-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FYpJq/7AOGGNpf8CqU2m4z0zXQM+UQrysW2uCnPY0GD05Vz+/+kfCoIPqUnrKzKX o26lN0j8iiP2+dfP03Xd5Q== 0001000096-06-000278.txt : 20060728 0001000096-06-000278.hdr.sgml : 20060728 20060728135852 ACCESSION NUMBER: 0001000096-06-000278 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 20060728 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Completion of Acquisition or Disposition of Assets ITEM INFORMATION: Unregistered Sales of Equity Securities ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20060728 DATE AS OF CHANGE: 20060728 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BESTNET COMMUNICATIONS CORP CENTRAL INDEX KEY: 0000799694 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE COMMUNICATIONS (NO RADIO TELEPHONE) [4813] IRS NUMBER: 861006416 STATE OF INCORPORATION: NV FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-15482 FILM NUMBER: 06987276 BUSINESS ADDRESS: STREET 1: 2850 THORNHILLS AVE. SE STREET 2: SUITE 104 CITY: GRAND RAPIDS STATE: MI ZIP: 49546 BUSINESS PHONE: 616-977-9933 MAIL ADDRESS: STREET 1: 2850 THORNHILLS AVE. SE STREET 2: SUITE 104 CITY: GRAND RAPIDS STATE: MI ZIP: 49546 FORMER COMPANY: FORMER CONFORMED NAME: WAVETECH INTERNATIONAL INC DATE OF NAME CHANGE: 19980225 FORMER COMPANY: FORMER CONFORMED NAME: WAVETECH INC DATE OF NAME CHANGE: 19920703 8-K 1 bestnet8k7282006.txt FORM 8-K ================================================================================ United States Securities and Exchange Commission Washington, DC 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report: July 28, 2006 (Date of earliest event reported: July 26, 2006) BESTNET COMMUNICATIONS CORP. - ----------------------------------------------------- (Exact name of registrant as specified in its charter) Nevada 001-15482 86-1006416 - ------ --------- ---------- (State or other jurisdiction (Commission (IRS Employer of incorporation) File Number) Identification No.) 2850 Thornhills Ave., S.E., Suite 104 Grand Rapids, Michigan 49546 - -------------------------------------- (Address of principal executive offices) (Zip Code) (616) 977-9933 (Registrant's telephone number) - -------------- Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Unless otherwise indicated or the context otherwise requires, all references below in this report on Form 8-K to "we," "us" and the "Company" are to BestNet Communications Corp., a Nevada corporation and its subsidiary, Oncologix Corporation, a Nevada corporation. References to "Oncologix" are to Oncologix Corporation. Cautionary Note Regarding Forward-looking Statements and Risk Factors The Registrant's Form 10-KSB, any Form 10-QSB or any Form 8-K of the Registrant or any other written or oral statements made by or on behalf of the Registrant may contain forward-looking statements which reflect the Registrant's current views with respect to future events and financial performance. The words "believe," "expect," "anticipate," "intends," "estimate," "forecast," "project," and similar expressions identify forward-looking statements. All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including any statements of the plans, strategies and objectives of management for future operations; any statements concerning proposed new products, services, developments or industry rankings; any statements regarding future economic conditions or performance; any statements of belief; any statements regarding the validity of our intellectual property and patent protection; and any statements of assumptions underlying any of the foregoing. Such "forward-looking statements" are subject to risks and uncertainties set forth from time to time in the Registrant's SEC reports and include, among others, the Risk Factors described below. Readers are cautioned not to place undue reliance on such forward-looking statements as they speak only of the Registrant's views as of the date the statement was made. The Registrant undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. ITEM 1.01 Entry into Material Definitive Agreements We are hereby reporting our entry into the following material agreements: (A) JDA Merger Agreement. On July 26, 2006 we entered into a Merger Agreement with our wholly owned subsidiary, Oncologix Corporation, a Nevada corporation ("Oncologix"), JDA Medical Technologies, Inc., a Maryland corporation ("JDA"), Andrew S. Kennedy, MD, Jeff Franco, Andrew Green and Adam Lowe (filed herewith as Exhibit 10.20) pursuant to which JDA has been merged into Oncologix. The individuals named are the principal shareholders of JDA. Dr. Kennedy and Mr. Franco are JDA's officers and directors and Mess'rs Green and Lowe are consultants to JDA and are, as a result of the Merger, becoming officers of Oncologix. Dr. Kennedy and Mr. Green are becoming members of the Company's Board of Directors and both of them as well as Mr. Lowe are becoming officers and directors of Oncologix. The Merger took place on the same date and its terms are further described under Item 2.01, below. (B) Master License Agreement. As a result of the Merger described below, Oncologix became the successor to JDA, as Licensee, under an existing Master License Agreement, as amended, with the University of Maryland, Baltimore (the "University"), as Licensor (filed herewith as Exhibit 10.21). That license covers certain microsphere technology owned by the University of Maryland pertaining to: (1) micro particles to which isotopes have been chemically attached for the purposes of treating cancer, (2) a proprietary, kit-based approach to the assembling of microspheres dosed with appropriate radiations, and (3) with post treatment visibility based on the attachment of gamma emitting isotopes to micro particles that allow visualization of the micro particles with diagnostic imaging. This technology and the License are further described under Item 2.01, below 2 (C) License Agreement with Fountain Pharmaceuticals, Inc. We also became the successor to JDA, as sublicensor, under a License Agreement with Fountain Pharmaceuticals, Inc., a Delaware corporation, filed herewith as Exhibit 10.22). This agreement grants an exclusive right to manufacture and market products embodying the University of Maryland technology in Mainland China, Taiwan and Hong Kong, and is more fully described below. (D) Employment Agreements. Upon the Merger, we entered into Employment Agreements, as Employer, with Dr. Kennedy (filed herewith as Exhibit 10.23), Mess'rs Green and Lowe (filed herewith as Exhibits 10.24 and 10.25 respectively) and a Consulting Agreement with Mr. Franco (filed herewith as Exhibit 10.26). Each of these agreements is for an initial term of two years, with renewals as provided by their terms. o Dr. Kennedy has been employed as the Chief Scientific and Medical Officer of Oncologix. He will also serve as a member of the Board of Directors of both the Company and Oncologix. He and has agreed to devote the approximate equivalent, in number of hours, of two working days per week to the business of Oncologix and is to be paid an annual salary of $240,000. However, his responsibilities to his medical practice will have priority over his service to the Company. o Mr. Green has been employed as Chairman and Chief Executive Officer of Oncologix. He will also serve as a member of the Board of Directors of both the Company and Oncologix. He is to be paid an annual salary of $180,000. o Mr. Lowe has been employed as the President and Chief Operating Officer of Oncologix. He will also serve as a member of the Board of Directors of Oncologix. He is to be paid an annual salary of $180,000. o Mr. Franco has been engaged as a consultant to Oncologix on a part-time basis (approximately one day per week) pursuant to a two-year Consulting Agreement, a copy of which has been filed herewith as Exhibit 10.26. He is to be paid an annual fee of $75,000. All of the Employment Agreements and the Consulting Agreement contain two-year covenants not to compete and typical provisions for the protection of confidential information and ownership by the Company of inventions made by such persons while engaged by the Company. ITEM 2.01 Completion of Acquisition or Disposition of Assets On July 26, 2006, the merger (the "Merger") contemplated by the Merger Agreement was completed with the filing of a Certificate of Merger with the Secretary of State of Nevada and Articles of Merger, merging JDA into Oncologix Corporation, which is our wholly owned subsidiary. As a result of the Merger and pursuant to the Merger Agreement, we are issuing 43,000,000 shares of our common stock to the holders of the common stock of JDA at a rate of 4.78 shares of our stock for each share of JDA stock. All options and warrants to acquire any stock of JDA have been terminated. Before the Merger, approximately 47,097,953 shares of our common stock and 443,162 shares of our preferred stock were outstanding. After the Merger 90,097,953 shares of our common stock and the same number of shares of preferred stock are outstanding. Upon the merger, 98,847,960 of our shares are outstanding, on a fully diluted basis, which includes not only shares of common stock, but also shares underlying outstanding shares of convertible preferred stock, warrants, options and convertible debentures that could be exercised or converted into shares of common stock. Pursuant to the Merger Agreement, the following shares of our common stock issued to the individuals named above have been placed in an escrow: Eighty per cent (80%) of the shares issued to Dr. Kennedy and Mr. Franco respectively and 3 all of the shares issued to Messrs Green and Lowe respectively. Those shares are to be released upon the occurrence of certain specified events, described under Item 3.02, below. In addition, for as long as they are held in the escrow pending those events, the escrowed shares of Dr. Kennedy and Mr. Franco are to be available as collateral for fulfillment of their possible individual indemnification obligations under the Merger Agreement. We granted certain piggyback and demand registration rights to the shareholders of JDA with respect to the shares of our stock issued to them. We agreed to provide $4,000,000 to fund the Oncologix operations. Of that amount, $350,000 had been previously advanced to JDA (as reported in our Current Report on Form 8K filed March 23, 2006). An additional $400,000 was deposited to the account of Oncologix at the Closing of the Merger and the remaining $3,250,000 is to be deposited in installments over a period of six months after the Closing. It should be noted by those reading this Report that if we fail to provide those funds as agreed, we will be in default under the Master License Agreement with the University of Maryland and such default could be grounds for the termination of the Master License Agreement by the University. We borrowed the funds for the initial $350,000 payment on a six-month convertible promissory note from a non-affiliate (as reported in our Current Report on Form 8K filed on March 23, 2006) who is believed to have been one of our existing shareholders. The $400,000 deposited at the Closing was borrowed on ninety-day notes, bearing interest at the rate of 10% per annum and convertible into shares of our common stock at the price per share equal to the price set in our forthcoming private offering of securities for the purpose of financing the Merger; $200,000 from a husband and wife who are not affiliated with us and $200,000 from Mr. Anthony Silverman, a member of our Board of Directors. We expect to obtain funds to repay these borrowings and to make the additional payments that are to be deposited for the Oncologix account from a private offering to investors. Mr. Silverman has advised us that he does not intend to convert his $200,000 note. BUSINESS OF THE REGISTRANT AND ITS SUBSIDIARY Significant Change in Direction. The Merger represents a significant change in our direction and focus and reflects a decision to enter the medical device industry. We are, however, continuing to conduct our Internet related telephone business as described in previous Annual and Quarterly Reports filed pursuant to the Securities Exchange Act of 1934, as amended, The Oncologix Business. Background and History Oncologix was formed on June 26, 2006 as a Nevada corporation to continue the business previously conducted by JDA and is the surviving corporation in a combination with JDA in the Merger. JDA was organized as a Maryland corporation in 2003. JDA was founded by Andrew S. Kennedy, MD, David Van Echo, MD, and Mr. Jeff Franco for the purpose of commercially exploiting an innovative technology for treating soft tissue cancers that improves upon current intravascular microsphere brachytherapy. Dr. Kennedy and Dr. van Echo, together with others, invented that technology while associated with the University of Maryland, Baltimore ("the University"), which paid for the research and development effort and which owns the technology. In September 2003, the University granted JDA the Master License Agreement that is mentioned in Item 1.01, above, and further described below. Since that time, 4 until the Merger, the activities of JDA were to participate in the development of software ancillary to the licensed technology and to seek sources of financing. The Master License Agreement is the principal asset acquired from JDA in the Merger. The University has applied for patents on the licensed technology which are still pending. No patents have yet been issued and there is no assurance that any patents will be issued. If the applications are denied, we will have no legal protection for the intellectual property embodied in the technology and it will become available to others. Government Regulation Our activities in the development, manufacture and sale of cancer therapy products are and will be subject to extensive laws, regulations, regulatory approvals and guidelines. Within the United States, therapeutic radiological devices must comply with the U.S. Federal Food, Drug and Cosmetic Act, which is enforced by the Food and Drug Administration ("FDA"). We are also required to adhere to applicable FDA regulations for Good Manufacturing Practices, including extensive record keeping and periodic inspections of manufacturing facilities. Medical devices such as the Oncosphere cannot be used or sold unless they are approved for specified purposes by the FDA. There are two levels of FDA approval. The first is the granting of approval to test the device by experimentation with human patients (called an Investigational Device Exemption or "IDE"); the second is obtaining approval to market the device to the public for the treatment of specified diseases (called Premarket Approval or "PMA"). Our business involves the importing, exporting, design, manufacture, distribution, us and storage of beta and gamma emitting radioisotopes. Those activities in the United States are subject to federal, state and local rules relating to radioactive material promulgated by the Nuclear Regulatory Commission ("NRC"), or states that have subscribed to certain standards and local authorities. In addition, we must comply with NRC, state and U.S. Department of Transportation requirements for labeling and packing shipments of radiation sources to hospitals or others users of our devices. In order to market our devices commercially, we will be required to obtain a sealed source device registration from those subscribing states or the NRC. Additionally, hospitals in the United States are required to have radiation licenses to hold, handle and use radiation. Many hospitals and/or physicians in the United States will be required to amend their radiation licenses to include our isotopes before receiving and using them. Depending on the state in which the hospital is located, the license amendment will be processed by the responsible subscribing state department or agency or by the NRC. Obtaining such registration, approvals and licenses can be complicated and time consuming and there is no assurance that any of them can be obtained. Plan of Operation Our plans are to complete the development of, and to manufacture, and distribute a medical device, a "microsphere", embodying the licensed technology. We expect to market our version of a microsphere under the name, "Oncosphere". We plan first to focus on liver cancers and then on other forms of soft tissue cancers. We believe that the Oncosphere, embodying the innovative licensed technology, improves upon chemotherapy, the currently standard treatment for treating soft tissue cancers, as well as being an improvement over other microspheres in current use in intravascular microsphere brachytherapy. A "microsphere" is a radiation-emitting spherical object, approximately one-quarter the width of a human hair, which, in an outpatient procedure, is implanted in the body of the patient in sufficient quantities at the site of the cancer tumor. "Brachytherapy" refers to the process of placing therapeutic radiation sources in or near diseased tissue. "Intravascular" refers to the method of implanting 5 the microsphere through the blood stream. We believe that if and when the Oncosphere reaches the public, we will be able to attain a leadership position in a new and expanding brachytherapy market. Our initial activity will be to complete the development of the Oncosphere and to conduct the studies and tests necessary to obtain data in support of an application to the FDA for authorization to conduct a clinical study of the Oncosphere (an IDE) to provide data on its safety and effectiveness in support of a PMA. To obtain an IDE for the Oncosphere, we must first conduct a number of studies and evaluations to collect information to support our application to the FDA. This effort is expected to take between eighteen and twenty-four months. We expect the $4,000,000 we have agreed to commit to this effort will be sufficient, but we cannot be certain that costs will not exceed this amount and we may have to seek additional financing. Based on the previous experience of Oncologix management in the development of radiation medical devices and obtaining FDA and radiation regulatory approvals, we believe that we have or can readily obtain all of the resources necessary to complete the required studies and evaluations. We intend to employ outside contractors to perform various tasks and studies. While the required expertise is highly specialized, it is available from a number of sources and no difficulty is expected in identifying and engaging qualified contractors. The estimated application and timing of expenditures for this effort are shown in the following table:
- ----------------------- --------------------- -------------------- --------------------- -------------------- 1st Quarter Fiscal 2nd Quarter Fiscal 3rd Quarter Fiscal 4th Quarter Fiscal 2007 2007 2007 2007 - ----------------------- --------------------- -------------------- --------------------- -------------------- Development $230,000 $610,000 $335,000 $135,000 - ----------------------- --------------------- -------------------- --------------------- -------------------- Other General Expenses 354,000 309,000 319,000 319,000 ------- ------- ------- ------- - ----------------------- --------------------- -------------------- --------------------- -------------------- Totals $584,000 $919,000 $654,000 $54,000 ======== ======== ======== ======= - ----------------------- --------------------- -------------------- --------------------- --------------------
The necessary funds are expected to be raised by the Company in a private placement of securities. The work necessary to support an application to the FDA for an IDE is generally divided into three phases, as follows. Development Phase. This is the phase in which there is a definition of the design, the overall process, and the manufacturing feasibility of the product. At the end of this phase there is reasonable scientific and engineering assurance that a design is feasible, that the processes to produce that design are reproducible, and that the product as designed can be manufactured in scalable quantities at reasonable costs. We are engaged in discussions with a view to engaging the assistance of a contract manufacturer in this phase. We will be able to begin Pre-Clinical Testing when this phase is completed, which will be when: o (A) A microsphere specification and design are defined that meet the user requirements as defined in the Product Requirements Document; o (B) It is demonstrated that lots can be manufactured at pilot plant scale (i.e. in quantities large enough to support an animal study and a pivotal clinical study); and 6 o (C) A preliminary manufacturing plan, based on reasonable assumptions, is completed based on data that support a commercially acceptable cost basis for commercial quantities. Pre-Clinical Testing Phase. In this phase of the project the design is verified against its "product (user) requirements" and the hazards of its use are identified in a risk analysis, both based on the results of animal experimentation. This testing is required by the FDA standards and European Standards governing medical devices for initiation of a clinical trial and is a necessary part of good engineering development and safety. These results will be required to be included in the IDE submission to the FDA. The trial design and final specifications should be based on discussions with and preliminary advice from the FDA. o The animal study will be the last pre-clinical test performed before the submission of the IDE to the FDA. The purpose of the animal study will be to: o (A). Confirm that radiation effects from the microspheres result in the expected local effect in the liver, without adversely affecting other tissues or organs; o (B), Document and describe any acute and chronic adverse events; o (C). Document and describe the feasibility of the delivery of microspheres to the liver without "spilling over" or "drifting" to other places in the body where their effect would be harmful. This study is done by examining each organ of an animal that has been used to test the product; and o (D). Document and describe the any potential liver toxicity. o The end of this phase will be the completion of a report of an animal study that meets industry and scientific standards to support the submission of an IDE to the FDA requesting approval for a "pivotal clinical" trial. Clinical Approval Phase. This is the phase in which the IDE submission is compiled, submitted to the FDA, and an approval to start the "pivotal clinical trial" is granted. The IDE can be compiled and submitted when the design verification is completed in the Pre-Clinical Testing Phase. The FDA responds to IDE submissions within 30 days with an approval, conditional approval, or disapproval. An approval or conditional approval will allow us to begin the treatment of patients in the "pivotal clinical trial". This Clinical Approval Phase will be considered completed when the FDA letter granting approval or conditional approval is received. Management estimates that this will occur from eighteen months to two years after the Merger. If we are successful, we will then have FDA consent to treat a group of patients on an experimental basis and if successful in that effort, we will then be able to request FDA approval to market the Oncosphere to all patients with specified diseases under a PMA. We anticipate the need for substantial additional financing at that time, as we do not expect to generate any cash from operations during the intervening period. We have not developed any plans for raising that financing. The form and availability of the financing will depend on general and industry conditions at the time. Our other activities during that time are expected to include Dr. Kennedy's participation in scientific presentations and papers informing the medical profession and the hospital industry of the benefits of microarterial brachytherapy in general and in training physicians in its application. As progress is made, we will begin to develop manufacturing and marketing plans for the Oncosphere. We will further plan to obtain financing for the necessary personnel, facilities and other requirements for the conduct of a commercial business. 7 The Product Soft tissue tumors are among the most difficult forms of cancer to treat. If not cured by initial therapy, these tumors eventually become unresponsive to chemotherapy and spread (metastasize) throughout the body. While there has been some progress in recent years in treating these cancers with surgery and chemotherapy, the five-year survival rates remain less than five percent. There is a strong demand from patients and physicians confronting these types of cancer for effective, easy-to-use therapies with acceptable side effects. Currently the standard treatment for patients with advanced cancerous tumors is chemotherapy, which is not specific to (does not discriminate as to) various types of cancer and has side effects that damage or destroy many normal cells in addition to the cancer cells. This may result in additional illness and even death. High doses of chemotherapy have typically resulted in extended, unpleasant and sometimes life-threatening hospital stays. Patients often require expensive, intrusive medical attention before they recover and are discharged home. An alternative therapy, radiation, is most often administered by delivering a beam from an external source through the patient's body and tumor. Because it must travel in a straight line, normal tissues surrounding the tumor also receive radiation and incur damage that can cause significant adverse side effects. Microsphere-based radiotherapy, a relatively recent form of therapy, solves both the efficacy and toxicity issues for the patient. The microparticles that comprise the microsphere have high doses of radiation attached and can deliver radiation directly into the tumor, thus sparing nearby normal cells and blood vessels. The element carrying the radiation is called Yttrium-90 (Y(90)), used in the treatment of various types of cancer. Chemotherapy drugs can become ineffective from a variety of defenses that cells treated with drugs will sometime develop while radiation, on the other hand, if administered in high enough doses, will usually kill cancerous cells. Therefore, if sufficient quantities of microspheres can be delivered to the tumor, they will be effective in killing the tumor, as there is not an adequate cellular "defense" against radiation. A sufficient supply of oxygen is a critical factor in destruction of the tumor cell's DNA to be relatively quick and permanent. Radiation becomes much less effective if there is a drop of oxygen in the region of the tumor (hypoxia), not because the tumor cell has itself become unresponsive to radiation but because the oxygen supply is insufficient to make the radiation damage to the tumor permanent; or, in other words fatal for the tumor cell. Microspheres do not cause hypoxia because only a relatively small number of spheres are infused and therefore no reduction in the amount oxygen carried in the blood to the area it is most needed to work in conjunction with radiation. Since normal cells in the distribution of the blood vessel do not have their oxygen supply interrupted, toxicity to the patient is reduced. Another significant advantage of microsphere-based radiotherapy is that it is administered in an outpatient procedure and most patients are able to return home from four to six hours after treatment. Treating physicians have additional, technical and professional considerations in selecting from among available therapies. Physicians involved with microsphere-based therapy are usually specialized as medical oncologists, radiation oncologists and interventional radiologists. The medical oncologist, often the first specialist to meet the patient, is crucial in the management and overall cancer treatment for each patient and is typically responsible for the general oncologic treatment of the patient and for referring the patient to other specialists. Oncologists usually prescribe a variety of chemotherapies in an effort to combat the growth and spread of the cancer. They often request other treatments provided by and coordinate teamwork by surgeons, radiation oncologists, and interventional radiologists. The medical oncologist will generally request one of the following therapies for soft tissue tumors: 8 Type of Therapy Administered by --------------- --------------- Chemo-embolization (Trans Arterial Interventional Radiologist Chemo Embolization) External Beam Radiation Radiation Oncologist Brachytherapy Radiation Oncologist Intra-Arterial Radioembolization Interventional Radiologist Medical oncologists generally select a form of therapy on the basis of available data relating to patient outcomes from actual experience. There are presently no definitive data supporting the efficacy of micro-arterial brachytherapy in cancer treatment. Medical oncologists are therefore not likely to select this therapy for their patients. However, they often defer to radiation oncologists or surgeons in making decisions involving the use of such new treatments as microsphere-based therapy. Radiation oncologists and surgeons generally become among the first to be aware of newer therapies, as they are usually first marketed to them, as is expected to be the case with microsphere-based therapy. Furthermore, it is anticipated that several studies will become available documenting the effectiveness this therapy as the use of microsphere-based therapy increases, as expected, over the next several years. Radiation oncologists are usually the first sub specialists that patients meet after meeting with the medical oncologist. Radiation oncologists and nuclear medicine physicians are the only physicians that are legally authorized to administer therapeutic radiation and isotopes by the Nuclear Regulatory Commission (NRC). Microspheres containing radiation are classified as a sealed source of radiation, and are thereby considered a brachytherapy device. Radiation therapy is typically a very exact physical science that can determine precisely where radiation beams and isotopes will go, or have gone, in treating tumors deep in any part of the body. Radiation oncologists are reluctant to administer microspheres without knowing exactly where the radiation will go in the body and in what quantities. Until recently, there has been no radiation dose planning software or other tool to assist radiation oncologists in microsphere therapy. However, there is presently under development a specialized software "tool" that facilitates generating radiation treatment plans, typically based on raw data from CT scanners. We are contributing efforts to this development. Interventional radiologists use catheters to deliver medication or devices directly to tumors through the body's circulatory system. These catheters are used by interventional radiologists to access the main arteries leading to tumors. As a group they are believed to be the most receptive to microsphere-based radiotherapy as it gives them a new treatment option for patients, and a new service to provide their departments and hospitals. Since interventional radiologists are crucial to the acceptance of this technology, the Company intends to give special attention to interventional radiologists in its future marketing efforts. Microsphere-based cancer therapies deliver 150 times the radiation dose of existing therapies directly into tumors. Based on industry information, we believe that these microsphere-based therapies have extended the lives of patients by an average of 10.5 months and some patients are still thriving 14 months after treatment. These patients were selected from among a group for which standard and salvage chemotherapy regimens and surgery have already failed and who have, typically, a matter of weeks or months to live at the most. Substantial problems with existing microsphere-based therapies, however, have kept them from being widely adopted. These include: (1) Limited and Costly Production - The radioactive isotope must be physically "baked in" to the spheres at a nuclear reactor, which is an expensive manufacturing process; 9 (2) Fixed Dosage - Because the isotope is "baked in" to the microspheres, there is only one pre-set dosage level, which prevents physicians from tailoring the dosage to the specific needs of the patient; and (3) Inability to Track the Microspheres - Physicians cannot track the path of the microspheres from injection to the tumor and are therefore unable to ascertain the location of the microspheres in the body of the patient. We believe that if and when it is approved by the FDA the Oncosphere will provide a solution to the problems with existing microsphere therapies. Rather than being manufactured with complex, central nuclear reactors, the Oncosphere will be assembled with the use of chemical processes made possible by recent advances in polymers and small molecule chemistry that permit the effective binding of highly radioactive isotopes to the microparticles that make up the Oncosphere. The use of chemical processes instead of "pre-baking" is expected to result in numerous highly desirable features that will provide competitive advantages, including: (1) An ability to produce the Oncosphere devices in greater quantities and at much lower costs than existing microsphere-based therapies. (2) An ability to tailor the dosage of the Oncospheres to each patient's individual needs. (3) An ability to use computer software to track the location of the microspheres in the patient's body and to confirm the delivered dose. (4) The availability of adequate documentation to facilitate proper insurance or Medicare reimbursement for use of the therapy. We believe that these advantages will be realized for the following reasons: (1) The Oncosphere's manufacturing process, chemically bonding the isotope to the sphere, is less expensive than currently used processes because it requires only standard chemical laboratory equipment rather than the reactor equipment necessary to activate the material through ion bombardment. Because of the limited size of the reactor chamber required for currently used processes, this factor will also permit processing in larger batch sizes. (2) The polymer microsphere that is the basis for the Oncosphere has a more consistent size range than currently used products and therefore the radiation dose can be more accurately controlled. As a result, the dose for Oncospheres can be tailored to each patient's individual disease in order to optimize the distribution of microspheres and dose. (3) While there is currently no commercial software that can provide an oncologist with the ability to prepare a pre-treatment plan or post-treatment verification of microsphere delivery, software currently under development by the Company and two other firms will, we believe, provide the ability to do pre-treatment planning for any microsphere product using yttrium-90 (the element used in brachytherapy) or for which they know the dose kernel (dosimetry). However, The Oncosphere has a gamma (photon) emitting component, which affords the capability of locating the spheres in the patient's body. This is significant because the beta isotope that actually kills the cancer cells cannot be seen outside the body. While we believe that while the addition of a gamma component is possible with other microspheres, the process for doing so are covered by patent applications filed by the University of Maryland and will be protected by any patents that may be issued. There is, of course, no assurance that any patent will be issued or that if it is, it will afford the degree of protection that we expect. (4) We believe that because the Oncosphere technology allows for post treatment verification, its use will provide physicians and hospitals with the data necessary to support requests for payment by insurance companies and Medicare for additional services. 10 Competition We are aware of several companies that have developed microsphere-based products to address soft tissue cancers: MDS Nordion is a Canadian company with approximately $1.5 billion a year in revenue. Its microsphere product is named "Therasphere". The FDA approved Therasphere for limited use under a Humanitarian Device Exemption (HDE) on December 10, 1999. We believe that Nordian is attempting to collect the patient data from patients treated under the HDE approval to support the submission of a request to the FDA for a PMA. We understand that approximately 200 doses of Therasphere were administered in 2002. Sirtex is an Australian company with approximately $11,000,000 in assets. Its microsphere product is named "SIR-Spheres". The FDA approved a PMA for SIR-Spheres on March 5, 2002 for treatment of colorectal cancer metastases in the liver concurrently with chemotherapy administered into the liver directly by means of a hepatic arterial pump. Approximately 400 doses of the SIR-Spheres were administered in the year 2003, 900 doses in the year 2004 and 2,500 doses in the year 2005 worldwide. pSivida, a British development stage company, has developed a competing brachytherapy product that is injected directly into solid tumors. This technique does not compete directly with JDA-Spheres, but is intended to treat some of the same diseases as microspheres. pSivida is publicly traded under symbol PSDV on the NASDAQ exchange. Marketing Strategy We believe that we will not be able to enter the market until approximately the year 2010. Until then, our efforts will consist of informing the medical profession and the hospital industry about microarterial brachytherapy and training physicians in its application. We expect these activities to be carried on primarily through the efforts of Andrew S. Kennedy, MD, one of the founders of JDA and now a director of both Oncologix and BestNet Communications Corp., the parent corporation of Oncologix, and the Chief Scientific and Medical Officer of Oncologix. An important factor influencing physicians' decisions in selecting forms of therapy is the availability of reimbursement by insurance companies and Medicare. Presently, physicians and hospitals using similar products are reimbursed at the rate of $14,000 per dose. Based on our preliminary analyses, we expect to be able to make each dose at a cost of not more than $4,000. It is expected that each physician will be able to administer from two to four doses per week. In view of the complex nature of the disease and the expertise involved in treating the patient, it is anticipated that most of the procedures will initially be conducted by a few highly experienced medical teams, commonly referred to as "centers of excellence". Our initial product marketing effort will focus on soliciting premier institutions and clinics to emphasize microsphere therapy in their practice. We anticipate that within two years of the initial product launch, approximately fifty medical centers will be performing the procedure regularly, each administering 100 doses annually (5,000 doses in total). This would result in gross revenue of approximately $70,000,000. It is believed that there are more than 130,000 patients with the characteristics of this disease in the US alone. We believe that each patient will be eligible for two to six treatments with the Oncosphere over their lifetimes. This is due to two primary factors: o (1) The ability with the Oncosphere to track the placement of the isotopes when they are embedded in the patient's tumor; and o (2) The delivery of a smaller number of spheres in each dose compared to other products, thus allowing more physician flexibility in prescribing the amount of spheres (and subsequently, radiation dose) delivered during a single treatment. Thus, repeat treatments are feasible if larger tumors do not completely respond to the first treatment, or if new tumors should grow in the liver. Physicians (especially radiation oncologists) regularly administer follow-on doses, or "fractionated" doses, rather than all at once in an effort to control the tumor growth incrementally. 11 The American Cancer Society's annual report shows that overall death rates from pancreas and liver cancer (two of the types we intend to target) are increasing and that the market we intend to pursue appears to be stable, with some sectors growing at a rate of approximately 3-5% annually. Readers of this Report should bear in mind, however, that our entry into the market is a number of years in the future and that present insurance reimbursement rates, manufacturing costs and other factors influencing our business may change during that period. They should further consider that during that time, new products could emerge that could afford better results at lower cost than the Oncosphere. Software Currently, there is no available software that provides an oncologist with a pre-treatment plan or post-treatment verification of microsphere delivery. Certain software now under development by Oncologix and associated companies is expected to provide the capability for pre-treatment planning for any microsphere using yttrium-90 or other radioactive isotope whose dose kernel (radiation dosimetry) has been determined. However, post-treatment dose verification will be available only for microspheres having a gamma (photon) emitting component. The Oncosphere has a gamma-emitting component that can be measured analyzed with the use of this software. We believe that when and if issued, the patents pending on the Oncosphere technology will cover that gamma-emitting feature. The Master License Agreement The business of Oncologix is made possible by the Master License Agreement ("License"), effective September 16, 2003, between Oncologix's predecessor, JDA, and the University. The following description of the License is incomplete and is qualified in every respect by the full text thereof, as amended, which is filed as an Exhibit to this Report. We have the exclusive worldwide right to make, have made, use, lease, offer to sell, sell and import products based on the technology embodied in the Oncosphere, generally known as "Instant Microspheres for Microarterial Imaging and Radiotherapy", subject to the terms of the License, including certain reservations of rights (which we do not believe are material) in the University and the U.S. Government. We may grant sublicenses and assign our rights under certain conditions. The continuation of the License is subject to termination if we fail to perform under certain requirements of the License, including: o Making certain reports of our activities to the University; o Having applied for an IDE from the FDA not later than September 16, 2008; o Having obtained a PMA from the FDA not later than September 16, 2011; o Having completed the $4,000,000 funding for the Oncologix operations as described above in this Report; o Make the following lump sum payments (in addition to payments already made): $25,000 upon the commencement of a Clinical Trial of a licensed product in any country other than the U.S. or filing an application with the FDA for an IDE, $50,000 three months after FDA approval of a PMA, $50,000 upon receipt of a PMA from the FDA, $100,000 upon any future change in control of Oncologix, and $200,000 at the end of the first calendar year in which Net Sales of Oncospheres exceeds $5,000,000. Royalties are to be paid on a country-by-country basis. 12 o Reimburse the University for legal fees paid to patent counsel in connection with the licensed technology; o Pay royalties as follows: 2.5% of Net Sales on a semi-annual basis but a minimum of $10,000 for each year after commercial sales begin, and 25% of royalties received by us from sublicensees, subject to various adjustments and qualifications contained in the License. We are also obligated to indemnify the University against certain expenses as provided in the License, as amended. We have granted an exclusive sublicense under the License to Fountain Pharmaceuticals, Inc., a Delaware corporation, for China, Taiwan and Hong Kong. The provisions of the sublicense generally mirror those of the License; the royalty rate thereunder is three percent (3%). A copy of the sublicense is filed herewith. Intellectual Property Protection We intend to rely on patent laws, software security measures, license agreements and nondisclosure agreements to protect our exclusive rights under our Master License Agreement with the University. Although patents have been applied for the technology underlying the Oncosphere, no patent has yet been granted and there is no guarantee or assurance that any will be granted or that that technology will be patentable. While there will be no legal protection for the software described above, the technology that includes the capability of using it to advantage is covered by the pending University patent applications. Research and Development Although Dr. Andrew S. Kennedy was one of the inventors of the Oncosphere technology, he and his co-inventors were, at the time, associated with the University, which bore the expense of research and development and is the owner of the technology. We believe that the actual cash expense was approximately $200,000 without including the value of the time spent by the inventors. JDA has paid $10,000 as a contribution to the expense of the development by another company of the Software described above. Our plans for funding continued research and development are reflected in the budget described under "Plan of Operation". Employees We intend to engage outside contractors and consultants during the development phases described under "Plan of Operation". During that time, our only employees will be the three officers of Oncologix; Dr. Andrew S. Kennedy (on the equivalent of two days per week basis) and Mess'rs Andrew Green and Adam Lowe. Financial, accounting and administrative functions will be performed by Mr. Michael Kramarz, the Chief Financial Officer of BestNet Communications Corp., the Parent company. See "Management". We plan, however, to hire people for the conduct of clinical trials. Property There are presently no facilities for Oncologix; its officers now work from their homes. We intend, however, to seek leased office facilities in the Atlanta area for our executive officers and shared space in Gary, North Carolina, for technical work. While there are now no lease commitments, we anticipate that our total lease charges will be approximately $3,000 per month. These facilities would be in addition to the Company's principal offices in Grand Rapids, Michigan and its operations facility in Toronto, Ontario, as described in the Company's Annual Report on Form 10KSB. 13 Risk Factors Those interested in investing in the Company because of the Merger should carefully consider the following Risk Factors pertaining to Oncologix as well as the risks and uncertainties that are described in the Company's most recent Annual and Quarterly Reports under the Securities Exchange Act of 1934. Going Concern Qualification. Our Independent Accountants have expressed doubt about our ability to continue as a going concern. The ability to continue as a going concern is an issue raised as a result of the material operating losses incurred since inception, and its stockholders' deficit. We expect to continue to experience net operating losses. Our ability to continue as a going concern is subject to our ability to obtain necessary funding from outside sources, including obtaining additional funding from the sale of our securities or obtaining loans from various financial institutions where possible. The going concern increases the difficulty in meeting such goals. Need for Additional Capital. We will need substantial funds to complete the development, manufacturing, and marketing of our potential future products. Consequently, we will seek to raise further capital through not only possible public and private offerings of equity and debt securities, but also collaborative arrangements, strategic alliances, and equity and debt financings or from other sources. We now estimate the need to raise at least $10,000,000 of additional funding by the end of 2008 to fund working capital. We may be unable to raise additional capital on commercially acceptable terms, if at all, and if we raise capital through additional equity financing, existing shareholders may have their ownership interests diluted. Our failure to be able to generate adequate funds from operations or from additional sources would harm our business. Uncertainties Regarding Healthcare Reimbursement and Reform. Our ability to commercialize products depends in part on the extent to which healthcare services and products are paid by governmental agencies, private health insurers and other organizations, such as health maintenance organizations, for the cost of such products and related treatments. Our business could be harmed if healthcare payers and providers implement cost-containment measures and governmental agencies implement measures that reduce payment to our customers for their use of our products. Industry Intensely Competitive. The medical device industry is intensely competitive. We will compete with both public and private medical device, biotechnology and pharmaceutical companies that have been established longer than we have, have a greater number of products on the market, have greater financial and other resources and have other technological or competitive advantages. We also compete in the development of technologies and processes and in acquiring personnel and technology from academic institutions, government agencies, and other private and public research organizations. We cannot be certain that one or more of our competitors will not receive patent protection that dominates, blocks or adversely affects our product development or business; will benefit from significantly greater sales and marketing capabilities or will not develop products that are accepted more widely than ours. Intellectual Property Risk. Our ability to obtain and maintain patent and other protection for our products will affect our success. We have exclusive licenses to technologies subject to patent applications in the U.S. and four foreign countries. The patent positions of medical device companies can be highly uncertain and involve complex legal and factual questions. Our patent rights, if granted, may not be upheld in a court of law if challenged. Our patent rights may not provide competitive advantages for our products and may be challenged, infringed upon or circumvented by our competitors. We cannot patent our products in all countries or afford to litigate every potential violation worldwide. Because of the large number of patent filings in the medical device and biotechnology field, our competitors may have filed applications or been issued patents and may obtain additional patents and proprietary rights relating to products or processes competitive with or similar to ours. We cannot be certain 14 that U.S. or foreign patents do not exist or will not issue that would harm our ability to commercialize our products and product candidates. Possible Failure to Comply with Government Regulations. We, and any prospective contract manufacturers and suppliers are subject to extensive, complex, costly, and evolving governmental rules, regulations and restrictions administered by the FDA, by other federal and state agencies, and by governmental authorities in other countries. In the United States, our products cannot be marketed until they are approved for market by the FDA. No application for FDA approval for the marketing of the Oncosphere has yet been made and we do not expect to be in a position to do so for approximately eighteen months to two years. Obtaining FDA market approval involves the submission, among other information, of the results of preclinical and clinical studies on the product, and requires substantial time, effort and financial resources. The FDA, and other federal and state agencies, as well as equivalent agencies of other countries with whom we will export our products, will also perform pre-licensing inspections of our facility, if any, and our contract manufacturers' and suppliers' facilities. Our failure or the failure of our contract manufacturers or suppliers to meet FDA or other agencies' requirements would delay or preclude our ability to sell our products potentially having an adverse material effect on our business. Even with FDA market approval, we, as well as our partners, contract manufacturers and suppliers, are subject to numerous FDA requirements covering, among other things, testing, manufacturing, quality control, labeling and continuing review of medical products, and to permit government inspection at all times. Failure to meet or comply with any rules, regulations, or restrictions of the FDA or other agencies could result in fines, unanticipated expenditures, product delays, non-approval or recall, interruption of production, and criminal prosecution. Exposure to Product Liability Claims. Our design, testing, development, manufacture, and marketing of products involve an inherent risk of exposure to product liability claims and related adverse publicity. Insurance coverage is expensive and difficult to obtain, and, in the future we may be unable to obtain coverage on acceptable terms, if at all. If we are unable to obtain sufficient insurance at an acceptable cost or if a successful product liability claim is made against us, whether fully covered by insurance or not, our business could be harmed. Exposure to Environmental Risks. Our business involves the controlled use of hazardous materials, chemicals, biologics, and radioactive compounds. Manufacturing is extremely susceptible to product loss due to radioactive, microbial, or viral contamination; material equipment failure; or vendor or operator error; or due to the very nature of the product's short half-life. Although we believe that when we become operational, our safety procedures for handling and disposing of such materials will comply with state and federal standards there will always be the risk of accidental contamination or injury. In addition, radioactive, microbial, or viral contamination may cause the closure of the respective manufacturing facility for an extended period of time. By law, radioactive materials may only be disposed of at state-approved facilities. If we were to become liable for an accident, or if we were to suffer an extended facility shutdown, we could incur significant costs, damages, and penalties that could harm our business. Reliance on Key Personnel. Our success will depend, to a great extent, upon the experience, abilities and continued services of our executive officers and key scientific personnel. If we lose the services of any of these officers or key scientific personnel, our business could be harmed. Our success also will depend upon our ability to attract and retain other highly qualified scientific, managerial, sales, and manufacturing personnel and our ability to develop and maintain relationships with key individuals in the industry. Competition for these personnel and relationships is intense and we compete with numerous pharmaceutical and biotechnology companies as well as with universities and non-profit research organizations. We may not be able to continue to attract and retain qualified personnel. Uncertain Value of Our License from the University. Although we believe that the patent pending on our licensed technology has significant value, we cannot be confident that other similar technology does not exist or will not be discovered, or that any patents, if granted, will be enforceable. 