MINNESOTA CORN PROCESSORS LLC, S-4/A, 1999-10-19

MINNESOTA CORN PROCESSORS LLC
S-4/A, 1999-10-19
FOOD AND KINDRED PRODUCTS

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER __, 1999

REGISTRATION NO. 333-71213
================================================================================
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

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

PRE-EFFECTIVE

AMENDMENT NO. 3
TO
FORM S-4
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933

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

MINNESOTA CORN PROCESSORS, LLC
(Exact name of Registrant as specified in its charter)

COLORADO 31199 41-1928467
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)

901 NORTH HIGHWAY 59, MARSHALL, MN 56258-2744
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)

L. DAN THOMPSON
MINNESOTA CORN PROCESSORS, INC.
901 NORTH HIGHWAY 59
MARSHALL, MN 56258-2744
(507) 537-2676
(Name, address, including zip code, and telephone number, including
area code, of agent for service)

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

COPIES TO:

Ronald D. McFall, Esq. David P. Swanson
Lindquist & Vennum P.L.L.P. Dorsey & Whitney, LLP
4200 IDS Center Pillsbury Center South
Minneapolis, MN 55402 220 South Sixth Street
Minneapolis, MN 55402

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

Approximate date of commencement of proposed sale to public: As soon as
practicable after this Registration Statement becomes effective and all other
conditions to the conversion pursuant to the Transaction Agreement described
herein have been satisfied or waived.

If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]

If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]

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

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRATION
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1993 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.

================================================================================

<PAGE>

MINNESOTA CORN PROCESSORS, COLORADO LIMITED LIABILITY COMPANY

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

INFORMATION STATEMENT -- PROSPECTUS
RELATING TO THE CONVERSION
OF MINNESOTA CORN PROCESSORS, INC.
TO A COLORADO LIMITED LIABILITY COMPANY

The board of directors of Minnesota Corn Processors has determined to
convert Minnesota Corn Processors from a Minnesota cooperative into a Colorado
limited liability company. To accomplish the conversion, Minnesota Corn
Processors proposes to take the following steps:

* First, Minnesota Corn Processors. will merge with and into Minnesota
Corn Processors Colorado, a Colorado cooperative which has been newly
formed for this conversion.

* Second, immediately after the initial merger, the Colorado cooperative
will merge with and into Minnesota Corn Processors, LLC, a newly
formed Colorado limited liability company.

Minnesota Corn Processors cannot consummate the mergers without the
members' approval (and the consent of the Company's lenders and Archer Daniels
Midland Company). Although you will not vote on the second merger, neither the
first merger nor the second merger will happen unless members approve the first
merger. So, if you vote in favor of the first merger, it will have the same
effect as if you voted for the second merger.

Each unit of equity participation of Minnesota Corn Processors that you
hold will be converted into one Class A unit of the new limited liability
company. Each member holding 5,000 or more Class A units will be entitled to one
vote on matters presented to members of the limited liability company in the
future.

If these transactions are approved by the members, the Company's lenders
and Archer Daniels Midland Company, it will result in an initial offering of
units in the Colorado limited liability company. No public market currently
exists for these units.

PLEASE SEE "RISK FACTORS" BEGINNING ON PAGE 7 TO READ ABOUT IMPORTANT
FACTORS YOU SHOULD CONSIDER BEFORE VOTING.

This document provides detailed information about the proposed conversion
and the new limited liability company. You should carefully review this entire
document. We have not authorized anyone to provide you with information that is
different. Information on our Web site is not part of this document. We strongly
support the conversion and enthusiastically recommend that you vote in favor of
the merger.

/s/ JERRY JACOBY
Jerry Jacoby
Chairman

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THE SECURITIES TO BE ISSUED IN THE
MERGER OR DETERMINED IF THIS JOINT INFORMATION STATEMENT/PROSPECTUS IS ACCURATE
OR ADEQUATE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

This document is dated October __, 1999, and first mailed to members on
October __, 1999.

<PAGE>

MINNESOTA CORN PROCESSORS, INC.

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

901 NORTH HIGHWAY 59, MARSHALL, MN 56258-2744

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

NOTICE OF SPECIAL MEETING OF MEMBERS
TO BE HELD ON NOVEMBER __, 1999

To the Members:

This is a notice of a special meeting of members of Minnesota Corn
Processors, Inc., a Minnesota cooperative, to be held on November __, 1999, at
____________, local time, at Jackpot Junction, Morton, Minnesota, for the
following purposes:

To consider and vote upon a proposal to approve (1) a plan of merger by and
between Minnesota Corn Processors (the "Minnesota cooperative") and
Minnesota Corn Processors Colorado, a newly formed Colorado cooperative
(the "Colorado cooperative") and (2) the amended and restated transaction
agreement, dated as of _____________, 1999, by and among the Colorado
cooperative and Minnesota Corn Processors, Colorado limited liability
company, a newly formed Colorado limited liability company (the "Colorado
limited liability company").

If the merger agreement between the Minnesota cooperative and the Colorado
cooperative is approved, immediately after the consummation of the merger
and without further action by members of Minnesota Corn Processors, the
Colorado cooperative will merge with and into the Colorado limited
liability company.

As a result of both mergers:

(1) The Colorado limited liability company will be the surviving entity;

(2) Members of Minnesota Corn Processors will become members of the
Colorado limited liability company and receive a number of Class A
units of the Colorado limited liability company equal to the number of
units of equity participation they hold as of the effective date of
the merger;

(3) Archer Daniels Midland Company, a nonmember of Minnesota Corn
Processors holding nonvoting units of equity participation will become
a non-voting member of the Colorado limited liability company, and
receive Class B units of the Colorado limited liability company; and

(4) Holders of nonqualified written notices of allocation will receive
nonvoting financial interests in the Colorado limited liability
company.

The close of business on __________, 1999 has been fixed as the record date
for determining those members entitled to vote at the annual meeting and any
adjournments or postponements of the meeting.

Regional information meetings will be held on November __, 1999 in Jackpot
Junction, Morton, Minnesota and on November __, 1999 in AgPark, Columbus,
Nebraska.

You are invited to attend a regional information meeting and the special
meeting. If you are unable to attend, please complete and return the enclosed
mail ballot to Minnesota Corn Processors in the envelope provided. Minnesota
Corn Processors must receive your ballot by 9:00 a.m. November __, 1999. YOU MAY
VOTE ON THE PROPOSED MERGER ONLY BY USING THE ENCLOSED BALLOT. NO ADDITIONAL
BALLOTS WILL BE DISTRIBUTED AT ANY REGIONAL INFORMATION MEETING OR THE ANNUAL
MEETING. NO PROCEDURES EXIST FOR A MEMBER TO REVOKE A BALLOT ONCE THE BALLOT HAS
BEEN RECEIVED.

By Order of the Board of Directors

-----------------------------------
Jerry Jacoby
Chairman

October __, 1999
Marshall, Minnesota

THE BOARD OF DIRECTORS OF MINNESOTA CORN PROCESSORS, INC. UNANIMOUSLY
RECOMMENDS THAT MEMBERS VOTE FOR APPROVAL OF THE MERGER AGREEMENT AND THE
TRANSACTION AGREEMENT.

<PAGE>

TABLE OF CONTENTS

PAGE
----

QUESTIONS AND ANSWERS ABOUT THE CONVERSION .................................. 1
SUMMARY ..................................................................... 2
SUMMARY FINANCIAL INFORMATION ............................................... 5
SUMMARY UNAUDITED PRO FORMA FINANCIAL INFORMATION ........................... 6
RISK FACTORS ................................................................ 7
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION .................. 10
THE SPECIAL MEETING ......................................................... 11
General ................................................................ 11
Matters to be Considered ............................................... 11
Who Can Vote ........................................................... 11
How You Can Vote ....................................................... 11
Votes Required ......................................................... 11
Recommendation of the Minnesota Corn Processors' Board ................. 11
THE CONVERSION .............................................................. 12
Reasons for the Conversion ............................................. 12
Recommendation of the board ............................................ 13
Appraisal Opinion ...................................................... 13
Definitions Used in the Appraisal ...................................... 14
Scope of Investigation ................................................. 14
Limitations and Assumptions ............................................ 15
Material Financial Analyses ............................................ 15
Tax Treatment .......................................................... 19
Accounting Treatment ................................................... 19
Regulatory Approval .................................................... 19
Absence of Dissenters' Rights........................................... 19
Federal Securities Law Consequences .................................... 19
THE MERGER AGREEMENTS AND THE TRANSACTION AGREEMENT ......................... 20
Merger agreement with the Colorado cooperative ......................... 20
Merger between the Colorado cooperative and the Colorado
limited liability company ............................................. 20
Exchange of Certificates ............................................... 21
Effective Time ......................................................... 21
Employee Benefit Plans ................................................. 22
Patronage Distributions ................................................ 22
1996 Loss Payables ..................................................... 22
Representation and Warranties .......................................... 22
Conditions to Consummation of the Mergers .............................. 22
Conduct of Business Prior to Conversion ................................ 23
Termination ............................................................ 23
Amendment .............................................................. 24
Indemnification and Insurance .......................................... 24
SELECTED FINANCIAL DATA ..................................................... 25

i
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PAGE
----

MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ........................... 26
Overview and Outlook ................................................... 26
Results of Operations .................................................. 26
Three Months Ended June 30, 1999 Compared to Three Months Ended
June 30, 1998 ........................................................ 26
Net Sales ........................................................... 26
Cost of Product Sold ................................................ 26
Selling, General & Administrative Expenses .......................... 26
Net Operating Income ................................................ 26
Interest and Other Income/Expense ................................... 27
Net Proceeds ........................................................ 27
Fiscal Year Ended March 31, 1999 Compared to Fiscal Year Ended
March 31, 1998 ....................................................... 27
Net Sales ........................................................... 27
Cost of Product Sold ................................................ 27
Selling, General & Administrative Expenses .......................... 27
Net Operating Income ................................................ 27
Interest and Other Income/Expense ................................... 27
Net Proceeds ........................................................ 27
Year Ended March 31, 1998 Compared with Year Ended
September 30, 1996 ................................................... 27
Net Sales ........................................................... 27
Cost of Product Sold ................................................ 28
Selling, General & Administrative Expenses .......................... 28
Net Operating Income ................................................ 28
Interest Expense and Other Income/Expense ........................... 28
Net Proceeds ........................................................ 28
Year Ended September 30, 1996 Compared to Year Ended
September 30, 1995 ................................................... 28
Net Sales ........................................................... 28
Cost of Product Sold ................................................ 28
Selling, General and Administration ................................. 28
Net Operating Income ................................................ 28
Interest Expense and other Costs/Income ............................. 29
Net Proceeds ........................................................ 29
Liquidity and Capital Resources ........................................ 29
Hedging Activities ..................................................... 30
Year 2000 Update ....................................................... 30
BUSINESS .................................................................... 32
Overview ............................................................... 32
The corn sweetener and ethanol markets ................................. 32
Corn Procurement ....................................................... 34
Wet Milling Operations ................................................. 34
Products ............................................................... 36
Product Quality ........................................................ 37
Sales and Distribution ................................................. 37
Competition ............................................................ 38
Government Regulation and Environmental Matters ........................ 39
Production Facilities .................................................. 39
Legal Proceedings ...................................................... 39
Employees .............................................................. 39

ii
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PAGE
----

MANAGEMENT .................................................................. 40
Directors .............................................................. 40
Committees of the Board ................................................ 44
Compensation of Directors .............................................. 45
Executive Officers ..................................................... 45
Executive Compensation ................................................. 47
Employee Benefit Plans ................................................. 47
Management Stock Purchase Program ...................................... 47
Relationships and Related Transactions ................................. 48
Employment Agreements .................................................. 48
Security Ownership of Management ....................................... 48
DESCRIPTION OF MEMBERSHIP UNITS ............................................. 49
General ................................................................ 49
Qualifications for Membership .......................................... 49
Class A units .......................................................... 50
Class B units .......................................................... 50
Distributions .......................................................... 50
Capital Accounts and Contributions ..................................... 50
Allocation of Profits and Losses; Special Allocation Rules ............. 51
Restrictions on Transfer of Units ...................................... 51
Distribution of Assets Upon Liquidation ................................ 51
Amendments to operating agreement ...................................... 52
COMPARISON OF RIGHTS OF MEMBERS ............................................. 52
FEDERAL INCOME TAX CONSEQUENCES ............................................. 58
Summary of the Federal Income Tax Consequences of the Conversion ....... 58
Federal Income Tax Consequences of Post-Conversion Unit Ownership ...... 62
Tax Treatment of the Colorado limited liability company's operations ... 64
Tax Consequences to Colorado Limited Liability Company Unit Holders .... 65
Tax Consequences of Disposition of Units ............................... 67
Other Tax Matters ...................................................... 69
LEGAL MATTERS ............................................................... 71
EXPERTS ..................................................................... 71
WHERE YOU CAN FIND MORE INFORMATION ......................................... 72
PRO FORMA CONDENSED FINANCIAL INFORMATION (UNAUDITED OF
MINNESOTA CORN PROCESSORS, a Colorado limited liability company) ........... 73
Introduction ........................................................... 73

iii
<PAGE>

QUESTIONS AND ANSWERS ABOUT THE CONVERSION

Q: How will I benefit?

A: The conversion is necessary to continue to ensure that any earnings
generated by the business is not subject to federal "double taxation" once
at the company level when earned and once again at the member level when
distributed. Minnesota Corn Processors also believes that the limited
liability company structure will give us the flexibility in how we acquire
corn.

Q: Will I continue to get value-added payments?

A: No, but you will be entitled to receive cash distributions in proportion to
your equity interest in the new limited liability company, subject to
applicable loan covenants and the approval of the Board of Directors.

Q: Do I have to pay self-employment taxes on the income allocations or cash
distributions?

A: No. Based on proposed regulations, it appears probable that limited
liability company members generally will not be subject to self-employment
tax.

Q: What happens to the amount I owe Minnesota Corn Processors for losses
allocated to me in 1996?

A: If you have not yet paid us for your share of the 1996 loss, the unpaid
amount will carry over as a lien against the Class A units you receive in
the conversion. Upon a transfer of your Class A units, you must pay off
this liability. In addition, the allocated losses will also be deducted
from future cash distributions, in a manner consistent with Minnesota Corn
Processors' previous plan.

Q: Have any of the directors indicated whether they will vote for or against
the conversion?

A: All 24 directors voted in favor of recommending the conversion and
submitting it to a vote by the members. None of the directors have formally
indicated how they will vote as members.

Q: Can I revoke my ballot after Minnesota Corn Processors receives it?

A: No. There are no procedures that permit you to revoke your ballot once
Minnesota Corn Processors receives it.

Q: Have Minnesota Corn Processors senior secured lenders consented to the
conversion?

A: No. We believe we are close, however, to an agreement with the lenders to
obtain their consent. The lenders' consent will not be valid unless Archer
Daniels Midland Company also consents.

Q: Has Archer Daniels Midland Company consented to the conversion?

A: No. Archer Daniels Midland Company has not yet consented to the conversion
and there is no assurance that it ever will consent. We will continue to
seek Archer Daniels Midland Company's consent until the proposed effective
date of the conversion. If we are not able to obtain their consent by that
time, the conversion will not proceed in the manner described in this
Information Statement, even though the members may have approved the
conversion.

1
<PAGE>

- --------------------------------------------------------------------------------
SUMMARY

THIS SUMMARY HIGHLIGHTS SELECTED INFORMATION FROM THIS DOCUMENT AND MAY NOT
CONTAIN ALL OF THE INFORMATION THAT IS IMPORTANT TO YOU. TO UNDERSTAND THE
TRANSACTION FULLY AND FOR A COMPLETE DESCRIPTION OF THE LEGAL TERMS OF THE
CONVERSION, PLEASE READ THIS ENTIRE DOCUMENT AND THE APPENDICES.

HOW THE CONVERSION WILL The conversion will involve two steps:
BE COMPLETED

(1) Minnesota Corn Processors has created a new
Colorado cooperative and will merge into the
Colorado cooperative.

(2) Immediately after the first merger takes effect,
the Colorado cooperative will merge into the new
limited liability company, which we refer to as
the Colorado limited liability company merger.

WE HAVE ATTACHED THE AGREEMENTS WHICH DESCRIBE THE
LEGAL TERMS OF THE CONVERSION AS APPENDIX A, B AND C
TO THIS DOCUMENT. WE ENCOURAGE YOU TO READ EACH
AGREEMENT.

VOTE REQUIRED TO APPROVE You are being asked to vote on the merger between
THE MERGER Minnesota Corn Processors and the Colorado
cooperative only, and you will not vote on the merger
between the Colorado cooperative and the Colorado
limited liability company. Minnesota Corn Processors,
as the sole stockholder of the Colorado cooperative,
has approved the Colorado limited liability company
merger. This second merger, and thus the conversion,
will not take effect, however, unless the first
merger is approved by members of Minnesota Corn
Processors.

WHO CAN VOTE You can vote if you owned shares of common stock of
Minnesota Corn Processors as of the close of business
on ____________, 1999. Each voting member will have
one vote regardless of the number of units of equity
participation owned. The favorable vote of two-thirds
of the votes cast, in person or by mail, at the
annual meeting is required to approve the merger.

WHAT YOU WILL RECEIVE IN As a result of the mergers you will receive one Class
THE CONVERSION A unit of the Colorado limited liability company for
every unit of equity participation of Minnesota Corn
Processors you own on the effective date of the
conversion. Your shares of common stock of Minnesota
Corn Processors will be canceled. Each Class A unit
of the Colorado limited liability company represents
a share of the profits and losses of the new entity.
As long as you own 1,000 Class A units, you will be a
member of the Colorado limited liability company, and
you will be entitled to one vote if you own 5,000 or
more Class A units. If you hold a nonqualified
written notice of allocation, it will be converted
into a nonvoting financial interest in the Colorado
limited liability company having comparable rights.
Each nonvoting equity participation unit held by
Archer Daniels Midland Company will be converted into
one Class B unit of the new limited liability
company. Class B units are nonvoting interests
participating in the profit and losses of the new
limited liability company.

NO NEED TO TURN IN YOUR You do not need to surrender the certificates
CERTIFICATES representing your units of equity participation or
exchange them for new certificates representing the
Class A units. After the conversion, certificates
representing units of equity participation of
Minnesota Corn Processors will automatically
represent Class A units of the new limited liability
company.

TAX IMPLICATIONS TO The conversion into a limited liability company will
MEMBERS FOLLOWING be a taxable event for both Minnesota Corn Processors
THE CONVERSION and its members, though Minnesota Corn Processors
does not expect to incur a tax liability based on an
appraisal received by the board. The amount of
taxable gain or loss that you will recognize will
depend on whether the value of your Class A units
received in the conversion is greater or
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2
<PAGE>

- --------------------------------------------------------------------------------
less than the aggregate tax basis in your stock and
units of equity participation of Minnesota Corn
Processors. Special financial interests in the
Colorado limited liability company that will be
issued to holders of nonqualified written notices of
allocation do not, in Minnesota Corn Processors'
view, have an ascertainable value and therefore will
not result in taxable gain. To review tax
consequences in more detail, please see "Federal
Income Tax Considerations." THE ACTUAL TAX
CONSEQUENCES OF THE CONVERSION TO YOU MAY BE
COMPLICATED. YOU SHOULD CONSULT YOUR OWN TAX ADVISOR
FOR A FULL UNDERSTANDING OF THE TAX CONSEQUENCES OF
THE CONVERSION.

As a limited liability company, the Colorado limited
liability company will pay no federal income tax on
its taxable income and will pass its taxable income
or loss to members in proportion to their relative
ownership interests. If distributions are made to the
holders of special financial interests, a
corresponding amount of income or gain will be
specially allocated to them. When we allocate income
or loss to you, you will be taxed on that income or,
subject to substantial restrictions, may deduct that
loss. This tax will be imposed regardless of whether
we actually distribute cash or property to you.

APPRAISAL In evaluating the potential tax impact of the
conversion on Minnesota Corn Processors and its
members, the board of directors considered the
opinion of American Appraisal Associates(R) that, as
of September 30, 1998, the appraised value of
Minnesota Corn Processors was $290.6 million and,
after appropriate discounts for minority interest and
lack of marketability, the liquidating value per unit
was $1.10. We have attached a summarization letter of
this opinion as Appendix E to this document. We
encourage you to read it.

CONDITIONS TO The completion of the conversion depends on the
THE CONVERSION satisfaction (or waiver) of a number of conditions,
including:

* approval of the Minnesota Corn Processors' merger
with the Colorado cooperative by members;

* the absence of any court order or legal restraint
blocking the conversion;

* the absence of any pending or threatened
governmental action seeking to prohibit the
conversion; and

* receipt of the consent of Archer Daniels Midland
Company and the Company's lenders.

ACCOUNTING TREATMENT We expect the conversion will be treated in a manner
similar to that of a "pooling of interests"
transaction under generally accepted accounting
principles. This means that, for accounting and
financial reporting purposes, no gain or loss will be
recognized at the time of the conversion and the book
value of the assets and liabilities of Minnesota Corn
Processors at the time of the conversion will carry
over to the Colorado limited liability company.

NO DISSENTERS' RIGHTS Under Minnesota law, you have no right to demand an
appraisal of your shares in connection with the
conversion and to receive a cash payment for the fair
value of your shares. The present board of directors
and management team of Minnesota Corn Processors will
continue to manage the Colorado limited liability
company after the conversion. Each director will
continue to represent one of eight geographic
districts and will be elected by the voting members
residing in the director's district.

DIFFERENCES IN THE RIGHTS If the conversion is completed, you will become a
OF MEMBERS member of a limited liability company, and your
rights will be governed by Colorado law and by the
operating agreement of the Colorado limited liability
company. In most respects, the rights
- --------------------------------------------------------------------------------

3
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- --------------------------------------------------------------------------------
of members under these provisions are similar to your
current rights as a member of Minnesota Corn
Processors. There are some differences, including:

* Members are not required to deliver corn and the
existing marketing agreement will be terminated.

* Distributions by the Colorado limited liability
company will be based on investment (equity)
rather than patronage.

* No person may own less than 1,000 Class A units
or more than 2% of the issued and outstanding
Class A units.

* Members owning less than 5,000 Class A units have
no voting rights.

WE HAVE ATTACHED THE OPERATING AGREEMENT AS APPENDIX
D TO THIS DOCUMENT. PLEASE READ THE AGREEMENT. IT IS
THE LEGAL DOCUMENT THAT GOVERNS THE PURPOSE, POWERS
AND INTERNAL AFFAIRS OF THE NEW LIMITED LIABILITY
COMPANY.

TRADING OF CLASS A UNITS The board of directors of the Colorado limited
liability company must approve all transfers and will
not recognize any transfer that would result in us
losing our partnership tax status.
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4
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SUMMARY FINANCIAL INFORMATION

The following table sets forth summary historical financial information of
Minnesota Corn Processors. This information is derived from our consolidated
financial statements which have been audited by Clifton Gunderson L.L.C.,
independent auditors.

Fiscal year 1997 was a six-month period because Minnesota Corn Processors
changed its fiscal year end from September 30 to March 31.

You should read the financial information presented below along with our
consolidated financial statements and related notes that Minnesota Corn
Processors includes at the end of this document. For a narrative explanation of
the following financial information, see "Management's Discussion and Analysis
of Financial Condition and Results of Operations." In reviewing the financial
information set forth below, you should consider:

* EBITDA represents earnings (loss) before interest, income taxes,
depreciation and amortization. It is present to enhance an
understanding of our operating results and ability to service debt and
is not intended to represent cash flow or net earnings under U.S.
generally accepted accounting principles ("GAAP"). Our use of EBITDA
may not be comparable to similarly titled measures used by other
companies. It is included as a tool for analyzing our results.

BALANCE SHEET DATA:
Working capital (deficit) ......... 19 (31) (363) (352) 43 65 59 72
Total assets ...................... 326 491 662 672 650 619 659 621
Long-term debt .................... 137 164 6 1 295 291 303 291
Member equity ..................... 131 201 201 212 287 289 282 291

OTHER DATA:
EBITDA ............................ 42 78 (16) 28 30 73 14 19
Cash flow from (for)
Operations ....................... (24) 76 (94) (4) (3) 35 (12) 3
Investing ......................... (102) (159) (206) (15) (13) (16) (2) (7)
Financing ......................... 109 91 281 25 9 (12) 13 --
Capital expenditures .............. 102 172 208 12 13 16 2 7
</TABLE>

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5
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SUMMARY UNAUDITED PRO FORMA FINANCIAL INFORMATION

In the table below, Minnesota Corn Processors presents consolidated income
statement data for the Colorado limited liability company for the fiscal year
ended March 31, 1998 and the fiscal year ended March 31, 1999, and the three
months ended June 30, 1998 and the three months ended June 30, 1999, as if the
conversion had been completed on April 1, 1997. Minnesota Corn Processors
presents consolidated balance sheet information as of March 31, 1998, as if the
conversion had been completed as of that date.

The following information is provided for illustrative purposes only and
does not necessarily reflect what the results of operations or financial
position of the Colorado limited liability company would have been if the
conversion had actually occurred on the dates specified. Please see "Unaudited
Pro Forma Financial Information" on page 75 for a more detailed explanation of
this analysis.

<TABLE>
<CAPTION>
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
YEAR ENDED YEAR ENDED THREE MONTHS ENDED THREE MONTHS ENDED
MARCH 31, 1998 MARCH 31, 1999 JUNE 30, 1998 JUNE 30, 1999
-------------- -------------- ------------------ ------------------
PRO FORMA PRO FORMA PRO FORMA PRO FORMA
-------------- -------------- ------------------ ------------------
(in millions)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net Revenues ..................... $ 563 $ 599 $ 165 $ 145
Operating Income (Loss) .......... (8) 23 (2) 8
Net Income (Loss) ................ (45) 6 (4) 2

BALANCE SHEET DATA:
Working Capital .................. 43 65 59 72
Total Assets ..................... 650 619 659 621
Long-Term Debt ................... 295 291 303 291
Member Equity .................... 287 289 282 291
</TABLE>

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6
<PAGE>

RISK FACTORS

YOU SHOULD CAREFULLY CONSIDER THE RISKS DESCRIBED BELOW BEFORE MAKING A
VOTING DECISION.

MINNESOTA CORN PROCESSORS WILL NOT PROCEED WITH THE CONVERSION WITHOUT THE
CONSENT OF THE COMPANY'S LENDERS AND ARCHER DANIELS MIDLAND COMPANY

Minnesota Corn Processors' management and board of directors has determined
that it would not be advisable to proceed with the conversion without the
consent of both the Company's lenders and Archer Daniels Midland Company. Those
parties have not yet provided their consent; if it is not possible to obtain
consents from those parties prior to the proposed effective date of the
conversion, Minnesota Corn Processors will not complete the conversion and will
not obtain the benefits of the proposed conversion described in "The
Conversion". In particular, failure to complete the conversion will leave
Minnesota Corn Processors at continued risk of losing its favorable single-level
tax status and will continue to require members to pay self-employment taxes on
Minnesota Corn Processors' earnings.

THE CONVERSION FROM A COOPERATIVE TO A LIMITED LIABILITY COMPANY WILL BE A
TAXABLE TRANSACTION TO MINNESOTA CORN PROCESSORS AND ITS MEMBERS

The conversion from a cooperative into a limited liability company will be
a taxable transaction. The amount of taxable gain or loss that Minnesota Corn
Processors must recognize will depend on the aggregate fair market value of the
assets of Minnesota Corn Processors valued as a going concern as well as the
fair market value of each Class A unit issued to members. Based on Minnesota
Corn Processors appraisal, the aggregate tax basis exceeds the appraised value
of our assets. This means that Minnesota Corn Processors will have a
nondeductible loss on liquidation and will not incur a tax liability. The amount
of taxable gain or loss that the members will recognize will depend on whether
the fair market value of Class A units issued to them is greater than or less
than their tax basis.

THE BOARD HAS RELIED ON AN APPRAISAL THAT IS NOT BINDING ON THE IRS

In deciding to proceed with the conversion, your board has relied on
accuracy of the appraisal. The appraisal is not binding on the IRS. Accordingly,
while Minnesota Corn Processors has no reason to believe that the IRS will
challenge the appraisal as an accurate determination of the value of Minnesota
Corn Processors, there is a risk that the IRS might determine that Minnesota
Corn Processors or its members must recognize gain for federal income tax
purposes. Furthermore, the appraisal is subject to adjustment for changes
occurring between the appraisal date, September 30, 1998, and the conversion
date.

THE IRS COULD ALSO CHALLENGE OTHER ASPECTS OF THE TRANSACTION THAT COULD
MATERIALLY ADVERSELY AFFECT MINNESOTA CORN PROCESSORS AND ITS MEMBERS

In addition to challenging the overall valuation of Minnesota Corn
Processors and the Colorado limited liability company units received by the unit
holders, the IRS might also might challenge:

* The apportionment of values to specific assets and the treatment of
the resulting gains or losses as capital gain or loss or ordinary
income or loss;

* The patronage or nonpatronage character of the income, gains or loss;
and

* Our treatment of the liquidation as a constructive distribution of
specific assets rather than as a distribution of interests in the
Colorado limited liability company.

There are anti-netting rules that may become operative if these challenges
are mounted by the IRS. Specifically, corporate capital losses cannot be offset
against any income other than capital gains and, likewise, patronage losses,
including Minnesota Corn Processors' net operating loss carryover, cannot be
offset against nonpatronage income or gain. For more information on anti-netting
rules and other tax information, please see "Federal Income Tax Consequences --
Summary of the Federal Income Tax Consequences of the Conversion."

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If the IRS challenges the transaction on any of these grounds, it could
materially damage our business and subject members and the limited liability
company to additional tax liability.

IF THE COLORADO LIMITED LIABILITY COMPANY IS TREATED AS A CORPORATION, CLASS A
UNITS COULD DECLINE IN VALUE

Minnesota Corn Processors expects that the Colorado limited liability will
be treated as a partnership for federal income tax purposes. This means that the
Colorado limited liability company will pay no income tax and members will pay
tax on their share of the Colorado limited liability company's net income. There
can be no assurance, however, that the Colorado limited liability company will
always be treated as a partnership due to changes in the law, or due to trading
in units to classify the entity as a publicly traded partnership.

If the Colorado limited liability company is treated as a corporation
rather than a partnership for federal income tax purposes, it would pay tax on
its income at corporate rates (currently a maximum 35% rate), distributions
would generally be taxed again to holders of Class A units as corporate
dividends, and no income, gains, losses or deductions would flow through to
holders of Class A units. Because a tax would be imposed upon the Colorado
limited liability company as an entity, the cash available for distribution to
unit holders would be reduced by the amount of the tax paid. Reduced
distributions could cause a reduction in the value of the Colorado limited
liability company units.

THE COLORADO LIMITED LIABILITY COMPANY'S TAX LIABILITIES MAY EXCEED CASH
DISTRIBUTIONS

It is likely that unit holders may receive allocations of taxable income
that exceed cash distributions from the Colorado limited liability company. This
will occur if the Colorado limited liability company determines that the cash
generated by the business is needed to fund the Colorado limited liability
company's activities or other obligations, rather than being available for
distribution to the Colorado limited liability company unit holders. It is
possible that unit holders may not receive distributions sufficient to pay the
tax liability attributed to each holder, and therefore the holders may be forced
to pay tax liabilities out of their personal funds.

MEMBERS MAY NOT BE ABLE TO FULLY DEDUCT THEIR SHARE OF THE COLORADO LIMITED
LIABILITY COMPANY'S LOSSES OR MEMBERS' INTEREST EXPENSE

It is likely that a member's interest in the Colorado limited liability
company will be treated as a "passive activity" for most unit holders. In the
case of unit holders who are individuals or closely held corporations, this
means that a unit holder's share of any loss incurred by the Colorado limited
liability company will be deductible only against the holder's income or gains
from other passive activities, e.g., S corporations and partnerships that
conduct a business in which the holder is not a material participant. Passive
activity losses that are disallowed in any taxable year are suspended and may be
carried forward and used as an offset against passive activity income in future
years. Upon disposition of a taxpayer's entire interest in a passive activity to
an unrelated person in a taxable transaction, suspended losses with respect to
that activity may then be deducted.

Many members have borrowed to purchase their equity interest in Minnesota
Corn Processors and have been deducting the interest expense. After the
conversion, part or all of their interest expense may not be deductible in the
same manner because it must be aggregated with other items of income and loss
that the member has independently experienced from passive activities and
subjected to the passive activity loss limitation.

THE CLASS A UNITS HAVE NO PUBLIC MARKET AND BOTH CLASS A AND B UNITS ARE
SUBJECT TO TRANSFER RESTRICTIONS

There is currently no established public trading market for the Class A
units, and an active trading market is unlikely to develop. The Colorado limited
liability company does not intend to apply for listing of the Class A units on
any stock exchange or on the Nasdaq Stock Market. Consequently, you may be
unable to readily resell your units.

To maintain partnership tax status, the Class A units and Class B units may
not be traded on an established securities market or readily tradable on a
secondary market. To help ensure that a market

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does not develop, the limited liability company's operating agreement prohibits
transfers without the approval of the board of directors. The board of directors
will generally approve transfers that fall within "safe harbors" contained in
the publicly-traded partnership rules under the tax code. Permitted transfers
include, transfers by gift, transfers upon death of a member, transfers between
family members and other transfers during the tax year that in the aggregate do
not exceed 2% of the total outstanding Class A and Class B units. If any person
transfers units in violation of the publicly traded partnership rules or without
the prior consent of the board, the Colorado limited liability company will
consider the transfer to be null and void. These restrictions on transfer could
reduce the value of the units.

MINNESOTA CORN PROCESSORS OPERATES IN AN INTENSELY COMPETITIVE INDUSTRY AND
THERE CAN BE NO ASSURANCE THAT THE CONVERSION WILL IMPROVE OUR COMPETITIVENESS

Minnesota Corn Processors business operates within highly competitive
markets. In the United States, Minnesota Corn Processors competes with other
corn processors or refiners, including Archer Daniels Midland Company, Cargill,
and A.E. Staley Manufacturing Company, a subsidiary of Tate & Lyle, PLC. Some of
our competitors are divisions of larger enterprises which may have greater
financial resources than Minnesota Corn Processors. Many of our products also
compete with products made from raw materials other than corn. For example, high
fructose corn syrup competes principally with cane and beet sugar, and ethanol
competes with Methyl Tert-Butyl Ether, a petroleum based fuel oxygenate, and
other oxygenate and compliance alternatives. Minnesota Corn Processors believes
the principal competitive factors in our markets are price, product quality and
service.

OUR BUSINESS IS SENSITIVE TO CORN PRICES, AND WHEN CORN PRICES INCREASE WE
GENERALLY CANNOT PASS ON THESE INCREASES TO OUR CUSTOMERS

Changes in the price of corn can significantly affect our business. In
general, rising corn prices produce lower profit margins and therefore represent
unfavorable market conditions. This is especially true when market conditions do
not allow us to pass along increased corn costs to our customers. The price
fluctuation in corn prices over the twenty year period from 1979 through 1999,
based on monthly futures data of the nearby futures month, has ranged from a low
of $1.42 per bushel to a high of $5.545 per bushel. In fiscal year 1996
Minnesota Corn Processors incurred substantial losses. A primary cause of the
losses was an exceptional increase in quantity impact corn costs which we were
unable to offset with higher product prices.

The price of corn is influenced by general economic, market and government
factors. These factors include weather conditions, farmer planting decisions,
domestic and foreign government farm programs and policies, global demand and
supply. The significance and relative impact of these factors on the price of
corn is difficult to predict. Factors such as crop disease or severe weather,
that tend to increase the price of corn could have an adverse impact on our
business because we may be unable to pass on higher corn costs to our customers.
Any events that tend to negatively impact the supply of corn will tend to
increase prices and harm our business.

DEBT SERVICE AND RESTRICTIVE LOAN COVENANTS COULD REDUCE DISTRIBUTIONS TO
MEMBERS

As of March 31, 1999, Minnesota Corn Processors' long-term debt was
approximately $291,000,000. It is possible our leverage and debt service
requirements may make us more vulnerable to economic or market downturns. If
Minnesota Corn Processors is unable to service our indebtedness, we may be
forced to reduce or delay planned capital expenditures, sell assets, restructure
our indebtedness or seek additional equity capital. There can be no assurance
that any of these strategies could be effected on satisfactory terms, if at all.
In addition, the terms of Minnesota Corn Processors' existing debt instruments
contain restrictive, financial and maintenance covenants. These covenants, among
other things, place limits on our ability to make cash distributions to members.
For example, cash distributions may not exceed 80% of our net earnings in any
given year, unless specific financial ratios are satisfied.

OUR BUSINESS IS SUBJECT TO EXTENSIVE ENVIRONMENTAL AND FOOD REGULATION AND
COMPLYING WITH THESE REGULATIONS CAN BE COSTLY AND UNPREDICTABLE

As a producer of food items, Minnesota Corn Processors is subject to
extensive regulation by the FDA and other government agencies. Minnesota Corn
Processors also is subject to various federal,

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state and local laws and regulations with respect to environmental matters. The
failure to comply or the need to respond to threatened actions involving
environmental laws and regulations may adversely affect our business, operating
results or financial condition.

MINNESOTA CORN PROCESSORS HAS SUFFERED LOSSES IN THE RECENT PAST

Prior to fiscal year 1999, when Minnesota Corn Processors earned a small
profit of approximately $5,900,000, we recorded net losses in the 1996, 1997 and
1998 fiscal years. We may suffer additional losses in the future.

HEDGING TRANSACTIONS INVOLVE RISKS THAT CAN HARM OUR BUSINESS

In an attempt to minimize the effects of the volatility of corn costs on
operating profits, we take hedging positions in the corn futures markets. The
effectiveness of such hedging activities is dependent upon, among other things,
the cost of corn and our ability to sell sufficient products to utilize all of
the corn with respect to which we have futures contracts. Although we attempt to
link hedging activities to sales plans and pricing activities, occasionally such
hedging activities can themselves result in losses. There can be no assurance
that such losses will not recur.

CAUTIONARY STATEMENT REGARDING
FORWARD-LOOKING INFORMATION

This document contains forward-looking statements. These statements are
based on management's beliefs and expectations, and on information currently
available to management. Forward-looking statements may be found under "The
Conversion," "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and "Business." Also, forward-looking statements include
statements in which Minnesota Corn Processors use words such as "believe,"
"expect," "anticipate," "intend," "will" or similar expressions.

Forward-looking statements involve numerous assumptions, risks and
uncertainties. Important factors that could significantly affect our current
plans, anticipated actions and future financial condition and results include,
among others, those set forth under the heading "Risk Factors." Actual results
may differ materially from those contemplated by any forward-looking statements.
Minnesota Corn Processors cautions you not to put undue reliance on any
forward-looking statements, which speak only as of the date of this document.

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THE SPECIAL MEETING

GENERAL

The board of directors of Minnesota Corn Processors is presenting the
accompanying ballot for use at the special meeting of members to be held on
November __, 1999 at ____, local time, at Jackpot Junction, Morton, Minnesota,
and at any adjournments or postponements after the annual meeting. This document
and the enclosed ballot form are first being mailed to Minnesota Corn
Processors' members on or about October __, 1999.

MATTERS TO BE CONSIDERED

The sole purpose of the special meeting will be to formally cast votes
regarding the merger of Minnesota Corn Processors with and into the Colorado
cooperative. A copy of the merger agreement between the Colorado cooperative and
Minnesota Corn Processors is attached as Appendix A, and a copy of the
transaction agreement among Minnesota Corn Processors, the Colorado cooperative
and the Colorado limited liability company is attached as Appendix C.

WHO CAN VOTE

Members of record at the close of business on _______, 1999 are entitled
to notice of and may vote at the annual meeting. On _______, 1999, there were
_______ voting members. Each member has one vote. If at least 10% of the
membership is present or represented by mail ballot at the annual meeting, a
quorum will exist.

HOW YOU CAN VOTE

To vote on the proposed merger, you must use the mail ballot accompanying
this document. It is the only ballot you will receive, and no additional ballots
will be distributed at any regional information meeting or the annual meeting.
As provided in Minnesota Corn Processors' bylaws, voting by proxy is prohibited.

If you are unable to attend the annual meeting, you can mail or personally
deliver the ballot to Minnesota Corn Processors, or personally deliver the
ballot at any regional information meeting. Two envelopes, one to hold the
ballot and one to return the envelope containing the ballot, are enclosed for
your convenience. Minnesota Corn Processors must receive your ballot by 9:00
a.m., November __, 1999 in order for your vote to be counted. NO PROCEDURES
EXIST FOR A MEMBER TO REVOKE A BALLOT ONCE THE BALLOT HAS BEEN RECEIVED BY
MINNESOTA CORN PROCESSORS.

VOTES REQUIRED

The affirmative vote of two-thirds of the votes cast, in person or by mail,
at the annual meeting is required to approve the merger of Minnesota Corn
Processors and the Colorado cooperative. As of _______, 1999, directors and
officers of Minnesota Corn Processors and their affiliates owned beneficially 24
shares of membership common stock, or approximately .45% of the total number of
members and votes.

RECOMMENDATION OF THE MINNESOTA CORN PROCESSORS' BOARD

The board has unanimously approved the merger agreement and the transaction
agreement, including all related transactions. The board believes that the
proposed conversion is in the best interests of Minnesota Corn Processors and
its members and recommends that members vote "FOR" the adoption of the merger
agreement and the transaction agreement.

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THE CONVERSION

REASONS FOR THE CONVERSION

The structure and terms of the conversion from cooperative to limited
liability company form were determined by your board of directors and senior
management after extensive investigation of the anticipated tax and other
impacts of the conversion on Minnesota Corn Processors and its members. In
determining whether to convert to a limited liability company, the Minnesota
Corn Processors' board and senior management team considered numerous factors.
The following is a brief discussion of those factors.

* As Minnesota Corn Processors' operations have expanded, it has become
increasingly difficult for members to cost-effectively deliver corn to
our facilities. This has forced members to use "GPA" or the Grower's
Procurement Agency as a mechanism to facilitate corn delivery. As a
result, Minnesota Corn Processors is operating less like a
cooperative, and is at risk of losing its favorable single-level tax
status under the Internal Revenue Code. The conversion to a limited
liability company form will enable Minnesota Corn Processors to
maintain its favorable single-level tax status at the company level.
It also gives Minnesota Corn Processors flexibility with respect to
corn procurement in order to compete with other corn wet milling
companies, without placing unattractive corn delivery requirements on
members. This was the primary factor leading to the conclusion to
convert from a cooperative to a limited liability company.

* Members are currently required to pay self-employment taxes on
Minnesota Corn Processors' earnings. As a member of the Colorado
limited liability company, members are not expected to be subject to
self-employment taxes on the new company's earnings. Proposed Treasury
regulations on this point have not been finalized and are subject to
change.

* The fact that limited liability company form permits an expanded
universe of potential members. This is true because the cooperative
form requires Minnesota Corn Processors to limit its membership to
corn producers and to distribute its earnings to members based on the
amount of corn each member delivers to the company, rather than the
value of each member's investment. The board and senior management
believes that, while no assurances can be given, the liquidity of
members' equity interests would be enhanced if membership in the new
company is opened up to a broader range of investors, that is,
non-producers. The limited liability company operating agreement
initially limits voting membership to producers.

* The conversion constitutes a taxable transaction, so it was important
to obtain an appraisal indicating that the tax consequences at both
the company and the member level would be manageable. As a result, the
board obtained an appraisal of American Appraisal Associates
indicating that, as of September 30, 1998, the value of Minnesota Corn
Processors as a going concern was $290.6 million and the value per
unit on that date was $1.10. This appraisal indicated that Minnesota
Corn Processors and most members would realize a loss rather than a
gain.

The board and management also considered alternative courses of action that
would be available to the cooperative. These alternatives included continuing
cooperative tax status and converting to a taxable corporation. Continuing as a
cooperative was considered to be undesirable because it would require members to
physically deliver corn. The board determined this was impractical and too
limiting or burdensome for both Minnesota Corn Processors and its members.
Converting to a taxable corporation was considered to be undesirable because of
the additional tax expense it involves relative to a cooperative or limited
liability company.

This discussion of factors considered by the board is not intended to be
exhaustive, but is believed to include all material factors considered by the
board. In reaching its determination to approve and recommend the conversion,
the board did not quantify or assign a relative weight to the above factors.

The following schedule illustrates the differences in combined income tax
consequences to Minnesota Corn Processors and a hypothetical member on a per
unit basis using past performance

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under the alternative forms of business entity that were considered by the Board
of Directors. It is assumed that the hypothetical member is a Minnesota resident
in the 15% tax bracket for federal income taxes, for example, married couple
filing jointly with taxable income below $42,350, who itemizes deductions. The
percentages shown are the approximate combined effective tax rates for each form
of entity, giving consideration to entity level income taxes for C corporations,
member state and federal income taxes and, in the case of a cooperative,
self-employment tax on the member.

COMPARISON OF COMBINED ENTITY AND HYPOTHETICAL MEMBERS TAXES PER UNIT
BASED ON HISTORICAL DISTRIBUTIONS AND ALTERNATIVE FORMS OF ENTITY

HYPOTHETICAL PER UNIT ENTITY AND MEMBER TAXES
-----------------------------------------------
LIMITED LIABILITY
DISTRIBUTION COOPERATIVE C CORPORATION COMPANY
OR LOSS ----------- ------------- -----------------
YEAR PER UNIT 34.2% 51.6% 21.1%
---------------------------------------------------------------------

1993 $ 0.73 $ 0.25 $ 0.38 $ 0.15
1994 $ 0.40 $ 0.14 $ 0.21 $ 0.08
1995 $ 0.55 $ 0.19 $ 0.28 $ 0.12
1996 $ (0.70) $ (0.15)
1997 $ (0.40) $ (0.08)
1998 $ (0.23) $ (0.05)

The principal differences in per unit tax liability, or saving, are that
cooperative distributions are subject to self-employment taxes while, under
proposed regulations, limited liability company income is not. The C corporation
is the most unattractive tax-wise because income is subject to double taxation.
The tax savings shown under the limited liability company model for loss years
are not immediately available unless the member has sufficient passive activity
income against which to deduct the losses.

RECOMMENDATION OF THE BOARD

Minnesota Corn Processors' board has approved the conversion. The board
believes that it is in the best interests of Minnesota Corn Processors and its
members to convert from a cooperative to a limited liability company.
Accordingly, the board has unanimously approved the merger agreement and
transaction agreement and recommends that members of Minnesota Corn Processors
vote "FOR" adoption of the merger agreement and transaction agreement. If the
conversion is not consummated for any reason, the board presently intends to
continue to operate Minnesota Corn Processors in its current cooperative form.

APPRAISAL OPINION

Because of the importance of fair market values in evaluating the tax
consequences of the proposed conversion, Minnesota Corn Processors retained
American Appraisal Associates, a nationally recognized appraisal firm, to
appraise the value of Minnesota Corn Processors and the value of the assets that
will be deemed constructively distributed to each of its unit holders.

We chose American Appraisal Associates because we have used them in the
past and we were satisfied with their work. In 1996, St. Paul Bank, in
connection with an outstanding loan, requested that we obtain an appraisal of
our real estate, which served as collateral for the loan. The lender requested
that we retain American Appraisal Associates to perform the appraisal. We were
satisfied with the work provided by American Appraisal Associates. We paid
American Appraisal Associates approximately $50,000 in connection with this
project. Due to the knowledge that the firm developed about us and our industry
in connection with the 1996 appraisal, our interest in avoiding paying for a new
firm to become educated about us and the quality and cost of the work that they
provided, we decided to retain American Appraisal Associates for this
assignment.

In the opinion of American Appraisal Associates, the fair market value
under the premise of continued use of Minnesota Corn Processors' business
enterprise was $611 million as of September 30, 1998 and on that date, the fair
market value under the premise of continued use of

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the minority common equity value of Minnesota Corn Processors immediately
following the consummation of the conversion is $1.10 per unit.

American Appraisal Associates, as part of its appraisal business, is
continually engaged in the valuation of businesses in connection with mergers,
acquisitions and divestitures, purchases of privatized businesses, property
accounting, acquisition due diligence, determining insurable values for risk
management, securities valuations, solvency opinions, and for tax and business
planning. American Appraisal Associates was founded in 1896, and is a leading
appraisal firm with 60 offices on five continents.

The board sought the appraisal in connection with its consideration of
Minnesota Corn Processors' conversion into a limited liability company.
Minnesota Corn Processors did not provide any valuation figure to the appraisal
firm. As described below, Minnesota Corn Processors provided American Appraisal
Associates with financial and other information about its business and its
industry. In June 1998, American Appraisal Associates delivered Minnesota Corn
Processors with an appraisal of its real estate without regard to the value of
the business enterprise as a going concern.

American Appraisal Associates subsequently conducted an appraisal of the
fair market value under the premise of continued use of: (1) the business
enterprise of Minnesota Corn Processors prior to the contemplated conversion to
a limited liability company, and (2) the minority common equity value of
Minnesota Corn Processors on a per-unit basis immediately following the
consummation of the conversion.

American Appraisal Associates performed its appraisal in accordance with
the purpose and reporting requirements set forth by the Uniform Standards of
Professional Appraisal Practice. The appraisal does not constitute a
recommendation as to how any member of Minnesota Corn Processors should vote on
the conversion.

The following is a summary of the appraisal's definitions, scope of
investigation limitations, assumptions, and material qualitative and
quantitative analyses.

DEFINITIONS USED IN THE APPRAISAL

BUSINESS ENTERPRISE. The appraisal defines the business enterprise value as
the combination of all tangible assets including, property, plant and equipment
and normal working capital and intangible assets of a continuing business.
Alternatively, it is equivalent to the invested capital of the business or the
combination of the value of stockholders' equity and long-term debt.

FAIR MARKET VALUE. The appraisal defines market value as the estimable
price which the business enterprise might exchange between a willing buyer and a
willing seller, neither being under compulsion, and each having reasonable
knowledge of all relevant facts. Fair market value using the premise of
continued use does not represent a piecemeal disposition of assets in the open
market or from an alternative use of those assets.

SCOPE OF INVESTIGATION

In connection with the appraisal, American Appraisal Associates, among
other things,

* Discussed with management the history and nature of the business since
its inception,

* Examined the financial condition of the organization and its book
value,

* Reviewed and analyzed the economic prospects of the corn milling
industry,

* Conducted a comparative analysis of the financial condition and
operating results of the business compared to publicly owned companies
engaged in similar businesses,

* Analyzed audited and unaudited financial statements for quarterly and
annual periods from 1993 to 1998, and performed balance sheet and
income statement analyses,

* Reviewed financial and other documents and forecasts, and

* Examined market conditions, economic and industry outlooks and
reviewed projections of future performance.

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LIMITATIONS AND ASSUMPTIONS

The appraisal relies upon the accuracy and completeness of all of the
financial and the information that the firm reviewed. American Appraisal
Associates is not an expert in the corn processing industry and the assumptions
and information that American Appraisal Associates relied upon concerning
Minnesota Corn Processors' business, such as pricing, industry trends and
forecasts, historical results and other industry information was provided by
Minnesota Corn Processors.

MATERIAL FINANCIAL ANALYSES

The appraisal relies upon two approaches to value, the market approach and
the income approach. The market approach estimates the value of the business
enterprise by comparing the financial condition and operating performance of the
company being appraised with those of publicly traded companies in the same or
similar lines of business, which are subject to corresponding economic,
environmental and political factors. The income approach estimates the present
worth of future of economic benefits. Future net cash flows are discounted for
distribution at market-based rates of return to provide indications of value. In
addition to performing market and income analyses, American Appraisal Associates
also examined Minnesota Corn Processors' sale of 30% minority interest to Archer
Daniels Midland Company in 1997, and investigated and adjusted the appraisal to
reflect Minnesota Corn Processors' nonoperating assets.

MARKET APPROACH. The appraiser located six guideline, or comparable
publicly traded companies engaged in the same, or similar line of business that
a hypothetical investor would consider as an investment alternative to Minnesota
Corn Processors. The guideline companies selected were: Archer Daniels Midland
Company; Corn Products International; Midwest Grain Products; Penford
Corporation; Grupo Industrial Maseca; and High Plains Corporation. The multiples
of these companies were weighted based upon a review of growth, profitability
and lines of business comparison.

Based on recent historical negative earnings by most of the guideline
companies, American Appraisal Associates determined that two levels of earnings
were appropriate for comparison with Minnesota Corn Processors, price: revenues
and price: operating earnings before depreciation, interest, taxes and
amortization ("EBDITA"). American Appraisal Associates calculated ratios for
1999 and 1997 fiscal years, and the past three and five year averages. American
Appraisal Associates determined a weighting based upon its judgment that the
five year average to be the best indicator of value.

American Appraisal Associates calculated an invested capital ratio which
represents a freely traded minority interest for the guideline companies as of
September 30, 1998. Invested capital value was derived for each earnings stream
and were weighted as follows:

- -------------------------------------------------------------------------------
INDICATED
EARNINGS STREAM INVESTED WEIGHTED
(In thousands) CAPITAL VALUE WEIGHT INDICATION
($ millions) (%) ($ millions)
- -------------------------------------------------------------------------------
Price: Revenues .................. 409 40 164
Price: Operating EBDITA .......... 409 60 264
Concluded Value .................. 100 409

Based upon this valuation process, the invested capital value before
application of a premium for control was determined to be $409 million.

American Appraisal Associates assumed a premium for control of 30% to value
control of the entire enterprise. The appraisal derived a value indication from
the guideline company method of the market approach using market-based returns
to minority shareholders. The appraisal's purpose is to value 100% controlling
interest in the invested capital of the company. The appraiser assumed an equity
capital structure of 75% equity and 25% debt, which led to an invested capital
premium for control of 22.5%. American Appraisal Associates applied this premium
to the minority value

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<PAGE>

indication in the following manner: $409 million (minority invested capital
value) X 1.225 (premium for control) approximately $500 million indicated
majority invested capital value.

INCOME APPROACH. American Appraisal Associates also developed an indication
of value based upon the income approach. This involved discounting future debt
free-net cash flows available to providers of invested capital to their present
worth at a rate that reflects both the current return requirements of the market
and the risks inherent in the specific investment. American Appraisal Associates
used a debt-free approach to avoid possible distortive effects of debt and debt
service to better reflect the earning power of the entity.

The appraisal relied upon a forecast for the fiscal years ending March 31,
1999 through 2003 of sales and operating margins. The appraisal used a corn cost
forecast based upon 22 year historical averages provided by Minnesota Corn
Processors. Minnesota Corn Processors also provided depreciation, taxes and
amortization expense and capital expenditure forecasts for the years ended March
31, 1999 through 2003. American Appraisal Associates arrived at an estimate of
working capital of 15% of net revenues, based on an analysis of Minnesota Corn
Processors' historical results. Based upon these forecasts, American Appraisal
Associates arrived at a range of projected debt-free cash flow from 1999 to
2003, from $29,167,000 to $119,945,000.

American Appraisal Associates calculated a discount rate of 17.5%. To reach
this discount rate, American Appraisal Associates determined:

* Equity of 75% and debt of 25% based upon comparable companies,

* The cost of equity capital of 22%, using the capital asset pricing
model, and assuming corn price risk and industry capacity, among other
things,

* The cost of debt capital to be 7% based upon review of various yields
of debt securities, and

* Adjustments for tax deductibility of debt service costs
proportionately weighted for the capital structure.

Using a discount rate of 17.5%, and the forecasted debt-free cash flows,
American Appraisal Associates arrived at a value using the income approach of
$615 million. The income approach assumes control so no premium was necessary.

