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                       CONTRIBUTION AND SECURITY AGREEMENT

         THIS CONTRIBUTION AND SECURITY AGREEMENT ("AGREEMENT") is made and
entered into effective as of May 15, 1998, by and among LSC, Incorporated, a
Minnesota corporation ("LSC"), Doug Phil ("PHIL"), Paul G. Miller ("Miller"),
Richard W. Perkins ("RWP"), Richard W. Perkins Revocable Trust (individually,
the "TRUST" and collectively with RWP, "PERKINS") and Edward E. Strickland
("STRICKLAND") (Phil, Miller, Perkins and Strickland, individually, a
"CO-OBLIGEE" and collectively, the "CO-OBLIGEES").

         A.       LSC, Miller, RWP, Trust and Strickland have executed in favor
of Bank Windsor (the "LENDER") that certain Commercial/Agricultural Revolving or
Draw Note - Variable Rate, dated February 1, 1998 (the "NOTE"), a copy of which
is attached hereto as EXHIBIT A.

         B.       LSC may make draws under the Note up to a maximum amount of
Five Hundred Thousand Dollars ($500,000) (the "LOAN").

         C.       Each of the Co-Obligees has promised to repay the Loan in
full.

         D.       The Co-Obligees desire to enter into this Agreement to
allocate the benefits of the Loan among themselves and to provide a fair and
equitable arrangement to make contributions in the event that any of the
Co-Obligees is required to make any payments to the Lender under the Note.

         E.       In consideration of the Co-Obligees' promise to repay the
Loan, and for other valuable consideration, the receipt and sufficiency of which
are acknowledged, LSC desires to grant each of the Co-Obligees (1) a security
interest in certain assets of LSC and (2) a warrant to purchase shares of LSC's
common stock, par value $.01 per share (the "COMMON STOCK").

         ACCORDINGLY, the parties hereby agree as follows:

1.       REPAYMENT OF NOTE. If any of the Co-Obligees makes any payment under
         the Note on behalf of LSC to the Lender, LSC shall within thirty (30)
         days of written demand repay such Co-Obligee the amounts paid by such
         Co-Obligee.

2.       CONTRIBUTION. In order to provide for just and equitable contribution
         among the Co-Obligees in the event any payment or distribution is made
         by a Co-Obligee (a "FUNDING CO-OBLIGEE") under the Note, that Funding
         Co-Obligee shall be entitled to a contribution from the other
         Co-Obligees (including any such Co-Obligee which itself is a Funding
         Co-Obligee) for all payments, damages and expenses incurred by that
         Funding Co-Obligee in discharging (a) LSC's obligations with respect to
         the Note or (b) any other Funding Co-Obligee's obligations with respect
         to the Note, in an amount equal to twenty-five percent (25%) of the
         amount of the payment or distribution made by such Funding Co-Obligee.
         Any amount payable as contribution under this Agreement shall be
         determined as of the date on which the related payment or distribution
         is made by a Funding Co-Obligee. The parties agree that Perkins shall
         be treated as one Co-Obligee, with RWP and the Trust jointly and
         severally liable for the contribution of Perkins to any Funding
         Co-Obligee.


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3.       ALLOCATION. In the event there exists at any time more than one Funding
         Co-Obligee with respect to the Note, the payment from the other
         Co-Obligees pursuant to this Agreement shall be allocated among such
         Funding Co-Obligees in proportion to the total amount of money paid for
         or on account of the Company by each such Funding Co-Obligee.

4.       SECURITY INTEREST.

         4.1.     "SOFTWARE" means LSC's SAM-FS storage management software
                  program, including all properties and rights with respect
                  thereto, both tangible and intangible, whether presently owned
                  or existing or hereafter acquired or arising or in which LSC
                  now has or at any time in the future obtains an interest and
                  wheresoever located, including, without limiting the
                  generality of the foregoing, the source code, object code and
                  documentation relating to the such software and all
                  intellectual property rights relating thereto, including
                  without limitation, all patents, patent applications,
                  trademarks, trademark applications, trade names, service
                  marks, copyrights, copyright applications, mask works, service
                  marks, know-how, trade secrets, proprietary processes and
                  technology; all the proceeds or products of any of the
                  foregoing and the proceeds of any such asset; and all right,
                  title and interest of LSC in or to all instruments and
                  documents covering or relating thereto or relating thereto.

