EMPLOYMENT AGREEMENT


            THIS AGREEMENT, dated effective as of June 1, 1997, by and between
VideoLabs, Inc., a Delaware corporation (the "Company") and James W. Hansen, a
Minnesota resident ("Executive"), and The Hansen Company, a Minnesota
corporation (the "Consultant").

            WHEREAS, the Company desires to employ Executive upon and subject to
the terms and conditions set forth in this agreement, and Executive desires to
render services for the Company on such terms and conditions; and

            WHEREAS, the Company desire to confirm its engagement of Consultant
and to revise its compensation arrangements with Consultant, and the Consultant
(which is corporation wholly owned by Executive) desires to join this Agreement
to confirm such engagement and revision.

            NOW, THEREFORE, in consideration of the premises and the respective
undertakings of the Company and Executive set forth below, the Company and
Executive agree as follows:

            1. EMPLOYMENT. The Company hereby employs Executive as Chairman of
the Board, Chief Executive Officer, President, and Treasurer, and other such
positions of subsidiaries as assigned by the Board of Directors, and Executive
accepts such employment and agrees to perform services for the Company, for the
period and upon the other terms and conditions set forth in this agreement.

            2. TERM OF EMPLOYMENT. The term of Executive's employment hereunder
shall commence on the effective date hereof and shall continue for an initial
term of three (3) years ("Term of Employment"). The Term of Employment shall
automatically renew for additional one year terms thereafter unless prior
written notice of nonrenewal is given by either Executive or the Company at
least sixty (60) days prior to the annual anniversary date of this agreement.
Notwithstanding the foregoing, the Executive may terminate the Term of
Employment at any time upon ninety (90) days prior written notice to the
Company.

            3. POSITION AND DUTIES.

               3.01 Service with Company. During his Term of Employment,
Executive agrees to perform such reasonable employment duties, consistent with
the terms of this agreement and the offices held by Executive as provided in
section 1 above, as the Board of Directors of the Company shall assign to him
from time to time. Such duties and employment responsibilities shall be
performed in accordance with the Company's rules, regulations and instructions
now in force or which may be adopted by the Company in the future.

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               3.02 Performance of Duties. During his Term of Employment, the
Executive agrees to serve the Company to the best of his ability. The Executive
shall have active involvement and be fully committed to the business and affairs
of the Company, and shall devote at least three (3) days per week to the affairs
of the Company. The Company acknowledges that Executive has employment and/or
businesses other than the Company. Executive hereby confirms that he is under no
contractual commitments inconsistent with his obligations set forth in this
agreement. During his Term of Employment, however, Executive shall not render or
perform services for any other corporation, firm, entity or person, nor will he
become involved in the operations or management of any other commercial
corporation, firm, entity or person, which is in competition with the business
of the Company.

               3.03 Noncompetition. In consideration of the payments to be made
to the Executive under this Agreement, including without limitation the
severance payments provided in Section 8.02 which the Executive acknowledges
constitute new and valuable consideration, the Executive hereby covenants and
agrees that during the Term of Employment, and for a period of twenty-four (24)
months following the termination of Executive's employment for any reason (the
"Restricted Term"), the Executive shall not, directly or indirectly, own,
manage, operate, control, act as an advisor or consultant to, or participate in,
the ownership, management, operation, or control of any business involving the
manufacture or sale, whether at wholesale or retail, of image capture,
transmission or manipulation devices in any geographic market served by the
Company during the Restricted Term; provided, however, that the foregoing shall
not prevent the Executive from owning not more than a one percent (1%) interest
in any entity engaged in such a competing business whose securities are traded
on any securities exchange or in the over-the-counter markets.

               4. COMPENSATION.

               4.01 Base Salary. As base compensation for all services to be
rendered by the Executive under this agreement during the Term of Employment ,
the Company shall pay to Executive a minimum monthly base salary of $5,000.00
per month, which salary shall be paid in accordance with the Company's normal
payroll procedures and policies and be reviewed annually by the Board of
Directors.

