Document:

Filed by Automated Filing Services Inc. (604) 609-0244 - Exelar Medical Corporation - Exhibit 10.1

TECHNOLOGY ACQUISITION AND FUNDING AGREEMENT

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

BETWEEN:

  
    
      
        TSI MEDICAL CORP.

          a Nevada corporation

          ("TSI")

      

    

  

OF THE FIRST PART

AND:

  
    
      
         EXELAR CORPORATION,

          a Delaware corporation

          ("Exelar")

      

    

  

OF THE SECOND PART

AND:

  
    
      
         EXELAR MEDICAL CORPORATION

          a Nevada corporation

          ("OPCO")

      

    

  

 OF THE THIRD PART

WHEREAS:

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

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

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

THE PARTIES HEREBY AGREE AS FOLLOWS:

 ARTICLE 1. 

  DEFINITIONS

	1.1	 	 The following terms will have the following meanings for all purposes
      of this Agreement.
	 	 	 
	 	 (a)      	 "Agreement" shall mean this Agreement and all schedules
        and amendments to this Agreement; 

	 	 	 
	 	 (b)      	 "Apparatus" means an apparatus for control of therapeutic
        radiation doses using superconducting magnets described in the Patents
        and that incorporates any of the Patents, the Know- how and/or the Intellectual
        Property; 

 Page 1 of 24

 

	 	 (c)      	 "Closing" means the closing of the Transactions
        described in paragraphs 2.2 and 3.1(a); 

	 
	 	 (d)      	 "Closing Date" means the 5th business day following
        the execution of this Agreement; 

	 
	 	 (e)      	 "Closing Documents" means the documents to be executed
        and/ or delivered by each respective party on Closing; 

	 
	 	 (f)      	 "Common Stock" means the common stock of OPCO, par
        value $0.001 per share; 

	 
	 	 (g)      	 "Employment Agreement" means the agreement attached
        hereto as Schedule F; 

	 
	 	 (h)      	 "Improvement" means any modification or variant
        of the Apparatus and the Invention, whether patentable or not, which,
        if manufactured, used, or sold, would fall within the scope of the Apparatus,
        the Invention or at least one claim of at least one of the Patents; 

	 
	 	 (i)      	 "Intellectual Property" means all copyrights, patent
        rights, trade secret rights, trade names, trademark rights, process information,
        technical information, designs, drawings, inventions and all other intellectual
        and industrial property rights of any sort related to or associated with
        Invention and the Apparatus; 

	 
	 	 (j)      	 "Invention" means the invention described in the
        Patents and embodied in the Apparatus"; 

	 
	 	 (k)      	 "Inventor" means Len Reiffel. 

	 
	 	 (l)      	 "Know- how" means all know- how, knowledge, expertise,
        inventions, works of authorship, prototypes, technology, information,
        know- how, materials and tools relating thereto or to the design, development,
        manufacture, use and commercial application of the Invention and the Apparatus;
      

	 
	 	 (m)      	 "Patents" means the Patents, patent applications
        and foreign patent applications described in Schedule A and any other
        patent that may be issued in connection with the Invention or the Apparatus
        or any Improvement; 

	 
	 	 (n)      	 "Promissory Note" means the Secured Promissory Note
        to be issued to the Inventor under the Technology Transfer Agreement 

	 
	 	 (o)      	 "Shareholders Agreement" means a unanimous shareholders
        agreement to be entered into between TSI and Exelar in the form attached
        hereto as Schedule D; 

	 
	 	 (p)      	 "Technology" means the Apparatus, the Invention,
        the Patents, the Know- How and the Intellectual Property; 

	 
	 	 (q)      	 Technology Transfer Agreement" means the agreement
        among OPCO, Exelar and the Inventor attached hereto as Schedule C; 

 Page 2 of 24

 

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

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

ARTICLE 2. 

  PURCHASE AND SALE OF TECHNOLOGY 

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

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

 ARTICLE 3. 

  FUNDING BY TSI 

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

	 	 (a)      
	 $325,000 (the "Initial Funding") at Closing;
      

	 
	 	 (b)      
	 a further $4,425,000 (the "Post Closing
        Funding") in tranches as follows: 

	 
	 	 	 (i)      
	 $575,000 on or before the date that is 90 days following closing; 
	 
	 	 	 (ii)      
	 $1,550,000 on or before the date that is 180 days following closing;
    
	 
	 	 	 (iii)      
	 $1,000,000 on or before the date that is 270 days following closing;
      and 
	 
	 	 	 (iv)     
      
	 $1,300,000 on or before the date that is 360 days following closing.
    
	 
	 	 	 Any payments made by TSI to Exelar under
        the Promissory Note, whether to pay the obligations thereunder or cure
        defaults thereunder, shall be credited against TSI's Post - Closing Funding
        obligations. 

	 
	 3.2      	 
	Subject to section 12 hereof, TSI shall
        be issued one common share of OPCO for each $2.00 of funding forthwith
        upon receipt of each tranche of funding. 

	 
	 3.3      	  
	Notwithstanding the dates set forth in
        section 3.1(b) above, OPCO may request such dates to be accelerated, upon
        10 days written notice to TSI, if OPCO provides written affirmation that
        it has specific uses for such funds which are consistent with the overall
      

Page 3 of 24 

 

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

 ARTICLE 4. 

  EXPENDITURE OF TSI FUNDING 

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

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

ARTICLE 5. 

  TSI ADDITIONAL FUNDING OPTION

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

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

ARTICLE 6. 

  EXELAR OPTION

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

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

 Page 4 of 24

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

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

 ARTICLE 7. 

  REPRESENTATIONS AND WARRANTIES OF EXELAR 

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

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

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

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

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

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

 Page 5 of 24

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

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

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

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

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

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

	 	 	 (1)      	 All Shares will be issued as "restricted
        shares", as contemplated by the Securities Act of 1933 (the "1933 Act").
        Exelar acknowledges and agrees that the Shares have not been registered
        under the 1933 Act or applicable state "Blue Sky" laws and, therefore,
        the Shares may not be resold, transferred or hypothecated without the
        registration of the Shares, or an opinion of counsel satisfactory to OPCO
        to the effect that such registration is not necessary; 

	 
	 	 	 (2)      	 All certificates representing the Shares
        will be endorsed with the following legend: 

	 
	 	 	 	 "THE SECURITIES REPRESENTED BY THIS
        CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
        (THE "ACT"), AND HAVE BEEN OFFERED AND SOLD IN RELIANCE UPON EXEMPTIONS
        FROM THE REGISTRATION REQUIREMENTS OF THE ACT. SUCH SECURITIES MAY NOT
        BE OFFERED FOR SALE, TRANSFERRED, PLEDGED OR RESOLD OR OTHERWISE TRANSFERRED
        UNLESS THEY ARE REGISTERED UNDER THE APPLICABLE PROVISIONS OF THE ACT
        OR ARE EXEMPT FROM SUCH REGISTRATION REQUIREMENTS." ; 

	 
	 	 	 (3)      	 All Shares will be issued to Exelar based
        on the representations and warranties of Exelar that: 

	 
	 	 	 	 (i)      
	 Exelar has not offered or sold the Shares within
        the meaning of the 1933 Act; 

	 
	 	 	 	 (ii)     
      
	 Exelar is acquiring the Shares for its own account
        for investment, with no present intention of dividing any interest with
        others or of reselling or otherwise disposing of all or any portion of
        the same; 

 Page 6 of 24

	 	 	 	 (iii)  	 Exelar does not intend any sale of the
        Shares either currently or after the passage of a fixed or determinable
        period of time or upon the occurrence or non-occurrence of any predetermined
        event or circumstance;

	 	 	 	  	 
	 	 	 	 (iv)  	 Exelar has no present or contemplated
        agreement, undertaking, arrangement, obligation, indebtedness or commitment
        providing for or which is likely to compel a disposition of the Shares;

	 	 	 	  	 
	 	 	 	 (r)  	 Exelar is not aware of any circumstances
        presently in existence which are likely in the future to prompt a disposition
        of the Shares;

	 	 	 	  	 
	 	 	 	 (vi)  	 The Shares were offered to Exelar in
        direct communication and not through any advertisement of any kind;

	 	 	 	  	 
	 	 	 	 (vii)  	 Exelar has the financial means to bear
        the economic risk of an investment in the Shares.

