8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 21, 2008 (July 15, 2008)

DOCUMENT CAPTURE TECHNOLOGIES, INC.

(Exact name of registrant as specified in its charter)

Delaware	000-25839	59-3134518
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employee Identification No.)

1798 Technology Drive, Suite 178

San Jose, California 95110

(Address of principal executive offices, including zip code)

Registrant’s telephone number, including area code:(408) 436-9888

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12(b) under the Exchange Act (17 CFR 240.14a-12(b))

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

This Form 8-K and other reports filed by Document Capture Technologies, Inc., a Delaware corporation (the “Registrant”) from time to time with the Securities and Exchange Commission (collectively the “Filings”) contain or may contain forward-looking statements and information based upon the beliefs of, and currently available to, the Registrant’s management as well as estimates and assumptions made by the Registrant’s management. When used in the Filings the words “anticipate”, “believe”, “estimate”, “expect”, “future”, “intend”, “plan” or the negative of these terms and similar expressions and variations thereof as they relate to the Registrant or the Registrant’s management identify forward-looking statements. Such statements reflect the current view of the Registrant with respect to future events and are subject to risks, uncertainties, assumptions and other risk factors relating to the Registrant’s industry, the Registrant’s operations and results of operations and any businesses that may be acquired by the Registrant. Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended or planned.

Although the Registrant believes that the expectations reflected in the forward-looking statements contained in the Registrant’s Filings are reasonable, the Registrant cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, the Registrant does not intend to update any of the forward-looking statements contained herein to conform these statements to actual results.

Section 5 - Corporate Governance and Management

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

(b) Resignation of Directors

Effective July 15, 2008, Mr. Lawrence Liang resigned from the Board of Directors of the Company. There were no disagreements between Mr. Liang and the Company or any officer or director of the Company on any matter relating to the Company’s operations, policies or practices.

(d) Election of Directors

Effective July 15, 2008, Mr. Darwin Hu stepped down as Chairman of the Company’s Board of Directors. Mr. Hu will continue to serve as a director of the Company until its next annual meeting of stockholders.

On July 15, 2008, the Company’s Board of Directors unanimously voted to elect Mr. Edward M. Straw to serve as Chairman of the Company’s Board of Directors, effective immediately, until the Company’s next annual meeting of stockholders. Mr. Straw will fill the vacancy on the Company’s Board of Directors created by the resignation of Mr. Liang.

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Mr. Straw is currently executive vice president of PRTM Management Consultants, a world class, operational strategy consulting group, where he assists with business development in federal, high tech and consumer packaged goods verticals as well as mentors and coaches younger partners in leadership, communication, presentation and deal closing skills. He also serves on the boards of Eddie Bauer Holdings, MeadWestvaco Corporation, Ply Gem Industries, Panther Expedited Services, and is the Chairman of Odyssey Logistics and Technology. From 2000 to 2005, Mr. Straw served as President of Global Operations of the Estée Lauder Companies Inc., where he led the manufacturing, research and development, information systems, package engineering, quality assurance and global supply chain areas, which support all 20 brands of the Estée Lauder Companies around the world. From 1998 to 2000, Mr. Straw was Senior Vice President, Global Manufacturing and Supply Chain Management at Compaq Computer Corporation, then, the world’s largest computer company. At Compaq, Mr. Straw was responsible for integrating and managing its global supply chain across the entire organization and among suppliers, partners and customers. Before joining Compaq, from 1997 to 1998, Mr. Straw was President of Ryder Integrated Logistics, Inc., the leading provider of supply chain services in North America. Prior to joining the private sector, Mr. Straw served in various positions in the U.S. Navy for over 30 years, including as Vice Admiral, Director and Chief Executive Officer of the Defense Logistics Agency, the largest military logistics command supporting the American armed forces. Mr. Straw is also currently Trustee for the U.S. Naval Academy Foundation, and has served on the Board of Directors of the Navy Federal Credit Union, the U.S. Chamber of Commerce, and the Boy Scouts of America, National Capital Region. Mr. Straw holds a Bachelor of Science degree in Engineering from the U.S. Naval Academy and an MBA from the George Washington University.

On July 15, 2008, in connection with his election to the Board of Directors, the Company entered into a stock option agreement (the “Stock Option Agreement”) with Mr. Straw under which the Company granted to Mr. Straw an option to purchase 1,000,000 shares of the Company’s common stock at an exercise price of $0.30 per share, which will vest over four years. This discussion is qualified in its entirety by reference to the form of Stock Option Agreement, attached hereto as Exhibit 10.1.

There are no arrangements or understandings between Mr. Straw and the Company or its directors, officers or employees, pursuant to which Mr. Straw was selected as a director. There are no transactions, since the beginning of the Company’s last fiscal year, or any currently proposed transaction, in which the Company was or is to be a participant and the amount involved exceeds the lesser of $120,000 or one percent of the average of the Company’s total assets at year-end for the last three completed fiscal years, and in which Mr. Straw had or will have a direct or indirect material interest. Other than the Stock Option Agreement described above, there is no material plan, contract or arrangement to which Mr. Straw is a party or in which he participates that was entered into in connection with his election as a director.

The Company’s press release announcing the changes to the composition of its Board of Directors is attached hereto as Exhibit 99.1.

(e) Material Amendment of Compensatory Arrangements of Certain Officers

On July 15, 2008, the Company’s Board of Directors approved addenda to the employment agreements for each of the following named executive officers of the Company:

· David Clark, Chief Executive Officer;

· William Hawkins, President and Chief Operating Officer; and

· Carolyn Ellis, Chief Financial Officer.

