Exhibit 10.1

AGREEMENT AND PLAN OF MERGER

THIS AGREEMENT

is made effective as of the 12th day of August, 2004.

AMONG:

 

CARLO CIVELLI,

of Gerbergasse 5, Postfach 7427,
8023, Zurich, Switzerland
("Civelli")

 

 

OF THE FIRST PART

AND:

 

BRUNO MOSIMANN,

of Albisriederstrasse 164,
Postfach, 8040, Zurich, Switzerland
("Mosimann")

 

 

OF THE SECOND PART

AND:

 

TSI MEDICAL CORP.

,
a Nevada corporation with its registered office at 3273
East Warm Springs Road, Las Vegas, NV 89120
("TSI Medical")

 

 

OF THE THIRD PART

AND:

 

RELAY MINES LIMITED

,
a Nevada corporation with its principal office at 1040
West Georgia Street, Suite 1160, Vancouver, British
Columbia, Canada V6E 4H1
("Relay Mines")

 

 

OF THE FOURTH PART

AND:

 

TSI MED ACQUISITION CORP.

,
a Nevada corporation with its registered office at 3273
East Warm Springs Road, Las Vegas, NV 89120
("Relay Sub")

 

 

OF THE FIFTH PART

WHEREAS:

A. Civelli and Mosimann (together, the "Principal Shareholders') are the
controlling shareholders of Relay Mines;

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B. The Boards of Directors of each of Relay Mines, Relay Sub and TSI Medical
deem it desirable and in the best interests of their respective shareholders
that TSI Medical be merged with and into Relay Sub with Relay Sub as the
surviving corporation (the "Merger') on the terms and subject to the conditions
of this Agreement;

C. The Boards of Directors of each of Relay Mines, Relay Sub and TSI Medical
have approved and adopted this Agreement;

D. Relay Sub is a wholly-owned subsidiary of Relay Mines and Relay Sub joins in
the execution of this Agreement in order to provide certain representations,
warranties and covenants to TSI Medical;

E. Relay Mines, as the sole shareholder of Relay Sub, has approved the Merger;
and

F. The Principal Shareholders join in the execution of this Agreement in order
to provide certain covenants in respect of cancellation of their share
positions.

NOW THEREFORE THIS AGREEMENT WITNESSES

that in consideration of covenants and agreements set forth herein and of the
sum of $10.00 paid by TSI Medical to each of the Principal Shareholders and to
Relay Mines, the receipt of which is hereby acknowledged, the parties hereto
agree each with the other as follows:

ARTICLE 1.
DEFINITIONS

1.1 Definitions. The following terms have the respective meanings specified in
this Article, unless the context indicates otherwise.

(a) "Agreement" shall mean this Agreement, and all the exhibits, schedules and
other documents attached to or referred to in the Agreement, and all amendments
and supplements, if any, to this Agreement;

(b) "Exelar Medical" shall mean Exelar Medical Corporation, a Nevada
corporation;

(c) "Exelar Medical Funding Agreement" shall mean the Technology Acquisition and
Funding Agreement among TSI Medical, Exelar Corporation and Exelar Medical
Corporation dated the 22nd day of March, 2004 whereby TSI Medical has agreed to
acquire up to 60% of the issued and outstanding shares of Exelar Medical;

(d) "Exchange Act" shall mean the United States Securities Exchange Act of 1934,
as amended;

(e) "GAAP" shall mean United States generally accepted accounting principles
applied in a manner consistent with prior periods;

(f) "SEC" shall mean the United States Securities and Exchange Commission;

(g) "Securities Act" shall mean the United States Securities Act of 1933, as
amended; and

(h) "Taxes" shall include federal, state, provincial and local income taxes,
capital gains tax, value-added taxes, franchise, personal property and real
property taxes, levies, assessments, tariffs, duties (including any customs
duty), business license or other fees, sales, use and any other taxes relating
to the assets of the designated party or the business of the designated party
for all periods up to and including the Closing Date, together with any related
charge or amount, including interest, fines, penalties and additions to tax, if
any, arising out of tax assessments.

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(i) "TSI Option Plan" shall mean the 2004 Stock Option Plan dated May 31, 2004
adopted by the board of directors of TSI Medical.

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

 

Schedule

Description

 

2.1
2.9A
2.9B
3.3
3.4
3.6
3.9
3.10
3.12
3.14
3.17
4.1
5.3
5.9

 

Articles of Merger
Certificate of Non-U.S. Shareholder
Certificate of U.S. Shareholder
Capitalization of TSI Medical
TSI Medical Subsidiaries
Actions and Proceedings
TSI Medical Financial Statements
Undisclosed Liabilities of TSI
Undisclosed Changes
TSI Medical Employment and Consulting Agreements
Material Contracts
Principal Shareholders of Relay Mines
Capitalization of Relay Mines
Undisclosed Liabilities of Relay Mines

1.3 Currency. All dollar amounts referred to in this Agreement are in United
States funds, unless expressly stated otherwise.

ARTICLE 2.
THE MERGER

2.1 The Merger. At the Effective Time (as defined in Section 2.3 below), TSI
Medical will be merged with and into Relay Sub in accordance with this
Agreement, the Articles of Merger substantially in the form of Schedule 2.1
attached to this Agreement (the "Articles of Merger'), and the applicable
provisions of Chapter 92A of the Nevada Revised Statutes (the "Nevada Law').
Following the Merger, Relay Sub will continue as the surviving corporation (the
"Surviving Corporation') and the separate existence of TSI Medical will cease,
except insofar as it may be continued by Nevada Law.

2.2 Closing. As soon as practicable following the satisfaction or waiver of the
conditions set forth in Section 6 of this Agreement, and provided that this
Agreement has not been terminated pursuant to Section 9, the parties to this
Agreement will hold a closing (the "Closing') for the purpose of confirming the
consummation of the Merger at a time and date mutually agreed upon by the
parties. Unless otherwise agreed by the parties, the Closing will take place at
the offices of the lawyers for TSI Medical. Notwithstanding the location of the
Closing, each party agrees that the Closing may be completed by the exchange of
undertakings between the respective legal counsel for TSI Medical, Relay Mines
and Relay Sub, provided such undertakings are satisfactory to each party's
respective legal counsel. The date on which the Closing actually occurs is
referred to as the "Closing Date.' At the Closing, the parties will execute and
exchange all documents, certificates and instruments contemplated by this
Agreement. The parties agree to use commercially reasonable efforts and all due
diligence to cause the Closing to be consummated on or before August 31, 2004
unless such date is extended by the mutual agreement of the parties.

2.3 Effective Time of the Merger. The Merger will be effective at the time (the
"Effective Time') of the filing of the Articles of Merger with the Secretary of
State of the State of Nevada, which certificate is to be filed as soon as
practicable on or after the Closing Date.

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2.4 Effect of the Merger. The Merger will have the effect set forth in Section
92A.250 of Nevada Law. Without limiting the generality of the foregoing, and
subject thereto, at the Effective Time all the property, rights, privileges,
powers and franchises of Relay Sub and TSI Medical will vest in the Surviving
Corporation without further act or deed, and all debts, liabilities and duties
of Relay Sub and TSI Medical will become the debts, liabilities and duties of
the Surviving Corporation. As a result or the Merger, the Surviving Corporation
will be the wholly-owned subsidiary of Relay Mines.

2.5 Certificate of Incorporation; Bylaws.

(a) The certificate of incorporation of Relay Sub as in effect immediately prior
to the Effective Time will continue unchanged, except to the extent amended by
the Articles of Merger, and will be the certificate of incorporation of the
Surviving Corporation until thereafter amended in accordance with the terms
thereof and in accordance with applicable law.

(b) At the Effective Time, the by -laws of Relay Sub, as in effect immediately
prior to the Effective Time, will be the by-laws of the Surviving Corporation
until thereafter amended in accordance with the terms thereof and in accordance
with applicable law.

2.6 Directors and Officers. The directors and officers of the Surviving
Corporation after the Effective Time will be the following persons: Logan B.
Anderson, Harold C. Moll and Peter Hogendoorn. Relay Mines, as the sole
shareholder of Relay Sub, by approving the Merger has approved these individuals
as the directors of the Surviving Corporation and will take any further action
in order to ensure the proper appointment of such directors to the board of
directors of the Surviving Corporation.

2.7 Taking of Necessary Action. If after the Effective Time any further action
is necessary to carry out the purposes of this Agreement or to vest the
Surviving Corporation with full title to all assets, rights, approvals,
immunities and franchises of either Relay Sub or TSI Medical, the officers and
directors, or the former officers and directors, as the case may be, of Relay
Mines, Relay Sub and TSI Medical and the Surviving Corporation will take all
such necessary action.

2.8 Merger Consideration. Each share of TSI Medical common stock, par value
$0.001 per share ("TSI Medical Common Stock') issued and outstanding immediately
prior to the Effective Time (other than Dissenting Shares, as defined in Section
2.10) will, by virtue of the Merger and without any action on the part of the
holder thereof, be converted into one share of Relay Mines Common Stock (as
defined in Section 5.3). All certificates representing the shares of Relay Mines
Common Stock issued on effectiveness of the Merger will be endorsed with the
following legend pursuant to the Securities Act in order to reflect that the
fact that the shares of Relay Mines Common Stock will be issued to the
shareholders of TSI Medical pursuant to exemptions or safe harbours from the
registration requirements of the Securities Act:

For holders of TSI Medical Common Stock resident in the United States:

"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 (THE "ACT"), AND HAVE BEEN ISSUED IN RELIANCE UPON AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT PROVIDED BY REGULATION D
PROMULGATED UNDER THE ACT. SUCH SECURITIES MAY NOT BE REOFFERED FOR SALE OR
RESOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
UNDER THE ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE
ACT."

For holders of TSI Medical Common Stock resident outside the United States:

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"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 (THE "ACT"), AND HAVE BEEN ISSUED IN RELIANCE UPON AN EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE ACT PROVIDED BY REGULATION S PROMULGATED
UNDER THE ACT. SUCH SECURITIES MAY NOT BE REOFFERED FOR SALE OR RESOLD OR
OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S,
PURSUANT TO AN EFFECTIVE REGISTRATION UNDER THE ACT, OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM REGISTRATION UNDER THE ACT. HEDGING TRANSACTIONS INVOLVING THE
SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE ACT."

2.9 Stock Certificate Conversion Procedure. After the Effective Time, each
holder of TSI Medical Common Stock will be entitled to exchange his, her, or its
certificate representing the TSI Medical Common Stock ("TSI Medical Stock
Certificate') for a certificate representing the number of shares of Relay Mines
Common Stock into which the number of shares of TSI Medical Common Stock
previously represented by such certificate surrendered have been converted
pursuant to Section 2.8 of this Agreement. Each holder of TSI Medical Common
Stock may exchange his, her or its TSI Medical Stock Certificate by delivering
such TSI Medical Stock Certificate to Relay Mines duly endorsed in blank (or
accompanied by duly executed stock powers duly endorsed in blank), in each case
in proper form for transfer, with signatures guaranteed, and, if applicable,
with all stock transfer and any other required documentary stamps affixed
thereto and with appropriate instructions to allow the transfer agent to issue
certificates for the Relay Mines Common Stock to the holder thereof together
with: (i) a Regulation S Investment Letter (if such holder is resident outside
of the United States), a copy of which is attached hereto in Schedule 2.9A, or
(ii) a Regulation D Investment Letter (if such holder is resident in the United
States), a copy of which is attached hereto in Schedule 2.9B. Until surrendered
as contemplated by this Section 2.9, each TSI Medical Stock Certificate will be
deemed at any time after the Effective Time to represent only the right to
receive Relay Mines Common Stock certificates representing the number of whole
shares of Relay Mines Common Stock into which the shares of TSI Medical Common
Stock formerly represented by such certificate have been converted. Upon receipt
of such duly endorsed TSI Medical Stock Certificates, Relay Mines will cause the
issuance of the number of shares of Relay Mines Common Stock as converted
pursuant to Section 2.8 of this Agreement.

2.10 Appraisal Rights. Notwithstanding any provision of this Agreement to the
contrary, shares of TSI Medical Common Stock (the "Dissenting Shares') that are
issued and outstanding immediately prior to the Effective Time and held by
stockholders who did not vote in favor of the Merger and who comply with all of
the relevant provisions of Sections 92A.300 to 92A.500 of Nevada Law (the
"Dissenting Stockholders') will not be converted into or be exchangeable for the
right to receive Relay Mines Common Stock, unless and until such holders have
failed to perfect or have effectively withdrawn or lost their rights to
appraisal under Nevada Law. TSI Medical will give Relay Mines (i) immediate oral
notice followed by prompt written notice of any written demands for appraisal of
any shares of TSI Medical Common Stock, attempted withdrawals of any such
demands and any other instruments served pursuant to Nevada Law and received by
TSI Medical relating to stockholders' rights of appraisal, and (ii) will keep
Relay Mines informed of the status of all negotiations and proceedings with
respect to demands for appraisal under Nevada Law. If any Dissenting Stockholder
fails to perfect or will have effectively withdrawn or lost the right to
appraisal, the shares of TSI Medical Common Stock held by such Dissenting
Stockholder will thereupon be treated as though such shares had been converted
into the right to receive Relay Mines Common Stock pursuant to Section 2.8 of
this Agreement.

2.11 No Further Ownership Rights in TSI Medical Common Stock. The promise to
exchange the TSI Medical Common Stock for shares of Relay Mines Common Stock in
accordance with the terms of this Agreement will be deemed to have been given in
full satisfaction of all rights pertaining to the TSI Medical Common Stock, and
there will be no further registration of transfers on the stock transfer books
of TSI Medical of the shares of TSI Medical Common Stock that were outstanding
immediately prior to the Effective Time. From and after the Effective Time, the
holders of TSI Medical Common Stock outstanding immediately prior to the
Effective Time will cease to have any rights with respect to such TSI Medical
Common Stock, except as otherwise provided in this Agreement or by law.

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2.12 Distributions with Respect to Unsurrendered TSI Medical Common Stock. No
dividends or other distributions by Relay Mines with a record date after the
Effective Time will be paid to the holder of any unsurrendered TSI Medical Stock
Certificate until the surrender of such TSI Medical Stock Certificate in
accordance with Section 2.9 of this Agreement. Following surrender of any such
TSI Medical Stock Certificate, Relay Mines will pay to the holder of the Relay
Mines Common Stock certificate issued in exchange the TSI Medical Stock
Certificate, without interest, (i) at the time of such surrender, the amount of
any dividends or other distributions with a record date after the Effective Time
and paid before the time of such surrender with respect to such Relay Mines
Common Stock which such holder is entitled pursuant to Section 2.8 of this
Agreement, and (ii) at the appropriate payment date, the amount of any dividends
or other distributions with a record date after the Effective Time but prior to
such surrender and with a payment date subsequent to such surrender payable with
respect to such Relay Mines Common Stock.

2.13 No Liability. Neither Relay Mines, Relay Sub, nor the Surviving Corporation
will be liable to any person in respect of shares of TSI Medical Common Stock,
or dividends or distributions with respect thereto, pursuant to any applicable
abandoned property, escheat or similar law. If any TSI Medical Stock Certificate
has not have been surrendered prior to seven years after the Effective Time (or
immediately prior to such earlier date on which any TSI Medical Stock
Certificate, or any dividends or distributions payable to the holder of such TSI
Medical Stock Certificate would otherwise escheat to or become the property of
any governmental body or authority), any such Relay Mines Common Stock,
dividends or distributions in respect of such TSI Medical Stock Certificate
will, to the extent permitted by applicable law, become the property of the
Surviving Corporation, free and clear of all claims or interest of any person
previously entitled to such certificate

2.14 Lost, Stolen or Destroyed Certificates. If any certificate representing TSI
Medical Common Stock has been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the person claiming such certificate or agreement to
be lost, stolen or destroyed and, if required by Relay Mines, the posting by
such person of a bond in such reasonable amount as Relay Mines may direct as
indemnity against any claim that may be made against it with respect to such
certificate, Relay Mines will cause to be issued in exchange for such lost,
stolen or destroyed certificate, the applicable Relay Mines Common Stock
deliverable in respect thereof, pursuant to Section 2.8 of this Agreement.

2.15 Existing TSI Medical Warrants. The holders of the outstanding warrants (the
"TSI Warrants') to purchase shares of TSI Medical will be offered warrants
entitling them to purchase the same number of shares of Relay at the same
exercise dates and exercise prices in exchange for the surrender of the TSI
Warrants, subject to delivery of declarations by the holders of the TSI
Warrants, as applicable, substantially in the forms set out in Schedule 2.9A or
Schedule 2.9B.

2.16 Existing TSI Medical Options. Relay will grant options to the holders of
the existing options of TSI Medical (the "Existing TSI Options') entitling them
to purchase shares under the option plan referred to in Section 6.2(i) of this
Agreement on the same terms and conditions, including exercise price, as the
Existing TSI Options.