ARTICLE 8.  

  REPRESENTATIONS AND WARRANTIES OF TSI 

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

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

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

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

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

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

 Page 7 of 24

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

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

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

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

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

	 	 	 (1)      	 All Shares will be issued as "restricted
        shares", as contemplated by the Securities Act of 1933 (the "1933 Act").
        Exelar acknowledges and agrees that the Shares have not been registered
        under the 1933 Act or applicable state "Blue Sky" laws and, therefore,
        the Shares may not be resold, transferred or hypothecated without the
        registration of the Shares, or an opinion of counsel satisfactory to OPCO
        to the effect that such registration is not necessary; 

	 
	 	 	 (2)      	 All certificates representing the Shares
        will be endorsed with the following legend: 

	 
	 	 	 	 "THE SECURITIES REPRESENTED BY THIS
        CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
        (THE "ACT"), AND HAVE BEEN OFFERED AND SOLD IN RELIANCE UPON EXEMPTIONS
        FROM THE REGISTRATION REQUIREMENTS OF THE ACT. SUCH SECURITIES MAY NOT
        BE OFFERED FOR SALE, TRANSFERRED, PLEDGED OR RESOLD OR OTHERWISE TRANSFERRED
        UNLESS THEY ARE REGISTERED UNDER THE APPLICABLE PROVISIONS OF THE ACT
        OR ARE EXEMPT FROM SUCH REGISTRATION REQUIREMENTS."; 

	 
	 	 	 (3)      	 All Shares will be issued to TSI based
        on the representations and warranties of Exelar that: 

	 
	 	 	 	 (i)      
	 TSI has not offered or sold the Shares within the
        meaning of the 1933 Act; 

	 
	 	 	 	 (ii)     
      
	 TSI is acquiring the Shares for its own account
        for investment, with no present intention of dividing any interest with
        others or of reselling or otherwise disposing of all or any portion of
        the same; 

 Page 8 of 24

	 	 	 	 (i)  	 TSI does not intend any sale of the Shares
        either currently or after the passage of a fixed or determinable period
        of time or upon the occurrence or non- occurrence of any predetermined
        event or circumstance;

	 	 	 	  	 
	 	 	 	 (ii)  	 TSI has no present or contemplated agreement,
        undertaking, arrangement, obligation, indebtedness or commitment providing
        for or which is likely to compel a disposition of the Shares;

	 	 	 	  	 
	 	 	 	 (b)  	 TSI is not aware of any circumstances
        presently in existence which are likely in the future to prompt a disposition
        of the Shares;

	 	 	 	  	 
	 	 	 	 (vii)  	 The Shares were offered to TSI in direct
        communication and not through any advertisement of any kind;

	 	 	 	  	 
	 	 	 	 (vii)  	 TSI has the financial means to bear the
        economic risk of an investment in the Shares.

  ARTICLE 9. 

  REPRESENTATIONS AND WARRANTIES OF OPCO  

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

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

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

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

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

 Page 9 of 24

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

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

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

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

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

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

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

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

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

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

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

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

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

ARTICLE 10. 

  CLOSING CONDITIONS

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

 Page 10 of 24

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

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

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

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

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

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

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

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

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

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

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

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

 Page 11 of 24

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

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

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

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

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

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

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

 ARTICLE 11. 

  CLOSING 

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

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

	 	 (a)      	 copies of all resolutions and/or consent actions
        adopted by or on behalf of the boards of directors of Exelar evidencing
        approval of this Agreement, the transactions contemplated by this Agreement,
        the Technology Transfer Agreement and the Shareholders Agreement; 

	 	 	 
	 	 (b)      	 a certificate of an officer of Exelar, dated as
        of Closing, certifying that (i) each covenant and obligation of Exelar
        has been complied with in all material respects; and (ii) each representation,
        warranty and covenant of Exelar is true and correct in all material respects
        at the Closing as if made on and as of the Closing; 

 Page 12 of 24

 

	 	 (c)      	 the Shareholders Agreement, executed by Exelar;
      

	 
	 	 (d)      	 the Technology Transfer Agreement executed by the
        Inventor and Exelar; 

	 
	 	 (e)      	 the opinion of legal counsel to Exelar as to the
        due authorization, execution, delivery and enforceability of this Agreement
        and the other Closing Documents; 

	 
	 	 (f)      	 the Employment Agreement executed by Len Reiffel;
      

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

	 	 (a)      	 copies of all resolutions and/or consent actions
        adopted by or on behalf of the boards of directors of TSI evidencing approval
        of this Agreement, the transactions contemplated by this Agreement, the
        Technology Transfer Agreement and the Shareholders Agreement; 

	 
	 	 (b)      	 a certificate of an officer of TSI, dated as of
        Closing, certifying that (i) each covenant and obligation of TSI has been
        complied with; and (ii) each representation, warranty and covenant of
        TSI is true and correct in all material respects at the Closing as if
        made on and as of the Closing; 

	 
	 	 (c)      	 the Shareholders Agreement, executed by TSI; 

	 
	 	 (d)      	 the opinion of legal counsel to TSI as to the due
        authorization, execution, delivery and enforceability of this Agreement
        and the other Closing Documents; and 

	 
	 	 (e)      	 a check payable to OPCO for the Initial Funding.
      

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

	 	 (a)      	 copies of all resolutions and/or consent actions
        adopted by or on behalf of the boards of directors of OPCO evidencing
        approval of this Agreement, the transactions contemplated by this Agreement,
        the Technology Transfer Agreement and the Shareholders Agreement; 

	 
	 	 (b)      	 a certificate of an officer of OPCO, dated as of
        Closing, certifying that (i) each covenant and obligation of OPCO has
        been complied with in all material respects; and (ii) each representation,
        warranty and covenant of OPCO is true and correct in all material respects
        at the Closing as if made on and as of the Closing; 

	 
	 	 (c)      	 the Shareholders Agreement, executed by OPCO; 

	 
	 	 (d)      	 the opinion of legal counsel to OPCO as to the due
        authorization, execution, delivery and enforceability of this Agreement
        and the other Closing Documents; 

	 
	 	 (e)      	 the Promissory Note in favour of the Inventor; 

	 
	 	 (f)      	 the Share Certificates for the shares to be issued
        to Exelar under the Technology Transfer Agreement; and 

	 
	 	 (g)      	 the Share Certificates for the shares to be issued
        to TSI in respect of the Initial Funding. 

 Page 13 of 24

 ARTICLE 12. 

  TSI DEFAULT 

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

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

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

ARTICLE 13. 

  TERMINATION

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

                (a)
                      
  Mutual written agreement of TSI and Exelar; 

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

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

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

 Page 14 of 24

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

ARTICLE 14. 

MISCELLANEOUS PROVISIONS

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

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

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

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

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

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

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

               If
  to Exelar:

                              
  EXELAR CORPORATION

                                
  602 Deming Place 

                                
  Chicago, IL 60614 

                                
  Facsimile: •773-871-0171 

                                
  E-Mail: lreiffel@aol.com 

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

 Page 15 of 24

                               Gould
  & Ratner 

                                
  222 N. LaSalle Street 

                                Suite
  800 

                                Chicago,
  IL 60601 

                                Facsimile:
  312-236-3241 

                                E-Mail:
  ftannenbaum@gouldratner.com

                                Attention:
  Fredric D. Tannenbaum 

               If
  to TSI:

                              TSI
  MEDICAL CORP. 

