POSSIS MEDICAL, INC.
                                  EXHIBIT INDEX

Exhibit
Number                              Description                               

10.23      Lease agreement for Corporate headquarters and manufacturing
           facility dated December 15, 1995.

<PAGE>
12.14.95


                                      LEASE




                              9055 BUILDING, L.L.P.
                                   (Landlord)



                               POSSIS MEDICAL INC.
                                    (Tenant)



                   9055 Evergreen Boulevard, Coon Rapids, Minn
                                   (Location)










                                                    Execution Date:
                                                    December 15, 1995
<PAGE>
                                Table of Contents



ARTICLE I.

         BASIC LEASE PROVISIONS AND EXHIBITS ..........................    1
         1.1.     Basic Lease Provisions. .............................    1
         1.2.     Exhibits. ...........................................    1

ARTICLE II.

         DEFINITIONS       ............................................    2
         2.1.     Definitions. ........................................    2

ARTICLE III.

         TERM              .............................................   4
         3.1.     Initial Term. ........................................   4
         3.2.     Extension Option.  ...................................   4

ARTICLE IV.

         MONETARY OBLIGATIONS ..........................................   5
         4.1.     Monthly Net Rent. ....................................   5
         4.2.     Operating Costs. .....................................   5
         4.3.     Tax Costs.  ..........................................   5

ARTICLE V.

         CONSTRUCTION      .............................................   6
         5.1.     Plans.   .............................................   6
         5.2      Access.  .............................................   6
         5.3      Construction. ........................................   7
         5.4.     Tenant Improvement Allowance. ........................   7

ARTICLE VI.

         USE; QUIET ENJOYMENT ..........................................   8
         6.1.     Use.      ............................................   8
         6.2.     Title.   .............................................   8
         6.3.     Quiet Enjoyment. .....................................   8


<PAGE>
ARTICLE VII.

         OPERATIONAL MATTERS ............................................   9
         7.1.     Maintenance by Landlord. ..............................   9
         7.2.     Maintenance of the Premises by Tenant. ................   9
         7.3.     Compliance with Laws. .................................  10
         7.4.     Environmental. ........................................  10
         7.5.     Signs.   ..............................................  11
         7.6.     Alterations. ..........................................  11
         7.7.     Utilities. ............................................  12
         7.8.     Entry by Landlord. ....................................  12
         7.9.     Communication Equipment.  .............................  12
         7.10     Interruption of Business. .............................  12
         7.11     Reserve Account. ......................................  12

ARTICLE VIII.

         TRANSACTIONS      ..............................................  13
         8.1.     Assignment and Subletting. ............................  13
         8.2.     Subordination and Nondisturbance. .....................  13
         8.3.     Estoppel Certificates. ................................  13

ARTICLE IX.

         RISK SHIFTING     ..............................................  14
         9.1.     Indemnification.  ...................................... 14
         9.2.     Liability Insurance. ................................... 14
         9.3.     Landlord's Property Insurance. ......................... 14
         9.4.     Tenant's Property Insurance. ........................... 15
         9.5.     Waiver of Insurable Claim.  ............................ 15
ARTICLE X.

         CASUALTY ........................................................ 16
         10.1.    Damage or Destruction. ................................. 16

ARTICLE XI.

         EMINENT DOMAIN    ............................................... 16
         11.1.    Eminent Domain. ........................................ 16


<PAGE>
ARTICLE XII.

         DEFAULTS ........................................................ 17
         12.1.    Tenant Defaults.  ...................................... 17
         12.2.    Landlord Defaults. ..................................... 18

ARTICLE XIII

         PURCHASE OPTION   ............................................... 18
         13.1.    Purchase Option. ....................................... 18
         13.2     Purchase Price. ........................................ 18
         13.3     Exercise. .............................................. 19
         13.4     Closing. ............................................... 19
         13.5     Title.    .............................................. 19
         13.6     Closing Conditions. .................................... 20
         13.7     Closing Documents. ..................................... 21
         13.8     Costs and Prorations. .................................. 21

ARTICLE XIV.

         ADDITIONAL PROVISIONS ........................................... 22
         14.1     Termination Right. ..................................... 22
         14.2     Additional Land. ....................................... 22
         14.3     Expansion of Building. ................................. 24

ARTICLE XV.

         MISCELLANEOUS     ............................................... 26
         15.1.    Waiver of Lease Provisions. ............................ 26
         15.2.    Surrender. ............................................. 27
         15.3.    Holding Over. .......................................... 27
         15.4.    Notices. ............................................... 27
         15.5.    Governing Law. ......................................... 27
         15.6.    Entire Agreement. ...................................... 28
         15.7.    Successors and Assigns. ................................ 28
         15.8.    Consent Not Unreasonably Withheld. ..................... 28
         15.9.    Short Form Lease.  ..................................... 28
         15.10.   Attorneys' Fees......................................... 28
         15.11.   Security Deposit. ...................................... 28

<PAGE>
Exhibit A:        Legal Description
Exhibit B:        Site Diagram of the Premises
Exhibit C:        Termination Fee Schedule
Exhibit D:        Arbitration Procedures
Exhibit E:        Signs
Exhibit F:        Excess Land
Exhibit G:        Expansion Space

<PAGE>
                                      LEASE


                                   ARTICLE I.

                       BASIC LEASE PROVISIONS AND EXHIBITS


     THIS LEASE is entered  into as of the 15th day of  Decembe,  1995,  between
9055 BUILDING,  L.L.P., a Minnesota limited liability partnership  ("Landlord"),
and POSSIS MEDICAL INC., a Minnesota corporation ("Tenant").

     1.1.    Basic Lease Provisions.

Address of          Suite 290
Landlord:           299 Coon Rapids Blvd.
                    Coon Rapids, Minnesota 55433
                    Fax No.  (612) 786-9320

Address of          2905 Northwest Blvd.
Tenant:             Minneapolis, MN 55441-2614
                    Fax No. (612) 550-1020

Premises:           The building  (the  "Building")  shown on Exhibit B, 
                    containing approximately 50,528 Rentable Square Feet  
                    (consisting of 11,250 rentable square feet of office space 
                    and 39,278 rentable square feet of warehouse space), 
                    together  with the land legally described on Exhibit A,  
                    including  the parking lot, driveways, sidewalks and 
                    Landscaping.

Term:               Approximately 10 years, as more precisely defined in 
                    Section 2.1(dd).

Extension Options:  Two options of 5 years each, as described in Section 3.2.

Annual Net
Rent:               $241,674

     1.2.  Exhibits.  The  exhibits  enumerated  in the  Table of  Contents  and
attached to this Lease are incorporated in this Lease by this reference.
                                      -1-
<PAGE>
                                   ARTICLE II.

                                   DEFINITIONS

     2.1.  Definitions.  In this Lease:  

     (a) Actual  Operating  Costs means the Operating Costs actually  incurred
for a calendar  year. 

     (b) "Annual Net Rent" means the amount set forth in the following schedule:
 
                                           Annual Net       Monthly Net
From and After:   Until and including:     Rent:            Rent:            

Rent Commencement The expiration of the    $241,674.00      $20,139.50
Date                       Term

     (c) Article means an article of this Lease. 

     (d) Basic Lease  Provisions means those  essential lease  provisions  
defined in Section 1.1. 

     (e) "Casualty" means a fire,  explosion,  tornado or other cause of damage 
to or destruction of the  Premises.  

     (f) City means the City of Coon Rapids,  Minnesota,  or other
governmental  authority  having  jurisdiction  over the matter in question.  

     (g) Contamination  is defined in  Section  7.5.  

     (h) Environmental  Damages is defined in Section 7.5. 

     (i) Environmental Regulations is defined in Section 7.5.

     (j) Extension Option means either of the two options to extend this Lease
for five years each,  as described in Section  3.2. 

     (k) Extension  Term means either of the two five-year  periods for which 
the Initial Term may be extended, as described in Section 3.2.
                                      -2-
<PAGE>
     (l) Excusable Delays means a delay occasioned by a strike, lockout, riot,
act of God, or any other cause or causes, whether similar or dissimilar to those
enumerated,  beyond  Landlord's  reasonable  control.  When this Lease extends a
deadline by reason of an Excusable  Delay,  the  deadline  will be extended by a
period of time equal to the duration of the Excusable  Delay,  unless  specified
otherwise.

     (m)  Fair Market Rent is defined on Exhibit D.

     (n)  Fair Market Value is defined in Exhibit D.

     (o)  Hazardous Substance is defined in Section 7.5.

     (p)  Initial Tenant Improvements is defined in Section 5.1.

     (q)  Initial  Term means the Term without taking into account the exercise
of any Extension  Option for any Extension  Term. 

     (r)  Interest  Rate means the per annum reference rate, as publicly  
announced from time to time by First Bank National  Association  (Minneapolis), 
plus two percent (2%). 

     (s)  [Intentionally Omitted]  

     (t)  Laws is defined in Section 7.1. 

     (u)  Monthly Net Rent means the Annual Net Rent  divided by twelve. 
 
     (v)  Operating  Costs means all costs in connection with the operation,  
maintenance and repair of the Premises, except those costs specifically made the
responsibility  of  Landlord  pursuant  to the  terms of this  Lease.  

     (w)  Rent  Commencement Date shall mean the date that is 90 days after the
date of this Lease,  which Rent  Commencement Date shall be extended on a day to
day basis for any delays caused by Landlord with respect to the  construction of
the Initial Tenant Improvements.

     (x)  Rentable  Square  Foot means a unit of one square foot of a Rentable
Square Foot Area.

     (y)  Rentable  Square Foot Area means that  number of enclosed  square feet
actually occupied or available for occupancy by Tenant.  
                                      -3-
<PAGE>
(z) Section means a section of this Lease. 
  
    (aa)  Taking means  acquisition by a public  authority having the power of
eminent domain of all or part of the Premises by  condemnation  or conveyance in
lieu of condemnation.