15 Uncertainty as to our Ability to Initiate Operations and Manage Growth. Our efforts to commercialize our medical products will result in new and increased responsibilities for management personnel and will place a strain upon our management, financial systems, and resources. We may be required to continue to implement and to improve our management, operating and financial systems, procedures and controls on a timely basis and to expand, train, motivate and manage our employees. There can be no assurance that our personnel, systems, procedures, and controls will be adequate to support our future operations. Item 3.02 Unregistered Sale of Equity Securities. In consideration of the Merger described above, we issued 43,000,000 shares of our common stock to the shareholders of JDA. This transaction was not registered under the Securities Act of 1933 (the "Act") in reliance on the exemption from registration afforded by section 4.2 of the Act, and Regulation D promulgated thereunder. The shares were issued to a total of __ persons, including four executive officers of Oncologix, one major educational institution of the state of Maryland and __ others, all of whom were determined to be Accredited Investors as defined under the Act in reliance on written information provided by them to us. All of the shares so issued are restricted as to transfer unless registered under the Act or an exemption from such registration is available under any of its provisions and we are furnished with a written opinion of counsel to that effect. The certificates evidencing all of the shares contain a legend to that effect and the records of our stock transfer agent have been marked accordingly. Under the terms of the Merger Agreement, we agreed to use our best efforts to register up to 500,000 of the shares for resale under the Act six months after the Closing of the Merger. None of the holders of those 500,000 shares are owned by the officers, directors or major shareholders of JDA. Eighty percent of the shares that were issued to Andrew s. Kennedy, MD, and to Mr. Jeff Franco, and all of the shares issued to Mess'rs Andrew Green and Adam Lowe have been placed in an escrow for the purposes described below. Dr Kennedy and Mr. Franco were officers and directors of JDA prior to the Merger. Dr Kennedy has been elected as a member of our Board of Directors and is employed as the Chief Scientific and Medical Officer of Oncologix (a position to which he will devote approximately 40% of his working time that does not conflict with his practice medicine, which he is continuing). Mr. Franco was an officer and director of JDA and has been engaged as a part-time consultant to Oncologix for a period of two years. The shares placed in the escrow will be released to their respective owners as each of the three development phases described above haven been attained, as follows: Twenty-five percent (25%) of the escrowed shares will be released upon achievement of the Development Phase; Thirty-one and one-quarter percent (31.25%) of the escrowed shares will be released upon achievement of the Pre-Clinical Testing phase; and All of the remaining shares (forty.-three and three-quarters percent (43.75%)) will be released upon achievement of the Clinical Approval Phase. If, however, any of the objectives have not have been achieved on or before the sixth anniversary date of the Closing under this Agreement, any of the shares that have not been released shall be returned to the Company and restored to the status of authorized but unissued shares of our common stock. While they remain in the escrow, the shares belonging to Dr. Kennedy and Mr. Franco will be available to compensate the Company for damages arising out of a breach of the representations and warranties made by JDA and Dr. Kennedy and Mr. Franco in the Merger Agreement. 16 ITEM 5.02 Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers Note: in the following, the "Parent" refers to BestNet Communications Corp., the Registrant and "Oncologix" refers to Oncologix Corporation, its wholly owned subsidiary. None of the officers and directors of the Parent have departed. The following persons have been elected to the positions indicated. Andrew Green - a Director of the Parent and as a Director and Chief Executive Officer of Oncologix. Andrew S. Kennedy, MD - a Director of the Parent and as a Director and Chief Scientific and Medical Officer of Oncologix. Steven Kurtzman, MD - a Director of Oncologix. Dr. Kurtzman is also an advisor to the Parent. Adam Lowe - a Director, President and Chief Operating Officer of Oncologix. Stanley L. Schloz, a Director and Chief Executive Officer of the Parent, and Barry Griffith, a Director of the Parent, have been also elected as Directors of Oncologix. Michael Karmarz, Chief Financial Officer and Secretary of the Parent, has also been elected as Chief Financial Officer and Secretary of Oncologix. The respective ages and backgrounds of those of the above who are officers or Directors of the Parent are disclosed in the Parent's most recent Annual Report filed under the Securities Exchange Act of 1934. That information with respect to the newly elected offices and Directors of the Parent and of Oncologix are as follows: Andrew Kennedy, MD, (age 42), was a Founder of JDA and became a Director of both the Parent and Oncologix and Chief Scientific and Medical Officer of Oncologix upon the Merger, and is expected to serve on the equivalent of a two-day per week basis. The major part of his time and efforts will continue to be applied to his position as co-medical director for Wake Radiology Oncology Services in Cary, North Carolina, where he has been since 2002 and where his primary activity is providing patients with treatments for cancer, specializing in gastrointestinal cancers, as well as cancers of the breast, lung and cervix. From 1997 until 2002, he was an associate professor in the Radiation Oncology and head of GI radiation oncology at The University of Maryland School of Medicine, and Residency program director. He is an internationally known radiation oncologist He has given numerous presentations on radiation therapy for the treatment of colorectal and liver cancer, and was instrumental in reintroducing an important new treatment for liver cancer, called infusion of microspheres, which offers hope to patients who have not had success with chemotherapy. He developed the most commonly used protocol in the US for infusion of microspheres and is the recipient of more than $900,000 in research grants to further investigate this and other cancer treatments. He has written many peer-reviewed scientific papers, articles, book chapters and abstracts on radiation oncology and has been invited to give presentations on radiation therapy for GI cancers and infusion of microspheres at the premier medical conferences in the United States, Asia and Europe. He is a graduate of Loma Linda School of Medicine, in Loma Linda, California, and completed his residency at The University of North Carolina at Chapel Hill, where, as chief resident, and later a research fellow, he completed significant work in three-dimensional treatment planning (3D external beam radiation therapy) and radiobiology research. Andrew M. Green (age 37) became a Director of both the Parent and Oncologix and Chairman and Chief Executive Officer of Oncologix upon the Merger. He had been a consultant to JDA from May 2006 until the Merger. Previously, since June 2005, 17 he and Mr. Adam Lowe (see below) were employed by NeoMedica, LLC, a consulting group owned by them, that specialized in executive level medical device consulting for clients that included early stage ventures dealing with Class III devices involving cardiology, ophthalmology, orthopedics, and electrophysiology. Prior to that, from 1996 until 2005, he was employed by the Novoste Corporation (a publicly traded medical device company) in obtaining approval of its intravascular brachytherapy device through the various medical device and radiation regulatory agencies throughout the world. His final position with Novoste was as a corporate officer with responsibility for Regulatory Affairs, Clinical Affairs, Quality Assurance and New Technology/Business Development. From 1993 until his employment with Novoste, he was employed as a Scientific Reviewer/Biomedical Engineer for the FDA, where he was responsible for the review of scientific, technical, pre-clinical and clinical data submitted in support of the safety and effectiveness of both interventional and general cardiovascular devices. He holds a BS degree in Biological Sciences and an MS degree in Bioengineering, both from Clemson University, where his research focused on characterization and use of materials in a biological environment. He also served in the US Army as a Field Combat Medical Specialist. Adam G. Lowe (age 43) became a Director of Oncologix and President and Chief Operating Officer of Oncologix upon the Merger. He had been a consultant to JDA from May 2006 until the Merger. Previously, since June 2005, he and Mr. Andrew Green (see above) were employed by NeoMedica, LLC, a consulting group owned by them, that specialized in executive level medical device consulting for clients that included early stage ventures dealing with Class III devices involving cardiology, ophthalmology, orthopedics, and electrophysiology. Prior to that, from 1999, he was employed by the Novoste Corporation (a publicly traded medical device company) as a corporate officer in the areas of Quality Assurance, Regulatory Affairs and Operations dealing with Class II and III devices focused on cardiology, oncology, radiology, and urology. Before his employment by Novoste, he was employed by C.R. Bard, Inc. from 1988 until 1981 and again from 1993 until 1999in various quality assurance positions in the areas of oncology, radiology and urology with his last being as Vice President of Quality. He was employed by Johnson & Johnson from 1991 until 1993. He holds a BS-Materials Science and Engineering degree with a concentration in polymer science from North Carolina State University. Steven Kurtzman (age 44) became a director of Oncologix upon the Merger. He has, since December 2005 been an advisor to the Parent and has been since January 2006 on the Advisory Board of IsoRay Medical, Inc. a publicly traded company that manufactures and markets radiation devices for brachytherapy primarily for the treatment of prostrate cancer. He has, since 1998, been practicing medicine in San Francisco, California, specializing in radiation oncology. He is currently the Director of Brachytherapy for Western Radiation Oncology, P.C. He is considered an expert in the management of prostate cancer and has lectured on and taught prostate brachytherapy nationally. He holds a BA from Cornell University and is a graduate of Case Western Reserve University School of Medicine. He completed his residency training in radiation oncology at the Hospital of the University of Pennsylvania. Executive Compensation Summary Compensation Table for New Oncologix Officers The following table shows the compensation for the officers of Oncologix as approved for the next two years pursuant to Employment Agreement between the Company and the respective officers. 18
Annual Long Term Compensation - --------------------------------------------------------------------------------------------------------------------------------- Compensation Awards Payouts - --------------------------------------------------------------------------------------------------------------------------------- Restricted Securities Stock Underlying LTIP All Other Name and Principal Position Year Salary Bonus Awards Options/SARs Payouts Compensation ($) ($) ($) (#) ($) ($) Andrew Green, Chief 2006 180,000 0 0 125,000 0 0 Executive Officer Adam Lowe, Chief 2006 180,000 0 0 125,000 0 0 Operating Officer Andrew Kennedy, Chief 2006 240,000 0 0 0 0 0 Medical Officer Securities Ownership of Certain Beneficial Owners and Management The following table shows the ownership of the Company's voting stock by officers, directors and holders of 5% or more of the outstanding stock after giving effect to the issuance of the Company's common stock upon the Closing of the Merger described above in this Report. Name and Address Amount and Nature Percent Of Beneficial Owner (1) of Beneficial Owner (2)(3) of Class (3) - ----------------------- -------------------------- ------------ Michael A. Kramarz 155,000(4) * Kelvin C. Wilbore 155,860(5) * Stanley L. Schloz 986,695(6) 1.09 Barry Griffith 74,133(7) * Anthony Silverman 4,171,653(8) 4.58% Andrew Kennedy 13,949,738(9) 15.48% Jeff Franco 13,949,738(10) 15.48% Andrew Green 3,761,790(11) 4.18% Adam Lowe 3,761,790(12) 4.18% All directors and executive officers as a group (5 persons) 26,860,799(13) 29.41% * Less than 1% Amounts and percentages in the table are based upon 90,097,953 shares of Common Stock outstanding.
19 (1) Unless otherwise noted, the address of each holder is 2850 Thornhills Ave. SE, Suite 104, Grand Rapids, Michigan 49546. (2) A person is deemed to be the beneficial owner of securities that can be acquired within 60 days from July 21, 2006 through the exercise of any option, warrant or other right. Shares of Common Stock subject to options, warrants or rights which are currently exercisable or exercisable within 60 days are deemed outstanding solely for computing the percentage of the person holding such options, warrants or rights, but are not deemed outstanding for computing the percentage of any other person. (3) Outstanding as of July 26, 2006. (4) This amount represents 155,000 vested stock options. (5) This amount represents 155,860 vested stock options. (6) This amount represents 95,000 vested stock options and direct ownership of 734,992 shares of Company's common stock and indirect ownership of 156,703 shares of common stock owned by Katsinam Partners LP, of which Mr. Schloz is a 7.843% owner. (7) This amount represents 74,133 vested stock options (8) This amount represents direct ownership of 73,333 vested stock options direct ownership of 2,918,400 shares of the Company's common stock, direct ownership of 150,000 warrants to purchase the Company's common stock and direct ownership of 670,417 shares of common stock underlying a convertible promissory note; indirect ownership of 352,447 shares of the company's common stock and 7,056 warrants to purchase the Company's common stock owned by Katsinam Partners, LP, of which Mr. Silverman is a 17.64% shareholder. (9) This amount represents 13,949,738 restricted shares of the Company's common stock. (10) This amount represents 13,949,738 restricted shares of the Company's common stock. (11) This amount represents 3,761,790 restricted shares of the Company's common stock. (12) This amount represents 3,761,790 restricted shares of the Company's common stock. All of the persons listed above, with the exception of Jeff Franco, are either officers or directors of BestNet Communications Corp. or of Oncologix or both. ITEM 9.01 Financial Statements and Exhibits (a) Financial Statements of Business Acquired To be filed by amendment. (b) Pro Forma Financial Information To be filed by amendment. 20 (c) Exhibits -------- Exhibit Title - ------- ----- Exhibit 10.20 Agreement of Merger and Plan of Reorganization by and among BestNet Communications Corp., Oncologix Corporation, JDA Medical Technologies Inc. and the Principal Shareholders and the Executive Shareholders of JA Medical Technologies, Inc. Exhibit 10.21 Master License Agreement with the University of Maryland, as amended Exhibit 10.22 To be filed by Amendment. Exhibit 10.23 Employment Agreement with Dr. Kennedy Exhibit 10.24 Employment Agreement with Mr. Green Exhibit 10.25 Employment Agreement with Mr. Lowe Exhibit 10.26 Consulting Agreement with Mr. Franco 21 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. BestNet Communications Corporation By: /s/ Stanley L. Schloz ----------------------------------- Stanley L. Schloz President By: /s/ Michael A. Kramarz ----------------------------------- Michael A. Kramarz Chief Financial Officer Date: July 28, 2006 22
EX-10.20 2 bestnet10-20.txt AGREEMENT OF MERGER Exhibit 10.20 AGREEMENT OF MERGER AND PLAN OF REORGANIZATION BY AND AMONG BESTNET COMMUNICATIONS CORPORATION, ONCOLOGIX CORPORATION, JDA MEDICAL TECHNOLOGIES, INC. AND THE PRINCIPAL SHAREHOLDERS AND THE EXECUTIVE SHAREHOLDERS (FOR A LIMITED PURPOSE) OF JDA MEDICAL TECHNOLOGIES, INC.
TABLE OF CONTENTS RECITALS............................................................................................1 ARTICLE I THE MERGER................................................................................1 1.1 The Merger...................................................................................1 1.2 Effective Time...............................................................................2 1.3 Effect of the Merger.........................................................................2 1.4 Articles of Incorporation: Bylaws............................................................2 1.5 Funding by BESC..............................................................................2 1.6 Directors and Officers.......................................................................3 1.7 BESC Shares to Be Issued.....................................................................3 (a) Conversion of JDA Common Stock...............................................................3 (b) Restricted Securities........................................................................3 (c) Cancellation of BESC-Owned and JDA-Owned Stock...............................................4 (d) JDA Stock Purchase Options or Other Rights...................................................4 (e) Adjustments to Exchange Ratio................................................................4 (f) Fractional Shares............................................................................4 (g) Definitions..................................................................................4 1.8 Dissenting Shares............................................................................4 1.9 Surrender of Certificates....................................................................5 1.9.2 Exchange Procedures........................................................................5 1.10 Escrow......................................................................................6 1.11 Performance Release of Shares from Escrow...................................................6 This phase will be considered completed when the FDA letter granting approval or conditional approval is received.................................................................7 1.12 Agent of the JDA Stockholders: Power of Attorney............................................8 1.12.1 Appointment...............................................................................8 1.12.2 Limitation of Liability...................................................................8 1.12.3 Acts of Agent Binding.....................................................................9 1.13 No Further Ownership Rights in JDA Common Stock.............................................9 1.14 Lost, Stolen or Destroyed Certificates......................................................9 1.15 Tax Consequences............................................................................9 1.16 Taking of Necessary Further Action..........................................................9 ARTICLE II REPRESENTATIONS, WARRANTIES AND COVENANTS OF JDA AND THE PRINCIPAL SHAREHOLDERS.........10 2.1 Disclosures True............................................................................10 2.2 Organization of JDA.........................................................................10 2.3 JDA Capital Structure.......................................................................10 2.4 Subsidiaries................................................................................11 2.5 Authority...................................................................................11 2.6 Historical Operations of JDA................................................................11 2.7 JDA Financial Statements....................................................................11 2.8 No Undisclosed Liabilities..................................................................12 2.9 No Changes..................................................................................12 2.10 Tax and Other Returns and Reports..........................................................13 2.11 Restrictions on Business Activities........................................................14 2.12 Title to Properties: No Liens or Encumbrances: Condition of Equipment......................15 2.13 Intellectual Property......................................................................15 2.13.1 Rights...................................................................................15 i 2.13.2 Commercial Software Rights...............................................................17 2.14 Agreements, Contracts and Commitments......................................................17 2.15 Interested Party Transactions..............................................................19 2.16 Governmental Authorization.................................................................19 2.17 Litigation.................................................................................19 2.18 Accounts Receivable........................................................................19 2.19 Minute Books...............................................................................20 2.20 Environmental and OSHA.....................................................................20 2.20.1 Hazardous Material.......................................................................20 2.20.2 Hazardous Materials Activities...........................................................20 2.20.3 Permits..................................................................................20 2.21 Brokers' and Finders' Fees.................................................................21 2.22 Labor Matters..............................................................................21 2.23 Insurance..................................................................................21 2.24 Compliance with Laws.......................................................................21 2.25 Complete Copies of Documents...............................................................22 2.26 Binding Agreements: No Default.............................................................22 2.27 Report by BESC on Form 8-K.................................................................22 2.28 Employee Benefit Plans.....................................................................22 2.29 Distribution Agreements....................................................................23 2.30 Representations Complete...................................................................23 ARTICLE III REPRESENTATIONS AND WARRANTIES OF BESC AND ONCOLOGIX...................................23 3.1 Organization, Standing and Power............................................................23 3.2 Capital Structure of BESC...................................................................23 3.2.1 BESC Authorized Capital Stock.............................................................23 3.2.2 Status of BESC Shares.....................................................................24 3.3 Authority...................................................................................24 3.4 SEC Documents; BESC Financial Statements....................................................25 3.5 Broker's and Finders' Fees..................................................................25 3.6 Current Report on Form 8-K..................................................................25 3.7 Ownership of JDA Common Stock...............................................................25 3.8 Litigation..................................................................................26 ARTICLE IV CONDUCT PRIOR TO THE EFFECTIVE TIME.....................................................26 4.1 Conduct of Business of JDA..................................................................26 4.2 No Solicitation.............................................................................28 4.3 Conduct of Business of BESC.................................................................28 ARTICLE V REGISTRATION RIGHTS......................................................................28 5.1 Certain Definitions.........................................................................28 5.2 Requested Registration......................................................................30 5.2.1 Request for Registration..................................................................30 5.2.2 Registration Statement....................................................................31 5.2.3 Underwriting..............................................................................31 5.2.4 Procedures................................................................................31 5.3 Expenses of Registration....................................................................32 5.4 Registration Procedures.....................................................................32 5.5 Indemnification.............................................................................34 5.5.1 By BESC...................................................................................34 5.5.2 By the Holders............................................................................34 5.5.3 Notice....................................................................................35 5.5.4 Contribution..............................................................................35 5.5.5 Underwriting Agreement to Control.........................................................36 ii 5.5.6 Information by Holder.....................................................................36 5.6 Rule 144 Reporting..........................................................................36 5.7 Transfer or Assignment of Registration Rights...............................................36 5.8 Allocation of Registration Opportunities....................................................37 5.9 Delay of Registration.......................................................................37 ARTICLE VI ADDITIONAL AGREEMENTS...................................................................37 6.1 Securities Filings..........................................................................37 6.2 Meeting of JDA Stockholders.................................................................38 6.3 Access to Information.......................................................................38 6.4 Confidentiality.............................................................................38 6.5 Expenses....................................................................................38 6.6 Public Disclosure...........................................................................39 6.7 Consents....................................................................................39 6.8 JDA Shareholder Letter Agreements...........................................................39 6.9 Legal Requirements..........................................................................39 6.10 Blue Sky Laws..............................................................................40 6.11 Best Efforts: Additional Documents and Further Assurances..................................40 6.12 JDA Stock Options..........................................................................40 6.13 Employment Agreements......................................................................40 ARTICLE VII CONDITIONS TO THE MERGER...............................................................40 7.1 Stockholder Approval........................................................................40 7.2 No Injunctions or Restraints: Illegality....................................................41 7.3 Additional Conditions to the Obligations of JDA.............................................41 (a) Representations, Warranties and Covenants...................................................41 (b) Certificate of BESC.........................................................................41 (c) Satisfactory Form of Legal Matters..........................................................41 (d) Legal Opinion...............................................................................41 (e) No Material Adverse Changes.................................................................41 (f) License Modification........................................................................42 7.4 Additional Conditions to the Obligations of BESC and Oncologix..............................42 (a) Representations, Warranties and Covenants...................................................42 (b) Certificate of JDA..........................................................................42 (c) Third Party Consents........................................................................42 (d) Certain Liabilities Discharged..............................................................42 (e) Satisfactory Form of Legal and Accounting Matters...........................................42 (f) Legal Opinion...............................................................................42 (g) No Material Adverse Changes.................................................................43 (h) Employment Agreements.......................................................................43 (i) Minimum Net Worth...........................................................................43 (j) Proprietary Information Agreement...........................................................43 (k) Accredited Investors........................................................................43 ARTICLE VIII SURVIVAL OF REPRESENTATIONS AND WARRANTIES............................................43 8.1 Survival of Representations and Warranties..................................................43 ARTICLE IX MISCELLANEOUS...........................................................................43 9.1 Liability of Principal Shareholders.........................................................43 9.2 Termination.................................................................................43 9.3 Effect of Termination.......................................................................44 9.4 Amendment...................................................................................44 9.5 Extension; Waiver...........................................................................44 9.6 Notices.....................................................................................45 9.7 Interpretation..............................................................................46 iii 9.8 Counterparts................................................................................46 9.9 Entire Agreement............................................................................46 9.10 Governing Law..............................................................................46 9.11 Attorneys' Fees............................................................................46 9.12 Disputes...................................................................................46 9.13 Rules of Construction......................................................................47 SCHEDULES iv
AGREEMENT OF MERGER AND PLAN OF REORGANIZATION This AGREEMENT OF MERGER AND PLAN OF REORGANIZATION (this "Agreement") is made and entered into as of July 26, 2006 among BestNet Communications Corporation, a Nevada corporation ("BESC"); Oncologix Corporation, a Nevada corporation ("Oncologix") which is the wholly owned subsidiary of BESC; JDA Medical Technologies, Inc., a Maryland corporation ("JDA"); and Jeff Franco ("Jeff Franco") and Andrew S. Kennedy, MD ("Kennedy"). Jeff Franco and Kennedy are collectively called herein the "Principal Shareholders". Andrew Green ("Green") and Adam Lowe ("Lowe") have joined in this Agreement solely for the purpose set forth in Sections 1.6(g) (iii) and 1.9, below. Green and Lowe are collectively called herein the "Executive Shareholders". The parties have agreed as follows: RECITALS A. The respective Boards of Directors of JDA, BESC and Oncologix believe it is in the best interests of each of the parties and their respective stockholders that JDA and Oncologix combine into a single corporation through the statutory merger of JDA with and into Oncologix (the "Merger") and, in furtherance thereof, have approved the Merger. B. Pursuant to the Merger, among other things, the outstanding shares of Common Stock of JDA ("JDA Common Stock") shall be converted into shares of Common Stock of BESC ("BESC Common Stock") as determined herein. C. JDA, the Principal Shareholders, BESC and Oncologix desire to make certain representations and warranties and other agreements in connection with the Merger. D. The parties intend, by executing this Agreement, to adopt a plan of reorganization within the meaning of Section 368 of the Internal Revenue Code of 1986, as amended (the "Code"). ARTICLE I THE MERGER 1.1 The Merger. At the Effective Time (as defined in Section 1.2) and subject to and upon the terms and conditions of this Agreement and cognizant law, JDA shall be merged with and into Oncologix, the separate corporate existence of JDA shall cease and Oncologix shall continue as Oncologix . Upon the accomplishment of the Merger, Oncologix shall continue to conduct the business theretofore conducted by JDA (the "JDA Business"). 1 1.2 Effective Time. As promptly as practicable after the satisfaction or waiver of the conditions set forth in Article VII, the parties hereto shall cause the Merger to be consummated by filing a Certificate of Merger (the "Certificate of Merger") with the Secretary of State of the State of Nevada and Articles of Merger with the Maryland State Department of Assessments and Taxation in such form as required by, and executed in accordance with the relevant provisions of, the respective laws of Nevada and Maryland (the time of such filing being the "Effective Time"). The closing of the transactions contemplated hereby (the "Closing") shall take place at 11:00a.m. at the offices of Firetag, Stoss & Dowdell, P.C., Suite 107, 1747 East Morten, Phoenix, Arizona 85020, on July 26, 2006 (the "Closing Date"). 1.3 Effect of the Merger. At the Effective Time, the effect of the Merger shall be as provided under the respective laws of Nevada and Maryland. Without limiting the generality of the foregoing, and subject thereto, at the Effective Time all the property, rights, privileges, powers and franchises of JDA and Oncologix shall vest in Oncologix , and, subject to the further provisions of this Agreement, all debts, liabilities and duties of JDA and Oncologix shall become the debts, liabilities and duties of Oncologix . 1.4 Articles of Incorporation: Bylaws. (a) Unless otherwise determined by BESC prior to the Effective Time, at the Effective Time the Articles of Incorporation of Oncologix, as in effect immediately prior to the Effective Time, shall be the Articles of Incorporation of Oncologix , in the form shown by Exhibit 1.4(a) attached hereto, until thereafter amended as provided by law and such Articles of Incorporation. (b) The Bylaws of Oncologix, in the form shown by Exhibit 1.4(b) attached hereto, as in effect immediately prior to the Effective Time, shall be the Bylaws of Oncologix until thereafter amended. 1.5 Funding by BESC. BESC shall provide at least $4,000,000 in funding for the operations of Oncologix. It is acknowledged that $350,000 of said amount has already been furnished by way of an advance to JDA. The balance of $3,650,000 shall be deposited for the account of Oncologix as follows: (a) At the Closing, BESC shall deposit a sum of not less than $400,000 (of which $61,300 is to be applied to the discharge of the "Walker Note"), and shall make further deposits as follows: (b) An additional $250,000 at the end of each of the five consecutive months next following; (c) The remaining balance at the end of the sixth month after the month in which the Closing occurs; whereupon (d) A certain Convertible Promissory Note issued to BESC by JDA on or about March 23, 2006 in the principal sum of $350,000, shall, together with any liability of JDA for accrued interest thereunder, shall be canceled and extinguished. 2 Any particular deposit by BESC may be in excess of the amounts shown above. Any such excess shall be credited against the next deposit to become due. 1.6 Directors and Officers. The directors of Oncologix immediately prior to the Effective Time shall be the initial directors of Oncologix, each to hold office in accordance with the Articles of Incorporation and Bylaws of Oncologix, and the officers of Oncologix immediately prior to the Effective Time shall be the initial officers of Oncologix, in each case until their respective successors are duly elected or appointed and qualified. Upon the Closing, the parties will take such action as may be necessary to cause the Board of Directors of Oncologix to be composed of Adam Lowe, Andrew S. Kennedy, MD., Barry Griffith, Stanley L. Schloz and Andrew Green. The following named persons are thereupon to be respectively elected the offices in Oncologix as indicated: Andrew Green, Chairman and Chief Executive Officer; Adam Lowe, President and Chief Operating Officer; and Michael Kramarz, Chief Financial Officer and Secretary. 1.7 BESC Shares to Be Issued. BESC shall issue and deliver at the Closing 43,000,000 shares of its Common Stock ("BESC Transaction Shares") in exchange for the acquisition by BESC of all outstanding shares of JDA Common Stock. No adjustment shall be made in the number of shares of BESC Common Stock issued in the Merger as a result of the exercise of any options or warrants to acquire JDA Common Stock. Subject to the terms and conditions of this Agreement, as of the Effective Time, by virtue of the Merger and without any action on the part of Oncologix, JDA or the holder of any of the following securities: (a) Conversion of JDA Common Stock. Each share of common stock, par value $.001 per share, of JDA (the "JDA Common Stock") issued and outstanding immediately prior to the Effective Time other than any Dissenting Shares (as defined and to the extent provided in Section 1.8(a)) will be canceled and extinguished and be converted automatically into the right to receive that number of shares of BESC Common Stock determined by application of the Exchange Ratio (as defined below), upon surrender of the certificate representing such share of JDA Common Stock in the manner provided in this Section 1.7. (b) Restricted Securities. It is understood and agreed that when issued the BESC Transaction Shares will be restricted as to transfer pursuant to the requirements of Regulation D promulgated by the Securities and Exchange Commission ("SEC") and that the certificate or certificates evidencing the BESC Transaction Shares, will bear a legend substantially as follows: THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE OR PROVINCIAL SECURITIES LAWS, AND MAY NOT BE OFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF UNLESS REGISTERED PURSUANT TO THE PROVISIONS OF SUCH ACT AND SUCH LAWS OR AN EXEMPTION THEREFROM IS AVAILABLE AS ESTABLISHED BY A WRITTEN OPINION OF COUNSEL ACCEPTABLE TO THE CORPORATION. 3 (c) Cancellation of BESC-Owned and JDA-Owned Stock. Each share of JDA Stock owned by Oncologix, BESC, JDA or any direct or indirect wholly owned subsidiary of BESC or of JDA outstanding immediately prior to the Effective Time (d) JDA Stock Purchase Options or Other Rights. At the Effective Time, any rights theretofore outstanding to acquire any JDA Common Stock, such as options, warrants, convertible debt or other rights shall have been fully exercised or terminated. (e) Adjustments to Exchange Ratio. The Exchange Ratio shall be adjusted to reflect fully the effect of any stock split, reverse split, stock dividend (including any dividend or distribution of securities convertible into BESC Common Stock), reorganization, recapitalization or other like change with respect to BESC Common Stock occurring after the date hereof and prior to the Effective Time. (f) Fractional Shares. No fraction of a share of BESC Common Stock will be issued, but in lieu thereof each holder of shares of JDA Stock who would otherwise be entitled to a fraction of a share of BESC Common Stock (after aggregating all fractional shares of BESC Common Stock to be received by such holder) shall be entitled to receive from BESC a whole share of BESC Common Stock. (g) Definitions. (i) Exchange Ratio. The "Exchange Ratio" shall be the quotient obtained by dividing the number of BESC Transaction Shares by the number of shares of JDA Common Stock outstanding as of the Effective Time. (ii) Escrow Shares. The "Escrow Shares" shall consist of the following number of BESC Transaction Shares issuable at the Closing: 80% of BESC Transaction Shares issuable to Kennedy; 80% of the BESC Transaction Shares issuable to Jeff Franco; and all of the BESC Transaction Shares issuable to Green and to Lowe respectively. 1.8 Dissenting Shares. a. Notwithstanding any provision of this Agreement to the contrary, any shares of capital stock of JDA held by a holder who has demanded and perfected appraisal rights for such shares in accordance with Maryland Law and who, as of the Effective Time, has not effectively withdrawn such appraisal rights ("Dissenting Shares"), shall not be converted into or represent a right to receive BESC Common Stock pursuant to Section 1.7, but the holder thereof shall only be entitled to such rights as are granted by Maryland Law. 4 b. Notwithstanding the provisions of subsection 1.8(a), if any holder of shares of capital stock of JDA who demands appraisal of such shares under Maryland Law shall effectively withdraw the right to appraisal, then, as of the later of the Effective Time and the occurrence of such event, such holder's shares shall automatically be converted into and represent only the right to receive BESC Common Stock, without interest thereon, upon surrender of the certificate representing such shares. c. JDA shall give BESC (i) prompt notice of any written demands for appraisal of any shares of capital stock of JDA, withdrawals of such demands, and any other instruments served pursuant to Maryland Law and received by JDA and (ii) the opportunity to participate in all negotiations and proceedings which take place prior to the Effective Time with respect to demands for appraisal under Maryland Law. JDA shall not, except with the prior written consent of BESC, voluntarily make any payment before the Effective Time with respect to any demands for appraisal of capital stock of JDA or offer to settle or settle any such demands. 1.9 Surrender of Certificates. 1.9.1 BESC to Provide Common Stock. Promptly after the Effective Time, BESC shall make available to the JDA Shareholder Agent (hereinbelow defined) for exchange in accordance with this Article I the shares of BESC Common Stock issuable pursuant to Section 1.7 to be exchanged for outstanding shares of JDA Common Stock pursuant to this Agreement, duly endorsed for transfer. 1.9.2 Exchange Procedures. At the Closing, the JDA Shareholder Agent shall deliver to Oncologix a certificate or certificates (the "JDA Certificates") which immediately prior to the Effective Time represented outstanding shares of JDA Common Stock whose shares were converted into the right to receive shares of BESC Common Stock pursuant to Section 1.8. Delivery shall be effected, and risk of loss and title to the JDA Certificates shall pass only upon delivery of the JDA Certificates to Oncologix in such form and subject to such other conditions as BESC may reasonably specify. Upon surrender of a JDA Certificate for cancellation to Oncologix or to such other agent or agents as may be appointed by BESC, duly completed and validly executed in accordance with the instructions thereto, the holder of such Certificate shall be entitled to receive in exchange therefor a certificate representing the number of whole shares of BESC Common Stock (less the number of shares of BESC Common Stock, if any, to be deposited in the Escrow (defined in Section 1.10, below) on such holder's behalf pursuant to paragraph 1.10, to which such holder is entitled pursuant to Section 1.7, and the Certificate so surrendered shall forthwith be canceled. As soon as practicable after the Effective Time, and subject to and in accordance with the provisions of Sections 1.10 and 1.11 hereof, BESC shall cause to be delivered to the Escrow Agent (as defined in Section 1.10) a certificate or certificates representing that number of shares of BESC Common Stock equal to the applicable number of Escrow Shares. Such shares shall be beneficially owned by the holders on whose 5 behalf such shares were deposited in the Escrow and shall be registered in the names of the respective JDA shareholders entitled thereto and delivered to them upon satisfaction of the conditions proved in Section 1.11, below. Until so surrendered, each outstanding Certificate that, prior to the Effective Time, represented shares of JDA Common Stock will be deemed from and after the Effective Time, for all corporate purposes, to evidence the ownership of the number of full shares of BESC Common Stock into which such shares of JDA Common Stock shall have been so converted in accordance with Section 1.7. 1.10 Escrow As soon as practicable after the Effective Time, the Escrow Shares (as defined in paragraph 1.7(g)(iii)), plus any additional New Shares (as defined in the Exhibits specified below in this Section 1.10) as may be issued in respect thereof (such as, for example, a dividend payable in shares of capital stock) after the Closing (collectively, the "Escrow Shares"), without any act of any stockholder, will be registered in the names of Jeff Franco, Andrew S. Kennedy, Andrew Green and Adam Lowe, and will be deposited with Hodes, Ulman, Pessin & Katz, P.A. (or other institution acceptable to BESC and the JDA Shareholder Agent (as defined below) as Escrow Agent (the "Escrow Agent"), to be governed by the terms set forth in the Escrow Agreements respectively attached hereto as Exhibits 1.10a, 1.10b, 1.10(c) and 1.10(d) at BESC's sole cost and expense. The number of BESC Transaction Shares in the Escrow contributed on behalf of each stockholder of JDA is listed opposite such stockholders' name on Schedule 2.3(a) attached hereto. 