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    EMPLOYMENT
AGREEMENT

     

     

    This
EMPLOYMENT AGREEMENT (this “Agreement”), is effective as of January 1, 2008 (the
“Effective Date”), by and between AVT, Inc., a Nevada corporation,
and Natalie Russell, an individual (the “Executive”).

     

    WITNESSETH:

     

    WHEREAS,
the Company desires to continue to employ the Executive and the Executive
desires to continue to be so employed and to serve from and after the Effective
Date, in the capacity of Vice President of Engineering to perform services on
its behalf in said position;

     

    NOW,
THEREFORE, in consideration of the foregoing and of the mutual promises and
covenants herein contained, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

     

    1.           EMPLOYMENT

     

    The
Company agrees to continue to employ the Executive, and the Executive agrees to
continue to serve the Company, on the terms and conditions set forth
herein.

     

    2.           TERM

     

    Subject
to Section 5 hereof, the Executive’s employment under this Agreement shall
commence on the Effective Date and shall end on the first anniversary of the
Effective Date (the “Initial Term”); provided that such
term shall be automatically extended for additional one-year periods, unless,
not later than 45 days prior to the expiration of the Initial Term (or any
extension thereof pursuant to this Section 2) either party hereto shall
provide written notice of its or her desire not to extend the term hereof to the
other party hereto.  As used herein, the term “Term” shall mean the
Initial Term together with each one-year extension.

     

    3.           POSITION AND
DUTIES

     

    (a)           The
Executive shall be duly appointed, effective on the Effective Date, and shall
thereafter during the Term, serve as Secretary and Office Manager of the Company
and shall perform such duties and exercise such supervision and powers over and
with regard to the business of the Company customarily associated with the
position of Secretary and Officer Manager, as well as such duties and services
required herein and as may be reasonably assigned to her from time to time by
the Board of Directors of the Company (the “Board”).  The Executive
shall perform her duties to the best of her ability and in a diligent and proper
manner.

     

    (b)           Except
during vacations and periods of illness, the Executive shall, during the Term,
devote all Executive’s business time (as opposed to personal time) and attention
to the performance of services for the Company and its subsidiaries hereunder;
provided, however, that the
Executive shall be permitted, to (i) continue to serve on the boards of the
business enterprises on which she is serving as of the Effective Date, (ii)
subject to the prior consent of the Corporate Governance Committee of the Board
(the “Corporate Governance Committee”), serve on any board of any business
enterprise other than those referenced in clause (i) above, and
(iii) serve on any board of any non-profit organization without obtaining
such a consent.  Notwithstanding the foregoing, the Corporate
Governance Committee shall have the right, at any time during the Term, to
require that the Executive resign from Executive’s position on the board or
trusteeship of any for-profit organization, effective as soon as such
resignation may be properly effected under applicable law, and the charters,
by-laws or other governing documents of the applicable for-profit
organization.  On or before the Effective Date, the Executive shall
provide the Corporate Governance Committee with a list of the boards and
committees on which she is serving as of the Effective Date.

     

    4.           COMPENSATION AND RELATED
MATTERS

     

    (a)           Salary.                      During
the Term, the Company shall pay to the Executive a base salary at a rate of not
less than $84,500 per annum, payable in accordance with the usual payroll
practices of the Company, but not less frequently than bi-weekly.  The
Executive’s base salary may be increased from time to time by the Compensation
Committee of the Board (the “Committee”) and, if so increased, shall not
thereafter be decreased during the Term.  As used herein, “Base
Salary” means the Executive’s initial salary hereunder as the same may be
increased during the Term.

     

     Notwithstanding anything in this
Agreement to the contrary, the Executive shall not be entitled to assert that
any breach of this Section 4(a)(ii) constitutes grounds for the Executive’s
termination of Executive’s employment for “Good Reason” (as defined
below).

     

    (b)           Bonus.                      Executive
shall be eligible to earn an annual bonus (the “Bonus”) as directed by the
Company’s Committee.

     

    (c)           Restricted
Shares.                                           Executive
shall receive such number of restricted shares of the Company’s common stock as
is equal to $25,000, based upon the average closing price for the ten (10)
trading days immediately preceding each of the following dates: March 31, 2008;
June 30, 2008; September 30, 2008; and December 31, 2008.