    (bb)  Tax  Costs  means  all real  estate  taxes,  levies,  charges,  and
installments  of  assessments   (including  interest  on  deferred  assessments)
assessed,  levied or imposed on the Premises,  excluding (i) special assessments
levied,  pending or a lien as of the date of  execution  of this Lease,  or (ii)
sewer, water or other utility hook-up or access charges or assessments.  Nothing
contained herein shall require Tenant to pay any local, county, municipal, state
or  federal  income,  franchise,  corporate,  estate,  inheritance,  succession,
capital levy,  business or transfer tax of Landlord,  provided that Tenant shall
be responsible for the payment of any local, county, municipal, state or federal
tax or charge directly  imposed upon the rent or other charges payable by Tenant
under this Lease.

     (cc)  Tenant Improvement Allowance is defined in Section 5.4.

     (dd)  Term  means  the  period  beginning  on the  date  of  delivery  of
possession  of the Premises to Tenant and ending on the last day of the month in
which the tenth anniversary of the Rent Commencement Date occurs. If the Initial
Term is extended  pursuant to Section 3.2,  the Term will include any  Extension
Term with respect to which an Extension Option has been exercised.


ARTICLE III.

TERM

     3.1.  Initial  Term.  Landlord  leases the  Premises to Tenant,  and Tenant
leases the Premises from  Landlord,  for the Initial  Term,  under the terms and
conditions of this Lease.

     3.2. Extension Option.  Tenant has two Extension Options to extend the Term
for five years each, if Tenant notifies Landlord in writing at least nine months
prior to the  expiration  of the  Term,  as the same  may have  been  previously
extended.  Tenant may not  exercise its second  Extension  Option for the second
Extension Term if it has not exercised its first Extension  Option for the first
Extension  Term. If Tenant  exercises any of its Extension  Options,  this Lease
will be in full force and effect during the Term, as so extended, subject to all
of the terms and  conditions of this Lease.  Annual Net Rent for each  Extension
Term shall be the Fair  Market  
                                      -4-
<PAGE>
Rent.  If,  after 60 days of the  exercise of an
Extension  Option,  Tenant and  Landlord  are unable to agree upon the Fair
Market Rent in writing,  Tenant will exercise  either of the following  options:
Market Rent in writing,  Tenant will exercise  either of the following  options:
(1) Rent in writing,  Tenant will exercise either of the following options:  (1)
Tenant may submit a  determination  of the Fair Market  Rent of the  Property to
Arbitration,   by  giving  written   notice  of  such   submission  to  Landlord
("Arbitration  Request"),  or (2) Tenant may  rescind  Tenant's  exercise of the
Extension  Option by written  notice to  Landlord.  If Tenant  fails to exercise
either  option  (1) or (2)  within 30 days  after the  expiration  of the 60 day
negotiation  period,  Tenant will be deemed to have elected  option (2) above.er
the expiration of the 60 day negotiation  period,  Tenant will be deemed to have
elected option (2) above.


ARTICLE IV.

MONETARY OBLIGATIONS

     4.1. Monthly Net Rent.  Tenant will pay the Monthly Net Rent to Landlord at
the  Address of  Landlord,  or such other place as Landlord  may  designate,  in
advance on the first day of each month during the Term,  commencing  on the Rent
Commencement  Date,  without  demand,  deduction  or setoff,  except as provided
otherwise in this Lease. If the Rent  Commencement  Date is a day other than the
first day of a month,  the Monthly Net Rent for the first  partial month will be
prorated on a per diem basis and paid on the Rent Commencement Date. All amounts
to be paid by Tenant to Landlord  under this Lease will be deemed to be rent for
purposes  of payment and  collection.  Tenant  shall pay  Landlord a late charge
equal to five  percent  (5%) of the  amount  past due for all  Monthly  Net Rent
payments  not paid by the 5th  business  day of the  month  for  which  they are
payable.  

     4.2. Operating Costs. Tenant agrees to pay all Operating Costs attributable
to the Term.

     4.3. Tax Costs.  Tenant agrees to pay all Tax Costs payable during the Term
directly  to  Landlord  on or before the date the  Premises  would be subject to
penalty  for  failure to timely pay the Tax Costs.  Any  partial  periods at the
beginning or end of the Term will be prorated  between  Landlord and Tenant on a
per diem basis.  Tenant  will not be  obligated  to pay any special  assessments
related to the initial  development of the Premises.  The payment of any special
assessments  will be spread over the  longest  period  possible.  Tenant will be
entitled to a prompt  refund of any tax refund  attributable  to the Term,  even
after the expiration or termination of this Lease. Tenant will have the right to
contest  the Tax Costs with the  appropriate  governmental  authority.  Landlord
warrants that the tax parcel covering the Premises contains no excess land being
held for future development. Landlord will promptly provide Tenant a copy of all
tax  statements  with respect to the Premises  that  Landlord  receives from the
taxing authority.
                                      -5-
<PAGE>
ARTICLE V.

CONSTRUCTION

     5.1. Plans. Prior to constructing the initial tenant improvements (Initial
Tenant Improvements), Tenant shall submit to Landlord, for the written approval
of  Landlord  (such  approval to be  promptly  given and not to be  unreasonably
withheld  or  conditioned),  Tenant's  space  plans for the layout and  interior
design of the Premises to be  improved.  If the space plans are not approved (or
disapproved with written comments stating the specific matters to which Landlord
objects) within 10 days after the submission thereof by Tenant to Landlord,  the
space  plans  shall be deemed  approved.  Tenant  agrees that any changes to the
approved  space  plans  which  materially  affect  the  design and layout of the
Premises  shall be  subject to the review and  approval  of  Landlord.  All such
changes  shall be deemed  approved  if not  disapproved  with  written  comments
stating the  specific  matters to which  Landlord  objects  within 10 days after
submission  thereof to Landlord  by Tenant.  Upon  approval of the space  plans,
Tenant  shall  promptly  cause  detailed   construction   drawings,   plans  and
specifications  for the Initial  Tenant  Improvements  to be prepared  and shall
submit them to Landlord for  Landlord's  written  approval.  Landlord  agrees to
respond within 10 days of each  submittal with approval or detailed  comments on
Tenant's construction drawings,  plans and specifications.  Tenant shall refrain
from commencing  construction with respect to the Initial Tenant Improvements or
any portion  thereof until  Landlord's  written  approval of the final  detailed
construction drawings,  plans and specifications (the Approved Plans) has been
obtained.  If Tenant  thereafter  desires  to make  substantive  changes  to the
Approved  Plans,  such changes  shall be  submitted  to Landlord for  Landlord's
written  approval.  Landlord  agrees to  respond  within 10  business  days with
respect to approval or comments on substantive changes to the Approved Plans. No
substantive  change  to the  Approved  Plans  shall  be made  unless  and  until
Landlord's   approval  has  been  given.   Landlord  agrees  that  it  will  not
unreasonably  withhold,  delay or condition its approval  hereunder of drawings,
plans and specifications,  or changes thereto. Landlord and Tenant shall use all
reasonable efforts to complete the Approved Plans by December 31, 1995.

     5.2 Access.  Prior to the Commencement Date and beginning as of the date of
this Lease,  Tenant and persons  designated  by Tenant  shall have  unrestricted
access  to the  Premises,  without  obligation  to pay  rent  or  other  charges
hereunder,  for the purpose of designing space plans,  constructing  the Initial
Tenant Improvements,  and installing Tenant's fixtures, furniture and equipment.
With respect to such occupancy, the insurance requirements of this Lease will be
effective and the indemnity provisions of Section 9.1 will apply.
                                      -6-
<PAGE>

     5.3  Construction.  Tenant  covenants that the  construction of the Initial
Tenant Improvements shall be in accordance with the following provisions:

     (a)  General  contractor  services  with  respect  to  the  Initial  Tenant
Improvements shall be performed by a general  contractor  selected by Tenant and
approved  by  Landlord,  which  approval  shall  not  be  unreasonably  delayed,
conditioned or withheld.

     (b)  The  Initial  Tenant  Improvements  must  be  completed  in  good  and
workmanlike manner, consistent with the standards prevailing in the Building and
in compliance with all applicable codes, laws and regulations.

     (c) Tenant shall be  responsible  for procuring  all necessary  permits and
authorizations  related to the Initial Tenant  Improvements  from all applicable
governmental authorities with jurisdiction.

     (d)  To  the  extent  the  estimated   cost  of  the  tenant   improvements
contemplated  in the Approved  Plans exceeds the Tenant  Improvement  Allowance,
Landlord  may require  Tenant to provide a letter of credit or other  reasonable
security,  in form and substance  reasonably  acceptable to Landlord and Tenant,
with respect to mechanic's lien claims arising out of Tenant's work.

     5.4.  Tenant   Improvement   Allowance.   Landlord  shall  pay  Tenant,  in
immediately  available  funds and in accordance  with the  procedures  specified
below,  a Tenant  Improvement  Allowance in the amount of $283,333  (the Tenant
Improvement  Allowance).  Upon execution of this Lease,  Landlord shall pay the
Tenant Improvement  Allowance into a construction  escrow account pursuant to an
escrow and  disbursing  agreement  reasonably  acceptable to Landlord and Tenant
providing for the periodic  disbursement  (not less than  monthly),  pursuant to
customary and  reasonable  construction  escrow  disbursing  procedures,  of the
Tenant  Improvement  Allowance  as  Tenant's  construction  in the  Premises  in
accordance  with the  Approved  Plans  progresses.  Landlord  shall pay the full
Tenant Improvement  Allowance  notwithstanding that Tenant's actual costs may be
greater or less than said amounts.  If Landlord  fails to pay Tenant any amounts
required to be paid under this  Section 5.4 within 5 days after such  payment is
due,  Tenant  may, in addition to any other  rights and  remedies  available  to
Tenant,  set off such  amounts  (plus  interest  on such  amounts  from the date
payment on such amounts was due at the Interest  Rate) against  installments  of
rent due under this  Lease.  Tenant  shall be  permitted  to continue to set off
against succeeding installments of 
                                      -7-
<PAGE>
rent until the total amount of such costs and
interest have been set off against rent,  and such set off shall be deemed to be
payment of rent under this Lease.
                                      
ARTICLE VI.