ARTICLE 3.
REPRESENTATIONS AND WARRANTIES OF
TSI MEDICAL

TSI Medical represents and warrants to Relay Mines and Relay Sub, and
acknowledges that Relay Mines and Relay Sub are relying upon such
representations and warranties, in connection with the execution, delivery and
performance of this Agreement, notwithstanding any investigation made by or on
behalf of Relay Mines or Relay Sub, as follows:

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3.1 Organization and Good Standing. TSI Medical is a corporation duly organized,
validly existing and in good standing under the laws of the State of Nevada and
has all requisite corporate power and authority to own, lease and to carry on
its business as now being conducted. TSI Medical is duly qualified to do
business and is in good standing as a foreign corporation in each of the
jurisdictions in which it owns property, leases property, does business, or is
otherwise required to do so, where the failure to be so qualified would have a
material adverse effect on the business of TSI Medical taken as a whole.

3.2 Authority. TSI Medical has all requisite corporate power and authority to
execute and deliver this Agreement and any other document contemplated by this
Agreement (collectively, the "TSI Medical Merger Documents') to be signed by TSI
Medical and to perform its obligations thereunder and to consummate the Merger
contemplated thereby. The execution and delivery of each of the TSI Medical
Merger Documents by TSI Medical and the consummation of the Merger contemplated
thereby have been duly authorized by its Board of Directors. No other corporate
or shareholder proceedings on the part of TSI Medical are necessary to authorize
such documents or to consummate the Merger contemplated thereby other than the
approval of the shareholders of TSI Medical of the Merger. This Agreement has
been, and the other TSI Medical Merger Documents when executed and delivered by
TSI Medical as contemplated by this Agreement will be, duly executed and
delivered by TSI Medical and this Agreement is, and the other TSI Medical Merger
Documents when executed and delivered by TSI Medical as contemplated hereby will
be, the valid and binding obligation of TSI Medical 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, (2) as limited by laws
relating to the availability of specific performance, injunctive relief, or
other equitable remedies, and (3) as limited by public policy.

3.3 Capitalization of TSI Medical. The entire authorized capital stock and other
equity securities of TSI Medical consists of 100,000,000 shares of TSI Medical
Common Stock, par value of $0.001 per share. There are 9,700,000 shares of TSI
Medical Common Stock issued and outstanding as of the date of this Agreement.
All of the issued and outstanding shares of TSI Medical Common Stock have been
duly authorized, are validly issued, were not issued in violation of any
pre-emptive rights and are fully paid and non-assessable, are not subject to
pre-emptive rights and were issued in full compliance with all federal, state,
and local laws, rules and regulations. Except as set forth on Schedule 3.3,
there are no outstanding options, warrants, subscriptions, conversion rights, or
other rights, agreements, or commitments obligating TSI Medical to issue any
additional shares of TSI Medical Common Stock, or any other securities
convertible into, exchangeable for, or evidencing the right to subscribe for or
acquire from TSI Medical any shares of TSI Medical Common Stock. Except as set
forth on Schedule 3.3, there are no agreements purporting to restrict the
transfer of the TSI Medical Common Stock, no voting agreements, voting trusts,
or other arrangements restricting or affecting the voting of the TSI Medical
Common Stock.

3.4 No Subsidiaries. Except as set forth on Schedule 3.4, TSI Medical does not
have any subsidiaries or agreements of any nature to acquire any subsidiary or
to acquire or lease any other business operations and will not prior to the
Closing Date acquire, or agree to acquire, any subsidiary or business without
the prior written consent of Relay Mines.

3.5 Non-contravention. Neither the execution, delivery and performance of this
Agreement, nor the consummation of the Merger, will:

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(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 of any obligation contained in or the
loss of any material benefit under, or result in the creation of any lien,
security interest, charge or encumbrance upon any of the material properties or
assets of TSI Medical under any term, condition or provision of any loan or
credit agreement, note, debenture, bond, mortgage, indenture, lease or other
agreement, instrument, permit, license, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to TSI Medical, or any of its
respective property or assets;

(2) violate any provision of the articles of incorporation or bylaws of TSI
Medical; or

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

3.6 Actions and Proceedings. Except as described in Schedule 3.6, 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 Medical or the Principal
Shareholders, threatened against TSI Medical or which involves any of the
business, or the properties or assets of TSI Medical that, if adversely resolved
or determined, would have a material adverse effect on the business, operations,
assets, properties, prospects, or conditions of TSI Medical taken as a whole (a
"TSI Medical Material Adverse Effect'). There is no reasonable basis for any
claim or action that, based upon the likelihood of its being asserted and its
success if asserted, would have such a TSI Medical Material Adverse Effect.
Schedule 3.6 lists all pending legal claims or proceedings, whether or not such
claim or proceeding would result in a TSI Medical Material Adverse Effect.

3.7 Compliance.

(a) TSI Medical 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 applicable regulation to the business or
operations of TSI Medical;

(b) TSI Medical is not subject to any judgment, order or decree entered in any
lawsuit or proceeding applicable to its business and operations that would
constitute a TSI Medical Material Adverse Effect;

(c) TSI Medical has duly filed all reports and returns required to be filed by
it with governmental authorities and has obtained all governmental permits and
other governmental consents, except as may be required after the execution of
this Agreement. All of such permits and consents are in full force and effect,
and no proceedings for the suspension or cancellation of any of them, and no
investigation relating to any of them, is pending or to the best knowledge of
TSI Medical, threatened, and none of them will be adversely affected by the
consummation of the Merger contemplated hereby; and

(d) TSI Medical has operated in material compliance with all laws, rules,
statutes, ordinances, orders and regulations applicable to its business. TSI
Medical has not received any notice of any violation thereof, nor is TSI Medical
aware of any valid basis therefore.

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3.8 Filings, Consents and Approvals. Other than the approval of holders owning a
majority of the TSI Medical Common Stock, 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 Medical of the Merger contemplated by this Agreement or to
enable Relay Mines to continue to conduct TSI Medical's business after the
Closing Date in a manner which is consistent with that in which it is presently
conducted.

3.9 Financial Representations. Attached to this Agreement as Schedule 3.9 are
true, correct, and complete copies of audited balance sheets for TSI Medical
dated as of January 31, 2003 and 2002 and unaudited balance sheet dated as of
January 31, 2004, together with related statements of operations and deficit,
statements of shareholders' deficiency (equity), for the fiscal years then ended
(collectively, the "Financial Statements'). The Financial Statements (a) are in
accordance with the books and records of TSI Medical, (b) present fairly the
financial condition of TSI Medical as of the respective dates indicated and the
results of operations for such periods, and (c) have been prepared in accordance
with GAAP. TSI Medical has not received any advice or notification from its
independent certified public accountants that TSI Medical has used any improper
accounting practice that would have the effect of not reflecting or incorrectly
reflecting in the Financial Statements or the books and records of TSI Medical,
any properties, assets, liabilities, revenues, or expenses. The books, records,
and accounts of TSI Medical accurately and fairly reflect, in reasonable detail,
the Merger, assets, and liabilities of TSI Medical. TSI Medical has not engaged
in any transaction, maintained any bank account, or used any funds of TSI
Medical, except for transactions, bank accounts, and funds which have been and
are reflected in the normally maintained books and records of TSI Medical.

3.10 Undisclosed Liabilities. Except as set forth in Schedule 3.10, TSI Medical
has no liabilities or obligations either direct or indirect, matured or
unmatured, absolute, contingent or otherwise, which:

(a) are not set forth in the Financial Statements or have not heretofore been
paid or discharged;

(b) did not arise in the regular and ordinary course of business under any
agreement, contract, commitment, lease or plan specifically disclosed (or are
not required to be disclosed in accordance with GAAP); or

(c) have not been incurred in amounts and pursuant to practices consistent with
past business practice, in or as a result of the regular and ordinary course of
its business since the date of the last Financial Statements.

For purposes of this Agreement, the term "liabilities' includes, any direct or
indirect indebtedness, guaranty, endorsement, claim, loss, damage, deficiency,
cost, expense, obligation or responsibility, fixed or unfixed, known or unknown,
asserted choate or inchoate, liquidated or unliquidated, secured or unsecured.

3.11 Tax Matters.

(a) As of the date hereof, (i) TSI Medical has timely filed all tax returns in
connection with any Taxes which are required to be filed on or prior to the date
hereof, taking into account any extensions of the filing deadlines which have
been validly granted to them; and (ii) all such returns are true and correct in
all material respects.

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(b) TSI Medical has paid all Taxes that have become or are due with respect to
any period ended on or prior to the date hereof, and has established an adequate
reserve therefore on its balance sheet for those Taxes not yet due and payable,
except for any Taxes the nonpayment of which will not have a TSI Medical
Material Adverse Effect.

(c) TSI Medical is not presently under and has not received notice of, any
contemplated investigation or audit by the Internal Revenue Service or any
foreign or state taxing authority concerning any fiscal year or period ended
prior to the date hereof.

(d) All Taxes required to be withheld on or prior to the date hereof from
employees for income Taxes, social security Taxes, unemployment Taxes and other
similar withholding Taxes have been properly withheld and, if required on or
prior to the date hereof, have been deposited with the appropriate governmental
agency.

3.12 Changes. Except as set forth in Schedule 3.12, since January 31, 2004, TSI
Medical has not:

(a) incurred any liabilities, other than liabilities incurred in the ordinary
course of business consistent with past practice, or discharged or satisfied any
lien or encumbrance, or paid any liabilities, other than in the ordinary course
of business consistent with past practice, or failed to pay or discharge when
due any liabilities of which the failure to pay or discharge has caused or will
cause any material damage or risk of material loss to it or any of its assets or
properties;

(b) sold, encumbered, assigned or transferred any fixed assets or properties
which would have been included in the assets of TSI Medical if the closing had
been held on January 31, 2004 or on any date since then, except for ordinary
course of business transactions consistent with past practice;

(c) created, incurred, assumed or guaranteed any indebtedness for money
borrowed, or mortgaged, pledged or subjected any of the assets or properties of
TSI Medical to any mortgage, lien, pledge, security interest, conditional sales
contract or other encumbrance of any nature whatsoever;

(d) made or suffered any amendment or termination of any material agreement,
contract, commitment, lease or plan to which it is a party or by which it is
bound, or cancelled, modified or waived any substantial debts or claims held by
it or waived any rights of substantial value, whether or not in the ordinary
course of business;

(e) declared, set aside or paid any dividend or made or agreed to make any other
distribution or payment in respect of its capital shares or redeemed, purchased
or otherwise acquired or agreed to redeem, purchase or acquire any of its
capital shares or equity securities;

(f) suffered any damage, destruction or loss, whether or not covered by
insurance, materially and adversely its business, operations, assets, properties
or prospects;

(g) suffered any material adverse change in its business, operations, assets,
properties, prospects or condition (financial or otherwise);

(h) received notice or had knowledge of any actual or threatened labor trouble,
termination, resignation, strike or other occurrence, event or condition of any
similar character which has had or might have an adverse effect on its business,
operations, assets, properties or prospects;

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(i) made commitments or agreements for capital expenditures or capital additions
or betterments exceeding in the aggregate $10,000, except such as may be
involved in ordinary repair, maintenance or replacement of its assets;

(j) other than in the ordinary course of business, increase the salaries or
other compensation of, or made any advance (excluding advances for ordinary and
necessary business expenses) or loan to, any of its employees or made any
increase in, or any addition to, other benefits to which any of its employees
may be entitled;

(k) changed any of the accounting principles followed or the methods of applying
such principles;

(l) entered into any transaction other than in the ordinary course of business
consistent with past practice; or

(m) agreed, whether in writing or orally, to do any of the foregoing.

3.13 Personal Property. TSI Medical does not own or lease any furniture,
fixtures or other tangible personal property.

3.14 Employees and Consultants. All employees and consultants of TSI Medical
have been paid all salaries, wages, income and any other sum due and owing to
them by TSI Medical as at the end of the most recent completed pay period. TSI
Medical is not aware of any labor conflict with any of TSI Medical employees
that might reasonably be expected to have a TSI Medical Material Adverse Effect.
Except as disclosed in Schedule 3.14, TSI Medical has not entered into any
written contracts of employment or consulting agreements. All amounts required
to be withheld by TSI Medical from employees salaries or wages and paid to any
governmental or taxing authority have been so withheld and paid. No employee of
TSI Medical is in violation of any term of any employment contract,
non-disclosure agreement, noncompetition agreement or any other contract or
agreement relating to the relationship of such employee with TSI Medical or any
other nature of the business conducted or to be conducted by TSI Medical or the
Surviving Corporation.

3.15 Intellectual Property. TSI Medical does not own any intellectual property.
Exelar Medical owns the assets as represented by Exelar Medical in the Exelar
Medical Funding Agreement.

3.16 Real Property. TSI Medical does not lease or own any real property.

3.17 Material Contracts and Transactions. Schedule 3.17 contains a list of all
material contracts, agreements, licenses, permits, arrangements, commitments,
instruments, understandings or contracts, whether written or oral, express or
implied, contingent, fixed or otherwise, to which TSI Medical is a party
(collectively, the "Contracts').

(a) Except as listed on Schedule 3.17, TSI Medical is not a party to any written
or oral:

(1) agreement for the purchase, sale or lease of any capital assets, or
continuing contracts for the purchase or lease of any materials, supplies,
equipment, real property or services;

(2) agreement regarding, sales agency, distributorship, or the payment of
commissions;

(3) agreement for the employment or consultancy of any person or entity;

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(4) note, debenture, bond, trust agreement, letter of credit agreement loan
agreement, or other contract or commitment for the borrowing or lending of
money, or agreement or arrangement for a line of credit or guarantee, pledge, or
undertaking of the indebtedness of any other person;

(5) agreement, contract, or commitment for any charitable or political
contribution;

(6) agreement, contract, or commitment limiting or restraining TSI Medical,
their business or any successor thereto from engaging or competing in any manner
or in any business or from hiring any employees, nor is any employee of TSI
Medical subject to any such agreement, contract, or commitment;

(7) material agreement, contract, or commitment not made in the ordinary course
of business;

(8) agreement establishing or providing for any joint venture, partnership, or
similar arrangement with any other person or entity;

(9) agreement, contract or understanding containing a "change in control,' or
similar provision; or

(10) power of attorney or similar authority to act.

(b) Each Contract is in full force and effect, and there exists no material
breach or violation of or default by TSI Medical under any Contract including,
without limiting the generality of the foregoing, the Exelar Medical Funding
Agreement, or any event that with notice or the lapse of time, or both, will
create a material breach or violation thereof or default under any Contract by
TSI Medical. The continuation, validity, and effectiveness of each Contract will
in no way be affected by the consummation of the Merger contemplated by this
Agreement. Except as listed on Schedule 3.17, there exists no actual or
threatened termination, cancellation, or limitation of, or any amendment,
modification, or change to any Contract. A true, correct and complete copy (and
if oral, a description of material terms) of each Contract, as amended to date,
has been furnished to Relay Mines.

3.18 Certain Transactions. Except as disclosed in Schedule 3.18, TSI Medical is
not indebted, directly or indirectly, to any of its officers, directors or
shareholders or to their respective spouses or children, in any amount
whatsoever and TSI Medical is not a guarantor or indemnitor of any indebtedness
of any other person, firm or corporation.

3.19 No Brokers. TSI Medical 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 Merger contemplated by this Agreement for which Relay Mines
would be responsible.

3.20 Minute Books. The minute books of TSI Medical provided to Relay Mines
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.

3.21 Completeness of Disclosure. No representation or warranty by TSI Medical in
this Agreement nor any certificate, schedule, statement, document or instrument
furnished or to be furnished to Relay Mines 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.

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ARTICLE 4.
COVENANTS, REPRESENTATIONS AND WARRANTIES
OF THE PRINCIPAL SHAREHOLDERS

The Principal Shareholders covenant with and jointly and severally represent and
warrant to TSI Medical as follows, and acknowledge that TSI Medical is relying
upon such covenants, representations and warranties in connection with the
merger of TSI Medical with Relay Sub, as follows:

4.1 The Principal Shareholders are the legal and beneficial owners of the shares
of Relay Mines set forth in Schedule 4.1.

4.2 No person, firm or corporation has any agreement or option or any right or
privilege (whether by law, pre-emptive or contractual) capable of becoming an
agreement or option for the purchase from the Principal Shareholders of any of
the shares of Relay Mines held by the Principal Shareholders.