PRIORITY TRANSACTIONS. In May 1997, Archer Daniels Midland Company
purchased a 30% minority interest in Minnesota Corn Processors for $120 million.
This transaction suggested a business enterprise valuation of $816 million based
upon debt outstanding as of March 31, 1997. American Appraisal Associates
determined that this transaction was not indicative of fair market value because
the investment was accomplished by a strategic buyer, and the purchase price
incorporated a significant premium attributable to the buyer's specific motives
and expectations. American Appraisal Associates observed that three other
parties had submitted offers to Minnesota Corn Processors that ranged in price
from $0.75 to $1.20 per equity unit. These offers suggested a business
enterprise value from $563 million to $651 million, well below Archer Daniels
Midland Company's price.

NONOPERATING ASSETS. American Appraisal Associates adjusted its indicated
business enterprise value for the value of nonoperating assets or excess or
deficient working capital. The following assets were considered nonoperating:

* Minnesota Corn Processors' investment in St. Paul Bank, a cooperative
bank, fair market value of $3,800,000;

* Deferred debt financing costs from restructuring certain debt, at
September 30, 1998 balance sheet value of $3,350,000;

* Cash surrender values for certain life insurance contracts for
employees of Liquid Sugars, valued at $137,000;

* Long term notes receivable from a vendor and from the City of
Marshall, Minnesota, valued at $2,322,000;

* Member loss allocation receivable balance as of September 30, 1998,
valued at $15,100,000.

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<PAGE>

CORRELATION OF MARKET AND INCOME APPROACHES AND MINORITY AND LACK OF
MARKETABILITY DISCOUNTS. American Appraisal Associates correlated and weighted
the market and income approaches. The income approach received a weight of 75%,
and the market approach 25%. Due to recent volatility in raw material prices, as
well as the supply/demand imbalance within the industry, the appraiser concluded
that the income approach was a better indication of future value. This
calculation indicated the invested capital of the operating business. The
concluded excess net working capital and nonoperating assets were added to this
value to arrive at a freely traded invested capital value for Minnesota Corn
Processors of $611 million. Minnesota Corn Processors intends to base its
entity-level income tax calculations on the freely traded invested capital value
as updated to the effective date.

DETERMINATION OF PER-UNIT VALUE. Having determined the fair market value
under the premise of continued use of the business enterprise of Minnesota Corn
Processors immediately before the conversion to a limited liability company to
be $611 million, the appraisal makes a number of further adjustments to reach
the minority common equity value of Minnesota Corn Processors on a per-unit
basis immediately after the conversion to a limited liability company. These
adjustments are described in the following paragraphs.

MINORITY INTEREST DISCOUNT. The appraiser also applied a minority interest
adjustment. The appraiser arrived at an appropriate discount based upon premiums
paid for a controlling interest in other similar companies. The appraiser
reasoned that because a premium for a controlling interest may be used to adjust
an indication of value from a minority interest to a majority or controlling
interest, a discount may be used to adjust an indication of value from a
majority interest to a minority interest.

To arrive at an appropriate premium, the appraiser examined two public
acquisitions, Imperial Holly corporation's acquisition of Savannah Foods
Industries in 1997, and Eridania Beghin-Say S.A.'s acquisition of American Maize
Products in 1995. Based on the 30-day average closing price prior to the
announcement of each transaction, the premium for control offered in the
acquisition of Savannah Foods & Industries was 38.8%, and in the acquisition of
American Maize Products was 60.1%. From this analysis, the appraisal assumed a
30% premium for control.

The appraisal calculated a minority interest discount utilizing the
following mathematical formula:

Minority Interest Discount = 1 - (1 + 1 + Premium for Control)

Accordingly, the minority interest discount for Minnesota Corn Processors was
concluded to be 23%.

DISCOUNT FOR LACK OF MARKETABILITY. Minnesota Corn Processors' common stock
is not offered for sale on the public market. Accordingly, a lack of
marketability discount was applied. To determine the magnitude of the discount,
the appraiser examined unregistered stocks of public companies sold in private
placements. The appraiser concluded that because a holder of unregistered
securities usually cannot market his or her shares immediately, the holders are
exposed not only to the erratic nature of the marketplace, but also to the risk
that the anticipated means of disposing of the stock may not materialize.
Unregistered stocks involving a minority interest typically are purchased at a
price substantially below that of identical, but freely marketable, securities.

American Appraisal Associates concluded that a 5% marketability discount
was applied to Minnesota Corn Processors due to the following factors:

* Minnesota Corn Processors' balance sheet is significantly smaller than
that of Archer Daniels Midland Company and Corn Products
International, its primary competitors;

* Based on the cash flow projections utilized in the income approach, a
holder of Minnesota Corn Processors' common stock will realize a
significant return on investment through dividends;

* As a result of industry-wide expansion from 1995 to 1997, the high
fructose corn syrup industry entered a period of supply-demand
imbalance in 1996-1997, resulting in an estimated decline in the
capacity utilization rate to 68%. Capacity utilization has improved
due to the

17
<PAGE>

closing of certain facilities and the continued growth in consumption.
As such, supply and demand should continue to rebalance, presenting a
favorable future for Minnesota Corn Processors;

* The management team consists of professionals with extensive
experience in the corn processing and food industries;

* Class A common stock has voting rights, and no member may own more
than 2% of the total issued and outstanding Class A shares. No
competitor of Minnesota Corn Processors will be eligible to own Class
A shares. Class B common stock will comprise nonvoting shares, and no
Class A or B shares may be transferred by any Minnesota Corn
Processors member without the prior consent of the board of directors.
However, it has been the company's policy to approve all transactions.
Minnesota Corn Processors members have the right of first refusal for
units intended to be transferred to transferees other than the spouse,
parent, brother, sister, or child of the transferring member; a family
farm corporation in which the transferring member is a shareholder; or
a partnership or other business entity in which the transferring
member is a partner, member, or other participant;

* There are no plans for redemption; and

* A minority common stockholder has no right to compel the company to
register unlisted stock.

By applying the discount for lack of marketability and the minority
discount as concluded previously, a per-unit value of a minority interest in
Minnesota Corn Processors immediately after its conversion to a limited
liability company was developed as follows:

As-if-Freely-Traded Invested Capital .......................... $ 611,000,000
Less Long-Term Liabilities as of 9/30/98 ...................... -320,300,000
-------------
As-if-Freely-Traded Aggregate Common Equity Value ............. $ 290,600,000
Less Minority Discount @ 23% .................................. 66,800,000
-------------
As-if-Freely-Traded Aggregate Common Equity Value ............. 223,800,000
Less Discount for Lack of Marketability @ 5% .................. 11,200,000
-------------
Closely Held Minority Common Equity Value ..................... $ 212,600,000
Rounded to: ................................................... $ 215,000,000
Number of Units Outstanding ................................... 196,198,000
Closely Held Minority Interest Common Equity Value Per Unit ... $ 1.10

CONCLUSION. Based on the investigation and analysis, American Appraisal
Associates concluded that, as of September 30, 1998, the fair market value under
the premise of continued use of the Minnesota Corn Processors' business
enterprise, prior to the conversion, is reasonably represented in the amount of
$611 million. As of the same date, the appraiser concluded the fair market value
under the premise of continued use of the minority common equity value of
Minnesota Corn Processors, immediately following the consummation of the
conversion, is $1.10 per unit, based on 196,198,000 units outstanding.

Prior to its engagement for this assignment, American Appraisal Associates
has never provided appraisal services to Minnesota Corn Processors or any of its
affiliates. Other than American Appraisal Associates' commitment to provide a
final appraisal as of the conversion date, Minnesota Corn Processors or its
affiliates have no plans, formal or informal to engage American Appraisal
Associates for any other valuation assignment. Since March 27, 1998, Minnesota
Corn Processors has paid American Appraisal Associates $85,468.61 for its
services.

Minnesota Corn Processors has attached a summarization letter of this
opinion to this document as Appendix E. You should read this document to
understand the matters considered and the scope of the review made by American
Appraisal Associates(R) in providing its opinion. Members of Minnesota Corn
Processors may review the full text of the appraisal report at the principal
offices of Minnesota Corn Processors.

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<PAGE>

TAX TREATMENT

The conversion will be a taxable event to Minnesota Corn Processors and its
members. Please see "Federal Income Tax Considerations" for a discussion of
important tax matters.

ACCOUNTING TREATMENT

For financial accounting purposes, the conversion will be treated in a
manner similar to that of a "pooling of interests" transaction under gaap. Under
this method of accounting, no gain or loss will be recognized at the time of the
conversion and the book value of the assets and liabilities of Minnesota Corn
Processors at the time of the conversion will carry over to the Colorado limited
liability company. However, since the Colorado limited liability company is not
a tax paying entity, any deferred income taxes on the books of Minnesota Corn
Processors at the time of the conversion will be eliminated. In addition, the
various equity accounts will be consolidated into only two captions -- Class A
Units and Class B Units.

REGULATORY APPROVAL

No federal or state regulatory requirements must be complied with or
approval must be obtained in connection with the proposed conversion.

ABSENCE OF DISSENTERS' RIGHTS

Members who object to the merger between Minnesota Corn Processors and the
Colorado cooperative will have no appraisal or dissenters' rights under
Minnesota law. Dissenters' rights would, if applicable, constitute the right to
receive, instead of Class A units, an amount in cash that a court decides is the
fair value of their units of equity participation.

FEDERAL SECURITIES LAW CONSEQUENCES

Under the federal securities laws, Class A units received in the conversion
by persons who are not affiliates under the Securities Act of 1933, of the
Colorado limited liability company may be resold immediately. Class A units
received in the conversion by "affiliates" of the Colorado limited liability
company may be resold only pursuant to further registration under the Securities
Act; in compliance with Rule 145 under the Securities Act; or in transactions
that are exempt from registration under the Securities Act. These restrictions
are expected to apply to the directors and executive officers of the Colorado
limited liability company.

This document cannot be used in connection with resales of Class A units
received in the conversion by any person who may be deemed to be an affiliate of
Minnesota Corn Processors or the Colorado limited liability company under the
Securities Act.

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<PAGE>

THE MERGER AGREEMENTS AND THE TRANSACTION AGREEMENT

THE FOLLOWING IS A SUMMARY OF THE MATERIAL TERMS OF THE MERGER AGREEMENT
BETWEEN MINNESOTA CORN PROCESSORS AND THE COLORADO COOPERATIVE, THE MERGER
AGREEMENT BETWEEN THE COLORADO COOPERATIVE AND THE COLORADO LIMITED LIABILITY
COMPANY, AND THE AMENDED AND RESTATED TRANSACTION AGREEMENT AMONG ALL PARTIES.
PLEASE REVIEW THESE AGREEMENTS IN APPENDICES A, B AND C.

MERGER AGREEMENT WITH THE COLORADO COOPERATIVE (THE "COLORADO COOPERATIVE
MERGER AGREEMENT")

GENERAL
The Colorado cooperative is a wholly-owned subsidiary of Minnesota Corn
Processors. It has been formed specifically to effectuate the conversion.
Subject to the terms and conditions of the Colorado cooperative merger agreement
and the transaction agreement, immediately before the effective time of the
Colorado limited liability company merger, Minnesota Corn Processors will merge
with the Colorado cooperative. The Colorado cooperative will be the surviving
entity. At the effective time, the separate corporate existence of Minnesota
Corn Processors will cease. The articles and bylaws of the Colorado cooperative
will be substantially identical to those of Minnesota Corn Processors as in
effect immediately before the merger. The directors and officers of Minnesota
Corn Processors will be the directors and officers of the Colorado cooperative.

This merger is a necessary step in the conversion process because Minnesota
law does not permit a Minnesota cooperative, such as Minnesota Corn Processors,
to merge with a limited liability company. Under Colorado law, cooperatives are
permitted to merge with limited liability companies. In addition, Colorado has
been chosen as the state of organization for the new limited liability company
because Colorado law allows limited liability companies greater freedom and
flexibility to manage their business and affairs than laws in most other states.

CONVERSION OF EQUITY INTERESTS; TREATMENT OF MEMBERSHIP STOCK
Upon completion of the merger between Minnesota Corn Processors and the
Colorado cooperative, each member of Minnesota Corn Processors will be a member
of the Colorado cooperative. All outstanding shares of Minnesota Corn Processors
common stock and units of equity participation will be converted automatically
into shares of common stock and units of equity participation of the Colorado
cooperative on a one-to-one basis. The rights and privileges of the Colorado
cooperative common stock and units of equity participation will be the same as
the rights and privileges of Minnesota Corn Processors common stock and units of
equity participation. The outstanding nonvoting units of equity participation of
Minnesota Corn Processors held by Archer Daniels Midland Company will also be
converted automatically into nonvoting units of equity participation of the
Colorado cooperative on a one-to-one basis.

Minnesota Corn Processors currently has outstanding $3,849,000 of patronage
refunds that were originally issued as nonqualified written notices of
allocation within the meaning of Section 1388(d) of the Internal Revenue Code.
The nonqualified written notices were not evidenced by capital stock or by units
of equity participation. Thus, they represent allocated patronage equities that
may be redeemed at the discretion of the board of directors. If the board elects
not to redeem them, then they will be redeemed upon the liquidation of Minnesota
Corn Processors, at the value determined by the board, after all units of equity
participation have been redeemed.

Nonqualified written notices represent patronage earnings of Minnesota Corn
Processors that were allocated to the members in a manner that did not produce a
patronage dividend deduction for Minnesota Corn Processors, and which were not
required to be taken into taxable income of the members when they were issued.
The stated amount of the notices would be deductible by Minnesota Corn
Processors and taxable to the holders if and when they are redeemed. The
entitlements of the holders of nonqualified written notices in Minnesota Corn
Processors will be converted into comparable entitlements in the Colorado
cooperative.

MERGER BETWEEN THE COLORADO COOPERATIVE AND THE COLORADO LIMITED LIABILITY
COMPANY (THE "COLORADO LIMITED LIABILITY COMPANY MERGER AGREEMENT")

GENERAL
Prior to the execution of the transaction agreement, the Colorado limited
liability company was formed as a Colorado limited liability company. Subject
to the terms and conditions of the Colorado

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<PAGE>

limited liability company merger agreement and the transaction agreement,
immediately after the effective time of the merger between Minnesota Corn
Processors and the Colorado cooperative, the Colorado cooperative will merge
with the Colorado limited liability company. The Colorado limited liability
company will be the surviving company. The separate corporate existence of the
Colorado cooperative will cease, and the initial membership interest of the
Colorado limited liability company held by Minnesota Corn Processors will be
automatically canceled.

As a result of the mergers, all members of the Colorado cooperative will
become members of the Colorado limited liability company, which means that all
members of Minnesota Corn Processors will be members of the Colorado limited
liability company. The business of Minnesota Corn Processors will be conducted
by the Colorado limited liability company. The directors and officers of
Minnesota Corn Processors will be the directors and officers of the Colorado
limited liability company.

CONVERSION OF EQUITY INTERESTS; TREATMENT OF MEMBERSHIP STOCK
Each outstanding unit of equity participation of the Colorado cooperative
will be converted automatically into one Class A unit of the Colorado limited
liability company. Each outstanding share of common stock of the Colorado
cooperative will be canceled. Each member owning at least 5,000 Class A units
will have one vote, regardless of the number of additional Class A units owned
by the member. The rights and privileges of the Class A units are set forth in
an operating agreement. For a description of the differences between the rights
of the holders of Class A units and holders of Minnesota Corn Processors units
of equity participation, please see "Comparison of Rights of Members."

In addition, each outstanding nonvoting unit of equity participation of the
Colorado cooperative held by Archer Daniels Midland Company will be converted
automatically into one Class B unit of the Colorado limited liability company. A
Class B unit is a nonvoting membership interest. With the exception of the right
to vote, Class B units have the same rights and privileges as the Class A units.

Nonqualified written notices of allocation will not be redeemed as part of
the merger from the Colorado cooperative to the Colorado limited liability
company. They will also not be converted into Colorado limited liability company
units. Instead, they will be designated as special financial interests in the
Colorado limited liability company that will possess entitlements comparable to
their present entitlements. Specifically, the Colorado limited liability company
board of directors will have the discretion to redeem the special financial
interests for their stated amount. If the board does not redeem them, they will
have a liquidation entitlement comparable to what now exists, namely a
subordinated right to be paid after each Colorado limited liability company unit
holder has been paid the value of their unit as determined by the board. If and
when the face amount of the special financial interests are paid, a special
allocation of income or gain will be made to the holders as taxable income.

EXCHANGE OF CERTIFICATES

There is no requirement to exchange any certificates representing shares of
common stock and units of equity participation of Minnesota Corn Processors or
the Colorado cooperative. After the mergers, until surrendered to the Colorado
limited liability company in a subsequent transfer, the certificates
representing Minnesota Corn Processors' units of equity participation will be
deemed to evidence ownership of the Class A units or Class B units, as the case
may be.

EFFECTIVE TIME

The merger of the cooperatives will take effect upon the later of the
filing of the articles of merger with the Secretary of State of Minnesota and
the filing of the statement of merger with the Secretary of State of Colorado.
The merger between the Colorado cooperative and the Colorado limited liability
company will take effect upon the filing of the statement of merger with the
Secretary of State of Colorado. Minnesota Corn Processors anticipates that the
mergers will be consummated on __________, __, provided that consents are
received from the Company's lenders and Archer Daniels Midland Company.

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<PAGE>

EMPLOYEE BENEFIT PLANS

Under the transaction agreement, the Colorado limited liability company
will honor all benefits accrued under any Minnesota Corn Processors benefit
plan, policy or arrangement in accordance with the respective terms of these
benefit plans and to the extent required by law.

PATRONAGE DISTRIBUTIONS

Within a reasonable period of time after the mergers, the Colorado limited
liability company will make patronage distributions to former members of
Minnesota Corn Processors based on patronage transactions with Minnesota Corn
Processors during the fiscal year, or a portion of the year immediately
preceding the mergers. Patronage distributions shall made in cash and equity
credits in a manner consistent with Minnesota Corn Processors' patronage
distribution policy in effect prior to consummating the mergers, and in the case
of equity credits, in the form of Class A units or Class B units, as
appropriate.

1996 LOSS PAYABLES

After the mergers, the unpaid portion of Minnesota Corn Processors'
operating loss for the fiscal year ended September 30, 1996 that was assessed
against units of equity participation shall continue as a lien in favor of the
Colorado limited liability company against Class A units received in the merger
between the Colorado cooperative and the Colorado limited liability company.

REPRESENTATION AND WARRANTIES

In the transaction agreement, the parties each have made representations
and warranties as to, among other things, the organization and good standing of
each party, the capitalization of each party and the corporate power and
authority of each party. In addition, the transaction agreement contains
representation and warranties of Minnesota Corn Processors as to, among other
things, its financial statements; the absence of undisclosed liabilities;
compliance with applicable laws; the absence of legal proceedings; and the
absence of material defaults under material contracts.

CONDITIONS TO CONSUMMATION OF THE MERGERS

The obligations of the parties to consummate the mergers are subject to the
satisfaction or waiver, where permissible, of the following conditions at or
prior to the consummation of the merger.

* Approval by the members of Minnesota Corn Processors of the merger
agreement with the Colorado cooperative and the transaction agreement;

* Approval by the members of the Colorado cooperative of the Colorado
limited liability company merger agreement and the transaction
agreement;

* No injunction, restraining order or order of any nature enjoining the
mergers;

* The effectiveness of the Registration Statement, of which this
document constitutes a part, and no proceedings to stop the
effectiveness are underway;

* Receipt of all consents necessary in connection with the mergers,
including those from Archer Daniels Midland Company, which we have not
yet obtained and may not be able to obtain, and Minnesota Corn
Processors' lenders;

* The accuracy in all material respects of the representations and
warranties of each party to the transaction agreement;

* Material performance of all obligations required to be performed prior
to the merger; and

* All actions, proceedings and documents necessary to carry out the
mergers shall be reasonably satisfactory to the parties.

As the sole shareholder of the Colorado cooperative and sole member of the
Colorado limited liability company before the mergers, Minnesota Corn
Processors, through the actions of its board of directors, has approved the
merger agreement between the Colorado limited liability company and the Colorado
cooperative and the transaction agreement among all of the parties. No assurance
can

22
<PAGE>

be provided that the other conditions precedent to the conversion will be
satisfied or waived by the party permitted to do so; in particular, Minnesota
Corn Processors will not proceed with the conversion without the consent of the
Company's lenders and Archer Daniels Midland Company. The condition that cannot
be waived includes approval by members of Minnesota Corn Processors of the
merger into the Colorado cooperative.

CONDUCT OF BUSINESS PRIOR TO CONVERSION

The transaction agreement provides that, prior to consummating the mergers,
Minnesota Corn Processors will conduct its business in the ordinary course
consistent with past practice. It also will use good faith efforts to preserve
intact its business organization, properties and the goodwill of its members
suppliers and other business relationships.

The parties have also agreed to use good faith efforts to take or cause to
be taken all actions, and to do or cause to be done, all things necessary,
proper or advisable under applicable laws so as to permit consummation of the
mergers and all related transactions as promptly as practicable. The parties
have agreed to cooperate in obtaining necessary permits, consents, approvals and
authorizations of all third parties and any court, administrative agency or
other federal, state or local government authority.

In addition, the parties have agreed that without the prior consent of the
other party they will not, among other things:

* Grant to any person any right to acquire capital stock or other equity
interests, except for allocation of patronage equities in a manner
consistent with past practice;

* Issue any additional shares of capital stock or other equity
interests, except in the ordinary course of business consistent with
past practice;

* Reclassify, combine, split or amend its capital stock or equity
interests;

* Purchase, acquire or redeem any shares of its capital stock or equity
interests, except in the ordinary course of business;

* Enter into, amend or terminate any material contract;

* Amend its articles of incorporation or articles of organization, as
the case may be, or its bylaws or operating agreement, as the case may
be, or any board policies;

* Other than in the ordinary course of business pursuant to existing
credit arrangements, incur any indebtedness for borrowed money;

* Make any material capital expenditures other than in the ordinary
course of business;

* Mortgage any of its assets or properties, or except in the ordinary
course, sell any of its material assets or properties;

* Pay any dividends or make any distributions with respect to its
capital stock or equity interests, except in the ordinary course
consistent with past practice; or

* Agree or commit to do any of the actions listed above.

TERMINATION

The transaction agreement may be terminated and the mergers may be
abandoned at any time prior to the consummation by:

* Minnesota Corn Processors or the Colorado cooperative if members of
Minnesota Corn Processors fail to approve the merger into a Colorado
cooperative;

* Mutual written consent of Minnesota Corn Processors, the Colorado
cooperative and the Colorado limited liability company, although
consent is a mere formality because Minnesota Corn Processors controls
the other parties;

* Any party to the transaction agreement upon written notice if one or
more of the conditions to its obligations cannot be met, the other
party has defaulted in any material respect under

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<PAGE>

any of the covenants or agreements under the transaction agreement or
any representation or warranty of the other party is or has become
materially untrue or incorrect and in either case, has not been cured
within 30 days after notice; or

* Either party if the conversion has not been consummated on or before
October 1, 1999.

AMENDMENT

The terms of the transaction agreement may be amended or supplemented at
any time by mutual agreement except, following members' approval of the merger
into a Colorado cooperative, the transaction agreement may not be amended if the
amendment would violate applicable law, or change the amount or form of the
consideration to be received by members of Minnesota Corn Processors.

INDEMNIFICATION AND INSURANCE

From and after the consummation of the mergers, the Colorado limited
liability company has agreed to indemnify each present and former director,
officer, employee or agent of Minnesota Corn Processors or the Colorado
cooperative. The Colorado limited liability company has also agreed to indemnify
each person who, while a director or officer of Minnesota Corn Processors and at
the request of Minnesota Corn Processors, serves or has served another
corporation, cooperative, partnership, joint venture, or other enterprise as a
director, officer or partner. This indemnification obligation covers any losses,
claims, damages, liabilities, or expenses arising out of or pertaining to
matters existing or occurring at or before the consummation of the mergers,
whether asserted or claimed before or after the consummation of the mergers, to
the fullest extent permitted by law. The Colorado limited liability company may
purchase insurance coverage against these losses, claims or expenses, but is not
obligated to do so. Indemnification against liabilities under the federal
securities laws may not be enforceable. You should know that indemnification
against liabilities under the federal securities laws may not be enforceable.

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<PAGE>

SELECTED FINANCIAL DATA

The following table sets forth selected financial data of Minnesota Corn
Processors. Minnesota Corn Processors has derived this information from its
consolidated financial statements. The audited financial statements have been
audited by Clifton Gunderson L.L.C., independent auditors.

Fiscal year 1997 was a six-month period because Minnesota Corn Processors,
Inc. changed its fiscal year end from September 30 to March 31.

You should read the financial data presented below along with "Management's
Discussion and Analysis of Financial Condition and Results of Operations," as
well as the consolidated financial statements and related notes that Minnesota
Corn Processors includes at the end of this document. In reviewing the following
financial information, you should consider:

* EBITDA represents earnings (loss) before interest, income taxes,
depreciation and amortization. It is presented to enhance an
understanding of our operating results and ability to service debt and
is not intended to represent cash flow or net earnings under U.S.
GAAP. Our use of EBITDA may not be comparable to similarly titled
measures used by other companies. It is included as a tool for
analyzing our results.

<TABLE>
<CAPTION>
PERIOD ENDED YEAR THREE MONTHS
MARCH 31, ENDED ENDED
YEAR ENDED SEPTEMBER 30, (6 MONTHS) MARCH 31, JUNE 30,
---------------------------- ------------ ---------------- ----------------
1994 1995 1996 1997 1998 1999 1998 1999
------ ------ ------ ------------ ------ ------ ------ ------
(in millions)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net Revenues ....................... $ 233 $ 327 $ 420 $ 237 $ 563 $ 599 $ 165 $ 145
Cost of product sold ............... 195 256 441 207 525 526 154 123
Gross proceeds (loss) .............. 38 71 (21) 30 38 73 11 22
Selling, general and
administrative expenses ........... 12 14 26 20 46 50 13 14
Operating income (loss) ............ 26 57 (47) 10 (8) 23 (2) 8
Interest expense ................... 6 11 19 20 32 23 6 6
Other income (expense) ............. 4 1 3 -- (5) 6 4 --
Net income (loss) .................. 24 47 (63) (10) (45) 6 (4) 2
Outstanding units of equity
participation at year end ......... 76.3 76.3 76.2 136.7 195.7 195.6 195.7 195.6

EBITDA supplements, and is not intended to represent a measure of performance in
accordance with disclosures required by generally accepted accounting
principles. It is included as a tool for analyzing our results.

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<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

THE FOLLOWING DISCUSSION CONTAINS FORWARD-LOOKING STATEMENTS. THESE
STATEMENTS ARE SUBJECT TO RISKS AND UNCERTAINTIES, INCLUDING THOSE DISCUSSED
UNDER "RISK FACTORS", THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM
THOSE ANTICIPATED.

OVERVIEW AND OUTLOOK

Following several years of attractive growth, Minnesota Corn Processors
sustained major losses in fiscal years ending in 1996, 1997 and 1998. The
primary reason for the losses was a significant expansion of corn wet milling
capacity in North America ahead of industry demand. The 55 high fructose demand,
however, has been growing at approximately 5% per year in the period of 1991 to
1998. The supply/demand caused sweetener prices to fall sharply and made these
corn processors unprofitable in 1996 and 1997. Since corn wet milling capacity
utilization dropped to 76% in 1996, some withdrawal of capacity and the
continuing demand growth has returned the industry capacity utilization to as
much as a 86-87% rate. This recovery has been in line with the industry's
history in dealing with these imbalances that occur approximately every 8-10
years. The recovery is generally fairly quick.

The other major factor contributing to the losses sustained during 1996 -
1997 was a sharply higher corn cost. Corn reached a historical high, with the
average cost of fiscal 1996 corn increasing by 76%. In late 1997, corn returned
to more normal levels and has actually fallen in late 1998 below normal lows.
This has helped us to return to profitability at the present time.

In fiscal 1999, Minnesota Corn Processors has addressed those items within
its control in order to be properly positioned when industry prices rebounded to
normal levels. Minnesota Corn Processors increased volume to basically full
capacity, while reducing operating costs per bushel to target levels, and
increasing efficiency. As a result in fiscal year 1999, Minnesota Corn
Processors returned to profitability. Lower corn costs and increased production
helped to push Minnesota Corn Processors into a profitable year for the first
time since September, 1995. Concentration on customer service and quality of
products will continue to establish an outstanding customer base. Capital
expenditures were directed to cost reduction projects at the processing
facilities.

RESULTS OF OPERATIONS

Please note that net sales included storage and handling income generated
by Liquid Sugars, Inc. This income is earned by storing and repackaging third
party product. Liquid Sugars does not take ownership of this product at any time
during this process. It acts as a through put facility for a third party. In any
one year the storage and handling income generated by Liquid Sugars is less than
1% of Minnesota Corn Processors' and Liquid Sugars' total revenues on a
consolidated basis, and therefore, is not disclosed separately.

THREE MONTHS ENDED JUNE 30, 1999 COMPARED TO THREE MONTHS ENDED JUNE 30, 1998
NET SALES. Net Sales were $20 million (12%) lower for the three months
ended June 30, 1999 as compared to the comparable period ended June 30, 1998.
Decreases in the net selling prices of ethanol and feed co-products account for
approximately $13 million of the downturn. Decreases in unmodified corn syrup
sales volumes and an overall decrease in sweetener sales volumes through LSI
account for the majority of the remaining decrease in sales.

COST OF PRODUCT SOLD. The cost of product sold was $31 million (20%) lower
for the three months ended June 30, 1999 compared to the comparable period in
1998. A decrease in the cost per bushel of corn accounted for $14 million of the
decrease. The cost of goods sold for LSI was also down significantly, primarily
due to the decrease in sales volumes through the facilities.

SELLING, GENERAL & ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses were $1 million greater for the three months ended June
30, 1999 as compared to the same period in 1998. No one major item accounted for
the 8% increase in SG&A expenses.

NET OPERATING INCOME. Net operating income was higher by approximately $10
million for the three months ended June 30, 1999 as compared to the three
months ended June 30, 1998. The

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decrease in net sales of $20 million was offset by the decrease in cost of goods
sold of $31 million and increase in selling, general and administrative expenses
of $1 million.

INTEREST AND OTHER INCOME/EXPENSE. Interest and other income/expense was
approximately $4 million greater for the period ended June 30, 1999 as compared
to the comparable period in 1998. This increase was due primarily to the
recording of a $3.7 million patronage dividend from the St. Paul Bank for Coops
in 1998 period that is no longer being earned or recorded for the three months
ended June 30, 1999. MCP ceased doing business with St. Paul Bank in August 1997
and is therefore no longer earning any patronage dividends.

NET PROCEEDS. Net proceeds were $2 million for the three months ended June
30, 1999 as compared to a $4 million loss at June 30, 1998, or a $6 million
improvement. The improvement of $10 million in net operating income was offset
by the $4 million increase in interest and other expense.

FISCAL YEAR ENDED MARCH 31, 1999 COMPARED TO FISCAL YEAR ENDED MARCH 31, 1998
NET SALES. Net sales increased 6.3% from $563 million to $599 million,
while grind, which constitutes total bushels processed, increased 13.2 million
bushels or 12.0%. Total sweetener sales increased by $60 million, with price
increases accounting for $12 million and additional sales volume accounting for
$48 million. Lower starch sales of $4 million, due primarily to reduced sales
volumes, and decreased ethanol sales of $17 million, of which approximately 80%
was due to lower prices, offset the increase in sweetener revenues. Decreased
feed co-product sales of approximately $3 million also offset the increase in
sweetener sales, primarily due to price declines in wet feed and gluten meal.

COST OF PRODUCT SOLD. Cost of products sold remained relatively flat. Corn
costs increased $1 million from 1998 to 1999, with increases in grind accounting
for a $34 million increase which was offset by a savings of $33 million due to a
lower per bushel cost. The ethanol producer credit recognized in 1999 was $3
million greater than in 1998, which offset slight increases in labor and other
manufacturing costs.

SELLING, GENERAL & ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased by $5 million. Leased railcar costs accounted
for $3 million (60%) of the overall increase. Other administrative costs
increased $2 million primarily due to higher labor costs and retirement costs.

NET OPERATING INCOME. Net operating income increased from a loss of $8
million to a profit of $22 million or an improvement of $30 million. The
increase in net sales of $36 million, with relatively flat production costs,
offset by the increase in general and administrative expense of $5 million
account for the improvement in net operating income.

INTEREST AND OTHER INCOME/EXPENSE. Other expense decreased from $37.4
million in fiscal year 1998 to $16.8 million in fiscal year 1999, a decline of
$20.6 million. A decrease in interest expense makes up $8.7 million of this
decline. Fiscal year 1999 represents a full year of refinanced debt as a result
of Archer Daniels Midland Company's equity infusion of $119.7 million in August
1997, and the restructuring of our long-term debt. "Loss on sales contract" was
estimated at $7.9 million for fiscal year 1998. The actual loss on the sales
contract was $4.5 million, resulting in a reversal of expense of $3.4 million in
fiscal year 1999, or an $11.3 million change from year to year.

NET PROCEEDS. Net proceeds improved from a loss of $45 million to a profit
of $6 million, an improvement of $51 million. Improvement of $30 million in net
operating income and the decrease of $21 million in other expense accounts for
the majority of the increase in net proceeds.

YEAR ENDED MARCH 31, 1998 COMPARED WITH YEAR ENDED SEPTEMBER 30, 1996
Please note that this comparison is necessary due to the change of fiscal
years from September 30 to March 31. These two periods compare the first full
new year (3/31/98) with last full old fiscal year (9/30/96).

NET SALES. Net sales increased from $420 million to $563 million or $143
million (34%). Total grind increased by 63.5%, principally due to increased
capacity from the completion of expansion in

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both Columbus and Marshall facilities. Volume increases were primarily in 55
HFCS (144.1%) and ethanol (54.0%). These volume increases were a direct result
of having a full year's production from capacity expansion. These volume
increases were offset by sweetener price decreases of 25-35% and starch and
ethanol decreases of 10%. The inclusion of LSI sales for a full year in 1998 as
compared to a half year in 1996 added $47 million to net sales or 32.9% of the
overall increase.

COST OF PRODUCT SOLD. Cost of product sold increased $84 million (19%). The
cost of corn only increased $8 million, with $109 million increase due to higher
grind but offset by $101 million decrease due to cost per bushel declining by
37%. Increases in labor, depreciation, repairs, and utility costs, as a result
of increased grind and production, account for $38 million (45.2%) of the
overall increase. The inclusion of LSI operations for a full year in 1998 as
compared to a half year in 1996 increase the cost of goods sold by $39 million
or 46.4% of the overall increase.

SELLING, GENERAL & ADMINISTRATIVE EXPENSES. These expenses increased $20
million. Leased railcar costs increased $4 million due to more railcars needed
for the increase in sales volumes. Selling and general and administrative costs
are up $5 million primarily due to increases in administrative labor cost, bad
debts, and legal and audit fees. The inclusion of LSI operations for the entire
year of 1998 as compared to a half year in 1996 added $12 million to this cost
or 60% of the overall increase.

NET OPERATING INCOME. Net operating income improved from a loss of $47
million to a loss of $8 million or $39 million (83%). The return to more normal
corn costs added $101 million but this was offset by the decrease in sweetener
prices of 25-30% or approximately $75 million. Improvements in operational
efficiencies account for the additional improvements.

INTEREST EXPENSE AND OTHER INCOME/EXPENSE. Interest expense increased $13
million due to higher interest rates and an increased debt load for five months
of fiscal year 1998 prior to the recapitalization and refinancing of the debt in
late August 1997. Other expense increased by $8 million due to the recognizing
of a loss on sales contracts of $8 million. The loss on sales contracts resulted
from having to purchase corn sweeteners on the open market at full list price to
fulfill a contract with a lower fixed selling price. This occurred due to delays
in starting up the new sweetener refineries in Marshall, Minnesota, and having
sold that anticipated production.

NET PROCEEDS. Net proceeds improved from a loss of $63 million to a loss of
$45 million or $18 million (28.6%). This is principally due to the improvement
in the operating proceeds ($39 million) offset by the higher financing cost ($13
million) and the recognition of the loss on a sales contract ($8 million).

YEAR ENDED SEPTEMBER 30, 1996 COMPARED TO YEAR ENDED SEPTEMBER 30, 1995
NET SALES. Net sales increased by $93 million or 28.4%, on slightly
decreased grind of 6.3%. The decreased grind was primarily related to a
cessation of ethanol production for two months due to the economic infeasibility
as a result of very high corn cost. The increase in net sales was primarily due
to the first year of operations of the 55 HFCS plant in Columbus, NE, as well as
the inclusion of six months of operations and sales of Liquid Sugars, Inc., a
subsidiary of Minnesota Corn Processors, acquired in March 1996.

COST OF PRODUCT SOLD. Cost of products sold increased by $185 million or
72.3%. The cost of corn increased significantly by $107 million. This was
primarily due to the average price of corn per bushel increasing 76.1% which
contributed $126 million of increased cost, offset by ($18 million) by the
decreased grind. Other costs increased $15 million including labor,
depreciation, utilities and supplies, as a result of starting up the 55 HFCS
plant in Columbus, Nebraska. The consolidation of six months of operations of
LSI with Minnesota Corn Processors added $56 million to the cost of products
sold.

SELLING, GENERAL AND ADMINISTRATION. These expenses increased $12 million.
Of this, approximately $2 million was additional railcar cost and $1 million was
in selling and administrative expense increase. The remaining $9 million
represents the first time overhead of LSI, acquired in March, 1996.

NET OPERATING INCOME. Net operating income decreased from $57 million to a
loss of $47 million or a decrease of $104 million. This is principally due to
the increased cost of corn ($107 million).

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INTEREST EXPENSE AND OTHER COSTS/INCOME. Interest expense increased by $8
million (72.7%) due to an increased debt load as a result of finalizing the
expansion project and funding a negative cash flow. Other income increased by $2
million which is primarily the result of an increase in the patronage dividend
received form the St. Paul Bank for Cooperatives.

NET PROCEEDS. Net proceeds decreased from a profit of $47 million to a loss
of $63 million or a $110 million decrease. The increase in corn cost of $107
million due to the higher per bushel unit cost is principally responsible for
the decrease in net proceeds.

LIQUIDITY AND CAPITAL RESOURCES

Minnesota Corn Processors has historically paid 100% of its taxable net
income to its members in the form of value added distributions or patronage
dividends. In the aggregate, Minnesota Corn Processors has paid over $161
million to its members since inception. The distributions have ranged from $.25
- - $.75 per unit from year to year.

Minnesota Corn Processors expects that cash flow from operations and
proceeds from its existing credit lines will be sufficient to fund operations,
to provide adequate capital expenditures (excluding any major expansion), and to
make distributions to its members for the next three to five years.

In late 1997, Minnesota Corn Processors sold a 30% equity interest, in the
form of nonvoting units of equity participation, to Archer Daniels Midland
Company for approximately $120 million. These funds were utilized to pay down
debt, from $410 million to $290 million, and to refinance existing short-term
debt with long-term debt. In connection with the passive equity investment,
Archer Daniels Midland Company and Minnesota Corn Processors entered into a
stockholder agreement dated August 27, 1997. This agreement sets forth the
rights and obligations of Archer Daniels Midland Company as a nonmember patron
of Minnesota Corn Processors. The agreement restricts Minnesota Corn Processors
from, among other things, materially changing its principal business, disposing
or otherwise transferring substantially all of its assets, making material
changes to its corn delivery program and incurring capital expenditures in
excess of $250,000 without the consent of Archer Daniels Midland Company. These
restrictions (other than the restriction regarding changes in the corn delivery
program) are continued in the Colorado limited liability company's operating
agreement.

In 1997, Minnesota Corn Processors also sold $290 million of first mortgage
notes in a private offering, primarily to major insurance companies. The
maturities range from seven to fifteen years, with no significant principal
payments due until September 30, 2003. The average interest rate, including a
variable rate portion, is approximately 71/4% at present. The notes restrict
Minnesota Corn Processors from incurring additional long-term debt and disposing
of assets, and require Minnesota Corn Processors to maintain specific financial
ratios. These include: maintaining a current ratio of not less than 1.1:1; not
permitting the ratio of Consolidated Funded Debt to Consolidated Capitalization
to exceed 0.6:1 for quarters ended on or before June 30, 2000 or 0.55:1 for
quarters ended after June 30, 2000; and maintaining a minimum total equity
amount which increases annually by 20% of net earnings until Minnesota Corn
Processors' ratio of Consolidated Funded Debt to Consolidated Capitalization is
less than 0.25:1.0. As of December 31, 1998, Minnesota Corn Processors was in
compliance with all covenants and restrictions. The notes are collateralized by
mortgages on the Marshall and Columbus facilities.

In addition, Minnesota Corn Processors has established a $50 million
working capital line of credit with Harris Trust and Savings Bank and US Bancorp
Ag Credit. At the current time, there is no amount outstanding under the line of
credit. This credit line, which protects Minnesota Corn Processors for seasonal
cash fluctuations, terminates August 27, 2000. The line of credit requires
Minnesota Corn Processors to maintain a minimum net working capital of $25
million at all times, a minimum equity amount equal to the sum of $270 million
plus 20% of consolidated net earnings for each fiscal year and a minimum cash
flow of $0 on March 31, 1999. In addition, the line of credit restricts
Minnesota Corn Processors' ability to make capital expenditures, make
distributions, create liens, incur indebtedness and sell assets and properties.

The plants were both expanded to double capacity with completion in 1997.
The plants are modern, cost efficient facilities. Capital expenditures will
remain moderate in the near future. Capital

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expenditures in the current year will be about $15 million and the projection
for next year is approximately $20 million. Capital expenditures totaled $165
million in 1995 and $185 million in 1996. These large expenditures were in large
part due to the $320 million expansion during those years. There are no
significant expansions planned at present.

Net cash flow from operations, EBITDA, improved to a positive $73 million
in fiscal 1999 (3/31/99) from a negative $16 million in fiscal year ended
9/30/96. This improvement is a result of increased depreciation, improved gross
margins and stronger volume. The benefit of increased cash flows from operation
and lower capital expenditures requirements in fiscal 1999 resulted in
significant improvement in net cash flows.

In 1996, the net losses, together with higher working capital requirements
and very elevated capital expenditures created a serious negative cash outflow
which was funded primarily by borrowings, which increased by $195 million.

Total assets at March 31, 1999 were $614 million, decreasing approximately
$31 million from the prior year, due to depreciation charges exceeding capital
expenditures by approximately $27 million. Working capital was $65 million at
March 31, 1999 and $43 million at March 31, 1998.

Capital expenditures were $16 million in the year ended 3/31/99 and $13
million in the prior year's period.

Total assets at September 30, 1996 increased $171 million over the prior
year, due to the capital expansion project with total capital expenditures of
$208 million. Debt increased $195 million. Working capital equaled a negative
$363 million due to the reclassification of all debt to a current liability.

HEDGING ACTIVITIES

Minnesota Corn Processors follows a policy of managing its risk of future
grain price and finished margin fluctuations by hedging in established
commodities markets through the use of futures and options. As grain is used in
the production process, realized gains or losses and option premiums on these
positions are recognized as a component of corn cost. Hedges are generally tied
to fixed price or tolling, corn related, sales contracts to establish a fixed
margin on these sales contracts.

YEAR 2000 UPDATE

READINESS
Minnesota Corn Processors began its analysis of Year 2000 compliance issues
in calendar year 1996. Re-programming to address issue areas as well as the
upgrading of certain software and hardware began in calendar year 1997.

To-date, approximately 85% of Minnesota Corn Processors' software is
compliant, having been developed, fully tested and implemented. The remaining
15% has been developed and is currently being tested, with implementation
completed by the end of June 1999. [STATUS] Hardware and network systems are
virtually all compliant, though some is compliant "with condition" until new
updates and patches are provided by vendors and installed. The last of these
updates and patches should be installed by September 1999.

Minnesota Corn Processors has completed an inventory of non-IT systems,
such as embedded technology and microcontrollers, as well as an assessment of
these areas requiring attention. Remediation plans have been developed for
non-IT systems, and remediation and testing are underway with completion
targeted for the third quarter of 1999.

Minnesota Corn Processors is in the process of verifying Year 2000
preparedness of third parties such as suppliers, vendors, service providers and
major customers that Minnesota Corn Processors has identified as critical. This
process has involved surveying via questionnaires, phone follow-up for
verification purposes, and then on-site assessments where appropriate. This
verification process is expected to be completed by the third quarter of 1999.
Until Minnesota Corn Processors receives and

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analyzes responses and completes on-site assessments of suppliers and service
providers, Minnesota Corn Processors cannot assess the potential impact of third
party supplier and service provider Year 2000 issues.

The Year 2000 compliance program is being managed by a team with
appropriate senior management support to identify and correct Year 2000 issues.
Minnesota Corn Processors has used in-house personnel as well as consultants to
assess and then remediate IT and non-IT areas.

COSTS
Minnesota Corn Processors expects total expenditures to become Year 2000
compliant to be in the range of $2.0 to $2.5 million. Minnesota Corn Processors
does not specifically track all costs associated with employees working on Year
2000 projects, but has included an estimate of all costs in the above range. All
expenses incurred in connection with becoming Year 2000 compliant are being
expensed as incurred, other than acquisitions of new software or hardware, which
will be capitalized. Minnesota Corn Processors expects that total remediation
costs will not have a material adverse effect on Minnesota Corn Processors'
financial condition or liquidity.

RISKS
Although Minnesota Corn Processors is not aware of any material operational
impediments associated with upgrading its computer and other hardware and
software systems to become Year 2000 compliant, Minnesota Corn Processors cannot
make any assurance that the upgrade of Minnesota Corn Processors' systems will
be free of defects or that Minnesota Corn Processors' contingency plans will
meet Minnesota Corn Processors' needs. If any such risks materialize, Minnesota
Corn Processors could experience material adverse consequences to its operations
and financial performance, substantial costs or both.

Considering the significant progress made to date, Minnesota Corn
Processors does not anticipate delays in finalizing internal Year 2000
remediation within remaining time schedules. However, third parties having a
material relationship with Minnesota Corn Processors may be a potential risk
based on their individual Year 2000 preparedness which may not be within
Minnesota Corn Processors' reasonable control.

Minnesota Corn Processors is in the process of identifying and reviewing
the Year 2000 preparedness of critical third parties to reduce the risk that
they will not become Year 2000 compliant on a timely basis. This identification
and review process is expected to be completed by the third quarter of 1999.
Appropriate contingency plans will be developed to address third party risk if
it cannot be reduced to Minnesota Corn Processors' satisfaction.

CONTINGENCY PLANS
Minnesota Corn Processors is exploring alternative solutions and developing
contingency plans for handling mission critical areas in the event that
remediation is unsuccessful. Minnesota Corn Processors anticipates that the
contingency plans may include the stockpiling of necessary supplies, the
build-up of inventory, creation of computerized or manual back-up systems,
replacement of vendors, and addition of new vendors. Minnesota Corn Processors
expects to complete contingency planning in July 1999.

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BUSINESS

OVERVIEW

Minnesota Corn Processors is an agricultural processing and marketing
cooperative that operates corn wet milling facilities in Minnesota and Nebraska.
Formed in 1980, Minnesota Corn Processors began wet milling operations in
Marshall, Minnesota in 1983. During the mid-1990s, Minnesota Corn Processors
experienced significant growth, spending approximately $337 million for
expansion of existing processing facilities and acquisition of storage and
distribution facilities.

Based on total production capacity, Minnesota Corn Processors is one of the
largest corn wet millers in the United States. In addition, Minnesota Corn
Processors is the second largest producer of ethanol in the United States, and a
leading producer of high quality corn sweetener products for the soft drink and
food industries. Our primary products include corn sweeteners, corn starch,
ethanol and feed co-products. Minnesota Corn Processors supplies a broad range
of customers in a variety of industries.

Minnesota Corn Processors has over 5,300 members. Minnesota Corn Processors
generally distributes its net income each year to members as patronage or
value-added payments. Each member's payment is based on our earnings attributed
to the corn delivered by the member. Minnesota Corn Processors may withhold a
portion of its annual earnings for use as capital.

THE CORN SWEETENER AND ETHANOL MARKETS

HIGH FRUCTOSE CORN SYRUP AND CONVENTIONAL CORN SYRUP
Since the invention of starch-based sweeteners in the early 1800's,
researchers have tried to develop a starch-based sweetener that is as sweet as
cane or beet sugar. After years of research, the desired result was achieved
through the process of rearranging glucose molecules into the chemical isomer
fructose, known as "glucose isomerization." As a result of the development of
glucose isomerization, the corn refining industry now produces a sweetener --
high fructose corn syrup -- that has a sweetness level equivalent to that of
sucrose. Since the development of high fructose corn syrup, the corn sweetener
industry has grown rapidly. According to the USDA, per capita consumption of
corn sweeteners grew at a compounded annual growth rate of 2.54% between 1985
and 1996 as compared to a growth rate of 0.51% for sugar.

In recent years, there has been good market growth for both high fructose
corn syrup and the more traditional corn sweeteners conventional corn syrup and
dextrose. While much of this growth is attributable to the soft drink industry's
switch from sucrose to high fructose corn syrup, the baking industry has also
contributed to the industry's growth in its switch from primarily dry sucrose to
42 High Fructose Corn Syrup. While corn sweeteners are priced competitively with
sugar, they have earned their place in the baking industry through other
advantages and are likely to retain their place in the foreseeable future with
continued growth of 3% to 4% per year. Corn sweeteners are more consistent in
quality than sucrose and are expected to continue to replace sucrose due to the
savings in labor cost generated by the ease of use and adaptability of corn
sweeteners in today's highly automated baking industry.

Based on continued strong domestic demand and the anticipation of increased
exports to Mexico, significant expansion of high fructose corn syrup capacity
was completed during the last few years. Archer Daniels Midland Company,
Cargill, A.E. Staley Manufacturing Company and others joined Minnesota Corn
Processors in expanding their production capacities. In total, 55 high fructose
corn syrup production capacity throughout the industry increased from 12.5
billion pounds dry in 1995 to approximately 15.6 billion pounds dry in 1997, an
increase of approximately 25%. The 42 high fructose corn syrup segment also
expanded by approximately 25% over that time period from 7.9 billion pounds to
9.9 billion pounds.

As a result of the recent industry-wide expansions, the high fructose corn
syrup industry entered a period of supply and demand imbalance in 1996 and 1997,
resulting in a decline in the industry capacity utilization rate to around 70%.
Industry analysts have estimated that the industry is currently operating at
levels ranging from approximately 80% to 85% of capacity. The rebound in the

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capacity utilization rate is due to (1) continued growth in domestic
consumption, and (2) shuttered capacity when Golden Technologies shut down its
Johnstown, Colorado operations which were reportedly producing approximately 228
million pounds (dry) of high fructose corn syrup and Cargill shut down its 55
High Fructose Corn Syrup facility in Dayton, Ohio. Minnesota Corn Processors is
not aware of any additional capacity expansions currently underway in the
domestic high fructose corn syrup industry, indicating that over the next few
years, supply and demand should rebalance as demand grows and industry
production should reach almost full capacity.

As industry capacity utilization rates dropped dramatically in 1996, major
high fructose corn syrup users were able to negotiate advantageous contracts for
the 1997 calendar year, gaining significant price reductions. In 1998, prices
began to stabilize and many industry experts expect pricing to increase in 1999
and 2000, to reflect a more balanced supply/demand situation.

The USDA has estimated that in 1998 the 55 High Fructose Corn Syrup segment
will grow at approximately 4% to 4.5% and the 42 High Fructose Corn Syrup
segment will grow approximately 3% in the U.S. The soft drink firms will drive
much of this growth as they continue to position themselves as "total beverage
companies," as evidenced by the introduction of over 200 new soft drinks,
juices, teas and punches over the last two years alone. In addition, the Mexican
market offers the opportunity for dramatic volume growth during the next 1 to 2
years; Canada has also experienced conversion from sucrose usage to use of 55
High Fructose Corn Syrup.

According to the USDA, U.S. exports of high fructose corn syrup to Mexico
rose to 78,000 metric tons (dry basis) in 1996 from only 9,000 tons in 1991.
Under NAFTA, the Mexican import tariff on U.S. high fructose corn syrup fell to
9% in 1997, and is scheduled to decrease by 1.5% each year thereafter to zero in
2003. Mexican demand for high fructose corn syrup is growing as bottlers adopt
new technology to handle liquid sweeteners. While none of the major soft drink
bottlers have announced a complete switch to using high fructose corn syrup in
their Mexican soft drinks, some of the smaller brands apparently have switched.
World demand for high fructose corn syrup sweetener is expected to increase from
20 billion pounds in 1995 to 26.6 billion pounds by the year 2000.

ETHANOL
Ethanol has important applications and is used primarily as a high quality
octane enhancer and an oxygenate capable of reducing air pollution and improving
automobile performance. As a fuel additive, the demand for ethanol is derived
from the overall demand for gasoline, as well as the competition of ethanol
versus competing oxygenate products and technologies. Motor vehicles in the U.S.
consume more than 130 billion gallons of gas every year.

Minnesota Corn Processors currently benefits from three economic incentives
to produce ethanol. First, in Minnesota, there is a state producer payment of 20
cents per gallon for the first 15 million gallons per plant for a total of $3
million annually to ethanol producers for ten years. Minnesota Corn Processors',
this producer payment is due to expire in 2001. Second, Nebraska also has a
similar program with an incentive of 20 cents for the first 25 million gallons.
Minnesota Corn Processors' agreement to receive these payments from Nebraska
expired on June 30, 1999. Minnesota Corn Processors currently is receiving the
limit of $8 million per year from both state programs. Third, ethanol users can
claim a 5.4 cents per gallon exemption from the federal gasoline excise tax.
This federal ethanol tax subsidy, which was set to expire in 2000, has been
extended through December 31, 2007. The exemption will gradually drop to 5.1
cents in 2005.

A large jump in corn prices in 1996 caused ethanol production variable
costs to exceed selling prices, resulting in a sharp reduction in production as
corn processors sought to curtail losses. Minnesota Corn Processors shut down
its Marshall ethanol production plant from July 14, 1996 until September 12,
1996.

If the federal ethanol tax incentive or state incentive payments are
eliminated or sharply curtailed, management believes that decreased demand for
ethanol will result. Minnesota Corn Processors' management is pursuing a
strategy to reduce Minnesota Corn Processors' reliance on ethanol through growth
in other product lines. Evidence of these efforts can be seen in the portion of
Minnesota Corn Processors' total sales represented by ethanol. In fiscal year
1993, ethanol sales

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represented 41% of Minnesota Corn Processors' total sales, while in fiscal year
1999, ethanol sales generated only 20% of Minnesota Corn Processors' total
sales.

CORN PROCUREMENT

Each unit of equity participation held by a member obligates the member to
deliver annually one bushel of corn to Minnesota Corn Processors as part of the
Minnesota Corn Processors' Corn Delivery Program. The price that we pay for corn
is determined by reference to the market price for corn in the area of our
facilities. The Corn Delivery Program has been modified by Minnesota Corn
Processors so that corn delivery is now on a voluntary rather than mandatory
basis. Members of the new Colorado limited liability company will not be
obligated to produce or deliver corn.

