Document:

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                        EXECUTIVE STOCK OPTION AGREEMENT

     THIS AGREEMENT ("Agreement") is entered into and effective as of November
22, 1999, by and between LSC, Incorporated (the "Company") and J. B. Balogh (the
"Employee").

     A.   The Employee is employed by the Company as President and Chief
Executive Officer.

     B.   The Company desires to give the Employee an inducement to acquire a
proprietary interest in the Company and an added incentive to advance the
interests of the Company by granting to the Employee an option to purchase
shares of common stock of the Company pursuant to this Agreement.

     Accordingly, the parties agree as follows:

1.   DEFINITIONS.

     The following terms will have the meanings set forth below, unless the
context clearly otherwise requires:

     1.1  "BOARD" means the Board of Directors of the Company.

     1.2  "BROKER EXERCISE NOTICE" means a written notice pursuant to which the
Employee, upon exercise of the Option, irrevocably instructs a broker or dealer
to sell a sufficient number of shares or loan a sufficient amount of money to
pay all or a portion of the exercise price of the Option and/or any related
withholding tax obligations and remit such sums to the Company and directs the
Company to deliver stock certificates to be issued upon such exercise directly
to such broker or dealer.

     1.3  "CHANGE IN CONTROL" means an event described in Section 4.1 of this
Agreement.

     1.4  "CODE" means the Internal Revenue Code of 1986, as amended.

     1.5  "COMMON STOCK" means the common stock of the Company, $.01 par value.

     1.6  "DISABILITY" means the disability of the Employee such as would
entitle the Employee to receive disability income benefits pursuant to the
long-term disability plan of the Company or Subsidiary then covering the
Employee or, if no such plan exists or is applicable to the Employee, the
permanent and total disability of the Employee within the meaning of Section
22(e)(3) of the Code.

     1.7  "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.

     1.8  "FAIR MARKET VALUE" means, with respect to the Common Stock, as of any
date (or, if no shares were traded or quoted on such date, as of the next
preceding date on which there was such a trade or quote) (a) the closing sale
price of the Common Stock if the Common Stock

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is listed, admitted to unlisted trading privileges or reported on any foreign or
national securities exchange or on the Nasdaq National Market or an equivalent
foreign market on which sale prices are reported; (b) if the Common Stock is not
so listed, admitted to unlisted trading privileges or reported, the closing bid
price as reported by the Nasdaq SmallCap Market, OTC Bulletin Board or the
National Quotation Bureau, Inc. or other comparable service; or (c) if the
Common Stock is not so listed or reported, such price as the Committee
determines in good faith in the exercise of its reasonable discretion.

     1.9  "OPTION" means the right to purchase Common Stock granted to the
Employee pursuant to Section 2 of this Agreement, which is not intended to
qualify as an "incentive stock option" within the meaning of Section 422 of the
Code.

     1.10 "PREVIOUSLY ACQUIRED SHARES" means shares of Common Stock that are
already owned by the Employee or, with respect to the Option, that are to be
issued upon the exercise of the Option.

     1.11 "RETIREMENT" means termination of employment or service pursuant to
and in accordance with the regular (or, if approved by the Board for purposes of
this Agreement, early) retirement/pension plan or practice of the Company or
Subsidiary then covering the Employee, provided that if the Employee is not
covered by any such plan or practice, the Employee will be deemed to be covered
by the Company's plan or practice for purposes of this determination.

     1.12 "SECURITIES ACT" means the Securities Act of 1933, as amended.

     1.13 "SUBSIDIARY" means any entity that is directly or indirectly
controlled by the Company or any entity in which the Company has a significant
equity interest, as determined by the Board.