                                810
  Peace Portal Drive, Suite 202

                                Blaine,
  WA 98230 

                                Facsimile:
  360-• 

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

                              
  Stephen F.X. O'Neill 

                                O'Neill
  & Taylor PLLC 

                                435
  Martin Street, Suite 1010 

                                Blaine,
  WA 98230 

                                604-687-5792
  / 360-332-3300 

                                604-687-6650
  / 360-332-2291 (fax)

                                "son@stockslaw.com"

               If
  to OPCO:

                              
  Logan B. Anderson 

                                810
  Peace Portal Drive

                                Suite
  203 

                                Blaine,
  WA 98230 

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

                              
  Cane & Associates 

                                3199
  E. Warm Springs Road, Suite 200

                                Las
  Vegas, NV 89120 

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

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

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

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

 Page 16 of 24

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

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

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

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

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

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

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

 Page 17 of 24

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

	EXELAR CORPORATION 

      a Delaware corporation by its 

      authorized signatory: 	 
	 	 
	/s/ Leonard Reiffel 	 
	Signature of Authorized Signatory 	 
	 	 
	 	 
	Name of Authorized Signatory 	 
	 	 
	 	 
	Position of Authorized Signatory 	 
	 	 
	 	 
	 	 
	TSI MEDICAL CORP. 

      a Nevada corporation by its

      authorized signatory: 	 
	 	 
	/s/ Harold C. Moll 	 
	Signature of Authorized Signatory 	 
	 	 
	 	 
	Name of Authorized Signatory 	 
	 	 
	 	 
	Position of Authorized Signatory 	 
	 	 
	 	 
	 	 
	EXELAR MEDICAL CORPORATION

      a Nevada corporation by its

      authorized signatory: 	 
	 	 
	/s/ Logan B. Anderson 	 
	Signature of Authorized Signatory 	 
	 	 
	 	 
	Name of Authorized Signatory 	 
	 	 
	 	 
	Position of Authorized Signatory 	 

 Page 18 of 24

 SCHEDULE A 

  To 

  Technology Acquisition and Funding Agreement 

  Among Exelar Corporation and 

  TSI Medical Corp. and OPCO

  Dated March 22, 2004 

  

 

DESCRIPTION OF PATENTS

 PATENTS AND PATENT APPLICATIONS

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

 

 SCHEDULE B 

  To 

  Technology Acquisition and Funding Agreement 

  Among Exelar Corporation and 

  TSI Medical Corp. and OPCO

  Dated March 22, 2004 

 

 

INTENTIONALLY DELETED

 SCHEDULE C 

  To 

  Technology Acquisition and Funding Agreement 

  Among Exelar Corporation and 

  TSI Medical Corp. and OPCO

  Dated March 22, 2004 

 

 

 TECHNOLOGY TRANSFER AGREEMENT

TECHNOLOGY TRANSFER AGREEMENT

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

AMONG:

  
    
      
        EXELAR CORPORATION, a Delaware corporation of 602 Deming
          Place, Chicago, IL 60614 

        (hereafter called "Exelar")

      

    

  

AND:

  
    
      
         LEN REIFFEL, of 602 Deming Place, Chicago, IL 60614

         (hereafter called the "Inventor") 

      

    

  

AND:

  
    
      
         EXELAR MEDICAL CORPORATION, a Nevada
          corporation having its registered address at 3199 E. Warm Springs Road,
          Suite 200 Las Vegas, NV 89120 

        (hereafter called "OPCO")

      

    

  

WHEREAS:

	 I.      	 Exelar is the owner of an invention and related
        apparatus that has been granted and has applied for United States and
        foreign patents which invention is held in the name of the Inventor. 

	 
	 II.      	 The parties have agreed to enter into this agreement
        to reflect the sale by Exelar and the purchase by OPCO of all property,
        including all patents, know -how and intellectual property, relating to
        the invention and the apparatus. 

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

 DEFINITIONS 

	1. 	In this Agreement: 

 

	 	 (a)      	 "Apparatus" means an apparatus for control of photon
        beam therapeutic radiation doses using superconducting magnets described
        in the Patents and that incorporates any of the Patents, the Know-how
        and/or the Intellectual Property; 

	 
	 	 (b)      	 "Improvement" means any modification or variant
        of the Apparatus and the Invention, whether patentable or not, which,
        if manufactured, used, or sold, would fall within the scope of the Apparatus,
        the Invention or at least one claim of at least one of the Patents; 

	 
	 	 (c)      	 "Intellectual Property" means all copyrights, patent
        rights, trade secret rights, trade names, trademark rights, process information,
        technical information, contract rights and obligations including those
        under that certain Subagreement No. 2000-106800-Exelar -Reiffel by and
        between National Medical Technology Testbed Inc. and Exelar (the "NMTB
        Agreement"), designs, drawings, inventions and all other intellectual
        and industrial property rights of any sort related to or associated with
        Invention and the Apparatus; 

	 
	 	 (d)      	 "Invention" means the inventions described in the
        Patents and embodied in the Apparatus; 

	 
	 	 (e)      	 "Inventor" means Len Reiffel; 

	 
	 	 (f)      	 "Know-how" means all know-how, knowledge, expertise,
        inventions, works of authorship, prototypes, technology, information,
        know-how, materials and tools relating thereto or to the design, development,
        manufacture, use and commercial application of the Invention and the Apparatus;
      

	 
	 	 (g)      	 "Patents" means the Patents and patent applications
        described in Schedule A and any other patent that may be issued in connection
        with the Invention or the Apparatus or any Improvement; 

	 
	 	 (h)      	 "Technology" means the Apparatus, the Invention,
        the Patents, the Know-How and the Intellectual Property. 

	 
	TRANSFER BY EXELAR
	 
	2.	 

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

	 
	 	 	(i)
	 the Invention; 

 2

 

	 	 	 (ii)      
	 the Apparatus; 

	 
	 	 	 (iii)      
	 the Patents; 

	 
	 	 	 (iv)      
	 the Know-how; 

	 
	 	 	 (v)     
      
	 the Intellectual Property. 

	 
	 	 (b)      	 Exelar and the Inventor agree to assist
        OPCO in every legal way to evidence, record and perfect the assignment
        evidenced by this Agreement and to apply for and obtain recordation of
        and from time to time enforce, maintain, and defend the assigned rights.
        To the extent that any of the Intellectual Property is a provisional patent,
        Inventor will cooperate with Exelar and the U.S. Patent and Trademark
        Office to attempt to obtain a final grant of said provisional patents
        and, to the extent any such provisional patents are actually issued in
        Inventor's name, Inventor shall promptly assign and transfer, for no cost
        (except the filing and recordation fees which will be borne by OPCO),
        to OPCO. If OPCO is unable for any reason whatsoever to secure Exelar
        or the Inventor's signatures to any document it is entitled to under this
        Agreement, Exelar and the Inventor hereby each irrevocably designate and
        appoint OPCO and its duly authorized officers and agents, as their respective
        agents and attorneys -in- fact with full power of substitution to act
        for and on their behalf and instead of each of Exelar and the Inventor,
        to execute and file any such document or documents and to do all other
        lawfully permitted acts to further the purposes of the foregoing with
        the same legal force and effect as if executed by each of Exelar and the
        Inventor. 

	 
	 	 (c)      	 If, after the date of this Agreement,
        Exelar or the Inventor develops or discovers, or is a co-developer or
        co-discoverer of any Improvement, then the Inventor or Exelar shall promptly
        sell, assign and transfer the Improvement to OPCO without the payment
        of any additional payment or consideration. 