4.3 This Agreement has been duly authorized, validly executed and delivered by
the Principal Shareholders.

ARTICLE 5.
REPRESENTATIONS AND WARRANTIES
OF RELAY MINES

Relay Mines and Relay Sub jointly and severally represent and warrant to TSI
Medical and acknowledge that TSI Medical is relying upon such representations
and warranties in connection with the execution, delivery and performance of
this Agreement, notwithstanding any investigation made by or on behalf of TSI
Medical, as follows:

5.1 Organization and Good Standing. Relay Mines and Relay Sub are each duly
organized, validly existing and in good standing under the laws of Nevada and
have all requisite corporate power and authority to own, lease and to carry on
its respective businesses as now being conducted. Relay Mines is duly qualified
to do business and is in good standing as foreign corporations in each of the
jurisdictions in which it owns property, leases property, does business, or is
otherwise required to do so, where the failure to be so qualified would have a
material adverse effect on the businesses, operations, or financial condition of
Relay Mines. Relay Sub has not carried on any business or acquired any assets or
incurred any liabilities since its incorporation, other than by reason of
execution of this Agreement.

5.2 Authority. Relay Mines and Relay Sub have all requisite corporate power and
authority to execute and deliver this Agreement and any other document
contemplated by this Agreement (collectively, the "Relay Mines Merger
Documents') to be signed by Relay Mines and Relay Sub and to perform their
obligations thereunder and to consummate the Merger contemplated thereby. The
execution and delivery of each of the Relay Mines Merger Documents by Relay
Mines and Relay Sub and the consummation by Relay Mines and Relay Sub of the
Merger contemplated thereby have been duly authorized by their respective Board
of Directors and no other corporate or shareholder proceedings on the part of
Relay Mines or Relay Sub are necessary to authorize such documents or to
consummate the Merger contemplated thereby. This Agreement has been, and the
other Relay Mines Merger Documents when executed and delivered by Relay Mines
and Relay Sub as contemplated by this Agreement will be, duly executed and
delivered by Relay Mines and Relay Sub and this

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Agreement is, and the other Relay Mines Merger Documents when executed and
delivered by Relay Mines and Relay Sub, as contemplated hereby will be, the
valid and binding obligations of Relay Mines and Relay Sub 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, (2) as limited
by laws relating to the availability of specific performance, injunctive relief,
or other equitable remedies, and (3) as limited by public policy.

5.3 Capitalization of Relay Mines. The entire authorized capital stock of Relay
Mines consists of 100,000,000 shares of common stock, par value $0.0001 ("Relay
Mines Common Stock'). There are 36,683,604 shares of Relay Mines common stock
issued and outstanding as of the date of this Agreement. All of the issued and
outstanding shares of Relay Mines Stock have been duly authorized, are validly
issued, were not issued in violation of any pre-emptive rights and are fully
paid and non-assessable, are not subject to pre-emptive rights and were issued
in full compliance with all federal, state, and local laws, rules and
regulations. Except as set forth on Schedule 5.3, there are no outstanding
options, warrants, subscriptions, phantom shares, conversion rights, or other
rights, agreements, or commitments obligating Relay Mines to issue any
additional shares of Relay Mines Stock, or any other securities convertible
into, exchangeable for, or evidencing the right to subscribe for or acquire from
Relay Mines any shares of Relay Mines Stock. Except as set forth on Schedule
5.3, there are no agreements purporting to restrict the transfer of the Relay
Mines Stock, no voting agreements, voting trusts, or other arrangements
restricting or affecting the voting of the Relay Mines Stock.

5.4 Capitalization of Relay Sub. The entire authorized capital stock and other
equity securities of Relay Sub ("Relay Sub Stock') consists of 100,000,000
shares of common stock, par value $0.00001 ("Relay Sub Common Stock'). There are
1,000 shares of Relay Sub common stock issued and outstanding as of the date of
this Agreement. All of the issued and outstanding shares of Relay Sub Stock have
been duly authorized, are validly issued, were not issued in violation of any
pre-emptive rights and are fully paid and non-assessable, are not subject to
pre-emptive rights and were issued in full compliance with all federal, state,
and local laws, rules and regulations. There are no outstanding options,
warrants, subscriptions, phantom shares, conversion rights, or other rights,
agreements, or commitments obligating Relay Sub to issue any additional shares
of Relay Sub Stock, or any other securities convertible into, exchangeable for,
or evidencing the right to subscribe for or acquire from Relay Mines any shares
of Relay Sub Stock. There are no agreements purporting to restrict the transfer
of the Relay Mines Stock, no voting agreements, voting trusts, or other
arrangements restricting or affecting the voting of the Relay Mines Stock.

5.5 Validity of Relay Mines Common Stock Issuable upon the Merger. The shares of
Relay Mines Common Stock to be issued upon consummation of the Merger in
accordance with this Agreement will, upon issuance, have been duly and validly
authorized and, when so issued in accordance with the terms of this Agreement,
will be duly and validly issued, fully paid and non-assessable.

5.6 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 Relay Mines or Relay Sub, threatened against Relay Mines or
Relay Sub which involves any of the business, or the properties or assets of
Relay Mines or Relay Sub that, if adversely resolved or determined, would have a
material adverse effect on the business, operations, assets, properties,
prospects or conditions of Relay Mines or Relay Sub taken as a whole. There is
no reasonable basis for any claim or action that, based upon the likelihood of
its being asserted and its success if asserted, would have such a material
adverse effect.

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5.7 SEC Filings. Relay Mines has furnished or made available to TSI Medical a
true and complete copy of each report, schedule, registration statement and
proxy statement filed by Relay Mines with the SEC since the inception of Relay
Mines (as such documents have since the time of their filing been amended, the
"Relay Mines SEC Documents"). Relay Mines has timely filed with the SEC all
documents required to have been filed pursuant to the Securities Act and the
Exchange Act. As of their respective dates, Relay Mines SEC Documents complied
in all material respects with the requirements of the Securities Act, or the
Exchange Act, as the case may be, and the rules and regulations of the SEC
thereunder applicable to such Relay Mines SEC Documents, and none of Relay Mines
SEC Documents contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.

5.8 Financial Representations. Included with the Relay Mines SEC Documents are
true, correct, and complete copies of audited balance sheets for Relay Mines
dated as of June 30, 2003 and 2002 and unaudited balance sheet dated as of March
31, 2004, together with related statements of income, cash flows, and changes in
shareholder's equity for the periods then ended (collectively, the "Relay Mines
Financial Statements'). The Relay Mines Financial Statements (a) are in
accordance with the books and records of Relay Mines, (b) present fairly the
financial condition of Relay Mines as of the respective dates indicated and the
results of operations for such periods, and (c) have been prepared in accordance
with GAAP. Relay Mines has not received any advice or notification from its
independent certified public accountants that Relay Mines has used any improper
accounting practice that would have the effect of not reflecting or incorrectly
reflecting in the Relay Mines Financial Statements or the books and records of
Relay Mines, any properties, assets, liabilities, revenues, or expenses. The
books, records, and accounts of Relay Mines accurately and fairly reflect, in
reasonable detail, the Merger, assets, and liabilities of Relay Mines. Relay
Mines has not engaged in any transaction, maintained any bank account, or used
any funds of Relay Mines, except for transactions, bank accounts, and funds
which have been and are reflected in the normally maintained books and records
of Relay Mines. Relay Sub has not carried on any business, entered into any
agreements or incurred any liabilities since its incorporation, other than as
expressly contemplated by this Agreement.

5.9 Undisclosed Liabilities. Except as set forth in Schedule 5.9, Relay Mines
has no liabilities or obligations either direct or indirect, matured or
unmatured, absolute, contingent or otherwise, which:

(a) are not set forth in the Relay Mines Financial Statements or have not
heretofore been paid or discharged;

(b) did not arise in the regular and ordinary course of business under any
agreement, contract, commitment, lease or plan specifically disclosed (or are
not required to be disclosed in accordance with GAAP); or

(c) have not been incurred in amounts and pursuant to practices consistent with
past business practice, in or as a result of the regular and ordinary course of
its business since the date of the last Relay Mines Financial Statements.

For purposes of this Agreement, the term "liabilities' includes, any direct or
indirect indebtedness, guaranty, endorsement, claim, loss, damage, deficiency,
cost, expense, obligation or responsibility, fixed or unfixed, known or unknown,
asserted choate or inchoate, liquidated or unliquidated, secured or unsecured.

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5.10 Certain Changes or Events. Except as and to the extent disclosed in the
Relay Mines SEC Documents, there has not been (a) a material adverse effect to
the business, operations or financial conditions of Relay Mines, or (b) any
significant change by Relay Mines in its accounting methods, principles or
practices.

5.11 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 Relay Mines and Relay Sub of the Merger contemplated by this
Agreement to continue to conduct its business after the Closing Date in a manner
which is consistent with that in which it is presently conducted.

5.12 Personal Property. There are no material equipment, furniture, fixtures and
other tangible personal property and assets owned or leased by Relay Mines or
Relay Sub, except as disclosed in the Relay Mines SEC Documents.

5.13 Employees and Consultants. Neither Relay Mines nor Relay Sub have any
employees or consultants, except as disclosed in the Relay Mines SEC Documents.

5.14 Material Contracts and Transactions. Other than as expressly contemplated
by this Agreement, there are no material contracts, agreements, licenses,
permits, arrangements, commitments, instruments, understandings or contracts,
whether written or oral, express or implied, contingent, fixed or otherwise, to
which Relay Mines or Relay Sub is a party except as disclosed in the Relay Mines
SEC Documents.

5.15 No Brokers. Neither Relay Mines nor Relay Sub has incurred any obligation
or liability to any party for any brokerage fees, agent's commissions, or
finder's fees in connection with the Merger contemplated by this Agreement for
which TSI Medical would be responsible.

5.16 Minute Books. The minute books of Relay Mines provided to TSI Medical
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.

5.17 Completeness of Disclosure. No representation or warranty by Relay Mines or
Relay Sub in this Agreement nor any certificate, schedule, statement, document
or instrument furnished or to be furnished to TSI Medical 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 6.
CLOSING CONDITIONS

6.1 Conditions Precedent to Closing by Relay Mines and Relay Sub. The
obligations of Relay Mines and Relay Sub to consummate the Merger is subject to
the satisfaction of the conditions set forth below, unless any such condition is
waived Relay Mines and Relay Sub at the Closing. The Closing of the Merger
contemplated by this Agreement will be deemed to mean a waiver of all conditions
to Closing. These conditions of closing are for the benefit of Relay Mines and
Relay Sub and may be waived by Relay Mines and Relay Sub in their discretion.

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(a) Representations and Warranties. The representations and warranties of TSI
Medical set forth in this Agreement will be true, correct and complete in all
respects as of the Closing Date, as though made on and as of the Closing Date
and TSI Medical will have delivered to Relay Mines a certificate dated as of the
Closing Date, to the effect that the representations and warranties made by TSI
Medical in this Agreement are true and correct.

(b) Performance. All of the covenants and obligations that TSI Medical is
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.

(c) Merger Documents. This Agreement and all other TSI Medical Merger Documents
necessary or reasonably required to consummate the Merger, all in form and
substance reasonably satisfactory to Relay Mines or Relay Sub, will have been
executed and delivered to Relay Mines and Relay Sub.

(d) Secretary's Certificate - TSI Medical. Relay Mines will have received a
certificate of the Secretary of TSI Medical attaching (i) a copy of TSI
Medical's articles of incorporation and bylaws, as amended through the Closing
Date certified by the Nevada Secretary of State; (ii) certified copies of
resolutions duly adopted by the Board of Directors of TSI Medical and the TSI
Medical Stockholders approving the execution and delivery of this Agreement and
the other Merger Documents and the consummation of the Merger and the other
transactions contemplated hereby and thereby; and (iii) a certificate as to the
incumbency and signatures of the officers of TSI Medical executing this
Agreement and the Merger Documents executed on the Closing Date as contemplated
by this Agreement.

(e) Supplement to Schedules. Any additional disclosures of TSI Medical made
pursuant to Section 7.4 of this Agreement will be acceptable to Relay Mines and
Relay Sub in their sole discretion.

(f) Third Party Consents. TSI Medical will have received duly executed copies of
all third party consents and approvals contemplated by the Merger Documents, in
form and substance reasonably satisfactory to Relay Mines.

(g) No Material Adverse Change. No TSI Medical Material Adverse Effect will have
occurred since the date of this Agreement.

(h) No Action. No suit, action, or proceeding will be pending or threatened
before any governmental or regulatory authority wherein an unfavorable judgment,
order, decree, stipulation, injunction or charge would (i) prevent the
consummation of any of the Merger contemplated by this Agreement, or (ii) cause
the Merger to be rescinded following consummation.

(i) Due Diligence Review. Relay Mines and Relay Sub will be reasonably satisfied
in all respects with their due diligence investigation and review of TSI
Medical.

(j) Compliance with Securities Laws. Relay Mines will have received evidence
satisfactory to Relay Mines that all shares of Relay Mines Common Stock issuable
in the Merger will be issuable without registration pursuant to the Securities
Act in reliance on the exemptions from the registration requirements of the
Securities Act provided by Rule 506 of Regulation D or in reliance on the safe
harbour from the registration requirements of the Securities Act provided by
Regulation S. In order to establish the availability of an exemption or safe
harbour from the registration requirements of the Securities Act for each
issuance of Relay Mines Common Stock to each shareholder of TSI Medical, TSI
Medical will deliver to Relay Mines on Closing investment representation letters
executed by each shareholder of TSI Medical, other than Dissenting Shareholders
as contemplated below:

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(i) each shareholder of TSI Medical who is not a U.S. Person and who otherwise
satisfies the eligibility requirements for issuance of Relay Mines Common Stock
in accordance with Rule 903 of Regulation S of the Securities Act will deliver
the Regulation S Investment Letter in a form reasonably acceptable to legal
counsel for Relay Mines and for TSI Medical; and

(ii) each shareholder of TSI Medical resident in the United States will deliver
the Regulation D Investment Letter in a form reasonably acceptable to legal
counsel for Relay Mines and for Exelar Medical and TSI Medical.

(k) Delivery of Financial Statements. TSI Medical will have delivered to Relay
such financial statements as, in the opinion of the auditors for Relay, are
required to permit Relay to make the necessary filings under the Exchange Act in
connection with the Merger.

(l) Exercise of Appraisal Rights. The holders of no more than two (2%) percent
of the issued and outstanding shares of TSI Medical Common Stock will have
exercised appraisal rights under Nevada Law as Dissenting Shareholders. TSI
Medical and Relay Mines will have resolved all matters of appraisal and payment
under Nevada Law for each Dissenting Shareholder to Relay Sub's satisfaction.

6.2 Conditions Precedent to Closing by TSI Medical. The obligation of TSI
Medical to consummate the Merger is subject to the satisfaction of the
conditions set forth below, unless such condition is waived by TSI Medical at
the Closing. The Closing of the Merger will be deemed to mean a waiver of all
conditions to Closing. These conditions precedent are for the benefit of TSI
Medical and may be waived by TSI Medical in its discretion.

(a) Representations and Warranties. The representations and warranties of Relay
Mines and Relay Sub and the Principal Shareholders set forth in this Agreement
will be true, correct and complete in all respects as of the Closing Date, as
though made on and as of the Closing Date and Relay Mines and Relay Sub will
have delivered to TSI Medical a certificate dated the Closing Date, to the
effect that the representations and warranties made by Relay Mines and Relay Sub
in this Agreement are true and correct.

(b) Performance. All of the covenants and obligations that Relay Mines and Relay
Sub 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. Relay Mines and Relay Sub must have delivered each of the documents
required to be delivered by them pursuant to this Agreement.

(c) Merger Documents. This Agreement and all Relay Mines Merger Documents, all
in form and substance reasonably satisfactory to TSI Medical, will have been
executed and delivered by Relay Mines and Relay Sub, as applicable.

(d) Secretary's Certificate - Relay Mines. TSI Medical will have received a
certificate of the Secretary of Relay Mines attaching (a) a copy of Relay Mines'
certificate of incorporation, as amended through the Closing Date certified by
the Secretary of State of the State of Nevada; (b) a true and correct copy of
Relay Mines' bylaws, as amended; (c) certified copies of resolutions duly
adopted by the Board of Directors of Relay Mines and the sole stockholder of
Relay Sub, approving the execution and delivery of this Agreement and the other
Merger Documents and the consummation of the Merger and the ot her transactions
contemplated hereby and thereby; and (d) a certificate as to the incumbency and
signatures of the officers of Relay Mines executing this Agreement and the
Merger Documents executed by Relay Mines on the Closing Date as contemplated by
this Agreement.

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(e) Exercise of Appraisal Rights. The holders of no more than two (2%) percent
of the issued and outstanding shares of TSI Medical Common Stock will have
exercised appraisal rights under Nevada Law as Dissenting Shareholders. TSI
Medical and Relay Mines will have resolved all matters of appraisal and payment
under Nevada Law for each Dissenting Shareholder to TSI Medical's satisfaction.

(f) Supplement to Schedules. Any additional disclosures of Relay Mines made
pursuant to Section 7.4 of this Agreement will be acceptable to TSI Medical in
its sole discretion.

