Document:

Exhibit 10.2

                                    EXHIBIT C
                          REGISTRATION RIGHTS AGREEMENT

     This Registration Rights Agreement (the "Agreement"), dated as of March 30,
2003,  is  entered  into by and among  BestNet  Communications  Corp.,  a Nevada
corporation (the "Company"), and the undersigned investors (each individually an
"Investor" and collectively  the  "Investors").  Capitalized  terms used but not
otherwise  defined herein shall have the meaning assigning to such terms in that
certain Unit  Purchase  Agreement by and among the Company and the  Investors of
even date herewith.

     WHEREAS, the Company has entered into a Unit Purchase Agreement dated March
30, 2003, by and among the Company and the Investors (the "Purchase  Agreement")
pursuant to which the Investors agreed to purchase from the Company a portion of
the  4,500,000  units  (collectively,  the  "Units" and  individually  a "Unit")
offered  by the  Company,  at a  purchase  price  per Unit of  $0.30,  each unit
consisting of the following  securities:  (a) three shares of Common Stock,  par
value $.001 per share,  of the Company  (the "Common  Stock");  (b) one share of
Series A  Preferred  Stock,  par value  $.001 per  share,  of the  Company  (the
"Preferred Stock"); and (c) three-year warrants (the "Warrants") to purchase one
share of Common Stock at a per share exercise price of $0.30;

     WHEREAS, the Preferred Stock is convertible into two shares of Common Stock
of the Company,  pursuant to the terms of a Certificate of Designations attached
as Exhibit A to the Purchase Agreement; and

     WHEREAS,  pursuant to the terms of the Purchase Agreement,  the Company has
agreed to provide the Investors with certain registration rights with respect to
the Units issued  pursuant to the Purchase  Agreement  and the  securities  that
comprise the Units.

     NOW,  THEREFORE,  in  consideration  of the mutual  promises and  covenants
contained in this Agreement, the parties hereto agree as follows:

1. REGISTRATION RIGHTS.

     a. DEMAND  REGISTRATION.  One or more  Investors  holding a majority of the
Units (the "Initiating  Investors") may elect to exercise the right to request a
Demand  Registration  pursuant to this Section 1 by furnishing  the Company with
written  notice  thereof (a "Demand  Notice").  Upon receipt by the Company of a
Demand  Notice,  the Company shall  promptly  notify each other  Investor of the
Demand  Notice  received by the  Company.  Upon  receipt of such notice from the
Company  (the  "Company  Notice"),  each such  Investor  may give the  Company a
written request to register all or some of such Investor's Units and Registrable
Shares in the registration  described in the Company Notice,  provided that such
written  request is received within twenty (20) days after the date on which the
Company  Notice is given (with such request  stating (i) the amount of Units and
Registrable  Shares to be  included,  (ii) such  Investor's  intended  method of
distribution  of  such  Units  and  Registrable   Shares  and  (iii)  any  other
information   reasonably  requested  by  the  Company  to  properly  effect  the
registration of such Units and Registrable Shares). The Company shall as soon as
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practicable after the date on which the Company Notice is given, but in no event
less than 30 days from  receipt of the  Company  Notice and no more than 45 days
from receipt by the Company of the Demand  Notice,  file with the Commission and
use its  commercially  reasonable  best  efforts  to  promptly  cause to  become
effective  no later than 120 days from  filing a  Registration  Statement  which
shall cover the Units and Registrable  Shares specified in the Demand Notice and
in any written  request from any other  Investor  received by the Company within
twenty  (20)  days from the date on which the  Unconditional  Company  Notice is
received. In the event the Company is unable to file a Registration Statement to
register  all of the  Registrable  Shares  as a result  of the  failure  to have
sufficient  authorized  capital stock with respect to the shares of Common Stock
issuable  upon  conversion  of the  Preferred  Stock  and upon  exercise  of the
Warrants, then one or more Investors holding a majority of the Units may request
a second  Demand  Registration  with  respect to such  unregistered  Registrable
Shares in the same manner as described in this Section 1(a).

     b.  INCLUSION  OF  OTHER   SECURITIES  IN   REGISTRATION   STATEMENT.   The
Registration Statement filed pursuant to the request of the Initiating Investors
may,  subject to the provisions of SECTION 1(c) below,  include other securities
of the Company  which are held by persons who, by virtue of  agreements  entered
into with the Company  prior or subsequent  to the date of this  Agreement,  are
entitled to include their securities in such registration.

     If,  by  virtue  of  agreements  with the  Company,  the  holders  of other
securities  of the Company  (the "Other  Holders")  request and are  entitled to
inclusion in such  registration,  the Company shall, on behalf of all Investors,
offer to the Other  Holders  that  such  other  securities  be  included  in the
underwriting  and may  condition  such  offer on the  acceptance  by such  Other
Holders of the further provisions of this Section 1.

     c. REGISTRATION  LIMITATION.  Except as otherwise provided in SECTION 1(a),
the Company shall be obligated to register  Investor  stock  pursuant to SECTION
1(a) on one occasion only,  provided,  however,  that such  obligation  shall be
deemed  satisfied  only when a  registration  statement  covering  all shares of
Investor  stock  specified  in  notices  received  as  aforesaid,  for  sale  in
accordance with the method of disposition  specified by the requesting  holders,
shall have (i) become  effective,  or (ii) been  withdrawn at the request of the
Investors  requesting  such  registration  (other  than  solely  as a result  of
material  information  concerning  the  business or  financial  condition of the
Company  which  is made  known  to  such  Investors  after  the  date  on  which
registration was requested).  In addition,  the Company shall not be required to
effect any  registration  within 180 days after the effective  date of any other
Registration Statement of the Company.

     d. COMPANY'S RIGHT TO DELAY REGISTRATION.  If at the time of any request to
register Units and  Registrable  Shares pursuant to SECTION 1(a), the Company is
engaged  or has fixed  plans to engage  within 30 days of the time of the Demand
Notice in a registered  public  offering as to which the  Investors  may include
Units and  Registrable  Shares,  then the Company may at its option  direct that
such  request  be  delayed  for a period  not in  excess  of 120  days  from the
effective  date of such  offering or 120 days from the date of  commencement  of
such other material activity,  as the case may be, such right to delay a request
to be exercised by the Company not more than once.

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2.  REGISTRATION  PROCEDURES.  If and  whenever  the  Company is required by the
provisions of SECTION 1 of this Agreement to use its reasonable  best efforts to
effect the  registration  of any of the Units and  Registrable  Shares under the
Securities Act, the Company shall:

     a.  prepare and file with the  Commission  a  Registration  Statement  with
respect to such Units and Registrable Shares and use its reasonable best efforts
to cause that Registration Statement to become and remain effective;

     b. as  expeditiously  as possible  prepare and file with the Commission any
amendments  and  supplements  to the  Registration  Statement and the prospectus
included  in the  Registration  Statement  as  may  be  necessary  to  keep  the
Registration Statement effective,  in the case of a firm commitment underwritten
public  offering,  until each  underwriter has completed the distribution of all
securities  purchased by it but not more than one year after the effective  date
and,  in the case of any other  offering,  until the  earlier of the sale of all
Units and  Registrable  Shares  covered  thereby or one year after the effective
date thereof;

     c. as  expeditiously  as possible  furnish to each  Selling  Investor  such
reasonable  numbers  of  copies  of  the  prospectus,  including  a  preliminary
prospectus,  in conformity with the requirements of the Securities Act, and such
other  documents  as the Selling  Investor  may  reasonably  request in order to
facilitate  the public sale or other  disposition  of the Units and  Registrable
Shares owned by the selling Investor;

     d. as expeditiously as possible use its reasonable best efforts to register
or  qualify  the  Units  and  Registrable  Shares  covered  by the  Registration
Statement  under the  securities  or blue sky laws of such states as the Selling
Investors  shall  reasonably  request,  and do any and all other acts and things
that may be necessary or desirable to enable the Selling Investors to consummate
the public sale or other disposition in such states of the Units and Registrable
Shares owned by the selling Investor; and

     e. keep the  Registration  Statement  effective  for a period ending on the
earlier of the sale by the Selling Investors of all Units and Registrable Shares
covered by the Registration Statement or one year from the effective date of the
Registration Statement.

