Document:

<PAGE>

<TABLE>
<CAPTION>
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           BANKWINDSOR                             BORROWER                   COMMERCIAL/
           IDS Center              LSC, INC.                                  AGRICULTURAL
      740 Marquette Avenue         RICHARD W PERKINS                          REVOLVING OR DRAW
  Minneapolis, Minnesota 55402     RICHARD W PERKINS REVOCABLE TRUST          NOTE-VARIABLE RATE
         (612) 338-2150            EDWARD E STRICKLAND
            "LENDER"               PAUL G MILLER

                                                    ADDRESS
                                   1270 EAGAN INDUSTRIAL ROAD
                                   EAGAN, MN  55121

                                   TELEPHONE NO.          IDENTIFICATION NO.

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   OFFICER         INTEREST       PRINCIPAL AMOUNT/       FUNDING/                        CUSTOMER
   INITIALS          RATE            CREDIT LIMIT      AGREEMENT DATE  MATURITY DATE       NUMBER        LOAN NUMBER
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   <S>             <C>            <C>                  <C>             <C>                <C>            <C>
     DKD           VARIABLE          $500,000.00          11/15/99        07/01/00                         97414401
-------------------------------------------------------------------------------------------------------------------------
</TABLE>

                                 PROMISE TO PAY

For value received, Borrower promises to pay to the order of Lender indicated
above the principal amount of FIVE HUNDRED THOUSAND AND NO/100 Dollars
($500,000.00) or, if less, the aggregate unpaid principal amount of all loans or
advances made by the Lender to the Borrower, plus interest on the unpaid
principal balance at the rate and in the manner described below. All amounts
received by Lender shall be applied first to late payment charges and expenses,
then to accrued interest, and then to principal or in any other order as
determined by Lender, in Lender's sole discretion, as permitted by law.

INTEREST RATE: This Note has a variable rate feature. Interest on the Note may
change from time to time if the Index Rate identified below changes. Interest
shall be computed on the basis of 360 DAYS AND THE ACTUAL NUMBER OF DAYS per
year. Interest on this Note shall be calculated at a variable rate equal to ONE
AND NO/1000 percent (1.000%) per annum OVER the Index Rate. The initial Index
Rate is currently EIGHT AND 250/1000 percent (8.250%) per annum. The initial
interest rate on this Note shall be NINE AND 250/1000 percent (9.250%) per
annum. Any change in the interest rate resulting from a change in the Index Rate
will be effective on: THE DATE THE INDEX RATE CHANGES

INDEX RATE:  The Index Rate for this Note shall be:  U.S. BANK N.A. REFERENCE
RATE

MINIMUM RATE/MAXIMUM RATE: The minimum interest rate on this Note shall be N/A
percent ( N/A %) per annum. The maximum interest rate on this Note shall not
exceed N/A percent ( N/A %) per annum or the maximum interest rate Lender is
permitted to charge by law, whichever is less.

POST MATURITY RATE: After maturity, whether due to scheduled maturity or
acceleration, Lender may increase the interest rate on this Note to:
__________________________________________________, or the maximum interest rate
Lender is permitted to charge by law, from the date of maturity until paid.

PAYMENT SCHEDULE: Borrower shall pay the principal and interest according to the
following schedule:

ON DEMAND, IF NO DEMAND IS MADE, THEN INTEREST ONLY PAYMENTS BEGINNING DECEMBER
1, 1999 AND CONTINUING AT MONTHLY TIME INTERVALS THEREAFTER. A FINAL PAYMENT OF
THE UNPAID PRINCIPAL BALANCE PLUS ACCRUED INTEREST IS DUE AND PAYABLE ON JULY 1,
2000.

<PAGE>

All payments will be made to Lender at its address described above and in lawful
currency of the United States of America.

RENEWAL: If checked, /X/ this Note is a renewal of loan number 97414401, and is
not in payment of that Note.

SECURITY: To secure the payment and performance of obligations incurred under
this Note, Borrower grants Lender a security interest in, and pledges and
assigns to Lender all of Borrower's rights, title, and interest, in all monies,
instruments, savings, checking and other deposit accounts of Borrower's,
(excluding IRA, Keogh and trust accounts and deposits subject to tax penalties
if so assigned) that are now or in the future in Lender's custody or control.
Upon default, and to the extent permitted by applicable law, Lender may exercise
any or all of its rights or remedies as a secured party with respect to such
property which rights and remedies shall be in addition to all other rights and
remedies granted to Lender including, without limitation, Lender's common law
right of setoff. / / If checked, the obligations under this Note are also
secured by a lien and/or security interest in the property described in the
documents executed in connection with this Note as well as any other property
designated as security now or in the future.

PREPAYMENT: This Note may be prepaid in part or in full on or before its
maturity date. If this Note contains more than one installment, all prepayments
will be credited as determined by Lender and as permitted by law. If this Note
is prepaid in full, there will be: /X/ No prepayment penalty. / / A prepayment
penalty of _________% of the principal prepaid.

LATE CHARGE: If a payment is received more than N/A days late, Borrower will be
charged a late charge of: / / ________% of the late payment; / / $_________ or
_______% of the late payment, whichever is / / greater / / less.

REVOLVING OR DRAW FEATURE: /X/ This Note possesses a revolving feature. Upon
satisfaction of the conditions set forth in this Note, Borrower shall be
entitled to borrow up to the full principal amount of the Note and to repay and
reborrow from time to time during the term of this Note. / / This Note possesses
a draw feature. Upon satisfaction of the conditions set forth in this Note,
Borrower shall be entitled to make one or more draws under this Note. The
aggregate amount of such draws shall not exceed the full principal amount of
this Note.

Lender shall maintain a record of the amounts loaned to and repaid by Borrower
under this Note. The aggregate unpaid principal amount shown on such record
shall be rebuttable presumptive evidence of the principal amount owing and
unpaid on this Note. The Lender's failure to record the date and amount of any
loan or advance shall not limit or otherwise affect the obligations of the
Borrower under this Note to repay the principal amount of the loans or advances
together with all interest accruing thereon. Lender shall not be obligated to
provide Borrower with a copy of the record on a periodic basis. Borrower shall
be entitled to inspect or obtain a copy of the record during Lender's business
hours.

CONDITIONS FOR ADVANCES: If there is no default under this Note, Borrower shall
be entitled to borrow monies or make draws under this Note (subject to the
limitations described above) under the following conditions:

THIS NOTE EVIDENCES A DISCRETIONARY LINE OF CREDIT; IT SHALL NOT MEAN THAT THE
BANK IS OBLIGATED TO MAKE ANY ADVANCES. EACH ADVANCE ON THIS NOTE SHALL BE IN
THE SOLE DISCRETION OF THE BANK'S OFFICERS.

<PAGE>

BORROWER ACKNOWLEDGES THAT BORROWER HAS READ, UNDERSTANDS, AND AGREES TO THE
TERMS AND CONDITIONS OF THIS NOTE INCLUDING THE PROVISIONS ON THE REVERSE SIDE.
BORROWER ACKNOWLEDGES RECEIPT OF AN EXACT COPY OF THIS NOTE.

NOTE DATE:  NOVEMBER 15, 1999

--------------------------------------------------------------------------------
BORROWER:  LSC, INC.                          BORROWER:  RICHARD W PERKINS

/s/ J. Bradley Balogh                         /s/ Richard W. Perkins
----------------------------------            ----------------------------------
J BRADLEY BALOGH                              RICHARD W PERKINS, INDIVIDUALLY
PRESIDENT
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
BORROWER:  RICHARD W PERKINS REVOCABLE TRUST  BORROWER:  EDWARD E STRICKLAND

/s/ Richard W. Perkins                        /s/ Edward E. Strickland
----------------------------------            ----------------------------------
RICHARD W PERKINS, TRUSTEE                    EDWARD E STRICKLAND, INDIVIDUALLY
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
BORROWER:  PAUL G MILLER

/s/ Paul G. Miller
----------------------------------
PAUL G MILLER, INDIVIDUALLY
--------------------------------------------------------------------------------

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

<PAGE>

                              TERMS AND CONDITIONS

1.     DEFAULT: Borrower will be in default under this Note in the event that
Borrower or any guarantor or any other third party: (a) fails to make any
payment on this Note or any other indebtedness to Lender when due; (b) fails to
perform any obligation or breaches any warranty or covenant to Lender contained
in this Note or any other present or future written agreement regarding this or
any indebtedness of Borrower to Lender; (c) provides or causes any false or
misleading signature or representation to be provided to Lender; (d) allows the
collateral securing this Note (if any) to be lost, stolen, destroyed, damaged in
any material respect, or subjected to seizure or confiscation; (e) permits the
entry or service of any garnishment, judgment, tax levy, attachment or lien
against Borrower, any guarantor, or any of their property or the Collateral; (f)
dies, becomes legally incompetent, is dissolved or terminated, ceases to operate
its business, becomes insolvent, makes an assignment for the benefit of
creditors, fails to pay debts as they become due, or becomes the subject of any
bankruptcy, insolvency or debtor rehabilitation proceeding; or (g) causes Lender
to deem itself insecure for any reasons, or Lender, for any reason, in good
faith deems itself insecure.