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Below is a brief description of the material terms of each such addendum which amends each executive officer’s employment agreement (“Employment Agreement”). Copies of all such addenda are attached hereto as Exhibits 10.2 through 10.4 and the following descriptions are qualified in their entirety by those Exhibits.

DAVID CLARK, CHIEF EXECUTIVE OFFICER. On July 15, 2008, the Company entered into an Addendum to Employment Agreement with Mr. David Clark, the Company’s Chief Executive Officer (the “Clark Addendum”). The Clark Addendum amends Mr. Clark’s Employment Agreement to (i) extend the expiration date of the Employment Agreement to December 31, 2010; (ii) increase Mr. Clark’s annual base salary to $200,000 from $175,000; (iii) change the geographic location provision of the “Termination by Employee” section of the Employment Agreement to Palm Beach County, Florida from San Jose, California; (iv) extend the term of his severance and C.O.B.R.A premium payments to twelve (12) months from six (6) months; and (v) add an arbitration provision to the “Termination by Employer” section of the Employment Agreement.

WILLIAM HAWKINS, PRESIDENT AND CHIEF OPERATING OFFICER. On July 15, 2008, the Company entered into an Addendum to the Employment Agreement with Mr. William Hawkins, the Company’s President and Chief Operating Officer (the “Hawkins Addendum”). The Hawkins Addendum amends Mr. Hawkins’ Employment Agreement to (i) extend the expiration date of the Employment Agreement to December 31, 2010; (ii) increase Mr. Hawkins’ annual base salary to $200,000 from $185,000; (iii) extend the term of his severance and C.O.B.R.A premium payments to twelve (12) months from six (6) months; and (iv) add an arbitration provision to the “Termination by Employer” section of the Employment Agreement.

CAROLYN ELLIS, CHIEF FINANCIAL OFFICER. On July 15, 2008, the Company entered into an Addendum to Employment Agreement with Ms. Carolyn Ellis, the Company’s Chief Financial Officer (the “Ellis Addendum”). The Ellis Addendum amends Ms. Ellis’ Employment Agreement to (i) extend the expiration date of the Employment Agreement to December 31, 2010; (ii) increase Ms. Ellis’ annual base salary to $165,000 from $135,000; (iii) change the geographic location provision of the “Termination by Employee” section of the Employment Agreement to San Diego, California from San Jose, California; (iv) extend the term of her severance and C.O.B.R.A premium payments to twelve (12) months from six (6) months; and (v) add an arbitration provision to the “Termination by Employer” section of the Employment Agreement.

Section 9 - Financial Statements and Exhibits

Item 9.01 Financial Statement and Exhibits.

(d) Exhibits.

Exhibit Number	Description
10.1	Form of Stock Option Agreement with Edward Straw
10.2	Clark Addendum
10.3	Hawkins Addendum
10.4	Ellis Addendum
99.1	Press Release dated July 21, 2008

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: July 21, 2008	DOCUMENT CAPTURE TECHNOLOGIES, INC.
	By:	/s/ David P. Clark
		David P. Clark Chief Executive Officer

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EX-10.1

Exhibit 10.1

NEITHER THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SHARES ISSUABLE UPON EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE ASECURITIES ACT@) OR THE SECURITIES LAWS OF ANY STATE. NEITHER THE SECURITIES REPRESENTED HEREBY MAY BE SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED NOR MAY THE SHARES BE ISSUED UPON EXERCISE UNLESS SUCH SECURITIES AND SHARES ARE REGISTERED UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS OR THE COMPANY RECEIVES AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH SALE, TRANSFER, PLEDGE OR ISSUANCE IS EXEMPT FROM REGISTRATION.

DOCUMENT CAPTURE TECHNOLOGIES, INC.

FORM OF STOCK OPTION AGREEMENT

THIS STOCK OPTION AGREEMENT (the AAgreement@), is made as of this 15th day of July 2008 by and between Document Capture Technologies, Inc., a Delaware corporation (the ACompany@), and Edward M. Straw (AOptionee@).

R E C I T A L

On July 15, 2008, the Company’s Board of Directors authorized the grant to Optionee of an option to purchase the number of shares of common stock (the ACommon Shares@) of the Company specified in Paragraph 1 hereof, at the price specified therein, such option to be for the term and upon the terms and conditions hereinafter stated. The Board of Directors, or such other committee or individual that the Board of Directors appoints, shall be the “Administrator” for purposes of this Agreement.

A G R E E M E N T

NOW, THEREFORE, in consideration of the promises and of the undertakings of the parties hereto contained herein, it is hereby agreed:

1.Number of Shares; Option Price. Pursuant to said action of the Board of Directors, the Company hereby grants to Optionee the option (AOption@) to purchase, upon and subject to the terms and conditions hereof, 1,000,000 Common Shares of the Company at the price of $0.30 per share (“Exercise Price”).

2.Term. This Option shall expire on the day before the seventh anniversary of the date hereof (the AExpiration Date@) unless such Option shall have been terminated prior to that date in accordance with the provisions of this Agreement. The term AAffiliate@ as used herein shall have the meaning as set forth in the Federal Securities laws of the United States.

3.Shares Subject to Exercise. Common Shares subject to exercise shall be one-fourth (1/4) of such Common Shares on or after July 15, 2009, one-fourth (1/4) of such Common Shares on or after July 15, 2010, one-fourth (1/4) of such Common Shares on or after July 15, 2011, and one-fourth (1/4) of such Common Shares on or after July 15, 2012. All Common Shares shall thereafter remain subject to exercise for the term specified in Paragraph 2 hereof. Upon the merger or consolidation of the Company, or an event in which more than 50% of the Company’s voting capital stock is acquired by one or more individuals acting as a “group” within the meaning of Section 13 of the Securities Exchange Act of 1934, as amended, then all of the Common Shares underlying the Option shall immediately become exercisable.