     If the Company  has  delivered  preliminary  or final  prospectuses  to the
Selling  Investors and after having done so the  prospectus is amended to comply
with the  requirements  of the Securities Act, the Company shall promptly notify
the Selling Investors and, if requested, the Selling Investors shall immediately
cease making offers of Units and Registrable  Shares and return all prospectuses
to the  Company  at the  Company's  sole cost and  expense.  The  Company  shall
promptly provide the Selling Investors with revised  prospectuses and, following
receipt of the  revised  prospectuses,  the Selling  Investors  shall be free to
resume making offers of the Units and Registrable Shares.

3. COMPANY REGISTRATION.

     a. "PIGGY-BACK"  RIGHTS. If the Company proposes to register (including for
this purpose a registration effected by the Company for its stockholders) any of
its stock or other  securities  under the Securities Act, in connection with the
public offering of such securities, on a registration form that would also allow

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the registration of the Units and Registrable  Shares (other than a registration
relating  solely to the sale of  securities to  participants  in a Company stock
plan, a registration  relating to corporate  reorganization or other transaction
under Rule 145 of the Securities Act, or a registration in which the only Common
Stock  being  registered  is  Common  Stock  issuable  upon  conversion  of debt
securities which are also being registered),  the Company shall, prior to filing
the  registration  statement  with the  Commission,  promptly give each Investor
written notice of such proposed registration (the "Registration  Notice").  Upon
receipt of such notice from the Company, each such Investor may give the Company
a written  request  (the  "Piggy-back  Request")  to include all or some of such
Investor's  Units and Registrable  Shares in the  registration  described in the
Registration  Notice,  provided  that such  written  request is received  within
twenty (20) days after the date on which the Registration  Notice is given (with
such  request  stating  (i) the  amount  of Units and  Registrable  Shares to be
included, (ii) such Investor's intended method of distribution of such Units and
Registrable Shares and (iii) any other information  reasonably  requested by the
Company to  properly  effect  the  registration  of such  Units and  Registrable
Shares).  Upon the timely receipt by the Company of the Piggy-back Request,  the
Company  shall,  subject to the  provisions of Section 3(c),  use its good faith
best  efforts  to cause to be  registered  under  the Act all of the  Units  and
Registrable Shares that each such Investor has requested.

     b. RIGHT TO  TERMINATE  REGISTRATION.  The Company  shall have the right to
terminate  or withdraw  any  registration  initiated  by it under this SECTION 3
prior to the  effectiveness of such  registration  whether or not any Holder has
elected  to  include  securities  in such  registration.  The  expenses  of such
withdrawn  registration shall be borne by the Company in accordance with SECTION
4 hereof.

     c. UNDERWRITING REQUIREMENTS.  In connection with any offering involving an
underwriting of shares of the Company's  capital stock, the Company shall not be
required  under this SECTION 3 to include any of the  Investors'  shares in such
underwriting  unless  they accept the terms of the  underwriting  as agreed upon
between  the Company and the  underwriters  selected by it (or by other  persons
entitled  to  select  the  underwriters)  and to  enter  into  any  underwriting
agreement in customary form with an underwriter or underwriters  selected by the
Company,  and then only in such quantity as the underwriters  determine will not
jeopardize  the success of the offering by the  Company.  If the total amount of
securities,  including Units and Registrable Shares, requested to be included in
such offering exceeds the amount of securities that the  underwriters  determine
is compatible  with the success of the offering,  then the Units and Registrable
Shares  of the  Investors  and the  securities  held by any  other  stockholders
distributing  their securities  through such underwriting shall be excluded from
the  underwriting  by reason of the  underwriter's  marketing  limitation to the
extent so required by such  limitation  as  follows:  the Units and  Registrable
Shares held by the  Investors  and such other  stockholders  distributing  their
securities through such underwriting shall be excluded in a manner such that the
number of any Units and Registrable Shares and such other securities that may be
included by such holders are allocated in  proportion,  as nearly as practicable
to the amounts of registrable  securities held by such holders.  For purposes of
apportionment, for any selling stockholder that is an Investor holding Units and
Registrable  Shares,  and that is a partnership  or  corporation,  the partners,
retired  partners and  stockholders of such Investor,  or the estates and family
members of any such partners and retired partners and any trusts for the benefit
of any of the foregoing persons shall be deemed to be a single Investor, and any
pro rata  reduction  with  respect  to such  Investor  shall  be based  upon the

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aggregate  amount  of Units and  Registrable  Shares  owned by all such  related
entities and individuals.

4. ALLOCATION OF EXPENSES. The Company will pay all Registration Expenses of all
registrations  under this  Agreement.  For  purposes of this SECTION 4, the term
"Registration Expenses" shall mean all expenses to be incurred by the Company in
complying with this Agreement,  including,  without limitation, all registration
and filing fees, exchange listing fees, printing and shipping expenses, fees and
expenses  of  counsel  for the  Company,  state  blue  sky  fees  and  expenses.
Notwithstanding the foregoing, "Registration Expenses" shall not include any and
all underwriting discounts and selling commissions applicable to the sale of the
Units and the Registrable Securities.

5. INDEMNIFICATION AND CONTRIBUTION.

     a. In the event of any  registration  of any of the  Units and  Registrable
Shares under the  Securities  Act pursuant to this  Agreement,  the Company will
indemnify and hold harmless the Selling  Investor of such Units and  Registrable
Shares,  each underwriter of such Units and Registrable Shares, if any, and each
other person,  if any, who controls such Selling Investor or underwriter  within
the  meaning of the  Securities  Act or the  Exchange  Act  against  any losses,
claims,  damages  or  liabilities,  joint  or  several,  to which  such  Selling
Investor,  underwriter  or  controlling  person  may  become  subject  under the
Securities  Act,  the  Exchange  Act,  state  securities  or  blue  sky  laws or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect  thereof) arise out of or are based upon any untrue statement or alleged
untrue  statement of any material fact contained in any  Registration  Statement
under  which  such  Units  and  Registrable  Shares  were  registered  under the
Securities Act, any preliminary  prospectus or final prospectus contained in the
Registration  Statement,  or any amendment or  supplement  to such  Registration
Statement, or arise out of or are based upon the omission or alleged omission to
state a material  fact  required to be stated  therein or  necessary to make the
statements  therein,  in light of the circumstances  under which they were made,
not misleading;  provided,  however,  that the Company will not be liable in any
such case to the extent that any such loss,  claim,  damage or liability  arises
out  of or is  based  upon  any  untrue  statement  or  omission  made  in  such
Registration Statement,  preliminary prospectus or final prospectus, or any such
amendment or supplement, (i) in reliance upon and in conformity with information
furnished to the Company,  in writing, by or on behalf of such Selling Investor,
underwriter  or  controlling  person  specifically  for  use in the  preparation
thereof  or (ii)  which  untrue  statement  was  corrected  by the  Company  and
delivered  to the  Selling  Investor  prior to  consummation  of the sale by the
Selling Investor resulting in such loss, claim, damage or liability.

     b. In the event of any  registration  of any of the  Units and  Registrable
Shares  under the  Securities  Act  pursuant  to this  Agreement,  each  Selling
Investor  of Units and  Registrable  Shares,  severally  and not  jointly,  will
indemnify and hold harmless the Company,  each of its directors and officers and
each  underwriter (if any) and each person,  if any, who controls the Company or
any such  underwriter  within the meaning of the  Securities Act or the Exchange
Act, against any losses,  claims,  damages or liabilities,  joint or several, to
which the Company,  such  directors and  officers,  underwriter  or  controlling
person  may  become  subject  under the  Securities  Act,  Exchange  Act,  state
securities  or blue sky  laws or  otherwise,  insofar  as such  losses,  claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any  untrue  statement  or alleged  untrue  statement  of a  material  fact