2.   GRANT OF OPTION.

     2.1  TERMS OF OPTION. The Company hereby grants the Employee the Option to
purchase Two Hundred Thousand (200,000) shares of Common Stock according to the
terms and subject to the conditions set forth in this Agreement. The Option
shall be immediately exercisable with respect to 100,000 shares at an exercise
price of $2.50 per share and will become exercisable with respect to the
remaining 100,000 shares in two (2) installments. The following table sets forth
the initial dates of exercisability of each subsequent installment, the number
of shares as to which the Option will become exercisable on such dates and the
exercise price for each such installment:

<TABLE>
<CAPTION>

                  Initial Date of                    Number of Shares                    Exercise
                  Exercisability                     Available for Exercise              Price
                  ------------------------------------------------------------------------------

               <S>                                   <C>                                 <C>
               November 22, 2000                          50,000                         $2.50
               November 22, 2001                          50,000                         $2.50

</TABLE>

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     The foregoing rights to exercise the Option will be cumulative with respect
to the shares becoming exercisable on each such date, but in no event will this
Option be exercisable after, and the Option will become void and expire as to
all unexercised shares at, 5:00 p.m. (Minneapolis, Minnesota time) on November
22, 2009 (the "Time of Termination").

     2.2  NOTICE. The Option may be exercised by the Employee in whole or in
part from time to time, subject to the conditions contained in this Agreement,
by delivery in person, by facsimile or electronic transmission or through the
mail of written notice of exercise to the Company at its principal executive
office in Eden Prairie, Minnesota (Attention: Chief Financial Officer) of a
written notice of exercise. Such notice must be in a form satisfactory to the
Board, must identify the Option, must specify the number of shares of Common
Stock with respect to which the Option is being exercised, and must be signed by
the person or persons so exercising the Option. Such notice must be accompanied
by payment in full of the total purchase price of the shares being purchased. In
the event that the Option is being exercised, as provided by Section 3.1, by any
person or persons other than the Employee, the notice must be accompanied by
appropriate proof of right of such person or persons to exercise the Option. As
soon as practicable after the effective exercise of the Option, the Employee
will be recorded on the stock transfer books of the Company as the owner of the
shares purchased, and the Company will deliver to the Employee one or more duly
issued stock certificates evidencing such ownership.

     2.3  PAYMENT. The total purchase price of the shares to be purchased upon
exercise of the Option shall be paid entirely in cash (including check, bank
draft or money order), by tender of a Broker Exercise Notice, or by delivery to
the Company of unencumbered Previously Acquired Shares having an aggregate Fair
Market Value on the date of exercise equal to the purchase price, or by a
combination of such methods; provided, however, that no portion of the exercise
price may be paid with Previously Acquired Shares if such payment would cause
the Company to incur compensation expense for financial accounting purposes
under generally accepted accounting principles.

3.   TERMINATION OF EMPLOYMENT OR OTHER SERVICE.

     3.1  TERMINATION DUE TO DEATH, DISABILITY OR RETIREMENT. If the Employee's
employment or other service with the Company and all Subsidiaries is terminated
by reason of death, Disability or Retirement, the Option will become immediately
exercisable in full and remain exercisable for a period of one year after such
termination (but in no event after the Time of Termination).

     3.2  TERMINATION FOR REASONS OTHER THAN DEATH, DISABILITY OR RETIREMENT. If
the Employee's employment or other service is terminated with the Company and
all Subsidiaries for any reason other than death, Disability or Retirement, or
the Employee is in the employ or service of a Subsidiary and the Subsidiary
ceases to be a Subsidiary of the Company (unless the Employee continues in the
employ or service of the Company or another Subsidiary), all rights of the
Employee under this Agreement will immediately terminate without notice of any
kind, and the Option will no longer be exercisable; provided, however, that if
such termination is due to any reason other than termination by the Company or
any Subsidiary for "cause," the Option

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will remain exercisable, to the extent exercisable as of such termination, for a
period of three months after such termination (but in no event after the Time of
Termination). For purposes of this Section 3.2, "cause" will mean (i)
dishonesty, fraud, misrepresentation, embezzlement or deliberate injury or
attempted injury, in each case related to the Company or any Subsidiary, (ii)
any unlawful or criminal activity of a serious nature, (iii) any intentional and
deliberate breach of a duty or duties that, individually or in the aggregate,
are material in relation to the Employee's overall duties, or (iv) any material
breach of any employment, service, confidentiality or non-compete agreement
entered into with the Company or any Subsidiary.