         4.2.     GRANT OF SECURITY INTEREST. To secure the obligation of LSC to
                  repay each Co-Obligee all amounts that any Co-Obligee pays
                  under the Note on behalf of LSC, LSC hereby grants to the
                  Co-Obligees a continuing security interest, and lien upon all
                  of LSC's right, title and interest in and to the Software,
                  including all properties and rights with respect thereto, both
                  tangible and intangible, whether presently owned or existing
                  or hereafter acquired or arising or in which LSC now has or at
                  any time in the future obtains an interest and wheresoever
                  located

         4.3.     DEFAULT. If LSC breaches it obligations under Section 1 of
                  this Agreement and such breach shall not have been cured
                  within thirty (30) days of notice from a Co-Obligee, or a case
                  may be commenced by or against LSC under Title 11 of the
                  United States Code, unless and only except to the extent
                  prevented by law, the Co-Obligees may, at their option and
                  without demand or notice, in addition to the rights and
                  remedies granted hereby or under any instruments evidencing or
                  relating to any of the Co-Obligees, exercise all rights and
                  remedies of a secured party under the Uniform Commercial Code
                  or any other applicable law. If a disposition of the Software
                  by the Co-Obligees occurs, the proceeds of such disposition
                  shall be applied as set forth in Minn. Stat. ss. 336.9-504.

5.       WARRANT. LSC shall grant to each of the Co-Obligees a warrant, in the
         form attached hereto as EXHIBIT B (a "Warrant"), to purchase 17,500
         shares of Common Stock, exercisable for a period of five years. Each
         Warrant issued shall have an exercise price equal to 80% of the per
         unit price of securities sold by LSC in its next round of equity
         financing that raises gross proceeds of at least $1,000,000.


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6.       MISCELLANEOUS.

         6.1.     TERMINATION. This Agreement, as it may be modified or amended
                  from time to time, shall remain in effect, and shall not be
                  terminated until the Note has been discharged or otherwise
                  satisfied in accordance with its terms.

         6.2.     ASSIGNMENT; SUCCESSORS AND ASSIGNS. None of the parties shall
                  assign or otherwise transfer its rights and obligations under
                  this Agreement, except with the prior written consent of all
                  of the other parties. This Agreement shall be binding upon
                  each party hereto and their respective heirs and permitted
                  successors and assigns and shall inure to the benefit of the
                  parties hereto and their respective heirs and permitted
                  successors and assigns.

         6.3.     AMENDMENT. This Agreement may not be deemed or construed to be
                  modified or amended, in whole or part, other than by written
                  amendment signed by all of the parties hereto.

         6.4.     SEVERABILITY. In the event that any term or provision of this
                  Agreement is invalid or unenforceable, such term or provision
                  shall be deemed stricken from this Agreement. The invalidity
                  or unenforceability of any term or provision of this Agreement
                  shall not invalidate this Agreement, and the remaining terms
                  and provisions of this Agreement shall continue in full force
                  and effect.

         6.5.     WAIVER. No failure by any party to take any action or assert
                  any right hereunder shall be deemed to be a waiver of any
                  rights or remedies under this Agreement or at law.

         6.6.     GOVERNING LAW. This Agreement, and any instrument or agreement
                  required hereunder, shall be construed in accordance with and
                  governed by the laws of the State of Minnesota, without regard
                  to the conflicts of laws principles thereof.

         6.7.     COUNTERPARTS. This Agreement may be executed in two or more
                  counterparts, each of which shall be deemed an original and
                  all of which shall constitute one and the same instrument.

                   (BALANCE OF PAGE INTENTIONALLY LEFT BLANK.)


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         IN WITNESS WHEREOF, the undersigned parties have caused this Agreement
to be duly executed as of the date first written above.

LSC INCORPORATED                          RICHARD W. PERKINS


By       /s/ J. B. (BRAD) BALOGH          /s/ RICHARD W. PERKINS
  -------------------------------------   --------------------------------------
                                          Richard W. Perkins, Individually
Its      PRESIDENT/CEO
   ------------------------------------

DOUG PHIL                                 RICHARD W. PERKINS REVOCABLE TRUST

/s/ DOUG PHIL                             By:      /s/ RICHARD W. PERKINS
---------------------------------------      -----------------------------------
Doug Phil, Individually                            Richard W. Perkins
                                          Its:     Trustee


PAUL G. MILLER                            EDWARD E. STRICKLAND

/s/ PAUL G. MILLER
---------------------------------------
Paul G. Miller, Individually              /s/ EDWARD E. STRICKLAND
                                          --------------------------------------
                                          Edward E. Strickland, Individually