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contained in any  Registration  Statement under which such Units and Registrable
Shares were registered  under the Securities Act, any preliminary  prospectus or
final prospectus  contained in the Registration  Statement,  or any amendment or
supplement to the Registration  Statement, or arise out of or are based upon any
omission  or alleged  omission  to state a material  fact  required to be stated
therein  or  necessary  to  make  the  statements   therein,  in  light  of  the
circumstances  under which they were made,  not  misleading,  provided that such
statement  or  omission  was  made  in  reliance  upon  and in  conformity  with
information  relating  to such  Selling  Investor  furnished  in  writing to the
Company  by and on  behalf  of such  Selling  Investor  specifically  for use in
connection  with the  preparation of such  Registration  Statement,  prospectus,
amendment or supplement; PROVIDED, HOWEVER, that the obligations of such Selling
Investors  hereunder shall be limited to an amount equal to the proceeds to each
Selling  Investor of Units and  Registrable  Shares sold in connection with such
registration.

     c.  Each  party  entitled  to  indemnification  under  this  SECTION 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,  HOWEVER,  that  counsel  for  the
Indemnifying  Party,  who shall conduct the defense of such claim or litigation,
shall  be  approved  by the  Indemnified  Party  (whose  approval  shall  not be
unreasonably  withheld);  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, except to the extent
that such delay prejudices such  indemnifying  party. The Indemnified  Party may
participate in such defense at such party's expense; PROVIDED, HOWEVER, that the
Indemnifying  Party shall pay such expense if representation of such Indemnified
Party by the counsel retained by the  Indemnifying  Party would be inappropriate
due to actual or potential differing interests between the Indemnified Party and
any other party represented by such counsel in such proceeding.  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 of such claim or litigation,  and no Indemnified  Party
shall  consent  to entry of any  judgment  or settle  such  claim or  litigation
without the prior written consent of the Indemnifying Party.

     d. If the indemnification  provided for under this SECTION 5 is unavailable
to or insufficient to hold the  Indemnified  Party harmless under  subparagraphs
(a) or (b) above in respect of any losses,  claims,  damages or liabilities  (or
actions in respect  thereof)  referred to therein  for any reason  other than as
specified  therein,  then the Indemnifying  Party shall contribute to the amount
paid or payable by such  Indemnified  Party as a result of such losses,  claims,
damages or liabilities (or actions in respect thereof) (i) in such proportion as
is appropriate  to reflect the relative  benefits  received by the  Indemnifying
Party on the one hand and such  Indemnified  Party on the other from the subject
offering or distribution or (ii) if the allocation  provided by clause (i) above
is not permitted by applicable  law, in such  proportion  as is  appropriate  to
reflect not only the relative  benefits referred to in clause (i) above but also
the  relative  fault  of  the  Indemnifying  Party  on the  one  hand  and  such
Indemnified  Party on the other in connection  with the  statements or omissions
which resulted in such losses,  claims,  damages or  liabilities  (or actions in

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respect  thereof) as well as any other relevant  equitable  considerations.  The
relative  benefits  received by the  Indemnifying  Party on the one hand and the
Indemnified Party on the other hand shall be deemed to be in the same proportion
as the net  proceeds of the  offering  or other  distribution  (after  deducting
expenses)  received by the  Indemnifying  Party bears to the net proceeds of the
offering  or other  distribution  (after  deducting  expenses)  received  by the
Indemnified Party. The relative fault shall be determined by reference to, among
other things,  whether the untrue or alleged untrue statement of a material fact
or the  omission  or  alleged  omission  to state a  material  fact  relates  to
information  supplied  by (or  omitted  to be  supplied  by) the  Company or the
Selling Investor, the parties' relative intent, knowledge, access to information
and  opportunity to correct or prevent such statement or omission,  the relative
benefits  received  by each  party  from the sale of the Units  and  Registrable
Shares   and  any  other   equitable   considerations   appropriate   under  the
circumstances. The amount paid or payable by an Indemnified Party as a result of
the losses,  claims,  damages or  liabilities  (or  actions in respect  thereof)
referred to above in this subsection (d) shall be deemed to include any legal or
other expenses  reasonably incurred by such Indemnified Party in connection with
investigating  or  defending  any such  action  or claim.  No  person  guilty of
fraudulent  misrepresentation  (within  the  meaning  of  SECTION  11(f)  of the
Securities  Act) shall be entitled to  contribution  from any person who was not
guilty of such fraudulent misrepresentation.

6. INFORMATION BY INVESTOR. Each Investor including Units and Registrable Shares
in any registration shall furnish to the Company such information regarding such
Investor  and the  distribution  proposed  by such  Investor  as the Company may
reasonably  request in writing and as shall be required in  connection  with any
registration,  qualification  or compliance  referred to in this Agreement.  The
Investors shall perform all acts reasonably necessary to effect the registration
of the Units and Registrable Shares.

7. CERTAIN  DEFINITIONS.  As used in this  Agreement,  the following terms shall
have the following respective meanings:

     "COMMISSION"  means the  Securities and Exchange  Commission,  or any other
federal agency at the time administering the Securities Act.

     "COMMON  STOCK" means the common stock,  par value $.001 per share,  of the
Company.

     "EXCHANGE  ACT" means the Securities  Exchange Act of 1934, as amended,  or
any  similar  federal  statute,  and  the  rules  and  regulations   promulgated
thereunder, all as the same shall be in effect at the time.

     "REGISTRATION EXPENSES" means the expenses described in Section 4.

     "REGISTRABLE  SHARES"  shall  mean  shares  of Common  Stock  issued to the
Investors  pursuant to the  Purchase  Agreement  and any other shares of capital
stock of the  Company  issued to the  Investors  in respect of such  shares as a
result of stock splits,  stock dividends,  reclassification,  recapitalizations,
mergers,  consolidations or similar events.  Registrable  Shares shall also mean
all shares of Common Stock issued to the Investors pursuant to the conversion of
the  Preferred  Stock and upon  exercise of the Warrants and any other shares of
capital  stock of the Company  issued to the Investors in respect of such shares
as   a   result   of   stock   splits,   stock   dividends,    reclassification,

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recapitalizations, mergers, consolidations or similar events. References in this
Agreement  to  amounts  or  percentages  of  Registrable  Shares as of or on any
particular date shall be deemed to refer to amounts or percentages  after giving
effect to any applicable events contemplated by the preceding sentences.

     "REGISTRATION  STATEMENT"  shall  mean any  registration  statement  of the
Company,  including,  without limitation,  an initial Registration Statement, on
any form (to be selected by the Company)  for which the Company  then  qualifies
and  which  permits  the  secondary  resale  thereunder  of the  Units  and  the
Registrable  Shares.  The term  Registration  Statement  shall also  include all
exhibits and financial  statements and schedules and documents  incorporated  by
reference in such  Registration  Statement when it becomes  effective  under the
Securities Act, and in the case of the references to the Registration  Statement
as of a date  subsequent to the effective date, as amended or supplemented as of
such date.

     "SECURITIES  ACT" means the  Securities  Act of 1933,  as  amended,  or any
similar federal statute, and the rules and regulations  promulgated  thereunder,
all as the same shall be in effect at the time.

     "SELLING  INVESTOR"  shall mean any Investor whose  Registrable  Shares are
included at the request of such  Investor in any  Registration  Statement  filed
pursuant to this Agreement.

     "INVESTOR"  shall  mean a Investor  (as  defined  in the  preamble  to this
Agreement) or any  transferee of  Registrable  Shares,  if such  transferee  has
executed a  counterpart  hereof at the time of the transfer to such  transferee,
unless the  Registrable  Shares held by such transferee are acquired in a public
distribution pursuant to a registration statement under the Securities Act.

8. GENERAL.

     a. NOTICES. All notices, requests, claims, demands and other communications
hereunder  shall be in writing and shall be deemed to have been given if sent by
registered  or certified  mail,  first class  postage  prepaid,  return  receipt
requested,  to the address of such parties set forth on the  signature  pages of
this  Agreement or such other future address as may be specified by any party by
notice to all of the other  parties.  Such  communications  may also be given by
personal delivery,  by facsimile or by regular mail, but shall be effective only
if and when actually received.

     b. ENTIRE  AGREEMENT.  This  Agreement  embodies the entire  agreement  and
understanding  between the parties  hereto  with  respect to the subject  matter
hereof and supersedes all prior agreements and  understandings  relating to such
subject matter.

     c.  AMENDMENTS AND WAIVERS.  Any term of this Agreement may be amended with
the written  consent of the Company and each of the Investors.  No waivers of or
exceptions to any term, condition or provision of this Agreement,  in any one or
more instances,  shall be deemed to be, or construed as, a further or continuing
waiver of any such term,  condition or  provision.  A party hereto may waive the
performance of any covenant for its benefit (either generally or in a particular
instance and either retroactively or prospectively),  PROVIDED, HOWEVER, that no
such waiver shall be effective unless in writing and signed by such party.

