Exhibit

10.2




 




CONDITIONAL

RELEASE 


from Pledge Agreement




 




This Conditional Release

is made effective as of October 28, 2002, by and among Gary R. Holland (“Holland”)

and Fargo Electronics, Inc., a Delaware corporation (the “Company”).




 




A.            Holland and the Company are parties to a Restricted Stock

Agreement, dated March 31, 1998, pursuant to which Holland purchased 312,500

restricted shares (the “Shares”) of the Company’s common stock (as

adjusted to account for the Company’s five-for-eight reverse stock split

effective November 1999).  The Shares

became fully vested as of August 1, 2001.




 




B.            As consideration for the Shares, Holland delivered to the

Company a Promissory Note, dated March 31, 1998 (the “Note”), in the principal

amount of $500,000, bearing interest on the unpaid balance thereof at the rate

six percent (6%) per annum, compounded annually.




 




C.            Holland’s obligations to the Company under the Note are

secured by a Pledge Agreement, dated March 31, 1998 (the “Pledge Agreement”), pursuant

to which Holland granted the Company a security interest in all of the Shares,

including all proceeds from the sale of the Shares.




 




D.            Holland wishes to use the proceeds

from the sale of a portion of the Shares to pay off all principal and interest

owing under the Note, plus applicable taxes; and the Company wishes to permit

the sale of a portion of the Shares for such purposes, subject to the terms and

conditions of this Agreement.




 




NOW, THEREFORE, the

parties agree as follows:




 




1.             Release of Collateral.  Subject to the terms and conditions of this Agreement, the

Company hereby releases 108,250 of the Shares (the “Released Shares”) as

collateral under the Pledge Agreement and hereby terminates its security

interest in the Released Shares.  The

Pledge Agreement will remain in full force and effect with respect to the

balance of the Shares until the unpaid principal balance and accrued interest

under the Note is paid in full.




 




2.             Payment of Note. 

Holland agrees to cause his broker to remit directly to the Company from

the proceeds of the sale of the Released Shares an amount sufficient to satisfy

the principal of, and accrued interest on the Note (the “Pay-Off Amount”), which as of

November 15, 2002 will be $638,904. 

Holland will cause his broker to remit such amount by wire transfer of

immediately available funds as soon as commercially possible following the sale

of the Released Shares pursuant to a Sales Plan that complies with the

requirements of Rule 10b5-1(c)(1) under the Securities Exchange Act of 1934, as

amended, which will be in the form attached hereto and executed by Holland and

his broker (the “Sales Plan”).




 




3.             Collateral; Default.  If Holland fails to sell the full amount of the Released Shares

on or before the termination date of the Sales Plan, Holland agrees to return

the unsold balance of the Released Shares, together with the balance of the

Shares, to the Company to hold as collateral to secure Holland’s remaining

obligations under the Note as provided for in the Pledge Agreement.  Holland’s failure to cause the proceeds from

the sale of the Released Shares (not to exceed the Pay-Off Amount) to be

transmitted to the Company and, if the Note is not paid in full,




 




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also to deliver to the Company the unsold amount of

the Released Shares and the balance of the Shares, will be deemed an Event of

Default under the Pledge Agreement.




 




4.             Representations and Warranties.  Holland represents and warrants to the

Company that Holland is the sole owner of the Shares (including the Released

Shares), free and clear of any lien, security interest, option or other charge

or encumbrance, except for the security interest of the Company.




 




5.             No Modification of Note.  Nothing in this Agreement will be deemed to

constitute any modification of any term or provision of the Note or any renewal

or extension of the indebtedness represented by the Note.




 




6.             Compliance with Company Policy and Applicable Law.  Holland agrees that any and all sales of the

Released Shares will be made in compliance with Rule 144 under the Securities

Act of 1933, as amended, Rule 10b-5 under the Exchange Act of 1934, as amended,

and the Company’s insider trading policy. 

Holland agrees to notify the Company immediately upon the execution of

each trade in which the Released Shares are sold.




 




7.             Governing Law. 

This Agreement will governed by and construed in accordance with the

laws of the State of Minnesota.




 




The parties have executed

this Agreement effective as of October 28, 2002.




 




 




	

  /s/ Gary R. Holland


  	

   


  
	

  Gary R. Holland


  
	

   


  
	

   


  
	

  FARGO ELECTRONICS, INC.


  
	

   


  
	

   


  
	

  By: 


  	

  /s/ Jeffrey D. Upin


  	

   


  
	

   


  	

  Jeffrey D. Upin


  
	

   


  	

  Vice President—Business Development &


  General Counsel


  
			





 




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Sales Plan




 




This Sales Plan, dated

October 28, 2002 (the “Sales Plan”), is made between Gary R.

Holland (“Holland”)

and Raymond James & Associates, Inc. (“Broker”).




 




A.            Holland desires to establish this Sales Plan to sell up

to 108,250 shares (“Shares”) of common stock, par value $0.01

per share (the “Stock”), of Fargo Electronics, Inc., a Delaware corporation

(the “Company”),

in accordance with that certain Conditional Release from Pledge Agreement,

dated October 28, 2002, between Holland and the Company.




 




B.            Holland desires to engage Broker to effect sales of Shares

in accordance with the Sales Plan.




 




Intending to be legally

bound, Holland and Broker hereby agree as follows:




 




1.             Starting on Monday, October 28, 2002, on each day on

which the Nasdaq National Market is open Broker will sell (each a “Sale”)

as many Shares as it is able, provided that Broker will only sell Shares

pursuant to this Sales Plan at a price of at least $7.75 per share (before

deducting any commission, commission equivalent, mark-up or differential or

other expenses of sale).




