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                                                                   EXHIBIT 10.7

                            MAGSTAR TECHNOLOGIES, INC.
                        2001 EMPLOYEE STOCK PURCHASE PLAN

1.   PURPOSE. The purpose of this 2001 Employee Stock Purchase Plan (the "Plan")
     is to advance the interests of MagStar Technologies, Inc. (the "Company")
     and its shareholders by providing Employees (as defined below) of the
     Company and its Designated Subsidiaries (as defined below) with an
     opportunity to acquire an ownership interest in the Company through the
     purchase of Common Stock (as defined below) of the Company on favorable
     terms through payroll deductions. It is the intention of the Company that
     the Plan qualify as an "employee stock purchase plan" under Section 423 of
     the Internal Revenue Code of 1986, as amended (the "Code"). Accordingly,
     provisions of the Plan shall be construed so as to extend and limit
     participation in a manner consistent with the requirements of Section 423
     of the Code.

2.   DEFINITIONS.

     2.1  "Board" means the Board of Directors of the Company.

     2.2  "Common Stock" means the voting common stock, par value $.1875 per
          share, of the Company, or the number and kind of shares of stock or
          other securities into which such voting common stock may be changed in
          accordance with Section 13 of the Plan.

     2.3  "Committee" means the entity administering the Plan, as provided in
          Section 3 below.

     2.4  "Compensation" means all regular straight-time earnings and
          commissions that are included in regular compensation, excluding
          bonuses and any pay for overtime (except to the extent that the
          inclusion of any such item is specifically directed by the Committee),
          determined in a manner consistent with the requirements of Section 423
          of the Code.

     2.5  "Designated Subsidiary" means a Subsidiary that has been designated by
          the Board from time to time, in its sole discretion, as eligible to
          participate in the Plan.

     2.6  "Employee" means any person, including an officer, who is customarily
          employed by the Company or one of its Designated Subsidiaries for at
          least 20 hours per week and more than five (5) months in a calendar
          year.

     2.7  "Exchange Act" means the Securities Exchange Act of 1934, as amended.

     2.8  "Fair Market Value" means, with respect to the Common Stock, as of any
          date (or, if no shares were traded or quoted on such date, as of the
          next preceding date on which there was such a trade or quote), (a) the
          closing sale price of the Common Stock if the Common Stock is listed,
          admitted to unlisted trading privileges or reported on any foreign or
          national securities exchange or on the Nasdaq National Market or an
          equivalent foreign market on which sale prices are reported; (b) if
          the Common Stock is not so listed, admitted to unlisted trading
          privileges or reported, the closing bid price as reported by the
          Nasdaq SmallCap Market, OTC Bulletin Board or the National Quotation
          Bureau, Inc. or other comparable service; or (c) if the Common Stock


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          is not so listed or reported, such price as the Committee determines
          in good faith in the exercise of its reasonable discretion, but in a
          manner acceptable under Section 423 of the Code.

     2.9  "Offering" means any of the offerings to Participants of options to
          purchase Common Stock under the Plan, each continuing for three
          months, except for the initial Offering which shall continue for the
          period set forth in Section 5 below.

     2.10 "Offering Date" means the first day of the Offering Period under the
          Plan, as described in Section 5 below.

     2.11 "Offering Period" means the time period commencing on the Offering
          Date and ending on the Termination Date.

     2.12 "Option Price" is defined in Section 8 below.

     2.13 "Participant" means an eligible Employee who elects to participate in
          the Plan pursuant to Section 6 below.

     2.14 "Securities Act" means the Securities Act of 1933, as amended.

     2.15 "Subsidiary" means any subsidiary corporation of the Company within
          the meaning of Section 424(f) of the Code.

     2.16 "Termination Date" means the last day of the Offering Period under the
          Plan, as described in Section 5 below.