	 
	 	 (d)      	 OPCO will have full control and discretion
        over the manufacturing of the Apparatus, including the selection and specification
        of components and materials. 

	 
	 	 (e)      	 OPCO will have full control and discretion
        over the marketing and commercial exploitation of the Apparatus, the Invention,
        Patents, Know-how and Intellectual Property. 

	 
	 	 (f)      	 Exelar and the Inventor shall communicate
        to OPCO all Know-how and Intellectual Property in the possession of Exelar
        and the Inventor reasonably relevant to the design, manufacture, marketing,
        and use of the Apparatus and the Invention. Exelar and the Inventor will
        continue to communicate to OPCO all such further Know-how and Intellectual
        Property as comes into Exelar or the Inventor's possession. 

	 
	 	 (g)      	 All Know-how and technical information
        in the possession of Exelar and the Inventor reasonably relevant to the
        design, manufacture, marketing, and use of the Apparatus shall be deemed
        to be confidential information. Exelar and the 

 3

 

	 	 	 Inventor shall not disclose or authorize the disclosure
        of such information to any third party, except as expressly permitted
        by OPCO in writing. Exelar and the Inventor shall take reasonable precautions
        to prevent the unauthorised disclosure to third parties of all such confidential
        information. 

	 
	 	 (h)      	 The obligations of Exelar and Inventor hereunder
        are subject to and conditioned on compliance in full, after all applicable
        cure periods, by OPCO under the Promissory Note (as defined under the
        Funding Agreement). In the event of a default under the Promissory Note,
        after all applicable cure periods, Inventor may terminate and cancel its
        obligations under this Agreement and receive an immediate reconveyance
        by OPCO of its respective conveyances, free and clear of all liens, claims,
        security interests and encumbrances of the Patents (together with any
        Improvements thereon and Intellectual Property related thereto) as indicated
        on Schedule A., of the Patents of Inventor. If in such case Inventor is
        unable for any reason whatsoever to secure OPCO's signatures to any document
        it is entitled to under this section, OPCO hereby irrevocably designate
        and appoint Inventor and its duly authorized officers and agents, as their
        respective agents and attorneys -in-fact with full power of substitution
        to act for and on their behalf and instead of OPCO, to execute and file
        any such document or documents and to do all other lawfully permitted
        acts to further the purposes of the foregoing with the same legal force
        and effect as if executed by OPCO. 

CONSIDERATION 

	3.	 
	 	 	 
	 	 (a)      
	 The consideration of the sale, assignment
        and transfer of the Invention, Apparatus, Patents, Know-how and Intellectual
        Property, shall be as follows: 

	 
	 	 	 (i)      
	 the assumption by OPCO of Exelar's obligation to
        pay the Inventor $500,000 in respect of the acquisition of the Technology
        from the Inventor (the "Exelar Obligation"); 

	 
	 	 	 (ii)     
      
	 the issuance by OPCO to Exelar of a total of 2,280,000
        shares of its common stock (the "Shares") on execution of this Agreement.
      

	 
	 	 (b)      
	 All shares of OPCO's common stock issued
        by OPCO pursuant to this Agreement (the "Shares") will be governed by
        the following: 

	 
	 	 	 (i)      
	 All Shares will be issued as "restricted shares",
        as contemplated by the Securities Act of 1933 (the "1933 Act"). Exelar
        acknowledges and agree that the Shares have not been registered under
        the 1933 Act or applicable state "Blue Sky" laws and, therefore, the Shares
        may not be resold, transferred or hypothecated without the registration
        of the Shares, or an opinion of counsel satisfactory to OPCO to the effect
        that such registration is not necessary; 

 4

 

	 	 	(ii) 	All certificates representing the Shares
        will be endorsed with the following legend: 

	 	 	 	 
	 	 	 	 "THE SECURITIES REPRESENTED BY THIS
        CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
        (THE "ACT"), AND HAVE BEEN OFFERED AND SOLD IN RELIANCE UPON EXEMPTIONS
        FROM THE REGISTRATION REQUIREMENTS OF THE ACT. SUCH SECURITIES MAY NOT
        BE OFFERED FOR SALE, TRANSFERRED, PLEDGED OR RESOLD OR OTHERWISE TRANSFERRED
        UNLESS THEY ARE REGISTERED UNDER THE APPLICABLE PROVISIONS OF THE ACT
        OR ARE EXEMPT FROM SUCH REGISTRATION REQUIREMENTS."; 

	 
	 	 	 (iii)      	 All Shares will be issued to Exelar based
        on the representations and warranties of Exelar that: 

	 
	 	 	 	 (A)     
      
	 Exelar has not offered or sold the Shares within
        the meaning of the 1933 Act; 

	 
	 	 	 	 (B)      
	 Exelar is acquiring the Shares for its own account
        for investment, with no present intention of dividing any interest with
        others or of reselling or otherwise disposing of all or any portion of
        the same; 

	 
	 	 	 	 (C)      
	 Exelar does not intend any sale of the Shares either
        currently or after the passage of a fixed or determinable period of time
        or upon the occurrence or non -occurrence of any predetermined event or
        circumstance; 

	 
	 	 	 	 (D)      
	 Exelar has no present or contemplated agreement,
        undertaking, arrangement, obligation, indebtedness or commitment providing
        for or which is likely to compel a disposition of the Shares; 

	 
	 	 	 	 (E)      
	 Exelar is not aware of any circumstances presently
        in existence which are likely in the future to prompt a disposition of
        the Shares; 

	 
	 	 	 	 (F)      
	 The Shares were offered to Exelar in direct communication
        between Exelar and OPCO and not through any advertisement of any kind;
      

	 
	 	 	 	 (G)      
	 Exelar has the financial means to bear the economic
        risk of an investment in the Shares. 

5

ACCEPTANCE OF ASSUMPTION BY INVENTOR

	 4.      	 The Inventor hereby consents and accepts
        the assumption of the Exelar Obligation by OPCO and agrees to extinguish
        the liability of Exelar to him in consideration of the issuance at closing
        of promissory notes of OPCO in favour of the Inventor as follows: 

	 
	 	 	 (i)     
      
	 a promissory note in the principal amount of $200,000
        payable with no interest on the date which is 90 days following closing
        and a payment in the principal amount of $300,000 payable with no interest
        on the date which is 180 days following closing. 

PATENTS

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

WARRANTIES AND REPRESENTATIONS

	6.	 	 
	 	 	 
	 	 (a)      	 The Inventor and Exelar jointly and severally
        warrant and represent to OPCO that: 

	 
	 	 	 (i)     
      
	 Exelar is the sole owner of the Invention, the Apparatus,
        the Patents, the Know-how and the Intellectual Property free and clear
        of all liens, charges, encumbrances and security interests except for
        the NMTB Agreement; 

	 
	 	 	 (ii)      
	 the Inventor holds the Patents in his name as trustee
        for Exelar; 

	 
	 	 	 (iii)      
	 Exelar has the power to sell, assign and transfer
        all of its right, title and interest in and to the Invention, the Apparatus,
        the Patents, the Know-how and the Intellectual Property to OPCO except
        for rights under the NMTB Agreement; 

	 
	 	 	 (iv)      
	 Exelar and the Inventor have not made, granted or
        entered into any assignment, encumbrance, license or other agreement affecting
        the 

 6

	 	 	  	 Invention, the Apparatus,
        the Patents, the Know- how and the Intellectual Property except pursuant
        to the NMTB Agreement;

	 	 	  	 
	 	 	 (v)  	 Exelar and the Inventor
        are not aware of any violation, infringement or misappropriation of any
        third party's rights (or any claim thereof) by the ownership, development,
        manufacture, sale or use of the Invention, the Apparatus, the Patents,
        the Know-how and the Intellectual Property;

	 	 	  	 
	 	 	 (vi)  	 the use of the Apparatus
        by Exelar and the Inventor has never given rise to any complaint alleging
        infringement of any patent, trademarks or other intellectual property
        rights of any other person;

	 	 	  	 
	 	 	 (vii)  	 Exelar and the Inventor
        were not acting within the scope of employment of any third party when
        conceiving, creating or otherwise performing any activity with respect
        to the Invention, the Apparatus, the Patents, the Know-how and the Intellectual
        Property;

	 	 	  	 
	 	 	 (viii)  	 Exelar and the Inventor
        are not aware of any questions or challenges with respect to the patentability
        or validity of any claims of any existing patents or patent pendings relating
        to the Invention, the Apparatus, the Patents, the Know-how and the Intellectual
        Property;

	 	 	 	 
	 	 	(ix)  	The Patents, including any patent applications,
      have been filed with the appropriate Patent authorities in accordance with
      all required laws and regulations and are in good standing. 