     

    (d)           Vacations.                                During
the Term, Executive shall be entitled to the number of days of paid time off
(“PTO”) in each fiscal year determined in accordance with the Company’s PTO
policies.  During the first year of this Agreement, Executive shall
receive 15 days vacation and 5 sick days.

     

    (e)           Benefit
Plans.                                Executive
will be entitled to the Company’s standard benefit plans.

     

    5.           TERMINATION

     

    The
Executive’s employment hereunder and the Term may be terminated under the
following circumstances:

     

    (a) Death.  The
Executive’s employment hereunder shall terminate upon Executive’s
death.  In the case of any such termination upon death, the
Executive’s estate shall be entitled to the payments and benefits described in
Section 6(a).

     

    (b) Disability.  If
the Executive is unable to timely and regularly perform Executive’s duties
hereunder due to physical or mental illness, injury or incapacity, as determined
by the Board in good faith based on medical evidence acceptable to it (a
“Disability”), and such Disability continues for a period of six consecutive
months, then the Company may terminate the Executive’s employment
hereunder.  A return to work for less than 30 consecutive days
during any period of Disability shall not be deemed to interrupt the running of
(and shall be included in) the aforementioned six-month period.  In
the case of any such termination by the Board on account of Disability, the
Executive shall be entitled to the payments and benefits described in
Section 6(a).

     

    (c) Termination by the Company
for Cause.  The Company may terminate the Executive’s
employment hereunder at any time for Cause.  For purposes of this
Agreement, “Cause” shall mean a termination of employment of the Executive by
the Company due to (i) the commission by the Executive of an act of fraud
or embezzlement against the Company or any of its subsidiaries or the conviction
of the Executive in a court of law, or guilty plea or no contest plea, of any
charge involving an act of fraud or embezzlement (including the willful and
unauthorized disclosure of information of the Company or any of its subsidiaries
which the Executive knows or should know to be material, confidential and
proprietary to the Company or any of its subsidiaries, which results, or could
reasonably have been expected to result, in material financial loss to the
Company or any of its subsidiaries), (ii) the conviction of the Executive
in a court of law, or guilty plea or no contest plea, to a felony charge,
(iii) the willful misconduct of the Executive as an employee of the Company
or any of its subsidiaries which is reasonably likely to result in injury or
financial loss to (I) the Company or (II) to any subsidiaries of the
Company, which injury or loss is material to the Company taken as a whole,
(iv) the willful failure of the Executive to render services to the Company
or any of its subsidiaries in accordance with the Executive’s employment, which
failure amounts to a material neglect of the Executive’s duties to the Company
and does not result from physical illness, injury or incapacity, and which
failure is not cured promptly after adequate notice of such failure and a
reasonably detailed explanation has been presented by the Company to the
Executive, or (v) a material breach of any of the covenants in
subsections 3(a), 3(b) or Section 10 hereof by the Executive, which
breach is not cured, if curable, within 30 days after a written notice of
such breach is delivered to the Executive.  The Executive shall not be
deemed to have been terminated for Cause unless the Company shall have given or
delivered to the Executive (1) reasonable notice setting forth the basis
for termination for Cause, and (2) a reasonable opportunity for the
Executive, together with Executive’s counsel, to request reconsideration by and
be heard before the Board, provided; however, that such
notice and opportunity to be heard shall not be required if the Board, based on
the advice of counsel, deems it inconsistent with its fiduciary duties and so
advises the Executive.

     

    For purposes of determining whether the
Executive was given “reasonable notice” and “reasonable opportunity to be heard”
in connection with any determination by the Board as to whether Cause exists,
10 business days’ notice of the Board meeting shall be deemed to constitute
“reasonable notice” (without prejudice to the determination of whether some
other period would also constitute “reasonable notice”), and the opportunity for
the Executive and Executive’s counsel to present arguments to the Board at such
meeting as to why the Executive believes that no Cause exists shall constitute
“reasonable opportunity to be heard” (without prejudice to the determination of
whether some other forum or method would also constitute a “reasonable
opportunity to be heard”).  For purposes of this Agreement, no act, or
failure to act, on the Executive’s part shall be deemed “willful” unless done,
or omitted to be done, by the Executive not in good faith and without reasonable
belief that the Executive’s action or omission was in the best interest of the
Company.