(g) Third Party Consents. Relay Mines and Relay Sub will have obtained duly
executed copies of all third-party consents and approvals contemplated by the
Merger documents, in form and substance reasonably satisfactory to TSI Medical.

(h) No Material Adverse. No event will have occurred since the date of this
Agreement that has had a material adverse effect on the business, operations,
assets, properties, prospects or conditions of Relay Mines and Relay Sub taken
as a whole.

(i) No Action. No suit, action, or proceeding will be pending or threatened
before any governmental or regulatory authority wherein an unfavorable judgment,
order, decree, stipulation, injunction or charge would (i) prevent consummation
of any of the Merger contemplated by this Agreement; or (ii) cause the Merger to
be rescinded following consummation.

(j) Schedule 14F Filing. Relay will have made the filing required by Paragraph
7.10.

(k) Cancellation of Control Shares. The Principal Shareholders will have
surrendered all 60,000,000 shares of Relay Mines Common Stock owned by them to
Relay Mines for cancellation without consideration.

(l) Adoption of Option Plan. Relay Mines will have adopted an option plan
substantially the same as the TSI Medical Option Plan.

ARTICLE 7.
ADDITIONAL COVENANTS OF THE PARTIES

7.1 Access and Investigation. Between the date of this Agreement and the Closing
Date, TSI Medical, on the one hand, and Relay Mines, on the other hand, will,
and will cause each of their respective representatives to, (a) afford the other
and its representatives full and free access to its personnel, properties,
contracts, books and records, and other documents and data, (b) furnish the
other and its representatives with copies of all such contracts, books and
records, and other existing documents and data as required by this Agreement and
as the other may otherwise reasonably request, and (c) furnish the other and its
representatives with such additional financial, operating, and other data and
information as the other may reasonably request. All of such access,
investigation and communication by a party and its representatives will be
conducted during normal business hours and in a manner designed not to interfere
unduly with the normal business operations of the other party. Each party will
instruct its auditors to cooperate with the other party and its representatives
in connection with such investigations.

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7.2 Confidentiality. All information regarding the business of TSI Medical
including, without limitation, financial information that TSI Medical provides
to Relay Mines during Relay Mines' due diligence investigation of TSI Medical
will be kept in strict confidence by Relay Mines and will not be used (except in
connection with due diligence), dealt with, exploited or commercialized by Relay
Mines or disclosed to any third party (other than Relay Mines' professional
accounting and legal advisors) without the prior written consent of TSI Medical.
If the Merger contemplated by this Agreement does not proceed for any reason,
then upon receipt of a written request from the TSI Medical, Relay Mines will
immediately return to TSI Medical any information received regarding TSI
Medical's business. Likewise, all information regarding the business of Relay
Mines including, without limitation, financial information that Relay Mines
provides to TSI Medical during its due diligence investigation of Relay Mines
will be kept in strict confidence by TSI Medical and will not be used (except in
connection with due diligence), dealt with, exploited or commercialized by TSI
Medical or disclosed to any third party (other than TSI Medical's professional
accounting and legal advisors) without Relay Mines' prior written consent. If
the Merger contemplated by this Agreement do not proceed for any reason, then
upon receipt of a written request from Relay Mines, TSI Medical will immediately
return to Relay Mines (or as directed by Relay Mines) any information received
regarding Relay Mines' business.

7.3 Notification. Between the date of this Agreement and the Closing Date, each
of the parties to this Agreement will promptly notify the other parties in
writing if it becomes aware of any fact or condition that causes or constitutes
a material breach of any of its representations and warranties as of the date of
this Agreement, if it becomes aware of the occurrence after the date of this
Agreement of any fact or condition that would cause or constitute a material
breach of any such representation or warranty had such representation or
warranty been made as of the time of occurrence or discovery of such fact or
condition. Should any such fact or condition require any change in the Schedules
relating to such party, such party will promptly deliver to the other parties a
supplement to the Schedules specifying such change. During the same period, each
party will promptly notify the other parties of the occurrence of any material
breach of any of its covenant in this Agreement or of the occurrence of any
event that may make the satisfaction of such conditions impossible or unlikely.

7.4 Exclusivity. Until such time, if any, as this Agreement is terminated
pursuant to this Agreement, TSI Medical will not, directly or indirectly
solicit, initiate, entertain or accept any inquiries or proposals from, discuss
or negotiate with, provide any nonpublic information to, or consider the merits
of any unsolicited inquiries or proposals from, any person or entity (other than
Relay Mines ) relating to any transaction involving the sale of the business or
assets (other than in the ordinary course of business), or any of the capital
stock of TSI Medical, or any merger, consolidation, business combination, or
similar transaction.

7.5 Conduct of TSI Medical Business Prior to Closing. From the date of this
Agreement to the Closing Date, and except to the extent that Relay Mines
otherwise consents in writing, TSI Medical will operate its business
substantially as presently operated and only in the ordinary course and in
compliance with all applicable laws, and use its best efforts to preserve intact
its good reputation and present business organization and to preserve its
relationships with persons having business dealings with it.

7.6 Certain Acts Prohibited - TSI Medical. Except as expressly contemplated by
this Agreement, between the date of this Agreement and the Closing Date, TSI
Medical will not, without the prior written consent of Relay Mines:

(a) amend its memorandum and articles, by-laws or other organizational
documents;

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

(b) incur any liability or obligation other than in the ordinary course of
business or encumber or permit the encumbrance of any properties or assets of
TSI Medical, except as disclosed in a Schedule to this Agreement;

(c) dispose of or contract to dispose of any TSI Medical property or assets
except in the ordinary course of business consistent with past practice;

(d) issue, deliver, sell, pledge or otherwise encumber or subject to any lien
any shares of the TSI Medical Common Stock, or any rights, warrants or options
to acquire, any such shares, voting securities or convertible securities;

(e) (i) declare, set aside or pay any dividends on, or make any other
distributions in respect of the TSI Medical Common Stock, or (ii) split, combine
or reclassify any TSI Medical Common Stock or issue or authorize the issuance of
any other securities in respect of, in lieu of or in substitution for shares of
TSI Medical Common Stock; or

(f) materially increase benefits or compensation expenses of TSI Medical, other
than as contemplated by the terms of any employment agreement in existence on
the date of this Agreement, increase the cash compensation of any director,
executive officer or other key employee or pay any benefit or amount not
required by a Plan or arrangement as in effect on the date of this Agreement to
any such person.

7.7 Certain Acts Prohibited - Relay Mines. Except as expressly contemplated by
this Agreement and the Exelar Medical Funding Agreement, between the date of
this Agreement and the Closing Date, Relay Mines will not, without the prior
written consent of TSI Medical:

(a) amend its certificate of incorporation, by-laws or other organizational
documents;

(b) incur any liability or obligation other than in the ordinary course of
business or encumber or permit the encumbrance of any properties or assets of
Relay Mines, except as disclosed in a Schedule to this Agreement;

(c) dispose of or contract to dispose of any Relay Mines property or assets
except in the ordinary course of business consistent with past practice;

(d) issue or sell shares of Relay Mines Stock, or any rights, warrants or
options to acquire, any such shares, voting securities or convertible
securities, other than in the Relay Mines Private Placement;

(e) (i) declare, set aside or pay any dividends on, or make any other
distributions in respect of the Relay Mines Stock, or (ii) split, combine or
reclassify any Relay Mines Stock or issue or authorize the issuance of any other
securities in respect of, in lieu of or in substitution for shares of Relay
Mines Stock; or

(f) materially increase benefits or compensation expenses of Relay Mines, other
than as contemplated by the terms of any employment agreement in existence on
the date of this Agreement, increase the cash compensation of any director,
executive officer or other key employee or pay any benefit or amount not
required by a Plan or arrangement as in effect on the date of this Agreement to
any such person.

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

7.8 Shareholders Meeting. As soon as is practical after execution of this
Agreement, TSI Medical will prepare and deliver a Notice of Meeting in
connection with the approval of the shareholders of TSI Medical of the Merger
(the "Notice of Meeting'). Relay Mines will provide to TSI Medical all
information relating to Relay Mines and Relay Sub as reasonably required to
prepare the Notice of Meeting in compliance with applicable corporate laws. TSI
Medical will provide a copy of the Notice of Meeting to Relay Mines and its
legal counsel for their review and comment prior to delivery to the shareholders
of TSI Medical. TSI Medical will use its commercially reasonable efforts to
finalize the Notice of Meeting and obtain the approval of the shareholders of
TSI Medical to the Merger. TSI Medical will ensure the meeting is conducted in
accordance with applicable laws.

7.9 Public Announcements. Relay Mines and TSI Medical each agree that they will
not release or issue any reports or statements or make any public announcements
relating to this Agreement or the Merger contemplated herein without the prior
written consent of the other party, except as may be required upon written
advice of counsel to comply with applicable laws or regulatory requirements
after consulting with the other party hereto and seeking their consent to such
announcement.

7.10 Relay Mines Board of Directors. Immediately upon the Closing, the current
directors of Relay Mines will adopt resolutions appointing a new board of
directors for Relay Mines consisting of three (3) members, Logan B. Anderson,
Harold C. Moll and Peter Hogendoorn. Relay Mines will prepare and file a
Schedule 14F information statement with the SEC as required under the Exchange
Act in connection with the change of directors arising in connection with the
completion of the Merger.

7.11 Relay Mines Name Change. Relay Mines agrees that it will change its
corporate name to "XLR Medical Corp. ', which name change will be effected by
merging the Relay Sub into Relay Mines. If the Merger is not consummated for any
reason, Relay Mines will not proceed with the change of its corporate name to
"XLR Medical Corp.'. TSI Medical acknowledges that completion of the name change
is not a condition precedent to completion of the Merger.

ARTICLE 8.
CLOSING

8.1 Closing. The Closing shall take place on the Closing Date at the offices of
the lawyers for TSI Medical or at such other location as agreed to by the
parties. Notwithstanding the location of the Closing, each party agrees that the
Closing may be completed by the exchange of undertakings between the respective
legal counsel for TSI Medical and Relay Mines, provided such undertakings are
satisfactory to each party's respective legal counsel.

8.2 Closing Deliveries of TSI Medical. At Closing, TSI Medical will deliver or
cause to be delivered the following, fully executed and in form and substance
reasonably satisfactory to Relay Mines: (a) copies of all resolutions and/or
consent actions adopted by or on behalf of the boards of directors of TSI
Medical evidencing approval of this Agreement and the Merger; (b) the
certificate and attached documents required by Section 6.1(d) of this Agreement;
(c) a certificate of an officer of TSI Medical, dated as of Closing, certifying
that (a) each covenant and obligation of TSI Medical has been complied with, and
(b) each representation, warranty and covenant of TSI Medical is true and
correct at the Closing as if made on and as of the Closing;

(d) the Articles of Merger duly executed by TSI Medical and any other TSI
Medical Merger Documents, each duly executed by TSI Medical, as required to give
effect to the Merger; and

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

(e) a copy of the Minutes of the Shareholders Meeting agreeing to the Merger.

8.3 Closing Deliveries of Relay Mines. At Closing, Relay Mines will deliver or
cause to be delivered the following, fully executed and in form and substance
reasonably satisfactory to TSI Medical:

(a) copies of all resolutions and/or consent actions adopted by or on behalf of
the boards of directors of Relay Mines and the shareholder and directors of
Relay Sub evidencing approval of this Agreement and the Merger;

(b) a certificate of an officer of Relay Mines, dated as of Closing, certifying
that (a) each covenant and obligation of Relay Mines has been complied with, and
(b) each representation, warranty and covenant of Relay Mines is true and
correct at the Closing as if made on and as of the Closing;

(c) a certificate of an officer of Relay Sub, dated as of Closing, certifying
that (a) each covenant and obligation of Relay Sub has been complied with, and
(b) each representation, warranty and covenant of Relay Sub is true and correct
at the Closing as if made on and as of the Closing;

(d) the certificate and attached documents required by Section 6.2(d) of this
Agreement;

(e) the Articles of Merger duly executed by Relay Sub and any other Relay Mines
Merger Documents, each duly executed by Relay Mines and Relay Sub, as required
to give effect to the Merger;

(f) the resolution required by Section 6.2(n) of this Agreement;

(g) evidence of the surrender of stock as required by Section 6.2(o) of this
Agreement;

(h) the minute books and all corporate records of Relay Mines; and

(i) a list of all bank, trust, savings, checking or other accounts of Relay
Mines.

ARTICLE 9.
TERMINATION

9.1 Termination. This Agreement may be terminated at any time prior to the
Closing Date contemplated hereby by:

(a) mutual agreement of Relay Mines, Relay Sub and TSI Medical;

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

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

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

(d) Relay Mines or TSI Medical, if the Merger contemplated by this Agreement has
not been consummated prior to August 31, 2004, unless the parties agree to
extend such date; or

(e) Relay Mines or TSI Medical if any permanent injunction or other order of a
governmental entity of competent authority preventing the consummation of the
Merger contemplated by this Agreement has become final and nonappealable.

9.2 Effect of Termination. In the event of the termination of this Agreement as
provided in Section 9.1, 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 10.
INDEMNIFICATION; REMEDIES; SURVIVAL

10.1 Certain Definitions. For the purposes of this Article 10, the terms "Loss'
and "Losses' means any and all demands, claims, actions or causes of action,
assessments, losses, damages. liabilities, costs, and expenses, including
without limitation, interest, penalties, fines and reasonable attorneys,
accountants and other professional fees and expenses, but excluding any
indirect, consequential or punitive damages suffered by Relay Mines or TSI
Medical including damages for lost profits or lost business opportunities.

10.2 Agreement of TSI Medical to Indemnify. TSI Medical will indemnify, defend,
and hold harmless Relay Mines and Relay Sub, its respective officers, directors,
shareholders, employees and affiliates from, against, and in respect of any and
all Losses asserted against, relating to, imposed upon, or incurred by Relay
Mines and Relay Sub by reason of, resulting from, based upon or arising out of:

(a) the breach by TSI Medical of any representation or warranty of TSI Medical
contained in or made pursuant to this Agreement, or certificate or instrument
delivered pursuant to this Agreement;

(b) the breach or partial breach by TSI Medical of any covenant or agreement of
TSI Medical made in or pursuant to this Agreement, or other certificate or
instrument delivered pursuant to this Agreement.

10.3 Agreement of Relay Mines to Indemnify. Relay Mines and Relay Sub will
indemnify, defend, and hold harmless TSI Medical from, against, for, and in
respect of any and all Losses asserted against, relating to, imposed upon, or
incurred by TSI Medical by reason of, resulting from, based upon or arising out
of:

(a) the breach by Relay Mines or Relay Sub of any representation or warranty of
Relay Mines or Relay Sub contained in or made pursuant to this Agreement, any
Relay Mines Merger Document or certificate or instrument delivered pursuant to
this Agreement;

(b) the breach or partial breach by Relay Mines or Relay Sub of any covenant or
agreement of Relay Mines or Relay Sub made in or pursuant to this Agreement, or
any Relay Mines Merger Document or other certificate or instrument delivered
pursuant to this Agreement.

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

ARTICLE 11.
MISCELLANEOUS PROVISIONS

11.1 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 six (6) months after
the Closing Date.

11.2 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.

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

11.4 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 Merger contemplated hereby, including all fees and expenses of
agents, representatives, counsel, and accountants.

11.5 Entire Agreement. This Agreement, the exhibits, schedules attached hereto
and the other Merger 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.

11.6 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 or registered or certified mail
(return receipt requested), postage prepaid, to the parties at the following
addresses (or at such other address for a party as will be specified by like
notice):

If to TSI Medical:

TSI MEDICAL CORP.
Suite 202, 810 Peace Portal Drive
Blaine, Washington 98230
Attention: Derek R. Van Laare, President
Telephone: (604) 726-0880
Facsimile: (508) 632-7694
E-Mail: dvanlaare@telus.net

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

Stephen F.X. O'Neill, Esq.
O'Neill Law Group PLLC
Suite 1010, 435 Martin Street
Blaine, Washington 98230
Telephone: (330) 360-3300
Facsimile: (330) 332-2291
E-Mail: son@stockslaw.com

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

If to Relay Mines:

RELAY MINES LIMITED
1040 West Georgia Street, Suite 1160
Vancouver, British Columbia
Canada V6E 4H1
Attention: Carlo Civelli, President
Telephone: (604) 605-0885
Facsimile: (604) 605-0886
E-Mail: maryna@callinan.com

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

Conrad C. Lysiak, Esq.
601 West First Avenue, Suite 503
Spokane, Washington 99201
Telephone: (509) 624-1475
Facsimile: (509) 747-1770
E-mail: cclysiak@qwest.net

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, (b) in the
case of a fax, when the party sending such fax has received electronic
confirmation of its delivery, (c) in the case of delivery by
internationally-recognized express courier, on the business day following
dispatch and (d) in the case of mailing, on the fifth business day following
mailing.

