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]