3.   ADMINISTRATION. The Plan will be administered by the Board or by a
     committee of the Board. So long as the Company has a class of its equity
     securities registered under Section 12 of the Exchange Act, the Plan will
     be administered by a committee of the Board consisting solely of not less
     than two members of the Board who are "non-employee directors" within the
     meaning of Rule 16b-3 under the Exchange Act and, if the Board so
     determines in its sole discretion, who are "outside directors" within the
     meaning of Section 162(m) of the Code (the "Committee"). Members of the
     Committee shall be appointed from time to time by the Board, shall serve at
     the pleasure of the Board, and may resign at any time upon written notice
     to the Board. A majority of the members of the Committee shall constitute a
     quorum. The Committee shall act by majority approval of the members and
     shall keep minutes of its meetings. Action of the Committee may be taken
     without a meeting if unanimous written consent is given. Copies of minutes
     of the Committee's meetings and of its actions by written consent shall be
     kept with the corporate records of the Company. In accordance with and
     subject to the provisions of the Plan, the Committee shall have authority
     to make, administer and interpret such rules and regulations as it deems
     necessary to administer the Plan, and any determination, decision or action
     in connection with construction, interpretation, administration or
     application of the Plan shall be final, conclusive and binding upon all
     Participants and any and all persons claiming under or through any
     Participant. No member of the Committee shall be liable for any action or
     determination made in good faith with respect to the Plan or any option
     granted under the Plan.

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4.   ELIGIBILITY.

     4.1  Any Employee who is employed by the Company or a Designated Subsidiary
          on the date that this Plan is approved by the Board and any Employee
          who becomes an employee after such date and has been employed by the
          Company or a Designated Subsidiary for at least one month prior to an
          Offering Date shall be eligible to participate in the Plan, beginning
          with the Offering commencing on such Offering Date, subject to the
          limitations imposed by Section 423(b) of the Code. With respect to a
          Designated Subsidiary that has been acquired by the Company, the
          period of employment of Employees of such Designated Subsidiary
          occurring prior to the time of such acquisition shall be included for
          purposes of determining whether an Employee has been employed for the
          requisite period of time under the Plan.

     4.2  Any provisions of the Plan to the contrary notwithstanding, no
          Employee shall be granted an option under the Plan if:

          (a)  immediately after the grant, such Employee (or any other person
               whose stock ownership would be attributed to such Employee
               pursuant to Section 424(d) of the Code) would own shares of
               Common Stock and/or hold outstanding options to purchase shares
               of Common Stock possessing five percent (5%) or more of the total
               combined voting power or value of all classes of shares of the
               Company or of any Subsidiary; or

          (b)  the amount of payroll deductions that the Employee has elected to
               have withheld under such option (pursuant to Section 7 below)
               would permit the Employee to purchase shares of Common Stock
               under all "employee stock purchase plans" (within the meaning of
               Section 423 of the Code) of the Company and its Subsidiaries to
               accrue (i.e., become exercisable) at a rate that exceeds $25,000
               of the Fair Market Value of such shares of Common Stock
               (determined at the time such option is granted) for each calendar
               year in which such option is outstanding at any time.

5.   OFFERINGS. Options to purchase shares of Common Stock shall be offered to
     Participants under the Plan through a continuous series of Offerings, each
     (a) continuing for three months (except for the initial Offering Period)
     and commencing on January 1, April 1, July 1 and October 1 of each year, as
     the case may be, except for the initial Offering Period (the "Offering
     Date"), and (b) terminating on March 31, June 30, September 30 and December
     31 of each year, as the case may be (the "Termination Date"). The initial
     Offering Period under the Plan shall continue for five months, commencing
     on May 1, 2001 and terminating on September 30, 2001. Offerings under the
     Plan shall continue until either (i) the Committee decides, in its sole
     discretion, that no further Offerings shall be made because the Common
     Stock remaining available under the Plan is insufficient to make an
     Offering to all eligible Employees, or (ii) the Plan is terminated in
     accordance with Section 17 below.

6.   PARTICIPATION.

     6.1  An eligible Employee may become a Participant in the Plan by
          completing a subscription agreement authorizing payroll deductions on
          the form provided by the Company (the "Participation Form") and filing
          the Participation Form with the Company's Human Resources Department
          not less than 15 days before the Offering Date of the first Offering
          in

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          which the Participant wishes to participate.

     6.2  Except as provided in Section 7.1 below, payroll deductions for a
          Participant shall begin with the first payroll following the
          applicable Offering Date, and shall continue until the termination
          date of the Plan, subject to earlier termination by the Participant as
          provided in Section 11 below or increases or decreases by the
          Participant in the amount of payroll deductions as provided in Section
          7.3 below.