4.Method and Time of Exercise. The Option may be exercised by written notice delivered to the Company at its principal executive office stating the number of Common Shares with respect to which the Option is being exercised, together with:

(A)a check or money order made payable to the Company in the amount of the exercise price and any withholding tax, as provided under Paragraph 5 hereof; or

(B)if expressly authorized in writing by the Administrator, in its sole discretion, at the time of the Option exercise, the tender to the Company of Common Shares owned by Optionee having a fair market value, as determined by the Administrator, not less than the exercise price, plus the amount of applicable federal, state and local withholding taxes; or

(C)the Optionee may, at its option, elect to exercise this Option, in whole or in part and at any time or from time to time, on a cashless basis, by surrendering this Option, with the purchase form attached to this Option as Exhibit A duly executed by or on behalf of the Optionee, at the principal office of the Company, or at such other office or agency as the Company may designate, by canceling a portion of this Option in payment of the Exercise Price payable in respect of the number of Common Shares purchased upon such exercise. In the event of an exercise pursuant to this subsection 4(c), the number of Common Shares issued to the Holder shall be determined according to the following formula:

X = Y(A-B)
A
Where:	X =	the number of Common Shares that shall be issued to the Holder;
	Y =	the number of Common Shares for which this Option is being exercised (which shall include both the number of Common Shares issued to the Holder and the number of Common Shares subject to the portion of the Option being cancelled in payment of the Exercise Price);
	A =	the Fair Market Value (as defined below) of one Common Share; and
	B =	the Exercise Price then in effect.

(ii) The Fair Market Value per Common Share shall be determined as follows:

(a) If the Common Shares are listed on a national securities exchange, the Nasdaq Stock Market, the OTC Bulletin Board or another nationally recognized trading system as of the Exercise Date, which shall be deemed to have been effected immediately prior to the close of business on the business day on which this option shall have been surrendered to the Company as provided in Section 4(c) hereof (“Exercise Date”), the Fair Market Value per Common Share shall be deemed to be the average of the high and low reported sale prices per Common Share thereon on the trading day immediately preceding the Exercise Date, as defined below, (provided that if the Common Shares are not so listed on such day, the Fair Market Value per Common Share shall be determined pursuant to clause (b) below).

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(b) If the Common Shares are not listed on a national securities exchange, the Nasdaq Stock Market, the OTC Bulletin Board or another nationally recognized trading system as of the Exercise Date, as defined below, the Fair Market Value per Common Share shall be deemed to be the amount most recently determined by the Board of Directors of the Company or an authorized committee of the Board of Directors of the Company (the “Board”) to represent the fair market value per share of the Common Shares (including without limitation a determination for purposes of granting common stock options or issuing common stock under any plan, agreement or arrangement with employees of the Company); and, upon request of the Optionee, the Board (or a representative thereof) shall, as promptly as reasonably practicable but in any event not later than 15 days after such request, notify the Optionee of the Fair Market Value per Common Share. Notwithstanding the foregoing, if the Board has not made such a determination within the three-month period prior to the Exercise Date, as defined below, then (A) the Board shall make, and shall provide or cause to be provided to the Optionee notice of, a determination of the Fair Market Value per Common Share within 15 days of a request by the Optionee that it do so, and (B) the exercise of this Option pursuant to this subsection 4(c) shall be delayed until such determination is made and notice thereof is provided to the Optionee.

Not less than 100 shares may be purchased at any one time unless the number purchased is the total number purchasable under such Option at the time. Only whole shares may be purchased.

5.Tax Withholding. As a condition to exercise of this Option, the Company may require Optionee to pay over to the Company all applicable federal, state and local taxes which the Company is required to withhold with respect to the exercise of this Option. At the discretion of the Administrator and upon the request of Optionee, the minimum statutory withholding tax requirements may be satisfied by the withholding of Common Shares otherwise issuable to Optionee upon the exercise of this Option.

6.Intentionally left blank.

7.Nontransferability. Except with the express written approval of the Administrator, this Option may not be assigned or transferred except by will, qualified domestic relations order or by the laws of descent and distribution, and may be exercised only by Optionee during his lifetime and after his death, by his personal representative or by the person entitled thereto under his will or the laws of intestate succession.

8.Optionee Not a Shareholder. Optionee shall have no rights as a shareholder with respect to the Common Shares of the Company covered by this Option until the date of issuance of a stock certificate or stock certificates to him upon exercise of this Option. No adjustment will be made for dividends or other rights for which the record date is prior to the date such stock certificate or certificates are issued.

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9.No Right to Employment. Nothing in the Option granted hereby shall interfere with or limit in any way the right of the Company or of any of its Affiliates to terminate Optionee's employment or consulting at any time, nor confer upon Optionee any right to continue in the employ of, or consult with, the Company or any of its Affiliates.

10.Anti-dilution Adjustment.

10.1 Stock Dividends, Stock Splits, Etc. If the Company declares or pays a dividend on its Common Stock payable in Common Stock or other securities, or subdivides the outstanding Common Stock into a greater amount of Common Stock, then upon exercise of this Option, for each Common Share acquired, Optionee shall receive, without cost to Optionee, the total number and kind of securities to which Optionee would have been entitled had Optionee owned the Common Shares of record as of the date the dividend or subdivision occurred.

