LOAN
AND SECURITY MODIFICATION AGREEMENT
 
 This Loan and Security Modification
Agreement is entered into as of March 10, 2010, by and among Document Capture
Technologies, Inc. and Syscan, Inc. (jointly and severally “Borrower” or
“Borrowers”) and Bridge Bank, National Association (“Bank”).
 
 1.           DESCRIPTION OF EXISTING
INDEBTEDNESS: Among other indebtedness which may be owing by Borrower to
Bank, Borrower is indebted to Bank pursuant to, among other documents, a Loan
and Security Agreement, dated September 2, 2009 by and between Borrower and
Bank, as may be amended from time to time (the “Loan and Security
Agreement”).  Capitalized terms used without definition herein shall
have the meanings assigned to them in the Loan and Security
Agreement.
 
 Hereinafter,
all indebtedness owing by Borrower to Bank shall be referred to as the
“Indebtedness” and the Loan and Security Agreement and any and all other
documents executed by Borrower in favor of Bank shall be referred to as the
“Existing Documents.”
 
 2.           DESCRIPTION OF CHANGE IN
TERMS.
 
 A.           Modification(s) to Loan and
Security Agreement:
 
 1)
              The
      following defined terms in Section 1.1, entitled “Definitions”, are hereby
      amended, restated or inserted as
follows:
 
 “Asset
      Coverage Ratio” means all unrestricted cash maintained with Bank, plus
      Eligible Accounts, plus Eligible Inventory not to exceed $500,000 at any
      time, divided by all Obligations owed to
Bank.
 
 “Borrowing
Base” means an amount equal to the sum of (i) eighty percent (80%) of Eligible
Accounts as determined by Bank with reference to the most recent Borrowing Base
Certificate delivered by Borrower, plus (ii) the lesser of (x) the value of
Eligible Inventory multiplied by the Inventory Advance Rate, or (y) the
Inventory Sublimit, minus (iii) reserves as Bank may deem property and necessary
from time to time.
 
 Paragraph
(j) under the defined term “Eligible Accounts” is hereby amended to read as
follows:
  (j)           Offsettable
deferred revenue in excess of $85,500;
  “Eligible
Inventory” means and includes Inventory, valued at the lower of cost, determined
on a FIFO or net orderly liquidation value, and which satisfies the following
requirements:
 
 (a)           the
Inventory is owned by Borrower free of any title defects or any liens or
interests of others except the security interest in favor of Bank;
  (b)           the
Inventory is held for sale or use in the ordinary course of Borrower’s business
and is of good and merchantable quality.  Display items,
work-in-process, parts, samples, and packing and shipping materials are not
eligible.  Inventory which is obsolete, unsalable, damaged, defective,
used, discontinued, perishable or slow-moving, or which has been returned by the
buyer, is not eligible;
  (c)           the
Inventory is covered by insurance as required in Section 6.6 of this
Agreement;
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  (d)           the
Inventory is not subject to any licensing agreements which would prohibit or
restrict in any way the ability of Bank to sell the Inventory (including its
packaging) to third parties;
  (e)           the
Inventory has been produced in compliance with the requirements of the U.S. Fair
Labor Standards Act (29 U.S.C. §§201 et seq.);
  (f)           the
Inventory is not on consignment;
  (g)           the
Inventory is not related to an “undesirable” industry, as determined by Bank
from time to time in its sole discretion;
  (h)           Bank
has received an audit on the Inventory satisfactory to Bank; and
  (i)           the
Inventory is otherwise acceptable to Bank.
  “Inventory
Advance Rate” means 40%, or such greater or lesser percentage as Bank may from
time to time establish in its sole discretion upon notice to
Borrower.
 
 “Inventory
Sublimit” means $500,000 upon the execution of this Loan and Security
Modification Agreement, and reduced to $350,000 upon July 31, 2010, and further
reduced to $0 upon September 2, 2010; provided however, the Inventory Sublimit
shall at no time be greater than 40% of the aggregate amount of Advances
outstanding under the Revolving Line.
 
 “Prime
      Floor” means three and one quarter of one percent
  (3.25%).
 
 “Quick
Assets” means, at any date as of which the amount thereof shall be determined,
the unrestricted cash maintained with Bank, plus Eligible Accounts as determined
by Bank with reference to the most recent Borrowing Base Certificate delivered
by Borrower.
 
 2)
              Subsection
      (i) under Section 2.3(a), entitled “Interest Rates”, is hereby amended to
      read as follows:
 
 (i)           Advances.  Except as
set forth in Section 2.3(b), the Advances shall bear interest, on the
outstanding Daily Balance thereof, at a rate per annum equal to (a) two and
three quarters of one percent (2.75 %) above the Prime Rate with respect to
Eligible Accounts, and (b) three and three quarters of one percent (3.75%) above
the Prime Rate with respect to Eligible Inventory.
  3)
              The
      following provisions are hereby inserted to Section 6.3, entitled “Financial Statements, Reports,
      Certificates”:
 
 Borrower
      shall deliver to Bank an Inventory listing within twenty five (25) days
      after the last day of each month, and an Inventory sell through report
      within twenty five (25) days after the end of each
  quarter.
 
