Document:

BioElectronics Corporation - Exhibit 10.3 - Prepared By TNT Filings Inc.

 

Exhibit 10.3 

EMPLOYMENT AGREEMENT 

This Employment Agreement ("Agreement") dated October 8, 2004
between BioElectronics Corporation, a Maryland Corporation (the "Company")
located at 3612 Sprigg Street South, Frederick, Maryland 21704 and Thomas
O’Connor (the "Executive"), residing at 1130 E. Missouri Avenue, Suite 700,
Phoenix, Arizona 85014. 

WITNESSETH: 

WHEREAS. The Board of Directors (the "Board") of the Company
wishes to employ the Executive as Vice President Operations and Chief Financial
Officer of the Company on the terms and subject to the conditions set forth
herein; and 

WHEREAS, the Executive wishes to accept employment with the
Company in the position of Vice President Operations and Chief Financial Officer
on the terms and subject to the conditions set forth herein. 

NOW, THEREFORE, in consideration of the premises and the
mutual covenants and obligations hereinafter set forth, the parties agree as
follows: 

1) 
EMPLOYMENT 

The Executive’s employment under the terms of this Agreement
shall commence on October 1, 2004 (the "Effective Date"), and shall continue
until December 31, 2007 unless terminated earlier pursuant to Section 5. (Such
period of employment under this Agreement is hereinafter referred to as the
"Employment Term."). The Executive shall provide services to the Company
hereunder as Vice President Operations and Chief Financial Officer of the
Company. The Executive will relocate, reside, and work at the Company’s planned
offices in the Frederick, Maryland area. The Executive will serve the Company
subject to the general supervision, advice and direction of the President upon
the terms and conditions set forth in this Agreement. 

2) DUTIES

PERFORMANCE OF DUTIES. During the
period of the Executive’s employment with the Company, the Executive shall:

  a) Manage the Company’s manufacturing, warehousing and
  distribution, order fulfillment, customer service, information systems and
  accounting. Executive shall also perform such further duties as are incidental
  or implied from its obligation to provide overall operational management and
  leadership to the Company; 

  b) In all respects use his best efforts to further, enhance,
  and develop the Company’s business, affairs, interests and welfare; and 
  

  c) Not become directly or indirectly associated with or
  engaged in any business which competes with the Company or accept any
  employment or other engagement whatsoever from any other person, firm,
  corporation, or entity or do anything inconsistent with its duties to the
  Company. 

3) 
COMPENSATION AND BENEFITS 

  a) BASE COMPENSATION. The Company shall pay the
  Executive a base salary (the "Base Salary"), as compensation for his
  employment under this Agreement, in the amount of $150,000 a year thereafter
  within the Employment Term, the Base Salary shall be as determined by the
  President and the Board of Directors but shall not be less than $150,000.
  During the Employment Term such Base Salary shall be paid in equal
  installments on at least a monthly basis, or on such other basis as is
  applicable to Executives of the Company. 

  b) ANNUAL BONUS. For each calendar year ending during
  the Employment Term, the Executive’s bonus compensation ("Annual Bonus") shall
  be up to 50% of base compensation for the year. The 2005 calendar year bonus
  will be predicated and calculated on annual sales as follows: 

  
    (i) Sales under $1.5 million 0.0% 

    (ii) Sales over $1.5 million 1.0% of total
    sales. 

    (iii) Sales over $2.0 million 1.5% of
    total sales. 

    (iv) Sales over $3.0 million 2.5% of total
    sales. 

  

  The annual bonus formula after the first year will be
  established by the Compensation Committee of the Board of Directors. The
  Executive’s Annual Bonus earned with respect to each year shall be paid on or
  before March 31st of the succeeding year. 

  
  c) STOCK OPTIONS. On the
  Effective Date of this Agreement, (the "Grant Date"), the Company shall in
  consideration of the Covenants in paragraph 5 grant to the Executive a Grant
  of $500,000 thousand shares of restricted common stock of the Company and an
  option (the "Option") to purchase 2.1 million shares of common stock of the
  Company, $.01 par value per share (the "Stock"). The Option shall be granted
  subject to the following terms: (i) the exercise price with respect to the
  initial 700,000 shares under the Option shall be $.30 per share (ii) an
  additional 700,000 shares at a grant price of $.40 per share; (iii) an
  additional 700,000 shares at a grant price of $.50 per share; (iv) the Option
  and Grant shall fully vest over a three-year period the Options are
  exercisable as follows: 33.3% shall be exercisable on each of the first,
  second and third anniversaries of the Grant Date; and (iv) the Option shall be
  exercisable by Executive or his estate for a period of five years. The
  Executive shall immediately become 100% vested in, and eligible to exercise,
  the Option, and others 

