<PAGE>

                                LEASE AGREEMENT

THIS LEASE AGREEMENT dated JUNE 24, 1999, by and between PRINCIPAL LIFE
INSURANCE COMPANY, AN IOWA CORPORATION, C/O PRINCIPAL CAPITAL MANAGEMENT, LLC, A
DELAWARE LIMITED LIABILITY COMPANY, 801 GRAND AVENUE, DES MOINES, IA 50392-1370,
("Landlord"), and LSC, INC., A MINNESOTA CORPORATION, whose address for the
purpose of this lease (Lease) shall be 1270 EAGAN INDUSTRIAL ROAD, SUITE 160,
EAGAN, MN 55121, ("Tenant").

IT IS AGREED AS FOLLOWS:

1.       DEMISE.

         Landlord does hereby lease to Tenant and Tenant hereby rents the
         premises (Premises) described as: 11,932 square feet of net rentable
         area consisting of approximately 11,419 square feet of office space and
         513 square feet of warehouse space located at 1270 EAGAN INDUSTRIAL
         ROAD, EAGAN, MN, which, more particularly, includes the space and
         Premises shown on the site plan attached hereto and marked EXHIBIT "A".

         IMPROVEMENTS. Landlord shall prepare and furnish the drawings and
         specifications as needed for all improvements set forth in EXHIBIT "B"
         ("LANDLORDS WORK"), which is attached hereto and made a part hereof.

2.       TERM.

         The term of this Lease shall be for a period of SIXTY (60) months,
         commencing on the 1ST day of AUGUST, l999 and ending at midnight on the
         31ST day of JULY, 2004 ("Lease Term"). Notwithstanding said
         commencement date, if for any reason Landlord cannot deliver possession
         of the leased Premises to the Tenant on or by AUGUST 1, 1999, Tenant
         shall not be obligated to pay rent until possession of the Premises is
         tendered to Tenant and Landlords work is substantially completed. In
         such event, the term of the Lease shall be extended so that the term
         remains SIXTY (60) months. If the leased Premises are delivered on a
         date other than the 1st day of the month, rent for that month shall be
         prorated and the term extended for the full term from the first day of
         the following month. However if possession is not delivered on or
         before August 1, 1999, Tenant shall have the right to occupy its leased
         premises at 9957 Valley View Road at a monthly gross rent of $8,500.00
         or prorated month thereof until such time as the Landlord is able to
         deliver to Tenant possession of the Premises. It is understood that
         Landlord and Tenant shall execute a separate lease for the premises at
         9957 Valley View Road which will further define the terms and
         conditions for said space. In the event that the delay of delivery of
         possession results from Tenant's failure to perform work for which
         Tenant is responsible, or fails to furnish or approve, as agreed, the
         plans and specifications as provided above, or fails to make timely
         selections of materials, color choices or other matters for which
         Tenant is responsible, the rent shall, nonetheless, commence on the
         commencement date stated above. If Tenant occupies the Premises prior
         to said commencement date, such occupancy shall be subject to all
         provisions hereof and shall not advance the termination date, and
         Tenant shall not pay Base Rent and Operating Expenses for such early
         possession period. Tenant shall pay utilities during such early
         possession period

<PAGE>

3.       RENT.

         (STEP RENT)

         (A)      RENT. Tenant shall pay for the use and occupancy of the
                  Premises a base rental (Rent) sum payable in equal monthly
                  installments on the first day of each month in advance without
                  demand during the Lease Term. Tenant's base rental sum during
                  the Lease shall be paid as follows:

<TABLE>
<CAPTION>
                                                             Annual                   Monthly
                                                             ------                   -------
<S>                                                       <C>                        <C>
                            Months 1 - 30                 $ 96,410.56                $8,034.21
                            Months 31-60                  $106,051.62                $8,837.63
</TABLE>

         Rent of any period during the Lease Term hereof which is less than one
         month shall be a pro-rata portion of the monthly installment. Rent
         shall be payable in lawful money of the United States to Landlord at
         the address stated herein or to such other persons or at such other
         places as Landlord may designate in writing.

         (B)      PLACE OF PAYMENT. All such rentals shall be paid to Landlord
                  at CB RICHARD ELLIS, PO BOX 1450, NW 7196-4M202, MINNEAPOLIS,
                  MN 55485-7196 or at such place as Landlord may designate from
                  time to time, in writing addressed to Tenant.

         (C)      LATE CHARGE. Tenant hereby acknowledges that late payment by
                  Tenant of Rent or other sums due thereunder will cause
                  Landlord to incur costs not contemplated by this Lease.
                  Therefore, if any installment of Rent or any other sum due
                  from Tenant shall not be received by Landlord within ten (10)
                  days after such amount is due, Tenant shall pay to Landlord a
                  late charge of six percent (6%) of such overdue amount.
                  Acceptance of such late charge by Landlord shall in no event
                  constitute a waiver of Tenant's default with respect to such
                  overdue amount or prevent Landlord from exercising any other
                  right or remedy available to Landlord.

         (D)      RECEIPT. Receipt is hereby acknowledged of the sum of
                  $11,076.87 in payment of the monthly base and operating
                  expense Rents for the first month of the Lease Term.

         (E)      SECURITY DEPOSIT. Tenant shall deposit with Landlord upon
                  execution hereof $11,880.29 as security for Tenant's faithful
                  performance of Tenant's obligation hereunder. If Tenant fails
                  to pay Rent or other charges due hereunder or otherwise
                  defaults with respect to any provision of the Lease, Landlord
                  may use, apply or retain all or any portion of said deposit
                  for the payment of any Rent or other charge in default or for
                  the payment of any other sum to which Landlord may become
                  obligated by reason of Tenant's default, or to compensate
                  Landlord for any loss or damage which Lessor may suffer
                  thereby. If Landlord so uses or applies all or any portion of
                  said deposit, Tenant shall within ten (10) days after written
                  demand therefor deposit cash with Landlord in an amount
                  sufficient to restore said deposit to the full amount herein
                  above stated and Tenant's failure to do so shall be a material
                  breach of this Lease. If the monthly Rent shall, from time to
                  time increase during the Lease Term, Tenant shall thereupon
                  deposit with Landlord additional security deposit so that the
                  amount of security deposit held by Landlord shall at all times
                  bear the same proportion to current rent as the original
                  security deposit bears to the original monthly Rent set forth
                  in Paragraph 3A hereof. Landlord shall not be required to keep
                  said deposit separate from its general accounts. If Tenant
                  performs all of Tenant's obligations hereunder, said deposit,
                  or so much thereof as has not theretofore been


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<PAGE>

                  applied by Landlord shall be returned, without payment of
                  interest or other increment for its use to Tenant (or at
                  Landlord's option, to the last assignee, if any, of Tenant's
                  interest hereunder) at the expiration of the Lease Term
                  hereof, and after Tenant has vacated the Premises. No trust
                  relationship is created herein between Landlord and Tenant
                  with respect to said Security Deposit except as created under
                  Minnesota statutes.

                  Tenant hereby agrees not to look to any mortgagee as
                  mortgagee, mortgagee-in-possession or successor in title to
                  the Premises for accountability for any security deposit
                  required by Landlord hereunder, unless said sums have actually
                  been received by said mortgagee as security for Tenant's
                  performance of this Lease. Subject to any Tenant defaults
                  which have not been cured, Landlord shall deliver the funds
                  deposited hereunder by Tenant to the purchaser of Landlord's
                  interest in the Premises, in the event that such interest is
                  sold, and thereupon Landlord shall be discharged from any
                  further liability with respect to said security deposit

         (F)      PRO RATA SHARE. Tenant's proportionate share shall be the
                  percentage which the square footage of the Premises bears to
                  the total square footage of the following-described
                  building(s) 1270 EAGAN INDUSTRIAL ROAD, EAGAN, MN, CONSISTING
                  OF APPROXIMATELY 60,164 SQUARE FEET ("BUILDING").

                  Tenant's pro rata share equals 19.83% (11,932 square feet
                  divided by 60,164 square feet)

4.       PERMITTED USE.

         Tenant covenants that the Premises will be used as general office and
         warehouse ("Permitted Use") together with the incidental activities of
         Tenant, its affiliated companies or other subsidiary companies and for
         no other use or purpose. Tenant further covenants that the Premises
         will not be used or occupied for any unlawful purposes. Tenant agrees
         to and shall use the Premises solely for the purpose of conducting the
         Permitted Use and for no other business or purpose. Tenant agrees to
         conduct Tenant's business in the Premises under Tenant's Trade Name,
         which Tenant represents that it has the right to use. Tenant
         acknowledges that the Permitted Use is not a use granted exclusively to
         Tenant and that Landlord reserves the right to lease premises in the
         building to others for the same or a similar Permitted Use. Tenant
         further acknowledges that it has received no written or oral
         inducements from Landlord or any of Landlord's representatives
         concerning this Lease (other than as specifically set forth herein) or
         that Tenant will be granted any such exclusive rights. Tenant further
         covenants that the Premises will not be used or occupied for any
         unlawful purposes. The Tenant will not make or permit to be made any
         use of the Premises or any part thereof which would violate any of the
         covenants, agreements, terms, provisions and conditions of this Lease
         or which directly or indirectly is forbidden by public law, ordinance
         or governmental regulation; or make or permit any use of the Premises
         which may be dangerous, noxious or offensive or create or maintain any
         nuisance or disturbance in, at or on the Premises; or make or permit
         any use of the Premises which may invalidate, or increase the premium
         cost of any policy of insurance carried on the Building and environs
         and their operation, or any use which, in Landlord's sole judgement,
         shall impair the character, reputation or appearance of the Building
         and environs.


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<PAGE>

5.       OPERATING EXPENSES.

                  TAXES, UTILITIES, REPAIRS, MAINTENANCE AND REPLACEMENT

                  (1)      Taxes

                           (a)      The Landlord shall pay all taxes payable
                                    during the Lease Term before the same are
                                    delinquent.

                           (b)      If in the future a tax or other charge on
                                    Rents shall be imposed by any governing body
                                    having the authority to impose such tax or
                                    charge, then such tax or charge shall
                                    likewise be the obligation of the Landlord.

                           (c)      As used herein, the term "taxes" shall mean
                                    real estate taxes, assessments (whether they
                                    be general or special), sewer rents, rates
                                    and charges, transit and transit district
                                    taxes, taxes based upon the receipt of rent,
                                    and any other federal, state or local
                                    governmental charge, general, special,
                                    ordinary or extraordinary (but not including
                                    income or franchise taxes or any other taxes
                                    imposed upon or measured by Landlord's
                                    income or profits, except as provided
                                    herein), which may now or hereafter be
                                    levied, assessed or imposed against the
                                    Premises.

                  (2)      Tenant shall pay all utility bills incurred for which
                           the Tenant is not separately metered including but
                           not limited to water, gas, electricity, fuel, light,
                           heat and power bills.

                  (3)      Landlord shall be responsible for providing the
                           following: (a) trash removal for the Building common
                           areas subject to Paragraph 5.3; (b) any vendor
                           services to the building common areas; (c)
                           landscaping; (d) all labor costs and supply costs
                           involved in the operation of the building; (e) all
                           other services of any kind and nature which may be
                           used in or upon the Premises (except as provided for
                           elsewhere in this Lease); (f) management fees paid
                           for the management of the Premises; (g) and the
                           repair, maintenance and replacement of the Building
                           and improvements as follows: (i) the roof; (ii) all
                           interior and exterior components of the building and
                           improvements both structural or otherwise; (iii)
                           parking lot, (iv) sidewalks, alleys and any and all
                           access drives, including the removal of snow and ice
                           therefrom; (v) common area heating and air
                           conditioning equipment, lines and fixtures; (vi)
                           plumbing equipment, lines and fixtures, including but
                           not limited to fire sprinkler and fire control
                           systems; (vii) electrical equipment, lines and
                           fixtures; (viii) all ingress-egress doors; (ix) plate
                           glass; (x) all utility lines and services; (xi)
                           preventive maintenance to all the Building heating
                           and air conditioning systems; (xii) and any and all
                           other repairs maintenance and replacements to the
                           building and improvements during the term of this
                           Lease.