               4.02 Stock Options. Executive shall be granted, effective May 29,
1997, an option to purchase up to 50,000 shares of the Company's common stock,
par value $.01 per share, pursuant to the Company's Stock Option Plan, at an
exercise price equal to the closing bid price for such common stock on May 29,
1997 (which was $1.00 per share). All such stock options shall be granted under,
and pursuant to all terms and conditions of, the Qualified Stock Option Plan.
The Board may consider additional grants annually.

               4.03 Benefits. Executive shall be entitled to such
company-sponsored benefits as are provided to executive employees of the
Company, subject to the terms and conditions of the applicable policies and/or
plans.

               4.04 Expenses. The Company will pay or reimburse Executive for
all

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reasonable and necessary out-of-pocket expenses incurred by him in the
performance of his duties under this agreement, subject to the presentment of
appropriate vouchers in accordance with the Company's normal polices for expense
verification. Executive shall be entitled to reimbursement for educational
expenses approved by the Board of Directors, and membership costs for the Young
Presidents Organization.

               4.05 Bonuses. Executive shall be entitled to participation in the
Company's management bonus pool, to the same extent as other management
personnel of the Company.

               4.06 Confirmation of Consulting Services. Each of the Consultant
and the Company hereby acknowledge the existing Consulting Agreement dated as of
October 15, 1996. From and after the date of this Agreement, the Consulting
Agreement shall be terminated, and null and void, except as provided in this
Section. Consultant shall provide management consulting services and assistance,
as required by the Company from time to time, and shall receive total
compensation of $2,000 per month, subject to review by the Board of Directors,
based upon an average of sixteen (16) hours of services by Consultant per month.
The Consultant's engagement may be terminated by the Company upon thirty (30)
days written notice. The provisions of Sections 5 through 17 of the Consulting
Agreement shall continue to apply between the Consultant and the Company from
and after the date of this Agreement as if set forth fully herein. The
Consultant shall be deemed an affiliate of the Executive and activities of the
Consultant shall be within the restrictions set forth in Section 3.03 of this
Agreement.

            5. CONFIDENTIAL INFORMATION. Except as permitted or directed by the
Company's Board of Directors, during the Term of Employment or at any time
thereafter Executive shall not divulge, furnish or make accessible to anyone or
use in any way (other than in the ordinary course of the business of the
Company) any confidential or secret knowledge or information of the Company
which Executive has acquired or become acquainted with or will acquire or become
acquainted with prior to the termination of the Term of Employment, whether
developed by himself or by others, concerning any trade secrets, confidential or
secret designs, processes, formulae, plans, devices or material (whether or not
patented or patentable) directly or indirectly useful in any aspect of the
business of the Company, any customer or supplier lists of the Company, any
confidential or secret development or research work of the Company, or any other
confidential information or secret aspects of the business of the Company.
Executive acknowledges that the above-described knowledge or information
constitutes a unique and valuable asset of the Company and represents a
substantial investment of time and expense by the Company and its predecessors,
and that any disclosure or other use of such knowledge or information other than
for the sole benefit of the Company would be wrongful and would cause
irreparable harm to the Company. Both during and after the Term of Employment,
Executive will refrain from any acts or omissions that would reduce the value of
such knowledge or information to the Company. The foregoing obligations of
confidentiality, however, shall not apply to any knowledge or information which
is now published or which subsequently becomes generally publicly known in the
form in which it was obtained from the Company, other than as a direct or
indirect result of the breach of this agreement by Executive. It is hereby
acknowledged that it is not the intention of the forgoing provisions to preclude
the Executive from securing gainful employment with subsequent employers who are
not competitors of the Company or who would otherwise have no reasonable
commercial use of the above described knowledge or information, but only to
protect the Company's legitimate proprietary information or knowledge.