2.     RIGHTS OF LENDER ON DEFAULT: If there is a default under this Note,
Lender will be entitled to exercise one or more of the following remedies
without notice or demand (except as required by law): (a) to cease making
additional advances under this Note; (b) to declare the principal amount plus
accrued interest under this Note and all other present and future obligations of
Borrower immediately due and payable in full; (c) to collect the outstanding
obligations of Borrower with or without resorting to judicial process; (d) to
take possession of any collateral in any manner permitted by law; (e) to require
Borrower to deliver and make available to Lender any collateral at a place
reasonably convenient to Borrower and Lender; (f) to sell, lease or otherwise
dispose of any collateral and collect any deficiency balance with or without
resorting to legal process; (g) to set-off Borrower's obligations against any
amounts due to Borrower including, but not limited to monies, instruments, and
deposit accounts maintained with Lender; and (h) to exercise all other rights
available to Lender under any other written agreement or applicable law.
Lender's rights are cumulative and may be exercised together, separately, and in
any order. Lender's remedies under this paragraph are in addition to those
available at common law, including, but not limited to, the right of set-off.

3.     DEMAND FEATURE: If this Note contains a demand feature, Lender's right to
demand payment, at any time, and from time to time, shall be in Lender's sole
and absolute discretion, whether or not any default has occurred.

4.     FINANCIAL INFORMATION: Borrower will provide Lender with current
financial statements and other financial information (including, but not limited
to, balance sheets and profit and loss statements) upon request.

5.     MODIFICATION AND WAIVER: The modification or waiver of any of Borrower's
obligations or Lender's rights under this Note must be contained in a writing
signed by Lender. Lender may perform any of Borrower's obligations or delay or
fail to exercise any of its rights without causing a waiver of those obligations
or rights. A waiver on one occasion will not constitute a waiver on any other
occasion. Borrower's obligations under this Note shall not be affected if Lender
amends, compromises, exchanges, fails to exercise, impairs or releases any of
the obligations belonging to any co-borrower or guarantor or any of its rights
against any co-borrower, guarantor or collateral.

6.     SEVERABILITY AND INTEREST LIMITATION: If any provision of this Note is
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
Notwithstanding anything contained in this Note to the contrary, in no event
shall interest accrue under this Note, before or after maturity, at a rate in
excess of the highest rate permitted by applicable law, and if interest
(including any charge or fee held to be interest by a court of competent
jurisdiction) in excess thereof be paid, any excess shall constitute a payment
of, and be applied to, the principal balance hereof, and if the principal
balance has been fully paid, then such interest shall be repaid to the Borrower.

7.     ASSIGNMENT: Borrower will not be entitled to assign any of its rights,
remedies or obligations described in this Note without the prior written consent
of Lender which may be withheld by Lender in its sole

<PAGE>

discretion. Lender will be entitled to assign some or all of its rights and
remedies described in this Note without notice to or the prior consent of
Borrower in any manner.

8.     NOTICE: Any notice or other communication to be provided to Borrower or
Lender under this Note shall be in writing and sent to the parties at the
addresses described in this Note or such other address as the parties may
designate in writing from time to time.

9.     APPLICABLE LAW: This Note shall be governed by the laws of the state
indicated in Lender's address. Borrower consents to the jurisdiction and venue
of any court located in the state indicated in Lender's address in the event of
any legal proceeding pertaining to the negotiation, execution, performance or
enforcement of any term or condition contained in this Note or any related loan
document and agrees not to commence or seek to remove such legal proceeding in
or to a different court.

10.    COLLECTION COSTS: If Lender hires an attorney to assist in collecting any
amount due or enforcing any right or remedy under this Note, Borrower agrees to
pay Lender's attorney's fees, to the extent permitted by applicable law, and
collection costs.

11.    RETURNED CHECK: If a check for payment is returned to Lender for any
reason, Lender will charge an additional fee of $20.00.

12.    MISCELLANEOUS: This Note is being executed for commercial/agricultural
purposes. Borrower and Lender agree that time is of the essence. Borrower waives
presentment, demand for payment, notice of dishonor and protest. If Lender
obtains a judgment for any amount due under this Note, interest will accrue on
the judgment at the judgment rate of interest permitted by law. All references
to Borrower in this Note shall include all of the parties signing this Note. If
there is more than one Borrower, their obligations will be joint and several.
This Note and any related documents represent the complete and integrated
understanding between Borrower and Lender pertaining to the terms and conditions
of those documents.

13.    JURY TRIAL WAIVER: BORROWER HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY IN
ANY CIVIL ACTION ARISING OUT OF, OR BASED UPON, THIS NOTE OR THE COLLATERAL
SECURING THIS NOTE.

14.      ADDITIONAL TERMS:

         PURPOSE: WORKING CAPITAL

<TABLE>
<CAPTION>
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                PRINCIPAL ADVANCES AND PAYMENTS                          INTEREST PAYMENTS             RATE CHANGE
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                  AMOUNT    AMOUNT
MADE BY   DATE      OF        OF       PRINCIPAL   UNDISBURSED   RECEIVED   DATE   INTEREST    DATE    DATE     RATE
                 ADVANCE    PAYMENT     BALANCE    COMMITMENTS      BY               PAID     PAID TO
----------------------------------------------------------------------------------------------------------------------
<S>       <S>    <C>        <C>        <C>         <C>           <C>        <C>    <C>        <C>      <C>      <C>
----------------------------------------------------------------------------------------------------------------------

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</TABLE><PAGE>

                                     FORM OF
                              BRIDGE LOAN AGREEMENT

         THIS BRIDGE LOAN AGREEMENT ("Agreement"), is made and entered effective
as of September 11, 1997, among LSC, Incorporated, a Minnesota corporation (the
"Company"), and each of the investors listed on Schedule I (collectively, the
"Investors").

         A.       The Company may need to borrow up to $500,000 to fund its
operations until such time as it can complete an equity financing raising gross
proceeds of at least $1,000,000 (the "Financing").

         B.       The Company currently anticipates that the Financing will
consist of a private placement of units, each unit consisting of one share of
Common Stock and a warrant to purchase one-half share of Common Stock (such unit
or any other shares or units of securities sold by the Company in the Financing
are referred to as a "Unit").

         C.       The Investors desire to loan the Company funds on the terms
and conditions set forth in this Agreement.

         Accordingly, in consideration of the foregoing, the mutual promises set
forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

         1.       PURCHASE OF CONVERTIBLE PROMISSORY NOTES. Each Investor agrees
to Purchase from the Company a convertible promissory note in the form attached
hereto as Exhibit A (a "Note") in the amount set forth on Schedule I hereto.
Such purchase shall be made concurrently with the execution of this Agreement by
each Investor and the delivery of a check in the principal amount of the Note to
be purchased. Each Note shall bear interest from the date of payment by the
Investor of the principal amount thereof at the rate of 10% per year. The
Company shall be entitled to the funds loaned by each Investor immediately upon
receipt, whether or not the Company has received funds from any other Investor.
The Investors acknowledge that the Company may, in its sole discretion, issue
and sell more than $500,000 principal amount of Notes under this Agreement,
without notice to or consent from any Investor.

         2.       REPAYMENT. All outstanding principal and accrued interest on
the Notes shall be due and payable on the earlier of (a) thirty (30) days after
the initial closing of the Financing or (b) June 30, 1998. The Notes may be
prepaid in whole or in part without premium or penalty as provided in the Notes.
All prepayments shall be applied to the Notes pro rata on the basis of the
proportion that the original principal amount of each Note bears to the original
principal amount of all of the Notes, and shall be applied first to the payment
of any costs of collection, then to the payment of accrued interest and
thereafter to principal.