                  (4)      Landlord shall be responsible for providing Property
                           and Liability Insurance for the Premises. Should
                           Landlord choose to self-insure, the cost of
                           maintaining such self insurance shall be considered
                           an expense of the property. In no event will the cost
                           exceed the cost of maintaining first dollar coverage.

                  (5)      Tenant, at Tenant's sole expense, shall comply with
                           all laws, rules, orders, ordinances, directions,
                           regulations and requirements of federal, state,
                           county, and


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<PAGE>

                           municipal authorities now in force or which may
                           hereafter be in force, which shall impose any duty
                           upon the Landlord or Tenant with respect to the use,
                           occupation or alteration of the Premises, except as
                           otherwise provided in this Lease.

                  (6)      All items listed in this paragraph 5(1) through
                           paragraph 5(4) shall hereinafter be referred to as
                           "Operating Expenses."

         Notwithstanding the foregoing, Operating Expenses shall not, however,
         include:

                  (i) depreciation, interest (except as set forth below with
                  respect to amortization of capital improvements) and
                  amortization on mortgages, and other debt costs or ground
                  lease payments, if any; legal fees in connection with leasing,
                  tenant disputes or enforcement of leases; real estate brokers'
                  leasing commissions; improvements or alterations to tenant
                  spaces; the cost of providing any service directly to and paid
                  directly by any tenant; any costs expressly excluded from
                  Operating Expenses elsewhere in this lease; costs of any items
                  to the extent Landlord receives reimbursement from insurance
                  proceeds or from a third party (such proceeds to be deducted
                  from operating Expenses in the year in which revised); and

                  (ii) capital expenditures except for; (a) the costs of any
                  capital improvements, equipment or devices installed or paid
                  for by Landlord (1) required or desired for the health and
                  safety of tenants and occupants, (2) to conform with any
                  change in public laws, ordinances or government regulations,
                  whether federal, state, local, or municipal, rules,
                  regulations or requirements of any governmental or quasi
                  governmental authority having jurisdiction not applicable to
                  the building as of the date of original construction or of the
                  board of fire underwriters or similar insurance body, or (3)
                  to effect a labor saving, energy saving or other economy
                  amortized over the useful life of such capital improvement,
                  equipment or device.

6.       ADDITIONAL RENT (NET CLAUSE).

         It is understood that the Rent set forth in paragraph 3 of the Lease
         was negotiated in anticipation that the Tenant pays for a pro-rata
         share of the Operating Expenses not paid directly by Tenant, defined in
         paragraph 5 of the Lease. Therefore, in order that Rent payable
         throughout the term of this Lease shall reflect such costs, Tenant
         shall pay its pro-rata share of the Operating Expenses defined in
         paragraph 5 which are estimated to be THREE AND 06/100 DOLLARS ($3.06)
         per square foot per annum or THREE THOUSAND FORTY-TWO AND 66/100
         ($3,042.66) per month in 1999. At the beginning of the Lease Term and
         within 60 days after the first day of each calendar year, Landlord
         shall furnish to Tenant an estimate of Tenant's pro-rata share of
         Operating Expenses, not paid directly by Tenant, defined in Paragraph 5
         for the ensuing calendar year. Tenant shall pay to Landlord 1/12th of
         said estimate at the same time and place as the base rent is to be paid
         pursuant to paragraph 3, above. Landlord will furnish a statement of
         the actual cost with respect to the reimbursable expenses no later than
         sixty (60) days following the calendar year-end including the year
         following the year in which the Lease terminates. In the event that
         Landlord is, for any reason, unable to furnish the accounting for the
         prior year within the time specified above, the Landlord will furnish
         such accounting as soon thereafter as practicable with the same force
         and effect as the statement would have had if delivered within the time
         specified above. Tenant will pay any deficiency to Landlord as shown by
         such statement within thirty (30) days after receipt of statement. If
         the total amount paid by Tenant during any calendar year exceeds the
         actual amount of its share of the Operating Expenses due for such
         calendar year, the excess


                                       5
<PAGE>

         will be refunded by Landlord within thirty (30) days of the date of the
         statement. Landlord will keep books and records showing the Operating
         Expenses in accordance with generally accepted accounting principles.
         Upon five (5) business days notice, Tenant shall have the right to
         inspect the books and records at the office of the Landlord or its
         Manager.

7.       REPAIRS AND MAINTENANCE

         Notwithstanding anything to the contrary contained herein, the Tenant
         will keep, maintain and preserve the Premises in a first class
         condition, normal wear and tear excepted. The Tenant at its sole cost
         and expense will provide janitorial and window washing for the interior
         of the Premises. In addition, Tenant shall be responsible for all
         utility services for which the Tenant is separately metered. When and
         if needed, at the Tenant's sole cost and expense, the Tenant will make
         all interior repairs and replacements including but not limited to
         interior walls, doors and windows, floors, floor coverings, light
         bulbs, plumbing fixtures, heating/air conditioning systems, hot water
         systems, and electrical fixtures. Tenant shall also make all repairs
         and replacements to Tenant's overhead garage and exterior pedestrian
         doors. The Tenant will also repair and replace at its sole cost and
         expense any broken windows and/or damage to the building or Premises
         caused by the negligence of the Tenant or its employees, agents, guests
         or invitees during the Lease Term hereof. The above repairs,
         replacements, and/or services must be performed by an approved
         contractor of the Landlord. Should Tenant fail to perform all interior
         repairs and replacements to Tenant's Premises such repairs may be
         performed by the Landlord and charged to the Tenant at the Tenant's
         sole cost and expense. Except as otherwise provided in this Lease,
         Tenant will comply with all ordinances of the City of EAGAN, rules and
         regulations of the Board of Health and the laws of the State of
         MINNESOTA. The Tenant is also responsible for compliance with all laws,
         rules and regulations of any governmental authority required of either
         the Landlord or the Tenant relative to the repair, maintenance and
         replacement in the Premises

         NOTWITHSTANDING ANYTHING TO THE CONTRARY, LANDLORD SHALL BE RESPONSIBLE
         FOR CUMULATIVE REPAIRS OR REPLACEMENT COSTS OF THE ROOF TOP HVAC UNITS
         IN EXCESS OF $2,000.00 PER YEAR. IN ADDITION, LANDLORD AT LANDLORD'S
         COST, SHALL HAVE A THIRD PARTY CONTRACTOR CERTIFY THAT THE HVAC UNITS
         AND OVERHEAD DOORS SERVICING THE PREMISES ARE IN GOOD WORKING CONDITION
         UPON THE COMMENCEMENT DATE OF THIS LEASE.

8.       SORTING AND SEPARATION OF REFUSE AND TRASH.

         (A)      The Tenant covenants and agrees, as its sole cost and expense,
                  to comply with all present and future laws, orders and
                  regulations of all state, federal, municipal and local
                  governments, departments, commissions and boards regarding the
                  collection, sorting, separation and recycling of waste
                  products, garbage, refuse and trash. The Tenant shall sort and
                  separate waste products, garbage, refuge and trash into such
                  categories as provided by law. Each separately sorted category
                  of waste products, garbage, refuse and trash shall be placed
                  in separate receptacles reasonably approved by the Landlord.
                  Such separate receptacles may, at the Landlord's option, be
                  removed from the Premises in accordance with a collection
                  schedule prescribed by law.

         (B)      The Landlord reserves the right to refuse to collect or accept
                  from the Tenant any waste products, garbage, refuse or trash
                  that is not separated and sorted as required by law, and to
                  require the Tenant arrange for such collection at the Tenant's
                  sole cost and expense, utilizing a contractor satisfactory to
                  the Landlord. The Tenant shall pay all costs, expenses, fines,
                  penalties or damages that may be imposed on the Landlord or
                  the Tenant by reason of the Tenant's failure to comply with
                  the provisions of this paragraph 8B, and,


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<PAGE>

                  at the Tenant's sole cost and expense, shall indemnify, defend
                  and hold the Landlord harmless (including legal fees and
                  expenses) from and against any actions, claims and suits
                  arising from such noncompliance, utilizing counsel reasonably
                  satisfactory to the Landlord.

9.       HAZARDOUS WASTE.

         The term "Hazardous Substances", as used in this lease shall mean
         pollutants, contaminants, toxic or hazardous wastes, or any other
         substances, the use and/or the removal of which is required or the use
         of which is restricted, prohibited or penalized by any "Environmental
         Law", which term shall mean any federal, state or local law, ordinance
         or other statute of a governmental or quasi-governmental authority
         relating to pollution or protection of the environment. Tenant hereby
         agrees that (A) no activity will be conducted on the Premises that will
         produce any Hazardous Substance, except for such activities that are
         part of the ordinary course of Tenant's business activities (the
         "Permitted Activities") provided said Permitted Activities are
         conducted in accordance with all Environmental Laws and have been
         approved in advance in writing by Landlord; Tenant shall be responsible
         for obtaining any required permits and paying any fees and providing
         any testing required by any governmental agency; (B) the Premises will
         not be used in any manner for the storage of any Hazardous Substances
         except for the temporary storage of such materials that are used in the
         ordinary course of Tenant's business (the "Permitted Materials")
         provided such Permitted Materials are properly stored in a manner and
         location meeting all Environmental Laws and approved in advance in
         writing by Landlord; Tenant shall be responsible for obtaining any
         required permits and paying any fees and providing any testing required
         by any governmental agency; (C) no portion of the Premises will be used
         as a landfill or a dump; (D) Tenant will not install any underground
         tanks of any type; (E) Tenant will not allow any surface or subsurface
         conditions to exist or come into existence which are a result of
         Tenants, its invitees or employees use of the Premises or Building and
         that constitute, or with the passage of time may constitute a public or
         private nuisance; (F) Tenant will not permit any Hazardous Substances
         to be brought onto the Premises, except for the Permitted Materials
         described above, and if so brought or found located thereon, the same
         shall be immediately removed, with proper disposal, and all required
         cleanup procedures shall be diligently undertaken pursuant to all
         Environmental Laws. Landlord or Landlord's representative shall have
         the right but not the obligation to enter the Premises for the purpose
         of inspecting the storage, use and disposal of Permitted Materials to
         ensure compliance with all Environmental Laws. Should it be determined,
         in Landlord's sole opinion, that said Permitted Materials are being
         improperly stored, used, or disposed of, then Tenant shall immediately
         take such corrective action as requested by Landlord. Should Tenant
         fail to take such corrective action within 24 hours, Landlord shall
         have the right to perform such work and Tenant shall promptly reimburse
         Landlord for any and all costs associated with said work. If at any
         time during or after the term of the Lease Term, the Premises are found
         to be so contaminated or subject to said conditions and are a result of
         Tenants, its invitees or employees use of the Premises or Building,
         Tenant shall diligently institute proper and thorough cleanup
         procedures at Tenant's sole cost, and Tenant agrees to indemnify,
         defend and hold harmless Landlord, its lenders, any managing agents and
         leasing agents of the Premises, and their respective agents, partners,
         officers, directors and employees, from all claims, demands, actions,
         liabilities, costs, expenses, damages (actual or punitive) and
         obligations of any nature arising from or as a result of the use of the
         Premises by Tenant. The foregoing indemnification and the
         responsibilities of Tenant shall survive the termination or expiration
         of this Lease.

         During the Lease Term, Tenant shall promptly provide Landlord with
         copies of all summons, citations, directives, information inquiries or
         requests, notices of potential responsibility, notices of violation or
         deficiency, orders or decrees, claims, complaints, investigations,
         judgments,


                                       7
<PAGE>

         letters, notice of environmental liens, and other communications,
         written or oral, actual or threatened, from the United States
         Environmental Protection Agency, Occupational Safety and Health
         Administration, The State of MINNESOTA Environmental Protection Agency
         or other federal, state or local agency or authority, or any other
         entity or individual, concerning (i) any Hazardous Substance and the
         Premises; (ii) the imposition of any lien on the Premises; or (iii) any
         alleged violation of or responsibility under any Environmental Law.

10.      INSURANCE.

         (A)      INSURANCE BY LANDLORD.

