exhibit_10-3.htm

EXHIBIT 10.3

EMPLOYMENT AQREEMENT

THIS AGREEMENT entered into as of August 15, 2006 and effective as of August 15, 2006 (the "Effective Date"), subject to Board of Directors approval, by and between Advanced Medical Isotope Corporation (AMIC) or its successors and/or assignees. (hereinafter called the "Company") and William J. Stokes, an individual residing at 257 Riverwood Street, Richland WA 99352 called the "Executive").

WITNESSETH:

WHEREAS, the Company and the Executive desire to enter into an employment agreement to establish the rights and obligations of the Executive and the Company in such employment relationship;

WHEREAS, the terms of this Agreement have been approved by the Board Chairman and will be presented to the full Board of Directors, of the Company;

NOW, THEREFORE, and in consideration of the mutual covenants herein contained, the Company and the Executive hereby mutually agree as follows:

1. Employment and Duties.

The Company hereby employs the Executive and the Executive hereby accepts employment with the Company upon the terms and conditions hereinafter set forth. The Executive shall serve the Company as its Chief Executive Officer. In such capacity, the Executive shall report directly to the Company's Board of Directors and the Executive shall have all powers, duties, and obligations as are normally associated with such position as described in Exhibit I. The Executive shall further perform such other duties related to the business of the Company as may from time to time be reasonably requested of him by the Board of Directors.

Executive shall promptly notify the Company of his/her election or appointment to any corporate, civic or charitable boards or committees on or after the date of this Agreement.

2. Term of Employment.

The term of employment (the "Term") shall begin on the Effective Date and shall expire on the third anniversary of the Effective Date, subject, however, to prior termination, as herein provided.

3. Base Salary.

The Executive shall receive a monthly salary of $4,000 salary, beginning on January 1, 2007 until August 1, 2007 upon which the salary shall be $8,000. Adjustments shall be made at the discretion of the Board of Directors considering the performance of the company and contributions of the Executive.

4. Bonus

1,500,000 shares of common stock as a sign-on bonus. Within forty five (45) days of the close of each half of the Company's fiscal year, during which Executive is employed by the Company, the Executive shall be eligible to receive bonus payments ("Bonus") under the plan established by the Board of Directors for the Executive.

5. Fringe Benefits.

The Company shall further provide the Executive with medical insurance that covers all benefits that are available to other employees and/or executives for health, dental, and vision, The Company will also provide life insurance coverages, sick leave, personal time, vacation time, short and long term disability programs, tax-qualified retirement plans, stock option and/or stock grant plans, paid holidays, expense reimbursement policies and such other fringe benefits of employment as the Company may provide from time to time to actively employed personnel of the Company who are similarly situated.

Notwithstanding the preceding provisions of this Paragraph 5, during the term of this Agreement (including extensions thereof) the Company shall provide the Executive reimbursement for all reasonable expenses incurred by the Executive in connection with the conduct of the Company's business art presentation of reasonable and appropriate receipts and in accordance with the Company's regular authorization and reimbursement policy applicable to senior executives and/or the Internal Revenue Service policies for business expense reimbursement and receipts.

6. Stock Options.

Executive shall be eligible for all Executive Stock Option Plans that are available to other Executives. The Board of Directors will be responsible for the general employee Stock Option Plans annually.

7. Provision of Directors and Officers Insurance.

The Company shall provide the Executive with full and complete Directors and Officers insurance coverage up to the maximum amount allowed under the Company's Directors and Officers insurance policy. The Executive shall he insured to the same extent as the Directors of the Company.

8. Termination of Employment.

(a) Termination of Employment by the Company.

The Executive's employment hereunder may be terminated by the Board of Directors without any breach of this Agreement. With the exception of termination for Cause, the Executive is expected to be provided thirty (30) days notice of a termination of employment.

The Executive's employment hereunder shall terminate upon his death and may be terminated by the Company in the event of his Disability for a continuous period of at least one hundred eighty (180) days. If Executive becomes subject to a Disability which is expected to last for a continuous period of at least one hundred eighty (18O) days, the Company may appoint an acting CEO, during such one hundred eighty (180) day period without any breach of this Agreement; provided, that Executive shall be entitled to continue receiving Base Salary and benefits under this Agreement during such one hundred eighty (180) day period.

(b) Termination of Employment by Executive.

The Executive may terminate his employment at any time with or without Good Reason. With the exception of personal hardship, the Executive is expected to provide thirty (30) days notice of a voluntary termination of employment.

Any termination of the Executive's employment by the Company hereunder, or by the Executive other than termination upon the Executive's death, shall be communicated by written Notice of Termination to the other party.

