Document:

EXHIBIT 10.1

 

2007-2009 Long-Term Cash Award

 

	
  Granted to:

  	
   

  	
  «Firstname» «Lastname»

  
	
  Effective Date of Grant:

  	
   

  	
  September 2007

  
	
  Targeted Award:

  	
   

  	
  «Target»

  
	
  Performance Period:

  	
   

  	
  January 1, 2007 — December 31, 2009

  

 

Under the long-term incentive program of W.R. Grace & Co (the “Company”),
the Compensation Committee (the “Committee”) of the Board of Directors of the
Company has granted you a Long-Term Cash Award under which you may earn a cash
payout in an amount equal to (or, in certain circumstances, greater or less
than) the Targeted Award set forth above, over the Performance Period.

 

You will earn this Targeted Award if the performance objectives
described in Annex B for the Performance Period are met. If the performance
objectives are only partially achieved or are over-achieved, the amount you
actually earn under this Award will be decreased (or eliminated) or increased
as set forth in Annex B.

 

The award will be calculated and paid to you, net of the applicable
taxes.

 

The consequences of a change in or termination of your employment
status during the Performance Period are described in the attached
Administrative Practices (Annex C).

 

In all matters regarding the administration of the Long-Term Cash
Award, the Committee has full and sole jurisdiction, subject to the provisions
of Annex C.

 

Long-Term Cash Awards are being granted only to a limited number of key
employees of the Company and its subsidiaries. This Award should, consequently,
be treated confidentially.

 

	
   

  	
  W.R. Grace & Co.

  
	
   

  	
   

  
	
   

  	
  /s/ Alfred Festa

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  Alfred Festa

  CEO, President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Acceptance of the foregoing is acknowledged this

                                    day
  of                          ,
  2007.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (Signature of Participant)

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (Please print full name)

  
				

 

 

Annex B

CALCULATION OF 2007-2009 LTIP

 

Your 2007-2009 LTIP award payout will be based on the 3-year compound
annual growth rate (CAGR) in total Grace core earnings before interest and
taxes (core EBIT). Payouts are contingent upon achievement of target CAGR for
the 3-year performance period. The target CAGR is 6%, using 2006 results as the base year.

 

The core earnings before interest and taxes (core EBIT) in 2006 was
$240.2 million. The chart below details six scenarios at different assumed
growth rates. The target growth is highlighted.

 

	
   

  	
   

  	
  Base Period

  	
   

  	
  Performance Period

  Growth Targets

  	
   

  	
   

  	
   

  
	
  Assumed Growth Rates

  	
   

  	
  2006

  	
   

  	
  2007

  	
   

  	
  2008

  	
   

  	
  2009

  	
   

  	
  Total Growth 07-09

  	
   

  
	
  1.50%

  	
   

  	
  240.2

  	
   

  	
  243.8

  	
   

  	
  247.5

  	
   

  	
  251.2

  	
   

  	
  742.5

  	
   

  
	
  3.00%

  	
   

  	
  240.2

  	
   

  	
  247.4

  	
   

  	
  254.8

  	
   

  	
  262.4

  	
   

  	
  764.6

  	
   

  
	
  6.00%

  	
   

  	
  240.2

  	
   

  	
  254.6

  	
   

  	
  269.9

  	
   

  	
  286.1

  	
   

  	
  810.6

  	
   

  
	
  10.00%

  	
   

  	
  240.2

  	
   

  	
  264.2

  	
   

  	
  290.6

  	
   

  	
  319.7

  	
   

  	
  874.5

  	
   

  
	
  15.00%

  	
   

  	
  240.2

  	
   

  	
  276.2

  	
   

  	
  317.6

  	
   

  	
  365.2

  	
   

  	
  959.0

  	
   

  
	
  25.00%

  	
   

  	
  240.2

  	
   

  	
  300.3

  	
   

  	
  375.4

  	
   

  	
  469.3

  	
   

  	
  1145.0

  	
   

  

 

Actual results for each year of the performance period are adjusted for
the change in pension expense and LITP expense as compared to the base period.

