Document:

lsb_8k0226ex103.htm

    Exhibit
10.3

       

      Amended and
Restated

      Deferred
Compensation

      Agreement
Between

      Lafayette Savings Bank,
FSB

      And

      Randolph F.
Williams

       

       

      THIS
AGREEMENT, was originally executed and delivered on September 29, 2005, by and
between Lafayette Savings Bank, FSB (the “Bank”) and Randolph F. Williams (the
“Employee”).  It is hereby amended and restated retroactive to the
Effective Date to provide as follows:

       

       

      W I T N E
S S E T H:

       

      WHEREAS,
the Employee is now serving as President and Chief Executive Officer of the
Bank; and

       

      WHEREAS,
the Bank desires to have the benefit of the Employee’s continued loyalty,
service and leadership until his retirement; and

       

      WHEREAS,
the Bank desires to provide the Employee with the supplemental retirement
benefit, to be paid upon his retirement in order to induce the Employee to
remain with the Bank and to devote his highest skill and energy to the discharge
of his employment duties; and

       

      WHEREAS,
the parties desire to incorporate their entire agreement in this
writing;

       

      NOW,
THEREFORE, in consideration of the premises, the mutual covenants herein
contained and in further consideration of each act done pursuant hereto by
either of the parties, the parties enter into the following Articles of
Agreement:

       

       

      ARTICLE
I

      DEFINITIONS

       

      Section
1.01   Account.  The
term “Account” means the account maintained for the Employee under this
Agreement, which is credited in each calendar year with amounts determined
pursuant to Article II of this Agreement.

       

      Section
1.02   Administrator.  The
term “Administrator” means the Board, which shall have the sole authority to
manage and control the operation and administration of this
Agreement.

       

      Section
1.03   Bank.  The
term “Bank” means Lafayette Savings Bank, FSB.

       

      Section
1.04   Board.  The
term “Board” means the Board of Directors of the Bank.  Whenever the
provisions of this Agreement require action by the Board, it may be taken by the
Compensation Committee of the Board with the same force and effect as though
taken by the entire Board.

       

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

      Section 1.05   Change in
Control.   The term “Change in Control” shall mean

       

      
        	
                 
      

              	
                (i)

              	
                a
      change in the ownership of the Bank or LSB Financial Corp. (the
      “Corporation”), which shall occur on the date that any one person, or more
      than one person acting as a group, acquires ownership of stock of the Bank
      or the Corporation that, together with stock held by such person or group,
      constitutes more than fifty percent (50%) of the total fair market value
      or total voting power of the stock of the Bank or the
      Corporation.  However, if any one person, or more than one
      person acting as a group, is considered to own more than fifty percent
      (50%) of the total fair market value or total voting power of the stock of
      the Bank or the Corporation, the acquisition of additional stock by the
      same person or persons is not considered to cause a change in the
      ownership of the Bank or the Corporation (or to cause a change in the
      effective control of the Bank or the Corporation (within the meaning of
      subsection (ii)).  An increase in the percentage of stock owned
      by any one person, or persons acting as a group, as a result of a
      transaction in which the Bank or the Corporation acquires its stock in
      exchange for property will be treated as an acquisition of stock for
      purposes of this subsection.  This subsection applies only when
      there is a transfer of stock of the Bank or the Corporation (or issuance
      of stock of the Bank or the Corporation) and stock in the Bank or the
      Corporation remains outstanding after the
  transaction.

              

      

       

      
        	
                 
      

              	
                (ii)

              	
                a
      change in the effective control of the Bank or the Corporation, which
      shall occur only on either of the following
  dates:

              

      

       

      
        	
                 
      

              	
                (a)

              	
                the
      date any one person, or more than one person acting as a group acquires
      (or has acquired during the 12-month period ending on the date of the most
      recent acquisition by such person or persons) ownership of stock of the
      Bank or the Corporation possessing thirty percent (30%) or more of the
      total voting power of the stock of the Bank or the
      Corporation.

              

      

       

      
        	
                 
      

              	
                (b)

              	
                the
      date a majority of members of the Corporation’s board of directors is
      replaced during any 12-month period by directors whose appointment or
      election is not endorsed by a majority of the members of the Corporation’s
      board of directors before the date of the appointment or election;
      provided, however, that this provision shall not apply if another
      corporation is a majority shareholder of the
  Corporation

              

      

       

      If any
one person, or more than one person acting as a group, is considered to
effectively control the Bank or the Corporation, the acquisition of additional
control of the Bank or the Corporation by the same person or persons is not
considered to cause a change in the effective control of the Bank or the
Corporation (or to cause a change in the ownership of the Bank or the
Corporation within the meaning of subsection (i) of this section).