1.11 Performance Release of Shares from Escrow (a) The Escrow Shares shall be released from the Escrow upon the occurrence of certain events ("Milestones") as follows, the terms, "Development Phase", "Pre-Clinical Testing Phase" and "Clinical Approval Phase", each to have the meaning defined below. Each Milestone will be deemed to have been attained when so certified in writing by the Chief Executive Officer, Chief Operating Officer and Chief Medical and Scientific Officer in the form shown by Exhibit 1.11 (a) attached hereto. (b) The ultimate goal for the JDA Business is to gain approval of the U.S. Food and Drug Administration ("FDA") to market a certain microsphere product for the treatment of liver cancer. There are numerous interim goals, or "Milestones", that are required to be completed in order to reach this ultimate goal. The following described Milestones, called respectively the Development Phase, the Pre-Clinical Testing Phase, and the clinical Approval Phase, are considered the most significant in that their realization is required to move from one phase to another. (i) Development Phase. The Development Phase is the portion of the project that defines the design, the overall process, and the manufacturing feasibility of the product. At the end of this phase there is reasonable scientific and engineering assurance that a design is feasible, the processes to produce that design are reproducible, and that the design can be manufactured in scalable quantities at reasonable costs. The successful completion of this phase will allow the JDA Business to begin Pre-Clinical Testing. This phase will be considered completed when: 6 (A) A microsphere specification and design are defined that meet the user requirements as defined in the Product Requirements Document; (B) Manufacturing lots are able to be manufactured at pilot plant scale (lots sizes that would be large enough to support an animal study and a pivotal clinical study; and (C) A preliminary manufacturing plan, based on reasonable assumptions, is documented that supports a commercially acceptable cost basis for commercial quantities. (ii) Pre-Clinical Testing Phase. The Pre-Clinical Testing phase is the portion of the project in which the design is verified against its "product (user) requirements" and the hazards of its use are identified in a risk analysis. This testing is required by the FDA and ISO standards for initiation of a clinical trial and is a necessary part of good engineering development and safety. These results will be required to be included in the IDE submission to the FDA requesting approval to initiate the treatment of patients in a pivotal clinical trial. The trial design and final specifications should be based on discussions with and preliminary advice from the FDA. The animal study will be the last pre-clinical test performed before the submission of the IDE to the FDA. The purpose of the animal study will be to: (A). Confirm that radiation effects from the microspheres produce expected local effect in the liver, without effects on other tissues or organs; (B), Document and describe any acute and chronic adverse events; (C). Document and describe feasibility of the delivery of microspheres to the liver without gastric, duodenal or pulmonary uptake; and (D). Document and describe the any potential liver toxicity. This Subparagph (D) will be considered completed when a report is finalized for an animal study that meets industry and scientific standards to support the submission of an IDE to the FDA requesting approval for a "pivotal clinical" trial. The Pre-Clinical Testing Phase will be deemed complete when the foregoing purposes have been accomplished. (iii). Clinical Approval Phase. The clinical Approval Phase is the phase of the project in which the IDE submission is compiled, submitted to the FDA, and an approval to start the "pivotal clinical trial" is granted. Once the design verification is completed in the Pre-Clinical Testing Phase, the IDE can be compiled and submitted. The FDA responds to IDE submissions within 30 days with an approval, conditional approval, or disapproval. An approval or conditional approval will allow JDA to begin the treatment of patients in the "pivotal clinical trial". This phase will be considered completed when the FDA letter granting approval or conditional approval is received. 7 (c) The Escrow Shares will be released to the respective beneficial owners thereof as follows: (i) a number equal to twenty-five percent (25%) of the Escrow Shares upon the successful completion of the Development Phase; (ii) a number equal to thirty-one and one-quarter percent (31.25%) of the Escrow Shares upon the successful completion of Pre-Clinical Testing Phase; and (iii) a number equal to forty.-three and three-quarters percent (43.75%) of the Escrow Shares upon the issue or grant by the U.S. Food and Drug Administration of an "IDE", in other words, completion of the Clinical Approval Phase; provided that (iv) if any of the Milestones shall not have been achieved on or before the sixth anniversary date of the Closing under this Agreement, any BESC Shares not theretofore released shall be returned to BESC and restored to the status of authorized but unissued shares of BESC's common stock. 1.12 Agent of the JDA Stockholders: Power of Attorney. 1.12.1 Appointment. In the event that the Merger is approved, effective upon such vote, and without further act of any stockholder, Jeff Franco shall be appointed as agent and attorney-in-fact (the "JDA Shareholder Agent") for each stockholder of JDA (except the University of Maryland, Baltimore, and such stockholders, if any, as shall have perfected their appraisal rights under Maryland law), for and on behalf of stockholders of JDA, to give and receive notices and communications, to authorize delivery to BESC of BESC Common Stock or other property from the Escrow in satisfaction of claims by BESC, to object to such deliveries, to agree to, negotiate, enter into settlements and compromises of, and demand arbitration and comply with orders of courts and awards of arbitrators with respect to such claims, and to take all actions necessary or appropriate in the judgment of the JDA Shareholder Agent for the accomplishment of the foregoing. Such agency may be changed by the stockholders of JDA from time to time upon not less than thirty (30) days prior written notice to BESC; provided that the JDA Shareholder Agent may not be removed unless holders of a two-thirds interest of the Escrow Fund agree to such removal and to the identity of the substituted agent. No bond shall be required of the Agent, and the JDA Shareholder Agent shall not receive compensation for his or her services. Notices or communications to or from the JDA Shareholder Agent shall constitute notice to or from each of the stockholders of JDA. The JDA Shareholder Agent shall be entitled to submit a claim and receive reimbursement from BESC for all reasonable, documented out-of-pocket expenses incurred by the JDA Shareholder Agent as a result of his acting as the JDA Shareholder Agent. 1.12.2 Limitation of Liability. The JDA Shareholder Agent shall not be liable for any act done or omitted hereunder as JDA Shareholder Agent while acting in good faith and in the exercise of reasonable judgment. The stockholders of JDA (other than the 8 University of Maryland, Baltimore) shall severally indemnify the JDA Shareholder Agent and hold him harmless against any loss, liability or expense incurred without negligence or bad faith on his part and arising out of or in connection with his acceptance or administration of the JDA Shareholder Agent's duties hereunder, including the reasonable fees and expenses of any legal counsel retained by him. 1.12.3 Acts of Agent Binding. A decision, act, consent or instruction of the JDA Shareholder Agent shall constitute a decision of all the stockholders for whom shares of BESC Common Stock otherwise issuable to them are deposited in the Escrow and shall be final, binding and conclusive upon each of such stockholders, and the Escrow Agent and BESC may rely upon any such decision, act, consent or instruction of the JDA Shareholder Agent as being the decision, act, consent or instruction of each every such stockholder of JDA. The Escrow Agent and BESC are hereby relieved from any liability to any person for any acts done by them in accordance with such decision, act, consent or instruction of the JDA Shareholder Agent. 1.13 No Further Ownership Rights in JDA Common Stock. All shares of BESC Common Stock issued upon the surrender for exchange of shares of JDA Common Stock in accordance with the terms hereof shall be deemed to have been issued in full satisfaction of all rights pertaining to such shares of JDA Common Stock, and there shall be no further registration of transfers on the records of Oncologix of shares of JDA Common Stock which were outstanding immediately prior to the Effective Time. If, after the Effective Time, Certificates are presented to Oncologix for any reason, they shall be canceled and exchanged as provided in this Article I. 1.14 Lost, Stolen or Destroyed Certificates. In the event any certificates evidencing shares of JDA Common Stock shall have been lost, stolen or destroyed, BESC shall issue in exchange for such lost, stolen or destroyed certificates, upon the making of an affidavit of that fact by the holder thereof, such shares of BESC Common Stock, if any, as may be required pursuant to Section 1.9; provided, however, that BESC may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificates to deliver a bond in such sum as it may reasonably direct as indemnity against any claim that may be made against BESC with respect to the certificates alleged to have been lost, stolen or destroyed. 1.15 Tax Consequences. It is intended by the parties hereto that the Merger shall constitute a reorganization within the meaning of Section 368 of the Code. 1.16 Taking of Necessary Further Action. If, at any time after the Effective Time, any such further action is necessary or desirable to carry out the purposes of this Agreement and to vest Oncologix with full right, title and possession to all assets, property, rights, privileges, powers and franchises of JDA and Oncologix, the officers and directors of JDA and Oncologix are fully authorized in the name of their respective corporations or otherwise to take, and will take, all such lawful and necessary action. 9 ARTICLE II REPRESENTATIONS, WARRANTIES AND COVENANTS OF JDA AND THE PRINCIPAL SHAREHOLDERS JDA, Jeff Franco and Kennedy (Jeff Franco and Kennedy being understood to be acting severally and not jointly and to be joining in this Article II on the basis of their best knowledge and belief after due inquiry) represent and warrant to and covenant with BESC and Oncologix, as follows: 2.1 Disclosures True. JDA has furnished to BESC a copy of its Business Plan dated July 5, 2006 (the "Business Plan") which together with the information and contained in the Schedules hereto or otherwise furnished by JDA are called collectively herein the "Disclosure Documents". The Disclosure Documents have been carefully prepared by JDA, do not contain any untrue statement of a material fact and do not omit to state a material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances in which they were made, not misleading, except to the extent disclosed in Schedule 2.1 attached hereto. 2.2 Organization of JDA. JDA is a corporation duly organized, validly existing and in good standing under the laws of the State of Maryland. JDA has the corporate power to own its property and to carry on its business as now being conducted and as proposed to be conducted by JDA. JDA is duly qualified to do business and in good standing as a foreign corporation in each jurisdiction in which the failure to be so qualified would have a material adverse effect on the business, assets (including intangible assets), financial condition, or results of operations ("Material Adverse Effect") of JDA. JDA has delivered a true and correct copy of its Articles of Incorporation and Bylaws, each as amended to date, to counsel for BESC. 2.3 JDA Capital Structure. The authorized capital stock of JDA consists of Ten Million (10,000,000) shares of Common Stock, par value $0.001 per share. There are 9,093,361 shares of JDA Common Stock issued and outstanding held by the persons, and in the amounts, set forth on Schedule 2.3(a). Schedule 2.3(a) also indicates how many shares of each holder were subject to repurchase upon termination of employment as of the date of execution of this Agreement. All outstanding shares of JDA Common Stock are duly authorized, validly issued, fully paid and nonassessable and not subject to preemptive rights created by statute, the Articles of Incorporation or Bylaws of JDA or any agreement to which JDA is a party or is bound. No shares of JDA Common Stock are reserved for issuance pursuant to JDA Common Stock Option Plan, no shares are subject to outstanding, unexercised options and no shares remain available for future grant. Except as set forth in Schedule 2.3(b), there will at the Closing be no other options, warrants, calls, rights, commitments or agreements of any character to which JDA is a party or by which it is bound 10 obligating JDA to issue, deliver, sell, repurchase or redeem, or cause to be issued, delivered, sold, repurchased or redeemed, any shares of the capital stock of JDA or obligating JDA to grant, extend or enter into any such option, warrant, call, right, commitment or agreement. 2.4 Subsidiaries. JDA has no subsidiaries or affiliated companies and does not otherwise own any shares of stock or any interest in, or control, directly or indirectly, any other corporation, partnership, association, joint venture or business entity. 2.5 Authority. JDA has all requisite corporate power and authority to enter into this Agreement and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of JDA. This Agreement has been duly executed and delivered by and constitutes the valid, binding and enforceable obligation of JDA. The execution and delivery of this Agreement by JDA does not, and the consummation of the transactions contemplated hereby will not, conflict with, or result in any violation of, or default under (with or without notice or lapse of time, or both), or give rise to a right of termination, cancellation or acceleration of any obligation or loss of a material benefit under (i) any provision of the Articles of Incorporation or Bylaws of JDA or (ii) any material mortgage, indenture, lease, contract or other agreement or instrument, permit, concession, franchise, license, judgment, order, decree, statute, law, ordinance, rule or regulation applicable to JDA or its properties or assets. No consent, approval, order or authorization of, or registration, declaration or filing with, any court, administrative agency or commission or other governmental authority or instrumentality ("Governmental Entity"), is required by or with respect to JDA in connection with the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby, except for (i) the filing of the Articles of Merger with Maryland State Department of Assessments and Taxation and (ii) such consents, approvals, orders, authorizations, registrations, declarations and filings as may be required under applicable state and federal securities laws and the laws of any foreign country. 2.6 Historical Operations of JDA. Except as described in Schedule 2.6, the operations of JDA prior to the date of this Agreement have consisted solely of product development activities, obtaining a certain technology license agreement from the University of Maryland, Baltimore, and obtaining certain financial assistance grants from certain agencies of the State of Maryland. JDA has never had and does not now have any customers, finished products or production facilities; and has never conducted any manufacturing, marketing or advertising and sales promotion activities. 2.7 JDA Financial Statements. Schedule 2.7 includes JDA's audited financial statements (balance sheets, income statements and statements of cash flows) as of and for the fiscal years ending December 31, 2004 and 2005, including the Notes that are a part of such statements, and JDA's unaudited financial statements as of and for the interim 11 period ended July 17, 2006 (collectively, the "JDA Financial Statements"). The JDA Financial Statements are complete and correct in all material respects, comply as to form in all material respects with applicable accounting requirements, have been prepared in accordance with generally accepted accounting principles consistently applied (except as may be indicated in the notes thereto or, in the case of unaudited statements, as permitted by SEC Form 10-QSB) and fairly present the consolidated financial position of JDA at the dates thereof and of its operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal, recurring audit adjustments). There has been no change in JDA accounting policies or estimates except as described in the Notes to the JDA Financial Statements. Except as specifically described in this Agreement or the JDA Schedules, JDA has no material obligations other than (i) those set forth in the JDA Financial Statements and (ii) those not required to be set forth in the JDA Financial Statements under generally accepted accounting principles. The unaudited balance sheet of JDA as of July 17, 2006 is hereinafter referred to as the "JDA Balance Sheet." 2.8 No Undisclosed Liabilities. JDA does not have any liabilities or obligations, either accrued or contingent (whether or not required to be reflected in financial statements in accordance with generally accepted accounting principles), and whether due or to become due, which individually or in the aggregate, (i) have not been reflected in JDA Balance Sheet (including the Notes thereto) or (ii) have not been specifically described in this Agreement or in JDA Schedules. 2.9 No Changes. Except as disclosed in Schedule 2.9 attached hereto and made a part hereof, since the date of the JDA Balance Sheet there has not been, occurred or arisen any: (a) transaction by JDA except in the ordinary course of business as conducted on that date; (b) capital expenditure by JDA, either individually or in the aggregate, exceeding $1,000; (c) destruction, damage to, or loss of any assets (including without limitation intangible assets) of JDA (whether or not covered by insurance), either individually or in the aggregate, exceeding $1,000 (d) labor trouble or claim of wrongful discharge or other unlawful labor practice or action; (e) change in accounting methods or practices (including any change in depreciation or amortization policies or rates, any change in policies in making or reversing accruals, or any change in capitalization of software development costs) by JDA; 12 (f) declaration, setting aside, or payment of a dividend or other distribution in respect to the shares of JDA, or any direct or indirect redemption, purchase or other acquisition by JDA of any of its shares; (g) increase in the salary or other compensation payable or to become payable by JDA to any of its officers, directors or employees, or the declaration, payment, or commitment or obligation of any kind for the payment, by JDA, of a bonus or other additional salary or compensation to any such person; (h) acquisition, sale or transfer of any asset of JDA except in the ordinary course of business; (i) formation, amendment or termination of any distribution agreement or any material contract, agreement or license to which JDA is a party, other than termination by JDA pursuant to the terms thereof; (j) loan by JDA to any person or entity, or guaranty by JDA of any loan; (k) waiver or release of any material right or claim of JDA, including any write-off or other compromise of any account receivable of JDA; (l) the commencement or notice or, to the best knowledge of JDA and the Principal Shareholders, threat of commencement of any governmental proceeding against or investigation of JDA or its affairs; (m) other event or condition of any character that has or would, in JDA's reasonable judgment, be expected to have a Material Adverse Effect on JDA; (n) issuance, sale or redemption by JDA of any of its shares or of any other of its securities other than issuances of shares of Common Stock pursuant to outstanding options and warrants; (o) change in pricing or royalties set or charged by JDA except for discounts extended in the ordinary course of business consistent with past practice; or (p) change in pricing or royalties set or charged by JDA except for discounts extended in the ordinary course of business consistent with past practice; or (q) negotiation or agreement by JDA to do any of the things described in the preceding clauses (a) through (o) (other than negotiations with BESC and its representatives regarding the transactions contemplated by this Agreement). 2.10 Tax and Other Returns and Reports. 2.10.1 Tax Returns and Audits. JDA has accurately prepared and timely filed all required federal, state, local and foreign returns, estimates, information statements and reports ("Returns") relating to any and all Taxes relating or attributable to JDA or its operations and such Returns are true and correct in all material respects and have been completed in accordance with applicable law in all material respects. For the purposes of this Agreement, a "Tax" or, collectively, "Taxes," means any and all federal, state, local and foreign taxes, assessments and other governmental charges, duties, impositions and liabilities, including taxes based upon or measured by gross receipts, income, profits, sales, use and occupation, and value added, ad valorem, transfer, franchise, withholding, payroll, recapture, employment, excise and property taxes, together with all interest, penalties and 13 additions imposed with respect to such amounts and any obligations under any agreements or arrangements with any other person with respect to such amounts. JDA has timely paid all Taxes required to be paid with respect to such Returns and has withheld with respect to its employees all federal and state income taxes, FICA, FUTA and other Taxes it is required to withhold. The accruals for Taxes on the books and records of JDA are sufficient to discharge the Taxes for all periods (or the portion of any period) ending on or prior to the Closing Date. JDA has not been delinquent in the payment of any Tax nor, except as set forth in Schedule 2.10(a), is there any Tax deficiency outstanding, proposed or assessed against JDA, nor has JDA executed any waiver of any statute of limitations on or extending the period for the assessment or collection of any Tax. No audit or other examination of any Return of JDA is presently in progress. Except as set forth in Schedule 2.10(a), JDA does not have any liabilities for unpaid federal, state, local and foreign Taxes, whether asserted or unasserted, known or unknown, contingent or otherwise and JDA has no knowledge of any basis for the assertion of any such liability attributable to JDA, or their respective assets or operations. JDA is not (nor has it ever been) required to join with any other entity in the filing of a consolidated tax return for federal tax purposes or a consolidated or combined return or report for state tax purposes. JDA is not a party to or bound by any tax indemnity, tax sharing or tax allocation agreement. JDA has provided, or made available, to BESC or its legal counsel copies of all federal, provincial and state income and all sales and use Tax Returns of JDA for all periods since their respective dates of incorporation. There are (and as of immediately following the Closing there will be) no liens on the assets of JDA relating to or attributable to Taxes. JDA has no knowledge of any basis for the assertion of any claim which, if adversely determined, would result in liens on the assets of JDA. There is no contract, agreement, plan or arrangement, including but not limited to the provisions of this Agreement, covering any employee or former employee of JDA that, individually or collectively, could give rise to the payment of any amount that would not be deductible pursuant to Sections 280G, 162 or 404 of the Internal Revenue Code of 1986, as amended ("Code"). 2.10.2 No Penalty. JDA is not subject to any penalty by reason of a violation of any order, rule or regulation of, or a default with respect to any return, report or declaration required to be filed with, any Governmental Entity to which it is subject, which violations or defaults, individually or in the aggregate, would have a Material Adverse Effect on JDA. 2.11 Restrictions on Business Activities. Except as otherwise disclosed in this Agreement or any of the Schedules hereto, there is no agreement (assuming the parties thereto other than JDA performed their respective obligations thereunder as required), judgment, injunction, order or decree binding upon JDA which has or could reasonably be expected to have the effect of materially prohibiting or materially impairing any business practice of JDA, any Oncologix of property by JDA or the conduct of business by JDA as currently conducted or as currently proposed to be conducted after the Effective Time. 14 2.12 Title to Properties: No Liens or Encumbrances: Condition of Equipment. 2.12.1 JDA owns no real property. Schedule 2.12.1 sets forth a true and complete list of all real property leased by JDA and the aggregate annual rental or other fee payable under any such lease. To the knowledge of JDA, all such leases are in good standing, valid and effective in accordance with their respective terms, and there is not with respect to JDA and, to the knowledge of JDA, any other parties to such leases, under any of such leases, any existing default or event of default (or event which with notice or lapse of time, or both, would constitute a default and in respect of which JDA has not taken adequate steps to prevent such default from occurring), except where the lack of such good standing, validity and effectiveness or the existence of such default or event of default would not have a Material Adverse Effect on JDA. 2.12.2 JDA holds good and valid title to, or, in the case of leased properties and assets, valid leasehold interests in, all of its tangible properties and assets, real, personal and mixed, used in its business, free and clear of any liens, charges, pledges, security interests or other encumbrances, except as reflected in JDA Financial Statements and except for such imperfections of title and encumbrances, if any, which are not substantial in character, amount or extent, and which do not materially detract from the value, or interfere with the present use, of the property subject thereto or affected thereby. 2.12.3 The equipment (the "Equipment") owned or leased by JDA is listed in Schedule 2.12(c), except individual pieces of equipment owned by JDA with an individual value of less than $500. The Equipment is, taken as a whole, (i) to the knowledge of JDA, adequate for the conduct of the business of JDA consistent with its past practice, (ii) suitable for the uses to which it is currently employed, (iii) in good operating condition, (iv) regularly and properly maintained, reasonable wear and tear excepted and (v) not obsolete, dangerous or in need of renewal or replacement, except for renewal or replacement in the ordinary course of business. 2.13 Intellectual Property. 2.13.1 Rights. JDA owns, or is licensed to use, all patents, trademarks, trade names, service marks, copyrights, and any applications therefor, maskworks, net lists, schematics, technology, know-how, computer software programs or applications and tangible or intangible proprietary information or material (excluding Commercial Software Rights (as defined in paragraph (b) below)) that are used or currently proposed to be used in the business of JDA as currently conducted or as currently proposed to be conducted (the "JDA Intellectual Property Rights"). Schedule 2.13 sets forth a complete list of all patents, trademarks, registered and material unregistered copyrights, trade names and service marks, and any applications therefor, included in JDA Intellectual Property Rights, and specifies the jurisdictions in which each such JDA Intellectual Property Right has been issued or registered or in which an application for such issuance and registration has been filed, including the respective registration or application numbers and the names of all registered owners, together with a list of all of JDA's currently marketed software products and an indication as to 15 which, if any, of such software products have been registered for copyright protection with the United States Copyright Office and any foreign offices and by whom such items have been registered. Schedule 2.13 also sets forth a complete list of (i) any requests JDA has received to make any such registration, including the identity of the requestor and the item requested to be so registered, and the jurisdiction for which such request has been made and (ii) all licenses, sublicenses and other agreements as to which JDA is a party and pursuant to which JDA or any other person is authorized to use any JDA Intellectual Property Right or other trade secret material to JDA, and includes the identity of all parties thereto, a description of the nature and subject matter thereof, the applicable royalty and the term thereof. JDA is not, nor will it be as a result of the execution and delivery of this Agreement or the performance of its obligations hereunder, in violation of any license, sublicense or agreement described on such list. JDA is the sole and exclusive owner or licensee of, with all right, title and interest in and to (free and clear of any liens or encumbrances), JDA Intellectual Property Rights, and has sole and exclusive rights (and, except as otherwise disclosed herein or in any Schedule hereto, is not contractually obligated to pay any compensation to any third party in respect thereof) to the use thereof or the material covered thereby in connection with the services or products in respect of which JDA Intellectual Property Rights are being used. No claims with respect to JDA Intellectual Property Rights have been asserted or, to the knowledge of JDA, are threatened by any person, nor, to the knowledge of JDA, is there any valid grounds for any bona fide claims (i) to the effect that the manufacture, sale, licensing or use of any product as now used, sold or licensed or proposed for use, sale or license by JDA infringes on any copyright, patent, trade mark, service mark or trade secret, (ii) against the use by JDA of any trademarks, trade names, trade secrets, copyrights, patents, technology, know-how or computer software programs and applications used in JDA's business as currently conducted or as proposed to be conducted, or (iii) challenging the ownership, validity or effectiveness of any of JDA Intellectual Property Rights. All trademarks, service marks and copyrights held by JDA are valid and subsisting. To the knowledge of JDA, there is no material unauthorized use, infringement or misappropriation of any of JDA Intellectual Property Rights by any third party, including any employee or former employee of JDA. JDA has not been sued or charged as a defendant in any claim, suit, action or proceeding which involves a claim of infringement of any patents, trademarks, service marks, copyrights or violation of any trade secret or other proprietary right of any third party and which has not been finally terminated prior to the date hereof nor does it have any knowledge of any such charge or claim, and there is not any infringement liability with respect to, or infringement or violation by, JDA of any patent, trademark, service mark, copyright, trade secret or other proprietary right of another. To JDA's knowledge, no JDA Intellectual Property Right or product of JDA is subject to any outstanding order, judgment, decree, stipulation or agreement restricting in any manner the licensing thereof by JDA. There is no outstanding order, judgment, decree or stipulation on JDA, and JDA is not party to any agreement, restricting in any manner the licensing of JDA's products by 16 JDA. JDA has not entered into any agreement to indemnify any other person against any charge of infringement of any JDA Intellectual Property Right. Each current and former employee of and consultant to JDA has signed a Proprietary Information and Inventions Agreement substantially in JDA's standard form as certified by JDA and delivered to BESC. 2.13.2 Commercial Software Rights "Commercial Software Rights" means packaged commercially available software programs generally available to the public through retail dealers in computer software which have been licensed to JDA pursuant to end-user licenses and which are used in JDA's business but are in no way a component of or incorporated in any of JDA's products and related trademarks, technology and know-how. To the best of JDA's knowledge, JDA has not breached or violated the terms of its license, sublicense or other agreement relating to any Commercial Software Rights and has a valid right to use such Commercial Software Rights and has a valid right to use such Commercial Rights under such license and agreements. JDA is not, nor will it be as a result of the execution and delivery of this Agreement or the performance of its obligations hereunder, in violation of any license, sublicense or agreement relating to Commercial Software Rights. No claims with respect to the Commercial Software Rights have been asserted or, to the knowledge of JDA, are threatened by any person against JDA, nor to the knowledge of JDA is there any valid grounds for any bona fide claims (i) to the effect that the manufacture, sale, licensing or use of any product as now used, sold or licensed or proposed for use, sale or license by JDA infringes on any copyright, patent, trade mark, service mark or trade secret, (ii) against the use by JDA of any trademarks, trade names, trade secrets, copyrights, patents, technology, know-how or computer software programs and applications used in JDA's business as currently conducted or as proposed to be conducted, or (iii) challenging the validity or effectiveness of any of JDA's rights to use Commercial Software Rights. To the knowledge of JDA, there is no material unauthorized use, infringement or misappropriation of any of the Commercial Software Rights by JDA or any employee or former employee of JDA during the period of their employment. To the knowledge of JDA, no Commercial Software Right is subject to any outstanding order, judgment, decree, stipulation or agreement restricting in any manner the use thereof by JDA. 2.14 Agreements, Contracts and Commitments. Except as described in Schedule 2.14, JDA does not have, is not a party to nor is it bound by: (a) any collective bargaining agreements, (b) any agreements that contain any unpaid severance liabilities or obligations, (c) any bonus, deferred compensation, incentive compensation, pension, profit sharing or retirement plans, or any other employee benefit plans or arrangements, 17 (d) any employment or consulting agreement, contract or commitment with an employee or individual consultant or salesperson or consulting or sales agreement, contract or commitment with a firm or other organization, (e) agreement or plan, including, without limitation, any stock option plan, stock appreciation right plan or stock purchase plan, any of the benefits of which will be increased, or the vesting of benefits of which will be accelerated, by the occurrence of any of the transactions contemplated by this Agreement or the value of any of the benefits of which will be calculated on the basis of any of the transactions contemplated by this Agreement, (f) any fidelity or surety bond or completion bond, (g) any lease of personal property having a value individually in excess of $1,000, (h) any agreement of indemnification or guaranty not entered into in the ordinary course of business (except, with respect to the officers and directors of JDA, as set forth in the Articles of Incorporation of JDA), (i) any agreement, contract or commitment containing any covenant limiting the freedom of JDA to engage in any line of business or compete with any person, (j) any agreement, contract or commitment relating to capital expenditures and involving future obligations in excess of $1,000, (k) any agreement, contract or commitment relating to the disposition or acquisition of assets not in the ordinary course of business or any ownership interest in any corporation, partnership, joint venture or other business enterprise, (l) any mortgages, indentures, loans or credit agreements, security agreements or other agreements or instruments relating to the borrowing of money or extension of credit, including guaranties referred to in clause (h) hereof, (m) any purchase order or contract for the purchase of raw materials or assets involving $1,000 or more in any single instance or $1,000 in the aggregate, (n) any construction contracts, (o) any distribution, joint marketing or development agreement, (p) any other agreement, contract or commitment which involves $1,000 or more and is not cancelable without penalty within thirty (30) days other than standard end-user licenses of JDA's products and services in the ordinary course of business consistent with past practice, or (q) any agreement which is otherwise material to JDA's business. JDA has not breached, or received any claim or threat that it has breached, any of the terms or conditions of any agreement, contract or commitment to which it is bound (including those set forth in any of JDA Schedules) in such manner as would permit any other party to cancel or terminate the same. Each agreement, contract or commitment required to be set forth in any of JDA Schedules is in full force and effect (assuming such agreement, contract or commitment has been 18 duly authorized, executed and delivered by the other party or parties thereto) and, except as otherwise disclosed or defaults fully remedied or resolved, is not subject to any material default thereunder of which JDA has knowledge by any party obligated to JDA pursuant thereto. 2.15 Interested Party Transactions. No officer, director or stockholder of JDA (nor any affiliate, sibling, descendant or spouse of any of such persons, or any trust, partnership, corporation or other entity in which any of such persons has or has had an interest), has or has had, directly or indirectly, (i) an interest in any entity which furnished or sold, or furnishes or sells, services or products which JDA furnishes or sells, or proposes to furnish or sell, or (ii) any interest in any entity which purchases from or sells or furnishes to, JDA, any goods or services, or (iii) any direct or indirect agreement, understanding, commitment or arrangement of any kind with or any interest in any person who is a party to any contract, agreement, commitment or arrangement of any kind with either JDA or BESC or an affiliate of either JDA or BESC, or (iv) a beneficial interest in any contract or agreement required to be set forth in Schedule 2.14; provided, that ownership of no more than one percent (1%) of the outstanding voting stock of a publicly traded corporation shall not be deemed an "interest in any entity" for purposes of this Section 2.15. 2.16 Governmental Authorization. Schedule 2.16 accurately lists each material federal, state, county, local or foreign governmental consent, license, permit, grant, or other authorization issued to JDA (i) pursuant to which JDA currently operates or holds any interest in any of its properties or (ii) which is required for the operation of its business or the holding of any such interest (herein collectively called "JDA Authorizations"). JDA Authorizations are in full force and effect and constitute all the authorizations required to permit JDA to operate or conduct its business or hold any interest in its properties. 2.17 Litigation. Except as described in Schedule 2.17 there are no suits, actions or legal, administrative, arbitration or other proceedings and governmental investigations or any other claims, pending or, to JDA's knowledge, threatened, nor to the best knowledge of JDA or the Principal Shareholders is there any basis therefor. None of such suits, actions, proceedings, investigations or claims seek to prevent the consummation of the Merger. There is no judgment, decree or order enjoining JDA in respect of, or the effect of which is to prohibit, any business practice or the Oncologix of any property or the conduct of business of JDA. Schedule 2.17 also lists all suits and legal actions initiated by JDA. 2.18 Accounts Receivable. All receivables of JDA arose in the ordinary course of business at the aggregate amounts thereof, are collectible (except to the extent reserved against as reflected in JDA's Financial Statements) and are carried at values determined in accordance with generally accepted accounting principles consistently applied. To the knowledge of JDA, none of the receivables of JDA is subject to any claim of offset, recoupment, setoff or counterclaim and there are no facts or circumstances (whether asserted or unasserted) that would give rise to any such 19 claim. No receivables are contingent upon the performance by JDA of any obligation or contract except for JDA's maintenance obligations under its maintenance agreements (although no customer has claimed that JDA has failed to perform its maintenance obligations). No person has any lien, charge, pledge, security interest or other encumbrance on any of such receivables and no agreement for deduction or discount has been made with respect to any of such receivables. 2.19 Minute Books. The minute books of JDA made available to counsel for BESC contain a complete and accurate summary of all meetings of directors and stockholders since the time of incorporation of JDA, and reflect all transactions referred to in such minutes accurately in all material respects. 2.20 Environmental and OSHA. 2.20.1 Hazardous Material. As of the Closing date, no material amount of any substance that is regulated by any Governmental Entity or that has been designated by any Governmental Entity to be radioactive, toxic, hazardous or otherwise a danger to health or the environment, including, without limitation, PCBs, asbestos, urea-formaldehyde and all substances listed pursuant to the United States Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended from time to time, and the United States Resource Recovery and Conservation Act of 1976, as amended from time to time, and the regulations and publications promulgated pursuant to said laws (a "Hazardous Material"), is present, as a result of the actions of JDA (excluding failure of JDA to remediate the presence of a Hazardous Material resulting from the actions of any previous owner or occupier of JDA Property of which presence JDA does not have knowledge) in violation of any law in effect on or before the Closing Date, in, on or under any property, including the land and the improvements, ground water and surface water thereof, that JDA or any of its past or present subsidiaries has at any time owned, operated, occupied or leased (collectively, "JDA Property"). In any event, JDA does not know of the presence of any Hazardous Material in, on or under any JDA Property. 2.20.2 Hazardous Materials Activities. At no time prior to the Closing has JDA transported, stored, used, manufactured, released or exposed its employees or others to Hazardous Materials in violation of any law in effect on or before the Closing Date, nor has JDA disposed of, transferred, sold, or manufactured any product containing a Hazardous Material (collectively "Hazardous Materials Activities") in violation of the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, the Resource Conservation and Recovery Act of 1976, the Toxic Substances Control Act of 1976 and any other applicable state or federal acts (including the rules and regulations thereunder) as in effect on or before the Closing Date. 2.20.3 Permits. JDA currently holds no environmental approvals, permits, licenses, clearances and consents and none are necessary for the conduct of JDA's Hazardous Material Activities and other businesses of JDA as such activities and businesses are currently being conducted. 20 2.21 Brokers' and Finders' Fees. Except as set forth in Schedule 2.21, JDA has not incurred, nor will it incur, directly or indirectly, any liability for brokerage or finders' fees or agents' commissions or any similar charges in connection with this Agreement or any transaction contemplated hereby. 2.22 Labor Matters. JDA is in compliance in all respects with all currently applicable laws and regulations respecting employment, discrimination in employment, terms and conditions of employment and wages and hours and occupational safety and health and employment practices, and is not engaged in any unfair labor practice. JDA has not received any notice from any Governmental Entity, and to the knowledge of JDA, there has not been asserted before any Governmental Entity, any claim, action or proceeding to which JDA is a party or involving JDA, and there is neither pending nor, to the knowledge of JDA, threatened any investigation or hearing concerning JDA arising out of or based upon any such laws, regulations or practices. There are no pending claims against JDA under any workers compensation plan or policy or for long-term disability. JDA has complied in all material respects with all applicable provisions of the Consolidated Omnibus Budget Reconciliation Act of 1985 and has no obligations with respect to any former employees or qualifying beneficiaries thereunder. Schedule 2.22 lists all current employees of JDA and their current salary and vacation accruals. 2.23 Insurance. Schedule 2.23 lists all insurance policies and fidelity bonds covering the assets, business, equipment, properties, operations, errors and omissions, employees, officers and directors of JDA as well as all claims made under any insurance policy by JDA since July 17, 2006. There is no claim by JDA pending under any of such policies or bonds as to which coverage has been questioned, denied or disputed by the underwriters of such policies or bonds. All premiums payable under all such policies and bonds have been paid and JDA is otherwise in compliance in all material respects with the terms of such policies and bonds (or other policies and bonds providing substantially similar insurance coverage). Such policies of insurance and bonds are of the type and in amounts customarily carried by persons conducting businesses similar to those of JDA. JDA does not know of any threatened termination of or material premium increase with respect to any of such policies. JDA has never been denied insurance coverage nor has any insurance policy of JDA ever been canceled for any reason. 2.24 Compliance with Laws. JDA has complied in all material respects with, is not in violation in any material respect of, and has not received any notices of violation with respect to, any federal, state or local statute, law or regulation with respect to the conduct of its business, or the ownership or operation of its business, assets or properties. 21 2.25 Complete Copies of Documents. JDA has delivered or made available true and complete copies of each document (or a summary of same) which has been requested in writing, with some degree of specificity, by BESC or its counsel. 2.26 Binding Agreements: No Default. Each of the contracts, agreements and other instruments shown on the Exhibits and Schedules referred to in this Agreement to which JDA is a party is a legal, binding, and enforceable obligation by or against JDA (assuming that such contracts, agreements and instruments are binding on all other parties thereto in writing and that JDA has no knowledge that they are not) in accordance with its terms, and no party with whom JDA has an agreement or contract is, to JDA's knowledge, in default thereunder or has breached any material terms or provisions thereof (subject to all applicable bankruptcy, insolvency, reorganization and other laws applicable to creditors' rights and remedies and to the exercise of judicial discretion in accordance with general principles of equity). 2.27 Report by BESC on Form 8-K. The information supplied by JDA for inclusion in the Current Report on Form 8-K (which, as amended or supplemented is referred to herein as the "8-K") to be filed by BESC with the Securities and Exchange Commission upon the execution of this Agreement shall not, on the date the 8-K is filed, contain any statement which, at such time and in light of the circumstances under which it shall be made, is false or misleading with respect to any material fact, or shall omit to state any material fact necessary in order to make the statements made therein not false or misleading; or omit to state any material fact necessary to correct any statement in any earlier communication with respect to this transaction which has become false or misleading. If at any time prior to the filing of the 8-K any event relating to JDA or any of its affiliates, officers or directors should be discovered by JDA which should be set forth in an amendment or a supplement to the 8-Kt, JDA shall promptly inform BESC and Oncologix. Notwithstanding the foregoing, JDA makes no representation or warranty with respect to any information supplied by BESC or Oncologix which is contained in the 8-K, a substantially final copy of which shall be provided by BESC to JDA and its counsel as soon as practicable prior to filing, 2.28 Employee Benefit Plans. Schedule 2.28 lists all employee benefit plans and all bonus, stock option, stock purchase, incentive, deferred compensation, supplemental retirement, severance and other similar fringe or employee benefit plans, programs or arrangements, and any current or former employment or executive compensation or severance agreements, written or otherwise, for the benefit of, or relating to, any employee of JDA. JDA does not and never has had any employee benefit plan subject to the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). None of the plans promises or provides retiree medical or other retiree welfare benefits to any person except as required by applicable law, including but not limited to COBRA; all plans are in compliance in all material 22 respects with the requirements prescribed by any and all applicable statutes, orders, or governmental rules and regulations currently in effect with respect thereto and JDA has performed in all material respects all obligations required to be performed by it under, is not in default under or violation of, and has no knowledge of any default or violation by any other party to, any of the plans. JDA has made available to BESC complete, accurate and current copies of all such plans and all amendments, documents, correspondence and filings relating thereto, including but not limited to any statements, filings, reports or returns filed with any governmental agency with respect thereto at any time within the three-year period ending on the date hereof. 