                                        8
<PAGE>
     d.  SEVERABILITY.  The invalidity or  unenforceability  of any provision of
this  Agreement  shall not affect the  validity or  enforceability  of any other
provision of this Agreement.

     e.  GOVERNING  LAW.  This  Agreement  shall be governed by and construed in
accordance with the laws of the State of Nevada without regard to its principals
of conflicts of law.

     f.  COUNTERPARTS.   This  Agreement  may  be  executed  in  any  number  of
counterparts and by the parties hereto in separate  counterparts,  each of which
when so  executed  shall be  deemed  to be an  original  and all of which  taken
together shall constitute one and the same instrument.

     g.  SUCCESSORS AND ASSIGNS.  This Agreement  shall inure to the benefit of,
and be binding upon,  the  successors,  assigns and  transferees  of each of the
parties hereto.

                                        9
<PAGE>
     IN WITNESS  WHEREOF,  the  Company and the  Investors  have  executed  this
Agreement as of the _____ day of ________, 2003.

                                        COMPANY

                                        BESTNET COMMUNICATIONS CORP.

                                        By:
                                            ------------------------------------

                                            ADDRESS FOR NOTICE:

                                            5075 Cascade Road SE, Suite A
                                            Grand Rapids, Michigan 49546
                                            Telecopy: (616) 977-9955

                                            WITH A COPY TO:

                                            Squire, Sanders & Dempsey L.L.P.
                                            Attn:  Gregory R. Hall, Esq.
                                            Two Renaissance Square
                                            40 North Central Avenue, Suite 2700
                                            Phoenix, Arizona 85004
                                            Telecopy: (602) 253-8129

                                       10
<PAGE>
                                    INVESTORS

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

                                            Address for Notice:

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

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

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

                                            Address for Notice:

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

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

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

                                            Address for Notice:

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

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

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

                                            Address for Notice:

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

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

                            [Investor Signature Page]<PAGE>

                                                                   EXHIBIT 10.40

                      CHAMPIONSHIP AUTO RACING TEAMS, INC.

                              EMPLOYMENT AGREEMENT

                                 DAVID J. CLARE

     This Employment Agreement (the "Agreement") is entered into as of December
14, 2002 by and between Championship Auto Racing Teams, Inc., a Delaware
corporation ("Company"), and David J. Clare ("Clare").

     In consideration of the promises below, the parties agree as follows.

     1.   Title. Clare shall hold the title of Chief Operating Officer or such
other position or positions as the Board of Directors determines from
time-to-time.

     2.   Duties.

          2.1. General Duties. Clare shall undertake and render services as may
from time-to-time be assigned to him by the Chief Executive Officer and the
Board of Directors or their designees. The duties shall be reasonably consistent
with Clare's experiences and shall include control and responsibility for the
day-to-day operation and activities of the Company, reporting directly to the
Chief Executive Officer, subject to the Bylaws of the Company and of CART, Inc.

          2.2. Outside Activities. Clare shall devote his full time to the
performance of his duties, and agrees that his first duty of loyalty is to the
Company and shall locate in or near Indianapolis, Indiana. Except with the
express written consent of the Board of Directors, Clare shall not, directly or
indirectly, alone or as a member of any partnership, or as an officer, director
or employee of any other corporation, partnership or other organization, be
actively engaged in any other duties or pursuits which interfere or compete with
the performance of his duties under this Agreement.

     3.   Term. This Agreement shall commence on January 6, 2003 and continue in
force for three (3) years, until December 31, 2005, (the "Employment Period")
unless sooner terminated by either party pursuant to Section 5 or Section 6 of
this Agreement.

     4.   Compensation. As payment in full for services rendered to Company,
Clare shall be entitled to receive from Company, and Company shall pay to Clare,
salary and benefits as follows.

          4.1  Salary. Company shall initially pay to Clare base salary at a
     rate of $235,000 per annum, from January 6, 2003 through December 31, 2003
     ("Base Salary") payable bi-weekly or at such other time or times as Company
     may allow or provide to other similarly situated employees in accordance
     with policies adopted from time-to-time by the Board of Directors. Base
     Salary for any partial period of employment shall be prorated. All
     compensation shall be subject to deductions or withholding for taxes.
     Clare's salary shall be renewed annually by the Board of Directors or the
     Compensation Committee thereof not later than November 30th of each year.

<PAGE>

          4.2  Bonus. Annually, commencing for the year 2003, the Company shall
     pay Clare a Bonus, which shall be based on established objective goals to
     be agreed upon by the Company's Compensation Committee and the Chief
     Executive Officer, sixty percent (60%) of which will be based on meeting
     budget numbers and forty percent (40%) based on other specific goals and
     objectives, with an anticipated maximum bonus of $200,000. The criteria
     will be agreed to by January 31, 2003.

          4.3  Fringe Benefits. Clare shall be entitled to annual vacation of
     three (3) weeks per year and to receive employee and fringe benefits
     including but not limited to any compensation plan such as an incentive
     stock option, restricted stock or stock purchase plan or any employee
     benefit plan such as a thrift, pension, profit sharing, medical disability,
     the Company's health plan at the Company's cost (with the right to include
     his spouse at Clare's cost) coverage under the Company's directors and
     officers and liability policy which the Company agrees to maintain in force
     and group term life insurance policy, (the Company's "Plans") as Company
     may allow or provide to other similarly situated employees in accordance
     with policies adopted from time-to-time by the Board of Directors.

          4.5  Expense Reimbursement. Company shall: (a) reimburse Clare for
     expenses necessarily and reasonably incurred by him for travel and
     entertainment which amounts shall be consistent with the size and
     profitability of the Company and within the amounts budgeted for such
     expenses, including coach airfare for domestic travel and business class
     air travel for flights over two hours either domestically or
     internationally. Clare shall submit such proofs of expense for which
     reimbursement is claimed in writing as the Company may reasonably require.
     Company shall also reimburse or pay directly for all travel expenses for
     Clare's spouse to travel to Indianapolis; (b) provide use of a Company
     automobile or a monthly allowance of Six Hundred Dollars ($600); (c) pay
     for up to sixty (60) days accommodations for the first sixty (60) days of
     employment at a rate of Forty-Five Dollars ($45) per day; (d) provide a
     moving allowance of Ten Thousand Dollars ($10,000); and, (e) at Company
     expense, and maintaining a U.S. work permit and green card covering the
     term of this Agreement, and the appropriate residence visa for Clare's
     spouse for the term of this Agreement.

          4.7  Holidays. Clare shall be entitled to holidays recognized as State
     and/or National holidays and as Company may allow or provide in accordance
     with policies adopted from time-to-time by the Board of Directors.

     5.   Termination of Employment. The following provisions shall apply in the
event of termination of Clare's employment for any reason other than a
termination that occurs concurrent with or subsequent to a Change in Control as
defined in Section 6.1.

          5.1. Right to Terminate by Company. Company may terminate Clare's
employment, through its Board of Directors, without cause upon thirty (30) days'
written Notice of Termination (as defined in Section 7.1 of this Agreement) or
immediately upon Notice of Termination for Cause. The term "Cause" when
referring to termination by Company means only the following and any other
termination shall be without Cause: (i) Clare's gross dereliction of his duties;
or (ii) Clare's commission of an act that is adverse to, or not in the best
interest of, or the reputation of the Company; or (iii) Clare's willful refusal
to carry out the duties and responsibilities of the Chief Operating Officer of
the Company as reasonably requested by the Board of Directors; or (iv) fraud,
theft or misappropriation of any property of Company by Clare; or (v) conviction
of Clare of a felony or of any crime involving dishonesty or moral turpitude; or
(vi) violation by Clare of the provisions of this Agreement, provided that,
termination for violation by Clare of the provisions of

                                      -2-

<PAGE>

this Agreement shall occur only after sixty (60) days' advance written notice by
Company to Clare containing reasonably specific details of the alleged breach
failure of Clare to cure the same within such sixty (60) day period, if a cure
is reasonable.