10.2Reclassifications, Exchange or Substitution. Upon any reclassification, exchange, substitution, or other event that results in a change of the number and/or class of the securities issuable upon exercise of this Option, Optionee shall be entitled to receive, upon exercise of this Option, the number and kind of securities and property that Optionee would have received for the Common Shares if this Option had been exercised immediately before such reclassification, exchange, substitution, or other event. The Company or its successor shall promptly issue to Optionee a new Option for such new securities or other property. The new Option shall provide for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided for in this Section 10.2, including, without limitation, adjustments to the Exercise Price and to the number of securities or property issuable upon exercise of the new Option. The provisions of this Section 10.2 shall similarly apply to successive reclassifications, exchanges, substitutions, or other events.

10.3 Adjustments for Combinations, Etc. If the outstanding shares of Common Stock are combined or consolidated, by reclassification or otherwise, into a lesser number of shares, the Exercise Price shall be proportionately increased.

10.4 Merger or Consolidation. In case of any consolidation of the Company with, or merger of the Company into any other corporation, or in the case of any sale or conveyance of all or substantially all of the assets of the Company other than in connection with a plan of complete liquidation of the Company, then as a condition of such consolidation, merger or sale or conveyance, adequate provision will be made whereby the registered holder of the Option will have the right to acquire and receive upon exercise of this Option in lieu of the shares of Common Stock immediately theretofore subject to acquisition upon the exercise of this Option, such shares of stock, securities or assets as may be issued or payable with respect to or in exchange for the number of shares of Common Stock immediately theretofore subject to acquisition and receivable upon exercise of this Option had such consolidation, merger or sale or conveyance not taken place. In any such case, the Company will make appropriate provision to insure that the provisions of this Section 10 hereof will thereafter be applicable as nearly as may be in relation to any shares of stock or securities thereafter deliverable upon the exercise of this Option.

11.Restrictions on Sale of Common Shares. Optionee represents and agrees that upon his exercise of this Option, in whole or in part, unless there is in effect at that time under the Securities Act a registration statement relating to the Common Shares issued to him, he will acquire the Common Shares issuable upon exercise of this Option for the purpose of investment and not with a view to their resale or further distribution, and that upon such exercise thereof he will furnish to the Company a written statement to such effect, satisfactory to the Company in form and substance. Optionee agrees that any certificates issued upon exercise of this Option may bear a legend indicating that their transferability is restricted in accordance with applicable state and federal securities law. Any person or persons entitled to exercise this Option under the provisions of Paragraphs 5 and 6 hereof shall, upon each exercise of this Option under circumstances in which Optionee would be required to furnish such a written statement, also furnish to the Company a written statement to the same effect, satisfactory to the Company in form and substance.

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12.Notices. All notices to the Company shall be addressed to the Chief Financial Officer at the principal executive office of the Company, and all notices to Optionee shall be addressed to Optionee at the address of Optionee on file with the Company or its subsidiary, or to such other address as either may designate to the other in writing. A notice shall be deemed to be duly given if and when enclosed in a properly addressed sealed envelope deposited, postage prepaid, with the United States Postal Service. In lieu of giving notice by mail as aforesaid, written notices under this Agreement may be given by personal delivery to Optionee or to the Chief Financial Officer (as the case may be).

13.Sale or Other Disposition. If Optionee at any time contemplates the disposition (whether by sale, gift, exchange, or other form or transfer) of any Shares acquired by exercise of this Option, he or she shall first notify the Company in writing of such proposed disposition and cooperate with the Company in complying with all applicable requirements of law, which, in the judgment of the Company, must be satisfied prior to such disposition.

[SIGNATURE PAGE FOLLOWS]

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

DOCUMENT CAPTURE TECHNOLOGIES, INC.
By :
Name:	David P. Clark
Title:	Chief Executive Officer

OPTIONEE

By:                                                 

Name: Edward M. Straw

Address:

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EXHIBIT A

PURCHASE FORM

To: Document Capture Technologies, Inc. Dated:____________

The undersigned, pursuant to the provisions set forth in the attached option, hereby elects to purchase (check applicable box):

_________ shares of the Common Stock of Document Capture Technologies, Inc. covered by such Option; or

the maximum number of shares of Common Stock covered by such Option pursuant to the cashless exercise procedure set forth in subsection 4(c).

The undersigned herewith makes payment of the full Exercise Price for such shares at the price per share provided for in such Option. Such payment takes the form of (check applicable box or boxes):

$______ in lawful money of the United States; and/or

the cancellation of such portion of the attached Option as is exercisable for a total of _____ Common Shares (using a Fair Market Value of $_____ per share for purposes of this calculation) ; and/or

the cancellation of such number of Option Shares as is necessary, in accordance with the formula set forth in subsection 4(c), to exercise this Option with respect to the maximum number of Option Shares purchasable pursuant to the cashless exercise procedure set forth in subsection 4(c).

Print or Type Name

(Signature must conform in all respects to name of holder as specified on the face of the Option)

(Street Address)

(City)  (State)    (Zip Code)

 

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EX-10.2

Exhibit 10.2

ADDENDUM to EMPLOYMENT AGREEMENT

This AGREEMENT (the “Agreement”), dated as of July 15, 2008, by and between Document Capture Technologies, Inc., a Delaware corporation with principal executive offices at 1772 Technology Drive, San Jose, California 95110 (hereinafter referred to as the “Company”), and David Clark, an individual residing at 13465 Southfields Road, Wellington, Florida 33414 (hereinafter referred to as “Employee”).