JOINT AND SEVERAL OBLIGATIONS

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

ENTIRE AGREEMENT

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

GOVERNING LAW

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

 7

 HEADINGS

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

MODIFICATION AND WAIVER

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

FURTHER ASSURANCE

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

GENDER

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

EQUAL PARTICIPATION IN DRAFTING

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

CLOSING

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

 8

 TIME OF THE ESSENCE

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

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

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

	EXELAR CORPORATION

      By its authorized signatory: 	 
	 	 
	 	 
	 	 
	Name 

      Title 	 
	 	 
	 	 
	EXELAR MEDICAL CORPORATION

      By its authorized signatory: 	 
	 	 
	 	 
	 	 
	Name 

      Title 	 

 9

 SCHEDULE A

PATENTS AND PATENT APPLICATIONS

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

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

 10

 SCHEDULE D 

  To 

  Technology Acquisition and Funding Agreement 

  Among Exelar Corporation and 

  TSI Medical Corp. and OPCO

  Dated March 22, 2004 

 

 

SHAREHOLDERS AGREEMENT

 SHAREHOLDERS AGREEMENT

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

AMONG:

  
    
      
        
          TSI MEDICAL CORP.

            a Nevada corporation

            ("TSI")

        

      

    

  

OF THE FIRST PART

AND:

  
    
      
        
           EXELAR CORPORATION,

            a Delaware corporation

            ("Exelar")

        

      

    

  

OF THE SECOND PART

AND:

  
    
      
        
           EXELAR MEDICAL CORPORATION

            a Nevada corporation

            (the "Corporation")

        

      

    

  

 OF THE THIRD PART

WHEREAS:

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

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

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

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

 1

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

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

	 	 (a)      	 "Agreement" shall mean this Agreement, and all schedules
        and amendments to in the Agreement. 

	 
	 	 (b)      	 "Budget" means the budget that is attached as Schedule
        E to the Technology Acquisition and Funding Agreement; 

	 
	 	 (c)      	 "Common Stock" means the common stock of the Corporation,
        par value $0.001 per share. 

	 
	 	 (d)      	 "Corporation" shall mean Exelar Medical Corporation,
        a Nevada corporation. 

	 
	 	 (e)      	 "Technology Acquisition and Funding Agreement" means
        the agreement among the parties with respect to the acquisition of Technology
        by and funding of the Corporation being executed concurrent with this
        Agreement. 

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

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

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

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

 2

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

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

	 	 	 (i)      	 alter or change the Corporation's Articles of Incorporation
        or Bylaws; 

	 
	 	 	 (ii)      	 authorize or designate any equity security (or security
        convertible into an equity security such as a warrant, option or convertible
        instrument) other than the Common Stock; 

	 
	 	 	 (iii)      	 increase the number of shares of capital stock reserved
        for issuance under, or authorize the creation of any employee, officer,
        director or consultant stock purchase or stock option plan; 

	 
	 	 	 (iv)      	 change the size of the Board of Directors; 

	 
	 	 	 (v)      	 increase or decrease the total number of authorized
        shares of Common Stock or any other class of stock; 

	 
	 	 	 (vi)      	 incur borrowings or other indebtedness individually
        or in the aggregate in excess of $50,000, excluding trade payables incurred
        in the ordinary course of business; 

	 	 	 	 
	 	 	(vii) 	pay or declare any dividend or distribution on, or
        redeem, repurchase, or otherwise acquire, any shares of capital stock
        (or make any payment or set aside a sinking fund for such purpose);

	 	 	 	 
	 	 	(viii) 	make loans or advances except in the ordinary course
        of business; 

	 	 	 	 
	 	 	(ix)  	approve any merger or consolidation of the Corporation
        or any sale of all or substantially all of the assets of the Corporation
        or approve or facilitate any other event resulting in a change in control
        of the Corporation;

	 	 	 	 
	 	 	(x) 	mortgage or pledge, or create a security interest
        in, or otherwise dispose of any material asset;  

	 	 	 	 
	 	 	(xi) 	form or constitute any audit, compensation, executive
        or other committee of the Board;

	 	 	 	 
	 	 	(xii) 	authorize any action that results in any voluntary
        bankruptcy, assignment for the benefit of creditors, acceleration of third
        party obligations, assignment for the benefit of creditors, confession
        of judgment, dissolution or liquidation of the Corporation or any reclassification
        of the Corporation's capital stock;

 3

	 	 	 (xiii)  	 hire or fire the CEO, COO,
        CFO or any other officer having similar  responsibilities;

	 	 	  	 
	 	 	 (xiv)  	 enter into any transaction
        with an affiliate;

	 	 	  	 
	 	 	 (xv)  	 incur capital expenditures
        in excess of $250,000 in any calendar year; or

	 	 	  	 
	 	 	 (xvi)  	 pay total compensation to
        any officer, director or employee of the  Corporation (other than
        as provided in the Budget) including the granting  of any option,
        warrant or other convertible security.

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

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

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

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

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

 4

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

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

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

	 15.      	 Term. This Agreement shall terminate and
        be of no further force or effect upon (a) the termination of TSI's funding
        obligations or exercise of other remedies by Exelar under paragraph 12.3
        of the Technology Acquisition and Funding Agreement, (b) the acquisition
        of the Corporation by another entity by means of any transaction or series
        of related transactions (including, without limitation, any reorganization,
        merger or consolidation) that results in the transfer of fifty percent
        (50%) or more of the outstanding voting power of the Corporation or a
        sale of all or substantially all of the assets of the Corporation, (c)
        February 15, 2010 or (d) the written consent of all the parties. 

	 
	 	 Notwithstanding any termination of this Agreement,
        if at any time after the termination of this Agreement either of TSI or
        Exelar (or their transferees, successors or assigns) (a "Seller") desires
        to sell all or any part of the Covered Shares owned by such Seller to
        any person or entity other than the Corporation or the other shareholder
        (the "Buyer"), TSI (if it is not the Seller) or Exelar if it is not the
        Seller) (the "Tagger") shall have the right to sell to the Buyer, as a
        condition to such sale by the Seller at the same price per share and on
        the same terms and conditions as the proposed sale by the Seller, the
        number of Covered Shares equal to the product of (i) the aggregate
        number of Covered Shares proposed to be sold by the Seller multiplied
        by (ii) a fraction with a numerator equal to the number of Covered
        Shares that Seller owns and a denominator equal to the total number of
        Covered Shares owned by such Seller and each Tagger who wishes to exercise
        tag-along rights in accordance with this section. Prior to any such proposed
        sale, such Seller shall deliver to the Tagger and to the Corporation a
        notice of proposed sale (the "Notice"), which discloses the identity of
        the Buyer, the Covered Shares proposed to be sold, the total number of
        Covered Shares owned by the Seller, the terms and conditions, including
        price, of the proposed sale, and any other material facts relating to
        the proposed sale. If the Tagger wishes to so participate in any sale
        under this section 15, it shall notify the Seller in writing of such intention
        as soon as practicable after such holder's receipt of the Notice, and
        in any event within twenty days after the date the Notice was received.
        Prior to the sale of any Covered Shares to be sold by Seller and/or Tagger
        hereunder, such person shall deliver to the Corporation (in a form reasonably
        acceptable to the Corporation) a written 