     3.3  BREACH OF CONFIDENTIALITY OR NON-COMPETE AGREEMENTS. Notwithstanding
anything in this Agreement to the contrary, in the event that the Employee
materially breaches the terms of any confidentiality or non-compete agreement
entered into with the Company or any Subsidiary, whether such breach occurs
before or after termination of the Employee's employment or other service with
the Company or any Subsidiary, the Board in its sole discretion may immediately
terminate all rights of the Employee under this Agreement without notice of any
kind.

     3.4  DATE OF TERMINATION OF EMPLOYMENT OR OTHER SERVICE. Unless the Board
otherwise determines in its sole discretion, the Employee's employment or other
service will, for purposes of this Agreement, be deemed to have terminated on
the date recorded on the personnel or other records of the Company or the
Subsidiary for which the Employee provides employment or other service, as
determined by the Board in its sole discretion based upon such records.

4.   CHANGE IN CONTROL.

     4.1  CHANGE IN CONTROL. For purposes of this Section 4, a "Change in
Control" of the Company will mean the following:

          (a) The acquisition by any individual, entity or group (within the
     meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a "Person")
     of beneficial ownership (within the meaning of Rule 13d-3 promulgated under
     the Exchange Act) of 50% or more of the combined voting power of the
     then-outstanding voting securities of the Company entitled to vote
     generally in the election of directors; provided, however, that for
     purposes of this Section 4.1(a), the following acquisitions shall not
     constitute a Change of Control: (i) any acquisition directly from the
     Company, (ii) any acquisition by the Company, (iii) any acquisition by any
     employee benefit plan (or related trust) sponsored or maintained by the
     Company or any corporation controlled by the Company, or (iv) any
     acquisition by any corporation pursuant to a transaction which complies
     with clauses (i), (ii) and (iii) of Section 4.1(c); or

          (b) The Incumbent Directors cease for any reason to constitute at
     least a majority of the Board; or

          (c) Consummation of a reorganization, merger or consolidation or sale
     or other disposition of all or substantially all of the assets of the
     Company (a "Business Combination"), in each case, unless, following such
     Business Combination, (i) all or

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     substantially all of the individuals and entities who were the beneficial
     owners of the combined voting power of the then-outstanding voting
     securities of the Company entitled to vote generally in the election of
     directors immediately prior to such Business Combination beneficially own,
     directly or indirectly, more than 50% of the then-outstanding combined
     voting power of the then-outstanding voting securities entitled to vote
     generally in the election of directors of the corporation resulting from
     such Business Combination (including, without limitation, a corporation
     which as a result of such transaction owns the Company or all or
     substantially all of the Company's assets either directly or through one or
     more subsidiaries) in substantially the same proportions as their
     ownership, immediately prior to such Business Combination, of the combined
     voting power of the then-outstanding voting securities entitled to vote
     generally in the election of directors, (ii) no Person (excluding any
     corporation resulting from such Business Combination or any employee
     benefit plan (or related trust) of the Company or such corporation
     resulting from such Business Combination) beneficially owns, directly or
     indirectly, 50% or more of the combined voting power of the
     then-outstanding voting securities entitled to vote generally in the
     election of directors of such corporation, except to the extent that such
     ownership existed prior to the Business Combination and (iii) at least a
     majority of the members of the board of directors of the corporation
     resulting from such Business Combination were Incumbent Directors at the
     time of the execution of the initial agreement, or of the action of the
     Board, providing for such Business Combination; or

          (d) Approval by the shareholders of the Company of a complete
     liquidation or dissolution of the Company.

     4.2  INCUMBENT DIRECTORS. For purposes of this Section 4, Incumbent
Directors will mean any individuals who are members of the Board on the
effective date of this Agreement and any individual becoming a director
subsequent to the date hereof whose election, or nomination for election by the
Company's shareholders, was approved by a vote of at least a majority of the
Incumbent Directors shall be considered as though such individual was an
Incumbent Director, but excluding, for this purpose, any such individual whose
initial assumption of office occurs as a result of an actual or threatened
election contest with respect to the election or removal of directors or other
actual or threatened solicitation of proxies or consents by or on behalf of a
Person other than the Board.