W I T N E S S E T H:

WHEREAS, the Company and the Employee are parties to an Employment Agreement dated April 26, 2005 (the “Original Agreement”) and two Addenda to the Employment Agreement dated January 18, 2008 and February 26, 2008 (the “Addenda” and together with the Original Agreement, the “Employment Agreement”);

WHEREAS, the Company desires to amend the Employment Agreement to (i) extend the term of the Employment Agreement through December 31, 2010; (ii) adjust Mr. Clark’s base salary in order to reflect his current role with the Company; (iii) add an arbitration provision to the “Termination by Employer” section of the Employment Agreement; (iv) change the geographic location provision of the “Termination by Employee” section of the Employment Agreement; and (v) change the definition of Severance Payment.

NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, the parties hereto hereby agree as follows:

1. Capitalized terms used herein but not otherwise defined herein have the meanings ascribed to them in the Employment Agreement. Capitalized terms amended hereby shall affect the remainder of the Employment Agreement.

2. Section 2(a) of Employee’s Employment Agreement is amended to read as follows:

a. Subject to Section 9 and Section 10 below, the term of this Agreement shall expire on December 31, 2010 (the “Term”). The Term of this Agreement shall be automatically extended for additional one (1) year periods, unless either party notifies the other in writing at least ninety (90) days prior to the expiration of the then existing Term of its intention not to extend the Term. During the Term, Employee shall devote substantially all of his business time and efforts to Employer and its subsidiaries and affiliates.

3. Section 4(a)(i) of the Employment Agreement is amended to read as follows:

(i) Employee shall be paid a base pay of $200,000 per year during the Term of this Agreement. Employee shall be paid periodically in accordance with the policies of the Employer during the term of this Agreement, but not less than monthly.

4. Section 9(a) of the Employment Agreement is amended to read as follows:

(i) Employer may terminate this Agreement upon written notice for Cause. For purposes hereof, "Cause" shall mean (A) Employee's misconduct as could reasonably be expected to have a material adverse effect on the business and affairs of Employer, (B) the Employee's disregard of lawful instructions of Employers Board of Directors consistent with Employee's position relating to the business of Employer or neglect of duties or failure to act, which, in each case, could reasonably be expected to have a material adverse effect on the business and affairs of Employer, (C) engaging by the Employee in conduct that constitutes activity in competition with Employer, including any unapproved activities identified in section 8(c) of this Agreement; (D) the conviction of Employee for the commission of a felony; and/or (E) the habitual abuse of alcohol or controlled substances. Notwithstanding anything to the contrary in this Section 9(a)(i), Employer may not terminate Employee's employment under this Agreement for Cause unless Employee shall have first received notice from the Board advising Employee of the specific acts or omissions alleged to constitute Cause, and such acts or omissions continue after Employee shall have had a reasonable opportunity (at least 10 days from the date Employee receives the notice from the Board) to correct the acts or omissions so complained of. In no event shall alleged incompetence of Employee in the performance of Employee's duties be deemed grounds for termination for Cause.

(ii) If Employer terminates Employee for Cause, both parties agree as follows:

(A) Before such termination shall become effective, the matter shall be submitted to a binding arbitration conducted at a location in San Jose, California to be determined by an arbitrator selected by the initiating party and in accordance with the then existing Rules of Practice and Procedure of the American Arbitration Association.

(B) The number of arbitrators shall be three; one selected by Employee, one selected by Employer, and one selected by the two selected arbitrators. Each arbitrator shall be impartial and independent and shall perform his or her duties with diligence and in good faith.

(C) Any party may be represented by counsel or other authorized representatives during the arbitration hearings. No party shall communicate ex parte with a selected or candidate arbitrator.

(D) The arbitrators shall, by majority decision, determine the fairness and validity of Employer’s reasons for terminating Employee for Cause and such determination shall be final and binding upon the parties. If the termination is determined to be invalid or unfair, Employer shall be deemed to have breached the Agreement and Section 10 of the Agreement shall apply.

(E) Each party shall bear its expenses, costs and attorney fees relating to the arbitration.

(F) Until such time as a final binding arbitration award is entered into, Employee shall be placed on administrative leave and shall continue to receive his full compensation (including salary, bonus, stock options and benefits) as if he remained an Employee of the Company.

(iii) This Agreement automatically shall terminate upon the death of Employee, except that Employee's estate shall be entitled to receive any amount accrued under Section 4(a).

5. Section 9(b)(i)(C) of the Employment Agreement is amended to read as follows:

(i) Employee shall have the right to terminate his employment under this Agreement upon 30 days’ notice to Employer given within 90 days following the occurrence of any of the following events (A) through (F) or within three years following the occurrence of event (G):

(C) Employer acts to change the geographic location of the performance of Employee’s duties from the Palm Beach County area. For purposes of this Agreement, the Palm Beach County area shall be deemed to be the area within 60 miles of Palm Beach County, Florida.

[ADDENDUM TO EMPLOYMENT AGREEMENT]

6. Section 9(b)(iii) of the Employment Agreement is amended to read as follows:

(iii) If Employee shall terminate this Agreement under Section 9(b)(i), Employee shall be entitled to receive twelve (12) months salary, at his then current yearly salary rate, (the “Severance Payment”), and Employer shall pay 100% of the C.O.B.R.A. premiums for twelve (12) monhts after such termination. Other than the Severance Payment and the payment of C.O.B.R.A. premiums described in this section 9(b)(iii), Employer shall have no further obligation to compensate Employee pursuant to Section 4 above. If Employee shall terminate this Agreement pursuant to Section 9(b)(ii), Employee shall not be entitled to the Severance Payment or any additional compensation as provided in Section 4.

All other terms and conditions of the Employment Agreement not affected hereby shall remain in effect as originally drafted.