9. Amounts Payable Upon Termination of Employment.

(a) Termination by the Company Without Cause or by the Executive for Good Reason.

In the event Executive's employment is terminated by the Company without Cause or by the Executive for Good Reason, Executive shall be entitled to the following payments and benefits: The determination of "Good Reason" is in the sole discretion of the Company.

(i) payment of all Accrued Obligations in a lump sum in cash as soon as practicable but no later than ninety (90) days following the Date of Termination;

(ii) payment of an amount equal to one (1) times the sum of Executive's monthly current Base Salary plus any portion of the Annual Bonus allocated by the Board of Directors for the period of employment.

(iii) immediate vesting of all outstanding options, stock grants, shares of restricted stock and any other equity incentive compensation; provided, that the stock options shall be exercisable only until the earlier to occur of (A) two (2) years from the date of the Executive's termination, or (B) the date the option would have otherwise expired if the Executive had not terminated employment; and

(iv) disability and other welfare plan benefits (other than continued group long-term disability coverage) for Executive and Executive's spouse/family, which are generally available to executives of the Company, for a period of one (1) year from the Date of Termination at the same cost to the Executive as is charged to such executives from time to time for comparable coverage.

(b) Termination by Executive Other Than for Good Reason or by the Company for Cause.

In the event that the Executive's employment is terminated by Executive other than for Good Reason, as determined by the Company, or by the Company for Cause, the Executive shall be entitled only to the payments and benefits set forth below:

(i) as of the Date of Termination, any Base Salary that is accrued but unpaid, any vacation that is accrued but unused and any business expenses that are unreimbursed; and

(ii) any other rights and benefits (if any) provided under plans and programs of the Company (excluding any bonus program), determined in accordance with the applicable terms and provisions of such plans and programs,

If the Executive's employment is terminated due to Disability, Executive shall be entitled to the following payments and benefits:

(i) payment of all Accrued Obligations in a lump sum in cash as soon as practicable but no later than ninety (90) days following the Date of Termination;

(ii) payment of an amount equal to twelve (12) times the sum of Executive's monthly current Base Salary plus any portion of the Annual Bonus allocated by the Board of Directors for the period of employment.

(iv) disability and other welfare plan benefits (other than continued group long-term disability coverage) for Executive and Executive's family, which are generally available to executives of the Company, for a period of one (1 ) year from the Date of Termination at the same cost to the Executive as is charged to such executives from time to time for comparable coverage.

Notwithstanding any other provision hereof, if Executive dies prior to the time that all payments described in this Section 9(c) have been completed, such payments and benefits shall be paid to the Executive's estate.

(d) Death.

If the Executive's employment is terminated by death, Executive's estate shall be entitled to the payment of all Accrued Obligations in a lump sum in cash as soon as practicable but no later than ninety (90) days following the Date of Termination.

(e) No Duty to Mitigate Damages.

After any Date of Termination, the Executive shall have no obligation to seek other employment, but shall have the right to be otherwise employed, and any compensation of any type whatsoever received by the Executive in connection with such employment shall not be offset by the Company against any of the obligations of the Company under this Agreement.

10. Restrictive covenants.

The Executive agrees that, during the term of this Agreement, including any extension thereof, and for a period of one (1) year thereafter, he shall not, directly or indirectly in the service of or on behalf of others, engage in or provide services substantially similar to those services he provides for the Company for a Competing Business. For purposes of this Section 10(a), the Executive acknowledges that the Business of the Company is conducted in the Area; of production, import for resale, and distribution of radioisotopes for use in the medical industries and as may be authorized by the Board of Directors.

11. Ownership and Protection of Proprietary Information.

(a) Confidentiality.

All Confidential information and Trade Secrets and all physical embodiments thereof received or developed by the Executive while employed by the Company are confidential to and are and will remain the sole and exclusive property of the Company. Except to the extent necessary to perform the duties assigned to him by the Company, the Executive will hold such Confidential Information and Trade Secrets in trust and strictest confidence, and will not use, reproduce, distribute, disclose or otherwise disseminate the Confidential Information and Trade Secrets or any physical embodiments thereof and may in no event take any action causing or fail to take the action necessary in order to prevent, any Confidential Information and Trade Secrets disclosed to or developed by the Executive to lose its character or cease to qualify as Confidential Information or Trade Secrets.

(b) Return of Company Property.

Upon request by the Company, and in any event upon termination of the employment of the Executive with the Company for any reason, as a prior condition to receiving any final compensation hereunder (including payments under Section 9 hereof), the Executive will promptly deliver to the Company all property belonging to the Company, including, without limitation, all Confidential information and Trade Secrets (and all embodiments thereof) then in the Executive's custody, control or possession.