     4.3  ACCELERATION OF EXERCISABILITY. If a Change in Control of the Company
occurs, then the Option will become immediately exercisable in full and will
remain exercisable for the remainder of its term, regardless of whether the
Employee remains in the employ or service of the Company or any Subsidiary.

     4.4  GROSS-UP PAYMENTS. In the event it shall be determined that any
payment or distribution by the Company to or for the benefit of the Executive,
including the acceleration of vesting of the Option or the issuance of shares
upon its exercise, (whether pursuant to the terms of this Agreement or
otherwise, but determined without regard to any additional payments required
under this Section 4.4) (a "Payment") would be subject to the excise tax imposed
by

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Section 4999 of the Code or any interest or penalties are incurred by the
Employee with respect to such excise tax (such excise tax, together with any
such interest and penalties, are hereinafter collectively referred to as the
"Excise Tax"), then the Employee shall be entitled to receive an additional
payment (a "Gross-Up Payment") in an amount such that after payment by the
Employee of all taxes (including any interest or penalties imposed with respect
to such taxes), including, without limitation, any income taxes (and any
interest and penalties imposed with respect thereto) and Excise Tax imposed upon
the Gross-Up Payment, the Employee retains an amount of the Gross-Up Payment
equal to the Excise Tax imposed upon the Payments. All determinations required
to be made under this Section 4.4, including whether and when a Gross-Up Payment
is required and the amount of such Gross-Up Payment and the assumptions to be
utilized in arriving at such determination, shall be made by a nationally
recognized certified public accounting firm as may be designated by the Employee
(the "Accounting Firm") which shall provide detailed supporting calculations
both to the Company and the Employee within 30 business days of the receipt of
notice from the Employee that there has been a Payment, or such earlier time as
is requested by the Company or the Employee. In the event that the Accounting
Firm is serving as accountant or auditor for the individual, entity or group
effecting the Change of Control, the Employee may appoint another nationally
recognized accounting firm to make the determinations required hereunder (which
accounting firm shall then be referred to as the Accounting Firm hereunder). All
fees and expenses of the Accounting Firm shall be borne solely by the Company.
Any Gross-Up Payment, as determined pursuant to this Section 4.4, shall be paid
by the Company to the Employee within ten days of the receipt of the Accounting
Firm's determination. Any determination by the Accounting Firm shall be binding
upon the Company and the Employee. As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the initial determination
by the Accounting Firm hereunder, it is possible that Gross-Up Payments which
will not have been made by the Company should have been made ("Underpayment"),
consistent with the calculations required to be made hereunder. In the event
that the Employee thereafter is required to make a payment of any Excise Tax,
the Accounting Firm shall determine the amount of the Underpayment that has
occurred and any such Underpayment shall be promptly paid by the Company to or
for the benefit of the Employee.

5.   RIGHTS OF EMPLOYEE; TRANSFERABILITY.

     5.1  EMPLOYMENT OR SERVICE. Nothing in this Agreement will interfere with
or limit in any way the right of the Company or any Subsidiary to terminate the
employment or service of the Employee at any time, nor confer upon the Employee
any right to continue in the employ or service of the Company or any Subsidiary.

     5.2  RIGHTS AS A SHAREHOLDER. As a holder of the Option, the Employee will
have no rights as a shareholder unless and until the Option is exercised for, or
paid in the form of, shares of Common Stock and the Employee becomes the holder
of record of such shares. Except as otherwise provided in this Agreement, no
adjustment will be made for dividends or distributions with respect to the
Option as to which there is a record date preceding the date the Employee
becomes the holder of record of such shares, except as the Board may determine
in its discretion.