Following the conversion, the Colorado limited liability company will
continue to require the same quantities of corn for processing as are currently
required. In order to fulfill those requirements, the Colorado limited liability
company will be required to acquire substantial quantities of corn in the
marketplace. To reduce the price risk of fluctuations in the corn market,
Minnesota Corn Processors has established a policy of hedging corn to cover
fixed price and volume sales contracts for its finished products. Minnesota Corn
Processors may also hedge a portion of its anticipated non-contracted production
requirements. The instruments used are principally readily marketable exchange
traded futures contracts. The changes in market value of the contracts have a
high correlation to the price changes of the base commodity. Also, the
underlying commodity can be delivered against the contracts. In order to match
revenue and expense, any gains or losses arising from open and closed hedging
transactions are included, through inventory, in cost of goods sold at the time
the product is sold.

The hedging policy revolves around the fundamental as well as technical
outlook of the CBOT, the U.S. and world supply and demand outlook for grain, and
the amount of risk both will have in determining the net price of corn for
Minnesota Corn Processors' projected grind demand. Management will continuously
monitor the amount of risk and make appropriate changes based on projected and
actual costs of corn, sales of product, production costs, and administrative
expenses.

WET MILLING OPERATIONS

Corn wet milling increases the nutritional and economic value of the corn
by separating it into homogeneous fractions. Although the wet milling process
was originally designed to produce relatively pure starch for industrial food
uses, the process now results in the optimum use and maximum value for each
fraction of the corn kernel.

A typical bushel of corn weighs 56 pounds and contains approximately 72,800
kernels. Most of the weight is the starch, oil, protein and fiber, with some
natural moisture. Each bushel of corn can yield:

* 31.5 pounds of starch or
* 34.0 pounds of sweetener or
* 2.5 gallons of fuel ethanol and
* 12.1 pounds of gluten feed and
* 2.7 pounds of gluten meal and
* 1.8 pounds of corn oil

A kernel of corn sliced lengthwise from top to bottom will disclose the
following primary components:

HULL. The hull is the fine skin on the outside of the kernel that protects
it from deterioration. It is water resistant and is undesirable to insects and
micro-organisms. Hulls go mostly into corn gluten feed for livestock, poultry
feeds and pet foods.

STARCH. Starch is found at the top, middle and on the sides of the kernel.
This is the most abundant constituent and is used in making starches and
sweeteners.

GLUTEN. Gluten is the dark portion inside the kernel, although some gluten
is mixed with the starch granules. Gluten contains the majority of the protein
found in a kernel of corn. Separated and purified, gluten becomes corn gluten
meal which is used in animal feeds.

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GERM. Germ is the seed-like pod at the bottom of the kernel in the center
and is the source of corn oil. The germ is important for food, drug and
industrial uses. About 50% of the germ is corn oil. After removal of the oil,
germ becomes a component of corn gluten meal or corn gluten feed and small
amounts of oil are included in the various feed products.

WATER. Approximately 15% of the kernel is water. It becomes part of the
steepwater in which the refining is initiated. Steepwater is rich in vitamins,
especially the B complex vitamins and is used in animal feed. Corn steepwater
is also used in the manufacture of antibiotics.

Corn is run through a process which generates the germ, gluten feed, gluten
meal, and finally starch. The starch is then converted into ethanol or dry
starch, or further processed into sweeteners or other starch-based products. The
flow chart below shows the products generated in the wet milling process.

[FLOW CHART]

Steeping Germ Grinding, Starch-Gluten Starch Fermentation
Separation Screening Separation Conversion

Oil Germ Fiber Gluten Starch Syrup
Refining Drying Refining

Corn

Corn Oil Feed Products Starches Sweetners Alcohol,
Chemicals

RECEIVING. Minnesota Corn Processors receives its corn by truck. Before
accepting a truck-load, the corn is tested for quality. Minnesota Corn
Processors has the right to refuse any shipment of corn if it does not meet its
quality standards. Receiving staff inspect arriving corn shipments and clean
them twice to remove dust, chaff, and foreign materials before steeping. Each
facility has on-site storage capacity for approximately 1 million bushels of
corn.

STEEPING. Each steep, a stainless steel vat, holds corn for 30 to 40 hours
soaking in 125 degree Fahrenheit water, increasing the corn's moisture levels
from 15% to 45% and causing the corn to more than double in size. The addition
of 0.2% sulfur dioxide to the water prevents excessive bacterial growth in the
warm environment. As the corn swells and softens, the mild acidity of the
steepwater begins to loosen the gluten bonds within the corn and release the
starch. After steeping, the corn is coarsely ground to break the germ loose from
other components. Steepwater is condensed to capture nutrients in the water for
use in animal feeds. The ground corn, in a water slurry, flows to the germ
separators.

GERM SEPARATION. Cyclone separators spin the low density corn germ out of
the slurry. The germs, containing about 85% of corn's oil, are pumped onto
screens and washed repeatedly to remove any starch left in the mixture.
Minnesota Corn Processors sells its germ on a contract basis to other oil
processors, who then extracts the oil from the germ. The oil is then refined and
filtered into finished corn oil. The germ residue is saved as another useful
component of animal feeds.

GRINDING AND SCREENING. The corn and water slurry leaves the germ separator
for a second, more thorough grinding in an impact or attrition-impact mill to
release the starch and gluten from the fiber in the kernel. The suspension of
starch, gluten and fiber flows over fixed concave screens which catch fiber but
allow starch and gluten to pass through. The fiber is collected, slurried, and
screened again to reclaim any residual starch or protein, then piped to the feed
house as a major ingredient of animal feeds. The starch-gluten suspension,
called mill starch is piped to the starch separators.

STARCH SEPARATION. Gluten has a lower density than mill starch. By passing
mill starch through a centrifuge, the gluten is readily spun out for use in
animal feeds. The starch, with just four to five percent protein remaining, is
diluted, washed 8 to 14 times in hydro clones to remove the last trace

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of protein and produce high quality starch, typically more than 99.5% pure. Some
of the starch is dried and marketed as unmodified corn starch and some is
slightly modified, but most is converted into corn sweeteners and ethanol.

STARCH CONVERSION. Starch, suspended in water, is liquified in the presence
of acid and/or enzymes which convert the starch to a low-dextrose solution.
Treatment with another enzyme continues the conversion process. Throughout the
process, refiners can halt acid or enzyme actions at key points to produce the
right profile of sugars like dextrose and maltose to meet different needs. In
some sweeteners the conversion of starch to sugars is halted at an early stage
to produce low-to-medium sweetness. In others, the conversion is allowed to
proceed until the sugar is nearly all dextrose. The sweetener product is refined
in filters, centrifuges and ion-exchange columns, and excess water is
evaporated. Corn sweeteners are sold directly in the form of heavy corn syrup or
high fructose corn syrup.

FERMENTATION. In yet another application to corn refining, enzymes modify
corn starch to produce feedstock suitable for traditional fermentation methods.
The result of the fermentation is ethanol, which corn refiners distill to remove
excess water and sell for a variety of uses. Carbon dioxide, a by-product of
fermentation, also may be sold to beverage manufacturers as the "fizz" in soft
drinks.

PRODUCTS

Minnesota Corn Processors' primary products groups include corn sweeteners,
ethanol, corn starches and feed products. Information about each of the product
groups is provided below. For the fiscal year ended March 31, 1999, the
approximate percentages of Minnesota Corn Processors' total sales associated
with each of these product groups were: corn sweeteners - 50%; ethanol - 20%;
corn starches - 5% and feed products - 25%.

CORN SWEETENERS
HFCS. Minnesota Corn Processors produces two types of high fructose
sweeteners: 42 and 55 High Fructose Corn Syrup. Both syrups share advantages --
stability, high osmotic pressure, and crystallization control -- but each offers
special qualities to food and beverage manufacturers and consumers. 42 High
Fructose Corn Syrup is popular in canned fruits, condiments and other processed
foods which need mild sweetness that won't mask natural flavors. 55 High
Fructose Corn Syrup has earned a commanding role in soft drinks, ice cream and
frozen desserts.

SYRUPS. Corn syrup is used in a variety of ways in food products. The most
common use for corn syrup is as a sweetener for food products. However, corn
syrups are adaptable to many uses and therefore have other less known
advantages. Corn syrups can depress the freezing point of frozen products to
prevent crystal formation in ice cream and other frozen desserts. Because of its
effect on viscosity, corn syrup is added to salad dressings and condiments to
ensure the product pours at manageable rates. In lunch meat and hot-dogs, corn
syrups provide the suspension to keep other ingredients evenly mixed, and, like
other corn products, the basic syrups can improve textures and enhance colors
without masking natural flavors, as in canned fruits and vegetables. Minnesota
Corn Processors manufactures a number of corn syrups which offer a broad range
of functionalities.

ETHANOL

Ethanol has several major applications including an octane enhancer in
fuels; an oxygenated fuel additive for the purpose of reducing ozone and carbon
monoxide vehicle emissions; and a non-petroleum-based gasoline substitute.
Approximately 95% of all ethanol is used in its primary form for blending with
unleaded gasoline and other fuel products. The implementation of the Federal
Clean Air act has made ethanol fuels the most important domestic renewable fuel,
allowing the country to meet its environmental goals and reduce imports of
petroleum based fuels. Ethanol used as a fuel oxygenate, provides one of the
easier, less expensive means to control carbon monoxide in problem areas.

STARCHES
Starch is one of nature's major renewable resources, and a mainstay of our
food and industrial economy. Starches have a wide variety of uses. On average,
each ton of paper produced in the U.S.

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uses 28 pounds of corn starch. Corn starches, and their cousins dextrins (a
roasted starch), are used in hundreds of adhesive applications. Special types of
starches are used in oil exploration as part of the "drilling mud" which cools
down super heated oil drilling bits. Starches are used as flocculating agents,
anti-caking agents, mold-release agents, dusting powder and thickening agents.
Literally thousands of supermarket staples are produced using both regular and
specially modified starches. Many of today's instant and ready-to-eat foods are
produced using starches which enable them to maintain the proper textural
characteristics during freezing, thawing and heating. Starches are converted to
sugar by breweries and used as the feedstock in beer production. Other starches
are important ingredients for instant pie and pudding fillings which require
little or no cooking compared to traditional formulations. The most promising
new market for corn starches is as a raw material for the production of
industrial chemicals and plastics which are today made from petroleum
feedstocks. Minnesota Corn Processors manufactures and sells unmodified and
slightly-modified corn starches, with the majority of sales going into the
corrugated, paper, brewing and food industries.

FEEDS PRODUCTS AND GERM
Minnesota Corn Processors produces three major feed products: gluten meal,
gluten feed and condensed fermented corn extractives (steepwater). Corn gluten
meal supplies vitamins, minerals, and energy in poultry feeds while pet food
processors value it for its high digestibility and low residue. Steepwater is a
liquid protein supplement for cattle and is also used as a binder in feed
pellets. Minnesota Corn Processors also produces germ which is sold to edible
oils manufacturers for further processing into corn oil and gluten feed.

PRODUCT QUALITY

Minnesota Corn Processors believes that its ability to produce high quality
products is a key competitive advantage over other industry participants. The
American Institute of Baking ("AIB") annually inspects each production facility
in the industry and numerically rates the plants so that industry users of corn
products can measure and compare the quality of facilities. In 1998, each of
Minnesota Corn Processors' plants earned a "Superior" rating for its overall
food safety levels, placing each among the top 5% within the food processing
industry. In addition, customers have acknowledged Minnesota Corn Processors'
superior quality through presentation of several quality awards.

SALES AND DISTRIBUTION

Minnesota Corn Processors' products are sold directly by a staff of sales
personnel located regionally across the United States. Minnesota Corn Processors
also employs third party resellers, primarily in the eastern and midwestern
portions of the United States. Minnesota Corn Processors owns and operates an
extensive distribution network which is located primarily west of the
Mississippi River, providing Minnesota Corn Processors with cost and service
advantages in this strategic geographic region. Minnesota Corn Processors'
combined sales and distribution network allows it to effectively distribute its
products to most areas of the United States by either rail or truck.

Minnesota Corn Processors supplies a broad range of customers throughout
the U.S. Sales of germ to Cargill accounted for approximately 12.5% of Minnesota
Corn Processors' sales revenues for the fiscal year ended March 31, 1999. No
other customer accounted for 10% or more of Minnesota Corn Processors' total net
sales for that period.

The majority of Minnesota Corn Processors' corn sweetener and starch sales
are made on an annual basis, under contracts fixed as to price and volume.
Minnesota Corn Processors sells its germ and steepwater on a contract basis.
Gluten meal is sold on both a contract basis and on the spot market. Feed
product prices typically reflect the general price of other comparable
feedstuffs, such as soybean meal, soybean oil, other edible oils and similar
products. Feed demand is primarily driven by the domestic population of animals
being raised for slaughter and by export demand.

The realized sales price of ethanol is driven by gasoline demand, overall
oxygenate program requirements, and the price of oxygenate alternatives such as
Methyl Tert-butyl Ether ("MTBE") a

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petroleum-based fuel oxygenate substitutable for ethanol. The majority of
Minnesota Corn Processors' ethanol sales are made on a spot basis, with most
other sales comprising business contracted for sale during non-attainment
periods, which is approximately September through February. Minnesota Corn
Processors' ability to produce ethanol provides an important mitigant against
the seasonality inherent in the high fructose corn syrup industry. Since soft
drinks are an important user of high fructose corn syrup, its production peaks
in the spring and early summer months in anticipation of the peak in soft drink
demand. On the other hand, ethanol demand peaks in the winter, when many cities
institute their oxygenated fuel programs mandated by the Federal Clean Air Act.

Minnesota Corn Processors has indoor rail car and truck loading
capabilities at both plants which minimize the negative effects of harsh weather
and help to maintain strict product quality standards. Minnesota Corn Processors
leases in excess of 2,000 rail cars for terms of up to 15 years. In March 1996,
Minnesota Corn Processors acquired Liquid Sugars, Inc., a sweetener blending,
storage and distribution operation with headquarters in Emeryville, California,
which serves various customers located in the western United States and
southwestern Canada. Liquid Sugars has 16 regional storage and transfer stations
which allow Minnesota Corn Processors to economically effect deliveries of
products to many regions of the country.

Minnesota Corn Processors' acquisition of Liquid Sugars involved the stock
of several California companies including Liquid Sugars. All of these companies
were involved in the sweetener distribution business, and all of which were
owned by key employees and their family members of Liquid Sugars. The
acquisition also involved the purchase by one of the related companies of real
estate that was owned by some of the key employees and leased to Liquid Sugars.
The total purchase price of the acquisition was $16,500,000 which Minnesota Corn
Processors paid in three installments. After the acquisition, on July 31, 1996,
all of the acquired companies were consolidated into Liquid Sugars.

In February 1997, Minnesota Corn Processors obtained an option to acquire
up to a 15% minority interest in Natural Solutions Corp., formerly known as Ice
Ban America, Inc., in exchange for agreeing to supply steepwater to it. The
option can expire on March 31, 2000, or may be extended by mutual consent.
Natural Solutions has developed the first noncorrosive, nontoxic, biodegradable
roadway de-icing agent. Minnesota Corn Processors' option allows it to purchase
up to a 15% minority interest in increments of any size. As the date of this
document, Minnesota Corn Processors has purchased 66,005 shares of Natural
Solutions. Natural Solutions has approximately 16,500,000 shares of common stock
outstanding, giving Minnesota Corn Processors a 0.4% interest. As part of the
agreement, Minnesota Corn Processors will assist in the on-going research and
development of the technology. Minnesota Corn Processors also has the right to
name members to the board of directors of Natural Solutions. Stanley L. Sitton,
Minnesota Corn Processors' Senior Vice President of Sales and Marketing,
recently resigned as a director of Natural Solutions. Natural Solutions is
quoted on the OTC Bulletin Board under the symbol "ICEB."

COMPETITION

Minnesota Corn Processors faces intense competition from other corn
processors, including Archer Daniels Midland Company, Cargill, and A.E. Staley
Manufacturing. Most of Minnesota Corn Processors" products compete with
virtually identical products and derivatives manufactured by other companies.
Many of these competitors are substantially larger and have greater financial
resources than Minnesota Corn Processors. Competition is generally based on
price, product quality and customer service.

Several products of Minnesota Corn Processors also compete with products
made from raw materials other than corn. High fructose corn syrup competes with
cane and beet sugar products. Ethanol competes with MTBE and other oxygenate
alternatives. Corn gluten meal competes with soybean meal. Fluctuations in
prices of these substitute products may affect the prices of and profits derived
from Minnesota Corn Processors' products.

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GOVERNMENT REGULATION AND ENVIRONMENTAL MATTERS

As a producer of food items for human consumption and items for use in the
pharmaceutical industry, Minnesota Corn Processors is subject to various
federal, state and local laws relating to the operation of its processing
facilities, product quality, purity and labeling. The failure to comply with one
or more regulatory requirements can result in a variety of sanctions, including
monetary fines.

The operations of Minnesota Corn Processors also are subject to various
federal, state and local laws and regulations with respect to environmental
matters, including air and water quality and underground fuel storage tanks.
Minnesota Corn Processors believes it is currently in substantial compliance
with environmental laws and regulations. Protection of the environment requires
Minnesota Corn Processors to incur expenditures for equipment or processes.
Minnesota Corn Processors is involved at various times in environmental
inquiries or proceedings, none have been or are believed to be material to our
business. If Minnesota Corn Processors were found to have violated federal state
or local environmental regulations, Minnesota Corn Processors could incur
liability for cleanup costs, damage claims from third parties and civil or
criminal penalties that could materially adversely affect its business.

PRODUCTION FACILITIES

Minnesota Corn Processors owns two processing facilities. The facility in
Marshall, Minnesota has the capacity to grind approximately 56 million bushels
of corn per year and is a major supplier of corn syrup. The facility in
Columbus, Nebraska has the capacity to grind approximately 70 million bushels of
corn per year and is a major supplier of 55 High Fructose Corn Syrup. Each
facility also produces starch, 42 High Fructose Corn Syrup and ethanol.

During the past few years, Minnesota Corn Processors has modernized and
expanded its facilities. During 1995 and 1996, Minnesota Corn Processors spent
approximately $320 million to:

* increase the corn syrup production capacity of the Minnesota facility;

* build a refinery capable of producing 42 High Fructose Corn Syrup at
the Minnesota facility;

* increase the 42 High Fructose Corn Syrup production capacity of the
Nebraska facility; and

* build a refinery capable of producing 55 High Fructose Corn Syrup at
the Nebraska facility.

Minnesota Corn Processors believes that the capital expansion program
completed in 1996 will allow Minnesota Corn Processors to operate highly
efficient facilities for the foreseeable future without incurring significant
additional capital expenditures.

LEGAL PROCEEDINGS

From time to time Minnesota Corn Processors is subject to litigation
incidental to its business. Minnesota Corn Processors is not currently a party
to any material legal proceedings.

EMPLOYEES

At March 31, 1999, the total number of full-time employees was 870. The
total number of part-time employees was 25. Approximately 8% of these employees
are covered by four collective bargaining agreements, one expiring in February
2001, one expiring in April 2001, one expiring in March 2002 and one expiring
March 2003.

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MANAGEMENT

DIRECTORS

Immediately after the conversion, the board of directors of the Colorado
limited liability company will be composed of the current members of the board
of directors of Minnesota Corn Processors. The current directors of Minnesota
Corn Processors will continue to serve as directors of the Colorado limited
liability company for the same terms for which they would otherwise have served
as directors of Minnesota Corn Processors. The board will consist of twenty-four
directors, each of whom will represent one of eight districts. Each director
will be elected by members of the new company residing in the district
represented by the directors. The board also will be divided into three classes
for election purposes. One class is elected at each annual meeting of members to
serve for a three-year term. The Colorado limited liability company's operating
agreement requires that the incumbent board of directors appoint a districting
committee to review the boundaries of the districts at least every three years.
The committee will recommend any changes in the district boundaries necessary or
appropriate to maintain equitable representation of the number of members in
each district.

The table below sets forth important information concerning the initial
directors of the Colorado limited liability company

NAME AND ADDRESS AGE DISTRICT TERM EXPIRES
- ---------------- --- -------- ------------

Doug G. Finstrom .............. 46 I 2000
1060 160th Avenue SE
Kerkhoven, Minnesota 56252

Duane R. Adams ................ 59 I 2000
54676 Minnesota Highway 7
Cosmos, Minnesota 56228

Howard A. Dahlager ............ 50 II 2001
85380 180th Street
Sacred Heart, Minnesota 56285

Ken Robinson .................. 54 II 2002
RR 2 Box 82
Bird Island, Minnesota 55310

David J. Scheibel ............. 38 II 2000
37554 County Road 4
Bird Island, Minnesota 55310

Jerry N. Jacoby ............... 54 III 2001
17557 County Highway 1
Springfield, Minnesota 56087

Steve F. Lipetzky ............. 48 III 2002
P.O. Box 152
Springfield, Minnesota 56087

John M. Zwach, Jr. ............ 51 III 2000
13705 205th Street
Walnut Grove, Minnesota 56180

Roger E. Fjerkenstad .......... 66 IV 2000
RR 2 Box 145
Dawson, Minnesota 56232

<PAGE>

NAME AND ADDRESS AGE DISTRICT TERM EXPIRES
- ---------------- --- -------- ------------

Galen Rud ..................... IV 2002
3030 60th Avenue NW
Montevideo, Minnesota 56265

Daniel P. Dybsetter ........... 54 V 2002
RR 1 Box 92
Porter, Minnesota 56280

John R. Jerzak ................ 46 V 2000
RR 1 Box 178
Ivanhoe, Minnesota 56142

Dean J. Buesing ............... 46 V 2001
RR 1 Box 157
Granite Falls, Minnesota 56241

Sandy A. Ludeman .............. 51 VI 2000
RR 2 Box 19
Tracy, Minnesota 56175

John P. Hennen ................ 63 VI 2002
1986 330th Street
Ghent, Minnesota 56239

John H. Nelson ................ 61 VII 2002
2034 170th Avenue
Garvin, Minnesota 56132

James H. Gervais .............. 47 VII 2000
2090 171st Street
Currie, Minnesota 56123

Ron F. Kirchner ............... 51 VII 2001
2696 71st Street
Avoca, Minnesota 56114

Kenneth L. Regier ............. 66 VIII 2001
503 South O Road
Aurora, Nebraska 68818

Larry W. Dowd ................. 53 VIII 2002
P.O. Box 129
Columbus, Nebraska 68602

Andrew V. Jensen .............. 49 VIII 2002
1407 W. 16th Road
Aurora, Nebraska 68818

Patrick L. Meuret ............. 42 VIII 2000
P.O. Box 146
Brunswick, Nebraska 68720

Robert J. Bender .............. 45 VIII 2000
5266 Cherokee Avenue
Columbus, Nebraska 68601

DOUG FINSTROM. Mr. Finstrom has been a director of Minnesota Corn
Processors since 1989. Mr. Finstrom has been in the business of farming near
Kerkhoven, Minnesota for the past 28 years. Mr. Finstrom is currently the
President of Property Management Services of Minnesota, Inc. He has been
involved in buying, selling, and managing investment properties for the past 3
years, and has also been for the past 15 years, president of Finco Equipment,
Inc., a company involved in leasing equipment and investing. In addition, Mr.
Finstrom has been a member of Minnesota Farm Bureau for 28 years.

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DUANE ADAMS. Mr. Adams has been a director of Minnesota Corn Processors
since 1997. Mr. Adams has been the president of Duane Adams Farms, Inc.,
producing corn and soybeans, near Cosmos, Minnesota for the past 15 years. In
addition, Mr. Adams has been a member of the Meeker County Corn Growers for the
past 10 years and was a director of that association for 6 years. Mr. Adams has
also been the past president of Cosmos Development Corporation.

HOWARD DAHLAGER. Mr. Dahlager has been a director of Minnesota Corn
Processors since 1988. Mr. Dahlager is co-owner and secretary-treasurer of JSF
Inc., Johnson Seed Farm near Sacred Heart, Minnesota, since 1979. Mr. Dahlager
has also been the secretary-treasurer for the past 4 years of Sacred Heart
Community Development Company Colorado limited liability company. In addition,
Mr. Dahlager is currently the secretary of M.C.I.A. -- Minnesota Crop
Improvement Association. Mr. Dahlager is also a member of Southern Minnesota
Beet Coop, Minn Aqua Fisheries and Midwest Investor (Golden Oval) Eggs.

KEN ROBINSON. Mr. Robinson has been a director of Minnesota Corn
Processors since 1990. Mr. Robinson has been in the business of farming in the
Bird Island, Minnesota area since 1983.

DAVID SCHEIBEL. Mr. Scheibel has been a director of Minnesota Corn
Processors since 1988. Mr. Scheibel's experiences include being a partner of a
946 acre farming operation from 1978 to 1994 near Bird Island, Minnesota. The
partnership raised corn, soybeans, seed corn and other specialty crops, as well
as feeding Holstein dairy replacement heifers and finishing Holstein beef
cattle. As a partner, his duties included financial and cost accounting, as well
as daily production responsibilities. Mr. Scheibel has also been employed in the
agriculture equipment business since 1994. He is currently serving as senior
parts man at Kibble Equipment Service Center in Bird Island, Minnesota. In
addition, Mr. Scheibel is currently a member and serving as a trustee and has
served in the past as financial secretary and grand knight of the Knights of
Columbus, Council #2000, Bird Island, Minnesota.

JERRY JACOBY. Mr. Jacoby has been a director of Minnesota Corn Processors
since 1986 and board chairman since 1992. Mr. Jacoby has been in the business
of farming, producing corn and soybeans, near Springfield, Minnesota since
1974. Mr. Jacoby has also been the treasurer for Sundown Township for 12 years.
In addition, Mr. Jacoby has been a member of Minnesota Corn Growers for 18
years and is also a member of the American Legion.

STEVE LIPETZKY. Mr. Lipetzky has been a director of Minnesota Corn
Processors since 1981. Mr. Lipetzky is the president of Stephen Trucking, Inc.
of Springfield, Minnesota, a trucking company hauling F.O.B. corn to Minnesota
Corn Processors, since its inception in May 1998. Although Minnesota Corn
Processors has done a significant amount of business with Mr. Lipetzky's
trucking company, that business has been on the same terms as MCP's
relationships with other trucking firms. In addition, Mr. Lipetzky is currently
working on the farm in partnership with his brothers. Mr. Lipetzky is currently
the Parish Council Chairman at St. Raphael's Catholic Church in Springfield,
Minnesota.

JOHN ZWACH, JR. Mr. Zwach has been a director of Minnesota Corn Processors
since 1991. Mr. Zwach is totally involved in operations and management in the
business of farming, a corn and soybean operation in Redwood County, Minnesota
for 29 years. Mr. Zwach is also currently a

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member of the Knights of Columbus and has been since 1968. In addition, Mr.
Zwach is a member of the American Legion Post in Milroy, Minnesota and has been
a member of the Milroy Lions club since the early 1970's.

ROGER FJERKENSTAD. Mr. Fjerkenstad helped in the organization of Minnesota
Corn Processors and has been a director since 1981. Mr. Fjerkenstad is a
retired farmer, producing corn, soybeans and hogs from 1957 to 1996 near
Dawson, Minnesota. Mr. Fjerkenstad has been a director of the Farmers Electric
Company, Dawson, Minnesota for 10 years.

GALEN RUD. Mr. Rud was elected to the Board of Directors at the Annual
Meeting held in July, 1999. Mr. Rud operates a corn and soybean farming
operation north of Montevideo, Minnesota and has been involved in that operation
since 1971. Mr. Rud served for 21 years as a director of his local Cenex
cooperative (including 15 years as chairman), for 6 years as a director of the
Luther Haven Nursing Home and for 9 years as a member of the Chippewa County
Extension Committee, including 2 years as chairman of that committee.

DANIEL DYBSETTER. Mr. Dybsetter has been a director of Minnesota Corn
Processors since 1994 and is currently serving as secretary. Mr. Dybsetter is
in the business of farming, producing corn, soybeans and hogs since 1970 near
Porter, Minnesota. Mr. Dybsetter is also a member and owns shares in the South
Dakota Soybean Processors and Phoenix Manufacturing. Mr. Dybsetter is also a
member of the Corn Growers Association, Soybean Growers Association and a
member of various area coops. Mr. Dybsetter was the past secretary for the
Yellow Medicine Pork Producers.

JOHN JERZAK. Mr. Jerzak has been a director of Minnesota Corn Processors
since 1985. Mr. Jerzak is primarily engaged in the business of farming near
Ivanhoe, Minnesota since 1975. Mr. Jerzak also has a seed business, dealing
primarily in DeKalb Seeds. In addition, Mr. Jerzak is Board Chairman of Hope
Mutual Insurance Company and a director of Divine Providence Hospital in
Ivanhoe, Minnesota.

DEAN BUESING. Mr. Buesing has been a director of Minnesota Corn Processors
since 1998. Mr. Buesing is the president of Buesing Farms, Inc., Granite Falls,
Minnesota, a farming operation producing corn, soybeans and hogs for 25 years.
Mr. Buesing has also been the president for the past 4 years of Buesing,
Buesing, Inc., Granite Falls, Minnesota which is involved in the building of
cornheads. In addition, Mr. Buesing is an officer and has served as treasurer
for the past 8 years of the Yellow Medicine Soybean Growers Association. Mr.
Buesing and Mr. Hennen are first cousins.

SANDY LUDEMAN. Mr. Ludeman has been a director of Minnesota Corn
Processors since 1997 and is currently serving as vice-chairman. Mr. Ludeman
has been a partner in Sanmarbo Farms, Inc., a diversified grain and livestock
farm near Tracy, Minnesota, since 1973. Mr. Ludeman has been on the board of
the Minnesota Farm Bureau Foundation for 4 years. In addition, Mr. Ludeman has
been a member of Minnesota Soybean Growers Association for 20 years, Minnesota
Corn Growers Association for 15 years and Minnesota Farm Bureau for 30 years.
Mr. Ludeman was the founding chairman of the United Soybean Board, past
president of the American Soybean Development Foundation, vice-chairman of the
Institute of Agriculture, Forestry, Home Economics and Advisory Council of the
University of Minnesota and past chairman of the Minnesota Soybean Research and
Promotion Council.

JOHN P. (JACK) HENNEN. Mr. Hennen has been a director of Minnesota Corn
Processors since 1997. Mr. Hennen has been in the business of farming in Lyon
County, Minnesota since 1960. Mr. Hennen's farming operation is diversified,
producing cattle, hogs, corn and soybeans. The farming operation has expanded
to include his 3 sons and their families. In addition, Mr. Hennen is currently
a director and has been vice-chairman of the Minnesota Beef Council for 2
years. Mr. Hennen also is a member of Minnesota Corn Growers, National Corn
Growers, Soybean Growers and a member of various coops in the area.

JOHN NELSON. Mr. Nelson has been a director of Minnesota Corn Processors
since 1981. Mr. Nelson is the owner-operator of a 930 acre farming business
located in Murray County for 40 years. Mr. Nelson is also involved in a farm
drainage business. In addition, Mr. Nelson served as state president in 1992
and is a past state director for the Minnesota Corn Growers Association. Mr.

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Nelson is also a member of the Minnesota Soybean Growers Association and has
been on the Murray County Planning and Zoning Board for 18 years, 10 of which he
was chairman.

JAMES GERVAIS. Mr. Gervais has been a director of Minnesota Corn
Processors since 1990. Mr. Gervais has been in the business of farming near
Currie, Minnesota for 27 years.

RON KIRCHNER. Mr. Kirchner has been a director of Minnesota Corn
Processors since 1998. Mr. Kirchner has been in the business of farming,
producing soybeans and custom feeding hogs near Fulda, Minnesota. Mr. Kirchner
has been a director for the past 6 years on the Fulda, Minnesota School Board.
In addition, Mr. Kirchner has been a member of the VFW for 30 years, the
American Legion Club for 30 years, the Corn Growers Association for 5 years and
the Soybean Growers Association for 2 years. Mr. Kirchner also volunteers at
St. Gabriel in Fulda, Minnesota as a relief time teacher.

KENNETH REGIER. Mr. Regier has been a director of Minnesota Corn
Processors since 1992. Mr. Regier is in the business of farming bear Aurora,
Nebraska, producing irrigated corn, since 1955. Mr. Regier has been a board
member of the Upper Big Blue Natural Resource District since 1980. In addition,
Mr. Regier has been a member of the Nebraska Coop Council, Education Committee,
since 1997. Mr. Regier was past board chairman of the Aurora Coop Elevator
Company.

LARRY DOWD. Mr. Dowd has been a director of Minnesota Corn Processors
since 1992. Mr. Dowd is President of Dowd Grain, O'Neill Farms, and Dowd Oil
Co, all of which are principally farming operations located in Holt County,
Nebraska, producing row crops, cow-calf operations, farrow to finish hog
operations. Mr. Dowd also serves as a director of First State Bank of Hickman,
and has a partnership interest in a swine breeding stock company. In addition,
Mr. Dowd has been a member of the Nebraska Corn Growers Association for 10
years.

ANDREW JENSEN. Mr. Jensen has been a director of Minnesota Corn Processors
since 1997. Mr. Jensen has been in the business of farming and livestock
production near Aurora, Nebraska since 1970. Mr. Jensen is currently the
president of Jensen Farms, Inc. and a partner in Jensen Brothers. Mr. Jensen
has been a state director of the Nebraska Corn Growers Association since 1986
and was the past state president from 1990 to 1992. In addition, Mr. Jensen has
been the chairman of Government Affairs since 1992, a member of the Nebraska
Cattlemen since 1970, a member of the National Corn Growers Association since
1982, a state director of the Nebraska Agriculture Awareness Foundation since
1996 and a national director of the National Corn Growers Association since
1992.

PATRICK L. MEURET. Mr. Meuret has been a director of Minnesota Corn
Processors since 1997. Mr. Meuret has been the manager of J.E. Meuret Grain Co.
Inc., Brunswick, Nebraska for 22 years. Mr. Meuret is currently chairman of the
board, Village Board of Trustees' -- Village of Brunswick, of which he has been
a board member for 8 years. In addition, Mr. Meuret is currently president of
Plainview Board of Education and has been a board member for 8 years. Mr.
Meuret is a past director of Nebraska Grain and Feed and the Nebraska Turkey
Growers Association.

ROBERT BENDER. Mr. Bender has been a director of Minnesota Corn Processors
since 1992. Mr. Bender is the owner-operator of Bender Farms, a grain and
livestock operation, near Columbus, Nebraska since 1977. Mr. Bender has also
been a the president of Bender Farms Trucking Inc., since 1992 and is a
partner-manager of CSS Farms. In addition, Mr. Bender is currently a partner
and has been the secretary for Klub 81 Inc. since 1980.

COMMITTEES OF THE BOARD

Following the conversion, the board will have the following committees:
executive, finance, corn procurement, grower relations, public relations,
compensation and long range planning.

EXECUTIVE. The executive committee exercises the authority of the board of
directors when the board is not in session, as permitted by law and the
operating agreement. Members: Howard Dahlager, Larry Dowd, Dan Dybsetter, Doug
Finstrom, Roger Fjerkenstad, Jim Gervais, Jerry Jacoby, Sandy Ludeman and John
Zwach, Jr.

44
<PAGE>

FINANCE. The finance committee reviews the financial structure, policies
and future of Minnesota Corn Processors as developed by senior management. It
also approves audit reports, accounting policies, financial statements and
internal controls. Members: Dean Buesing, Howard Dahlager, Larry Dowd, Doug
Finstrom, Roger Fjerkenstad, Jerry Jacoby, Ron Kirchner and Sandy Ludeman.

CORN PROCUREMENT. The corn procurement committee establishes Minnesota
Corn Processors' strategic corn procurement activities. Members: Duane Adams,
Larry Dowd, Jim Gervais, Jack Hennen, John Jerzak, Steve Lipetzky and David
Scheibel.

GROWER RELATIONS. The grower relations committee has historically
coordinated Minnesota Corn Processors' interaction with the growers who have
provided Minnesota Corn Processors' corn. Members: Duane Adams, Daniel
Dybsetter, Roger Fjerkenstad, Andrew Jensen, Steve Lipetzky, John Nelson,
Kenneth Regier and Ken Robinson.

PUBLIC RELATIONS. The pubic relations committee assists management in
directing Minnesota Corn Processors' public relations activities. Members:
Robert Bender, Daniel Dybsetter, Andrew Jensen, Jack Hennen, Ron Kirchner, Ken
Robinson and John Zwach, Jr.

COMPENSATION. The compensation committee reviews management compensation
practices and employee benefit plans. Members: Robert Bender, Howard Dahlager,
Jerry Jacoby, John Jerzak, Donald Lindblad, Patrick Meuret and John Nelson.

LONG RANGE PLANNING. The long range planning committee considers and
analyzes Minnesota Corn Processors' long-term strategic and market positions.
Members: Dean Buesing, Doug Finstrom, Jim Gervais, Sandy Ludeman, Patrick
Neuret, Kenneth Regier, David Scheibel and John Zwach, Jr.

COMPENSATION OF DIRECTORS

The Colorado limited liability company will reimburse each director for
actual expenses of attending board and committee meetings and provide a per diem
payment for services performed on behalf of the Colorado limited liability
company in the amount $250 for the board chairman, $150 for the vice chairman
and secretary, and $100 for other directors. The operating agreement provides
that additional director compensation must be approved by Class A members.
Minnesota Corn Processors currently reimburses each director for actual expenses
and also provides a per diem payment for services performed.

EXECUTIVE OFFICERS

Upon completion of the conversion, the following individuals will be
executive officers of the Colorado limited liability company and will serve
full-time in the capacities listed:

<TABLE>
<CAPTION>
NAME AGE POSITION TERM EXPIRES
- ---- --- -------- ------------
<S> <C> <C> <C>
L. Daniel Thompson .......... 57 President and Chief Executive Officer 3/31/2001
(plus renewals)

Daniel H. Stacken ........... 35 Vice President and Chief Financial Officer at will(1)

Lawrence J. Schiavo, Jr. .... 40 Vice President of Operations and Business at will(1)
Development

Stanley L. Sitton ........... 42 Senior Vice President of Sales and Marketing at will(1)

Roger L. Untiedt ............ 40 Vice President of Technology at will(1)

Roger F. Evert .............. 37 Vice President of Human Resources at will(1)
and Administration
</TABLE>

- ------------------
(1) These Officers serve at the discretion of the Chief Executive Officer and
can be terminated by him without notice.

L. DANIEL THOMPSON. Mr. Thompson has served as President and Chief
Executive Officer of Minnesota Corn Processors since August 1997. Mr. Thompson
served as Chief Financial Officer from January 1997 to August 1997. From
December 1994 to January 1997, he served as President and

45
<PAGE>

Chief Executive Officer of Bake Rite Foods, a shortening and vegetable oil
manufacturer. Before that, Mr. Thompson was President and Chief Executive
Officer of Lou Ana Foods, Inc., a vegetable oil refinery. Mr. Thompson is also
a director of Liquid Sugars.

DANIEL H. STACKEN. Mr. Stacken has served as Vice President and Chief
Financial Officer of Minnesota Corn Processors since November 1998. Mr. Stacken
served as Controller from December 1991 to November 1998. He is a director of
Liquid Sugars.

LAWRENCE J. SCHIAVO, JR. Mr. Schiavo has served as Vice President of
Operations and Business Development of Minnesota Corn Processors since November
1998. Mr. Schiavo served as Director of Operations from October 1992 to
November 1998 and as Plant Manager of the Marshall facility from June 1990 to
October 1992.

STANLEY L. SITTON. Mr. Sitton was named Senior Vice President of Sales and
Marketing in November 1998 and has been Vice President of Sales and Marketing
of Minnesota Corn Processors since March 1997. Mr. Sitton also is a director of
Liquid Sugars. From December 1985 to February 1997, Mr. Sitton served in
various positions with A.E. Staley Manufacturing Company focusing on sales and
marketing.

ROGER L. UNTIEDT. Mr. Untiedt was named Vice President of Technology in
November 1998 and from February, 1996 and November, 1998 served as Director of
Quality and Engineering of Minnesota Corn Processors. From November 1992 to
February 1996, he served as Plant Manager of the Marshall facility.

ROGER F. EVERT. Mr. Evert was named Vice President of Human Resources and
Administration in November 1998. From October 1992 to November 1998, Mr. Evert
was Human Resources Manager.

46
<PAGE>

EXECUTIVE COMPENSATION

The following table shows the compensation paid by Minnesota Corn
Processors for the Chief Executive Officer and the five next highest paid
executive officers at the end of fiscal year 1999.

SUMMARY COMPENSATION TABLE

LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
------------------------------------- -------------------
SECURITIES
FISCAL OTHER ANNUAL UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION OPTIONS
- --------------------------- ------ -------- -------- ------------ -------------------

<S> <C> <C> <C> <C> <C>
L. Daniel Thompson 1999 $243,972 $ -- $ -- --
President and Chief Executive
Officer

Daniel H. Stacken 1999 117,988 10,000 -- --
Vice President and Chief
Financial Officer

George A. Lamberth(1) 1999 180,461 10,000 14,100 --
Chief Operating Officer of the
Cooperative; President and
Chief Executive Officer of
Liquid Sugars, Inc.

Lawrence J. Schiavo 1999 134,250 10,000 -- --
Vice President of Operations
and Business Development

Stanley L. Sitton 1999 162,008 10,000 -- --
Senior Vice President of Sales
and Marketing

Roger L. Untiedt 1999 134,731 10,000 -- --
Vice President and Director of
Technology
</TABLE>

- ------------------
(1) Mr. Lamberth resigned from Minnesota Corn Processors effective September 2,
1999.

Other Annual Compensation includes reimbursements for premiums paid in
connection with life insurance and retirement policies.

EMPLOYEE BENEFIT PLANS

In 1998, Minnesota Corn Processors adopted a Retirement Savings and
Investment Plan or 401(k) plan covering Minnesota Corn Processors' full-time
employees. The 401(k) plan is intended to qualify under Section 401(k) of the
tax code, so that contributions to the 401(k) plan by employees or by Minnesota
Corn Processors, and the investment earnings thereon, are not taxable to
employees until withdrawn from the 401(k) plan. Minnesota Corn Processors
matches a maximum of 1.5% of each employee's earnings, but on the basis of 25%
of the employee's contribution, up to a maximum of 6%. Minnesota Corn Processors
contributions vest 20% per year of service.

Minnesota Corn Processors also maintains for all of its full-time employees
health and medical insurance, dental insurance, short-term and long-term
disability and term life insurance.

MANAGEMENT STOCK PURCHASE PROGRAM

From 1986 to 1999, Minnesota Corn Processors provided a management stock
purchase program to give management an opportunity to purchase nonvoting units
of equity participation. The program was discontinued on March 31, 1999. The
board selects the participants who will be granted rights to purchase nonvoting
units of equity participation and determines the number of nonvoting units

47
<PAGE>

covered by the right. The purchase price is equal to 75% of the average selling
price of units of equity participation during the preceding 12 months. The
purchase price is payable in full at the time of exercise of the right or, in
the discretion of the Board, through accumulated cash dividend payments over an
unspecified period of time. If the payment is funded by cash dividends,
Minnesota Corn Processors has no recourse against the participant for the full
amount of the purchase price. The rights are not transferable without the
written consent of Minnesota Corn Processors and may be exercised immediately
after the date of grant for a period of one year. The nonvoting units acquired
upon the exercise of a right are subject to redemption by Minnesota Corn
Processors upon termination of the participant's employment. However, if the
participant's employment is terminated for reasons other than for cause, the
participant may sell his or her nonvoting units to a qualified third party,
within 3 months following termination of the participant's employment. In fiscal
1998, the right to purchase 10,000 units were granted to each of Mr. Thompson
and Mr. Sitton at an average per unit price of $2.08.

As of March 31, 1999, the total number of nonvoting units of equity
participation held by the executive officers named in the Summary Compensation
Table, were as follows: Mr. Thompson - 3,078 units, Mr. Stacken - 8,635 units,
Mr. Schiavo - 24,965 units, Mr. Sitton - 3,078 units and Mr. Untiedt - 8,633
units. The board does not intend to grant any rights under the management stock
purchase program in the future.

Other than serving on the board of Liquid Sugars, Inc., none of our
officers or directors serve on boards or occupy positions that could cause
conflicts of interest that could impede their fulfillment of duties to us.

RELATIONSHIPS AND RELATED TRANSACTIONS

Steve Lipetsky, a director of Minnesota Corn Processors since 1981, is the
president of Stephen Trucking. Stephen Trucking has been hauling corn to
Minnesota Corn Processors since May, 1998. Since May 1998, Minnesota Corn
Processors has paid Stephen Trucking $125,371.

EMPLOYMENT AGREEMENTS

Minnesota Corn Processors has an employment agreement with Mr. Thompson,
its president and chief executive officer. Under the agreement, Mr. Thompson's
initial annual salary is $250,000. Mr. Thompson also is eligible for an annual
bonus based on a fixed percentage of net income for that fiscal year. The
agreement provides for discretionary annual bonuses to Mr. Thompson for any
fiscal year in which Minnesota Corn Processors is unprofitable. In addition,
Mr. Thompson receives a $20,000 annuity annually.

The initial term of the agreement expires on March 31, 2001, subject to
automatic renewal terms of one year each, unless terminated earlier. If the
Board terminates the employment agreement with Mr. Thompson without cause (as
defined), Mr. Thompson will receive a cash severance payment equal to:

* if the employment ends during the initial term, the greater of
$250,000 or the product of $4,807.69 times the number of weeks
remaining from the date of termination to the end of the initial term,
or

* if the employment ends after the initial term, $250,000.

In addition, if Mr. Thompson sells his house in Marshall, Minnesota for
less than what he paid for it, Minnesota Corn Processors will make up any loss.

SECURITY OWNERSHIP OF MANAGEMENT

The operating agreement provides that each Class A member owning 5,000 or
more Class A units will have one vote and that no Class A member may own more
than 2% of the total issued and outstanding Class A units. If the conversion had
been completed on March 31, 1999, officers and directors would beneficially own
as a group approximately 4.9% of the outstanding Class A units.

48
<PAGE>

DESCRIPTION OF MEMBERSHIP UNITS

THE FOLLOWING SUMMARY OF THE MATERIAL FEATURES OF THE COLORADO LIMITED
LIABILITY COMPANY MEMBERSHIP UNITS DOES NOT PURPORT TO BE COMPLETE AND IS
QUALIFIED IN ITS ENTIRELY BY REFERENCE TO THE COLORADO LIMITED LIABILITY COMPANY
OPERATING AGREEMENT.

GENERAL

The Colorado limited liability company has two classes of membership: Class
A membership, which has voting rights, and Class B membership, which has no
voting rights. Membership is not limited to agricultural producers. Class A
memberships are represented by Class A units. A Class A Unit is the holder's
share of the profits and losses of the Colorado limited liability company and
the holder's right to receive distributions of cash or assets. Class B
memberships are represented by Class B units, which also represent the right to
share in the profits and losses and distributions of the Colorado limited
liability company . The Colorado limited liability company is authorized to
issue 350,000,000 Class A units and 150,000,000 Class B units.

The operating agreement authorizes the Colorado limited liability company
to issue additional units to:

* fund expansion or maintain and repair its corn wet milling facilities
and related facilities,

* fund construction or acquisition of facilities or any related or
complementary business,

* fund losses which cannot be reasonably expected to be funded with
future earnings, or

* fund equity contributions to joint ventures related or complementary
to the Colorado limited liability company's existing business. If the
Colorado limited liability company issues additional units in the
future, members will have the right to subscribe for additional units
in order to permit members to maintain their percentage of units owned
at a constant level.

QUALIFICATIONS FOR MEMBERSHIP

CLASS A MEMBERSHIP
A Class A membership is available to any individual, corporation or other
entity who acquires a minimum of 1,000 Class A units. The initial Class A
members of the Colorado limited liability company will be members of Minnesota
Corn Processors, Inc. who receive Class A units upon completion of the
conversion. Class A membership is also limited to agricultural producers. These
are persons or entities who have been, or who are presently engaged in the
production of agricultural products, members of those persons' immediate family
or current or former employees of the Colorado limited liability company.
Competitors of the Colorado limited liability company are not eligible to
purchase or own Class A units. The Colorado limited liability intends to enforce
its policy against competitors owning Class A units. At the time of the
conversion, competitors would include Archer Daniels Midland Company, Cargill,
Corn Products and A.E. Staley Manufacturing Company, Cerestar USA, National
Starch and Chemical Company, Penford Products Company, Roquette America, Inc.,
and any officers or directors of those companies.

Transfers of the Class A units are subject to the prior consent of the
board of directors as well as other procedural requirements including, receipt
of evidence that the transferee is not a competitor of the Colorado limited
liability company. These procedural requirements will allow the Colorado limited
liability company to monitor and enforce its policy that competitors are not
eligible to purchase Class A units.

CLASS B MEMBERSHIP
A Class B membership is available to any individual, corporation or other
entity who acquires a minimum of 1,000 Class B units. Upon completion of the
conversion, the initial Class B member will be Archer Daniels Midland Company,
which will receive 58,622,340 Class B units, constituting 100% of the Class B
units. As the owner of the Class B units, Archer Daniel Midland Company will be
entitled to approximately 30% of the Colorado limited liability company's
profits and losses and 30% of any cash distributions made to members.

49
<PAGE>

CLASS A UNITS

VOTING RIGHTS
Although Class A members are required to own a minimum of 1,000 Class A
units, only members holding 5,000 or more Class A units are entitled to vote.
Holders of 5,000 or more Class A units are entitled to one vote on all matters
to be voted upon by the members. The Colorado limited liability company has the
right to purchase the Class A units of any member owning less than 1,000 Class A
units at the established value (as defined below), following written notice of
the deficiency to the member and expiration of a one-year cure period within
which the member can buy additional Class A units. Any member owning at least
1,000 Class A units, but less than 5,000 units, is not entitled to vote. Class A
units held by any member not entitled to vote will be excluded in determining
the total number of Class A units required for action to be taken by the
members.

MAXIMUM OWNERSHIP LIMITATION

No member can own more than 2% of the total issued and outstanding Class A
units. For purposes of calculating the 2% limitation, the number of Class A
units owned by a member includes any Class A units owned by that member's
spouse, children, parents, brothers and sisters, and any Class A units owned by
any corporation, partnership or other entity in which the member or the member's
family members owns or controls a majority of the voting power. Any Class A
member owning more than 2% of the outstanding Class A units is not entitled to
vote until the member disposes of the excess Class A units. In addition, the
Colorado limited liability company has the right to purchase the number of Class
A units in excess of the 2% limitation at the established value, following
written notice of the excess ownership to the member and expiration of a
one-year cure period within which the member can dispose of the excess Class A
units.

Under the operating agreement, the established value means the per unit
purchase price set by the board of directors based on 75% the fair market value
of the Class A units, as determined by the board using reasonable valuation
methods, or the book value of the Class A units, whichever is less. At the
option of the Colorado limited liability company, the purchase price may be made
in one lump sum or in equal installments over a five-year period, with interest.

CLASS B UNITS

Class B units are nonvoting membership interests. However, the Colorado
limited liability company may not, without the prior consent of Archer Daniels
Midland Company so long as it holds one-third of the outstanding Class B units:

(1) materially change its principal business,

(2) sell, lease or otherwise transfer substantially all of its assets, or

(3) incur capital expenditures in excess of $250,000.

Colorado limited liability company has the right to purchase the Class B
units of any member owning less than 1,000 Class B units at the established
value, following written notice and expiration of the one-year cure period.
There is no maximum limit on the ownership of Class B units. Holders of Class B
units are also entitled to receive distributions of cash as may be declared by
the board of directors, on the same basis as holders of Class A Units.

DISTRIBUTIONS

Unit holders are entitled to receive distributions of cash as may be
declared by the board of directors. Distributions of cash will be made to unit
holders in proportion to the number of units owned by each member. The holders
of Class A units and Class B units are entitled to equivalent per unit
distributions. The board of directors has the discretion to make distributions
to holders of special financial interests in the aggregate amount of the stated
amount of such interests.

CAPITAL ACCOUNTS AND CONTRIBUTIONS

The purchase price for Class A units and Class B units will constitute a
capital contribution to the Colorado limited liability company for purposes of
becoming a member of the Colorado limited

50
<PAGE>

liability company. The operating agreement does not require any member to make
additional capital contributions to the company, except that the board of
directors may require any member who owes a tax withholding obligation to the
company to reimburse the company for that liability. Except as otherwise
provided in the operating agreement, interest will not accrue on capital
contributions, and members will have no right to withdraw or be repaid any
capital contribution.

ALLOCATION OF PROFITS AND LOSSES; SPECIAL ALLOCATION RULES

ALLOCATION OF PROFITS AND LOSSES
Except as otherwise provided in special allocations, profits and losses
realized by the Colorado limited liability company will be allocated to the
members in proportion to the number of units held by each member. Profits and
losses will be determined by the board of directors on either a daily, monthly,
or other basis permitted under the tax code and corresponding Treasury
regulations.

SPECIAL ALLOCATION RULES
The general rule for profit and loss allocations is subject to a number of
exceptions referred to as special allocations. The most relevant of the special
allocations is the special allocation of profits that will be made if
distributions are made to the holders of special financial interests. The other
special allocations are required by Treasury regulations and are aimed at highly
leveraged partnerships that allocate taxable losses in excess of the partner's
actual capital contributions. These circumstances are highly unlikely to occur
in the Colorado limited liability company.

RESTRICTIONS ON TRANSFER OF UNITS

Transferability of units is restricted to ensure that the Colorado limited
liability company is not deemed a "publicly traded partnership" and thus taxed
as a corporation. See "Federal Income Tax Considerations -- Publicly Traded
Partnership Rules." Under the operating agreement, no transfers may occur
without the approval of the board of directors. The board of directors will
permit transfers that fall within "safe harbors" contained in the publicly
traded partnership rules under the tax code. These include transfers by gift,
transfers upon the death of a member, intra family transfers and other transfers
during the tax year that in the aggregate do not exceed 2% of the total
outstanding Class A and Class B units.

In addition, the board may give nontransferring members a right of first
refusal with respect to transfers of units. In the future, the Colorado limited
liability company may consider establishing a qualified matching service to
facilitate trading in the Class A units. If anyone transfers units in violation
of the publicly traded partnership requirements of the tax code or without the
prior consent of the board, the Colorado limited liability company will consider
the purported transfer to be null and void, and will not recognize any voting
and distribution rights for those units.

The board of directors may, in its discretion, establish other conditions
and procedures for transfers of units as long as they are reasonably related to
tax or securities limitations. These may include: delivery of a legal opinion to
Minnesota Corn Processors; delivery of transfer instruments to Minnesota Corn
Processors; delivery of financial information sufficient to enable Minnesota
Corn Processors to file all necessary tax returns; and repayment of any
indebtedness owed by the transferring member to the Colorado limited liability
company.

All transfers of Class B units also must be approved by the board of
directors. The pledge of, or granting of a security interest in, lien or other
encumbrance in or against a member's units does not constitute a transfer of the
units. A transfer of units as a result of foreclosure or transfer in lieu of
foreclosure does constitute a transfer of units, and is subject to the
restrictions on transfers of units. The transfer of all of a member's units to a
transferee terminates the transferring member's membership in Minnesota Corn
Processors.

DISTRIBUTION OF ASSETS UPON LIQUIDATION

Minnesota Corn Processors' operating agreement establishes the following
order and priority for distribution of Minnesota Corn Processors' assets upon
dissolution, each category to be satisfied in

51
<PAGE>

full before any distribution is made to the next: first, all debts and
liabilities of Minnesota Corn Processors must be paid; second, reserves for
contingent liabilities must be set aside; third, the value of Class A and Class
B units, as determined by the board of directors must be paid pro rata to the
unit holders; fourth, the stated amount of special financial interests, reduced
by previous distributions with respect to these interests, must be paid; and
fifth, all remaining property and assets of Minnesota Corn Processors are then
to be distributed among the unit holders pro rata in amount equal to the unit
holders' respective capital accounts.