 5

 

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

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

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

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

6

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

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

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

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

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

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

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

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

 7

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

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

	EXELAR CORPORATION 

      a Delaware corporation by its

      authorized signatory: 	 
	 	 
	 	 
	Signature of Authorized Signatory 	 
	 	 
	 	 
	Name of Authorized Signatory 	 
	 	 
	 	 
	Position of Authorized Signatory 	 
	 	 
	 	 
	TSI MEDICAL CORP. 

      a Nevada corporation by its 

      authorized signatory: 	 
	 	 
	 	 
	Signature of Authorized Signatory 	 
	 	 
	 	 
	Name of Authorized Signatory 	 
	 	 
	 	 
	Position of Authorized Signatory 	 
	 	 
	 	 
	EXELAR MEDICAL CORPORATION 

      a Nevada corporation by its 

      authorized signatory: 	 
	 	 
	 	 
	Signature of Authorized Signatory 	 
	 	 
	 	 
	Name of Authorized Signatory 	 
	 	 
	 	 
	Position of Authorized Signatory 	 

8

 SCHEDULE A 

  ADOPTION AGREEMENT 

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

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

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

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

	SIGNED, SEALED AND DELIVERED

      by the Transferee in the presence of: 	 	 
	 	 	 
	 	 	 
	Signature of Witness 	 	Signature of Transferee 
	 	 	 
	 	 	 
	 	 	 
	Name of Witness	 	 
	 	 	 
	 	 	 
	 	 	 
	Address of Witness 	 	 

 

 SCHEDULE E 

  To 

  Technology Acquisition and Funding Agreement 

  Among Exelar Corporation and

  TSI Medical Corp. and OPCO

  Dated March 22, 2004 

 

 

BUDGET

EXELAR MEDICAL

BUDGET 

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

 SCHEDULE F 

  To 

  Technology Acquisition and Funding Agreement 

  Among Exelar Corporation and 

  TSI Medical Corp. and OPCO

  Dated March 22, 2004 

 

 

EMPLOYMENT AGREEMENT

 EMPLOYMENT AGREEMENT

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

BETWEEN: 

  
    
      
         Exelar Medical Corporation of NV 

         (the "Corporation") 

      

    

  

 OF THE FIRST PART 

AND: 

  
    
      
        LEN REIFFEL, of 602 Deming Place, Chicago, II 60614

         (the "Employee") 

      

    

  

OF THE SECOND PART 

WHEREAS: 

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

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

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

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

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

(b) Assemble the Corporation's staff 

(c) Manage the Corporation's technical activities 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

[REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

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

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

	Exelar Medical Corporation

      By its authorized signatory:	 
	 	 
	 	 
	 	 
	 	 
	Name 

      Title 	 

	SIGNED, SEALED AND DELIVERED
 BY
      LEN REIFFEL 

      in the presence of: 	 	 
	 	 	 
	 	 	 
	 	 	 
	Signature of Witness 	 	LEN REIFFEL 
	 	 	 
	 	 	 
	 	 	 
	Name of Witness 	 	 
	 	 	 
	 	 	 
	 	 	 
	Address of WitnessEXHIBIT 4.7
                                                                     -----------

                      EMPLOYEE STOCK OPTION GRANT AGREEMENT

                                    UNDER THE

                     CDKNET.COM, INC. 2004 STOCK OPTION PLAN

     This Grant Agreement (the "Agreement") is entered into by and between
CDKnet.com, Inc., a Delaware corporation (the "Company"), and the individual
(the "Optionee") specified on the Notice of Grant of Stock Options attached
hereto and incorporated by reference herein (the "Notice of Grant of Stock
Options"), effective as of May 24, 2004 (the "Grant Date").

     1.   Grant of Option. The Company hereby grants to the Optionee, pursuant
to the CDKnet.com, Inc. 2004 Stock Option and Restricted Stock Plan (the
"Plan"), an option (the "Option") to purchase the number of Shares set forth in
the Notice of Grant attached hereto as Exhibit 1, at the exercise price per
Share set forth in the Notice of Grant (the "Exercise Price"), and subject to
the terms and conditions of the Plan, which is incorporated herein by reference.
Subject to Section 15(c) of the Plan (Effect of Amendment or Termination), in
the event of a conflict between the terms and conditions of the Plan and this
Option Agreement, the terms and conditions of the Plan shall prevail.

          (a) This Option is not intended to qualify as an Incentive Stock
Option as defined in Section 422 of the Code and shall be treated as a
Nonqualified Stock Option ("NQO"). The Notice of Grant of Stock Options sets
forth the following terms of the Option: (i) the Optionee, (ii) the number of
shares of Stock subject to the Option, (iii) the Strike Price per share, and
(iv) the date as of which the Option shall expire (the "Expiration Date"), at
5:00 p.m. Eastern Time, unless fully exercised or earlier terminated. The
information provided on the Notice of Grant of Stock Options is in all respects
subject to the terms of this Agreement.

     2.   Terminology. Unless stated otherwise in this Agreement, capitalized
terms in this Agreement shall have the meaning set forth in the Plan. Except
where the context otherwise requires, the term "Company" shall mean CDKnet.com,
Inc., a Delaware corporation.

     3.   Exercise of Option.

          (a) Right to Exercise. Except as otherwise provided in this Agreement,
this Option may be exercised as to its vested portion at any time and from time
to time, in whole or in part, on or before the Expiration Date or earlier
termination of the Option by executing the exercise notice in the form of
Exhibit 2. To the extent not exercised, vested shares shall accumulate and be
exercisable, in whole or in part, at any time after becoming exercisable, but
not later than the Expiration Date or other termination of the Option. In the
event of the Optionee's death, disability, or other termination of employment,
the exercisability is governed by Section 4 below.

          (b) Vesting. Unless the Option has earlier terminated, Optionee shall
vest in accordance with the vesting schedule set forth in the Notice of Grant.

          (c) Exercise Procedure. Subject to the conditions set forth in this
Agreement, including without limitation the execution of a Stock Restriction
Agreement as required by Section 3(e) hereof, this Option shall be exercised by
delivery of written notice of exercise on any business day to the Corporate
Secretary of the Company in such form as the Administrator may require from time
to time. Such notice shall specify the number of shares in respect of
<PAGE>
which the Option is being exercised and shall be accompanied by full payment of
the Strike Price for such shares in accordance with Section 3(d) of this
Agreement. The exercise shall be effective upon receipt by the Corporate
Secretary of the Company of such written notice accompanied by the required
payment. The Option may be exercised only in multiples of whole vested shares
and may not be exercised at any one time as to fewer than one hundred (100)
shares (or such lesser number of shares as to which the Option is then
exercisable). No fractional shares shall be issued pursuant to this Option.

          (d) Method of Payment. Payment of the Strike Price shall be by any of
the following, or a combination thereof, as determined by the Administrator in
its discretion at the time of exercise:

              i.  By delivery of cash, certified or cashier's check, or money
                  order;

              ii. By any other method approved by the Administrator.

     Subject to such limitations as the Administrator may determine, at any time
during which the Stock is publicly traded on a national securities exchange or
NASDAQ, the Strike Price shall be deemed to be paid, in whole or in part, if the
Optionee delivers a properly executed exercise notice, together with irrevocable
instructions: (A) to a brokerage firm approved by the Company to deliver
promptly to the Company the aggregate amount of sale or loan proceeds to pay the
Strike Price and any withholding tax obligations that may arise in connection
with the exercise, and (B) to the Company to deliver the certificates for such
purchased shares directly to such brokerage firm.