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  that may be granted to him in the future, in the event of
  (a) his termination without Cause (as defined in Section 4, (b) a dissolution
  or liquidation of the Company, (c) a sale of all or substantially all of the
  Company’s assets, (d) a merger or consolidation involving the Company in which
  the Company is not the surviving corporation, (e) a merger or consolidation
  involving the Company in which the Company is the surviving corporation but
  the holders of shares of common stock receive securities of another
  corporation and/or other property, including cash, or (f) a tender offer for
  at least a majority of the outstanding stock of the Company. If immediate
  vesting occurs because of a termination without Cause, the Option shall be
  exercisable for thirty-six (36) months following the effective date of such
  termination; in all other events the option will remain exercisable under the
  terms of the grant. 

  d) DIVESTITURE BONUS. Upon sale of the Company during
  the term of 

  Agreement or any renewals thereof the Company will pay the
  Executive an incentive and termination payment of 3% of the sale price of the
  Company for the first $100 million, 2.5% on the next $100 million and 1%
  thereafter, payable in equivalent form (stock or cash) of the divestiture
  transaction. 

  e) BENEFITS. During the Employment Term, the
  Executive shall be entitled to participate in all pension, profit sharing and
  other retirement plans, incentive compensation plans and all group health,
  hospitalization and disability insurance plans and other Executive welfare
  benefit plans in which other senior executives of the Company may participate
  on terms and conditions no less favorable than those which apply to such other
  senior executives of the Company. The Executive shall be entitled to three
  weeks annual paid vacations; and to be reimbursed for any reasonable
  out-of-pocket expenses incurred by the Executive in connection with the
  performance of his duties, upon presentation of reasonable evidence
  satisfactory to the Company of the amounts and nature of such expenses. For
  relocation from Scottsdale, Arizona to the Frederick, Maryland area the
  Company will pay the Executive a lump sum payment of $20,000. 

4) 
TERMINATION 

EVENTS OF TERMINATION. The
Employment Term shall terminate upon the first to occur of the following events:

  a) The close of business on December 31, 2007, unless
  mutually extended in writing by the parties; 

  b) The death of the Executive; 

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  c) 
  The close of business on the
  180th day following the date on which the Company gives the
  Executive written notice of the termination of his employment as a result of
  his Permanent Disability. Permanent Disability shall mean the Executive’s
  inability to perform the material duties contemplated by this Agreement by
  reason of a physical or mental disability or infirmity which has continued for
  more than 30 consecutive days. The Executive agrees to submit such medical
  evidence regarding such disability or infirmity as is reasonably requested by
  the Company, including, but not limited to, an examination by a physician
  selected by the Company in its sole discretion; 

  d) 
  The close of business on the
  date on which the Company gives the Executive written notice of the Company’s
  termination of his employment for Cause. Cause shall mean (A) the Executive’s
  neglect f his material duties, (B) an act or acts by the Executive, or any
  omission by him, constituting a felony, and the Executive has entered a guilty
  plea or confession to, or has been convicted of, such felony, (C) the
  Executive’s failure to follow any lawful directive of the President consistent
  with the Executive’s position and duties, (D) an act or acts of fraud or
  dishonesty by the Executive which results or is intended to result in
  financial or economic harm to the Company, or (E) breach of a material
  provision of this Agreement by the Executive; and 

  e) 
  The close of business on the
  effective date of a Voluntary Termination by the Executive of his employment
  with the Company. Voluntary Termination shall mean any voluntary termination
  by the Executive of his employment with the Company provided that the
  Executive shall give the Company at least 30 days’ prior written notice of the
  effective date of such termination. 