AMENDMENTS TO OPERATING AGREEMENT

The operating agreement may be amended by the vote of 66.67% of the members
voting, either in person or, if authorized by the board, by proxy or mail
ballot, at any regular or annual meeting of the members at which a quorum is
present. In the case of any amendment which modifies the rights and benefits
afforded to holders of Class B units, the consent of 66.67% of the holders of
Class B units is required.

COMPARISON OF RIGHTS OF MEMBERS

The rights of members are currently governed by Minnesota law and the
articles of incorporation and bylaws of Minnesota Corn Processors. Upon
completion of the conversion, the rights of members will be governed by Colorado
law and the operating agreement of the Colorado limited liability company. The
following is a summary of the material differences between Minnesota Corn
Processors units and the Colorado limited liability company Class A units. This
summary is not intended to be a complete discussion of, and is qualified in its
entirety by reference to Minnesota law, Colorado law, Minnesota Corn Processors'
articles and bylaws and the operating agreement. The identification of specific
differences is not meant to indicate that other equally or more significant
differences do not exist. A copy of the operating agreement is attached as
Appendix D to this document. The articles of incorporation and bylaws of
Minnesota Corn Processors may be obtained from Minnesota Corn Processors,
without charge, by contacting Dan Stacken, Minnesota Corn Processors, 901 North
Highway 59, Marshall, Minnesota 56258.

<TABLE>
<CAPTION>
CLASS A AND B UNITS OF THE COLORADO UNITS OF EQUITY PARTICIPATION OF
LIMITED LIABILITY COMPANY MINNESOTA CORN PROCESSORS
<S> <C> <C>
TAXATION The Colorado limited liability The Minnesota Corn Processors is
company will be treated as a exempt from taxation at the
partnership for federal income tax company level under Subchapter T
purposes. The Colorado limited of the tax code so long as it
liability company will pay no tax on distributes at least 20% of patronage
its net income. Rather, each member distributions to its members in cash.
is subject to income tax based on the Each member is subject to income
member's allocable share of income, tax based on the amount of
gain, loss, deduction and credits, patronage and dividends distributed
whether or not any cash is actually to the member.
distributed to the member.

LIMITED LIABILITY Under Colorado law and the Members are not personally liable
operating agreement, members will for the debts, obligations and
not be personally liable for the debts, liabilities of Minnesota Corn
obligations and liabilities of the Processors, but are obligated to
Colorado limited liability company. deliver corn under their marketing
agreements.
</TABLE>

52
<PAGE>

<TABLE>
<CAPTION>
CLASS A AND B UNITS OF THE COLORADO UNITS OF EQUITY PARTICIPATION OF
LIMITED LIABILITY COMPANY MINNESOTA CORN PROCESSORS
<S> <C> <C>
DISTRIBUTIONS; Subject to any legal or contractual Minnesota Corn Processors is
CORN DELIVERY restrictions, the board has the required to distribute its annual net
OBLIGATION discretion whether and when to income to members based on
make cash distributions to the patronage. Patronage distributions
members, and to fix the amount of may be paid in the form of cash,
any distribution. Holders of Class A stock, units of equity participation,
units and Class B units are entitled certificates of interest, revolving fund
to equivalent per unit distributions. certificates, notes or credits.
The board also has the discretion to Minnesota Corn Processors may, and
make distributions to the holders of under its loan covenants, may be
special financial interest up to their required to, retain a portion of its
stated amount. Members have no annual income for working capital
obligation to deliver corn and purposes. Members are obligated to
distributions are based on the deliver roughly one bushel of corn
number of units held by a member. for each unit of equity participation
they own.

AUTHORIZED CAPITAL The operating agreement provides Minnesota Corn Processors' articles
for authorized capital consisting of provide for authorized stock
350 million Class A units and 150 consisting of 100,000 shares of
million Class B units. common stock, $50.00 par value per
share, 100,000 shares of nonvoting
preferred stock, $50.00 par value per
share and non-voting units of equity
participation equal to 30% of
Minnesota Corn Processors' total
participating equity.

MEMBERSHIP Under the operating agreement, Minnesota Corn Processors articles
INTERESTS Class A units represent voting provide that common stock is the
membership interests and Class B only class of membership and voting
units represent nonvoting stock. Common stock may be held
membership interests. Class A units only by agricultural producers. Each
may be held by any person that is unit of equity participation
not a competitor of the Colorado represents the right and obligation to
limited liability company. Ownership deliver corn. Minnesota Corn
of Class A units is also limited to Processors is a closed-end
agricultural producers. No person cooperative, which means that new
may own less than 1,000 Class A members may be admitted by
units or more than 2% of the issued purchasing shares from existing
and outstanding Class A units. members, or from the company if the
company expands its corn processing
capacity.

</TABLE>

53
<PAGE>

<TABLE>
<CAPTION>
CLASS A AND B UNITS OF THE COLORADO UNITS OF EQUITY PARTICIPATION OF
LIMITED LIABILITY COMPANY MINNESOTA CORN PROCESSORS
<S> <C> <C>
LIQUIDITY AND There is no public trading market for There is no public trading market for
TRANSFERABILITY the Class A units. The operating Minnesota Corn Processors common
agreement imposes transfer stock and units of equity
restrictions to preserve the Colorado participation. No transfer may occur
limited liability company's without the prior consent of the
partnership tax status. No transfer board, and the common stock may
may occur without the prior consent be held only by qualified agricultural
of the board. The board has the producers. Members have a
discretion to permit members to right-of-first-refusal with respect to
participate voluntarily in a transfers of stock.
right-of-first-refusal program with
respect to transfers of units.

VOTING RIGHTS Under the operating agreement, each Under Minnesota Corn Processors'
member owning a minimum of 5,000 articles, each member owning a
Class A units is entitled to one vote, minimum of 5 common shares is
regardless of the number of units entitled to one vote, regardless of the
owned. Members owning less than number of shares or units of equity
5,000 Class A units have no voting participation owned.
rights; members owning more than
2% of the outstanding Class A units Minnesota Corn Processors' bylaws
will not be entitled to voting rights prohibit voting by proxy.
until they reduce their ownership to
no more than 2% of the outstanding
Class A units. Members who are
competitors do not have voting
rights.

The operating agreement permits
voting by mail ballot and proxy.

TERMINATION OF Under the operating agreement, a Minnesota Corn Processors' bylaws
MEMBERSHIP member's membership interest will provide that the board, in its sole
terminate upon (1) a complete discretion, may terminate
transfer of all of the member's units, membership if the member (1)
(2) dissolution of a nonindividual becomes ineligible for membership,
member, (3) death of an individual (2) fails to patronize Minnesota Corn
member, (4) withdrawal or (5) failing Processors for a period of 1 year or
to meet the minimum or maximum more, (3) moves outside the territory
requirements for unit ownership. served by Minnesota Corn
Processors, (4) dies or ceases to be
an agricultural producer or (5)
intentionally or repeatedly violates
any provisions of the article or
bylaws, breaches any contract with
Minnesota Corn Processors, remains
indebted to Minnesota Corn
Processors for 90 days after the
indebtedness first becomes payable
or willfully obstructs any lawful
purpose or activity of Minnesota
Corn Processors.
</TABLE>

54
<PAGE>

<TABLE>
<CAPTION>
CLASS A AND B UNITS OF THE COLORADO UNITS OF EQUITY PARTICIPATION OF
LIMITED LIABILITY COMPANY MINNESOTA CORN PROCESSORS
<S> <C> <C>
REDEMPTION Class A units may be redeemed if a Under Minnesota Corn Processors'
member owns less than 1,000 Class articles, the common stock may be
A Units or more than 2% of the redeemed by Minnesota Corn
total outstanding Class A Units. The Processors at the lesser of par value
redemption price is the lesser of or book value.
book value or 75% of the fair
market value of the units, as
determined by the board using
reasonable valuation methods.

ANNUAL MEETINGS The operating agreement provides Minnesota Corn Processors' bylaws
that regular meetings of the provide that the annual meeting of
members shall be held at least once members shall be held within six
per year. The operating agreement months following the close of the
gives any member the right to fiscal year.
demand a meeting of the members if
a regular meeting has not been held
within six months after the end of
the fiscal year.

VOTE ON The operating agreement states that Minnesota law requires that a
EXTRAORDINARY a merger, consolidation, share or merger, consolidation, sale of all or
TRANSACTIONS interest exchange, sale of all or substantially all of the assets of
substantially all of the assets of the Minnesota Corn Processors, or a
company, dissolution of the company dissolution of Minnesota Corn
or any transaction, agreement or Processors must be approved by the
action on behalf of the company that affirmative vote of two-thirds of the
is not related or complementary to members voting in person or if
Minnesota Corn Processors' existing authorized, by mail ballot. Minnesota
business, must be approved by the Corn Processors' articles do not
affirmative vote of two-thirds of the contain vote requirements for
Class A members voting in person, extraordinary transactions.
or if authorized, by proxy or mail Additionally, in the event of an
ballot. Additionally, in the event of extraordinary transaction or capital
an extraordinary transaction or expenditures in excess of $250,000, if
capital expenditures in excess of Archer Daniels Midland Company
$250,000, if Archer Daniels Midland holds one-third of the outstanding
Company holds one-third of the Class B units, Archer Daniels
outstanding Class B units, Archer Midland Company's consent is
Daniels Midland Company's consent required.
is required.

AMENDMENT OF Amending the operating agreement Amending Minnesota Corn
GOVERNING requires approval of two-thirds of Processors' articles and bylaws
DOCUMENTS the Class A and B members voting requires approval by the members by
in person, or if authorized, by proxy the affirmative vote of a majority of
or mail ballot. the members present at the meeting.
</TABLE>

55
<PAGE>

<TABLE>
<CAPTION>
CLASS A AND B UNITS OF THE COLORADO UNITS OF EQUITY PARTICIPATION OF
LIMITED LIABILITY COMPANY MINNESOTA CORN PROCESSORS
<S> <C> <C>
PREEMPTIVE RIGHTS The operating agreement grants Minnesota law and Minnesota Corn
preemptive rights to holders of Class Processors' articles or bylaws do not
A units and Class B units. grant preemptive rights, except that
Archer Daniels Midland Company
does have preemptive rights under
its shareholder agreement with
Minnesota Corn Processors.

APPRAISAL RIGHTS OF Colorado law and the operating Minnesota law and Minnesota Corn
DISSENTING agreement do not grant appraisal Processors', articles or bylaws do not
MEMBERS rights. grant appraisal rights.

LIQUIDATING RIGHTS Upon liquidation, unit holders are Upon liquidation, assets remaining
entitled to share ratably in any assets after the satisfaction of all debts and
remaining after obligations to liabilities are distributed as follows:
creditors are satisfied and reserves (1) to holders of units of equity
for contingent liabilities or participation on a pro rata basis; (2)
obligations as deemed necessary by to holders of other patronage equity
the board or the person conducting interests on a pro rata basis; (3) to
the liquidation are established. holders of common stock and
However, when unit holders have preferred stock an amount equal to
received the value of their units as the par value of their shares; and (4)
determined by the board, the holders remaining assets to current and
of special financial interests will be former patrons in accordance with
entitled to payment of their stated their proportionate patronage.
value as reduced by prior
distributions.

FINANCIAL The Colorado limited liability Minnesota Corn Processors is not
REPORTING company will be subject to the subject to the reporting requirements
reporting requirements of the of the Exchange Act.
Exchange Act and will file annual,
quarterly and special reports with the
SEC.

FIDUCIARY DUTIES Colorado law provides that a Minnesota Corn Processors' articles
director must perform his duties in limit the personal liability of
good faith, in a manner he directors to the maximum extent
reasonably believes to be in the best permitted by Minnesota law.
interests of the limited liability Minnesota law provides that
company, and with such care as an directors of a cooperative will not be
ordinarily prudent person in a like personally liable for monetary
position would use under similar damages for breach of their fiduciary
circumstances. A person who so duties as directors, except liability for
performs his duties shall not have (1) any breach of their duty of
any liability for reason of being a loyalty to Minnesota Corn Processors
director of the limited liability or its members, (2) acts or omissions
company. not in good faith or which involve
intentional misconduct or a knowing
violation of law or (3) any
transaction from which the director
derived an improper personal
benefit.
</TABLE>

56
<PAGE>

<TABLE>
<CAPTION>
CLASS A AND B UNITS OF THE COLORADO UNITS OF EQUITY PARTICIPATION OF
LIMITED LIABILITY COMPANY MINNESOTA CORN PROCESSORS
<S> <C> <C>
INDEMNIFICATION OF The operating agreement requires Minnesota Corn Processors' bylaws
OFFICERS AND the Colorado limited liability provide that Minnesota Corn
DIRECTORS company, to the fullest extent Processors shall indemnify its
permitted by law, to indemnify directors, officers, managers,
officers and directors. The Colorado employees or agents to the fullest
limited liability company will also extent permitted by Minnesota law.
indemnify each director from, and Indemnification of liabilities under
make advances for expenses incurred the federal securities laws may not
by the director, in connection with be enforceable.
any claim made against the director
arising from an action or omission
made in good faith or which he or
she reasonably believed to be in the
best interests of the company or any
other claim to the maximum extent
permitted under Colorado law.
However, this indemnification
obligation does not apply if the claim
results from an act or omission
constituting fraud or willful
misconduct. In addition, except as
otherwise provided in an agreement
with an officer, the Colorado limited
liability company is required to
indemnify officers to the fullest
extent permitted by law.
Indemnification of liabilities under
the federal securities laws may not
be enforceable.
</TABLE>

57
<PAGE>

FEDERAL INCOME TAX CONSEQUENCES

The following is a summary of the material federal income tax consequences
of the conversion of Minnesota Corn Processors into the Colorado limited
liability company and of ownership of units in the limited liability company.
The summary is based on current provisions of the Internal Revenue tax code of
1986, as amended, existing and proposed Treasury regulations and current
administrative rulings and court decisions, all of which are subject to change.
Subsequent changes in these authorities may cause the tax consequences to vary
substantially from the consequences described below.

Lindquist & Vennum P.L.L.P., Minneapolis, MN, tax and securities law
counsel to Minnesota Corn Processors, has rendered an opinion to the effect that
this discussion of Federal Income Tax Consequences is an accurate description of
the principal federal income tax consequences to the entities and their members
resulting from the conversion. Counsel emphasizes that the expected tax
consequences depend in significant part on the accuracy of the appraisal and it
notes the possibility of an IRS challenge on various issues discussed below. An
opinion of legal counsel does not assure the intended tax consequences because
it binds neither the Internal Revenue Service nor the courts.

This summary does not discuss all the tax considerations that may be
relevant to particular unit holders in light of their personal investment
circumstances, or to certain types of shareholders that may be subject to
special tax rules. It briefly discusses state tax considerations and does not
address local or foreign taxation. Therefore, members are urged to consult their
tax advisors regarding the tax consequences of the conversion to them as well as
the tax consequences of subsequent operations.

SUMMARY OF THE FEDERAL INCOME TAX CONSEQUENCES OF THE CONVERSION

For state business law purposes, the conversion of Minnesota Corn
Processors into a Colorado limited liability company will consist of two steps:
a merger of Minnesota Corn Processors into a transitory Colorado cooperative,
followed by a merger of the transitory cooperative into the Colorado limited
liability company. For tax purposes, however, Minnesota Corn Processors will
treat the conversion as a reorganization of Minnesota Corn Processors into a
transitory Colorado cooperative, a complete liquidation of Minnesota Corn
Processors consisting of the distribution of its assets to its members and the
assumption of its liabilities by the members, and followed by a contribution of
the distributed assets subject to those liabilities to the Colorado limited
liability company.

TAX CONSEQUENCES OF THE CONVERSION TO MINNESOTA CORN PROCESSORS
The merger of Minnesota Corn Processors into the transitory Colorado
cooperative is a reorganization that will be treated as a mere change in form as
defined in Section 368(a)(1)(F) of the tax code which has no federal income tax
consequences to either Minnesota Corn Processors or its equity owners.

The merger of the transitory Colorado cooperative into the Colorado limited
liability company will be treated as a taxable liquidation of Minnesota Corn
Processors. Section 336(a) of the tax code requires a corporation to recognize
gain on liquidating distributions of appreciated property as if it had sold the
property to the distributees.

Minnesota Corn Processors intends to treat the conversion as a constructive
distribution of its assets rather than as a constructive distribution of
interests in the Colorado limited liability company. Accordingly, Minnesota Corn
Processors will apportion the aggregate appraised value, $611 million, net of
current liabilities, appraised as of September 30, 1998, among its assets and
determine gain or loss asset-by-asset. Minnesota Corn Processors' apportionment,
which is based in part on the

58
<PAGE>

appraised value of assets including the member loss receivable and the St.Paul
Bank investment, and in part on management's judgment as to other asset values,
is as follows:

- -----------------------------------------------------------------------------------------
COOPERATIVE GAIN/LOSS
ON LIQUIDATION 9/30/98 9/30/98 LIQUIDATING
(In thousands) VALUES TAX BASIS GAIN (LOSS)
- -----------------------------------------------------------------------------------------

<S> <C> <C> <C>
Current assets (net of current liabilities) .... $ 70,120 $ 70,120 $ --
Member Loss Receivable ......................... 15,100 21,532 (6,432)
Property, plant and equipment .................. 491,120 502,893 (11,773)
LSI investment and intercompany receivable ..... 25,060 25,060 --
St. Paul Bank Investment ....................... 3,800 11,296 (7,469)
Unamortized costs .............................. 3,400 4,724 (1,324)
Other assets ................................... 2,400 5,237 (2,837)
--------- -------- --------
Totals ......................................... $611,000 $640,862 $(29,862)
========= ======== ========
</TABLE>

The amounts shown above are based on September 30, 1998 figures and will be
adjusted to conversion date values and basis for purposes of determining
Minnesota Corn Processors' gain or loss on each of its assets.

The above calculations suggest that Minnesota Corn Processors will have a
taxable loss on each major category of assets as a result of the Colorado
limited liability company conversion. Nevertheless, the conversion is not free
of tax risk because there can be no assurance that the IRS will not challenge
Minnesota Corn Processors on the following points:

* the aggregate values determined by the appraisal,

* the apportionment of values to specific assets and the treatment of
the resulting gains or losses as capital gain or loss or ordinary
income or loss,

* the patronage or nonpatronage character of the gains or loss, and

* the characterization of the liquidation as a constructive distribution
of specific assets rather than as a distribution of interests in
Minnesota Corn Processors.

The IRS is not bound by the appraisal and there are anti-netting rules that
may become operative if these challenges are mounted by the IRS. Specifically,
corporate capital losses cannot be offset against any income other than capital
gains and, likewise, patronage losses, including Minnesota Corn Processors' net
operating loss carryover, cannot be offset against nonpatronage income or gain.
For example, if the IRS were to successfully establish asset values higher of
those shown above either in the aggregate or for specific assets, the
anticipated losses could become taxable gains that might be characterized as
nonpatronage sourced which would prevent them from being offset by losses and
operating loss carry-overs that are patronage sourced.

In addition, the conversion will extinguish outstanding qualified written
notices of allocation by distributing assets having a value that is
approximately $5,142,000 less than the face amount of the qualified written
notices. The IRS is likely to assert that this amount must be reported as
nonpatronage income by Minnesota Corn Processors. If nonpatronage losses are
insufficient to offset this potential income, the IRS may seek to tax this
income to Minnesota Corn Processors although it has not been successful in
litigation of similar issues.

Minnesota Corn Processors' management and its board of directors have
evaluated the tax risks of the conversion with the valuation advice of American
Appraisal Associates and the tax advice of its legal counsel, Lindquist &
Vennum, P.L.L.P., and have concluded that the benefits of the conversion
substantially outweigh the tax risks.

TAX CONSEQUENCES OF THE CONVERSION TO UNIT HOLDERS
Amounts received by a shareholder in complete liquidation of a corporation
are treated as full payment in exchange for the shareholder's stock under
Section 331(a) of the tax code. Accordingly,

59
<PAGE>

each member of Minnesota Corn Processors will recognize gain or loss as a result
of the conversion measured by the difference between the adjusted tax basis of
the member's old cooperative units and the fair market value of the deemed
liquidating distribution received by that member.

The fair market value of the deemed liquidating distribution has been
determined by an appraisal to be $1.10 per unit for minority interests of the
Colorado cooperative. See "The Conversion -- Material Financial Analyses." This
value is subject to adjustment to the conversion date value. The IRS is not
bound by the appraisal, and if it successfully challenges the appraisal the
value of each share may increase causing each member to recognize more gain or
less loss on the conversion than is currently anticipated.

Members will have differing tax results depending on the tax basis of each
unit owned. It is anticipated that some members (principally those who purchased
some or all of their units in 1982) may incur substantial capital gains, while
most other members will incur capital losses. The following schedule illustrates
some of the per unit calculations based on when a unit was initially issued:

- ----------------------------------------------------------------------------------------------
GAIN/LOSS PER UNIT
(in thousands, except per ORIGINAL LIQUIDATING TOTAL GAIN/LOSS
unit amounts) UNITS TAX BASIS DISTRIBUTION GAIN/LOSS PER UNIT
- ----------------------------------------------------------------------------------------------

<S> <C> <C> <C> <C> <C>
Units Issued in 1982 .......... 57,488 18,798 $ 63,245 $ 44,447 $ 0.77
Units Issued in 1991 .......... 29,307 41,868 32,243 (9,625) (0.33)
Units Issued in 1994 .......... 19,722 49,306 21,698 (27,608) (1.40)
Units Issued in 1995 .......... 28,824 129,709 31,711 (97,998) (3.40)
Units Issued as Qualified
Patronage ..................... 1,464 7,320 1,611 (5,709) (3.90)
Archer Daniels Midland
Company equity ................ 58,622 119,790 64,493 (55,297) (0.94)
Totals ........................ 195,428 366,791 $ 215,000 $(151,791) $(0.78)
======= ======= ========= ========= ======

Liquidation distribution per
Unit: ......................... $ 1.10
=========
</TABLE>

The amounts shown above are based on September 30, 1998 figures drawn from
the appraisal and will be adjusted to conversion date values and basis for
purposes of determining each unit holder's gain or loss.

The original tax basis is the original issue price and is applicable to
those unit holders that acquired their units in the original issue. Unit holders
who acquired their units by purchase from another unit holder will have a basis
equal to their purchase price. Unit holders who acquired their units from a
decedent will have a basis equal to the value of the unit for estate tax
purposes.

For the purpose of determining gain, Minnesota Corn Processors unit holders
who acquired their units by gift will have a basis equal to the donor's basis.
However, if use of the donor's basis will produce a loss and if the fair market
value at the time of the gift was less than the donor's basis, then the donee's
basis will be the fair market value at the time of the gift. To illustrate, if
the holder of units issued in 1995 for $5 makes a gift, the donee's basis for
purposes of the conversion will be the current fair market value of the gift
($1.10 per unit based on September 30, 1998 figures) and no loss will be
realized by the donee. On the other hand, if a donor who acquired units in 1982
at $0.33 per unit makes a gift of those units, the donee will take the donor's
basis and have the same $0.77 per unit gain as shown on the above schedule.
Accordingly, caution should be exercised by any unit holder who makes gifts of
units in anticipation of the conversion.

Holders of units that were issued to them as qualified written notices of
allocation will have a loss on the conversion. The character of the loss as
ordinary loss or as capital loss, however, is uncertain. Redemption of a
qualified written notice of allocation traditionally has been treated as an
ordinary loss under the authority of Revenue Ruling 70-64, 1970-1 C.B. 36, and
Revenue Ruling 70-407, 1970-2 C.B. 52. However, in Notice 87-68, 1987-2 C.B.
378, the IRS suspended Revenue

60
<PAGE>

Ruling 70-74 and implicitly suspended Revenue Ruling 70-407 pending the decision
of the U.S. Supreme Court in ARKANSAS BEST CORP. V. COMMISSIONER, 485 U.S. 212
(1988), which was later decided against the taxpayer. Original holders may
reasonably contend that ordinary loss treatment is appropriate under general
cooperative tax principles because the conversion represents the completion of a
patronage transaction. However, the IRS may well argue for capital loss
treatment. Purchasers of these units will have a basis equal to their purchase
price and will realize capital gain or loss depending on whether the their
purchase price is less than or greater than the $1.10 per unit value of the
Colorado limited liability company units received.

Distributions with respect to special financial interests in the Colorado
limited liability company into which the nonqualified written notices of
allocation will be converted are extremely uncertain both as to time and as to
amount and, because of the extent of the Colorado limited liability company
board's discretion, there is no assurance that any amount will ever be paid.
Accordingly, Minnesota Corn Processors intends to take the position that the
nonvoting special financial interests in the Colorado limited liability company
that will be issued to holders of the nonqualified written notices in the
conversion do not have an ascertainable value in the hands of the holders, and
no amount will be reported to the IRS for the receipt of special financial
interests. If the IRS were to successfully challenge this position, the holders
of nonqualified written notices, who originally received their notices as
patrons, would have ordinary income in 1999 to the extent of the value of their
special financial interests in the Colorado limited liability company. Other
holders would calculate income in accordance with tax code Section 1385(c)(2).

UTILIZATION OF CAPITAL LOSSES BY NON-CORPORATE TAXPAYERS
Noncorporate taxpayers such as individuals, trusts and estates may deduct
capital losses to the extent of capital gains recognized by the taxpayer during
the taxable year, plus $3,000. Unused capital losses may not be carried back but
may be carried forward indefinitely until they are fully utilized or the
taxpayer dies. Thus, an individual member who has no other capital gains or
losses could deduct $3,000 per year until the conversion loss is fully deducted
or the member dies. In addition to capital gains the member may realize on sale
of capital assets, it also should be noted that net tax code Section 1231 gains
are treated as capital gains that may be offset by capital loss deductions or
carry forwards.

UTILIZATION OF CAPITAL LOSSES BY C CORPORATIONS
In the case of a C corporation, capital losses are deductible only to the
extent of capital gains. C corporations may not use any part of their capital
losses to reduce ordinary taxable income under tax code section 1211(a). A C
corporation deducts its capital losses against its capital gains for the taxable
year. A C corporation that sustains capital losses in excess of capital gains in
the taxable year has a net capital loss which, in general and subject to
limitations, can be carried back three years and forward five years until it is
used. The amount of net capital loss, whether long or short-term, carried back
or carried forward to another year is treated as a short-term capital loss in
the year to which it is carried under tax code Section 1212(a)(1).

CONSTRUCTIVE PARTNERSHIP FORMATION
The merger of the Colorado cooperative into the Colorado limited liability
company will be treated for tax purposes as a constructive formation of the
Colorado limited liability company as a partnership. Accordingly, the members
will be treated as having contributed the assets they constructively received in
the liquidation of Minnesota Corn Processors subject to Minnesota Corn
Processors' liabilities. In general, neither gain nor loss is recognized to a
partnership or its partners in the case of a contribution of property to the
partnership in exchange for an interest in the partnership under tax code
Section 731.

IMPORTANCE OF THE APPRAISAL TO MINNESOTA CORN PROCESSORS AND ITS UNIT HOLDERS
Minnesota Corn Processors' tax treatment, the tax treatment of Minnesota
Corn Processors unit holders and the initial asset basis in the hands of the
Colorado limited liability company all depend in significant part on the
accuracy of the appraisal. While we have no reason to believe that the

61
<PAGE>

appraisal will not be accepted by the IRS, there can be no assurance that the
IRS will not challenge the values used in determining gain or loss at Minnesota
Corn Processors or unit holder level or that a court will not sustain a
challenge.

IRS INFORMATION REPORTING REQUIREMENTS
Minnesota Corn Processors is required to file Form 966 notifying the IRS of
the taxable liquidation within 30 days of formal adoption of the plan of merger
and to supplement the filing if the plan is later amended. Minnesota Corn
Processors will be required to issue a Form 1099-DIV to each unit holder whose
units have a value of more than $600 not later than January 31, 2000, and
transmit the information to the IRS before February 28, 2000.

FEDERAL INCOME TAX CONSEQUENCES OF POST-CONVERSION UNIT OWNERSHIP

TAX STATUS OF THE COLORADO LIMITED LIABILITY COMPANY
Single-tax treatment and the ability to make cash distributions to unit
holders without incurring an entity level federal income tax depends on the
treatment of the Colorado limited liability company as a partnership for income
tax purposes. Minnesota Corn Processors expects that the Colorado limited
liability company will be treated as a partnership for federal income tax
purposes. This means that the Colorado limited liability company will pay no
federal income tax and members will pay tax on their share of the Colorado
limited liability company's net income. Under recently revised Treasury
regulations known as the "check-the-box" regulations, an unincorporated entity
such as a limited liability company will be taxed as a partnership unless the
entity is considered a publicly traded limited partnership or the entity
affirmatively elects to be taxed as a corporation.

The Colorado limited liability company will not elect to be taxed as a
corporation and will endeavor to take steps as are feasible and advisable to
avoid classification as a publicly traded limited partnership. In early 1997, a
study of partnership law by the staff of the Congressional Joint Committee on
Taxation questioned the legal authority of the Treasury to issue the
check-the-box regulations. Although none of the staff's recommendations were
enacted into law, Congress has shown no inclination to adopt legislation that
would jeopardize the tax classification of the many entities that have acted in
reliance on the check-the-box regulations.

If the Colorado limited liability company fails to qualify for partnership
taxation for whatever reason, it would be treated as a "C corporation" for
federal income tax purposes. As a "C corporation," it would be taxed on its
taxable income at corporate rates (currently a maximum 35% federal rate),
distributions would generally be taxed again to holders of Class A units as
corporate dividends, and the holders of Class A units would not be required to
report their share of the Colorado limited liability company's income, gains,
losses or deductions on their tax returns. Because a tax would be imposed upon
the Colorado limited liability company as an entity, the cash available for
distribution to unit holders would be reduced by the amount of tax paid which
could cause a reduction in the value of the units.

PUBLICLY TRADED PARTNERSHIP RULES
To qualify for taxation as a partnership, the Colorado limited liability
company cannot be subject to the publicly traded partnership rules under the
Section 7704 of the tax code. Generally, the tax code provides that a publicly
traded partnership will be taxed as a corporation. The tax code defines a
publicly traded partnership as a partnership whose interests are traded on an
established securities market, or are readily tradable on a secondary market (or
the substantial equivalent). Although there is no legal authority on whether a
limited liability company is subject to these rules, it is probable that the
Colorado limited liability company is subject to the publicly traded partnership
rules because it has elected to be classified and taxed as a partnership.

The Colorado limited liability company will seek to avoid being treated as
a publicly traded partnership. Under Section 1.7704-1(d) of the Treasury
regulations, interests in a partnership are not considered traded on an
established securities market or readily tradable on a secondary market unless
the partnership participates in the establishment of the market or the inclusion
of its interests

62
<PAGE>

in a market, or the partnership recognizes any transfers made on the market by
redeeming the transferor partner or admitting the transferee as a partner.

The Colorado limited liability company does not intend to list the Class A
and Class B units on any stock exchange or the Nasdaq Stock Market. In addition,
the operating agreement prohibits any transfer of units without the approval of
the board. The board intends to only approve transfers that fall within safe
harbor provisions of the Treasury regulations, and therefore will not cause the
Colorado limited liability company to be classified as a publicly traded
partnership. These safe harbor provisions generally provide that interests will
not be treated as readily tradable on a secondary market (or the substantial
equivalent) if the interests are transferred:

* in "private" transfers;

* in qualified redemptions and repurchases;

* pursuant to a qualified matching service; or

* in limited amounts that satisfy a 2% test.

Private transfers include, among others:

* transfers such as gifts in which the transferee's tax basis is
determined by reference to the transferor's tax basis in the interests
transferred,

* transfers at death, including transfers from an estate or testamentary
trust,

* transfers between members of a family as defined in Section 267(c)(4)
of the tax code,

* transfers from retirement plans qualified under Section 401(a) of the
tax code or an IRA, and

* "block" transfers. A block transfer is a transfer by a member and any
related persons as defined in the tax code in one or more transactions
during any thirty-calendar-day period of interests representing in the
aggregate more than two percent of the total interests in partnership
capital or profits.

Transfers pursuant to a qualified redemption or repurchase are disregarded
in determining whether interests are readily tradable on a secondary market if
several conditions are met. First, the redemption or repurchase cannot occur
until at least 60 days after the partnership receives written notice of the
member's intent to exercise the redemption or repurchase right. Second, either
the purchase price is not established until at least 60 days after receipt of
notification or the purchase price is established not more than four times
during the entity's tax year. Third, the sum of the interests in capital or
profits transferred during the year (other than in private transfers) cannot
exceed 10 percent of the total interests in partnership capital or profits.

Transfers through a qualified matching service also are disregarded in
determining whether interests are readily tradable. A matching service is
qualified only if:

* It consists of a computerized or printed system that lists customers'
bid and/or ask prices in order to match members who want to sell with
persons who want to buy;

* Matching occurs either by matching the list of interested buyers with
the list of interested sellers or through a bid and ask process that
allows interested buyers to bid on the listed interest;

* The seller cannot enter into a binding agreement to sell the interest
until the fifteenth calendar day after his interest is listed (which
date must be confirmable by maintenance of contemporaneous records);

* The closing of a sale effected through the matching service does not
occur prior to the forty-fifth calendar day after the interest is
listed;

* The matching service displays only quotes that do not commit any
person to buy or sell an interest at the quoted price (nonfirm price
quotes) or quotes that express an interest in

63
<PAGE>

acquiring an interest without an accompanying price (nonbinding
indications of interest) and does not display quotes at which any
person is committed to buy or sell a interest at the quoted price
(firm quotes);

* The seller's information is removed within 120 days of its listing and
is not reentered into the system for at least 60 days after its
deletion, and

* The sum of the percentage interests transferred during the entity's
tax year (excluding private transfers) cannot exceed 10 percent of the
total interests in partnership capital or profits.

In addition, interests are not treated as readily tradable if the sum of
the percentage interests transferred during the entity's tax year (excluding
private transfers, qualified redemptions and qualified matching service
transfers) do not exceed two percent of the total interests in partnership
capital or profits.

TAX TREATMENT OF THE COLORADO LIMITED LIABILITY COMPANY'S OPERATIONS

FLOW-THROUGH OF TAXABLE INCOME; USE OF CALENDAR YEAR
No federal income tax will be paid by the Colorado limited liability
company. Instead, each unit holder will be required to report on his income tax
return his allocable share of the income, gains, losses and deductions of the
Colorado limited liability company without regard to whether corresponding cash
distributions are received.

Because the Colorado limited liability company will be taxed as a
partnership, it will have its own taxable year separate from the taxable years
of its unit holders. Unless a business purpose can be established to support a
different taxable year, a partnership must use the "majority interest taxable
year" which is the taxable year that conforms to the taxable year of the holders
of more than 50% of its interests. In the Colorado limited liability company's
case, the majority interest taxable year is the calendar year. Although the
Colorado limited liability company will consider applying for a nonconforming
taxable year, unit holders should assume that the Colorado limited liability
company will be required to use the calendar year.

COLORADO LIMITED LIABILITY COMPANY'S BASIS IN ASSETS

Tax code Section 723 provides that the basis of any property contributed to
a partnership by a partner is the adjusted basis of the property in the hands of
the contributor at the time of the contribution. In general, this will be the
fair market value of the Colorado limited liability company units, $1.10 per
unit, increased by the amount of liabilities initially assumed by the Colorado
limited liability company. The aggregate basis must be apportioned among the
categories of assets in proportion to their relative fair market values and
future cost recovery deductions will be based on the amounts so apportioned. It
is possible that the IRS will challenge the allocation of basis to specific
categories of assets within the Colorado limited liability company so as to
increase the allocation to longer-lived assets or assets that cannot be
depreciated or amortized such as land and tax code Section 197 intangibles that
were used by Minnesota Corn Processors during the Section 197 transition period
of 1991 to 1993.

TAXABLE INCOME OR LOSS FROM OPERATIONS
The Colorado limited liability company will compute its taxable income or
loss in a manner that differs materially from the way Minnesota Corn Processors
determines its taxable income or loss. Material changes include the fact that an
Colorado limited liability company does not issue patronage dividends or value
added payments and therefore does not receive a deduction for these payments.
The net effect at the unit holder level is similar with respect to taxable
income, however, in that the bulk of the taxable income of the Colorado limited
liability company will be reported by the members. Colorado limited liability
company losses, however, flow-through to the unit holders, subject to
restrictions discussed below, while a cooperative's losses generally produce net
operating loss carryovers.

The Colorado limited liability company may have material differences in
taxable income or loss relative to pre-conversion taxable income or loss because
of changes in asset basis that is attributable

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to the conversion. The Colorado limited liability company will have a lower
basis in its accounts receivable and inventory as the result of the valuation
and discounts applied in the conversion process. This is likely to result in a
nonrecurring increase in 1999 Colorado limited liability company income in the
approximate amount of the discount for lack of marketability and minority
interest that is apportioned to accounts receivable and inventory currently
estimated at $9 million. This will result in nonrecurring taxable income of
approximately 4.6 cents per unit in the year of conversion. In addition, new
cost recovery schedules will be adopted that will be based on the discounted
value of depreciable and amortizable assets as if they are placed in service on
the conversion date. We estimate that our annual cost recovery deductions in the
first several years following the conversion will be approximately $8.7 million
or 4.5 cents per unit less than cost recovery deductions of Minnesota Corn
Processors in recent years. These are the inevitable consequences of the
conversion and are subject to adjustment to conversion date values and discounts
as explained in the discussion of the tax consequences of the conversion.

TAX CONSEQUENCES TO COLORADO LIMITED LIABILITY COMPANY UNIT HOLDERS

FLOW-THROUGH OF TAXABLE INCOME OR LOSS
Each unit holder and holder of a special financial interest will be
required to report on his income tax return for his taxable year with which or
within which ends the Colorado limited liability company's taxable year his
distributive share of the income, gains, losses and deductions of the Colorado
limited liability company without regard to whether corresponding cash
distributions are received. To illustrate, each calendar year unit holder will
include his share of the Colorado limited liability company's 1999 taxable
income or loss on his 1999 income tax return. A unit holder with a June 30
fiscal year will report his share of the Colorado limited liability company's
1999 taxable income or loss on his income tax return for the fiscal year ending
June 30, 2000. Holders of special financial interests will be allocated taxable
income only if they receive a corresponding cash distribution. The Colorado
limited liability company will provide each unit holder with an annual Schedule
K-1 indicating the member's share of the Colorado limited liability company's
income, loss and their separately stated components.

TAX TREATMENT OF DISTRIBUTIONS
Distributions by the Colorado limited liability company to a unit holder or
the holder of a special financial interest generally will not be taxable to the
unit holder for federal income tax purposes as long as distributions do not
exceed his basis in his units immediately before the distribution. Cash
distributions in excess of unit basis -- which are considered unlikely -- are
treated as gain from the sale or exchange of the units under the rules described
below for unit dispositions.

INITIAL TAX BASIS OF UNITS AND PERIODIC BASIS ADJUSTMENTS
Under tax code Section 722, a member's initial basis in his or her
membership interest in the Colorado limited liability company will be equal to
the sum of the amount of money and the contributor's adjusted basis of any
property contributed to the Colorado limited liability company. This amount is
increased by a member's share of the Colorado limited liability company's
debt.(1) Since the property deemed to be contributed by each member is the
property received in the constructive liquidation, each member's initial basis
in the Colorado limited liability company units should be equal to the fair
market value of those units as reported by the member in determining gain or
loss on the conversion transaction as described above plus the member's share of
the Colorado limited liability company's debt. Pursuant to the appraisal and
subject to adjustment to conversion date amounts, the initial basis will be
$2.73 per unit consisting of a net property contribution of $1.10 plus $1.63 per
unit share of debt.

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

(1) Inclusion of debt in the basis of a unit holder's Colorado limited liability
company interest is technically true but is unnecessarily confusing. During the
tax shelter boom of the 1980's, inclusion of debt in the basis of a partnership
interest allowed partnership investors to write off losses in excess of their
investment. This led to the at-risk and passive loss restrictions. Inclusion of
Debt in basis is unlikely to have any material tax consequences to an Colorado
limited liability company unit holder.

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A member's initial basis in Colorado limited liability company units will
be increased to reflect the member's distributive share of the Colorado limited
liability company's taxable income and tax-exempt income, amounts attributable
to depletion that are not likely to be relevant, and any increase in a member's
share of the Colorado limited liability company's debt. If a member makes
additional capital contributions at any time, the adjusted unit basis is
increased by the amount of any cash contributed or the adjusted basis in any
property contributed.

A member's unit basis will be decreased, but not below zero, by (1) the
amount of any cash distributed to the member; (2) the basis of any other
property distributed; (3) the amount of depletion deductions; (4) the member's
distributive share of losses and nondeductible expenditures of the Colorado
limited liability company that are "not properly chargeable to capital account"
and (5) any reduction in that member's share of Colorado limited liability
company's debt.

The unit basis calculations are complex. A member is only required to
compute unit basis if the computation is necessary to determine his tax
liability but accurate records should be maintained. Typically, basis
computations are necessary at the following times:

1. The end of a taxable year during which the Colorado limited liability
company suffered a loss, for the purpose of determining the
deductibility of the member's share of the loss;

2. Upon the liquidation or disposition of a member's interest, and

3. Upon the nonliquidating distribution of cash or property to a partner,
in order to ascertain the basis of distributed property or the
taxability of cash distributed.

Except in the case of a taxable sale of a unit or liquidation of the
Colorado limited liability company, exact computations usually are not
necessary. For example, a unit holder who regularly receives cash distributions
that are less than or equal to his share of the Colorado limited liability
company's taxable income will have a positive unit basis at all times.
Consequently, no computations are necessary to demonstrate that cash
distributions are not taxable to him under tax code Section 731(a)(1). The
purpose of the basis adjustments is to keep track of a member's "tax investment"
in Colorado limited liability company, with a view toward preventing double
taxation or exclusion from taxation of income items upon ultimate disposition of
the units.

DEDUCTIBILITY OF LOSSES; PASSIVE LOSS LIMITATIONS
In general, a unit holder may deduct losses allocated to him, subject to a
number of restrictions. Those restrictions include a general rule that losses
cannot be deducted if they exceed a member's basis in his units nor to the
extent they exceed the member's at-risk amount. These specific restrictions are
not likely to impact the members of the Colorado limited liability company.
However, if the Colorado limited liability company incurs a taxable loss or if
taxable income is insufficient to cover interest expense on Minnesota Corn
Processors related borrowing, the passive activity loss deduction rules are
likely to have widespread effect.

Tax code Section 469 substantially restricts the ability of taxpayers to
deduct losses from passive activities. Passive activities generally include
activities conducted by pass-through entities, such as the Colorado limited
liability company and other partnerships, limited liability companies or S
corporations, in which the taxpayer does not materially participate. Generally,
losses from passive activities are deductible only to the extent of the
taxpayer's income from other passive activities. Passive activity losses that
are not deductible because of these rules may be carried forward and deducted
against future passive activity income or may be deducted in full upon
disposition of a unit holder's entire interest in the Colorado limited liability
company to an unrelated party in a fully taxable transaction.

It is important to note that "passive activities" do not include dividends
and interest income that normally is considered to be "passive" in nature; nor
do they include farming operations in which the taxpayer is a material
participant.

Many members have borrowed to purchase their equity interest in Minnesota
Corn Processors and have been deducting the interest expense. After the
conversion, this interest expense will be aggregated with other items of income
and loss from passive activities and subjected to the passive

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activity loss limitation. To illustrate, if a member's only passive activity is
the Colorado limited liability company, and if the Colorado limited liability
company incurs a net loss, no interest expense on related borrowing would be
deductible. If that member's share of the Colorado limited liability company's
taxable income is less than the related interest expense, the excess would be
nondeductible. In both instances, the disallowed interest would be suspended and
would be deductible against future passive activity income or upon disposition
of the member's entire interest in the Colorado limited liability company to an
unrelated party in a fully taxable transaction.

ALTERNATIVE MINIMUM TAX
If the Colorado limited liability company adopts accelerated methods of
depreciation, it is possible that taxable income for Alternative Minimum Tax
purposes might exceed regular taxable income passed through to the unit holders.
No decision has been made on this point but we believe that most unit holders
are unlikely to be adversely affected by excess alternative minimum taxable
income.

TAX CONSEQUENCES OF DISPOSITION OF UNITS

RECOGNITION OF GAIN OR LOSS
Gain or loss will be recognized on a sale of Colorado limited liability
company units equal to the difference between the amount realized and the unit
holder's basis in the units sold. Amount realized includes cash and the fair
market value of other property received plus the member's share of the Colorado
limited liability company's debt. Because of the inclusion of debt in basis, it
is possible that a member could have a tax liability on sale that exceeds the
proceeds of sale. While this a result is common in "tax shelters," it is quite
unlikely in the case of a typical business operation such as the Colorado
limited liability company.

Gain or loss recognized by a unit holder on the sale or exchange of a unit
held for more than one year generally will be taxed as long-term capital gain or
loss. A portion of this gain or loss, however, will be separately computed and
taxed as ordinary income or loss under tax code Section 751 to the extent
attributable to depreciation recapture or other "unrealized receivables" or
"substantially appreciated inventory" owned by the Colorado limited liability
company. The Colorado limited liability company will adopt conventions to assist
those members that sell units in apportioning the gain among the various
categories.

ALLOCATIONS AND DISTRIBUTIONS FOLLOWING UNIT TRANSFERS
If any unit is transferred during any accounting period in compliance with
the provisions of Article X of the operating agreement, then solely for purposes
of making allocations and distributions, the Colorado limited liability company
will use the interim closing of the books method (rather than a daily proration
of profit or loss for the entire period) and the convention that recognizes the
transfer as of the beginning of the month following the month in which the
notice, documentation and information requirements of Article VIII have been
substantially complied with. All distributions on or before the end of the
calendar month in which these requirements have been substantially complied with
shall be made to the transferor and all distributions thereafter shall be made
to the transferee. The board the authority to adopt other reasonable methods
and/or conventions.

EFFECT OF TAX CODE SECTION 754 ELECTION ON UNIT TRANSFERS
The adjusted basis of each unit holder in his Colorado limited liability
company units ("outside basis") initially will equal his proportionate share of
the adjusted basis of the Colorado limited liability company in its assets
("inside basis"). Over time, however, it is probable that changes in unit values
and cost recovery deductions will cause the value of a unit to differ materially
from the unit holder's proportionate share of the inside basis.

Section 754 of the tax code permits a partnership to make an election that
allows a transferee who acquires units either by purchase or upon the death of a
unit holder to adjust his share of the inside basis to fair market value as
reflected by the unit price in the case of a purchase or the estate

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tax value of the unit in the case of an acquisition upon death of a unit holder.
Once the amount of the transferee's basis adjustment is determined, it is
allocated among the Colorado limited liability company's various assets pursuant
to tax code Section 755.

A Section 754 election is beneficial to the transferee when his outside
basis is greater than his proportionate share of the entity's inside basis. In
this case, a special calculation is made solely for the benefit of the
transferee that will determine his cost recovery deductions and his gain or loss
on disposition of Colorado limited liability company property by reference to
his higher outside basis. The Section 754 election will be detrimental to the
transferee if his outside basis is less than his proportionate share of inside
basis.

Tax code Section 743(b) provides that the partnership or Colorado limited
liability company is responsible for making the basis adjustments. However, the
unit transferees are required to report the basis adjustments. Transferees
accomplish this by attaching statements to their returns that show how the
Section 743(b) adjustment was determined and how the adjustment was allocated
among the various partnership properties. No existing guidance indicates when
(i.e., before or after the Schedule K-1) the effect of the basis adjustment to
specific partnership items is to be determined or who is required to make and
report the adjustments to the partnership items.

Proposed Treasury regulations issued in January, 1998, clarify that
partnerships and Colorado limited liability companies are required to make the
basis adjustments. In addition, these regulations place the responsibility for
reporting basis adjustments on the entity. The entity reports basis adjustments
by attaching statements to their partnership returns when they acquire knowledge
of transfers subject to Section 743. In addition, partnerships and Colorado
limited liability companies are required to adjust specific partnership items in
light of the basis adjustments. Consequently, amounts reported on the
transferee's Schedule K-1 are adjusted amounts.

Transferees are subject to an affirmative obligation to notify partnerships
and Colorado limited liability companies of their basis in acquired interests.
To accommodate entity concerns about the reliability of the information
provided, partnerships and Colorado limited liability companies are entitled to
rely on the written representations of transferees concerning either the amount
paid for the partnership interest or the transferee's basis in the partnership
interest under tax code Section 1014 (unless clearly erroneous).

Section 9.3 of the operating agreement provides that the Colorado limited
liability company will not make a Section 754 election unless the Board
determines that the tax benefits made available to affected transferees by the
election are likely to be sufficient to justify the increased cost and
administrative burden of accounting for the resulting basis adjustments.
Depending on the circumstances, the value of units may be effected positively or
negatively by whether or not the Colorado limited liability company makes a
Section 754 election. The board intends to monitor prices at which units change
hands and is likely to authorize the election only when and if unit prices
become materially greater than the Colorado limited liability company's per unit
inside basis and only if it determines that this material difference is likely
to continue or increase over time. If the Colorado limited liability company
decides to make a Section 754 election, the election is made by the Colorado
limited liability company on a timely filed partnership income tax return and it
is effective for transfers occurring in taxable year of the return in which the
election is made. Once made, the Section 754 election is irrevocable unless the
Internal Revenue Service consents to its revocation.

IRS REPORTING REQUIREMENT
Article X of the operating agreement contains the requirements for a valid
transfer of units, including proper documentation and Board approval. In
addition, the IRS requires a taxpayer who sells or exchanges a unit to notify
Colorado limited liability company in writing within thirty days or, for
transfers occurring on or after December 16 of any year, by January 15 of the
following year. Although the IRS reporting requirement is limited to "Section
751(a) exchanges," it is likely that any transfer of an Colorado limited
liability company unit will constitute a Section 751(a) exchange. The written
notice required by the IRS must include the names and addresses of both parties
to the

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exchange, the identifying numbers of the transferor and, if known, of the
transferee and the exchange date. The IRS imposes a penalty of $50 for failure
to file the written notice unless reasonable cause can be shown.

OTHER TAX MATTERS

TAX INFORMATION TO UNIT HOLDERS; CONSISTENT REPORTING
The Colorado limited liability company will be required to provide each
unit holder with a Schedule K-1 (or authorized substitute therefore) on an
annual basis. Harsh penalties are provided for failure to do so unless
reasonable cause for the failure is established.

Each unit holder's Schedule K-1 will set out the holder's distributive
share of each item of income, gain, loss, deduction or credit that is required
to be separately stated. Each unit holder must report all items consistently
with Schedule K-1 or, if an inconsistent position is reported, must notify the
IRS of any inconsistency by filing Form 8062 "Notice of Inconsistent Treatment
or Administrative Adjustment Request (AAR)" with the original or amended return
in which the inconsistent position is taken.

IRS AUDIT PROCEDURES
Prior to 1982, regardless of the size of a partnership, adjustments to a
partnership's items of income, gain, loss, deduction, or credit had to be made
in separate proceedings with respect to each partner individually. Because a
large partnership sometimes had many partners located in different audit
districts, adjustments to items of income, gains, losses, deductions, or credits
of the partnership had to be made in numerous actions in several jurisdictions,
sometimes with conflicting outcomes.

The Tax Equity and Fiscal Responsibility Act of 1982 established unified
audit rules applicable to all but most partnerships. These rules require the tax
treatment of all "partnership items" to be determined at the partnership, rather
than the partner, level. Partnership items are those items that are more
appropriately determined at the partnership level than at the partner level, as
provided by regulations. Since the Colorado limited liability company will be
taxed as a partnership, these rules are applicable to it and its unit holders.

The IRS may challenge the reporting position of a partnership by conducting
a single administrative proceeding to resolve the issue with respect to all
partners. But the IRS must still assess any resulting deficiency against each of
the taxpayers who were partners in the year in which the understatement of tax
liability arose. Any partner of a partnership can request an administrative
adjustment or a refund for his own separate tax liability. Any partner also has
the right to participate in partnership-level administrative proceedings. A
settlement agreement with respect to partnership items binds all parties to the
settlement.

IRS rules establish the "Tax Matters Partner" as the primary representative
of a partnership in dealings with the IRS. The Tax Matters Partner must be a
"member-manager" which is defined as a Colorado limited liability company member
who, alone or together with others, is vested with the continuing exclusive
authority to make the management decisions necessary to conduct the business for
which the organization was formed. In the Colorado limited liability company's
case, this would be a member of the board of directors who is also a member of
Colorado limited liability company. Section 9.4 of the operating agreement
provides for board designation of the Tax Matters Partner and for default
designations if it fails to do so.

The IRS generally is required to give notice of the beginning of
partnership-level administrative proceedings and any resulting administrative
adjustment to all partners whose names and addresses are furnished to the IRS.
For partnerships with more than 100 partners, however, the IRS generally is not
required to give notice to any partner whose profits interest is less than one
percent.

After the IRS makes an administrative adjustment, the Tax Matters Partner
(and, in limited circumstances, other partners) may file a petition for
readjustment of partnership items in the Tax Court, the district court in which
the partnership's principal place of business is located, or the Claims Court.

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NEW ELECTIVE PROCEDURES FOR LARGE PARTNERSHIPS
The Taxpayer Relief Act of 1997 contains an elective provision under which
the income tax reporting and IRS auditing of partnerships of more than 100
partners is streamlined. This statute reduces the number of items that must be
separately stated on the Schedules K-1 that are issued to the partners which
will ease the burden on their tax preparers.

If the election is made, IRS audit adjustments generally will flow through
to the partners for the year in which the adjustment takes effect. However, the
partnership may elect to pay an imputed underpayment that is calculated by
netting the adjustments to the income and loss items of the partnership and
multiplying that amount by the highest tax rate whether individual or corporate.
A partner may not file a claim for credit or refund of his allocable share of
the payment.

Timing adjustments are made in the year of audit in order to avoid
adjustments to multiple years where possible. In addition, the partnership,
rather than the partners individually, generally is liable for any interest and
penalties that result from a partnership audit adjustment. Penalties, such as
the accuracy and fraud penalties, are determined on a year-by-year basis,
without offsets, based on an imputed underpayment. Any payment for Federal
income taxes, interest, or penalties, that an electing large partnership is
required to make is non-deductible.

Under the electing large partnership audit rules, a partner is not
permitted to report any partnership items inconsistently with the partnership
return, even if the partner notifies the IRS of the inconsistency. The IRS may
treat a partnership item that was reported inconsistently by a partner as a
mathematical or clerical error and immediately assess any additional tax against
that partner. The IRS is not required to give notice to individual partners of
the commencement of an administrative proceeding or of a final adjustment.
Instead, the IRS is authorized to send notice of a partnership adjustment to the
partnership itself by certified or registered mail. An administrative adjustment
may be challenged in the Tax Court, the district court in which the
partnership's principal place of business is located, or the Claims Court.
However, only the partnership, and not partners individually, can petition for a
readjustment of partnership items.

The board of the Colorado limited liability company will review the new
large partnership procedures with its legal counsel and certified public
accountants to determine whether it appears advantageous to elect to be subject
to the new procedures. Because of the substantial cost and administrative burden
involved in implementing IRS audit adjustments at the unit holder level under
the existing procedures, it is likely that the board will decide to make the
election.