11.7 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.

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

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

11.10 Governing Law. This Agreement will be governed by and construed in
accordance with the laws of the Province of British Columbia applicable to
contracts made and to be performed therein.

11.11 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.

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

11.12 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.

11.13 Fax Execution. This Agreement may be executed by delivery of executed
signature pages by fax and such fax execution will be effective for all
purposes.

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

IN WITNESS WHEREOF

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

RELAY MINES LIMITED

a Nevada corporation by its authorized signatory:

/s/ Carlo Civelli

Signature of Authorized Signatory

Carlo Civelli
Name of Authorized Signatory

Director
Position of Authorized Signatory

TSI MEDICAL CORP.

a Nevada corporation by its authorized signatory:

/s/ Derek Van Laare

Signature of Authorized Signatory

Derek Van Laare
Name of Authorized Signatory

President
Position of Authorized Signatory

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

SIGNED, SEALED AND DELIVERED
BY CARLO CIVELLI

in the presence of:

/s/ Alba Grasso

Signature of Witness

Alba Grasso
Name of Witness

/s/ Carlo Civelli

CARLO CIVELLI

Collefresco 210
Address of Witness
Montalcino, Italy

SIGNED, SEALED AND DELIVERED
BY BRUNO MOSIMANN

in the presence of:

/s/ Regine Schoch

Signature of Witness

Regine Schoch
Name of Witness

/s/ Bruno Mosimann

BRUNO MOSIMANN

Albisriederstr. 164
Address of Witness
CH-8040 Zurich / Switzerland

TSI MED ACQUISITION CORP.

a Nevada corporation by its authorized signatory:

/s/ Reg Handford

Signature of Authorized Signatory

Reg Handford
Name of Authorized Signatory

President
Position of Authorized Signatory

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

SCHEDULE 2.1
TO THE AGREEMENT AND PLAN OF MERGER
AMONG CIVELLI, MOSIMANN, TSI MEDICAL CORP.,
RELAY MINES LIMITED AND TSI MED ACQUISITION CORP.
ARTICLES OF MERGER

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

DEAN HELLER
Secretary of State
204 North Carson Street, Suite 1
Carson City, Nevada 89701-4299
(775) 684 5708
Website: secretaryofstate.biz

Articles of Merger
(PURSUANT TO NRS 92A.200)

Page 1

Important: Read attached instructions before completing form.

(Pursuant to Nevada Revised Statutes Chapter 92A)
(excluding 92A.200(4b))
SUBMIT IN DUPLICATE

1) Name and jurisdiction of organization of each constituent entity (NRS
92A.200). If there are more and attach an 81/2" x 11'' blank sheet containing
the than four merging entities, check box required information for each
additional entity.

TSI MEDICAL CORP.

Name of merging entity

 

Nevada
Jurisdiction

Corporation
Entity type *

 

Name of merging entity

 

 

Jurisdiction

Entity type *

 

Name of merging entity

 

Jurisdiction

Entity type *

 

Name of merging entity

 

Jurisdiction

Entity type *

 

and,

TSI MED ACQUISITION CORP.

Name of surviving entity

 

Nevada
Jurisdiction

Corporation
Entity type *

* Corporation, non-profit corporation, limited partnership, limited-liability
company or business trust.

This form must be accompanied by appropriate fees. See attached fee schedule.

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

DEAN HELLER
Secretary of State
204 North Carson Street, Suite 1
Carson City, Nevada 89701-4299
(775) 684 5708
Website: secretaryofstate.biz

Articles of Merger
(PURSUANT TO NRS 92A.200)

Page 2

Important: Read attached instructions before completing form.

2) Forwarding address where copies of process may be sent by the Secretary of
State of Nevada (if a foreign entity is the survivor in the merger - NRS 92A.1
90):

Attn:

c/o:

3) (Choose one)

[ x ]

The undersigned declares that a plan of merger has been adopted by each
constituent entity (NRS 92A.200).

[   ]

The undersigned declares that a plan of merger has been adopted by the parent
domestic entity (NRS 92A.180)

4) Owner's approval (NRS 92A.200)(options a, b, or c must be used, as
applicable, for each entity) (if and attach an 8 1/2" x 11'' blank sheet there
are more than four merging entities, check box containing the required
information for each additional entity):

(a) Owner's approval was not required from

Name of merging entity, if applicable

Name of merging entity, if applicable

Name of merging entity, if applicable

Name of merging entity, if applicable

and, or;

Name of surviving entity, if applicable

This form must be accompanied by appropriate fees. See attached fee schedule.

 

 

 

 

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

DEAN HELLER
Secretary of State
204 North Carson Street, Suite 1
Carson City, Nevada 89701-4299
(775) 684 5708
Website: secretaryofstate.biz

Articles of Merger
(PURSUANT TO NRS 92A.200)

Page 3

Important: Read attached instructions before completing form.

Important., Read attached instructions before completing form.

(b) The plan was approved by the required consent of the owners of *:

TSI MEDICAL CORP.
Name of merging entity, if applicable

Name of merging entity, if applicable

Name of merging entity, if applicable

Name of merging entity, if applicable

and, or;

TSI MED ACQUISITION CORP.
Name of surviving entity, if applicable

* Unless otherwise provided in the certificate of trust or governing instrument
of a business trust, a merger must be approved by all the trustees and
beneficial owners of each business trust that is a constituent entity in the
merger.

This form must be accompanied by appropriate fees. See attached fee schedule.

 

 

 

 

 

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

DEAN HELLER
Secretary of State
204 North Carson Street, Suite 1
Carson City, Nevada 89701-4299
(775) 684 5708
Website: secretaryofstate.biz

Articles of Merger
(PURSUANT TO NRS 92A.200)

Page 4

Important: Read attached instructions before completing form.

(c) Approval of plan of merger for Nevada non-profit corporation (NRS 92A.160):

The plan of merger has been approved by the directors of the corporation and by
each public officer or other person whose approval of the plan of merger is
required by the articles of incorporation of the domestic corporation.

Name of merging entity, if applicable

Name of merging entity, if applicable

Name of merging entity, if applicable

Name of merging entity, if applicable

and, or;

Name of surviving entity, if applicable

This form must be accompanied by appropriate fees. See attached fee schedule.

 

 

 

 

 

 

 

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

DEAN HELLER
Secretary of State
204 North Carson Street, Suite 1
Carson City, Nevada 89701-4299
(775) 684 5708
Website: secretaryofstate.biz

Articles of Merger
(PURSUANT TO NRS 92A.200)

Page 5

Important: Read attached instructions before completing form.

5) Amendments, if any, to the articles or certificate of the surviving entity.
Provide article numbers, if available. (NRS 92A.200)*:

 

 

 

6) Location of Plan of Merger (check a or b):

[   ]

(a) The entire plan of merger is attached;

 

or,

[ x ]

(b) The entire plan of merger is on file at the registered office of the
surviving corporation, limited-liability company or business trust, or at the
records office address if a limited partnership, or other place of business of
the surviving entity (NRS 92A.200).

7) Effective date (optional)":

* Amended and restated articles may be attached as an exhibit or integrated into
the articles of merger. Please entitle them ''Restated'' or ''Amended and
Restated,'' accordingly. The form to accompany restated articles prescribed by
the secretary of state must accompany the amended and/or restated articles.
Pursuant to NRS 92A.180 (merger of subsidiary into parent - Nevada parent owning
90% or more of subsidiary), the articles of merger may not contain amendments to
the constituent documents of the surviving entity except that the name of the
surviving entity may be changed.

** A merger takes effect upon filing the articles of merger or upon a later date
as specified in the articles, which must not be more than 90 days after the
articles are filed (NRS 92A.240).

This form must be accompanied by appropriate fees. See attached fee schedule.

 

 

 

 

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

DEAN HELLER
Secretary of State
204 North Carson Street, Suite 1
Carson City, Nevada 89701-4299
(775) 684 5708
Website: secretaryofstate.biz

Articles of Merger
(PURSUANT TO NRS 92A.200)

Page 6

Important: Read attached instructions before completing form.

8) Signatures - Must be signed by: An officer of each Nevada corporation; All
general partners of each Nevada limited partnership; All general partners of
each Nevada limited partnership; A manager of each Nevada limited-liability
company with managers or all the members if there are no managers; A trustee of
each Nevada business trust (NRS 92A.230)* and attach an 8 %'' x 1 1 '' blank

(if there are more than four merging entities, check box sheet containing the
required information for each additional entity.):

TSI MEDICAL CORP.

Name of merging entity

 

President

Signature

Title

Date

 

Name of merging entity

 

 

Signature

Title

Date

 

Name of merging entity

 

 

Signature

Title

Date

TSI MED ACQUISITION CORP.

Name of merging entity

 

President

Signature

Title

Date

* The articles of merger must be signed by each foreign constituent entity in
the manner provided by the law governing it (NRS 92A.230). Additional signature
blocks may be added to this page or as an attachment, as needed.

IMPORTANT:

Failure to include any of the above information and submit the proper fees may
cause this filing to be rejected.

This form must be accompanied by appropriate fees. See attached fee schedule.

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

SCHEDULE 2.9A
TO THE AGREEMENT AND PLAN OF MERGER
AMONG CIVELLI, MOSIMANN, TSI MEDICAL CORP.,
RELAY MINES LIMITED AND TSI MED ACQUISITION CORP.

CERTIFICATE OF NON-U.S. SHAREHOLDER
OF RELAY MINES LIMITED

In connection with the issuance of common stock ("Relay Mines Common Stock") of
Relay Mines Limited, a Nevada corporation (" Relay Mines"), to the undersigned,
pursuant to that certain Agreement and Plan of Merger dated August 12, 2004
among Relay Mines, TSI Med Acquisition Corp., a Nevada corporation, Carlo
Civelli, Bruno Mosimann and TSI Medical Corp., a Nevada corporation (the
"Target"), the undersigned hereby agrees, represents and warrants that he, she
or it:

1. is not a "U.S. Person" as such term is defined by Rule 902 of Regulation S
under the United States Securities Act of 1933, as amended ("U.S. Securities
Act") (the definition of which includes, but is not limited to, an individual
resident in the U.S. and an estate or trust of which any executor or
administrator or trust, respectively is a U.S. Person and any partnership or
corporation organized or incorporated under the laws of the U.S.);

2. was outside the U.S. when the shareholders of the Target approved of the
Merger (as such is defined in the Agreement and Plan of Merger);

3. the Relay Mines Common Stock is not being acquired, directly or indirectly,
for the account or benefit of a U.S. Person or a person in the United States;

4. acknowledges and agrees not to engage in hedging transactions with regard to
the Relay Mines Common Stock prior to the expiration of the one (1) year
distribution compliance period set forth in Rule 903(b)(3) of Regulation S under
the U.S. Securities Act;

5. acknowledges and agrees that Relay Mines shall refuse to register any trans
fer of the Relay Mines Common Stock not made in accordance with the provisions
of Regulation S, pursuant to registration under the U.S. Securities Act, or
pursuant to an available exemption from registration under the U.S. Securities
Act;

6. understands and agrees that the Relay Mines Common Stock will bear the
following legends:

"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 (THE "ACT"), AND HAVE BEEN ISSUED IN RELIANCE UPON AN EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE ACT PROVIDED BY REGULATION S PROMULGATED
UNDER THE ACT. SUCH SECURITIES MAY NOT BE REOFFERED FOR SALE OR RESOLD OR
OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S,
PURSUANT TO AN EFFECTIVE REGISTRATION UNDER THE ACT, OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM REGISTRATION UNDER THE ACT. HEDGING TRANSACTIONS INVOLVING THE
SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE ACT."

IN WITNESS WHEREOF, I have executed this Certificate of Non-U.S. Shareholder.

Signature

Date

Print Name

Title (if Applicable)

Address

 

 

 

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

SCHEDULE 2.9B
TO THE AGREEMENT AND PLAN OF MERGER
AMONG CIVELLI, MOSIMANN, TSI MEDICAL CORP.,
RELAY MINES LIMITED AND TSI MED ACQUISITION CORP.

CERTIFICATE OF U.S. SHAREHOLDER
OF RELAY MINES LIMITED

In connection with the issuan ce of common stock ("Relay Mines Common Stock") of
Relay Mines Limited, a Nevada corporation (" Relay Mines"), to the undersigned,
pursuant to that certain Agreement and Plan of Merger dated August 12, 2004
among Relay Mines, TSI Med Acquisition Corp., a Nevada corporation, Carlo
Civelli, Bruno Mosimann and TSI Medical Corp., a Nevada corporation (the
"Target"), the undersigned hereby agrees, represents and warrants that he, she
or it:

1. Acquired Entirely for Own Account.

The undersigned represents and warrants that he, she or it is acquiring the
Relay Mines Common Stock solely for the undersigned's own account for investment
and not with a view to or for sale or distribution of the Relay Mines Common
Stock or any portion thereof and without any present intention of selling,
offering to sell or otherwise disposing of or distributing the Relay Mines
Common Stock or any portion thereof in any transaction other than a transaction
complying with the registration requirements of the U.S. Securities Act of 1933,
as amended (the "Securities Act"), and applicable state and provincial
securities laws, or pursuant to an exemption therefrom. The undersigned also
represents that the entire legal and beneficial interest of the Relay Mines
Common Stock that he, she or it is acquiring is being acquired for, and will be
held for, the undersigned's account only, and neither in whole nor in part for
any other person or entity.

2. Information Concerning Relay Mines.

The undersigned acknowledges that he, she or it has received all such
information as the undersigned deems necessary and appropriate to enable him,
her or it to evaluate the financial risk inherent in making an investment in the
Relay Mines Common Stock, including but not limited to Relay Mines' Form 10-KSB
filed with the U.S. Securities and Exchange Commission, and the documents and
materials included therewith, which includes a description of the risks inherent
in an investment in Relay Mines and an Information Statement in connection with
the Merger (as such term is defined in the Agreement and Plan of Merger) (the
"Disclosure Documents"). The undersigned further acknowledges that he, she or it
has received satisfactory and complete information concerning the business and
financial condition of Relay Mines in response to all inquiries in respect
thereof.

3. Economic Risk and Suitability.

The undersigned represents and warrants as follows:

(a) the undersigned realizes that the Relay Mines Common Stock involves a high
degree of risk and are a speculative investment, and that he, she or it is able,
without impairing the undersigned's financial condition, to hold the Relay Mines
Common Stock for an indefinite period of time;

(b) the undersigned recognizes that there is no assurance of future profitable
operations and that investment in Relay Mines involves substantial risks, and
that the undersigned has taken full cognizance of and understands all of the
risk factors related to the Relay Mines Common Stock;

(c) the undersigned has carefully considered and has, to the extent the
undersigned believes such discussion necessary, discussed with the undersigned's
professional legal, tax and financial advisors the suitability of an investment
in Relay Mines for the particular tax and financial situation of the undersigned
and that the undersigned and/or the undersigned's advisors have determined that
the Relay Mines Common Stock is a suitable investment for the undersigned;

(d) the financial condition and investment of the undersigned are such that he,
she or it is in a financial position to hold the Relay Mines Common Stock for an
indefinite period of time and to bear the economic risk of, and withstand a
complete loss of, the value of the Relay Mines Common Stock;

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

(e) the undersigned alone, or with the assistance of professional advisors, has
such knowledge and experience in financial and business matters that the
undersigned is capable of evaluating the merits and risks of acquiring the Relay
Mines Common Stock, or has a pre-existing personal or business relationship with
Relay Mines or any of its officers, directors, or controlling persons of a
duration and nature that enables the undersigned to be aware of the character,
business acumen and general business and financial circumstances of Relay Mines
or such other person;

(f) the undersigned has carefully read the Disclosure Documents and Relay Mines
has made available to the undersigned or the undersigned's advisors all
information and documents requested by the undersigned relating to investment in
the Relay Mines Common Stock, and has provided answers to the undersigned's
satisfaction to all of the undersigned's questions concerning Relay Mines;

(g) if the undersigned is a partnership, trust, corporation or other entity: (1)
it was not organized for the purpose of acquiring the Relay Mines Common Stock
(or all of its equity owners are "accredited investors" as defined in Section 6
below); (2) it has the power and authority to execute this Certificate and the
person executing said document on its behalf has the necessary power to do so;
(3) its principal place of business and principal office are located within the
state set forth in its address below; and (4) all of its trustees, partners
and/or shareholders, whichever the case may be, are bona fide residents of said
state;

(h) the undersigned understands that neither Relay Mines nor any of its officers
or directors has any obligation to register the Relay Mines Common Stock under
any federal or other applicable securities act or law;

(i) the undersigned has relied solely upon the Disclosure Documents, advice of
his or her representatives, if any, and independent investigations made by the
undersigned and/or his or her the undersigned representatives, if any, in making
the decision to acquire the Relay Mines Common Stock and acknowledges that no
representations or agreements other than those set forth in the Disclosure
Documents have been made to the undersigned in respect thereto;

(j) all information which the undersigned has provided concerning the
undersigned himself, herself or itself is correct and complete as of the date
set forth below, and if there should be any material change in such information
prior to the issuance of the Relay Mines Common Stock, he, she or it will
immediately provide such information to Relay Mines;

(k) the undersigned confirms that the undersigned has received no general
solicitation or general advertisement and has attended no seminar or meeting
(whose attendees have been invited by any general solicitation or general
advertisement) and has received no advertisement in any newspaper, magazine, or
similar media, broadcast on television or radio regarding acquiring the Relay
Mines Common Stock; and

(l) the undersigned is at least 21 years of age and is a citizen of the United
States residing at the address indicated below.