5) 
PROTECTED INFORMATION;
PROHIBITED SOLICITATION AND COMPETITION 

  a) 
  The Executive hereby
  recognizes and acknowledges that during the course of his employment by the
  Company, the Company will furnish, disclose or make available to the Executive
  confidential or proprietary information related to the Company’s business,
  including, without limitation, customer lists, ideas, processes, inventions
  and devices, that such confidential or proprietary information has been
  developed and will be developed through the Company’s expenditure of
  substantial time and money, and that all such confidential information could
  be used by the Executive and others to compete with the Company. The Executive
  hereby agrees that all such confidential or proprietary information shall
  constitute trade secrets, and further agrees to use such confidential or
  proprietary information only for the purpose of carrying out his duties with
  the Company and not otherwise to disclose such information unless otherwise
  required to do so by subpoena or other legal process. The Executive agrees
  that all inventions 

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  and discoveries shall be the sole property of the Company,
  and the Company shall be the sole owner of all patents. 

  b) The Executive hereby agrees, in consideration of his
  employment hereunder and in view of the confidential position to be held by
  the Executive hereunder, that during the Employment Term and for the period
  ending on the date which is one year after the later of the termination of the
  Employment Term and the Executive shall not, without the written consent of
  the Company, knowingly solicit, entice or persuade any other employee of the
  Company or any affiliate of the Company to leave the services of the Company
  or such affiliate for any reason. 

  c) The Executive further agrees that, he shall not during
  the Employment Term and for the period ending on the date which one year after
  enter into any relationship whatsoever, either directly or indirectly, alone
  or in partnership, or as an officer, director, employee or stockholder
  (beneficially owning stock or options to acquire stock totaling more than five
  percent of the outstanding shares) of any corporation (other than the
  Company),or otherwise acquire or agree to acquire a significant present or
  future equity or other proprietorship interest, whether as a stockholder,
  partner, proprietor or otherwise, with any enterprise, business or division
  thereof (other than the Company), which is engaged in the development,
  manufacture or marketing and sales of electromagnetic or electro stimulation
  medical devices. 

  d) The restrictions in this Section 5 shall survive the
  termination of this Agreement and shall be in addition to any restrictions
  imposed upon the Executive by statute or at common law. The parties hereby
  acknowledge that the restriction in this Section 5 have been specifically
  negotiated and agreed to by the parties to protect the Company from unfair
  competition. 

6) 
INJUNCTIVE RELIEF 

The Executive hereby expressly acknowledges that any breach or
threatened breach by the Executive of any of the terms set forth in Section 5 of
this Agreement may result in significant and continuing injury to the Company,
the monetary value of which would be impossible to establish. Therefore, the
Executive agrees that the Company shall be entitled to apply for injunctive
relief in court of appropriate jurisdiction. The provisions of this Section
shall survive the Employment Term. 

7) PARTIES
BENEFITED; ASSIGNMENTS 

This Agreement shall be binding upon the Executive, his heirs
and his personal representative or representatives, and upon the Company and its
successors and assigns. Neither this Agreement nor any rights or obligations
hereunder may be assigned by the Executive, other than by will or by the laws of
descent and distribution. 

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8) NOTICES

Any notice required or permitted by this Agreement shall be in
writing, sent by registered or certified mail, return receipt requested,
addressed to the President and the Company at its then principal office, or to
the Executive at the address set forth in the preamble, as the case may be, or
to such other address or addresses as any party hereto may from time to time
specify in writing for the purpose in a notice given to the other parties in
compliance with this Section. Notices shall be deemed given when received.

9) 
GOVERNING LAW 

This Agreement shall be governed by and construed and enforced
in accordance with the laws of the State of Maryland, without regard to conflict
of law principles. 

10) DISPUTES 

Any dispute or controversy arising under, out of, in
connection with or in relation to this Agreement shall, at the election and upon
written demand of either the Executive or the Company, be finally determined and
settled by arbitration in Frederick, Maryland in accordance with the rules and
procedures of the American Arbitration Association, and judgment upon the award
may be entered in any court having jurisdiction thereof. 

11) MISCELLANEOUS 

This Agreement contains the entire agreement of the parties
relating to the subject matter hereof. This Agreement supersedes any prior
written or oral agreements or understandings between the parties relating to the
subject matter hereof. No modification or amendment of this Agreement shall be
valid unless in writing and signed by or on behalf of the parties hereto. A
waiver of the breach of any term or condition of this Agreement shall not be
deemed to constitute a waiver of any subsequent breach of the same or any other
term or condition. This Agreement is intended to be performed in accordance
with, and only to the extent permitted by, all applicable laws, ordinances,
rules and regulations. If any provision of this Agreement, or the application
thereof to any person or circumstance, shall, for any reason and to any extent,
be held in valid or unenforceable, such invalidity and unenforceability shall
not affect the remaining provisions hereof and the application of such
provisions to other persons or circumstances, all of which shall be enforced to
the greatest extent permitted by law. The compensation provided to the Executive
pursuant to this Agreement shall be subject to any withholdings and deductions
required by any applicable tax laws. Any amounts payable under this Agreement to
the Executive after the death of the Executive shall be paid to the Executive’s
estate or legal representative. The headings in this Agreement are inserted for
convenience of reference only and shall not be a part of or control or affect
the meaning of any provision hereof. 