            6. VENTURES. If, during the Term of Employment, Executive is engaged
in or associated with the planning or implementing of any project, program or
venture involving the

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Company and a third party or parties, all rights in such project, program or
venture shall belong to the Company. Except as formally approved by the
Company's Board of Directors, Executive shall not be entitled to any interest in
such project, program or venture or to any commission, finder's fee or other
compensation in connection therewith other than the salary or other compensation
to be paid to Executive as provided in this agreement.

               7. PATENT, COPYRIGHTS AND RELATED MATTERS.

               7.01 Disclosure and Assignment. Executive will promptly disclose
in writing to the Company complete information concerning each and every
invention, discovery, improvement, device, design, apparatus, practice, process,
method or product, whether patentable or not, made, developed, perfected,
devised, conceived or first reduced to practice by Executive, either solely or
in collaboration with others, during the Term of Employment, or within six
months thereafter, whether or not during regular working hours, relating to any
phase of the business of the Company conducted at such time (hereinafter
referred to as "Developments"). Executive, to the extent that he has the legal
right to do so, hereby acknowledges that any and all of said Developments are
the property of the Company and hereby assigns and agrees to assign to the
Company and all of the Executive's right, title and interest in and to any and
all of such Developments.

               7.02 Future Developments. As to any future Developments made by
Executive and which are first conceived or reduced to practice during the Term
of Employment, or within six months thereafter, but which are claimed for any
reason to belong to an entity or person other than the Company, Executive will
promptly disclose the same in writing to the Company and shall not disclose the
same to others if the Company, within sixty (60) days thereafter, shall claim
ownership of such Developments under the terms of this agreement. If the Company
makes such claim, Executive agrees that, insofar as the rights (if any) of
Executive are involved, it will be settled by arbitration in accordance with the
rules of the American Arbitration Association. The locale of the arbitration
shall be Minneapolis, Minnesota (or other locale convenient to the Company's
principal executive offices). If the Company makes no such claim, Executive
hereby acknowledges that the Company has made no promise to receive and hold in
confidence any such information disclosed by Executive.

               7.03 Limitation on Sections 7.01 and 7.02. The provisions of
sections 7.01 and 7.02 shall not apply to any Development meeting the following
conditions:

               (a)            such Development was developed entirely on
                              Executive's own time; and

               (b)            such Development was made without the use of any
                              Company equipment, supplies, facility or trade
                              secret information; and

               (c)            such Development does not relate (i) directly to
                              the business of the Company, or (ii) to the
                              Company's actual or demonstrably anticipated
                              research or development.

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               7.04 Executive Assistance. Executive agrees to assist Company in
obtaining patents or copyrights on any Developments assigned to the Company that
Company, in its sole discretion, seeks to patent or copyright. Executive also
agrees to sign all documents and do all things deemed necessary by Company to
obtain and/or maintain such patents or copyrights, to assign them to Company,
and to protect them against infringement. The obligations of this Section 7 are
continuing and shall survive the termination of Executive's employment with
Company.

               7.05 Appointment of Agent. Executive irrevocably appoints the
Company to act as Executive's agent and attorney in fact to perform all acts
necessary to obtain/or maintain patents or copyrights to any Developments
assigned by Executive to Company under this Agreement if (i) Executive refuses
to perform those acts or (ii) is unavailable, within the meaning of the United
States patent and copyright laws. Executive acknowledges that the grant of the
foregoing power of attorney is coupled with an interest and shall survive the
death or disability of Executive and the termination of Executive's employment
with Company.

               7.06 Notice and Acknowledgment. Executive acknowledges that this
section of this agreement does not apply to a Development for which there was no
equipment, supplies, facilities or trade secret information of the Company used
and which was developed entirely on Executive's own time, and which does not
relate directly to the business of the Company or the Company's actual or
demonstrably anticipated research or development, or which does not result from
any work performed by Executive for the Company.