         Landlord shall, during the Lease Term, procure and keep in force the
         following insurance, the cost of which may be deemed as additional Rent
         payable, by Tenant pursuant to Paragraph 5 or Paragraph 6:

                  (1)      PROPERTY INSURANCE. "All Risk" property insurance,
                           including, without limitation, coverage for
                           earthquake and flood; and machinery (if applicable);
                           sprinkler damage; vandalism; malicious mischief. Such
                           Insurance shall not cover Tenant's equipment, trade
                           fixtures, inventory, fixtures or personal property
                           located on or in the Premises;

                  (2)      LIABILITY INSURANCE. Commercial general liability
                           (lessor's risk) insurance against any and all claims
                           for bodily injury, death or property damage occurring
                           in or about the Building or the Land. Such insurance
                           shall have a combined single limit of not less than
                           One Million Dollars ($1,000,000) per occurrence per
                           location with a Two Million Dollar ($2,000,000)
                           aggregate limit; and

                  (3)      OTHER. Such other insurance as Landlord deems
                           necessary and prudent.

         (B)      INSURANCE BY TENANT.

                  Tenant shall, during the Lease Term, procure and keep in force
                  the following insurance:

                  (1)      PERSONAL PROPERTY INSURANCE. "All Risk" property
                           insurance, including, without limitation, coverage
                           for earthquake and flood. (if applicable); boiler and
                           machinery (if applicable); sprinkler damage;
                           vandalism; malicious mischief on all equipment, trade
                           fixtures, inventory, fixtures and personal property
                           located on or in the Premises, including fixtures
                           hereinafter constructed or installed on the Premises.
                           Such insurance shall be in an amount equal to the
                           full replacement cost of the aggregate of the
                           foregoing and shall provide coverage comparable to
                           the coverage in the standard ISO all risk form, when
                           such form is supplemented with the coverages required
                           above.

                  (2)      LIABILITY INSURANCE. Commercial general liability
                           insurance for the mutual benefit of Landlord and
                           Tenant, against any and all claims for personal
                           injury, death or property damage occurring in, or
                           about the Premises (and Tenant's operations on the
                           Premises), or arising out of Tenant's or Tenant's
                           agents' use or occupancy of the Premises. Such
                           insurance shall have a combined single limit of not
                           less than One Million Dollars ($1,000,000) per
                           occurrence per location with Two Million Dollars
                           ($2,000,000) aggregate limit. Such insurance shall
                           contain


                                       8
<PAGE>

                           a cross-liability (severability of interests) clause
                           and an extended ("broad form") liability endorsement,
                           including contractual coverage. The minimum limited
                           specified above are the minimum amounts required by
                           Landlord, and may be revised by Landlord from time to
                           time to meet changed circumstances, including without
                           limitation to reflect (i) changes in the purchasing
                           power of the dollar, (ii) changes indicated by the
                           amount of plaintiff's verdicts in personal injury
                           actions in the State of MINNESOTA or (iii) changes
                           consistent with the standards required by other
                           landlords in the county in which the Premises are
                           located. Such liability insurance shall be primary
                           and not contributing to any insurance available to
                           Landlord, and Landlord's insurance (if any) shall be
                           in excess thereto.

                  (3)      OTHER. Such other insurance as required by law,
                           including, without limitation, workers' compensation
                           insurance.

                  (4)      FORM OF THE POLICIES. The policies required to be
                           maintained by Tenant pursuant to Paragraphs 10
                           (B)(1), (2), and (3) above shall be with companies
                           rated A10 or better in Best Insurance Guide, licensed
                           to do business in the State of MINNESOTA and
                           domiciled in USA, on forms, with deductible amounts
                           (if any), and loss payable clauses satisfactory to
                           Landlord, shall include Landlord and the beneficiary
                           or mortgagee of any deed of trust or mortgage
                           encumbering the Premises as additional insureds, and
                           shall provide that such parties may, although
                           additional insureds, recover for any loss suffered by
                           Tenant's negligence. Certified copies of policies or
                           certificates of insurance shall be delivered to
                           Landlord prior to the Commencement Date; a new policy
                           or certificates shall be delivered to Landlord at
                           least thirty (30) days prior to the expiration date
                           of the old policy. Tenant shall have the right to
                           provide insurance coverage which it is obligated to
                           carry pursuant to the terms hereof in a blanket
                           policy, provided such blanket policy expressly
                           affords coverage to the Premises and to Tenant as
                           required by this Lease. Tenant shall obtain a written
                           obligation on the part of Tenant's insurer(s) to
                           notify Landlord and any beneficiary or mortgagee of a
                           deed of trust or mortgage encumbering the Premises in
                           writing of any delinquency in premium payments and at
                           least thirty (30) days prior to any cancellation or
                           modification of any policy.

                  (5)      An amount equal to five percent (5%) of the monthly
                           minimum base Rental shall be charged as additional
                           Rent for each month in which Tenant fails to deliver
                           to Landlord a current certificate(s) evidencing that
                           the insurance required hereunder is being maintained.
                           Each such policy and certificate shall provide for at
                           least thirty (30) days prior written notice to
                           Landlord in the event of cancellation.

         (C)      FAILURE BY TENANT TO OBTAIN INSURANCE.

                  If Tenant does not take out the insurance required pursuant to
                  Paragraph 10(B) or keep the same in full force and effect,
                  Landlord may, but shall not be obligated to take out the
                  necessary insurance and pay the premium therefor, and Tenant
                  shall repay to Landlord, as additional Rent, the amount so
                  paid promptly upon demand. In addition, Landlord may recover
                  from Tenant and Tenant agrees to pay, as additional Rent, any
                  and all reasonable expenses (including attorneys' fees) and
                  damages which Landlord may sustain by reason of the failure to
                  Tenant to obtain and maintain such insurance, it being
                  expressly declared that the expenses and damages of Landlord
                  shall not be limited to the amount of the premiums thereon.


                                       9
<PAGE>

         (D)      SUBROGATION.

                  In the event of loss or damage to the Premises, each party
                  will look first to any insurance in its favor before making
                  any claim against the other party. Each party will obtain for
                  each policy in effect a provision permitting waiver of any
                  claim against the other party for loss or damage within the
                  scope of the insurance. In addition, each party, its agents,
                  employees or guests to the extent permitted, for itself and
                  its insurers waives all such insured claims against the other
                  party.

11.      DAMAGE OR RESTORATION.

         If, prior to or during the Lease Term, or any extension thereof, the
         Premises or the building of which the Premises may be a part, shall be
         so damaged or destroyed by fire or other casualty so as to render them
         untenantable for the purposes set forth in Paragraph 4 hereof, then
         Landlord, at its sole option, shall have the right to cancel and
         terminate this Lease. If not terminated, then Landlord shall repair and
         restore the Premises within one hundred eighty (180) days of the damage
         or destruction to substantially the same condition as immediately prior
         to such damage or destruction, and the Rent or a just and proportionate
         part thereof, according to Tenant's ability to utilize the Premises in
         its damaged condition, shall be abated until the Premises shall have
         been repaired and restored by Landlord. In the event Landlord can not
         restore the Premises within the above 180 day period, then Tenant may
         terminate this Lease by providing Landlord with written notice of their
         intent to terminate within ten (10) days of Landlord's notification
         that the Premises can not be restored within the above date. Such
         Landlord notification shall be delivered to Tenant within thirty (30)
         days of the damage or destruction, Such Tenant notice shall state the
         termination date of this Lease and such date shall be no less than
         fifteen days nor more than forty-five (45) days after the giving of
         such notice. But if the Premises shall be so lightly damaged by fire or
         other casualty as not to be rendered untenantable, then Landlord agrees
         to repair the Premises with reasonable promptness and the rent accrued
         and accruing, shall not cease. "Untenantable" Premises shall be such as
         to not allow Tenant to transact and effectuate its operations in the
         ordinary course of business.

12.      INDEMNIFICATION.

         Tenant shall indemnify, hold harmless, and defend Landlord (except for
         Landlord's gross negligence or willful misconduct) against all claims,
         losses or liabilities for injury or death to any person or for damage
         to or loss of use of any property arising out of any occurrence in, on
         or about the Premises, if caused or contributed to by Tenant or
         Tenant's agents, or arising out of any occurrence in, upon or at the
         Premises or on account of the use, condition, occupational safety or
         occupancy of the Premises. Tenant shall indemnify, hold harmless, and
         defend Landlord (except for Landlord's gross negligence or willful
         misconduct) against all claims, losses or liabilities for injury or
         death to any person or for damage to or loss of use of any property
         arising out of any occurrence in, on or about the building or land, if
         caused or contributed to by Tenant or Tenant's agents, gross negligence
         or willful misconduct. It is the intent of the parties hereto that the
         indemnity contained in this Paragraph shall not be limited or barred by
         reason of any negligence on the part of Landlord or Landlord's agents,
         except as expressly provided herein. Such indemnification shall include
         and apply to attorneys' fees, investigation costs, and other costs
         actually incurred by Landlord. Tenant shall further indemnify, defend
         and hold harmless Landlord from and against any and all claims arising
         from any breach or default in the performance of any obligation on
         Tenant's part to be performed under the terms of this Lease. The
         provisions of this Paragraph shall survive Lease Termination with
         respect to any damage, injury, death, breach or default occurring prior
         to such termination. This Lease is made on the


                                       10
<PAGE>

         express conditions that Landlord shall not be liable for, or suffer
         loss by reason of, injury to person or property, from whatever cause,
         in any way connected with the condition, use, occupational safety or
         occupancy of the Premises specifically including, without limitation,
         any liability for injury to the person or property of Tenant or
         Tenant's agents except to the extent of Landlord's gross negligence or
         willful misconduct.

13.      ASSIGNMENT AND SUBLETTING.

         Tenant may assign, sublet or transfer this Lease to any person, firm or
         corporation with the written consent of Landlord which consent shall
         not be unreasonably withheld, conditioned or delayed, provided,
         however, that no such assignment, sublease or transfer shall act as a
         release of Tenant from any of the obligations and agreements on its
         part to be kept and performed hereunder. Any assignment, sublease or
         transfer without the prior written consent of Landlord shall be null
         and void at Landlord's option. Landlord's approval of any subtenant or
         assignee is conditioned upon there being no additional compliance
         required with any laws, rules and regulations of any governmental
         authority required of either the Landlord or the Tenant and such
         approval shall create no responsibility or liability on the part of the
         Landlord for any noncompliance with laws, rules and regulations of any
         governmental authority.

         Request for consent to assign Tenant's interest or to sublease the
         Premises shall be accompanied by a statement setting forth the name of
         the prospective assignee or sublessee, the financial details of the
         assignment or sublease (i.e. the rental and security deposit), the
         term, other relevant information concerning the proposed assignee or
         sublessee. Landlord shall have the right within ten (10) days after
         receipt of such written request from Tenant to (A) withhold consent to
         the assignment or sublease if the withholding of such consent is
         reasonable, or (B) consent to such sublease or Assignment, in which
         case any rent payable by the assignee or sublessee (including any lump
         sum of additional payment or other consideration for the assignment or
         sublease) which exceeds the rent payable by Tenant hereunder shall be
         shared fifty percent (50%) by Tenant and fifty percent (50%) by
         Landlord, or (C) terminate this Lease, effective as of the commencement
         date of the term of such sublease or the effective date of such
         assignment and enter into a direct Lease with such proposed assignee or
         sublessee. If Landlord elects to so terminate the Lease and enter into
         a direct Lease with such proposed assignee or sublessee, then this
         Lease shall be canceled and terminated as of the effective date of the
         proposed assignment or the commencement date of the proposed sublease,
         as set forth in Tenant's notice.

         Notwithstanding the foregoing, Tenant shall have the right, without the
         consent of Landlord to assign this Lease or to sublet all or a portion
         of the Premises to (i) any corporation or agency which controls, is
         controlled by, or is under common control with Tenant; (ii) any
         corporation or agency into which or with which Tenant merges or
         consolidates; (iii) any corporation or agency which acquires all or
         substantially all of the business and assets of Tenant, provided that
         in any of the foregoing events, (a) such assignee shall expressly agree
         in writing for the benefit of Landlord to assume all of Tenant's
         obligations hereunder accruing after the effective date of assignment,
         and (b) Tenant shall remain liable for the performance of all of
         Tenant's obligations hereunder unless said assignee or sublessee has
         the same or better net worth and creditworthiness as Tenant, and said
         assignee or sublessee's use of the Premises is similar to Tenant's use.

