CONSULTING AGREEMENT


         THIS CONSULTING AGREEMENT ("AGREEMENT"), made effective as of October
15, 1996, by and between VideoLabs Inc., a Delaware corporation (the "COMPANY"),
and The Hansen Company, a Minnesota corporation ("CONSULTANT").

                                    RECITALS:

         A. The Company and Consultant desire to enter into this Agreement to
confirm the terms and conditions of Consultant's retention as an independent
consultant.

                                   AGREEMENTS:

         NOW, THEREFORE, in consideration of the mutual promises, agreements and
covenants contained in this Agreement, the parties hereby covenant and agree as
follows:


         1. ENGAGEMENT OF CONSULTANT TO PERFORM CONSULTING SERVICES. The Company
hereby engages Consultant to provide general and overall managerial and
financial advice and consulting services to the Company as may be requested by
the Company from time to time, and Consultant accepts such engagement and hereby
agrees to perform such services for the Company, as an independent contractor,
and not as an employee, during the Term of this Agreement. The services to be
performed by Consultant hereunder shall include the services and duties
generally provided by each of a president and a treasurer of a corporation, and
such additional services as may be reasonably requested from time to time by the
Company (collectively, the "SERVICES"). All of the Services provided by the
Consultant shall be provided through, and only through, Mr. James W. Hansen (the
"PRINCIPAL"), a principal of the Consultant, unless otherwise agreed by the
Board of Directors of the Company. The Consultant shall at all times be and
remain subject to the control and direction of the Board of Directors, and in
performing Services the Consultant shall at all times carry out the directions
and instructions of the Board of Directors.

         2. AUTHORITY AND TITLE; PERFORMANCE STANDARDS. During the Term, the
Principal, on behalf of the Consultant, shall be designated as the acting
president and treasurer of the Company, and shall have the powers and
authorities, and shall be subject to the duties and obligations, inherent in
such offices. The Principal shall report directly to the Board of Directors and
such other persons, if any, as may be directed by the Board of Directors.
Consultant shall perform the Services as and when requested by the Company, on a
substantially full-time (at least 30 hours per week) basis during the Term.
Consultant may determine the particular hours and days for the performance of
the Services, provided that the Services are performed on a timely basis, and
provided that Principal is generally available during normal business hours of
the Company. Except as otherwise provided herein, Consultant shall not be
prohibited from providing services to others during the Term, provided the
Principal is made available to the Company on a substantially full-time basis to
provide Services hereunder. In the performance of the Services, Consultant shall
act in good faith and shall use all reasonable efforts to comply with all
reasonable requests of the Company during the term of this Agreement. Consultant
shall perform the Services diligently and to the best of Consultant's, and
Principal's, ability. Consultant, and Principal, shall be subject to any and all
fiduciary duties owed to the Company which are inherent with the offices of
president and treasurer. Any action or decision of the Company under this
Agreement, shall be determined by the Board of Directors. Consultant represents
and warrants to the Company that there are no restraints upon Consultant or
Principal which will or could prohibit Consultant from fulfilling its
obligations hereunder.

         3. TERM. Subject to the terms and provisions of this Agreement, the
term of this Agreement and Consultant's engagement hereunder, shall be for an
initial period of three months commencing on the effective date hereof, unless
terminated earlier in accordance with the terms and provisions of Section 7
hereof (the "TERM"). The Term shall automatically be extended for additional
periods of three months after the initial term unless, at least thirty (30) days
prior to the end of the initial or any extension Term, either party gives
written notice to the other of their intention not to renew the Term.