USE; QUIET ENJOYMENT

     6.1.  Use.  Tenant  may use and  occupy  the  Premises  for  office,  light
manufacturing,  warehouse  and/or  distribution  purposes,  and uses  incidental
thereto.  Tenant  shall not use the  Premises  for any  unlawful use or purpose.
Landlord  further  warrants and represents that as of the date of this Lease the
Premises  comply with all applicable  laws,  statutes,  rules,  regulations  and
ordinances,  and that the Premises will be properly  zoned and permitted for use
of the Premises for office,  light  manufacturing,  warehouse  and  distribution
purposes.  The foregoing  notwithstanding,  Landlord makes no representations or
warranties  regarding the  compliance  of the Premises  with the Americans  With
Disabilities Act of 1991 or other laws or regulations  relating to accessibility
of  facilities  or  properties  for  disabled,   handicapped  and/or  physically
challenged persons.


     6.2.  Title.  On or before the date thirty (30) days after the date hereof,
Landlord agrees to provide Tenant,  at Tenant's sole expense (provided Tenant is
informed of the cost before the  commitment  is ordered and Tenant has the right
to decline coverage),  with a commitment for an ALTA leasehold owner's policy of
title insurance  committing to insure Tenant's  interest in this Lease,  subject
only to real estate taxes,  the mortgage of the  mortgagee  from whom Tenant has
received a  nondisturbance  agreement and easements  which do not interfere with
Tenant's intended use of the Premises. Landlord disclaims any lien (statutory or
otherwise)  on any of Tenant's  inventory  or personal  property or on any trade
fixtures paid for by Tenant.

     6.3. Quiet Enjoyment. If Tenant pays the Monthly Net Rent and other charges
and performs all of Tenant's  obligations  under this Lease,  Landlord  promises
that Tenant may peaceably and quietly  possess and enjoy the Premises under this
Lease.
                                      -8-
<PAGE>
ARTICLE VII.

OPERATIONAL MATTERS

     7.1.  Maintenance  by  Landlord.  Prior  to  delivering  possession  of the
Premises to Tenant,  Landlord,  at its sole expense,  will cause the Premises to
comply with all laws, codes,  ordinances,  rules and regulations of governmental
authorities having jurisdiction with respect thereto (the "Laws").  Landlord, at
its sole expense, will be responsible for any noncompliance of the Premises with
the  Laws  existing  at  the  time  of  delivery  of  the  Premises  to  Tenant.
Notwithstanding the foregoing, Landlord's obligations with respect to compliance
with the Americans  With  Disabilities  Act of 1991 or other Laws or regulations
relating to accessibility of facilities or properties for disabled,  handicapped
and/or  physically  challenged  persons  shall  be  limited  to  correcting  any
noncompliance  of the  structural  portions  of  the  Premises  or the  exterior
improvements thereto (such as sidewalks,  entrances and parking areas), and then
(1) only to the  extent  such  noncompliance  does  not  arise  out of  Tenant's
specific use (for example, a use rendering the Premises a public  accommodation)
of the  Premises  (as  opposed  to mere  occupancy),  Tenant's  improvements  or
Tenant's  employees and (2) only to the extent such  correction is required by a
governmental or quasi-governmental  body having jurisdiction or by a final order
of any court having jurisdiction.  Landlord,  at its sole expense, will maintain
in  good  condition  and  repair  (including  replacement,   if  necessary)  all
structural  components of the  Premises.  Landlord,  at its sole expense,  shall
replace the roof and replace the pavement on the parking lot as necessary during
the Term and any renewals or  extensions  thereof.  Landlord  shall consult with
Tenant   regarding  the  scheduling  of  Landlord's   maintenance,   repair  and
replacement work so as to minimize disruption to Tenant's business. Tenant shall
be responsible for routine maintenance of the roof and parking lot.

     7.2.  Maintanence of the Premises by Tenant.  Except as provided in Section
7.1, Tenant, at its sole expense, will keep the Premises, including the fixtures
and equipment and the heating,  ventilating and air conditioning  system,  in as
good condition and repair as they were in the time possession of the Premises is
tendered to Tenant, as later imporved  pursuant to the terms therof,  except for
ordinary  wear and tear of  damage  from  Casualty.  If  Tenant  fails to do so,
Landlord  may,  after ten (10) days notice (or a shorter  time in the case of an
emergency)  enter the Premises to perform the maintenance and repairs and charge
the costs to Tenant,  which amount will be payable upon  demand,  together  with
interest at the Interest Rate.
                                      -9-
<PAGE>
     7.3.  Compliance  with Laws.  Tenant will, at its expense,  promptly comply
with all laws, ordinances,  rules, orders, regulations and other requirements of
governmental  authorities now or subsequently  pertaining to Tenant's particular
use (as opposed to mere occupancy) of the Premises.

     7.4.  Environmental.  Landlord  has  supplied to Tenant a true and complete
copy of a  current  Phase I  environmental  assessment  for  the  Premises  (the
"Report"). Landlord has made arrangements so that Tenant may rely on the Report.
Landlord  represents and warrants to Tenant that Landlord does not have and does
not know of any other  environmental  reports,  studies or tests which have been
prepared or conducted  with respect to the  Premises,  other than the Report and
the tests identified  therein.  Landlord represents and warrants that, except as
provided in the Report,  to the best of Landlord's  knowledge:  (i) the Premises
are in  compliance  with all  Environmental  Regulations  and (ii) no  Hazardous
Substances  have been  stored,  used or  otherwise  located  on, in or under the
Premises.  Landlord agrees to indemnify, defend and hold Tenant harmless against
any and all Environmental  Damages incurred or to be incurred as a result of the
breach, by Landlord, of its representations. Tenant has had ample opportunity to
inspect the  Premises  and,  except as  expressly  warranted by Landlord in this
paragraph,  takes the Premises in their as is condition in regard to the matters
governed by this paragraph. Tenant agrees to indemnify, defend and hold Landlord
harmless against any and all Environmental Damages incurred or to be incurred as
a result of  Tenant  Contamination  or  failure  by  Tenant  to comply  with any
Environmental   Regulations,   including  reasonable   attorneys'  fees.  Tenant
Contamination  means  contamination at the Premises which is caused by or arises
out of any act, omission,  neglect or fault of Tenant or its agents,  employees,
contractors or invitees.  Contamination  means the  uncontained or  uncontrolled
presence of or release of  Hazardous  Substances  into any  environmental  media
from, upon, within,  below, into or on the Premises.  Hazardous Substances means
any toxic or hazardous chemicals,  wastes,  materials or substances,  including,
without  limitation,  lead,  radon,  asbestos,  asbestos  containing  materials,
polychlorinated  biphenyls,  dioxin,  urea-formaldehyde,  nuclear fuel or waste,
radioactive  materials,  explosives,  carcinogens,  petroleum  products,  or any
pollutants  or  contaminants,  as those  terms  are  defined  in any  applicable
federal, state, local or other governmental law, statute,  ordinance, code, rule
or regulation.  Environmental Regulations means all laws, statutes,  ordinances,
codes, rules and regulations  relating to Hazardous Substances or the protection
of the environment.  Environmental Damages means all claims, judgments,  losses,
penalties,  fines,  liabilities,   encumbrances,  liens,  costs  and  reasonable
expenses  of  investigation,  defense or good faith  settlement  resulting  from
violations of Environmental Regulations,  and including, without limitation: (i)
damages for personal  injury and injury to property or natural  resources;  (ii)
reasonable fees and disbursement of attorneys, consultants, contractors, experts
                                      -10-
<PAGE>
and laboratories;  (iii) costs of any cleanup,  remediation,  removal, response,
abatement,  containment, closure, restoration or monitoring work required by any
Environmental  Regulation and other costs  reasonably  necessary to restore full
economic  use of the  Premises;  and (iv)  third-party  claims  relating  to the
immediately  preceding  subsections  (i)  -  (iii).  If  Landlord  performs  any
remediation  it will do so in such a  manner  as to  have as  little  impact  on
Tenant's business being conducted at the Premises as reasonably possible.

     7.5 Signs.  Subject only to applicable  local  ordinances,  Landlord agrees
that Tenant may  install  such  exterior  signage as Tenant  deems  appropriate,
including,  without  limitation,  monument  signage and signage  attached to the
Building.  Tenant agrees that Landlord may install one exterior identifying sign
on the Building in the location,  and conforming to the specification,  shown on
Exhibit E hereto.  If Tenant  purchases  the Premises as provided in this Lease,
Landlord  agrees to promptly remove its sign and repair any damage caused to the
Building in connection therewith.
                                      
     7.6  Alterations.  Tenant  will  not  make any  alterations,  additions  or
improvements  in or to the Premises  without first obtaining the written consent
of  Landlord,  which  consent  will not be  unreasonablay  withheld  or delayed.
Landlord may require,  as a condition to such  consent,  reasonable  security or
procedures to protect Landlord's  interest in the Premises against liens arising
out of the performance of such  alterations,  additions or improvements.  Tenant
will pay for any labor, services,  materials, supplies or equipment furnished to
Tenant in or about the  Premises,  and will pay and  discharge  any  mechanic's,
materialmen's or other lien against the Premises resulting from Tenant's failure
to make such payment, or will contest the lien and deposit with Landlord,  or an
escrow agent or title insurance company, cash equal to 125% of the amount of the
lien, or otherwise  post  security  sufficient to release the Premises from such
lien. If the lien is reduced to final  judgment and all appeals are exhausted or
waived,  Tenant will  discharge the judgment and may use any cash deposited with
Landlord for such purpose, and Landlord will return all remaining cash deposited
by Tenant.  Landlord  may post notices of  nonresponsibility  on the Premises as
provided by law.  Notwithstanding  the foregoing,  Tenant may make nonstructural
alterations or improvements in and to the Premises  without  Landlord's  consent
with  respect  to any  project  costing  less than  $25,000  and which  will not
adversely affect or impair any building systems.
                                      -11-
<PAGE>
     7.7.  Utilities.  Tenant agrees to pay for all public utilities rendered or
furnished to the  Premises  during the Term,  including  water,  sewer,  gas and
electricity.  Landlord agrees and represents that, during the Term, the Premises
will at all times be connected to water, sewer, gas and electric lines. Landlord
will provide separate utility meters for all utilities serving the Premises.