       

      
        	
                 
      

              	
                (iii)

              	
                a
      change in the ownership of a substantial portion of the Bank’s assets,
      which shall occur on the date that any one person, or more than one person
      acting as a

              

      

       

      
        
           

        

        
          2

          
            

          

        

        
           

        

      

      group,
acquires (or has acquired during the 12-month period ending on the date of the
most recent acquisition by such person or persons) assets from the Bank that
have a total gross fair market value equal to or more than forty percent (40%)
of the total gross fair market value of all of the assets of the Bank
immediately before such acquisition or acquisitions.  For this
purpose, gross fair market value means the value of the assets of the Bank, or
the value of the assets being disposed of, determined without regard to any
liabilities associated with such assets.  No change in control event
occurs under this subsection (iii) when there is a transfer to an entity that is
controlled by the shareholders of the Bank immediately after the
transfer.  A transfer of assets by the Bank is not treated as a change
in the ownership of such assets if the assets are transferred to –

       

      
        	
                 
      

              	
                (a)

              	
                a
      shareholder of the Bank (immediately before the asset transfer) in
      exchange for or with respect to its
stock;

              

      

       

      
        	
                 
      

              	
                (b)

              	
                an
      entity, 50 percent or more of the total value or voting power of which is
      owned, directly or indirectly, by the
Bank.

              

      

       

      
        	
                 
      

              	
                (c)

              	
                a
      person, or more than one person acting as a group, that owns, directly or
      indirectly, 50 percent or more of the total value or voting power of all
      the outstanding stock of the Bank;
or

              

      

       

      
        	
                 
      

              	
                (d)

              	
                an
      entity, at least 50 percent of the total value or voting power of which is
      owned, directly or indirectly, by a person described in paragraph
      (c).

              

      

       

      For
purposes of this subsection (iii) and except as otherwise provided in paragraph
(a) above, a person’s status is determined immediately after the transfer of the
assets.

       

      For
purposes of this section, persons will not be considered to be acting as a group
solely because they purchase or own stock of the same corporation at the same
time, or as a result of the same public offering.  However, persons
will be considered to be acting as a group if they are owners of a corporation
that enters into a merger, consolidation, purchase or acquisition of stock, or
similar business transaction with the Bank or the Corporation; provided that
they will not be considered as a group if they are owners of an entity that
merges into the Bank or the Corporation where the Bank or the Corporation is the
surviving corporation in the merger.

       

      Section
1.06   Code.  The
term Code means the Internal Revenue Code of 1986, as amended.

       

      Section
1.07   Compensation.  The
term “Compensation” shall include Employee’s base salary and bonus paid by the
Bank.

       

      Section
1.08   Effective
Date.  The
term “Effective Date” means October 1, 2005.

       

      Section
1.09   Employee.  The
term “Employee” means Randolph F. Williams.

       

      
        
           

        

        
          3

          
            

          

        

        
           

        

      

      Section 1.10   Plan
Year.  The Term “Plan Year” means the consecutive twelve (12)
month period beginning each January 1 and ending on the following December
31.

       

      Section
1.11   Retirement
Date.  The
term “Retirement Date” means the date Employee incurs a Termination of
Employment from the Bank after attaining age sixty-five (65).

       

      Section
1.12   Termination of
Employment.  The
term “Termination of Employment” means the date on which the Employee retires,
resigns or otherwise, voluntarily or involuntarily, terminates his full-time
employment with the  Bank.  Whether a Termination of
Employment takes place is determined based on the facts and circumstances
surrounding the termination of the Employee’s employment.  A
Termination of Employment will be considered to have occurred if it is
reasonably anticipated that:

       

      
        	
                 
      

              	
                (i)

              	
                the
      Employee will not perform any services for the Bank after Termination of
      Employment, or

              

      

       

      
        	
                 
      

              	
                (ii)

              	
                the
      Employee will continue to provide services to the Bank at an annual rate
      that is less than fifty percent (50%) of the average annual bona fide
      services rendered during the immediately preceding thirty-six (36) months
      of employment.