          5.2. Termination for Death or Disability. Clare's employment shall
terminate upon the earliest of the events specified below:

          (i)  the death of Clare;

          (ii) the Date of Termination (as defined in Section 7.2) specified in
a written Notice of Termination by reason of physical or mental condition of
Clare which shall substantially incapacitate him from performing his principal
duties ("Disability") delivered by the Company to Clare at least thirty (30)
days prior to the specified Date of Termination, which shall be any date after
the expiration of any one hundred twenty (120) consecutive days during all of
which Clare shall be unable, by reason of his Disability, to perform his
principal duties, provided however, that such Notice of Termination shall be
null and void if Clare fully resumes the performance of his duties under this
Agreement prior to the Date of Termination set forth in the Notice of
Termination.

          5.3. Right to Terminate by Clare. Clare may terminate his employment
for any reason upon thirty (30) days' written Notice of Termination, including
the payment of money or material breach by the Company of its obligations under
this Agreement, and only after thirty (30) days' advance written notice of
Termination containing reasonably specific details of the alleged breach and
failure by the Company to cure the same within such thirty (30) day period.

          5.4. Results of Termination by Company.

          (i)  Termination for Cause. On the Date of Termination for Cause of
Clare's employment by Company, Company shall pay the Base Salary then in effect
through the Date of Termination.

          (ii) Termination Without Cause. On the Date of Termination by the
Company of Clare's employment, the Company shall pay Clare his Base Salary then
in effect throughout the Employment Period.

          5.5. Results of Termination for Death or Disability.

          (i)  Death of Clare. If Clare's employment is terminated due to the
death of Clare, Company shall pay the Base salary due Clare through the date on
which death occurs;

          (ii) Disability of Clare. If Clare's employment is terminated due to
the disability of Clare as described in Section 5.2 (ii) of this of this
Agreement, Company shall continue to pay Clare his Base Salary for the ninety
(90) day period following the specified Date of Termination. After this ninety
(90) period, Company agrees to pay to Clare during each month for the next six
months an amount equal to the difference between Clare's monthly Base Salary and
the amount which Clare receives or is entitled to receive from any long term
disability insurance coverage provided for Clare by Company. If Clare's
disability occurs in the course of his duties hereunder due to accident or
injury, Clare shall receive his Base Salary and fringe benefits throughout the
remaining Employment Period. In addition, the Company shall maintain in full
force and effect, for the continued benefit of Clare and Clare's dependents for
a period terminating on the earliest of (a) the expiration of the

                                      -3-

<PAGE>

Employment Period or (b) the commencement date of equivalent benefits from a new
employer, all life, accidental death, medical and dental insurance plans or
programs in which Clare was entitled to participate immediately prior to the
Date of Termination, provided that Clare's continued participation is possible
under the general terms and provisions of such plans and Clare continues to pay
an amount equal to his regular contribution for such participation, if any.

          5.6. Results of Termination by Clare. Upon Clare's termination of his
employment as provided in Section 5.3, the Company shall make the same payments
to Clare through the Date of Termination as Company would be obligated to make
under Section 5.4 (ii).

          5.7. Other Company Policies. Upon termination of Clare's employment
for any reason, Clare will be entitled to any additional rights pursuant to
policies of Company regarding employment termination established by the Board of
Directors from time-to-time.

          5.8. Termination of Company's Obligation. If at any time within the
twenty-four (24) month period following termination of Clare's employment
without Cause by Company, pursuant to Section 5.1 of this Agreement, Clare
breaches any of his obligations under Sections 8, 9, 10, 11 and/or 12 of this
Agreement, then Company's obligation to make payments under Section 5.4 (ii) of
this Agreement shall cease as of the date such breach occurs.

     6.   Change in Control

          6.1. Change in Control and Proposed Change in Control Defined.

          (i)  No benefits shall be payable to Clare pursuant to this Section 6
unless there has been a Change in Control of the Company as set for the below.
For purposes of this Agreement a "Change in Control" shall mean a Change in
Control of Company of a nature that would be required to be reported in response
to Item 1 (a) of the Current Report on Form 8-K, as in effect on the date
hereof, pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"); provided that, without limitation, such a
Change in Control shall be deemed to have occurred at such time as:

               (a)  any Person, as such term is used in Section 13 (d) and 14
     (d) of the Exchange Act (other than Company, any trustee or other fiduciary
     holding securities under an employee benefit plan of Company, or any
     company owned, directly or indirectly, by the stockholders of Company in
     substantially the same proportions as their ownership of stock of Company)
     is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the
     Exchange Act), directly or indirectly, of 25% or more of the combined
     voting power of Company's outstanding securities;

               (b)  individuals who constitute the Board on the date hereof (the
     "Incumbent Board") cease for any reason to constitute at least a majority
     thereof, provided that any person becoming a director subsequent to the
     date hereof whose election, or nomination for election by Company's
     shareholders, was approved by a vote of at least a majority of the
     directors comprising the Incumbent Board (either by a specific vote or by
     approval of the proxy statement of Company in which such person is named as
     a nominee for director, without objection to such nomination) shall be, for
     purposes of this clause (b), considered as though such person were a member
     of the Incumbent Board.

                                      -4-

<PAGE>

               (c)  the stockholders of Company approve a merger or
     consolidation of Company with any other company, other than (1) a merger or
     consolidation which would result in the voting securities of Company
     outstanding immediately prior thereto continuing to represent (either by
     remaining outstanding by or being converted into voting securities of the
     surviving entity) more than fifty percent (50%) of the combined voting
     power of the voting securities of Company or such surviving entity
     outstanding immediately after such merger or consolidation; or (2) a merger
     or consolidation effected to implement a recapitalization of Company (or
     similar transition) in which no "Person" (as defined above) acquires more
     than fifty percent (50%) of the combined voting power of the Company's then
     outstanding securities; or

               (d)  the stockholders of Company approve a plan of complete
     liquidation of Company or an agreement for the sale or disposition by
     Company of all or substantially all of Company's assets.

     Notwithstanding anything in the foregoing to the contrary, no Change in
Control shall be deemed to have occurred for purposes of this Agreement by
virtue of any transaction which results in Clare, or a group of Persons which
includes Clare, acquiring, directly or indirectly, 50% or more of the combined
voting power of the Company's outstanding securities.

          (ii) For purposes of this Agreement, a "Proposed Change in Control" of
Company shall be deemed to have occurred if:

               (a)  Company enters in an agreement, the consummation of which
     would result in the occurrence of a Change in Control of Company;

               (b)  any person (including Company) publicly announces an
     intention to take or to consider taking actions which if consummated would
     constitute a change in Control of Company;

               (c)  any person (other than a trustee or other fiduciary holding
     securities under an employee benefit plan of Company, or a company owned,
     directly or indirectly, by the stockholders of Company in substantially the
     same proportions as their ownership of stock of Company), who is or becomes
     the beneficial owner, directly or indirectly, of securities of the Company
     representing twenty-five percent (25%) or more of the combined voting power
     of Company's then outstanding securities, increases his beneficial
     ownership of such securities through either successive or simultaneous
     acquisition by a total of three (3) percentage points or more over the
     percentage so owned by such person prior to such acquisition; or

               (d)  the Board adopts a resolution to the effect that, for
     purposes of this Agreement, a Proposed Change in Control of Company has
     occurred.

          6.2. Continued Employment. If a Proposed Change in Control occurs
prior to the expiration of this Agreement, Clare agrees that he will remain in
the employ of Company until the earliest of (a) a date which is one hundred
eighty (180) days from the occurrence of such Proposed Change in control of
Company, (b) the termination of Clare's employment by reason of death or
Disability as defined in Section 5.2 of this Agreement, or (c) the date on which
Clare first becomes entitled under this Agreement to receive the benefits
provided in Section 6.5 of this Agreement.