     7.8. Entry by Landlord.  Landlord and its agents and contractors  will have
the right to enter the Premises at reasonable  times for inspecting or repairing
the Premises,  upon not less than 24 hours' prior  written  notice (which notice
need not  conform to the  requirements  for notice set out in the notice  clause
(15.4) of this Lease) to Tenant,  but Landlord  will have no obligation to make
repairs, alterations or improvements except as expressly provided in this Lease.
If Tenant so requests with respect to any such entry,  Landlord,  its agents and
contractors  shall be accompanied by an escort  provided by Tenant (except in an
emergency).  During the last 270 days of the Term,  Landlord will have the right
to enter the  Premises at  reasonable  times,  subject to the same prior  notice
requirements set forth in the preceding sentence,  for the purpose of exhibiting
the Premises for leasing,  provided such entry does not  unreasonably  interfere
with Tenant's use of the Premises.

     7.9. Communication Equipment. Tenant will be entitled to place, at Tenant's
expense,  a satellite  dish or dishes and other  communication  equipment on the
roof of the  building  as needed for the conduct of  Tenant's  business.  Tenant
agrees to comply with any screening  requirements of the City and any reasonable
screening  requirements of Landlord in connection  with the  installation of any
such communication equipment.  Tenant shall cause such equipment to be installed
in a  manner  that  will  not  cause  any  permanent  damage  to the roof of the
Building,  shall be responsible for, shall indemnify landlord against, and shall
hold  Landlord  harmless  with  respect  to, any  leakage  or other roof  damage
resulting from such equipment,  and shall promptly repair all damage and restore
the roof upon any  removal  of such  equipment.from  such  equipment,  and shall
promptly  repair  all  damage  and  restore  the roof upon any  removal  of such
equipment.

     7.10 Interruption of Business.  Notwithstanding  any Excusable Delay, if an
interruption  or  impairment  of utilities or services  provided to the Premises
materially  impairs  Tenant's  ability to conduct its business and Tenant closes
its business in the Premises by reason  thereof and such  impairment and closure
continues for three (3) consecutive days,  beginning after the end of such 3-day
period,  all rent will abate until such  utilities  or services  are  reasonably
restored  to an extent to render  the  Premises  tenantable.  Landlord  will use
reasonable efforts to cause such utilities or services to be restored as soon as
possible.

     7.11 Reserve Account.  Landlord agrees to maintain an improvements  reserve
account and deposit therein $15,000 during each lease year. Landlord may 
                                      -12-
PAGAE>
use the 
funds in said reserve account for purposes of paying for Landlord's  maintenance
and repair  obligations  specified  in Section 7.1 above.  Landlord  will notify
Tenant  before  expending  any such funds.  Upon  request of Tenant from time to
time,  Landlord  will provide  Tenant a statement of the balance in said reserve
account  and an  accounting  of  all  expenditures  made  therefrom.  If  Tenant
exercises its Purchase Option,  Landlord at closing shall transfer to Tenant all
sums then remaining in said reserve account.


ARTICLE VIII.

TRANSACTIONS

     8.1.  Assignment and  Subletting.  With Landlord's  prior written  consent,
which consent will not be unreasonably withheld or delayed, Tenant may assign or
sublet all or any part of the Premises for any  permitted use at any time during
the Term. No consent will be required in connection  with an assignment  related
to the sale of all or  substantially  all of  Tenant's  business  or a merger or
consolidation  or an assignment to a parent,  subsidiary or affiliate of Tenant.
No assignment or subletting will release Tenant of any of its obligations  under
this Lease;  provided,  however,  if the assignee has a tangible net worth of at
least  $20,000,000  according to the assigne's  most recent  audited  financial
statements,  the assigning  Tenant will be relieved of any liability  under this
Lease accruing after the assignment of this Lease.
                                      
     8.2.  Subordination and Nondisturbance.  At the request of any mortgagee or
ground  lessor,  this Lease will be subject and  subordinate  to any mortgage or
ground lease which may now or in the future  encumber the  Premises,  and Tenant
will  execute,  acknowledge  and deliver to Landlord any  document  requested by
Landlord to evidence the subordination.  Any such future subordination by Tenant
will be subject to Tenant receiving a nondisturbance agreement from the party to
whom it is  subordinating,  which  nondisturbance  agreement  will recognize the
rights of Tenant under this Lease so long as Tenant is not in default.  Tenant's
obligations   under  this  Lease  are  contingent  upon  Landlord   obtaining  a
nondisturbance  agreement in Tenant's  favor,  reasonably  acceptable to Tenant,
from Landlord's current mortgagees or ground lessor, if any.

     8.3. Estoppel  Certificates.  Within 10 business days after written request
from either  party,  the other  party will  execute,  acknowledge  and deliver a
document  furnished by the requesting party,  which statement may be relied upon
by the  requesting  party  and third  parties,  stating  (a) that this  Lease is
unmodified  and in full force and effect (or if modified,  that this Lease is in
full force and effect as modified and stating the modifications),  (b) the dates
to which rent and other  charges  have been paid,  (c) the  current  Monthly Net
Rent,  (d) the dates on which the Term begins and ends, (e) the existence of any
unexpired Extension Options, (f) that 
                                      -13-
<PAGE>
Tenant has accepted the Premises and is in
possession, (g) that neither Landlord nor Tenant is in default under this Lease,
or specifying  any such default,  and (h) such other and further  information as
may be reasonably
requested.


ARTICLE IX.

RISK SHIFTING

     9.1. Indemnification. Tenant agrees to indemnify, defend, and hold harmless
Landlord and its  officers,  directors,  shareholders,  partners,  employees and
agents from and against all third party claims of whatever nature arising out of
this Lease or Tenant's use and  occupancy  of the Premises  except to the extent
arising from the gross  negligent  acts or willful  misconduct  of Landlord,  or
Landlord's  contractors,  licensees,  officers,  partners,  agents or employees,
including reasonable attorneys' fees. Landlord agrees to indemnify,  defend, and
hold  harmless  Tenant  and its  officers,  directors,  shareholders,  partners,
employees and agents from and against all third party claims of whatever  nature
to the extent  arising from the gross  negligent  acts or willful  misconduct of
Landlord or Landlord's contractors,  licensees,  officers,  partners,  agents or
employees, including reasonable attorneys' fees.
                                      
     9.2.  Liability  Insurance.  Tenant  agrees  during  the  Term to  maintain
adequate  liability and other insurance with duly qualified,  reputable insurers
authorized  to do business in the state in which the  Premises  are located and,
upon  request,  to furnish  Landlord  with  certificates  of insurance  properly
executed by Tenant's  insurance  companies  evidencing the insurance policies in
effect,  which  certificates  will agree to provide  thirty (30) days' notice to
Landlord in the event of  cancellation of such coverage.  The minimum  insurance
coverages to be maintained by Tenant will be as follows:

     (a)  Commercial  general  liability   insurance,   naming  Landlord  as  an
additional insured, having a combined single limit of not less than $2,000,000.

     (b)  Workers'  compensation  insurance  in  accordance  with the  statutory
requirements of the state where the Premises are located.

     9.3. Landlord's  Property Insurance.  Landlord agrees that it will keep the
Premises insured against loss or damage by those perils covered by the Insurance
Services  Office  Special  Cause  of Loss  Form or with  "all  risks"  coverage,
including,  malicious mischief and vandalism, and boiler and machinery coverage,
in an amount  sufficient to prevent  Landlord from being a co-insurer  under the
terms of the applicable  policies,  but in any event, in an amount not less than
one-hundred  percent (100%) of the full  replacement  value of the Premises,  as
determined  from 
                                      -14-
<PAGE>
time to time. Such insurance  shall include  insurance  against
interruption  of rents with  respect to the  Premises.  Such  insurance  will be
issued by  financially  responsible  insurers duly  authorized to do business in
Minnesota,  having a rating of "A X" or better as set forth in the most  current
issue of Best's Insurance Reports.  Landlord agrees to competitively bid all its
insurance  policies at least every other year.  The  insurance  company  will be
required to give  Tenant not less than thirty (30) days'  notice in the event of
cancellation, non-renewal or material alteration of such coverage. Landlord will
be  deemed  to be a  self-insurer  as to  the  deductible  or  any  co-insurance
applicable  to  such   insurance   coverage  and  will  pay  any  deductible  or
co-insurance amount applicable in the event of loss or damage.  Tenant agrees to
reimburse  Landlord for the premiums paid by Landlord for the insurance referred
to in this Section 9.3,  within 10 business  days after receipt of a copy of the
invoice for such insurance. Upon execution of this Lease, Landlord shall provide
Tenant a certificate of insurance  evidencing the coverages required  hereunder,
and prior to the expiration of any such policies  Landlord shall deliver renewal
certificates thereof to Tenant. Landlord shall also provide Tenant a copy of the
insurance policy. Promptly after any change in insurance coverages, in insurance
policy forms or in insurer,  Landlord shall provide Tenant a copy of the changed
policy and/or related documents.
                                      
     9.4. Tenant's  Property  Insurance.  Tenant agrees to maintain,  at its own
expense,  insurance  against  loss or  damage  by those  perils  covered  by the
Insurance  Services Office Special Cause of Loss Form or with all risk coverage,
including  malicious  mischief  and  vandalism,  on Tenant's  personal  property
(including  Tenant's  equipment and  removable  trade  fixtures)  located at the
Premises.  Nothing  contained  in this Section 9.4 will be construed as creating
any  liability  or  responsibility  on the part of Landlord  for the adequacy of
insurance coverage on Tenant's personal property.  Tenant will be deemed to be a
self-insurer  as to  the  deductible  or any  co-insurance  applicable  to  such
insurance coverage and will pay any deductible or co-insurance amount applicable
in the event of loss or damage.

     9.5. Waiver of Insurable Claims. Notwithstanding anything contained in this
Lease to the  contrary,  Landlord and Tenant  release each other and the other's
agents  and  employees  from any  liability  for loss or damage by fire or other
casualty  coverable by the Insurance  Services Office Special Cause of Loss Form
or a standard form of "all risks" insurance  policy,  whether or not the loss or
damage resulted from the negligence of the other, its agents or employees.  Each
party will use reasonable  efforts to obtain policies of insurance which provide
that this release will not adversely affect the rights of the insureds under the
policies.  The releases in this Section 9.5 will be effective whether or not the
loss was actually covered by insurance.
                                      -15-
<PAGE>
ARTICLE X.