         In addition, Tenant shall have the right to allow any of the entities
         described above to occupy portions of the Premises in accordance with
         the provisions of this Lease.


                                       11
<PAGE>

14.      CARE OF PREMISES.

         Tenant further covenants and agrees that during said Lease Term it will
         keep said Premises and every part thereof and all buildings at any time
         situated thereon in a clean and wholesome condition and generally that
         it will in all respects and at all times duly comply with all lawful
         health and police regulations and also that it will keep the
         improvements at any time situated upon the Premises safe, secure and
         comfortable to the lawful and valid requirements applicable thereto.

15.      ALTERATION BY TENANT.

         (A)      Tenant is hereby given the right, at its sole cost and
                  expense, at any time during the term hereof, to make any
                  alterations or improvements less than $5,000.00 to the
                  interior of the demised premises which the Tenant may deem
                  necessary or desirable for its purposes; provided, however,
                  that no structural, mechanical or electrical alterations or
                  improvements or other alterations or improvements in excess of
                  $5,000.00 shall be made without the written approval of the
                  Landlord, which written approval shall not be unreasonably
                  withheld. Landlord's approval of any plans, specifications or
                  work drawings shall create no responsibility or liability on
                  the part of the Landlord for their completeness, design
                  sufficiency or compliance with any laws, rules and regulations
                  of governmental agencies or authorities.

         (B)      All work herein permitted shall be done and completed by the
                  Tenant in a good and workmanlike manner and in compliance with
                  all requirements of law and of governmental rules and
                  regulations. Tenant agrees to indemnify the Landlord against
                  all mechanics' or other liens arising out of any of such work,
                  and also against any and all claims for damages or injury
                  which may occur during the course of any such work. The
                  Landlord agrees to join with the Tenant in applying for all
                  permits necessary to be secured from governmental authorities
                  and to promptly execute such consents as such authorities may
                  require in connection with any of the foregoing work.

         (C)      Landlord may require that Tenant remove any or all said
                  alterations, improvements or additions at the expiration of
                  the term, and restore the Premises to their prior condition.
                  Unless Landlord requires their removal, all alterations,
                  additions and improvements which may be made on the Premises,
                  shall become the property of Landlord and remain upon and be
                  surrendered with the Premises at the expiration of the Lease
                  Term. Tenant shall repair any damage to the Premises caused by
                  the installation or removal of Tenant's trade fixtures,
                  furnishings and equipment.

16.      CONDEMNATION.

         (A)      If the leased Premises shall be wholly taken by exercise of
                  right of eminent domain, then this Lease shall terminate from
                  the day the possession of the whole of the Premises shall be
                  required under the exercise of such power of eminent domain.
                  Any award for the taking of all or part of the Premises under
                  the power of eminent domain or any payment made under threat
                  of the exercise of such power shall be the property of the
                  Landlord. Tenant reserves such separate rights as it may have
                  against the condemning authority to claim damages for loss of
                  its trade fixtures and the cost of removal and relocation
                  expenses.


                                       12
<PAGE>

         (B)      If such part of the building or buildings in which Tenant's
                  business is operated shall be condemned so as to the
                  substantially and materially hamper the operation of Tenant's
                  business, then the Rent payable hereunder shall be reduced in
                  the proportion that the remaining area of the Premises bears
                  to the original area of the entire Premises leased hereunder.
                  If the parties are unable to agree upon the amount of the
                  reduction in Rent within seven (7) days from the date the
                  Tenant's business is substantially and materially hampered,
                  then it shall be arrived at by arbitration AIA rules, each
                  party to select an arbitrator and if the two arbitrators are
                  unable to agree they shall select a third arbitrator and the
                  three arbitrators so selected shall determine the amount of
                  such reasonable reduction. It is agreed that the findings of
                  the arbitrators shall be binding upon the parties and that the
                  parties split equally the expense of arbitration.

17.      SUBORDINATION.

         Tenant shall, upon the written request of Landlord, agree to the
         subordination of this Lease and the lien hereof to the lien of any
         present or future mortgage upon the premises irrespective of the time
         of execution or the time of recording of any such mortgage. In the
         event of subordination of this Lease, Landlord will attempt to obtain
         from the holder of any such mortgage, a written agreement with Tenant
         to the effect that (A) in the event of a foreclosure or other action
         taken under the mortgage by the holder thereof, this Lease and the
         rights of Tenant hereunder shall not be disturbed but shall continue in
         full force and effect so long as Tenant shall not be in default
         hereunder; and (B) such holder will agree that in the event it or any
         successor assign shall be in possession of the premises, that so long
         as Tenant shall observe and perform all of the obligations of Tenant to
         be performed pursuant to this Lease, such Mortgagee will perform all
         obligations of Landlord required to be performed under this Lease. The
         word "Mortgage" as used herein includes mortgages, deeds of trust and
         any sale-leaseback transactions, or other similar instruments, and
         modifications, extensions, renewals, and replacements thereof, and any
         and all advances thereunder.

18.      ACCESS TO PREMISES

         Landlord and its authorized agents shall have free access to said
         Premises at any and all reasonable times with prior notice except in
         the case of an emergency to inspect the same and for the purposes
         pertaining to the rights of the Landlord.

19.      RULES AND REGULATIONS.

         Tenant agrees to comply with all rules and regulations promulgated by
         Landlord concerning the use and enjoyment of the Premises. Among other
         things, the rules and regulations specifically prohibit outdoor
         storage. Landlord agrees that it shall use its best efforts to
         uniformly enforce such rules and regulations

20.      COVENANTS OF RIGHT TO LEASE.

         Landlord covenants that it has good and sufficient right to enter into
         this Lease and that they alone have full right to lease the Premises
         for the Lease Term aforesaid. Landlord further covenants that upon
         performing the terms and obligations of Tenant under this Lease, Tenant
         will have quite enjoyment throughout the Lease Term and any renewal or
         extension thereof.


                                       13
<PAGE>

21.      MECHANIC'S LIENS.

         Neither the Tenant nor anyone claiming by, through, or under the lease,
         shall have the right to file or place any mechanic's lien or other lien
         of any kind or character whatsoever upon said Premises or upon any
         building or improvement thereon, or upon the leasehold interest of the
         Tenant therein, and notice is hereby given that no contractor,
         subcontractor, or anyone else who may furnish any material, service or
         labor for any building, improvements, alteration repairs or any part
         thereof, shall at any time be or become entitled to any lien thereon,
         and for the further security of the Landlord, the Tenant covenants and
         agrees to give actual notice thereof in advance, to any and all
         contractors and subcontractors who may furnish or agree to furnish any
         such material, service or labor.

22.      EXPIRATION OF LEASE AND SURRENDER OF POSSESSION.

         (A)      Holding Over. Tenant will, at the termination of this Lease by
                  lapse of time or otherwise, yield up immediate possession to
                  Landlord. If Tenant retains possession of the Premises or any
                  part thereof after such termination, then Landlord may, at its
                  option, serve written notice upon Tenant that such holding
                  over constitutes any one (i) creation of a month-to-month
                  tenancy, upon the terms and conditions set forth in this
                  Lease, or (ii) creation of a tenancy at sufferance, in any
                  case upon the terms and conditions set forth in this Lease;
                  provided, however, that the monthly Rent (or daily Rent under
                  (iii)) shall, in addition to all other sums which are to be
                  paid by Tenant hereunder, whether or not as additional Rent,
                  be equal to one and one-half (150%) the Rent being paid
                  monthly to Landlord under this Lease immediately prior to such
                  termination (prorated in the case of (iii) on the basis of a
                  365-day year for each day Tenant remains in possession). If no
                  such notice is served, then a tenancy at sufferance shall be
                  deemed to be created at the Rent in the preceding sentence.
                  Tenant shall also pay to Landlord all damages sustained by
                  Landlord resulting from retention of possession by Tenant,
                  including the loss of any proposed subsequent tenant for any
                  portion of the Premises. The provisions of this paragraph
                  shall not constitute a waiver by Landlord of any right of
                  re-entry as herein set forth; nor shall receipt of any Rent or
                  any other act in apparent affirmance of the tenancy operate as
                  a waiver of the right to terminate this Lease for a breach of
                  any of the terms, covenants, or obligations herein on Tenant's
                  part to be performed.

         (B)      Upon the expiration of this Lease, by lapse of time or
                  otherwise, any and all buildings, improvements or additions
                  erected on said Premises by Tenant shall be and become the
                  property of the Landlord without any payment therefor and
                  Tenant shall surrender said Premises, together with all
                  buildings and improvements thereon, whether erected by Tenant
                  or Landlord; ordinary wear and tear and damage by fire or
                  other casualty excepted.

         (C)      Tenant may install adequate equipment, fixtures and machinery
                  for the carrying on of its business and upon the termination
                  of this Lease by lapse of time or otherwise, provided all
                  Rents and other amounts that may be due and owing to Landlord
                  have been paid and the provisions of this Lease complied with,
                  the Tenant may remove such equipment, fixtures and machinery
                  installed by it at Tenant's cost. However, upon removal of
                  such equipment, fixtures and machinery, the Tenant shall also
                  repair any damage caused by such removal or installation.


                                       14
<PAGE>

23.      DEFAULT-REMEDIES.

         The occurrence of one or more of the following events shall constitute
         a material default and breach of this Lease by Tenant:

         (A)      Failure by Tenant to make payment of any Rent herein agreed to
                  be paid or any other payment required to be made by Tenant
                  hereunder, as and when due, and such a failure shall continue
                  for a period of five (5) working days after Landlord's written
                  notice thereof;

         (B)      The making by Tenant of any assignment or arrangement for the
                  benefit of creditors;

         (C)      The filing by Tenant of a petition in bankruptcy or for any
                  other relief under the Federal Bankruptcy Law or any other
                  applicable statute;

         (D)      The levying of an attachment, execution of other judicial
                  seizure upon the Tenant's property in or interest under this
                  lease, which is not satisfied or released or the enforcement
                  thereof stayed or superseded by an appropriate proceeding
                  within thirty (30) days thereafter;

         (E)      The filing of an involuntary petition in bankruptcy or for
                  reorganization or arrangement under the Federal Bankruptcy Law
                  against Tenant and such involuntary petition is not withdrawn
                  dismissed, stayed or discharged within sixty (60) days from
                  the filing thereof;

         (F)      The appointment of a Receiver or Trustee to take possession of
                  the property of Tenant or of Tenant's business or assets and
                  the order or decree appointing such Receiver or Trustee shall
                  have remained in force undischarged or unstayed for thirty
                  (30) days after the entry of such order or decree;

         (G)      The vacating or abandonment of the Premises without the
                  payment of Rent.

         (H)      The failure by Tenant to perform or observe any other term,
                  covenant, agreement or condition to be performed or kept by
                  the Tenant under the terms, conditions, or provisions of this
                  lease, and such a failure shall continue uncorrected for
                  thirty (30) days after written notice thereof has been given
                  by Landlord to the Tenant or such longer period provided that:
                  1) Tenant is diligently pursuing a cure, and 2) Such failure
                  does not materially and adversely effect the Premises or
                  Building.