4. Restricted Securities.

The undersigned acknowledges that Relay Mines has hereby disclosed to the
undersigned in writing:

(a) the Relay Mines Common Stock that the undersigned is acquiring have not been
registered under the Securities Act or the securities laws of any state of the
United States, and such securities must be held indefinitely unless a transfer
of them is subsequently registered under the Securities Act or an exemption from
such registration is available; and

(b) Relay Mines will make a notation in its records of the above described
restrictions on transfer and of the legend described below.

5. Legends.

The undersigned agrees that the Relay Mines Common Stock will bear the following
legends:

 

 

 

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

"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 (THE "ACT"), AND HAVE BEEN ISSUED IN RELIANCE UPON AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT PROVIDED BY REGULATION D
PROMULGATED UNDER THE ACT. SUCH SECURITIES MAY NOT BE REOFFERED FOR SALE OR
RESOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
UNDER THE ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE
ACT."

6. Suitable Investor.

In order to establish the qualification of the undersigned to acquire the Relay
Mines Common Stock, the information requested in either subsection 6(a) or (b)
below must be supplied.

(a) The undersigned is an "accredited investor," as defined in Securities and
Exchange Commission (the "SEC") Rule 501. An "accredited investor" is one who
meets any of the requirements set forth below. The undersigned represents and
warrants that the undersigned falls within the category (or categories) marked.
PLEASE INDICATE EACH CATEGORY OF ACCREDITED INVESTOR THAT YOU, THE UNDERSIGNED,
SATISFY, BY PLACING AN "X" ON THE APPROPRIATE LINE BELOW.

_____

Category 1.

A bank, as defined in Section 3(a)(2) of the Securities Act, whether acting in
its individual or fiduciary capacity; or

_____

Category 2.

A savings and loan association or other institution as defined in Section 3(a)
(5) (A) of the Securities Act, whether acting in its individual or fiduciary
capacity; or

_____

Category 3.

A broker or dealer registered pursuant to Section 15 of the Securities Exchange
Act of 1934; or

_____

Category 4.

An insurance company as defined in Section 2(13) of the Securities Act; or

_____

Category 5.

An investment company registered under the Investment Company Act of 1940; or

_____

Category 6.

A business development company as defined in Section 2(a) (48) of the Investment
Company Act of 1940; or

_____

Category 7.

A small business investment company licensed by the U.S. Small Business
Administration under Section 301(c) or (d) of the Small Business Investment Act
of 1958; or

_____

Category 8.

A plan established and maintained by a state, its political subdivision or any
agency or instrumentality of a state or its political subdivisions, for the
benefit of its employees, with assets in excess of $5,000,000; or

_____

Category 9.

An employee benefit plan within the meaning of the Employee Retirement Income
Security Act of 1974 in which the investment decision is made by a plan
fiduciary, as defined in Section 3(21) of such Act, which is either a bank,
savings and loan association, insurance company or registered investment
advisor, or an employee benefit plan with total assets in excess of $5,000,000
or, if a self-directed plan, the investment decisions are made solely by persons
who are accredited investors; or

_____

Category 10.

A private business development company as defined in Section 202(a) (22) or the
Investment Advisers Act of 1940; or

_____

Category 11.

An organization described in Section 501(c)(3) of the Internal Revenue Code, a
corporation, a Massachusetts or similar business trust, or a partnership, not
formed for the specific purpose of acquiring the Interest, with total assets in
excess of $5,000,000; or

_____

Category 12.

A director or executive officer of Relay Mines; or

_____

Category 13.

A natural person whose individual net worth, or joint net worth with that
person's spouse, at the time of this purchase exceeds $1,000,000; or

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

_____

Category 14.

A natural person who had an individual income in excess of $200,000 in each of
the two most recent years or joint income with that person's spouse in excess of
$300,000 in each of those years and has a reasonable expectation of reaching the
same income level in the current year;or

_____

Category 15.

A trust, with total assets in excess of $5,000,000, not formed for the specific
purpose of acquiring the Interest, whose purchase is directed by a sophisticated
person as described in SEC Rule 506(b)(2)(ii); or

_____

Category 16.

An entity in which all of the equity owners are accredited investors.

(b) The undersigned is not an accredited investor and meets the requirements set
forth below. PLEASE INDICATE THAT YOU, THE UNDERSIGNED, SATISFY THESE
REQUIREMENTS BY PLACING AN "X" ON THE LINE BELOW.

_____

The undersigned, either alone or with the undersigned's representative, has such
knowledge, skill and experience in business, financial and investment matters so
that the undersigned is capable of evaluating the merits and risks of an
investment in the Relay Mines Common Stock. To the extent necessary, the
undersigned has retained, at the undersigned's own expense, and relied upon,
appropriate professional advice regarding the investment, tax and legal merits
and consequences of owning the Relay Mines Common Stock. In addition, the amount
of the undersigned's investment in the Relay Mines Common Stock does not exceed
ten percent (10%) of the undersigned's net worth. The undersigned agrees to
furnish any additional information requested to assure compliance with
applicable federal and state securities laws in connection with acquiring the
Relay Mines Common Stock.

7. Understandings.

The undersigned understands, acknowledges and agrees that:

(a) no federal or state agency has made any finding or determination as to the
accuracy or adequacy of the Disclosure Documents or as to the fairness of the
terms of this offering for investment nor any recommendation or endorsement of
the Relay Mines Common Stock;

(b) this offering is intended to be exempt from registration under the
Securities Act by virtue of Section 4(2) of the Securities Act, which is in part
dependent upon the truth, completeness and accuracy of the statements made by
the undersigned herein;

(c) the Relay Mines Common Stock is "restricted securities" in the U.S. under
the Securities Act. There can be no assurance that the undersigned will be able
to sell or dispose of the Relay Mines Common Stock. It is understood that in
order not to jeopardize this offering's exempt status under Section 4(2) of the
Act, any transferee may, at a minimum, be required to fulfill the investor
suitability requirements thereunder;

(d) the representations, warranties and agreements of the undersigned contained
herein and in any other writing delivered in connection with the transactions
contemplated hereby shall be true and correct in all respects on and as of the
date the Relay Mines Common Stock is acquired as if made on and as of such date;
and

(e) THE RELAY MINES COMMON STOCK MAY NOT BE TRANSFERRED, RESOLD OR OTHERWISE
DISPOSED OF EXCEPT AS PERMITTED UNDER THE SECURITIES ACT AND ANY OTHER
APPLICABLE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. THE
UNDERSIGNED SHOULD BE AWARE THAT THEY WILL BE REQUIRED TO BEAR THE FINANCIAL
RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.

IN WITNESS WHEREOF, I have executed this Certificate of U.S. Shareholder.

Signature

Date

Print Name

Title (if Applicable)

Address

 

 

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

SCHEDULE 3.3
TO THE AGREEMENT AND PLAN OF MERGER
AMONG CIVELLI, MOSIMANN, TSI MEDICAL CORP.,
RELAY MINES LIMITED AND TSI MED ACQUISITION CORP.

CAPITALIZATION OF TSI MEDICAL

The aggregate number of shares which TSI Medical Corp. shall have authority to
issue shall consist of 100,000,000 shares of common stock, par value $0.001.

There are 9,492,667 shares of common stock are issued and outstanding.

There are 1,450,000 outstanding options to purchase shares of common stock at an
exercise price of $0.50 per share expiring May 31, 2009 and 54,367 outstanding
warrants to purchase shares of common stock at a price of $0.75 per share
expiring October 1, 2006.

The Company has entered into a Technology Acquisition and Funding Agreement
dated March 22, 2004 (the "TFA Agreement') with Exelar Corporation ("Exelar')
and Exelar Medical Corporation ("EMC') with respect to the funding of EMC. Under
the terms of the TFA Agreement following completion of certain funding by TSI
Medical, Exelar will have the right to transfer its interest in EMC to TSI
Medical in exchange for shares of TSI Medical's common stock representing 49% of
the outstanding shares of TSI Medical.

TSI Medical is obligated to issue 300,000 shares of its common stock to Imaging
Technology Ventures, Inc. of Hillsborough, California by way of finder's fee in
connection with its agreement with Exelar.

Other than the above, there are no outstanding options, warrants, subscriptions,
conversion rights, or other rights, agreements or commitments obligating TSI
Medical Corp. to issue additional shares of common stock or preferred stock, or
any other securities convertible into, exchangeable for, or evidencing the right
to subscribe for or acquire from TSI Medical Corp. any shares of common stock or
preferred stock.

There are no agreements purporting to restrict the transfer of any shares of TSI
Medical Corp., no voting agreement, voting trusts, or other arrangements
restricting or affecting the voting of the shares of TSI Medical Corp.

 

 

 

 

 

 

 

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

SCHEDULE 3.4
TO THE AGREEMENT AND PLAN OF MERGER
AMONG CIVELLI, MOSIMANN, TSI MEDICAL CORP.,
RELAY MINES LIMITED AND TSI MED ACQUISITION CORP.
TSI MEDICAL SUBSIDIARIES

TSI Medical has a wholly-owned subsidiary incorporated in the Province of
British Columbia, Canada called 689158 B.C. Ltd.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

SCHEDULE 3.6
TO THE AGREEMENT AND PLAN OF MERGER
AMONG CIVELLI, MOSIMANN, TSI MEDICAL CORP.,
RELAY MINES LIMITED AND TSI MED ACQUISITION CORP.
ACTIONS AND PROCEEDINGS

TSI Medical's subsidiary, 689158 B.C. Ltd., received a default notice from The
Charles F. White Corporation ("CFW') dated July 14, 2004 in connection with a
loan agreement dated as of March 8, 2004 between 689158 B.C. Ltd. and CFW. CFW
demands payment of the total indebtedness outstanding as at July 2, 2004, being
$602,121.24, plus interest accrued from July 2, 2004. The loan is guaranteed by
TSI Medical. Management of TSI Medical have been in discussions with the
principal of CFW, who has indicated to management of TSI Medical that he will be
willing to extend the payment terms for the loan. A formal extension has not yet
been concluded. TSI Medical's guarantee of the loan is secured by its 826,240
common shares of Techniscan, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

SCHEDULE 3.9
TO THE AGREEMENT AND PLAN OF MERGER
AMONG CIVELLI, MOSIMANN, TSI MEDICAL CORP.,
RELAY MINES LIMITED AND TSI MED ACQUISITION CORP.
TSI MEDICAL FINANCIAL STATEMENTS

Unaudited Financial Statements as of January 31, 2004.

Audited Financial Statements as of January 31, 2003 and 2002.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

TSI MEDICAL CORP.
(Formerly Purcell Ventures, Inc.)
(A Development Stage Company)

FINANCIAL STATEMENTS

JANUARY 31, 2004
(Unaudited)
(Stated in U.S. Dollars)

 

 

 

 

 

 

 

 

 

 

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

TSI MEDICAL CORP.
(Formerly Purcell Ventures, Inc.)
(A Development Stage Company)

BALANCE SHEET
(Unaudited)
(Stated in U.S. Dollars)

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

 

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

JANUARY 31
2004

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

 

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

JANUARY 31
2003

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

ASSETS

 

 

 

Current

 

 

 

Cash

$

6,077

 

$

32

 

Investment (Note 3)

 

385,568

 

 

-

 

Loan Receivable(Note 4)

 

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

345,000

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

 

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

 

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

 

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

 

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

 

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

$

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

736,645

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

 

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

$

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

32

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

 

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

LIABILITIES

 

 

 

 

 

 

Current

 

 

 

 

 

 

Accounts payable

$

88,875

 

$

14,705

 

Loans and advances payable (Notes 4 and 6)

 

120,000

 

 

49,100

 

Loan-C.F.White (Note 4)

 

500,000

 

 

 

 

Other Advances

 

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

79,047

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

 

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

 

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

 

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

 

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

 

 

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

787,922

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

 

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

 

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

63,805

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

 

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

SHAREHOLDERS' EQUITY (DEFICIENCY)

 

 

 

 

 

 

Share Capital

 

 

 

 

 

 

Authorized:

 

 

 

 

 

 

 

100,000,000 common shares, par value $0.001 per share

 

 

 

 

 

 

Issued and outstanding:

 

 

 

 

 

 

 

8,512,500 common shares at January 31, 2003 and

 

 

 

 

 

 

 

9,492,667 common shares at January 31, 2004

 

9,492

 

 

8,513

 

Additional paid-in capital

 

810,824

 

 

282,737

 

Deficit Accumulated During The Development Stage

 

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

(871,593)

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

 

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

 

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

(355,023)

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

 

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

 

 

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

(51,277)

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

 

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

 

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

(63,773)

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

 

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

 

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

$

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

736,645

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

 

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

$

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

32

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

 

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

2

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

TSI MEDICAL CORP.
(Formerly Purcell Ventures, Inc.)
(A Development Stage Company)

STATEMENT OF OPERATIONS AND DEFICIT
(Unaudited)
(Stated in U.S. Dollars)

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

 

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

YEAR
ENDED
JANUARY 31
2004

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

 

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

YEAR
ENDED
JANUARY 31
2003

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

 

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

INCEPTION
DECEMBER 21
2000 TO
JANUARY 31
2004

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

Expenses

 

 

 

 

 

 

Consulting

$

134,550

 

$

44,500

 

$

188,050

Management fees

 

90,000

 

 

60,000

 

 

150,000

Office administration Fees

 

 

 

 

1,500

 

 

1,500

Office and sundry

 

14,669

 

 

10,839

 

 

25,508

Interest

 

15,759

 

 

 

 

 

15,759

Professional fees

 

87,587

 

 

33,674

 

 

126,834

Public relations

 

35,992

 

 

 

 

 

35,992

Rent

 

 

 

 

750

 

 

750

Travel and promotion

 

133,128

 

 

66,187

 

 

199,315

Transfer Agent Fees

 

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

4885

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

 

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

 

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

 

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

 

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

 

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

4885

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

 

 

 

 

 

 

 

 

 

Loss Before The Following

 

516,570

 

 

217,450

 

 

748,593

Write Off Of Advances To Joint Venture

(Note 1(b))

 

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

 

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

 

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

 

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

123,000

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

 

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

 

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

123,000

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

Net Loss For The Period

 

 

 

 

340,450

 

 

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

871,593

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

Deficit Accumulated During The Development Stage, Beginning Of Period

 

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

355,023

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

 

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

 

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

14,573

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

 

 

 

Deficit Accumulated During The Development Stage, End Of Period

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

$

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

871,593

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

 

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

$

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

355,023

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

 

 

 

Basic And Diluted Loss Per Share

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

$

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

0.97

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

 

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

$

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

0.01

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

 

 

 

Weighted Average Number Of Common Shares Outstanding

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

 

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

8,990,024

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

 

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

 

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

8,422,721

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

 

 

 

3

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

TSI MEDICAL CORP.
(Formerly Purcell Ventures, Inc.)
(A Development Stage Company)

STATEMENT OF STOCKHOLDERS' (DEFICIENCY) EQUITY

January 31, 2004
(Unaudited)
(Stated in U.S. Dollars)

 

COMMON STOCK

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

 

 

 

 

NUMBER OF SHARES

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

AMOUNT

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

ADDITIONAL PAID-IN CAPITAL

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

DEFICIT

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

TOTAL

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

Balance, January 31, 2001

 

-

$

-

$

-

$

-

$

-

January 11, 2002 - Shares issued for cash at $0.001

 

5,000,000

 

5,000

 

-

 

-

 

5,000

January 29, 2002 - Shares issued for cash at $0.01

 

3,000,000

 

3,000

 

27,000

 

-

 

30,000

Net loss for the year

 

-

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

 

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

-

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

 

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

-

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

 

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

(14,573)

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

 

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

(14,573)

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

Balance, January 31, 2002

 

8,000,000

 

8,000

 

27,000

 

(14,573)

 

20,427

March 15, 2002 - Shares issued for cash at $0.50

 

250,000

 

250

 

124,750

 

-

 

125,000

April 30, 2002 - Shares issued for cash at $0.50

 

140,000

 

140

 

69,860

 

-

 

70,000

May 31, 2002 - Shares issued for cash at $0.50

 

60,500

 

61

 

30,189

 

-

 

30,250

June 25, 2002 - Shares issued for cash at $0.50

 

62,000

 

62

 

30,938

 

-

 

31,000

Net loss for the year

 

-

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

 

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

-

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

 

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

-

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

 

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

(340,450)

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

 

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

(340,450)

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

Balance, January 31, 2003

 

8,512,500

 

8,513

 

282,737

 

(355,023)

 

(63,773)

June 23, 2003 - Shares issued for cash at $0.50

432,500

432

215,818

-

216,250

September 30, 2003 Shares issued for cash at $0.75

 

547,667

 

547

 

312,269

 

 

 

312,816

Net loss for the period

 

-

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

 

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

-

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

 

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

-

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

 

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

(516,570)

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

 

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

(516,570)

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

Balance, January 31, 2004

 

9,492,667

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

$

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

9,492

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

$

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

810,824

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

$

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

(871,593)

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

$

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

(51,277)

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

 

 

 

4

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

TSI MEDICAL CORP.
(Formerly Purcell Ventures, Inc.)
(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

January 31, 2004
(Unaudited)
(Stated in U.S. Dollars)

1. NATURE OF OPERATIONS

a)

Organization

 

The Company was incorporated in the state of Nevada, U.S.A., on December 21,
2000. On June 19, 2003, the Company changed its name from Purcell Ventures, Inc.
to TSI Medical Corp.

b)

Development Stage Activities

 

The Company was originally organized to seek business opportunities in the high
technology field. In January of 2002, the Company entered into a joint venture
letter agreement for the development and marketing of a technology for
automobile air bag inflation as more particularly described below (the "Airbag
Technology').The Airbag Technology is a patented technology for automotive
airbag inflation using cool gases. The Company provided initial funding to the
Airbag Technology of $123,000 but decided not to proceed and has written the off
those advances.