CASUALTY

     10.1. Damage or Destruction.  If the Premises are damaged by Casualty,  the
damage  (excluding  damage to Tenant's  personal  property)  will be repaired by
Landlord  at its expense to a condition  as near as  reasonably  possible to the
condition prior to the Casualty.  Landlord acknowledges that it is imperative to
Tenant  that the  Premises  be  restored  as quickly  as  possible  following  a
Casualty;  accordingly,  Landlord  will  begin  repairs  as soon  as  reasonably
possible,  but not  later  than the date  that is 30 days  after the date of the
Casualty and will use all reasonable  efforts and diligence to promptly complete
the  repairs  and  restore  the  Premises  in as  short a time as is  reasonably
possible in light of the nature of the Casualty,  but in no event later than, in
the case of a major  Casualty,  the date that is 270 days  after the date of the
Casualty,  subject to Excusable  Delays.  If Landlord fails to begin or complete
the repairs as required,  Tenant may give Landlord  notice to do so. If Landlord
has not begun the repairs or completed  the repairs,  as  applicable,  within 30
days after Tenant's notice, Tenant may terminate this Lease by written notice to
Landlord  given within 30 days after  expiration of the 30-day  period.  If this
Lease is terminated because of the 
                                      
     Casualty,  rents and other payments will be prorated as of the later of the
date of such  Casualty  or the date when  Tenant  ceased  doing  business in the
Premises and will be proportionately  refunded to Tenant or paid to Landlord, as
the case may be.  During any period in which the  Premises or any portion of the
Premises are made  untenantable as a result of the Casualty  (whether or not the
Premises  themselves were damaged by the Casualty),  all rent will be abated for
the period of time untenantable,  plus thirty (30) days for Tenant to reopen all
of the Premises after the completion of Landlord's repairs, in proportion to the
Rentable  Square Foot Area made  untenantable  as a result of the  Casualty.  In
addition, if the Casualty occurs less than two (2) years prior to the end of the
Term, as the same may have been extended,  Tenant may terminate this Lease as of
the Casualty if the Premises may not  reasonably  be made  tenantable  within 90
days  after  the  Casualty.Lease  as of the  Casualty  if the  Premises  may not
reasonably be made tenantable within 90 days after the Casualty.


ARTICLE XI.

EMINENT DOMAIN

     11.1.  Eminent Domain.  If there is a Taking of 25% or more of the Rentable
Square Feet of the building or the Premises, or 10% of the parking spaces on the
Premises,  either  party  may  terminate  this  Lease as of the date the  public
authority takes possession,  by written notice to the other party within 30 days
after the Taking.  If this Lease is so terminated,  any rents and other payments
will be prorated as of the termination and will be  proportionately  refunded to
Tenant,  or paid to  Landlord,  as 
                                      -16-
<PAGE>
the  case may be.  All  damages,  awards  and
payments  for the Taking will belong to  Landlord  regardless  of the basis upon
which they were made or  awarded,  except  that  Tenant  will be entitled to any
amounts   specifically  awarded  by  the  condemning  authority  to  Tenant  for
relocation,  damage to Tenant's  property or business loss. If this Lease is not
terminated as a result of the Taking, Landlord will restore the remainder of the
Premises to a condition as near as reasonably possible to the condition prior to
the Taking (excluding  Tenant's  personal  property) and all rent will be abated
for the period of time the space is  untenantable  in  proportion  to the square
foot area untenantable.


ARTICLE XII.

DEFAULTS
     12.1.  Tenant  Defaults.  If (a) Tenant  defaults in the payment of rent or
other  amounts  under  this  Lease and the  default  continues  for 5 days after
written  notice  by  Landlord  to  Tenant,  (b)  Tenant  defaults  in any  other
obligation under this Lease and the default  continues for 15 days after written
notice by Landlord to Tenant  (unless such default is of a nature that cannot be
cured  within  such 15 day  period,  in which case Tenant will have such time to
cure the default as is reasonably  necessary,  provided Tenant commences to cure
such default  within the original 30 day period and continues to diligently  and
continuously pursue the cure thereof to completion), (c) any proceeding is begun
by or  against  Tenant to  subject  the  assets of Tenant to any  bankruptcy  or
insolvency  law or for an  appointment  of a  receiver  of  Tenant or for any of
Tenant's assets and with respect to proceeding  against Tenant is not discharged
within 60 days, or (d) Tenant makes a general  assignment of Tenant's assets for
the benefit of creditors,  then Landlord may, with or without  terminating  this
Lease,  cure the default and charge  Tenant all costs and  expenses of doing so,
and  Landlord  also may, by process of law,  re-enter the  Premises,  remove all
persons and property,  and regain possession of the Premises,  without waiver or
loss of any of Landlord's rights under this Lease, including Landlord's right to
payment of Monthly Net Rent.  Landlord also may  terminate  this Lease as to all
future rights of Tenant.  Landlord may elect to receive from Tenant,  in lieu of
all future  Monthly Net Rent,  a lump sum equal to all Monthly Net Rent  payable
from the date of default through what would have been the remainder of the Term,
minus  the  estimated  rental  value of the  Premises  for the same  period.  If
Landlord  elects  this  remedy,  the rental  value  will be based on  Landlord's
estimates and  assumptions,  unless they are clearly shown to be erroneous,  and
the Monthly Net Rent and rental value will be  discounted to present value at an
assumed  interest  rate equal to the Interest  Rate.  Tenant waives any right of
restoration to possession of the Premises after re-entry, notice of termination,
or judgment for possession. If this Lease is terminated under this Section 12.1,
Tenant  will  indemnify  Landlord  against all loss of 
                                      -17-
<PAGE>
rents and other costs and
damages  which  Landlord  may  incur  as a  result  of the  termination  for the
remainder  of the Term,  and  against all related  reasonable  attorneys'  fees,
brokerage fees and other expenses,  including,  without limitation,  the cost of
preparing  the  Premises  for  re-letting.  If  Tenant  defaults  in  any of its
obligations under this Lease, it will promptly  reimburse Landlord for all costs
(including, without limitation, reasonable attorneys' fees) incurred by Landlord
in enforcing Tenant's  obligations,  whether or not this Lease is terminated and
whether or not suit is brought. No right or remedy will preclude any other right
or remedy,  no right or remedy will be exclusive of or dependent  upon any other
right or remedy,  and any right or remedy may be exercised  independently  or in
combination.

     12.2. Landlord Defaults.  If Landlord fails or neglects to keep and perform
any of the  covenants or  agreements in this Lease on the part of Landlord to be
kept and performed,  Tenant may notify Landlord thereof and if Landlord does not
cure such  default  within  thirty (30) days (or such  shorter  period as may be
reasonable under the circumstances, in the event of an emergency) after the date
of receiving such notice (or if the default is of such a character as to require
more than  thirty  (30) days to cure,  Landlord  does not  commence to cure such
default  within  thirty  (30) days and  proceed  with the cure  with  reasonable
diligence),  Tenant  may, in addition  to all other  remedies  now or  hereafter
afforded or provided by law, perform such covenant or agreement for or on behalf
of  Landlord  or make good any such  default,  and any amount or  amounts  which
Tenant  advances  on  Landlord's  behalf will be repaid by Landlord to Tenant on
demand,  together  with  interest  thereon at the Interest Rate from the date of
such advance to the  repayment  thereof in full,  and if Landlord does not repay
any such amount or amounts upon demand,  Tenant may,  without  forfeiture of its
rights under this Lease,  deduct the same,  together  with  interest  thereon as
provided  above,  from the next  installment or  installments  of rent to accrue
under this Lease.

ARTICLE XIII

PURCHASE OPTION

     13.1.  Purchase  Option.  Tenant  shall  have the  option to  purchase  the
Premises  upon the terms and  conditions  set  forth in this  Article  XIII (the
"Purchase Option").

     13.2 Purchase Price. If Tenant exercises the Purchase Option,  the purchase
price  for the  Premises  shall  be the Fair  Market  Value  thereof  determined
pursuant to the procedures described below, provided, however, that the Purchase
Price shall not be less than "Landlord's Cost" (defined below), and shall not be
greater than  Landlord's  Cost plus an amount equal to 5% of Landlord's Cost for
                                      -18-
<PAGE>
each year  (prorated  for  partial  years)  within  the Term  prior to Closing .
"Landlord's  Cost" shall mean the sum of (1) the purchase price paid by Landlord
for  the  Premises,   (2)  the  Tenant   Improvement   Allowance,   (3)  $70,200
(representing  the  stipulated  holding  costs  [operating  expense and mortgage
interest] of Landlord during Tenant's  three-month  rent-free build-out period),
(4) the Excess Land Cost (as defined in Section 14.2),  if  applicable,  (5) the
Expansion Space Cost, (as defined in Section 14.3),  if applicable,  and (6) the
then unamortized  value (based in all cases upon a stipulated  useful life of 10
years) of the costs of other  improvements  or replacements to the Premises paid
for by Landlord  that may be  properly  treated as a capital  expenditure  under
applicable federal income tax guidelines. If, after 30 days, Tenant and Landlord
are unable to agree upon the Fair Market Value in writing,  Tenant will exercise
either of the following  options:  (1) Tenant may submit a determination  of the
Fair Market Value of the Property to  Arbitration,  by giving  written notice of
such submission to Landlord ("Arbitration  Request"),  or (2) Tenant may rescind
Tenant's  exercise of the Option by written notice to Landlord.  If Tenant fails
to exercise  either option (1) or (2) within 30 days after the expiration of the
30 day  negotiation  period,  Tenant will be deemed to have  elected  option (2)
above.