 

The Long-Term Cash Award payout will vary with actual results as shown
in the chart below:

 

	
  CAGR Level 

  Achieved

  	
   

  	
  Payout

  (rounded to the

  nearest whole

  percentage)

  	
   

  
	
  25%

  	
   

  	
  200

  	
  %

  
	
  15%

  	
   

  	
  147

  	
  %

  
	
  10%

  	
   

  	
  121

  	
  %

  
	
  6%

  	
   

  	
  100

  	
  %

  
	
  3%

  	
   

  	
  50

  	
  %

  
	
  3%<

  	
   

  	
  Prorated

  	
   

  

 

For the 2007-2009 LTIP, cash payments will be made in two
installments—50% of what is earned based on performance for 2007 and 2008, but
no more than 50% of your target for the first two years, will be paid in
March 2009, and the balance will be paid in March 2010.

 

Example:

 

A sample calculation of the Long-Term Cash Award Earned is provided
below. Assume that your Targeted Award is $20,400. $13,600 would be earned
after Year 2 assuming a 6% growth per year. Therefore the payment in
March 2009 would be $6,800, 50% of what is earned.

 

	
  CAGR Level Achieved

  	
   

  	
  Payout in March 2009

  	
   

  	
  Payout in March 2010

  	
   

  	
  Total Payout

  	
   

  
	
  25%

  	
   

  	
  $

  	
  6,800

  	
   

  	
  $

  	
  34,000

  	
   

  	
  $

  	
  40,800

  	
   

  
	
  15%

  	
   

  	
  $

  	
  6,800

  	
   

  	
  $

  	
  23,188

  	
   

  	
  $

  	
  29,988

  	
   

  
	
  10%

  	
   

  	
  $

  	
  6,800

  	
   

  	
  $

  	
  17,885

  	
   

  	
  $

  	
  24,685

  	
   

  
	
  6%

  	
   

  	
  $

  	
  6,800

  	
   

  	
  $

  	
  13,600

  	
   

  	
  $

  	
  20,400

  	
   

  
	
  3%

  	
   

  	
  $

  	
  3,400

  	
   

  	
  $

  	
  6,800

  	
   

  	
  $

  	
  10,200

  	
   

  

 

1

 

Annex C

 

W. R. GRACE & CO.

Administrative Practices — Long-Term Cash
Award Program

2007-2009 Performance Period

 

Definitions

 

“Award Payment”: An Interim Long-Term Cash Award Payment or Remaining
Long-Term Award Payment, as applicable.

 

“Board of Directors”: The Board of Directors of the Company.

 

“Committee”: The Compensation Committee of the Board of Directors.

 

“Company”: W. R. Grace & Co., a Delaware Corporation and/or,
if applicable in the context, one or more of its Subsidiaries.

 

“Incomplete Long-Term Cash Awards”: A Long-Term Cash Award for which
the Performance Period has not been completed as of the date referenced.

 

“Interim Long-Term Cash Award Payment”: As defined on page 4, provided
that such payment will not exceed 50% of the Participant’s Targeted Award for
the first two years, regardless of Company performance at the time of payment.

 

“Key Employee”: An officer or other senior, full-time employee of the
Company, who, in the opinion of the Company, can contribute significantly to
the growth and successful operations of the Company.

 

“Long-Term Cash Award Program”: An undertaking by the Company to
financially reward a Key Employee at the end of a Performance Period, which
undertaking is contingent upon or measured by the attainment over the
Performance Period of specified performance objectives determined (on a
consolidated or unconsolidated basis) by changes in the 3-year compound annual
growth rate (CAGR) in Total Grace’s core earnings before interest and taxes
(core EBIT).

 

“Long-Term Cash Award”: A cash award, to be paid in the future, which
is granted to Key Employees under the Company’s long-term incentive program.

 

“Long-Term Cash Award Earned”: The amount of cash earned by a
Participant pursuant to the terms of a Long-Term Cash Award.