                                      -5-

<PAGE>

          If a Proposed Change in Control occurs prior to the expiration of this
Agreement, Company agrees that it will not terminate Clare's employment without
Cause until the earliest of (a) a date on which the Board adopts a resolution to
the effect that the actions leading to such Proposed Change in control have been
abandoned or terminated, (b) the termination of Clare's employment by reason of
Death or Disability as defined in Section 5.2 of this Agreement, or (c) the date
on which Clare first becomes entitled under this Agreement to receive the
benefits provided in Section 6.5 of this Agreement.

          6.3. Term of Agreement. If a Change in Control occurs prior to the
expiration of this Agreement, this Agreement shall continue in effect for a
period of not less than twenty-four (24) months beyond the month in which the
Change in Control shall have occurred provided that (i) such Change in Control
shall have occurred prior to the end of the Employment Period and (ii) if
Clare's employment has not been terminated pursuant to Section 5 of this
Agreement prior to the occurrence of such Change in Control.

          6.4. Termination Following Change in Control. If a Change in Control
shall have occurred, Clare shall be entitled to the benefits provided in Section
6.5. of this Agreement upon the termination of his employment within twenty-four
(24) months after such Change in Control has occurred, unless such termination
is (a) because of Clare's death, (b) by the Company for Cause, (c) because of
Clare's Disability or (d) by Clare other than for Good Reason (as all such
capitalized terms are hereinafter defined).

          (i)  Disability. Termination by Company of Clare's employment based on
Disability shall have the meaning as defined in Section 5.2 of this Agreement.

          (ii) Termination by Company for Cause. Company may terminate Clare's
employment for Cause, through its Board of Directors, immediately upon Notice of
Termination. Termination by Company of Clare's employment for Cause shall have
the meaning as defined in Section 5.1 of this Agreement.

          (iii) Termination by Clare for Good Reason. Clare may terminate his
employment for Good Reason upon ninety (90) day's written Notice of Termination.
Termination by Clare of his employment for Good Reason shall have meanings:

               (a)  a change in Clare's status, position(s) or responsibilities
     as an officer of Company which, in his reasonable judgment, does not
     represent a promotion from his status, title, position(s) and
     responsibilities as in effect immediately prior to the Change in Control,
     or the assignment to him of any duties or responsibilities which, in his
     reasonable judgment, are inconsistent with such status, title or
     position(s), or any removal of him from or any failure to reappoint or
     reelect him to such position(s), except in connection with the termination
     of his employment by Company for Cause, for Disability or as result of
     Clare's death or by Clare as defined in Section 5.3 of this Agreement:

               (b)  a reduction by Company in Clare's Base Salary as in effect
     immediately prior to the Change in Control;

               (c)  the failure by Company to continue in effect any Plan (as
     defined in Section 4.4. of this Agreement) in which he is participating at
     the time of the Change in Control (or Plans providing him with at least
     substantially similar benefits) other than as a result of the normal
     expiration of any such Plan in accordance with its terms in effect at the

                                      -6-

<PAGE>

     time of the Change in Control, or the taking of any action, or the failure
     to act, by Company which would adversely affect his continued participation
     in any of such Plans on at least as favorable a basis to him as is the case
     on the date of the Change in Control or which would materially reduce his
     benefits in the future under any of such Plans or deprive him of any
     material benefit enjoyed by him at the time of the Change in Control;

               (d)  Company's requiring Clare to be based anywhere other than
     where Clare's office is located immediately prior to the Change in Control
     except for required travel on Company's business to an extent substantially
     consistent with the business travel obligations which Clare undertook on
     behalf of the Company prior to the Change in Control;

               (e)  the failure by Company to obtain from any Successor (as
     hereinafter defined) the assent to this Agreement contemplated by Section
     6.6 of this Agreement; and

               (f)  any purported termination by Company of Clare's employment
     is not effected pursuant to a Notice of Termination satisfying the
     requirements of Section 7.1. of this Agreement which purported termination
     shall not be effective for purposes of this Agreement.

          (iv) Termination by Company Without Cause. Company may terminate
Clare's employment, through its Board of Directors, without Cause upon ninety
(90) days' written Notice of Termination. Termination by Company of Clare's
employment without Cause shall have the meaning as defined in Section 5.1 of
this Agreement.

          (v)  Termination by Clare Without Good Reason. Clare may terminate his
employment without Good Reason upon ninety (90) days' written Notice of
Termination.

          6.5. Compensation Upon Termination or During Disability.

          (i)  Compensation Upon Disability. During any period following a
Change in Control that Clare fails to perform his duties as a result of
Disability, Company shall make the payments set forth in Section 5.5. (ii) of
this Agreement.

          (ii) Compensation Upon Termination by Company for Cause. If Clare's
employment shall be terminated by Company for Cause following a Change in
Control, Company shall make the payments set forth in Section 5.4 (i) of this
Agreement.

          (iii) Compensation Upon Termination by Company Without Cause or by
Clare for Good Reason. If, within twenty-four (24) months after a Change in
Control shall have occurred Clare's employment by Company shall be terminated
(a) by Company without cause or (b) by Clare for Good Reason based on an event
occurring concurrent with or subsequent to a Change in Control, then, at the
time specified in Subsection (vii), Clare shall be entitled, without regard to
any contrary provisions of any Plan, to the benefits as provided below:

               (a)  the Company shall pay Clare his full Base Salary through the
     Date of Termination at the rate in effect just prior to the time a Notice
     of Termination is given plus any benefits or awards (including both cash
     and stock components) which pursuant to the terms of any Plans have been
     earned or become payable, but which have not yet been paid to Clare
     (including amounts which previously had been deferred at Clare's request);

                                      -7-

<PAGE>

               (b)  as severance pay and in lieu of any further salary for
     periods subsequent to the Date of Termination, Company shall pay to Clare
     at the time specified in subsection (vii), a single lump sum severance
     payment (the "Severance Payment") in an amount in cash equal to three times
     Clare's annual Base Salary at the rate in effect just prior to the time a
     Notice of Termination is given;

               (c)  Company shall maintain in full force and effect, for the
     continued benefit of Clare and Clare's dependents for a period terminating
     on the earliest of (x) two (2) years after the Date of Termination or (y)
     the commencement date of equivalent benefits from a new employer all life,
     accidental death, medical and dental insurance plans or programs in which
     Clare was entitled to participate immediately prior to the Date of
     Termination, provided that Clare's continued participation is possible
     under the general terms and provisions of such plans and Clare continues to
     pay an amount equal to his regular contribution for such participation, if
     any. In the event that Clare's participation in any such plan is barred,
     Company at its sole cost and expense, shall arrange to have issued for the
     benefit of Clare and Clare's dependents individual policies of insurance
     providing benefits substantially similar (on an after-tax basis) provided
     that, Company shall be responsible for the payment of such benefits (on an
     after tax basis) to those which Clare otherwise would have been entitled to
     receive under such plans pursuant to this paragraph (c) or, if such
     insurance is not available at a reasonable cost to Company, Company shall
     otherwise provide Clare and Clare's dependents equivalent benefits (on an
     after tax basis) for a period not to exceed five (5) years following the
     end of the two (2) years after the Termination Date. Clare shall not be
     required to pay any premiums or other charges in an amount greater than
     that which Clare would have paid in order to participate in such plans.

          Company shall pay Clare for any vacation time earned but not taken at
     the Date of Termination, at an hourly rate equal to Clare's annual Base
     Salary as in effect immediately prior to the time a Notice of Termination
     is given divided by 2080.

          Company shall pay to Clare all legal fees and expenses incurred by
     Clare as a result of such termination, including all such fees and
     expenses, if any, incurred in contesting or disputing any such termination
     in seeking to obtain or enforce any right or benefit provided by this
     Section 6 of this Agreement (other than any such fees or expenses incurred
     in connection with any such claim which is determined to be frivolous) or
     in connection with any tax audit or proceeding to the extent attributable
     to the application of Section 4999 of the Internal Revenue Code of 1986, as
     amended (the "Code").