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IN WITNESS WHEREOF, the parties have duly executed and
delivered this Agreement as of the date first written above. 

BioElectronics Corporation: 

	/s/ Andrew J. Whelan
	By: Andrew J. Whelan,
    President
	 
	 
	Executive
	 
	 
	/s/ Thomas O’Connor
	By: Thomas O’ConnorBioElectronics Corporation - Exhibit 10.4 - Prepared By TNT Filings Inc.

 

Exhibit 10.4 

MADISON 

COMMERCE CENTER-A, LLC 

Lease Agreement 

This Lease Agreement is made on this 31 day of August, 2005, at Murrieta,
California between MADISON COMMERCE CENTER-A, LLC. (hereinafter "Lessor" or MCC)
and 

ANDREW S. WHELAN DBA BIOELECTRONICS CORPORATIONS,
(hereinafter "Lessee" or "Tenant"). 

I. Premises 

MCC hereby leases to Tenant and Tenant hereby hires from MCC,
the property hereinafter referred to as the "subject premises" located in the
City of Murrieta, County of Riverside, State of California, and more
particularly described as 41120 Elm Street, Suite No.(s). H-204 (Exhibit
"A"). 

II. Term 

X Fixed-Term Tenancy.
The term of this Lease shall commence on OCTOBER 1, 2005 and continue
until MARCH 31, 2006. Said rental term shall be automatically extended
for the same period and all provisions applicable to the initial lease term
shall apply to the extended lease term(s) with the exception of renewal rate,
unless Lessee gives Lessor or Lessor gives Lessee written notice of cancellation
of this renewal provision at least thirty (30) days prior to the expiration of
any lease term. 

III. Rent & Rent Deposit 

Tenant shall pay as rent to MCC the sum of FIVE HUNDRED
SEVENTY FIVE AND NO/100 Dollars ($575.00) as the first month’s rent
and the sum of FIVE HUNDRED SEVENTY FIVE AND NO/100 ($575.00) as a
deposit against payment of rent for the last month of occupancy under this Lease
Agreement; thereafter, on or before the first day of each succeeding month,
Tenant shall pay the sum of FIVE HUNDRED SEVENTY FIVE AND NO/100 Dollars
($575.00). 

Resident has received concessions or other compensation as an
inducement to enter into this agreement for a certain lease term. Resident shall
repay the inducement prior to vacating the Premises if Resident terminates this
lease or defaults before the end of the lease term. The agreed total value of
the inducement received ______________________________________Resident
terminates this lease or defaults before the end of the lease term. The agreed
total value 

Pg. 1 of 4 

Initials: Lessee: ________ Lessor: ________

of the inducement received         
N/A                          

In the event payment of rent is made after the fifth (5th)
day of the month, an automatic late charge of $50.00 will be charged and
must be included with rental payment. 

A $50.00 charge will be paid by the Lessee to the Lessor for
each returned check. 

The deposit for payment of the final month’s rent provided for
hereunder may be used by MCC for any purpose, free of trust, and no interest
shall be paid to Tenant thereon. 

IV. Set-Up Fee 

Lessee acknowledges that Lessee has inspected the subject
premises prior to taking occupancy and that the subject premises are clean and
in good repair. On or before occupancy Lessee shall pay MCC the sum of NINETY
FIVE Dollars ($95.00) for payment of expenses incurred by MCC for
door directory signs, keys and general administrative set-up of account. 

V. Use of Premises 

The subject premises shall be used by Lessee as a business
office and for uses normally incident thereto and for no other purpose. Lessee
shall allow no hazardous or noxious materials to be stored at the subject
premises and Lessee shall allow no activities on the subject premises, which are
illegal or otherwise constitute a nuisance or disturbance to other tenants of
the building. 

VI. Covenants of Tenant/Lessee 

Lessee covenants and agrees to pay each monthly installment of
rent provided for herein on or before the due date, to use the subject premises
for the purpose hereinabove stated, and to surrender the subject premises,
together with appropriate office and building keys, upon the termination of
tenancy in as good condition as existed at the date of initial occupancy,
reasonable wear and tear excepted. 