         Then and in any such event Landlord shall have the right, at the option
         of the Landlord, then or at any time thereafter while such default or
         defaults shall continue, to elect either (1) to cure such default or
         defaults at its own expense and without prejudice to any other remedies
         which it might otherwise have, any payment made or expenses incurred by
         Landlord in curing such default with interest thereon at twelve percent
         (12%) per annum to be and become additional Rent to be paid by Tenant
         with the next installment of Rent falling due thereafter; or (2) to
         re-enter the Premises, without notice, and dispossess Tenant and anyone
         claiming under Tenant by summary proceedings or otherwise, and remove
         their effects, and take complete possession of the Premises and either
         (a) declare this Lease forfeited and the Lease Term ended, or (b) elect
         to continue this Lease in full force and effect, but with the right at
         any time thereafter to declare this Lease forfeited and the Lease Term
         ended. In such re-entry the Landlord may, with process of law, remove
         all persons from the Premises, and Tenant hereby covenants in such
         event, for itself and all others occupying the Premises under Tenant,
         to peacefully yield up and surrender the Premises


                                       15
<PAGE>

         to the Landlord. Should Landlord declare this Lease forfeited and the
         Lease Term ended, the Landlord shall be entitled to recover from Tenant
         the Rent and all other sums due and owing by Tenant to the date of
         termination, plus the costs of curing all of Tenant's defaults existing
         at or prior to the date of termination, plus the cost of recovering
         possession of the Premises, plus the deficiency, if any, between
         Tenant's Rent for the balance of the Lease Term provided hereunder and
         the Rent obtained by Landlord under another lease for the Premises for
         the balance of the Lease Term remaining under this lease. Landlord
         shall use its best efforts to rent the Premises with or without
         advertising, and on the best terms available for the remainder of the
         Lease Term hereof, or for such longer or shorter period as Landlord
         shall deem advisable. Tenant shall remain liable for payments of all
         Rent and other charges and costs imposed on Tenant herein, in the
         amounts, at the times and upon the conditions as herein provided, but
         Landlord shall credit against such liability of the Tenant all amounts
         received by Landlord from such reletting after first reimbursing itself
         for all costs incurred in curing Tenant's defaults and re-entering,
         preparing and refinishing the Premises for reletting, and reletting the
         Premises, and for the payment of any procurement fee or commission paid
         to obtain another tenant, and for the attorney fees and legal costs
         incurred by Landlord. Tenant specifically reserves any rights or
         defenses under Minnesota law to any omissions of commissions of
         Landlord's obligations pursuant to this paragraph.

24.      RE-ENTRY BY LANDLORD.

         No re-entry by Landlord or any action brought by Landlord to oust
         Tenant from the Premises shall operate to terminate this Lease unless
         Landlord shall have given written notice of termination to Tenant, in
         which event Tenant's liability shall be as above provided. No right or
         remedy granted to Landlord herein is intended to be exclusive of any
         other right or remedy, and each and every right and remedy herein
         provided shall be cumulative and in addition to any other right or
         remedy hereunder or now or hereafter existing in law or equity or by
         statute. In the event of termination of this Lease, Tenant waives any
         and all rights to redeem the Premises either given by any statute now
         in effect or hereafter enacted.

25.      ADDITIONAL RIGHTS TO LANDLORD.

         (A)      In addition to any and all other remedies, Landlord may
                  restrain any threatened breach of any covenant, condition or
                  agreement herein contained but the mention herein of any
                  particular remedy or right shall not preclude the Landlord
                  from any other remedy or right it may have either at law or
                  equity, or by virtue of some other provision of this Lease;
                  nor shall the consent to one act, which would otherwise be a
                  violation or waiver of or redress for one violation either of
                  covenant, promise agreement undertaking or condition, prevent
                  a subsequent act which would originally have constituted a
                  violation from having all the force and effect of any original
                  violation.

         (B)      Receipt by Landlord of Rent or other payments from the Tenant
                  shall not be deemed to operate as a waiver of any rights of
                  the Landlord to enforce payment of any Rent, additional Rent,
                  or other payments previously due or which may thereafter
                  become due, or of any rights of the Landlord to terminate this
                  Lease or to exercise any remedy or right which otherwise might
                  be available to the Landlord, the right of Landlord to declare
                  a forfeiture for each and every breach of this Lease is a
                  continuing one for the life of this Lease.


                                       16
<PAGE>

26.      SUCCESSORS, ASSIGNS AND LIABILITY.

         The terms, covenants, conditions and agreements herein contained and as
         the same may from time to time hereafter be supplemented, modified or
         amended, shall apply to, bind, and inure to the benefit of the parties
         hereto and their legal representatives, successors and assigns,
         respectively. In the event either party now or hereafter shall consist
         of more than one person, firm or corporation, then and in such event
         all such person, firms and/or corporations shall be jointly and
         severally liable as parties hereunder.

27.      NOTICES.

         All notices required under this Lease shall be in writing and shall be
         deemed to be properly served when posted by certified United States
         mail, postage prepaid, return receipt requested, addressed to the party
         to whom directed at the address herein set forth or at such other
         address as may be from time to time designated in writing by the party
         changing such address.

<TABLE>
<CAPTION>
         Landlord                                              Tenant
         --------                                              ------
<S>                                                            <C>
         Principal Life Insurance Company                      LSC, Inc.
         c/o Principal Capital Management, LLC                 1270 Eagan Industrial Road, Suite 160
         801 Grand Avenue                                      Eagan, MN  55121
         Des Moines, Iowa
         with copy to:                                         with copy to:
         -------------                                         ------------
         CB Richard Ellis                                      Louise M.  Segreto
         7760 France Avenue South, Suite 770                   1433 W.  32nd Street
         Minneapolis, MN  55435                                Minneapolis, MN  55408
</TABLE>

28.      MORTGAGEE'S APPROVAL.

         If Landlord's mortgagee shall require modifications of the terms and
         provisions of this Lease, Tenant agrees to execute and deliver to
         Landlord the agreements required to affect such Lease modification
         within thirty (30) days after Landlord's request therefor. In no event,
         however, shall Tenant be required to agree to any modification of the
         provision of this Lease relating to: the amount of Rent or other
         charges reserved herein; the size and/or general location of the
         Premises; the duration and/or commencement date of the Lease Term; or
         reducing the improvements to be made by Landlord to the Premises prior
         to the delivery of possession.

29.      ESTOPPEL CERTIFICATES.

         Tenant agrees that at any time within ten (10) days following written
         notice from Landlord, it will execute, acknowledge and deliver to
         Landlord or any proposed mortgagee or purchaser a statement in writing
         certifying whether this Lease is in full force and effect and, if it is
         in full force and effect, what modifications have been made to the date
         of the certificates and whether or not any defaults or offsets exist
         with respect to this Lease and, if there are, what they are claimed to
         be and setting forth dates to which Rent or other charges have been
         paid in advance, if any, and stating whether or not Landlord is in
         default, if so, specifying what the default may be. The failure of
         Tenant to execute, acknowledge, and deliver to Landlord a statement as
         above shall constitute an acknowledgment by Tenant that this Lease is
         unmodified and in full force and effect and that the Rent and other
         charges have been duly and fully paid to and including the respective
         due dates immediately preceding the date of Landlord's notice to Tenant
         and shall constitute as to any person, a waiver of any defaults which
         may exist prior to such notice.


                                       17
<PAGE>

30.      MISCELLANEOUS.

         (A)      In the event that Tenant desires to store or maintain the type
                  or character of goods or materials in the Premises which cause
                  an increase in insurance premiums, Tenant shall first obtain
                  the written consent of Landlord and Tenant shall reimburse
                  Landlord for any increase in premiums caused thereby.

         (B)      If any term or provision of this Lease is declared invalid or
                  unenforceable, the remainder of this Lease shall not be
                  affected by such determination and shall continue to be valid
                  and enforceable.

         (C)      This agreement contains the entire Lease contract between the
                  parties hereto. A short form of this Lease, for the purpose of
                  recording, may be executed by the parties simultaneously
                  herewith and if either party desires to record this Lease, the
                  short form shall be used for that purpose.

         (D)      The parties executing this Lease warrant that this agreement
                  is being executed with full corporate authority and that the
                  officers whose signatures appear hereon are duly authorized
                  and empowered to make and execute this Lease in the name of
                  the corporation by appropriate and legal resolution of its
                  Board of Directors.

         (E)      Unless the context clearly denotes the contrary, the word
                  "Rent" or "Rental" as used in this Lease not only includes
                  cash Rental, but also all other payments and obligations to
                  pay assumed by the Tenant, whether such obligations to pay run
                  to the Landlord or to other parties.

         (F)      It is mutually agreed by and between Landlord and Tenant that
                  the respective parties hereto shall and they hereby do, waive
                  trial by jury in any action, proceeding or counterclaim
                  brought by either of the parties hereto against the other on
                  any matter whatsoever arising out of or in any way connected
                  with this Lease, the relationship of Landlord and Tenant,
                  Tenant's use of or occupancy of the Premises or any claim of
                  injury or damage and any emergency statutory or any other
                  statutory remedy. If Landlord commences any summary proceeding
                  for nonpayment of Rent. Tenant will not interpose any
                  counterclaim of whatever nature or description in any such
                  proceeding. Nothing in this paragraph shall be deemed to
                  preclude Tenant from interposing any claim with regard to the
                  Lease in a separate and collateral proceeding.

31.      DEFAULT RATE OF INTEREST

         All amounts owed by Tenant to Landlord pursuant to any provision of
         this Lease shall bear interest from the date due until paid at twelve
         percent (12%) per annum, unless a lesser rate shall then be the maximum
         rate permissible by law with respect thereto, in which event said
         lesser rate shall be charged.

32.      EXCULPATORY PROVISIONS

         It is expressly understood and agreed by and between the parties
         hereto, anything herein to the contrary notwithstanding, that each and
         all of the representations, warranties, covenants, undertakings and
         agreements herein made on the part of Landlord while in form purporting
         to be the representations, warranties, covenants, undertakings and
         agreements of Landlord are nevertheless each and every one of them made
         and intended, not as personal representations,


                                       18
<PAGE>

         warranties, covenants, undertakings and agreements by Landlord or for
         the purpose or with the intention of binding Landlord personally, but
         are made and intended for the purpose only of subjecting Landlord's
         interest in the Premises to the terms of this Lease and for no other
         purpose whatsoever, and in case of default hereunder by Landlord,
         Tenant shall look solely to the interests of Landlord in the Premises;
         and that Landlord shall not have any personal liability to pay any
         indebtedness accruing hereunder or to perform any covenant, either
         express or implied, herein contained, all such personal liability, if
         any, being expressly waived and released by Tenant and by all persons
         claiming by, through or under Tenant.

33.      MORTGAGE PROTECTION

         Tenant agrees to give any holder of any first mortgage or first trust
         deed in the nature of a mortgage (both hereinafter referred to as a
         "First Mortgage") against the Premises, or any interest therein, by
         registered or certified mail, a copy of any notice or claim of default
         served upon Landlord by Tenant, provided that prior to such notice
         Tenant has been notified in writing (by way of service on Tenant of a
         copy of an assignment of Landlord's interest in leases, or otherwise)
         of the address of such First Mortgage holder. Tenant further agrees
         that if Landlord shall have failed to cure any such default within
         twenty (20) or such shorter time in the event of emergency repairs that
         materially and adversely effect the Premises days after such notice to
         Landlord (or if such default cannot be cured or corrected within that
         time, then such additional time as may be necessary if Landlord has
         commenced within such twenty (20) days and is diligently pursuing the
         remedies or steps necessary to cure or correct such default), then the
         holder of the First Mortgage shall have an additional thirty (30) days
         within or such shorter time in the event of emergency repairs that
         materially and adversely effect the Premises which to cure or correct
         such Default (or if such default cannot be cured or corrected within
         that time, then such additional time as may be necessary if such holder
         of the First Mortgage has commenced with such thirty (30) days and is
         diligently pursuing the remedies or steps necessary to cure or correct
         such default, including the time necessary to obtain possession if
         possession is necessary to cure or correct such default.

34.      RECIPROCAL COVENANT ON NOTIFICATION OF ADA VIOLATIONS

         Within ten (10) days after receipt, Landlord and Tenant shall advise
         the other party in writing, and provide the other with copies of (as
         applicable), any notices alleging violation of the Americans with
         Disabilities Act of 1990 ("ADA") relating to any portion of the
         property or the Premises; any claims made or threatened in writing
         regarding noncompliance with the ADA and relating to any portion of the
         property or the Premises; or any governmental or regulatory actions or
         investigations instituted or threatened regarding noncompliance with
         the ADA and relating to any portion of the property or the Premises.