     

    (d) Termination by the Executive
for Good Reason.  The Executive may voluntarily terminate
Executive’s employment hereunder at any time for Good Reason.  For
purposes of this Agreement, “Good Reason” shall mean (i) a material breach
by the Company of this Agreement (for the avoidance of doubt, other than any
breach of Section 4(a)(ii) or 4(c)(ii)) or of the Non-Qualified Stock
Option Agreement, which breach is not cured within 30 days after the Board’s
receipt of written notice of such non-compliance from the Executive;
(ii) the assignment to the Executive without Executive’s consent by the
Company of duties materially and adversely inconsistent with the Executive’s
position, duties or responsibilities as in effect immediately after the
Effective Date, including, but not limited to, any material reduction in such
position, duties or responsibilities, or a change in the Executive’s title or
office, as then in effect, or any removal of the Executive from any of such
positions, titles or offices, or any failure to elect or reelect the Executive
as a member of the Board or any removal of the Executive as such a member,
except in connection with the termination of Executive’s employment pursuant to
any of subsections 5(a), 5(b) or 5(c) hereof; or (iii) the relocation
of the Company’s headquarters to a place more than 50 miles from its location as
of the Effective Date without the approval of the Executive.

     

    (e) Termination by the Company
Without Cause.  The Company may at any time terminate the
Executive for any reason, and, except for the amounts payable pursuant to
subsection 6(b) hereof (or as otherwise set forth in any equity agreement), the
Executive shall have no claim against the Company under this Agreement or
otherwise by reason of such termination.

     

    (f) Termination by the Executive
Without Good Reason. The Executive may at any time terminate Executive’s
employment hereunder without Good Reason; provided that the Executive will be
required to give the Company at least 90 days’ advance written notice of a
resignation without Good Reason.

     

    (g) Notice of
Termination.  Any termination of the Executive’s employment
hereunder, by the Company or by the Executive (other than termination pursuant
to subsection 5(a) hereof), shall be communicated by written “Notice of
Termination” to the other party hereto.  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.

     

    6.           COMPENSATION UPON
TERMINATION

     

    (a)           Death or
Disability.  If the Executive’s employment hereunder terminates
pursuant to subsections 5(a) (Death) or 5(b) (Disability), the Executive or
Executive’s estate (as the case may be) shall be entitled to receive: (i) a
lump sum payment on the date of such termination equal to the amount of any
earned, but unpaid Base Salary through the date of such termination; and
(ii) an additional lump sum payment not later than thirty (30) days
following such termination equal to (A) two times Base Salary, and
(B) the amount of any unreimbursed business expenses properly incurred by
the Executive in accordance with Company policy prior to the date of the
Executive’s termination.  In addition, the Executive or Executive’s
estate, as the case may be, shall be entitled to receive the Bonus for the
Fiscal Year in which such termination occurs, which is provided under the Bonus
formula for such Fiscal Year, based on Actual Performance for such Fiscal Year
as if the Executive had remained in the employ of the Company through the end of
such Fiscal Year.  Such Bonus to be paid as and when bonuses are paid
to the other senior executives of the Company.  In addition, for a
period of 24 months after such termination, the Executive (unless the
termination is the result of the Executive’s death) and Executive’s eligible
dependents shall, to the extent permitted under the applicable plans of the
Company as in effect on the date of such termination be eligible to continue to
participate in the medical, life, dental and disability insurance coverage
provided to employees at the Company’s expense; provided, however, that after
such termination the Executive shall continue to pay premiums in respect to such
coverage to the same extent that the Executive was paying such premiums
immediately prior to such termination.