 

“Participant”: A Key Employee who is, or who is proposed to be, a
recipient of a Long-Term Cash Award.

 

“Performance Period”: Except as provided herein, a period of three
calendar years over which a Long-Term Cash Award may be earned, as approved by
the Committee. The first Performance Period under this Plan will commence
effective January 1, 2007 and will end on December 31, 2009.
Performance Periods with respect to different Long-Term Cash Awards to the same
individual may overlap.

 

“Total Grace Core EBIT”: The core earnings before interest and taxes
(core EBIT)” of the Company as reported on (and calculated in accordance with)
the statement of W. R. Grace & Co. Continuing Operations- Segment
Basis.

 

“Remaining Long-Term Cash Award Payment”: As defined on Page 4, the
second installment of the Long-Term Cash Award that may be paid after the end
of the Performance Period, based on Company performance for the entire
Performance Period.

 

1

 

“Subsidiary”: A corporation, partnership, limited liability company or
other form of business association of which shares of common stock or other
ownership interests (i) having more than 50% of the voting power regularly
entitled to vote for directors (or equivalent management rights) or
(ii) regularly entitled to receive more than 50% of the dividends (or
their equivalents) paid on the common stock (or other ownership interests), are
owned, directly or indirectly, by the Company.

 

“Targeted Award”: The amount of cash award specified in writing for a
Participant as his or her “Targeted Award” for a Performance Period and which
is subject to and covered by the terms and conditions of a Long-Term Cash
Award. This amount may be different from the Long-Term Cash Award Earned by an
individual.

 

Plan Administration

 

The Plan shall be administered by the Committee, provided that no
member of the Committee shall be eligible to receive a Long-Term Cash Award
while serving on the Committee.

 

The Committee shall approve (i) the performance measurements and
objectives for each Long-Term Cash Award and (ii) the Performance Period
over which a Long-Term Cash Award is to be earned.

 

The Committee shall approve (i) the Grace Leadership Team members
who are to be granted Long-Term Cash Awards and (ii) the Targeted Award
subject to each Long-Term Cash Award. The Committee (or the designee of the
Committee, which may include the Chief Executive Officer of the Company) shall
approve awards for all other Key Employees.

 

Long-Term Cash Awards

 

The Committee may, at any time or from time to time, grant Long-Term
Cash Awards to Key Employees.

 

Each Long-Term Cash Award shall be evidenced by a written instrument
containing such terms and conditions as the Committee shall approve, provided
the instrument is consistent with these practices.

 

No Long-Term Cash Award, nor any payment or right thereunder, shall be subject
in any manner to alienation, sale, transfer, assignment, pledge, encumbrance or
charge, except by will or the laws of descent and distribution, or by the terms
of a Participant’s Designation of Beneficiary, if any, on file with the
Company.

 

In the case of a Key Employee who becomes a Participant after the
beginning of a Performance Period, the Committee may ratably reduce the amount
of the Targeted Award covered by such Employee’s Long-Term Cash Award or
otherwise appropriately adjust the terms of the Long-Term Cash Award to reflect
the fact that the Key Employee is to be a Participant for only part of the
Performance Period.

 

It is the intention of the Committee that Long-Term Cash Awards be
related to the results of the core operations affected by the management
actions taken by the Participants. Subject to the administrative practices that
apply to termination or change in employment status and to the amendment or
discontinuance of Long-Term Cash Awards, the performance objectives applicable
to Long-Term Cash Awards will remain unchanged during the Performance Period
except as follows:

 

In general, acquisitions and divestments will be included in the
performance results.

 

Termination or Change in Employment Status

 

A Participant shall forfeit all rights to any Award Payment, if, prior
to the date of payment of such Award Payment, the Participant (1) resigns
without the consent of the Committee, (2) retires under a retirement plan
of the Company or Subsidiary before age 62 without the consent of the Committee,
or (3) is terminated for cause.