     6.3  A Participant may discontinue participation in the Plan at any time as
          provided in Section 11 below.

7.   PAYROLL DEDUCTIONS.

     7.1  By completing and filing a Participation Form, a Participant shall
          elect to have payroll deductions made from the Participant's total
          Compensation (in whole percentages from one percent (1%) to a maximum
          of ten percent (10%) of the Participant's total Compensation) on each
          payday during the time he or she is a Participant in the Plan in such
          amount as he or she shall designate on the Participation Form.

     7.2  All payroll deductions authorized by a Participant shall be credited
          to an account established under the Plan for the Participant. The
          monies represented by such account shall be held as part of the
          Company's general assets, usable for any corporate purpose, and the
          Company shall not be obligated to segregate such monies. A Participant
          may not make any separate cash payment or contribution to such
          account.

     7.3  No increases or decreases of the amount of payroll deductions for a
          Participant may be made during an Offering. A Participant may increase
          or decrease the amount of payroll deductions under the Plan for
          subsequent Offerings by completing an amended Participation Form and
          filing it with the Company's Human Resources Department not less than
          15 days prior to the Offering Date as of which such increase or
          decrease is to be effective.

8.   GRANT OF OPTION. On each Offering Date, each eligible Employee who is then
     a Participant shall be granted (by operation of the Plan) an option to
     purchase (at the Option Price) as many shares of Common Stock as the
     Participant will be able to purchase with the payroll deductions credited
     to the Participant's account during the Offering Period. Notwithstanding
     the foregoing, in no event may the number of shares purchased by any
     Participant during an Offering exceed 1,000 shares of Common Stock. The
     option price per share of such shares (the "Option Price") shall be the
     lesser of (a) eighty-five percent (85%) of the Fair Market Value of one
     share of Common Stock on the Offering Date, or (b) eighty-five (85%) of the
     Fair Market Value of one share of Common Stock on the Termination Date.

9.   EXERCISE OF OPTION.

     9.1  Unless a Participant gives written notice to the Company as provided
          in Section 9.4 below or withdraws from the Plan pursuant to Section 11
          below, the Participant's option for the purchase of shares of Common
          Stock granted for an Offering will be exercised automatically at the
          Termination Date of such Offering for the purchase of the number of
          full and fractional shares calculated to the third (3rd) decimal place
          of Common Stock that the accumulated payroll

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          deductions in the Participant's account on such Termination Date will
          purchase at the applicable Option Price.

     9.2  A Participant may purchase one or more shares in connection with the
          automatic exercise of an option granted for any Offering. If the
          Committee elects to deliver a statement of account to Participants
          pursuant to Section 10.1(a)(A) below, that portion of any balance
          remaining in a Participant's payroll deduction account at the close of
          business on the Termination Date of any Offering that is less than the
          purchase price of one full share will be deemed to have purchased such
          number of fractional shares of Common Stock as would then be
          purchasable at the applicable Option Price, with such fractional
          shares calculated to the third (3rd) decimal place. If the Committee
          elects to deliver stock certificates to Participants pursuant to
          Section 10.1(a)(B) below, that portion of any balance remaining in a
          Participant's payroll deduction account at the close of business on
          the Termination Date of any Offering that is less than the purchase
          price of one full share will be carried forward into the Participant's
          payroll deduction account for the following Offering; provided that in
          no event will the balance carried forward be equal to or greater than
          the purchase price of one share on the Termination Date of an
          Offering.

     9.3  No Participant (or any person claiming through such Participant) shall
          have any interest in any Common Stock subject to an option under the
          Plan until such option has been exercised, at which point such
          interest shall be limited to the interest of a purchaser of the Common
          Stock purchased upon such exercise pending the delivery or credit of
          such Common Stock in accordance with Section 10 below. During the
          Participant's lifetime, a Participant's option to purchase shares of
          Common Stock under the Plan is exercisable only by such Participant.

     9.4  By written notice to the Company prior to the Termination Date of any
          Offering, a Participant may elect, effective on such Termination Date,
          to:

          (a)  withdraw all of the accumulated payroll deductions in the
               Participant's account as of the Termination Date (which
               withdrawal may, but need not, also constitute a notice of
               termination and withdrawal pursuant to Section 11.1); or

          (b)  exercise the Participant's option for a specified number of full
               shares not less than five that is less than the number of full
               shares of Common Stock that the accumulated payroll deductions in
               the Participant's account will purchase on the Termination Date
               of the Offering at the applicable Option Price, and withdraw the
               balance in the Participant's payroll deduction account.