     13.3  Exercise.  The  Purchase  Option may be exercised by Tenant by giving
written  notice of  exercise  not less than 120 days prior to the  closing  date
specified  in said notice (the  "Closing  Date").  In no event shall the Closing
Date occur before the date that is the 5th anniversary of the Rent  Commencement
Date.
     13.4  Closing.  Subject to the  closing  conditions  specified  below,  the
closing  ("Closing")  of the purchase  and sale of the  Premises  shall occur at
10:00 a.m. on the Closing Date specified in the exercise notice at the office of
the Title Company or such other time and place to which  Landlord and Tenant may
agree.
                                      
     13.5 Title.  Landlord at its expense will, on or before the date that is 45
days after the date of Tenant's  exercise  of the  Purchase  Option,  furnish to
Tenant a commitment  ("Title  Commitment")  for an ALTA owner's  policy of title
insurance  on a standard  form ALTA  extended  coverage  form  issued by a title
insurance company selected by Tenant (the "Title Company")  committing to insure
marketable  title in  Tenant  in the  amount of the  Purchase  Price.  The Title
Commitment  shall show  marketable  title to the Property in Landlord,  free and
clear of all liens,  charges,  encumbrances,  and other  exceptions  (other than
arising through Tenant), shall insure the rights and easements appurtenant to or
benefitting  the Premises,  shall name Tenant as the party to be insured,  shall
provide for  extended  coverage  over the  standard  printed  exceptions  in the
general  form of the title  policy  referred  to  above,  shall  include  proper
searches covering  bankruptcies and state and federal judgments and liens; shall
insure access to public roads,  shall have attached thereto true,  correct,  and
legible  copies of all  documents  referred  to  therein;  and  
                                      -19-
<PAGE>
shall  contain a
certificate of all taxes and special assessments delinquent,  payable or pending
with  respect  to the  Premises.  Within  30  days  after  receiving  the  Title
Commitment, Tenant may make written objections ("Objections") to the form and/or
contents of the Title Commitment, provided that Tenant shall not object to liens
or  encumbrances  or matters of record created by Tenant.  Landlord will have 45
days after receipt of the Objections to cure the Objections, during which period
the Closing will be postponed as necessary.  Landlord shall use its best efforts
to correct any  Objections.  To the extent an Objection  can be satisfied by the
payment  of money,  Tenant  shall  have the right to apply a portion of the cash
payable to Landlord at the Closing to  satisfaction  of such  Objection  and the
amount so applied  shall  reduce the amount of cash  payable to  Landlord at the
Closing. If the Objections are not cured within such 45 day period,  Tenant will
have the option to:

     (i) Terminate the purchase  contemplated under this Purchase Option without
any liability to Landlord or

     (ii)  Withhold from the Purchase  Price at Closing an amount which,  in the
reasonable  judgment of the Title  Company,  is sufficient to assure cure of the
Objections.  Any  amount so  withheld  will be  placed in escrow  with the Title
Company,  pending such cure. If Landlord does not cure such Objections within 90
days after such escrow is established,  Tenant may then cure such Objections and
charge the costs of such cure (including reasonable attorney's fees) against the
escrowed amount. If such escrow is established, the parties agree to execute and
deliver at Closing  such  documents as may be  reasonably  required by the Title
Company,  and  Landlord  agrees  to pay the  charges  of  Title  to  create  and
administer the escrow.
                                      
     (iii) Waive the Objections  and proceed to close.  Landlord will furnish to
Tenant at Closing the title policy ("Title  Policy") issued by the Title Company
pursuant  to the Title  Commitment,  or a  suitably  marked up Title  Commitment
initialed by the Title Company  undertaking  to issue such a title policy in the
form required by the Title Commitment as approved by Tenant.

     13.6 Closing  Conditions.  If the Purchase  Option is  exercised,  Tenant's
obligation  to  complete  the  purchase of the  Premises  will be subject to the
following  conditions,  all of which  must be met to  Tenant's  satisfaction  or
waived in writing by Tenant,  at its sole  discretion,  before the Closing:  

     (1) Tenant and Tenant's  lender,  if any, are satisfied with the results of
any  and all  examinations  of the  Property,  including  environmental  audits,
                                      -20-
<PAGE>
conducted in connection with Tenant's contemplated acquisition of the Property.

     (2) Tenant  shall have  obtained,  on  conditions  satisfactory  to Tenant,
financing for the acquisition of the Premises.

     (3) Title shall have been made satisfactory to Tenant as provided herein.
         
     (4) No Taking or Casualty shall have occurred.  

     If the conditions referred to above are not met to Tenant's satisfaction or
waived in writing by Tenant,  at its sole discretion,  on or before the Closing,
the Tenant may, if it chooses, rescind its exercise of the Purchase Option.

     13.7 Closing Documents. At Closing Landlord shall execute and/or deliver to
Tenant the following (collectively, "Landlord's Closing Documents"):

     (1) A Warranty Deed  conveying the Premises to Tenant free and clear of all
encumbrances, except as to matters caused or created by Tenant.

     (2) An Affidavit of Title by Landlord  indicating  that on the Closing Date
there are no  outstanding,  unsatisfied  judgments,  tax  liens or  bankruptcies
against or involving Landlord or, to Landlord's  knowledge,  the Premises;  that
there  has been no  skill,  labor  or  material  furnished  to the  Premises  at
Landlord's  request for which payment has not been made or for which  mechanics'
liens could be filed;  and that there are no other  unrecorded  interests in the
Land, other than matters  disclosed to and accepted or waived by Tenant pursuant
to the provisions of this Purchase Option.
                                      
     (3) A non-foreign  affidavit,  properly  executed and in  recordable  form,
containing  such  information  as is required by IRC Section  1445(b)(2) and its
regulations.

     (4)  Any  other  documents  as may  be  customary  or as may be  reasonably
requested  by Tenant or Title  Company in order to  consummate  the purchase and
sale on the terms and conditions herein set forth.

     13.8  Costs and  Prorations.  Landlord  and Tenant  agree to the  following
prorations  and  allocations  of costs  regarding  the  Closing  pursuant to the
Purchase Option:
                                      -21-
<PAGE>
     (1) Tenant will pay the premium for the Title Policy. Landlord will pay the
fee charged by the Title Company for issuance of the Title Commitment, including
the costs of searches and updating.  Landlord and Tenant shall each pay one-half
of any closing fee charged by the Title Company.

     (2) Landlord  shall pay all state deed,  transfer,  excise and  documentary
taxes regarding the Warranty Deed to be delivered by Landlord.

     (3) Real estate  taxes  payable in the year of Closing  will be paid by the
party responsible for the same pursuant to the terms of this Lease.

     (4) Landlord  will pay the cost of  recording  all  documents  necessary to
place record title in the condition required hereunder. Tenant will pay the cost
of recording the warranty deed and all other documents.


ARTICLE XIV.

ADDITIONAL PROVISIONS

     14.1  Termination  Right.  Upon giving of the Termination  Notice described
herein and payment of the  Termination Fee described  herein,  Tenant shall have
the right to  terminate  this Lease as of the last day of the month in which the
fifth anniversary of the Rent Commencement Date occurs (the "Initial Termination
Date"),  and as of each annual  anniversary of the Initial  Termination Date. In
order to exercise the  termination  right,  Tenant must give  written  notice of
termination  not less than 9 months prior to the  applicable  termination  date.
Upon the termination  date,  Tenant shall pay to Landlord the Termination Fee as
set forth on Exhibit C hereto.

     14.2 Additional  Land. At any time during the Term of this Lease (including
Extension Options, if opted), and upon waiver of the Termination Right set forth
in Paragraph  14.1,  Tenant shall have the right to require  Landlord to use its
best efforts to acquire the land  described  upon Exhibit F attached  hereto and
made a part hereof (the "Land  Option"),  consisting of  approximately  one-half
(1/2) acre (the "Excess Land").  The Land Option shall be exercised by Tenant by
providing  written  notice  to  Landlord  of the  exercise  of  such  option  in
accordance  with Section 15.4 hereof,  and within said notice,  Tenant shall set
forth the terms and  conditions  acceptable to Tenant upon which  Landlord shall
use its best efforts to commence negotiations with the owner of the Excess Land,
including,  but  not  limited  to,  purchase  price,  closing  costs,  financing
alternatives,  closing date, etc. Within fifteen (15) days of receipt of notice,
                                      -22-
<PAGE>                            
Landlord shall commence  negotiations with the owner of the subject property, in
conjunction with a representative of Tenant.

     At any time during the course of negotiations  for the Excess Land,  Tenant
shall have the right,  but not the  obligation,  to  withdraw  its  exercise  of
option,  should Tenant, in Tenant's sole discretion,  determine that continuance
of the negotiations would not result in an acceptable closing of the purchase of
the  Excess  Land.  In such  event,  Tenant  shall  reimburse  Landlord  for any
reasonable  expenses actually incurred.  Such withdrawal of Tenant's exercise of
this Land Option shall not prejudice Tenant's right to exercise this Land Option
again at a later  date.  Landlord  shall  not  execute  any  purchase  agreement
regarding the Excess Land unless Tenant has approved such purchase  agreement in
writing or unless such purchase agreement is expressly  contingent upon Tenant's
written approval thereof. In addition, Landlord shall not modify or waive any of
the terms,  conditions  or  contingencies  contained in such  approved  purchase
agreement without the express written consent of Tenant.

     Notwithstanding  any other term or  conditions  as  contained  within  this
Section 14, in the event Landlord and the owner of the Excess Land are unable to
reach an agreement relative to purchase of the Excess Land within six (6) months
of the date of notice of Tenant's exercise of option, Tenant's Land Option shall
expire,  and Landlord  shall have no further  obligation  to  negotiate  for the
purchase of the Excess Land.

     If  Landlord  is  successful  in the  acquisition  of the  Excess  Land  in
accordance  with the  terms  of the  purchase  agreement  with  respect  thereto
approved by Tenant,  the rent to be paid by Tenant shall be determined by taking
100% of the actual costs of acquisition of the Excess Land,  plus reasonable and
directly  applicable soft costs, i.e.,  subdivision fees,  attorney fees, survey
and engineering  costs,  broker's fees,  etc. (the "Excess Land Cost"),  plus an
overhead fee of fifteen  percent (15%) of the Excess Land Cost, and applying the
loan constant equal to the Interest Rate fixed as of the date of the acquisition
of the Excess Land amortized over a period of twenty-five (25) years.