         3.       CONVERSION. Upon an initial closing of the Financing, all or
any portion of principal and accrued interest under each Note will be
convertible into Units of securities issued in the Financing, at the option
of the Investor holding such Note. The conversion price of each Note shall be
equal to 80% of the per Unit price of the securities issued in the Financing,
and the exercise price of any warrants included in a Unit issued to Investors
upon conversion of a Note

<PAGE>

shall be 80% of exercise price of warrants included in a Unit issued to
purchasers of Units in the Financing. The Company shall provide written
notice to the Investors of the commencement of the Financing and the
anticipated initial closing date of the Financing a reasonable period of time
in advance of such date. If an Investor elects not to convert its Note into
Units of securities issued in the Financing, the Company will grant to such
Investor the warrants that such Investor would have received if such Investor
had elected to convert its Note. The Warrant shall be substantially in the
form attached hereto as Exhibit B or such other form of warrant as may be
issued to purchasers of securities in the Financing, provided that the terms
of such warrant shall be no less favorable to the Investors as the terms
contained in Exhibit B. The securities issuable upon conversion of the Notes
are referred to as the "Conversion Securities."

         4.       REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to each of the Investors that this Agreement has been
duly authorized by all necessary corporate action on behalf of the Company, has
been duly executed and delivered by authorized officers of the Company, and is a
valid and binding agreement on the part of the Company. All corporate action
necessary to the authorization, issuance and delivery of the Notes and the
Conversion Securities has been taken on or prior to the date hereof.

         5.       REPRESENTATIONS AND WARRANTIES OF THE INVESTORS. Each of the
Investors severally represents and warrants to the Company as follows:

                  (a)      The Notes and Conversion Securities are being
         purchased for investment for such Investor's own account and not with
         the view to, or for resale in connection with, any distribution or
         public offering thereof. Each Investor understands that neither the
         Notes nor the Conversion Securities has been registered under the
         Securities Act of 1933, as amended (the "Securities Act"), or any state
         securities laws by reason of their contemplated issuance in
         transactions exempt from the registration requirements of the
         Securities Act and applicable state securities laws and that the
         reliance of the Company and others upon these exemptions is predicated
         in part upon this representation by each Investor. Each Investor
         further understands that the Notes and Conversion Securities may not be
         transferred or resold without registration under the Securities Act and
         any applicable state securities laws, or an exemption from the
         requirements of the Securities Act and applicable state securities
         laws.

                  (b)      Each Investor's principal office or residence, as the
         case may be, is located in the state set forth on Schedule I hereto.
         Each Investor qualifies as an "accredited investor," as defined in Rule
         501 of Regulation D under the Securities Act. Each Investor
         acknowledges that the Company has made available to each such Investor
         at a reasonable time prior to the execution of this Agreement the
         opportunity to ask questions and receive answers concerning the
         business, operations and financial condition of the Company and the
         terms and conditions of the sale of securities contemplated by this
         Agreement and to obtain any additional information (which the Company
         possesses or can acquire without unreasonable effort or expense) as may
         be necessary to verify the accuracy of information furnished to such
         Investor. Each Investor acknowledges having received a copy of the
         Company's Information Package, including Company's audited financial
         statements for the years ended December 31, 1995 and 1996, unaudited
         financial statements for the period from January 1, 1997 through July
         31, 1997, a

                                       2
<PAGE>

         summary of the Company's business, a description of the Company's
         product and recent press releases issued by the Company. Each Investor
         is able to bear the loss of its entire investment in the Notes and
         Conversion Securities without any material adverse affect on its
         business, operations or prospects, and has such knowledge and
         experience of financial and business matters that it is capable of
         evaluating the merits and risks of the investment to be made by it
         pursuant to this Agreement.

                  (c)      This Agreement has been duly authorized by all
         necessary action on the part of each Investor, has been duly executed
         and delivered by such Investor and is a valid and binding agreement of
         such Investor.

6.       MISCELLANEOUS.

         (a)      This Agreement and the rights and obligations of the parties
hereunder shall not be assignable, in whole or in part, by any party without the
prior written consent of each other party, and neither this Agreement nor any
provision hereof may be amended, modified, waived or discharged without the
written consent of the party against whom enforcement of such amendment,
modification, waiver or discharge is sought.

         (b)      This Agreement, including the exhibits attached hereto,
constitutes the entire agreement of the parties relative to the subject matter
hereof and supersedes any and all other agreements and understanding, whether
written or oral, relative to the matters discussed herein.

         (c)      This Agreement shall be construed and enforced in accordance
with the laws of the State of Minnesota.

         (d)      This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one in the same instrument.

                     [Following Page is the Signature Page]

                                       3
<PAGE>

         IN WITNESS WHEREOF, the Company and the Investors have executed this
Agreement effective as of the date first written above.

                                                 LSC, INCORPORATED

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

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

                                                 [INDIVIDUAL INVESTOR]

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

                                                 -------------------------------
                                                 [Print Name]

                                                 [CORPORATE OR PARTNERSHIP
                                                   INVESTOR]

                                                 [Print Name of Entity]

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

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

                                       4
<PAGE>

                                   SCHEDULE I

Investor Name and Address                            Amount of Note
-------------------------                            --------------

                                       5
<PAGE>

                                                                       EXHIBIT A
                                LSC, INCORPORATED
                           CONVERTIBLE PROMISSORY NOTE

$___________                                                   ___________, 1997
                                                          Minneapolis, Minnesota

         LSC, Incorporated, a Minnesota corporation (the "Company"), for value
received, hereby promises to pay to ___________________________, or any person
to whom this Note is subsequently transferred and who becomes a registered
holder of this Note (the "Holder"), the principal sum of
____________________________________________________________ and no/100 Dollars
($__________) or so much of said principal sum as may be then outstanding, on
the earlier of (a) thirty (30) days after the initial closing of the Financing,
as defined below, or (b) June 30, 1998 and thereafter on demand, and to pay
interest on the unpaid principal balance hereof on such date at the rate of ten
percent (10.0%) per year. Interest shall begin to accrue on the date of issuance
set forth above and shall be calculated on a simple interest basis until all
principal is paid.

         This Note is one of the notes described in, and is subject to the terms
and provisions of, the Bridge Loan Agreement, dated as of September 11, 1997,
among the Company and the investors named therein (the "Agreement"). The
provisions of the Agreement are incorporated herein by reference with the same
force and effect as if fully set forth herein.

         This Note is subject to the following terms and conditions:

1.       PAYMENT. Payment of the principal of and interest on this Note will be
made at the address of the Holder on the Company's books in such coin or
currency as is legal tender of the United States of America at the time of
payment. This Note may be prepaid in whole or in part at any time without the
consent of the Holder. All payments on this Note and all other notes subject to
the Agreement shall be applied to this Note and such other notes pro rata on the
basis of the proportion that the original principal amount of each note bears to
the original principal amount of all such notes, and in the case of this Note,
such prepayments shall be applied first to the payment of any costs of
collection that may be due hereunder, then to the payment of accrued interest,
and the balance shall be applied to principal.

2.       CONVERSION

         2.1      TERMS OF CONVERSION. Upon the initial closing of an equity
financing of the Company raising gross proceeds of at least $1,000,000 (the
"Financing"), all or any portion of principal and accrued interest under this
Note will be convertible into units of securities issued in the Financing, at
the option of the Holder. The conversion price of this Note shall be equal to
80% of the per Unit price of the securities issued in the Financing, and the
exercise price of any warrants included in a Unit issued to the Holder upon
conversion of this Note shall be 80% of exercise price of warrants included in a
Unit issued to purchasers of Units in the Financing. The Company shall provide
written notice to the Holder of the commencement of the Financing and the
anticipated initial closing date of the Financing a reasonable period of time in
advance of such date. The conversion price set forth above shall be subject to
adjustment in accordance with Section 2.3 hereof (such price or adjusted price
being referred to herein as the "Conversion Price"). The units of securities
issuable upon conversion of this Note are referred to hereinafter as the
"Conversion Securities." If this Note is converted in connection with the
Financing or any other financing of the Company, the Holder

<PAGE>

shall be entitled with respect to any Conversion Securities so obtained to the
same rights, and shall accept the same obligations, as are accorded to and
accepted by the other investors in the Financing or any such other financing.