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     5.3  RESTRICTIONS ON TRANSFER. Except pursuant to testamentary will or the
laws of descent and distribution or as otherwise expressly permitted by this
Agreement, unless approved by the Board in its sole discretion, no right or
interest of the Employee in the Option prior to the exercise of such Option will
be assignable or transferable, or subjected to any lien, during the lifetime of
the Employee, either voluntarily or involuntarily, directly or indirectly, by
operation of law or otherwise. The Employee will, however, be entitled to
designate a beneficiary to receive the Option upon the Employee's death, and in
the event of the Employee's death, payment of any amounts due under this
Agreement will be made to, and exercise of the Option (to the extent permitted
pursuant to Section 3.1) may be made by, the Employee's legal representatives,
heirs and legatees.

6.   PAYMENT OF WITHHOLDING TAXES.

     The Company is entitled to (a) withhold and deduct from future wages of the
Employee (or from other amounts that may be due and owing to the Employee from
the Company), or make other arrangements for the collection of, all legally
required amounts necessary to satisfy any federal, state or local withholding
and employment-related tax requirements attributable to the Option, including,
without limitation, the grant or exercise of the Option, or (b) require the
Employee promptly to remit the amount of such withholding to the Company before
acting on the Employee's notice of exercise of the Option. In the event that the
Company is unable to withhold such amounts, for whatever reason, the Employee
agrees to pay to the Company an amount equal to the amount the Company would
otherwise be required to withhold under federal, state or local law.

7.   ADJUSTMENTS.

     In the event of any reorganization, merger, consolidation,
recapitalization, liquidation, reclassification, stock dividend, stock split,
combination of shares, rights offering, divestiture or extraordinary dividend
(including a spin-off), or any other change in the corporate structure or shares
of the Company, the Board (or, if the Company is not the surviving corporation
in any such transaction, the board of directors of the surviving corporation),
in order to prevent dilution or enlargement of the rights of the Employee, will
make appropriate adjustment (which determination will be conclusive) as to the
number and kind of securities or other property (including cash) subject to, and
the exercise price of, the Option.

8.   SECURITIES LAW AND OTHER RESTRICTIONS.

     Notwithstanding any other provision of this Agreement or any agreements
entered into pursuant to this Agreement, the Company will not be required to
issue any shares of Common Stock under this Agreement, and the Employee may not
sell, assign, transfer or otherwise dispose of shares of Common Stock issued
pursuant to the Option, unless (a) there is in effect with respect to such
shares a registration statement under the Securities Act and any applicable
state or foreign securities laws or an exemption from such registration under
the Securities Act and applicable state or foreign securities laws, and (b)
there has been obtained any other consent, approval or permit from any other
regulatory body which the Board, in its sole discretion, deems

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necessary or advisable. The Company may condition such issuance, sale or
transfer upon the receipt of any representations or agreements from the parties
involved, and the placement of any legends on certificates representing shares
of Common Stock, as may be deemed necessary or advisable by the Company in order
to comply with such securities law or other restrictions.

9.   MISCELLANEOUS.

     9.1  BINDING EFFECT. This Agreement will be binding upon the heirs,
executors, administrators and successors of the parties to this Agreement.

     9.2  GOVERNING LAW. This Agreement and all rights and obligations under
this Agreement will be construed in accordance with and governed by the laws of
the State of Minnesota, without regard to conflicts of laws provisions. Any
legal proceeding related to this Agreement will be brought in an appropriate
Minnesota court, and the parties to this Agreement consent to the exclusive
jurisdiction of the court for this purpose.

     9.3  ENTIRE AGREEMENT. This Agreement sets forth the entire agreement and
understanding of the parties to this Agreement with respect to the subject
matter hereof and supersede all prior agreements, arrangements, plans and
understandings.

     9.4  AMENDMENT AND WAIVER. This Agreement may be amended, waived, modified
or canceled only by a written instrument executed by the parties to this
Agreement or, in the case of a waiver, by the party waiving compliance.

      IN WITNESS WHEREOF, the parties to this Agreement have executed this
Agreement effective the day and year first above written.