 




2.             This Sales Plan will become effective on October 28,

2002 and will terminate on the earlier of: (i) November 29, 2002, (ii) the date

that aggregate sales proceeds of $811,875 have been received (after deducting

any commission, commission equivalent, mark-up or differential and other

expenses of sale), (iii) the date that 108,250 Shares have been sold], (iv) the

date of the public announcement of a secondary offering of the Stock or (v) the

death of Holland.




 




3.             Holland understands that Broker may not be able to

effect a Sale due to a market disruption or a legal, regulatory or contractual

restriction applicable to the Broker. 

If any Sale cannot be executed as required by paragraph 1, due to a

market disruption, a legal, regulatory or contractual restriction applicable to

the Broker, Broker will effect such Sale as promptly as practical after the

cessation or termination of such market disruption, applicable restriction or

other event.




 




4.             Holland represents and warrants that he is not aware of

material, nonpublic information with respect to the Company or any securities

of the Company (including the Stock), is not subject to any legal, regulatory

or contractual restriction or undertaking that would prevent the Broker from

conducting Sales in accordance with this Sales Plan and is entering into this

Sales Plan in good faith and not as part of a plan or scheme to evade the

prohibitions of Rule 10b5-1.  Holland

will immediately notify the Broker if he becomes subject to a legal, regulatory

or contractual restriction or undertaking that would prevent the Broker from

making Sales pursuant to this Sales Plan, and, in such a case, Holland and

Broker will cooperate to amend or otherwise revise this Sales Plan to take

account of such legal, regulatory or contractual restriction or undertaking

(provided that neither party will be obligated to take any action that would be

inconsistent with the requirements of Rule 10b5-1(c)).




 




5.             It is the intent of the parties that this Sales Plan

comply with the requirements of Rule 10b5-1(c)(1)(i)(B) under the Securities

Exchange Act of 1934, as amended (the “Exchange Act”), and this Sales Plan will be

interpreted to comply with the requirements of Rule 10b5-1(c).




 




6.             Broker agrees to conduct all Sales in accordance with

the manner of sale requirement of Rule 144 under the Securities Act of 1933, as

amended, and in no event will Broker effect any




 




 




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Sale if such Sale would exceed the then applicable

volume limitation under Rule 144, assuming Broker’s Sales under this Sales Plan

are the only sales subject to that limitation. 

Holland agrees not to take, and agrees to cause any person or entity

with which he would be required to aggregate sales of Stock pursuant to

paragraph (a)(2) or (e) of Rule 144 not to take, any action that would cause

the Sales not to comply with Rule 144. 

Broker will be responsible for completing and filing on behalf of

Holland the required Form 144s; provided, however, that Holland will be given

the opportunity to review and revise such Form 144s prior to filing.  Holland understands and agrees that Broker

will make one Form 144 filing at the beginning of each three-month period

commencing October 28, 2002.




 




7.             Broker agrees to remit the proceeds of each Sale

directly to the Company, and as soon as commercially possible following

completion of each such Sale, until the Company has received an aggregate of

$638,904, by wire transfer of immediately available funds to the following

account:                                                            .  If Shares are sold in multiple increments

over a period of more than one day in any one week during the term of this

Sales Plan, the funds may be paid to the Company in a single lump sum

immediately following the sale of the last increment of Shares, but in no event

later than 12:00 p.m.  EST on Friday of

each week.  The balance of the net

proceeds from Sales will be credited to Holland’s account or otherwise

disbursed in accordance with Holland’s separate instructions to Broker.




 




8.             If Broker does not sell a sufficient number of Shares to

remit proceeds of $638,904 to the Company as instructed above, Broker will to

deliver to the Company the unsold amount of the Shares as soon as commercially

possible following termination of this Sales Plan.




 




9.             At the end of each day, Broker agrees to provide all the

details of the transaction to the Company, both by telephone and in writing (by

fax or e-mail).  Broker understands that

Holland needs such information on a timely basis in order to comply with his

reporting responsibilities under Section 16 of the Exchange Act.




 




10.           This Sales Plan will be governed by

and construed in accordance with the laws of the State of Minnesota and may be

modified or amended only by a writing signed by the parties hereto and the

Company.




 




IN WITNESS WHEREOF, the

undersigned have signed this Sales Plan as of the date first written above.




 




	

   


  	

  RAYMOND JAMES &

  ASSOCIATES, INC.


  	 

	

   


  	

   


  	 

	

   


  	

   


  	 

	

  /s/ Gary R. Holland


  	

   


  	

  By:


  	

  /s/ Jeff Fordham


  	 

	

  Gary R. Holland


  	

   


  	 

	

   


  	

  Its:


  	

  Senior Vice President


  
	

   


  	

   


  	 

	

  Acknowledged:


  	

   


  	 

	

   


  	

   


  	 

	

  FARGO ELECTRONICS, INC.


  	

   


  	 

	

   


  	

   


  	 

	

   


  	

   


  	 

	

  By:


  	

  /s/ Jeffrey D. Upin


  	

   


  	

   


  	 

	

   


  	

  Jeffrey D. Upin


  	

   


  	 

	

   


  	

  Vice President—Business

  Development


  & General Counsel


  	

   


  	 

	

   


  	

   


  	 

								





 




 




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