10.  DELIVERY.

     10.1 As promptly as practicable after the Termination Date of each
          Offering, the Company will deliver to each Participant, as
          appropriate, the following:

          (a)  At the election of the Committee, either issue (A) in
               certificated or uncertificated form to a third party the
               aggregate number of shares of Common Stock purchased in
               connection with an Offering (including an aggregate of all of the
               fractional shares deemed to have been purchased pursuant to
               Section 9.2 above) rounded to the nearest full share, which
               shares will be held by such third party for the benefit of the

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               Participants in accordance with their respective interests, and
               to each Participant a statement summarizing the number of whole
               shares of Common Stock purchased and fractional shares deemed
               purchased upon exercise of the Participant's option granted for
               such Offering, or (B) a certificate representing the number of
               full shares of Common Stock purchased upon exercise of the
               Participant's option granted for such Offering, registered in the
               name of the Participant or, if the Participant so directs on the
               Participation Form, in the names of the Participant and his or
               her spouse.

          (b)  If the Participant makes an election pursuant to Section 9.4(a)
               above for the Offering, a check in an amount equal to the total
               of the payroll deductions credited to the Participant's account.

          (c)  If Participant makes an election pursuant to Section 9.4(b)
               above, a check in the amount of the balance of any payroll
               deductions credited to the Participant's account that were not
               used for the purchase of Common Stock.

          (d)  If the balance in the Participant's payroll deduction account
               exceeds the dollar amount necessary to purchase the maximum
               amount of shares that may be purchased in an Offering, a check in
               an amount equal to the excess balance.

     10.2 If the Company delivers a statement of account as provided in Section
          10.1(a)(A) above, a Participant may at any time request that a
          certificate for the number of whole shares of Common Stock purchased
          by such Participant in an Offering or in any previous Offering (with
          respect to which such participant has not been issued a certificate)
          be issued and delivered to such Participant by making a written
          request to the Company. Such written request shall be made to the
          Company's Human Resources Department or, at the direction of the
          Company, to the transfer agent and registrar for the Company's Common
          Stock. In lieu of issuing certificates for fractional shares,
          Participants will receive a cash distribution representing any
          fractional shares, calculated in accordance with Section 11.1 below.

     10.3 If the Company delivers a statement of account as provided in Section
          10.1(a)(A) above, all full shares purchased and fractional shares
          deemed to have been purchased by a Participant in an Offering and in
          any subsequent Offerings will accumulate for the benefit of the
          Participant until the Participant's withdrawal or termination pursuant
          to Section 11 below.

11.  WITHDRAWAL; TERMINATION OF EMPLOYMENT.

     11.1 A Participant may terminate participation in the Plan and withdraw
          all, but not less than all, of the payroll deductions credited to the
          Participant's account under the Plan at any time prior to the
          Termination Date of an Offering, for such Offering, by giving written
          notice to the Company. Such notice shall state that the Participant
          wishes to terminate the Participant's involvement in the Plan, specify
          a termination date and request the withdrawal of all of the
          Participant's payroll deductions held under the Plan. All of the
          Participant's payroll deductions credited to the Participant's account
          will be paid to such Participant as soon as practicable after the
          termination date specified in the notice of termination and withdrawal
          (or, if no such date is specified, as soon as practical after receipt
          of notice of termination and withdrawal), and the Participant's option
          for such Offering will be automatically canceled, and no further
          payroll

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          deductions for the purchase of shares of Common Stock will be made for
          such Offering or for any subsequent Offering, except in accordance
          with a new Participation Form filed pursuant to Section 6 above. If
          the Committee elects to deliver a statement of account pursuant to
          Section 10.1(a)(A) above, then on the withdrawal and termination of a
          Participant's participation in the Plan, the Participant will be
          entitled to receive, at the Participant's option, (i) cash equal to
          the Fair Market Value of all full shares of Common Stock and any
          fractional share deemed purchased pursuant to Section 9.2 then held
          for the benefit of the Participant; or (ii) a certificate representing
          the number of full shares of Common Stock held for the benefit of the
          Participant plus cash in an amount equal to the Fair Market Value of
          any remaining fractional shares deemed to have been purchased. In any
          event, Fair Market Value will be determined as set forth in Section
          11.4 below, and such certificate will be delivered and such amounts
          paid as soon thereafter as practicable.