                                LSC, INCORPORATED

                                By  /s/ Paul G. Miller
                                  --------------------
                                  Paul G. Miller
                                  Chairman, Executive Committee

                                EMPLOYEE

                                /s/ J. B. Balogh
                                ----------------------
                                J. B. Balogh

                                       8<PAGE>

                                     FORM OF
                            INDEMNIFICATION AGREEMENT

Date:  _____________

PARTIES AND ADDRESSES:

LSC, Incorporated                                          (the "Company")
1270 Eagan Industrial Road, Suite 160
Eagan, MN 55121-1231

------------------------                                   (the "Indemnitee")

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

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

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

RECITALS:

         A. The Company is concerned with the retention of qualified, competent
persons to serve as directors and officers of the Company.

         B. Indemnitee is a member of the Company's Board of Directors and or an
officer of the Company.

         C. The Company, a Minnesota corporation, desires that Indemnitee
continue to serve the Company in the capacity described above.

         D. Indemnitee is willing to continue serving the Company in the
capacity described above, subject to the provisions of this Agreement.

AGREEMENT:

In consideration of the mutual promises contained herein, and for other good and
valuable consideration, the parties agree as follows:

1. INDEMNIFICATION; ADVANCE OF EXPENSES. The Company agrees to indemnify and
hold Indemnitee harmless from and against any claims, liabilities, damages or
expenses incurred by Indemnitee in or arising out of the status, capacities and
activities of Indemnitee with respect to the Company to the maximum extent
permitted under Minnesota Statutes Section 302A.521, in accordance with the
terms, conditions and procedures set forth in this Agreement and Minnesota
Statutes Section 302A.521. The Company shall advance expenses to Indemnitee to
the maximum extent permitted under Minnesota Statutes Section 302A.521, in
accordance with the terms, conditions and procedures set forth in this

<PAGE>

Agreement and Minnesota Statutes Section 302A.521.

2.       INSURANCE.

         (a) The Company agrees to purchase and maintain, for the benefit and on
         behalf of Indemnitee, directors' and officers' liability insurance
         covering those claims and liabilities, with respect to which insurance
         is reasonably available on a cost effective basis, which may be
         asserted against, or incurred by, Indemnitee in or arising out of the
         status, capacities and activities of Indemnitee as a director and/or
         officer of the Company. This obligation to purchase insurance shall be
         in addition to the obligation of the Company to indemnify Indemnitee
         under Section 1. The decision as to whether insurance is "reasonably
         available on a cost effective basis" may be made by the Company's Board
         of Directors by majority vote of the directors present at any meeting
         at which a quorum is present.

         (b) In the event the Company is unable to, or for any reason does not
         in fact, acquire and maintain in effect the insurance required by
         Section 2(a), the Company agrees, in addition to its obligations under
         Section 1, to indemnify Indemnitee to the full extent of the coverage
         which would otherwise have been provided for the benefit of Indemnitee
         pursuant to the policy or policies of insurance provided for in Section
         2(a).

3.       NOTIFICATION AND DEFENSE OF CLAIM.

         (a) Promptly after receipt by Indemnitee, or the Company, of any notice
         or document respecting the commencement of any action, suit, proceeding
         or investigation naming or involving Indemnitee and relating to any
         matter concerning which Indemnitee may be entitled to indemnification
         or advancement of expenses pursuant to this Agreement, the party
         receiving same will notify the other of the receipt of same, but the
         omission on the part of Indemnitee to so notify the Company will not
         relieve the Company from any obligation or liability which it may have
         to Indemnitee under this Agreement or otherwise.

         (b) With respect to any action, suit or proceeding:

                  (i) The Company will be entitled to participate therein at
                  the Company's own expense.

                  (ii) Except as otherwise provided below, to the extent that
                  the Company may deem desirable, the Company, individually, or
                  jointly with any other indemnifying party, will be entitled to
                  assume the defense thereof, with counsel satisfactory to
                  Indemnitee. After notice from the Company to Indemnitee of the
                  Company's election to assume the defense thereof, the Company
                  will not be liable to Indemnitee under this Agreement for any
                  legal fees or other expenses subsequently incurred by
                  Indemnitee in connection with the defense thereof, unless
                  otherwise consented to by the Company (which consent shall not
                  be unreasonably withheld), other than reasonable costs of
                  investigation or as otherwise provided below. Indemnitee shall
                  have the right to employ counsel in such action, suit or
                  proceeding but the fees and expenses of such counsel incurred
                  after notice from the Company of its assumption of the defense
                  thereof shall be at the expense of Indemnitee unless:

                           I. The employment of counsel by Indemnitee has been
                           authorized by the Company, or

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                           II. Indemnitee shall have reasonably concluded that
                           there may be a conflict of interest between the
                           Company and Indemnitee in the conduct of the defense
                           of such action, or

                           III. The Company shall not in fact have employed
                           counsel to assume the defense of such action,

                  in each of which cases the fees and expenses of Indemnitee's
                  counsel shall be at the expense of the Company.

                  Notwithstanding the other provisions of this Section 3(b), the
                  Company shall not be entitled to assume the defense of any
                  action, suit or proceeding brought by or on behalf of the
                  Company or as to which Indemnitee shall have made the
                  conclusion provided for in (II) above.

                  (iii) The Company shall not be liable to indemnify Indemnitee
                  under this Agreement for any amounts paid in settlement of any
                  action or claim effected without the Company's written
                  consent. The Company shall not settle any action or claim in
                  any manner which would impose any penalty or limitation on
                  Indemnitee without Indemnitee's written consent. Neither the
                  Company nor Indemnitee will unreasonably withhold their
                  consent to any proposed settlement.

4. REPAYMENT OF EXPENSES. Indemnitee agrees that Indemnitee will reimburse the
Company for all expenses advanced to Indemnitee or paid by the Company on behalf
of Indemnitee pursuant to the Company's obligations under Section 1 in the event
that the criteria for indemnification as set forth in Minnesota Statutes Section
302A.521 have not been satisfied.

5. ABSOLUTE RIGHT TO INDEMNIFICATION AND ADVANCEMENT OF EXPENSES. The Company
agrees that it shall not, and the Company hereby waives all rights that it has
or may have to, refuse to indemnify or advance expenses based on any breach or
alleged breach of any of the provisions of this Agreement by Indemnitee, or for
any other reason whatsoever.

6. AMENDMENTS TO MINNESOTA STATUTES, OR COMPANY'S ARTICLES OF INCORPORATION OR
BYLAWS. The Company represents that its Articles of Incorporation and Bylaws
provide for indemnification of Indemnitee to the maximum extent permitted by
Minnesota Statutes Section 302A.521 as of the date of this Agreement, and to the
maximum extent required by this Agreement. Any amendments to the Articles of
Incorporation or Bylaws of the Company which reduce or eliminate indemnification
rights of persons entitled to indemnification under its Articles of
Incorporation or Bylaws shall have no effect with respect to this Agreement, and
Indemnitee shall continue to have all rights, entitlements and benefits
hereunder. If the Minnesota Statutes (or other applicable law) or the Articles
of Incorporation or Bylaws of the Company are amended so as to provide for
greater indemnification rights or benefits, this Agreement shall be deemed
amended to provide for such greater indemnification rights or benefits and
Indemnitee shall be entitled to such greater rights and benefits to the maximum
extent available to any then currently serving director or officer, as the case
may be, of the Company. To the extent that the Minnesota Statutes, or other
applicable law, limit in any manner the rights and benefits available to
Indemnitee under this Agreement, this Agreement shall be interpreted as
providing indemnification to Indemnitee to the fullest extent permitted by
applicable law.

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7. OTHER RIGHTS OF INDEMNITEE. The rights of Indemnitee to indemnification and
advancement of expenses pursuant to this Agreement shall not be exclusive of
other rights Indemnitee may have (i) under applicable law, (ii) pursuant to
other agreements between the Company and Indemnitee or the Company's Articles of
Incorporation or Bylaws, (iii) pursuant to a vote of disinterested directors of
the Company or (iv) pursuant to a vote of shareholders of the Company.

8. AMENDMENT. This Agreement may be amended at any time by written instrument
executed by the Company and Indemnitee.

9. ENFORCEMENT OF AGREEMENT BY INDEMNITEE.

         (a) The Company expressly confirms and agrees that it has entered into
         this Agreement and assumes the obligations imposed on the Company
         hereby in order to induce Indemnitee to continue as a director and/or
         officer of the Company, and acknowledges that Indemnitee is relying
         upon this Agreement in continuing in such capacity or capacities.