(a) Default: The occurrence of any of the following shall
constitute a material default and breach of this Lease by Lessee: 1) Any failure
by Lessee to pay rent or to make any other payments required to be made by
Lessee hereunder, after written notice; 2) The abandonment or vacation of the
Premises by Lessee, bankruptcy of Lessee, or assignment for benefit of
creditors; 3) A failure by Lessee to observe and perform any other provision of
this Lease to be observed or performed by Lessee, where such failure continues
for thirty (30) days after written notice thereof by Lessor to Lessee. 

In the event of any such default by Lessee, Lessor shall also
have the right, with or without terminating this Lease, to re-enter the Premises
and remove all persons and property from the Premises; such property may be
removed and stored in public warehouse or elsewhere at the cost of and for the
account of Lessee. 

Pg. 2 of 4 

Initials: Lessee: ________ Lessor: ________

(b) Abandonment: Lessee shall not vacate or abandon the
premises at any time during the term and if Lessee shall abandon, vacate or
surrender said premises for a period of thirty (30) days or be dispossessed by
process of Law, or otherwise, any personal property belonging to Lessee and left
on the premises shall be deemed to be abandoned. 

(c) Keys: Lessee shall receive 1 key for each office
leased and 1 key for entry into main office. Lessee shall pay to Lessor
the sum of $25.000 for each key not returned at the expiration of this Lease, or
for any additional duplicate keys provided to Lessee. Tenant shall not alter any
lock or install additional locks or bolts on any door. 

(d) Lessor’s Employees: Should Lessee elect to
hire any of Lessor’s employees, during tenancy and/or for a one (1) year period
following vacancy of premises, a fee shall be paid to Lessor in the amount of
$10,000.00 per employee as compensation for Lessor’s loss thereof, unless Lessor
does not intend to retain said employee(s). 

(e) Fax/Copy Equipment: Lessee may maintain its own "desktop"
fax machine equipment inside the leased office. Copy machines/equipment,
free-standing machines and/or machines that require additional electricity or
dedicated circuitry are not permitted. Lessee also agrees not to allow or
solicit other clients on the premises to use Lessee’s fax equipment. 

VII. Covenants of ND/Lessor 

Lessor agrees to pay for janitorial services
and all utilities (except telephone service, which shall be billed directly to
Tenant by Verizon and the specified long distance carrier), unless Lessee
participates in additional services offered by Lessor. 

(a) Tenants must be present when telephone lines are installed
and when telephones are programmed. Any subsequent changes will be at tenant’s
expense. 

(b) Rental payment includes a receptionist to meet and greet
clients during business hours (8 a.m. to 5 p.m.) Monday through Friday, coffee
service, use of up to five (5) free hours of conference room time, with a
6-month lease term, assuming availability is granted, per the reservation book.
A $25.00 per hour charge will be billed to the Lessee for the use of the
conference room in excess of the allowed "free" time. Additional services
included are as follows: N/A 

(c) Lessor shall provide office support services Monday
through Friday during business hours; based on the then current rate sheet,
shall be rendered at the end of each month and is due and payable charges,
stationary supplies, parking validations, secretarial services, etc.) that have
been incurred by MCC on behalf of the client/tenant during the previous monthly
accounting period, payment is requested no later than the 10th day of
each month following presentation of this statement. 

Pg. 3 of 4 

Initials: Lessee: ________ Lessor: ________

VIII. Successors and Assigns 

The covenants and conditions herein contained shall be subject
to the provisions as to assignment, apply to and bind the heirs, successors,
executors, administrators and assigns or the parties hereto. 

IX. Miscellaneous 

1. This Lease Agreement is entered into in the State of
California and shall be interpreted in accordance with the laws of the State of
California. 

2. This Lease Agreement constitutes the entire Agreement of
the parties with respect to the subject matter hereof. 

3. This Lease Agreement may not be modified except in writing
signed by both parties. The subject matter hereof, the prevailing party shall be
entitled to recover, in addition to costs, reasonable attorney’s fees. 

	Madison Commerce Center-A, LLC:	Tenant/Lessee:
	 	 	 	 
	By:	/s/ Theresa M. Hadley	By:	/s/ T. O’Connor
	 	 	 	 
	Print:	Theresa M. Hadley	Print:	T. O’Connor
	 	 	 	 
	Title:	Leasing Consultant	Title:	EVP/COO
	 	 	 	 
	Date:	8/31/05	Date:	8/31/05
	 	 	 	 

Pg. 4 of 4 

Initials: Lessee: ________ Lessor: ________

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