         2.2      EFFECT OF CONVERSION. As promptly as practicable after the
surrender, as herein provided, of this Note for conversion, the Company shall
deliver to or upon the written order of the Holder certificates representing the
number of fully paid and nonassessable units of the Conversion Securities into
which this Note, or such part thereof, may be converted in accordance with the
provisions of this Article 2. Such conversion shall be deemed to have been made
on the date of the initial closing of the Financing, if converted in connection
with the Financing, or upon surrender of this Note to the Company at its
principal office during usual business hours, if not converted in connection
with the Financing. On such date that this Note shall have been surrendered for
conversion in case of optional conversion (such date, subject to change in
accordance with the following provisions of this paragraph, shall be hereinafter
referred to as the "Conversion Date"), so that the rights of the Holder as a
noteholder shall cease at such time and, subject to the following provisions of
this paragraph, the person or persons entitled to receive the Conversion
Securities shall be treated for all purposes as having become the record holder
or holders of such Conversion Securities at such time; provided, however, that
no such conversion or surrender on any date when the stock transfer books of the
Company are closed shall be effective to constitute the person or persons
entitled to receive such Conversion Securities as the record holder or holders
of such Conversion Securities on such date, but such surrender shall be
effective to constitute the person or persons entitled to receive such
Conversion Securities as the record holder or holders thereof for all purposes
at the close of business on the next succeeding day on which such stock transfer
books are open.

         2.3      ADJUSTMENT OF CONVERSION PRICE. The Conversion Price shall be
subject to adjustment from time to time as follows:

                  (a) In case the Company shall declare a dividend or make a
         distribution upon the Conversion Securities payable otherwise than out
         of earnings or earned surplus (including dividends in Conversion
         Securities or any obligations or any shares of stock of the Company
         which are convertible into, or exchangeable for, Conversion Securities
         (any of such obligations or shares of stock being hereinafter called
         "Convertible Securities"), or in any rights or options to purchase any
         Conversion Securities or Convertible Securities, then thereafter the
         Holder, upon conversion, will be entitled to receive the number of
         units of Conversion Securities into which this Note has been converted,
         and, in addition and without payment therefor, the cash, stock or other
         securities and other property which such Holder would have received by
         way of dividends (otherwise than out of such earnings or surplus) if
         continuously held since the Holder became the record holder of this
         Note the Holder (i) had been the record holder of the number of units
         of Conversion Securities which would have been received had this Note
         been so converted on such record date and (ii) had retained all
         dividends or distributions in stock or securities (including Conversion
         Securities or Convertible Securities, or in any rights or options to
         purchase any Conversion Securities or Convertible Securities) payable
         in respect of such Conversion Securities or in respect of any stock or
         securities paid as dividends or distributions and originating directly
         or indirectly from such Conversion Securities. For the purposes of the
         foregoing a dividend or distribution other than in cash shall be
         considered payable out of earnings or earned surplus only to the extent
         that such earnings or surplus are charged an amount equal to the fair

                                       2
<PAGE>

         market value of such dividend or distribution as determined by the
         Board of Directors of the Company.

                  (b)      In case the Company shall subdivide its outstanding
         units of Conversion Securities into a greater number of units at any
         time, the Conversion Price in effect immediately prior to such
         subdivision shall be proportionately reduced, and conversely, in case
         the outstanding units of Conversion Securities of the Company shall be
         combined into a smaller number of units, the Conversion Price in effect
         immediately prior to such combination shall be proportionately
         increased.

                  (c)      If any capital reorganization or reclassification of
         the capital stock of the Company, or consolidation or merger of the
         Company with another corporation, or the sale of all or substantially
         all of its assets to another corporation shall be effected in such a
         way that holders of Conversion Securities shall be entitled to receive
         stock, securities or assets with respect to or in exchange for
         Conversion Securities, then, as a condition of such reorganization,
         reclassification, consolidation, merger or sale, lawful and adequate
         provision shall be made whereby the Holder shall thereafter have the
         right to receive upon the basis and upon the terms and conditions
         specified herein and in lieu of the units of the Conversion Securities
         of the Company immediately theretofore receivable upon the conversion
         of this Note, such units of stock, securities or assets as may be
         issued or payable with respect to or in exchange for a number of
         outstanding units of such Conversion Securities equal to the number
         theretofore receivable upon the conversion of this Note had such
         reorganization, reclassification, consolidation, merger or sale not
         taken place, and in any such case appropriate provision shall be made
         with respect to the rights and interests of the Holder to the end that
         the provisions hereof (including without limitation provisions for
         adjustments of the Conversion Price and of the number of units
         receivable upon the conversion of this Note) shall thereafter be
         applicable, as nearly as may be in relation to any units of stock,
         securities or assets thereafter receivable upon the conversion of this
         Note. The Company shall not effect any such consolidation, merger or
         sale, unless prior to the consummation thereof the successor
         corporation (if other than the Company) resulting from such
         consolidation or merger or the corporation purchasing such assets shall
         assume by written instrument executed and mailed to the Holder, at the
         last address appearing on the books of the Company, the obligation to
         deliver to the Holder such units of stock, securities or assets as, in
         accordance with the foregoing provisions, such Holder may be entitled
         to receive. Notwithstanding the foregoing, the Holder shall at all
         times following any such reorganization, reclassification,
         consolidation, merger or sale have the right to demand and receive
         payment in cash of the amount of all principal and accrued interest due
         on any unconverted portion of this Note.

                  (d)      In any case in which this Section 2.3 shall require
         that an adjustment shall become effective immediately after a record
         date for an event, and if the Holder should convert after such record
         date and before the occurrence of such event, then the Company may
         defer until the occurrence of such event (i) issuing the additional
         units of Conversion Securities issuable upon such conversion by reason
         of the adjustment required by such event over and above the units
         issuable upon such conversion before giving effect to such adjustment
         and (ii) paying to the Holder any amount of cash in lieu of a
         fractional share pursuant to Section 2.8 hereof.

                  (e)      All calculations under this Article 2 shall be made
         to the nearest cent or to the nearest one-hundredth of a share, as the
         case may be.

                                       3
<PAGE>

                  (f)      In case at any time:

                           (i)      The Company shall declare any cash dividend
                  on its Conversion Securities;

                           (ii)     The Company shall pay any dividend payable
                  in stock upon its Conversion Securities or make any
                  distribution (other than regular cash dividends) to the
                  holders of its Conversion Securities;

                           (iii)    The Company shall offer for subscription pro
                  rata to the holders of its Conversion Securities any
                  additional shares of stock of any class or other rights;

                           (iv)     There shall be any capital reorganization,
                  or reclassification of the capital stock of the Company, or
                  consolidation or merger of the Company with, or sales of all
                  or substantially all of its assets to, another corporation; or

                           (v)      (v) There shall be a voluntary or
                  involuntary dissolution, liquidation or winding up of the
                  Company;

         then, in any one or more of said cases, the Company shall give written
notice, by first-class mail, postage prepaid, addressed to the Holder at the
address of Holder as shown on the books of the Company, of the date on which (A)
the books of the Company shall close or a record shall be taken for such
dividend, distribution or subscription rights, or (B) such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding up shall take place, as the case may be. Such notice shall also specify
the date as of which the holders of Conversion Securities of record shall
participate in such dividend, distribution or subscription rights, or shall be
entitled to exchange their Conversion Securities for securities or other
property deliverable upon such reorganization, reclassification, consolidation,
merger, sale, dissolution, liquidation, or winding up, as the case may be. Such
written notice shall be given at least twenty (20) days prior to the action in
question and not less than twenty (20) days prior to the record date or the date
on which the Company's transfer books are closed in respect thereto.

         2.4      ADJUSTMENT OF NUMBER OF SHARES. Upon each adjustment in the
Conversion Price pursuant to any provision of this Article 2, the number of
units of Conversion Securities issuable hereunder shall be adjusted by dividing
the then unpaid principal amount hereof plus accrued interest by the per share
Conversion Price in effect immediately following such adjustment.