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

DOCUMENT CAPTURE TECHNOLOGIES, INC.		EMPLOYEE
By:	/s/ William Hawkins	/s/ David Clark
	William Hawkins	David Clark
	President and Chief Operating Officer

[ADDENDUM TO EMPLOYMENT AGREEMENT]

EX-10.3

Exhibit 10.3

ADDENDUM to EMPLOYMENT AGREEMENT

This AGREEMENT (the “Agreement”), dated as of July 15, 2008, by and between Document Capture Technologies, Inc., a Delaware corporation with principal executive offices at 1772 Technology Drive, San Jose, California 95110 (hereinafter referred to as the “Company”), and William Hawkins, an individual residing at 5248 Saint Anne’s Court, San Jose, California 95138 (hereinafter referred to as “Employee”).

W I T N E S S E T H:

WHEREAS, the Company and the Employee are parties to an Employment Agreement dated April 26, 2005 (the “Original Agreement”) and two Addenda to the Employment Agreement dated January 18, 2008 and February 26, 2008 (the “Addenda” and together with the Original Agreement, the “Employment Agreement”);

WHEREAS, the Company desires to amend the Employment Agreement to (i) extend the term of the Employment Agreement through December 31, 2010; (ii) adjust Mr. Hawkins’ base salary in order to reflect his current role with the Company; (iii) add an arbitration provision to the “Termination by Employer” section of the Employment Agreement; and (iv) change the definition of Severance Payment.

NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, the parties hereto hereby agree as follows:

1. Capitalized terms used herein but not otherwise defined herein have the meanings ascribed to them in the Employment Agreement. Capitalized terms amended hereby shall affect the remainder of the Employment Agreement.

2. Section 2(a) of Employee’s Employment Agreement is amended to read as follows:

a. Subject to Section 9 and Section 10 below, the term of this Agreement shall expire on December 31, 2010 (the “Term”). The Term of this Agreement shall be automatically extended for additional one (1) year periods, unless either party notifies the other in writing at least ninety (90) days prior to the expiration of the then existing Term of its intention not to extend the Term. During the Term, Employee shall devote substantially all of his business time and efforts to Employer and its subsidiaries and affiliates.

3. Section 4(a)(i) of the Employment Agreement is amended to read as follows:

(i) Employee shall be paid a base pay of $200,000 per year during the Term of this Agreement. Employee shall be paid periodically in accordance with the policies of the Employer during the term of this Agreement, but not less than monthly.

4. Section 9(a)(i) of the Employment Agreement is amended to read as follows:

(i) Employer may terminate this Agreement upon written notice for Cause. For purposes hereof, "Cause" shall mean (A) Employee's misconduct as could reasonably be expected to have a material adverse effect on the business and affairs of Employer, (B) the Employee's disregard of lawful instructions of Employers Board of Directors consistent with Employee's position relating to the business of Employer or neglect of duties or failure to act, which, in each case, could reasonably be expected to have a material adverse effect on the business and affairs of Employer, (C) engaging by the Employee in conduct that constitutes activity in competition with Employer, including any unapproved activities identified in section 8(c) of this Agreement; (D) the conviction of Employee for the commission of a felony; and/or (E) the habitual abuse of alcohol or controlled substances. Notwithstanding anything to the contrary in this Section 9(a)(i), Employer may not terminate Employee's employment under this Agreement for Cause unless Employee shall have first received notice from the Board advising Employee of the specific acts or omissions alleged to constitute Cause, and such acts or omissions continue after Employee shall have had a reasonable opportunity (at least 10 days from the date Employee receives the notice from the Board) to correct the acts or omissions so complained of. In no event shall alleged incompetence of Employee in the performance of Employee's duties be deemed grounds for termination for Cause.

(ii) If Employer terminates Employee for Cause, both parties agree as follows:

(A) Before such termination shall become effective, the matter shall be submitted to a binding arbitration conducted at a location in San Jose, California to be determined by an arbitrator selected by the initiating party and in accordance with the then existing Rules of Practice and Procedure of the American Arbitration Association.

(B) The number of arbitrators shall be three; one selected by Employee, one selected by Employer, and one selected by the two selected arbitrators. Each arbitrator shall be impartial and independent and shall perform his or her duties with diligence and in good faith.

(C) Any party may be represented by counsel or other authorized representatives during the arbitration hearings. No party shall communicate ex parte with a selected or candidate arbitrator.

(D) The arbitrators shall, by majority decision, determine the fairness and validity of Employer’s reasons for terminating Employee for Cause and such determination shall be final and binding upon the parties. If the termination is determined to be invalid or unfair, Employer shall be deemed to have breached the Agreement and Section 10 of the Agreement shall apply.

(E) Each party shall bear its expenses, costs and attorney fees relating to the arbitration.

(F) Until such time as a final binding arbitration award is entered into, Employee shall be placed on administrative leave and shall continue to receive his full compensation (including salary, bonus, stock options and benefits) as if he remained an Employee of the Company.

(iii) This Agreement automatically shall terminate upon the death of Employee, except that Employee's estate shall be entitled to receive any amount accrued under Section 4(a).

[ADDENDUM TO EMPLOYMENT AGREEMENT]

5. Section 9(b)(iii) of the Employment Agreement is amended to read as follows:

(iii) If Employee shall terminate this Agreement under Section 9(b)(i), Employee shall be entitled to receive twelve (12) months salary, at his then current yearly salary rate, (the “Severance Payment”), and Employer shall pay 100% of the C.O.B.R.A. premiums for twelve (12) months after such termination. Other than the Severance Payment and the payment of C.O.B.R.A. premiums described in this section 9(b)(iii), Employer shall have no further obligation to compensate Employee pursuant to Section 4 above. If Employee shall terminate this Agreement pursuant to Section 9(b)(ii), Employee shall not be entitled to the Severance Payment or any additional compensation as provided in Section 4.