 

The Company subsequently negotiated the terms of a proposed joint venture with
TechniScan, Inc. ("TechniScan') to develop, market and sell medical devices
including a breast cancer imaging system (the "SafeScan Imaging System')
employing TechniScan's proprietary inverse scattering technology (the
"Technology').The Company decided not to proceed with the TechniScan Joint
Venture and has converted the advances made into equity of TechniScan, Inc.

 

The Company on January 14, 2004 entered into a Letter of Intent with Exelar
Corporation to provide funding for the continued development of Exelar's
technology which utilizes small super conducting magnets to control therapeutic
radiation doses delivered by photon linear accelerators.The Company entered into
final agreement on March 25, 2004.(See subsequent events)

 

Since inception, the Company has suffered recurring losses and net cash outflows
from operations. The Company expects to continue to incur substantial losses to
complete the development of its business. Since its inception, the Company has
funded operations through common stock issuances and related party loans in
order to meet its strategic objectives. Management believes that sufficient
funding will be available to meet its business objectives, including anticipated
cash needs for working capital, and is currently pursuing several financing
options. However, there can be no assurance that the Company will be able to
obtain sufficient funds to continue the development of a business. As a result
of the foregoing, there exists substantial doubt about the Company's ability to
continue as a going concern. These financial statements do not include any
adjustments that might result from the outcome of this uncertainty.

 

 

 

 

 

 

5

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

TSI MEDICAL CORP.
(Formerly Purcell Ventures, Inc.)
(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

January 31, 2004
(Unaudited)
(Stated in U.S. Dollars)

2. SIGNIFICANT ACCOUNTING POLICIES

The financial statements of the Company have been prepared in accordance with
generally accepted accounting principles in the United States of America.
Because a precise determination of many assets and liabilities is dependent upon
future events, the preparation of financial statements for a period necessarily
involves the use of estimates which have been made using careful judgement.

The financial statements have, in management's opinion, been properly prepared
within reasonable limits of materiality and within the framework of the
significant accounting policies summarized below:

a)

Development Stage Company

 

The Company is a development stage company as defined in the Statements of
Financial Accounting Standards No. 7. The Company is devoting substantially all
of its present efforts to establish a new business and none of its planned
principal operations have commenced. All losses accumulated since inception have
been considered as part of the Company's development stage activities.

b)

Use of Estimates

 

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities, and disclosure of
contingent assets and liabilities at the date of the financial statements, and
the reported amounts of revenues and expenses for the reporting period. Actual
results could differ from these estimates.

c)

Income Taxes

 

The Company has adopted Statement of Financial Accounting Standards No. 109 -
"Accounting for Income Taxes' (SFAS 109). This standard requires the use of an
asset and liability approach for financial accounting and reporting on income
taxes. If it is more likely than not that some portion or all if a deferred tax
asset will not be realized, a valuation allowance is recognized.

d)

Stock Based Compensation

 

The Company measures compensation cost for stock based compensation using the
intrinsic value method of accounting as prescribed by A.P.B. Opinion No. 25 -
"Accounting for Stock Issued to Employees'. The Company has adopted those
provisions of Statement of Financial Accounting Standards No. 123 - "Accounting
for Stock Based Compensation',

 

 

 

 

 

6

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

TSI MEDICAL CORP.
(Formerly Purcell Ventures, Inc.)
(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

January 31, 2004
(Unaudited)
(Stated in U.S. Dollars)

2. SIGNIFICANT ACCOUNTING POLICIES

(Continued)

 

which require disclosure of the pro-forma effect on net earnings and earnings
per share as if compensation cost had been recognized based upon the estimated
fair value at the date of grant for options awarded.

e)

Financial Instruments

 

The Company's financial instruments consist of cash, accounts payable, and loans
and advances payable.

 

Unless otherwise noted, it is management's opinion that this Company is not
exposed to significant interest or credit risks arising from these financial
instruments. The fair value of these financial instruments approximate their
carrying values, unless otherwise noted.

f)

Net Loss Per Share

 

In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128 - "Earnings Per Share' ("SFAS 128').
Under SFAS 128, basic and diluted earnings per share are to be presented. Basic
earnings per share is computed by dividing income available to common
shareholders by the weighted average number of common shares outstanding in the
period. Diluted earnings per share takes into consideration common shares
outstanding (computed under basic earnings per share) and potentially dilutive
common shares.

3. INVESTMENT (PROPOSED JOINT VENTURE AGREEMENT)

The Company and TechniScan, Inc. ("TechniScan') have executed an operating
agreement (the "Operating Agreement') to effect a joint venture. The material
provisions of the Operating Agreement, as amended July 31, 2003, can be
summarized as follows:

a)

The parties have formed a Utah limited liability company called SafeScan Medical
Systems, LLC ("SafeScan') for the purposes of commercializing TechniScan's
Proprietary Inverse Scattering Technology (the "Technology').

b)

SafeScan will commercialize the Technology in the form initially of a medical
device for breast cancer diagnosis and/or screening (the "SafeScan Imaging
System'), and subsequently may pursue other medical products employing the
Technology.

 

 

 

 

 

7

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

TSI MEDICAL CORP.
(Formerly Purcell Ventures, Inc.)
(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

January 31, 2004
(Unaudited)
(Stated in U.S. Dollars)

3. INVESTMENT (PROPOSED JOINT VENTURE AGREEMENT)

(Continued)

c)

TechniScan will grant SafeScan an exclusive worldwide royalty-free license for
all medical uses of the Technology and will transfer, to the joint venture, all
rights to medical specific patents and provisional patents held by it. In
addition, TechniScan will contribute all hardware, software, equipment,
supplies, including breast scanner prototypes and other items of property held
by it that pertain directly and exclusively to the SafeScan Imaging System.
SafeScan will also purchase from TechniScan, at its depreciated book value,
other capital equipment, furniture and assets not directly and exclusively
related to the breast scanner.

d)

The Company will provide financing direction and financial expertise to the
joint venture. The financing to be provided by the Company to the joint venture
will be $15,650,000 on the following schedule:

 

i)

$165,000 by July 31, 2003, $80,000 of which had been contributed to that date;

 

ii)

$500,000 on or before November 15, 2003;

 

iii)

$500,000 on or before December 15, 2003;

 

iv)

$500,000 on or before January 15, 2004;

 

v)

$2,000,000 on or before February 15, 2004;

 

vi)

$5,485,000 on or before April 15, 2004; and

 

vii)

an additional $6,500,000 on the later of June 30, 2004 or 90 days following FDA
approval of the breast imaging device for sale in the United States.

e)

SafeScan will be managed by a management board consisting of up to seven persons
including two representatives of each of the Company and TechniScan, and up to
three other mutually agreed persons. The management board will control major
decisions, approve budgets and major contracts.

f)

SafeScan will enter into a development contract with TechniScan for continuing
research and development, and technical support of the Technology, and technical
support for commercialization of the SafeScan Imaging System.

g)

TechniScan will have the right to merge its interest in the joint venture into
the Company at any time following FDA approval or full financing by the Company
on terms to be agreed.

h)

The Company will also purchase 875,000 common shares of TechniScan at $0.40 per
share (the "Share Purchase') by December 15, 2003 for total purchase of
$350,000, of which $100,000 has been advanced at July 31, 2003. The Share
Purchase will represent approximately 3% of the shares of TechniScan (on a fully
diluted basis). With the Share Purchase, the Company's direct and indirect
interest in SafeScan will be in excess of 51%.

 

 

 

 

 

7

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

TSI MEDICAL CORP.
(Formerly Purcell Ventures, Inc.)
(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

January 31, 2004
(Unaudited)
(Stated in U.S. Dollars)

3. INVESTMENT (PROPOSED JOINT VENTURE AGREEMENT)

(Continued)

i)

The Operating Agreement and transfers of assets by TechniScan will close on
February 15, 2004 provided the Company has completed all funding required to
that date.

j)

In the event that the Company shall default in making any required
contributions, TechniScan shall acquire the Company's interest in SafeScan by
issuing its common shares to the Company at the lower of $0.60 per share or 150%
of the last price at which TechniScan has sold its common shares.

k)

The Company did not proceed with the proposed Joint Venture and converted the
funds advanced ($385,568.00) into shares of TechniScan as follows,

 

-

551,420 shares at $0.40 per share and,

 

-

275,000 shares at $0.60 per share

4. LOANS AND ADVANCES PAYABLE

The loans and advances payable in the amount of $37,913 (January 31, 2003 -
$49,100) are interest free with no specific terms of repayment and are owing to
a director.

The Company obtained a short term loan from a shareholder for $500,000.00 which
is due July 2, 2004.As at year end $155,000.00 had been received and the balance
was received after year end. The interest rate is 12%pa.

5. RELATED PARTY TRANSACTIONS

a)

During the period ended July 31, 2004, the Company paid $59,550 (2003 - $24,500)
in consulting fees to directors and officers of the Company and management fees
to a director of $90,000 (2003 - $60,000).

b)

During the period ended July 31, 2004 the Company incurred $Nil (2003-$1,500) in
office administration fees and $Nil (2003- $1,500) in rent with companies with
common directors.

6. DIRECTORS LOAN

A director and shareholder of the Company has made an advance to the Company of
$100,000.00. The loan is repayable on demand along with $20,000.00 for interest.

 

 

9

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

7. SUBSEQUENT EVENTS

On January 14, 2004 the Company entered into a letter of intent with Exelar
Corporation to fund the development of its propriety technology which utilizes
super conducting magnets to control therapeutic radiation doses delivered by
photon linear accelerators. Subsequent to the year end (March 22,2004) the
Company entered into a Technology Acquisition and Funding Agreement with Exelar
Corporation (a Delaware Company) whereby the Company agreed to finance Exelar
Medical Corporation (a Nevada corporation which is the operating company that
holds the technology developed by Exelar Corporation) for a total of
$4,750,000.00 as follows,

a)

$325,000 upon closing (March 25, 2004), paid subsequent to the year end

b)

$575,000 on or before the date that is 90 days following closing

c)

$1,550,000 on or before the date that is 180 days following closing

d)

$1,000,000 on or before the date that is 270days following closing, and

e)

$1,300,000 on or before the date that is 360 days following closing

Upon completion of the above advances the Company will have acquired 51% of
Exelar Medical Corporation. The Company may acquire an additional 10% for
$1,500,000 subject to the acceptance of both parties.

The Company has agreed to pay a finder's fee of 300,000 shares to a third party
as part of the acquisition.

 

 

 

 

 

 

 

 

 

 

 

 

 

10

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

 

 

 

 

 

 

 

 

 

 

PURCELL VENTURES, INC.
(A Development Stage Company)

FINANCIAL STATEMENTS

JANUARY 31, 2003 AND 2002
(Stated in U.S. Dollars)

 

 

 

 

 

 

 

 

 

 

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

AUDITORS' REPORT

To the Shareholders and Directors
Purcell Ventures, Inc.
(A development stage company)

We have audited the balance sheets of Purcell Ventures, Inc. (a development
stage company) as at January 31, 2003 and 2002, and the statements of operations
and deficit accumulated during the development stage, cash flows, and
stockholders' equity for the years ended January 31, 2003 and 2002, and for the
period from December 21, 2000 (date of inception) to January 31, 2003. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with United States generally accepted
auditing standards. Those standards require that we plan and perform an audit to
obtain reasonable assurance whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.

In our opinion, these financial statements present fairly, in all material
respects, the financial position of the Company as at January 31, 2003 and 2002,
and the results of its operations and cash flows for the years ended January 31,
2003 and 2002, and for the period from December 21, 2000 (date of inception) to
January 31, 2003, in accordance with United States generally accepted accounting
principles.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company has suffered recurring losses and net cash
outflows from operations since inception. These factors raise substantial doubt
about the Company's ability to continue as a going concern. Management's plans
in regard to these matters are also discussed in Note 1. These financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.

Vancouver, B.C.
June 20, 2003

"Morgan & Company"
Chartered Accountants

 

 

 

 

 

 

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

PURCELL VENTURES, INC.
(A Development Stage Company)

BALANCE SHEETS
(Stated in U.S. Dollars)

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

 

JANUARY 31

 

 

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

2003

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

 

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

2002

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

 

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

ASSETS

 

 

 

 

 

Current

 

 

 

 

 

Cash

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

$

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

32

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

 

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

$

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

32,027

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

 

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

LIABILITIES

 

 

 

 

 

 

Current

 

 

 

 

 

 

Accounts payable

$

14,705

 

$

11,500

 

Loans and advances payable (Note 3)

 

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

49,100

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

 

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

 

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

100

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

 

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

 

 

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

63,805

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

 

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

 

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

11,600

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

 

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

SHAREHOLDERS' (DEFICIENCY) EQUITY

 

 

 

 

 

 

Share Capital

 

 

 

 

 

 

Authorized:

 

 

 

 

 

 

 

100,000,000 common shares, par value $0.001 per share

 

 

 

 

 

 

Issued and outstanding:

 

 

 

 

 

 

 

8,512,500 common shares (2002 - 8,000,000)

 

8,513

 

 

8,000

 

Additional paid-in capital

 

282,737

 

 

27,000

 

Deficit Accumulated During The Development Stage

 

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

(355,023)

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

 

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

 

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

(14,573)

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

 

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

 

 

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

(63,773)

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

 

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

 

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

20,427

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

 

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

 

$

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

32

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

 

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

$

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

32,027

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

 

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

 

 

 

 

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

PURCELL VENTURES, INC.
(A Development Stage Company)

STATEMENTS OF OPERATIONS AND DEFICIT
(Stated in U.S. Dollars)

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

 

YEARS ENDED
JANUARY 31

INCEPTION
DECEMBER 21
2000 TO
JANUARY 31
2003

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

 

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

2003

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

 

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

2002

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

Expenses

 

 

 

Consulting

$

113,500

 

$

-

 

$

113,500

Office administration

 

6,000

 

 

-

 

 

6,000

Office and sundry

 

4,627

 

 

462

 

 

5,089

 

Professional fees

 

25,136

 

 

14,111

 

 

39,247

Rent

 

3,000

 

 

-

 

 

3,000

Travel and promotion

 

65,187

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

 

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

 

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

-

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

 

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

 

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

65,187

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

Loss Before The Following

 

217,450

 

 

14,573

 

 

232,023

Write Off Of Advances To Joint Venture

 

123,000

 

 

-

 

 

123,000

Net Loss For The Year

 

340,450

 

 

14,573

 

$

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

355,023

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

Deficit Accumulated During The Development Stage, Beginning Of Year

 

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

14,573

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

 

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

 

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

-

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

 

 

 

Deficit Accumulated During The Development Stage, End Of Year

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

$

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

355,023

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

 

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

$

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

14,573

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

 

 

 

Basic And Diluted Loss Per Share

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

$

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

0.04

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

 

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

$

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

0.05

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

 

 

 

Weighted Average Number Of Common Shares Outstanding

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

 

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

8,404,390

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

 

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

 

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

312,329

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

 

 

 

 

 

 

 

 

 

 

 

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

PURCELL VENTURES, INC.
(A Development Stage Company)