The covenants of confidentiality set forth herein will apply on and after the date hereof to any Confidential Information and Trade Secrets disclosed by the Company or developed by the Executive prior to or after the date hereof. The covenants restricting the use of Confidential Information will continue to survive the termination of this Agreement.

12. Non-exclusivity of Rights.

Nothing in this Agreement shall prevent or limit the Executive's continuing or future participation in any benefit, bonus, incentive or other plan or program provided by the Company or any of its Affiliated Companies and for which the Executive may qualify, nor shall anything herein limit or otherwise prejudice such rights as the Executive may have under any other agreements with the Company or any Affiliated Companies, including, but not limited to stock option or restricted stock agreements. Amounts which are vested benefits or which the Executive is otherwise entitled to receive under any plan or program of the Company or any Affiliated Companies at or subsequent to the Date of Termination shall be payable in accordance with such plan or program.

13. Full Settlement.

The Company's obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any circumstances, including, without limitation, any set-off, counterclaim, recoupment, defense or other right which the Company may have against the Executive or others whether by reason of the subsequent employment of the Executive or otherwise. In no event shall the Executive be obligated to seek other employment by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement. In the event that the Executive shall in good faith give a Notice of Termination for Good Reason and it shall thereafter be determined that Good Reason did not take place, the employment of the Executive shall, unless the Company and the Executive shall otherwise mutually agree, be deemed to have terminated, at the date of giving such purported Notice of Termination, by mutual consent of the Company and the Executive and, except as provided in the last preceding sentence, the Executive shall be entitled to receive only those payments and benefits which he would have been entitled to receive at such date had he terminated his employment voluntarily at such date under this Agreement.

14. Definitions.

(a) “Accrued Obligations” shall mean (i) the Executive's full Base Salary through the Date of Termination, (ii) any unpaid but accrued Bonus, (iii) the product of the total Bonus paid to the Executive for the last full fiscal year of the Company and a fraction, the numerator of which is the number of days in the current fiscal year of the Company through the Date of Termination, and the denominator of which is 365, (iv) any compensation previously deferred by the Executive (together with any accrued earnings thereon) and not yet paid by the Company and any accrued vacation pay for the current year not yet paid by the Company, (v) any amounts or benefits owing to the Executive or to the Executive's beneficiaries under the then applicable employee benefit plans or policies of the Company and (vi) any amounts owing to the Executive for reimbursement of expenses properly incurred by the Executive prior to the Date of Termination and which are reimbursable in accordance with the reimbursement policy of the Company described in Section 5(a).

(b) “Affiliated Company” shall mean any company controlling, controlled by or under common control with the Company.

(d) “Base Salary” shall have the meaning set forth in Section 3.

(e) “Bonus” shall have the meaning set forth in Section 4.

(f) “Business of the Company” shall mean any business that involves the manufacture, production, sale, marketing, promotion, exploitation, development, licensing or distribution of radioisotope devices used in the treatment of cancer.

(g) “Cause” shall mean either: (i) any act that constitutes, on the part of the Executive, fraud or dishonesty that directly results in material injury to the Company or the conviction of a felony, or (ii) the Executive materially breaches this Agreement, provided, however, that in case of Clause (ii) above, such conduct shall not constitute Cause unless the Board of Directors shall have delivered to the Executive notice setting forth with specificity (A) the conduct deemed to qualify as Cause, (B) reasonable action that would remedy such objection, and (C) a reasonable time (not less than thirty (30) days) within which the Executive may take such remedial action, and the Executive shall not have taken such specified remedial action within such specified reasonable time.