         (b) In the event Indemnitee is required to bring any action to enforce
         Indemnitee's rights or to collect monies due Indemnitee under this
         Agreement, and is successful in such action, the Company shall
         reimburse Indemnitee for all of Indemnitee's fees and expenses in
         bringing and pursuing such action.

10. NOTICES. All notices and other communications between the parties with
respect to this Agreement must be in writing and shall be deemed to have been
duly delivered as of the date on which they are hand delivered or deposited in
the United States mail for delivery by registered or certified mail, postage and
fees prepaid, addressed as first above written. Addresses may be changed by
notice in writing signed by a party desiring to change such party's address, but
any such notice of change of address shall not be effective until actually
received by the other party.

11. AGREEMENT CONTROLLING. Except as otherwise specified herein, this Agreement
supersedes all other agreements and understandings between the parties with
respect to the subject matter hereof to the extent such other agreements and
understandings are inconsistent with the provisions of this Agreement.

12. SEVERABILITY OF PROVISIONS. The provisions of this Agreement are severable
and, in the event any portion of this Agreement is declared illegal or
unenforceable for any reason whatever, the remainder of this Agreement shall be
effective and binding upon the parties hereto to the fullest extent permissible
by law. Without limiting the generality of the foregoing sentence, it is
expressly understood that the intent of this Agreement is to provide for
indemnification of Indemnitee to the maximum extent permitted by law and, as
such, in no event shall the illegality or unenforceability of any provision of
this Agreement be construed or interpreted so as to deny indemnification of
Indemnitee to the maximum extent permitted by law.

13. BINDING EFFECT. Due to the personal nature of the services to be rendered by
Indemnitee, Indemnitee may not assign this Agreement. Subject to the foregoing,
the provisions of this Agreement are binding upon and inure to the benefit of
(i) Indemnitee and Indemnitee's respective heirs, legal representatives and
administrators, and (ii) the Company and the Company's successors, transferees
and assigns.

                                       4
<PAGE>

14. SURVIVAL. The obligations of the Company to Indemnitee with respect to the
indemnification and advancement of expenses as provided in this Agreement shall
survive and continue after Indemnitee has ceased to be a director and/or
officer, as the case may be, of the Company and after this Agreement has
terminated, and shall inure to the benefit of Indemnitee and Indemnitee's heirs,
legal representatives and administrators.

15. ARBITRATION. Any dispute arising out of or relating to this Agreement or an
actual or alleged breach of this Agreement shall be discussed between the
parties in a good faith effort to arrive at a mutual settlement of any such
controversy. If, notwithstanding the parties' good faith efforts, a dispute
remains unresolved for a period of 45 days after initial notice from one party
to the other of the dispute, the parties shall submit such dispute to
arbitration in accordance with the rules of the American Arbitration
Association, and judgment upon the award may be entered in any court having
jurisdiction over the controversy. The costs of the proceedings shall be paid by
the Company. Unless otherwise agreed upon, the place of the arbitration
proceedings shall be Hennepin County, Minnesota.

16. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Minnesota, without regard to the laws
of conflict of any jurisdiction.

17. NO EMPLOYMENT AGREEMENT. This Agreement shall not be construed or
interpreted to create an employment agreement between the Company and
Indemnitee.

18. TERM. The term of this Agreement shall be coextensive with Indemnitee's
service as a director and/or officer, as the case may be, of the Company;
provided, however, it is expressly understood that Section 14 shall survive the
termination of this Agreement.

                      (BALANCE OF PAGE INTENTIONALLY BLANK)

                                       5
<PAGE>

IN WITNESS WHEREOF, the parties have executed this Agreement in the manner
appropriate for each as of the day and year above written.

LSC, INCORPORATED

By
   ------------------------------------

         Its
             ------------------------------

INDEMNITEE

---------------------------------------
[Signature]

                                       6

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