STATEMENTS OF CASH FLOWS
(Stated in U.S. Dollars)

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

 

YEARS ENDED
JANUARY 31

 

INCEPTION
DECEMBER 21
2000 TO
JANUARY 31

 

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

2003

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

 

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

2002

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

 

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

2003

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

Cash Flows From Operating Activities

 

 

 

 

 

 

 

Net loss for the year

$

(340,450)

 

$

(14,573)

 

$

(355,023)

Adjustments To Reconcile Net Loss To Net

 

 

 

 

 

 

 

 

Cash By Operating Activities

 

 

 

 

 

 

 

 

Write off of advances to joint venture

 

123,000

 

 

-

 

 

123,000

Accounts payable

 

3,205

 

 

11,500

 

 

14,705

Loan and advances payable

 

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

49,000

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

 

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

 

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

100

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

 

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

 

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

49,100

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

 

 

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

(165,245)

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

 

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

 

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

(2,973)

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

 

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

 

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

(168,218)

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

Cash Flows From Investing Activity

 

 

 

 

 

 

 

 

Advances to joint venture

 

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

(123,000)

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

 

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

 

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

-

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

 

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

 

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

(123,000)

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

Cash Flows From Financing Activity

 

 

 

 

 

 

 

 

Common stock issued

 

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

256,250

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

 

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

 

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

35,000

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

 

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

 

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

291,250

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

Increase (Decrease) In Cash

 

(31,995)

 

 

32,027

 

 

32

Cash, Beginning Of Year

 

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

32,027

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

 

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

 

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

-

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

 

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

 

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

-

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

Cash, End Of Year

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

$

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

32

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

 

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

$

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

32,027

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

 

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

$

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

32

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

 

 

 

 

 

 

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

PURCELL VENTURES, INC.
(A Development Stage Company)

STATEMENT OF STOCKHOLDERS' (DEFICIENCY) EQUITY

JANUARY 31, 2003
(Stated in U.S. Dollars)

 

COMMON STOCK

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

 

 

 

 

NUMBER OF SHARES

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

AMOUNT

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

ADDITIONAL PAID-IN CAPITAL

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

DEFICIT

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

TOTAL

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

Balance, January 31, 2001

-

$

-

$

-

$

-

$

-

January 11, 2002 - Shares issued for cash at $0.001

5,000,000

 

5,000

 

-

 

-

 

5,000

January 29, 2002 - Shares issued for cash at $0.01

3,000,000

 

3,000

 

27,000

 

-

 

30,000

Net loss for the year

-

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

 

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

-

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

 

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

-

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

 

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

(14,573)

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

 

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

(14,573)

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

Balance, January 31, 2002

8,000,000

 

8,000

 

27,000

 

(14,573)

 

20,427

March 15, 2002 - Shares issued for cash at $0.50

250,000

 

250

 

124,750

 

-

 

125,000

April 30, 2002 - Shares issued for cash at $0.50

140,000

 

140

 

69,860

 

-

 

70,000

May 31, 2002 - Shares issued for cash at $0.50

60,500

 

61

 

30,189

 

-

 

30,250

June 25, 2002 - Shares issued for cash at $0.50

62,000

 

62

 

30,938

 

-

 

31,000

Net loss for the year

-

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

 

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

-

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

 

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

-

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

 

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

(340,450)

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

 

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

(340,450)

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

Balance, January 31, 2003

8,512,500

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

 

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

8,513

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

 

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

282,737

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

 

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

(355,023)

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

 

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

(63,773)

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

 

 

 

 

 

 

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

PURCELL VENTURES, INC.
(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

JANUARY 31, 2003 AND 2002
(Stated in U.S. Dollars)

1. NATURE OF OPERATIONS

a)

Organization

 

The Company was incorporated in the state of Nevada, U.S.A., on December 21,
2000.

b)

Development Stage Activities

 

The Company was originally organized to seek business opportunities in the high
technology field. In January of 2002, the Company entered into a joint venture
letter agreement for the development and marketing of a technology for
automobile air bag inflation as more particularly described below (the "Airbag
Technology'). The Company has decided not to proceed with the Airbag Technology
and has negotiated the terms of a proposed joint venture with TechniScan, Inc.
("TechniScan') to develop, market and sell medical devices including a breast
cancer imaging system (the "SafeScan Imaging System') employing TechniScan's
proprietary inverse scattering technology (the "Technology'). The Airbag
Technology is a patented technology for automotive airbag inflation using cool
gases. The Company provided initial funding to the Airbag Technology of $123,000
but decided not to proceed and has written off those advances.

 

Since inception, the Company has suffered recurring losses and net cash outflows
from operations. The Company expects to continue to incur substantial losses to
complete the development of its business. Since its inception, the Company has
funded operations through common stock issuances and related party loans in
order to meet its strategic objectives. Management believes that sufficient
funding will be available to meet its business objectives, including anticipated
cash needs for working capital, and is currently pursuing several financing
options. However, there can be no assurance that the Company will be able to
obtain sufficient funds to continue the development of a business. As a result
of the foregoing, there exists substantial doubt about the Company's ability to
continue as a going concern. These financial statements do not include any
adjustments that might result from the outcome of this uncertainty.

2. SIGNIFICANT ACCOUNTING POLICIES

The financial statements of the Company have been prepared in accordance with
generally accepted accounting principles in the United States. Because a precise
determination of many assets and liabilities is dependent upon future events,
the preparation of financial statements for a period necessarily involves the
use of estimates which have been made using careful judgement.

 

 

 

 

 

 

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

PURCELL VENTURES, INC.
(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

JANUARY 31, 2003 AND 2002
(Stated in U.S. Dollars)

2. SIGNIFICANT ACCOUNTING POLICIES

(Continued)

The financial statements have, in management's opinion, been properly prepared
within reasonable limits of materiality and within the framework of the
significant accounting policies summarized below:

a)

Development Stage Company

 

The Company is a development stage company as defined in the Statements of
Financial Accounting Standards No. 7. The Company is devoting substantially all
of its present efforts to establish a new business and none of its planned
principal operations have commenced. All losses accumulated since inception have
been considered as part of the Company's development stage activities.

b)

Use of Estimates

 

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities, and disclosure of
contingent assets and liabilities at the date of the financial statements, and
the reported amounts of revenues and expenses for the reporting period. Actual
results could differ from these estimates.

c)

Income Taxes

 

The Company has adopted Statement of Financial Accounting Standards No. 109 -
"Accounting for Income Taxes' (SFAS 109). This standard requires the use of an
asset and liability approach for financial accounting and reporting on income
taxes. If it is more likely than not that some portion or all if a deferred tax
asset will not be realized, a valuation allowance is recognized.

d)

Stock Based Compensation

 

The Company measures compensation cost for stock based compensation using the
intrinsic value method of accounting as prescribed by A.P.B. Opinion No. 25 -
"Accounting for Stock Issued to Employees'. The Company has adopted those
provisions of Statement of Financial Accounting Standards No. 123 - "Accounting
for Stock Based Compensation', which require disclosure of the pro-forma effect
on net earnings and earnings per share as if compensation cost had been
recognized based upon the estimated fair value at the date of grant for options
awarded.

 

 

 

 

 

 

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

PURCELL VENTURES, INC.
(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

JANUARY 31, 2003 AND 2002
(Stated in U.S. Dollars)

2. SIGNIFICANT ACCOUNTING POLICIES

(Continued)

e)

Financial Instruments

 

The Company's financial instruments consist of cash, accounts receivable and
loans payable.

 

Unless otherwise noted, it is management's opinion that this Company is not
exposed to significant interest or credit risks arising from these financial
instruments. The fair value of these financial instruments approximate their
carrying values, unless otherwise noted.

f)

Net Loss Per Share

 

In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128 - "Earnings Per Share' ("SFAS 128').
Under SFAS 128, basic and diluted earnings per share are to be presented. Basic
earnings per share is computed by dividing income available to common
shareholders by the weighted average number of common shares outstanding in the
period. Diluted earnings per share takes into consideration common shares
outstanding (computed under basic earnings per share) and potentially dilutive
common shares.

3. LOANS AND ADVANCES PAYABLE

The loans and advances payable in the amount of $49,100 (2002 - $100) are
interest free with no specific terms of repayment and are owing to a director.

4. RELATED PARTY TRANSACTIONS

a)

During the year ended January 31, 2003, the Company paid $84,000 in consulting
fees to directors and officers of the Company.

b)

During the year ended January 31, 2003, the Company incurred $6,000 in office
administration fees and $3,000 in rent with companies with common directors.

 

 

 

 

 

 

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

PURCELL VENTURES, INC.
(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

JANUARY 31, 2003 AND 2002
(Stated in U.S. Dollars)

5. SUBSEQUENT EVENTS

a)

Proposed Joint Venture Agreement

 

The Company and TechniScan have executed a term sheet (the "Term Sheet')
outlining the terms of the proposed joint venture. The material provisions of
the Term Sheet, as amended, can be summarized as follows:

 

1.

The parties will form a Utah limited liability company for the purposes of
commercializing the medical applications of the Technology.

 

2.

The joint venture will commercialize the Technology in the form initially of a
medical device for breast cancer diagnosis and/or screening (the "SafeScan
Imaging System'), and subsequently may pursue other medical products employing
the Technology.

 

3.

TechniScan will grant the joint venture an exclusive worldwide royalty free
license for all medical uses of the Technology and will transfer, to the joint
venture, all rights to medical specific patents and provisional patents held by
it. In addition, TechniScan will contribute all hardware, software, equipment,
supplies, including breast scanner prototypes and other items of property held
by it that pertain directly and exclusively to the SafeScan Imaging System. The
joint venture will also purchase from TechniScan, at its depreciated book value,
other capital equipment, furniture and assets not directly and exclusively
related to the breast scanner.

 

4.

Purcell will provide financing direction and financial expertise to the joint
venture. The financing to be provided by Purcell to the joint venture will be
$15,650,000 on the following schedule:

 

 

i)

$50,000 by June 30, 2003;

 

 

ii)

$100,000 by July 15, 2003;

 

 

iii)

$500,000 by July 31, 2003;

 

 

iv)

an additional $500,000 by August 31, 2003;

 

 

v)

an additional $500,000 by September 30, 2003;

 

 

vi)

an additional $3.5 million by December 15, 2003;

 

 

vii)

an additional $4.0 million by March 31, 2004; and

 

 

viii)

an additional $6.5 million on the later of June 30, 2004 or 90 days following
FDA approval of the breast imaging device for sale in the United States.

 

5.

The joint venture will be managed by a management board consisting of up to
seven persons including two representatives of each of Purcell and TechniScan,
and up to three other mutually agreed persons. The management board will control
major decisions, approve budgets and major contracts.

 

 

 

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

PURCELL VENTURES, INC.
(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

JANUARY 31, 2003 AND 2002
(Stated in U.S. Dollars)

5. SUBSEQUENT EVENTS

(Continued)

a)

Proposed Joint Venture Agreement (Continued)

 

6.

The joint venture will enter into a development contract with TechniScan for
continuing research and development, and technical support of the Technology,
and technical support for commercialization of the SafeScan Imaging System.

 

7.

TechniScan will have the right to merge its interest in the joint venture into
Purcell at any time following FDA approval or full financing by Purcell on terms
to be agreed.

 

8.

The Company will also purchase 875,000 common shares of TechniScan at $0.40 per
share (the "Share Purchase') by July 15, 2003. The Share Purchase will represent
approximately 3% of the shares of TechniScan (on a fully diluted basis). With
the Share Purchase, the Company's direct and indirect interest in the joint
venture will be in excess of 51%.

 

9.

The joint venture will be established when all required filings have been made,
all agreements have been formalized and executed, and the Company has completed
the Share Purchase and the initial funding of $150,000 to the joint venture.

 

10.

In the event that the Company shall default in making any required contributions
after formation of the joint venture, TechniScan shall have the right to acquire
the Company's interest in the joint venture by issuing its common shares to the
Companyat the lower of $0.60 per share or 150% of the last price at which
TechniScan has sold its common shares.

 

The Term Sheet is not a binding agreement and no binding agreement will exist
with respect to the proposed joint venture until the definitive agreements
described in the Term Sheet have been negotiated and executed. The Company is in
the final stages of negotiating and completing the formal agreements with
TechniScan.

b)

Offering of Securities

 

The Company is offering for sale, pursuant to Regulation S, up to 500,000 common
shares at US$0.50 per share.

c)

Name Change

 

The Company's name was changed to TSI Medical Corp.

 

 

 

 

 

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

SCHEDULE 3.10
TO THE AGREEMENT AND PLAN OF MERGER
AMONG CIVELLI, MOSIMANN, TSI MEDICAL CORP.,
RELAY MINES LIMITED AND TSI MED ACQUISITION CORP.

UNDISCLOSED LIABILITIES OF TSI MEDICAL

TSI Medical received advances of $725,000 from Relay Mines.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

SCHEDULE 3.12
TO THE AGREEMENT AND PLAN OF MERGER
AMONG CIVELLI, MOSIMANN, TSI MEDICAL CORP.,
RELAY MINES LIMITED AND TSI MED ACQUISITION CORP.

UNDISCLOSED CHANGES

None.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

SCHEDULE 3.14
TO THE AGREEMENT AND PLAN OF MERGER
AMONG CIVELLI, MOSIMANN, TSI MEDICAL CORP.,
RELAY MINES LIMITED AND TSI MED ACQUISITION CORP.

EMPLOYEES AND CONSULTING AGREEMENTS

TSI Medical pays annual management fees to its officers as follows:

Name

Position Held

Annual Compensation

Harold C. Moll

Chairman & Director

$

120,000

 

Derek R. Van Laare

President, Secretary, Treasurer & Director

$

72,000

 

The management fees are paid pursuant to oral agreements. No written agreements
have been entered into with respect to the payment of the management fees.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

SCHEDULE 3.17
TO THE AGREEMENT AND PLAN OF MERGER
AMONG CIVELLI, MOSIMANN, TSI MEDICAL CORP.,
RELAY MINES LIMITED AND TSI MED ACQUISITION CORP.

MATERIAL CONTRACTS

1.

Technology Acquisition and Funding Agreement dated March 22, 2004 among TSI
Medical, Exelar Corporation and Exelar Medical Corporation.

2.

Shareholders Agreement dated March 25, 2004 among TSI Medical, Exelar
Corporation and Exelar Medical Corporation.

3.

Management fee agreements referred to in Schedule 3.14 to this Agreement and
Plan of Merger.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

SCHEDULE 4.1
TO THE AGREEMENT AND PLAN OF MERGER
AMONG CIVELLI, MOSIMANN, TSI MEDICAL CORP.,
RELAY MINES LIMITED AND TSI MED ACQUISITION CORP.

PRINCIPAL SHAREHOLDERS OF RELAY MINES

Name of Principal Shareholder

Number of Shares Held

Percentage of Beneficial Ownership

Carlo Civelli

30,000,000

 

40.9%

 

Bruno Mosimann

30,000,000

 

40.9%

 

 

Based on 73,367,208 issued and outstanding.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

SCHEDULE 5.3
TO THE AGREEMENT AND PLAN OF MERGER
AMONG CIVELLI, MOSIMANN, TSI MEDICAL CORP.,
RELAY MINES LIMITED AND TSI MED ACQUISITION CORP.

CAPITALIZATION OF RELAY MINES

The entire authorized capital stock and other equity securities of Relay Mines
("Relay Mines Stock') consists of 100,000,000 shares of common stock, par value
$0.00001 ("Relay Mines Common Stock'). There are 73,367,208 shares of Relay
Mines common stock issued and outstanding as of the date of this Agreement.

Relay Mines received subscription funds for an issuance of a total of 2,500,000
units at a price of $0.25 per unit. Each unit consists of one share of common
stock and one-half of one share purchase warrant, with each warrant entitling
the holder to purchase an additional share of common stock at a price of $0.25
per share for a period of one year. The shares will be issued to European
investors in reliance of Regulation S.

Other than the above, there are no outstanding options, warrants, subscriptions,
phantom shares, conversion rights, or other rights, agreements, or commitments
obligating Relay Mines to issue any additional shares of Relay Mines Stock, or
any other securities convertible into, exchangeable for, or evidencing the right
to subscribe for or acquire from Relay Mines any shares of Relay Mines Stock.
There are no agreements purporting to restrict the transfer of the Relay Mines
Stock, no voting agreements, voting trusts, or other arrangements restricting or
affecting the voting of the Relay Mines Stock.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

SCHEDULE 5.9
TO THE AGREEMENT AND PLAN OF MERGER
AMONG CIVELLI, MOSIMANN, TSI MEDICAL CORP.,
RELAY MINES LIMITED AND TSI MED ACQUISITION CORP.

UNDISCLOSED LIABILITES OF RELAY MINES

Relay Mines is indebted to Aton Select Fund Ltd. in the amount of $100,000.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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