         4. CONSULTING FEE; WARRANTS. In consideration for the Services rendered
hereunder, Consultant shall receive a fee of Eight Thousand and No/100 Dollars
($8,000.00) per month (the "FEE") during the Term, pro rated daily for any
partial months. The Fee shall be payable monthly, in arrears, following
Consultant's submittal of an invoice to the Company. The Company's Board of
Directors may, in their absolute and sole discretion, have the Company pay the
Consultant up to an additional Fifty Thousand Dollars ($50,000.00) for the
Services rendered, based upon the performance of the Company. Nothing contained
in the Agreement, however, shall require the Company to pay any amounts for the
Services in addition to the Fee. Unless this Agreement is terminated by the
Company for cause pursuant to Section 7 and provided that Consultant performs
the Services in a manner consistent with the provisions of Sections 2 and 3
above, Company shall pay the Consultant the Fee whether or not Services are
requested by the Company. The Consultant acknowledges and agrees that only the
Consultant, and not the Principal, shall be entitled to the Fee or any portion
thereof. The Consultant shall be solely responsible for any compensation or
renumeration to the Principal.

         5. RELATIONSHIP OF PARTIES. Consultant (whether or not acting through
the Principal) is and shall be deemed to be an independent consultant, and the
Company and Consultant acknowledge and agree that the relationship created by
this Agreement is not that of joint venturers or of employer and employee.
Consultant and Principal shall not be entitled to participate in any life,
disability, accident and health insurance, hospitalization, pension, retirement,
or any other employee benefits of the Company. Consultant shall be responsible
for any and all taxes associated with the payment of the Fee, and shall report
and pay such taxes consistent with the provisions of this Agreement. The Company
shall not be entitled to direct the method of performance of the Services.
Consultant, through the Principal as acting president and treasurer, shall have
the authority to bind the Company to any contract, agreement or arrangement
without specific approval or authorization by the Board of Directors, but only
with respect to transactions in the ordinary course of the business of the
Company. All contracts, agreements, arrangements or other transactions which are
not in the ordinary course of the business of the Company shall require the
specific or general authorization of the Board of Directors. The provisions of
this Section shall survive the expiration or termination of this Agreement.

         6. REIMBURSEMENT FOR EXPENSES. Consultant shall be reimbursed by the
Company for all reasonable travel and other expenses actually and properly
incurred in the performance of the Services hereunder; provided, however, that
all such travel and other out-of-pocket expenses must be approved in advance by
the Company. For all such expenses, Consultant shall furnish to the Company
statements, receipts and vouchers as and when required by and to the reasonable
satisfaction of the Company.

         7. TERMINATION. Notwithstanding any provisions of this Agreement to the
contrary, this Agreement and Consultant's retention hereunder may be terminated
prior to the expiration of the Term in the event of the occurrence of any of the
following:

                  (a) The Company may terminate this Agreement and Consultant's
         retention hereunder without cause upon five (5) days notice; provided,
         however, that in the event of a termination without cause, the entire
         unpaid portion of the Fee for the remaining portion of the Term shall
         be paid by the Company through the remainder of such Term,
         notwithstanding such termination.

                  (b) The Company may terminate this Agreement and Consultant's
         retention hereunder for cause. As used in this Section 8(b), the term
         "CAUSE" shall mean: (i) gross negligence of Consultant or Principal in
         the performance of the Services; (ii) willful neglect of Consultant's
         or Principal's duties or willful refusal to comply with the reasonable
         requests for Services by the Company; (iii) dishonesty, theft, fraud or
         other criminal act on the part of Consultant or Principal; or (iv)
         Consultant's or Principal's material breach of the covenants contained
         herein and the failure by Consultant to promptly cure such breach or
         failure within ten (10) days after a written demand for performance is
         delivered to Consultant by the Company, specifying such cause. In the
         event of a termination by the Company for cause, the Company shall have
         no obligation to pay any portion of the Fee payable for periods after
         the date of such termination.