All other terms and conditions of the Employment Agreement not affected hereby shall remain in effect as originally drafted.

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

DOCUMENT CAPTURE TECHNOLOGIES, INC.		EMPLOYEE
By:	/s/ David Clark	/s/ William Hawkins
	David Clark	William Hawkins
	Chief Executive Officer

[ADDENDUM TO EMPLOYMENT AGREEMENT]

EX-10.4

Exhibit 10.4

ADDENDUM to EMPLOYMENT AGREEMENT

This AGREEMENT (the “Agreement”), dated as of July 15, 2008, by and between Document Capture Technologies, Inc., a Delaware corporation with principal executive offices at 1772 Technology Drive, San Jose, California 95110 (hereinafter referred to as the “Company”), and Carolyn Ellis, an individual residing at [_________________________________________] (hereinafter referred to as “Employee”).

W I T N E S S E T H:

WHEREAS, the Company and the Employee are parties to an Employment Agreement dated November 1, 2007 (the “Employment Agreement”);

WHEREAS, the Company desires to amend the Employment Agreement to (i) extend the term of the Employment Agreement through December 31, 2010; (ii) adjust Ms. Ellis’ base salary in order to reflect her current role with the Company; (iii) add an arbitration provision to the “Termination by Employer” section of the Employment Agreement; (iv) change the geographic location provision of the “Termination by Employee” section of the Employment Agreement; and (v) change the definition of Severance Payment.

NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, the parties hereto hereby agree as follows:

1. Capitalized terms used herein but not otherwise defined herein have the meanings ascribed to them in the Employment Agreement. Capitalized terms amended hereby shall affect the remainder of the Employment Agreement.

2. Section 2(a) of the Employment Agreement is amended to read as follows:

a. Subject to Section 9 and Section 10 below, the term of this Agreement shall expire on December 31, 2010 (the “Term”). The Term of this Agreement shall be automatically extended for additional one (1) year periods, unless either party notifies the other in writing at least ninety (90) days prior to the expiration of the then existing Term of its intention not to extend the Term. During the Term, Employee shall devote substantially all of her business time and efforts to Employer and its subsidiaries and affiliates.

3. Section 4(a)(i) of the Employment Agreement is amended to read as follows:

(i) Employee shall be paid a base pay of $165,000 per year during the Term of this Agreement. Employee shall be paid periodically in accordance with the policies of the Employer during the term of this Agreement, but not less than monthly.

4. Section 9(a) of the Employment Agreement is amended to read as follows:

(i) Employer may terminate this Agreement upon written notice for Cause. For purposes hereof, "Cause" shall mean (A) Employee's misconduct as could reasonably be expected to have a material adverse effect on the business and affairs of Employer, (B) the Employee's disregard of lawful instructions of Employers Board of Directors consistent with Employee's position relating to the business of Employer or neglect of duties or failure to act, which, in each case, could reasonably be expected to have a material adverse effect on the business and affairs of Employer, (C) engaging by the Employee in conduct that constitutes activity in competition with Employer, including any unapproved activities identified in section 8(c) of this Agreement; (D) the conviction of Employee for the commission of a felony; and/or (E) the habitual abuse of alcohol or controlled substances. Notwithstanding anything to the contrary in this Section 9(a)(i), Employer may not terminate Employee's employment under this Agreement for Cause unless Employee shall have first received notice from the Board advising Employee of the specific acts or omissions alleged to constitute Cause, and such acts or omissions continue after Employee shall have had a reasonable opportunity (at least 10 days from the date Employee receives the notice from the Board) to correct the acts or omissions so complained of. In no event shall alleged incompetence of Employee in the performance of Employee's duties be deemed grounds for termination for Cause.

(ii) If Employer terminates Employee for Cause, both parties agree as follows:

(A) Before such termination shall become effective, the matter shall be submitted to a binding arbitration conducted at a location in San Jose, California to be determined by an arbitrator selected by the initiating party and in accordance with the then existing Rules of Practice and Procedure of the American Arbitration Association.

(B) The number of arbitrators shall be three; one selected by Employee, one selected by Employer, and one selected by the two selected arbitrators. Each arbitrator shall be impartial and independent and shall perform his or her duties with diligence and in good faith.

(C) Any party may be represented by counsel or other authorized representatives during the arbitration hearings. No party shall communicate ex parte with a selected or candidate arbitrator.

(D) The arbitrators shall, by majority decision, determine the fairness and validity of Employer’s reasons for terminating Employee for Cause and such determination shall be final and binding upon the parties. If the termination is determined to be invalid or unfair, Employer shall be deemed to have breached the Agreement and Section 10 of the Agreement shall apply.

(E) Each party shall bear its expenses, costs and attorney fees relating to the arbitration.

(F) Until such time as a final binding arbitration award is entered into, Employee shall be placed on administrative leave and shall continue to receive her full compensation (including salary, bonus, stock options and benefits) as if she remained an Employee of the Company.

(iii) This Agreement automatically shall terminate upon the death of Employee, except that Employee's estate shall be entitled to receive any amount accrued under Section 4(a).