35.      LAWS THAT GOVERN.

         Landlord and Tenant agree that the term and conditions of this Lease
         shall be governed by the Laws of the State of MINNESOTA.

36.      FINANCIAL STATEMENTS

         At year end audit each year, and not more than one time per year,
         unless Tenant has been in default of this Lease, Tenant within ten (10)
         business days after Landlord's request, shall deliver to Landlord the
         current financial statements of Tenant, and financial statement of the
         two (2) years prior to the current financial statements year, with an
         opinion of a certified public


                                       19
<PAGE>

         accountant. This information includes a balance sheet and profit and
         loss statement for the most recent prior year, all prepared in
         accordance with generally accepted accounting principles consistently
         applied.

37.      UPON DEMOLITION OF BUILDING

         Landlord shall have the right to terminate this Lease at any time if
         Landlord, or the holder of legal title to the Building elects or is
         required, for any reason, to substantially remodel or demolish the
         building or any substantial portion of the Building Such termination
         shall become effective not more than ninety (90) days after the
         effective date of such termination. No money or other consideration
         shall be payable by Landlord or such purchaser or ground lessee to
         Tenant for this right and the right hereby reserved to Landlord, the
         purchaser of ground lessee shall inure to all purchasers, assignors,
         lessees, transferees and ground lessees, as the case may be, and in
         addition to all other rights of Landlord.

38.      CONFIDENTIALITY

         Tenant agrees that this Agreement of Lease will be kept confidential
         and shall not, without Landlord's prior written consent, be disclosed
         by the Tenant or by its agents, representatives and employees who have
         a need to know and who are informed by Tenant of the confidential
         nature of the Agreement of Lease.

39.      TERMINATION OPTION

         Tenant shall have the option to terminate this Lease on July 31, 2002
         ("Termination Option"). To exercise said Termination Option, Tenant
         must notify Landlord in writing of its intent to exercise said option
         by October 31, 2001. In addition, Tenant shall pay to Landlord at the
         time of notice an amount equal to One Hundred One Thousand Seventy Five
         and no/100 Dollars ($101,075.00) ("Termination Payment"). In the event
         Tenant fails to notify Landlord of its intent to exercise said option
         by said date or fails to deliver the Termination Payment with said
         notice than this Termination Option shall become null and void.

         The Rider(s) (NONE) and/or Exhibit(s) A, B, B-1, B-2, C, AND D attached
         to this Lease, consisting of 17 pages, are hereby made a part of this
         Lease.

         IN WITNESS WHEREOF, the parties hereto may execute this Lease in
         counterpart copies, each of which shall be deemed originals or Landlord
         and Tenant have executed this Lease the date and year noted below.

Signed at 1:00 p.m.  on this 28th day of June, 1999


                                       20
<PAGE>

<TABLE>
<CAPTION>
Landlord:                                                          Tenant:

<S>                                                                <C>
Principal Life Insurance Company, an Iowa corporation              LSC, Inc.,
  By: Principal Capital Management, LLC,                           a Minnesota corporation
  a Delaware limited liability company,
  its authorized signatory

By:  /s/ Vance Voss                                                By:  /s/ J. B. Balogh
   -------------------------------------------                        ------------------------------------

Its:  Director, C.R.E. Equities                                    Its:  President/CEO
   -------------------------------------------                        ------------------------------------

By:
   -------------------------------------------                        ------------------------------------

Its:
   -------------------------------------------                        ------------------------------------
</TABLE>

--------------------------------------------------------------------------------
CONSULT YOUR ATTORNEY: This document has been prepared for approval by your
attorney. No representation or recommendation is made by Broker as to the legal
sufficiency, legal effect, or tax consequence of this document or the
transaction to which it relates. These are questions for your attorney and
financial advisors.
--------------------------------------------------------------------------------


                                       21
<PAGE>

State of ___________       )
                           )
County of _________        )

On this _______ day of __________________________________, 19 , before me, the
undersigned, Notary Public in and for the State of ___________ personally
appeared _______________________________ and __________________________________,
to me personally known, who being by me duly sworn, did say that they are the
________________________ and _______________________________, respectively of
said corporation executing the within and foregoing instrument, that the seal
affixed thereto is the seal of the said corporation; that the instrument was
signed and sealed on behalf of the corporation by authority its Board of
Directors; and that the said __________________________ and
____________________________ as such officers acknowledged the execution of said
instrument to be the voluntary act and deed of the corporation by it and by them
voluntarily executed.

                              -------------------------------------------------
                              Notary Public in and for the State of  ______


                                       22
<PAGE>

                                    EXHIBIT A

                          Eagandale Business Campus II
                           1270 Eagan Industrial Road
                                    Eagan, MN

<PAGE>

                                    EXHIBIT B

         THIS EXHIBIT is attached to and forms a part of a certain lease dated
JUNE 24, 1999, by and between PRINCIPAL LIFE INSURANCE COMPANY, AN IOWA
CORPORATION, c/o Principal Capital Management, LLC, a Delaware limited liability
company, 801 Grand Avenue, Des Moines, IA 50392-1370, "Landlord", and LSC, Inc.,
a Minnesota corporation, "Tenant".

         Work to be Done in the Premises. Tenant's layout and interior design
shall be prepared by Tenant at Tenant's expense.

         The Landlord agrees that, subject to delays due to causes beyond the
Lessor's control, it will, at its own expense, provide the following:

         1. Landlord's Work to include improvements as per the Preliminary Space
Plan Al OPT2, drawn by Mohagen Architects, dated 4/20/99 (attached hereto as
Exhibit B-1), and the cost estimate by The Bainey Group dated April 1, 1999
(attached hereto as Exhibit B-2). Landlord's Work shall be in compliance with
all applicable governmental codes and regulations including compliance with the
American with Disabilities Act (ADA). In addition, Landlord shall provide a
Tenant Improvement Allowance of up to $3,000 for the creation of an exterior
canopy at Tenant's exterior entry.

         In the event Tenant fails to deliver its plans within the time required
below subject to delays beyond its control or in the event that Tenant
materially modifies or changes its plans thereafter, then it shall be
conclusively presumed that delivery of the Premises was delayed by the amount of
time equivalent to such delay in delivery of plans or by the amount of time
required to make revised plans, correct work and otherwise make the changes
required by Tenant and in this event Tenant shall pay to Landlord all its costs
for such changes and a sum equal to the base annual rent for the period of such
delay.

         If the Tenant desires alterations and improvements in excess of or
other than the work heretofore provided for in this section ("Tenant's
Additional Work"), the Lessor shall do same at the Tenant's expense, provided
the work shall be approved by the Landlord and Tenant in writing, which approval
shall not be unreasonably withheld, and further provided that no part of the
work shall be of a character which will require changes outside the Premises or
will adversely affect the legality of the use of the building or the cost of
fire insurance for the building.

         The Tenant shall reimburse the Landlord upon ten (10) of demand for the
cost of Tenant's Additional Work, including the cost of architectural or
engineering services required to coordinate Tenant's Additional Work with the
Lessor's Work. Costs as used herein shall include all bona fide charges
evidenced by invoice to Landlord either from a general contractor or from
suppliers, materialmen, laborers or other contractors for material, labor
contractor's charges and other out-of-pocket costs plus ten percent (10%) for
overhead, plus an additional ten percent (10%) of the aggregate for profit,
other expenses and contingencies. Any amount for which the Tenant fails to
reimburse the Landlord upon ten (10) days of demand shall be considered
Additional Rent hereunder, and may be added to any Installment of Rent
thereafter becoming due, and the Landlord shall have the same remedies for a
default in such reimbursement as for a default in the payment of Rent.

         In order to permit integration with other work being done by the
Landlord in the Premises and the building without causing any delays in such
work, the Tenant shall furnish the Landlord with the tenant's working drawings
not later than __________ and color selections not later than ___________ for
any work to be done pursuant to this Section.

<PAGE>

                                   EXHIBIT B-1

                              Office Layout Diagram

<PAGE>

                                   EXHIBIT B-2

Thursday, April 01, 1999

Paul Orloske
CB Richard Ellis
7760 France Avenue South
Suite 770
Minneapolis, MN  55435

RE: LSC, INC.

Dear Paul:

We are pleased to provide you with the following Proposal for providing
construction services for the tenant improvements at 1270 Eagan Industrial Road,
Suite #160, in Eagan, MN. This proposal is based on plans from Mohagen
Architects, LTD. dated 3/24/99 and on site observation.

The following represents an outline of the scope of work included in our
proposal:

GENERAL CONDITIONS:

-    All required supervision, labor, clean up, material, insurance, taxes,
     permits, and licenses as typically required in the General Conditions.

DEMOLITION:

-    Removal and disposal of 22 lineal feet of partitions.
-    Removal and disposal of one set of loading dock pads and bumpers.
-    Removal and disposal of one overhead door and track.
-    Removal and disposal of cabinets from break room.

CONCRETE AND MASONRY:

-    Cut one 6'0" x 8'0" opening for new entry door and sidelight.
-    Remove curb and new curb cut.
-    Trench and backfill for new stoop footing and foundation.
-    Form and pour stoop footing.
-    Furnish and install stoop foundation.
-    Furnish and install 6" granular base.
-    Form and pour approximately 34 lineal feet of 5' wide x 4" thick concrete
     walk.

<PAGE>

DOORS, FRAMES, AND HARDWARE:

-    Furnish and install (11) eleven 3'0" x 6"8" solid core Oak doors, Oak
     frames with 24" attached sidelights, and lever handle latch sets.
-    Furnish sand install one 3'0" x 6'8" solid core Oak door, Oak frame with
     36" attached sidelight, and lever handle latch set.
-    Furnish and install (6) six 3'0"x 6'8" solid core Oak doors, Oak frames,
     and handle latch sets.
-    Furnish and install (2) two 3'0" x 6'8" solid core doors, Oak frames, and
     push/pull hardware.
-    Furnish and install one 6'0" x double solid core Oak doors, hollow metal
     frame, and lever handle latch hardware.

EXTERIOR CARPENTRY:

-    Furnish and install tongue and groove wood siding above new exterior window
     to match building standard.

ALUMINUM FRAMES AND GLAZING:

-    Furnish and install one 3'0" x 7'0" anodized aluminum door and sidelight
     with.
-    Furnish and install one l0'0" x 8'0" anodized aluminum window unit where
     overhead door is removed to match building standard.

GYPSUM DRYWALL:

-    Furnish and install approximately 690 lineal feet of steel stud and gypsum
     drywall partition to the acoustical ceiling grid uninsulated.
-    Furnish and install approximately 170 lineal feet of steel stud and gypsum
     drywall partition to above ceiling grid insulated around bathrooms.
-    Furnish and install approximately 70 lineal feet of one hour rated steel
     stud and gypsum drywall partition to the deck insulated demising wall.
-    Miscellaneous patching of gypsum drywall from removal of walls.

PAINTING:

-    Prime and paint 14,500 square feet of wall surface.
-    Apply finishes to all new doors and frames.
-    Apply finishes to all new sidelights.
-    Touch-up exterior at removal of overhead door and pads.

ACOUSTICAL CEILINGS:

-    Furnish and install 2 x 4 x 5/8" flat lay-in acoustical ceiling tile and
     grid through out the suite, except in the warehouse and storage areas.
-    Furnish and install one urinal.
-    Furnish and install (5) five drop-in lavatories and faucets.
-    Furnish and install (5) five traps and supply wraps.
-    Furnish and install (3) three floor drains.
-    Furnish and install shower valve with hand held shower, hose, and bar.
-    Furnish and install one barrier free water cooler.
-    Furnish and install one janitor's floor sink and wall faucet.
-    Furnish and install one 50-gallon water heater.

<PAGE>

-    Re-install existing sink and faucet.
-    Hook up tenant supplied dishwasher.
-    Remove and cap existing laundry tub sink.

FIRE PROTECTION:

-    Relocate (4) four up-right sprinkler heads.
-    Furnish and install (90) ninety pendent sprinkler heads.