 

2

 

If a Participant retires under a retirement plan of the Company or
Subsidiary at or after age 62, or ceases employment as a result of death or
disability, or ceases employment as a result of an involuntary termination
after a Change in Control of the Company (as defined herein), during a
Performance Period, then his rights in any Incomplete Long-Term Cash Award
related to that Performance Period shall thereupon vest, and he shall be
entitled to receive any Award Payment of any Long-Term Cash Award Earned he
would otherwise have received (at the time he would have otherwise received the
Award Payment), except that the amount of any Long-Term Cash Award Earned shall
be reduced ratably in proportion to the portion of the Performance Period
during which the Participant was not an employee. If a Participant ceases
employment with the Company for any of the reasons specified in this paragraph,
after the completion of any Performance Period (but before the payment of the
Remaining Long-Term Cash Award Payment related to the completed Performance
Period), then his rights to any Long-Term Cash Award Earned and to such Award
Payment related to the completed Performance Period shall thereupon vest, and
he shall be entitled to receive such Award Payment at the time he would have
otherwise received the Payment.

 

If a Participant ceases employment with the Company for any reason
other than those indicated in the previous two paragraphs (including by reason
of involuntary termination not for cause, except as provided above with respect
to involuntary termination after a Change in Control of the Company, or
transfer of employment to a buyer of any business unit of the Company), then his
rights in any Incomplete Long-Term Cash Award, and any Award Payment that is
unpaid as of the date the Participant ceases such employment, shall be
forfeited, unless the Committee (or the designee of the Committee, which may
include the Chief Executive Officer of the Company) determines to make an
exception. All such determinations, if any, shall be final and binding on all
parties.

 

Except as modified by the provisions of the second and third paragraphs
of this section, payments due to Participants pursuant to the applicable
preceding paragraphs, above, shall be calculated and made in accordance with
the provisions described under the section entitled “Calculation of Long-Term
Cash Awards Earned: Form of Payment”.

 

A leave of absence, if approved by the Committee, shall not be deemed a
termination or change of employment status for the purposes of this section,
but, unless the Committee otherwise directs, any Long-Term Cash Award Earned
that a Participant would otherwise have received under a Long-Term Cash Award
Program shall be reduced ratably in proportion to the portion of the
Performance Period during which the Participant was on such leave of absence.

 

Any consent, approval or direction which the Committee may give under
this section in respect of an event or transaction may be given before or after
the event or transaction.

 

Calculation of Long-Term Cash Awards Earned:
Form of Payment

 

Long-Term Cash Awards Earned will be paid to a Participant in two
installments (1) the first installment shall be paid in March of the third
and final year of the Performance Period and shall be equal to 50% of what is
earned based on the Company’s performance for the first two calendar years of
the applicable Performance Period, but no more than 50% of the Participant’s
Targeted Award for the first two years (the “Interim Long-Term Cash Award
Payment”), and (2) the balance, if any, of the Long-Term Cash Award Earned
will be paid in March after the end of the third and final year of the
Performance Period (the “Remaining Long-Term Cash Award Payment”).

 

The Committee shall determine the extent to which the performance
objectives of a Long-Term Cash Award have been achieved during the Performance
Period and the amount of any Long-Term Cash Awards Earned (and the amount of any
Award Payment). All calculations in this regard shall be made in accordance
with the generally accepted accounting principles customarily applied by the
Company and shall be submitted to the Committee for its review and approval.
The determination of the Committee shall be final and binding.