SELF-EMPLOYMENT TAX
The IRS has held on audit that Minnesota Corn Processors' members currently
are subject to self-employment tax on value added payments although the IRS now
concedes that retired members who are no longer engaged in farming are not
subject to self-employment tax on such payments. The tax code and Treasury
regulations provide that general partners are subject to self-employment tax on
their distributive share of partnership income and that limited partners who do
not render services to the partnership are not subject to self-employment tax.
Neither the tax code nor the Treasury regulations address the treatment of
Colorado limited liability company unit holders for self-employment tax
purposes. Proposed Regulations, however, were issued in 1997 that provide
generally for imposition of the self-employment tax on Colorado limited
liability company unit holders only if they (1) have personal liability for
Colorado limited liability company obligations, have authority to contract on
behalf of the Colorado limited liability company, or participate in the Colorado
limited liability company's business for more than 500 hours each year. Few, if
any, of the Colorado limited liability company's unit holders would be subject
to self-employment tax under this test.

The status of the Proposed regulations is uncertain because they were
subject to a Congressional moratorium that ended July 1, 1998 and the Treasury
has not taken steps to finalize them. Nevertheless, because of the similarity of
Colorado limited liability company unit holders and limited partners, it is
believed to be highly likely that Colorado limited liability company unit
holders will be treated similar to limited partners, i.e., generally not subject
to self-employment tax on their share of

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Colorado limited liability company earnings. This will represent a substantial
saving relative to cooperative taxation for those Colorado limited liability
company unit holders whose FICA wages and self-employment earnings are below the
maximum FICA income base which is $72,600 for 1999.

STATE INCOME TAXES
Colorado limited liability company unit holders generally are subject to
tax in their state of residence as well as in those states in which the entity
does business if their share of income exceeds the minimum filing requirements.
Since the Colorado limited liability company will potentially be doing business
in several states, this could create a substantial reporting burden for the
members. Most states, however, allow "composite reporting" by partnerships and
limited liability companies which means that the entity pays income taxes to the
various states and the individual members are relieved of the reporting
responsibility in states other than their state of residence and their state of
residence generally will allow a tax credit for state income taxes paid by the
entity for the benefit of the unit holder. For example, a unit holder who is a
resident of Minnesota will report his entire share of the Colorado limited
liability company's income but will receive credit on his Minnesota return for
taxes paid to Minnesota and other states on his behalf. The Minnesota resident
unit holder generally will not have to file individually in other states.

LEGAL MATTERS

The validity of the Class A units to be issued in connection with the
conversion will be passed upon by Dorsey & Whitney, LLP.

EXPERTS

The consolidated financial statements of Minnesota Corn Processors at March
31, 1999, 1998 and 1997 and for the years ended March 31, 1999 and 1998, the six
month fiscal period ended March 31, 1997, and the year ended September 30, 1996
provided in this document have been audited by Clifton Gunderson L.L.C.,
independent auditors, as set forth in their report thereon. The consolidated
financial statements have been included herein in reliance upon said report
given upon the authority of said firm as experts in accounting and auditing.

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WHERE YOU CAN FIND MORE INFORMATION

Following the conversion, the Colorado limited liability company will file
annual, quarterly and special reports with the SEC. You may read and copy any
reports that the Colorado limited liability company files at the SEC's public
reference rooms in Washington, D.C., New York, New York and Chicago, Illinois.
Please call the SEC at 1-800-SEC-0330 for further information on the public
reference rooms. The reports also will be available from commercial document
retrieval services and at the SEC's web site (http://www.sec.gov).

The Colorado limited liability company has filed with the SEC a
Registration Statement on Form S-4 that registers the distribution to members of
the Class A units to be issued in connection with the conversion. This document
is a part of that Registration Statement. As allowed by SEC rules, this document
does not contain all the information you can find in the Registration Statement
or the exhibits to the Registration Statement. The Colorado limited liability
company intends to furnish Class A unit holders with annual reports containing
financial statements audited by an independent certified public accounting firm.

YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THE DOCUMENT TO VOTE
ON THE CONVERSION. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION
THAT IS DIFFERENT FROM WHAT IS CONTAINED IN THIS DOCUMENT. THIS DOCUMENT IS
DATED ___________, 1999. YOU SHOULD NOT ASSUME THAT THE INFORMATION CONTAINED IN
THIS DOCUMENT IS ACCURATE AS OF ANY OTHER DATE, AND NEITHER THE MAILING OF THE
THIS DOCUMENT TO MEMBERS NOR THE ISSUANCE OF CLASS A UNITS IN THE CONVERSION
SHALL CREATE ANY IMPLICATION TO THE CONTRARY.

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PRO FORMA CONDENSED FINANCIAL INFORMATION
(UNAUDITED OF MINNESOTA CORN PROCESSORS, A COLORADO LIMITED LIABILITY COMPANY)

INTRODUCTION

In order to convert Minnesota Corn Processors from a Minnesota cooperative
into a Colorado limited liability company, the following steps must be taken:

* First, Minnesota Corn Processors will merge with and into Minnesota
Corn Processors Colorado, a Colorado cooperative that has been newly
formed for this conversion.

* Second, immediately after the initial merger, the Colorado cooperative
will merge with and into Minnesota Corn Processors, LLC, a newly
formed Colorado limited liability company.

Each unit of equity participation of Minnesota Corn Processors currently
outstanding will be converted into one Class A unit of the new limited liability
company. Each member holding 5,000 or more Class A units will be entitled to one
vote, which is equivalent to the cooperative voting requirements of 5 common
shares @ 1,000 units of equity participation per share. Since these mergers
result in no change in voting rights or dilution of interests, they will be
accounted for using the pooling of interest method of accounting, in accordance
with generally accepted accounting principles.

Because the purpose of the mergers is to effect the conversion of Minnesota
Corn Processors form a cooperative to a limited liability company, there are no
pro forma adjustments to the consolidated financial statements appearing in this
document beginning on page F-1.

The new authorized equity structure of the limited liability company will
be for a total 350 million Class A voting units and 150 million Class B
nonvoting units. At March 31, 1999, there were 136,866,968 voting units
outstanding, and 58,696,755 non-voting units outstanding.

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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

MINNESOTA CORN PROCESSORS, INC.

PAGE
----

Independent Auditor's Report ............................................ F-1

Consolidated Balance Sheets ............................................. F-2

Consolidated Statements of Operations ................................... F-3

Consolidated Statements of Member Equities .............................. F-4

Consolidated Statements of Cash Flows ................................... F-5

Summary of Significant Accounting Policies .............................. F-7

Notes to Consolidated Financial Statements .............................. F-12

74
<PAGE>

INDEPENDENT AUDITOR'S REPORT

Board of Directors
Minnesota Corn Processors and Consolidated Entities
Marshall, Minnesota

We have audited the accompanying consolidated balance sheets of Minnesota Corn
Processors and Consolidated Entities as of March 31, 1999, 1998, and 1997, and
the related consolidated statements of operations, member equities, and cash
flows for the years ended March 31, 1999 and 1998, the six months ended March
31, 1997, and the year ended September 30, 1996. These consolidated financial
statements are the responsibility of the cooperative's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Minnesota Corn
Processors and Consolidated Entities as of March 31, 1999, 1998 and 1997, and
the results of their operations and their cash flows for the years ended March
31, 1999 and 1998, the six months ended March 31, 1997, and the year ended
September 30, 1996, in conformity with generally accepted accounting principles.

Marshfield, Wisconsin
April 30, 1999

F-1
<PAGE>

MINNESOTA CORN PROCESSORS AND CONSOLIDATED ENTITIES
CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
JUNE 30, MARCH 31,
--------------- ----------------------------------------------------
1999 1999 1998 1997
--------------- --------------- ---------------- ---------------
(UNAUDITED) (RESTATED) (RESTATED)
<S> <C> <C> <C> <C>
CURRENT ASSETS
Cash and cash equivalents .......................... $ 4,466,802 $ 8,610,996 $ 743,882 $ 7,059,433
Receivables ........................................ 51,219,261 47,944,856 53,229,357 45,799,234
Inventories ........................................ 42,829,432 39,416,211 44,635,757 46,717,654
Prepaids ........................................... 3,987,089 3,851,690 5,531,029 4,451,495
Margin deposits .................................... 5,578,285 2,545,774 4,082,861 402,515
Deferred income taxes .............................. -- -- 242,500 230,900
Recoverable income taxes ........................... -- -- 113,696 243,680
Option contract premiums ........................... 1,797,344 1,081,194 1,457,280 627,920
------------- ------------- ------------- -------------
Total current assets .............................. 109,878,213 103,450,721 110,036,362 105,532,831
------------- ------------- ------------- -------------
INVESTMENTS AND OTHER ASSETS
Investments ........................................ 10,530,708 10,356,694 9,013,698 7,438,676
Deferred start up costs ............................ -- -- 170,732 554,517
Deferred debt refinancing costs .................... 3,169,949 3,229,949 3,469,949 --
Cash surrender value of life insurance ............. 146,000 146,000 249,800 337,000
Non-current receivables ............................ 1,856,157 1,998,714 649,693 600,040
Non-current prepaids ............................... 1,661,690 1,717,690 634,613 1,890,950
Goodwill ........................................... 3,469,562 3,543,382 3,838,663 4,133,945
------------- ------------- ------------- -------------
Total investments and other assets ................ 20,834,066 20,992,429 18,027,148 14,955,128
------------- ------------- ------------- -------------
PROPERTY AND EQUIPMENT .............................. 707,717,423 701,383,665 685,637,379 673,016,449
Less accumulated depreciation ...................... 217,295,935 206,546,129 163,147,927 120,992,735
------------- ------------- ------------- -------------
Net property and equipment ........................ 490,421,488 494,837,536 522,489,452 552,023,714
------------- ------------- ------------- -------------
TOTAL ASSETS ........................................ $ 621,133,767 $ 619,280,686 $ 650,552,962 $ 672,511,673
============= ============= ============= =============
LIABILITIES AND MEMBER EQUITIES
CURRENT LIABILITIES
Short-term notes payable ........................... $ 1,416,384 $ 1,415,373 $ 7,967,176 $ 4,881,527
Current portion of long-term debt .................. 470,465 417,772 1,660,000 409,538,655
Accounts payable - grain ........................... 3,980,121 6,011,410 11,385,344 6,968,672
Accounts payable - other ........................... 10,113,819 17,859,906 37,410,401 26,457,925
Value added payable ................................ -- 4,140,000 -- --
Income taxes payable ............................... -- 298,615 -- --
Accrued expenses and taxes, other than
income taxes ...................................... 22,383,008 8,460,242 8,216,163 9,204,273
------------- ------------- ------------- -------------
Total current liabilities ........................ 38,363,797 38,603,318 66,639,084 457,051,052
LONG-TERM DEBT ...................................... 290,895,789 290,975,901 295,000,000 804,614
DEFERRED COMPENSATION ............................... 785,000 785,000 1,075,727 1,013,232
DEFERRED INCOME TAXES ............................... -- -- 654,500 967,100
------------- ------------- ------------- -------------
Total liabilities ................................ 330,044,586 330,364,219 363,369,311 459,835,998
------------- ------------- ------------- -------------
MEMBER EQUITIES
Units of equity participation certificates ......... 247,006,471 247,006,471 246,858,933 246,867,655
Non-voting units of equity participation ........... 119,790,000 119,790,000 119,790,000 --
Contributed capital ................................ 1,007,789 1,007,789 1,007,789 1,007,789
Unallocated capital deficit ........................ (54,072,853) (56,659,299) (63,177,920) (18,017,847)
Non-qualified patronage refunds .................... 3,849,171 3,849,171 3,849,171 3,849,171
Loss to be allocated to members .................... (20,547,422) (20,665,755) (21,534,536) (21,584,206)
Retained earnings (deficit) ........................ (5,943,975) (5,411,910) 390,214 553,113
------------- ------------- ------------- -------------
Total member equities ............................ 291,089,181 288,916,467 287,183,651 212,675,675
------------- ------------- ------------- -------------
TOTAL LIABILITIES AND MEMBER
EQUITIES ........................................... $ 621,133,767 $ 619,280,686 $ 650,552,962 $ 672,511,673
============= ============= ============= =============
</TABLE>

These consolidated financial statements should be read only in connection with
the accompanying summary of significant accounting policies
and notes to consolidated financial statements.

F-2
<PAGE>

MINNESOTA CORN PROCESSORS AND CONSOLIDATED ENTITIES
CONSOLIDATED STATEMENTS OF OPERATIONS

COST OF GOODS ..................... 123,283,212 154,305,103 525,667,383 525,142,179 207,031,141 441,371,956
------------ ------------ ------------- ------------- ------------- -----------
Gross proceeds (loss) ........... 21,594,194 10,615,036 73,102,080 38,050,817 30,430,779 (21,033,394)

SELLING, GENERAL, AND
ADMINISTRATIVE
EXPENSES ......................... 13,550,230 12,429,853 50,530,355 45,917,515 19,972,556 25,922,710
------------ ------------ ------------- ------------- ------------- -----------
Net operating proceeds
(loss) ......................... 8,043,964 (1,814,817) 22,571,725 (7,866,698) 10,458,223 (46,956,104)
------------ ------------ ------------- ------------- ------------- -----------
OTHER INCOME (EXPENSE)
Interest expense ................. (5,411,939) (6,034,847) (23,170,643) (31,901,028) (20,347,464) (18,662,306)
Interest and other income
(net) ........................... (369,746) 163,184 3,077,580 2,408,801 175,856 2,820,372
Gain (loss) on disposal of
property and equipment .......... (14,277) (350) 15,287 30,344 17,902 (109,783)
Gain (loss) on sales contract .... -- 3,713,699 3,268,000 (7,986,000) -- --
------------ ------------ ------------- ------------- ------------- -----------
(5,795,962) (2,158,314) (16,809,776) (37,447,883) (20,153,706) (15,951,717)
------------ ------------ ------------- ------------- ------------- -----------
Net income (loss) before
income taxes ................... 2,248,002 (3,973,131) 5,761,949 (45,314,581) (9,695,483) (62,907,821)

PROVISION FOR INCOME
TAXES ............................ 75,288 17,029 (69,267) (285) 59,124 --
------------ ------------ ------------- ------------- ------------- -----------

NET INCOME (LOSS) ................. $ 2,172,714 $ (3,990,160) $ 5,831,216 $ (45,314,296) $ (9,754,607) $ (62,907,821)
============ ============ ============= ============= ============= =============
ALLOCATION OF NET
INCOME (LOSS)
Applied to loss allocated
to members ...................... $ 750,000 $ -- $ -- $ (51,273,016)
Unallocated capital reserve ...... 6,743,340 (45,151,397) (10,629,771) (12,081,615)
Value added ...................... 4,140,000 -- -- 1,291,779
Retained earnings (deficit) ...... (5,802,124) (162,899) 875,164 (844,969)
------------- ------------- ------------- -------------
$ 5,831,216 $ (45,314,296) $ (9,754,607) $ (62,907,821)
============= ============= ============= =============
</TABLE>

These consolidated financial statements should be read only in connection with
the accompanying summary of significant accounting policies
and notes to consolidated financial statements.

F-3
<PAGE>

MINNESOTA CORN PROCESSORS AND CONSOLIDATED ENTITIES
CONSOLIDATED STATEMENTS OF MEMBER EQUITIES

<TABLE>
<CAPTION>
UNALLOCATED
UNITS OF EQUITY NON-VOTING CAPITAL NON-QUALIFIED
PARTICIPATION UNITS OF EQUITY CONTRIBUTED RESERVE PATRONAGE
CERTIFICATES PARTICIPATION CAPITAL (DEFICIT) REFUNDS
--------------- --------------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C>
BALANCE, OCTOBER 1, 1995 ................. $110,136,393 $ -- $2,753,030 $ 12,300,385 $3,849,171
Add adjustment for the cumulative
effect on prior years of applying
retroactively the change from the
LIFO method of inventory pricing
to the FIFO method ..................... -- -- -- -- --
Transfers ............................... 64,879,953 -- (1,745,241) 1,745,241 --
Allocation of 1995 net proceeds ......... 7,328,054 -- -- -- --
Equities sold ........................... 64,833,780 -- -- -- --
Equities repurchased .................... (92,977) -- -- (603,495) --
Value added paid ........................ -- -- -- -- --
1996 net loss ........................... -- -- -- (12,081,615) --
------------ ------------ ---------- ------------ ----------
BALANCE, SEPTEMBER 30, 1996 .............. 247,085,203 -- 1,007,789 1,360,516 3,849,171
Equities repurchased .................... (8,250) -- -- (51,248) --
Loss allocation:
Payments by members .................... -- -- -- -- --
Less discounts on payments ............. -- -- -- (8,906,644) --
1997 net loss ........................... -- -- -- (10,629,771) --
Transfers ............................... (209,298) -- -- 209,298 --
------------ ------------ ---------- ------------ ----------
BALANCE, MARCH 31, 1997 .................. 246,867,655 -- 1,007,789 (18,017,849) 3,849,171
Loss allocation:
Payments by members .................... -- -- -- -- --
Less discounts on payments ............. -- -- -- (8,676) --
1998 net loss ........................... -- -- -- (45,151,397) --
Equities issued ......................... 6,450 119,790,000 -- -- --
Adjustments ............................. (15,172) -- -- 2 --
------------ ------------ ---------- ------------ ----------
BALANCE, MARCH 31, 1998 .................. 246,858,933 119,790,000 1,007,789 (63,177,920) 3,849,171
Loss allocation:
Payments by members .................... -- -- -- -- --
1999 allocation of net income ........... -- -- -- 10,883,340 --
Value added ............................. -- -- -- (4,140,000) --
Transfers ............................... 147,538 -- -- (208,018) --
Equity retirements ...................... -- -- -- (16,701) --
------------ ------------ ---------- ------------ ----------
BALANCE, MARCH 31, 1999 .................. $247,006,471 $119,790,000 $1,007,789 $(56,659,299) $3,849,171
============ ============ ========== ============ ==========
</TABLE>

[WIDE TABLE CONTINUED FROM ABOVE]

<TABLE>
<CAPTION>
QUALIFIED
PATRONAGE REFUNDS
UNITS OF EQUITY PAYABLE IN UNITS LOSS RETAINED
PARTICIPATION OF EQUITY ALLOCATED TO EARNINGS
SUBSCRIPTIONS PARTICIPATION MEMBERS (DEFICIT) TOTAL
--------------- ----------------- ------------ --------- ------------
<S> <C> <C> <C> <C> <C>
BALANCE, OCTOBER 1, 1995 ................. $64,879,953 $7,328,054 $ -- $ -- $201,246,986
Add adjustment for the cumulative
effect on prior years of applying
retroactively the change from the
LIFO method of inventory pricing
to the FIFO method ..................... -- -- -- 522,918 522,918
Transfers ............................... (64,879,953) -- -- -- --
Allocation of 1995 net proceeds ......... -- (7,328,054) -- -- --
Equities sold ........................... -- -- -- -- 64,833,780
Equities repurchased .................... -- -- -- -- (696,472)
Value added paid ........................ -- -- (1,291,779) -- (1,291,779)
1996 net loss ........................... -- -- (49,981,237) (844,969) (62,907,821)
----------- ---------- ------------ ----------- ------------
BALANCE, SEPTEMBER 30, 1996 .............. -- -- (51,273,016) (322,051) 201,707,612
Equities repurchased .................... -- -- -- -- (59,498)
Loss allocation:
Payments by members .................... -- -- 20,782,166 -- 20,782,166
Less discounts on payments ............. -- -- 8,906,644 -- --
1997 net loss ........................... -- -- -- 875,164 (9,754,607)
Transfers ............................... -- -- -- -- --
----------- ---------- ------------ ----------- ------------
BALANCE, MARCH 31, 1997 .................. -- -- (21,584,206) 553,113 212,675,673
Loss allocation:
Payments by members .................... -- -- 40,994 -- 40,994
Less discounts on payments ............. -- -- 8,676 -- --
1998 net loss ........................... -- -- -- (162,899) (45,314,296)
Equities issued ......................... -- -- -- -- 119,796,450
Adjustments ............................. -- -- -- -- (15,170)
----------- ---------- ------------ ----------- ------------
BALANCE, MARCH 31, 1998 .................. -- -- (21,534,536) 390,214 287,183,651
Loss allocation:
Payments by members .................... -- -- 58,301 -- 58,301
1999 allocation of net income ........... -- -- 750,000 (5,802,124) 5,831,216
Value added ............................. -- -- -- -- (4,140,000)
Transfers ............................... -- -- 60,480 -- --
Equity retirements ...................... -- -- -- -- (16,701)
----------- ---------- ------------ ----------- ------------
BALANCE, MARCH 31, 1999 .................. $ -- $ -- $(20,665,755) $(5,411,910) $288,916,467
=========== ========== ============ =========== ============
</TABLE>

These consolidated financial statements should be read only in connection with
the accompanying summary of significant accounting policies
and notes to consolidated financial statements.

F-4
<PAGE>

MINNESOTA CORN PROCESSORS AND CONSOLIDATED ENTITIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
SIX MONTHS
THREE MONTHS YEAR ENDED YEAR ENDED ENDED YEAR ENDED
ENDED JUNE 30, MARCH 31, MARCH 31, MARCH 31, SEPTEMBER 30,
--------------------------- ------------ ------------ ------------ -------------
1999 1998 1999 1998 1997 1996
------------ ------------ ------------ ------------ ------------ -------------
(UNAUDITED) (RESTATED) (RESTATED) (RESTATED)
<S> <C> <C> <C> <C> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES
Net income (loss) ..................... $ 2,172,714 $ (3,990,160) $ 5,831,216 $(45,314,296) $ (9,754,607) $(62,907,821)
Adjustments to reconcile net income
(loss) to net cash provided
(used) by operating activities:
Depreciation and amortization ....... 11,303,959 11,513,639 44,485,669 43,185,375 18,228,484 28,367,875
Investment impairment loss .......... 260,000 -- 1,400,000 -- -- --
Non-cash patronage refunds
received ........................... -- (2,599,589) (2,599,589) (1,261,572) -- (1,577,607)
(Gain) loss on disposal of
equipment .......................... 14,277 (350) (15,287) (30,344) (17,902) 109,783
Sales proceeds applied to
purchase of investments ............ -- -- (143,407) -- -- --
Deferred debt refinancing costs ..... -- -- -- (3,609,949) -- --
Changes in operating assets and
liabilities:
Receivables ....................... (3,274,405) (15,844,823) 3,926,796 (7,479,776) (1,251,347) (4,595,021)
Inventories ....................... (3,413,221) 128,327 5,219,546 2,081,897 (3,604,589) (317,592)
Cash surrender value of life
insurance ........................ -- (235,501) 103,800 87,200 (23,000) (26,513)
Prepaids .......................... (135,399) (1,006,258) 596,262 176,803 (3,052,395) 599,860
Margin deposits ................... (3,032,511) (1,584,813) 1,537,087 (3,680,346) (402,515) 1,256,498
Accounts payable - grain .......... (2,031,289) (3,452,303) (5,373,934) 4,416,672 (4,198,533) (25,395,005)
Value added payments
payable .......................... (116,908) -- -- -- -- (1,291,779)
Accounts payable - other .......... (11,886,087) (10,246,057) (20,055,585) 10,731,291 2,900,959 (28,139,320)
Accrued expenses and taxes,
other than income taxes .......... 13,624,151 14,280,438 244,079 (988,110) (1,587,220) 2,544,127
Income taxes
recoverable/payable -
current and deferred ............. -- -- 311 (194,216) (261,552) (478,998)
Deferred market position .......... (80,325) -- -- -- -- (2,951,179)
Option contract premiums .......... (716,150) 1,457,280 376,086 (829,360) (627,920) --
Deferred compensation ............. -- 4,024 (290,727) 62,495 29,872 983,360
------------ ------------ ------------ ------------ ------------ ------------
Net cash provided (used) by
operating activities ............. 2,688,806 (11,576,146) 35,242,323 (2,646,236) (3,622,265) (93,819,332)
------------ ------------ ------------ ------------ ------------ ------------
CASH FLOWS FROM
INVESTING ACTIVITIES
Additions to property and equipment ... (6,657,841) (1,990,492) (14,441,820) (12,671,480) (12,105,601) (187,162,400)
Other ................................. -- -- -- -- -- 2,389
Proceeds from disposal of property
and equipment ........................ 24,373 2,500 266,201 90,963 55,967 105,431
Net repayments of notes receivable
from employees, affiliates, and
others ............................... 142,557 -- 8,684 -- -- --
Investments purchased ................. (434,014) -- -- (313,450) -- (1,407,470)
Other investments purchased ........... -- -- -- -- -- (145)
Purchase of subsidiary ................ -- -- -- -- -- (4,717,627)
------------ ------------ ------------ ------------ ------------ ------------
Net cash used by investing
activities ....................... (6,924,925) (1,987,992) (14,166,935) (12,893,967) (12,049,634) (193,179,822)
------------ ------------ ------------ ------------ ------------ ------------
</TABLE>

F-5
<PAGE>

MINNESOTA CORN PROCESSORS AND CONSOLIDATED ENTITIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD/YEAR ............. 8,610,996 743,882 743,882 7,059,433 310,930 19,144,708
------------ ------------ ------------ ------------ ------------ ------------
CASH AND CASH EQUIVALENTS,
END OF PERIOD/YEAR ................... $ 4,466,802 $ 116,621 $ 8,610,996 $ 743,882 $ 7,059,433 $ 310,930
============ ============ ============ ============ ============ ============
SUPPLEMENTAL CASH FLOW
INFORMATION
Interest paid (including $7,176,751
capitalized in 1996) ................ $ 23,194,460 $ 33,573,344 $ 22,997,498 $ 25,839,057
Income taxes paid .................... -- 193,931 -- --
Income taxes recovered ............... 69,578 -- 2,790 --

NON-CASH ACTIVITY
Purchase subsidiary with long-term
borrowing ........................... -- -- -- 11,782,373
Investments purchased through sales
of product .......................... 143,407 -- -- --
Property and equipment acquired
through debt financing .............. 1,431,744 -- -- --
</TABLE>

These consolidated financial statements should be read only in connection with
the accompanying summary of significant accounting policies
and notes to consolidated financial statements.

F-6
<PAGE>

MINNESOTA CORN PROCESSORS AND CONSOLIDATED ENTITIES
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Minnesota Corn Processors ("the cooperative") (MCP) is a member owned
cooperative incorporated in Minnesota for the purpose of producing value added
corn related products for its members. The cooperative produces corn starch,
syrup, gluten, fuel ethanol, and high fructose corn syrup.

Members are required to purchase units of equity participation based upon
the number of bushels for which they contract.

In March, 1996, Minnesota Corn Processors purchased 100% of the equity of
Liquid Sugars, Inc. (LSI) and it's wholly owned subsidiary, Liquid Sugar
Transportation Corporation, along with the equity of California Syrup & Extract
Co., Calag Products, Inc., Liquid Sugars, Inc. -- Midwest, and Steep and Deep
Corporation. Included in this purchase were also the assets of a partnership,
WACO. These entities were all related through common ownership.

Effective July 31, 1996, all of the above entities were merged into Steep &
Deep Corporation, which immediately changed its name to Liquid Sugars, Inc.,
through a pooling of interests. Other than the former Liquid Sugars, Inc., the
operating results of these entities were not significant. All shares of the
former entities were canceled since upon the date of the merger, all assets and
liabilities of these former entities became part of Steep & Deep Corporation
(now Liquid Sugars, Inc.).

Liquid Sugars, Inc. (LSI), a wholly owned subsidiary, is a sweetener
blending and storage operation, which provides its products to various types of
customers (including food processors) located primarily in the Western United
States. As a result of MCP's 100% ownership of LSI, the accounts and
transactions of LSI are consolidated in these financial statements.

Grower Procurement Agency (GPA), an agency of the members of MCP, was
formed to assemble, procure, and supply corn to MCP on behalf of its membership.
The Board of Directors consists of employees of MCP, and it leases facilities
and employees from MCP. Because of the control which MCP has over the operations
of GPA, this entity is also being consolidated.

INTERIM FINANCIAL INFORMATION

The consolidated balance sheet as of June 30, 1999, and the consolidated
statements of operations and cash flows for the three-month periods ended June
30, 1999 and 1998, has been prepared by the cooperative without audit. In the
opinion of management all adjustments necessary to conform to generally accepted
accounting principles and the rules and regulations of the Securities and
Exchange Commission for interim financial information have been made, all of
which are normal and recurring in nature.

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of MCP, and its
wholly owned subsidiary, LSI, and its controlled entity, GPA. All significant
intercompany accounts and transactions have been eliminated.

USE OF ESTIMATES IN PREPARING FINANCIAL STATEMENTS

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. The most
significant management estimates relate to the determination of the valuation of
repair parts inventory, the accumulated depreciation, and the allowance for
doubtful accounts.

CREDIT POLICY

The cooperative sells its product primarily to the petroleum industry,
farmers and ranchers, breweries, bakeries, the paper industry, and soft drink
companies on terms it establishes for each customer. LSI sells its products to
food processors and others on terms it establishes for each customer.

F-7
<PAGE>

MINNESOTA CORN PROCESSORS AND CONSOLIDATED ENTITIES
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

GPA basically has only one customer, MCP. Credit sales are made throughout the
United States and, to a much lesser degree, in Canada, by MCP and its
consolidated entities.

REVENUE RECOGNITION POLICY

Revenues are recognized at the time product is shipped to customers, net of
freight charges, except for consigned inventories where the revenue is
recognized at the time the shipment is used by the customer.

CASH AND CASH EQUIVALENTS

For purposes of the statement of cash flows, the cooperative and its
consolidated entities considers all highly liquid investments in debt
instruments of other entities, with a maturity date of less than three months at
the date of purchase, to be cash equivalents.

INVENTORIES

Unprocessed corn, finished goods, maintenance parts, and in-process
inventories are valued at the lower of cost or net realizable value. Ingredients
are valued at the lower of cost or market. All inventory valuations assume a
first-in, first-out flow of goods.

HEDGE TRANSACTIONS

The cooperative generally follows a policy of hedging a portion of its
future grain requirements to the extent considered practicable for minimizing
risk from market price fluctuations. All hedging instruments are designated as
and effective hedges, as required by generally accepted accounting principles.
Futures contracts used for hedging are purchased and sold through regulated
commodity exchanges. Noncommodity exchange purchase and sale contracts may
expose MCP to risk in the event that a counterparty to a transaction is unable
to fulfill its contractual obligation.

As grain is used in the production process, realized gains or losses and
option contract premiums on these positions are recognized in cost of sales.
Marketing gains or losses realized on grain prior to the delivery period for
which they are identified as protecting are deferred and recognized pro rata
through the identified delivery period. Such deferred amounts are reflected as
option contract premiums in the current asset section of the consolidated
balance sheet. Deferred gains and losses from commodity exchange purchases
(representing amounts to be recognized as the grain is purchased in future
periods) are not recorded in these financial statements.

In connection with these hedge transactions, margin deposits are made with
brokers, as reflected in the current asset section of the balance sheet.

INVESTMENTS

Investments are principally in the St. Paul Bank. They are recorded at
original cost, plus the face value of equities received as patronage refunds.
The face value of equities redeemed by other cooperatives is deducted from the
investment balance. The investments are not transferable. No cash is received
until such time as redeemed at the discretion of the other cooperative.
Patronage refunds and redemptions are recorded in the year received. If a
permanent impairment in value is deemed to have occurred, the investment value
is reduced and a loss is reported in the consolidated statement of operations.

PROPERTY AND EQUIPMENT

The cost of property and equipment includes all costs incurred to bring
such assets to the condition necessary for their intended use.

F-8
<PAGE>

MINNESOTA CORN PROCESSORS AND CONSOLIDATED ENTITIES
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Costs of property and equipment are charged to operations, as depreciation,
on a straight-line method over the estimated useful lives of the individual
assets.

The ranges of the estimated useful lives for the major classes of property
and equipment are as follows:

Land and public improvements ................. Not being depreciated
Land improvements ............................ 18 to 20 years
Building and leasehold improvements .......... Generally 33 years, with some
immaterial amounts on a shorter
life
Equipment .................................... 5 to 25 years
Railroad, switch engine, and rail cars ....... 11 to 25 years
Silos ........................................ 5 to 35 years
Construction in progress ..................... Not being depreciated

PENSION PLANS

The cooperative makes payments under a defined contribution plan for the
benefit of substantially all employees at a contribution rate, which is
stipulated by the plan and which is discretionary up to 2.5% of consolidated net
income. Effective April 1, 1998, the cooperative matches 25% of each employee's
401(k) contributions up to a 6% deferral election.

LSI makes payments under a defined contribution plan for the benefit of
substantially all nonunion employees at a contribution rate, which is stipulated
by the plan and which is discretionary up to 2.5% of consolidated net income.
Effective April 1, 1998, LSI matches 25% of each employee's 401(k) contributions
up to a 6% deferral election.

A portion of LSI's employees are covered by a collective bargaining
agreement. LSI contributes to the union employees' pension plan in accordance
with the terms of the collective bargaining agreement.

Effective April 1, 1999, a Money Purchase Pension program, which is fully
funded by MCP and LSI at 3% of employee wages, was adopted. Furthermore, MCP and
LSI increased the level at which the matching contributions are made from 25% of
the first 6% of the employee deferral election to 50% of the first 6%, effective
April, 1, 1999.

DEFERRED COMPENSATION

LSI maintains non-qualified deferred compensation agreements with certain
of its employees. The present value of the future payments amounted to $785,000,
$1,075,727, $1,013,232, and $983,360 at March 31, 1999, March 31, 1998, March
31, 1997, and September 30, 1996, respectively. These amounts are based on
estimated rates of returns. Actual future payments could differ from these
estimates. The increase in future benefits attributable to interest is expensed
yearly. Life insurance contracts have been acquired covering the life of most of
the employees covered by the deferred compensation arrangements, with LSI being
both the owner and the beneficiary of the policies. The purpose of these life
insurance policies is to assist in payment of the deferred compensation
obligations in the event of death or retirement of the employee. The cash
surrender value, amounting to $146,000, $249,800, $337,000, and $314,000
relating to these policies, is included as a non-current asset in the balance
sheets as of March 31, 1999, March 31, 1998, March 31, 1997, and September 30,
1996, respectively.

INCOME TAXES

The cooperative is subject to federal income tax, Minnesota franchise tax,
and Nebraska and New Jersey income tax and is permitted a deduction from
taxable income for the portion of the net proceeds refunded to patrons in the
form of qualified patronage refunds, if any, or value added payments. In

F-9
<PAGE>

MINNESOTA CORN PROCESSORS AND CONSOLIDATED ENTITIES
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

addition, any tax that may be due to the State of Nebraska will be offset
primarily by credits allowable under the Nebraska Employment and Investment
Growth Act.

LSI is subject to federal and numerous state income taxes as a tax paying
corporation. The entity is subject to state income taxes on a pro rata basis in
most of these states.

GPA is a Minnesota corporation that is subject to taxation under the
provision of its organizing code section.

Consolidated tax returns are not being filed for federal income tax
purposes.

DEFERRED INCOME TAXES

Deferred income taxes arise from LSI from the difference in reported bases
of assets and liabilities for financial and tax accounting. Deferred taxes are
classified as current or non-current depending on the classification of the
asset and liabilities to which they relate. Deferred tax assets are reduced by a
valuation allowance if it is deemed more likely than not that some or all of the
deferred tax assets will not be realized.

The principal sources of differences are property and equipment
depreciation methods and non-deductible items, such as the allowance for
doubtful accounts, vacation pay accruals, and deferred compensation.

MCP distributes its proceeds and losses on a tax basis, which effectively
eliminates the requirement of recording deferred income taxes relating to timing
differences for this entity. Those timing differences are accounted for in the
unallocated capital reserve.

DEFERRED START UP COSTS

Various start-up costs incurred in connection with the construction of the
plant in Nebraska have been deferred ($3,747,373) and are being charged to
expense (amortized) on a straight-line basis over a 5-year period effective
September, 1992, and August, 1994. Amortization expense relating to the deferred
organizational costs was $170,732, $383,786, $374,736, and $749,472 for the
years ended March 31, 1999 and 1998, six months ended March 31, 1997, and year
ended September 30, 1996, respectively. Accumulated amortization was $3,747,373,
$3,576,642, $3,192,856, and $2,818,120 at March 31, 1999, March 31, 1998, March
31,1997, and September 30, 1996, respectively.

AMORTIZATION OF OTHER INTANGIBLE COSTS

Goodwill resulting from the purchase price of LSI being greater than fair
market value is being amortized on a straight-line basis over a 15-year period
beginning in April, 1996. Amortization expense for the years ended March 31,
1999 and 1998, six months ended March 31, 1997, and year ended September 30,
1996, was $295,282, $295,282, $147,641, and $147,641, respectively. Accumulated
amortization was $885,846, $590,564, $295,282, and $147,641 at March 31, 1999,
March 31, 1998, March 31, 1997, and September 30, 1996, respectively.

Included in prepaid expenses is an amount of $3,788,324 representing costs
incurred by MCP in connection with the construction of a railroad bridge in
Columbus, Nebraska, to encourage another rail company to serve that location. It
is expected that the freight savings will result in the recovery of the costs
incurred over a three-year period. Accordingly, these costs are being amortized
on a straight-line basis over a three-year period effective October 1, 1996.
Amortization expense for the year amounted to $1,897,388, $1,260,624, and
$630,312 for the years ended March 31, 1999 and 1998, and for the six months
ended March 31, 1997, respectively. Accumulated amortization was $3,788,324,
$1,890,936, and $630,312 at March 31, 1999, March 31, 1998, and March 31, 1997,
respectively.

F-10
<PAGE>

MINNESOTA CORN PROCESSORS AND CONSOLIDATED ENTITIES
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

DEFERRED DEBT REFINANCING COST

The debt refinancing costs relate to a restructuring of debt completed
during fiscal 1997/98. The asset is carried at cost and is being amortized over
a 15-year period using the interest method. Amortization expense for the years
ended March 31, 1999 and 1998, was $240,000 and $140,000, respectively.
Accumulated amortization was $380,000 and $140,000 at March 31, 1999 and 1998,
respectively.

CHANGE IN FISCAL YEAR

Minnesota Corn Processors, Liquid Sugars, Inc., and Grower Procurement
Agency all changed their fiscal years to a March 31 closing date, effective
October 1, 1996. Previously, these entities had a fiscal closing date of
September 30 for financial statement purposes.

This information is an integral part of the accompanying consolidated
financial statements.

F-11
<PAGE>

MINNESOTA CORN PROCESSORS AND CONSOLIDATED ENTITIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 -- RECEIVABLES

Balance sheet totals comprise the following elements:

<TABLE>
<CAPTION>
MARCH 31, MARCH 31, MARCH 31,
1999 1998 1997
------------ ------------ -----------
<S> <C> <C> <C>
Notes receivable ..................................... $ 335,623 $ 494,003 $ 360,317
Trade accounts ....................................... 47,606,750 51,061,695 41,127,112
Other -- primarily tax refunds on capital
expenditures and ethanol production credits ......... 3,384,197 3,940,352 5,408,845
Allowance for doubtful accounts ...................... (1,383,000) (1,617,000) (497,000)
------------ ------------ -----------
Total receivables .................................... $ 49,943,570 $ 53,879,050 $46,399,274
============ ============ ===========
Balance sheet classification:
Current assets ....................................... $ 47,944,856 $ 53,229,357 $45,799,234
Non-current assets ................................... 1,998,714 649,693 600,040
------------ ------------ -----------
Total ................................................ $ 49,943,570 $ 53,879,050 $46,399,274
============ ============ ===========
</TABLE>

NOTE 2 -- INVENTORIES

Principal elements of inventories were as follows:

<TABLE>
<CAPTION>
JUNE 30, MARCH 31, MARCH 31, MARCH 31,
1999 1999 1998 1997
----------- ----------- ----------- -----------
(UNAUDITED) (RESTATED) (RESTATED)
<S> <C> <C> <C> <C>
Corn ............................................. $ 3,203,819 $ 3,592,192 $ 3,637,865 $ 3,157,109
Chemicals, supplies, and coal .................... 5,176,174 5,335,998 5,583,811 6,414,285
Goods in process of manufacture .................. 1,988,313 2,065,497 1,896,421 1,908,421
Finished goods and finished product in
transit between Minnesota Corn Processors
locations and Liquid Sugars, Inc. locations ..... 16,293,612 12,762,376 16,269,782 17,197,403
Repair parts ..................................... 12,650,945 12,600,654 12,756,915 13,034,900
Liquid Sugars, Inc. -- sweetener inventory
-- bulk and specialty products .................. 3,516,569 3,059,494 4,490,963 5,005,536
----------- ----------- ----------- -----------
Total inventories ................................ $42,829,432 $39,416,211 $44,635,757 $46,717,654
=========== =========== =========== ===========
</TABLE>

NOTE 3 -- INVESTMENTS

Investments are nearly all in stock of St. Paul Bank. The stock was
acquired under the terms of the cooperative's prior loan agreement with the bank
and through patronage refunds received from the bank.

Notification was received in March, 1999, from St. Paul Bank that there is
deemed to have been an impairment in the value of the investment in that
cooperative of approximately 12.4%. Accordingly, the cooperative has recognized
a $1,400,000 loss in the consolidated statement of operations to reflect this
likely impairment in the value of the investment. This loss is reflected as an
element of interest and other income (net) in the consolidated statement of
operations for the year ended March 31, 1999.

F-12
<PAGE>

MINNESOTA CORN PROCESSORS AND CONSOLIDATED ENTITIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 4 -- PROPERTY AND EQUIPMENT

The consolidated entity's investment in property and equipment is recorded
in the balance sheet at cost. The principal elements of the totals shown in the
balance sheet are as follows:

<TABLE>
<CAPTION>
MARCH 31, MARCH 31, MARCH 31,
1999 1998 1997
------------ ------------ ------------
<S> <C> <C> <C>
Land and public improvements ................... $ 6,808,750 $ 5,624,778 $ 5,552,696
Land improvements .............................. 7,274,134 6,543,052 5,907,292
Buildings and leasehold improvements ........... 118,614,482 116,552,177 115,540,657
Equipment ...................................... 543,402,192 541,590,580 520,475,494
Railroad, switch engine, and rail cars ......... 8,977,176 1,960,902 2,029,235
Silos .......................................... 10,644,158 10,627,402 9,750,952
Construction in progress ....................... 5,662,773 2,738,488 13,760,123
------------ ------------ ------------
Total property and equipment ................... $701,383,665 $685,637,379 $673,016,449
============ ============ ============
</TABLE>

Depreciation expense was $43,779,655, $42,366,307 for March 31, 1999 and
1998, $17,706,108 for the six month fiscal period ended March 31, 1997, and
$27,470,763 for the year ended September 30, 1996.

NOTE 5 -- SHORT-TERM NOTES PAYABLE

Balance sheet totals consist of notes payable to:

<TABLE>
<CAPTION>
MARCH 31, MARCH 31, MARCH 31,
1999 1998 1997
---------- ---------- ----------
<S> <C> <C> <C>
Debentures payable ............................. $1,415,373 $1,367,176 $1,681,527
Bank of the West ............................... -- 6,600,000 3,200,000
---------- ---------- ----------
Total short-term notes payable ................. $1,415,373 $7,967,176 $4,881,527
========== ========== ==========
</TABLE>

The debentures payable to members and others are unsecured. Interest is
paid on maturity of the debenture at a rate between 5.00% and 7.00% per annum.
Notes are issued for one-year periods and may be renewed.

NOTE 6 -- LONG-TERM DEBT AND PROPERTY PLEDGED

Long-term debt comprises the following elements:

<TABLE>
<CAPTION>
MARCH 31, MARCH 31, MARCH 31,
1999 1998 1997
------------ ------------ ------------
<S> <C> <C> <C>
St. Paul Bank and RaboBank -- bridge financing
agreement (construction) ........................ $ -- $ -- $183,233,513
St. Paul Bank -- other term loan agreement
(consolidated) .................................. -- -- 94,300,000
St. Paul Bank -- revolving note .................. -- -- 40,000,000
RaboBank -- revolving credit agreement ........... -- -- 30,000,000
Rabo Bank -- term loan agreement ................. -- -- 50,000,000
Former stockholders of Liquid Sugars, Inc. ....... -- -- 11,618,413
Loup River Public Power District ................. -- -- 21,729
B & B Procurement ................................ -- -- 29,614
</TABLE>

F-13
<PAGE>

MINNESOTA CORN PROCESSORS AND CONSOLIDATED ENTITIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 6 -- LONG-TERM DEBT AND PROPERTY PLEDGED (CONTINUED)

<TABLE>
<CAPTION>
MARCH 31, MARCH 31, MARCH 31,
1999 1998 1997
------------ ------------ -----------
<S> <C> <C> <C>
Harris Trust and Savings Bank and U.S. Bancorp
Ag Credit, Inc. -- outstanding on $50,000,000
revolving credit loan due August 27, 2000.
Outstanding amounts are secured by security
agreements on inventories and accounts receivable
of the cooperative and LSI and assignment of
hedging account. Interest at variable rates (approxi-
mately 6.75% at March 31, 1999). .................... $ -- $ 5,000,000 $ --

Private Placement Notes -- Series A -- repayment
to be made at the rate of $3,571,429 per year
commencing September 1, 2001, with final payment
due September 1, 2007. Secured by real estate
mortgage. Interest payable semi-annually at 7.57%
per annum. .......................................... 25,000,000 25,000,000 --

Private Placement Notes -- Series B -- repayment
to be made at the rate of $24,000,000 per year
commencing September 1, 2005, with final payment
due September 1, 2009. Secured by real estate
mortgage. Interest payable semi-annually at 7.72%
per annum. .......................................... 120,000,000 120,000,000 --

Private Placement Notes -- Series C -- repayment
to be made at the rate of $6,428,571 per year
commencing September 1, 2006, with final payment
due September 1, 2012. Secured by real estate
mortgage. Interest payable semi-annually at 7.83%
per annum. .......................................... 45,000,000 45,000,000 --

Private Placement Notes -- Series D -- repayment
to be made at the rate of $20,000,000 per year
commencing September 1, 2003, with final payment
due September 1, 2007. Secured by real estate
mortgage. Interest payable at a variable rate (6.32%
at March 31, 1999). ................................. 100,000,000 100,000,000 --

Bank of the West. .................................... -- 600,000 840,000
Bank of the West ..................................... -- 180,000 300,000
Bank of the West ..................................... -- 880,000 --

Bank of the West -- capital lease dated January 25,
1999, payable in 60 monthly payments of $3,979,
including imputed interest at the rate of 7.44% per
annum. The final payment is due on January 31,
2004. ............................................... $ 193,343 $ -- $ --
</TABLE>

F-14
<PAGE>

MINNESOTA CORN PROCESSORS AND CONSOLIDATED ENTITIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 6 -- LONG-TERM DEBT AND PROPERTY PLEDGED (CONTINUED)

<TABLE>
<CAPTION>
MARCH 31, MARCH 31, MARCH 31,
1999 1998 1997
------------ ------------ -----------
<S> <C> <C> <C>
Bank of the West -- capital lease dated January 25,
1999, payable in 36 monthly installments beginning
August 31, 1999, of $19,692, including imputed
interest at the rate of 7.11% per annum. The final
payment is due on July 31, 2002. .................. 636,668 -- --

IBM Credit corporation -- capital lease dated
December 7, 1998, payable in 36 monthly
installments beginning December, 1998, of $7,408,
including imputed interest at the rate of 8.90% per
annum. The final payment is due on October 31,
2001. ............................................. 204,478 -- --

Marshall Municipal Utilities -- Water Pipeline lease
agreement payable in annual installments of
$179,592, plus 8% interest. Final payment due on
March 23, 2001. ................................... 359,184 -- --
------------ ------------ -----------

Total .............................................. 291,393,673 296,660,000 410,343,269
Less current portion ............................... 417,772 1,660,000 409,538,655
------------ ------------ -----------
Long-term debt ..................................... $290,975,901 $295,000,000 $ 804,614
============ ============ ===========
</TABLE>

There are loan covenants with respect to the Harris Trust and Savings Bank,
U.S. Bancorp Ag Credit, Inc., and private placement notes that require the
cooperative to maintain minimum equity of $270,000,000, maintain a current ratio
of 1.1 to 1, maintain minimum net working capital of $25,000,000, maintain
certain levels of cash flow, limitations for capital expenditures, and various
other financial conditions. Additionally, Harris Trust & Savings Bank and U.S.
Bancorp Ag Credit, Inc. have a borrowing base limit on advances. The base
consists of portions of accounts receivable and inventories.

The three capital leases payable to the Bank of the West and IBM Credit
Corporation are secured by title to the equipment covered by the lease. These
leases were executed by Liquid Sugars, Inc. and guaranteed by Minnesota Corn
Processors.

Future maturities of long-term debt are as follows:

<TABLE>
<S> <C>
March 31, 2000 ............................................................... $ 417,772
March 31, 2001 ............................................................... 504,168
March 31, 2002 ............................................................... 3,883,951
March 31, 2003 ............................................................... 3,692,171
March 31, 2004 ............................................................... 23,609,897
Thereafter ................................................................... 259,285,714
------------
Total ........................................................................ $291,393,673
============
</TABLE>

NOTE 7 -- COMMITMENTS AND CONTINGENCIES

Certain property and equipment used by the cooperative are leased. Payments
on such operating leases, recorded as expense in the statement of operations,
totaled $13,748,608 and $10,914,552 for the years ended March 31,1999 and 1998,
respectively; $5,333,862 for the six months ended March 31, 1997; and $8,616,454
for the year ended September 30, 1996.

F-15
<PAGE>

MINNESOTA CORN PROCESSORS AND CONSOLIDATED ENTITIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 7 -- COMMITMENTS AND CONTINGENCIES (CONTINUED)

Property and equipment being acquired under capital leases had an original
cost of $1,072,560 and is included as an element of equipment in Note 4.
Accumulated depreciation relating to the leased equipment was $47,408 and $-0-at
March 31, 1999 and 1998, respectively. Depreciation expenses was $47,408 and
$-0- at March 31, 1999 and 1998, respectively.

Noncancellable future minimum payments are required on these leases as
follows for the next five years:

<TABLE>
<CAPTION>
CAPITAL OPERATING
LEASES LEASES
------------ ------------
<S> <C> <C>
1999/2000 ....................................... $ 294,182 $ 13,945,781
2000/2001 ....................................... 372,948 13,390,313
2001/2002 ....................................... 335,908 12,685,009
2002/2003 ....................................... 126,518 12,082,467
2003/2004 ....................................... 39,793 11,747,430
Thereafter ...................................... -- 57,556,928
---------- ------------
Total future minimum lease payments ............. 1,169,349 121,407,928
Less portion representing interest .............. 134,860 --
---------- ------------
Present value of minimum lease payments ......... $1,034,489 $121,407,928
========== ============
</TABLE>

MCP is involved in various claims at March 31, 1999. In the opinion of
management, the ultimate liability for such claims would not have a material
adverse financial effect upon the company. Management further believes that all
or part of any potential liability for certain of these claims will be covered
by insurance, and management is vigorously defending all such claims against the
cooperative.

As of June 30, 1999, MCP continues to be involved in the above various
claims. In the opinion of management, the ultimate liability for such claims
would not have a material adverse effect upon the company. (The information in
this paragraph is unaudited.)

MCP entered into a stock purchase agreement in which they may purchase a
7.5% ownership interest in a third party with an option to purchase an
additional 7.5% ownership interest. The cost of this investment at March 31,
1999, was $456,710, which amount is included in investments in the balance
sheet.

It is expected that the total costs to complete the construction in
progress at March 31, 1999, for MCP will approximate $4,900,000.

In May, 1997, Archer Daniels Midland Company (ADM) purchased 58,622,340
nonvoting units of equity participation. In return for this investment ADM will
receive 30% of any future profits.

The cooperative has agreed to exercise its option to purchase the assets of
the Nebraska location of Liquid Corn, Inc. for an estimated total cost of
$4,000,000.

F-16
<PAGE>

MINNESOTA CORN PROCESSORS AND CONSOLIDATED ENTITIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 8 -- MEMBER EQUITIES

The following is information pertinent to elements of patron equities:

NON-VOTING
PREFERRED COMMON
STOCK STOCK
----------- ----------

Par value .............................. $ 50 $ 50
Shares authorized ...................... 100,000 100,000
Aggregate par value authorized ......... $5,000,000 $5,000,000

Included in the member equities is an account entitled loss allocated to
members, which represents the balance of the loss for the fiscal year ended
September 30, 1996, which was allocated to the membership. This loss is to be
recovered from the members in one of two ways:

A. A portion of the loss will be deducted from future value added or
other positive allocations, until the loss is repaid in full.

B. The loss represents a lien against the members' units of equity
participation, and should a member sell their units of equity
participation, the amount of the loss allocated to the members will be
deducted from such sale.

At year-end, amounts are paid to members at the discretion of the Board of
Directors based upon operating results. This amount is considered a value-added
payment and is accounted for as a component of the allocation of the net
proceeds.

None of the cooperative's stock is transferable except as permitted by the
cooperative's board of directors. Because the cooperative's stock is not
transferable, the number of shares issued, redeemed, and outstanding are not
recorded in the financial statements.

At March 31, 1999, the number of voting units of equity participation
represented 136,866,968 bushel of corn contracts with members and the number of
non-voting units of equity participation represented 58,696,755 bushel of corn
contracts for a total of 195,563,723 total bushel of corn contracts with members
and non-members.

NOTE 9 -- INCOME TAXES

Net operating losses totaling approximately $69,237,000 are available to
reduce future taxable income for federal income tax purposes. The net operating
losses carryforward will begin to expire March 31, 2011, for federal income tax
purposes.

Separate federal and state income tax returns will be filed by the entities
included in the consolidated financial statements.