HEATING, VENTILATION, AND AIR CONDITIONING:

-    Furnish and install one 6-ton heat / cool roof top unit with economizer for
     rooms 100, 101, 102, 103, and 104. This unit is to include factory
     roofcurb, two smoke detectors, thermostat and subbase.
-    Furnish and install one 600-CFM power roof ventilator for bathrooms and
     shower exhaust. This unit is to include a factory roofcurb, gravity
     backdraft damper, and disconnect.
-    Furnish and install ductwork from new unit and two existing roof top units.
-    Furnish and install (38) thirty-eight diffusers and return air grilles.
-    Remove and cap (3) three existing unit heaters.
-    Furnish and install all gas piping from gas meter.

ELECTRICAL:

-    Disconnect wiring for construction
-    Remove (86) eighty-six existing strip fixtures.
-    Furnish and install (152) one hundred fifty two 2 x 4 acrylic lens light
     fixtures.
-    Furnish and install one shower light.
-    Furnish and install (17) seventeen single pole light switches.
-    Furnish and install (6) six three way light switches.
-    Furnish and install (7) seven exit signs and emergency lights.
-    Wire and install (37) thirty-seven general duty receptacles.
-    Wire and install (8) eight dedicated duplex receptacles.
-    Wire and install (4) four GFI duplex receptacles.
-    Wire and install (5) five base power feeds.
-    Provide (26) twenty-six telephone / data openings.
-    Wire and install one 1.5kw vestibule heater.
-    Furnish and install aluminum capped grid and vinyl rock ceiling tile at
     room 119.

MILLWORK:

-    Furnish and install approximately 14 lineal feet of plastic laminate upper
     and base cabinets with plastic laminate countertop.
-    Furnish and install (3) three plastic laminate vanities tops with open
     supports.

CERAMIC TILE:

-    Furnish and install Group I ceramic wall tile for wainscot on wet walls in
     both restrooms.
-    Furnish and install Group I ceramic floor tile on floors in restrooms.
-    Furnish and install Group I ceramic wall tile full height in shower.
-    Furnish and install Group I ceramic floor tile for shower.

<PAGE>

CARPETING:

-    Furnish and install 1,079 square feet of direct glued down carpeting using
     an allowance of $18.00/yard installed.
-    Furnish and install 1,370 lineal feet of carpet base to match.
-    Furnish and install 27 cartons of VCT and vinyl base.

RESTROOM AND SHOWER ACCESSORIES:

-    Furnish and install (5) five floor mounted overhead braced metal toilet
     compartments and one urinal screen.
-    Furnish and install (2) two paper towel dispensers / waste receptacles.
-    Furnish and install one paper towel dispenser.
-    Furnish and install (5) five toilet paper holders.
-    Furnish and install (5) five soap dispensers.
-    Furnish and install (3) three sanitary napkin disposals.
-    Furnish and install (2) two sets of grab bars.
-    Furnish and install one shower grab bars set.
-    Furnish and install one shower seat.
-    Furnish and install one shower curtain rod, curtain, and hooks.

LOCKERS:

-    Furnish and install (7) seven 12" x 18" x 72" Vanguard lockers with
     recessed handles, closed bases and sloped hoods.

PLUMBING:

-    Furnish and install (2) two ADA water closets.
-    Furnish and install (3) three standard water closets.
-    Wire one PRV.
-    Wire one 6-ton roof top unit.
-    Wire one 10-ton roof top unit.
-    Wire one 12.5-ton roof top unit.
-    Wire (3) three thermostats.
-    Wire (6) six duct smoke detectors.
-    Wire one hot water heater.
-    See Alternates for separation of service.

Our Proposal to provide the complete construction of the above referenced work
is, $183,950.00. ONE HUNDRED EIGHTY THREE THOUSAND NINE HUNDRED FIFTY DOLLARS.

The following are option alternates to the above referenced work:

ALTERNATE #1: Wire (2) two services and separate circuits between the three
spaces. One 100-amp for vacancy, one 100-amp for EFG Technologies. Reefed
circuits as required, and furnish and install transformers as required. ADD
$8,850.00

<PAGE>

CLARIFICATIONS:

-    Due to the fact that a majority of the work included in this Proposal is
     from verbalization of requirements along with minimal detail on the
     drawings, the scope of work included in this proposal takes precedence.
-    We have included the cost of a standard building permit but do not include
     any SAC, WAC, Park dedication fees or other charges any governmental
     agencies may require.
-    We do not include space planning, interior design, architectural design or
     structural design. If required by the City of Eagan, the owner or others we
     can provide this service at an additional cost contingent upon the scope of
     work required.
-    We specifically exclude in rack fire protection or any other special
     requirements as a result of tenant's special use.
-    Payment due upon substantial completion.
-    This Proposal may be withdrawn if not accepted in 30 calendar days, or may
     be subjected to changes in price.

If this proposal is acceptable, sign one copy and return it to our office. If
you have a standard form of agreement or if you would like us to produce a
different form of agreement please advise. We appreciate having the opportunity
to provide you with our Proposal. If you have any questions or if I can be of
further assistance please call me at 612-557-6911.

Sincerely,                                 CB Richard Ellis

                                           Accepted By:
                                                       -------------------------
Mitch Rautio
Project Manager                            Title:
The Bainey Group                                  ------------------------------

                                           Date:
                                                 -------------------------------

<PAGE>

                                    EXHIBIT C

                   HAZARDOUS MATERIALS DISCLOSURE CERTIFICATE

Your cooperation in this matter is appreciated. Initially, the information
provided by you in this Hazardous Materials Disclosure Certificate is necessary
for the Lessor (identified below) to evaluate and finalize a lease agreement
with you as Lessee. After a lease agreement is signed by you and the Lessor (the
"Lease Agreement"), on an annual basis in accordance with the provisions of
Section _____ of the signed Lease Agreement, you are to provide an update to the
information initially provided by you in this certificate. The information
contained in the initial Hazardous Materials Disclosure Certificate and each
annual certificate provided by you thereafter will be maintained in
confidentiality by Lessor subject to release and disclosure as required by (i)
any lenders and owners and their respective environmental consultants, (ii) any
prospective purchaser(s) of all or any portion of the property on which the
Premises are located, (iii) Lessor to defend itself or its lenders, partners or
representatives against any claim or demand, and (iv) any laws, rules,
regulations, orders, decrees, or ordinances, including, without limitation,
court orders or subpoenas. Any and all capitalized terms used herein, which are
not otherwise defined herein, shall have the same meaning ascribed to such term
in the signed Lease Agreement. Any questions regarding this certificate should
be directed to, and when completed, the certificate should be delivered to:

Lessor"
        -----------------------------------------------------------------------

        -----------------------------------------------------------------------

        -----------------------------------------------------------------------
        Attn:
             ------------------------------------------------------------------
        Phone:
               ----------------------------------------------------------------

Name of (Prospective) Lessee:  LSC, Incorporated
                               ------------------------------------------------

Mailing Address: 9957 Valley View Road, Eden Prairie, MN  55344-3526
                 --------------------------------------------------------------

Contact Person, Title and telephone Number(s):
                                               --------------------------------
Harold L.  Hudson, Manager, Operations (612) 833-1109
-----------------------------------------------------

Contact Person for Hazardous Waste Materials Management and Manifests and
Telephone Number(s): See above.
                     ----------

Address of (Prospective) Premises:     1270 Corporate Center Drive, Suite 160,
                                       Eagan, MN  55121
                                       ----------------------------------------

Length of (Prospective) initial Term:  Five (5) years

1.       GENERAL INFORMATION:

Describe the initial proposed operations to take place in, on, or about the
Premises, including, without limitation, principal products processed,
manufactured or assembled, services and activities to be provided or otherwise
conducted. Existing Lessees should describe any proposed changes to ongoing
operations. (Attached additional sheets if necessary).

<PAGE>

2.       USE, STORAGE AND DISPOSAL OF HAZARDOUS MATERIALS

         2.1      Will any Hazardous Materials be used / /, generated / /,
                  stored / / or disposed of / / in, on or about the Premises?
                  (NOTE: Generally all storage will be required to be fully
                  contained). Existing Lessees should describe any Hazardous
                  Materials which continue to be used, generated, stored or
                  disposed of in, on or about the Premises.

                  Wastes                    Yes / /              No /X/
                  Chemical Products         Yes / /              No /X/
                  Other                     Yes / /              No /X/

                  If yes is marked attach all MSDS's and please explain: (MSDS's
                  Attached ),

                  -------------------------------------------------------------

                  -------------------------------------------------------------

                  -------------------------------------------------------------

         2.2      If yes is marked in Section 2.1, attach a list of any
                  Hazardous Materials to be used, generated, stored or disposed
                  of in, on or about the Premises, including the applicable
                  hazard class and an estimate of the quantities of each such
                  Hazardous Materials at any given time; estimated annual
                  throughout; the proposed location(s) and method of storage,
                  including container sizes and types (excluding nominal amounts
                  of ordinary household cleaners and janitorial supplies which
                  are not regulated by any Environmental Laws); and the proposed
                  location(s) and method of disposal for each Hazardous
                  Material, including, the estimated frequency, and the proposed
                  contractors or subcontractors. Existing Lessees should attach
                  a list setting forth the information requested above and such
                  list should include actual data from ongoing operations and
                  the identification of any variations in such information from
                  the prior year's certificate. Attach a Site Plan indicating
                  all storage areas - (Attached / /).

3.       STORAGE TANKS AND SUMPS

         3.1      Is any above or below ground storage of gasoline, diesel,
                  petroleum, or other Hazardous Materials in tanks or sumps
                  proposed in, on or about the Premises? Existing Lessees should
                  describe any such actual or proposed activities, including any
                  required SPCC Plan.

                  Yes / /            No /X/

                  If yes, please explain:
                                         --------------------------------------

                  -------------------------------------------------------------

                  -------------------------------------------------------------

<PAGE>

4.       WASTE MANAGEMENT

         4.1      Has your company been issued an EPA Hazardous Waste Generator
                  I.D. Number? Existing Lessees should describe any additional
                  identification numbers issued since the previous certificate.

                  Yes / /              No /X/

                  Describe RCRA Status:
                                       ----------------------------------------

                  -------------------------------------------------------------

                  -------------------------------------------------------------

         4.2      Has your company filed a biennial or quarterly report as a
                  hazardous waste generator? Existing Lessees should describe
                  any new reports filed.

                  Yes / /              No /X/

                  If yes, attach a copy of the most recent report filed.
                  (Attached / /).

5.       WASTEWATER TREATMENT AND DISCHARGE

         5.1      Will your company discharge wastewater or other wastes to:

<TABLE>
<S>                                                                             <C>
                                 storm drain?                                          sewer?
                         -------                                                ------
                                 surface water?                                        facility treatment plan?
                         -------                                                ------
                                 grounds                                          X    no wastewater or other
                         -------                                                ------
                                 (i.e., compressor blow-down)                             wastes discharged
</TABLE>

                  Existing Lessees should indicate any actual discharges. If so,
                  describe the nature of any proposed or actual discharge(s).
                  (NOTE: Generally, discharges to storm drains will be
                  prohibited without prior review and approval from Landlord).

                                     - N/A -
                  -------------------------------------------------------------

                  -------------------------------------------------------------

6.       AIR DISCHARGES

         6.1      Do you plan for any air filtration systems or stacks to be
                  used in your company's operations in, on or about the Premises
                  that will discharge into the air; and will such air emissions
                  be monitored? Existing Lessees should indicate whether or not
                  there are any such air filtration systems or stacks in use in,
                  on or about the Premises which discharge into the air and
                  whether such air emissions are being monitored.

                  Yes / /              No /X/

                  If yes, please explain:
                                         --------------------------------------

                  -------------------------------------------------------------

                  -------------------------------------------------------------

<PAGE>

         6.2      Do you propose to operate any of the following types of
                  equipment, or any other equipment requiring an air emissions
                  permit? Existing Lessees should specify any such equipment
                  being operated in, on or about the Premises.