 

3

 

Treatment of Large Corporate Acquisitions and
Divestments

 

Notwithstanding any other provision of the Plan to the contrary, the
Total Grace Core EBIT for the Performance Period shall be adjusted to account
for any business acquisition that occurs during the Performance Period, which
has a purchase price to the Company of more than $50 million (a “Significant
Acquisition), as follows:

 

(a)                                  with respect to the
calendar year during the Performance Period in which the Significant
Acquisition closes, the Total Grace Core EBIT will be decreased by the result
of the following formula—the EBIT of the Significant Acquisition (the “Base SA
EBIT”) for the full calendar year prior to the calendar year that the
Significant Acquisition closes (the “Pre-Acquisition Calendar Year”), which
shall be calculated by the Company in the same manner as the Company calculated
the Total Grace Core EBIT, multiplied by (the number of full months remaining
in the calendar year that the Significant Acquisition closed divided by 12);

 

(b)                                 with respect to the
first subsequent full calendar year (if any) during the Performance Period
after the Significant Acquisition closes, the Total Grace Core EBIT shall be
further decreased by the following formula—the Base SA EBIT for the
Pre-Acquisition Calendar Year multiplied by 1.06; and with respect to the
second subsequent calendar year (if any) during the Performance Period after
the Significant Acquisition closes, the Total Grace Core EBIT shall be further
decreased by the following formula—the Base SA EBIT for the Pre-Acquisition
Calendar Year multiplied by 1.06, the result of which is further multiplied by
1.06.

 

Also, notwithstanding any other provision of the Plan to the contrary,
in the event that the Company divests any of its businesses, which results in
total proceeds to the Debtors of more than $50 million (a “Significant
Divestiture”) during the Performance Period, the Total Grace Core EBIT for the Performance
Period shall be increased to account for the Significant Divestiture using the
approach that is the converse of the approach specified above with respect to
Significant Acquisitions; so that the effect of a Significant Divestiture upon
the Total Grace Core EBIT shall be neutralized in the same manner as the effect
of a Significant Acquisition described above; and any realized gains or losses
that result from the Significant Divestiture shall not be included in the Total
Grace Core EBIT.

 

General

 

Nothing in this document nor in any instrument executed pursuant hereto
shall confer upon a Participant any right to continue in the employ of the
Company or a Subsidiary, or shall affect the right of the Company or a
Subsidiary to terminate his or her employment with or without cause.

 

The Company or a Subsidiary may make such provisions as it may deem
appropriate for the withholding or any taxes that the Company or a Subsidiary
determines it is required to withhold in connection with any Long-Term Cash Award
Earned.

 

Nothing in a Long-Term Cash Award is intended to be a substitute for,
or shall preclude or limit the establishment or continuation of, any other
plan, practice, or arrangement for the payment of compensation or benefits to
employees generally, or to any class or group of employees, which the Company
or a Subsidiary now has or may hereafter lawfully put into effect, including,
without limitation, any retirement, pension, group insurance, annual bonus,
stock purchase, stock bonus or stock option plan; provided, however, that no
amounts awarded or paid pursuant to any Long-Term Cash Award shall be included
or counted as compensation for the purposes of any employee benefit plan of the
Company or a Subsidiary where contributions to the plan, or the benefits
received from the plan, are measured or determined in whole or in part, by the
amount of the employee’s compensation.

 

The grant of a Long-Term Cash Award to an employee of a Subsidiary
shall be contingent on the approval of the Long-Term Cash Award by the
Subsidiary and the Subsidiary’s agreement that (i) the Company may
administer such Award on its behalf and (ii) the Subsidiary will make, or
reimburse the 

 

4

 

Company for, the payments called for by the Long-Term Cash Award. The
provisions of this paragraph and the obligations of the Subsidiary so
undertaken may be waived, in whole or in the part, from time to time by the
Company.

 

Amendments and Discontinuance

 

In the event acquisitions, divestments, substantial changes in tax or
other laws or in accounting principles or practices, natural disasters or other
extraordinary events render fulfillment of the performance objectives of a
Long-Term Cash Award impossible or impracticable, or result in the achievement
of the performance objectives without appreciable effort by the Participant,
the Committee may, but shall not be obligated to, amend any such Long-Term Cash
Award in any appropriate manner so that the Participant may earn Long-Term Cash
Awards comparable to those that might have been earned if the extraordinary
event had not occurred.

 

The Chief Executive Officer of the Company may approve such technical
changes and clarifications to the Long-Term Cash Award Program as necessary,
provided such changes or clarifications do not vary substantially from the
terms and conditions outlined in this description.