2.29 Distribution Agreements. No person has the right to distribute any of the products of JDA 2.30 Representations Complete. None of the representations or warranties made by JDA, nor any statement made in any Schedule, Exhibit or certificate furnished by JDA pursuant to this Agreement, when read in its entirety, contains or will contain any untrue statement of a material fact at the Effective Time, or omits or will omit to state any material fact necessary in order to make the statements contained herein or therein, in the light of the circumstances under which made, not misleading. ARTICLE III REPRESENTATIONS AND WARRANTIES OF BESC AND ONCOLOGIX BESC and Oncologix represent and warrant to JDA, subject to the exceptions specifically disclosed in the schedules supplied and initialed by BESC to JDA (the "BESC Schedules"), as follows: 3.1 Organization, Standing and Power. BESC is a corporation duly organized, validly existing and in good standing under the laws of the State of Nevada. Oncologix is a corporation duly organized, validly existing and in good standing under the laws of the State of Nevada. BESC and Oncologix each have the corporate power to own its properties and to carry on its business as now being conducted and is duly qualified to do business and is in good standing in each jurisdiction in which the failure to be so qualified would have a Material Adverse Effect on BESC and Oncologix taken as a whole. BESC has made available a true and correct copy of the Articles of Incorporation and Bylaws of BESC and Oncologix, as amended to date, to counsel for JDA. 3.2 Capital Structure of BESC. 3.2.1 BESC Authorized Capital Stock. The authorized stock of BESC consists of 100,000,000 shares of Common Stock, par value $0.001 per share, of which 47,092,953 shares were issued and outstanding as of July 11, 2006 and 10,000,000 shares of preferred stock, of which 443,162 shares were outstanding as of said date. The authorized capital stock of Oncologix consists of 50,000,000 shares of Common Stock, par value $0.001 per share, 1,000,000 shares of which, as of the date hereof, are issued and outstanding and are held by BESC, and 5,000,000 shares of preferred stock, of 23 which no shares were outstanding as of the date hereof. All such shares have been duly authorized, and all such issued and outstanding shares have been validly issued, are fully paid and nonassessable and are free of any liens or encumbrances other than any liens or encumbrances created by or imposed upon the holders thereof. Except as disclosed in the SEC Documents (defined in Section 3.4), there are no options, warrants, calls, rights, commitments or agreements of any character to which BESC is a party or by which it is bound obligating BESC to issue, deliver, sell, repurchase or redeem, or cause to be issued, delivered, sold, repurchased or redeemed, any shares of the capital stock of BESC or obligating BESC to grant, extend or enter into any such option, warrant, call, right, commitment or agreement. 3.2.2 Status of BESC Shares. The shares of BESC Transaction Shares to be issued pursuant to the Merger will be duly authorized, validly issued, fully paid, and nonassessable. 3.3 Authority. BESC and Oncologix have all requisite corporate power and authority to enter into this Agreement and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby will have been duly authorized by all necessary corporate action on the part of BESC and Oncologix. This Agreement has been duly executed and delivered by BESC and Oncologix and constitutes the valid and binding obligations of BESC and Oncologix. The execution and delivery of this Agreement do not, and the consummation of the transactions contemplated hereby will not, conflict with, or result in any violation of, or default (with or without notice or lapse of time, or both), or give rise to a right of termination, cancellation or acceleration of any obligation or to loss of a material benefit under (i) any provision of the Articles of Incorporation or Bylaws of BESC and Oncologix or (ii) any mortgage, indenture, lease, contract or other agreement or instrument, permit, concession, franchise, license, judgment, order, decree, statute, law, ordinance, rule or regulation applicable to BESC and Oncologix or their respective properties or assets, other than any such conflicts, violations, defaults, terminations, cancellations or accelerations which individually or in the aggregate would not have a material adverse effect on the ability of BESC or Oncologix to consummate the transactions contemplated hereby. No consent, approval, order or authorization of, or registration, declaration or filing with, any Governmental Entity, is required by or with respect to BESC and Oncologix in connection with the execution and delivery of this Agreement by BESC and Oncologix or the consummation by BESC and Oncologix of the transactions contemplated hereby, except for (i) the filing of the Articles of Merger with the Maryland Department of Assessments and Taxation, (ii) such consents, approvals, orders, authorizations, registrations, declarations and filings as may be required under applicable state and federal securities laws and the laws of any foreign country and (iii) such other consents, authorizations, filings, approvals and registrations which if not obtained or made would not have a material adverse effect on the ability of BESC or Oncologix to consummate the transactions contemplated hereby. 24 3.4 SEC Documents; BESC Financial Statements. BESC has furnished or made available to JDA a true and complete copy of its Form 10-KSB for the fiscal years ended August 31, 2004 and 2005, and of its Form 10-QSB for the quarter ended May 31, 2006 and each subsequent Current Report on Form 8-K (collectively, the "SEC Documents"), which BESC filed under the Exchange Act with the Securities and Exchange Commission (the "SEC"). As of their respective filing dates, the SEC Documents complied in all material respects with the requirements of the Exchange Act, and none of the SEC Documents contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances in which they were made, not misleading, except to the extent corrected by a subsequently filed document with the SEC. The financial statements of BESC, including the notes thereto, included in the SEC Documents (the "BESC Financial Statements") comply as to form in all material respects with applicable accounting requirements and with the published rules and regulations of the SEC with respect thereto, have been prepared in accordance with generally accepted accounting principles consistently applied (except as may be indicated in the notes thereto or, in the case of unaudited statements, as permitted by Form 10-QSB of the SEC) and fairly present the consolidated financial position of BESC at the dates thereof and of its operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal, recurring audit adjustments). There has been no change in BESC accounting policies or estimates except as described in the notes to the BESC Financial Statements. BESC has no material obligations other than (i) those set forth in the BESC Financial Statements and (ii) those not required to be set forth in the BESC Financial Statements under generally accepted accounting principles. 3.5 Broker's and Finders' Fees. BESC has not incurred, and will not incur, directly or indirectly, any liability for brokerage or finders' fees or agents' commissions or any similar charges in connection with this Agreement, the Merger or any transaction contemplated hereby. 3.6 Current Report on Form 8-K. The Current Report on Form 8-K ("8-K") which will be filed with the SEC upon the Closing of this transaction, shall not, at the time it is filed, contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements included therein, in light of the circumstances under which they were made, not misleading. The 8-K shall comply in all material respects as to form and substance with the requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act") and the rules and regulations promulgated thereunder. 3.7 Ownership of JDA Common Stock. As of the date of execution of this Agreement, neither BESC nor Oncologix owns any shares of JDA Common Stock. 25 3.8 Litigation. Except as disclosed in the SEC Documents or in Schedule 3.8 attached hereto, there are no suits, actions or legal, administrative, arbitration or other proceedings or governmental investigations against BESC pending or, to BESC's knowledge, threatened, which (i) if determined adversely to BESC, could be expected to result in a material adverse effect on the financial condition or results of operations of BESC, or (ii) seek to prevent the consummation of the Merger. ARTICLE IV CONDUCT PRIOR TO THE EFFECTIVE TIME 4.1 Conduct of Business of JDA. During the period from the date of this Agreement and continuing until the earlier of the termination of this Agreement or the Effective Time, JDA agrees (except to the extent that BESC shall otherwise consent in writing), to carry on its business in substantially the same manner as described in the Business Plan and, to the extent consistent with such business, use all reasonable efforts to preserve intact JDA's present business organizations, keep available the services of its present officers and key employees and preserve their relationships with, suppliers, licensors, licensees, and others having business dealings with it, to the end that JDA's goodwill and ongoing businesses shall be unimpaired at the Effective Time. JDA shall promptly notify BESC of any event or occurrence or emergency and any event which could, in the reasonable judgment of JDA, have a Material Adverse Effect on JDA. Except as expressly contemplated by this Agreement or set forth in Schedule 4.1, JDA shall not, without the prior written consent of BESC: (a) Issue, deliver or sell or authorize or propose the issuance, delivery or sale of, or purchase or propose the purchase of, any shares of its capital stock or securities convertible into, or subscriptions, rights, warrants or options to acquire, or other agreements or commitments of any character obligating it to issue any such shares or other convertible securities except for the issuance of shares of capital stock upon exercise of options outstanding on the date hereof; (b) Enter into any commitment or transaction not in the ordinary course of business (i) to be performed over a period longer than six (6) months in duration, or (ii) to purchase fixed assets for a purchase price in excess of $1,000; (c) Grant any severance or termination pay to any director or any employee; (d) Transfer to any person or entity any rights to JDA's Intellectual Property; (e) Enter into or amend any agreements pursuant to which any other party is granted exclusive marketing or other rights of any type or scope with respect to any products of JDA; (f) Violate, amend or otherwise modify the terms of any of the contracts or agreements required to be set forth in JDA Schedules; (g) Commence any litigation; 26 (h) Declare or pay any dividends on or make any other distributions (whether in cash, stock or property) in respect of any of its capital stock, or split, combine or reclassify any of its capital stock or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for shares of capital stock of JDA, or repurchase or otherwise acquire, directly or indirectly, any shares of its capital stock except from former employees, directors and consultants in accordance with agreements, copies of which have been furnished to BESC's counsel, providing for the repurchase of shares at cost in connection with any termination of service to JDA; (i) Cause or permit any amendments to its Articles of Incorporation or Bylaws; (j) Acquire or agree to acquire by merging or consolidating with, or by purchasing a substantial portion of the assets of, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof, or otherwise acquire or agree to acquire any assets which are material, individually or in the aggregate, to the business of JDA; (k) Sell, lease, license or otherwise dispose of any of its properties or assets which are material, individually or in the aggregate, to the business of JDA, except in the ordinary course of business; (l) Incur any indebtedness for borrowed money or guarantee any such indebtedness or issue or sell any debt securities of JDA or guarantee any debt securities of others; (m) Adopt or amend any employee benefit plan, or enter into any employment contract, pay any special bonus or special remuneration to any director or employee, or increase the salaries or wage rates of its employees; (n) Revalue any of its assets, including without limitation writing down the value of inventory or writing off notes or accounts receivable other than in the ordinary course of business; (o) Pay, discharge or satisfy in an amount in excess of $1,000 in any one case any claim, liability or obligation (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction in the ordinary course of business of liabilities reflected or reserved against in JDA Financial Statements (or the notes thereto); (p) Make or change any material election in respect of Taxes, adopt or change any accounting method in respect of Taxes, file any material Return or any amendment to a material Return, enter into any closing agreement, settle any claim or assessment in respect of Taxes, or consent to any extension or waiver of the limitation period applicable to any claim or assessment in respect of Taxes; or (q) Take, or agree in writing or otherwise to take, any of the actions described in Sections 4.1(a) through (p) above, or any action which would make any of the representations or warranties or covenants of JDA contained in this Agreement materially untrue or incorrect. 27 4.2 No Solicitation. Prior to the Effective Time, JDA will not (nor will JDA permit any of JDA's officers, directors, stockholders affiliated with any officer or director or JDA's agents, representatives or affiliates to) directly or indirectly, take any of the following actions with any party other than BESC and its designees: (a) solicit, encourage, initiate or participate in any negotiations or discussions with respect to, any offer or proposal to acquire all or substantially all of JDA's business and properties or capital stock whether by merger, purchase of assets, tender offer or otherwise, (b) except as required by law and except for disclosures made to financial institutions and others in the ordinary course of business, disclose any information not customarily disclosed to any person other than its attorneys or financial advisors concerning JDA's business and properties or afford to any person or entity access to its properties, books or records, or (c) assist or cooperate with any person to make any proposal to purchase all or any part of JDA's capital stock or assets, other than licensing of software in the ordinary course of business. In the event JDA shall receive any offer or proposal, directly or indirectly, of the type referred to in clause (a) or (c) above, or any request for disclosure or access pursuant to clause (b) above, it shall immediately inform BESC as to any such offer or proposal and will cooperate with BESC by furnishing any information it may reasonably request. 4.3 Conduct of Business of BESC. During the period from the date of this Agreement and continuing until the earlier of the termination of this Agreement and the Effective Time, as the case may be, BESC agrees (except to the extent that JDA shall otherwise consent in writing), that BESC shall promptly notify JDA of any event or occurrence or emergency which is not in the ordinary course of business of BESC and which is material and adverse to the business of BESC and its subsidiaries taken as a whole. ARTICLE V REGISTRATION RIGHTS 5.1 Certain Definitions. As used in this Article V, the following terms shall have the following respective meanings: (a) "Closing" shall mean the Closing as defined in Section 1.2 of this Agreement. (b)"Commission" shall mean the Securities and Exchange Commission or any other federal agency at the time administering the Securities Act. (c) "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended, or any similar successor federal statute and the rules and regulations thereunder, all as the same shall be in effect from time to time. 28 (d) "Holder" shall mean any person who acquired Registrable Securities pursuant to this Agreement and any transferee of Registrable Securities to whom the registration rights conferred by this Agreement have been transferred in compliance with Section 5.14 hereof. (e) "Initiating Holders" shall mean any Holder or Holders who in the aggregate hold not less than forty percent (40%) of the outstanding Registrable Securities. (f) "Other Stockholders" shall mean persons other than Holders who, by virtue of agreements with the Company, are entitled to include their securities in certain registrations. (g)"Restricted Securities" shall mean the securities of the Company required to bear or bearing the legend set forth in Section 1.8 (b) hereof. (h) "Registrable Securities" shall mean: (i) during the period commencing six months after the Closing and ending 24 months thereafter, no more than 500,000 and BESC Transaction Shares (excluding, however, Shares issued to the Principal Shareholders and to the Executive Shareholders) that are not subject to the Escrow provided in Section 1.10 of this Agreement; (ii) during the period commencing 24 months after the Closing and ending 36 months thereafter, no more than fifty percent (50%) of the BESC Transaction Shares any Released Shares, including those issued to the Principal Shareholders and the Executive Shareholders that have been released from the Escrow; (iii) during the period commencing 36 months after the Closing and ending 40 months thereafter, any such Shares not subject to the Escrow including those issued to the Principal Shareholders and the Executive Shareholders; and (iv) any Common Stock issued as a dividend or other distribution with respect to or in exchange for or in replacement of the shares referenced in (i), (ii), and (iii); provided that, (v) In no case shall "Registrable Securities" include shares that were previously registered or that have otherwise been sold to the public. (i) The terms "register", "registered" and "registration" shall refer to a registration effected by preparing and filing a registration statement in compliance with the Securities Act and applicable rules and regulations thereunder, and the declaration or ordering of the effectiveness of such registration statement. (j) "Registration Expenses" shall mean all expenses incurred in effecting any registration pursuant to this Agreement, including, without limitation, all registration, qualification and filing fees, printing expenses, escrow fees, fees and disbursements of counsel for the Company, blue sky fees and expenses, expenses of any regular or special audits incident to or required by any such registration, but shall not include Selling Expenses and fees and disbursements of counsel for the Holders (but excluding the compensation of regular employees of the Company, which shall be paid in any event by the Company). 29 (k) "Rule 144" shall mean Rule 144 as promulgated by the Commission under the Securities Act, as such Rule may be amended from time to time, or any similar successor rule that may be promulgated by the Commission. (l) "Securities Act" shall mean the Securities Act of 1933, as amended, or any similar successor federal statute and the rules and regulations thereunder, all as the same shall be in effect from time to time, corresponding to such act. (m) "Selling Expenses" shall mean all underwriting discounts and selling commissions applicable to the sale of Registrable Securities and all fees and disbursements of counsel for any Holder (other than the fees and disbursements of counsel included in Registration Expenses). 5.2 Requested Registration. 5.2.1 Request for Registration. If BESC shall receive from Initiating Holders at any time or times not later than forty (40) months after the Closing, a written request specifying that it is made pursuant to this Section 5.2 that effect any registration with respect to all or a part of the Registrable Securities having a reasonably anticipated aggregate offering price, net of underwriting discounts and commissions, that exceeds $250,000, BESC will: (a) promptly give written notice of the proposed registration to all other Holders; and (b) as soon as practicable, use its best efforts to effect such registration (including, without limitation, filing post-effective amendments, appropriate qualifications under applicable blue sky or other state securities laws and appropriate compliance with the Securities Act) as would permit or facilitate the sale and distribution of all or such portion of such Registrable Securities as are specified in such request, together with all or such portion of the Registrable Securities of any Holder or Holders joining in such request as are specified in a written request received by BESC within twenty (20) days after such written notice from the Company is effective; provided that BESC shall register up to 200,000 shares held by the University of Maryland, Baltimore, at its request, without regard to any of the conditions provided above in this Section 5.2.1. BESC shall not be obligated to effect, or to take any action to effect, any such registration pursuant to this Section 5.2: (A) In any particular jurisdiction in which BESC would be required to execute a general consent to service of process in effecting such registration, qualification or compliance, unless BESC is already subject to service in such jurisdiction and except as may be required by the Securities Act; 30 (B) After BESC has effected three such registrations pursuant to this Section 5.2) and such registrations have been declared or ordered effective; (C) During the period starting with the date sixty (60) days prior to BESC's good faith estimate of the date of filing of, and ending on a date one hundred eighty (180) days after the effective date of, a registration pursuant to Section 5.3 hereof; provided that it is actively employing in good faith all reasonable efforts to cause such registration statement to become effective; 5.2.2 Registration Statement Subject to the foregoing clauses (A) through (C) of Section 5.2.1, BESC shall file a registration statement covering the Registrable Securities so requested to be registered as soon as practicable after receipt of the request or requests of the Initiating Holders; provided, however, that if (i) in the good faith judgment of the Board of Directors of BESC, such registration would be seriously detrimental to BESC and the Board of Directors of BESC concludes, as a result, that it is essential to defer the filing of such registration statement at such time, and (ii) BESC shall furnish to such Holders a certificate signed by the president of BESC stating that in the good faith judgment of the Board of Directors of BESC, it would be seriously detrimental to BESC for such registration statement to be filed in the near future and that it is, therefore, essential to defer the filing of such registration statement, then BESC shall have the right to defer such filing for the period during which such disclosure would be seriously detrimental, provided, that BESC may not defer the filing for a period of more than one hundred eighty (180) days after receipt of the request of the Initiating Holders, and, provided further, that (except as provided in clause (c) above) BESC shall not defer its obligation in this manner more than once in any twelve-month period. The registration statement filed pursuant to the request of the Initiating Holders may, subject to the provisions of this Section 5.2, include other securities of BESC and may include securities of BESC being sold for the account of BESC. 5.2.3 Underwriting. If the Initiating Holders intend to distribute the Registrable Securities covered by their request by means of an underwriting, they shall so advise BESC as a part of their request made pursuant to this Section 5.2 and BESC shall include such information in the written notice referred to in Section 5.2.1(a)above. The right of any Holder to registration pursuant to this Section 5.2 shall be conditioned upon such Holder's participation in such underwriting and the inclusion of such Holder's Registrable Securities in the underwriting (unless otherwise mutually agreed by a majority in interest of the Initiating Holders and such Holder with respect to such participation and inclusion) to the extent provided herein. A Holder may elect to include in such underwriting all or a part of the Registrable Securities he holds. 5.2.4 Procedures. If BESC shall request inclusion in any registration pursuant to this Section 5.2 of securities being sold for its own account, or if other persons shall request inclusion in any registration pursuant to this Section 5.2, the Initiating Holders shall, on behalf of all Holders, offer to include such securities in the underwriting and may condition such offer on their acceptance of the further applicable provisions of this Article V (including Section 5.12). BESC shall 31 (together with all Holders, and other persons proposing to distribute their securities through such underwriting) enter into an underwriting agreement in customary form with the representative of the underwriter or underwriters selected for such underwriting by a majority in interest of the Initiating Holders, which underwriter(s) are reasonably acceptable to BESC. Notwithstanding any other provision of this Section 5.2, if the representative of the underwriters advises the Initiating Holders in writing that marketing factors require a limitation on the number of shares to be underwritten, the number of shares to be included in the underwriting or registration shall be allocated as set forth in Section 5.13 hereof. If the person who has requested inclusion in such registration as provided above does not agree to the terms of any such underwriting, such person shall be excluded therefrom by written notice from BESC, the underwriter or the Initiating Holders. The securities so excluded shall also be withdrawn from registration. Any Registrable Securities or other securities excluded shall also be withdrawn from such registration. If shares are so withdrawn from the registration and if the number of shares to be included in such registration was previously reduced as a result of marketing factors pursuant to this Section 5.2(d), then BESC shall offer to all holders who have retained rights to include securities in the registration the right to include additional securities in the registration in an aggregate amount equal to the number of shares withdrawn, with such shares to be allocated among such Holders requesting additional inclusion in accordance with Section 5.13. 5.3 Expenses of Registration. All Registration Expenses incurred in connection with any registration, qualification or compliance pursuant to Section 5.2, and reasonable fees of one counsel for the selling stockholders shall be borne by BESC; provided, however, that if the Holders bear the Registration Expenses for any registration proceeding begun pursuant to Section 5.2 and subsequently withdrawn by the Holders registering shares therein, such registration proceeding shall not be counted as a requested registration pursuant to Section 5.2 hereof, except in the event that such withdrawal is based upon material adverse information relating to that is different from the information known or available (upon request from BESC or otherwise) to the Holders requesting registration at the time of their request for registration under Section 5.2, in which event such registration shall not be treated as a counted registration for purposes of Section 5.2 hereof, even though the Holders do not bear the Registration Expenses for such registration. All Selling Expenses relating to securities so registered shall be borne by the holders of such securities pro rata on the basis of the number of shares of securities so registered on their behalf. 5.4 Registration Procedures. In the case of each registration effected by pursuant to Section 5.2, BESC will keep each Holder advised in writing as to the initiation of each registration and as to the completion thereof. At its expense, the Company will use its best efforts to: (a) Keep such registration effective for a period of one hundred twenty (120) days or until the Holder or Holders have completed the distribution described in the registration statement relating thereto, whichever first 32 occurs; provided, however, that such 120-day period shall be extended for a period of time equal to the period the Holder refrains from selling any securities included in such registration at the request of an underwriter of Common Stock (or other securities) of BESC (b) Prepare and file with the Commission such amendments and supplements to such registration statement and the prospectus used in connection with such registration statement as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement; (c) Furnish such number of prospectuses and other documents incident thereto, including any amendment of or supplement to the prospectus, as a Holder from time to time may reasonably request; (d) Notify each seller of Registrable Securities covered by such registration statement at any time when a prospectus relating thereto is required to be delivered under the Securities Act of the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading or incomplete in the light of the circumstances then existing, and at the request of any such seller, prepare and furnish to such seller a reasonable number of copies of a supplement to or an amendment of such prospectus as may be necessary so that, as thereafter delivered to the purchasers of such shares, such prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading or incomplete in the light of the circumstances then existing; (e) Cause all such Registrable Securities registered pursuant hereunder to be listed on each securities exchange on which similar securities issued by the Company are then listed; (f) Provide a transfer agent and registrar for all Registrable Securities registered pursuant hereunder and a CUSIP number for all such Registrable Securities, in each case not later than the effective date of such registration; (g) Otherwise use its best efforts to comply with all applicable rules and regulations of the Commission, and make available to its security holders, as soon as reasonably practicable, an earnings statement covering the period of at least twelve months, but not more than 18 months, beginning with the first month after the effective date of the Registration Statement, which earnings statement shall satisfy the provisions of Section 10(a) of the Securities Act; and (h) In connection with any underwritten offering pursuant to a registration statement filed pursuant to Section 5.2 hereof, BESC will enter into an underwriting agreement reasonably necessary to effect the offer and sale of Common Stock, provided such underwriting agreement contains customary underwriting provisions and provided further that if the underwriter so requests the underwriting agreement will contain customary contribution provisions. 33 5.5 Indemnification. 5.5.1 By BESC. BESC will indemnify each Holder, each of its officers, directors and partners, legal counsel and accountants and each person controlling such Holder within the meaning of Section 15 of the Securities Act, with respect to which registration, qualification or compliance has been effected pursuant to this Article V, and each underwriter, if any, and each person who controls within the meaning of Section 15 of the Securities Act any underwriter, against all expenses, claims, losses, damages and liabilities (or actions, proceedings or settlements in respect thereof) arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any prospectus, offering circular or other document (including any related registration statement, notification or the like) incident to any such registration, qualification or compliance, or based on any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, or any violation by BESC of the Securities Act or any rule or regulation thereunder applicable to BESC and relating to action or inaction required of BESC in connection with any such registration, qualification or compliance, and will reimburse each such Holder, each of its officers, directors, partners, legal counsel and accountants and each person controlling such Holder, each such underwriter and each person who controls any such underwriter, for any legal and any other expenses reasonably incurred in connection with investigating and defending or settling any such claim, loss, damage, liability or action, provided that BESC will not be liable in any such case to the extent that any such claim, loss, damage, liability or expense arises out of or is based on any untrue statement or omission based upon written information furnished to BESC by such Holder or underwriter and stated to be specifically for use therein. It is agreed that the indemnity agreement contained in this Section 5.5.1 shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of BESC (which consent has not been unreasonably withheld). 5.5.2 By the Holders. Each Holder (other than the University of Maryland, Baltimore) will, if Registrable Securities held by him are included in the securities as to which such registration, qualification or compliance is being effected, indemnify BESC, each of its directors, officers, partners, legal counsel and accountants and each underwriter, if any, of the BESC's securities covered by such a registration statement, each person who controls BESC or such underwriter within the meaning of Section 15 of the Securities Act, each other such Holder and Other Stockholder and each of their officers, directors and partners, and each person controlling such Holder or Other Stockholder, against all claims, losses, damages and liabilities (or actions in respect thereof) arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any such registration statement, prospectus, offering circular or 34 other document, or any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse BESC and such Holders, Other Stockholders, directors, officers, partners, legal counsel and accountants, persons, underwriters or control persons for any legal or any other expenses reasonably incurred in connection with investigating or defending any such claim, loss, damage, liability or action, in each case to the extent, but only to the extent, that such untrue statement (or alleged untrue statement) or omission (or alleged omission) is made in such registration statement, prospectus, offering circular or other document in reliance upon and in conformity with written information furnished to BESC by such Holder; provided, however, that the obligations of such Holder hereunder shall not apply to amounts paid in settlement of any such claims, losses, damages or liabilities (or actions in respect thereof) if such settlement is effected without the consent of such Holder (which consent shall not be unreasonably withheld). Notwithstanding anything contained herein to the contrary, the foregoing indemnification, hold harmless, and reimbursement obligations shall not apply to the University of Maryland, Baltimore. 5.5.3 Notice. Each party entitled to indemnification under this Section 5.5 (the "Indemnified Party") shall give notice to the party required to provide indemnification (the "Indemnifying Party") promptly after such Indemnified Party has actual knowledge of any claim as to which indemnity may be sought, and shall permit the Indemnifying Party to assume the defense of any such claim or any litigation resulting therefrom, provided that counsel for the Indemnifying Party, who shall conduct the defense of such claim or any litigation resulting therefrom, shall be approved by the Indemnified Party (whose approval shall not unreasonably be withheld), and the Indemnified Party may participate in such defense at such party's expense, and provided further that the failure of any Indemnified Party to give notice as provided herein shall not relieve the Indemnifying Party of its obligations under this Section 5.5, to the extent such failure is not prejudicial. No Indemnifying Party, in the defense of any such claim or litigation, shall, except with the consent of each Indemnified Party, consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect to such claim or litigation. Each Indemnified Party shall furnish such information regarding itself or the claim in question as an Indemnifying Party may reasonably request in writing and as shall be reasonably required in connection with defense of such claim and litigation resulting therefrom. 5.5.4 Contribution. If the indemnification provided for in this Section 5.5 is held by a court of competent jurisdiction to be unavailable to an Indemnified Party with respect to any loss, liability, claim, damage or expense referred to therein, then the Indemnifying Party, in lieu of indemnifying such Indemnified Party hereunder, shall contribute to the amount paid or payable by such Indemnified Party as a result of such loss, liability, claim, damage or expense in such proportion as 35 is appropriate to reflect the relative fault of the Indemnifying Party on the one hand and of the Indemnified Party on the other in connection with the statements or omissions which resulted in such loss, liability, claim, damage or expense as well as any other relevant equitable considerations. The relative fault of the Indemnifying Party and of the Indemnified Party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission to state a material fact relates to information supplied by the Indemnifying Party or by the Indemnified Party and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. 5.5.5 Underwriting Agreement to Control. Notwithstanding the foregoing, to the extent that the provisions on indemnification and contribution contained in the underwriting agreement entered into in connection with the underwritten public offering are in conflict with the foregoing provisions, the provisions in the underwriting agreement shall control. 5.5.6 Information by Holder. Each Holder of Registrable Securities shall furnish to BESC such information regarding such Holder and the distribution proposed by such Holder as BESC may reasonably request in writing and as shall be reasonably required in connection with any registration, qualification or compliance referred to in this Article V. 5.6 Rule 144 Reporting. With a view to making available the benefits of certain rules and regulations of the Commission which may permit the sale of the Restricted Securities to the public without registration, BESC agrees to use its best efforts to: (a) Make and keep public information available as those terms are understood and defined in Rule 144 under the Securities Act; (b) File with the Commission in a timely manner all reports and other documents required of BESC under the Securities Act and the Exchange Act at any time after it has become subject to such reporting requirements; (c) So long as a Holder owns any Restricted Securities, furnish to the Holder forthwith upon written request a written statement by BESC as to its compliance with the reporting requirements of Rule 144, a copy of the most recent annual or quarterly report of the Company, and such other reports and documents so filed as a Holder may reasonably request in availing itself of any rule or regulation of the Commission allowing a Holder to sell any such securities without registration. 5.7 Transfer or Assignment of Registration Rights. The rights to cause BESC to register securities granted to a Holder by BESC under Section 5.2, may be transferred or assigned by a Holder only to a transferee or assignee of not less than 100,000 shares of Registrable Securities (as presently constituted and subject to subsequent adjustments for stock splits, stock dividends, reverse stock splits and the like), and only provided that BESC is given written notice at the time of or within a reasonable time after said transfer or assignment, stating the name and address of said 36 transferee or assignee and identifying the securities with respect to which such registration rights are being transferred or assigned, and provided further that the transferee or assignee of such rights assumes the obligations of such Holder under this Article V. 5.8 Allocation of Registration Opportunities. In any circumstance in which all of the Registrable Securities and other shares of Common Stock of BESC (including shares of Common Stock issued or issuable upon conversion of shares of any currently unissued series of Preferred Stock of the Company) with registration rights (the "Other Shares") requested to be included in a registration on behalf of the Holders or other selling stockholders cannot be so included as a result of limitations of the aggregate number of shares of Registrable Securities and Other Shares which may be so included, the number of shares of Registrable Securities and Other Shares which may be so allocated among the Holders and other selling stockholders requesting inclusion of shares pro rata on the basis of the number of shares of Registrable Securities and Other Shares that would be held by such Holders and other selling stockholders, assuming conversion; provided, however, that, so that such allocation shall not operate to reduce the aggregate number of Registrable Securities and Other Shares to be included in such registration, if any Holder or other selling stockholder does not request inclusion of the maximum number of shares of Registrable Securities and Other Shares allocated to him pursuant to the above-described procedure, the remaining portion of his allocation shall be reallocated among those requesting Holders and other selling stockholders whose allocations did not satisfy their requests pro rata on the basis of the number of shares of Registrable Securities and Other Shares that would be held by such Holders and other selling stockholders, assuming conversion, and this procedure shall be repeated until all of the shares of Registrable Securities and Other Shares that may be included in the registration on behalf of the Holders and other selling stockholders have been so allocated. BESC shall not limit the number of Registrable Securities to be included in a registration pursuant to this Agreement in order to include shares held by stockholders with no registration rights or to include any other shares of stock issued to employees, officers, directors or consultants pursuant to BESC's Employee Stock Option Plan, or with respect to registrations under Section 5.2, in order to include in such registration securities registered for the Company's own account. 5.9 Delay of Registration. No Holder shall have any right to take and, action to restrain, enjoin, or otherwise delay any registration as the result of any controversy that might arise with respect to the interpretation or implementation of this Article V. ARTICLE VI ADDITIONAL AGREEMENTS 6.1 Securities Filings. BESC shall make all necessary filings with respect to the Merger under the Securities Act and the Exchange Act and the rules and regulations thereunder, under applicable Blue Sky or similar securities laws, rules and regulations and shall use all reasonable efforts required approvals and clearances with respect thereto. 37 6.2 Meeting of JDA Stockholders. JDA shall promptly after the date hereof take all action necessary in accordance with Maryland Law and its Articles of Incorporation and Bylaws to convene a JDA Stockholders' meeting. JDA shall consult with BESC and use all reasonable efforts to hold JDA Stockholders' Meeting on a day acceptable to BESC. In connection with such JDA Stockholders' Meeting, JDA shall prepare and deliver to its stockholders a statement describing the Merger and its effects ("Statement"). The Statement shall be subject to BESC's approval, which shall not be unreasonably withheld, and shall include the unanimous recommendation of the Board of Directors of JDA in favor of the Merger and the transactions contemplated hereby, which recommendation shall not be changed. 6.3 Access to Information. JDA shall afford BESC and its accountants, counsel and other representatives, reasonable access during normal business hours during the period prior to the Effective Time to (a) all of its properties, books, contracts, commitments and records, and (b) all other information concerning the business, properties and personnel of JDA as BESC may reasonably request. JDA agrees to provide to BESC and its accountants, counsel and other representatives copies of internal financial statements promptly upon request. No information or knowledge obtained in any investigation pursuant to this Section 6.3 shall affect or be deemed to modify any representation or warranty contained herein or the conditions to the obligations of the parties to consummate the Merger. 6.4 Confidentiality. From the date hereof to and including the Effective Time, the parties hereto shall maintain, and cause their directors, employees, agents and advisors to maintain, in confidence and not disclose or use for any purpose, except the evaluation of the transactions contemplated hereby and the accuracy of the respective representations and warranties of the parties hereto contained herein, information concerning the other parties hereto and obtained directly or indirectly from such parties, or their directors, employees, agents or advisors, except such information as is or becomes (a) available to the non-disclosing party from third parties not subject to an undertaking of confidentiality or secrecy; (b) generally available to the public other than as a result of a breach by the non-disclosing party hereunder; or (c) required to be disclosed under applicable law; and except such information as was in the possession of such party prior to obtaining such information from such other party as to which the fact of prior possession such possessing party shall have the burden of proof. In the event that the transactions contemplated hereby shall not be consummated, all such information which shall be in writing shall be returned to the party furnishing the same, including to the extent reasonably practicable, copies or reproductions thereof which may have been prepared. 6.5 Expenses. Whether or not the Merger is consummated, all expenses incurred in connection with the Merger and this Agreement ("Expenses"), including without limitation legal fees and expenses, shall be the obligation of the party incurring such 38 expenses except that extra-ordinary out-of-pocket expenses incurred by JDA at BESC's request in furtherance of BESC's due diligence efforts shall be borne by BESC; provided, however, that if the Merger shall be consummated, JDA may apply up to $100,000 of the funds deposited by BESC pursuant to Section 1.5 to the payment of legal and accounting (but not auditing) fees and miscellaneous expenses incurred by JDA in connection with this Agreement and the transactions contemplated hereby. Expenses incurred by JDA in excess of such amount shall be borne by the stockholders of JDA and not JDA. 6.6 Public Disclosure. Unless otherwise required by law, prior to the Effective Time no disclosure (whether or not in response to an inquiry) of the subject matter of this Agreement shall be made by any party hereto unless approved by BESC and JDA prior to release, provided that such approval shall not be unnecessarily withheld, subject, in the case of BESC, to BESC's obligation to comply with applicable securities laws. 6.7 Consents. BESC and JDA shall each promptly apply for or otherwise seek, and use its best efforts to obtain, all consents and approvals required to be obtained by it for the consummation of the Merger, and JDA shall use its best efforts to obtain all consents, waivers and approvals under any of JDA's agreements, contracts, terms of indebtedness, licenses or leases in order to preserve the benefits thereunder for Oncologix and otherwise in connection with the Merger. All of such consents and approvals are set forth in Schedule 6.7. 6.8 JDA Shareholder Letter Agreements. Schedule 2.3(a) sets forth the name, address and Social Security or other tax identification number of each shareholder of JDA. JDA shall provide BESC such information and documents as BESC shall reasonably request for purposes of assuring itself of the availability of an exemption from registration of the BESC Common Stock to be issued pursuant to this Agreement. JDA shall use its best efforts to deliver or cause to be delivered to BESC, concurrently with the execution of this Agreement (and in any case prior to the Effective Time) from each of the shareholders of JDA, an executed Letter of Non-Distributive Intent in the form attached hereto as Exhibit 6.8. BESC and Oncologix shall be entitled to place appropriate legends on the certificates evidencing any BESC Common Stock to be received by such Affiliates pursuant to the terms of this Agreement, and to issue appropriate stop transfer instructions to the transfer agent for BESC Common Stock, consistent with the terms of such Affiliate Agreements. 6.9 Legal Requirements. BESC, Oncologix and JDA will each take all reasonable actions necessary to comply promptly with all legal requirements which may be imposed on them with respect to the consummation of the transactions contemplated by this Agreement and will promptly cooperate with and furnish information to any party hereto in connection with any such requirements imposed upon such other party in 39 connection with the consummation of the transactions contemplated by this Agreement and will take all reasonable actions necessary to obtain (and will cooperate with the other parties hereto in obtaining) any consent, approval, order or authorization of, or any registration, declaration or filing with, any Governmental Entity or other person, required to be obtained or made in connection with the taking of any action contemplated by this Agreement. The foregoing obligations shall not be construed to require JDA to pay money or other consideration to stockholders of JDA to unduly influence such stockholders to vote in favor of the Merger and the transactions contemplated hereby. 6.10 Blue Sky Laws. BESC shall take such steps as may be necessary to comply with the securities and blue-sky laws of all jurisdictions which are applicable to the issuance of BESC Common Stock pursuant hereto. JDA shall use its best efforts to assist BESC as may be necessary to comply with the securities and blue-sky laws of all jurisdictions which are applicable in connection with the issuance of BESC Common Stock pursuant hereto. 6.11 Best Efforts: Additional Documents and Further Assurances. Each of the parties to this Agreement shall use its best efforts to effectuate the transactions contemplated hereby and to fulfill and cause to be fulfilled the conditions to closing under this Agreement. Each party hereto, at the request of another party hereto, shall execute and deliver such other instruments and do and perform such other acts and things as may be reasonably necessary or desirable for effecting completely the consummation of this Agreement and the transactions contemplated hereby. 6.12 JDA Stock Options. It is understood that upon the Closing, there shall be no outstanding options, warrants, convertible debt or other rights to acquire any securities of JDA. 6.13 Employment Agreements. Contemporaneous with the execution of this Agreement, BESC, Oncologix and the individuals set forth on Schedule 6.13 are entering into employment and/or consulting agreements, in the form of Exhibits 6.13 (a), 6.13 (b), 6.13(c) and 6.13(d) hereto, which shall become effective as of the Effective Time. The employment agreements set forth in said Exhibits hereto are hereinafter collectively referred to as the "Employment Agreements". ARTICLE VII CONDITIONS TO THE MERGER The respective obligations of each party to this Agreement to effect the Merger shall be subject to the satisfaction at or prior to the Effective Time of the following conditions: 7.1 Stockholder Approval. This Agreement and the Merger and other transactions contemplated hereby (including without limitation the Employment Agreements) shall have been approved and adopted by the requisite vote of the stockholders of JDA at JDA Stockholders' Meeting. 