<TABLE>
<S>                                                                 <C>
                               Spray booth(s)                                     Incinerator(s)
                 -------------                                      -------------
                               Dip Tank(s)                                        Drycleaning
                 -------------                                      -------------
                               Drying oven(s)                                     Other (please describe)
                 -------------                                      -------------
                                                                         X        No Equipment
                                                                    ------------- Requiring Air Permits

</TABLE>

                  If yes, please explain:
                                         --------------------------------------

                  -------------------------------------------------------------

                  -------------------------------------------------------------

6.3      Do any of your operations generate an obvious odor:

                  Yes / /              No /X/

                  If yes, please explain:
                                         --------------------------------------

                  -------------------------------------------------------------

                  -------------------------------------------------------------

7.       HAZARDOUS MATERIALS DISCLOSURES

         7.1      Has your company prepared or will it be required to prepare a
                  Hazardous Materials management plan ("Management Plan")
                  pursuant to Fire Department or other governmental or
                  regulatory agencies' requirements. Existing Lessees should
                  indicate whether or not a Management Plan is required and has
                  been prepared.

                  Yes / /              No /X/

                  If yes, attach a copy of the Management Plan. Existing Lessees
                  should attach a copy of any required updates to the Management
                  Plan.

         7.2      (CA Only) Are any of the Hazardous Materials, and in
                  particular chemicals, proposed to be used in your operations
                  in or about the premises regulated under Proposition `65?
                  Existing tenants should indicate whether or not there are any
                  new hazardous materials being used which are regulated under
                  Proposition `65.

                  Yes / /              No /X/

                  If yes, please explain:
                                         --------------------------------------

                  -------------------------------------------------------------

                  -------------------------------------------------------------

8.       ENFORCEMENT ACTIONS AND COMPLAINTS

         8.1      With respect to Hazardous Materials or Environmental Laws, has
                  your company ever been subject to any agency enforcement
                  actions, administrative orders, or consent decrees designated
                  as a PRP or has your company received requests for
                  information, notice or

<PAGE>

                  demand letters (cited in violation of any environmental
                  regulation), or any other inquiries regarding its operations?
                  Existing Lessees should indicate whether or not any such
                  actions, orders or decrees have been, or are in the process of
                  being, undertaken or if any such requests have been received.

                  Yes / /              No /X/

                  If yes, describe the actions, orders or decrees and any
                  continuing compliance obligations imposed as a result of these
                  actions, orders or decrees and also describe any requests,
                  notices or demands, and attach a copy of all such

         10.1     (This Section reserved for any requirements unique to a State
                  or Local control agency)

The undersigned hereby acknowledges and agrees that this Hazardous Materials
Disclosure Certificate is being delivered in connection with, and as required
by, Lessor in connection with the evaluation and finalization of a Lease
Agreement and will be attached thereto as an exhibit. The undersigned further
acknowledges and agrees that this Hazardous Materials Disclosure Certificate is
being delivered in accordance with, and as required by, the provisions of
Section 9 of the Lease Agreement. The undersigned further acknowledges and
agrees that the Lessor and its partners, lenders and representatives may, and
will, rely upon the statements, representations, warranties, and certifications
made herein and the truthfulness thereof in entering into the Lease Agreement
and the continuance thereof throughout the term, and any renewals thereof, of
the Lease Agreement. I (SEE BELOW) acting with full authority to bind the
(proposed) Lessee and on behalf of the (proposed) Lessee, certify, represent and
warrant that the information contained in this certificate is true and correct.

(PROSPECTIVE) Lessee:

By      /s/
   ---------------------------------------------

Title        President/CEO
     -------------------------------------------

Date       June 28, 1999

<PAGE>

                                    EXHIBIT D

BUILDING RULES AND REGULATIONS

1.       Any sign, lettering, picture, notice, or advertisement installed on or
         in any part of the Premises and visible from the exterior of the
         Office/Showroom Complex, or visible from the exterior of the Premises,
         shall be installed at Tenant's sole cost and expense, and in such
         manner, character, and style as Landlord may approve in writing. In the
         event of a violation of the foregoing by Tenant, Landlord may remove
         the same without any liability and may charge the expense incurred by
         such removal to Tenant.

2.       No awning or other projection shall be attached to the outside walls of
         the Office/Showroom Complex. No curtains, blinds, shades, or screens
         visible from the exterior of the Premises, shall be attached to or hung
         in, or use in connection with any window or door of the Premises
         without the prior written consent of Landlord. Such curtains, blinds,
         shades, screens, or other fixtures must be of a quality, type, design,
         and color and attached in the manner approved by Landlord.

3.       Tenant, its servants, employees, customers, invitees, and guests shall
         not obstruct sidewalks, entrances, passages, corridors, vestibules,
         halls, or stairways in and about the Office/Showroom Complex which are
         used in common with other tenants and their servants, employees,
         customers, guests, and invitees and which are not a part of the
         Premises of Tenant. Tenant shall not place objects against glass
         partitions or doors or windows which would be unsightly from the
         Office/Showroom Complex and will promptly remove any such objects upon
         notice from Landlord.

4.       Tenant shall not make excessive noises, cause disturbances or
         vibrations or use or operate any electrical or mechanical devices that
         emit excessive sound or other waves or disturbances or create obnoxious
         odors, any of which may be offensive to the other tenants and occupants
         of the Office/Showroom Complex, or that would interfere with the
         operation of any device, equipment, radio, television broadcasting, or
         reception from or within the Office/Showroom Complex or elsewhere and
         shall not place or install any projections, antennas, aerials, or
         similar devices inside or outside of the Premises or on the
         Office/Showroom Complex without Landlord's approval.

5.       Tenant shall not waste electricity, water, or air conditioning and
         shall cooperate fully with Landlord to insure the most effective
         operation of the Office/Showroom Complex's heating and air conditioning
         system and shall refrain from attempting to adjust any controls other
         than unlocked room thermostats, if any, installed for Tenant's use.
         Tenant shall keep corridor doors closed.

6.       Tenant assumes full responsibility for protecting its space from theft,
         robbery, and pilferage which includes keeping doors locked and other
         means of entry to the Premises closed and secured after normal business
         hours.

7.       In no event shall Tenant bring into the Office/Showroom Complex
         inflammables such as gasoline, kerosene, naphtha and benzene or
         explosives or any other article of intrinsically dangerous nature. If,
         by reason of the failure of Tenant to comply with the provisions of
         this subparagraph, any insurance premium for all or any part of the
         Office/Showroom Complex shall at any time be increased, Tenant shall
         make immediate payment of the whole of the increase insurance premium
         without waiver of any of Landlord's other rights at law or in equity
         for Tenant's breach of this Lease.

<PAGE>

8.       Tenant shall comply with all applicable federal, state, and municipal
         laws, ordinances, and regulations and building rules and shall not
         directly or indirectly make any use of the Premises which may be
         prohibited by any of the foregoing or which may be dangerous to persons
         or property or may increase the cost of insurance or require additional
         insurance coverage.

9.       Landlord shall have the right to prohibit any advertising by Tenant
         which in Landlord's reasonable opinion tends to impair the reputation
         of the Office/Showroom Complex or its desirability as an
         Office/Showroom Complex for office use and, upon written notice from
         Landlord, Tenant shall refrain from or discontinue such advertising.

10.      The Premises shall not be used for lodging, sleeping, or for any
         immoral or illegal purpose.

11.      Tenant and Tenant's servants, employees, agents, visitors, and
         licensees shall observe faithfully and comply strictly with the
         foregoing rules and regulations and such other and further appropriate
         rules and regulations as Landlord or Landlord's agent may from time to
         time adopt. Reasonable notice of any additional rules and regulations
         shall be given in such manner as Landlord may reasonable elect.

12.      Unless expressly permitted by the Landlord, no additional locks or
         similar devices shall be attached to any door or window and no keys
         other than those provided by the Landlord shall be made for any door.
         If the Tenant desires more than two keys for one lock, the Landlord may
         provide the same upon payment by the Tenant. Upon termination of this
         Lease or of the Tenant's possession, the Tenant shall surrender all
         keys of the Premises and shall explain to the Landlord all combination
         locks on safes, cabinets, and vaults.

13.      Any carpeting cemented down by Tenant shall be installed with a
         releasable adhesive. In the event of a violation of the foregoing by
         Tenant, Landlord may charge the expense incurred by such removal to
         Tenant.

14.      The water and wash closets, drinking fountains, and other plumbing
         fixtures shall not be used by any purpose other than those for which
         they were constructed and no sweepings, rubbish, rags, coffee grounds,
         or other substances shall be thrown therein. All damages resulting from
         any misuse of the fixtures shall be borne by the Tenant who, or whose
         servants, employees, agents, visitors, or licensees, shall have cause
         the same. No person shall waste water by interfering or tampering with
         the faucets or otherwise.

15.      No electric circuits for any purpose shall be brought into the leased
         premises without Landlord's written permission specifying the manner in
         which same may be done.

16.      No dogs or other animals shall be allowed in office, halls, corridors,
         or elsewhere in the building.

17.      Tenant shall not throw anything out of the door or windows or down any
         passageways or elevator shafts.

18.      All loading, unloading, receiving, or delivery of goods, supplies, or
         disposal of garbage or refuse shall be made only through entryways and
         freight elevators provided for such purposes and indicated by Landlord.
         Tenant shall be responsible for any damages to the building or the
         property of its employees or to others and injuries sustained by any
         person whomsoever resulting from the use of or moving of such articles
         in or out of the leased premises, and shall make all repairs and
         improvements required by Landlord or governmental authorities in
         connection with the use or moving of such articles.

<PAGE>

19.      All safes, equipment, or other heavy articles shall be carried in or
         out of the Premises only at such time and in such manner as shall be
         prescribed in writing by Landlord and Landlord shall in all cases have
         the right to specify the proper position of any such safe, equipment,
         or other heavy article which shall only be used by Tenant in a manner
         which will not interfere with or cause damage to the leased premises or
         the building in which they are located, or to the other tenants or
         occupants of said building. Tenant shall be responsible for any damage
         to the building or the property of its employees or other and injuries
         sustained by any person whomsoever resulting from the use or moving of
         such articles in or out of the leased premises and shall make all
         repairs and improvements required by Landlord or governmental
         authorities in connection with the use or moving of such articles.

20.      Canvassing, soliciting and peddling in the building is prohibited and
         each Tenant shall cooperate to prevent the same.

21.      Vending machines shall not be installed without permission of the
         Landlord.

22.      Wherever in these Building Rules and Regulations the work "Tenant"
         occurs, it is understood and agreed that it shall mean Tenant's
         associates, agents, clerks, servants, and visitors. Wherever the work
         "Landlord" occurs, it is understood and agreed that it shall mean
         Landlord's agents, clerks, servants, and visitors.

23.      Landlord shall have the right to enter upon the leased premises at all
         reasonable hours for the purpose of inspecting the same.

24.      Landlord shall have the right to enter the leased premises at hours
         convenient to the Tenant for the purpose of exhibiting the same to
         prospective tenants within sixty (60) day period prior to the
         expiration of this Lease and may place signs advertising the leased
         premises for rent on the windows and doors of said Premises at any time
         within said sixty (60) day period.

25.      Tenant, its servants, employees, customers, invitees, and guests shall,
         when using the common parking facilities, if any, in and around the
         building, observe and obey all signs regarding fire lanes and no
         parking zones and when parking, always park between the designated
         lines. Landlord reserves the right to tow away, at the expense of the
         owner, any vehicle which is improperly parked or parked in a no parking
         zone. All vehicles shall be parked at the sole risk of the owner and
         Landlord assumes no responsibility for any damage to or loss of
         vehicles. No vehicles shall be parked overnight outside the premises
         without notice to Landlord or its agents.

26.      All entrance doors to the Premises shall be locked when the Premises
         are not in use. All corridor doors shall also be closed during times
         when the air conditioning equipment in the Office/Showroom Complex is
         operating so as not to dissipate the effectiveness of the systems or
         place an overload thereon.

27.      Landlord reserves the right at any time from time to time to rescind,
         alter, or waive, in whole or in part, any of these Rules and
         Regulations when it is deemed necessary, desirable, or proper, in
         Landlord's judgement, for its best interest or for the best interest of
         the tenants of the Office/Showroom Complex.