 

In the event a Change in Control of the Company (as defined herein)
shall occur or the Board of Directors has reason to believe that a Change of
Control may occur, the Committee may, with respect to any one or more Long-Term
Cash Awards, (i) reduce the length of a Performance Period to not less
than one year, (ii) make ratable adjustments to performance objectives and
Targeted Awards, (iii) change the methods of measuring the performance
objectives, (iv) accelerate the payment of any Long-Term Cash Awards
Earned or any Award Payment, and (v) take other action deemed by it to be
appropriate and in the best interests of the Company under the circumstances.
For the purposes of this paragraph:

 

(A)                              “Change in Control of the
Company” means and shall be deemed to have occurred if (a) the Company
determines that any “person” (as such term is used in Section 13(d) and 14
(d) of the Securities Exchange Act of 1934), other than a trustee or other
fiduciary holding securities under an employee benefit plan of the Company or a
corporation owned, directly or indirectly, by the stockholders of the Company
in substantially the same proportions as their ownership of stock of the
Company, has become the “beneficial owner” (as defined in Rule 13d-3 under
such Act), directly or indirectly, of 20% or more of the outstanding common
stock of the Company (provided, however, that a Change in Control shall not be
deemed to have occurred if such person has become the beneficial owner of 20%
or more of the outstanding Common Stock as the results of a sale of Common
Stock by the Company that has been approved by the Board of Directors); or
pursuant to a plan of reorganization which has been confirmed by the U.S.
District Court or Bankruptcy Court having jurisdiction of the Company’s Chapter
11 case, Case No. 01-01139 (JJF), pursuant to an order of such Court which
is final and nonappealable, and becomes effective); (ii) individuals who
are Continuing Directors cease to constitute a majority of any class of
directors of the Board; (iii) there occurs a reorganization, merger,
consolidation or other corporate transaction involving the Company (a “Corporate
Transaction”), in each case, with respect to which the stockholders of the
Company immediately prior to such Corporate Transaction do not, immediately
after the Corporate Transaction, own 50% or more of the combined voting power
of the corporation resulting from such Corporate Transaction, provided that
this clause (iii) shall not apply to a Corporate Transaction which is
pursuant to section 363 of the Bankruptcy Code, or is pursuant to a plan
of reorganization which has been confirmed by the U.S. District Court or Bankruptcy
Court having jurisdiction of the Company’s chapter 11 case, Case
No. 01-01139 (JJF), pursuant to an order of such Court which is final and
nonappealable, and becomes effective, or (iv) the shareholders of the
Company approve a complete liquidation or dissolution of the Company.

 

5

 

(B)           “Continuing
Director” means any member of the Board of Directors who was such a member on
the date on which this Program was approved by the Board of Directors, and any
successor to a Continuing Director who is approved as a nominee or elected to
succeed to a Continuing Director by a majority of Continuing Directors who are
then members of the Board of Directors.

 

The granting of Long-Term Cash Awards may be amended or discontinued by
the Committee at any time.

 

No amendment or discontinuance of Long-Term Cash Awards shall, without
a Participant’s consent, adversely affect his rights in any Long-Term Cash
Awards theretofore granted to him, except that, if the Committee so directs,
all Incomplete Long-Term Cash Awards may be terminated prospectively with the
same effect as a termination of employment under the second paragraph of the
section entitled “Termination or Change in Employment Status”.

 

6Exhibit 10.1

 

SECOND
AMENDMENT TO SECOND AMENDED AND RESTATED

CREDIT AGREEMENT

 

This SECOND AMENDMENT TO SECOND
AMENDED AND RESTATED CREDIT AGREEMENT (this “Amendment”), made and
entered into as of July 6, 2007, is by and between MagStar Technologies, Inc.,
a Minnesota corporation (the “Borrower”), and U.S. Bank National Association, a
national banking association (the “Lender”).