40 7.2 No Injunctions or Restraints: Illegality. No temporary restraining order, preliminary or permanent injunction or other order issued by any court of competent jurisdiction or other legal restraint or prohibition preventing the consummation of the Merger shall be in effect, nor shall any proceeding brought by an administrative agency or commission or other governmental authority or instrumentality, domestic or foreign, seeking any of the foregoing be pending; nor shall there be any action taken, or any statute, rule, regulation or order enacted, entered, enforced or deemed applicable to the Merger, which makes the consummation of the Merger illegal. 7.3 Additional Conditions to the Obligations of JDA. The obligations of JDA to consummate and effect this Agreement and the transactions contemplated hereby shall be subject to the satisfaction at or prior to the Effective Time of each of the following conditions, any of which may be waived, in writing, exclusively by JDA: (a) Representations, Warranties and Covenants. The representations and warranties of BESC in this Agreement shall be true and correct in all material respects on and as of the Effective Time as though such representations and warranties were made on and as of such time and BESC shall have performed and complied in all material respects with all covenants, obligations and conditions of this Agreement required to be performed and complied with by it as of the Effective Time. (b) Certificate of BESC. JDA shall have been provided with a certificate executed on behalf of BESC by its President and its Chief Financial Officer or Treasurer to the effect that, as of the Effective Time: (i) all representations and warranties made by BESC and Oncologix under this Agreement are true and complete in all material respects; and (ii) all covenants, obligations and conditions of this Agreement to be performed by BESC and Oncologix on or before such date have been so performed in all material respects. (c) Satisfactory Form of Legal Matters. The form, scope and substance of all legal and accounting matters contemplated hereby and all closing documents and other papers delivered hereunder shall be reasonably acceptable to counsel to JDA. (d) Legal Opinion. JDA shall have received a legal opinion from counsel to BESC, substantially in the form of Exhibit 7.3(d) hereto. (e) No Material Adverse Changes. There shall not have occurred any event, fact or condition that has had or reasonably would be expected to have a Material Adverse Effect on BESC. 41 (f) License Modification. The Master License Agreement between JDA and the University of Maryland, Baltimore, dated September 16, 2003 shall have been duly modified to the satisfaction of BESC. 7.4 Additional Conditions to the Obligations of BESC and Oncologix. The obligations of BESC and Oncologix to consummate and effect this Agreement and the transactions contemplated hereby shall be subject to the satisfaction at or prior to the Effective Time of each of the following conditions, any of which may be waived, in writing, exclusively by BESC: (a) Representations, Warranties and Covenants. The representations and warranties of JDA and the Principal Shareholders in this Agreement shall be true and correct in all material respects on and as of the Effective Time as though such representations and warranties were made on and as of such time and JDA shall have performed and complied in all material respects with all covenants, obligations and conditions of this Agreement required to be performed and complied with by it as of the Effective Time. (b) Certificate of JDA. BESC shall have been provided with a certificate executed on behalf of JDA by its President and Chief Financial Officer to the effect that, as of the Effective Time: (i) all representations and warranties made by JDA under this Agreement are true and complete in all material respects; and (ii) all covenants, obligations and conditions of this Agreement to be performed by JDA on or before such date have been so performed in all material respects. (c) Third Party Consents. All consents, waivers and approvals required from third parties relating to the contracts and agreements of JDA so that the Merger and other transactions contemplated hereby do not adversely affect the rights of, and benefits to, JDA thereunder shall have been obtained. (d) Certain Promissory Notes. Oncologix shall have received from each of the Principal Shareholders a promissory note in the form of the promissory note attached hereto as Exhibit 7.4(d). (e) Satisfactory Form of Legal and Accounting Matters. The form, scope and substance of all legal and accounting matters contemplated hereby and all closing documents and other papers delivered hereunder shall be reasonably acceptable to BESC's counsel. (f) Legal Opinion. BESC shall have received a legal opinion from legal counsel to JDA in substantially the form of Exhibit 7.3(f) hereto. 42 (g) No Material Adverse Changes. There shall not have occurred any event, fact or condition which has had or reasonably would be expected to have a Material Adverse Effect on JDA. (h) Employment Agreements. The Employment Agreements shall have been duly executed and delivered and shall be in full force and effect. (i) Accredited Investors. As of the Effective Time, there shall be no more than thirty-five (35) stockholders of JDA who are not "accredited investors," as that term is defined in Regulation D promulgated under the Securities Act. ARTICLE VIII SURVIVAL OF REPRESENTATIONS AND WARRANTIES 8.1 Survival of Representations and Warranties. All covenants to be performed prior to the Effective Time, and all representations and warranties in this Agreement or in any instrument delivered pursuant to this Agreement shall survive the Merger for two (2). All covenants to be performed after the Effective Time shall continue for a period of five (5) years. ARTICLE IX MISCELLANEOUS 9.1 Liability of Principal Shareholders. Recovery against either or both of the Principal Shareholders for breach of their respective representations and warranties in this Agreement shall be limited to such number of their respective Escrow Shares or other assets held in the Escrow Account having a fair market value equal to the amount to be released from escrow in satisfaction of any claim for such breach; provided, however, that nothing herein shall limit any noncontractual remedy or recovery for breach of Sections 6.5 or 7.4 or the willful or grossly negligent making of any untrue statement of material fact, or the use in connection with this Agreement or the transactions contemplated hereby of any scheme, artifice or device to defraud, or any omission to make any statement necessary to make the statements made, under the circumstances in which they were made, not misleading. 9.2 Termination. This Agreement may be terminated and the Merger abandoned at any time prior to the Effective Time: (a) by mutual consent of JDA and BESC; (b) by BESC if it is not in material breach of its obligations under this Agreement and there has been a material breach of any representation, warranty, covenant or agreement contained in this Agreement on the part of JDA and such breach has not been cured within fifteen (15) days after notice to JDA. 43 (c) by JDA if it is not in material breach of its respective obligations under this Agreement and there has been a material breach of any representation, warranty, covenant or agreement contained in this Agreement on the part of BESC or Oncologix and such breach has not been cured within 15 days after notice to BESC; (d) by any party hereto if: (i) the Closing has not occurred by July 31, 2006; (ii) there shall be a final non-appealable order of a federal or state court in effect preventing consummation of the Merger; (iii) there shall be any action taken, or any statute, rule, regulation or order enacted, promulgated or issued or deemed applicable to the Merger by any Governmental Entity which would make consummation of the Merger illegal; or (iv) there shall be any action taken, or any statute, rule, regulation or order enacted, promulgated or issued or deemed applicable to the Merger by any Governmental Entity, which would (A) prohibit BESC's or JDA's ownership or operation of all or a material portion of the business of JDA, or compel BESC or JDA to dispose of or hold separate all or a material portion of the business or assets of JDA or BESC as a result of the Merger or (B) render BESC, Oncologix or JDA unable to consummate the Merger, except for any waiting period provisions. Where action is taken to terminate this Agreement pursuant to this Section 9.1, it shall be sufficient for such action to be authorized by the Board of Directors (as applicable) of the party taking such action. 9.3 Effect of Termination. In the event of termination of this Agreement as provided in Section 9.1, this Agreement shall forthwith become void and there shall be no liability or obligation on the part of BESC, Oncologix or JDA or their respective officers, directors or stockholders, except if such termination results from the breach by a party hereto of any of its representations, warranties, covenants or agreements set forth in this Agreement. 9.4 Amendment. This Agreement may be amended by the parties hereto at any time before or after approval of matters presented in connection with the Merger by the stockholders of those parties required by applicable law to so approve but, after any such stockholder approval, no amendment shall be made which by law requires the further approval of stockholders of a party without obtaining such further approval. This Agreement may not be amended except by an instrument in writing signed on behalf of each of the parties hereto. 9.5 Extension; Waiver. At any time prior to the Effective Time any party hereto may, to the extent legally allowed, (i) extend the time for the performance of any of the obligations or other acts of the other parties hereto, (ii) waive any inaccuracies in the representations and warranties made to such party contained herein or in any document delivered pursuant hereto and (iii) waive compliance with any of the agreements or conditions for the benefit of such party contained herein. Any agreement on the part of a party hereto to any such extension or waiver shall be valid only if set forth in an instrument in writing signed on behalf of such party. 44 9.6 Notices. All notices and other communications hereunder shall be in writing and shall be deemed given if delivered personally or by commercial delivery service, or mailed by registered or certified mail (return receipt requested) or sent via telecopy to the parties at the following addresses (or at such other address for a party as shall be specified by like notice): To BESC and Oncologix Bestnet Communications Corp. Oncologix Corporation 2850 Thornhills Ave SE, Suite 104 Grand Rapids, Michigan 49546 With a Copy to: Stephen T. Meadow, Esq. Firetag, Stoss & Dowdell, P.C. 1747 E. Morten Avenue, Suite 107 Phoenix, AZ 85020 To Principal Stockholders: Jeff Franco 6501 Autumn Wind Circle Clarksville, MD 21029 Andrew S. Kennedy 307 Devonhall Lane Cary, NC 27511 To JDA: JDA Medical Technologies, Inc. 6501 Autumn Wind Circle Clarksville, MD 21029 With a Copy to: Bruce H. Jurist, Esq. Hodes, Ulman, Pessin & Katz, P.A. 901 Dulaney Valley Road, Suite 400 Towson, Maryland 21204 To Executive Stockholders: Adam Lowe 1251 Bridgewater Walk Snellville, GA 30078 Andrew Green 3230 Munsey Court Cumming, GA 30041 To Escrow Agent: Hodes, Ulman, Pessin & Katz, P.A. 901 Dulaney Valley Road, Suite 400 Towson, Maryland 21204 Attn: Bruce H. Jurist, Esq. 45 9.7 Interpretation. When a reference is made in this Agreement to Schedules or Exhibits, such reference shall be to a Schedule or Exhibit to this Agreement unless otherwise indicated. The words "include," "includes" and "including" when used herein shall be deemed in each case to be followed by the words "without limitation". The table of contents and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. 9.8 Counterparts. This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other party, it being understood that all parties need not sign the same counterpart. 9.9 Entire Agreement. This Agreement and the documents and instruments and other agreements among the parties hereto (a) constitute the entire agreement among the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof; (b) are not intended to confer upon any other person any rights or remedies hereunder; and (c) shall not be assigned by operation of law or otherwise except as otherwise agreed in writing. 9.10 Governing Law. This Agreement shall be governed in all respects, including validity, interpretation and effect, by the laws of the State of Arizona. All parties hereto agree to submit to the jurisdiction of the federal and state courts of the State of Arizona. 9.11 Attorneys' Fees. Subject to the provisions of Section 9.10 which shall govern the awarding of attorneys' fees in any arbitration conducted pursuant to Section 9.10, if any party to this Agreement brings an action against another party to this Agreement to enforce its rights under this Agreement, the prevailing party shall be entitled to recover its reasonable costs and expenses, including reasonable attorneys' fees and costs, incurred in connection with such action, including any appeal of such action. 9.12 Disputes. Any dispute, disagreement, claim or controversy arising out of or relating to this Agreement, any document or instrument delivered pursuant to, in connection with, or simultaneously with this Agreement, or any breach of this Agreement ("Dispute") shall be subject to the negotiation, mediation and arbitration provisions contained herein. Each party to a Dispute shall make every reasonable effort to meet in person and confer for the purpose of resolving the Dispute by good faith negotiation before resorting to any legal proceedings or any other 46 dispute resolution procedure. If the Dispute cannot be settled through negotiation, the parties shall make every reasonable effort to settle the Dispute by mediation by a single mediator qualified to consider the matter in dispute before resorting to any legal proceedings or any other dispute resolution procedure. If a Dispute cannot be settled through mediation, the Dispute shall be finally settled by arbitration to be held in Phoenix, Arizona, under the Rules of Commercial Arbitration of the American Arbitration Association by a panel of three (3) arbitrators qualified to consider the matter in dispute. The arbitrators may grant injunctions or other relief in such dispute or controversy. The decision of a majority of the arbitrators shall be final, conclusive and binding upon the parties to the arbitration; and any party shall be entitled to cause judgment on the decision or award of the arbitrators to be entered in any court of competent jurisdiction. Any party may initiate a mediation or an arbitration by providing written notice of the mediation or arbitration, as the case may be (the "Dispute Notice"), to the other parties, which Dispute Notice shall state the name of initiating party, briefly state the matter to be mediated or arbitrated, and, if applicable, name a person whom such party has nominated to act as mediator. If, within thirty (30) days after the date of the Dispute Notice, the parties have not agreed among themselves as to the identity of the mediator, then any party may immediately refer this matter for resolution by the American Arbitration Association. The parties shall each pay their pro rata share (according to the number of parties involved in the Dispute) of the costs, deposits and expenses of the mediator. The party initiating the arbitration shall pay the costs, deposits and expenses of such arbitration and the prevailing party shall be awarded its attorneys' fees and expenses in addition to all other relief awarded by the arbitrators, provided that if the arbitrators determine that a party has initiated an arbitration without a reasonable basis for doing so, then the arbitrators shall assess against that party all costs relating to the arbitration, including the attorneys' fees and expenses of the other parties. 9.13 Rules of Construction. The parties hereto agree that they have been represented by counsel during the negotiation and execution of this Agreement and, therefore, waive the application of any law, regulation, holding or rule of construction providing that ambiguities in an agreement or other document will be construed against the party drafting such agreement or document. 47 IN WITNESS WHEREOF, BESC, Oncologix, JDA, the Principal Shareholders, the Executive Shareholders and the Escrow Agent (with respect to the Escrow Agent, as to matters set forth in Article II only) have caused this Agreement to be signed by themselves or their duly authorized respective officers, all as of the date first written above. BESTNET COMMUNICATIONS CORP. BY: ______________________________ ITS: _____________________________ ONCOLOGIX CORPORATION BY: ______________________________ ITS: _____________________________ JDA MEDICAL TECHNOLOGIES, INC. BY: ______________________________ ITS: _____________________________ THE PRINCIPAL SHAREHOLDERS: BY: _______________________________ JEFF FRANCO BY: _______________________________ ANDREW S. KENNEDY, MD THE EXECUTIVE SHAREHOLDERS: BY: ______________________________ ANDREW GREEN BY: ______________________________ ADAM LOWE ESCROW AGENT: HODES, ULMAN, PESSIN & KATZ, P.A. BY: ______________________________ BRUCE H. JURIST, ESQ. ITS: MEMBER 48
EX-10.21 3 bestnetexh1021.txt MASTER LICENSE AGREEMENT Exhibit 10.21 MASTER LICENSE AGREEMENT effective September 16, 2003 between UNIVERSITY OF MARYLAND, BALTIMORE and JDA MEDICAL TECHNOLOGIES, INC. Table of Contents Article 1. BACKGROUND ................................................ 1 Article 2. DEFINITIONS ............................................... 1 Article 3. GRANT OF LICENSE; OPTION .................................. 4 Article 4. COMPANY RESPONSIBILITIES .................................. 6 Article 5. CONSIDERATION: PAYMENTS ................................... 8 Article 6. DATA ...................................................... 12 Article 7. PATENT PROSECUTION AND PUBLICATIONS ....................... 12 Article 8. CONFIDENTIALITY ........................................... 14 Article 9. REPORTS AND ACCOUNTING .................................... 16 Article 10. INFRINGEMENT .............................................. 18 Article 11. TERM AND TERMINATION ...................................... 20 Article 12. ASSIGNABILITY ............................................. 22 Article 13. APPLICABLE LAW; WAIVER .................................... 22 Article 14. INTEGRATION AND INTERPRETATION ............................ 22 Article 15. REPRESENTATIONS AND WARRANTIES ............................ 23 Article 16. CLAIMS, INDEMNIFICATION AND INSURANCE ..................... 23 Article 17. ADVERTISING AND PUBLICITY ................................. 25 Article 18. DISPUTE RESOLUTION ........................................ 25 Article 19. MISCELLANEOUS ............................................. 26 Signatures ............................................................ 29 ExhibitA-1 p .......................................................... 30 ExhibitA-2 p .......................................................... 31 Confidential MASTER LICENSE AGREEMENT for Instant Microspheres for Microarterial Imaging and Radiotherapy This Master License Agreement ("Agreement") effective September 16, 2003 ("Effective Date") is made by and between the University of Maryland, Baltimore ("UM"), a constituent institution of the University System of Maryland, an agency of the State of Maryland, having an address at 520 West Lombard Street, Baltimore, Maryland 21201, and JDA Medical Technologies, Inc., a corporation of Maryland, with its principal place of business at 6501 Autumn Wind Circle, Clarksville, Maryland 21029 ("Company"). ARTICLE 1. BACKGROUND 1.01 As a public research and education institution, UM is interested in licensing Patent Rights (as defined below) to benefit the public by development and marketing of new and useful products and methods. 1.02 Valuable inventions ("inventions"), comprised of the Patent Rights identified in Exhibit A-1, and generally known as "Instant Microspheres for Microarterial Imaging and Radiotherapy" [Docket Code: BL2003-028], have been made by Inventors (as defined below). 1.03 Subject to certain rights retained by the federal government in inventions resulting from federally supported work, under UM policy UM owns all right, title, and interest in and to the Inventions, which has been confirmed by the execution of an assignment to UM from each Inventor. 1.04 Company desires to license the Patent Rights as set forth in this Agreement. ARTICLE 2. DEFINITIONS In this Agreement, the following terms have the meanings set forth in this Article. 2.01 "Affiliate": any entity which directly or indirectly controls, is controlled by, or is under common control with Company. "Control" means the right to exercise more than 50% of the voting rights of a controlled corporation, limited liability company, or partnership, or the power to direct or cause the direction of the management or policies of any other controlled entity. 2.02 "Company Data": Information arising out of or resulting from use of the Patent Rights made by one or more employees of, or owned by, Company or 2 Confidential Company's affiliates or Sublicensees, including, without limitation, documents, drawings, models, designs, data, memoranda, tapes, records, formulae and algorithms, in hard copy form or in electronic form. 2.03 "Company Improvement": Any invention or discovery arising out of or resulting from use of the Patent Rights which is or may be patentable or otherwise protected under law, made by one or more employees of, or owned by, Company or Company's Affiliates. 2.04 "Confidential Information": Information relating to the subject matter of the Patent Rights which has not been made public and includes, without limitation, any documents, drawings, sketches, models, designs, data, memoranda, tapes, records, formulae and algorithms, given orally, in hard copy form, or in electronic form, which Company receives from UM or UM Personnel, or UM or UM Personnel receives from Company. 2.05 "First Commercial Sale": The initial transfer of a Licensed Product for compensation by Company, an Affiliate or a Sublicensee to a Third Party. Transfer of a Licensed Product for clinical testing occurring prior to the issuance of any required regulatory approval for sale does not constitute First Commercial Sale. 2.06 "Inventors": Bruce Line, David Van Echo, Andrew Kennedy, Hamid Ghandehari, and Anjan Nan. 2.07 "Joint Data": Information arising out of or resulting from use of the Patent Rights made by one or more employees of, or owned by, Company or Company's Affiliates, and by one or more UM Personnel, or owned by, UM, including, without limitation, documents, drawings, sketches, models, design, data, memoranda, tapes, records, formulae and algorithms, in hard copy or electronic form.. 2.08 "Joint Improvement": Any invention or discovery arising out of or resulting from use of the Patent Rights which is or may be patentable or otherwise protected under law, made by one or more employees of, or owned by, Company or Company's Affiliates, and made by one or more employees of, or owned by, UM. 2.09 "Licensed Field": The use of Patent Rights for all purposes. 2.10 "Licensed Product": Any product which is covered by any claims in the Patent Rights. 3 Confidential 2.11 "Net Sales": The gross sales revenues and fees billed by Company, an Affiliate or a Sublicensee, for the sale of Licensed Products, less the sum of the following: (a) customary trade, quantity and cash discounts actually allowed and taken; (b) sales or use taxes, excise taxes and customs duties and other governmental charges included in the invoiced amount; (c) outbound transportation, shipping and insurance, prepaid or allowed, if separately itemized on the invoice to the customer; and (d) amounts actually allowed or credited on returns or rejections of Licensed Products or billing errors. Net Sales does not include any resales of Licensed Product after its sale by Company, an Affiliate or a Sublicensee to a Third Party purchaser. In computing Net Sales, (1) no deductions from gross revenues and fees will be made for commissions paid to individuals, whether they be with independent sales agencies or regularly employed on the payroll by Company, its Affiliate(s) or Sublicensee(s), or for cost of collections, and (2) Licensed Products will be considered sold when billed out or invoiced, whichever is first. 2.12 "Patent Expenses": All fees and charges of outside patent counsel (whether or not paid by UM or reimbursed to UM) as well as all costs incurred by UM (including fees, charges, and costs incurred before the Effective Date) in connection with the preparation, filing, prosecution, issuance, reissuance, reexamination, interference, and maintenance of applications for patent or equivalent protection for the Patent Rights, UM Improvements, and/or Joint Improvements. 2.13 "Patent Rights": UM's interest in: (a) U.S. and foreign patent applications and patents listed in Exhibit A-1 as of the Effective Date; (b) any divisions or continuations, or the foreign equivalent of these, of the U.S. and foreign patent applications described in (a); (c) foreign patent applications which are filed as the foreign counterparts of the U.S. patent applications described in (a), and the foreign equivalent of divisions or continuations of such foreign patent applications; (d) U.S. and foreign patents issuing from the applications described in (a), (b), and (c); and (e) any reissues, reexaminations or patent-term extensions, or the foreign equivalent of these, of U.S. and foreign patents described in (a) or (d). 2.14 "Sublicensee": A person or entity, including an Affiliate, to which Company sublicenses or transfers all or some of the Patent Rights. 2.15 "Third Party": Any entity or person other than UM, Company, an Affiliate or a Sublicensee. 2.16 "UM Affiliates": University of Maryland Medical System Corporation, faculty practice organizations of UM, and the Baltimore Veterans Administration Medical Center. 4 Confidential 2.17 "UM Data": Information in UM's possession received from Inventors prior to the Effective Date which is directly related to Patent Rights in the Licensed Field and reasonably necessary for the practice of the Patent Rights by Company or an Affiliate or Sublicensee under this Agreement. UM Data includes, without limitation, documents, drawings, models, designs, data, memoranda, tapes, records, formulae and algorithms, in hard copy form or in electronic form. Medical or research information which identifies an individual or which may reasonably be used to identify an individual is expressly excluded from the definition of UM Data and may not be disclosed by UM, its officers, employees, students or agents, to Company, Affiliates, Sublicensees or their officers, servants or agents. 2.18 "UM Improvement": An invention, modification or discovery made by or more UM Personnel, or owned by UM, which is directly related to the Patent Rights in the Licensed Field, the practice of which, if unlicensed, would infringe one or more claims of the Patent Rights, or which, has a similar structure to the Patent Rights and performs a similar function to that described in the patent rights in a better or more economical manner, which is or may be patentable or otherwise protected under law. 2.19 "UM Personnel": Inventors and the students, trainees, and other persons working with Inventors, using UM resources, and subject to the UM intellectual property policy (including any prior or future policy). 2.20 "UM Rights in Improvements": UM Improvements and UM's joint interest in Joint Improvements. ARTICLE 3. GRANT OF LICENSE; OPTION 3.01 Subject to rights of the United States that may exist under grants to UM and pursuant to 35 U.S.C, Section 201 et seq. and all implementing regulations, and subject to Section 3.02, UM grants to Company, and Company accepts, an exclusive worldwide license under Patent Rights to make, have made, use, lease, offer to sell, sell and import the Licensed Products within the Licensed Field for the term of this Agreement. This license includes the right to grant sublicenses consistent with this Agreement. 3.02 UM specifically reserves the rights: (a) to practice under the Patent Rights and make and use the Licensed Products on a royalty-free basis solely for research and education, and to license universities, colleges, and other research or educational institutions to practice under the Patent Rights and make and use the Licensed Products on a royalty-free basis solely for research and education; (b) to provide information and material covered by the Patent Rights to universities, colleges and other research or educational institutions, but only for research and educational purposes and uses and not for any commercial purposes or uses; and (c) to permit UM Personnel to disseminate and publish scientific findings from research related to Patent Rights subject to the requirements in Section 7.05, when appropriate. 5 Confidential 3.03 Company may transfer its rights to an Affiliate consistent with this Agreement, provided Company is responsible for the obligations of its Affiliate relevant to this Agreement, including the payment of royalties, whether or not paid to Company by its Affiliate. 3.04 Company may grant sublicenses consistent with this Agreement, provided Company is responsible for the obligations of its Sublicensees relevant to this Agreement, including the payment of royalties, whether or not paid to Company by its Sublicensees. 3.05 Company will identify its Affiliates and its Sublicensees under this Agreement to UM by name, address and field of sublicense (both as to geography and subject matter), and will promptly provide to UM a copy of each sublicense and a copy of each agreement or document designating or establishing an Affiliate having the right to use the Patent Rights. Company may redact information from an agreement or document provided however UM is advised of the nature of the information redacted, Further, each agreement and document must contain sufficient information for UM to determine that Company, Affiliates and Sublicensees are operating in accordance with this Agreement, including the kinds and amounts of consideration exchanged and the schedule and amount of payments due to Company. 3.06 This Agreement confers no license or rights by implication, estoppel, or otherwise under any patent applications of UM other than Patent Rights within the Licensed Field, regardless of whether such patent applications or patents are dominant or subordinate to Patent Rights within the Licensed Field. Joint Improvements and UM Improvements are not considered part of Patent Rights unless added to Exhibit A-1 by proper amendment of this Agreement. 3.07 If Company accepts from Affiliates or Sublicensees anything of value in lieu of cash in consideration for any sublicense or other transfer of Patent Rights or Licensed Products, Company must notify UM in writing within 30 days. 3.08 (a) UM Improvements are owned by UM. Joint improvements are owned jointly by Company and UM. Company Improvements are owned by Company, subject to a non-exclusive, non-transferable, irrevocable, and royalty-free license to UM to practice Company Improvements in any field of use for research or education but not for commercial purposes. (b) Subject to rights of other parties sponsoring research at UM, Company has a first option to enter into a license agreement with UM for UM Rights in Improvements, within the Licensed Field, so long as (i) this Agreement is in effect, (ii) Company pays Patent Expenses for UM Rights in Improvements, and (iii) Company has not notified UM that Company declines to exercise its option. During the term of this option, 6 Confidential UM Rights in Improvements will be subject to the same patent prosecution terms and conditions applicable to Patent Rights under Article 7 of this Agreement. (c) Company is responsible for the filing, prosecution, and maintenance of patent applications for Company Improvements unless Company and UM agree otherwise in writing. (d) Company may exercise its option to UM Rights in Improvements by giving written notice to UM within 60 days after Company receives written notice from UM of a UM Improvement or Joint Improvement in accordance with Section 3.08(f) below, or within 60 days after Company gives written notice to UM of a Joint Improvement in accordance with Section 3.08(f) below. Company's exercise of the option initiates a negotiation period of 120 days. If the negotiation period ends and Company and UM have not executed an amendment to this Agreement adding all or a portion of UM Rights in Improvements to the license, UM will be free to license to others all or a portion of UM Rights in Improvements not licensed to Company. (e) The terms of any license to Company for UM Rights in Improvements will include a reservation of a nonexclusive, non-transferable, irrevocable and royalty-free license to UM to practice UM Rights in Improvements in any field of use for research and education but not for commercial purposes. (1) UM will report promptly to Company in writing each UM Improvement available for option and each Joint Improvement. Company will report promptly to UM in writing each Company Improvement and each Joint Improvement. These reports will be in sufficient detail to determine inventorship. These reports will be treated as Confidential Information. Inventorship will be determined in accordance with the patent laws of the United States. ARTICLE 4. COMPANY RESPONSIBILITIES 4.01 Company will use commercially reasonable efforts to bring one or more Licensed Products to market in each country in which Patent Rights are licensed through a thorough, vigorous and diligent program for exploitation of the Patent Rights within the Licensed Field. Company's efforts must satisfy the following milestones: (a) Company has delivered to UM prior to execution of this Agreement a research and development plan (the "R&D Plan") reasonably acceptable to UM, showing the amount of money and time budgeted and planned for technical development of the Patent Rights, and a proposed commercialization scheme for the Licensed Products. (b) Within 90 days after the Effective Date, Company will deliver to UM a business plan (the "Business Plan") showing the amount of money, number and kind of personnel, and time budgeted and planned for each phase of development, clinical studies, marketing, manufacturing, and 7 Confidential sublicensing of Licensed Products. The Business Plan must include Company's specific plans to secure financing for commercialization of the Invention. (c) Company will provide quarterly written reports for the first 3 years after the Effective Date, and annual written reports thereafter, to UM on progress against the R&D Plan and the Business Plan, including detailed technical information on the research and development activities related to the Licensed Products and marketing analyses and any changes in the R&D Plan or Business Plan. (d) To the extent that the Company's responsibility for any aspect of the R&D Plan or Business Plan is made the responsibility of an Affiliate or Sublicensee, Company retains its obligations to UM as to this Article as if Company is solely responsible for that aspect. (e) Company submits an Investigational Device Exemption for a Licensed Product to the FDA on or before 3 years after the Effective Date. (f) Company receives Pre-Market Approval for a Licensed Product on or before 6 years after the Effective Date. 4.02 Company agrees that any Licensed Products for use or sale in the United States will be manufactured substantially in the United States in accordance with the requirements of 35 U.S.C. Section 204 and 37 C.F.R. 401.14(a)(i). 4.03 The use and disclosure of technical information acquired pursuant to this Agreement and the exercise of Patent Rights granted by this Agreement are subject to the export, assets, and financial control regulations of the United States of America, including, without limitation, restrictions under regulations of the United States that may be applicable to direct or indirect re-exportation of such technical information or of equipment, produats, or services directly produced by use of such technical information. Company is responsible for taking any steps necessary to comply with such regulations. 4.04 Company will ensure that "Patent Pending" or the Patent Rights patent number or both appears on all Licensed Products, their labels or their packaging. 4.05 Company represents that, as of the Effective Date, it and its Affiliates qualify as a small business concern that meet the size standards set forth in 13 CFR Part 121 to be eligible for reduced patent fees. Company must provide written notification to UM immediately upon Company's learning that Company and its Affiliates no longer qualify as a small business concern or immediately after Company sublicenses any part of the Patent Rights to an entity that does not qualify as a small business concern. 8 Confidential ARTICLE 5. CONSIDERATION: PAYMENTS In consideration of the license granted to Company of the Patent Rights listed in Exhibit A-1 as of the Effective Date: 5.01 Company will pay to UM a non-refundable licensing fee of $10,000.00 which is not creditable against any other fee, royalty, or payment, and is due not later than 30 days after the Effective Date. 5.02 (a) Company will pay to UM the following commercial milestone payments as they are met: (i) FDA approval of Investigational Device Exemption for a Licensed Product: $ 25,000.00; (ii) FDA approval of Pre-Market Approval Application for a Licensed Product: $ 50,000.00; (iii) Acquisition of a controlling interest in Company by a Third Party: $100,000.00; (iv) Completion of first calendar year in which Net Sales exceed $5,000,000.00: $200,000.00 (b) If Company receives milestone payments from a Sublicensee for any of the milestones listed in Section 5.02(a), the share of any milestone payments paid to UM under Section 5.06(b) may be credited toward the milestone payments required by Section 5.02(a). 5.03 Except to the extent otherwise provided by Sections 5.06 and 5.07, Company and its Affiliates will pay to UM a running royalty on Net Sales of Licensed Products covered by Patent Rights as described in Exhibit A-2. Running royalty payments are due within 60 days after each June 30 and December 31, along with a report as required by Section 9.02. If no running royalty is due for any semi-annual period, Company will so report as required by Section 9.02. 5.04 Company will pay UM minimum annual royalties as set forth below, beginning with a minimum annual royalty due for the calendar year in which the First Commercial Sale occurs, if the aggregate of all running royalties due under Section 5.03 and all other creditable fees or payments due under this Article 5 is less than the minimum annual royalty amount for that year. The minimum annual royalty for each year is $10,000.00. Company will pay UM the difference between the minimum annual royalty and the total of running royalties and all other creditable fees or payments due for that calendar year within 60 days after the end of that calendar year. 5.05 (a) Company and its Affiliates will pay running royalties on a country by country basis as provided in Section 5.03 for Net Sales in each country of Licensed Products covered under Patent Rights in that country, until disallowance, expiration or invalidation of all claims in the Patent Rights of that country that cover the Licensed Products. 9 Confidential (b) Except as provided in Section 11.01, on a country by country basis, if a claim of any patent comprising the Patent Rights is invalidated by a court of competent jurisdiction from which no appeal is taken, or from which no further appeal can be taken, UM agrees that it will not terminate this Agreement but will terminate only the future obligations of Company pursuant to Article 5 with respect to Licensed Products made under the invalidated claim(s) and not covered by other claim(s) of the Patent Rights. 5.06 For Licensed Products sold by a Sublicensee that is not an Affiliate, Company will pay to UM: (a) 25% of all royalties received by Company and its Affiliates from the Sublicensee's Net Sales. (b) 25% of all licensing, up-front, milestone or other payments received by Company from the Sublicensee in consideration of its rights as Sublicensee; and (c) 25% of the fair market value of non-cash consideration received by Company under the Sublicensee's license agreement. Non-cash consideration may be accepted by Company only with UM's prior written approval. If a Sublicensee's license agreement provides fair market value in cash or non- cash consideration for the Sublicensee's use of Patent Rights and, in addition, provides that Company will receive other funds for separate, reasonable consideration (e.g., payment for Company research, or for the purchase of Company stock at market price), no royalty is due with respect to the Sublicensee's payment of such other funds. The fair market value of non-cash consideration is the greater of the fair market value determined as of the effective date of the sublicense agreement or the date of transfer of the non-cash consideration to the Company. For any sublicense executed by Company (or an Affiliate) and the Sublicensee two or more years after the Effective Date, the 25% rates specified in (a), (b) and (c) of this Section 5.06 will be reduced to 15%. Payments under this Section 5.06 are due within 60 days after each June 30 and December 31, along with a report as required by Section 9.02. 5.07 (a) In the event that Company or an Affiliate or a Sublicensee is required to license one or more technologies of a Third Party in order to make, have made, use, lease, offer to sell, sell or import Licensed Products or to practice or otherwise make use of the Patent Rights, and is required to pay a royalty to one or more Third Parties, Company or its Affiliate may deduct from royalties due to UM 50% of the royalty paid to the Third Party(ies), but in no event may the royalties due to UM be reduced by more than 50% as a result of licenses from Third Parties. (b) In sublicense agreements, Company will not permit Sublicensees that are not Affiliates to deduct more than 50% of royalties due to Company as a result of licenses from Third Parties. 5.08 (a) No multiple fees or royalties are payable because any Licensed Product, its manufacture, use, sale, or lease is or will be covered 10 Confidential by more than one patent application or patent licensed under this Agreement as part of Patent Rights. (b) The aggregate reduction of royalties on Net Sales as a result of applicability of Sections 5.06 and 5.07 will not exceed 50% of royalties as calculated with no reduction of royalties on Net Sales as permitted by those Sections. 5.09 (a) Royalties are payable from the country in which they are earned and are subject to foreign exchange regulations then prevailing in the country. Royalty payments must be paid to UM in United States Dollars by check(s) drawn to the order of UM or by electronic funds transfers to an account designated by UM. To the extent sales may have been made by Company, its Affiliates or Sublicensees in a foreign country, those royalties will be determined first in the currency of the country in which the royalties are earned, and then converted to their equivalent in United States Dollars. The buying rates of exchange for converting the currencies involved into the currency of the United States quoted by the Morgan Guaranty Trust Company of New York, New York, averaged on the last business day of each of 6 consecutive calendar months constituting the semi-annual period in which the royalties were earned, will be used to determine any such conversion. Company will bear any loss of exchange or value or pay any expenses incurred in the transfer or conversion to U.S. dollars. (b) To the extent that statutes, laws, codes, or government regulations (including currency exchange regulations) prevent or limit royalty payments to UM by Company, its Affiliates or its Sublicensees with respect to Net Sales received in any country, Company will render to UM annual reports of sales of Licensed Products in such country. All monies due and owing UM as provided in the annual reports at UM's option (1) will be deposited promptly by Company, its Affiliates or its Sublicensees, as the case may be, in a local bank in such country in an account to be designated by UM in writing, or (2) will be paid promptly to UM or deposited in its account, as directed in writing by UM in any other country where the payment or deposit is lawful under the currency restrictions. 5.10 If Company sells Licensed Products to its Affiliates or Sublicensees for subsequent resale, no royalty will be due on the sales to Affiliates or Sublicensees, but royalty will be calculated and paid on the resale of the Licensed Product to a Third Party. If Company sells Licensed Products to an Affiliate, Sublicensee, or Third Party in a non-arm's length transaction, and the Licensed Products are not subsequently resold, the selling price of the Licensed Products is deemed to be the selling price that would have been received in an arm's length transaction, based on sales of products of similar quantity and quality on or about the UMe of such transaction, or, in the absence of such sales, based upon reasonable pricing practices in Company's industry. 5.11 Interest is due on any payments to UM required by any Section of this Agreement that are more than 30 days late. Also, interest is due on any underpayments of royalties or other amounts payable to UM under this Agreement. The interest rate is 10% simple interest per annum accruing from the due date. 11 Confidential 5.12 If Joint Improvements and/or UM Improvements are added to Patent Rights by amendment of Exhibit A-1, the amendment will specify whether and how the terms of Sections 5.01 to 5.06 are applied to the Patent Rights. There is no presumption that Joint Improvements or UM Improvements will be licensed upon the terms and conditions originally provided in those Sections. 5.13 Within 90 days after the Effective Date of this Agreement, Company will grant UM 664,028 founders shares in Company (10% of total authorized shares) for and in consideration of this Agreement. Founders shares issued to UM will have the same rights as those issued to other founders. Company acknowledges that UM may transfer any or all of its Company shares to another individual or entity at any time. Company agrees to fully cooperate with UM and to take all actions necessary to complete the prompt transfer of such Company shares in accordance with UM's instructions and subject to any restrictions on voting, sale, transfer, or other matters required by UM. Any document(s) and issued or reissued stock certificates necessary to accomplish a transfer of Company shares by UM will be executed by Company and delivered to UM within 30 days after Company's receipt of UM's request. 5.14 UM's share of total equity in Company will not be diluted to less than 10% of total authorized shares prior to Company raising $250,000 in paid-in capital. Shares issued by Company as incentive stock options under an employee stock plan will not be considered in determining whether UM owns less then 10% of issued stock, provided that stock options under such plan do not exceed 30% of authorized shares. 12 ARTICLE 6. DATA 6.01 Company Data is owned by Company. Joint Data is owned jointly by Company and UM. UM Data is owned by UM. 6.02 To the extent permitted by law, UM will keep Company Data and Joint Data confidential in accordance with Article 8, and Company will keep UM Data and Joint Data confidential in accordance with Article 8. Any information that would identify human research subjects or patients will be maintained confidentially by UM and Company to the extent permitted by law. 6.03 While this Agreement is in effect and Company is pursuing commercialization efforts, Company will have the right to use UM Data and Joint Data in and for regulatory filings on behalf of Company or its Affiliates, and UM will have the right to use Company Data and Joint Data for research purposes. If this Agreement is terminated or if Company abandons its commercialization efforts, UM will have (a) the exclusive right to use UM Data and (b) the non-exclusive right to use Joint Data, for research purposes, and for regulatory filings related to Patent Rights, and to authorize others to do so, subject to Article 8. ARTICLE 7. PATENT PROSECUTION AND PUBLICATIONS 7.01 (a) UM is responsible for filing any patent applications for the Patent Rights, UM Improvements, and Joint Improvements. The scope of patent coverage within Patent Rights, UM Improvements, or Joint Improvements will not be significantly modified by UM without prior review by Company, but any modification will not require the approval of Company, and Company will not control the prosecution of applications for patents for Patent Rights, UM Improvements, or Joint Improvements. (b) Company may approve outside patent counsel chosen by UM, which approval must not be withheld or delayed unreasonably. (c) UM will provide Company with copies of all substantive communications received from and filed with the U.S. Patent and Trademark Office in connection with the prosecution of patent applications for which Company pays Patent Expenses. (d) UM is not liable for any loss, in whole or in part, of a patent term extension granted by the U.S. Patent and Trademark Office on a patent issuing under Patent Rights, even if such loss resulted from the acts or omissions of UM, UM Personnel or UM's patent counsel. 7.02 (a) UM will invoice Company for Patent Expenses incurred by UM prior to and after the Effective Date with respect to U.S. patents and patent applications. Company will pay the invoice in full to UM within 30 days after the date of UM's invoice. Company's failure to pay an invoice on time will result in interest charges in accordance with Section 5.11 as well as loss of input into patenting decisions until such UMe as Company pays all outstanding invoices for Patent Expenses. Additionally, Company's failure to pay an invoice within 90 days after date of invoice will result in termination of Company's option rights under Section 3.08. 13 Confidential (b) With respect to the filing and prosecution of foreign patent applications specified by Company in accordance with Section 7.04, Company will pre-pay or directly pay charges and fees, including attorneys' fees, at UM's option. (c) If Company does not license UM Improvements or UM's rights in Joint Improvements, Company will have no obligation under Section 3.08(b) to pay Patent Expenses related to the UM Improvements or Joint Improvements incurred by UM for patent filing and prosecution activities occurring more than 60 days after Company's option is terminated or expires as provided in Section 3.08. UM will act in good faith to minimize the Patent Expenses incurred between receipt of notice and the end of the 60 day period. (d) If this Agreement is terminated for any reason other than expiration in accordance with Section 11.01, Company will have no obligation to pay Patent Expenses related to Patent Rights or UM Rights in Improvements incurred by UM for patent filing and prosecution activities occurring more than 60 days after termination. UM will act in good faith to minimize the Patent Expenses incurred between receipt of notice of termination and the end of the 60 day period. 