F-17
<PAGE>

MINNESOTA CORN PROCESSORS AND CONSOLIDATED ENTITIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 9 -- INCOME TAXES (CONTINUED)

The sources of deferred tax assets and liabilities and the tax effect of
each are as follows:

<TABLE>
<CAPTION>
MARCH 31, MARCH 31, MARCH 31,
1999 1998 1997
------------ ------------ ------------
<S> <C> <C> <C>
Deferred tax assets:
Allowance for doubtful accounts ..................... $ 55,000 $ 46,000 $ 400,100
Contributions carryover ............................. 36,000 30,000 --
Accrued vacation pay ................................ 215,000 167,000 256,800
Deferred compensation ............................... 322,000 409,000 423,400
Net operating loss carryforwards .................... 2,919,000 575,100 --
------------ ------------ ------------
3,547,000 1,227,100 1,080,300
Valuation allowance for deferred tax assets ......... (1,677,000) -- (426,000)
------------ ------------ ------------
Net deferred tax assets ............................ 1,870,000 1,227,100 654,300
Deferred tax liabilities:
Tax over financial statement depreciation ........... (1,870,000) (1,639,100) (1,390,500)
------------ ------------ ------------
Net deferred tax asset (liability) ................... $ -- $ (412,000) $ (736,200)
============ ============ ============
</TABLE>

The net deferred tax is presented in the accompanying consolidated balance
sheet as follows:

<TABLE>
<CAPTION>
MARCH 31, MARCH 31, MARCH 31,
1999 1998 1997
------------ ------------ ------------
<S> <C> <C> <C>
Current deferred tax asset ............................... $ -- $ 242,500 $ 230,900
Non-current deferred tax liability ....................... -- (654,500) (967,100)
-------- ---------- ----------
Net deferred tax asset (liability) ....................... $ -- $ (412,000) $ (736,200)
======== ========== ==========
</TABLE>

The provision for income tax expense (benefit) consists of the following
components:

<TABLE>
<CAPTION>
SIX MONTHS
YEAR YEAR ENDED YEAR ENDED
MARCH 31, MARCH 31, MARCH 31, SEPTEMBER 30,
1999 1998 1997 1996
----------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Federal:
Current ................................. $ 325,512 $ 307,812 $ (132,518) $ --
Deferred ................................ (392,800) (357,200) 146,600 --
---------- ---------- ---------- --------
(67,288) (49,388) 14,082 --
---------- ---------- ---------- --------
State and local:
Current ................................. 16,861 16,103 (21,258) --
Deferred ................................ (19,200) 33,000 66,300 --
---------- ---------- ---------- --------
(2,339) 49,103 45,042 --
---------- ---------- ---------- --------
Total income tax expense (benefit) ....... $ (69,627) $ (285) $ 59,124 $ --
========== ========== ========== ========
</TABLE>

F-18
<PAGE>

MINNESOTA CORN PROCESSORS AND CONSOLIDATED ENTITIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 9 -- INCOME TAXES (CONTINUED)

A reconciliation of the provision for income taxes at the statutory federal
tax rates to the cooperative's actual provision for income taxes is as follows:

<TABLE>
<CAPTION>
SIX MONTHS
YEAR YEAR ENDED YEAR ENDED
MARCH 31, MARCH 31, MARCH 31, SEPTEMBER 30,
1999 1998 1997 1996
----------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Computed at federal statutory rates ......... $ 325,501 $ 303,409 $ 9,700 $ --
Adjustment of prior year accrual ............ 8,257 12,306 (142,218) --
State income taxes, net of federal tax
benefit .................................... 8,615 8,200 (21,258) --
---------- ---------- ---------- --------
342,373 323,915 (153,776) --
Deferred taxes .............................. (412,000) (324,200) 212,900 --
---------- ---------- ---------- --------
Total income tax expense (benefit) .......... $ (69,627) $ (285) $ 59,124 $ --
========== ========== ========== ========
</TABLE>

NOTE 10 -- MARKETING OBLIGATIONS

The cooperative and GPA had the following open purchase contracts for corn:

<TABLE>
<CAPTION>
BUSHELS
------------------------
CASH FUTURES
CONTRACTS CONTRACTS
----------- ----------
<S> <C> <C>
March 31, 1999 ............................................................. 1,380,837 29,330,000
March 31, 1998 ............................................................. 5,634,303 26,000,000
March 31, 1997 ............................................................. 6,785,938 --
September 30, 1996 ......................................................... 4,508,875 --
</TABLE>

At March 31, 1999, the average price of the open cash contracts was $2.264
per bushel. There was an unrealized gain on these transactions in the amount of
$910,345 on March 31, 1999.

At March 31, 1999, the average price of the open futures contracts was
$2.7708 per bushel. There was an unrealized loss on these transactions in the
amount of $2,307,488 on March 31, 1999.

MCP had the following obligations on deferred price contracts:

<TABLE>
<CAPTION>
BUSHELS AMOUNT
----------- ----------
<S> <C> <C>
March 31, 1999 ............................................................. 2,115,099 $6,011,410
March 31, 1998 ............................................................. 3,445,504 11,385,344
March 31, 1997 ............................................................. 844,564 2,273,237
September 30, 1996 ......................................................... 286,457 1,217,358
</TABLE>

The liability is reflected as a current liability as a part of the caption
entitled accounts payable grain.

F-19
<PAGE>

MINNESOTA CORN PROCESSORS AND CONSOLIDATED ENTITIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 11 -- DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS

The consolidated entities financial instruments consist principally of
cash, trade receivables and payables, grain contracts, sales contracts,
short-term and long-term notes payable. There are no significant differences
between the carrying value and the fair value of any of these financial
instruments. For investments in other cooperatives, there are no quoted market
prices and a reasonable estimate of the fair value could not be made without
incurring excessive costs.

Quoted market prices are generally not available for MCP's financial
instruments. Accordingly, fair values are based on judgments regarding
anticipated cash flows, future expected loss experience, current economic
conditions, risk characteristics of various financial instruments and other
factors. These estimates involve uncertainties and matters of judgment and,
therefore, cannot be determined with precision. Changes in assumptions could
significantly affect the estimates. The carrying amount for cash and cash
equivalents is a reasonable estimate of fair value.

NOTE 12 -- PENSION EXPENSE

Pension costs charged to operations on the accrual basis amounted to
$547,949 and $93,720 for the years ended March 31, 1999 and 1998, respectively;
$51,675 for the six month fiscal period ended March 31, 1997; and $129,262 for
the year ended September 30, 1996.

NOTE 13 -- CONCENTRATIONS OF CREDIT RISK

The cooperative maintains cash and temporary investments at various
financial institutions. Balances on deposit are insured by the Federal Deposit
Insurance Corporation (FDIC) up to specified limits. Balances in excess of FDIC
limits are uninsured. Total cash and temporary investments held by the financial
institutions exceeded specified limits at various dates throughout the periods
presented in these financial statements.

Sales to one customer amounted to $59,927,150, or approximately 10% of the
consolidated revenues for the year ended March 31, 1999.

NOTE 14 -- LOSS ON SALES CONTRACT

In 1998, an MCP customer exercised its contract option to purchase
additional corn sweeteners at a contract price that was less than the current
market price. This option was exercised after MCP had committed its corn
sweetener production to other customers. Because the customer has a binding
contract, MCP has agreed to subsidize this customer by purchasing product on the
open market and selling it to the customer at the reduced contract price. This
transaction created an estimated loss of $7,986,000 and is included in the
statement of operations in 1998. In 1999 the loss was determined to be
$4,718,000 and the difference was reinstated to income in 1999.

NOTE 15 -- EMPLOYMENT CONTRACTS

During 1998, the company entered into employment contracts with employees,
ranging from five to eight years in length. Salary commitments under these
contracts total $7,909,012 as of March 31, 1999, and $9,733,469 at March 31,
1998.

F-20
<PAGE>

MINNESOTA CORN PROCESSORS AND CONSOLIDATED ENTITIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 16 -- SUBSEQUENT EVENT

The Board of Directors of Minnesota Corn Processors will be requesting a
membership vote to convert the cooperative to a Limited Liability Company. This
transaction, if approved, is a taxable transaction at both the cooperative and
member levels. However, it is expected that any tax implications at the
cooperative level will be primarily, if not entirely, offset by the net
operating loss carryover, resulting in no tax to the cooperative from the
potential conversion.

NOTE 17 -- YEAR 2000 COMPLIANCE

Like most entities, the cooperative may be exposed to risks associated with
Year 2000 dating problems. This problem affects computer software and hardware;
transactions with customers, vendors and other entities; and equipment dependent
on microchips. It is not possible for any entity to guarantee the results of its
own remediation efforts or to accurately predict the impact of Year 2000 dating
problems on third parties with which the cooperative does business. If
remediation efforts of the cooperative or third parties with which it does
business are not successful, it is possible the Year 2000 dating problem could
negatively impact the cooperative's financial condition and results of
operations.

NOTE 18 -- RESTATEMENT FOR CHANGE IN METHOD OF
INVENTORY PRICING

Liquid Sugars, Inc. has valued the inventory using the first-in/first-out
(FIFO) method in 1999; whereas in all prior years, inventory was valued using
the last-in/first-out (LIFO) method. The new method of valuing inventory was
adopted to conform the company's inventory valuation method with the method
being used by its parent company. The financial statements of prior years have
been restated to apply the new method retroactively. The effect of the
accounting change on LSI's net loss and retained earnings (deficit) as
previously reported for previous years is as follows:

NET
INCOME RETAINED
(LOSS) EARNINGS
---------- ----------

Effects of accounting change from valuing inventory:
4-1-96 date of acquisition of LSI ................. $ -- $ 522,918
Fiscal year ended September 30, 1996 .............. -- --
Six months ended March 31, 1997 ................... 433,316 433,316
Fiscal year ended March 31, 1998 .................. (127,564) (127,564)
---------- ----------
$ 305,752 $ 828,670
========== ==========

NOTE 19 -- LONG-LIVED ASSETS

In accordance with Statement of Financial Accounting Standards (SFAS) No.
121, which is entitled Accounting For the Impairment of Long-Lived Assets and
For Long-Lived Assets to be Disposed of, the cooperative records impairment
losses on long-lived assets used in operations when indicators of impairment are
present and the undiscounted cash flows estimated to be generated by those
assets are less than the assets' carrying amount. Based on current estimates,
management does not believe impairment of operating properties is present.

This information is an integral part of the accompanying consolidated
financial statements.

F-21
<PAGE>

APPENDIX A

PLAN OF MERGER

THIS PLAN OF MERGER (the "Plan") is dated as of January __, 1999, and is by
and between MINNESOTA CORN PROCESSORS, INC (the "Cooperative") and MINNESOTA
CORN PROCESSORS COLORADO ("MCP Colorado"), each of which may be referred to
herein as a "Constituent Cooperative" and both of which may be collectively
referred to herein as the "Constituent Cooperatives."

WHEREAS, the Cooperative is a cooperative association organized under
Chapter 308A of Minnesota Statutes, as amended (the "Minnesota Act"); and MCP
Colorado is a cooperative association organized under Title 7 Article 56 of the
Colorado Revised Statutes, as amended (the "Colorado Act"), and is a wholly
owned subsidiary of the Cooperative. The Minnesota Act and the Colorado Act may
be referred to herein collectively as the "Acts."

WHEREAS, the respective Boards of Directors of the Cooperative and MCP
Colorado and the respective members of the Cooperative and MCP Colorado each has
approved and adopted this Plan and the transactions contemplated hereby in the
manner required by their respective Articles of Incorporation and Bylaws, and
the appropriate sections of the Acts.

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements of the parties contained herein, the parties hereto agree as
follows:

SECTION 1. THE MERGER. On the Effective Time (as defined in Section 8), the
Cooperative and MCP Colorado shall combine through merger (the "MCP Merger") in
accordance with the applicable provisions of the Acts; and MCP Colorado shall be
the surviving cooperative and shall continue to exist as a Colorado cooperative
association by virtue of, and shall be governed by, the Colorado Act.

SECTION 2. ARTICLES OF MERGER. As soon as practicable following
satisfaction or waiver of all conditions to the consummation of the MCP Merger,
the articles of merger (the "Articles of Merger") and a statement of merger
("Statement of Merger") shall be executed in compliance with Section 308A.801 of
the Minnesota Act and Section 7-56-605 of the Colorado Act, respectively. The
Articles of Merger shall be filed with the Secretary of State of the State of
Minnesota and the Statement of Merger shall be filed with the Secretary of State
of the State of Colorado, or as otherwise required by the Acts.

SECTION 3. EFFECT OF MERGER. From and after the Effective Time, without any
further action by the Constituent Cooperatives or any of their respective
members: (a) MCP Colorado, as the surviving cooperative in the MCP Merger, shall
have all of the rights, privileges, immunities and powers, and shall be subject
to all the duties and liabilities, of a cooperative organized under the Colorado
Act; (b) MCP Colorado, as the surviving cooperative in the MCP Merger, shall
possess all of the rights, privileges, immunities and franchises, of a public as
well as a private nature, of each Constituent Cooperative, and all property,
real, personal and mixed, and all debts due on whatever account, including all
choices in action, and each and every other interest of or belonging to or due
to each Constituent Cooperative, shall be deemed to be and hereby is vested in
MCP Colorado, without further act or deed, and the title to any property, or any
interest therein, vested in either Constituent Cooperative, shall not revert or
be in any way impaired by reason of the MCP Merger; (c) MCP Colorado shall be
responsible and liable for all of the liabilities and obligations of each
Constituent Cooperative, and any claim existing or action or proceeding pending
by or against one of the Constituent Cooperatives may be prosecuted as if the
MCP Merger had not taken place or MCP Colorado may be substituted in its place;
(d) neither the rights of creditors nor any liens upon the property of either of
the Constituent Cooperatives shall be impaired by the MCP Merger; and (e) the
MCP Merger shall have any other effect set forth in the Acts and the Transaction
Agreement dated January __, 1999 between the Cooperative, MCP Colorado and
Minnesota Corn Processors, LLC (the "Transaction Agreement"); all with the
effect and to the extent provided in the applicable provisions of the Acts.

A-1
<PAGE>

SECTION 4. ARTICLES OF INCORPORATION AND BYLAWS. From and after the
Effective Time, pursuant to the Articles of Merger and without any further
action by the Constituent Cooperatives or any of their respective members, the
Articles of Incorporation of MCP Colorado in effect immediately prior to the
Effective Time shall be the Articles of Incorporation of MCP Colorado, as the
surviving cooperative in the MCP Merger (the "Surviving Entity Articles"). From
and after the Effective Time, without any further action by the Constituent
Cooperatives or any of their respective members, the Bylaws of MCP Colorado in
effect immediately prior to the Effective Time shall be the Bylaws of MCP
Colorado, as the surviving cooperative in the MCP Merger (the "Surviving Entity
Bylaws"). A copy of the Surviving Entity Articles of Incorporation and Bylaws
was provided to the respective members of each Constituent Cooperative in
connection with their consideration of the MCP Merger.

SECTION 5. BOARD OF DIRECTORS AND OFFICERS. From and after the Effective
Time, without any further action by the Constituent Cooperatives or any of their
respective members, each person serving as a director or an officer of the
Cooperative immediately prior to the Effective Time shall become a director or
an officer of MCP Colorado, as the surviving cooperative in the MCP Merger, (in
the case of officers, holding the same office in MCP Colorado as they held in
the Cooperative immediately prior to the Effective Time) to serve in accordance
with the Surviving Entity Bylaws. The initial directors and officers of MCP
Colorado prior to the effective date shall resign their positions as directors
and officers of MCP Colorado as of the effective date.

SECTION 6. EXCHANGE, REDESIGNATION AND CONVERSION AND CONTINUATION OF
CAPITAL STOCK, NON-STOCK EQUITY INTERESTS, PATRONS' EQUITIES AND MEMBERSHIPS. On
the Effective Time, the manner and basis of exchanging and continuing the shares
of capital stock, non-stock equity interests, units of equity participation,
non-voting units of equity participation, patronage equity interests (including
all entitlements to patronage refunds), any other allocated equity interests,
and unallocated and capital reserves of the Cooperative and MCP Colorado (all
such interests referred to herein as "Cooperative Equity Interests" or "MCP
Colorado Equity Interests", respectively), and membership interests in the
Cooperative and MCP Colorado, for equal Equity Interests and membership
interests in MCP Colorado, shall be as follows:

(a) EXCHANGE AND CONTINUATION OF COOPERATIVE MEMBERSHIPS. As of the
Effective Time, without any further action by the Constituent Cooperatives
or any of their respective members, each holder of common stock of the
Cooperative shall become and be a member of MCP Colorado, to the extent
they are eligible for membership under the Surviving Entity Articles and
the Surviving Entity Bylaws, in such class and with such incidents of
membership as are set forth in the Surviving Entity Articles and the
Surviving Entity Bylaws.

(b) MCP COLORADO MEMBERSHIPS. As of the Effective Time, without any
further action by the Constituent Cooperatives or any of their respective
members, the Cooperative, as the sole member of MCP Colorado, shall cease
to exist by operation of the merger and shall cease to be a member of MCP
Colorado.

(c) EXCHANGE AND CONTINUATION OF COOPERATIVE EQUITY INTERESTS. As of
the Effective Time, without any further action by the Constituent
Cooperatives or any of their respective members, all Equity Interests
standing on the books of the Cooperative immediately prior to the Effective
Time shall be determined and exchanged for equal Equity Interests in MCP
Colorado at its stated dollar amount on a dollar-for-dollar basis,
including as follows:

i. Common Stock. Each share of common stock of the Cooperative
issued and outstanding immediately prior to the Effective Time
shall cease to be outstanding and shall be exchanged for one (1)
share of Common Stock of MCP Colorado at a par value of $50.00
per share.

ii. Preferred Stock. Each share of Preferred stock of the Cooperative
issued and outstanding immediately prior to the Effective Time
shall cease to be outstanding and shall be exchanged for one (1)
share of Preferred Stock of MCP Colorado at a par value of $50.00
per share.

iii. Patronage Equity Interests and Units of Equity Participation. All
patronage refunds (qualified and nonqualified), units of equity
participation and non-voting units of equity

A-2
<PAGE>

participation and any other allocated or to be allocated
patronage equity interests (including all entitlements thereto)
standing on the books of the Cooperative immediately prior to the
Effective Time (which are not otherwise evidenced by capital
stock) shall be exchanged for equal patronage refunds, units of
equity participation and non-voting units of equity
participation, and allocated or to be allocated equity interests,
entitlements to patronage refunds, or other equal patronage
equity interests on the books of MCP Colorado, at their stated
dollar amount on a dollar-for-dollar basis, and in such
denominations or other designations or series so as to preserve
the year of issue (as MCP Colorado deems necessary) and other
terms and conditions of the original issuance; and each unit of
equity participation so exchanged shall be subject on the books
of MCP Colorado to the same obligation for loss allocation as
standing on the books of the Cooperative immediately prior to the
Effective Time.

iv. Deferred Patronage and Unallocated Reserve. All deferred
patronage (not exchanged above), unallocated reserves, and any
other unallocated equity interests standing on the books of the
Cooperative immediately prior to the Effective Time shall be
exchanged and credited for equal deferred patronage, unallocated
reserves or other equal unallocated equity interests on the books
of MCP Colorado, at their stated dollar amount on a
dollar-for-dollar basis, and in such denominations or other
designations or series so as to preserve the year of issue (if
applicable and as MCP Colorado deems necessary) and other terms
and conditions of the original issuance (if applicable).

v. Net Effect. The net effect of the exchange of Cooperative Equity
Interests for equal Equity Interests in MCP Colorado shall be
that the holders of Cooperative Equity Interests standing on the
books of the Cooperative immediately prior to the Effective Time
shall hold and will have equal Equity Interests in MCP Colorado
immediately following the Effective Time, in terms of stated
dollar amount on a dollar-for-dollar basis, year of issue (as
determined necessary), loss allocation obligations and any other
rights and preferences, and that the deferred patronage,
unallocated reserves and other unallocated Equity Interests of
the Cooperative, as standing on its books immediately prior to
the Effective Time, shall be exchanged and credited for an equal
Equity Interest in MCP Colorado immediately following the
Effective Time, in terms of stated dollar amount on a
dollar-for-dollar basis and other rights and preferences.

(d) MCP COLORADO EQUITY INTERESTS. Prior to the Effective Time, the
Cooperative is the sole member of MCP Colorado and all equity interest of
any and every nature in MCP Colorado is owned by and held in the name of
the Cooperative. Upon the Effective Time, the Cooperative, as the merging
entity, shall merge with and into MCP Colorado and shall cease to exist in
its own right. All Equity Interests of any and every nature standing on the
books of MCP Colorado and held by the Cooperative immediately prior to the
Effective Time shall be cancelled.

(e) SURVIVING ENTITY ARTICLES AND BYLAWS TO GOVERN. Membership in MCP
Colorado and all Equity Interests in MCP Colorado whether issued or
credited in exchange for Cooperative Equity Interests or continued with
respect to MCP Colorado Equity Interests as described above, shall in all
instances be governed by the provisions of the Surviving Entity Articles
and the Surviving Entity Bylaws.

(f) FURTHER ASSURANCES OF HOLDERS OF EQUITY. Each holder of
Cooperative Equity Interests and each holder of MCP Colorado Equity
Interests shall take such action or cause to be taken such action as MCP
Colorado may reasonably deem necessary or appropriate to effect the
exchange and continuation of the equity interests hereunder, including
without limitation the execution and delivery of any stock certificates or
other evidences of equity being exchanged or continued hereunder.

SECTION 7. FURTHER ASSURANCES. From time to time and after the Effective
Time, as and when requested by MCP Colorado, or its successors or assigns, the
Cooperative shall execute and deliver or cause to be executed and delivered all
such deeds and other instruments, and shall take or cause to be taken all such
further action or actions, as MCP Colorado, or its successors or assigns, may
deem

A-3
<PAGE>

necessary or desirable in order to vest in and confirm to MCP Colorado, or its
successors or assigns, title to and possession of all of the properties, rights,
privileges, powers and franchises referred to in Section 3 of this Plan, and
otherwise to carry out the intent and purposes of this Plan. If MCP Colorado
shall at any time deem that any further assignments or assurances or any other
acts are necessary or desirable to vest, perfect or confirm of record or
otherwise the title to any property or to enforce any claims of the Cooperative
or MCP Colorado vested in MCP Colorado pursuant to this Plan, the officers of
MCP Colorado or its successors or assigns, are hereby specifically authorized as
attorneys-in-fact of each the Cooperative and MCP Colorado (which appointment is
irrevocable and coupled with an interest), to execute and deliver any and all
such deeds, assignments and assurances and to do all such other acts in the name
and on behalf of each the Cooperative and MCP Colorado, or otherwise, as such
officer shall deem necessary or appropriate to accomplish such purpose.

SECTION 8. EFFECTIVE TIME. The MCP Merger shall become effective at the
later of the filing of the Articles of Merger with the Secretary of State of
Minnesota and the filing of the Statement of Merger with the Secretary of State
of Colorado (the "Effective Time").

SECTION 9. GOVERNING LAW. This Plan shall be governed by and construed in
accordance with the laws of the State of Colorado.

IN WITNESS WHEREOF, this Plan has been agreed to and executed by the duly
authorized representatives of the Cooperative and MCP Colorado, as of the date
first set forth above.

MINNESOTA CORN PROCESSORS, INC.

By:
--------------------------------------

Its:
--------------------------------------

MINNESOTA CORN PROCESSORS COLORADO

By:
--------------------------------------

Its:
--------------------------------------

A-4
<PAGE>

APPENDIX B

PLAN OF MERGER

THIS PLAN OF MERGER (the "Plan") is dated as of January __, 1999, and is by
and between MINNESOTA CORN PROCESSORS COLORADO, ("MCP Colorado") and MINNESOTA
CORN PROCESSORS, LLC ("LLC"), each of which may be referred to herein as a
"Constituent Entity" and both of which may be collectively referred to herein as
the "Constituent Entities".

WHEREAS, MCP Colorado is a cooperative association organized under Title 7,
Article 56 of the Colorado Revised Statutes as amended (the "Colorado Act"), and
LLC is a limited liability company organized under Title 7 Article 80 of the
Colorado Revised Statutes as amended (the "LLC Act"), and a wholly owned
subsidiary of MCP Colorado as a result of a merger of Minnesota Corn Processors,
Inc., a Minnesota cooperative association (the "Cooperative"), with and into MCP
Colorado, effective on the date hereof. The LLC Act and the Colorado Act may be
referred to herein collectively as the "Acts"; and

WHEREAS, the Board of Directors and members of MCP Colorado have approved
and adopted this Plan and the transactions contemplated hereby in the manner
required by its Articles of Incorporation and Bylaws, the Colorado Act and other
applicable provisions of Colorado law including specifically the Colorado
Corporations and Associations Act found at Title 7, Article 90 of the Colorado
Revised Statues ("CCA Act"); and

WHEREAS, the Board of Directors and members of LLC have approved and
adopted this Plan and the transactions contemplated hereby in the manner
required by its Articles of Organization and Operating Agreement, the LLC Act
and the CCA Act; and

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements of the parties contained herein, the parties hereto agree as
follows:

SECTION 1. THE MERGER. On the Effective Time (as defined in Section 8), MCP
Colorado and LLC shall combine through merger (the "LLC Merger") in accordance
with the applicable provisions of the Acts and the CCA Act, and LLC shall be the
surviving entity and shall continue to exist as a Colorado limited liability
company with principal offices at 901 North Highway 59, Marshall, MN 56258-2744,
by virtue of, and shall be governed by, the LLC Act.

SECTION 2. STATEMENT OF MERGER. As soon as practicable following
satisfaction or waiver of all conditions to the consummation of the LLC Merger,
a statement of merger (the "Statement of Merger") shall be executed in
accordance with all legal requirements. The Statement of Merger shall be filed
with the Secretary of State of the State of Colorado or as otherwise required by
law.

SECTION 3. EFFECT OF MERGER. From and after the Effective Time, without any
further action by the Constituent Entities or any of their respective members:
(A) LLC, as the surviving entity in the LLC Merger, shall have all of the
rights, privileges, immunities and powers, and shall be subject to all the
duties and liabilities, of a limited liability company organized under the LLC
Act; (B) LLC, as the surviving entity in the LLC Merger, shall possess all of
the rights, privileges, immunities and franchises, of a public as well as a
private nature, of each Constituent Entity, and all property, real, personal and
mixed, and all debts due on whatever account, including all choices in action,
and each and every other interest of or belonging to or due to each Constituent
Entity, shall be deemed to be and hereby is vested in LLC, without further act
or deed, and the title to any property, or any interest therein, vested in
either Constituent Entity, shall not revert or be in any way impaired by reason
of the LLC Merger; (C) LLC shall be responsible and liable for all of the
liabilities and obligations of each Constituent Entity, and any claim existing
or action or proceeding pending by or against one of the Constituent Entities
may be prosecuted as if the LLC Merger had not taken place or LLC may be
substituted in its place; (D) neither the rights of creditors nor any liens upon
the property of either of the Constituent Entity shall be impaired by the LLC
Merger; and (E) the LLC Merger shall have any other effect set forth in the
Acts, the CCA Act, and the Transaction Agreement dated January __, 1999 between
the Cooperative, MCP

B-1
<PAGE>

Colorado and LLC (the "Transaction Agreement"); all with the effect and to the
extent provided in the applicable provisions of Colorado law.

SECTION 4. ARTICLES OF ORGANIZATION; OPERATING AGREEMENT. From and after
the Effective Time, pursuant to the Statement of Merger and without any further
action by the Constituent Entities or any of their respective members, the
Articles of Organization of LLC in effect immediately prior to the Effective
Time shall be the Articles of Organization of LLC, as the surviving entity in
the LLC Merger (the "Surviving Entity Articles"). From and after the Effective
Time, without any further action by the Constituent Entities or any of their
respective members, the Operating Agreement of LLC as in effect immediately
prior to the Effective Time shall be the Operating Agreement of LLC, as the
surviving entity in the LLC Merger (the "Surviving Entity Operating Agreement").
A copy of the Surviving Entity Articles of Organization and Operating Agreement
was provided to the respective members of each Constituent Cooperative in
connection with their consideration of the LLC Merger.

SECTION 5. BOARD OF DIRECTORS. From and after the Effective Time, without
any further action by the Constituent Cooperatives or any of their respective
members, each person serving as a director or an officer of MCP Colorado
immediately prior to the Effective Time shall be a director or an officer of
LLC, as the surviving entity in the LLC Merger, (in the case of officers,
holding the same office in LLC as they held in MCP Colorado immediately prior to
the Effective Time) to serve in accordance with the Surviving Entity Operating
Agreement. The initial directors and officers of LLC prior to the effective date
shall resign their positions as directors and officers of LLC as of the
effective date.

SECTION 6. EXCHANGE, REDESIGNATION AND CONVERSION OF CAPITAL STOCK,
NON-STOCK EQUITY INTERESTS, PATRONS' EQUITIES AND MEMBERSHIPS. On the Effective
Time, the manner and basis of exchanging or converting the shares of capital
stock, non-stock equity interests, units of equity participation, non-voting
units of equity participation, patronage equity interests (including all
entitlements to patronage refunds), any other allocated equity interests, and
unallocated and capital reserves of MCP Colorado and LLC (all such interests
referred to herein as "MCP Colorado Equity Interests" or "LLC Equity Interests",
respectively), and membership interests in MCP Colorado and LLC, for
proportionally equivalent Equity Interests and equal membership interests in
LLC, shall be as follows:

(a) EXCHANGE AND CONTINUATION OF MCP COLORADO MEMBERSHIPS. As of the
Effective Time, without any further action by the Constituent Entities or
any of their respective members, (i) each member and holder of Units of
Participation of MCP Colorado shall become and be a Class A member of LLC,
to the extent they are eligible for membership under the Surviving Entity
Articles and the Surviving Entity Operating Agreement, and (ii) each holder
of non-voting Units of Participation of MCP Colorado shall become and be a
Class B member of LLC. Class A and Class B members shall have such
incidents of membership as are set forth in the Surviving Entity Articles
and the Surviving Entity Operating Agreement.

(b) LLC MEMBERSHIP. As of the Effective Time, without any further
action by the Constituent Entities or any of their respective members, MCP
Colorado, as the sole member of LLC, shall cease to exist by operation of
the merger and shall also cease to be a member of LLC.

(c) EXCHANGE AND CONTINUATION OF MCP COLORADO EQUITY INTERESTS. As of
the Effective Time, without any further action by the Constituent Entities
or any of their respective members, all MCP Colorado Equity Interests
standing on the books of` MCP Colorado immediately after the consummation
of the merger of The Cooperative with and into MCP Colorado, and
immediately prior to the Effective Time shall be determined and exchanged
for proportionally equivalent Equity Interests in LLC as follows:

i. VOTING UNITS OF EQUITY PARTICIPATION. Each voting unit of equity
participation standing on the books of MCP Colorado and held by
members of MCP Colorado ("Member Equity") immediately prior to
the Effective Time shall cease to be outstanding and shall be
exchanged for one Class A Unit of LLC; and each Class A Unit of
LLC so exchanged shall be subject on the books of LLC to the same
obligation for loss allocation as standing on the books of MCP
Colorado immediately prior to the Effective Time.

ii. NON-VOTING UNITS OF EQUITY PARTICIPATION. Each non-voting unit of
equity participation standing on the books of MCP Colorado and
held by non-members of MCP Colorado

B-2
<PAGE>

("Non-Member Equity") immediately prior to the Effective Time
shall cease to be outstanding and shall be exchanged for one
Class B Unit of LLC.

iii. COMMON STOCK. All shares of common stock standing on the books of
MCP Colorado immediately prior to the Effective Time shall be
cancelled and shall cease to exist.

iv. NONQUALIFIED PATRONAGE REFUNDS. All nonqualified patronage
refunds standing on the books of MCP Colorado immediately prior
to the Effective Time shall be converted into nonvoting financial
interests of LLC having the same stated dollar amount, years of
issue (as LLC deems necessary) and other terms and conditions as
applicable to such nonqualified patronage refunds immediately
prior to the Effective Time.

(d) LLC EQUITY INTERESTS. Prior to the Effective Time, MCP Colorado is
the sole member of LLC and all equity interest of any and every nature in
LLC is owned by and held in the name of MCP Colorado. Upon the Effective
Time, MCP Colorado, as the merging entity, shall merge with and into LLC
and shall cease to exist in its own right. All Equity Interests of any and
every nature standing on the books of LLC immediately prior to the
Effective Time shall be cancelled.

(e) SURVIVING ENTITY ARTICLES AND OPERATING AGREEMENT TO GOVERN.
Membership in LLC and all Equity Interests in LLC issued or credited in
exchange for MCP Colorado Equity Interests and continued with respect to
LLC Equity as described above, shall in all instances be governed by the
provisions of the Surviving Entity Articles and the Surviving Entity
Operating Agreement.

(f) FURTHER ASSURANCES OF HOLDERS OF EQUITY. Each holder of MCP
Colorado Equity Interests and each holder of LLC Equity Interests shall
take such action or cause to be taken such action as LLC may reasonably
deem necessary or appropriate to effect the exchange and continuation of
the equity interests hereunder, including without limitation the execution
and delivery of any stock certificates or other evidences of equity being
exchanged or continued hereunder.

SECTION 7. FURTHER ASSURANCES. From time to time and after the Effective
Time, as and when requested by LLC, or its successors or assigns, MCP Colorado
shall execute and deliver or cause to be executed and delivered all such deeds
and other instruments, and shall take or cause to be taken all such further
action or actions, as LLC, or its successors or assigns, may deem necessary or
desirable in order to vest in and confirm to LLC, or its successors or assigns,
title to and possession of all of the properties, rights, privileges, powers and
franchises referred to in Section 3 of this Plan, and otherwise to carry out the
intent and purposes of this Plan. If LLC shall at any time deem that any further
assignments or assurances or any other acts are necessary or desirable to vest,
perfect or confirm of record or otherwise the title to any property or to
enforce any claims of MCP Colorado or LLC vested in LLC pursuant to this Plan,
the officers of LLC or its successors or assigns, are hereby specifically
authorized as attorneys-in-fact of each MCP Colorado and LLC (which appointment
is irrevocable and coupled with an interest), to execute and deliver any and all
such deeds, assignments and assurances and to do all such other acts in the name
and on behalf of each MCP Colorado and LLC, or otherwise, as such officer shall
deem necessary or appropriate to accomplish such purpose.

SECTION 8. EFFECTIVE DATE. The LLC Merger shall become effective at the
time of filing of the Statement of Merger with the Secretary of State of
Colorado (the "Effective Time").

SECTION 9. GOVERNING LAW. This Plan shall be governed by and construed in
accordance with the laws of the State of Colorado.

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IN WITNESS WHEREOF, this Plan has been agreed to and executed by the duly
authorized representatives of MCP Colorado and LLC, as of the date first set
forth above.

MINNESOTA CORN PROCESSORS COLORADO

By:
--------------------------------------

Its:
--------------------------------------

MINNESOTA CORN PROCESSORS, LLC

By:
--------------------------------------

Its:
--------------------------------------

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APPENDIX C

===========================

AMENDED AND RESTATED
TRANSACTION AGREEMENT

by and among

MINNESOTA CORN PROCESSORS, INC.
a Minnesota cooperative association

and

MINNESOTA CORN PROCESSORS COLORADO,
a Colorado cooperative association

and

MINNESOTA CORN PROCESSORS, LLC
a Colorado limited liability company

Dated as of May __, 1999

===========================

<PAGE>

TABLE OF CONTENTS

TRANSACTION AGREEMENT ............................................... C-1

ARTICLE I
OVERVIEW OF THE TRANSACTIONS ........................................ C-1
SECTION 1.01 PURPOSE ................................................ C-1
SECTION 1.02 THE MCP MERGER ......................................... C-1
SECTION 1.03 THE LLC MERGER ......................................... C-1
SECTION 1.04 THE CLOSING ............................................ C-1
SECTION 1.05 ACTIONS AT THE CLOSING ................................. C-1
SECTION 1.06 EFFECTIVE TIME ......................................... C-2
SECTION 1.07 EFFECT OF THE MERGERS .................................. C-2

ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COOPERATIVE ................... C-2
SECTION 2.01 REPRESENTATIONS AND WARRANTIES OF THE
COOPERATIVE ............................................ C-2
SECTION 2.02 ORGANIZATION AND GOOD STANDING ......................... C-2
SECTION 2.03 CAPITAL STOCK AND EQUITY PARTICIPATION UNITS ........... C-3
SECTION 2.04 FINANCIAL STATEMENTS ................................... C-3
SECTION 2.05 UNDISCLOSED LIABILITIES ................................ C-3
SECTION 2.06 COMPLIANCE WITH APPLICABLE LAWS ........................ C-3
SECTION 2.07 LEGAL PROCEEDINGS ...................................... C-3
SECTION 2.08 ABSENCE OF DEFAULTS .................................... C-3
SECTION 2.09 AUTHORIZATION .......................................... C-3

ARTICLE III
REPRESENTATIONS AND WARRANTIES OF MCP COLORADO ...................... C-4
SECTION 3.01 REPRESENTATIONS AND WARRANTIES OF MCP COLORADO ......... C-4
SECTION 3.02 ORGANIZATION AND GOOD STANDING ......................... C-4
SECTION 3.03 CAPITAL STOCK .......................................... C-4
SECTION 3.04 AUTHORIZATION .......................................... C-4

ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF LLC ............................... C-4
SECTION 4.01 REPRESENTATIONS AND WARRANTIES OF LLC .................. C-4
SECTION 4.02 ORGANIZATION AND GOOD STANDING ......................... C-4
SECTION 4.03 CAPITAL STOCK .......................................... C-4
SECTION 4.04 AUTHORIZATION .......................................... C-4

ARTICLE V
COVENANTS ........................................................... C-4
SECTION 5.01 REASONABLE BEST EFFORTS ................................ C-4
SECTION 5.02 CONDUCT OF BUSINESS .................................... C-5
SECTION 5.03 FORBEARANCES ........................................... C-5
SECTION 5.04 MEETINGS OF MEMBERS .................................... C-5
SECTION 5.05 ACCESS ................................................. C-5
SECTION 5.06 NOTICE OF DEVELOPMENTS ................................. C-6
SECTION 5.07 EXCLUSIVITY ............................................ C-6
SECTION 5.08 REGISTRATION STATEMENT ................................. C-6

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ARTICLE VI
CONDITIONS PRECEDENT ............................................... C-6
SECTION 6.01 CONDITIONS TO OBLIGATIONS OF EACH PARTY
TO THE MCP MERGER ..................................... C-6
SECTION 6.02 CONDITIONS TO OBLIGATIONS OF EACH PARTY
TO THE LLC MERGER ..................................... C-7
SECTION 6.03 ADDITIONAL CONDITIONS TO OBLIGATION OF
THE COOPERATIVE ....................................... C-7
SECTION 6.04 ADDITIONAL CONDITIONS TO OBLIGATION OF
MCP COLORADO .......................................... C-7
SECTION 6.05 ADDITIONAL CONDITIONS TO OBLIGATION OF LLC ............ C-8

ARTICLE VII
POST CLOSING AGREEMENTS ............................................ C-8
SECTION 7.01 EMPLOYEE BENEFIT PLANS ................................ C-8
SECTION 7.02 PATRONAGE DISTRIBUTIONS ............................... C-8
SECTION 7.03 1996 LOSS PAYABLE ..................................... C-9
SECTION 7.04 INDEMNIFICATION; DIRECTORS' AND OFFICERS'
INSURANCE ............................................. C-9

ARTICLE VIII
TERMINATION ........................................................ C-9
SECTION 8.01 TERMINATION OF AGREEMENT .............................. C-9
SECTION 8.02 EFFECT OF TERMINATION ................................. C-9

ARTICLE IX
MISCELLANEOUS ...................................................... C-10
SECTION 9.01 WAIVER ................................................ C-10
SECTION 9.02 AMENDMENT ............................................. C-10
SECTION 9.03 BINDING NATURE ........................................ C-10
SECTION 9.04 COUNTERPARTS .......................................... C-10
SECTION 9.05 ENTIRE AGREEMENT ...................................... C-10
SECTION 9.06 NOTICES ............................................... C-10
SECTION 9.07 NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES ......... C-10
SECTION 9.08 CAPTIONS .............................................. C-10

EXHIBITS

Exhibit A -- MCP Merger Agreement ..................................... C-12
Exhibit B -- LLC Merger Agreement ..................................... C-16
Exhibit C -- Surviving Entity Articles of Organization ................
Exhibit D -- Surviving Entity Operating Agreement .....................
Exhibit E -- List of Consents and Approvals ...........................

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TRANSACTION AGREEMENT

THIS TRANSACTION AGREEMENT ( "Agreement") is made and entered into as of
May __, 1999, by and among MINNESOTA CORN PROCESSORS, INC. a Minnesota
cooperative association (the "Cooperative"), MINNESOTA CORN PROCESSORS COLORADO,
a Colorado cooperative association ("MCP Colorado") and MINNESOTA CORN
PROCESSORS, LLC, a Colorado limited liability company ("LLC").

WHEREAS, the Cooperative, MCP Colorado, and LLC are each organized to
benefit and serve their respective members and patrons; and

WHEREAS, the parties believe the interests of their respective members will
best be benefitted and served if the parties reorganize their business
operations and corporate structure whereby: (i) the Cooperative will merge into
MCP Colorado, with MCP Colorado being the surviving entity (the "MCP Merger");
and (ii) MCP Colorado will then merge into LLC, with LLC being the surviving
entity (the "LLC Merger"); the MCP Merger and the LLC Merger may be referred to
in this Agreement individually as a "Merger" or "Transaction" and collectively
as the "Mergers" or "Transactions"; and

WHEREAS, the parties have now agreed on the final terms and conditions of
the Mergers, and wish to: (i) memorialize these agreements as more particularly
described herein; and (ii) enter into this Agreement for the purpose of
effecting the Mergers;

NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties and covenants herein contained, the parties hereto
agree as follows:

ARTICLE I
OVERVIEW OF THE TRANSACTIONS

SECTION 1.01 PURPOSE. The purpose of the transactions contemplated by this
Agreement is to reorganize the corporate structure of the Cooperative from a
Minnesota cooperative association into a Colorado limited liability company.
This reorganization will be accomplished through a two-step merger process.
First, the Cooperative shall merge with and into MCP Colorado. Second, MCP
Colorado will merge with and into LLC. The MCP Merger and the LLC Merger are
separate and distinct transactions, and each Merger shall be individually
consummated. Although the Mergers are separate transactions, consummation of the
LLC Merger is contingent upon consummation of the MCP Merger and consummation of
the MCP Merger is contingent upon satisfaction of all conditions precedent for
consummation of the LLC Merger. Upon completion of both Mergers, the Cooperative
and MCP Colorado will cease to exist and LLC will continue as the sole surviving
entity.

SECTION 1.02 THE MCP MERGER. Subject to the terms and conditions set forth
in this Agreement and the Plan of Merger attached hereto as Exhibit A (the "MCP
Merger Agreement), the Cooperative will merge with and into MCP Colorado. MCP
Colorado shall be the surviving entity (the "Surviving Colorado Entity").
Immediately after completion of the MCP Merger and without any further action by
its board of directors and members, MCP Colorado, as the Surviving Colorado
Entity, shall merge with and into LLC as described in Section 1.03 hereof.

SECTION 1.03 THE LLC MERGER. Subject to the terms and conditions set forth
in this Agreement and the Plan of Merger attached hereto as Exhibit B (the "LLC
Merger Agreement), MCP Colorado will merge with and into LLC. LLC shall be the
surviving entity (the "Surviving Entity"), and thereafter shall continue to
exist and operate as Minnesota Corn Processors, LLC under the laws of the State
of Colorado.

SECTION 1.04 THE CLOSING. The closing of the Mergers (the "Closing") will
take place on the date the Effective Time occurs at the offices of Dorsey &
Whitney, LLP, 220 South Sixth Street, Minneapolis, Minnesota 55402 or on such
other date and/or at such other place as the parties may agree.

SECTION 1.05 ACTIONS AT THE CLOSING. At the Closing, the parties shall
take the following actions:

(a) MCP Merger. The Cooperative and MCP Colorado shall (i) execute the MCP
Merger Agreement, (ii) execute and deliver to each other the various
certificates, instruments, and documents

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referred to in the MCP Merger Agreement, and (iii) execute and file with the
Secretary of State of the States of Minnesota and Colorado articles of merger as
required by the laws of the States of Minnesota and Colorado to effectuate the
merger in accordance with the terms of the MCP Merger Agreement.

(b) LLC Merger. MCP Colorado and LLC shall (i) execute the LLC Merger
Agreement, (ii) execute and deliver to each other the various certificates,
instruments, and documents referred to in the LLC Merger Agreement, and (iii)
execute and file with the Colorado Secretary of State a statement of merger as
required by the laws of the State of Colorado to effectuate the merger in
accordance with the terms of the LLC Merger Agreement.

SECTION 1.06 EFFECTIVE TIME. Each of the Mergers shall become effective on
the date on which the articles of merger and statement of merger have been duly
filed in the respective offices of the Minnesota and Colorado Secretary of State
as required by law (the "Effective Time"). At any time after the Effective Time,
LLC as the Surviving Entity may take any action (including executing and
delivering any document) in the name and on behalf of any party to this
Agreement in order to carry out and effectuate the transactions contemplated by
this Agreement.

SECTION 1.07 EFFECT OF THE MERGERS.

(a) Articles of Organization and Operating Agreement. The Articles of
Organization of LLC attached hereto as Exhibit C and the Operating Agreement of
LLC attached hereto as Exhibit D shall become the Articles of Organization and
the Operating Agreement of the Surviving Entity.

(b) Directors and Officers. The officers and directors of the Cooperative
at the Effective Time shall, from and after the Effective Time, be the directors
and officers of LLC (the "LLC Directors and Officers") to serve until their
respective terms have expired and their successors have been duly elected and
qualified in accordance with the terms of LLC's Operating Agreement. The terms
of the LLC Directors and Officers shall expire on the date each such director's
or officer's term would have expired under Article III Section 1 of the
Cooperative's Amended and Restated Bylaws had the Mergers not occurred. At the
Effective Time, the initial directors and officers of MCP Colorado and LLC
immediately prior to the Effective Time shall resign as directors and officers
of MCP Colorado and LLC, respectively.

(c) Stock and Units of Equity Participation. At the Effective Time, without
any further action by the parties or any of their respective members, and as
further described in the MCP Merger Agreement and the LLC Merger Agreement:

(i) Each member of the Cooperative prior to the Effective Time shall first
become a member of MCP Colorado as a result of the MCP Merger and then shall
automatically become a member of LLC as the Surviving Entity upon consummation
of the LLC Merger; and

(ii) Upon consummation of the MCP Merger, (1) the stock and units of equity
participation held by each member and each nonmember of the Cooperative shall be
automatically converted into like forms and amounts (on a one-for-one basis) of
stock and units of equity participation of MCP Colorado and (2) all stock of MCP
Colorado owned by the Cooperative shall be cancelled without payment of any
consideration therefor. Upon consummation of the LLC Merger, (1) each unit of
equity participation of MCP Colorado shall automatically be converted into one
Class A Unit (for voting members) or one Class B Unit (for nonvoting members) of
LLC and (2) each outstanding share of common stock of MCP Colorado shall be
cancelled.

ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COOPERATIVE

SECTION 2.01 REPRESENTATIONS AND WARRANTIES OF THE COOPERATIVE. The
Cooperative represents and warrants to MCP Colorado that the statements
contained in this Article II are correct and complete in all material respects
as of the date of this Agreement.

SECTION 2.02 ORGANIZATION AND GOOD STANDING. The Cooperative is a
cooperative association duly organized and existing under Chapter 308A of the
Minnesota Statutes (as amended, the "Cooperative

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Act"), is in good standing under the laws of the State of Minnesota, and has all
requisite corporate power and authority to own its properties and conduct its
business as it is presently being conducted. The Cooperative is duly qualified
to do business and is in good standing in each jurisdiction in which it conducts
business or owns or leases properties of a nature which would require such
qualification.

SECTION 2.03 CAPITAL STOCK AND EQUITY PARTICIPATION UNITS. As of the date
hereof, the authorized capital stock of the Cooperative consists solely of
100,000 shares of common stock, of which 28,317 are issued and outstanding, and
100,000 shares of preferred stock, none of which are issued and outstanding. A
total of 195,563,723 units of equity participation (voting and nonvoting) are
issued and outstanding. The outstanding shares of common stock and units of
equity participation have been duly authorized and are validly issued and
outstanding.

SECTION 2.04 FINANCIAL STATEMENTS. The Cooperative has delivered to MCP
Colorado its audited financial statements as of March 31, 1998, accompanied by
the opinion of Clifton, Gunderson, LLC and its unaudited financial statements as
of September 30, 1998, certified by the Treasurer of the Cooperative. Such
financial statements fairly present the financial position of the Cooperative at
the dates indicated therein and the results of its operation for the periods
indicated therein, in conformity with generally accepted accounting principles
consistently applied. There has been no material adverse change in the financial
condition or results of operations of the Cooperative since the date of such
financial statements.

SECTION 2.05 UNDISCLOSED LIABILITIES. Except for those liabilities
reflected in the financial statements referred to in Section 2.04 and for
liabilities incurred in the ordinary course of business since September 30,
1998, the Cooperative has not incurred a liability that, either individually or
in the aggregate, has had or will have a material adverse effect on the
Cooperative.

SECTION 2.06 COMPLIANCE WITH APPLICABLE LAWS. The Cooperative is in
compliance with all applicable laws and regulations the violation of which would
have a material adverse effect on the Cooperative or on its business as
currently conducted. The Cooperative has all material licenses and permits
required by law or otherwise necessary for the proper operation of its business
as currently conducted, all of such licenses and permits are in full force and
effect, and no action to terminate, withdraw, not renew or materially limit or
otherwise change any such license or permit is pending or has been threatened by
any governmental agency or other party.

SECTION 2.07 LEGAL PROCEEDINGS. There is no material action, proceeding or
investigation by any administrative or regulatory body or other person which has
been commenced or is pending, or to the best of the Cooperative's knowledge
after reasonable inquiry, is threatened against the Cooperative or any of the
assets which are owned by the Cooperative.

SECTION 2.08 ABSENCE OF DEFAULTS. The Cooperative is not in any material
respect in default under any provision of its Articles of Incorporation or
Bylaws or any material indenture, mortgage, loan agreement or other material
agreement to which it is a party or by which it is bound, and the Cooperative is
not in violation of any statute, order, rule or regulation of any court or
governmental agency having jurisdiction over it or its properties which if
enforced could have a material adverse effect on its business, and except for
any consent or approval identified on Exhibit E attached hereto, neither the
execution and delivery of this Agreement nor the consummation of the
Transactions in accordance with this Agreement will in any material respect
conflict with or result in a breach of any of the foregoing, which if enforced
could have a material adverse effect on its business.

SECTION 2.09 AUTHORIZATION. The Cooperative has the corporate power and
authority to execute and to perform its obligations under this Agreement
(subject to the approval of its members as required by Section 6.01(a)). This
Agreement and the Transaction have been duly and validly authorized by the Board
of Directors of the Cooperative, and, except for the approval of its members as
required by Section 6.01(a), no other corporate action is required by the
Cooperative in connection with this Agreement or the Transaction. This Agreement
constitutes the valid and binding agreement of the Cooperative, enforceable
against the Cooperative in accordance with its terms, except to the extent such
enforcement may be limited by the application of equitable principles where
equitable relief is sought or bankruptcy and other laws relating to the
enforcement of creditors, rights generally.

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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF MCP COLORADO

SECTION 3.01 REPRESENTATIONS AND WARRANTIES OF MCP COLORADO. MCP Colorado
represents and warrants to the Cooperative and LLC that the statements contained
in this Article III are correct and complete in all material respects as of the
date of this Agreement.

SECTION 3.02 ORGANIZATION AND GOOD STANDING. MCP Colorado is a cooperative
association duly organized and existing under the Colorado Cooperative Act, is
in good standing under the laws of the State of Colorado, and has all requisite
corporate power and authority to own its properties and conduct its business as
it is presently being conducted. MCP Colorado is duly qualified to do business
and is in good standing in each jurisdiction in which it conducts business or
owns or leases properties of a nature which would require such qualification.

SECTION 3.03 CAPITAL STOCK. As of the date hereof, the authorized capital
stock of MCP Colorado consists of 100,000 shares of common stock, of which one
share is issued and outstanding, and 100,000 shares of preferred stock, of which
none are issued and outstanding.

SECTION 3.04 AUTHORIZATION. MCP Colorado has the corporate power and
authority to execute and to perform its obligations under this Agreement
(subject to the approval of its member as required by Sections 6.01(b) and
6.02(a)). This Agreement and the Transaction have been duly and validly
authorized by the Board of Directors of MCP Colorado, and except for the
approvals of its members and defined members as required by Sections 6.01(b) and
6.02(a) no other corporate action is required by MCP Colorado in connection with
this Agreement or the Transactions. This Agreement constitutes the valid and
binding agreement of MCP Colorado, enforceable against MCP Colorado in
accordance with its terms, except to the extent such enforcement may be limited
by the application of equitable principles where equitable relief is sought or
bankruptcy and other laws relating to the enforcement of creditors, rights
generally.

ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF LLC

SECTION 4.01 REPRESENTATIONS AND WARRANTIES OF LLC. LLC represents and
warrants to MCP Colorado that the statements contained in this Article IV are
correct and complete in all material respects as of the date of this Agreement.

SECTION 4.02 ORGANIZATION AND GOOD STANDING. LLC is a limited liability
company duly organized and existing under the Colorado Limited Liability Company
Act, is in good standing under the laws of the State of Colorado, and has all
requisite corporate power and authority to own its properties and conduct its
business as it is presently being conducted. LLC is duly qualified to do
business and is in good standing in each jurisdiction in which it conducts
business or owns or leases properties of a nature which would require such
qualification.

SECTION 4.03 CAPITAL STOCK. As of the date hereof, the authorized capital
stock of LLC consists of 350,000,000 Class A units and 150,000,000 Class B
units, of which none are issued and outstanding, respectively.

SECTION 4.04 AUTHORIZATION. LLC has the corporate power and authority to
execute and to perform its obligations under this Agreement. This Agreement and
the Transaction have been duly and validly authorized by the Board of Directors
of LLC, and, no other corporate action is required by LLC in connection with
this Agreement or the Transaction. This Agreement constitutes the valid and
binding agreement of LLC, enforceable against LLC in accordance with its terms,
except to the extent such enforcement may be limited by the application of
equitable principles where equitable relief is sought or bankruptcy and other
laws relating to the enforcement of creditors, rights generally.

ARTICLE V
COVENANTS

SECTION 5.01 REASONABLE BEST EFFORTS. Each party agrees to cooperate with
the other parties hereto and to use its reasonable best efforts in good faith
to take, or cause to be taken, all actions, and

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to do, or cause to be done, all things necessary, proper or desirable, or
advisable under applicable laws, so as to permit consummation of the Mergers as
promptly as practicable. In addition, each party shall cooperate and use its
reasonable best efforts to prepare all documentation, to effect all filings and
to obtain all permits, consents, approvals and authorizations of all third
parties necessary to consummate the Transactions contemplated by this Agreement.

SECTION 5.02 CONDUCT OF BUSINESS. During the period from the date of this
Agreement to the Effective Time, except as expressly contemplated by this
Agreement, each of the Cooperative, MCP Colorado and LLC shall conduct its
business in the ordinary course and in a manner consistent with its past
practices (except as expressly contemplated hereby), and shall use good faith
efforts to preserve intact its business organization, properties (except as they
may be sold, used or otherwise disposed of in the ordinary course) and the good
will of its members, suppliers, customers and others having business
relationships with it.

SECTION 5.03 FORBEARANCES. During the period from the date of this
Agreement to the Effective Time, except as expressly contemplated by this
Agreement, without the prior consent of the other parties to this Agreement, no
party shall:

(a) grant to any person any option or other right to acquire capital stock
or other equity interests, except for allocation of patronage equities in a
manner consistent with past practice;

(b) issue any additional shares or units of capital stock and other equity
interests, except in the ordinary course of business and consistent with past
practice;

(d) amend its Articles of Incorporation or Articles of Organization, as the
case may be, its Bylaws or Operating Agreement, as the case may be, or any board
policies;

(e) incur any indebtedness for borrowed money or make any commitment to
borrow money, except indebtedness incurred in the ordinary course of business
pursuant to credit arrangements existing as of the date of this Agreement
(including any renewals thereof);

(f) make any material capital expenditures other than in the ordinary
course of business or which were disclosed to the other party;

(g) mortgage any of its assets or properties, or except in the ordinary
course of business, sell any of its material assets or properties;

(h) pay any dividends or make any distributions with respect to its capital
stock or equity interests, except in the ordinary course of business;

(i) reclassify, combine, subdivide, split, or amend its capital stock or
equity interests;

(j) purchase, acquire or redeem any shares of its capital stock or equity
interests, except in the ordinary course of business; or

(k) agree or commit to do any of the foregoing.

SECTION 5.04 MEETINGS OF MEMBERS. Each of the Cooperative and MCP Colorado
will take all steps necessary to call an appropriate meeting of its respective
members, for the purpose of considering and voting on this Agreement and its
respective Merger in accordance with its respective Articles of Incorporation,
Bylaws and applicable law.