         2.5      COVENANTS OF THE COMPANY. The Company covenants that it will
at all times reserve and keep available, free from preemptive rights, out of its
authorized Conversion Securities, solely for the purpose of issue upon
conversion of this Note as herein provided, such number of units of Conversion
Securities as shall then be issuable upon the conversion of this Note. The
Company covenants that all Conversion Securities which shall be so issuable
shall be duly and validly issued and fully paid and nonassessable.

         2.6      CORPORATE ACTION. Before taking any action which would cause
an adjustment reducing the Conversion Price below the then stated or par
value of the Conversion Securities issuable upon conversion of this Note, the
Company will take any corporate action which may be necessary in order that
the Company may validly and legally issue fully paid and nonassessable
Conversion Securities at such adjusted Conversion Price.

                                       4
<PAGE>

         2.7      PAYMENT OF TRANSFER TAX. The issuance of certificates for
units of Conversion Securities upon the conversion of this Note shall be made
without charge to the Holder for any tax in respect of the issuance of such
certificates, and such certificates shall be issued in the name of, or in such
names as may be directed by, the Holder.

         2.8      FRACTIONAL SHARES. The Company shall not be required to issue
fractional units of Conversion Securities or script upon conversion of this
Note. If any fractional interest in a units of Conversion Securities otherwise
would be deliverable upon the conversion of this Note, the Company instead shall
deliver an amount of cash equal to such fraction multiplied by the Conversion
Price then in effect.

         2.9      SUBSCRIPTION RIGHTS. In case the Company shall issue rights,
warrants or options to all holders of Conversion Securities of the Company, as
such, entitling them to subscribe for or purchase units of Conversion
Securities, the Company shall at the same time issue to the Holder the kind and
amount of such rights, warrants or options so issued which the Holder would have
been entitled to receive upon such issuance had the then unpaid principal sum of
this Note been converted immediately prior to the record date fixed for
determining the holders of Conversion Securities entitled to receive such
rights, warrants or options.

3.       CONSOLIDATION, MERGER, SALE OR CONVEYANCE

         3.1      GENERALLY. Nothing contained in this Note will prevent any
consolidation or merger of the Company with or into any other corporation or
corporations or successive consolidations or mergers in which the Company or its
successor or successors is a party or parties, or will prevent any sale or
conveyance of the property of the Company as an entirety or substantially as an
entirety to any other corporation authorized to acquire and operate the same.
However, the Company hereby covenants and agrees that any such consolidation,
merger, sale or conveyance will be upon the condition that (a) immediately after
such consolidation, merger, sale or conveyance the corporation (whether the
Company or such other corporation) formed by or surviving any such consolidation
or merger, or to which such sale or conveyance will have been made, will not be
in default in the performance or observance of any of the terms, covenants and
conditions of this Note to be kept or performed by the Company; and (b) the
corporation (whether the Company or such other corporation) formed by or
surviving any such consolidation or merger, or to which such sale or conveyance
will have been made, will expressly assume the due and punctual payment of the
principal of and interest on this Note, according to the terms of this Note, and
the faithful performance and observance of all of the covenants, conditions, and
requirements of this Note to be performed by the Company by a supplemental
instrument executed and delivered to the Holder by such corporation.

         3.2      RELEASE. In case of any such consolidation, merger, sale or
conveyance and upon the assumption by the successor corporation pursuant to
Section 3.1 above, such successor corporation will succeed to and be substituted
for the Company, with the same effect as if it had been named in this Note in
the Company's place, and the Company (including any intervening successor to the
Company which has become obligated under this Note) will be relieved of any
further obligation under this Note.

         3.3      LIABILITY OF SUCCESSOR CORPORATION. All of the covenants,
stipulations, promises, and agreements contained in this Note by or on behalf of
the Company will bind its successors and assigns, whether so expressed or not.

                                       5
<PAGE>

4.       DEFAULT

         4.1      EVENTS OF DEFAULT. An "Event of Default" shall be deemed to
occur upon the happening of any of the following: (i) the failure to pay when
due any amount of principal or interest payable hereunder, (ii) the filing
against the Company which is not dismissed within sixty (60) days thereafter, or
by the Company, of a petition in bankruptcy or for an arrangement or
reorganization, (iii) the making by the Company of a general assignment for the
benefit of creditors, (iv) the appointment of a receiver or trustee for the
Company, (v) the institution of liquidation or dissolution or reorganization
proceedings with respect to the Company, or (vi) the Company becoming unable or
admitting in writing an inability to pay its debts generally as they become due.

         4.2      RIGHTS ON DEFAULT. If an Event of Default occurs and is
continuing, the Holder may declare the principal of this Note, together with any
accrued and unpaid interest, if not already due, to be due and payable
immediately, by written notice to the Company. Upon any such declaration, such
principal and interest will become due and payable immediately, anything
contained in this Note to the contrary notwithstanding.

         4.3      ENFORCEMENT. If the Holder declares the principal of this
Note, together with all accrued and unpaid interest on this Note, due and
payable immediately, the Holder may proceed, subject, however, to all the terms
and conditions hereof, to protect and enforce its rights by an action at law,
suit in equity, or other appropriate proceeding.

5.       MISCELLANEOUS

         5.1      RESTRICTION ON TRANSFER. By accepting this Note, the Holder
agrees that the transfer of this Note will be subject to the restriction that no
such transfer will be effected until the Holder has first obtained a written
opinion of counsel, satisfactory to the Company, that the proposed transfer, if
consummated, may be lawfully made without registration under the Securities Act
and any applicable state securities law.

         5.2      HEADINGS. The headings in this Note are inserted for
convenience only and will not affect the meaning or interpretation of all or any
part of this Note.

         5.3      GOVERNING LAW. This Note will be deemed to be a contract made
under the laws of the State of Minnesota, and for all purposes will be construed
in accordance with the laws of the State of Minnesota.

         5.4      EXPENSES OF COLLECTION. In the event of any default by the
Company in its obligations hereunder, the Company shall reimburse the Holder on
demand the amount of its costs and expenses in enforcing its rights hereunder,
including reasonable attorneys fees.

         5.5      PAYMENT DATE. In case the date of maturity of this Note is not
a business day, then payment of principal and interest to the Holder need not be
made on such date, but may be made on the next succeeding business day with the
same force and effect as if made on the date of maturity or the date fixed for
prepayment and no interest will accrue for the period after such date.

         5.6      CONSTRUCTION. Wherever possible, each provision of this Note
will be interpreted in such a manner as to be effective and valid under
applicable law, but if any provision of this Note is prohibited by or invalid
under applicable law, such provision will be ineffective only to the extent of

                                       6
<PAGE>

such prohibition or invalidity without invalidating the remainder of such
provision or the remaining provisions of this Note.

         5.7      AMENDMENTS. This Note may not be and will not be deemed or
construed to have been modified, amended, rescinded, canceled, or waived in
whole or in part, except by written instruments signed by the Company and the
Holder.

         IN WITNESS WHEREOF, the Company has caused this Note to be duly
executed as of the day and year first set forth above.

                                            LSC, INCORPORATED

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

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

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

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR STATE
SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, OFFERED, PLEDGED OR
OTHERWISE DISTRIBUTED FOR VALUE UNLESS THERE IS AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT AND SUCH LAWS COVERING SUCH SECURITIES OR THE COMPANY
RECEIVES AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY STATING THAT SUCH SALE,
TRANSFER, ASSIGNMENT, OFFER, PLEDGE OR OTHER DISTRIBUTION FOR VALUE IS EXEMPT
FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT AND SUCH
LAWS.

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

                                       7
<PAGE>

                                                                       EXHIBIT B
                        WARRANT FOR PURCHASE OF SHARES OF
                                 COMMON STOCK OF
                                LSC, INCORPORATED

                               _____________, 1997

         For value received, ___________________, or its registered assigns (the
"Holder"), is entitled to purchase from LSC, Incorporated., a Minnesota
corporation (the "Company"), at any time on or before ___________________ fully
paid and nonassessable shares of the Company's Common Stock, $.01 par value
(such class of stock being hereinafter referred to as the "Common Stock" and
such Common Stock as may be acquired upon exercise hereof being hereinafter
referred to as the "Warrant Stock"), at the price of $_____ per share ("Warrant
Exercise Price").

         This Warrant is described in, and is subject to the terms and
provisions of, the Bridge Loan Agreement, dated as of September 11, 1997, among
the Company and the investors named therein (the "Agreement"). The provisions of
the Agreement are incorporated herein by reference with the same force and
effect as if fully set forth herein.