 4)
              Section
      6.8 entitled “Quick Ratio” is hereby amended as
follows:6.8Quick
      Ratio.  Borrowers shall maintain at all times a ratio of
      Quick Assets to Current Liabilities less deferred revenue,
      and warrant liability, including all Obligations owing by Borrowers to
      Bank, of at least 1.10 to 1.00, to be measured on a quarterly
      basis.
 
 2
 
 5)
              Section
      6.9 entitled “Tangible Net Worth” is hereby amended to read as
      follows:6.9 Tangible Net
      Worth.  Borrowers shall maintain at all times a Tangible
      Net Worth plus Subordinated Debt of at least Two Million Three Hundred
      Thousand Dollars ($2,300,000), plus (i) fifty percent (50%) of any
      future equity raises plus (ii) fifty percent (50%) of any future
      Subordinated Debt raised plus (iii) twenty five percent (25%) of
      Borrowers’ quarterly net profit after
tax.
  6)
              The
      following subsection is hereby inserted into Section 6 entitled
      “Affirmative Covenants”:6.12 Asset Coverage
      Ratio.  Borrowers shall maintain at all times an Asset
      Coverage Ratio of at least 1.75 to 1.00, to be measured monthly during the
      first two months of each
quarter.
  3.           CONSISTENT
CHANGES.  The Existing Documents are each hereby amended
wherever necessary to reflect the changes described above.
 
 4.           PAYMENT OF COMMITMENT
FEE. Borrower shall pay Bank a fee in the amount of $6,000 (the
“Commitment Fee”) plus all out-of-pocket expenses.
 
 5.           NO DEFENSES OF
BORROWER/GENERALRELEASE.  Borrower
agrees that, as of this date, it has no defenses against the obligations to pay
any amounts under the Indebtedness.  Each of Borrower and Guarantor
(each, a “Releasing Party”) acknowledges that Lender would not enter into this
Loan and Security Modification Agreement without Releasing Party’s assurance
that it has no claims against Bank or any of Bank’s officers, directors,
employees or agents.  Except for the obligations arising hereafter
under this Loan and Security Modification Agreement, each Releasing Party
releases Bank, and each of Bank’s and entity’s officers, directors and employees
from any known or unknown claims that Releasing Party now has against Bank of
any nature, including any claims that Releasing Party, its successors, counsel,
and advisors may in the future discover they would have now had if they had
known facts not now known to them, whether founded in contract, in tort or
pursuant to any other theory of liability, including but not limited to any
claims arising out of or related to the Agreement or the transactions
contemplated thereby.  Releasing Party waives the provisions of
California Civil Code section 1542, which states:
 
 “A
general release does not extend to claims which the creditor does not know or
suspect to exist in his favor at the time of executing the release, which if
known by him must have materially affected his settlement with the
debtor.”
  The
provisions, waivers and releases set forth in this section are binding upon each
Releasing Party and its shareholders, agents, employees, assigns and successors
in interest.  The provisions, waivers and releases of this section
shall inure to the benefit of Bank and its agents, employees, officers,
directors, assigns and successors in interest.  The provisions of this
section shall survive payment in full of the Obligations, full performance of
all the terms of this Loan and Security Modification Agreement and the
Agreement, and/or Bank’s actions to exercise any remedy available under the
Agreement or otherwise.
 
 6.           CONTINUING
VALIDITY.  Borrower understands and agrees that in modifying
the existing Indebtedness, Bank is relying upon Borrower’s representations,
warranties, and agreements, as set forth in the Existing
Documents.  Except as expressly modified pursuant to this Loan and
Security Modification Agreement, the terms of the Existing Documents remain
unchanged and in full force and effect.  Bank’s agreement to
modifications to the existing Indebtedness pursuant to this Loan and Security
Modification Agreement in no way shall obligate Bank to make any future
modifications to the Indebtedness.  Nothing in this Loan and Security
Modification Agreement shall constitute a satisfaction of the
Indebtedness.  It is the intention of Bank and Borrower to retain as
liable parties all makers and endorsers of Existing Documents, unless the party
is expressly released by Bank in writing.  No maker, endorser, or
guarantor will be released by virtue of this Loan and Security Modification
Agreement.  The terms of this paragraph apply not only to this Loan
and Security Modification Agreement, but also to any subsequent Loan and
Security modification agreements.
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  7.           CONDITIONS.  The
effectiveness of this Loan and Security Modification Agreement is conditioned
upon payment of the Commitment Fee.
 
 8.           COUNTERSIGNATURE.  This
Loan and Security Modification Agreement shall become effective only when
executed by Bank and Borrowers.
 
   BORROWER:
                
                BANK:DOCUMENT
      CAPTURE TECHNOLOGIES, INC.
                
                BRIDGE
      BANK, NATIONAL ASSOCIATIONBy:
                
                
                By:Name:
                
                
                Name:Title:
                
                
                Title:BORROWER:SYSCAN,
      INC.By:Name:Title:
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