(h) A "Change of Control" means: (i) the acquisition after the execution of this agreement, by any individual, entity or group (within the meaning of Section 130)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") (a "Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of voting securities of the corporation where such acquisition causes such person to own thirty- five percent (35%) or more of the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the "Outstanding Company Voting Securities"); provided, however, that for purposes of this Subsection (i), the following acquisitions shall not be deemed to result in a Change of Control: (A) any acquisition directly from the Company, (B) any acquisition by the Company, (C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company or (D) any acquisition by any corporation pursuant to a transaction that complies with clauses (A). (B) and (C) of Subsection (iii) below; and provided, further, that if any Person's beneficial ownership of the Outstanding Company Voting Securities reaches or exceeds thirty-five percent (35%) as a result of a transaction described in clause (A) or (B) above, and such Person subsequently acquires beneficial ownership of additional voting securities of the Company, such subsequent acquisition shall he treated as an acquisition that causes such Person to own thirty-five percent (35%) or more of the Outstanding Company Voting Securities; or (ii) individuals who, as of the date hereof constitute the Board (the "Incumbent Board") cease for any reason to constitute at least a majority of the Board; porvided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election, by the Company's shareholders, was approved by a vote of at least two-thirds of the directors then comprising the incumbent Board shall be considered as though such individual were a member of the incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; (iii) the approval by the shareholders of the Company of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company ("Business Combination") or, if consummation of such Business Combination is subject, at the time of such approval by shareholders, to the consent of any government or governmental agency, the obtaining of such consent (either explicitly or implicitly by consummation); excluding, however, such a Business Combination pursuant to which (A) all or substantially all of the individuals and entities who were the beneficial owners of the Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly. more than sixty percent (60%) of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be of the corporation resulting from such Business Combination including, without limitation, a corporation that as a result of such transaction owns the Company or all or substantially all of the Company's assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Company Voting Securities, (B) no Person (excluding any employee benefit plan (or related trust) of the Company or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, thirty-five percent (35%) or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination and (C) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or (iv) approval by the shareholders of the Company of a complete liquidation or dissolution of the Company.

(i) "Change of Control Date" shall mean the date on which a Change of Control shall be deemed to have occurred.

(j) "Code" shall mean the Internal Revenue Code of 1986, as amended.

(k) "Company Information" means Confidential Information and Trade Secrets,

(l) "Competing Business" means any person, film, corporation, joint venture or other business entity which is engaged in the Business of the Company within the Area.

(m) "Confidential Information" means confidential data and confidential information relating to the business of the Company (which does not rise to the status of a trade secret under applicable law) which is or has been disclosed to Executive or of which Executive became aware as a consequence of or through his employment with the Company and which has value to the Company and is not generally known to its competitors, and which is designated by the Company as confidential. Confidential Information shall riot include any data or information that (i) has been voluntarily disclosed to the general public by the Company; (ii) has been independently developed and disclosed to the general public by others; or (iii) otherwise enters the public domain through lawful means.

(n) "Date of Termination" shall mean (i) if the Executive's employment is terminated by his death, the date of his death; (ii) if the Executive's employment is terminated by the Company as a result of Disability pursuant to Paragraph 8(a)(iii), the date that is thirty (30) days after Notice of Termination is given, provided, the Executive shall not have returned to the performance of his duties on a full-time basis during such thirty (30) day period; (iii) if the Executive terminates his employment for Good Reason pursuant to Paragraph 8(b), the date that is ten (10) days after Notice of Termination is given (provided that the Company does not cure the event which gives the Executive Good Reason during the ten (10) day period); (iv) if the Executive terminates his employment other than for Good Reason, the date that is two (2) weeks after Notice of Termination is given, provided, in the sole discretion of the Company, such date may be any earlier date after Notice of Termination is given; (v) if the Executive's employment is terminated by the Company without Cause pursuant to Section 8(a)(i), the date that is two (2) weeks after Notice of Termination is given; or (vi) if the Executive's employment is terminated by the Company for Cause pursuant to Paragraph 8(a)(ii), the date on which the Notice of Termination is given.

(o) "Disability" shall mean physical or mental illness which would entitle the Executive to receive full long-term disability benefits under the Company's long-term disability plan on terms substantially similar to those of the long-term disability plan as in effect as of the financial breakeven date.

(p) "Good Reason" shall mean the occurrence of one of the following events which occurs without the Executive's consent (provided the Company does not cure such event on a retroactive basis to the extent possible within ten (10) days following its receipt of the Executive's Notice of Termination): (i) the Executive's title, position, authority or responsibilities (including reporting responsibilities and authority) are changed in a materially adverse manner; (ii) the Executive's Base Salary is reduced for any reason other than in connection with the termination of his employment or mutual agreement; (iii) for any reason other than in connection with the termination of the Executive's employment, the Company materially reduces any fringe benefit provided to the Executive under Section 5, below the level of such fringe benefit provided generally to other actively employed similarly situated executives of the Company (notwithstanding the foregoing, if the Company agrees to fully compensate the Executive for any such material reduction for a period ending on the earlier to occur of (A) the date such fringe benefit is no longer provided to other actively employed similarly situated executives of the Company or (B) four (4) years, then such event shall not constitute Good Reason); (iv) the Company otherwise materially breaches, or is unable to perform its obligations under this Agreement; or (v) the occurrence of a Change of Control.