         This Warrant is subject to the following provisions, terms and
conditions:

         1. The rights represented by this Warrant may be exercised by the
Holder, in whole or in part (but not as to a fractional share of Common Stock),
by written notice of exercise delivered to the Company accompanied by the
surrender of this Warrant (properly endorsed if required) at the principal
office of the Company and upon payment to it, by cash, certified check or bank
draft, of the warrant exercise price for such shares. In addition, the Holder
may elect to pay the full purchase price by receiving a number of shares of
Common Stock computed using the following formula:

                  X = Y(A-B)
                      ------
                         A
Where:            X =      the number of shares of Common Stock to be issued to
                           the Holder.

                  Y =      the number of shares of Common Stock as to which this
                           Warrant is being exercised.

                  A =      the Fair Market Value of one share of Common Stock.

                  B =      Warrant Exercise Price.

         "Fair Market Value" means, with respect to the Company's Common Stock,
as of any date:

                  (a)      if the Common Stock is listed or admitted to unlisted
         trading privileges on any national securities exchange or is not so
         listed or admitted but transactions in the Common Stock are reported on
         the Nasdaq National Market, the reported closing price of the Common
         Stock on such exchange or by the Nasdaq National Market as of such date

<PAGE>

         (or, if no shares were traded on such day, as of the next preceding day
         on which there was such a trade); or

                  (b)      if the Common Stock is not so listed or admitted to
         unlisted trading privileges or reported on the Nasdaq National Market,
         and bid and asked prices therefor in the over-the-counter market are
         reported by Nasdaq or National Quotation Bureau, Inc. (or any
         comparable reporting service), the mean of the closing bid and asked
         prices as of such date, as so reported by Nasdaq or, if not so reported
         thereon, as reported by National Quotation Bureau, Inc. (or such
         comparable reporting service); or

                  (c)      if the Common Stock is not so listed or admitted to
         unlisted trading privileges, or reported on the Nasdaq National Market,
         and such bid and asked prices are not so reported by Nasdaq or National
         Quotation Bureau, Inc. (or any comparable reporting service), such
         price as the Company's Board of Directors determines in good faith in
         the exercise of its reasonable discretion.

         The Company agrees that the Warrant Stock so purchased shall be and are
deemed to be issued as of the close of business on the date on which this
Warrant shall have been surrendered and payment made for such Warrant Stock as
aforesaid. Certificates for the shares of Warrant Stock so purchased shall be
delivered to the Holder within 15 days after the rights represented by this
Warrant shall have been so exercised, and, unless this Warrant has expired, a
new Warrant representing the number of Warrant Stock, if any, with respect to
which this Warrant has not been exercised shall also be delivered to the Holder
within such time. Notwithstanding the foregoing, however, the Company shall not
be required to deliver any certificates for the Warrant Stock, except in
accordance with the provisions and subject to the limitations of Section 5
below.

         2.       The Company covenants and agrees that all shares of Warrant
Stock that may be issued upon the exercise of this Warrant will, upon issuance,
be duly authorized and issued, fully paid and nonassessable and free from all
taxes, liens and charges with respect to the issuance thereof. The Company
further covenants and agrees that until expiration of this Warrant, the Company
will at all times have authorized, and reserved for the purpose of issuance or
transfer upon exercise of this Warrant, a sufficient number of shares of Common
Stock to provide for the exercise of this Warrant.

         3.       The foregoing provisions are, however, subject to the
following:

                  (a)      The Warrant Exercise Price shall be subject to
         adjustment from time to time as hereinafter provided. Upon each
         adjustment of the Warrant Exercise Price, the holder of this Warrant
         shall thereafter be entitled to purchase, at the Warrant Exercise Price
         resulting from such adjustment, the number of shares obtained by
         multiplying the Warrant Exercise Price in effect immediately prior to
         such adjustment by the number of shares purchasable pursuant hereto
         immediately prior to such adjustment and dividing the product thereof
         by the Warrant Exercise Price resulting from such adjustment.

                  (b)      Except as provided in this Section 3, if and whenever
         the Company shall issue or sell any shares of its Common Stock for a
         consideration per share less than the

                                       2
<PAGE>

         Warrant Exercise Price in effect at the time of such issuance or sale,
         then, forthwith upon such issue or sale, the Warrant Exercise Price
         shall be reduced to such lesser price.

                  (c)      Notwithstanding any other provision of this Section
         3, the Warrant Exercise Price shall not be adjusted in the case of
         issuance by the Company of (i) shares of Common Stock issued upon
         exercise or conversion of any warrants, options, convertible securities
         or other rights to acquire shares of Common Stock outstanding on the
         date hereof, (ii) options to purchase shares of Common Stock (including
         shares of Common Stock issued upon the exercise thereof) granted or to
         be granted pursuant to the Company's existing stock option plan, as
         such plan is in effect on the date hereof or as may be amended by the
         Board of Directors, (iii) shares of Common Stock or options or other
         rights to purchase shares of Common Stock (including shares of Common
         Stock issued upon the exercise thereof) issued under employee benefit
         plans that the Company may adopt in the future including, but not
         limited to, stock purchase plans, profit sharing plans, stock option
         plans and stock incentive plans, (iv) shares of Common Stock issued
         upon exercise of warrants issued under the Agreement, or (v) shares of
         Common Stock issued upon conversion of convertible promissory notes
         issued under the Agreement.

                  (d)      No adjustment of the Warrant Exercise Price, however,
         shall be made in an amount less than 1.0% of the Warrant Exercise Price
         in effect on the date of such adjustment, but any such lesser
         adjustment shall be carried forward and shall be made at the time and
         together with the next subsequent adjustment which, together with any
         such adjustment so carried forward, shall be an amount equal to or
         greater than 1.0% of the Warrant Exercise Price then in effect.

                  (e)      For the purposes of this Section 3, the following
         provisions (i) to (iv), inclusive, shall also be applicable:

                           (i)      In case at any time the Company shall grant
                  (whether directly or by assumption in a merger or otherwise)
                  any rights to subscribe for or to purchase, or any options for
                  the purchase of, (a) Common Stock or (b) any obligations or
                  any shares of stock or other securities of the Company which
                  are convertible into, or exchangeable for, Common Stock (any
                  of such obligations or shares of stock or other securities
                  being hereinafter called "Convertible Securities") whether or
                  not such rights or options or the right to convert or exchange
                  any such Convertible Securities are immediately exercisable,
                  and the price per share for which Common Stock is issuable
                  upon the exercise of such rights or options or upon conversion
                  or exchange of such Convertible Securities (determined by
                  dividing (x) the total amount, if any, received or receivable
                  by the Company as consideration for the granting of such
                  rights or options, plus the minimum aggregate amount of
                  additional consideration payable to the Company upon the
                  exercise of such rights or options, plus, in the case of such
                  Convertible Securities, the minimum aggregate amount of
                  additional consideration, if any, payable upon the issue of
                  such Convertible Securities and upon the conversion or
                  exchange thereof, by (y) the total maximum number of shares of
                  Common Stock issuable upon the exercise of such rights or
                  options or upon the conversion or exchange of all such
                  Convertible Securities issuable upon the exercise of such
                  rights or

                                       3
<PAGE>

                  options) shall be less than the Warrant Exercise Price in
                  effect immediately prior to the time of the granting of such
                  rights or options, then the total maximum number of shares of
                  Common Stock issuable upon the exercise of such rights or
                  options or upon conversion or exchange of the total maximum
                  amount of such Convertible Securities issuable upon the
                  exercise of such rights or options shall (as of the date of
                  granting of such rights or options) be deemed to have been
                  issued for such price per share. Except as provided in Section
                  3(h) below, no further adjustments of the Warrant Exercise
                  Price shall be made upon the actual issue of such Common Stock
                  or of such Convertible Securities upon exercise of such rights
                  or options or upon the actual issue of such Common Stock upon
                  conversion or exchange of such Convertible Securities.