     Upon  acquisition of the Excess Land,  Landlord and Tenant shall enter into
an amendment to this Lease setting forth the  commencement  date relative to the
addition  of the Excess  Land to the  definition  of the Land,  the  increase of
monthly rental,  and any other applicable terms and conditions.  Upon adding the
Excess Land to the definition of the Land, the Term of this Lease shall be for a
period of not less than ten (10) years.  
                                      
     For example,  should the Excess Land be acquired  during the fourth year of
the initial Term,  Tenant would have to exercise its first  Extension  Option so
that upon acquisition of the Excess Land, the Term of the Lease would be 
                                      -23-
<PAGE>
greater
than ten (10) years. If, after exercising the first or second Extension  Option,
the Term of the Lease is less than ten (10)  years,  the Term shall be  adjusted
within the  amendment to provide for an ending date on the last day of the month
in which the tenth  anniversary of the delivery of possession of the Excess Land
occurs.

     14.3  Expansion  of  Building.  At any time  during  the Term of this Lease
(including  Extension  Options,  if opted),  and upon waiver of the  Termination
Right set forth in  Paragraph  14.1,  Tenant  shall  have the  option to require
Landlord to expand the  Building  upon the Land (the  "Expansion  Option"),  the
construction  of which  expansion  shall be at Landlord's  sole cost and expense
(the  "Expansion  Space").  Landlord's  obligation to build the Expansion  Space
shall  be  limited  to  building  and  delivering  a  completed  building  shell
(including  heating,  ventilation,  air conditioning,  electrical,  plumbing and
other  building  systems,  stairwells  and  elevators  if  applicable,  and  the
structural  components).   All  costs  for  tenant  improvements  shall  be  the
responsibility of Tenant.  The Expansion Space shall be located upon the Land in
a manner substantially as shown on the attached drawing identified as Exhibit G.
In the event that Tenant  determines  that it wishes to exercise  its  Expansion
Option herein, it shall so notify Landlord pursuant to the provisions of Section
15.4 hereof.  Landlord shall promptly prepare for Tenant's approval  preliminary
plans and specifications for the Expansion Space, the consent to which shall not
be  unreasonably  withheld.  Construction  shall commence not later than one (1)
month after final  approval of the working  drawings for the Expansion  Space by
both Landlord and Tenant.

     In the event that Tenant exercises its Expansion Option as set forth above,
the  leasing  arrangements  for the  Expansion  Space  as  constructed  shall be
according  to the terms and  conditions  of this Lease and the  Expansion  Space
shall become a part of the  Building  hereunder,  with all terms and  conditions
hereof  remaining the same,  except for rent which,  with regard to the original
Building,  shall remain as provided in Paragraphs 3.2 and 4.1 of this Lease and,
with  regard  to the  Expansion  Space,  shall  be  determined  pursuant  to the
provisions set forth
below.

     Upon  substantial  completion of the Expansion  Space,  Landlord and Tenant
shall enter into an amendment to this Lease setting forth the commencement  date
relative to the Expansion Space,  monthly rental, and any other applicable terms
and conditions.  Rent for the Expansion Space shall commence upon the earlier of
(1) the date Tenant occupies the Expansion Space for the conduct of its business
therein,  or (2) the date that is 30 days following the date upon which Landlord
substantially completes Landlord's work as to the Expansion Space.

     The rent to be paid for the Expansion  Space  constructed  hereunder (if so
opted by Tenant) shall be determined by taking one hundred percent 
                                      -24-
<PAGE>
(100%) of the actual cost of construction  of the Expansion  Space  (including 
the cost of any modifications  to  the existing   Premises   required  by  the  
Americans  With Disabilities Act of 1991 or other laws or regulations  relating 
to accessibility of  facilities  or  properties  for  disabled,   handicapped  
and/or  physically challenged  persons and expressly  required  because of the  
construction of the Expansion  Space),  plus  reasonable and directly  
applicable  soft costs,  i.e, construction  interest,  construction  permits,  
engineering costs,  third-party contractor's  fees,  overhead and profit,  etc.
as certified by the  architect selected for the project (the  "Expansion  Space 
Cost"),  plus a Landlord's  fee equal to fifteen  percent  (15%) of the 
Expansion  Space Cost,  and applying the loan  constant  equal to the Interest  
Rate fixed as of the date of  substantial completion of Landlord's  work  
regarding the Expansion  Space  amortized over a period of twenty-five (25) 
years.

     The Term governing the Expansion  Space shall be coterminous  with the Term
of this Lease (or Extension  Options,  if opted), and in no event shall the Term
of this Lease be less than ten (10) years.  For example,  should Tenant exercise
its Expansion  Option  during the fourth year of the initial Term,  Tenant would
have to,  simultaneously,  exercise  its first  Extension  Option so that,  upon
exercise of the  Expansion  Option,  the Term for the Lease is greater  than ten
(10) years. If, after exercising the first or second Extension Option,  the Term
of the Lease is less than ten (10)  years,  the Term  shall be  adjusted  in the
amendment  to provide  for an ending  date on the last day of the month in which
the tenth  anniversary  of the delivery of  possession  of the  Expansion  Space
occurs.

     The foregoing notwithstanding,  Landlord shall not commence construction of
the Expansion Space unless and until:

     (1) Tenant shall have approved final plans and specifications  with respect
thereto.  

     (2) Landlord  and Tenant shall have agreed to an Expansion  Space Cost cap,
fixing  a   guaranteed   maximum   Expansion   Space  Cost,   subject   only  to
Tenant-approved  change orders,  for purposes of calculating  the rental payable
with respect to the Expansion Space.

     (3) Landlord and Tenant shall have agreed to a deadline for the substantial
completion  of the  Expansion  Space,  subject only to  Tenant-caused  delays or
Excusable Delays.

     Landlord  will  perform  all of the work  required  by the final  plans and
specifications  in a good  and  workerlike  manner,  using  
                                      -25-
<PAGE>
new and  first-class materials,  in  accordance  with all  applicable  building
and zoning codes and regulations and other applicable laws.

     At or prior to the delivery of possession of the Expansion Space to Tenant,
Landlord will provide to Tenant a certificate of Landlord's architect certifying
completion of the  Expansion  Space  pursuant to this Section (the  "Architect's
Certificate")  and a certificate of occupancy by the City of Coon Rapids for the
Expansion Space.

     Tenant  may submit to  Landlord  at any time and from time to time prior to
the date  ninety  (90) days after  taking  occupancy  of the  Expansion  Space a
punchlist of uncompleted  or defective  items in the Expansion  Space.  Landlord
agrees to correct all such  uncompleted or defective  items,  at Landlord's sole
expense, as soon as reasonably  possible,  but in no event more than thirty (30)
days  after  receipt  of notice  from  Tenant.  Notwithstanding  the  foregoing,
Landlord will, at Landlord's  sole expense,  correct any latent defect  promptly
after Tenant notifies  Landlord of any latent defect.  Tenant will not be deemed
to  waive  any  rights  Tenant  may  have  against   Landlord  under  Landlord's
warranties,  as provided  below,  by taking  possession of the Expansion  Space.
Landlord  warrants all  construction  work related to the Expansion  Space to be
free of defects in both design and construction.  Tenant will have no obligation
to pay or reimburse  Landlord for any costs  related to any defect  described in
the preceding  sentence.  Landlord agrees to diligently pursue any claims it may
have under any warranties or otherwise with respect to design or construction of
or labor or  materials  supplied  to the  Expansion  Space.  Landlord  agrees to
provide Tenant with copies of all warranties and  maintenance  information  from
manufacturers with respect to the components of the Expansion Space and all shop
drawings used in constructing the Expansion Space.  Following  completion of the
work, Landlord also agrees to provide Tenant with an "as built" set of plans and
specifications for the Expansion Space.


ARTICLE XV.

MISCELLANEOUS

     15.1. Waiver of Lease Provisions.  No waiver of any provision of this Lease
will be  deemed  a waiver  of any  other  provision  or a  waiver  of that  same
provision  on a  subsequent  occasion.  The  receipt  of rent by  Landlord  with
knowledge of a default under this Lease by Tenant will not be deemed a waiver of
the default.  Landlord  will not be deemed to have waived any  provision of this
Lease unless it is done by express written agreement of Landlord. Any payment by
                                      -26-
<PAGE>
Tenant and acceptance by Landlord of a lesser amount than the full amount of all
rent then due will be  applied  to the  earliest  rent due.  No  endorsement  or
statement  on any check or letter for  payment of rent or other  amount  will be
deemed an accord and satisfaction, and Landlord may accept such check or payment
without  prejudice  to its right to  recover  the  balance  of any rent or other
payment or to pursue any other remedy provided in this Lease.

     15.2.  Surrender.  On expiration of the Term or sooner  termination of this
Lease, Tenant will return possession of the Premises to Landlord, without notice
from Landlord, in good order and condition, except for ordinary wear and damage,
Casualty or conditions  Tenant is not required to remedy under this Lease.  Upon
such surrender,  Tenant shall  remove from the  Premises all moveable  personal
property  of Tenant and shall be entitled to remove,  at  Tenant's  option,  all
other equipment,  trade fixtures and other installations  placed or installed in
the Premises by Tenant,  including,  without limitation,  all trade fixtures and
equipment  relating to Tenant's  "clean rooms".  Notwithstanding  the foregoing,
upon  surrender  Tenant  shall  restore  the  Premises  to a clean,  orderly and
tenantable condition.

     15.3.  Holding Over. If Tenant  remains in possession of the Premises after
expiration  of the Term without a new lease,  it may do so only with the consent
of Landlord,  and any such holding over will be from month-to-month,  subject to
all the same provisions of this Lease,  except that the rental rate will be 125%
of the then Monthly Net Rent. The month-to-month  occupancy may be terminated by
Landlord  or  Tenant  on the  last day of any  month  by at least 30 days  prior
written notice to the other.