Notwithstanding the foregoing, the occurrence of one of the events in Paragraphs (i) through (v) hereof shall not be considered Good Reason for the Executive's termination, unless the Executive delivers a Notice of Termination pursuant to Paragraph 8 hereof, within sixty (60) days after the Executive has actual notice of the occurrence of any of the events listed in Paragraphs (i) through (v) hereof.

(q) "Notice of Termination" shall mean a notice that shall indicate the specific termination provision in this Agreement relied upon, and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive's employment under the provision so indicated.

(r) "Subsidiary" shall mean any majority owned subsidiary of the Company.

(s) "Trade Secrets" means information of the Company, without regard to form, including, but not limited to, technical or nontechnical data, formulas, patterns, compilations, programs, devices, methods, techniques, drawings, processes, financial data, financial plans, product or service plans or lists of actual or potential customers or suppliers which is not commonly known by or available to the public and which information (i) derives economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use; and (ii) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

15. Assignment and Survivorship of Benefits.

The rights and obligations of the Company under this Agreement shall inure to the benefit of, and shall be binding upon, the successors and assigns of the Company. If the Company shall at any time be merged or consolidated into, or with, any other company, or if substantially all of the assets of the Company are transferred to another company, then the provisions of this Agreement shall be binding upon and inure to the benefit of the company resulting from such merger or consolidation or to which such assets have been transferred, and this provision shall apply in the event of any subsequent merger, consolidation, or transfer.

16. Notices.

Any notice given to either party to this Agreement shall be in writing, and shall be deemed to have been given when delivered personally or sent by certified mail, postage prepaid, return receipt requested, duly addressed to the party concerned, at the address indicated below or to such changed address as such party may subsequently give notice of.

If to the Company:

Advanced Medical Isotopes Corporation

6308 Okanogan Street

Kennewick, WA

Attn: Mr. James Katzaroff, President and Board of Directors Chairman

If to the Executive:

William J. Stokes

257 Riverwood Street

Richland WA 99352

17. Indemnification.

The Executive shall be indemnified by the Company, to the extent provided in the case of officers under the Company's Certificate of Incorporation or Bylaws.

18. Taxes.

Anything in this Agreement to the contrary notwithstanding, all payments required to be made hereunder by the Company to the Executive shall be subject to withholding of such amounts relating to taxes as the Company may reasonably determine that it should withhold pursuant to any applicable law or regulations. In lieu of withholding such amounts, in whole or in part, however, the Company may, in its sole discretion, accept other provision for payment of taxes, provided that it is satisfied that all requirements of the law affecting its responsibilities to withhold such taxes have been satisfied.

19. Enforcement of Rights.

All legal and other fees and expenses, including, without limitation, any arbitration expenses, incurred by the Executive in connection with seeking to obtain or enforce any right or benefit provided for in this Agreement, or in otherwise pursuing any right or claim, shall be paid by the Company, to the extent permitted by law, provided that the Executive is successful in whole or in part as to such claims as the result of litigation, arbitration, or settlement. Under a partial finding for the Executive, the Company shall be obligated to pay such legal fees as associated with the upheld claim or prorated to the award vs. the claim.

In the event the Company refuses or otherwise fails to make a payment when due and it is ultimately decided that the Executive is entitled to such payment, such payment shall be increased to reflect an interest equivalent for the period of delay, compounded annually, equal to four (4) percentage points over the Prime Interest Rate as posted periodically in the Wall Street Journal in effect as of the date the payment was first due.

20. Governing Law/Captions/Severance.

This Agreement shall be construed in accordance with, and pursuant to, the laws of the State of Washington. The captions of this Agreement shall not be part of the provisions hereof; and shall have no force or effect. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement. Except as otherwise specifically provided in this paragraph, the failure of either party to insist in any instance on the strict performance of any provision of this Agreement or to exercise any right hereunder shall not constitute a waiver of such provision or right in any other instance.

21. Entire Agreement/Amendment.

This instrument contains the entire agreement of the parties relating to the subject matter hereof, and the parties have made no agreement, representations, or warranties relating to the subject matter of this Agreement that are not set forth herein. This Agreement may be amended at any time by written agreement of both parties, but it shall not be amended by oral agreement This Agreement terminates any and all prior Agreements relating to the terms of Executive's employment.

IN WITNESSETH WHEREOF, the parties have executed this Agreement on the date first above written.

	Advanced Medical Isotope Corporation

	By:	James C. Katzaroff,

		/s/ James C. Katzaroff
		Title: President and Chairman Board of Directors

	EXECUTIVE:

		William J. Stokes

		/s/ William J. Stokes
		Title: Chief Executive Officer