                           (ii)     In case the Company shall issue or sell
                  (whether directly or by assumption in a merger or otherwise)
                  any Convertible Securities, whether or not the rights to
                  exchange or convert thereunder are immediately exercisable,
                  and the price per share for which Common Stock is issuable
                  upon such conversion or exchange (determined by dividing (x)
                  the total amount received or receivable by the Company as
                  consideration for the issue or sale of such Convertible
                  Securities, plus the minimum aggregate amount of additional
                  consideration, if any, payable to the Company upon the
                  conversion or exchange thereof, by (y) the total maximum
                  number of shares of Common Stock issuable upon the conversion
                  or exchange of all such Convertible Securities) shall be less
                  than the Warrant Exercise Price in effect immediately prior to
                  the time of such issue or sale, then the total maximum number
                  of shares of Common Stock issuable upon conversion or exchange
                  of all such Convertible Securities shall (as of the date of
                  the issue or sale of such Convertible Securities) be deemed to
                  be outstanding and to have been issued for such price per
                  share, provided that (a) except as provided in Section 3(h)
                  below, no further adjustments of the Warrant Exercise Price
                  shall be made upon the actual issue of such Common Stock upon
                  conversion or exchange of such Convertible Securities, and (b)
                  if any such issue or sale of such Convertible Securities is
                  made upon exercise of any rights to subscribe for or to
                  purchase or any option to purchase any such Convertible
                  Securities for which adjustments of the Warrant Exercise Price
                  have been or are to be made pursuant to other provisions of
                  this Section 3, no further adjustment of the Warrant Exercise
                  Price shall be made by reason of such issue or sale.

                           (iii)    In case any shares of Common Stock or
                  Convertible Securities or any rights or options to purchase
                  any such Common Stock or Convertible Securities shall be
                  issued or sold for cash, the consideration received therefor
                  shall be deemed to be the amount received by the Company
                  therefor, without deducting therefrom any expenses incurred or
                  any underwriting commissions or concessions paid or allowed by
                  the Company in connection therewith. In case any shares of
                  Common Stock or Convertible Securities or any rights or
                  options to purchase any such Common Stock or Convertible
                  Securities shall be issued or sold for a consideration other
                  than cash, the amount of the consideration other than cash
                  received by the Company shall be deemed to be the fair value
                  of such consideration as determined by the Board of Directors
                  of the Company, without

                                       4
<PAGE>

                  deducting therefrom any expenses incurred or any underwriting
                  commissions or concessions paid or allowed by the Company in
                  connection therewith. In case any shares of Common Stock or
                  Convertible Securities or any rights or options to purchase
                  such Common Stock or Convertible Securities shall be issued in
                  connection with any merger or consolidation in which the
                  Company is the surviving corporation, the amount of
                  consideration therefor shall be deemed to be the fair value as
                  determined by the Board of Directors of the Company of such
                  portion of the assets and business of the non-surviving
                  corporation or corporations as such Board shall determine to
                  be attributable to such Common Stock, Convertible Securities,
                  rights or options, as the case may be. In the event of any
                  consolidation or merger of the Company in which the Company is
                  not the surviving corporation or in the event of any sale of
                  all or substantially all of the assets of the Company for
                  stock or other securities of any other corporation, the
                  Company shall be deemed to have issued a number of shares of
                  its Common Stock for stock or securities of the other
                  corporation computed on the basis of the actual exchange ratio
                  on which the transaction was predicated and for a
                  consideration equal to the fair market value on the date of
                  such transaction of such stock or securities of the other
                  corporation, and if any such calculation results in adjustment
                  of the Warrant Exercise Price, the determination of the number
                  of shares of Common Stock issuable upon conversion immediately
                  prior to such merger, conversion or sale, for purposes of
                  Section 3(i) below, shall be made after giving effect to such
                  adjustment of the Warrant Exercise Price.

                           (iv)     In case the Company shall take a record of
                  the holders of its Common Stock for the purpose of entitling
                  them (a) to receive a dividend or other distribution payable
                  in Common Stock or in Convertible Securities, or in any rights
                  or options to purchase any Common Stock or Convertible
                  Securities, or (b) to subscribe for or purchase Common Stock
                  or Convertible Securities, then the date of such record shall
                  be deemed to be the date of the issue or sale of the shares of
                  Common Stock deemed to have been issued or sold upon the
                  declaration of such dividend or the making of such other
                  distribution or the date of the granting of such rights of
                  subscription or purchase, as the case may be.

                  (f)      In case the Company shall (i) declare a dividend upon
         the Common Stock payable in Common Stock (other than a dividend
         declared to effect a subdivision of the outstanding shares of Common
         Stock, as described in Section 3(g) below) or Convertible Securities,
         or in any rights or options to purchase any Common Stock or Convertible
         Securities, or (ii) declare any other dividend or make any other
         distribution upon the Common Stock payable otherwise than out of
         earnings or earned surplus, then thereafter the Holder upon the
         conversion hereof will be entitled to receive the number of shares of
         Common Stock issuable upon exercise of this Warrant, and, in addition
         and without payment therefor, each dividend described in clause (i)
         above and each dividend or distribution described in clause (ii) above
         which such holder would have received by way of dividends or
         distributions if continuously since the Holder became the record holder
         of this Warrant the Holder (x) had been the record holder of the number
         of shares of Common Stock then received, and (y) had retained all
         dividends or distributions in stock or securities (including Common
         Stock or Convertible Securities, or in any rights or

                                       5
<PAGE>

         options to purchase any Common Stock or Convertible Securities) payable
         in respect of such Common Stock or in respect of any stock or
         securities paid as dividends or distributions and originating directly
         or indirectly from such Common Stock. For the purposes of the foregoing
         a dividend or distribution other than in cash shall be considered
         payable out of earnings or earned surplus only to the extent that such
         earnings or surplus are charged an amount equal to the fair value of
         such dividend or distribution as determined by the Board of Directors
         of the Company.

                  (g)      In case the Company shall at any time subdivide its
         outstanding shares of Common Stock into a greater number of shares, the
         Warrant Exercise Price in effect immediately prior to such subdivision
         shall be proportionately reduced, and conversely, in case the
         outstanding shares of Common Stock of the Company shall be combined
         into a smaller number of shares, the Warrant Exercise Price in effect
         immediately prior to such combination shall be proportionately
         increased.

                  (h)      If (i) the purchase price provided for in any right
         or option referred to in clause (i) of Section 3(e), or (ii) the
         additional consideration, if any, payable upon the conversion or
         exchange of Convertible Securities referred to in clause (i) or clause
         (ii) of Section 3(e), or (iii) the rate at which any Convertible
         Securities referred to in clause (i) or clause (ii) of Section 3(e) are
         convertible into or exchangeable for Common Stock, shall change at any
         time (other than under or by reason of provisions designed to protect
         against dilution), the Warrant Exercise Price then in effect hereunder
         shall forthwith be increased or decreased to such Warrant Exercise
         Price as would have obtained had the adjustments made upon the issuance
         of such rights, options or Convertible Securities been made upon the
         basis of (a) the issuance of the number of shares of Common Stock
         theretofore actually delivered upon the exercise of such options or
         rights or upon the conversion or exchange of such Convertible
         Securities, and the total consideration received therefor, and (b) the
         issuance at the time of such change of any such options, rights, or
         Convertible Securities then still outstanding for the consideration, if
         any, received by the Company therefor and to be received on the basis
         of such changed price; and on the expiration of any such option or
         right or the termination of any such right to convert or exchange such
         Convertible Securities, the Warrant Exercise Price then in effect
         hereunder shall forthwith be increased to such Warrant Exercise Price
         as would have obtained had the adjustments made upon the issuance of
         such rights or options or Convertible Securities been made upon the
         basis of the issuance of the shares of Common Stock theretofore
         actually delivered (and the total consideration received therefor) upon
         the exercise of such rights or options or upon the conversion or
         exchange of such Convertible Securities. If the purchase price provided
         for in any right or option referred to in clause (i) of Section 3(e),
         or the rate at which any Convertible Securities referred to in clause
         (i) or clause (ii) of Section 3(e) are convertible into or exchangeable
         for Common Stock, shall decrease at any time under or by reason of
         provisions with respect thereto designed to protect against dilution,
         then in case of the delivery of Common Stock upon the exercise of any
         such right or option or upon conversion or exchange of any such
         Convertible Security, the Warrant Exercise Price then in effect
         hereunder shall forthwith be decreased to such Warrant Exercise Price
         as would have obtained had the adjustments made upon the issuance of
         such right, option or Convertible Security been made upon the

                                       6
<PAGE>

         basis of the issuance of (and the total consideration received for) the
         shares of Common Stock delivered as aforesaid.