          (iv) Compensation Upon Termination by Clare Without Good Reason. If
Clare's employment shall be terminated by Clare without Good Reason following a
Change in Control, Company shall make the payments set forth in Section 5.6 of
this Agreement.

          (v)  No Offsets or Reductions. Except as specifically provided above,
the amount of any payment provided for in this Section 6.5. shall not be reduced
offset or subject to recovery by Company by reason of any compensation earned by
Clare as the result of employment by another employer after the Date of
Termination, or otherwise. Clare's entitlements under Section 6.5. of this
Agreement are in addition to, and not in lieu of, any rights, benefits or
entitlements Clare may have under the terms or provisions of any Plan.

          (vi) Company's Deduction of Payment. Notwithstanding anything in the
foregoing to the contrary, Company shall not be obligated to pay any portion of
any amount otherwise payable to

                                       -8-

<PAGE>

Clare pursuant to this Agreement if the payment would cause any amount to be
paid by Company to Clare to not be reasonably deductible by the Company solely
by operation of Section 280G of the Internal Revenue Code of 1986, as amended,
or any equivalent successor provision of law.

          (vii) Time of Payment. The payments provided for in Subsection (iii)
shall be made not later than the fifth day following the Date of Termination;
provided, however, that if the amounts of such payments cannot be finally
determined on or before such day, Company shall pay to Clare on such day an
estimate, as determined in good faith by Company, of the minimum amount of such
payments and shall pay the remainder of such payments (together with interest at
the rate provided in Section 1274(b)(2)(B) of the Code) as soon as the amount
thereof can be determined but in no event later than the thirtieth day after the
Date of Termination. In the event that the amount of the estimated payments
exceeds the amount subsequently determined to have been due, such excess shall
constitute a loan by Company to Clare payable on the fifth (5th) day after
demand therefore by Company (together with interest at the rate provided in
Section 1274(b)(2)(B) of the Code).

          6.6. Successors; Binding Agreement.

          (i)  Successors. Company will require any Successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of Company to expressly assume
and agree to perform Company's obligations under this Agreement in the same
manner and to the same extent that Company would be required to perform it if
not such succession had taken place. Failure of Company to obtain such
assumption and agreement prior to the effectiveness of any such succession shall
be a breach of this Agreement and shall entitle Clare to compensation from
Company in the same amount and on the same terms to which Clare would be
entitled hereunder if Clare terminated his employment for Good Reason following
a Change in Control of Company, except that for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall be
deemed the Date of Termination. As used in this Agreement, "Company" shall mean
the Company as hereinbefore defined and any Successor to its business and/or
assets as aforesaid which assumes and agrees to perform this Agreement by
operation of law, or otherwise.

          (ii) Binding Agreement. This Agreement shall inure to the benefit of
and be enforceable by Clare and Clare's personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees. If Clare should die while any amount would still be payable to him
hereunder if Clare had continued to live, all such amounts, unless otherwise
provided herein, shall be paid in accordance with the terms of this Agreement to
Clare's devisee, legatee or other designee or, if there be no such designee, to
Clare's estate.

          6.7. Arbitration. Any dispute or controversy arising under or in
connection with Section 6 of this Agreement shall be settled exclusively by
arbitration in Indianapolis, Indiana by three arbitrators in accordance with the
rules of the American Arbitration Association then in effect. Judgment may be
entered on the arbitrators' award in any court having jurisdiction; provided,
however, that Clare shall be entitled to seek specific performance of Clare's
right to be paid until the Date of Termination during the pendency of any
dispute or controversy arising under or in connection with the Agreement.
Company shall bear all costs and expenses arising in connection with any
arbitration proceeding pursuant to this Section 6.7.

          6.8. Survival. The respective obligations of, and benefits afforded
to, Company and Clare as provided in Section 6.5, 6.6 and 6.7 of this Agreement
shall survive termination of this Agreement.

                                      -9-

<PAGE>

          6.9. Termination of Company's Obligation. If at any time within the
twenty-four (24) month period following termination of Clare's employment
without Cause by Company pursuant to Section 6.4 (iv) or termination by Clare
for Good Reason pursuant to Section 6.4 (iii) of this Agreement, Clare breaches
any of his obligations under Sections 8, 9, 10, 11, and/or 12 of this Agreement,
then Company's obligation to make payments under Section 6.5 (iii) shall cease
as of the date such breach occurs.

          7.   Definitions. For purposes of Section 5 and Section 6 of this
Agreement, Notice of Termination and Date of Termination shall have the
following meanings:

               7.1. Notice of Termination. Any purported termination by Company
or by Clare pursuant to Section 5 or Section 6 of this Agreement shall be
communicated by written Notice of Termination to the other party hereto in
accordance with Section 18.3 of this Agreement. For purposes of this Agreement,
a "Notice of Termination" shall mean a notice which shall indicate the specific
termination provision in this Agreement relied upon and, except in the event of
termination by Clare without Good Reason or termination by Company without
Cause, such Notice of Termination shall set forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of Clare's
employment under the provisions so indicated.

               7.2. Date of Termination. "Date of Termination" following a
termination of Clare's employment by Company or Clare pursuant to Section 5 or
Section 6 of this Agreement shall mean (i) if Clare's employment is to be
terminated for Disability, thirty (30) days after Notice of Termination is
delivered by the Board to Clare provided that such notice shall be given only
after the expiration of any one hundred twenty (120) consecutive days during all
of which Clare shall be unable by reason of his disability to perform his
principal duties (provided that such Notice of Termination shall be null and
void if Clare fully resumes the performance of Clare's duties under this
Agreement prior to the Date of Termination as set forth in the Notice); (ii) if
Clare's employment is to be terminated by company for cause, the date on which a
Notice of Termination is given; and (iii) if Clare's employment is terminated by
Clare with Good Reason or without Good Reason or by Company without Cause, the
date specified in the Notice of Termination, which shall be a date no earlier
than thirty (30) days after the date on which Notice of Termination pursuant to
Section 5 is given and no earlier than ninety (90) days after the date on which
a Notice of Termination pursuant to Section 6 is given, unless an earlier date
has been agreed to by the party receiving the Notice of Termination either in
advance of, or after, receiving such Notice of Termination. Notwithstanding
anything in the foregoing to the contrary, if the party receiving the Notice of
Termination pursuant to Section 6 has not previously agreed to the termination,
then within thirty (30) days after any Notice of Termination is given, the party
receiving such Notice of Termination may notify the other party that a dispute
exists concerning the termination, in which event the Date of Termination shall
be the date set either by mutual written agreement of the parties or by the
arbitrators in a proceeding as provided in Section 6.7 of this Agreement.

     8.   Confidentiality.

          8.1. Definition of Confidential Information. As used in this
Agreement, the term "Confidential Information" means: (a) proprietary
information of Company; (b) information marked or designated by Company as
confidential; (c) information, whether or not in written form and whether or not
designated as confidential, which is known to Clare as being treated by Company
as confidential; and (d) information provided to Company by third parties which
Company is obligated to keep confidential. Confidential Information includes but
is not limited to, discoveries, ideas, designs,

                                      -10-
<PAGE>

drawings, specifications, techniques, models, devises, data, formula, programs,
documentation, processes, know-how, customer lists, marketing plans, and
financial and technical information.

          8.2. Acknowledgment of Receipt of Confidential Information. Clare
acknowledges that in the course of performing his duties for Company he will
have access to Confidential Information, the ownership and confidential status
of which are highly important to company, and Clare agrees in addition to the
specific covenants contained herein to comply with all Company policies and
procedures for the protection of such Confidential Information.

          8.3. Ownership. Clare acknowledges that all Confidential Information
is and shall continue to be the exclusive property of Company, whether or not
prepared in whole or in part by him and whether or not disclosed to or entrusted
to him in connection with employment by Company.

          8.4. Acknowledgment of Irreparable Harm. Clare acknowledges that any
disclosure of Confidential Information will cause irreparable harm to Company.

          8.5. Covenant of Nondisclosure. Clare agrees not to disclose
Confidential Information, directly or indirectly, under any circumstances or by
any means, to any third person without the express written consent of Company.