         8. CONFIDENTIAL INFORMATION. Consultant acknowledges that the
confidential and proprietary information and data (which shall mean information
or data not known or generally available to the public) obtained by Consultant
or Principal during the course of performing Services under this Agreement
concerning the Company's business, affairs, products, inventions, processes,
techniques, equipment, machinery, apparatus, business operations, technical
information, drawings, specifications, materials, know how, and the like, and
any knowledge or information developed by Consultant or Principal as a result of
performing Services hereunder (collectively referred to as the "CONFIDENTIAL
INFORMATION"), are all the sole property of the Company. Consultant agrees to
hold, and to cause Principal to hold, all Confidential Information in confidence
and not to disclose the same, without the prior written consent of the Company,
to anyone for any reason at any time (unless so required by law or legal
process, and then only after written notice to the Company and a reasonable
opportunity for the Company to challenge, at its cost, such disclosure).
Consultant shall not, directly or indirectly, use or permit the use of any
Confidential Information for any purpose, other than performing the Services
hereunder, without the written consent of Company. Consultant shall use its best
efforts to prevent publication, disclosure or other use or transmission of any
Confidential Information. Upon the termination or expiration of this Agreement,
or earlier if requested by the Company, Consultant agrees to return to the
Company all Confidential Information in the possession of Consultant, regardless
of the form of such Confidential Information. The provisions of this Section
shall survive the expiration or termination of this Agreement.

         9. INTELLECTUAL PROPERTY RIGHTS.

                  (a) Without limiting the Company's rights arising by law or
         custom, Consultant acknowledges that the Company shall exclusively own,
         and Consultant hereby assigns, transfers, and conveys to the Company,
         all discoveries, work product, trademarks, service marks, trade names,
         brand names, software, copyrights, inventions, improvements, patents
         and other intellectual property rights produced, created, developed or
         conceived by Consultant or Principal prior to or during the Term of
         this Agreement, whether registered or unregistered, which relate to the
         Company's business (collectively, the "INTELLECTUAL PROPERTY RIGHTS").
         Consultant shall disclose all such Intellectual Property Rights to the
         Company, and Consultant agrees to execute and deliver all documents
         required by the Company to document or perfect the Company's exclusive
         ownership of the Intellectual Property Rights.

                  (b) Consultant further agrees that all copyrightable works
         developed by the Consultant or the Principal, either alone or with
         others, prior to or during the Term of this Agreement, which relate in
         any way to the Company's business, shall be considered to be works made
         for hire and the ownership of and the copyrights to such works shall be
         the exclusive property of the Company. Consultant shall disclose all
         such works to the Company, and Consultant agrees to execute and deliver
         all documents required by the Company to document or perfect the
         Company's exclusive ownership of such works.

                  (c) Upon the termination or expiration of this Agreement, or
         earlier if requested by the Company, Consultant agrees to return to the
         Company all tangible (including electronic storage) elements of the
         Intellectual Property Rights and works in the possession of Consultant,
         regardless of the form of such Intellectual Property Rights and works.

                  (d) The provisions of this Section shall survive the
         expiration or termination of this Agreement.

         10. NONCOMPETITION COVENANT. Consultant hereby agrees that, during the
Term and for a period of one year thereafter, Consultant shall not, directly or
indirectly, own, manage, operate, control, be employed by, act as an advisor or
consultant to, or participate in, the ownership, management, operation, or
control of any business involving the design, development, manufacture,
distribution or sale (whether at wholesale or retail) of image capture devices
or otherwise in competition with the businesses of the Corporation, as now or
hereafter conducted, in any geographic market served by the Corporation during
the restriction period; provided, however, that nothing contained in this
Section shall prohibit the Consultant from owning stock in a publicly traded
company which is in competition with the Company provided Consultant's aggregate
holdings therein do not exceed one percent (1%) of the capital of such company.
The provisions of this Section shall survive the expiration or termination of
this Agreement.

         11. CONSIDERATION; REMEDIES. Consultant acknowledges and agrees that
the covenants set forth in Sections 8, 9 and 10 above are conditions to the
offer of retention by the Company on the terms and for the compensation provided
hereunder and that a portion of the consideration paid to Consultant hereunder
is being paid by the Company in consideration for such covenants. Consultant
further acknowledges and agrees that any breach or threatened breach of any of
the covenants set forth in Sections 8, 9 or 10 above would result in immediate
and irreparable injury to the Company for which money damages would be an
inadequate remedy. Accordingly, Consultant agrees that the Company will have the
right to obtain equitable relief including an injunction to enforce the terms of
Sections 8, 9 or 10 of this Agreement in addition to any other legal or
equitable remedies that may be available to the Company. In the event of any
violation by Consultant of the terms of Sections 8, 9 or 10 of this Agreement,
Consultant agrees to pay the reasonable costs and legal fees to the Company in
pursuing any of its rights with respect to this Agreement, in addition to the
damages sustained by the Company. The provisions of this Section shall survive
the expiration or termination of this Agreement.