                  (i)      If any capital reorganization or reclassification of
         the capital stock of the Company, or consolidation or merger of the
         Company with another corporation, or the sale of all or substantially
         all of its assets to another corporation shall be effected in such a
         way that holders of Common Stock shall be entitled to receive stock,
         securities or assets with respect to or in exchange for Common Stock,
         then, as a condition of such reorganization, reclassification,
         consolidation, merger or sale, lawful and adequate provision shall be
         made whereby the Holder of this Warrant shall thereafter have the right
         to receive upon the basis and upon the terms and conditions specified
         herein and in lieu of the shares of the Common Stock of the Company
         immediately theretofore receivable upon the exercise of this Warrant,
         such shares of stock, securities or assets as may be issued or payable
         with respect to or in exchange for a number of outstanding shares of
         such Common Stock equal to the number of shares of such stock
         immediately theretofore receivable upon the exercise of this Warrant
         had such reorganization, reclassification, consolidation, merger or
         sale not taken place, plus all dividends unpaid and accumulated or
         accrued thereon to the date of such reorganization, reclassification,
         consolidation, merger or sale, and in any such case appropriate
         provision shall be made with respect to the rights and interests of the
         Holder of this Warrant to the end that the provisions hereof (including
         without limitation provisions for adjustments of the Warrant Exercise
         Price and of the number of shares receivable upon the exercise of the
         this Warrant) shall thereafter be applicable, as nearly as may be in
         relation to any shares of stock, securities or assets thereafter
         receivable upon the exercise of this Warrant. The Company shall not
         effect any such consolidation, merger or sale, unless prior to the
         consummation thereof the successor corporation (if other than the
         Company) resulting from such consolidation or merger or the corporation
         purchasing such assets shall assume by written instrument executed and
         mailed to the Holder of this Warrant, at the last addresses of such
         holders appearing on the books of the Company, the obligation to
         deliver to the Holder such shares of stock, securities or assets as, in
         accordance with the foregoing provisions, the Holder may be entitled to
         receive.

                  (j)      Upon any adjustment of the Warrant Exercise Price,
         then and in each case the Company shall give written notice thereof, by
         first-class mail, postage prepaid, addressed to the Holder of this
         Warrant, which shall state the Warrant Exercise Price resulting from
         such adjustment and the increase or decrease, if any, in the number of
         shares receivable at such price upon the exercise of this Warrant,
         setting forth in reasonable detail the method of calculation and the
         facts upon which such calculation is based, and which notice shall be
         certified by a nationally recognized firm of independent auditors
         (which may be the Company's independent auditors).

                  (e)      (k) In case at any time:

                      (i)   the Company shall declare any cash dividend
                   on its Common Stock;

                                       7
<PAGE>

                           (ii)     the Company shall pay any dividend payable
                  in stock upon its Common Stock or make any distribution (other
                  than regular cash dividends) to the holders of its Common
                  Stock;

                           (iii)    the Company shall offer for subscription pro
                  rata to the holders of its Common Stock any additional shares
                  of stock of any class or other rights;

                           (iv)     there shall be any capital reorganization,
                  or reclassification of the capital stock of the Company, or
                  consolidation or merger of the Company with, or sales of all
                  or substantially all of its assets to, another corporation; or

                           (v)      there shall be a voluntary or involuntary
                  dissolution, liquidation or winding up of the Company;

         then, in any one or more of said cases, the Company shall give written
         notice, by first-class mail, postage prepaid, addressed to the Holder
         at the addresses of such holders as shown on the books of the Company,
         of the date on which (a) the books of the Company shall close or a
         record shall be taken for such dividend, distribution or subscription
         rights, or (b) such reorganization, reclassification, consolidation,
         merger, sale, dissolution, liquidation or winding up shall take place,
         as the case may be. Such notice shall also specify the date as of which
         the holders of Common Stock of record shall participate in such
         dividend, distribution or subscription rights, or shall be entitled to
         exchange their Common Stock for securities or other property
         deliverable upon such reorganization, reclassification, consolidation,
         merger, sale, dissolution, liquidation, or winding up, as the case may
         be. Such written notice shall be given at least twenty (20) days prior
         to the action in question and not less than twenty (20) days prior to
         the record date or the date on which the Company's transfer books are
         closed in respect thereto.

                  (l)      If any event occurs as to which in the opinion of the
         Board of Directors of the Company the other provisions of this Section
         3 are not strictly applicable or if strictly applicable would not
         fairly protect the rights of the Holder in accordance with the
         essential intent and principles of such provisions, then the Board of
         Directors shall make an adjustment in the application of such
         provisions, in accordance with such essential intent and principles, so
         as to protect such rights as aforesaid.

                  (m)      As used in this Section 3 the term "Common Stock"
         shall mean and include the Company's presently authorized Common Stock
         and shall also include any capital stock of any class of the Company
         hereafter authorized which shall not be limited to a fixed sum or
         percentage in respect of the rights of the holders thereof to
         participate in dividends or in the distribution of assets upon the
         voluntary or involuntary liquidation, dissolution or winding up of the
         Company; provided that the shares receivable pursuant to exercise of
         this Warrant shall include shares designated as Common Stock of the
         Company as of the date of issuance of this Warrant, or, in case of any
         reclassification of the outstanding shares thereof, the stock,
         securities or assets provided for in Section 3(i) above.

                                       8
<PAGE>

                  (n)      No fractional shares of Common Stock shall be issued
         upon conversion pursuant to this Section 3, but, instead of any
         fraction of a share which would otherwise be issuable, the Company
         shall pay a cash adjustment in respect of such fraction in an amount
         equal to the same fraction of the Fair Market Value, as defined in
         Section 1, of one share of Common Stock as of the close of business on
         the day of conversion.

         4.       This Warrant shall not entitle the Holder to any voting rights
or other rights as a shareholder of the Company.

         5.       The Holder, by acceptance hereof, represents and warrants that
(a) it is acquiring this Warrant for its own account for investment purposes
only and not with a view to its resale or distribution and (b) it has no present
intention to resell or otherwise dispose of all or any part of this Warrant.
Other than pursuant to registration under federal and state securities laws or
an exemption from such registration, the availability of which the Company shall
determine in its sole discretion, (y) the Company will not accept the exercise
of this Warrant or issue certificates for shares of Warrant Stock and (z)
neither this Warrant nor any shares of Warrant Stock may be sold, pledged,
assigned or otherwise disposed of (whether voluntarily or involuntarily). The
Company may condition such issuance or sale, pledge, assignment or other
disposition on the receipt from the party to whom this Warrant is to be so
transferred or to whom Warrant Stock is to be issued or so transferred of any
representations and agreements requested by the Company in order to permit such
issuance or transfer to be made pursuant to exemptions from registration under
federal and applicable state securities laws. Each certificate representing the
Warrant (or any part thereof) and any shares of Warrant Stock shall be stamped
with appropriate legends setting forth these restrictions on transferability.
The Holder, by acceptance hereof, agrees to give written notice to the Company
before exercising or transferring this Warrant or transferring any shares of
Warrant Stock of the Holder's intention to do so, describing briefly the manner
of any proposed exercise or transfer. Within thirty (30) days after receiving
such written notice, the Company shall notify the Holder as to whether such
exercise or transfer may be effected.

         6.       This Warrant shall be transferable only on the books of the
Company by the Holder in person, or by duly authorized attorney, on surrender of
the Warrant, properly assigned.

         7.       Neither this Warrant nor any term hereof may be changed,
waived, discharged or terminated orally but only by an instrument in writing
signed by the party against which enforcement of the change, waiver, discharge
or termination is sought.

         IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
its duly authorized officer and to be dated as of the date set forth above.

                                                    LSC, INCORPORATED

                                                    By
                                                      --------------------------
                                                    Its
                                                       -------------------------

                                       9
<PAGE>

THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 OR APPLICABLE STATE SECURITIES LAWS. THESE SECURITIES HAVE BEEN
ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD, PLEDGED, ASSIGNED
OR OTHERWISE DISPOSED OF, AND NO TRANSFER OF THE SECURITIES WILL BE MADE BY THE
COMPANY OR ITS TRANSFER AGENT, IN THE ABSENCE OF SUCH REGISTRATION OR AN OPINION
OF COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.

                                       10

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