SECTION 5.05 ACCESS. Each party will permit the authorized representatives
of the other parties to have full access at all reasonable times, and in a
manner so as not to interfere with the normal business operations of such party,
to all premises, properties, personnel, books, records (including tax records),
contracts, and documents of or pertaining to such party, and will furnish them
such additional financial and operating data and other information concerning
its business and properties as such other parties may from time to time
reasonably request. Each of the parties will use their best efforts to cause all
confidential information obtained by it from the other parties to be treated as
such, will also use its best efforts not to use such information in a manner
detrimental to such party and, if for any reason the

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Transactions are not consummated, will promptly return all documents, papers,
books, records and other materials (and all copies thereof) obtained in the
course of its investigation and evaluation.

SECTION 5.06 NOTICE OF DEVELOPMENTS. Each party will give prompt written
notice to the other of any material adverse development causing a breach of any
of its own representations and warranties contained herein. Except as specified
in such written notice, no disclosure by a party pursuant to this Section 5.06
shall be deemed to prevent or cure any misrepresentation, breach of warranty, or
breach of covenant.

SECTION 5.07 EXCLUSIVITY. Except for the Transactions contemplated by this
Agreement, none of the parties will (i) solicit, initiate, or encourage the
submission of any proposal or offer from any person relating to the acquisition
of any capital stock or other voting securities, or any substantial portion of
the assets, of such party (including any acquisition structured as a merger,
consolidation, or share exchange) or (ii) participate in any discussions or
negotiations regarding, furnish any information with respect to, assist or
participate in, or facilitate in any other manner any effort or attempt by any
person to do or seek any of the foregoing. Each party will notify the other
party immediately if any person makes any proposal, offer, inquiry, or contact
with respect to any of the foregoing.

SECTION 5.08 REGISTRATION STATEMENT. LLC shall promptly prepare and file
with the SEC a Registration Statement on Form S-4 (the "Registration Statement")
in connection with the issuance of Class A and Class B units in the LLC Merger.
The parties shall use their reasonable best efforts to have the Registration
Statement declared effective under the Securities Act of 1933 (the "Securities
Act") as promptly as practicable after such filing, and the parties shall
thereafter mail or deliver the Information Statement Prospectus, which
constitutes a part of the Registration Statement, to their respective members.

ARTICLE VI
CONDITIONS PRECEDENT

SECTION 6.01 CONDITIONS TO OBLIGATIONS OF EACH PARTY TO THE MCP MERGER. The
respective obligations of the Cooperative and MCP Colorado to consummate the MCP
Merger and other matters described in this Agreement, are subject to the
satisfaction or waiver of each of the following conditions on or before the
Effective Time, except that condition (f) must be satisfied and cannot be waived
by either party:

(a) The members of the Cooperative shall have approved this Agreement and
the MCP Merger Agreement, all in accordance with the requirements of applicable
law and the Articles of Incorporation and Bylaws of the Cooperative;

(b) The member of MCP Colorado shall have approved the MCP Merger Agreement
and this Agreement all in accordance with the requirements of applicable law and
the Articles of Incorporation and Bylaws of MCP Colorado;

(c) No injunction, restraining order or order of any nature issued by any
court of competent jurisdiction, government or governmental agency enjoining the
Transaction shall have been issued and remain in effect;

(d) All consents, approvals and waivers which are necessary in connection
with the Transactions, or any part thereof, shall have been obtained, including
the consents and approvals referred to in Exhibits E and F attached hereto;

(e) No action shall have been threatened or instituted by any governmental
agency or any other person challenging the legality of the Transactions, seeking
to prevent or delay consummation of the Transactions or seeking to obtain
divestiture or other relief in the event of consummation of the Transactions. It
is understood in the event that such an action is threatened or instituted, the
parties will first attempt for a period of 90 days to obtain dismissal or other
favorable resolution of such threatened or actual action prior to exercise of
their right to terminate hereunder;

(f) The member of MCP Colorado shall have approved the LLC Merger Agreement
and this Agreement as set forth in Section 6.02(a); and

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(g) The Registration Statement shall have become effective under the
Securities Act and no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been initiated or threatened by the SEC.

SECTION 6.02 CONDITIONS TO OBLIGATIONS OF EACH PARTY TO THE LLC MERGER. The
respective obligations of MCP Colorado and LLC to consummate the LLC Merger and
other matters described in this Agreement, are subject to the satisfaction or
waiver of each of the following conditions on or before the Effective Time,
except that condition (f) must be satisfied and cannot be waived by either
party:

(a) The member of MCP Colorado shall have approved this Agreement and the
LLC Merger Agreement, all in accordance with the requirements of applicable law
and the Articles of Incorporation and Bylaws of MCP Colorado;

(b) No injunction, restraining order or order of any nature issued by any
court of competent jurisdiction, government or governmental agency enjoining the
Transaction shall have been issued and remain in effect;

(c) All consents, approvals and waivers which are necessary in connection
with the Transactions, or any part thereof, shall have been obtained, including
the consents and approvals referred to in Exhibits E and F attached hereto;

(d) No action shall have been threatened or instituted by any governmental
agency or any other person challenging the legality of the Transactions, seeking
to prevent or delay consummation of the Transactions or seeking to obtain
divestiture or other relief in the event of consummation of the Transactions. It
is understood in the event that such an action is threatened or instituted, the
parties will first attempt for a period of 90 days to obtain dismissal or other
favorable resolution of such threatened or actual action prior to exercise of
their right to terminate hereunder;

(e) The members of the Cooperative and the member of MCP Colorado shall
have approved the MCP Merger Agreement and this Agreement as set forth in
Section 6.01(a) and 6.01(b), and the MCP Merger should be consummated; and

(f) The Registration Statement shall have become effective under the
Securities Act and no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been initiated or threatened by the SEC.

SECTION 6.03 ADDITIONAL CONDITIONS TO OBLIGATION OF THE COOPERATIVE. The
obligation of the Cooperative to consummate the MCP Merger is subject to the
satisfaction or waiver of each of the following additional conditions at or
before the Effective Time:

(a) The representations and warranties of MCP Colorado contained in this
Agreement shall be true and correct in all material respects as of the Effective
Time as though such representations and warranties were made on and as of the
Effective Time, and MCP Colorado shall have performed in all material respects
all obligations required to be performed by it under this Agreement and the MCP
Merger Agreement prior to the Effective Time;

(b) The Cooperative shall have received a certificate, dated as of the
Effective Time, and executed by the President of MCP Colorado, certifying in
such detail as the Cooperative may reasonably request as to the accuracy of such
representations and warranties, the fulfillment of such obligations, compliance
with such covenants and satisfaction of the conditions to the Cooperative's
obligation as of the Effective Time; and

(c) All actions, proceedings and documents necessary to carry out the
Transactions shall be reasonably satisfactory to the Cooperative.

SECTION 6.04 ADDITIONAL CONDITIONS TO OBLIGATION OF MCP COLORADO. The
obligation of MCP Colorado to consummate the MCP Merger and the LLC Merger is
subject to the satisfaction or waiver of each of the following additional
conditions at or before the Effective Time:

(a) The representations and warranties of the Cooperative and LLC contained
in this Agreement shall be true and correct in all material respects as of the
Effective Time as though such representations and warranties were made on and as
of the Effective Time, and the Cooperative and LLC shall have

C-7
<PAGE>

performed in all material respects all of their respective obligations required
to be performed by each of them under this Agreement, the MCP Merger Agreement,
and the LLC Merger Agreement prior to the Effective Time;

(b) No fact, event or circumstance shall have occurred or become known to
MCP Colorado after the date hereof that alone, or together with all other facts,
events or circumstances, has had or is reasonably likely to have a material
adverse effect on the Cooperative or the Surviving Entity;

(c) MCP Colorado shall have received a certificate, from each of the
Cooperative and LLC dated as of the Effective Time, executed by their
Presidents, certifying in such detail as MCP Colorado may reasonably request as
to the accuracy of their representations and warranties, the fulfillment of
their obligations, compliance with their covenants and satisfaction of the
conditions to MCP Colorado's obligations as of the Effective Time; and

(d) All actions, proceedings and documents necessary to carry out the
Transaction shall be reasonably satisfactory to MCP Colorado.

SECTION 6.05 ADDITONAL CONDITIONS TO OBLIGATION OF LLC. The obligation of
LLC to consummate the LLC Merger is subject to the satisfaction or waiver of
each of the following additional conditions at or before the Effective Time:

(b) No fact, event or circumstance shall have occurred or become known to
LLC after the date hereof that alone, or together with all other facts, events
or circumstances, has had or is reasonably likely to have a material adverse
effect on MCP Colorado;

(c) LLC shall have received a certificate, dated as of the Effective Time,
and executed by the President of MCP Colorado, certifying in such detail as LLC
may reasonably request as to the accuracy of such representations and
warranties, the fulfillment of such obligations, compliance with such covenants
and satisfaction of the conditions to LLC's obligation as of the Effective Time;
and

(d) All actions, proceedings and documents necessary to carry out the
Transactions shall be reasonably satisfactory to LLC.

ARTICLE VII
POST CLOSING AGREEMENTS

SECTION 7.01 EMPLOYEE BENEFIT PLANS. From and after the Effective Time, the
employee benefit plans of the Cooperative in effect as of the date of this
Agreement shall remain in effect with respect to employees of the Cooperative
(or their subsidiaries) covered by such plans at the Closing Date until such
time as LLC shall, subject to applicable law and the terms of such plans, adopt
new benefit plans with respect to employees of LLC. LLC agrees to honor in
accordance with their terms all benefits vested as of the date hereof under the
employee benefit plans of the Cooperative. Nothing in this Section 7.01 shall be
interpreted as preventing LLC from amending, modifying or terminating any
employee benefit plan of the Cooperative or other contracts, arrangements,
commitments or understandings, in accordance with their terms and applicable
law.

SECTION 7.02 PATRONAGE DISTRIBUTIONS. Following the Effective Time and
within the time period required by the various provisions of the Code, the
Surviving Entity will make patronage distributions to the former members of each
party based on patronage transactions with the respective parties during each
party's respective fiscal year or portion thereof immediately preceding the
Effective Time. The patronage distributions shall be in the form of cash and
equity credits in a manner consistent with the previous patronage distributions
of each party (and in the case of equity credits, in the form of Class A Units
or Class B units of LLC, as appropriate).

C-8
<PAGE>

SECTION 7.03 1996 LOSS PAYABLE. After the Effective Time, the unpaid
portion of the Cooperative's operating loss for the fiscal year ended September
30, 1996 that was assessed against a unit of equity participation of the
Cooperative shall continue as a lien against a Class A unit received in the LLC
Merger.

SECTION 7.04 INDEMNIFICATION; DIRECTORS' AND OFFICERS; INSURANCE. From and
after the Effective Time, the Surviving Entity shall indemnify each present and
former director, officer, employee or agent of the Cooperative or MCP Colorado
and each person who, while a director or officer of the Cooperative and at the
request of the Cooperative, serves or has served another corporation,
cooperative, partnership, joint venture or any other enterprise as a director,
officer or partner, against any losses, claims, damages, liabilities or expenses
(including legal fees) arising out of or pertaining to matters existing or
occurring at or before the Effective Time, whether asserted or claimed prior to,
at or after the Effective Time, to the fullest extent permitted by law. The
Surviving Entity may obtain insurance coverage against any such loss, claim or
expense, subject to standard exclusions and exceptions to coverage, but is not
obligated to do so.

ARTICLE VIII
TERMINATION

SECTION 8.01 TERMINATION OF AGREEMENT. This Agreement shall be terminated
and the Transactions abandoned if at any time prior to the Effective Time:

(a) The members of the Cooperative fail to approve the Merger as required
by Section 6.01(a) or the member of MCP Colorado fails to approve the Merger as
required by Sections 6.01(b) and 6.02(a).

(b) The parties mutually agree in writing to terminate this Agreement; or

(c) Either party to a Merger delivers a written notice to the other, to the
effect that (i) one or more of the conditions to its obligations as set forth
herein cannot be met, (ii) the other party has defaulted in a material respect
under one or more of its covenants or agreements contained herein, or (iii) any
of the representations or warranties of the other party are or have become
materially untrue or incorrect as of the date of such notice, and in any case
such condition or conditions have not been satisfied, such default or defaults
have not been remedied or such representation or warranty has not been rendered
true and correct within thirty(30) days after such notice is mailed; or

(d) The Closing has not occurred on or before September 1, 1999, or such
later date as the parties may mutually agree upon.

SECTION 8.02 EFFECT OF TERMINATION. If this Agreement is terminated
pursuant to Section 8.01 above, all rights and obligations of the parties
hereunder shall terminate without any liability of either party to the other
(except for any liability of a party then in breach); provided, however, that
the confidentiality and return of documents provisions contained in or referred
to Section 5.05 above shall survive any such termination.

C-9
<PAGE>

ARTICLE IX
MISCELLANEOUS

SECTION 9.01 WAIVER. At any time before the Effective Time, any provision
of this Agreement may, to the extent legally allowed, be waived by the party
benefitted by the provision by an agreement in writing between the parties
hereto executed in the same manner as this Agreement, except that after approval
of the Mergers contemplated by this Agreement by the respective members of the
Cooperative and MCP Colorado, there may not be any waiver of any provision of
this Agreement which would reduce the amount or form of consideration to be
received by members in the Mergers.

SECTION 9.02 AMENDMENT. The parties by mutual consent may amend, modify or
supplement this Agreement in such manner as may be agreed upon in writing;
provided, however, that after approval of the Mergers by the respective members
of the Cooperative and MCP Colorado, this Agreement may not be amended if it
would violate applicable law or reduce the amount or form of the consideration
to be received by members in the Mergers.

SECTION 9.03 BINDING NATURE. This Agreement shall be binding upon and inure
only to the benefit of the parties hereto and their respective successors and
assigns, provided that neither this Agreement nor any of the rights, interests
or obligations hereunder shall be assigned or delegated by any of the parties
hereto without the prior written consent of the other parties hereto.

SECTION 9.04 COUNTERPARTS. 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 and the same instrument.

SECTION 9.05 ENTIRE AGREEMENT. This Agreement, the MCP Merger Agreement,
the LLC Merger Agreement and the other documents referred to herein and therein
set forth the entire understanding of the parties hereto with respect to the
matters provided for herein and therein and supersede all prior agreements,
covenants, arrangements, communications, representations or warranties, whether
oral or written, by any officer, employee or representative of either party.

SECTION 9.06 NOTICES. All notices, requests, demands and other
communications hereunder shall be deemed to have been duly given if delivered
personally, telecopied (with confirmation) or mailed by certified or registered
mail (return receipt requested), to the parties at the following addresses (or
such other address as such party may specify by like notice):

If to the Cooperative: Minnesota Corn Processors, Inc.
901 North Highway 59
Marshall, MN 56258
Attn: L. Dan Thompson

If to MCP Colorado: Minnesota Corn Processors Colorado
901 North Highway 59
Marshall, MN 56258
Attn: Jerry Jacoby

If to LLC: Minnesota Corn Processors, LLC
901 North Highway 59
Marshall, MN 56258
Attn: Jerry Jacoby

SECTION 9.07 NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of the parties contained in Articles II, III and
IV of this Agreement shall form the basis for closing conditions only, shall not
survive the Effective Time and shall not form the basis for any action by or on
behalf of either party or any third party for breach, misrepresentation or
indemnity at any time after the Effective Time.

SECTION 9.08 CAPTIONS. The article and section headings of this Agreement
are for convenience only and shall not affect the meaning or construction of
this Agreement.

C-10
<PAGE>

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first set forth above.

MINNESOTA CORN PROCESSORS, INC.

By:
--------------------------------------

Its:
--------------------------------------

MINNESOTA CORN PROCESSORS COLORADO

By:
--------------------------------------

Its:
--------------------------------------

MINNESOTA CORN PROCESSORS, LLC

By:
--------------------------------------

Its:
--------------------------------------

C-11
<PAGE>

EXHIBIT A

PLAN OF MERGER

THIS PLAN OF MERGER (the "Plan") is dated as of May __, 1999, and is by and
between MINNESOTA CORN PROCESSORS, INC (the "Cooperative") and MINNESOTA CORN
PROCESSORS COLORADO ("MCP Colorado"), each of which may be referred to herein as
a "Constituent Cooperative" and both of which may be collectively referred to
herein as the "Constituent Cooperatives."

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements of the parties contained herein, the parties hereto agree as
follows:

SECTION 3. EFFECT OF MERGER. From and after the Effective Time, without any
further action by the Constituent Cooperatives or any of their respective
members: (a) MCP Colorado, as the surviving cooperative in the MCP Merger, shall
have all of the rights, privileges, immunities and powers, and shall be subject
to all the duties and liabilities, of a cooperative organized under the Colorado
Act; (b) MCP Colorado, as the surviving cooperative in the MCP Merger, shall
possess all of the rights, privileges, immunities and franchises, of a public as
well as a private nature, of each Constituent Cooperative, and all property,
real, personal and mixed, and all debts due on whatever account, including all
choices in action, and each and every other interest of or belonging to or due
to each Constituent Cooperative, shall be deemed to be and hereby is vested in
MCP Colorado, without further act or deed, and the title to any property, or any
interest therein, vested in either Constituent Cooperative, shall not revert or
be in any way impaired by reason of the MCP Merger; (c) MCP Colorado shall be
responsible and liable for all of the liabilities and obligations of each
Constituent Cooperative, and any claim existing or action or proceeding pending
by or against one of the Constituent Cooperatives may be prosecuted as if the
MCP Merger had not taken place or MCP Colorado may be substituted in its place;
(d) neither the rights of creditors nor any liens upon the property of either of
the Constituent Cooperatives shall be impaired by the MCP Merger; and (e) the
MCP Merger shall have any other effect set forth in the Acts and the Amended and
Restated Transaction Agreement dated May __, 1999 between the Cooperative, MCP
Colorado and LLC (the "Transaction Agreement"); all with the effect and to the
extent provided in the applicable provisions of the Acts.

SECTION 4. ARTICLES OF INCORPORATION AND BYLAWS. From and after the
Effective Time, pursuant to the Articles of Merger and without any further
action by the Constituent Cooperatives or any of their

C-12
<PAGE>

respective members, the Articles of Incorporation of MCP Colorado in effect
immediately prior to the Effective Time shall be the Articles of Incorporation
of MCP Colorado, as the surviving cooperative in the MCP Merger (the "Surviving
Entity Articles"). From and after the Effective Time, without any further action
by the Constituent Cooperatives or any of their respective members, the Bylaws
of MCP Colorado in effect immediately prior to the Effective Time shall be the
Bylaws of MCP Colorado, as the surviving cooperative in the MCP Merger (the
"Surviving Entity Bylaws"). A copy of the Surviving Entity Articles of
Incorporation and Bylaws was provided to the respective members of each
Constituent Cooperative in connection with their consideration of the MCP
Merger.

(c) EXCHANGE AND CONTINUATION OF COOPERATIVE EQUITY INTERESTS. As of
the Effective Time, without any further action by the Constituent
Cooperatives or any of their respective members, all Equity Interests
standing on the books of the Cooperative immediately prior to the Effective
Time shall be determined and exchanged for equal Equity Interests in MCP
Colorado AT ITS STATED DOLLAR AMOUNT ON A DOLLAR-FOR-DOLLAR BASIS,
including as follows:

iii. Patronage Equity Interests and Units of Equity Participation. All
patronage refunds (qualified and nonqualified), units of equity
participation and non-voting units of equity participation and
any other allocated or to be allocated patronage equity interests

C-13
<PAGE>

(including all entitlements thereto) standing on the books of the
Cooperative immediately prior to the Effective Time (which are
not otherwise evidenced by capital stock) shall be exchanged for
equal patronage refunds, units of equity participation and
non-voting units of equity participation, and allocated or to be
allocated equity interests, entitlements to patronage refunds, or
other equal patronage equity interests on the books of MCP
Colorado, at their stated dollar amount on a dollar-for-dollar
basis, and in such denominations or other designations or series
so as to preserve the year of issue (as MCP Colorado deems
necessary) and other terms and conditions of the original
issuance; and each unit of equity participation so exchanged
shall be subject on the books of MCP Colorado to the same
obligation for loss allocation as standing on the books of the
Cooperative immediately prior to the Effective Time.

C-14
<PAGE>

to and possession of all of the properties, rights, privileges, powers and
franchises referred to in Section 3 of this Plan, and otherwise to carry out the
intent and purposes of this Plan. If MCP Colorado shall at any time deem that
any further assignments or assurances or any other acts are necessary or
desirable to vest, perfect or confirm of record or otherwise the title to any
property or to enforce any claims of the Cooperative or MCP Colorado vested in
MCP Colorado pursuant to this Plan, the officers of MCP Colorado or its
successors or assigns, are hereby specifically authorized as attorneys-in-fact
of each the Cooperative and MCP Colorado (which appointment is irrevocable and
coupled with an interest), to execute and deliver any and all such deeds,
assignments and assurances and to do all such other acts in the name and on
behalf of each the Cooperative and MCP Colorado, or otherwise, as such officer
shall deem necessary or appropriate to accomplish such purpose.

SECTION 9. GOVERNING LAW. This Plan shall be governed by and construed in
accordance with the laws of the State of Colorado.

IN WITNESS WHEREOF, this Plan has been agreed to and executed by the duly
authorized representatives of the Cooperative and MCP Colorado, as of the date
first set forth above.

MINNESOTA CORN PROCESSORS, INC.

By:
--------------------------------------

Its:
--------------------------------------

MINNESOTA CORN PROCESSORS COLORADO

By:
--------------------------------------

Its:
--------------------------------------

C-15
<PAGE>

EXHIBIT B

PLAN OF MERGER

THIS PLAN OF MERGER (the "Plan") is dated as of ____________, 1999, and is
by and between MINNESOTA CORN PROCESSORS COLORADO, ("MCP Colorado") and
MINNESOTA CORN PROCESSORS, LLC ("LLC"), each of which may be referred to herein
as a "Constituent Entity" and both of which may be collectively referred to
herein as the "Constituent Entities".

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements of the parties contained herein, the parties hereto agree as
follows:

SECTION 3. EFFECT OF MERGER. From and after the Effective Time, without any
further action by the Constituent Entities or any of their respective members:
(a) LLC, as the surviving entity in the LLC Merger, shall have all of the
rights, privileges, immunities and powers, and shall be subject to all the
duties and liabilities, of a limited liability company organized under the LLC
Act; (b) LLC, as the surviving entity in the LLC Merger, shall possess all of
the rights, privileges, immunities and franchises, of a public as well as a
private nature, of each Constituent Entity, and all property, real, personal and
mixed, and all debts due on whatever account, including all choices in action,
and each and every other interest of or belonging to or due to each Constituent
Entity, shall be deemed to be and hereby is vested in LLC, without further act
or deed, and the title to any property, or any interest therein, vested in
either Constituent Entity, shall not revert or be in any way impaired by reason
of the LLC Merger; (c) LLC shall be responsible and liable for all of the
liabilities and obligations of each Constituent Entity, and any claim existing
or action or proceeding pending by or against one of the Constituent Entities
may be prosecuted as if the LLC Merger had not taken place or LLC may be
substituted in its place; (d) neither the rights of creditors nor any liens upon
the property of either of the Constituent Entity shall be impaired by the LLC
Merger; and (e) the LLC Merger shall have any other effect set forth in the
Acts, the CCA Act, and the Amended and Restated Transaction Agreement dated as
of May __, 1999 between the Cooperative, MCP Colorado and LLC (the "Transaction
Agreement"); all with the effect and to the extent provided in the applicable
provisions of Colorado law.

C-16
<PAGE>

SECTION 4. ARTICLES OF ORGANIZATION; OPERATING AGREEMENT. From and after
the Effective Time, pursuant to the Statement of Merger and without any further
action by the Constituent Entities or any of their respective members, the
Articles of Organization of LLC in effect immediately prior to the Effective
Time shall be the Articles of Organization of LLC, as the surviving entity in
the LLC Merger (the "Surviving Entity Articles"). From and after the Effective
Time, without any further action by the Constituent Entities or any of their
respective members, the Amended and Restated Operating Agreement of LLC as in
effect immediately prior to the Effective Time shall be the Operating Agreement
of LLC, as the surviving entity in the LLC Merger (the "Surviving Entity
Operating Agreement"). A copy of the Surviving Entity Articles of Organization
and Operating Agreement was provided to the respective members of each
Constituent Cooperative in connection with their consideration of the LLC
Merger.

(g) EXCHANGE AND CONTINUATION OF MCP COLORADO MEMBERSHIPS. As of the
Effective Time, without any further action by the Constituent Entities or
any of their respective members, (i) each member and holder of Units of
Participation of MCP Colorado shall become and be a Class A member of LLC,
to the extent they are eligible for membership under the Surviving Entity
Articles and the Surviving Entity Operating Agreement, and (ii) each holder
of non-voting Units of Participation of MCP Colorado shall become and be a
Class B member of LLC. Class A and Class B members shall have such
incidents of membership as are set forth in the Surviving Entity Articles
and the Surviving Entity Operating Agreement.

(h) LLC MEMBERSHIP. As of the Effective Time, without any further
action by the Constituent Entities or any of their respective members, MCP
Colorado, as the sole member of LLC, shall cease to exist by operation of
the merger and shall also cease to be a member of LLC.

(i) EXCHANGE AND CONTINUATION OF MCP COLORADO EQUITY INTERESTS. As of
the Effective Time, without any further action by the Constituent Entities
or any of their respective members, all MCP Colorado Equity Interests
standing on the books of` MCP Colorado immediately after the consummation
of the merger of The Cooperative with and into MCP Colorado, and
immediately prior to the Effective Time shall be determined and exchanged
for proportionally equivalent Equity Interests in LLC as follows:

vi. Voting Units of Equity Participation. Each voting unit of equity
participation standing on the books of MCP Colorado and held by
members of MCP Colorado ("Member Equity") immediately prior to
the Effective Time shall cease to be outstanding and shall be
exchanged for one Class A Unit of LLC; and each Class A Unit of
LLC so exchanged shall be subject on the books of LLC to the
same obligation for loss allocation as standing on the books of
MCP Colorado immediately prior to the Effective Time.

vii. Non-Voting Units of Equity Participation. Each non-voting unit
of equity participation standing on the books of MCP Colorado
and held by non-members of MCP Colorado

C-17
<PAGE>

("Non-Member Equity") immediately prior to the Effective Time
shall cease to be outstanding and shall be exchanged for one
Class B Unit of LLC.

viii. Common Stock. All shares of common stock standing on the books
of MCP Colorado immediately prior to the Effective Time shall be
cancelled and shall cease to exist.

ix. Nonqualified Patronage Refunds. All nonqualified patronage
refunds standing on the books of MCP Colorado immediately prior
to the Effective Time shall be converted into nonvoting
financial interests of LLC having the same stated dollar amount,
years of issue (as LLC deems necessary) and other terms and
conditions as applicable to such nonqualified patronage refunds
immediately prior to the Effective Time.

(j) LLC EQUITY INTERESTS. Prior to the Effective Time, MCP Colorado is
the sole member of LLC and all equity interest of any and every nature in
LLC is owned by and held in the name of MCP Colorado. Upon the Effective
Time, MCP Colorado, as the merging entity, shall merge with and into LLC
and shall cease to exist in its own right. All Equity Interests of any and
every nature standing on the books of LLC immediately prior to the
Effective Time shall be cancelled.

(k) SURVIVING ENTITY ARTICLES AND OPERATING AGREEMENT TO GOVERN.
Membership in LLC and all Equity Interests in LLC issued or credited in
exchange for MCP Colorado Equity Interests and continued with respect to
LLC Equity as described above, shall in all instances be governed by the
provisions of the Surviving Entity Articles and the Surviving Entity
Operating Agreement.

(l) FURTHER ASSURANCES OF HOLDERS OF EQUITY. Each holder of MCP
Colorado Equity Interests and each holder of LLC Equity Interests shall
take such action or cause to be taken such action as LLC may reasonably
deem necessary or appropriate to effect the exchange and continuation of
the equity interests hereunder, including without limitation the execution
and delivery of any stock certificates or other evidences of equity being
exchanged or continued hereunder.

SECTION 8. EFFECTIVE DATE. The LLC Merger shall become effective at the
time of filing of the Statement of Merger with the Secretary of State of
Colorado (the "Effective Time").

SECTION 9. GOVERNING LAW. This Plan shall be governed by and construed in
accordance with the laws of the State of Colorado.

C-18
<PAGE>

IN WITNESS WHEREOF, this Plan has been agreed to and executed by the duly
authorized representatives of MCP Colorado and LLC, as of the date first set
forth above.

MINNESOTA CORN PROCESSORS COLORADO

By:
--------------------------------------

Its:
--------------------------------------

MINNESOTA CORN PROCESSORS, LLC

By:
--------------------------------------

Its:
--------------------------------------

C-19
<PAGE>

APPENDIX D

SECOND AMENDED AND RESTATED
OPERATING AGREEMENT

MINNESOTA CORN PROCESSORS, LLC

A Colorado Limited Liability Company

(CONTAINS RESTRICTIONS ON
TRANSFERABILITY OF MEMBERSHIP INTERESTS)

<PAGE>

MINNESOTA CORN PROCESSORS, LLC

SECOND AMENDED AND RESTATED
OPERATING AGREEMENT

(CONTAINS RESTRICTIONS ON TRANSFERS
OF MEMBERSHIP INTERESTS)

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE I DEFINITIONS ....................................................... D-1
1.1 Terms Defined in the Act .......................................... D-1
1.2 Terms Defined Herein .............................................. D-1

ARTICLE II THE LIMITED LIABILITY COMPANY ..................................... D-6
2.1 Formation; Effective Date of Agreement ............................ D-6
2.2 Name .............................................................. D-6
2.3 Business Purpose .................................................. D-6
2.4 Powers ............................................................ D-6
2.5 Duration .......................................................... D-6
2.6 Registered Office and Registered Agent ............................ D-6
2.7 Principal Office .................................................. D-6
2.8 Title to Property; No Agency Power ................................ D-6
2.9 Limited Liability of Members and Directors ........................ D-7

ARTICLE III MEMBERS ........................................................... D-7
3.1 Membership ........................................................ D-7
3.2 Ownership of Membership Interests ................................. D-7
3.3 Classes of Membership ............................................. D-8
3.4 Voting ............................................................ D-8
3.5 Place of Meetings ................................................. D-8
3.6 Regular Meetings .................................................. D-9
3.7 Special Meetings .................................................. D-9
3.8 Notice of Meetings ................................................ D-9
3.9 Waiver of Notice .................................................. D-9
3.10 Quorum ............................................................ D-9
3.11 Proxies; Mail Ballots ............................................. D-9
3.12 Action Without Meeting ............................................ D-9
3.13 Telephonic Meetings ............................................... D-9
3.14 Termination of Membership ......................................... D-9
3.15 Continuation of the Company ....................................... D-10
3.16 No Obligation to Purchase Units ................................... D-10
3.17 Advance Consent to Certain Substitute Members ..................... D-10
3.18 Compliance with Articles of Organization and Operating Agreement .. D-10
3.19 No Dissenters' Rights ............................................. D-10

ARTICLE IV CAPITAL ........................................................... D-11
4.1 Units ............................................................. D-11
4.2 Capital Accounts .................................................. D-11
4.3 Initial Issuance of Units; Offering of Additional Units ........... D-11
4.4 No Capital Calls .................................................. D-11
4.5 Tax Withholding Obligations ....................................... D-12
4.6 Transferee Succeeds to Transferor's Capital Account ............... D-12
4.7 No Right to Return of Contributions ............................... D-12
4.8 No Interest on Capital Contributions .............................. D-12
4.9 Loans to the Company .............................................. D-12
4.10 No Repayment Liability ............................................ D-12
</TABLE>

D-i
<PAGE>

<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE V ALLOCATIONS AND DISTRIBUTIONS ..................................... D-12
5.1 Allocation of Profits and Losses .................................. D-12
5.2 Special Allocations ............................................... D-12
5.3 Curative Allocations .............................................. D-13
5.4 Loss Limitation ................................................... D-14
5.5 Other Allocation Rules ............................................ D-14
5.6 Tax Allocations ................................................... D-14
5.7 Distributions ..................................................... D-14
5.8 Tax Withholding Obligations Constitute a Distribution ............. D-15

ARTICLE VI BOARD OF DIRECTORS ................................................ D-15
6.1 Board of Directors ................................................ D-15
6.2 Qualifications of Directors ....................................... D-15
6.3 Election of Directors ............................................. D-15
6.4 Removal of Directors .............................................. D-15
6.5 Vacancies ......................................................... D-16
6.6 Annual Meeting .................................................... D-16
6.7 Regular Meetings .................................................. D-16
6.8 Special Meetings .................................................. D-16
6.9 Quorum, Voting .................................................... D-16
6.10 Executive Committee ............................................... D-16
6.11 Compensation ...................................................... D-16
6.12 Number of Districts ............................................... D-16
6.13 Districting Committee ............................................. D-16
6.14 Counties and Districts ............................................ D-17
6.15 Directors and Districts ........................................... D-17
6.16 Board Actions Requiring Approval of Members ....................... D-18
6.17 Board Actions Requiring Approval of ADM ........................... D-18
6.18 Absent Directors .................................................. D-18
6.19 Action Without Meeting ............................................ D-18
6.20 Telephonic Meetings ............................................... D-18

ARTICLE VII DUTIES OF DIRECTORS ............................................... D-19
7.1 General Powers .................................................... D-19
7.2 Employment of President and Chief Executive Officer ............... D-19
7.3 Bonds and Insurance ............................................... D-19
7.4 Accounting System and Audit ....................................... D-19
7.5 Agreements with Members ........................................... D-19
7.6 Depository ........................................................ D-19

ARTICLE VIII BOARD OFFICERS; PRESIDENT AND CHIEF EXECUTIVE
OFFICER ........................................................... D-19
8.1 Election of Board Officers ........................................ D-19
8.2 Duties of Chairman ................................................ D-19
8.3 Duties of Vice Chairman ........................................... D-20
8.4 Duties of Secretary ............................................... D-20
8.5 Duties of President and Chief Executive Officer ................... D-20
8.6 Compensation ...................................................... D-20
8.7 Special Powers .................................................... D-20

ARTICLE IX REQUIRED RECORDS; ACCOUNTING AND TAX MATTERS ...................... D-21
9.1 Required Records .................................................. D-21
9.2 Books of Account .................................................. D-21
9.3 Tax Characterization, Returns, Elections and Information .......... D-21
9.4 Tax Matters Partner; Tax Audit Costs .............................. D-21
</TABLE>

D-ii
<PAGE>

<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE X TRANSFER OF MEMBER INTERESTS ...................................... D-22
10.1 Restrictions on Transfer. ......................................... D-22
10.2 Conditions Precedent to Transfers ................................. D-22
10.3 Substitution of Member ............................................ D-23
10.4 Effective Date of Transfer ........................................ D-23
10.5 Distributions and Allocations in Respect to Transferred Interest .. D-23

ARTICLE XI DISSOLUTION AND WINDING UP ........................................ D-24
11.1 Liquidating Events ................................................ D-24
11.2 Winding Up ........................................................ D-24
11.3 Distributions Upon Dissolution .................................... D-24
11.4 Compliance With Regulations; Deficit Capital Accounts ............. D-24
11.5 Deemed Distribution and Recontribution ............................ D-25
11.6 Allocations During Period of Liquidation .......................... D-25
11.7 Character of Liquidating Distributions ............................ D-25

ARTICLE XII MEMBERS BOUND BY AGREEMENT ........................................ D-25

ARTICLE XIII INDEMNIFICATION OF DIRECTORS AND EMPLOYEES ........................ D-26
13.1 Indemnity of Directors, Employees and Other Agents ................ D-26

ARTICLE XIV MISCELLANEOUS ..................................................... D-26
14.1 Entire Agreement .................................................. D-26
14.2 Amendment ......................................................... D-26
14.3 Conflict with Articles ............................................ D-26
14.4 Certificates of Membership Interest ............................... D-26
14.5 Severability ...................................................... D-26
14.6 Remedies .......................................................... D-27
14.7 Consent and Waiver ................................................ D-27
14.8 No Third Party Beneficiary ........................................ D-27
14.9 Notices ........................................................... D-27
14.10 Binding Effect .................................................... D-27
14.11 Necessary Instruments and Acts .................................... D-27
14.12 Number and Gender ................................................. D-27
14.13 Interpretation .................................................... D-27
14.14 Counterparts ...................................................... D-27
14.15 Governing Law ..................................................... D-27

SCHEDULE A
</TABLE>

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<PAGE>

MINNESOTA CORN PROCESSORS, LLC

SECOND AMENDED AND RESTATED
OPERATING AGREEMENT

(CONTAINS RESTRICTIONS ON TRANSFERS
OF MEMBERSHIP INTERESTS)

THIS SECOND AMENDED AND RESTATED OPERATING AGREEMENT is entered into and
made effective as of the ____ day of October, 1999 by and between Minnesota Corn
Processors, LLC, a Colorado limited liability company (the "Company"), and the
members of the Company who are identified as such on the Membership Register
from time to time (collectively, the "Members").

RECITALS

WHEREAS, the Cooperative, as the only initial Member, has caused the
Company to be formed under the laws of the State of Colorado for the following
purposes: (a) to acquire all of the businesses and assets of Minnesota Corn
Processors, Inc., a Minnesota cooperative corporation (the Cooperative"); and
(b) to operate the corn processing and marketing business currently operated by
the Cooperative; and (c) for any other lawful purpose;

WHEREAS, the Cooperative and the Company previously entered into an
Operating Agreement dated as of January 22, 1999 (the "Original Agreement"), and
an Amended and Restated Operating Agreement dated as of May __, 1999 the
"Amended Agreement"), and adopted the Original Agreement and, subsequently, the
Amended Agreement, as the operating agreement of the Company as contemplated by
Section 7-80-108 of the Colorado Limited Liability Company Act;

WHEREAS, the Cooperative and the Company wish to amend and restate the
Amended Agreement in its entirety effective as of the date hereof and hereby
adopt this Second Amended and Restated Operating Agreement as the operating
agreement of the Company for purposes of Section 7-80-108 of the Colorado
Limited Liability Company Act;

NOW THEREFORE, in consideration of the foregoing and the mutual agreements
of the Members contained herein, and the mutual benefits to be gained by the
performance hereof, each of the Members agrees as follows:

ARTICLE I

DEFINITIONS

1.1 Terms Defined in the Act. Unless defined specifically herein, terms
relating to a limited liability company shall have the meanings given in or
interpreted under the Colorado Limited Liability Company Act.

1.2 Terms Defined Herein. The following capitalized words and phrases shall
have the following respective meanings as used herein, except as may be
otherwise expressly provided in this Agreement or unless the context otherwise
specifies.

"ACT" means the Colorado Limited Liability Company Act, as amended,
and any successor thereto.

"ADJUSTED CAPITAL ACCOUNT DEFICIT" means, with respect to any Unit
Holder, the deficit balance, if any, in such Unit Holder's Capital Account as of
the end of the relevant allocation period, after giving effect to the following
adjustments:

(i) Credit to such Capital Account any amounts which such Unit Holder
is deemed to be obligated to restore pursuant to the penultimate sentences in
Sections 1.704-2(g)(1) and 1.704-2(i)(5) of the Regulations; and

D-1
<PAGE>

(ii) Debit to such Capital Account the items described in Sections
1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) and 1.704-1(b)(2)(ii)(d)(6) of
the Regulations.

This definition is intended to comply with the provisions of Section
1.704-1(b)(2)(ii)(d) of the Regulations and shall be interpreted consistently
therewith.

"ADM" means Archer Daniels Midland Company, a Delaware corporation.

"AFFILIATE" means, with respect to a specified Person, any Person,
directly or indirectly, through one or more intermediaries, controlling or
controlled by, or under common control with a specified Person. The term
"control", as used in the preceding sentence, means with respect to a
corporation the right to exercise, directly or indirectly, more than 50% of the
voting rights attributable to the controlled corporation, and, with respect to
any partnership, trust or other entity or association, the possession, directly
or indirectly, of the power to direct or cause the direction of the management
or policies of the controlled entity.

"AGREEMENT" means this Second Amended and Restated Operating Agreement
of Minnesota Corn Processors, LLC, as amended, modified or supplemented from
time to time, including any schedules to this Agreement. Words such as "herein",
"hereinafter", "hereof", and "hereunder" refer to this Agreement.

"ARTICLES OF ORGANIZATION" means the Articles of Organization filed on
behalf of the Company with the Secretary of State of Colorado, as from time to
time amended.

"BOARD" or "BOARD OF DIRECTORS" means the Board of Directors of the
Company established by Article VI. For purposes of the Act, the "Board" or
"Board of Directors" shall mean the board of managers of the Company.

"CAPITAL ACCOUNT" means, with respect to any Unit Holder, the Capital
Account maintained for such Person in accordance with the provisions of Section
4.2 herein.

"CAPITAL CONTRIBUTIONS" means, with respect to any Unit Holder, the
amount of money and the Gross Asset Value of any property (other than money) and
the agreed value of services rendered or the obligation to perform services
which are contributed to the capital of the Company with respect to the Units
held by such Person pursuant to the terms of this Agreement.

"CERTIFICATE OF MEMBERSHIP INTEREST" means a certificate or other
evidence of ownership of the Units adopted by the Company pursuant to Section
14.4 of this Agreement.

"CLASS A MEMBER" means a Member that owns Class A Units.

"CLASS B MEMBER" means a Member that owns Class B Units.

"CLASS A UNITS" means the unit of measurement used to quantify the
Membership Interest of a Member eligible to purchase a voting Membership
Interest.

"CLASS B UNITS" means the unit of measurement used to quantify the
Membership Interest of a Member eligible to purchase a non-voting Membership
Interest.

"CODE" means the Internal Revenue Code of 1986, as amended from time
to time (or any corresponding provisions of succeeding law).

"COMPANY" shall have the meaning assigned to that term in the first
paragraph of this Agreement.

"COMPANY MINIMUM GAIN" shall have the same meaning as "partnership
minimum gain" in Regulations Sections 1.704-2(b)(2) and 1.704-2(d).

"COMPETITOR" means (i) each Person identified as a Competitor on
Schedule A attached hereto and the successors and assigns thereof; (ii) any
other Person identified by the Company as a Competitor; and (iii) any officer or
director of any Person identified in (i) and (ii) hereof.

"DEPRECIATION" means, for each allocation period, an amount equal to
the depreciation, amortization, or other cost recovery deduction allowable with
respect to an asset for such allocation

D-2
<PAGE>

period, except that if the Gross Asset Value of an asset differs from its
adjusted basis for federal income tax purposes at the beginning of such
allocation period, Depreciation shall be an amount which bears the same ratio to
such beginning Gross Asset Value as the federal income tax depreciation,
amortization, or other cost recovery deduction for such allocation period bears
to such beginning adjusted tax basis; provided, however, that if the adjusted
basis for federal income tax purposes of an asset at the beginning of such
allocation period is zero, Depreciation shall be determined with reference to
such beginning Gross Asset Value using any reasonable method selected by the
Board of Directors.

"DIRECTOR" or "DIRECTORS" means the natural persons elected,
appointed, or otherwise designated as directors by the Members to direct the
business and affairs of the Company as provided in Article VI. For purposes of
the Act, the directors shall be deemed to be the "managers" of the Company.

"ESTABLISHED VALUE" means a per-Unit value established by the Board of
Directors from time to time, which shall be based on (i) seventy-five percent
(75%) of the fair market value for the Units, as determined by the Board of
Directors using reasonable valuation methods; or (ii) the book value of the
Units as shown on the Company's most recent audited financial statements,
whichever is less.

"EVENT OF DISASSOCIATION" shall have the meaning assigned to that term
in Section 3.15 of this Agreement.

"GROSS ASSET VALUE" means with respect to any asset, the asset's
adjusted basis for federal income tax purposes, except as follows:

(a) The initial Gross Asset Value of any asset contributed by a Member
to the Company shall be the gross fair market value of such asset, as determined
by the Board of Directors, provided that the initial Gross Asset Values of the
assets contributed to the Company pursuant to Section 4.3 hereof shall be as set
forth in such section;

(b) The Gross Asset Values of all Company assets shall be adjusted to
equal their respective gross fair market values (taking Code Section 7701(g)
into account), as determined by the Board of Directors as of the following
times: (i) the acquisition of an additional interest in the Company by any new
or existing Member in exchange for more than a DE MINIMIS Capital Contribution;
(ii) the distribution by the Company to a Member of more than a DE MINIMIS
amount of Company property as consideration for an interest in the Company; and
(iii) the liquidation of the Company within the meaning of Regulations Section
1.704-1(b)(2)(ii)(g), provided that an adjustment described in clauses (i) and
(ii) of this paragraph shall be made only if the Board of Directors reasonably
determines that such adjustment is necessary to reflect the relative economic
interests of the Members in the Company;

(c) The Gross Asset Value of any item of Company assets distributed to
any Member shall be adjusted to equal the gross fair market value (taking Code
Section 7701(g) into account) of such asset on the date of distribution as
determined by the Board of Directors; and

(d) The Gross Asset Values of Company assets shall be increased (or
decreased) to reflect any adjustments to the adjusted basis of such assets
pursuant to Code Section 734(b) or Code Section 743(b), but only to the extent
that such adjustments are taken into account in determining Capital Accounts
pursuant to Regulations Section 1.704-1(b)(2)(iv)(m) and subparagraph (f) of the
definition of "Profits and Losses" or Section 5.2(c) hereof; provided, however,
that Gross Asset Values shall not be adjusted pursuant to this subparagraph (iv)
to the extent that an adjustment pursuant to subparagraph (b) is required in
connection with a transaction that would otherwise result in an adjustment
pursuant to this subparagraph (d).

If the Gross Asset Value of an asset has been determined or adjusted
pursuant to subparagraph (b) or (d), such Gross Asset Value shall thereafter be
adjusted by the Depreciation taken into account with respect to such asset, for
purposes of computing Profits and Losses.

"INITIAL AGREED VALUE PER UNIT" shall mean the fair market value of
each Unit received by the Initial Members pursuant to the Transaction Agreement
in the merger of MCP Colorado into the Company as determined by a nationally
recognized appraisal firm selected by the Cooperative. The Board of Directors
shall be authorized to make reasonable modifications to such appraisal to
reflect

D-3
<PAGE>

intervening events between the date of the appraisal and the transfer of Units
to the Initial Members pursuant to the merger of MCP Colorado with and into the
Company pursuant to the Transaction Agreement.

"INITIAL MEMBERS" shall mean, (i) prior to the merger of MCP Colorado
into the Company pursuant to the Transaction Agreement, the Cooperative, and
(ii) from and after the effective time of the merger of MCP Colorado into the
Company pursuant to the Transaction Agreement, each Person who receives Class A
Units or Class B Units pursuant to such merger.

"LIQUIDATING EVENT" shall have the meaning assigned to that term in
Section 9.1 of this Agreement.

"LOSSES" shall have the meaning associated with that term in the
definition of Profits and Losses hereunder.

"MCP COLORADO" means Minnesota Corn Processors Colorado, the
transitory Colorado cooperative into which the Cooperative will be merged in
anticipation of the merger of such Colorado cooperative into the Company.

"THE COOPERATIVE" means Minnesota Corn Processors, Inc., a Minnesota
cooperative corporation.

"MEMBER" means any Person (i) who has become a Member pursuant to the
terms of this Agreement, and who is designated as a Member on the Membership
Register, (ii) who is the owner of 1,000 or more Units, and (iii) who has not
ceased to be a Member pursuant to the terms of this Agreement.

"MEMBERS" means all such Persons.

"MEMBERSHIP INTEREST" means a Unit Holder's share of the Profits and
Losses of the Company and a Unit Holder's right to receive distributions of cash
or other assets of the Company in accordance with the terms of this Agreement.

"MEMBERSHIP REGISTER" shall have the meaning specified in Section 3.1
of this Agreement.

"1996 LOSS PAYABLE" shall mean the unpaid portion of the Cooperative's
operating loss for fiscal year ended September 30, 1996 that was assessed
against a unit of equity participation by the Board of Directors of The
Cooperative and which pursuant to the Transaction Agreement continues as a lien
in favor of the Company against a Class A Unit into which such unit of equity
participation has been converted.

"NONRECOURSE DEDUCTIONS" has the meaning set forth in Section
1.704-2(b)(1) of the Regulations.

"NONRECOURSE LIABILITY" has the meaning set forth in Section
1.704-2(b)(3) of the Regulations.

"PERSON" means any individual, partnership, limited liability company,
association, corporation, cooperative, estate, trust or other entity, and also
includes a group as that term is used for purposes of Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended.

"PROFITS" shall have the meaning associated with that term in the
definition of Profits and Losses hereunder.

"PRODUCER" means and includes Persons (including individuals, firms,
partnerships, corporations, or associations) who are (1) currently or formerly
engaged in the production of one or more agricultural products, including
tenants of land used for the production of any such product, and lessors of such
land who receive as rent part of the produce of such land, and associations of
such producers, (2) members of the immediate family (i.e., a spouse, parent,
brother or sister, child or grandchild) of any Member, and (3) current or former
employees or agents of the Company.

"PROFITS AND LOSSES" shall mean, for each allocation period, an amount
equal to the Company's taxable income or loss for such allocation period,
determined in accordance with Code Section 703(a) (for this purpose, all items
of income, gain, loss, or deduction required to be stated separately pursuant to
Code Section 703(a)(1) shall be included in taxable income or loss), with the
following adjustments (without duplication):

D-4
<PAGE>

(a) Any income of the Company that is exempt from federal income tax
and not otherwise taken into account in computing Profits or Losses pursuant to
this definition of "Profits" and "Losses" shall be added to such taxable income
or loss;

(b) Any expenditures of the Company described in Code Section
705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures pursuant to
Regulations Section 1.704-1(b)(2)(iv)(i), and not otherwise taken into account
in computing Profits or Losses pursuant to this definition of "Profits" and
"Losses" shall be subtracted from such taxable income or loss;

(c) In the event the Gross Asset Value of any Company asset is
adjusted pursuant to subparagraphs (b) or (c) of the definition of Gross Asset
Value, the amount of such adjustment shall be treated as an item of gain (if the
adjustment increases the Gross Asset Value of the asset) or an item of loss (if
the adjustment decreases the Gross Asset Value of the asset) from the
disposition of such asset and shall be taken into account for purposes of
computing Profits or Losses;

(d) Gain or loss resulting from any disposition of Property with
respect to which gain or loss is recognized for federal income tax purposes
shall be computed by reference to the Gross Asset Value of the Property disposed
of, notwithstanding that the adjusted tax basis of such Property differs from
its Gross Asset Value;

(e) In lieu of the depreciation, amortization, and other cost recovery
deductions taken into account in computing such taxable income or loss, there
shall be taken into account Depreciation for such Allocation Year, computed in
accordance with the definition of Depreciation;

(f) To the extent an adjustment to the adjusted tax basis of any
Company asset pursuant to Code Section 734(b) is required, pursuant to
Regulations Section 1.704-(b)(2)(iv)(m)(4), to be taken into account in
determining Capital Accounts as a result of a distribution other than in
liquidation of a Member's interest in the Company, the amount of such adjustment
shall be treated as an item of gain (if the adjustment increases the basis of
the asset) or loss (if the adjustment decreases such basis) from the disposition
of such asset and shall be taken into account for purposes of computing Profits
or Losses; and

(g) Notwithstanding any other provision of this definition, any items
which are specially allocated pursuant to Section 5.2 or Section 5.3 hereof
shall not be taken into account in computing Profits or Losses.

The amounts of the items of Company income, gain, loss or deduction
available to be specially allocated pursuant to Section 5.2 or Section 5.3
hereof shall be determined by applying rules analogous to those set forth in
subparagraphs (a) through (f) above.

"PROPERTY" means all real and personal property, including cash,
acquired and operated by the Company and any improvements thereto, and shall
include both tangible and intangible property.

"REGULATIONS" means the Income Tax Regulations, including Temporary
Regulations, promulgated under the Code as such Regulations may be amended from
time to time (including corresponding provisions of succeeding Regulations).

"SPECIAL FINANCIAL INTERESTS" means the nonvoting financial interest
in the Company issued to the former holders of nonqualified written notices of
allocation issued by the Cooperative, the stated amounts of which shall
correspond to the stated amounts of such nonqualified written notices of
allocation.

"REGULATORY ALLOCATIONS" has the meaning set forth in Section 5.3
hereof.

"TAX WITHHOLDING OBLIGATION" means an amount equal to the portion of
any amount allocated, credited, or otherwise distributable to a Unit Holder
which the Company is required to withhold for income tax purposes pursuant to
any applicable federal, state, local, or other governmental agency law or
regulation.

"TRANSACTION AGREEMENT" means the Amended and Restated Transaction
Agreement dated as of the date hereof among the Cooperative, MCP Colorado and
the Company.

D-5
<PAGE>

"TRANSFER" means, as a noun, any voluntary or involuntary transfer,
sale or other disposition and, as a verb, to voluntarily or involuntarily
transfer, sell, or otherwise dispose of, but shall not include a pledge, grant
of a security interest or other encumbrance.

"UNIT" means the unit of measurement used herein to quantify the
Membership Interest of a Unit Holder, consisting of Class A Units or Class B
Units, as reflected on the Membership Register. A Unit Holder's Membership
Interest as quantified by the number of Units owned by such Person may be
evidenced by a certificate of Units issued by the Company, which certificate
shall contain appropriate restrictive legends.

"UNIT HOLDER NONRECOURSE DEBT" has the same meaning as the term
"partner nonrecourse debt" in Section 1.704-2(b)(4) of the Regulations.

"UNIT HOLDER NONRECOURSE DEBT MINIMUM GAIN" means an amount, with
respect to each Unit Holder Nonrecourse Debt, equal to the Company Minimum Gain
that would result if such Unit Holder Nonrecourse Debt were treated as a
Nonrecourse Liability, determined in accordance with Section 1.704-2(i)(3) of
the Regulations.

"UNIT HOLDER NONRECOURSE DEDUCTIONS" has the same meaning as the term
"partner nonrecourse deductions" in Sections 1.704-2(i)(1) and 1.704-2(i)(2) of
the Regulations.

"UNIT HOLDERS" means all Persons who hold Units. "Unit Holder" means
any one of the Unit Holders.

ARTICLE II

THE LIMITED LIABILITY COMPANY

2.1 Formation; Effective Date of Agreement. The Company is formed as a
Colorado limited liability company pursuant to and in accordance with the
provisions of the Act and upon the terms and conditions set forth in this
Agreement. This Agreement is made effective as of the formation of the Company.

2.2 Name. The name of the Company shall be Minnesota Corn Processors, LLC.
All business of the Company shall be conducted in such name or in trade names
approved by the Board of Directors. The name of the Company may be changed from
time to time in accordance with the Act.

2.3 Business Purpose. The purpose of the Company is to conduct any business
activity in which a limited liability company organized under the Act may be
lawfully engaged in and to conduct any and all activities related or incidental
thereto, including the acquisition, improvement, leasing, operation, mortgage
and disposition of personal property and real property.

2.4 Powers. The Company may carry on any lawful business, purpose or
activity permitted by the Act and shall possess and may exercise all the powers
and privileges granted by the Act or by any other law or by this Agreement,
together with any powers incidental, necessary or convenient to the conduct,
promotion or attainment of the business, purposes or activities of the Company.