     

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

     

    If the
Executive’s employment is terminated by the Company pursuant to
subsection 5(e) (Without Cause) or if the Executive terminates Executive’s
employment pursuant to subsection 5(d) (for Good Reason), then the
Executive shall be entitled to receive: (A) a lump sum payment on the date
of such termination equal to the amount of any earned, but unpaid Base Salary
through the date of such termination; and (B) an additional lump sum
payment not later than thirty (30) days following such termination equal to
(I) any earned but unpaid Bonus; and (II) the amount of any unreimbursed
business expenses properly incurred by the Executive in accordance with Company
policy prior to the date of the Executive’s termination.  The
Executive shall have no further rights to any compensation or other benefits
under this Agreement.

     

    (c)           Termination by the Company
For Cause or by the Executive Without Good Reason.

     

    If the Executive’s employment is
terminated by the Company under subsection 5(c) (for Cause) or by the
Executive under subsection 5(f) (without Good Reason), the Executive shall
be entitled to receive: (i) a lump sum payment on the date of such
termination equal to the amount of any earned, but unpaid Base Salary through
the date of such termination; and (ii) an additional lump sum payment not
later than thirty (30) days following such termination for reimbursement of
any unreimbursed business expenses properly incurred by the Executive in
accordance with Company policy prior to the date of the Executive’s
termination.  If the Executive’s employment hereunder is terminated by
the Executive under subsection 5(f) (without Good Reason), the Executive
shall also be entitled to receive any earned but unpaid Bonus not later than
thirty (30) days following such termination.  The Executive shall
have no further rights to any compensation or other benefits under this
Agreement.

     

    (d)           Expiration of the Employment
Term.  In the event that the Company or the Executive elects
not to extend the Term as provided in Section 2 hereof, the Executive’s
employment shall be terminated upon the expiration of the Term, and, subject to
Section 14 hereof, the provisions of this Agreement shall cease to apply
effective as of such expiration, and the Executive shall be entitled to receive
only the following:  (i) any accrued but unpaid Base Salary
through the date of termination; (ii) reimbursement of any unreimbursed
business expenses properly incurred by the Executive in accordance with Company
policy prior to the date of termination; and (iii) any earned but unpaid
Bonus.  The Executive shall thereafter receive no other compensation
or benefits, other than pursuant to the terms of the plans, policies and
practices of the Company; provided, however, that the
Executive shall not be entitled to any payments or benefits under any separately
stated severance plan, policy or program of the Company.

     

    7.           INDEMNIFICATION AND
INSURANCE

     

    During
the Term and thereafter, the Executive shall be entitled to indemnification to
the fullest extent permitted in accordance with the By-Laws and/or charters or
other formation and governing documents of the Company and its subsidiaries and
affiliates and as provided under the terms of the Company’s directors and
officers liability and (if applicable) fiduciary liability insurance policies
(the “Policies”), as the Policies may be amended from time to time, or any
successor policy, provided, that any such policy shall have terms that are, in
the aggregate, no less favorable than the terms of the relevant policy in effect
on the Effective Date.  If at any time the Company’s Board of
Directors or a committee thereof approves a form of indemnification agreement
for use with the Company’s directors or officers, then the Company shall enter
into an indemnification agreement with the Executive containing the same terms
and conditions as are contained in such form of indemnification agreement.

     

    8.           TAXES

     

    Except as
otherwise provided in Section 7 of this Agreement, the Company shall
withhold from all amounts payable under this Agreement all federal, state, local
and other taxes required by law to be withheld with respect to such
payments.

     

    9.           CONFIDENTIALITY AND
NON-SOLICITATION

     

    (a)           The
Executive acknowledges that the information, observations and data obtained by
Executive’s while employed by the Company concerning the business or affairs of
the Company and its subsidiaries and affiliates which are not available to the
public, customers, suppliers and competitors of the Company which are in the
nature of trade secrets, are proprietary or the disclosure of which could
reasonably be expected to cause a financial loss to the Company, or otherwise
have an adverse effect on the Company (“Confidential Information”) are the
property of the Company or such subsidiary or affiliate.  Therefore,
the Executive agrees that, except as required by law or the rules of any
national securities exchange, she shall not disclose to any unauthorized person
or use for Executive’s own account any Confidential Information without the
prior written consent of the Board, unless and to the extent that any of the
aforementioned matters becomes generally known to the public or is ascertainable
from public or published information and is available for use by the public
other than as a result of the Executive’s acts or omissions to
act.  The Executive shall deliver to the Company any time the Company
may request in writing, all copies of all memoranda, notes, plans, records,
reports, computer tapes and software and other documents and data, or the
portions thereof, that contain the Confidential Information, which she may then
possess or have under Executive’s control.