          (e) Issuance of Shares upon Exercise. Upon due exercise of the Option,
in whole or in part, in accordance with the terms of this Agreement, the Company
shall issue to the Optionee, or such other person exercising the Option, as the
case may be, the number of shares of Stock so paid for, in the form of fully
paid and nonassessable stock and shall deliver certificates therefor as soon as
practicable thereafter. The stock certificates for any shares of Stock issued
hereunder shall, unless such shares are registered or an exemption from
registration is available under applicable federal and state law, bear a legend
restricting transferability of such shares, and if such shares are subject to a
Stock Restriction Agreement pursuant to Section 3(e) hereof, shall bear a legend
referencing the Stock Restriction Agreement.

     4.   Termination of Employment.

          (a) Exercise Period Following Termination of Employment. Unless the
Option has earlier terminated, if the Optionee's employment with the Company is
terminated, other than as a result of the causes set forth in clauses (b), (c)
or (d) below: (i) this Option shall terminate immediately upon such termination
of employment to the extent of any unvested shares, and all unvested shares
shall be forfeited, and (ii) this Option shall be exercisable during the 30-day
period following such termination of employment with respect to any vested
shares, but in no event after the Expiration Date. Unless sooner terminated,
this Option shall terminate in its entirety upon the expiration of the
applicable exercise period noted above in this Section 4(a).

          (b) Permanent Disability of Optionee. Notwithstanding the provisions
of Section 4(a) above, if the Optionee's employment with the Company terminates
as a result of his Permanent Disability (as defined herein), (i) this Option
shall terminate immediately upon such termination of employment to the extent of
any unvested shares, and all unvested shares shall be forfeited,

                                        2
<PAGE>
and (ii) this Option shall be exercisable during the six-month period following
such termination of employment with respect to any vested shares, but in no
event after the Expiration Date. Unless sooner terminated, this Option shall
terminate in its entirety upon the expiration of such six-month period.
"Permanent Disability" shall have the meaning set forth in Optionee's existing
Employment Agreement with the Company. If no such Employment Agreement is in
effect, then such term shall have the same meaning as set forth in the last
existing employment agreement between Optionee and the Company or otherwise in
accordance with the definition set forth in the Plan.

          (c) Death of Optionee. If the Optionee dies before the Expiration Date
or other termination of the Option, (i) this Option shall terminate immediately
upon the Optionee's death to the extent of any unvested shares, and all unvested
shares shall be forfeited, and (ii) this Option shall be exercisable during the
six-month period following the date of death of the Optionee with respect to any
vested shares, but in no event after the Expiration Date, by the Optionee's
executor, personal representative, or the person(s) to whom this Option is
transferred by will or the laws of descent and distribution. Unless sooner
terminated, this Option shall terminate in its entirety upon the expiration of
such six-month period.

          (d) Discharge for Cause. Notwithstanding anything to the contrary
herein, this Option shall terminate in its entirety, regardless of whether the
Option is vested in whole or in part, immediately upon the Optionee's discharge
of employment for Cause. For purposes of this Section, the term "Cause" shall
have the meaning set forth in existing Employment Agreement with the Company. If
no such Employment Agreement is in effect, then such term shall have the same
meaning as set forth in the last existing employment agreement between Optionee
and the Company or as set forth in the Plan.

     5.   Adjustments and Business Combinations.

          (a) Adjustments for Events Affecting Stock. In the event of changes in
the Stock of the Company by reason of any stock dividend, spin-off, split-up,
recapitalization, merger, consolidation, business combination or exchange of
shares and the like, the Administrator shall, in its discretion, make
appropriate adjustments to the number, kind, and price of shares covered by this
Option, and shall, in its discretion and without the consent of the Optionee,
make any other adjustments in this Option, including but not limited to reducing
the number of shares subject to the Option or providing or mandating alternative
settlement methods such as settlement of the Option in cash or in shares of
Stock or other securities of the Company or of any other entity, or in any other
matters which relate to the Option as the Administrator shall, in its sole
discretion, determine to be necessary or appropriate.

          (b) Pooling of Interests Transaction. Notwithstanding anything in the
Plan or this Agreement to the contrary and without the consent of the Optionee,
the Administrator, in its sole discretion, may make any modifications to the
Option, including but not limited to cancellation, forfeiture, surrender, or
other termination of the Option in whole or in part regardless of the vested
status of the Option, in order to facilitate any business combination that is
authorized by the Board to comply with requirements for treatment as a pooling
of interests transaction for accounting purposes under generally accepted
accounting principles.

          (c) Adjustments for Unusual Events. The Administrator is authorized to
make, in its discretion and without the consent of the Optionee, adjustments in
the terms and conditions of, and the criteria included in, the Option in
recognition of unusual or nonrecurring events affecting

                                        3
<PAGE>
the Company, or the financial statements of the Company or any Affiliate, or of
changes in applicable laws, regulations, or accounting principles, whenever the
Administrator determines that such adjustments are appropriate to prevent
dilution or enlargement of the benefits or potential benefits intended to be
made available under the Option or the Plan.

          (d) Binding Nature of Adjustments. Adjustments under this Section 5
will be made by the Administrator, whose determination as to what adjustments,
if any, will be made and the extent thereof will be final, binding, and
conclusive. No fractional shares will be issued pursuant to this Option on
account of any such adjustments.

     6.   Confidential Information. In consideration of the Option granted to
the Optionee pursuant to this Agreement, the Optionee agrees and covenants that,
except as specifically authorized by the Company, the Optionee will keep
confidential any trade secrets or confidential or proprietary information of the
Company which are now or which hereafter may become known to the Optionee as a
result of the Optionee's employment by the Company, and shall not at any time,
directly or indirectly, disclose any such information to any person, firm,
Company, or other entity, or use the same in any way other than in connection
with the business of the Company, at all times during and after the Optionee's
employment. The provisions of this Section 6 shall not narrow or otherwise limit
the obligations and responsibilities of the Optionee set forth in any agreement
of similar import entered into between the Optionee and the Company.

     7.   Non-Guarantee of Employment. Nothing in the Plan or this Agreement
shall alter the at-will or other employment, consultant, or director status of
the Optionee, nor be construed as a contract of employment between the Company
and the Optionee, or as a contractual right of Optionee to continue in the
employ of, the Company, or as a limitation of the right of the Company to
discharge the Optionee at any time with or without cause or notice.

     8.   No Rights as a Stockholder. The Optionee shall not have any of the
rights of a stockholder with respect to the shares of Stock that may be issued
upon the exercise of the Option until such shares of Stock have been issued to
him or her upon the due exercise of the Option. No adjustment shall be made for
dividends or distributions or other rights for which the record date is before
the date such certificate or certificates are issued.

     9.   Nonstatutory Nature of the Option. The Optionee acknowledges that,
upon exercise of this Option, the Optionee will recognize taxable income in an
amount equal to the excess of the then Fair Market Value of the shares over the
Strike Price and must comply with the provisions of Section 10 of this Agreement
with respect to any tax withholding obligations that arise as a result of such
exercise.

     10.  Withholding of Taxes. At the time the NSO Option is exercised, in
whole or in part, or at any time thereafter as requested by the Company, the
Optionee hereby authorizes withholding from payroll or any other payment of any
kind due the Optionee and otherwise agrees to make adequate provision for
foreign, federal, state, and local taxes required by law to be withheld, if any,
which arise in connection with the Option. The Company may require the Optionee
to make a cash payment to cover any withholding tax obligation as a condition of
exercise of the Option. If the Optionee does not make such payment when
requested, the Company may refuse to issue any Stock certificate under the Plan
until arrangements satisfactory to the Administrator for such payment have been
made. The Administrator may, in its sole discretion, permit the Optionee to
satisfy, in whole or in part, any withholding tax obligation which may arise in
connection with the Option either by electing to have the Company withhold from
the shares to be issued upon

                                        4
<PAGE>
exercise that number of shares, or by electing to deliver to the Company
already-owned shares, in either case having a Fair Market Value equal to the
amount necessary to satisfy the statutory minimum withholding amount due.