 

RECITALS

 

1.             The
Lender and the Borrower entered into a Second Amended and Restated Credit
Agreement dated as of June 30, 2005 as amended by a First Amendment to Second
Amended and Restated Credit Agreement dated as of June 30, 2006 (as amended and
as hereafter amended the “Credit Agreement”); and

 

2.             The
Borrower desires to amend certain provisions of the Credit Agreement, and the
Lender has agreed to make such amendments, subject to the terms and conditions
set forth in this Amendment.

 

AGREEMENT

 

NOW, THEREFORE, for good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto hereby covenant and agree to be bound as
follows:

 

Section 1.  Capitalized
Terms. Capitalized terms used herein and not otherwise
defined herein shall have the meanings assigned to them in the Credit
Agreement, unless the context shall otherwise require.

 

Section 2.  Amendments.
The Credit Agreement is hereby amended as follows:

 

2.1          Revolving
Maturity Date. Section 2.l(a) of the Credit Agreement is amended by
deleting therefrom the date “June 30, 2007” and inserting in its place “July
31, 2007” as the Revolving Maturity Date.

 

Section 3.  Effectiveness
of Amendments. The amendments contained in this Amendment
shall become effective upon delivery by the Borrower of, and compliance by the Borrower
with, the following:

 

3.1          This
Amendment duly executed by the Borrower.

 

3.2          The
Borrower shall have satisfied such other conditions as specified by the Lender,
including payment of all unpaid legal fees and expenses incurred by the Lender
through the date of this Amendment in connection with the Credit Agreement and
the Amendment Documents.

 

Section 4.  Representations,
Warranties, Authority, No Adverse Claim.

 

4.1          Reassertion of Representations and Warranties, No
Default. The Borrower hereby represents that on and as of the
date hereof and after giving effect to this Amendment (a) all of the
representations and warranties contained in the Credit Agreement are true,
correct and complete in all respects as of the date hereof as though made on
and as of such date, except for changes permitted by the terms of the Credit Agreement,
and (b) there will exist no Default or 

 

 

Event of Default under
the Credit Agreement as amended by this Amendment on such date which has nor
been waived by the Lender.

 

4.2           Authority, No Conflict, No Consent Required.
The Borrower represents and warrants that the Borrower has the power and legal
right and authority to enter into the Amendment Documents and has duly
authorized as appropriate the execution and delivery of the Amendment Documents
and other agreements and documents executed and delivered by the Borrower in
connection herewith or therewith by proper corporate action, and none of the
Amendment Documents nor the agreements contained herein or therein contravenes
or constitutes a default under any agreement, instrument or indenture to which
the Borrower is a party or a signatory or a provision of the Borrower’s
Articles of Incorporation, Bylaws or any other agreement or requirement of law,
or result in the imposition of any Lien on any of its properly under any
agreement binding on or applicable to the Borrower or any of its property
except, if any, in favor of the Lender. The Borrower represents and warrants
that no consent, approval or authorization of or registration or declaration
with any Person, including but not limited to any governmental authority, is
required in connection with the execution and delivery by the Borrower of the
Amendment Documents or other agreements and documents executed and delivered by
the Borrower in connection therewith or the performance of obligations of the Borrower
therein described, except for those which the Borrower has obtained or provided
and as to which the Borrower has delivered certified copies of documents
evidencing each such action to the Lender.

 

4.3           No Adverse Claim. The Borrower
warrants, acknowledges and agrees that no events have been taken place and no
circumstances exist at the date hereof which would give the Borrower a basis to
assert a defense, offset or counterclaim to any claim of the Lender with
respect to the Obligations.

 

Section 5.  Affirmation
of Credit Agreement, Further References, Affirmation of Security Interest.
The Lender and the Borrower each acknowledge and affirm that the Credit Agreement,
as hereby amended, is hereby ratified and confirmed in all respects and all
terms, conditions and provisions of the Credit Agreement, except as amended by
this Amendment. shall remain unmodified and in full force and effect. All
references in any document or instrument to the Credit Agreement are hereby
mended and shall refer to the Credit Agreement as amended by this Amendment.
The Borrower confirms to the Lender that the Obligations are and continue to be
secured by the security interest granted by the Borrower in favor of the Lender
under the Security Agreement, and all of the terms, conditions, provisions,
agreements, requirements, promises, obligations, duties, covenants and
representations of the Borrower under such documents and any and all other
documents and agreements entered into with respect to the obligations under the
Credit Agreement are incorporated herein by reference and are hereby ratified
and affirmed in all respects by the Borrower.