     

    During the Term and for 36 months
thereafter, the Executive shall not either directly or indirectly through
another entity, (i) induce or attempt to induce any management or other key
employees of the Company or its subsidiaries or affiliates to leave the employ
of the Company or such subsidiary or affiliate, or in any way interfere with the
relationship between the Company or its subsidiaries or affiliates and any such
employee, or (ii) hire any person who was a management or other key
employee of the Company or its subsidiaries or affiliates at any time during the
Executive’s employment with the Company.

     

    (b)           If,
at the time of enforcement of this Section 10, a court shall hold that the
duration, scope or area restrictions stated herein are unreasonable under
circumstances then existing, the parties agree that the maximum duration, scope
or area reasonable under such circumstances, if less, shall be substituted for
the stated duration, scope or area and that the court or arbitrator shall be
allowed to revise the restrictions contained herein to cover, if less, the
maximum period, scope and area permitted by law.

     

    (c)           In
the event of the breach or a threatened breach by the Executive of any of the
provisions of this Section 10, the Company, in addition and supplementary
to other rights and remedies existing in its favor, may apply to any court of
law or equity of competent jurisdiction for specific performance or injunctive
or other relief in order to enforce or prevent any violations of the provisions
hereof (without posting a bond or other security).

     

    10.           SUCCESSORS; BINDING
AGREEMENT

     

    (a)           This
Agreement shall be binding upon and inure to the benefit of the Company and any
successor of the Company, including, any corporation acquiring directly or
indirectly all or substantially all of the Common Stock, business or assets of
the Company, whether by merger, restructuring, reorganization, consolidation,
sale or otherwise (and such successor shall thereafter be deemed the “Company”
for the purposes of this Agreement).  Each of the Company’s
subsidiaries is hereby acknowledged to be a third-party beneficiary with respect
to the provisions of Section 10 hereof and shall be entitled to enforce
such provisions as if it were a party hereto.

     

    (b)           This
Agreement and all rights of the Executive hereunder shall inure to the benefit
of and be enforceable by the Executive’s personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees.  In the event of the Executive’s death or of a judicial
determination of Executive’s incompetence, reference in this Agreement to the
Executive shall be deemed to refer, as appropriate, to Executive’s beneficiary,
estate or other legal representative.

     

     

    11.           NO
MITIGATION; NO OFFSET

     

    The
Company agrees that, subsequent to the Executive’s termination of employment by
the Company, the Executive is not required to seek other employment or to
attempt in any way to reduce any amounts payable to Executive’s due under this
Agreement, and that the amount of any payment that the Company is obligated to
make to the Executive shall not be reduced by any compensation earned by the
Executive as the result of employment by another employer, by retirement
benefits, by offset against any amount claimed to be owed by the Executive to
the Company, or otherwise.

     

    12.           NOTICE

     

    For the
purposes of this Agreement, notices, demands and all other communications
provided for in the Agreement shall be in writing and shall be deemed to have
been duly given when hand delivered or (unless otherwise specified) when mailed
by United States certified mail, return receipt requested, postage prepaid,
addressed as follows:

     

    If to the
Executive:

     

    [redacted]

    


    If to the
Company:

     

    Natalie Bishop

    AVT, Inc.

    341 Bonnie Circle, Suite
102

    Corona, CA 92880

    


    or to
such other address as any party may have furnished to the others in writing in
accordance herewith, except that notices of change of address shall be effective
only upon receipt.

     

    13.           SURVIVORSHIP

     

    The
respective rights and obligations of the parties hereunder, including the rights
and obligations set forth in Sections 6, 7, 8, 9 and 10 of this Agreement,
shall survive any termination of this Agreement to the extent necessary to the
intended preservation of such rights and obligations.