               8. TERMINATION.

               8.01 Grounds for Termination. This agreement shall be terminated
prior to the end of the Term of Employment under the following circumstances:

               (a)            By mutual agreement of Executive and the Company;

               (b)            Immediately upon the death of Executive;

               (c)            Upon delivery by Executive of a notice of
                              termination to the Company, in which event this
                              agreement shall be terminated ninety (90) days
                              after receipt of such notice; and

               (e)            Immediately, in the event of (i) Executive's
                              personal dishonesty, willful misconduct, breach of
                              fiduciary duty, intentional failure to perform
                              stated duties, willful violation of any laws
                              (other than minor traffic violations or similar
                              offenses), or material breach of the policies or
                              procedures of the Company. The Company agrees to
                              give Executive thirty (30) days notice to cure
                              those limited items that can actually be cured
                              prior to effecting termination pursuant to this
                              subsection, such termination to be deemed to be
                              termination for cause; or (ii) the bankruptcy or
                              insolvency of the Company.

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Notwithstanding any termination of this agreement, Executive, in consideration
of his employment hereunder to the date of such termination, shall remain bound
by the provisions of this agreement which specifically relate to periods,
activities or obligations upon or subsequent to the termination of Executive's
employment, and the Company shall remain bound by the provisions of section 5
(to the extent that they relate to time periods prior to the date of such
termination).

               8.02 Severance Payment for Termination by Company Following a
Change in Control. If a Change in Control of the Company occurs during the Term
of Employment and following such Change in Control, the Company terminates the
employment of Executive other than for Cause during the six (6) month period
following the Change in Control, Executive shall be entitled to severance
compensation, in full and complete satisfaction of any and all obligations of
the Company under this Agreement and as the sole and exclusive remedy available
to Executive as a result of the termination, equal to the Executive's then
current base salary (and the last annual bonus paid, if any) for the twenty-four
(24) month period following the effective date of termination subject to
applicable withholdings and in accordance with the regular payroll practices of
the Company. Any employee benefits provided to Executive shall terminate upon
the effective date of termination, subject to such continuation rights as may be
available to Executive by law. Nothing in this agreement, including the
severance payments described in this section, shall in any way be construed to
extend the period of Executive's employment with the Company subject to Board
approval.

               For purposes of this section, a Change in Control shall mean
either of the following:

               (a)            a change in control of a nature that would be
                              required to be reported in response to Item 6(e)
                              of Schedule 14A of Regulation 14A promulgated
                              under the Securities Exchange Act of 1934, as
                              amended (the "Exchange Act"), whether or not the
                              Company is then subject to such reporting
                              requirement; or

               (b)            a merger or consolidation to which the Company is
                              a party if, following the effective date of such
                              merger or consolidation, the individuals and
                              entities who were shareholders of the Company
                              prior to the effective date of such merger or
                              consolidation have beneficial ownership (as
                              defined in Rule 13d-3 under the Exchange Act) of
                              less than fifty percent (50%) of the combined
                              voting power of the surviving corporation
                              following the effective date of such merger or
                              consolidation.

               8.03 Surrender of Records and Property. Upon termination of his
employment with the Company, Executive shall deliver promptly to the Company all
records, manuals, books, blank forms, documents, letters, memoranda, notes,
notebooks, reports, data, tables, calculations or copies thereof, which are the
property of the Company or which relate in any way to the business, products,
practices or techniques of the Company, and all other property, trade secrets
and confidential information of the Company, including, but not limited to, all

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documents which in whole or in part contain any trade secrets or confidential
information of the Company, which in any of these cases are in his possession or
under his control. Provided, however, that Executive shall be entitled to retain
items of sentimental value, copies of which shall be provided to the Company at
the request of the Company and at the Company's expense.

               9. MISCELLANEOUS.

               9.01 Governing Law. This agreement is made under and shall be
governed by and construed in accordance with the laws of the State of Minnesota.