          8.6. Covenant of Nonuse. Clare agrees that he will not copy, transmit,
reproduce, summarize, quote, or make any commercial or other use whatsoever of
Confidential Information, except as may be necessary to perform work done by him
for Company.

          8.7. Safeguard of Confidential Information. Clare agrees to exercise
the highest degree of care in safeguarding Confidential Information against
loss, theft, or other inadvertent disclosure and agree generally to take all
steps necessary or requested by Company to insure maintenance of
confidentiality.

          8.8. Exclusions. This Agreement shall not apply to the following
information: (a) information now and hereafter voluntarily disseminated by
Company to the public or which otherwise becomes part of the public domain
through lawful means; (b) information already known to Clare as documented by
written records which predate this Agreement; (c) information subsequently and
rightfully received from third parties and not subject to any obligation of
confidentiality; (d) information independently developed by Clare.

          8.9. Work Made for Hire. Clare agrees that all creative work,
including computer programs or models, prepared or originated by him for Company
or during or within the scope of his employment by Company which may be subject
to protection under Federal copyright Law, constitutes "work made for hire," all
rights to which are owned by Company; and, in any event, Clare assigns to
Company all intellectual property rights in such work whether by right of
copyright, trade secret or otherwise and whether or not subject to protection by
copyright laws.

     9.   Company Ownership of Trade Secrets.

          9.1. Company Ownership. Clare agrees that all inventions, discoveries,
improvements, trade secrets, formula, techniques, processes, know-how and
computer programs, whether or not patentable, and whether or not reduced to
practice, conceived or developed during his employment by Company, either alone
or jointly with others, which relate to or result from the actual or anticipated
business, work, research, or investigation of Company or any affiliated company,
or

                                      -11-

<PAGE>

which result to any extent from use of Company or any affiliated company's
premises or property, shall be owned exclusively by the Company, Clare hereby
assigns to Company all his right, title and interest in all such inventions,
trade secrets, etc., and Clare agrees that Company shall be the sole owner of
all domestic and foreign patents or other rights pertaining thereto, and further
agree to execute all documents which Company reasonably determines to be
necessary or convenient for use in applying for, perfecting, or enforcing
patents or other intellectual any assignments, patent applications, or other
documents which may be requested by Company. Notwithstanding the above, this
provision does not apply to an invention for which no equipment, supplies,
facilities, or trade secret of Company was used and which was developed entirely
on Clare's own time, unless (a) the invention relates (i) directly to the
business of Company, or (ii) to Company's actual or demonstrably anticipated
research or development, or (b) the invention results from any work performed by
Clare for Company.

          9.2. Clare Inventions. All inventions, if any, of Clare made prior to
Clare's employment by Company are excluded from the scope of this Agreement and
a complete list of such inventions, if any, is attached to this Agreement as
Exhibit A. Clare agrees to disclose to Company at the time of employment or
thereafter, all inventions being developed by Clare for the purposes of
determining Clare or Company rights to the invention.

     10.  Ventures. If Clare, during the term of this Agreement, is engaged in
or associated with the planning or implementing of any project, program or
venture involving Company and any third party or parties, all rights in the
project, program or venture shall belong to Company, and Clare shall not be
entitled to any interest therein or to any commission, finder's fee or other
compensation in connection therewith other than the salary to be paid to Clare
as provided in this Agreement.

     11.  Covenant of Good Faith. Clare agrees that the subject of this
Agreement involves sensitive matters which go to the very heart of the corporate
existence and well-being of Company and that it may be difficult for Company to
protect adequately its interest through agreement or otherwise. Clare agrees to
exercise the highest degree of good faith in his dealings with Company and to
refrain from any actions which might reasonably be deemed to be contrary to its
interests.

     12.  Delivery of Materials. Upon termination of his employment status,
Clare will deliver to Company all materials, including without limitation
documents, records, drawings, prototypes, models and schematic diagrams, which
describe, depict, contain, constitute, reflect, record or in any way relate to
inventions or Confidential Information, which are in Clare's possession or under
his control, whether or not the materials were prepared by Clare.

     13.  Subpoenas. If Clare is served with any subpoena or other compulsory
judicial or administrative process calling for production of Confidential
Information or if Clare is otherwise required by law or regulation to disclose
Confidential Information, Clare will immediately, and prior to production or
disclosure, notify Company and provide it with such information as may be
necessary in order that Company may take such action as it deems necessary to
protect its interest.

     14.  Remedies. Clare acknowledges that breach of Sections 8, 9, 10, 11, 12,
13, 15 and 16 of this Agreement will cause irreparable harm to the Company and
if Clare fails to abide by these obligations, Company will be entitled to
specific performance, including immediate issuance of a temporary restraining
order of preliminary injunction enforcing this Agreement, and to judgment for
damages caused by Clare's breach, and to the rights and duties of Company and
Clare, respectively, under this Agreement are in addition to, and not in lieu
of, those rights and duties afforded to and imposed upon them by law or at
equity.

                                      -12-

<PAGE>

     15.  Termination Certificate. Upon termination of this Agreement, Clare
will give a written statement to Company certifying that he has complied with
his obligations under Sections 9, 11 and 12 and acknowledging his continuing
obligations under Section 8 to preserve and confidentiality of Company's
confidential or secret knowledge or information, and under Section 13 to notify
Company if he is served with a subpoena.

     16.  Other Obligations. Clare acknowledges that Company from time-to-time
may have agreements with other persons or with various governmental agencies
that impose obligations or restrictions on Company regarding inventions or
creative works made during the course of work thereunder or regarding the
confidential nature or such work. Clare agrees to be bound by all such
obligations and restrictions of which he is informed by Company and to take all
action necessary to discharge the obligations of Company thereunder.

     17.  Durations. The obligations set forth in Sections 8, 9, 10, 11, 12 and
13 of this Agreement will continue beyond the term of Clare's employment by
Company for two years following such termination.

     18.  General Provisions.

          18.1. Severability. The provisions of this Agreement are severable and
if any provision hereof is held to be invalid, illegal, or unenforceable in any
respect, it shall be enforced to the maximum extent permissible, and the
remaining provision of the agreement shall not be affected thereby and in full
force and effect.

          18.2. Attorney's Fees/Applicable Law/Venue. Except as provided in
Section 6.5(iii), in any action or suit arising out of this Agreement, the
prevailing party shall be entitled to recover all reasonable attorneys' fees and
expenses of litigation, including fees on appeal or in connection with any
petition for review. The rights and obligations of the parties under this
Agreement shall in all respects be governed by the laws of the State of Indiana
exclusive of choice of law rules.

          18.3. Notice. Any notice provided for hereunder may be delivered to
the designated recipient either by personal delivery or by certified mail,
return receipt requested. If mailed, the notice when enclosed in an envelope
properly addressed to the proposed recipient at his address last of record with
the notifying party and deposited postage paid in a mail depository of the
United States post office, shall be deemed given when so mailed. Notice to
Company shall be so delivered or addressed to an officer of Company other than
Clare.

          18.4. Assignment. Clare acknowledges that the services to be rendered
are unique and personal. This Agreement may not be assigned by Clare.

          18.5. Successors of Company. This Agreement shall inure to the benefit
of and shall be binding upon Company, its successors, or assigns.

          18.6. Waiver. Company may waive any obligation Clare has under this
Agreement, but such waiver will not affect Company's right to require strict
compliance with the Agreement in the future.

          18.7. Entire Agreement. This Agreement supersedes all previous
agreements, oral or written, between Company and Clare and constitutes the
entire agreement between the Parties, and

                                      -13-

<PAGE>

unless otherwise provided in this Agreement, no modification or waiver of any of
the provisions or any future representation, promise, or addition shall be
binding upon the Parties unless made in writing and signed by both Parties.

     In witness whereof, the parties have executed this contract on the date
first set forth above.

                                 CHAMPIONSHIP AUTO RACING TEAMS, INC.

                                 By: /s/  Christopher R. Pook
                                   ---------------------------------------------
                                    Christopher R. Pook, Chief Executive Officer

                                    /s/  David J. Clare
                                    --------------------------------------------
                                    David J. Clare

                                      -14-

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