     

    14.           REPRESENTATIONS AND
WARRANTIES

     

    (a)           The
Company represents and warrants that (i) it is fully authorized and
empowered to enter into this Agreement and that the Board has approved the terms
of this Agreement, (ii) the execution of this Agreement and the performance
of its obligations under this Agreement will not violate or result in a breach
of the terms of any material agreement to which the Company is a party or by
which it is bound, (iii) no approval by any governmental authority or body
is required for it to enter into this Agreement, and (iv) the Agreement is
valid, binding and enforceable against the Company in accordance with its
terms.

     

    (b)           The
Executive hereby represents to the Company that the execution and delivery of
this Agreement by the Executive and the Company, and the performance by the
Executive of the Executive’s duties hereunder, shall not constitute a breach of,
or otherwise contravene, the terms of any employment or other agreement to which
the Executive is a party or otherwise bound.

     

    15.           MISCELLANEOUS

     

    The
parties hereto agree that this Agreement contains the entire understanding and
agreement between them, and supersedes all prior understandings and agreements
between the parties respecting the employment by the Company of the Executive
(including, without limitation, the Executive Severance Agreement, dated as of
November 19, 1999), and that the provisions of this Agreement may not be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing signed by the parties hereto.  No waiver by
either party hereto at any time of any breach by the other party hereto of, or
compliance with, any condition or provision of this Agreement to be performed by
such other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time.  No
agreements or representations, oral or otherwise, express or implied, with
respect to the subject matter hereof have been made by either party which are
not set forth expressly in this Agreement.  The validity,
interpretations, construction and performance of this Agreement shall be
governed by the laws of the State of California without giving effect to
conflict of laws principles.  The parties hereby consent to the
jurisdiction of the state and federal courts located within the State of
California.  Any legal action, mediation or arbitration shall be held
in North County San Diego, State of California.

     

    16.           VALIDITY

     

    The
invalidity or unenforceability of any provision or provisions of this Agreement
shall not affect the validity or enforceability of any other provision or
provisions of this Agreement, which shall remain in full force and
effect.

     

    17.           OWNERSHIP.

     

    Company
shall solely own and have exclusive worldwide right, title and interest in to
all the work performed by Executive, and to all derivative works and/or
modifications thereto, and in all United States and foreign trademarks, service
marks, copyrights, patents, trade secrets, and all other intellectual property
rights (collectively “Intellectual Property Rights”) relating
thereto.  No license, ownership or other interest of any kind in the
Work is granted directly or indirectly to Contractor.  In the event
this Agreement is terminated for any reason prior to the completion of all of
the Term, Company shall still exclusively own all rights in the work and other
work in process related thereto, and in all Intellectual Property Rights related
thereto.

     

    18.           ASSIGNMENT.

     

    All work
performed by Executive, and all written, graphic and/or machine readable
materials, documentation, designs, models, drawings, inventions, know-how,
software code and tools, algorithms, libraries, routines, deliverables and other
items created or produced by Executive hereunder (collectively “Related
Materials”) are commissioned at Company’s request and direction and shall be
considered a “work-made-for-hire” under the copyright laws of the United
States.  To the extent that any of the work performed by Executive
and/or Related Materials are not considered a “work-made-for-hire,” Executive
hereby irrevocably assigns and transfers to Company all right, title and
interest worldwide in and to the work performed by Executive and Related
Materials, whether or not patentable or copyrighted, made or conceived or
reduced to practice, and to all modifications and derivative works thereof and
to all Intellectual Property Rights related thereto.  In addition,
Executive hereby irrevocably waive any right to assert any moral rights against
Company or any third party with respect to the work performed by Executive,
Related Materials, any modifications or derivative works thereof, and/or to any
Intellectual Property Rights related thereto.

     

    19.           COUNTERPARTS

     

    This
Agreement may be executed in one or more counterparts (and by facsimile), each
of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.

     

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

     

    
      	
              Automated
      Vending Technologies, Inc.

              A
      Delaware corporation

               

               

               

              ______________________________________

              By:  Loretta
      Vermette

              Its:  Chairman
      of the Board

            	 
      	
              Executive

               

               

               

               

              _______________________________________

              Natalie
      Russell

            


    

    


     

    


     


    
      
        
          


           

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