7.03 Company and UM will cooperate to limit the Patent Expenses while ensuring that the Patent Rights cover all items of commercial interest and importance. UM is solely responsible for making decisions regarding scope and content of U.S. and foreign applications to be filed under Patent Rights and prosecution of the applications. UM will give Company reasonable opportunity to advise UM. Company will cooperate with UM in the prosecution, filing, and maintenance of any patent applications. UM will advise Company promptly as to all material developments with respect to the applications. Copies of all papers received and filed in connection with prosecution of applications will be provided promptly to Company to enable it to advise UM thereon, but only as to those countries designated by Company pursuant to Section 7.04. 7.04 (a) UM will file patent applications for Inventions and UM Rights in Improvements in Japan and Canada, the European States (defmed as "EP" on the international application form of the Patent Cooperation Treaty), and additional countries specified by Company in accordance with this section. Company will specify in writing to UM the additional foreign countries in which patent applications are to be filed and prosecuted. Company will specify such additional countries no later than 60 days before the national phase filing deadline for the pertinent patent application. UM will cause foreign filings to be made by UM's patent counsel, subject to Company's payment of Patent Expenses as set forth in Section 7.02. If Company gives at least 60 days prior written notice to UM, Company may elect to discontinue support for Patent Expenses in any country other than the United States, Japan, Canada and the European States. Company will be responsible for reasonable Patent Expenses incurred in that 60 day period with respect to the country or countries where Company is ceasing support. From and after UM's receipt of Company's notice, Company's rights in Patent Rights and UM Rights in Improvements will terminate with respect to the country or countries where Company is ceasing support, and Company will execute such documents as reasonably may be requested by UM to confirm termination of Company's rights. (b) UM may elect to file and prosecute patent applications, solely at its own expense, in foreign countries not listed in Section 7.04(a) or not specified by Company. If UM so elects, UM will notify Company of such 14 election. Company shall notify UM in writing within 30 days if it agrees to support the relevant Patent Expenses in any such country. In the event Company declines to support the relevant Patent Expenses or Company does not timely respond to UM's notice, Company will have no right to approve UM's patent counsel, and no license rights with respect to Patent Rights in those countries, and no option rights with respect to UM Rights in Improvements in those countries. 7.05 In order to safeguard Patent Rights and UM Rights in Improvements, UM will request that UM Personnel not disseminate or publish any results or otherwise publicly disclose the results of research performed by UM Personnel relating to the Patent Rights within the Licensed Field and subject to the license(s) or option granted to Company under this Agreement unless any materials containing those results are first submitted to Company for review, comment, and consideration of appropriate patent action. UM will request that UM Personnel submit such materials relating to a planned written publication or other public disclosure to Company for review at least 60 days prior to the date of the planned submission for written publication. Company will advise UM within 30 days after receipt of the materials whether patent applications should be filed in connection with obtaining or maintaining Patent Rights related to the materials submitted by UM. UM will request UM Personnel to delay written publication or public disclosure up to a maximum of 90 days after the date Company receives the materials to enable UM to file, at Company's expense, any patent applications recommended by Company. ARTICLE 8. CONFIDENTIALITY 8.01 It may be necessary for either party to disclose to the other certain Confidential Information. Disclosures by UM are deemed to refer to disclosures by any UM Personnel. Disclosures by Company are deemed to refer to disclosures by Company officers, directors, employees or agents. Confidential Information may be disclosed only in accordance with the provisions of this Article. 8.02 Except as hereafter specifically authorized in writing by the disclosing party, the receiving party will not disclose or use the Confidential Information for a period of 5 years after the date of receipt of Confidential Information. 8.03 These obligations of non-disclosure and nonuse do not apply to any Confidential Information which the receiving party can demonstrate by reliable written evidence: (a) was generally available to the public at the time of disclosure to the receiving party; or (b) was already in the possession of the receiving party at the time of the disclosure, other than pursuant to a confidential disclosure agreement between the parties and not due to any unauthorized act by the receiving party; or (c) was developed by the receiving party prior to the disclosure; or (d) the receiving party is required by law to disclose. 8.04 These obligations of non-disclosure and nonuse will not continue to apply to any Confidential Information which the receiving party can demonstrate by reliable written evidence. 15 Confidential (a) has become generally available to the public other than through a breach of this Agreement by the receiving party after disclosure; (b) has been acquired by the receiving party on a nonconfidential basis from any third party having a lawful right to disclose it to the receiving party; or (c) corresponds to information developed by the receiving party independent of and with no reliance upon the disclosing party's Confidential Information. 8.05 Each party will use that level of care to prevent the use or disclosure of the other party's Confidential Information as it exercises in protecting its own Confidential Information. 8.06 All Confidential Information will be clearly marked as confidential by the disclosing party and, if not in written or tangible form when disclosed, will be indicated as confidential upon disclosure and then summarized in writing and so marked as confidential within 30 days after disclosure to the receiving party. 8.07 Notwithstanding the foregoing, Company, its Affiliates and its Sublicensees are permitted to disclose and use the Confidential Information to the extent reasonably necessary to exercise Company's license or sublicenses hereunder, provided that any disclosure is made subject to confidentiality restrictions consistent with those accepted by Company in this Agreement. 8.08 UM is an educational institution with standards and practices for protection of Confidential Information which differ from Company's standards and practices. By this Agreement UM undertakes to use reasonable efforts to protect the confidentiality of Company's Confidential Information. Company agrees that, provided such efforts are made, it will not seek to hold UM or UM Personnel liable in the event of disclosure of Company's Confidential Information. 8.09 The records of UM are subject to the Maryland Access to Public Records Law (Title 10, Subtitle 6, Part III, State Government Article, Annotated Code of Maryland). This Agreement and its Exhibits (whether or not made park of this Agreement) are public records of UM under the Act. Reports to UM, as provided in Article 9, are public records of UM. Confidential Information of Company contained in this Agreement (and its Exhibits) and any other Confidential Information of Company received by UM is not subject to disclosure in response to a request under the Act if the Confidential Information is determined to be confidential financial information, confidential commercial information, or trade secret information as provided in Section 10-617(d) of the Act. Company asserts that any Confidential Information of Company provided to UM under this Agreement is confidential financial or commercial information, or trade secret information, not subject to disclosure under the Act. Unless UM determines on the advice of counsel that such position is not reasonable, UM agrees to assert this position in response to any request for public records applicable to Company's Confidential Information, and to promptly notify Company upon receipt of such a request. 16 8.10 Upon termination of this Agreement for any reason other than those set forth in Section 11.01 or a material breach by UM, Company will return to UM all material which is Confidential Information of UM, together with all copies and other forms of reproduction, except that a single archive copy may be kept in Company's legal files. Each party agrees that termination of this Agreement does not alter the 5 year obligation of confidentiality set forth in Section 8.02. ARTICLE 9. REPORTS AND ACCOUNTING 9.01 During the term of this Agreement and for 5 years after its termination, Company will keep, and require each Affiliate and Sublicensee to keep, complete, true, and accurate records containing all the particulars that may be necessary to enable royalties payable to UM to be determined, and permit these records to be inspected at any time during regular business hours, upon reasonable notice, by an independent auditor appointed by UM for this purpose and acceptable to Company who will report to UM only the amount of royalty payable under this Agreement. This audit will be at UM's expense unless the audit shows an underpayment in amounts due to UM in relation to amounts paid to UM by 5% or more for any semi-annual period (as defined in Section 9.02) subject to audit, in which case the audit expense will be borne by Company. 9.02 Within 60 days after each June 30 and December 31, Company will deliver to UM a true and accurate report, giving particulars of the business conducted by Company, its Affiliates and its Sublicensees, if any, in the preceding semi-annual period that are pertinent to any accounting for royalties, fees, or other payments under this Agreement. These reports will be certified as correct by an authorized officer of Company and will include at least the following information for the semi-annual period: (a) number of Licensed Products manufactured and sold by Company and by each Affiliate and each Sublicensee; (b) total billings for Licensed Products sold by Company and by each Affiliate and by each Sublicensee; (c) accounting for all Licensed Products used or sold; (d) deductions as provided in Section 2.11; and (e) names and addresses of all Affiliates and Sublicensees of Company. 9.03 With each report submitted in accordance with Section 9.02, Company must pay to UM the royalties, fees, or other payments due and payable under this Agreement for the semi-annual period covered by the report. If no royalties, fees or other payments are due, Company will so report. 9.04 UM is a unit of the government of the State of Maryland. Where Company, an Affiliate or a Sublicensee is required to report and withhold for taxation revenues paid to UM as licensor, Company, the Affiliate or the Sublicensee will assert that UM is exempt from the tax by virtue of its governmental status. If the Company, Affiliate, or Sublicensee nevertheless is required to withhold tax, any tax required to be withheld will be paid promptly by Company or its Affiliates and its Sublicensees for and on behalf of UM to the appropriate governmental authority, and Company will furnish UM with proof of payment 17 Confidential of the tax together with official or other appropriate evidence issued by the competent governmental authority sufficient to enable UM to support a claim for tax credit or refund with respect to any sum so withheld. Any tax required to be withheld on payments by Company to UM will be an expense of and be borne solely by UM, and Company's royalty payment(s) to UM following the withholding of the tax will be decreased by the amount of such tax withholding. Company will cooperate with UM in the event UM elects to seek, at its own expense, administrative or judicial determination of tax exemption. 9.05 During the implementation of the R&D Plan and Business Plan described in Section 4.01, and if requested by UM, Company will allow UM to inspect, at any time during regular business hours and upon reasonable notice, all Company correspondence to and from any pertinent U.S. regulatory agency and any foreign equivalent. 9.06 Company will report to UM within 30 days after occurrence, each of the following: (a) submission of Investigational Device Exemption; (b) submission of Pre-Market Approval Application; (c) approval of Pre-Market Approval Application; and (d) First Commercial Sale. ARTICLE 10. INFRINGEMENT 10.01 UM and Company agree to notify each other promptly of each infringement or possible infringement of the Patent Rights of which either party becomes aware. 10.02 Company may (a) bring suit in its own name, at its own expense, and on its own behalf for infringement of presumably valid claims in the Patent Rights licensed to Company; (b)in any such suit, enjoin infringement and collect for its use damages, profits, and awards of whatever nature recoverable for such infringement; and (c) settle any claim or suit for infringement of the Patent Rights. Company may not compel UM to initiate or join in any such suit for patent infringement. Company may request UM to initiate or join in any such suit if necessary to avoid dismissal of the suit. If UM is made a party to any such suit, Company will reimburse and indemnify UM for any costs, expenses, or fees which UM incurs as a result of UM's joinder. In all cases, Company agrees to keep UM reasonably apprised of the status and progress of any litigation. 10.03 If an infringement action or a declaratory judgment action alleging invalidity or non-infringement of any of the Patent Rights is brought against Company or raised by way of counterclaim or affirmative defense in an infringement suit brought by Company under Section 10.02, Company may (a) defend the suit in its own name, at its own expense, and on its own behalf for presumably valid claims in the Patent Rights; (b)in any such suit, ultimately enjoin infringement and collect for its use, damages, profits, and awards of whatever nature recoverable for such infringement; and (c) settle any claim or suit for damages or a declaratory judgment involving the Patent Rights. Company may not compel UM to initiate or join in any such suit. Company may request UM to initiate or join in any such suit if necessary to avoid dismissal of the suit. If UM is made a party to any such suit, 18 Company will reimburse and indemnify UM for any costs, expenses, or fees which UM incurs as a result of UM's joinder. In all cases, Company agrees to keep UM reasonably apprised of the status and progress of any litigation. 10.04 Company will not settle any action described in Section 10.02 or 10.03 without first obtaining the consent of UM, which consent will not be withheld or delayed unreasonably. In any action under Sections 10.02 or 10.03, the expenses of Company and UM, including costs, fees, attorney fees, and disbursements, will be paid by Company. Up to 50% of such expenses may be credited against the running royalties payable to UM under Article 5 under the Patent Rights in the country in which such suit is filed. If 50% of such expenses exceed the amount of running royalties payable by Company in any royalty year, the expenses in excess may be carried over as a credit on the same basis in succeeding royalty years. Any recovery of compensatory damages made by Company, through court judgment or settlement, will be treated as Net Sales and royalties will be paid by Company to UM in accordance with Article 5. Any other recovery made by Company, through court judgment or settlement, first will be applied to reimburse UM for running royalties withheld as a credit against litigation expenses and then to reimburse Company for its litigation expense. Any remaining recoveries will be shared equally by Company and UM. 10.05 UM will cooperate fully with Company in connection with any action under Sections 10.02 or 10.03. UM agrees to provide prompt access to all necessary documents and to render reasonable assistance in response to requests by Company. 10.06 UM has a continuing right to intervene in a suit initiated by Company under Section 10.02 or in a declaratory judgment action involving the Patent Rights brought against Company under Section 10.03. In either case, if UM chooses to intervene, UM will be responsible for its litigation expenses and will be entitled to all recoveries which it obtains for itself as a result of its intervention. 10.07 If Company desires to initiate a suit for patent infringement under Section 10.02, Company will notify UM in writing within 90 days after giving or receiving notice of infringement under Section 10.01. If Company fails to notify UM of its intent to initiate suit within the 90 day period or if Company notifies UM that it does not intend to initiate suit, UM may initiate suit at its own expense. In such case, UM is entitled to all recoveries from such action. 10.08 If an infringement action or a declaratory judgment action alleging invalidity or non-infringement of any of the Patent Rights is brought against Company or raised by way of counterclaim or affirmative defense in an infringement suit brought by Company as described in Section 10.02, Company will notify UM whether Company intends to respond in opposition to such legal action within 10 days after Company's receipt of notice of the filing of such action. If Company fails to notify UM of its intent to respond in opposition to such legal action within the 10 day period, or if Company notifies UM that it does not intend to oppose the action, UM may respond to the legal action at UM's expense. In such case, UM is entitled to all recoveries from such action. 19 Confidential 10.09 Company will cooperate fully with UM in connection with any action described in Sections 10.07 or 10.08. Company agrees to provide prompt access to all necessary documents and to render reasonable assistance in response to requests by UM. 20 ARTICLE 11. TERM AND TERMINATION 11.01 Unless sooner terminated in accordance with any of the succeeding provisions of this Article 11, this Agreement will continue in full force and effect until the disallowance, expiration, or invalidation of the last Patent Right anywhere which is licensed under this Agreement. 11.02 Should Company fail to pay UM any sum due and payable under this Agreement, UM may terminate this Agreement on 60 days written notice, unless Company pays UM within the 60 day period all delinquent sums together with interest due and unpaid. Upon expiration of the 60 day period, if Company has not paid all sums and interest due and payable, the rights, privileges, and licenses granted under this Agreement terminate. 11.03 Prior to the First Commercial Sale of a Licensed Product to a Third Party, Company is considered diligent with regard to development of a Licensed Product as long as Company updates and reports progress against the R&D Plan and Business Plan described in Section 4.01 and as long as Company: continues to provide the necessary financial and other resources which are required to maintain progress in accomplishing the R&D Plan, as it relates to Licensed Products; conducts or enables others to conduct the activities required to maintain scheduled progress in accomplishing the Business Plan, as it relates to Licensed Products; and meets the deadlines for filing an. Investigational Device Exemption and receiving Pre-Market Approval as provided in Section 4.01. 11.04 If UM declares Company not diligent in development or sales of Licensed Product based upon the criteria set forth in Section 11.03, then UM may terminate this Agreement upon 30 days written notice. The withholding by a regulatory agency of marketing approval in spite of Company's diligent effort to obtain such approval may not be the basis for UM to declare Company not diligent. 11.05 Except as set forth in Sections 11.02, 11.04, or 19.03, in the event that any provision of this Agreement is breached by Company, any Affiliate or any Sublicensee, UM may terminate this Agreement and any sublicenses granted hereunder upon 90 days written notice to Company. However, if the breach is corrected within the 90 day period and UM is reimbursed for all damages directly resulting from the breach, this Agreement and any sublicenses will continue in full force and effect and UM will so notify the Company is writing. 11.06 Company may terminate this Agreement at any time by giving UM 30 days written notice of termination, and upon payment to UM of all payments maturing through the effective date of the termination and all Patent Expenses invoiced by UM within 30 days after the effective date of the termination. 21 Confidential 11.07 Expiration or termination of this Agreement does not relieve either party of any obligation for payment and reporting which arises before expiration or termination including obligations under Articles 5 and 9. Articles 10, 15, 16, 17, and 18 and Sections 5.13, 5.14, 6.03, 11.08, 11.09, 11.10, 11.11, 11.12, and 19.11 will survive expiration or termination. Article 8 and Sections 9.01 and 19.02 will survive expiration or termination and will expire in accordance with their terms. Other sections of this Agreement will be effective after expiration or termination where that intent is clear from the content of those sections. 11.08 Upon termination of this Agreement for any reason, any Sublicensee not in default may seek a license from UM. 11.09 Upon and effective as of the date of expiration or termination of this Agreement, Company, upon UM's request, will transfer to UM a non-exclusive, non-transferable, irrevocable and royalty-free license with the right to sublicense others granting UM the right to practice Company Improvements in any field of use for research and education but not for commercial purposes. 11.10 Upon the effective as of the date of termination of this Agreement for any reason, Company, upon UM's request, will grant to UM any and all rights to trademarks and tradenames associated only with Licensed Products. Any written document(s) necessary to accomplish a transfer of these rights will be executed by Company and delivered to UM within 30 days after Company's receipt of UM's request. 11.11 Upon expiration or termination of this Agreement for any reason, at UM's request, Company will provide UM with a copy of Company Data and Joint Data. 11.12 Upon the expiration or termination of all or part of the license rights of Company under this Agreement, and at UM's request, Company will execute a document acknowledging the license rights that have expired or terminated. 22 Confidential ARTICLE 12 ASSIGNABILITY 12.01 Company may assign this Agreement to an Affiliate or to a successor to all or substantially all of the Company's assets or business to which this Agreement relates. Company may not otherwise assign or transfer this Agreement without the prior written consent of UM, which will not be unreasonably withheld. 12.02 UM may assign this Agreement to a successor-in-interest but UM may not otherwise assign or transfer this Agreement without the prior written consent of Company, which will not be unreasonably withheld. ARTICLE 13. APPLICABLE LAW; WAIVER 13.01 This Agreement is made and construed in accordance with the laws of the State of Maryland without regard to choice of law issues, except that all questions concerning the construction or effect of patents will be decided in accordance with the laws of the country in which the particular patent concerned has been granted. 13.02 Company submits itself to the jurisdiction of the State courts of the State of Maryland and Federal courts within the State of Maryland for purposes of any suit relating to this Agreement, and further agrees that any action against UM relating to this Agreement will be initiated by Company only in a court of competent jurisdiction in Baltimore City, Baltimore County, or Howard County, Maryland. 13.03 UM and Company waive their rights to trial by jury as to any litigation between them relating to this Agreement. ARTICLE 14. INTEGRATION AND INTERPRETATION 14.01 This Agreement, together with any Exhibits specifically referenced and attached, embodies the entire understanding between Company and UM. There are no contracts, understandings, conditions, warranties or representations, oral or written, express or implied, with reference to the subject matter of this Agreement that are not merged in this Agreement. 14.02 This Agreement is negotiated as an arm's-length business transaction. Draftsmanship will not be taken into account in construing the Agreement. 14.03 If any condition or provision in any article of this Agreement is held to be invalid or illegal or contrary to public policy by a court of competent jurisdiction from which there is no appeal, this Agreement will be construed as though the provision or condition did not appear. The remaining provisions of this Agreement will continue in full force and effect. 23 Confidential ARTICLE 15. REPRESENTATIONS AND WARRANTIES 15.01 UM hereby represents that to the knowledge of the executing UM officer, as of the date of execution by the officer, (a) as confirmed by assignments from UM Personnel who are known to be Inventors, UM has full right, title, and interest in and to the Patent Rights identified in Exhibit A-1 (subject to any rights of the United States under grants to UM and pursuant to 35 U.S.C. Section 201 et seq and all implementing regulations); (b) the Patent Rights identified in Exhibit A-1 are not the subject matter of any currently pending litigation involving UM, and UM has not been informed of any related litigation contemplated either by UM or any Third Party; and (c) UM is unaware that any person disputes inventorship or ownership of Patent Rights as described in this Agreement. UM warrants that the officer of UM executing this Agreement is authorized to do so on behalf of UM. UM EXPRESSLY DISCLAIMS ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NONINFRINGEMENT, AND PATENT VALIDITY, WITH RESPECT TO PATENT RIGHTS. 15.02 Company hereby represents and warrants to UM that: (a) Company has full legal right, power and authority to execute, deliver and perform its obligations under this Agreement; (b) the execution, delivery and performance by Company of this Agreement do not contravene or constitute a default under any provision of applicable law or of any agreement, judgment, injunction, order, decree, or other instrument binding upon Company; and (c) the officer of the Company executing this Agreement has been authorized by the Company's board of directors or governing body to execute this Agreement as the act of the Company. ARTICLE 16. CLAIMS, INDEMNIFICATION AND INSURANCE 16.01 UM and its officers and employees acting within the scope of their employment by UM are subject to the Maryland Tort Claims Act ("the Act"), Title 12, Subtitle 1, State Government Article, Annotated Code of Maryland, which permits claims in tort against the State of Maryland under certain circumstances and subject to limits provided by law. In order to file a claim under the Act, a claimant must submit a written claim to the Treasurer of the State of Maryland or a designee of that office within one year after the injury to the person or property that is the basis of the claim. Company warrants and represents that at least 30 days prior to a Licensed Product entering a clinical investigation as defined in 21 CFR 56, Company will acquire comprehensive liability and property damage insurance coverage in the minimum amounts of$ 1,000,000 per claim and $3,000,000 aggregate, applicable to bodily injury, property damage, and product liability claims. Company warrants that the comprehensive liability and property damage insurance that Company will purchase will cover contractually assumed liabilities referred to in Section 16.02, and Company will maintain such coverage throughout the remaining term of this Agreement. During the period from the execution of this Agreement up to 30 days before entering a clinical investigation as defined in 21 CFR 56, Company will maintain liability insurance 24 Confidential at limits to sufficiently cover its obligations under this Agreement and such insurance will cover contractually assumed liabilities referred to in Section 16.02. A certificate evidencing the required insurance coverage will be delivered to UM: (i) at or before execution of this Agreement; (ii) each time there is a change in Company's insurance coverage; (iii) each time Company's insurance coverage is renewed; and (iv) prior to a Licensed Product entering a clinical investigation as defined in 21 CFR 56. Company agrees to require its insurance carriers) to notify UM within 15 days prior to cancellation of Company's insurance coverage. If Company does not secure liability insurance written on an occurrence basis, but instead secures liability insurance written on a claims-made basis, Company warrants that it will purchase extended reporting coverage or otherwise provide insurance satisfying its obligations hereunder for a period of not less than three years following termination of this Agreement. 16.02 (a) Company will defend, indemnify, and hold harmless UM, UM Personnel, UM Affiliates, the University System of Maryland, the State of Maryland, and their regents, officers, employees, students, and agents (each individually a "UM Party" and all, collectively "UM Parties") against any and all claims, costs or liabilities, including attorney's fees and court costs at trial and appellate levels, for any loss, damage, personal injury, or loss of life: (i) caused by the actions of Company, its Affiliates, or Sublicensees, or their officers, servants, or agents, or Third Parties acting on behalf of or under authorization from Company, its Affiliates or Sublicensees, in the performance of this Agreement; (ii) arising out of use of licensed Patent Rights by Company, its Affiliates, or Sublicensees or their officers, servants, or agents, or by any Third Party acting on behalf of or under authorization from Company, its Affiliates, or Sublicensees; or (iii) arising out of use by a UM Party of products, processes, or protocols developed either by Company, its Affiliates, or Sublicensees or their officers, servants, or agents, or by Third Parties acting on behalf of or under authorization from Company, its Affiliates or Sublicensees, in the performance of this Agreement, unless the claim, cost, or liability is attributable solely to the negligence of a UM Party (b) Company's agreement to defend, indemnify and hold harmless a UM Party is conditioned upon: (i) UM promptly notifying Company in writing after UM receives notice of any claim, and (ii) the UM Party seeking indemnification fully cooperating with Company in the defense of the claim. (c) Company's agreement to defend, indemnify and hold harmless a UM Party will not apply to any claim, cost, or liability attributable to the negligent act or willful misconduct of the UM Party. 16.03 UM and Company further agree that nothing in this Agreement will be interpreted as: (a) a denial to either party of any remedy or defense available to it under the laws of the State of Maryland; 25 Confidential (b) the consent of the State of Maryland or its agents and agencies to be sued; or (c) a waiver of sovereign immunity or any other governmental immunity of the State of Maryland and UM beyond the extent of any waiver provided by law. ARTICLE 17. ADVERTISING AND PUBLICITY 17.01 Neither party will use the name of the other or any of its employees or personnel, or any adaptation thereof, in any advertising, promotional, or sales literature without prior written consent obtained from the other party. Either party may publicize the fact that the parties have made this Agreement. ARTICLE 18. DISPUTE RESOLUTION 18.01 If a dispute between the parties related to this Agreement arises, either party, by notice to the other party, may have the dispute referred to the parties' respective officers designated below, or their successors, for attempted resolution by good faith negotiations within 30 days after the notice is received. The designated officers are as follows: For Company: Chief Financial Officer For UM: Vice President, Research and Development In the event the designated officers are not able to resolve the dispute within this 30 day period, or any agreed extension, they will confer in good faith with respect to the possibility of resolving the matter through mediation with a mutually acceptable Third Party or a national mediation organization. The parties agree that they will participate in any mediation sessions in good faith in an effort to resolve the dispute in an informal and inexpensive manner. All expenses of the mediator will be shared equally by the parties. Any applicable statute of limitations will be tolled during the pendency of a mediation initiated under this Agreement. Evidence of anything said or any admission made in the course of any mediation will not be admissible in evidence in any civil action between the parties. In addition, no document prepared for the purpose of, or in the course of, or pursuant to, the mediation, or copy thereof, will be admissible in evidence in any civil action between the parties. However, the admissibility of evidence will not be limited if all parties who participated in the mediation consent to disclosure of the evidence. 26 ARTICLE 19. MISCELLANEOUS 19.01 No license or right is granted by implication or otherwise with respect to any patent application or d by either party, unless specifically set forth in this Agreement. 19.02 Company, its Affiliates, Sublicensees, subcontractors and agents will not knowingly employ or directly or indirectly, any person working in the Licensed Field, or involved in negotiating ti Dn behalf of UM, while the person is employed by UM or for 2 years thereafter, unless UM mpany with prior written consent of the UM President to the employment or compensation by Company. "Compensation" includes but is not limited to: cash, stock, stock option or stock purchase consulting agreements, gifts, grants, stipends, loans, perquisites, promises of future employment or any other form of consideration or agreement executed between a UM employee and Company, its ublicensees, subcontractors or agents. "Employment" includes both uncompensated and compensated service to Company. The Maryland Public Ethics Law, Title 15, State Government Article, Code of Maryland, may apply to a decision by the UM President in regard to such matter. This Section is not intended to prevent Inventors from owning stock of Company received by a distribution of licensing revenues under the University System of Maryland Intellectual Property Policy. As Company stockholders, Inventors may receive dividends and enjoy other benefits of ship, subject to any terms and conditions UM or Company may require in order to satisfy 27 conflict of interest concerns. Should UM terms and conditions be relevant to the relationship of Company to Inventors, as shareholders, UM will advise Company of them. This provision is not intended to prevent Company from placing any restrictions upon Inventors' stock that may be necessary to satisfy federal or state laws or regulations applicable to Company or to development of Licensed Products. 19.03 Company will provide written notice to UM prior to the filing of a petition in bankruptcy if Company intends to file a voluntary petition, or, if known by Company through statements or letters from a creditor or otherwise, if a Third Party intends to file an involuntary petition in bankruptcy against Company. Notice will be given at least 75 days before the planned filing or, if such notice is not feasible, as soon as Company is aware of the planned filing. Company's failure to perform this obligation is deemed to be a material prepetition incurable breach under this Agreement not subject to the 90-day notice requirement of Section 11.05, and UM is deemed to have terminated this Agreement 75 days prior to the filing of the bankruptcy petition. 19.04 If Company conducts clinical trials of a Licensed Product, it will give full consideration to use UM or the University of Maryland Medical System Corporation as a site for clinical trials, subject to agreement on terms and conditions, including compensation, negotiated in good faith. 19.05 Neither party is liable for failure or delay in performing any of its obligations under this Agreement if the failure or delay is required in order to comply with any governmental regulation, request or order, or necessitated by other circumstances beyond the reasonable control of the party so failing or delaying, including but not limited to Acts of God, war (declared or undeclared), insurrection, fire, flood, accident, labor strikes, work stoppage or slowdown (whether or not such labor event is within the reasonable control of the parties), or inability to obtain raw materials, supplies, power or equipment necessary to enable a party 28 to perform its obligations. Each party will: (a) promptly notify the other party in writing of an event of force majeure, the expected duration of the event and its anticipated effect on the ability of the party to perform its obligations; and (b) make reasonable efforts to remedy the event of force majeure. 19.06 All notices, consents and other communications required or allowed under this Agreement must be in writing and are effective upon receipt: (a) when delivered by hand; or (b) when received by the addressee after being mailed by registered or certified mail (air mail if mailed overseas), return receipt requested; or (c) when received by the addressee, by delivery service (return receipt requested), in each case addressed to the party at its address set forth below (or to another address that a party may later designate by notice to the other party): If to UM: Director, Technology Commercialization Office of Research and Development University of Maryland, Baltimore 515 West Lombard Street, Suite 500 Baltimore, Maryland 2120 1-1602 Copy to: University Counsel University of Maryland, Baltimore 520 West Lombard Street, Second Floor Baltimore, Maryland 2 1201-1627 If to Company: Chief Financial Officer 29 JDA Medical Technologies, Inc. 6501 Autumn Wind Circle Clarksviile, MD 21029 19.07 This Agreement, including Exhibits, may not be amended, nor may any right or remedy of either party be waived, unless the amendment or waiver is in writing and signed by a duly authorized representative of each party. 19.08 A failure or delay by a party in exercising any of its rights or remedies under this Agreement does not constitute a waiver of the rights or remedies, nor does any single or partial exercise of any right or remedy preclude any other or further exercise thereof or the exercise of any other right or remedy. The rights and remedies of the parties provided in this Agreement are cumulative and not exclusive of any rights or remedies provided by law. 19.09 UM and Company are not (and nothing in this Agreement may be construed to constitute them as) partners, joint venturers, agents, representatives or employees of the other, nor is there any status or relationship between them other than that of independent contractors. Neither party has any responsibility nor liability for the actions of the other party except as specifically provided in this Agreement. Neither party has any right or authority to bind or obligate the other party in any manner or make any representation or warranty on behalf of the other party. 19.10 Unless otherwise provided, all costs and expenses incurred in connection with this Agreement will be paid by the party which incurs the cost or expense, and the other party has no liability for such cost or expense. 30 19.11 This Agreement is not intended to create, and does not create, enforceable legal rights as a third party beneficiary or through any other legal theory on the part of any University Personnel or any other person except as otherwise provided by Section 16.02. 19.12 This Agreement is signed in duplicate originals. The headings used in this Agreement are for convenience of reference only and do not affect the meaning or construction of this Agreement. 19.13 If UM offers incubator space for rent to licensees of UM technologies following the opening of the 15MB Health Sciences Research Park, UM will offer Company a reasonable amount of space at terms comparable to those offered by UM to similarly situated companies. 19.14 UM will cooperate with Company's reasonable requests for UM participation in Company's ftmdraising, regulatory and business development activities. This agreement does not create personal obligations on the part of any of the Inventors or other UM Personnel. Company, upon UM's request, will reimburse UM for any out of pocket expenses it may incur in connection with such activities (e.g., travel expenses; duplication of materials or media). The parties have caused this Agreement to be executed by their duly authorized representatives on the dates indicated below. 31 UNIVERSITY OF MARYLAND BALITMORE BY: /s/ David J. Ramsay WITNESS: /s/ Carol Cra????? -------------------------------- ------------------------- David J. Ramsay, D.M., D.Phil Date: 2-19-04 Date: 2/19/04 ----------------------------- ---------------------------- JDA MEDICAL - CHOOMS, INC. BY: /s/ Jeff Franco ATTEST: /s/ ??????? ------------------------------- -------------------------- Jeff Franco Chief Financial Officer Date: ??????????????? Date: 2/23/04 ----------------------------- ---------------------------- 32 Confidential EXHIBIT A- 1: PATENT RIGHTS United States Patent Application Serial Number 60/479,832 Date Filed: 6/20/2003 Title: "Instant microspheres for microarterial imaging and radiotherapy" Inventors: Line, Van Echo, Kennedy, Ghandehari, and Nan Docket Code: BL-2003-028 Patent applications and patents described in Section 2.15(b), (c), or (d) will be added to Exhibit A-1 through an amendment in accordance with Section 19.07. UM Acknowledged Date ???????? Company Acknowledged ______________ Date ______________ 33 Confidential EXHIBIT A-2: ROYALTY RATES United States Patent Application Serial Number 60/479,832 2.5% Date Filed: 6/20/2003 Title: "Instant microspheres for microarterial imaging and radiotherapy" Inventors: Line, Van Echo, Kennedy, Ghandehari, and Nan Docket Code: BL-2003-028 UM Acknowledged Date ???????? Company Acknowledged ______________ Date ______________ 34 Exhibit 10.21 Continued AGREEMENT AND CONSENT This Agreement and Consent (this "Agreement") by and between University of Maryland, Baltimore, a constituent institution of the University System of Maryland (which is a public corporation and an instrumentality of the State of Maryland) ("UMB"), and JDA Medical Technologies, Inc., a Maryland corporation ("Company"), is made this __ day of July, 2006. The parties hereby agree as follows: ARTICLE 1. RECITALS 1.01 Pursuant to the Master License Agreement dated September 16, 2003 by and between UMB and Company (the "MLA"), UMB granted to Company an exclusive worldwide license under certain Patent Rights to make, have made, use, lease, offer to sell, sell and import the Licensed Products within the Licensed Field for the term set forth in the MLA. 1.02 Company proposes to enter into a merger transaction (the "Merger") with BestNet Communications Corporation ("BestNet") and Oncologix Corporation ("Oncologix"), pursuant to an Agreement of Merger and Plan of Reorganization dated July ___, 2006 (the "Merger Agreement"). Company represents and warrants that a true and complete copy of the Merger Agreement has been submitted to UMB, and no provision of the Merger Agreement has been amended, modified, or waived. 1.03 If the merger is closed on the terms and conditions set forth in the Merger Agreement, UMB hereby consents to the Merger and to the assignment to and assumption by Oncologix of the MLA in connection therewith. 1.04 In order to allow Company to close the Merger, the parties agree to amend the MLA as set forth below. The parties have also agreed as to certain other matters as set forth below 1.05 All capitalized terms not defined or re-defined herein shall have the meaning otherwise given in the MLA. ARTICLE 2. COMPANY RESPONSIBILITIES 2.01 Section 4.01(e) of the MLA is hereby deleted and in its place is inserted the following: "(e) On or before September 16, 2008, (a) Company (or a duly authorized Sublicensee in any country other than the U.S.) submits an Application for an Investigational Device Exemption ("IDE") for a Licensed Product to the FDA, or any foreign equivalent, or (b) Company (or a duly authorized Sublicensee in any country other than the U.S.) commences a Clinical Trial of a Licensed Product. For purposes of this License Agreement, "Clinical Trial" shall mean a human clinical trial of a Licensed Product to that would satisfy the requirements of 21 C.F.R. ss.812.1 et seq., or its foreign equivalents. A Clinical Trial shall be considered to have commenced when the Licensed Product has been administered to the first subject in the study." 2.02 Section 4.01(f) of the MLA is hereby deleted and in its place is inserted the following: "(f) Company receives Pre-Market Approval for a Licensed Product on or before September 16, 2011." 2.03 A new Section 4.01(g) is added to the MLA, as follows: "(g) Pursuant to an Agreement of Merger and Plan of Reorganization dated July ___, 2006 (the "Merger Agreement") by and among BestNet Communications Corporation ("BestNet"), Oncologix Corporation ("Oncologix"), Company, and certain shareholders of Company, BestNet shall provide at least $4,000,000 in funding for the operations of Oncologix. It is acknowledged that $350,000 of said amount has already been furnished by way of an advance to the Company. The balance of $3,650,000 shall be deposited for the account of Oncologix as follows: (i) $400,000 at the Closing (as defined in the Merger Agreement); (ii) $250,000 on the last day of each of the five successive months following the month in which the Closing occurs; (iii) the remaining balance on the last day of the sixth month after the Closing occurs; whereupon (iv) a certain Convertible Promissory Note issued to BestNet by Company on or about March 23, 2006 in the principal sum of $350,000 shall, together with any liability of the Company for accrued interest thereunder, be canceled and extinguished. Such funds shall be used solely for the purposes set forth in the Merger Agreement." ARTICLE 3. MILESTONE PAYMENTS 3.01 Section 5.02(a) of the MLA is hereby deleted and in its place is inserted the following: "(a) Company will pay to UMB the following commercial milestone payments within thirty (30) days following the satisfaction of each milestone: (i) The first to occur of (a) commencement of a Clinical Trial for a Licensed Product in any country other than the U.S., or (b) filing with FDA of an IDE for a Licensed Product: $25,000.00; (ii) Three (3) months following FDA approval of an IDE for a Licensed Product: $50,000.00; (iii) Receipt of the first Pre-Market Approval by the FDA for a Licensed Product: $50,000.00; (iv) Acquisition of a controlling interest in Company by a Third Party (other than pursuant to the Merger Agreement): $100,000.00; (v) Completion of the first calendar year in which Net Sales exceed $5,000,000.00: $200,000.00." ARTICLE 4. COMPANY SHARES 4.01 In addition to the 664,028 founders shares issued to UMB pursuant to the MLA, immediately prior to the closing of the Merger Company shall issue to UMB an additional 42,248 shares of Company's common stock. Those additional shares shall be converted into two hundred thousand (200,000) shares of BestNet common stock (the "Additional Shares") upon closing of the Merger. 4.02 BestNet shall use its best efforts (subject only to approval by the U.S. Securities and Exchange Commission) to cause the Additional Shares to be registered (as defined in the Merger Agreement) during the period commencing six (6) months after the closing of the Merger and ending twenty-four (24) months thereafter. Such registration shall be at the sole expense of BestNet, and shall be made regardless of any condition or requirement under the Merger Agreement (including without limitation the requirement of Section 5.2.1 that the request for registration be made by a certain percentage of holders, or that the anticipated aggregate net offering price of the registrable securities exceed a certain value). 4.03 A new Section 5.15 is added to the MLA, as follows: "UMB understands and acknowledges that the shares issued pursuant to this Agreement are "restricted securities" under federal and state securities laws insofar as they have not been registered under the Securities Act of 1933, as amended ("1933 Act"), or the securities laws of any other jurisdiction, that they may not be resold or transferred without compliance with the registration or qualification provisions of the 1933 Act or applicable federal and state securities laws of any state or other jurisdiction or an opinion of counsel that an exemption from such registration and qualification requirements is available." 4.04 If the Merger is closed in accordance with the terms of the Merger Agreement, UMB acknowledges and agrees that it shall not be entitled to any protection against dilution of UMB's founders shares under Section 5.14 of the MLA. ARTICLE 5. INDEMNIFICATION. 