     15.4. Notices.  Any notice under this Lease will be in writing, and will be
sent by prepaid  certified mail or reputable  overnight  courier or by facsimile
confirmed by certified mail or reputable overnight courier,  addressed to Tenant
at the Address of Tenant, and to Landlord at the Address of Landlord, or to such
other address as is designated in a notice given under this Section 15.4,  which
change of address  will be  effective 10 days after the giving of notice of such
change.  A notice will be deemed given on the date of first  attempted  delivery
(if sent by certified  mail or overnight  courier) or upon  completed  facsimile
transmission to the proper fax number.  Routine  mailings by either party may be
sent by regular mail.

     15.5. Governing Law. This Lease will be construed under and governed by the
laws of state of  Minnesota.  If any  provision  of this  Lease  is  illegal  or
unenforceable,  it will be  severable  and all other  provisions  will remain in
force as though the severable provision had never been included.
                                      -27-
<PAGE>

     15.6.  Entire  Agreement.  This Lease contains the entire agreement between
Landlord and Tenant  regarding the Premises.  This Lease may be modified only by
an  agreement  in writing  signed by Landlord  and Tenant.  No  surrender of the
Premises,  or of the  remainder of the Term,  will be valid  unless  accepted by
Landlord in writing. This Lease was thoroughly negotiated by Landlord and Tenant
and no inference will be drawn based on which party drafted the original version
of this Lease.

     15.7.  Successors and Assigns. All provisions of this Lease will be binding
on and for the benefit of the  successors  and  assigns of Landlord  and Tenant,
except that no person or entity  holding under or through Tenant in violation of
any provision of this Lease will have any right or interest in this Lease or the
Premises.

     15.8.  Consent Not  Unreasonably  Withheld.  Landlord and Tenant agree that
whenever under this Lease provision is made for securing the consent or approval
of the other,  such  consent or approval  will not be  unreasonably  withheld or
delayed. If either party believes the other has unreasonably withheld or delayed
its  consent  or  approval,  an action  for  declaratory  judgment  or  specific
performance  will be the sole right and remedy in any  dispute as to whether the
other has breached such obligation.

     15.9.  Short Form  Lease.  Upon the  request of either  Landlord or Tenant,
Landlord  and Tenant will enter into a Short Form  Lease,  in  recordable  form,
which will set forth the parties to this Lease,  the Premises,  the Initial Term
and the Extension  Options,  but will incorporate the balance of this Lease only
by reference. Either party, at its cost, may record such a Short Form Lease.

     15.10.  Attorneys'  Fees. In any dispute between  Landlord and Tenant,  the
reasonable  attorneys'  fees  of  the  prevailing  party  will  be  paid  by the
non-prevailing party.

     15.11.  Security  Deposit.  Tenant shall deposit with Landlord on or before
the Rent  Commencement  Date,  and shall  maintain  through the date that is the
fifth  anniversary of the Rent  Commencement  Date, an irrevocable,  assignable,
non-documentary  standby  letter  of  credit in form  reasonably  acceptable  to
Landlord and issued by a financial institution reasonably acceptable to Landlord
in the amount of Twenty Thousand Dollars ($20,000), as security for the faithful
performance  by Tenant  of every  term and  condition  of this  Lease,  it being
expressly  understood  and agreed that  Tenant may not direct  Landlord to apply
said  security in payment of rent for any month during the Term.  If there shall
be a breach or default by Tenant in  respect  of any term or  condition  of this
Lease, Landlord may draw upon all or any part of the letter of credit to perform
the same for the account of Tenant, or for any
                                      -28-
<PAGE>
damages,  whether such damages or
default  accrue  before or after  summary  proceedings  or re-entry by Landlord.
Landlord  shall not be required so to use, apply or retain the whole or any part
of said security nor shall the provisions  herein contained limit the rights and
remedies of  Landlord  under this Lease.  If Tenant  shall fully and  faithfully
comply  with  all  of the  provisions  of  this  lease,  then,  upon  the  fifth
anniversary of the Rent  Commencement  Date,  said security shall be returned to
Tenant. In the event of any sale,  transfer or assignment of Landlord's interest
under  this  Lease,  Landlord  may  transfer  or  assign  said  security  to the
transferee,  and Landlord  thereupon  shall be released from all liability  with
respect to said security.  Without affecting the  non-documentary  status of the
letter of credit and without involving the issuer of the letter of credit in any
matters  affecting  this  Lease,  Landlord  shall not  present a draft under the
letter of credit for payment  unless (1) a default  exists on the part of Tenant
beyond any applicable  notice and cure period  provided in this Lease or (2) the
letter is scheduled to expire before the time specified  above for the return of
the security to Tenant, and at least 20 days before the expiration of the letter
of credit a renewal  letter of credit shall not have been delivered to Landlord.
Tenant  agrees to keep  renewing the letter of credit  until the time  specified
above for the return of the security to Tenant,  without any need on the part of
Landlord  to give  Tenant any notice  that it is in  default in  supplying  that
renewal,  any  provision  of this Lease as to notice of default to Tenant to the
contrary notwithstanding. The issuer of the letter of credit has no interest in,
or concern with,  this Lease or the  performance  under it by either party.  The
issuer's sole obligation is to honor a sight draft timely drawn and presented.


     Landlord and Tenant have executed this Lease to be effective as of the date
stated in the first paragraph of this Lease.


                              Landlord:

                              9055 BUILDING, L.L.P.


                              By    /S/ Al Hamel
                                
                              Its Partner



                             Tenant:


                             POSSIS MEDICAL INC.

                             By /S/ Robert J. Scott

                             Its Vice President of Manufacturing Operations

                                      -29-
<PAGE>
EXHIBIT A

Legal Description
                                      -30-
<PAGE>
EXHIBIT B

Site Diagram of the Premises
                                      -31-
<PAGE>
EXHIBIT C

Termination Fee Schedule
                                      -32-
<PAGE>
EXHIBIT D



Arbitration Procedures


     The  parties  to this  Lease  will  initially  attempt  to  agree  upon the
determination  of Fair Market Value or Fair Market Rent,  as the case may be. If
they have been unable to so agree  within the period  that they are  required to
agree as to such matter under the Lease,  if any,  then either party may request
by written notice to the other party ("Arbitration  Request") that the matter be
determined by an  arbitration  board  consisting of three  reputable real estate
appraisers or professionals  who are recognized  experts regarding the valuation
issues in question and  regarding  similar  commercial  properties  in the north
suburban  Minneapolis  area. One arbitrator will be appointed by each party, and
each such arbitrator will have no material  financial or other business interest
in common with the party selecting such arbitrator.  If a party fails to appoint
an  arbitrator  and notify the other  party of such  appointment  within 30 days
after the Arbitration Request is made, then the arbitrator that was appointed by
such other party within such 30-day period will be the sole  arbitrator.  If two
arbitrators are properly  appointed and such first two arbitrators are unable to
agree on a third  arbitrator  within 30 days after the appointment of the second
arbitrator,  then such third arbitrator will be appointed by the presiding judge
of the Court, or by any person to whom such presiding  judge formally  delegates
the matter, or, if such methods of appointment fail, by the American Arbitration
Association.

     In the  case of  arbitration  conducted  by a sole  arbitrator,  such  sole
arbitrator will render his or her determination of the Fair Market Value or Fair
Market  Rent to the  parties by the 60th day after the  Arbitration  Request was
made. If the arbitration is conducted by three arbitrators, each arbitrator will
submit his or her determination(s) of Fair Market Value or Fair Market Rent in a
sealed  envelope by the 30th day following  appointment of the last  arbitrator,
and any determinations not submitted by such time shall be disregarded.  In such
case, the parties will meet on such 30th day (or if it is not a business day, on
the first business day  thereafter) at 11:00 a.m. at the office of Landlord,  or
such other  place as the  parties  may agree,  and  simultaneously  deliver  the
determinations.  If the  determinations  of at least two of the  arbitrators are
identical in amount, such amount will be deemed the decision of the arbitrators.
If the  determination  of the three  arbitrators  are  different in amount,  the
decision  as to Fair  Market  Value or Fair  Market  Rent will be  independently
determined as follows:

     (a) If neither the highest nor lowest determination differs from the middle
determination by more than 10% of such middle  determination,  then the decision
will be deemed to be the average of the three determinations; and
                                      -33-
<PAGE>
     (b) If clause (a) does not apply,  then the  decision  will be deemed to be
the average of the middle determination and the determination  closest in amount
to such middle determination.

     The decision of the  arbitrators,  determined  as above set forth,  will be
final and non-appealable. The fees and expenses of the arbitrator or arbitrators
will be shared equally by Landlord and Tenant. The costs of all counsel, experts
and other representatives that are retained by a party will be paid by
such party.

     During the period of time that any arbitration is pending under this Lease,
the  parties to this  Lease will  continue  to comply  with all those  terms and
provisions that are not the subject of the arbitration.

     "Fair  Market  Value"  means the cash  price  that a seller of the  subject
property,  being willing but under no  compulsion  to sell the  property,  would
receive  from a buyer  of the  subject  property,  being  willing  but  under no
compulsion to buy the property,  taking into  consideration the condition of the
property,  the  then  current  conditions  in  the  marketplace  for  comparable
transactions,  and the impact of zoning and approval  requirements of applicable
governmental authorities with jurisdiction.

     "Fair Market Rent" means the then  prevailing  fair market  rental rate for
the premises in question  with  respect to the time period in  question,  taking
into account all pertinent  factors,  including but not limited to the terms and
conditions  of this  Lease  exclusive  of the  rental  rate,  the then  existing
condition  of the  premises  in  question,  the  presence  or  absence of tenant
inducements and/or allowances  typically provided in the relevant market area at
the time for comparable space in comparable buildings, and assuming the Landlord
to be a prudent person willing to lease, but being under no compulsion to do so,
and assuming the Tenant to be a prudent person willing to lease, but being under
no compulsion to do so.
                                      -34-
<PAGE>

EXHIBIT E

Landlord's Sign

     Landlord may install one exterior  identifying  sign on the upper southwest
corner of the Building  consisting of 24 inch block  lettering as follows:  MMEC
III.
                                      -35-
<PAGE>

EXHIBIT F

Excess Land
-35-
<PAGE>

EXHIBIT G

Expansion Space