     11.2 Upon termination of a Participant's employment for any reason,
          including retirement or death, the payroll deductions accumulated in
          the Participant's account will be returned to the Participant as soon
          as practicable after such termination or, in the case of death, to the
          person or persons entitled thereto under Section 14 below, and the
          Participant's option will be automatically canceled. If the Committee
          elects to deliver a statement of account pursuant to Section
          10.1(a)(A), then upon the termination of a Participant's employment
          for any reason, including retirement or death, the Participant, or, in
          the case of death, the Participant's designated beneficiary (if
          allowed by the Committee) as determined in accordance with Section 14
          or the executor or administrator of the Participant's estate will be
          entitled to receive, at their option, (i) cash equal to the Fair
          Market Value of all full shares of Common Stock and any fractional
          share deemed purchased pursuant to Section 9.2 then held for the
          benefit of the Participant; or (ii) a certificate representing the
          number of full shares of Common Stock held for the benefit of the
          Participant plus cash in an amount equal to the Fair Market Value of
          any remaining fractional share deemed to have been purchased. In any
          event, Fair Market Value will be determined as set forth in Section
          11.4 below and such certificate will be delivered and such amounts
          paid as soon thereafter as practicable. For purposes of the Plan, the
          termination date of employment shall be the Participant's last date of
          actual employment and shall not include any period during which such
          Participant receives any severance payments. A transfer of employment
          between the Company and a Designated Subsidiary or between one
          Designated Subsidiary and another Designated Subsidiary, or absence or
          leave approved by the Company, shall not be deemed a termination of
          employment under this Section 11.2.

     11.3 A Participant's termination and withdrawal pursuant to Section 11.1
          above will not have any effect upon the Participant's eligibility to
          participate in a subsequent Offering by completing and filing a new
          Participation Form pursuant to Section 6 above or in any similar plan
          that may hereafter be adopted by the Company.

     11.4 For purposes of this Section 11 only, "Fair Market Value" means the
          prevailing market price of the Common Stock on any national securities
          exchange (if the Common Stock is listed on any such exchange) or as
          reported by the Nasdaq National Market, the Nasdaq SmallCap System or
          the National Quotation Bureau, Inc. (or any comparable reporting
          service), as the case may be, (if transactions or bid and asked prices
          are reported in the over-the-counter market are so reported) on the
          first day on which shares of Common Stock are traded following the day
          on which the Company, or if the Company so designates, the Company's
          agent, receives

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          notice from a Participant of an event specified in Section 11.1 or
          11.2 above.

12.  INTEREST.  No interest shall accrue on a Participant's payroll deductions
     under the Plan.

13.  STOCK SUBJECT TO THE PLAN.

     13.1 The maximum number of shares of Common Stock that shall be reserved
          for sale under the Plan shall be 250,000 shares, subject to adjustment
          upon changes in capitalization of the Company as provided in Section
          13.2 below. The shares to be sold to Participants under the Plan may
          be, at the election of the Company, either treasury shares or shares
          authorized but unissued. If the total number of shares of Common Stock
          that would otherwise be subject to options granted pursuant to Section
          8 above on any Termination Date exceeds the number of shares then
          available under the Plan (after deduction of all shares for which
          options have been exercised or are then outstanding), the Company
          shall make a pro rata allocation of the shares of Common Stock
          remaining available for issuance in as uniform and equitable a manner
          as is practicable as determined in the Company's sole discretion. In
          such event, the Company shall give written notice of such reduction of
          the number of shares subject to the option to each Participant
          affected thereby and shall return any excess funds accumulated in each
          Participant's account as soon as practicable after the Termination
          Date of such Offering.

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

     13.3 In the event that Participants are deemed to have purchased fractional
          shares of Common Stock pursuant to Section 9.2 above, the aggregate of
          such fractional share interests at any given time will be applied to
          reduce the maximum number of shares of Common Stock remaining
          available for issuance under the Plan.

14.  DESIGNATION OF BENEFICIARY.

     14.1 In the discretion of the Committee, a Participant may file written
          designation of a beneficiary who is to receive shares of Common Stock
          and/or cash, if any, from the Participant's account under the Plan in
          the event of such Participant's death at a time when cash or shares of
          Common Stock are held for the Participant's account.