              

      

       

      With
respect to any benefit payable as a result of Termination of Employment,
Termination of Employment shall be determined by reference to the Bank and all
members of any controlled group (determined under Section 414(b) of the Code) or
trades or businesses under common control (determined under Section 414(c) of
the Code) that includes the Bank.

       

      Section
1.13   Total
Disability.  The
term “Total Disability” means any medically determinable physical or mental
impairment which can be expected to result in death or to last for a continuous
period of not less than 12 months and which (1) renders the Employee unable to
engage in any substantial gainful activity or (2) entitles Employee to income
replacement benefits for a period of not less than three months under an
accident and health plan covering employees of the Bank.

       

       

       

      ARTICLE
II

      THE
ALLOCATION

       

      Section
2.01   Allocations to the
Employee’s Account.  On
the Effective Date and on the last business day of the month thereafter
occurring on or before the first to occur of (1) the Employee’s attainment of
his Retirement Date, (2) his death or (3) his Termination of Employment, the
Bank shall credit to the Employee’s Account 10% of the amount of Employee’s
compensation, or such other percentage of Employee’s compensation not to exceed
20% as he shall elect to have withheld from his compensation from time to
time.  Amounts elected to be deferred by the Employee shall be
withheld from the Employee’s compensation for the pay periods for which such
compensation is paid.  Each allocation under this Section 2.01 shall
be deemed to have been made for purposes of computing interest under Section
2.03 of this Agreement as of the required allocation date.

       

      The
Employee may elect to defer a portion of his Compensation (other than
Performance-Based Compensation) to be earned in a Plan Year by making an
irrevocable election to do so before

       

      
        
           

        

        
          4

          
            

          

        

        
           

        

      

      January 1st
of that Plan Year.  Notwithstanding the foregoing, if the Employee is
not otherwise eligible to participate in another individual account
non-qualified deferred compensation plan, and the individual first becomes
eligible to participate in this Plan after January 1, 2005, the Employee
may irrevocably elect to defer a portion of his Compensation (other than
Performance-Based Compensation) to be earned by the Employee in the same Plan
Year (and after making the election) as long as the election is made within 30
days following the date the individual first becomes eligible to
participate.

       

      The
Employee may no later than six months before the end of the applicable Service
Period irrevocably elect to defer a portion of the Performance-Based
Compensation otherwise payable to the Employee in the following Plan
Year.  If the Employee is not otherwise eligible to participate in
another individual account non-qualified deferred compensation plan, and the
individual first becomes eligible to participate in this Plan after
January 1, 2005, the Employee may irrevocably elect to defer a portion of
his Performance-Based Compensation to be earned in the same Plan Year (and after
making the election) as long as the election is made within 30 days following
the date the individual first becomes eligible to participate.  The
maximum amount of Performance-Based Compensation taken into account for this
purpose shall be the total amount of Performance-Based Compensation for such
Service Period, multiplied by the ratio of remaining days in the Service Period
over the total number of days in the Service Period (after taking into account
required tax withholding and payroll deductions for other benefit
programs).

       

      For
purposes of this Section:

       

      “Performance-Based
Compensation” means the compensation paid by the Bank that meets the following
criteria:

       

      
        	
                 
      

              	
                (i)

              	
                the
      compensation must be based on services performed over a period of at least
      12 months:

              

      

       

      
        	
                 
      

              	
                (ii)

              	
                the
      payment or amount of the compensation must be contingent on the
      satisfaction of pre-established organizational or individual performance
      criteria (established no later than 90 days after the beginning of the
      Service Period); and

              

      

       

      
        	
                 
      

              	
                (iii)

              	
                the
      compensation cannot include any amount or portion of any amount that will
      be paid either regardless of performance or based on a level of
      performance that is substantially certain to be met at the time the
      performance criteria are
established.

              

      

       

      “Service
Period” means a period of at least 12 months during which the Employee performs
services with respect to which Performance-Based Compensation is otherwise
payable.

       

      Section
2.02   Amount of Bank
Allocations.  As
of the Effective Date, the Bank shall allocate additional amounts to the
Employee’s Account at the end of each quarter (beginning with the quarter ending
December 31, 2005) as matching contributions based on the amount of salary the
Employee has elected to defer and have withheld under Section 2.01 during that
quarter, as follows:

       

      
        
           

        

        
          5

          
            

          

        

        
           

        

      

      

       

      
        	 	
                Date

              	 
      	
                Amount

              	 
	 	 
      	 
      	 
      	 
	 	
                December
      31, 2005

              	 
      	
                Twenty
      cents ($.20) for each one dollar ($1.00) of salary deferred by the
      Employee, subject to a maximum of 4% of Employee’s salary for those
      periods.

