Exhibit 10.3




 




MagStar Technologies, Inc. (MGST)




Hopkins, MN




March 11, 2003




 




News Release




 




MagStar Technologies, Inc.

(formerly Reuter Manufacturing, Inc.) announced that on February 25, 2003, it

sold and leased back its headquarters and manufacturing facility in Hopkins,

Minnesota.  The purchaser was Hopkins

Eleventh Avenue LLC (“Eleventh Avenue”), an affiliate of the Company’s largest

shareholder.




 




The purchase price for

the building and property was $3,700,000, consisting of $3,189,148.03 in cash

and a Promissory Note for $510,851.97.  

The Company entered into a 6.5 year gross lease with Eleventh Avenue for

the building and property at an annual cost of $3.50 per square foot,

aggregating $382,935.00 per year for the first three years and escalating to

$417,948.00 per year for the remaining three and one half years.




 




In the transaction, the

Company paid in full its mortgage on the property with U.S. Bank in the amount

of $2,675,798.08, including accrued interest. 

The mortgage had originally been entered into as security for Term Loan

A under the provisions of the Company’s Credit Agreement with U.S. Bank dated

October 20, 2000.




 




As of January 31, 2003,

the land and building had a balance sheet value of $1,551,081.74, including

depreciation.  The sale price of

$3,700,000 resulted in a balance sheet gain of 

$2,148,918.26 which will be realized over the life of the lease from

Eleventh Avenue.  After paying off the

mortgage, the Company used the net cash and Promissory Note proceeds totaling

$1,024,201.92 to reduce debt owed to Activar Properties, Inc. and affiliates.




 




Eleventh Avenue is a

wholly owned subsidiary of Activar Properties, Inc. which in turn is wholly

owned by Richard F. McNamara, a director of the Company.  James L. Reissner, the President of Activar

Properties, Inc., is also a director and shareholder of the Company.  Richard F. McNamara is also the owner of

Activar, Inc., the largest shareholder of the Company.




 




The Board of Directors

of the Company authorized the transaction in order to reduce the indebtedness

of the Company and improve cash flow. 

In the course of the past two years, Activar Properties, Inc. and

affiliates have supplied much of the Company’s cash needs, and the Company’s

outstanding balance to Activar Properties, Inc. and affiliates was

approximately $5,513,000 as of February 28, 2003.  The transaction with Eleventh Avenue was determined to be on

better terms than could be obtained by the Company directly from unaffiliated

financing sources.  The purchase price

was based upon an independent appraisal of the value of the property and

building obtained by the bank which provided financing to Eleventh Avenue in

connection with the transaction.




 





























 




MagStar Technologies, Inc.

(formerly Reuter Manufacturing, Inc.) is a Hopkins based manufacturer of

precision-machined components and close tolerance bearing-related assemblies,

used in electro-mechanical devices such as several models of blood centrifuges

for a variety of medical applications. Other growing concentrations include

biometric identification assemblies, spindles, precision slides, complex

magnetic assemblies, and motion control devices for factory and OEM equipment

automation. In order to differentiate itself from its competitors, the Company

emphasizes its’ core technical competencies, which are engineering solutions,

precision machining, and assembly services.




 




 




The information in this

discussion may contain forward-looking statements within the meaning of Section

27A of the Securities Act of 1933, as amended, and Section 21E of the

Securities Exchange Act of 1934, as amended. 

These forward-looking statements involve risks and uncertainties,

including statements regarding the Company’s capital needs, business strategy

and expectations.  Any statements

contained that are not statements of historical facts may be deemed to be

forward-looking statements.  In some

cases you can identify forward-looking statements by terminology such as “may,”

“will,” “should,” “expect,” “plan,” “intend,” “anticipate,” “believes,”

“estimate,” “predict,” “potential,” or “continue” the negative of the terms or

other comparable terminology.  Actual

events or results may differ materially. 

In evaluating these statements, you should consider various factors,

including the risks included from time to time in other reports filed with the

SEC.  These factors may cause the

Company’s actual results to differ materially from any forward-looking

statements.  The Company disclaims any obligation

to publicly update these statements, or disclose any difference between actual

results and those reflected in these statements.  The information constitutes forward-looking statements within the

meaning of the Private Securities Litigation Reform Act of 1995.




 




2