     14.2 Such designation of beneficiary may be changed by the Participant at
          any time by written notice. In the event of the death of a Participant
          in the absence of a valid designation of a beneficiary who is living
          at the time of such Participant's death, the Company shall deliver
          such shares of Common Stock and/or cash to the executor or
          administrator of the estate of the Participant; or, if no such
          executor or administrator has been appointed (to the knowledge of the

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          Company), the Company, in its discretion, may deliver such shares of
          Common Stock and/or cash to the spouse or to any one or more
          dependents or relatives of the Participant; or, if no spouse,
          dependent or relative is known to the Company, then to such other
          person as the Company may designate.

15.  TRANSFERABILITY. Neither payroll deductions credited to a Participant's
account nor any rights with regard to the exercise of an option or to receive
shares of Common Stock under the Plan may be assigned, transferred, pledged or
otherwise disposed of in any way (other than by will, the laws of descent and
distribution, or as provided in Section 14 above) by the Participant. Any such
attempt at assignment, transfer, pledge or other disposition shall be without
effect, except that the Company may treat such act as an election to withdraw
funds in accordance with Section 11.1 above.

16.  AMENDMENT OR TERMINATION. The Plan may be amended by the Board from time to
time to the extent that the Board deems necessary or appropriate in light of,
and consistent with, Section 423 of the Code; provided, however, that no such
amendment shall be effective, without approval of the shareholders of the
Company, if shareholder approval of the amendment is then required pursuant to
Rule 16b-3 under the Exchange Act or any successor rule or Section 423 of the
Code. The Board also may terminate the Plan or the granting of options pursuant
to the Plan at any time; provided, however, that the Board shall not have the
right to modify, cancel, or amend any outstanding option granted pursuant to the
Plan before such termination unless each Participant consents in writing to such
modification, amendment or cancellation.

17.  NOTICES. All notices or other communications by a Participant to the
Company in connection with the Plan shall be deemed to have been duly given when
received in the Company's Human Resources Department or in such other department
or by such other person as may be designated by the Company for the receipt of
such notices or other communications, in the form and at the location specified
by the Company.

18.  TERM OF PLAN. The Plan shall be effective as of April 3, 2001, the date the
Plan was adopted by the Board. The Plan has been adopted by the Board subject to
shareholder approval within twelve months before or after the date the Board
adopted the Plan and subject to completion of the Company's initial public
offering of Common Stock. Prior to shareholder approval, shares of Common Stock
may be issued under the Plan subject to such approval. The Plan will terminate
at midnight on April 3, 2011, and may be terminated prior to such time by Board
action in accordance with Section 16.

19.  CONDITIONS UPON ISSUANCE OF SHARES.

     19.1 COMPLIANCE. Shares shall not be issued with respect to an option
          unless the exercise of such option and the issuance and delivery of
          such shares pursuant thereto shall comply with all applicable
          provisions of law, domestic or foreign, including, without limitation,
          the Securities Act, the Exchange Act, the rules and regulations
          promulgated thereunder, and the requirements of any stock exchange or
          Nasdaq upon which the shares may then be listed, and shall be further
          subject to the approval of counsel for the Company with respect to
          such compliance. As a condition to the exercise of an option, if
          required by applicable securities laws, the Company may require the
          Participant for whose account the option is being exercised to

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          represent and warrant at the time of such exercise that the shares are
          being purchased only for investment and without any present intention
          to sell or distribute such shares if, in the opinion of counsel for
          the Company, such a representation is required by any of the
          aforementioned applicable provisions of law.

     19.2 SHARE TRANSFERS. Shares of Common Stock issued pursuant to options
          granted under the Plan may not be sold, assigned, transferred,
          pledged, encumbered or otherwise disposed of, whether voluntarily or
          involuntarily, directly or indirectly, by operation of law or
          otherwise, except pursuant to registration under the Securities Act
          and applicable state securities laws or pursuant to exemptions from
          such registrations. The Company may condition the sale, assignment,
          transfer, pledge, encumbrance or other disposition of such shares not
          issued pursuant to an effective and current registration statement
          under the Securities Act and all applicable state securities laws on
          the receipt from the party to whom the shares of Common Stock are to
          be so transferred of any representations or agreements requested by
          the Company in order to permit such transfer to be made pursuant to
          exemptions from registration under the Securities Act and applicable
          state securities laws.