              	 
	 	 
      	 
      	 
      	 
	 	
                As
      of the last day of each quarter thereafter during the term of this
      Agreement

              	 
      	
                Such
      amounts as Bank shall determine for a calendar year which shall be
      approved by the Board before the end of the preceding calendar
      year

              	 

      

      

      Section
2.03   Allocation of
Interest.  As
of the end of each Plan Year, and as of the date of termination of this
Agreement or payment in full of the benefits provided for hereunder, Bank shall
credit the Employee’s Account, with interest, compounded annually, on the
undistributed balance then held in his Account.  The annual rate of
interest for each Plan Year shall be equal to the highest certificate of deposit
rates offered by the Bank during the year preceding the year in which the
interest is to be allocated.  Interest with respect to any allocations
made during a Plan Year shall accrue from the date of allocation.

       

      Section
2.04   Optional Account
Investments.  In
lieu of the interest credits described in Section 2.03, the Administrator, in
its complete and sole discretion, may elect to invest the amounts credited to
the Employee’s Account in specific investments in the name of the
Bank.  To the extent the Administrator makes such investments, the
actual amounts credited to the Employee’s Account shall reflect the actual
investment results for such investments rather than the deemed interest
described in Section 2.03, and the Bank will not be obligated to pay Employee
any difference between the deemed interest rate in Section 2.03 and those
investment results.  In making these investment decisions, the
Administrator may, but is not required to, seek recommendations from the
Employee as to the manner in which the Employee’s Account should be
invested.

       

      Section
2.05   Termination of this
Agreement.  Either
Employee or the Bank may terminate this agreement with respect to any calendar
year by providing written notice to the other party hereto on or before December
1st of the preceding calendar year.  Upon termination of this
agreement, no further compensation deferrals or Bank allocations shall be made
to the Employee’s Account, and except as provided below benefits shall be
payable in accordance with Article III.

       

      Notwithstanding
anything to the contrary in this Section 2.05, the Employee’s benefit shall
be distributed immediately in a lump sum if this agreement terminates in the
following circumstances:

       

      
        	
                 
      

              	
                (i)

              	
                Within
      thirty (30) days before or twelve (12) months after a Change in Control,
      provided that termination of this agreement was effected through an
      irrevocable action taken by the Bank and provided further that all
      distributions are made no later than twelve (12) months following such
      termination of the agreement and that all the Bank's arrangements which
      are substantially similar to the agreement

              

      

       

      
        
           

        

        
          6

          
            

          

        

        
           

        

      

      are
terminated so the Employee and any participants in the similar arrangements are
required to receive all amounts of compensation deferred under the terminated
arrangements within twelve (12) months of the termination of the
arrangements;

       

      
        	
                 
      

              	
                (ii)

              	
                Upon
      the Bank’s dissolution or with the approval of a bankruptcy court provided
      that the amounts deferred under the agreement are included in the
      Employee’s gross income in the latest of (a) the calendar year in which
      the agreement terminates; (b) the calendar year in which the amount is no
      longer subject to a substantial risk of forfeiture; or (c) the first
      calendar year in which the distribution is administratively practical;
      or

              

      

       

      
        	
                 
      

              	
                (iii)

              	
                Upon
      the Bank’s termination of this and all other account balance plans (as
      referenced in Section 409A of the Code or the regulations thereunder),
      provided that all distributions are made no earlier than twelve (12)
      months and no later than twenty-four (24) months following such
      termination, provided further that the termination of this agreement does
      not occur proximate to the downturn in the financial health of the Bank
      and provided further that the Bank does not adopt any new account balance
      plans for a minimum of three (3) years following the date of such
      termination.

              

      

       

       

      ARTICLE
III

      BENEFITS

       

      Section
3.01   Death
Benefits.  Upon
the death of the Employee prior to the attainment of his Retirement Date or
prior to his Termination of Employment, his beneficiary, if living, or his
contingent beneficiaries, if not, as determined pursuant to Section 4.03 of this
Agreement, shall receive in a single lump sum cash payment the balance held in
the deceased Employee’s Account on the date of Employee’s death.  In
the absence of any such designation or if the designated or contingent
beneficiary is not living at the death of the Employee, the Account balance
shall be paid in a lump sum to the Employee’s spouse, if any, or, if none, to
his estate.  The lump sum payment shall be paid within sixty (60)
calendar days after the Employee’s death.