 

Section 6. Merger and Integration, Superseding
Effect. This Amendment, from and after the date hereof,
embodies the entire agreement and understanding between the parties hereto and
supersedes and has merged into this Amendment all prior oral and written
agreements on the same subjects by and between the parties hereto with the
effect that this Amendment shall control with respect to the specific subjects
hereof and thereof

 

Section 7. Severability.
Whenever possible, each provision of this Amendment and the other Amendment
Documents and any other statement, instrument or transaction contemplated hereby
or thereby or relating hereto or thereto shall be interpreted in such manner as
to be effective, valid and enforceable under the applicable law of any
jurisdiction, but, if any provision of this Amendment, the other Amendment
Documents or any other statement, instrument or transaction contemplated hereby
or 

 

2

 

thereby or relating hereto or thereto shall be held to
be prohibited, invalid or unenforceable under the applicable law, such
provision shall be ineffective in such jurisdiction only to the extent of such
prohibition, invalidity or unenforceability, without invalidating or rendering
unenforceable the remainder of such provision or the remaining provisions of
this Amendment, the other Amendment Documents or any other statement,
instrument or transaction contemplated hereby or thereby or relating hereto or
thereto in such jurisdiction, or affecting the effectiveness, validity or
enforceability of such provision in any other jurisdiction.

 

Section 8.  Successors.
The Amendment Documents shall be binding upon the Borrower and the Lender and
their respective successors and assigns, and shall inure to the benefit of the
Borrower and the Lender and the successors and assigns of the Lender.

 

Section 9.  Legal
Expenses. As provided in Section 8.2 of the Credit
Agreement, the Borrower agrees to reimburse the Lender, upon execution of this
Amendment, for all reasonable out-of-pocket expenses (including attorney’ fees
and legal expenses of Dorsey & Whitney LLP, counsel for the Lender determined
according to such counsel’s generally applicable rates which may be higher than
the rates charged to the Lender in certain matters) incurred in connection with
the Credit Agreement, including in connection with the negotiation, preparation
and execution of the Amendment Documents and all other documents negotiated,
prepared and executed in connection with the Amendment Documents, and in
enforcing the obligations of the Borrower under the Amendment Documents, and to
pay and save the Lender harmless from all liability for, any stamp or other
taxes which may be payable with respect to the execution or delivery of the
Amendment Documents, which obligations of the Borrower shall survive any
termination of the Credit Agreement.

 

Section 10.  Headings. The
headings of various sections of this Amendment have been inserted for reference
only and shall not be deemed to be a part of this Amendment.

 

Section 11.  Counterparts. The
Amendment Documents may be executed in several counterparts as deemed necessary
or convenient, each of which, when so executed, shall be deemed an original,
provided that all such counterparts shall be regarded as one and the same
document, and either party to the Amendment Documents may execute any such
agreement by executing a counterpart of such agreement.

 

Section 12.  Governing Law. THE
AMENDMENT DOCUMENTS SHALL RE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF
MINNESOTA, WITHOUT GIVING EFFECT TO CONFLICT OF LAW PRINCIPLES THEREOF, BUT
GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS, THEIR HOLDING
COMPANIES AND THEIR AFFILIATES.

 

3

 

IN WITNESS WHEREOF, the parties hereto have caused
this Amendment to be executed as of the date and year first above written.

 

	
  BORROWER:

  	
  MAGSTAR TECHNOLOGIES,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
  LENDER:

  	
  U.S. BANK NATIONAL
  ASSOCIATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
					

 

4

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