     19.3 LEGENDS. Unless a registration statement under the Securities Act and
          applicable state securities laws is in effect with respect to the
          issuance or transfer of shares of Common Stock under the Plan, each
          certificate representing any such shares shall be endorsed with a
          legend in substantially the following form, unless counsel for the
          Company is of the opinion as to any such certificate that such legend
          is unnecessary:

          THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
          SECURITIES ACT OF 1933, AS AMENDED ("THE ACT"), OR UNDER APPLICABLE
          STATE SECURITIES LAWS. THESE SECURITIES HAVE BEEN ACQUIRED FOR
          INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD, ASSIGNED,
          TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF EXCEPT
          PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND SUCH
          STATE LAWS OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE ACT
          AND SUCH STATE LAWS, THE AVAILABILITY OF WHICH IS TO BE ESTABLISHED TO
          THE SATISFACTION OF THE COMPANY.

20.  MISCELLANEOUS. The headings to Sections in the Plan have been included for
     convenience of reference only. Except as otherwise expressly indicated, all
     references to Sections in the Plan shall be to Sections of the Plan. The
     Plan shall be interpreted and construed in accordance with the laws of the
     State of Minnesota.

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<Page>

                            MAGSTAR TECHNOLOGIES, INC.
                        2001 EMPLOYEE STOCK PURCHASE PLAN

                    PAYROLL DEDUCTION AUTHORIZATION FORM AND
                             SUBSCRIPTION AGREEMENT

______            Original Application
______            Change in Payroll Deduction Amount

1.  I, _______________________________ hereby elect to participate in the
MagStar Technologies, Inc. 2001 Employee Stock Purchase Plan (the "Plan") and
subscribe to purchase shares of the Company's Common Stock (the "Shares") in
accordance with this Agreement and the Plan.

2.  I hereby authorize payroll deductions, beginning ____________, 20__, from
each paycheck in the amount of __% of my compensation (may not exceed ten
percent (10%) of total compensation on each payday) in accordance with the Plan.

3.  I understand that said payroll deductions shall be accumulated for the
purchase of shares in accordance with the Plan, and that shares will be
purchased for me automatically at the end of each Offering Period under the Plan
unless I withdraw my accumulated payroll deductions, withdraw from the Plan, or
both, by giving written notice to the Company prior to the end of the offering
period, as provided in the Plan.

4.  Shares purchased for me under the Plan should be issued or held in an
account in the name(s) of:


    ----------------------------------------------------------------
                               (name(s))


    ----------------------------------------------------------------
                               (address)


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


    ----------------------------------------------------------------
                          (social security number)

5.  I understand that if I dispose of any Shares received by me pursuant to the
Plan within two years after the first day of the Offering Period during which I
purchased such Shares, I may be treated for federal income tax purposes as
having received ordinary income at the time of such disposition in an amount
equal to the excess of the fair market value of the Shares at the time such
Shares were delivered to me over the option price paid for the Shares. I HEREBY
AGREE TO NOTIFY THE COMPANY IN WRITING WITHIN 30 DAYS AFTER THE DATE OF ANY SUCH
DISPOSITION. However, if I dispose of such shares at any time after the
expiration of the two year holding period, I understand that I will be treated
for federal income tax purposes as having received income only

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at the time of such disposition, and that such income will be taxed as
ordinary income only to the extent of an amount equal to the lesser of (a)
the excess of the fair market value of the Shares at the time of such
disposition over the amount paid for the Shares under the option, or (b) the
excess of the fair market value of the Shares over the option price, measured
as if the option had been exercised on the first day of the offering period
during which I purchased such shares. The remainder of the gain, if any,
recognized on such disposition will be taxed at capital gains rates.

6.  I have read the current prospectus for the MagStar Technologies, Inc.
2001 Employee Stock Purchase Plan.

Date:
     ----------------------             ----------------------------------------
                                             Signature of Employee


CERTIFICATION OF TAX IDENTIFICATION NUMBER


-------------------------------------------------------------------------------
Please indicate your Social Security or Tax Identification Number

I certify under penalties of perjury (1) that the number above is my correct
Social Security or Taxpayer Identification Number and (2) that I am not subject
to backup withholding either because I have not been notified by the IRS that I
am subject to backup withholding as a result of failure to report all interest
or dividends, or the IRS has notified me that I am no longer subject to backup
withholding.

Date:
     ----------------------             ----------------------------------------
                                             Signature

                                       12