5.01 Section 16.02(a) of the MLA is hereby deleted and in its place is inserted the following: "16.02 (a) Company will defend, indemnify, and hold harmless UM, UM Personnel, UM Affiliates, the University System of Maryland, the State of Maryland, and each of their respective current and future regents, directors, trustees, officers, faculty, medical and professional staff, employees, students, trainees, and agents, and their respective successors, heirs, and assigns (each individually a "UM Party" and all, collectively "UM Parties") against any claim, liability, cost, damage, deficiency, loss, expense or obligation of any kind or nature (including without limitation reasonable attorneys' fees, expert witness fees, court costs and other costs and expenses of litigation at trial and appellate levels) incurred by or imposed upon Indemnitees or any one of them in connection with any claims, suits, actions, demands or judgments: (i) Arising out of the actions or omissions of Company, its Affiliates, or Sublicensees, or their directors, officers, employees, or agents, or any Third Party acting on behalf of or under authorization from Company, its Affiliates, or Sublicensees; (ii) Arising out of use of the Patent Rights by Company, its Affiliates, or Sublicensees or their directors, officers, employees, or agents, or by any Third Party acting on behalf of or under authorization from Company, its Affiliates, or Sublicensees; (iii) Arising out of use by a UM Party of products, processes, or protocols developed either by Company, its Affiliates, or Sublicensees or their directors, officers, employees, or agents, or by Third Parties acting on behalf of or under authorization from Company, its Affiliates or Sublicensees, provided the use was consistent with any instructions, protocols, or supervision provided or approved by Company or a Sublicensee, unless the claim, cost, or liability is attributable solely to the negligence of a UM Party; (iv) Arising out of any theory of product liability (including without limitation actions in the form of tort, warranty, or strict liability) concerning any Licensed Product or any other product, process or service made, used, or sold pursuant to any right or license granted under this License Agreement; or (v) Arising out of any actions or omissions of Fountain Pharmaceuticals, Inc., a Delaware corporation, its affiliates, sublicensees, or assignees, or any of their directors, officers, employees, or agents, whether in connection with the License Agreement dated June 12, 2006 or otherwise." ARTICLE 6. WAIVERS. 6.01 UMB hereby waives any default or breach of the MLA by Company through and including the date of closing of the Merger. UMB acknowledges and aggress that it shall not have any rights or remedies (including without limitation the right to terminate the MLA) as a result of any default or breach of the MLA by Company through and including the date of closing of the Merger. 6.02 UMB hereby waives the commercial milestone payment of $100,000.00, which would have been due upon closing of the Merger pursuant to Section 5.02(a)(iii) of the MLA. ARTICLE 7. RATIFICATION 7.01 Except as specifically modified above, the MLA is hereby ratified, affirmed, and is in full force and effect. ARTICLE 8. COUNTERPARTS. 8.01 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. ARTICLE 9. CONDITION PRECEDENT. 9.01 This Agreement shall not be effective unless and until the closing of the Merger. This Agreement shall be null and void if the Merger is not closed by July 31, 2006. ARTICLE 10. GOVERNING LAW. 10.01 This Agreement is made and shall be construed in accordance with the laws of the State of Maryland, without regard to the principles of conflicts of laws. [Signature Page Follows] IN WITNESS WHEREOF, UMB and Company have executed and delivered this Agreement as of the date first above written. UNIVERSITY OF MARYLAND, BALTIMORE JDA MEDICAL TECHNOLOGIES, INC. By: By: ------------------------------------- -------------------------- Its: Its: ------------------------------------ ------------------------- Agreed and accepted: BESTNET COMMUNICATIONS CORPORATION By: ------------------------------------ Its: ----------------------------------- ONCOLOGIX CORPORATION By: ------------------------------------ Its: ----------------------------------- EX-10.23 4 bestnet10-23.txt EMPLOYMENT AGREEMENT (KENNEDY) Exhibit 10.23 EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT (the "Agreement") is made as of July 26, 2006 (the "Effective Date"), by and among Andrew S. Kennedy, MD, who resides at 307 Devonhall Lane, Cary, NC 27511 ("Kennedy"), and Oncologix Corporation, a Nevada corporation (the "Company"), which is the wholly owned subsidiary of BESC. The parties have agreed as follows: 1. RECITALS 1.1 The Company For the purposes of this Agreement, the term, "the Company" shall, where the context indicates, include any present or future parent, subsidiary, or other affiliate of the Company and any successor or assign of the Company. 1.2 Underlying Transaction This Agreement has been executed and delivered pursuant to a certain Merger Agreement dated July 26, 2006 among BestNet Communications Corp., a Nevada corporation ("BESC"), JDA Medical Technologies, Inc., a Maryland corporation ("JDA"), the Company, Kennedy and certain other parties. Kennedy understands and acknowledges that his entry into this Agreement and his performance hereunder are material inducements to BESC and the Company to enter into and to perform under the Merger Agreement. Simultaneously with the mutual execution and delivery of this Employment Agreement, approximately thirty-two and forty-four hundredths percent (32.44%) of the outstanding capital stock of JDA is being acquired from Kennedy by BESC through the Company, and Kennedy is acquiring approximately four and eighteen hundredths percent (4.18%) of the outstanding capital stock of BESC. 1.3 Kennedy's Relationship and Expertise. Kennedy was a founder of JDA, has since its inception been a member of its Board of Directors and its Chief Scientific and Medical Officer and was a primary inventor of its technology. Kennedy desires to continue in a substantially similar policy-oriented capacity with the Company, under its new ownership. The Company desires to engage Kennedy to perform substantially similar services for the Company, on the basis of his considerable familiarity with and expertise in the Business (as defined herein), its application in the practice of medicine and his knowledge and experience as a medical practitioner. In formulating the provisions of this Agreement, the parties have understood and recognized that the Company is engaged in the business of developing, testing and marketing products and services in connection with radiation therapies for the treatment of cancers, including without limitation, Microarterial Brachytherapy or the use of radio-labeled microspheres in the treatment of soft tissue cancers ("Business") and that the market for any business of such nature is worldwide and not limited to any particular geographical area. 1 1.4 Kennedy's Prior Obligations. The Company acknowledges that Kennedy, prior to execution of this Agreement, has taken on employment, management and other responsibilities with Wake Radiology Oncology, PLLC ("Wake Radiology Oncology"). No obligation herein shall be interpreted to limit in any way the ability of Kennedy to carry out his current or future responsibilities to Wake Radiology Oncology, as it currently exists or as it may exist in the future, resulting, for example, from a merger or acquisition of Wake Radiology Oncology. 1.5 Purpose of Agreement. Kennedy and the Company desire to provide for Kennedy's employment by the Company upon the terms and conditions set forth in this Agreement. 2. TERMS OF EMPLOYMENT 2.1 Employment and Term. The Company will employ Kennedy, and Kennedy hereby accepts employment with the Company, for an initial term commencing on the Effective Date, and continuing for a period of two (2) years following the Effective Date (the "Initial Term"). It is contemplated, however, that, unless written notice of the intention not to renew is given by either party to the other at least sixty (60) days prior to the end of the Initial Term or the applicable then-current term, this Agreement will be renewed for successive periods ("Additional Term(s)," and together with the Initial Term, the "Term") on the terms and conditions set forth herein or as otherwise mutually agreed by the parties. Employment during the Term may be earlier terminated as provided herein. 2.2 Duties. (a) Kennedy shall initially serve in the capacity of Chief Scientific and Medical Officer, reporting to the Board of Directors of the Company. more particularly with respect to the Initial Term, he will be expected to work with other members of the Company's management to refine the animal trials that will be performed in support of the IDE submission, to design or participate in the design, implementation and analysis of all cellular, animal and eventually human testing and to have an oversight role in the feasibility study of the spheres, and continual refinement of the product specifications to optimize the final microsphere with dual tags of a gamma and beta isotope. He will also be expected to develop the scientific and medical rationale in the application to the Food and Drug Administration ("FDA") for permission to infuse JDA spheres in humans, e.g. the IDE and to revise the initial pilot and pivotal human trials for FDA approval. This will include recruitment of medical centers to carry out the trials, training them, and overseeing their performance. He will be expected to complete the official protocols after FDA meetings and input. He will be working closely with Company management and any consultants to develop the infusion kit, training manual, web site, company public relations and marketing as they relate to the Company's product and physicians, and train an experienced group of physician proctors and sales persons; a key responsibility being the development of a core group of physician users is to ensure the highest safety, efficacy and patient outcomes with JDA spheres. 2 (b) Kennedy agrees to devote approximately sixty-four (64) hours each month to the performance of the Business, and Kennedy shall not, except with respect to Wake Radiology Oncology as set forth in Section 1.4 herein, directly or indirectly, alone or as a member of any partnership or other organization, or as an officer, director or employee of any other corporation, partnership, or other organization, be actively engaged in or concerned with any other duties or pursuits which interfere with the performance of his duties hereunder. The Company acknowledges that Kennedy has business interests and ventures outside the Business of the Company and agrees that Kennedy can independently pursue these business interests and ventures as long as they do not interfere with him fulfilling his obligations under this Agreement. (c) Kennedy further agrees to accept election and to serve during all or any part of the Term as a director of the Company without any compensation therefor other than that specified in this Agreement, if elected to such position by the stockholders of the Company. For purposes of clarity, Kennedy's service as a director of the Company shall be considered as a part of the time devoted to the performance of the Business as set forth in Section 2.2(b) herein. The Company shall use its best efforts to cause Kennedy to be elected as a director and shall include him in the management slate for election as a director at every stockholders' meeting at which his term as a director would otherwise expire. 2.3 Compensation. (a) The Company shall pay Kennedy, and Kennedy shall accept, as full compensation for all services rendered hereunder, a base salary (the "Base Salary") and the other compensation and benefits provided hereunder. Kennedy's Base Salary shall be at an annual rate of Two Hundred Forty Thousand Dollars ($240,000), payable in approximately equal installments at such intervals as are consistent with the Company's pay periods for salaried executives. The Base Salary shall be subject to annual review by the Company for increases, based on Kennedy's performance of the duties assigned to him hereunder, the financial condition of the Company and the applicable policies and review standards of the Company in effect from time to time. In addition to the Base Salary, Kennedy shall be eligible to receive an annual discretionary bonus as determined by the Company, at its sole discretion (the "Bonus"). Notwithstanding anything herein to the contrary, all payments required to be made hereunder by the Company to Kennedy, or his estate or beneficiaries, shall be subject to the withholding of such amounts as the Company may reasonably determine it should withhold pursuant to any applicable law or regulation. 3 (b) Kennedy shall be eligible to participate in retirement, pension, group insurance, medical, health, dental, vacation and any other plans or programs of substantially similar character as are made generally available to executive employees of the Company. All such benefits are to be provided by the Company, subject to the terms of any welfare or pension plan sponsored by the Company. (c) The Company shall reimburse Kennedy for all reasonable expenses incurred by him in the performance of his duties pursuant to this Agreement in accordance with the Company's policies concerning the reimbursement of expenses. 2.4 Termination of Employment. (a) Death. Kennedy's employment hereunder shall terminate in the event of his death. Except for any Salary, Bonus and other benefits accrued, vested and unpaid as of the end of the month in which any such termination occurred, the Company shall be under no further obligation hereunder to Kennedy or his heirs or personal representatives, and Kennedy or his heirs and personal representatives no longer shall be entitled to receive any payments or any other rights or benefits under this Agreement. (b) Disability. The Company may terminate Kennedy's employment hereunder for "Disability," upon sixty (60) days' prior written notice to Kennedy, if an independent physician (who shall be board certified in the specialty most closely related to the nature of incapacity or disability alleged to exist) mutually selected by Kennedy or his representative and the Board of Directors or its designee has determined that Kennedy is unable to perform the essential functions of his job for a continuous period of six (6) months, with or without accommodation, as contemplated by this Agreement, by reason of a physical or mental illness. In the event of such Disability, Kennedy shall be entitled to receive any Salary, Bonus and other benefits accrued, vested and unpaid as of the date of any such termination, and the Company shall be under no further obligation hereunder to Kennedy, and Kennedy no longer shall be entitled to receive any other payments, rights or benefits under this Agreement. (c) Termination by the Company for Cause. The Company may terminate Kennedy's employment hereunder for "Cause", which for the purposes of this Agreement shall mean: (i) the willful or material breach by Kennedy of any of the terms of this Agreement; (ii) Kennedy's conviction of (or plea of guilty with respect to) any theft, fraud or crime involving moral turpitude or crime or offense involving money or other property of the Company or any affiliate of the Company or which constitutes a felony in the jurisdiction involved; (iii) the engaging by Kennedy in willful misconduct which is injurious to the Company or its affiliates, monetarily or otherwise, including without limitation any act or acts that in the reasonable opinion of the Company's Board of Directors, give rise to a material risk of liability for discrimination or sexual or other forms of harassment or other similar liabilities to subordinate employees; (iv) gross negligence by Kennedy with respect to his services to the Company which has continued for fifteen (15) days after written notice to Kennedy; (v) continued and repeated substantive violations of reasonable, specific written directions of the Company's Board of Directors, which directions are consistent with this Agreement and Kennedy's position as an officer or continued and repeated failure 4 to perform duties assigned by or pursuant to this Agreement or in accordance with the policies of the Company and which have continued for fifteen (15) days after written notice to Kennedy; (vi) any material breach by Kennedy of any other agreement between the Company and Kennedy which has continued for fifteen (15) days after written notice to Kennedy; and (vii) any material breach by Kennedy of his fiduciary duty to the Company, including any misappropriation of a corporate opportunity. In the event of termination for Cause, Kennedy shall be entitled to receive any Salary, Bonus and other benefits accrued, vested and unpaid as of the date of any such termination, and the Company shall be under no further obligation hereunder to Kennedy, and Kennedy no longer shall be entitled to receive any other payments, rights or benefits under this Agreement. Following any termination for Cause, the Company shall have such rights and remedies as may be available to it for any breach of this Agreement or otherwise. (d) Termination by the Company other than for Cause. The Company may terminate Kennedy's employment hereunder at any time for any reason other than for Cause; provided that the Company has given Kennedy ninety (90) days' written notice of termination, which termination shall be effective upon expiration of the notice period. In the event of such termination, (i) Kennedy shall be entitled to receive a severance benefit equal to his Base Salary at the rate in effect at the time of termination for the remainder of the then current Term or for three (3) months, whichever is less, and shall also be entitled to receive any Base Salary, Bonus or other compensation vested and unpaid as of the date of any such termination and any benefits to which Kennedy may be entitled under and in accordance with the terms of any Kennedy benefit plan, policy or program maintained by the Company. Upon Kennedy's receipt of such severance benefit, salary and benefits, the Company shall be under no further obligation hereunder to Kennedy, and Kennedy no longer shall be entitled to receive any payments or any other rights or benefits under this Agreement or otherwise, and the provisions of Section 3.2 shall terminate upon such termination of this Agreement. (e) Termination by Kennedy for Good Reason. Notwithstanding anything herein to the contrary, Kennedy shall be entitled to terminate his employment hereunder for "Good Reason" without breach of this Agreement. As used herein, "Good Reason" shall mean: (i) the Company becomes insolvent, as evidenced by its inability to meet its obligations in the ordinary course of business; (ii) any reduction in Kennedy's Base Salary (other than a proportional reduction affecting executive employees of the Company generally); (iii) removal of Kennedy from a senior position with the Company; or (iv) the Company's requirement that he perform his duties hereunder on a regular basis from a location more than thirty (30) miles from his current office or then-current office, as applicable; provided however, that it is understood that as a part of his duties he is expected to periodically attend scientific and professional conferences throughout the world. In the event of such termination by Kennedy, Kennedy shall nonetheless be entitled to receive a severance benefit equal to a Base Salary at the rate in effect at the time of termination for the remainder of the then current Term or for three (3) months, whichever is less. Except for such severance benefit and except for any Base Salary, Bonus and benefits accrued, vested and unpaid as of the date of such termination, Kennedy no longer shall be entitled to receive any payments or any other rights or benefits under this Agreement, and the Company shall have no further obligation hereunder or otherwise to Kennedy following any such termination. 5 3. PROPRIETARY INFORMATION AND INVENTIONS; COVENANT NOT TO COMPETE 3.1 Company Ownership of Intellectual Property. Kennedy agrees that all processes, discoveries, formulas, improvements, technologies, designs and inventions ("Inventions"), including new contributions, improvements, ideas and discoveries, whether patentable or not, conceived, developed, invented or made solely by Kennedy, or jointly with others, during the Term, within the scope of his employment and related to the Business, shall belong to the Company or its affiliates. Kennedy shall further: (a) promptly disclose such Inventions to the Company; (b) assign to the Company, without additional compensation, all patent and other rights to such Inventions, whether patentable or unpatentable, including all substitute, continuation-in-part and reissue applications, patents of addition and confirmation relative thereto, for the United States of America and foreign countries; (c) sign all papers necessary to carry out the foregoing; and, (d) give testimony in support of inventorship. The Company agrees that Kennedy owns all right, title and interest in and to any Invention made during his employment by JDA or the Company that was made outside normal working hours and outside his scope of employment with JDA or the Company. 3.2 Covenant Not to Compete. (a) Kennedy acknowledges that his duties under this Agreement and the services he will provide to the Company are of a special, unique, unusual and extraordinary character, which gives this Agreement particular value to the Company, and that it would be difficult to employ any individual or individuals to replace Kennedy in the performance of such duties and services. Therefore, in consideration of this Agreement and of the Merger Agreement and his receipt of BESC capital stock as recited above, subject to the provisions of Section 1.4 herein, Kennedy agrees that during his employment by the Company, and for a period of two (2) years after termination of this Agreement for any reason, including expiration of the Term of this Agreement, Kennedy shall not, directly or indirectly, as owner, partner, joint venturer, stockholder, employee, broker, agent, principal, trustee, corporate officer, director, or in any capacity whatsoever engage in, become financially interested in, be employed by, render any consultation or business advice with respect to, or have any connection with, any business similar to the Business or which is otherwise competitive with products or services with respect to the Business, in any geographic area where, at the time of the termination of his employment, the Business was being conducted or was proposed to be conducted; provided, however, that Kennedy may own any securities of any corporation which is engaged in such business and is publicly owned and traded but in an amount not to exceed at any one time five percent (5%) of any class of stock or securities of such corporation. 6 (b) Kennedy acknowledges that the Company intends to conduct business on a world-wide basis, that its sales and marketing prospects are for continued expansion into world markets and that, therefore, the territorial and time limitations set forth in Section 3.2(a) are reasonable and properly required for the adequate protection of the Business. In the event any such territorial or time limitation is deemed to be unreasonable by a court of competent jurisdiction, Kennedy agrees to the reduction of the territorial or time limitation to the area or period which such court deems reasonable. 3.3. Confidentiality. Kennedy agrees, while employed by the Company and for a two (2) year period thereafter, directly or indirectly, not to disclose or use to the detriment of the Company or any of its affiliates (the term "affiliates" as used in this Agreement is understood to mean subsidiaries, and parent and brother/sister corporations of the Company) or for the benefit of any other person or firm, any confidential information or trade secrets which are not readily available in the public domain (including, but not limited to, the identity and particular needs of any customer of the Company or any of its affiliates, the methods and techniques of the business of the Company or any of its affiliates, the marketing plans and objectives of the Company or any of its affiliates, the formula of any product of the Company or any of its affiliates) of the Company or any of its affiliates. Such confidential information or trade secrets shall not include information that (i) became known to Kennedy prior to disclosure by the Company; (ii) is or subsequently becomes generally available to the public without Kennedy's breach of this Agreement; (iii) is obtained by Kennedy from a third party having a right to disclose such information; or (iv) except as limited below, is required by law, governmental order or decree to be disclosed by Kennedy. Furthermore, Kennedy shall deliver promptly to the Company upon termination of employment, or at any time the Company may so request, all memoranda, notes, records, reports, manuals, drawings, blueprints, formulas, and other documents (and all copies thereof) relating to the Business and all property associated therewith, then possessed or under the control of Kennedy. 3.4 Remedies for Breach. Kennedy acknowledges that the legal remedies for breach of the covenants contained in this Article 3 are inadequate, and therefore agrees that, in addition to any or all other remedies available to the Company and its affiliates in the event of a breach or a threatened breach of any covenant contained therein, the Company of any of its affiliates may: (a) Obtain preliminary and permanent injunctions against any and all such actions, and (b) Seek to recover from Kennedy monetary damages to the Company or its affiliates arising from such breach or threatened breach and all costs and expenses (including attorneys' fees) incurred by the Company or any of its affiliates in enforcement of such covenants. 7 3.5 Survival. This Article 3 shall survive any termination of Kennedy's employment hereunder unless otherwise provided herein. 4. GENERAL AND MISCELLANEOUS 4.1. Notices. All notices, requests, consents and other communications required or permitted to be given hereunder shall be in writing and shall be deemed to have been duly given if sent by private overnight mail service (delivery confirmed by such service), registered or certified mail (return receipt requested and received), or delivered personally, in each case to the following addresses, or such other address as either party may from time to time specify by notice given to the other party in the manner specified herein. Any notice to be given by the Company hereunder to Kennedy shall be in proper form if signed by an officer or director (excluding Kennedy) of the Company giving notice. Any such notices shall be deemed to be given on the date delivered in the manner provided above (including the receipt of confirmation as provided above). Until one party shall advise the other in writing to the contrary, notices shall be deemed delivered: (a) To the Company if delivered to a director or the highest-ranking officer (excluding Kennedy) of the Company, or, if mailed, certified or registered mail, postage prepaid to: the Company at its principal place of business at 2850 Thornhills Ave., Suite C, Grand Rapids, Michigan 49546, with a copy to Stephen T. Meadow, Esq., Firetag, Stoss & Dowdell, P.C., 1747 East Morten, Suite 107, Phoenix. Arizona. 8020 (b) To Kennedy if to the address set forth at the head of this Agreement, with a copy to Bruce H. Jurist, Esq., HODES, ULMAN, PESSIN & KATZ, P.A., 901 Dulaney Valley Road, Suite 400, Towson Maryland 21204. 4.2. Benefit. This Agreement shall bind and inure to the benefit of Kennedy and his heirs and personal representatives, and the Company, and its parent, subsidiaries, affiliates, successors and assigns; provided that any transferee, assignee or successor shall be bound by the obligations of the Company hereunder. No party may assign any rights or delegate any obligations hereunder without the prior written consent of the other party; provided however, that the Company may assign its rights and obligations hereunder upon the consummation of a merger or sale of substantially all of the stock or assets of the Company. 4.3. Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Arizona, without regard to its conflicts of laws principles. The parties consent to the exclusive jurisdiction of the federal and/or state courts sitting in the State of Arizona. 8 4.4. Severability. The provisions of Paragraphs 3.2 and 3.4 of this Agreement are severable and the invalidity of any one or more of such provisions does not affect or limit the enforceability of the remaining provisions or paragraphs of this Agreement. Furthermore, should any court of last resort determine that any of the provisions of Paragraph 3.2 are unenforceable because unreasonable as to time and geographical area, such provisions shall be interpreted as though such provisions had originally been within the limits that such court finds to be reasonable. 4.5. Headings. The Headings in this Agreement are solely for convenience of reference and shall not affect its interpretation. 4.6. No Waiver. No failure on the part of any party hereto at any time to require the performance by any other party of any term of this Agreement shall be taken or held to be a waiver of such term or in any way affect such party's right to enforce such term, and no waiver on the part of either party of any term of this Agreement shall be taken or held to be a waiver of any other term hereof or the breach thereof. 4.7. Entire Agreement; Written Modifications. This instrument contains the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior arrangements or understandings concerning Kennedy's employment by the Company; all representations, promises and prior or contemporaneous understandings relating to Kennedy's employment by the Company are merged into and expressed in this instrument. This Agreement shall not be amended, modified or supplemented without the written agreement of the parties at the time of such amendment, modification or supplement. 4.8 Counterparts. This Agreement may be executed in separate counterparts, each of which when so executed shall be an original but all of such counterparts shall together constitute but one and the same instrument. 4.9 Disputes. Any dispute, disagreement, claim or controversy arising out of or relating to this Agreement, any document or instrument delivered pursuant to, in connection with, or simultaneously with this Agreement, or any breach of this Agreement ("Dispute") shall be subject to the negotiation, mediation and arbitration 9 provisions contained herein. Each party to a Dispute shall make every reasonable effort to meet in person and confer for the purpose of resolving the Dispute by good faith negotiation before resorting to any legal proceedings or any other dispute resolution procedure. If the Dispute cannot be settled through negotiation, the parties shall make every reasonable effort to settle the Dispute by mediation by a single mediator qualified to consider the matter in dispute before resorting to any legal proceedings or any other dispute resolution procedure. If a Dispute cannot be settled through mediation, the Dispute shall be finally settled by arbitration to be held in Phoenix, Arizona, under the Rules of Commercial Arbitration of the American Arbitration Association by a panel of three (3) arbitrators qualified to consider the matter in dispute. The arbitrators may grant injunctions or other relief in such dispute or controversy. The decision of a majority of the arbitrators shall be final, conclusive and binding upon the parties to the arbitration; and any party shall be entitled to cause judgment on the decision or award of the arbitrators to be entered in any court of competent jurisdiction. Any party may initiate a mediation or an arbitration by providing written notice of the mediation or arbitration, as the case may be (the "Dispute Notice"), to the other parties, which Dispute Notice shall state the name of initiating party, briefly state the matter to be mediated or arbitrated, and, if applicable, name a person whom such party has nominated to act as mediator. If, within thirty (30) days after the date of the Dispute Notice, the parties have not agreed among themselves as to the identity of the mediator, then any party may immediately refer this matter for resolution by the American Arbitration Association. The parties shall each pay their pro rata share (according to the number of parties involved in the Dispute) of the costs, deposits and expenses of the mediator. The party initiating the arbitration shall pay the costs, deposits and expenses of such arbitration and the prevailing party shall be awarded its attorneys' fees and expenses in addition to all other relief awarded by the arbitrators, provided that if the arbitrators determine that a party has initiated an arbitration without a reasonable basis for doing so, then the arbitrators shall assess against that party all costs relating to the arbitration, including the attorneys' fees and expenses of the other parties. [signature page follows] 10 IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of the day and year first above written. Oncologix Corporation By: ______________________________ Its: _____________________________ - ---------------------------------- Andrew S. Kennedy, MD 11 EX-10.24 5 bestnet10-24.txt EMPLOYMENT AGREEMENT (GREEN) Exhibit 10.24 EMPLOYMENT AGREEMENT The parties to this Agreement, made as of _______, 2006, are Andrew Green, an individual residing at 3230 Munsey Court, Cumming, GA 30041 ("Employee"), and Oncologix Corporation, a Nevada corporation (the "Company"), which is the wholly owned subsidiary of BestNet Communications Corp., a Nevada corporation They have agreed as follows: 1. RECITALS 1.1 The Company For the purposes of this Agreement, the term, "the Company" shall, where the context indicates, include any present or future parent, subsidiary, or other affiliate of the Company and any successor or assign of the Company. 1.2 Underlying Transaction This Agreement has been executed and delivered pursuant to a certain Merger Agreement dated _____ 2006 among BestNet Communications Corp., JDA Medical Technologies, Inc. (a Maryland corporation referred to as "JDA"), the Company and Employee. Employee understands and acknowledges that his entry into this Agreement and his performance hereunder are material inducements to BestNet Communications Corp. and the Company to enter into and to perform under the Merger Agreement. Simultaneously with the mutual execution and delivery of this Employment Agreement, approximately eight and three-quarters percent (8 3/4%) of the outstanding capital stock of JDA is being acquired from Employee by BestNet Communications Corp through the Company, and Employee is acquiring approximately three and one-eighth percent (3 1/8%) of the outstanding capital stock of BestNet Communications Corp. 1.3 Employee's Relationship and Expertise. Employee is a consultant to JDA. On the basis of his considerable familiarity with and expertise in the medical device industry and governmental regulation of such industry and his knowledge and managerial experience in that industry, the Company desires to engage Employee as an executive officer of the Company and Employee desires to be employed as such with the Company, under its new ownership. In formulating the provisions of this Agreement, the parties have understood and recognized that the Company is engaged in the medical device business ("Business") and that the market for any business of such nature is worldwide and not limited to any particular geographical area. 1 1.4 Purpose of Agreement. Employee and the Company desire to provide for Employee's employment by the Company upon the terms and conditions set forth in this Agreement. 2. TERMS OF EMPLOYMENT 2.1 Employment and Term. The Company will employ Employee, and Employee hereby accepts employment with the Company, for an initial term commencing on the date first shown above, and continuing for a period of two (2) years until and including _____, 2008 (the "Initial Term"), unless such employment is earlier terminated as provided herein. this Agreement shall, however, be renewed automatically, on the same terms for successive one-year terms (the Initial Term and, if the period of employment is so renewed, such additional period(s) of employment are collectively referred to herein as the "Term") unless terminated by written notice given by either party to the other at least 60 days prior to the end of the applicable Term. 2.2 Duties. (a) Employee shall initially serve in the capacity of Chief Executive Officer, reporting to the Board of Directors of the Company. (b) Employee agrees to devote approximately all of his working time, attention and energies to the performance of the business of the Company and any of its affiliates or subsidiaries by which he may be employed; and Employee shall not, except as disclosed on Schedule 2.2 hereto, directly or indirectly, alone or as a member of any partnership or other organization, or as an officer, director or employee of any other corporation, partnership, or other organization, be actively engaged in or concerned with any other duties or pursuits which interfere with the performance of his duties hereunder, or which, if non-interfering, may be, in the reasonable determination of the Board of Directors of the Company, in its sole discretion, inimical or contrary to the best interests of the Company, except duties or pursuits specifically authorized by the Board of Directors of the Company. (c) Employee further agrees to accept election and to serve during all or any part of the Term as a director of the Company without any compensation therefor other than that specified in this Agreement, if elected to such position by the stockholders of the Company. 2.3 Compensation. (a) The Company shall pay Employee, and Employee shall accept, as full compensation for all services rendered hereunder, a salary and the other compensation and benefits provided hereunder. Employee's Base Salary shall be at 2 an annual rate of $180,000, payable in approximately equal installments at such intervals as are consistent with the Company's pay periods for salaried executives and such other benefits and/or allowances as are permitted to him from time to time by the Board of Directors in its sole discretion. Notwithstanding anything herein to the contrary, all payments required to be made hereunder by the Company to Employee, or his estate or beneficiaries, shall be subject to the withholding of such amounts as the Company may reasonably determine it should withhold pursuant to any applicable law or regulation. (b) Employee shall be eligible to participate in retirement, group insurance, medical, dental, vacation and any other plans or programs of substantially similar character as are made generally available to executive employees of the Company. All such benefits are to be provided by the Company, subject to the terms of any welfare or pension plan sponsored by the Company. (c) The Company shall reimburse Employee for all reasonable expenses incurred by him in the performance of his duties pursuant to this Agreement in accordance with the Company's policies concerning the reimbursement of expenses. 2.4 Termination of Employment. (a) Death. Employee's employment hereunder shall terminate in the event of his death. Except for any salary and benefits accrued, vested and unpaid as of the date of any such termination and except for any benefits to which Employee or his heirs or personal representatives may be entitled under and in accordance with the terms of any employee benefit plan, policy or program maintained by the Company, the Company shall be under no further obligation hereunder to Employee or his heirs or personal representatives, and Employee or his heirs and personal representatives no longer shall be entitled to receive any payments or any other rights or benefits under this Agreement. (b) Disability. The Company may terminate Employee's employment hereunder for "Disability" if an independent physician mutually selected by Employee or his representative and the Board of Directors or its designee has determined that Employee is unable to perform the essential functions of his job, with or without accommodation, as contemplated by this Agreement, by reason of a physical or mental illness or other condition continuing for more than sixty (60) consecutive days or for shorter periods aggregating more than one hundred twenty (120) days in any period of twelve (12) consecutive months. In the event of such Disability, Employee shall be entitled to receive any salary and benefits accrued, vested and unpaid as of the date of any such termination and any benefits to which Employee may be entitled under and in accordance with the terms of any Employee benefit plan, policy or program maintained by the Company. In the event of termination for Disability, the Company shall be under no further obligation hereunder to Employee, and Employee no longer shall be entitled to receive any other payments, rights or benefits under this Agreement. 3 (c) Termination by the Company for Cause. The Company may terminate Employee's employment hereunder for "Cause", which for the purposes of this Agreement shall mean any of the following which are susceptible of cure that have not been cured within a reasonable time after notice in writing to the Employee: (i) the willful or material breach by Employee of any of the terms of this Agreement; (ii) Employee's conviction of (or plea of guilty or nolo contendere with respect to) any theft, fraud or crime involving moral turpitude or crime or offense involving money or other property of the Company or any affiliate of the Company or which constitutes a felony in the jurisdiction involved; (iii) the engaging by Employee in willful misconduct which is injurious to the Company or its affiliates, monetarily or otherwise, including without limitation any act or acts that in the reasonable opinion of the Company's Board of Directors, give rise to a material risk of liability for discrimination or sexual or other forms of harassment or other similar liabilities to subordinate employees; (iv) insubordination of a material nature; (v) gross negligence by Employee with respect to his or her services to the Company; (vi) continued and repeated substantive violations of reasonable, specific written directions of the Company's Board of Directors, which directions are consistent with this Agreement and Employee's position as an officer or continued and repeated failure to perform duties assigned by or pursuant to this Agreement or in accordance with the policies of the Company except by reason of disability as hereinabove defined; (vii) any material breach by Employee of the Proprietary Information and Inventions Agreement between the Company and Employee; (viii) any material breach by Employee of his fiduciary duty to the Company, including any misappropriation of a corporate opportunity; or (ix) excessive absenteeism, except as shall have been caused by disability as hereinabove defined. In the event of termination for Cause, the Company shall be under no further obligation hereunder to Employee, and Employee no longer shall be entitled to receive any other payments, rights or benefits under this Agreement. Following any termination for Cause, the Company shall have such rights and remedies as may be available to it for any breach of this Agreement or otherwise. (d) Termination by the Company other than for Cause. The Company may terminate Employee's employment hereunder at any time for any reason other than for Cause; provided that the Company has given Employee ninety (90) days' written notice of termination, which termination shall be effective upon expiration of the notice period. In the event of such termination, (i) Employee shall be entitled to receive payment of a lump sum severance benefit equal to his cumulative salary at the rate in effect at the time of termination for the remainder of the then current Term or for three (3) months, whichever is less, and shall also be entitled to receive any salary and benefits accrued, vested and unpaid as of the date of any such termination and any benefits to which Employee may be entitled under and in accordance with the terms of any Employee benefit plan, policy or program maintained by the Company. Upon Employee's receipt of such severance benefit, salary and benefits, (i) the Company shall be under no further obligation hereunder to Employee and Employee no longer shall be entitled to receive any payments or any other rights or benefits under this Agreement or otherwise. 4 (e) Termination by Employee for Good Reason. Notwithstanding anything herein to the contrary, Employee shall be entitled to terminate his employment hereunder for "Good Reason" without breach of this Agreement. As used herein, "Good Reason" shall mean: (i) any material breach of this Agreement by the Company which has not been cured within a reasonable time after receipt of notice thereof from employee; (ii) the Company becomes insolvent, as evidenced by its inability to meet its obligations in the ordinary course of business; (iii) any reduction in Employee's Salary (other than a proportional reduction affecting executive employees of the Company generally, in which case Employee's salary shall not be reduced below ninety percent (90%) of the salary specified above); or (iv) removal of Employee from a senior position with the Company. In the event of such termination by Employee, Employee shall nonetheless be entitled to receive a severance benefit equal to a salary at the rate in effect at the time of termination for the remainder of the then current Term or for three (3) months, whichever is less. Except for such severance benefit and except for any salary and benefits accrued, vested and unpaid as of the date of such termination, Employee no longer shall be entitled to receive any payments or any other rights or benefits under this Agreement, and the Company shall have no further obligation hereunder or otherwise to Employee following any such termination. 3. PROPRIETARY INFORMATION AND INVENTIONS; COVENANT NOT TO COMPETE 3.1 Company Ownership of Intellectual Property. Employee agrees that all processes, discoveries, formulas, improvements, technologies, designs and inventions ("Inventions"), including new contributions, improvements, ideas and discoveries, whether patentable or not, conceived, developed, invented or made solely by Employee, or jointly with others, during the Employment Term, within the scope of his employment, shall belong to the Company or its affiliates. Employee shall further: (a) promptly disclose such Inventions to the Company; (b) assign to the Company, without additional compensation, all patent and other rights to such Inventions, whether patentable or unpatentable, including all substitute, continuation-in-part and reissue applications, patents of addition and confirmation relative thereto, for the United States of America and foreign countries; (c) sign all papers necessary to carry out the foregoing; and, (d) give testimony in support of inventorship. The Company agrees that Employee owns all right, title and interest in and to any Invention made during his employment by JDA that was made outside normal working hours and outside his scope of employment with JDA. 5 3.2 Covenant Not to Compete. (a) Employee acknowledges that his duties under this Agreement and the services he will provide to the Company are of a special, unique, unusual and extraordinary character, which gives this Agreement particular value to the Company, and that it would be difficult to employ any individual or individuals to replace Employee in the performance of such duties and services. Therefore, in consideration of this Agreement and of the Merger Agreement and his receipt of BESC capital stock as recited above, Employee agrees that during his employment by the Company, and for a period of one (1) year after termination of this Agreement for any reason, including expiration of the term of this Agreement, Employee shall not, directly or indirectly, as owner, partner, joint venturer, stockholder, employee, broker, agent, principal, trustee, corporate officer, director, or in any capacity whatsoever engage in, become financially interested in, be employed by, render any consultation or business advice with respect to, or have any connection with, any business engaged in the design or manufacture of products which, either separately or as part of a system, are used or useful for the treatment of cancer by radiation in any geographic area where, at the time of the termination of his employment, the business of the Company or any of its affiliates was being conducted or was proposed to be conducted; provided, however, that Employee may own any securities of any corporation which is engaged in such business and is publicly owned and traded but in an amount not to exceed at any one time two percent (2%) of any class of stock or securities of such corporation. (b) Employee acknowledges that the Company intends to conduct business on a world-wide basis, that its sales and marketing prospects are for continued expansion into world markets and that, therefore, the territorial and time limitations set forth in Section 3.2(a) are reasonable and properly required for the adequate protection of the business of the Company and its affiliates. In the event any such territorial or time limitation is deemed to be unreasonable by a court of competent jurisdiction, Employee agrees to the reduction of the territorial or time limitation to the area or period which such court deems reasonable. 3.3. Confidentiality. Employee agrees, while employed by the Company and thereafter, directly or indirectly, not to disclose or use to the detriment of the Company or any of its affiliates (the term "affiliates" as used in this Agreement is understood to mean subsidiaries, and parent and brother/sister corporations of the Company) or for the benefit of any other person or firm, any confidential information or trade secrets which are not readily available in the public domain (including, 6 but not limited to, the identity and particular needs of any customer of the Company or any of its affiliates, the methods and techniques of the business of the Company or any of its affiliates, the marketing plans and objectives of the Company or any of its affiliates, the formula of any product of the Company or any of its affiliates) of the Company or any of its affiliates. Such confidential information or trade secrets shall not include information that (i) became known to Employee prior to disclosure by the Company; (ii) is or subsequently becomes generally available to the public without Employee's breach of this Agreement; (C) is obtained by Employee from a third party having a right to disclose such information; or (D) except as limited below, is required by law, governmental order or decree to be disclosed by Employee. Furthermore, Employee shall deliver promptly to the Company upon termination of employment, or at any time the Company may so request, all memoranda, notes, records, reports, manuals, drawings, blueprints, formulas, and other documents (and all copies thereof) relating to the business of the Company or any of its affiliates and all property associated therewith, then possessed or under the control of Employee. 3.4 Remedies for Breach. The parties acknowledge that the legal remedies for breach of the covenants contained in this Article 3 are inadequate, and therefore agree that, in addition to any or all other remedies available to either of them in the event of a breach or a threatened breach of any covenant contained therein, either party (which in the case of the Company, includes any of its affiliates) may: (a) Obtain preliminary and permanent injunctions against any and all such actions, and (b) Seek to recover from the other party monetary damages to the party alleging a breach by the other party arising from such breach or threatened breach and all costs and expenses (including attorneys' fees) incurred by party alleging a breach in enforcement of such covenants. 3.5 Survival. This Article 3 shall survive any termination of Employee's employment hereunder unless otherwise provided herein. 