               9.02 Prior Agreements. This agreement contains the entire
agreement of the parties relating to the subject matter hereof and supersedes
all prior agreements and understandings with respect to such subject matter, and
the parties hereto have made no agreements, representations or warranties
relating to the subject matter of this agreement which are not set forth herein.

               9.03 Withholding Taxes. The Company may withhold from all salary,
bonus, severance pay or other benefits payable under this agreement all federal,
state, city or other taxes as shall be required pursuant to any law or
governmental regulation or ruling.

               9.04 Amendments. No amendment or modification of this agreement
shall be deemed effective unless made in writing and signed by the parties
hereto.

               9.05 No Waiver. No term or condition of this agreement shall be
deemed to have been waived, nor shall there be any estoppel to enforce any
provisions of this agreement, except by a statement in writing signed by the
party whom enforcement of the waiver or estoppel is sought. Any written waiver
shall not be deemed a continuing waiver unless specifically stated, shall
operate only as to the specific term or condition waived and shall not
constitute a waiver of such term or condition for the future or as to any act
other than specifically waived.

               9.06 Severability. To the extent any provision of this agreement
shall be invalid or unenforceable, it shall be considered deleted here from and
the remainder of such provision and of this agreement shall be unaffected and
shall continue in full force and effect. In furtherance and not in limitation of
the foregoing, should the duration or geographical extent of, or business
activities covered by, any provision of this agreement be in excess of that
which is valid and enforceable under applicable law, then such provision shall
be construed to cover only that duration, extent or activities which may validly
and enforceably be covered. Executive acknowledges the uncertainty of the law in
this respect and expressly stipulates that this agreement be given the
construction which renders its provisions valid and enforceable to the maximum
extent (not exceeding its express terms) possible under applicable law.

               9.07 Assignment. This agreement shall not be assignable, in whole
or in part, by either party without the written consent of the other party.

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               9.08 Injunctive Relief. Executive agrees that it would be
difficult to compensate the Company fully for damages for any violation of the
provisions of this agreement, including without limitation the provisions of
sections 5, 6, and 7. Accordingly, Executive specifically agrees that the
Company shall be entitled to temporary and permanent injunctive relief to
enforce the provisions of this agreement and that such relief may be granted
without the necessity of proving actual damages. This provision with respect to
injunctive relief shall not, however, diminish the right of the Company to claim
and recover damages in addition to injunctive relief.

               9.09 Mandatory Arbitration, In the event any dispute arises under
this Agreement, or as to the breach hereof, and if the dispute cannot be settled
within a reasonable time through direct negotiations between the parties, which
the parties agree to pursue in good faith, such dispute shall be submitted to
binding arbitration conducted in Minneapolis, Minnesota, in accordance with the
then-current Commercial Rules of the American Arbitration Association ("AAA").
The costs and expenses of the arbitration shall be paid by the party against
whom the arbitrators render a decision, if a decision is rendered against a
party, otherwise the costs and expenses shall be shared equally by Executive and
the Company. The arbitrators shall have full power and authority to rule on any
question of law in the same manner as any judge of any court of competent
jurisdiction, and the decision of the arbitrators shall be final and conclusive
upon the parties, and shall not be subject to any appeal or review if the
arbitrators have followed the Commercial Rules of the AAA. The arbitrators shall
have full power to make any award (including the award of equitable remedies)
that shall under the circumstances presented to them be deemed to be proper;
provided that the arbitrators shall not have the power to award punitive damages
or to limit, expand or otherwise modify the terms of this Agreement. Judgment
may be entered upon any award rendered by the arbitrators in accordance with
applicable law in any court of competent jurisdiction.

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

                                             VIDEOLABS, INC.



                                             By /s/ Richard F. Craven
                                                Its Director



                                               /s/James W. Hansen


                                               THE HANSEN COMPANY



                                               By /s/ James W. Hansen
                                                  Its President