       

      Section
3.02   Termination of Employment or
Total Disability.  Upon
the Employee’s Termination of Employment or Total Disability, he shall receive a
cash payment of the balance in his Account at the time of his Termination of
Employment or Total Disability.  The Account balance shall be paid in
substantially equal monthly installments over a term of five (5) years
commencing no later than sixty (60) calendar days after his Termination of
Employment or Total Disability; provided, however, that if Employee is, at the
time of Termination of Employment, a “key employee” (within the meaning of
Section 416(i) of the Code without regard to paragraph (5) thereof) of a
corporation whose stock is publicly traded on an established securities market
or otherwise, within the meaning of Section 409A(a)(2)(B)(i) of the Code, any
payment made on account of the Employee’s Termination of Employment may not
commence any earlier than the earlier of a date which is six months after the
Employee’s Termination of Employment or the date of Employee’s
death.  In the event the restriction in the preceding sentence is
applicable to the Employee, any distribution which would otherwise be paid to
the Employee within the first six months following the Termination of Employment
shall be accumulated and paid to the

       

      
        
           

        

        
          7

          
            

          

        

        
           

        

      

      Employee
in a lump sum on the first day of the seventh month following the Termination of
Employment.  All subsequent distributions shall be paid in the manner
specified.

       

      Section
3.03   Death After Payments
Commence.  If
Employee dies prior to receiving any or all of the monthly installments
contemplated by Section 3.02 of this Article III, the Account balance not yet
paid to Employee shall be paid in a lump sum within sixty (60) calendar days
after the Employee’s death to his designated beneficiaries, if living, or to his
contingent beneficiaries, if not living.  In the absence of any such
designation or if the designated or contingent beneficiary is not living at the
death of the Employee, the Account balance shall be paid in a lump sum to the
Employee’s spouse, if any, or, if none, to his estate.  Such payment
shall be made within sixty (60) calendar days after the Employee’s
death.

       

      Section
3.04   Continued Interest or
Earnings Accrual.  Amounts
appropriated under this Agreement pending distribution shall continue to accrue
interest or earnings at the rate and in the manner prescribed by Section 2.03 or
2.04 of Article II hereof.

       

      ARTICLE
IV

      ADMINISTRATION

       

      Section
4.01   Delegation of
Responsibility.  The
Administrator may delegate duties involved in the administration of this
Agreement to the Compensation Committee of the Board.  However, the
ultimate responsibility for the administration of this Agreement shall remain
with the Administrator.

       

      Section
4.02   Payment of
Benefits.  The
amounts allocated to the Employee’s Account and payable as benefits under this
Agreement shall be paid solely from the general assets of the
Bank.  The Employee shall not have any interest in any specific assets
of the Bank under the terms of this Agreement.  This Agreement shall
not be considered to create an escrow account, trust fund or other funding
arrangement of any kind or a fiduciary relationship between the Employee and the
Bank.

       

      Section
4.03   Designation of
Beneficiaries.  The
Employee shall designate in a writing filed with the Secretary of the Bank a
beneficiary and a contingent beneficiary to whom death benefits or any unpaid
benefits due hereunder at the date of the Employee’s death shall be
paid.

       

      ARTICLE
V

      MISCELLANEOUS

       

      Section
5.01   Amendment of
Agreement.  This
Agreement cannot be amended, modified or supplemented in any respect except by a
subsequent written agreement entered into by the parties.

       

      Section
5.02   Successors and
Assigns.  This
Agreement shall be binding upon, and shall inure to the benefit of, the Bank,
its successors and assigns, and the Employee, his heirs, legatees and personal
representatives.

       

      Section 5.03   Non-Alienation.  The
Employee and his beneficiary, as determined pursuant to Section 4.03 of this
Agreement, shall not have any right to anticipate, alienate or

       

      
        
           

        

        
          8

          
            

          

        

        
           

        

      

      assign
any rights under this Agreement, and any effort to do so shall be null and
void.  The monthly benefits payable under this Agreement shall be
exempt from the claims of creditors or other claimants and from all orders,
decrees, levies and executions and any other legal process to the fullest extent
permitted by law.