5. Section 9(b)(i)(C) of the Employment Agreement is amended to read as follows:

(i) Employee shall have the right to terminate her employment under this Agreement upon 30 days’ notice to Employer given within 90 days following the occurrence of any of the following events (A) through (F) or within three years following the occurrence of event (G):

(C) Employer acts to change the geographic location of the performance of Employee’s duties from the San Diego area. For purposes of this Agreement, the San Diego area shall be deemed to be the area within 60 miles of San Diego, California.

[ADDENDUM TO EMPLOYMENT AGREEMENT]

6. Section 9(b)(iii) of the Employment Agreement is amended to read as follows:

(iii) If Employee shall terminate this Agreement under Section 9(b)(i), Employee shall be entitled to receive twelve (12) months salary, at her then current yearly salary rate, (the “Severance Payment”), and Employer shall pay 100% of the C.O.B.R.A. premiums for twelve (12) months after such termination. Other than the Severance Payment and the payment of C.O.B.R.A. premiums described in this section 9(b)(iii), Employer shall have no further obligation to compensate Employee pursuant to Section 4 above. If Employee shall terminate this Agreement pursuant to Section 9(b)(ii), Employee shall not be entitled to the Severance Payment or any additional compensation as provided in Section 4.

All other terms and conditions of the Employment Agreement not affected hereby shall remain in effect as originally drafted.

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

DOCUMENT CAPTURE TECHNOLOGIES, INC.		EMPLOYEE
By:	/s/ David Clark	/s/ Carolyn Ellis
	David Clark	Carolyn Ellis
	Chief Executive Officer

[ADDENDUM TO EMPLOYMENT AGREEMENT]

EX-99.1

Exhibit 99.1

Document Capture Technologies Names Edward M. Straw Chairman of its Board of Directors

Former President of Global Operations at Estee Lauder and Accomplished U.S. Naval Officer Brings Four Decades of Supply Chain Expertise to Board

SAN JOSE, Calif., July 21, 2008 -- Document Capture Technologies, Inc. (OTC Bulletin Board: DCMT), a leading provider of secure imaging solutions, today announced that Edward M. Straw has been appointed Chairman of its Board of Directors via unanimous board consent, effective July 15, 2008. He replaces Darwin Hu, who stepped down as Chairman but remains on the board as a director.

Mr. Straw is currently executive vice president of PRTM Management Consultants, a world class, operational strategy consulting group. He assists with business development in federal, high tech and consumer packaged goods verticals as well as mentors and coaches younger partners in leadership, communication, presentation and deal closing skills. From 2000-2005, he served as president of global operations for Estee Lauder, where he built and directed a supply chain transformation strategy that resulted in dramatic improvements in cycle time, customer service and gross margins during his tenure. He led the manufacturing, research and development, information systems, package engineering, quality assurance and global supply chain (procurement, inventory management and distribution) areas, which support all 20 brands of the Estée Lauder Companies around the world. Mr. Straw also had P&L responsibility for the Fashion Group, which consists of 250 stand alone retail outlet stores and military exchanges. Previously, he served as senior vice president of supply chain management and manufacturing for the Compaq Computer Corp. from 1998-1999. Prior to Compaq, he served as president of Ryder Integrated Logistics Inc.,the leading provider of supply chain services in North America, from 1996-1998.

David P. Clark, Document Capture Technologies CEO, commented, “We welcome Mr. Straw to our board of directors and are fortunate to have such a distinguished and accomplished individual lead our board. We see his appointment as a significant benefit to DCT’s board as well as our senior management team, as we expect to utilize his extensive experience, resources and contact network to enhance our operational efficiency, contribute to our strategic development and position us for further future success.”

Mr. Straw has extensive directorship experience, and currently serves on the board of directors for Eddie Bauer Holdings, the MeadWestvaco Corporation, Ply Gem Industries, and Panther Expedited Services. He is the chairman of Odyssey Logistics & Technology and is also a trustee for the U.S. Naval Academy Foundation.

Prior to joining the private sector, Mr. Straw had a distinguished 30-year career in the U.S. Navy, retiring as a three-star admiral in 1996. Prior to his retirement from the military service, he was chief executive officer of the Defense Logistics Agency, the largest military logistics command supporting the U.S. armed forces. In this position, he reported to Gen. Colin Powell, chairman of the Joint Chiefs of Staff. He received the Defense, Navy and Air Force Distinguished Service medals; the Ford Foundation's Innovations in American Government Award; and the Society of Logistics Engineers' Founders Medal.

Mr. Straw holds a B.S. degree from the U.S. Naval Academy and an MBA from The George Washington University, and is also a graduate of the National War College.

About Document Capture Technologies, Inc.

Document Capture Technologies, Inc. (OTCBB: DCMT.OB), headquartered in San Jose, Calif., designs and manufactures document capture solutions for OEM customers worldwide. The company currently manufactures over 20 proprietary document capture products and has become one of the world’s largest private-label manufacturers of USB-powered mobile document scanning devices. The Company’s growing intellectual property portfolio in document capture includes four key patents with an additional one patent pending.

Forward-Looking Statements

Statements contained in this press release, which are not historical facts, are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based largely on current expectations and are subject to a number of known and unknown risks, uncertainties and other factors beyond the Company’s control that could cause actual events and results to differ materially from these statements. These risks include, without limitation, that there can be no assurance that any strategic opportunities will be available to the Company and that any strategic opportunities may only be available on terms not acceptable to the Company. These statements are not guarantees of future performance, and readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this release. Document Capture undertakes no obligation to update publicly any forward-looking statements.

Company Contact:	Investor Contact:
Document Capture Technologies, Inc.	Hayden Communications, Inc.
David P. Clark	Peter Seltzberg
(408) 213-3701	(212) 946-2849
dclark@docucap.com	peter@haydenir.com