4. GENERAL AND MISCELLANEOUS 4.1. Notices. All notices, requests, consents and other communications required or permitted to be given hereunder shall be in writing and shall be deemed to have been duly given if sent by private overnight mail service (delivery confirmed by such service), registered or certified mail (return receipt requested and received), telecopy (confirmed receipt by return fax from the receiving party) or delivered personally, in each case to the following addresses, or such other address as either party may from time to time specify by notice given to the other party in 7 the manner specified herein. Any notice to be given by the Company hereunder to Employee shall be in proper form if signed by an officer or director (excluding Employee) of the Company giving notice. Any such notices shall be deemed to be given on the date delivered in the manner provided above (including the receipt of confirmation as provided above).Until one party shall advise the other in writing to the contrary, notices shall be deemed delivered: (a) To the Company if delivered to a director or the highest-ranking officer (excluding Employee) of the Company, or, if mailed, certified or registered mail, postage prepaid to: the Company at its principal place of business at2850 Thornhills Avenue, Suite 104, Grand Rapids, MI 49546, Attn: Chief Financial Officer, with a copy to Stephen T. Meadow, Esq., Firetag, Stoss & Dowdell, P.C., 1747 East Morten, Suite 107, Phoenix. Arizona. 85020. (b) To Employee at the address set forth at the head of this Agreement. 4.2. Benefit. This Agreement shall bind and inure to the benefit of Employee and his heirs and personal representatives, and the Company, and its parent, subsidiaries, affiliates, successors and assigns; provided that any transferee, assignee or successor shall be bound by the obligations of the Company hereunder. Employee may not assign any rights or delegate any obligations hereunder without the prior written consent of the Company. 4.3. Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Arizona, without regard to its conflicts of laws principles. The parties consent to the exclusive jurisdiction of the federal and/or state courts sitting in the State of Arizona. 4.4. Severability. The provisions of Paragraphs 3.2 and 3.4 of this Agreement are severable and the invalidity of any one or more of such provisions does not affect or limit the enforceability of the remaining provisions or paragraphs of this Employment Agreement. Furthermore, should any court of last resort determine that any of the provisions of Paragraph 3.2 are unenforceable because unreasonable as to time and geographical area, such provisions shall be interpreted as though such provisions had originally been within the limits that such court finds to be reasonable. 4.5. Headings. The Headings in this Agreement are solely for convenience of reference and shall not affect its interpretation. 8 4.6. No Waiver. No failure on the part of any party hereto at any time to require the performance by any other party of any term of this Employment Agreement shall be taken or held to be a waiver of such term or in any way affect such party's right to enforce such term, and no waiver on the part of either party of any term of this Agreement shall be taken or held to be a waiver of any other term hereof or the breach thereof. 4.7. Entire Agreement; Written Modifications. This instrument contains the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior arrangements or understandings concerning Employee's employment by the Company; all representations, promises and prior or contemporaneous understandings relating to Employee's employment by the Company are merged into and expressed in this instrument. This Agreement shall not be amended, modified or supplemented without the written agreement of the parties at the time of such amendment, modification or supplement. 4.8 Counterparts. This Agreement may be executed in separate counterparts, each of which when so executed shall be an original but all of such counterparts shall together constitute but one and the same instrument. 4.9 Disputes. Any dispute, disagreement, claim or controversy arising out of or relating to this Agreement, any document or instrument delivered pursuant to, in connection with, or simultaneously with this Agreement, or any breach of this Agreement ("Dispute") shall be subject to the negotiation, mediation and arbitration provisions contained herein. Each party to a Dispute shall make every reasonable effort to meet in person and confer for the purpose of resolving the Dispute by good faith negotiation before resorting to any legal proceedings or any other dispute resolution procedure. If the Dispute cannot be settled through negotiation, the parties shall make every reasonable effort to settle the Dispute by mediation by a single mediator qualified to consider the matter in dispute before resorting to any legal proceedings or any other dispute resolution procedure. If a Dispute cannot be settled through mediation, the Dispute shall be finally settled by arbitration to be held in Phoenix, Arizona, under the Rules of Commercial Arbitration of the American Arbitration Association by a panel of three (3) arbitrators qualified to consider the matter in dispute. The arbitrators may grant injunctions or other relief in such dispute or controversy. The decision of a majority of the arbitrators shall be final, conclusive and binding upon the parties to the arbitration; and any party shall be entitled to cause judgment on the decision or award of the arbitrators to be entered in any court of competent jurisdiction. Any party may initiate a mediation or an arbitration by providing written notice of the mediation or 9 arbitration, as the case may be (the "Dispute Notice"), to the other parties, which Dispute Notice shall state the name of initiating party, briefly state the matter to be mediated or arbitrated, and, if applicable, name a person whom such party has nominated to act as mediator. If, within thirty (30) days after the date of the Dispute Notice, the parties have not agreed among themselves as to the identity of the mediator, then any party may immediately refer this matter for resolution by the American Arbitration Association. The parties shall each pay their pro rata share (according to the number of parties involved in the Dispute) of the costs, deposits and expenses of the mediator. The prevailing party in the arbitration shall be awarded its attorneys' fees and expenses in addition to all other relief awarded by the arbitrators. IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of the day and year first above written. ONCOLOGIX CORPORATION, a Nevada corporation By: ____________________________ Its: ____________________________ EMPLOYEE: ------------------------------------- ANDREW GREEN 10 EX-10.25 6 bestnet10-25.txt EMPLOYMENT AGREEMENT (LOWE) Exhibit 10.25 EMPLOYMENT AGREEMENT The parties to this Agreement, made as of ____________, 2006, are Adam Lowe, an individual residing at 1251 Bridgewater Walk, Snellville, GA 30078 ("Employee"), and Oncologix Corporation, a Nevada corporation (the "Company"), which is the wholly owned subsidiary of BestNet Communications Corp., a Nevada corporation They have agreed as follows: 1. RECITALS 1.1 The Company For the purposes of this Agreement, the term, "the Company" shall, where the context indicates, include any present or future parent, subsidiary, or other affiliate of the Company and any successor or assign of the Company. 1.2 Underlying Transaction This Agreement has been executed and delivered pursuant to a certain Merger Agreement dated _____ 2006 among BestNet Communications Corp., JDA Medical Technologies, Inc. (a Maryland corporation referred to as "JDA"), the Company and Employee. Employee understands and acknowledges that his entry into this Agreement and his performance hereunder are material inducements to BestNet Communications Corp. and the Company to enter into and to perform under the Merger Agreement. Simultaneously with the mutual execution and delivery of this Employment Agreement, approximately eight and three-quarters percent (8 3/4%) of the outstanding capital stock of JDA is being acquired from Employee by BestNet Communications Corp through the Company, and Employee is acquiring approximately three and one-eighth percent (3 1/8%) of the outstanding capital stock of BestNet Communications Corp. 1.3 Employee's Relationship and Expertise. Employee is a consultant to JDA. On the basis of his considerable familiarity with and expertise in the medical device industry and governmental regulation of such industry and his knowledge and managerial experience in that industry, the Company desires to engage Employee as an executive officer of the Company and Employee desires to be employed as such with the Company, under its new ownership. In formulating the provisions of this Agreement, the parties have understood and recognized that the Company is engaged in the medical device business ("Business") and that the market for any business of such nature is worldwide and not limited to any particular geographical area. 1 1.4 Purpose of Agreement. Employee and the Company desire to provide for Employee's employment by the Company upon the terms and conditions set forth in this Agreement. 2. TERMS OF EMPLOYMENT 2.1 Employment and Term. The Company will employ Employee, and Employee hereby accepts employment with the Company, for an initial term commencing on the date first shown above, and continuing for a period of two (2) years until and including _____, 2008 (the "Initial Term"), unless such employment is earlier terminated as provided herein. this Agreement shall, however, be renewed automatically, on the same terms for successive one-year terms (the Initial Term and, if the period of employment is so renewed, such additional period(s) of employment are collectively referred to herein as the "Term") unless terminated by written notice given by either party to the other at least 60 days prior to the end of the applicable Term. 2.2 Duties. (a) Employee shall initially serve in the capacity of President and Chief Operating Officer, reporting to the Chief Executive Officer and the Board of Directors of the Company. (b) Employee agrees to devote approximately all of his working time, attention and energies to the performance of the business of the Company and any of its affiliates or subsidiaries by which he may be employed; and Employee shall not, except as disclosed on Schedule 2.2 hereto, directly or indirectly, alone or as a member of any partnership or other organization, or as an officer, director or employee of any other corporation, partnership, or other organization, be actively engaged in or concerned with any other duties or pursuits which interfere with the performance of his duties hereunder, or which, if non-interfering, may be, in the reasonable determination of the Board of Directors of the Company, in its sole discretion, inimical or contrary to the best interests of the Company, except duties or pursuits specifically authorized by the Board of Directors of the Company. (c) Employee further agrees to accept election and to serve during all or any part of the Term as a director of the Company without any compensation therefor other than that specified in this Agreement, if elected to such position by the stockholders of the Company. 2.3 Compensation. (a) The Company shall pay Employee, and Employee shall accept, as full compensation for all services rendered hereunder, a salary and the other compensation and benefits provided hereunder. Employee's Base Salary shall be at an annual rate of $180,000, payable in approximately equal installments at such 2 intervals as are consistent with the Company's pay periods for salaried executives and such other benefits and/or allowances as are permitted to him from time to time by the Board of Directors in its sole discretion. Notwithstanding anything herein to the contrary, all payments required to be made hereunder by the Company to Employee, or his estate or beneficiaries, shall be subject to the withholding of such amounts as the Company may reasonably determine it should withhold pursuant to any applicable law or regulation. (b) Employee shall be eligible to participate in retirement, group insurance, medical, dental, vacation and any other plans or programs of substantially similar character as are made generally available to executive employees of the Company. All such benefits are to be provided by the Company, subject to the terms of any welfare or pension plan sponsored by the Company. (c) The Company shall reimburse Employee for all reasonable expenses incurred by him in the performance of his duties pursuant to this Agreement in accordance with the Company's policies concerning the reimbursement of expenses. 2.4 Termination of Employment. (a) Death. Employee's employment hereunder shall terminate in the event of his death. Except for any salary and benefits accrued, vested and unpaid as of the date of any such termination and except for any benefits to which Employee or his heirs or personal representatives may be entitled under and in accordance with the terms of any employee benefit plan, policy or program maintained by the Company, the Company shall be under no further obligation hereunder to Employee or his heirs or personal representatives, and Employee or his heirs and personal representatives no longer shall be entitled to receive any payments or any other rights or benefits under this Agreement. (b) Disability. The Company may terminate Employee's employment hereunder for "Disability" if an independent physician mutually selected by Employee or his representative and the Board of Directors or its designee has determined that Employee is unable to perform the essential functions of his job, with or without accommodation, as contemplated by this Agreement, by reason of a physical or mental illness or other condition continuing for more than sixty (60) consecutive days or for shorter periods aggregating more than one hundred twenty (120) days in any period of twelve (12) consecutive months. In the event of such Disability, Employee shall be entitled to receive any salary and benefits accrued, vested and unpaid as of the date of any such termination and any benefits to which Employee may be entitled under and in accordance with the terms of any Employee benefit plan, policy or program maintained by the Company. In the event of termination for Disability, the Company shall be under no further obligation hereunder to Employee, and Employee no longer shall be entitled to receive any other payments, rights or benefits under this Agreement. 3 (c) Termination by the Company for Cause. The Company may terminate Employee's employment hereunder for "Cause", which for the purposes of this Agreement shall mean any of the following which are susceptible of cure that have not been cured within a reasonable time after notice in writing to the Employee: (i) the willful or material breach by Employee of any of the terms of this Agreement; (ii) Employee's conviction of (or plea of guilty or nolo contendere with respect to) any theft, fraud or crime involving moral turpitude or crime or offense involving money or other property of the Company or any affiliate of the Company or which constitutes a felony in the jurisdiction involved; (iii) the engaging by Employee in willful misconduct which is injurious to the Company or its affiliates, monetarily or otherwise, including without limitation any act or acts that in the reasonable opinion of the Company's Board of Directors, give rise to a material risk of liability for discrimination or sexual or other forms of harassment or other similar liabilities to subordinate employees; (iv) insubordination of a material nature; (v) gross negligence by Employee with respect to his or her services to the Company; (vi) continued and repeated substantive violations of reasonable, specific written directions of the Company's Board of Directors, which directions are consistent with this Agreement and Employee's position as an officer or continued and repeated failure to perform duties assigned by or pursuant to this Agreement or in accordance with the policies of the Company except by reason of disability as hereinabove defined; (vii) any material breach by Employee of the Proprietary Information and Inventions Agreement between the Company and Employee; (viii) any material breach by Employee of his fiduciary duty to the Company, including any misappropriation of a corporate opportunity; or (ix) excessive absenteeism, except as shall have been caused by disability as hereinabove defined. In the event of termination for Cause, the Company shall be under no further obligation hereunder to Employee, and Employee no longer shall be entitled to receive any other payments, rights or benefits under this Agreement. Following any termination for Cause, the Company shall have such rights and remedies as may be available to it for any breach of this Agreement or otherwise. (d) Termination by the Company other than for Cause. The Company may terminate Employee's employment hereunder at any time for any reason other than for Cause; provided that the Company has given Employee ninety (90) days' written notice of termination, which termination shall be effective upon expiration of the notice period. In the event of such termination, (i) Employee shall be entitled to receive payment of a lump sum severance benefit equal to his cumulative salary at the rate in effect at the time of termination for the remainder of the then current Term or for three (3) months, whichever is less, and shall also be entitled to receive any salary and benefits accrued, vested and unpaid as of the date of any such termination and any benefits to which Employee may be entitled under and in accordance with the terms of any Employee benefit plan, policy or program maintained by the Company. Upon Employee's receipt of such severance benefit, salary and benefits, (i) the Company shall be under no further obligation hereunder to Employee and Employee no longer shall be entitled to receive any payments or any other rights or benefits under this Agreement or otherwise. 4 (e) Termination by Employee for Good Reason. Notwithstanding anything herein to the contrary, Employee shall be entitled to terminate his employment hereunder for "Good Reason" without breach of this Agreement. As used herein, "Good Reason" shall mean: (i) any material breach of this Agreement by the Company which has not been cured within a reasonable time after receipt of notice thereof from employee; (ii) the Company becomes insolvent, as evidenced by its inability to meet its obligations in the ordinary course of business; (iii) any reduction in Employee's Salary (other than a proportional reduction affecting executive employees of the Company generally, in which case Employee's salary shall not be reduced below ninety percent (90%) of the salary specified above); or (iv) removal of Employee from a senior position with the Company. In the event of such termination by Employee, Employee shall nonetheless be entitled to receive a severance benefit equal to a salary at the rate in effect at the time of termination for the remainder of the then current Term or for three (3) months, whichever is less. Except for such severance benefit and except for any salary and benefits accrued, vested and unpaid as of the date of such termination, Employee no longer shall be entitled to receive any payments or any other rights or benefits under this Agreement, and the Company shall have no further obligation hereunder or otherwise to Employee following any such termination. 3. PROPRIETARY INFORMATION AND INVENTIONS; COVENANT NOT TO COMPETE 3.1 Company Ownership of Intellectual Property. Employee agrees that all processes, discoveries, formulas, improvements, technologies, designs and inventions ("Inventions"), including new contributions, improvements, ideas and discoveries, whether patentable or not, conceived, developed, invented or made solely by Employee, or jointly with others, during the Employment Term, within the scope of his employment, shall belong to the Company or its affiliates. Employee shall further: (a) promptly disclose such Inventions to the Company; (b) assign to the Company, without additional compensation, all patent and other rights to such Inventions, whether patentable or unpatentable, including all substitute, continuation-in-part and reissue applications, patents of addition and confirmation relative thereto, for the United States of America and foreign countries; (c) sign all papers necessary to carry out the foregoing; and, (d) give testimony in support of inventorship. The Company agrees that Employee owns all right, title and interest in and to any Invention made during his employment by JDA that was made outside normal working hours and outside his scope of employment with JDA. 5 3.2 Covenant Not to Compete. (a) Employee acknowledges that his duties under this Agreement and the services he will provide to the Company are of a special, unique, unusual and extraordinary character, which gives this Agreement particular value to the Company, and that it would be difficult to employ any individual or individuals to replace Employee in the performance of such duties and services. Therefore, in consideration of this Agreement and of the Merger Agreement and his receipt of BESC capital stock as recited above, Employee agrees that during his employment by the Company, and for a period of one (1) year after termination of this Agreement for any reason, including expiration of the term of this Agreement, Employee shall not, directly or indirectly, as owner, partner, joint venturer, stockholder, employee, broker, agent, principal, trustee, corporate officer, director, or in any capacity whatsoever engage in, become financially interested in, be employed by, render any consultation or business advice with respect to, or have any connection with, any business engaged in the design or manufacture of products which, either separately or as part of a system, are used or useful for the treatment of cancer by radiation in any geographic area where, at the time of the termination of his employment, the business of the Company or any of its affiliates was being conducted or was proposed to be conducted; provided, however, that Employee may own any securities of any corporation which is engaged in such business and is publicly owned and traded but in an amount not to exceed at any one time two percent (2%) of any class of stock or securities of such corporation. (b) Employee acknowledges that the Company intends to conduct business on a world-wide basis, that its sales and marketing prospects are for continued expansion into world markets and that, therefore, the territorial and time limitations set forth in Section 3.2(a) are reasonable and properly required for the adequate protection of the business of the Company and its affiliates. In the event any such territorial or time limitation is deemed to be unreasonable by a court of competent jurisdiction, Employee agrees to the reduction of the territorial or time limitation to the area or period which such court deems reasonable. 3.3. Confidentiality. Employee agrees, while employed by the Company and thereafter, directly or indirectly, not to disclose or use to the detriment of the Company or any of its affiliates (the term "affiliates" as used in this Agreement is understood to mean subsidiaries, and parent and brother/sister corporations of the Company) or for the benefit of any other person or firm, any confidential information or trade secrets which are not readily available in the public domain (including, but not limited to, the identity and particular needs of any customer of the Company or any of its affiliates, the methods and techniques of the business of 6 the Company or any of its affiliates, the marketing plans and objectives of the Company or any of its affiliates, the formula of any product of the Company or any of its affiliates) of the Company or any of its affiliates. Such confidential information or trade secrets shall not include information that (i) became known to Employee prior to disclosure by the Company; (ii) is or subsequently becomes generally available to the public without Employee's breach of this Agreement; (C) is obtained by Employee from a third party having a right to disclose such information; or (D) except as limited below, is required by law, governmental order or decree to be disclosed by Employee. Furthermore, Employee shall deliver promptly to the Company upon termination of employment, or at any time the Company may so request, all memoranda, notes, records, reports, manuals, drawings, blueprints, formulas, and other documents (and all copies thereof) relating to the business of the Company or any of its affiliates and all property associated therewith, then possessed or under the control of Employee. 3.4 Remedies for Breach. The parties acknowledge that the legal remedies for breach of the covenants contained in this Article 3 are inadequate, and therefore agree that, in addition to any or all other remedies available to either of them in the event of a breach or a threatened breach of any covenant contained therein, either party (which in the case of the Company, includes any of its affiliates) may: (a) Obtain preliminary and permanent injunctions against any and all such actions, and (b) Seek to recover from the other party monetary damages to the party alleging a breach by the other party arising from such breach or threatened breach and all costs and expenses (including attorneys' fees) incurred by party alleging a breach in enforcement of such covenants. 3.5 Survival. This Article 3 shall survive any termination of Employee's employment hereunder unless otherwise provided herein. 4. GENERAL AND MISCELLANEOUS 4.1. Notices. All notices, requests, consents and other communications required or permitted to be given hereunder shall be in writing and shall be deemed to have been duly given if sent by private overnight mail service (delivery confirmed by such service), registered or certified mail (return receipt requested and received), telecopy (confirmed receipt by return fax from the receiving party) or delivered 7 personally, in each case to the following addresses, or such other address as either party may from time to time specify by notice given to the other party in the manner specified herein. Any notice to be given by the Company hereunder to Employee shall be in proper form if signed by an officer or director (excluding Employee) of the Company giving notice. Any such notices shall be deemed to be given on the date delivered in the manner provided above (including the receipt of confirmation as provided above).Until one party shall advise the other in writing to the contrary, notices shall be deemed delivered: (a) To the Company if delivered to a director or the highest-ranking officer (excluding Employee) of the Company, or, if mailed, certified or registered mail, postage prepaid to: the Company at its principal place of business at 2850 Thornhills Avenue, Suite 104, Grand Rapids, MI 49546, with a copy to Stephen T. Meadow, Esq., Firetag, Stoss & Dowdell, P.C., 1747 East Morten, Suite 107, Phoenix. Arizona. 85020. (b) To Employee at the address set forth at the head of this Agreement. 4.2. Benefit. This Agreement shall bind and inure to the benefit of Employee and his heirs and personal representatives, and the Company, and its parent, subsidiaries, affiliates, successors and assigns; provided that any transferee, assignee or successor shall be bound by the obligations of the Company hereunder. Employee may not assign any rights or delegate any obligations hereunder without the prior written consent of the Company. 4.3. Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Arizona, without regard to its conflicts of laws principles. The parties consent to the exclusive jurisdiction of the federal and/or state courts sitting in the State of Arizona. 4.4. Severability. The provisions of Paragraphs 3.2 and 3.4 of this Agreement are severable and the invalidity of any one or more of such provisions does not affect or limit the enforceability of the remaining provisions or paragraphs of this Employment Agreement. Furthermore, should any court of last resort determine that any of the provisions of Paragraph 3.2 are unenforceable because unreasonable as to time and geographical area, such provisions shall be interpreted as though such provisions had originally been within the limits that such court finds to be reasonable. 4.5. Headings. The Headings in this Agreement are solely for convenience of reference and shall not affect its interpretation. 8 4.6. No Waiver. No failure on the part of any party hereto at any time to require the performance by any other party of any term of this Employment Agreement shall be taken or held to be a waiver of such term or in any way affect such party's right to enforce such term, and no waiver on the part of either party of any term of this Agreement shall be taken or held to be a waiver of any other term hereof or the breach thereof. 4.7. Entire Agreement; Written Modifications. This instrument contains the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior arrangements or understandings concerning Employee's employment by the Company; all representations, promises and prior or contemporaneous understandings relating to Employee's employment by the Company are merged into and expressed in this instrument. This Agreement shall not be amended, modified or supplemented without the written agreement of the parties at the time of such amendment, modification or supplement. 4.8 Counterparts. This Agreement may be executed in separate counterparts, each of which when so executed shall be an original but all of such counterparts shall together constitute but one and the same instrument. 4.9 Disputes. Any dispute, disagreement, claim or controversy arising out of or relating to this Agreement, any document or instrument delivered pursuant to, in connection with, or simultaneously with this Agreement, or any breach of this Agreement ("Dispute") shall be subject to the negotiation, mediation and arbitration provisions contained herein. Each party to a Dispute shall make every reasonable effort to meet in person and confer for the purpose of resolving the Dispute by good faith negotiation before resorting to any legal proceedings or any other dispute resolution procedure. If the Dispute cannot be settled through negotiation, the parties shall make every reasonable effort to settle the Dispute by mediation by a single mediator qualified to consider the matter in dispute before resorting to any legal proceedings or any other dispute resolution procedure. If a Dispute cannot be settled through mediation, the Dispute shall be finally settled by arbitration to be held in Phoenix, Arizona, under the Rules of Commercial Arbitration of the American Arbitration Association by a panel of three (3) arbitrators qualified to consider the matter in dispute. The arbitrators may grant injunctions or other relief in such dispute or controversy. The decision of a majority of the arbitrators shall be 9 final, conclusive and binding upon the parties to the arbitration; and any party shall be entitled to cause judgment on the decision or award of the arbitrators to be entered in any court of competent jurisdiction. Any party may initiate a mediation or an arbitration by providing written notice of the mediation or arbitration, as the case may be (the "Dispute Notice"), to the other parties, which Dispute Notice shall state the name of initiating party, briefly state the matter to be mediated or arbitrated, and, if applicable, name a person whom such party has nominated to act as mediator. If, within thirty (30) days after the date of the Dispute Notice, the parties have not agreed among themselves as to the identity of the mediator, then any party may immediately refer this matter for resolution by the American Arbitration Association. The parties shall each pay their pro rata share (according to the number of parties involved in the Dispute) of the costs, deposits and expenses of the mediator. The prevailing party in the arbitration shall be awarded its attorneys' fees and expenses in addition to all other relief awarded by the arbitrators. IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of the day and year first above written. ONCOLOGIX CORPORATION, a Nevada corporation By: ____________________________ Its: ____________________________ EMPLOYEE: --------------------------------- ADAM LOWE 10 EX-10.26 7 bestnet10-26.txt EMPLOYMENT AGREEMENT (FRANCO) Exhibit 10.26 CONSULTING AGREEMENT This Consulting Agreement (the "Agreement") is entered into as of July 26, 2006 (the "Effective Date"), by and between Oncologix Corporation, a Nevada corporation having its principal place of business at 2850 Thornhills Ave., Suite C, Grand Rapids, Michigan 49546 ("the Company"), and Jeff Franco whose address is 6501 Autumn Wind Circle, Clarksville, MD 21029 ("Franco"). The parties have agreed as follows. 1. RECITALS 1.1 The Company For the purposes of this Agreement the term "the Company", shall, where the context indicates, include any present or future parent, subsidiary, or other affiliate of the Company to which the Company may assign its rights and duties under this Agreement. 1.2 Underlying Transaction This Consulting Agreement has been executed and delivered pursuant to a certain Agreement of Merger and Plan of Reorganization (the "Merger Agreement") dated July 26, 2006 among the Company, JDA Medical Technologies, Inc., a Maryland corporation ("JDA"), BestNet Communications Corporation, a Nevada corporation ("BestNet"), Franco and certain other parties, pursuant to which JDA was merged into the Company, a wholly owned subsidiary of BestNet. Franco understands and acknowledges that his entry into this Agreement and his performance hereunder are material inducements to the Company and the other parties to enter into and to perform under the Merger Agreement. Simultaneously with the mutual execution and delivery of this Agreement, approximately thirty-two and forty-four hundredths percent (32.44%) of the outstanding capital stock of JDA is being acquired from Franco by the Company, and Franco is acquiring approximately four and eighteen hundredths percent (4.18%) of the outstanding capital stock of BestNet. 1.3 Franco's Relationship and Expertise. Franco has been the Chief Executive Officer of JDA since its inception and desires to furnish the Company with the benefit of the knowledge, experience and contacts in the medical products industry expertise, particularly in relation to the Business that he acquired while acting as such, and the Company desires to make use of the same. In formulating the provisions of this Agreement, the parties have understood and recognized that the Company is engaged in the medical device business and that the market for any business of such nature is worldwide and not limited to any particular geographical area. The "Business" shall mean products and services in connection with Microarterial Brachytherapy or the use of radio-labeled microspheres in the treatment of soft tissue cancers. 1 1.4 Franco's Prior Obligations; Reservations. The Company acknowledges that Franco, prior to execution of this Agreement, has taken on employment, consulting, and other responsibilities to Genisent International, Inc., which provides medical device related products and services outside of the Business ("Genisent"). No obligation herein shall be interpreted to limit in any way the ability of Franco to carry out his current or future responsibilities to Genisent, as it currently exists or as it may exist in the future, resulting, for example, from a merger or acquisition of Genisent; provided however, that Franco shall not personally provide any services related to the Business to Genisent or its successor. This Agreement shall not restrict in any way Franco's ability to provide consulting or other services outside of the Business. 2. TERMS OF AGREEMENT 2.1 Engagement The Company hereby engages Franco, pursuant to the provisions of this Agreement, as an independent contractor and not as an employee, to render diligent and expert advisory and consulting services in connection with the Business to the Company as the Company may from time to time reasonably request, for no more than thirty-two (32) hours each month (the "Services"), and Franco hereby accepts such engagement, for a period commencing on the Effective Date and ending on the second anniversary of the Effective Date (the "Term"). Franco agrees that he will not have any authority to bind or act on behalf of the Company. Franco shall at all times be an independent contractor hereunder, rather than an agent, co-venturer, employee or representative of the Company. Neither Franco nor his employees will be considered by reason of the provisions of this Agreement or otherwise as being employees of the Company or as being entitled to participate in any health insurance, medical, pension, bonus or similar employee benefit plans sponsored by the Company for its employees. Franco shall report all earnings under this Agreement in the manner appropriate to his status as an independent contractor and shall file all necessary reports and pay all taxes with respect to such payments. Subject to the provisions of Section 1.4 herein, Franco may engage directly or indirectly in other businesses, ventures and engagements that are not competitive with the Business. 2.2 Compensation. (a) In full payment for the Services contemplated under this Agreement, the Company shall pay Franco a fee of Six Thousand Two Hundred Fifty Dollars ($6,250) each month in consideration of his furnishing the Services to the Company and otherwise performing as required under this Agreement. 2 (b) The Company will reimburse Franco for all reasonable out-of-pocket expenses incurred by him in connection with his performance under this Agreement with prior approval of the Company's Chief Executive Officer or his designee, upon completion of an expense report reasonably satisfactory to the Company. 2.3 Confidential Information. (a) Agreement. Franco acknowledges that the information, observations and data obtained by him while engaged by the Company (including those obtained by him prior to the date of this Agreement with a duty not to disclose) concerning the Company that are not generally available to the public other than as a result of a breach of this Agreement by Franco, including without limitation, the identity and particular needs of any customer of the Company or any of its affiliates, the methods and techniques of any of the businesses of the Company or any of its affiliates, the marketing plans and objectives of the Company or any of its affiliates, the formula of any product of the Company or any of its affiliates) of the Company or any of its affiliates ("Confidential Information") are the property of the Company. During the Term and for a period of two (2) years thereafter, Franco agrees that neither he nor his employees, agents, affiliates or relatives will disclose to any unauthorized person, or use for his or their own account, any Confidential Information without the prior written consent of the Company, unless and to the extent that such matters (i) become generally known to and available for use by the public other than as a result of Franco's acts or omissions to act, (ii) are independently developed by Franco or his employees without use of the Confidential Information; or (iii) is obtained by Franco or his employees from a third party having a right to disclose such information. Notwithstanding the foregoing, if required pursuant to judicial or administrative subpoena or process or other legal obligation to disclose any Confidential Information, Franco may make such disclosure only to the extent required, in the opinion of counsel for Franco, to comply with such subpoena, process or other obligation. Franco shall, as promptly as possible and in any event prior to the making of such disclosure, notify the Company of any such subpoena, process or obligation and shall cooperate with the Company in seeking a protective order or other means of protecting the confidentiality of the Confidential Information. (b) Specific Performance. The parties hereto agree that money damages would be an inadequate remedy for any breach of any of the provisions of this Section 2.3 of this Agreement. If Franco, or his employees, agents or relatives breach or threaten to breach any provision of such section, the Company or its successors or assigns may, in addition to together available rights and remedies, apply to any court for injunctive relief to enforce, or prevent any violation of, any of the provisions of such sections (without posting a bond or other security). 2.4 Company Ownership of Intellectual Property. Franco agrees that all processes, discoveries, formulas, improvements, technologies, designs and inventions ("Inventions"), including new contributions, improvements, ideas and discoveries, whether patentable or not, 3 (i) within the scope of the Business as conducted from time to time during the period of Franco's engagement hereunder and (ii) within the scope of the Business during his employment as an officer of JDA prior to such engagement, conceived, developed, invented or made solely by Franco, or jointly with others, whether on the Company's premises or through the use of its facilities or not, shall belong to the Company or its affiliates; provided however, that this provision shall specifically exclude any Inventions in connection with the employment, consulting or other obligations of Franco under Section 1.4 herein. Franco shall further: (a) promptly disclose such Inventions to the Company; (b) assign to the Company, without additional compensation, all patent and other rights to such Inventions, whether patentable or unpatentable, including all substitute, continuation-in-part and reissue applications, patents of addition and confirmation relative thereto, for the United States of America and foreign countries; (c) sign all papers to carry out the foregoing as reasonably requested by the Company; and (d) give testimony in support of inventorship as reasonably requested by the Company, at the sole cost and expenses of the Company. Franco agrees not to assert any rights to any Invention as having been made or acquired prior to the date of this Agreement, except for Inventions, if any, disclosed to the Company in writing prior to the date hereof. 2.5 Covenant Not to Compete. Subject to the provisions of Section 1.4 herein, Franco agrees that during the engagement hereunder and for two (2) years from the termination of his engagement hereunder by with the Company or any of its affiliates (the "Non-Competition Term"), he will not, either individually or in a partnership, or in conjunction with any person or persons, firms, association, syndicate, corporation or other entity or venture, as principal, partner, shareholder, director, officer, consultant, employee, agent or in any manner whatsoever, either directly or indirectly, (a) provide, on behalf of a competitor of the Company or of any of its affiliates, products or services that compete with the Business to any customer or client, or prospective customer or client, of the Company or any of its affiliates; or (b) engage in or become interested in or advise any business, person, firm, association, syndicate, corporation or other entity or venture engaged throughout the world, in any business similar to the Business; provided that beneficial ownership of less than five percent (5%) of the capital stock of such venture, with no participation in its management, shall not be considered to be a violation of this provision. 2.6 Non-Solicitation. Franco shall not, while engaged by the Company and thereafter for a period of two (2) years, directly or indirectly, induce, advise, recommend to, or participate in any effort to induce, any officer of the Company or any of its affiliates to leave the employ of the Company. Furthermore, Franco shall deliver promptly to the Company upon termination of his engagement, or at any time the Company may so reasonably request, all memoranda, notes, records, reports, manuals, drawings, blueprints, formulas, and other documents (and all copies thereof) relating to the Business and all property associated therewith, then possessed or under the control of Franco. 4 2.7 Remedies for Breach. Franco acknowledges that the legal remedies for breach of the covenants contained in this Article 2 are inadequate, and therefore agrees that, in addition to any or all other remedies available to the Company and its affiliates in the event of a breach or a threatened breach of any covenant contained therein, the Company of any of its affiliates may: (a) obtain preliminary and permanent injunctions against any and all such actions, and (b) seek to recover from Franco monetary damages to the Company or its affiliates arising from such breach or threatened breach and all costs and expenses (including reasonable attorneys' fees) incurred by the Company or any of its affiliates in enforcement of such covenants. 3. GENERAL AND MISCELLANNEOUS 3.1 Severability. Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or any other jurisdiction but this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein. 3.2 Survival. Sections 2.3, 2.4, 2.5, 2.6 and 2.7 shall survive and continue in full force and effect in accordance with its terms notwithstanding any termination of this Agreement. 3.3 Entire Agreement. This Agreement and those documents expressly referred to herein embody the complete agreement and understanding among the parties and supersede and preempt any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way. This Agreement may be amended or waived only with the prior written consent of the Company and Franco. 5 3.4 Assignment. Franco may not assign this Agreement. The Company may not assign this Agreement without the prior written consent of Franco except to an affiliate of the Company or in connection with a transfer of all or substantially all of the assets of the Company in which case, the provisions of this Agreement shall be binding upon and inure to the benefit of the corporation or entity to which such assets shall be transferred. 3.5 Counterparts. This Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute one and the same instrument. 3.6 Headings. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement or of any term hereof. 3.7 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Arizona, without regard to principles of conflict of laws. The parties agree to submit to the exclusive jurisdiction and venue of the state and/or federal courts of the State of Arizona. 3.8 Disputes. Any dispute, disagreement, claim or controversy arising out of or relating to this Agreement, any document or instrument delivered pursuant to, in connection with, or simultaneously with this Agreement, or any breach of this Agreement ("Dispute") shall be subject to the negotiation, mediation and arbitration provisions contained herein. Each party to a Dispute shall make every reasonable effort to meet in person and confer for the purpose of resolving the Dispute by good faith negotiation before resorting to any legal proceedings or any other dispute resolution procedure. If the Dispute cannot be settled through negotiation, the parties shall make every reasonable effort to settle the Dispute by mediation by a single mediator qualified to consider the matter in dispute before resorting to any legal proceedings or any other dispute resolution procedure. If a Dispute cannot be settled through mediation, the Dispute shall be finally settled by arbitration to be held in Phoenix, Arizona, under the Rules of Commercial Arbitration of the American Arbitration Association by a panel of three (3) arbitrators qualified to consider the matter in dispute. The arbitrators may grant injunctions or other relief in such 6 dispute or controversy. The decision of a majority of the arbitrators shall be final, conclusive and binding upon the parties to the arbitration; and any party shall be entitled to cause judgment on the decision or award of the arbitrators to be entered in any court of competent jurisdiction. Any party may initiate a mediation or an arbitration by providing written notice of the mediation or arbitration, as the case may be (the "Dispute Notice"), to the other parties, which Dispute Notice shall state the name of initiating party, briefly state the matter to be mediated or arbitrated, and, if applicable, name a person whom such party has nominated to act as mediator. If, within thirty (30) days after the date of the Dispute Notice, the parties have not agreed among themselves as to the identity of the mediator, then any party may immediately refer this matter for resolution by the American Arbitration Association. The parties shall each pay their pro rata share (according to the number of parties involved in the Dispute) of the costs, deposits and expenses of the mediator. The party initiating the arbitration shall pay the costs, deposits and expenses of such arbitration and the prevailing party shall be awarded its attorneys' fees and expenses in addition to all other relief awarded by the arbitrators, provided that if the arbitrators determine that a party has initiated an arbitration without a reasonable basis for doing so, then the arbitrators shall assess against that party all costs relating to the arbitration, including the attorneys' fees and expenses of the other parties. 3.9 Notices. All notices, requests, consents and other communications required or permitted to be given hereunder shall be in writing and shall be deemed to have been duly given if sent by private overnight mail service (delivery confirmed by such service), registered or certified mail (return receipt requested and received), or delivered personally, in each case to the following addresses, or such other address as either party may from time to time specify by notice given to the other party in the manner specified herein. Any notice to be given by the Company hereunder to Franco shall be in proper form if signed by an officer or director of the Company giving notice. Any such notices shall be deemed to be given on the date delivered in the manner provided above (including the receipt of confirmation as provided above). Until one party shall advise the other in writing to the contrary, notices shall be deemed delivered: (a) to the Company, if delivered to a director or the highest-ranking officer of the Company, or, if mailed, certified or registered mail, postage prepaid to: the Company at its principal place of business at 2850 Thornhills Ave., Suite C, Grand Rapids, Michigan 49546, with a copy to Stephen T. Meadow, Esq., Firetag, Stoss & Dowdell, P.C., 1747 East Morten, Suite 107, Phoenix. Arizona. 8020 (b) To Franco, if delivered to the address set forth at the head of this Agreement, with a copy to Bruce H. Jurist, Esq., Hodes, Ulman, Pessin & Katz, P.A., 901 Dulaney Valley Road, Suite 400, Towson, Maryland 21204. [signature page follows] 7 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date set forth above. Oncologix Corporation By: _______________________ Its: ______________________ - --------------------------- Jeff Franco 8
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