       

      Section
5.04   Choice of
Law.  This
Agreement shall be construed and interpreted pursuant to, and in accordance
with, the laws of the State of Indiana.

       

      Section
5.05   Waiver.  Failure
of any party hereto to insist upon strict compliance with any of the terms,
covenants and conditions hereof shall not be deemed a waiver or relinquishment
of any similar right or power hereunder at any subsequent time.

       

      Section
5.06   Notices.  Any
notice required or permitted to be given under this Agreement shall be
sufficient if in writing and if personally delivered to the party to whom notice
should be given at the addresses set forth below (or at such other address for a
party as shall be specified by notice given pursuant hereto):

       

      

      
        	 	
                Bank:

              	
                Lafayette
      Savings Bank, FSB

              
	 	 
      	
                101
      Main Street

              
	 	 
      	
                P.O.
      Box 1628

              
	 	 
      	
                Lafayette,
      IN 47902

              
	 	 
      	 
      
	 	
                Employee:

              	
                Randolph
      F. Williams

              
	 	 
      	
                3611
      Chancellor Way

              
	 	 
      	
                West
      Lafayette, IN 47906

              

      

      

      

      Section
5.07   Unenforceability.  If
any provision of this Agreement is deemed invalid or unenforceable, the
remaining provisions shall remain in effect, unless modified by the
administrator with the consent of Employee.

       

      Section
5.08   Headings.  The
headings in this Agreement are solely for convenience of reference and shall not
affect its interpretation.

       

      Section
5.09   Duration of this
Agreement.  This
Agreement shall automatically terminate at the date on which the balance of the
Employee’s Account has been distributed pursuant to the terms of this
Agreement.

       

      Section
5.10   No Employment
Contract.  This
Agreement shall not be construed as an agreement, consideration or inducement of
employment or as affecting in any manner the rights or obligations of the Bank
or of the Employee to continue or to terminate the employment relationship at
any time.

       

      Section
5.11   Distributions Upon Income
Inclusion Under Section 409A of the Code. Upon
the inclusion of any amount into the Employee’s income as a result of the
failure of this non-qualified deferred compensation arrangement to comply with
the requirements of Section 409A of the Code, to the extent such tax liability
can be covered by the amount of the

       

      
        
           

        

        
          9

          
            

          

        

        
           

        

      

      Employee’s
Account, a distribution shall be made as soon as is administratively practicable
following the discovery of the failure.

       

      IN
WITNESS WHEREOF, the Bank and Employee have caused this Agreement to be amended
and restated as of this 27th day of February, 2008.

       

      

      
        	 
      	
                LAFAYETTE
      SAVINGS BANK, FSB

              
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                By:

              	/s/
      Mariellen M. Neudeck
	 
      	 
      	 
      
	 
      	
                “Bank”

              
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	/s/
      Randolph F. Williams
	 
      	
                Randolph
      F. Williams, Employee

              
	 
      	 
      	 
      
	 
      	
                “Employee”

              

      

      
 

       

       

      10ADDENDUM TO EMPLOYMENT AGREEMENT

This AGREEMENT (the "Agreement"), dated as of February 26, 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 Darwin Hu, an individual
residing at 761 Harry Road, San Jose, California 95120 (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 an Addendum to Employment
Agreement dated January 18, 2008 (the "Addendum" and together with the Original
Agreement, the "Employment Agreement"); and

WHEREAS, the Employee has tendered his resignation as President and Chief
Executive Officer of the Company effective March 1, 2008 and the Company has
accepted his resignation in such capacities;

WHEREAS, the Company desires that Employee continue to serve as its Chairman of
the Board of Directors, and the Employee desires to serve the Company in that
capacity, upon the terms and subject to the conditions contained in the
Employment Agreement, as amended by this Agreement; 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.

2.       The Employee agrees to continue to execute his duties and
         responsibilities in accordance with the terms and provisions of the
         Employment Agreement, subject to the following terms and conditions as
         agreed upon:

     (a)  Effective June 1, 2008, unless the Company appoints Employee to an
          executive officer position of the Company, Employee shall be paid a
          base pay of $112,500 per year during the Term.

(b)      Employee shall continue to serve as Chairman of the Board of Directors.

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/ Darwin Hu
     ---------------                                         --------------
       David Clark                                           Darwin Hu
       Chief Executive Officer

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