     11.  The Company's Rights. The existence of this Option shall not affect in
any way the right or power of the Company or its stockholders to make or
authorize any or all adjustments, recapitalizations, reorganizations, or other
changes in the Company's capital structure or its business, or any merger or
consolidation of the Company, or any issue of bonds, debentures, preferred, or
other stocks with preference ahead of or convertible into, or otherwise
affecting the Stock or the rights thereof, or the dissolution or liquidation of
the Company, or any sale or transfer of all or any part of the Company's assets
or business, or any other corporate act or proceeding, whether of a similar
character or otherwise.

     12.  Optionee. Whenever the word "Optionee" is used in any provision of
this Agreement under circumstances where the provision should logically be
construed, as determined by the Administrator, to apply to the estate, personal
representative, or beneficiary to whom this Option may be transferred by will or
by the laws of descent and distribution, the word "Optionee" shall be deemed to
include such person.

     13.  Nontransferability of Option. This Option is nontransferable otherwise
than by will or the laws of descent and distribution and during the lifetime of
the Optionee, the Option may be exercised only by the Optionee or, during the
period the Optionee is under a legal disability, by the Optionee's guardian or
legal representative. Except as provided above, the Option may not be assigned,
transferred, pledged, hypothecated, or disposed of in any way (whether by
operation of law or otherwise) and shall not be subject to execution,
attachment, or similar process.

     14.  Notices. All notices and other communications made or given pursuant
to this Agreement shall be in writing and shall be sufficiently made or given if
hand-delivered or mailed by certified mail, addressed to the Optionee at the
address contained in the records of the Company, or addressed to the
Administrator, care of the Company for the attention of its Corporate Secretary
at its principal office or, if the receiving party consents in advance,
transmitted and received via telecopy or via such other electronic transmission
mechanism as may be available to the parties.

     15.  Entire Agreement. This Agreement contains the entire agreement between
the parties with respect to the stock option granted hereunder. Any oral or
written agreements, representations, warranties, written inducements, or other
communications made before the execution of this Agreement with respect to the
stock option granted hereunder shall be void and ineffective for all purposes.

     16.  Amendment. This Agreement may not be modified, except as provided in
the Plan or in a written document signed by each of the parties hereto.

     17.  Conformity with Plan. This Agreement is intended to conform in all
respects with, and is subject to all applicable provisions of, the Plan, which
is incorporated herein by reference. Inconsistencies between this Agreement and
the Plan shall be resolved in accordance with the terms of the Plan. In the
event of any ambiguity in this Agreement or any matters as to which this
Agreement is silent, the Plan shall govern. A copy of the Plan is available upon
request to the Administrator.

                                        5
<PAGE>
     18.  Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New Jersey, other than the conflict of
laws principles thereof. All actions to enforce or interpret this Agreement
shall be brought in an exclusive forum in New Jersey determined by the
Administrator.

     19.  Headings. The headings in this Agreement are for reference purposes
only and shall not affect the meaning or interpretation of this Agreement.

     IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by
its duly authorized officer as of the date first above written.

                                            CDKNET.COM, INC.

                                            By: _______________________
                                                Steven A. Horowitz, CEO

The undersigned hereby acknowledges that he/she has carefully read this
Agreement and the Plan and agrees to be bound by all of the provisions set forth
in such documents.

                                            OPTIONEE:

                                            _______________________________

                                            Date: As of ____________, 200__

                                        6
<PAGE>

                                    EXHIBIT 1
                                    ---------
                        NOTICE OF GRANT OF STOCK OPTIONS
                        --------------------------------

OPTIONEE:                                __________________

GRANT DATE:                              MAY 24, 2004

NUMBER OF SHARES SUBJECT
TO THE OPTION:                           _____________ (NSOS)

STRIKE PRICE PER SHARE:                  $.01

VESTING:                                 50% ON NOVEMBER 24, 2004
                                         BALANCE ON MAY 24, 2005

EXPIRATION DATE:                         MAY 23, 2008

                                        7
<PAGE>

                                    EXHIBIT 2
                                    ---------
                           FORM OF NOTICE OF EXERCISE
                           --------------------------

Administrator of 2004 Stock Option and Restricted Stock Plan
c/o Office of the Corporate Secretary
CDKnet.com, Inc.
948 US Highway 22
North Plainfield, NJ  07060

Gentlemen:

     I hereby exercise the Stock Option granted to me on May 24, 2004, by
CDKnet.com, Inc. (the "Company"), subject to all the terms and provisions
thereof and of the CDKnet.com, Inc. 2004 Stock Option and Restricted Stock Plan
(the "Plan"), and notify you of my desire to purchase ____________ shares of
Common Stock of the Company at a price of $___________ per share pursuant to the
exercise of said Option. This will confirm my understanding with respect to the
shares to be issued to me by reason of this exercise of the Option (the shares
to be issued pursuant hereto shall be collectively referred to hereinafter as
the "Shares"), unless such exercise occurs after a registration statement is
filed and effective, as follows:

          (a) I am acquiring the Shares for my own account for investment with
no present intention of dividing my interest with others or of reselling or
otherwise disposing of any of the Shares.

          (b) The Shares are being issued without registration under the
Securities Act of 1933, as amended (the "Act"), in reliance upon one or more
exemptions contained in the Act, and such reliance is based in part on the above
representation.

          (c) The certificates for the Shares to be issued to me will bear a
legend substantially as follows:

              "The securities represented by this stock certificate have not
been registered under the Securities Act of 1933 (the "Act") or applicable state
securities laws (the "State Acts"), and shall not be sold, pledged,
hypothecated, donated, or otherwise transferred (whether or not for
consideration) by the holder except upon the issuance to the Company of a
favorable opinion of its counsel and/or submission to the Company of such other
evidence as may be satisfactory to counsel for the Company, to the effect that
any such transfer shall not be in violation of the Act and the State Acts.

              "The shares of stock represented by this certificate are subject
to restrictions on transfer and an option to purchase set forth in a certain
Stock Restriction Agreement between the Company and the registered owner of this
certificate (or his predecessor in interest), and no transfer of such shares may
be made without compliance with that Agreement. A copy of that Agreement is
available for inspection at the office of the Company upon appropriate request
and without charge."

Appropriate stop transfer instructions will be issued by the issuer to its
transfer agent.

                                        8
<PAGE>

          (d) Since the Shares have not been registered under the Act, they must
be held indefinitely until an exemption from the registration requirements of
the Act is available or they are subsequently registered, in which event the
representation in Paragraph (a) hereof shall terminate. As a condition to any
transfer of the shares, I understand that the issuer will require an opinion of
counsel satisfactory to the issuer to the effect that such transfer does not
require registration under the Act or any state securities law.

          (e) The issuer is not obligated to comply with the registration
requirements of the Act or with the requirements for an exemption under
Regulation A or Regulation D under the Act for my benefit.

          I am a party to a Stock Restriction Agreement with the Issuer,
pursuant to which I have agreed to certain restrictions on the transferability
of the Shares and other matters relating thereto.

Total Amount Enclosed: $__________

Date:________________________               ____________________________________
                                            (Optionee)

                                            CDKnet.com, Inc.

                                            By: ________________________________
                                                Steven A. Horowitz, CEO

                                        9

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00071-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00071-of-00352.parquet"}]]