         12. NOTICES. Except as otherwise specifically provided, any notice in
writing required or permitted to be given in respect of this Agreement shall be
sufficiently given if delivered to the party by hand, by Federal Express or
similar overnight carrier service or mailed by registered or certified mail,
postage pre-paid, return receipt requested to the following addresses:

         Company:                   VideoLabs, Inc.
                                    10925 Bren Road East
                                    Minneapolis, Minnesota 55343
                                    Attn:    Chairman of the Board
                                    Phone: (612) 988-0055
                                    Telecopy: (612) 988-0066



         Consultant:                 The Hansen Company
                                     26 Highway 96 East
                                     Dellwood, Minnesota 55110
                                     Attn:  President
                                     Phone: (612) 426-1822
                                     Telecopy: (612) 426-1822

         Any notices shall be deemed to have been received by the party to whom
it is addressed if mailed as aforesaid on the third business day following the
date of mailing, or if sent by facsimile transmission as aforesaid on the first
business day following the date of transmission. Consultant shall be required to
inform the Company of any change of address as soon as it occurs.

         13. NO WAIVER. The failure or delay on the part of any party in
exercising any right, power or remedies under this Agreement or available to
such party at law or in equity, shall not operate or be construed as a waiver of
such right, power or remedy. Any waiver of a right, power or remedy under this
Agreement must be in writing and signed by the party granting the waiver. The
giving of a waiver in one instance or for one purpose shall not create any
implied obligation to give a waiver in another instance or for another purpose.

         14. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Minnesota, without giving effect to
choice of law principle thereof.

         15. ENTIRE AGREEMENT. The parties hereto agree that this Agreement
constitutes the entire understanding of the parties and supersedes and replaces
all oral or written representations and that this Agreement shall not be
amended, modified or supplemented in any respect except by a subsequent written
Agreement signed by both parties hereto.

         16. SUCCESSORS AND ASSIGNS. The Agreement shall inure to the benefit of
and be binding upon the parties hereto and upon the heirs, executors,
administrators and personal representatives of Consultant and the successors and
assigns of the Company.

         17. SEVERABILITY. Subject to the provisions of applicable law, in the
event that any term or provision of this Agreement, or any part or aspect
thereof, shall be deemed by a court of competent jurisdiction to be overly broad
in scope or duration or both, the court considering the same shall have the
power and authority, and the parties hereby direct such court to exercise such
power and authority, to modify such term or provision to limit such scope and
duration so that such term or provision is no longer overly broad and to enforce
the same as so limited. Subject to the foregoing sentence, in the event that any
provisions of this Agreement shall be held to be invalid or unenforceable for
any reason, such invalidity or unenforceability shall attach only to such
provisions and shall not affect or render invalid or unenforceable any other
provision of this Agreement, it being the intent of the parties that the terms
and provisions of this Agreement shall be deemed to be severable into separate
and independent covenants.

         18. COUNTERPARTS. This Agreement may be executed in any number of
counterparts each of which when executed shall be deemed to be an original and
one and the same instrument.

         IN WITNESS WHEREOF, the parties hereto have executed this Consulting
Agreement as of the date and year first above written.


VIDEOLABS, INC.                         THE HANSEN COMPANY




By    /s/                               By    /s/
      -----------------------                 -----------------------
      Richard F. Craven                       James W. Hansen
      Its Director                            Its President




                         PRINCIPAL JOINING RESTRICTIONS

     The Principal hereby acknowledges that the Principal will receive personal
benefit from the Consultant entering into this Agreement. As an inducement to
the Company to enter into this Agreement, the Principal hereby agrees to be
personally bound to all of the covenants, restrictions and obligations of the
Company contained in Sections 8, 9, 10 and 11 of the Agreement.



                                    /s/
                                    -----------------------
                                    James W. Hansen