2.5 Duration. The duration of the Company shall be perpetual, unless
dissolved earlier as provided herein.

2.6 Registered Office and Registered Agent. The location of the registered
office and the name of the registered agent of the Company in the State of
Colorado shall be as stated in the Articles of Organization. The registered
office and registered agent of the Company in the State of Colorado may be
changed from time to time by the Board of Directors.

2.7 Principal Office. The principal office of the Company shall be located
at 901 North Highway 59, Marshall, MN 56258, or at such other place(s) within or
without the State of Minnesota as the Board of Directors may determine from time
to time.

2.8 Title to Property; No Agency Power. All Property originally
transferred to or subsequently acquired by or on account of the Company shall
be owned by the Company as an entity. No Member,

D-6
<PAGE>

Director or Unit Holder shall have any ownership interest in such Property in
such Person's individual name or right. The Company shall hold all of its
Property in the name of the Company and not in the name of any Member, Director
or Unit Holder. Subject to the approval by the Board or the Members when
required by this Agreement, title to Property may be transferred by an
instrument of transfer executed by the appropriate officer of the Company as
designated by the Board. No Member, Director or Unit Holder has the authority,
in said Person's capacity as Member, Director or Unit Holder, to transfer title
to Property or bind the Company or the other Members or any one of them. Only
duly authorized officers, directors and agents of the Company shall have the
authority to bind the Company.

2.9 Limited Liability of Members and Directors. Except as otherwise
expressly provided by the Act, the debts, obligations and liabilities of the
Company, whether arising in contract, tort or otherwise, shall be solely the
debts, obligations and liabilities of the Company. No Member, Director or other
agent of the Company, solely by reason of such status, shall be personally
liable, under a judgment, decree or order of a court, or in any other manner,
for the acts, debts, obligations or liabilities of the Company, whether arising
in contract, tort or otherwise.

ARTICLE III

MEMBERS

3.1 Membership. There shall be no Members admitted to the Company except as
provided in this Agreement. The name, address, Capital Contribution, and class
of membership of each Member shall be set forth in a membership register
maintained by the Company at its principal office or by a duly appointed agent
of the Company (the "Membership Register"), which shall be modified from time to
time as additional Units are issued and as Units are transferred pursuant to
Article X. Prior to the merger of MCP Colorado into the Company pursuant to the
Transaction Agreement, the Cooperative (or its successors) shall be the only
Member of the Company. From and after the effective time of the merger of MCP
Colorado into the Company pursuant to the Transaction Agreement, the membership
interest of the Cooperative (or its successor) in the Company shall be canceled,
and (A) the Class A Members of this Company shall include, (i) initially, the
members of the Cooperative who receive Class A Units from the Cooperative
pursuant to the Transaction Agreement; and (ii) individuals, corporations or
other entities who acquire a minimum of 1,000 Class A Units in a permitted
transfer or in an offering by the Company of additional Class A Units. The Class
B Members of this Company shall include, (i) initially, Archer Daniels Midland
Company, as the transferee of Class B Units from the Cooperative pursuant to the
Transaction Agreement, and (ii) individuals, corporations or other entities who
acquire a minimum of 1,000 Class B Units in a permitted transfer.

The holders of Special Financial Interests shall not be Members of the
Company and shall have no rights other than the rights to distributions
specified in Sections 5.7(a) and 11.3(d) and the corresponding right to income
allocations provided in Section 5.2(i).

3.2 Ownership of Membership Interests.

(a) Minimum Ownership of Units Required. Each Class A Member shall own
not less than 1,000 Class A Units. Each Class B Member shall own not less than
1,000 Class B Units.

(b) Limitation on Ownership of Membership Interests.

(i) Number of Units. No Class A Member shall own more than two
percent (2%) of the total issued and outstanding Class A Units of the Company.
For purposes of this Section 3.2(b), the number of Units owned by any Member
shall include Units owned by the member's spouse, children, parents, or brothers
and sisters, and by any Affiliate of the Member or the Member's spouse,
children, parents or brothers and sisters.

(ii) Nonproducers. Only Producers shall be eligible to own Class
A Units of the Company.

(iii) Competitors. Any Competitor of the Company shall not be
eligible to own Class A Units of the Company.

D-7
<PAGE>

(c) Company Right to Purchase Units. If (A) any Member holds at any
time less than the minimum number of Units required by Section 3.2(a) or more
than the maximum number of Units permitted under Section 3.2(b), or if any Class
A Units are held by any Person who is not a Producer, and such violation of this
Agreement is not cured within one (1) year after notice thereof by the Company,
or (B) any Member is or becomes a Competitor, that Member's voting rights, if
any, shall be suspended as provided in Section 3.14 below and, in addition, the
Company shall have the right (but not the obligation) to purchase, and the
Member shall be required to sell (i) in the case of a violation of Section
3.2(a), 3.2(b)(ii) or 3.2(b)(iii), all of the Units owned by such Member, and
(ii) in the case of a violation of Section 3.2(b)(i), that Member's Units in
excess of the two percent (2%) maximum provided for in Section 3.2(b)(i). The
purchase price for Units purchased by the Company under this Section shall be an
amount equal to the Established Value of the Units determined at the time the
Company notifies the Member of the violation and shall be payable, at the
Company's option, in one lump sum or equal installments over a period of five
(5) years, with interest at a rate equal to the interest rate for 91 day U.S.
Treasury bills, adjusted quarterly.

3.3 Classes of Membership. This Company has two (2) classes of Membership.

(a) Class A Membership. Class A Membership (as quantified by the Class
A Units) shall be the voting Membership Interests of the Company.

(b) Class B Membership. Class B Membership (as quantified by the Class
B Units) shall be non-voting Membership Interests.

3.4 Voting.

(a) Units Required. Each Class A Member owning a minimum of 5,000
Class A Units shall be entitled to one (1) vote with respect to any matter to be
determined by the Members under this Agreement or the Act, regardless of the
number of Units owned by such Class A Member. Any Class A Member who is in
default of any of its obligations under this Agreement shall not be entitled to
vote on any matter during the period of such default. When determining the
aggregate number of Units held by a Member for purposes of this Agreement, the
Units held by any Member who is in default of any obligations under this
Agreement shall be excluded. Each Member other than individual Members shall
designate in writing to the Chairman of the Board of the Company the name of one
(1) individual authorized to act as such Member's representative with respect to
all matters covered by this Agreement, including the right to exercise such
Member's voting rights hereunder. The Company and the other Members shall be
entitled to rely on the authority of the individual so designated. Each Member
may change such Member's representative by written notice to the Chairman of the
Board at such Member's sole discretion.

A member absent from any meeting may submit an absentee vote on any
motion, resolution, or amendment to be acted upon at such meeting. An absentee
vote must be cast on a ballot containing the exact text of the proposed motion,
resolution, or amendment by delivering such ballot to the Secretary at the
principal office of the Company by hand, by United States mail (with postage
prepaid thereon), by facsimile, by overnight courier or by any other reasonable
means, to arrive not later than five (5) days prior to the day of the meeting at
which the vote is taken.

(b) Non-Voting Members. Any Class A Member owning at least 1,000 Class
A Units but less than 5,000 Class A Units as of the date upon which notice of
action to be taken by the Members is mailed to the Members shall be considered a
non-voting member of the Company and shall not be entitled to vote on any
matters reserved to the Members. The Units held by such non-voting members shall
be excluded in determining the aggregate number of Units held by Members.
Notwithstanding that such member is not entitled to vote, the Units in the hands
of the non-voting member shall continue to be subject to all the applicable
provisions of this Agreement, including but not limited to the transfer
restrictions set forth in Article X hereof. In the event a non-voting member
purchases the minimum number of Class A Units required to receive voting rights
under Section 3.4(a) hereof, such member shall be entitled to the voting rights
set forth in Section 3.4(a) without any further action by the Members or the
Board.

3.5 Place of Meetings. Each meeting of the Members shall be held at such
place as the Board of Directors may from time to time designate in writing to
the Members.

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3.6 Regular Meetings. Regular meetings of the Members shall be held not
less than once per year, at such time and place as determined by the Board of
Directors; provided however, that if a regular meeting has not been held within
six (6) months after the end of each fiscal year of the Company any Member may
demand a meeting of the members by written demand to the Board of Directors.

3.7 Special Meetings. Special meetings of the Members may be called by the
Board of Directors or twenty percent (20%) of the Class A Members. The business
transacted at a special meeting of the Members is limited to the purposes stated
in the notice of the meeting.

3.8 Notice of Meetings. Written notice of each meeting of the Members,
stating the date, time and place, and in the case of a special meeting, the
purpose of the meeting, shall be given in writing at least fourteen (14) days
and not more than sixty (60) days prior to the meeting to every Member entitled
to vote at such meeting.

3.9 Waiver of Notice. A Member may waive the notice of meeting required
under this Article. A written notice of waiver signed by the Member entitled to
notice is effective whether given before, during or after the meeting.
Attendance by a Member at a meeting is waiver of notice of that meeting, unless
the Member objects at the beginning of the meeting to the transaction of
business because the meeting is not lawfully called or convened and thereafter
does not participate in the meeting.

3.10 Quorum. The presence (in person or by proxy or mail ballot) of at
least ten percent (10%) of the Class A Members is required for the transaction
of business at a meeting of the Members; provided, however, that a quorum shall
never be more than fifty (50) Class A Members.

3.11 Proxies; Mail Ballots. Voting by proxy or by mail ballot shall be
permitted on any matter if authorized by the Board of Directors.

3.12 Action Without Meeting. Any action required or permitted to be taken
at a meeting of the Members of the Company may be taken without a meeting by
written action signed by all of the Class A Members. The written action is
effective when signed by all the Class A Members, unless a different effective
time is provided in the written action.

3.13 Telephonic Meetings. Any regular or special meeting of the Members may
be taken by telephonic or electronic conference or any other means of
communication through which the Members can simultaneously hear each other
during the conference, if the same notice is given of the conference to each
Member, and if the Members participating in the conference would be sufficient
to constitute a quorum at a meeting. Participation in a telephonic, electronic,
or other conference of such means constitutes presence at the meeting in person
or by proxy if all the other requirements are met.

3.14 Termination of Membership. A Member's Membership Interest terminates
and such Person ceases to be a Member on and following the occurrence of any of
the following events (each an "Event of Disassociation"):

(a) Complete Transfer. The Member transfers all of the Member's Units,
regardless of whether the transferee(s) is admitted as a substitute Member
pursuant to Section 10.5 of this Agreement;

(b) Dissolution of Member. Any event terminating the existence of any
non-individual Member;

(d) Withdrawal. The Member resigns by written notice to the Chairman
of the Board; or

(e) Disqualification. The Member holds less than the minimum number of
Units required by Section 3.2(a) or more than the maximum number of Units
permitted by Section 3.2(b) and fails to cure the applicable violation within
one (1) year after notice thereof by the Company.

A Person who has ceased to be a Member shall be considered a non-member
Unit Holder only, and shall have no right to any information or accounting of
the affairs of the Company, shall not be entitled to inspect the books or
records of the Company, shall not be entitled to vote on any matters reserved to
the Members, and shall not have any of the other rights of a Member under the
Act or this Agreement.

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The Units held by such Unit Holder shall be excluded in determining the
aggregate number of Units held by Members. Notwithstanding that such Unit Holder
is no longer a Member, the Units in the hands of such Unit Holder shall continue
to be subject to all the applicable provisions of this Agreement, including but
not limited to the transfer restrictions set forth in Article X hereof.

In the event such Unit Holder ceased to be a Member pursuant to Section
3.14(f), such Unit Holder shall be reinstated as a Member without any further
action by the Members or the Board upon a showing to the Board that such Unit
Holder meets the minimum and maximum requirements set forth in Section 3.2.

3.15 Continuation of the Company. The Company shall not be dissolved upon
the occurrence of an Event of Disassociation or any other event which is deemed
to terminate the continued membership of a Member. The Company's affairs shall
not be required to be wound up. The Company shall continue without dissolution.

3.16 No Obligation to Purchase Units. No Member whose membership in the
Company terminates shall have any right to demand or receive a return of such
terminated Member's Capital Contributions. Neither the remaining Members nor the
Company shall have any obligation to purchase or redeem the Units of any such
terminated Member.

3.17 Advance Consent to Certain Substitute Members.

(a) Substitute Member -- Dissolution. In the event of dissolution of a
non-individual Member, any person who continues the business of a dissolved
Member, or who holds some or all of the Membership Interest of the dissolved
Member, shall be admitted as a substitute Member; provided, however, that such
Person shall not be admitted as a substitute Member unless and until each of the
conditions set forth in Section 10.3 of this Agreement have been satisfied.

(b) Substitute Member -- Death. In the event of the death of an
individual Member, each of the following Persons who holds some or all of the
Membership interest of the deceased Member shall be admitted as a substitute
Member; provided, however, that such Person shall not be admitted as a
substitute Member unless and until each of the conditions set forth in Section
10.3 of this Agreement are satisfied at the time such Person becomes the holder
of all or some of such Membership Interest:

(i) the estate of the deceased Member;

(ii) the surviving joint tenant of the Membership Interest; and

(iii) any distributee of the estate of the deceased Member,
including any trustee(s) of a trust which holds some or all of the Membership
Interest of the deceased Member.

The rights of the estate of a deceased Member shall be exercised by the personal
representative(s) appointed by the court as the personal representative of the
estate of a deceased Member.

(c) Substitute Member. The purpose of this Section 3.17 is that
the voting rights of any Member whose membership is terminated by the
dissolution or death of such Member shall follow the Membership Interest of such
Member notwithstanding such termination, through the automatic substitution of
the holder of all or some of such Membership Interest as a substitute Member.
Any Person who is admitted as a substitute Member under this Section 3.17 shall
be entitled to all of the rights and bound by the obligations of, the Member for
which it is substituted.

3.18 Compliance with Articles of Organization and Operating Agreement. Each
Member of the Company is subject to the terms of the Company's Articles of
Organization, this Agreement, and such other reasonable policies and procedures
as the Board from time to time adopts to implement the terms of this Agreement.

3.19 No Dissenters' Rights. No Member or Unit Holder shall have any
dissenters' rights or appraisal rights or other similar rights as a result of
any merger or consolidation or other action involving the Company approved by
the Class A Members as provided in Section 6.16 hereof.

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ARTICLE IV

CAPITAL

4.1 Units. The Company shall be authorized to issue 500,000,000 Units. Of
the total number of Units authorized in this Section 4.1, 350,000,000 Units are
hereby designated as Class A Units, and 150,000,000 Units are hereby designated
as Class B Units.

4.2 Capital Accounts. A Capital Account maintained for such Unit Holder in
accordance with the following provisions:

(a) To each Unit Holder's Capital Account there shall be credited (i)
such Unit Holder's Capital Contributions (determined in the case of the initial
Unit Holders as provided in Section 4.3(a)), (ii) such Unit Holder's
distributive share of Profits and any items in the nature of income or gain
which are specially allocated pursuant to Section 5.2 or Section 5.3 hereof, and
(iii) the amount of any Company liabilities assumed by such Unit Holder or which
are secured by any Property distributed to such Unit Holder.

(b) To each Unit Holder's Capital Account there shall be debited (i)
the amount of money and the Gross Asset Value of any Property distributed to
such Unit Holder pursuant to any provision of this Agreement, (ii) such Unit
Holder's distributive share of Losses and any items in the nature of expenses or
losses which are specially allocated pursuant to Section 5.2 or Section 5.3
hereof, and (iii) the amount of any liabilities of such Unit Holder assumed by
the Company or which are secured by any Property contributed by such Unit Holder
to the Company;

(c) In determining the amount of any liability for purposes of
subparagraphs (a) and (b) above there shall be taken into account Code Section
752(c) and any other applicable provisions of the Code and Regulations.

The provisions of this Agreement relating to the maintenance of Capital
Accounts are intended to comply with Regulations Section 1.704-1(b), and shall
be interpreted and applied in a manner consistent with such Regulations. In the
event the Board of Directors shall determine that it is prudent, it may modify
the manner in which the Capital Accounts are maintained, provided that it is not
likely to have a material effect on the amounts distributed to any Person
pursuant to Article XI hereof upon the dissolution of the Company. The Board of
Directors also shall (i) make any adjustments that are necessary or appropriate
to maintain equality between the Capital Accounts of the Unit Holders and the
amount of capital reflected on the Company's balance sheet, as computed for book
purposes, in accordance with Regulations Section 1.704-1(b)(2)(iv)(q), and (ii)
make any appropriate modifications in the event unanticipated events might
otherwise cause this Agreement not to comply with Regulations Section
1.704-1(b).

4.3 Initial Issuance of Units; Offering of Additional Units.

(a) MCP Colorado will fund the Company on the Closing Date specified
in the Transaction Agreement by contributing all of its assets to the Company in
consideration of the Company's assumption of all of MCP Colorado's liabilities
and other obligations. On the effective date of the merger of MCP Colorado into
the Company, each member of MCP Colorado shall be issued the number and class of
Units that corresponds to the number and class of units such member held in MCP
Colorado. As the result of the foregoing transactions, the Unit Holder shall be
deemed to have made a Capital Contribution in the amount the product of (i) the
number of Units distributed to such Unit Holder, times (ii) the Initial Agreed
Value Per Unit.

(b) From time to time, the Board of Directors may authorize the
issuance and sale by the Company of additional Units (within the limits set
forth in Section 4.1). In the event the Company offers such additional Units,
the Company shall offer the existing Class A and Class B Members the opportunity
to purchase additional Units so as to permit them to maintain at a constant
level their then existing percentage of the total Class A or Class B Units.
Class A and Class B Members may purchase all or any portion of the additional
Units offered pursuant to this Section 4.3(b).

4.4 No Capital Calls. The Company may not require Members to make
additional contributions of capital to the Company for any reason, except as
provided in Section 4.5.

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4.5 Tax Withholding Obligations. The Board of Directors may, in its
discretion, by resolution require that any Member to whom a Tax Withholding
Obligation is attributable make an additional contribution to the capital of the
Company in an amount equal to such Tax Withholding Obligation less the amount of
any loans for such purpose made to the Company pursuant to Section 4.9.

4.6 Transferee Succeeds to Transferor's Capital Account. Any transfers
permitted by Article X of this Agreement by a Member to a transferee of all or a
part of such Member's Membership Interest in the Company shall vest in such
transferee (and such transferee shall become a successor in interest) the
interest of the transferor Member's Capital Account to the extent of the
Membership Interest transferred.

4.7 No Right to Return of Contributions. The Members (including terminated
members) shall have no right to the withdrawal or the return of their respective
Capital Contributions except to the extent set forth in Article XI upon
liquidation of the Company.

4.8 No Interest on Capital Contributions. Other than Distributions
authorized pursuant to Article V or Article XI, no Member shall be entitled to
receive any interest or other property on account of the Member's Capital
Contributions to the Company.

4.9 Loans to the Company. A Member may lend money to the Company if
authorized by the Board of Directors. Any such loan shall not be treated as a
Capital Contribution for any purpose and shall not entitle the Member to any
increase in such Member's Membership Interest. The Company shall be obligated to
such Member for the amount of any such loan, with interest thereon at such rate
as may have been agreed upon by the Board of Directors.

4.10 No Repayment Liability. No Member, Director or other Unit Holder shall
be personally liable for the repayment of any Capital Contributions of any other
Unit Holder.

ARTICLE V

ALLOCATIONS AND DISTRIBUTIONS

5.1 Allocation of Profits and Losses. After giving effect to the special
allocations set forth in Section 5.2 or Section 5.3, Profits and Losses for any
accounting period shall be allocated to the Unit Holders and shall be divided
among them in proportion to the number of Units held by each as set forth on the
Membership Register.

5.2 Special Allocations. The following special allocations shall be made
in the following order:

(a) Minimum Gain Chargeback. Except as otherwise provided in Section
1.704-2(f) of the Regulations, notwithstanding any other provision of this
Article V, if there is a net decrease in Company Minimum Gain during any
allocation period, each Unit Holder shall be specially allocated items of
Company income and gain for such allocation period (and, if necessary,
subsequent allocation periods) in an amount equal to such Unit Holder's share of
the net decrease in Company Minimum Gain, determined in accordance with
Regulations Section 1.704-2(g). Allocations pursuant to the previous sentence
shall be made in proportion to the respective amounts required to be allocated
to each Unit Holder pursuant thereto. The items to be so allocated shall be
determined in accordance with sections 1.704-2(f) (6) and 1.704-2(j) (2) of the
Regulations. This Section 3.3(a) is intended to comply with the minimum gain
chargeback requirement in Section 1.704-2(f) of the Regulations and shall be
interpreted consistently therewith.

(b) Unit Holder Minimum Gain Chargeback. Except as otherwise provided
in Section 1.704-2(i) (4) of the Regulations, notwithstanding any other
provision of this Article V, if there is a net decrease in Unit Holder
Nonrecourse Debt Minimum Gain attributable to a Unit Holder Nonrecourse Debt
during any allocation period, each Unit Holder who has a share of the Unit
Holder Nonrecourse Debt Minimum Gain attributable to such Unit Holder
Nonrecourse Debt, determined in accordance with Section 1.704-2(i) (5) of the
Regulations, shall be specially allocated items of Company income and gain for
such allocation period (and, if necessary, subsequent allocation periods) in an
amount equal to such Unit Holder's share of the net decrease in Unit Holder
Nonrecourse Debt, determined in

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accordance with Regulations Section 1.704-2(i) (4). Allocations pursuant to the
previous sentence shall be made in proportion to the respective amounts required
to be allocated to each Unit Holder pursuant thereto. The items to be so
allocated shall be determined in accordance with Sections 1.704-2(i) (4) and
1.704-2(j) (2) of the Regulations. This Section 5.2(b) is intended to comply
with the minimum gain chargeback requirement in Section 1.704-2(i) (4) of the
Regulations and shall be interpreted consistently therewith.

(c) Qualified Income Offset. In the event any Unit Holder unexpectedly
receives any adjustments, allocations, or distributions described in Sections
1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), or 1.704-1(b)(2)(ii)(d)(6) of
the Regulations, items of Company income and gain shall be specially allocated
to such Unit Holder in an amount and manner sufficient to eliminate, to the
extent required by the Regulations, the Adjusted Capital Account Deficit of the
Unit Holder as quickly as possible, provided that an allocation pursuant to this
Section 5.2(c) shall be made only if and to the extent that the Unit Holder
would have an Adjusted Capital Account Deficit after all other allocations
provided for in this Article V have been tentatively made as if this Section
5.2(c) were not in the Agreement.

(d) Gross Income Allocation. In the event any Unit Holder has a
deficit Capital Account at the end of any allocation period which is in excess
of the sum of (i) the amount such Unit Holder is obligated to restore pursuant
to the penultimate sentences of Regulations Sections 1.704-2(g)(1) and
1.704-2(i)(5), each such Unit Holder shall be specially allocated items of
Company income and gain in the amount of such excess as quickly as possible,
provided that an allocation pursuant to this Section 5.2(d) shall be made only
if and to the extent that such Unit Holder would have a deficit Capital Account
in excess of such sum after all other allocations provided for in this Article V
have been made as if Section 5.2(c) and this Section 5.2(d) were not in the
Agreement.

(e) Nonrecourse Deductions. Nonrecourse Deductions for any allocation
period shall be specially allocated to the Unit Holders in proportion to their
respective Units held.

(f) Unit Holder Nonrecourse Deductions. Any Unit Holder Nonrecourse
Deductions for any allocation period shall be specially allocated to the Unit
Holder who bears the economic risk of loss with respect to the Unit Holder
Nonrecourse Debt to which such Unit Holder Nonrecourse Deductions are
attributable in accordance with Regulations Section 1.704-2(i) (1).

(g) Section 754 Adjustments. To the extent an adjustment to the
adjusted tax basis of any Company asset, pursuant to Code Section 734(b) or Code
Section 743(b) is required, pursuant to Regulations Section
1.704-1(b)(2)(iv)(m)(2) or 1.704-1(b)(2)(iv)(m)(4), to be taken into account in
determining Capital Accounts as the result of a distribution to a Unit Holder in
complete liquidation of such Unit Holder's interest in the Company, the amount
of such adjustment to Capital Accounts shall be treated as an item of gain (if
the adjustment increases the basis of the asset) or loss (if the adjustment
decreases such basis) and such gain or loss shall be specially allocated to the
Unit Holders in accordance with their interests in the Company in the event
Regulations Section 1.704-1(b)(2)(iv)(m)(2) applies, or to the Unit Holder to
whom such distribution was made in the event Regulations Section
1.704-1(b)(2)(iv)(m)(4) applies.

(h) Allocations Relating to Taxable Issuance of Units. Any income,
gain, loss or deduction realized as a direct or indirect result of the issuance
of Units by the Company shall be allocated among the Unit Holders so that, to
the extent possible, the net amount of such items, together with all other
allocations under this Agreement to each Unit Holder shall be equal to the net
amount that would have been allocated to each such Unit Holder if the items had
not been realized.

(i) Allocations Relating to Special Financial Interests. If a
distribution is made to a holder of a Special Financial Interests under Section
5.7(a) or 11(d), a corresponding amount of income, gain, gross receipts or gross
sales proceeds, as determined by the Board of Directors, shall be allocated to
such holder.

5.3 Curative Allocations. The allocations set forth in Sections 5.2(a)
through 5.2(g) and 5.4 (the "Regulatory Allocations") are intended to comply
with certain requirements of the Regulations. It is the intent of the Unit
Holders that, to the extent possible, all Regulatory Allocations shall be offset
either with other Regulatory Allocations or with special allocations of other
items of Company income, gain,

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loss or deduction pursuant to this Section 5.3. Therefore, notwithstanding any
other provision of this Section 3 (other than the Regulatory Allocations), the
Board of Directors shall make such offsetting special allocations of Company
income, gain, loss or deduction in whatever manner it determines appropriate so
that, after such offsetting allocations are made, each Unit Holder's Capital
Account balance is, to the extent possible, equal to the Capital Account balance
such Unit Holder would have had if the Regulatory Allocations were not part of
the Agreement and all Company items were allocated pursuant to Sections 5.1 and
5.2(h).

5.4 Loss Limitation. Losses allocated pursuant to Section 5.1 hereof shall
not exceed the maximum amount of Losses that can be allocated without causing
any Unit Holder to have an Adjusted Capital Account Deficit at the end of any
allocation period. In the event some but not all of the Unit Holders would have
Adjusted Capital Account Deficits as a consequence of an allocation of Losses
pursuant to Section 5.1 hereof, the limitation set forth in this Section 5.4
shall be applied on a Unit Holder by Unit Holder basis and Losses not allocable
to any Unit Holder as a result of such limitation shall be allocated to the
other Unit Holders in accordance with the positive balances in such Unit
Holder's Capital Accounts so as to allocate the maximum permissible Losses to
each Unit Holder under Section 1.704-1(b)(2)(ii)(d) of the Regulations.

5.5 Other Allocation Rules.

(a) For purposes of determining the Profits, Losses, or any other
items allocable to any period, Profits, Losses, and any such other items shall
be determined on a daily, monthly, or other basis, as determined by the Board of
Directors using any permissible method under Code Section 706 and the
Regulations thereunder.

(b) The Unit Holders are aware of the income tax consequences of the
allocations made by this Article 5 and hereby agree to be bound by the
provisions of this Article 5 in reporting their shares of Company income and
loss for income tax purposes.

(c) Solely for purposes of determining a Unit Holder's proportionate
share of the "excess nonrecourse liabilities" of the Company within the meaning
of Regulations Section 1.752-3(a) (3), the Unit Holders' interests in Company
profits are in proportion to their Units held.

To the extent permitted by Section 1.704-2(h) (3) of the Regulations, the
Company shall endeavor to treat distributions as having been made from the
proceeds of a Nonrecourse Liability or a Unit Holder Nonrecourse Debt only to
the extent that such distributions would cause or increase an Adjusted Capital
Account Deficit for any Unit Holder.

5.6 Tax Allocations. In accordance with Code Section 704(c) and the
Regulations thereunder, income, gain, loss, and deduction with respect to any
Property contributed to the capital of the Company shall, solely for tax
purposes, be allocated among the Unit Holders so as to take account of any
variation between the adjusted basis of such Property to the Company for federal
income tax purposes and its initial Gross Asset Value using such allocation
method as may be provided by Regulations and selected by the Board of Directors.

In the event the Gross Asset Value of any Company asset is adjusted
pursuant to subparagraph (b) of the definition of Gross Asset Value, subsequent
allocations of income, gain, loss, and deduction with respect to such asset
shall take account of any variation between the adjusted basis of such asset for
federal income tax purposes and its Gross Asset Value in the same manner as
under Code Section 704(c) and the Regulations thereunder.

Any elections or other decisions relating to such allocations shall be made
by the Board of Directors in any manner that reasonably reflects the purpose and
intention of this Agreement. Allocations pursuant to this Section 5.6 are solely
for purposes of federal, state, and local taxes and shall not affect, or in any
way be taken into account in computing, any Unit Holder's Capital Account or
share of Profits, Losses, other items, or distributions pursuant to any
provision of this Agreement.

5.7 Distributions. Cash shall be distributed in the amounts and at such
times as the Board may determine in its discretion; provided, however, that the
declaration and making of any distribution shall in all instances be limited by
applicable provisions of the Act. Subject to such limitation, the Board shall

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endeavor to cause the Company to make cash distributions in amounts reasonably
matching the income taxes payable with respect to ownership of Units.
Distributions shall be in such amounts as the Board determines is not required
to be retained by the Company to meet the reasonably foreseeable cash
requirements and needs of the business and activities of the Company and to
establish an adequate reserve for the payment of Company liabilities and
contingencies. Distributions of cash or other property hereunder shall be made
as follows:

(a) In the sole discretion of the Board of Directors, distributions
may be made pro rata to the holders of Special Financial Interests in any amount
up to the stated amount thereof provided that the aggregate amount of such
distributions shall not exceed the aggregate stated amount of all Special
Financial Interests.

(b) Except as otherwise provided in Section 5.7(a), to the Unit
Holders to be divided among them in proportion to the number of Units held by
each Unit Holder.

(c) Any distribution may be made subject to offset for any debt or
other amount owed by the Unit Holder or the holder of a Special Financial
Interest to the Company.

For purposes of determining those Unit Holders entitled to receive
distributions pursuant to this Section 5.7, the Board of Directors may fix in
advance a record date which shall be the first day of any calendar month
following the calendar month in which the Board of Directors declares the
distribution. If no such record date is fixed by the Board, the record date
shall be the first day of the calendar month in which the distribution is to
paid. Notwithstanding the foregoing, distributions made with respect to Units
that are the subject of a Transfer shall be made in accordance with Section 10.6
hereof and distributions made with respect to additional Units issued by the
Company shall be made in accordance with Section 10.6 as if such additional
Units had been the subject of a Transfer.

5.8 Tax Withholding Obligations Constitute a Distribution. Any Tax
Withholding Obligation which is withheld by the Company shall constitute a
distribution of such amount by the Company to the Unit Holder to whom such Tax
Withholding Obligation is attributable.

ARTICLE VI

BOARD OF DIRECTORS

6.1 Board of Directors. Except as otherwise provided in this Agreement, the
business and affairs of the Company shall be managed under the direction of the
Board of Directors as provided herein. Prior to the merger of MCP Colorado into
the Company pursuant to the Transaction Agreement, the Board of Directors shall
consist of the individuals identified as such in the Articles of Organization.
At the effective time of the merger of MCP Colorado into the Company pursuant to
the Transaction Agreement, the Board of Directors shall consist of the Directors
specified in the Transaction Agreement. Thereafter, the Board of Directors shall
consist of twenty-four (24) Directors, who shall be elected by the Class A
Members in accordance with this Article.

6.2 Qualifications of Directors. All Directors elected by the Class A
Members shall be natural persons and must be Class A Members or an elected or
appointed representative of a Class A Member which is other than a natural
person.

6.3 Election of Directors. At each Annual Meeting of the Members, elections
shall be held to fill all vacancies on the Board of Directors. Class A Members
may vote by mail ballot for directors. Directors shall be elected for staggered
terms of three (3) years and until a successor is elected and qualified.

6.4 Removal of Directors. The Board of Directors or any individual director
may be removed from office, with cause, by a vote of a majority of the Class A
Members from the district that elected the director that are present in person
or by mail ballot, and that are entitled to vote at the meeting of the Class A
Members at which said removal of directors is considered. In case any one (1) or
more directors be so removed, successor directors shall be elected at the same
meeting. Such successor directors shall

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be from the same district or districts as the director or directors so removed.
Notice of a meeting at which any Class A Members will be voting to remove a
director must state removal of directors as an item to be voted upon at the
meeting.

6.5 Vacancies. Whenever a vacancy occurs on the Board of Directors, other
than from expiration of a term of office or removal from office, a majority of
the remaining Directors shall appoint a Member from the same district to fill
the vacancy until the next Annual Meeting of the Class A Members, at which time
the Members may elect a new Director to fill the vacancy for the remainder of
the term of the vacant Directors.

6.6 Annual Meeting. An annual organizational meeting of the Board of
Directors shall be held within thirty (30) days following each Annual Meeting of
the Class A Members for the purpose of the election of the board officers for
the ensuing year, and to transact such other business as may properly come
before the meeting.

6.7 Regular Meetings. A regular meeting of the Board of Directors shall be
held at such frequency and at such time and place as the Board of Directors may
determine.

6.8 Special Meetings. A special meeting of the Board of Directors shall be
held whenever called by the Chairman or, during his or her absence, by the Vice
Chairman, on forty-eight (48) hours' notice to each Director personally, or by
mail. Special meetings shall be called by the Chairman or Secretary in like
manner and on like notice on the written request of any Director. The purpose of
a special meeting need not be specified in the notice of the meeting. Notice of
any special meeting may be waived by attendance at a meeting, except when a
Director attends a meeting and objects to the transaction of business, or by a
waiver of notice signed before, during, or after the meeting.

6.9 Quorum, Voting. A majority of the Directors in office shall constitute
a quorum necessary to the transaction of business at any annual organizational
meeting, regular meeting, or special meeting of the Board of Directors, but if
less than a quorum is present, those Directors present may adjourn the meeting
from time to time until a quorum shall be present. All questions shall be
decided by a vote of a majority of the Directors present at a meeting.

6.10 Executive Committee. The Board of Directors may designate three (3) or
more Directors, one of whom shall be the Chairman of the Board, to constitute an
Executive Committee. The Board of Directors may elect other Directors as
alternative members of the Executive Committee. To the extent determined by the
Board of Directors, the Executive Committee shall have and exercise the
authority of the Board of Directors in the direction of the Company; provided,
however, that the Executive Committee shall not have the powers of the Board of
Directors in regard to apportionment or distribution of cash, election of
officers, filling vacancies on the Board of Directors, and recommending
amendments to this Agreement. The Executive Committee shall act only in the
interval between meetings of the Board of Directors, and shall be subject at all
times to the control and direction of the Board of Directors. Copies of the
minutes of each Executive Committee meeting shall be mailed to all directors
within seven (7) days following such meeting.

6.11 Compensation. The compensation of the Board of Directors shall be
determined by resolution of the Board of Directors, which shall be presented for
approval to the Class A Members at any Annual Meeting or special meeting, and
when so determined shall be continuing until altered or amended. Board officers
shall be entitled to reimbursement for actual expenses incurred in attending
Board of Directors meetings or in conducting other business of the Company. Such
expense accounts shall be approved by officers of the Board of Directors.

6.12 Number of Districts. The territory in which the Class A Members are
located shall be divided into eight districts. The boundaries of such districts
shall be defined without dividing counties, and the number of Directors
representing each district shall be approximately proportionate to the number of
Class A Members located in that district. Each district shall be represented by
two or more Directors, who shall be elected at the Annual Meeting, as provided
in Section 6.3.

6.13 Districting Committee. Periodically, the Board of Directors may
appoint a Districting Committee. The Districting Committee shall review the
boundaries of the districts, the number of Class A Members located in each
district, and the number of Directors representing each district. The

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Districting Committee shall then recommend any changes to said boundaries that
are necessary to maintain equality of representation among such districts.

The boundaries of the districts, the number of Class A Members located in
each district, and the number of Directors representing each district shall be
subject to review by the Districting Committee at least every three years. The
recommendations of the Districting Committee may be accepted, rejected, or
modified by the Board of Directors. Rather than appointing a Districting
Committee, the Board of Directors may delegate the duties, powers, rights, and
responsibilities described in this Section 6.13 to any existing committee of the
Board of Directors.

6.14 Counties and Districts. Initially, the counties in each of the eight
districts shall be as follows:

(a) District One. District One shall include the following counties in
Minnesota: Anoka, Big Stone, Chisago, Clay, Crow Wing, Dakota, Douglas, Grant,
Hennepin, Kanabec, Kandiyohi, Mahnomen, Meeker, Mille Lacs, Morrison, Norman,
Otter Tail, Pennington, Polk, Pope, Ramsey, Red Lake, Sherburne, Stearns,
Stevens, Swift, Todd, Traverse, Wadena, Washington, Wilkin, and Wright.

(b) District Two. District Two shall include the following counties in
Minnesota: Blue Earth, Carver, Dodge, Faribault, Fillmore, Freeborn, Goodhue, Le
Sueur, McLeod, Mower, Nicollet, Olmsted, Renville, Rice, Scott, Sibley, Steele,
Wabasha, and Waseca.

(d) District Four. District Four shall include Chippewa County and Lac
Qui Parle County in Minnesota.

(e) District Five. District Five shall include Lincoln County and
Yellow Medicine County in Minnesota, and shall also include the following
counties in South Dakota: Beadle, Bon Homme, Brookings, Brown, Charles Mix,
Clark, Clay, Codington, Deuel, Grant, Hamlin, Kingsbury, Lake, Lincoln, McCook,
Miner, Minnehaha, Moody, Spink, Turner, and Yankton.

(f) District Six. District Six shall include Lyon County in Minnesota.

(g) District Seven. District Seven shall include the following
counties in Minnesota: Cottonwood, Jackson, Martin, Murray, Nobles, Pipestone,
and Rock. District Seven shall also include the following counties in Iowa:
Cerro Gordo, Clay, Chickasaw, Dickinson, Emmet, Lyon, Mitchell, Osceola, Sioux,
and Winnebago.

(h) District Eight. District Eight shall include all of the counties
in Nebraska, and shall also include the following counties in Iowa: Carroll,
Crawford, Davis, Delaware, Dubuque, Fremont, Harrison, Ida, Linn, Louisa, Page,
Pottawattamie, Shelby, Story, and Webster.

If a situation arises where a Class A Member is located in a county or
state which is not designated as part of the any of the eight districts, then
the Board of Directors may add that county or state to whichever of the
districts the Board of Directors determines is most logical, in its sole
discretion, and may notify the affected Member of its decision. The Board of
Directors may take this action without the need for any additional amendments to
this Agreement. The designation of new counties to existing districts by the
Board of Directors under these circumstances shall be reviewed by the
Districting Committee when it is next appointed.

6.15 Directors and Districts. Initially, the number of directors
representing each district shall be as follows:

(a) District One shall be represented by three directors.

(b) District Two shall be represented by three directors.

(d) District Four shall be represented by two directors.

(e) District Five shall be represented by three directors.

(f) District Six shall be represented by two directors.

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(g) District Seven shall be represented by three directors.

(h) District Eight shall be represented by five directors.

6.16 Board Actions Requiring Approval of Members. The Board may not
authorize or approve the following actions without the affirmative vote or prior
consent of sixty-six and two-thirds percent (66.67%) of the Class A Members
voting in person, by proxy or by mail ballot at a duly called Members meeting:

(a) Any amendment of this Agreement or the Articles of Organization of
the Company (except that the Board may amend Section 6.17 without the consent or
approval of any Class A Members);

(b) Approve any merger, consolidation, share or interest exchange, or
sale of all or substantially all of the assets of the Company (other than the
merger contemplated in the Transaction Agreement and a merger of a wholly-owned
subsidiary with and into the Company in which the Company is the surviving
entity);

(d) Authorize any transaction, agreement or action on behalf of the
Company that is not related or complimentary to the Company's existing business
or would make it impossible for the Company to carry on the primary business of
the Company.

6.17 Board Actions Requiring Approval of ADM. So long as ADM holds at least
one-third of the outstanding Class B Units, neither the Board nor the Class A
Members may authorize or approve the following actions without the prior written
consent of ADM:

(a) Make any material change in the principal business of the Company;

(b) Sell, lease, liquidate, exchange, dispose of or otherwise transfer
substantially all of the assets of the Company; or

(c) Embark upon any capital expenditure project that would involve the
expenditure by the Company of any amount in excess of Two Hundred and Fifty
Thousand Dollars ($250,000.00).

ADM shall not unreasonably withhold any consent required of it pursuant to
this Section 6.17. For purposes of assessing the reasonableness of the
withholding by ADM of consent hereunder, reference shall be made to the
viewpoint of a lender or passive investor that occupies the position of sole
holder of the Class B Units.

6.18 Absent Directors. A Director of the Company may give advance written
consent or opposition to a proposal to be acted upon at a Board meeting. If the
Director is not present at the meeting, consent or opposition to a proposal does
not constitute presence at the meeting for purposes of determining existence of
a quorum, but consent or opposition shall be counted as a vote in favor of or
against the proposal and shall be entered in the minutes or other record of
action at the meeting, if the proposal acted on at the meeting is substantially
the same or has substantially the same effect as the proposal to which the
Director has consented or objected.

6.19 Action Without Meeting. Any action required or permitted to be taken
at a meeting of the Directors may be taken without a meeting by written action
signed by all of the Directors. The written action is effective when signed by
all the Directors, unless a different effective time is provided in the written
action.

6.20 Telephonic Meetings. Any regular or special meeting of the Directors
may be taken by telephonic or electronic conference or any other means of
communication through which the Directors can simultaneously hear each other
during the conference, if the same notice is given of the conference to each
Director, and if the Directors participating in the conference would be
sufficient to constitute a quorum at a meeting. Participation in a telephonic,
electronic, or other conference of such means constitutes presence at the
meeting in person if all the other requirements are met.

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ARTICLE VII

DUTIES OF DIRECTORS

7.1 General Powers. The Board of Directors shall direct the business and
affairs of the Company, and shall exercise all of the powers of the Company
except such as are by this Agreement conferred upon or reserved to the Members.
The Board of Directors shall adopt such policies, rules, regulations, and
actions not inconsistent with law or this Agreement as it may deem advisable.

7.2 Employment of President and Chief Executive Officer. The Board of
Directors shall select and employ a President and Chief Executive Officer and
fix the compensation of such President and Chief Executive Officer. The Board of
Directors may terminate the employment of the President and Chief Executive
Officer with or without cause at any time, unless an enforceable written
contract between the Company and the President and Chief Executive Officer
provides otherwise.

7.3 Bonds and Insurance. The Board of Directors shall require the President
and Chief Executive Officer and all officers, agents, and employees charged by
the Company with responsibility for the custody of any of its funds or property
to give adequate bonds. Such bonds, unless cash security is given, shall be
furnished by a responsible bonding company and approved by the Board of
Directors, and the cost thereof shall be paid by the Company. The Company shall
provide for the adequate insurance of the property of the Company, or property
which may be in the possession of the Company, or stored by it, and not
otherwise adequately insured, and in addition adequate insurance covering
liability for accidents to all employees and the public.

7.4 Accounting System and Audit. The Board of Directors shall cause to be
installed and maintained an adequate system of accounts and records. At least
once in each year the books and accounts of the Company shall be audited by an
independent auditing firm, and the report of such audit shall be made at the
next Annual Meeting of the Class A Members.

7.5 Agreements with Members. The Board of Directors and such duly
authorized officers shall have the power to carry out all agreements of the
Company with its Members in every way advantageous to the Company representing
the Members collectively.

7.6 Depository. The Board of Directors may direct management to approve one
or more banks or other financial institutions to act as depositories of the
funds of the Company, and to determine the manner of receiving, depositing, and
disbursing the funds of the Company, the form of checks, and the person or
persons by whom they shall be signed, with the power to change such banks and
the person or persons signing such checks and the form thereof at will.

ARTICLE VIII

BOARD OFFICERS; PRESIDENT AND CHIEF EXECUTIVE OFFICER

8.1 Election of Board Officers. At each Annual Meeting of the Board of
Directors, the Board of Directors shall elect the principal officers of the
Board, which principal officers shall be a Chairman, a Vice Chairman, a
Secretary and such other Board officers as may be established by the Board. The
Chairman, Vice Chairman and Secretary must be Directors of the Company. A board
officer may be removed by the Board of Directors whenever in its judgment the
best interests of the Company will be served thereby. If any vacancy shall occur
among the principal officers of the Board, it shall be filled by the Board of
Directors at its next regular meeting following the vacancy.

8.2 Duties of Chairman. The Chairman shall:

(a) preside over all meetings of the Members of the Company, the
Executive Committee, and the Board of Directors;

(b) call special meetings of the Board of Directors;

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(d) sign all membership certificates and such other papers of the
Company as the Chairman may be authorized or directed to sign by the Board of
Directors; provided, however, that the Board of Directors may authorize any
person to sign any or all checks, contracts, and other documents in writing on
behalf of the Company. The Chairman shall perform such other duties as may be
prescribed by this Agreement or by the Board of Directors.

8.3 Duties of Vice Chairman. In the absence or disability of the Chairman,
the Vice Chairman shall perform the duties of the Chairman.

8.4 Duties of Secretary. The Secretary shall attend all meetings of the
Company and the Board of Directors, all meetings of the Executive Committee, and
all meetings of the Members, and shall record all votes and keep minutes of all
proceedings. The Secretary shall keep a complete record of all meetings of the
Company and of the Board of Directors. The Secretary shall sign such papers
pertaining to the Company as he or she may be authorized or directed to sign by
the Board of Directors. The Secretary shall serve all notices required by law
and by this Agreement, including notices of meetings, and shall make a full
report of all matters and business pertaining to his or her office to the
Members at the Annual Meeting. The Secretary shall cause to be kept and
maintained complete membership records, shall make all reports required by law,
and shall perform such other duties as may be required of him or her by the
Company or the Board of Directors. An Assistant Secretary, if any, shall perform
the duties of the Secretary during the absence or disability of the Secretary.

8.5 Duties of President and Chief Executive Officer. The President and
Chief Executive Officer shall be employed by the Board of Directors as an
officer of the Company and shall perform such duties as the Board of Directors
may prescribe, and shall exercise such authority as the Board of Directors may
from time to time vest in him or her. Under the direction of the Board of
Directors, the President and Chief Executive Officer shall have general charge
of the ordinary and usual business operations of the Company, including the
purchasing, marketing and handling of all products and supplies handled by the
Company.

The President and Chief Executive Officer shall cause all money belonging
to the Company that comes into his or her possession in the name of the Company
to be deposited in a bank or other financial institution selected by the Board
of Directors, and if authorized to do so by the Board of Directors, shall make
all disbursements by check or electronic transfer of funds therefrom for the
ordinary and necessary expenses of the business in the manner and form
prescribed by the Board of Directors. On the appointment of his or her
successor, the President and Chief Executive Officer shall deliver to said
successor all money and property belonging to the Company which he or she has in
his or her possession or over which he or she has control.

The President and Chief Executive Officer shall be required to maintain the
Company's records and accounts in such a manner that the true and correct
condition of the Company's business may be ascertained therefrom at any time.
The President and Chief Executive Officer shall render annual and periodic
statements in the form and in the manner prescribed by the Board of Directors,
and shall carefully preserve all books, documents, correspondence, and records
of whatever kind pertaining to the business of the Company that may come into
his or her possession.

The President and Chief Executive Officer shall employ, supervise, and
dismiss any or all officers or employees of the Company, except agents or
counsel specifically employed by the Board of Directors. The President and Chief
Executive Officer may designate employees of the Company as various vice
presidents or assistant secretaries of the Company and define their duties and
responsibilities as such officers of the Company.

8.6 Compensation. The salary, compensation, and other benefits of the
President and Chief Executive Officer and all Board officers shall be fixed by
the Board of Directors; provided, however, that no officer who is a director may
take part in the vote on his or her own compensation.

8.7 Special Powers. The President and Chief Executive Officer or any
officer may be vested by the Board of Directors with any power and charged with
any duty not contrary to law or inconsistent with this Agreement.

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ARTICLE IX

REQUIRED RECORDS; ACCOUNTING AND TAX MATTERS

9.1 Required Records. The Board shall cause to be maintained the required
records of the Company in a complete and accurate manner. The Board shall cause
to be maintained the required records on a current basis, including, without
limitation, the recording of any transfer of all or part of a Member's
Membership Interest pursuant to Article X hereof in the required records as soon
as the Board receives notice of such transfer. The Board shall conspicuously
note in the required records that the Members' Membership Interests are governed
by this Agreement and that this Agreement contains a restriction on the
assignment of Membership Interests. The required records at all times shall be
kept at the principal executive office of the Company or such other place or
places within the United States as the Board may determine. Each Member shall
have access to and may inspect and (at its expense) copy the required records to
the extent allowable and in accordance with the Act, subject to such reasonable
standards as may be established by the Company in accordance with the Act as to
certain of the required records. The costs of such inspection shall be borne by
the inspecting Member.

9.2 Books of Account. The Board shall cause to be kept complete and
accurate accounts of all transactions of the Company in proper books of account
and shall enter or cause to be entered therein a full and accurate account of
each and every Company transaction in accordance with accounting principles and
methods as determined by the Board with the advice of the Company's accountants.
The books of account of the Company shall be closed and balanced as of the end
of each fiscal year. The books of account and other records of the Company shall
at all times be kept at the principal executive office of the Company or such
other place or places within the United States as the Board may determine. Each
Member shall have access to and may inspect and copy any of such books and
records at all reasonable times and in accordance with the Act. The costs of
such inspection and copying shall be borne by the inspecting Member.

9.3 Tax Characterization, Returns, Elections and Information. The Members
acknowledge that the Company will be characterized as a partnership for federal
income tax purposes. Management shall prepare or cause to be prepared and shall
file on or before the due date (or any extension thereof) any federal, state or
local tax returns required to be filed by the Company and, except as otherwise
provided in any Board resolution, shall have complete discretion and authority
concerning any tax election required or permitted to be made by the Company.
Notwithstanding the preceding sentence, the Company shall not make an election
under Section 754 of the Code unless the Board shall determine by resolution
that the tax benefits made available to affected transferee Members as a result
of such an election are likely to be of sufficient magnitude to justify the
increased cost and administrative burden of accounting for the resulting basis
adjustments under Sections 734(b) and 743(b) of the Code.

Management shall deliver or cause to be delivered to each Member within a
reasonable time after the end of each fiscal year or, if applicable, after the
extended due date of the Company's tax return, such information concerning the
Company as is necessary or appropriate to permit each Member to properly
complete any federal, state or local income tax return in which Members must
include items attributable to the Company. Management shall endeavor to provide
sufficient information from time to time during the year as may be appropriate
to permit the Members to pay federal, state and local estimated taxes.

9.4 Tax Matters Partner; Tax Audit Costs. The Tax Matters Partner shall be
the person so designated in accordance with Sections 6221-33 of the Code and
related Treasury Regulations and such person shall assume the responsibilities
assigned to tax matters partners therein. The Board may designate the Tax
Matters Partner in accordance with said sections and regulations or, if no such
designation is made, the Tax Matters Partner shall be the Chairman of the Board
or, if such Chairman is not a Member, the Director who is a Member and who,
among the other Directors who are members, individually owns the largest number
of Units.

If on advice of counsel the Tax Matters Partner determines that it is in
the best interest of the Members that the final results of any administrative
proceeding be appealed by the institution of legal proceedings, the Tax Matters
Partner is hereby authorized to commence such legal proceedings in such

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forum as the Tax Matters Partner, on advice of counsel, determines to be
appropriate. In the event the Tax Matters Partner selects a forum for appeal in
which the Unit Holders are required to deposit a proportionate share of any
disputed tax before making such appeal, the Tax Matters Partner must obtain the
approval of the Board and the consent of Members owning a majority of the Voting
Interests. If such approval and consent is obtained, each of the Unit Holders
will be required to deposit and pay such Unit Holder's proportionate share of
such disputed tax before participating in such appeal. The Unit Holders
acknowledge that such deposit under current law does not earn interest and that
the failure to so deposit may preclude a Unit Holder from pursuing any other
sort of appeal by court action.

The Tax Matters Partner shall not be liable to any other Unit Holder for
any action taken with respect to any such administrative proceedings or appeal
so long as the Tax Matters Partner is not grossly negligent or guilty of willful
misconduct. Any costs paid or incurred by the Tax Matters Partner in connection
with its activities in such capacity shall be reimbursed by the Company.

Each Unit Holder acknowledges that any cost a Unit Holder may incur in
connection with an audit of such Unit Holder's income tax return, including an
audit of such Unit Holder's investment in this Company, is such Unit Holder's
sole responsibility and obligation. The Company, the Board, the officers and the
Tax Matters Partner shall not be liable to any Unit Holder for reimbursement or
sharing of any such costs.

ARTICLE X

TRANSFER OF MEMBER INTERESTS

10.1 Restrictions on Transfer.

(a) No Person shall Transfer any Unit if, in the determination of the
Board, such Transfer would cause the Company to be treated as a "publicly traded
partnership" within the meaning of Section 7704(b) of the Code.

(b) No Person shall Transfer any Unit except with the prior consent of
the Board of Directors.

(c) Any Transfer of a Unit that would result in a violation of the
restrictions in Section 10.1(a) or (b) shall be null and void, and the intended
transferee shall acquire no rights in such Unit.

10.2 Conditions Precedent to Transfers. The Board of Directors may not
recognize any Transfer of Units unless and until the Company has received:

(a) an opinion of counsel (whose fees and expenses shall be borne by
the transferor) satisfactory in form and substance to the Board that such
Transfer may be lawfully made without registration or qualification under
applicable state and federal securities laws, or such Transfer is properly
registered or qualified under applicable state and federal securities laws;

(b) such documents and instruments of conveyance executed by the
transferor and transferee as may be necessary or appropriate in the opinion of
counsel to the Company to effect such Transfer, except that in the case of a
Transfer of Units involuntarily by operation of law, the Transfer shall be
confirmed by presentation of legal evidence of such Transfer, in form and
substance satisfactory to the Company;

(d) the transferee's taxpayer identification number and sufficient
information to determine the transferee's initial tax basis in the interest
transferred, and any other information reasonably necessary to permit the
Company to file all required federal and state tax returns and other legally
required information statements or returns;

(e) evidence satisfactory in form and substance to the Board that the
transferee meets the minimum and maximum Unit ownership requirements and any
other applicable eligibility requirements set forth in Section 3.2 of this
Agreement;

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(f) in the case of a Transfer of Class A Units subject to a 1996 Loss
Payable (other than a gift Transfer to a Member's relatives, made without
consideration), full payment in cash to offset such Member's 1996 Loss Payable;
and

(g) in the case of a Transfer of Class B Units, a written agreement
executed by the transferee to the effect that transferee is not entitled to the
benefits of the Stockholder Agreement between the Cooperative and Archer Daniels
Midland Corporation dated August 27, 1997; provided, however, the Board may
waive any or all of the conditions stated above. In addition, the Board may (i)
institute or suspend a procedure applicable to Class A Units similar to the
procedure adopted pursuant to the Bylaws of the Cooperative as in effect just
prior to closing of the transactions described in the Transaction Agreement,
except that utilization of any such procedure must be discretionary at the
option of the Class A Unit Holder, and (ii) adopt such other conditions on the
Transfer of Units as it deems appropriate, provided that such additional
restrictions are reasonably required to satisfy the requirements of applicable
tax or securities laws.

10.3 Substitution of Member. A transferee of Units shall be admitted as a
substitute Member only if (i) the provisions of this Article have been met, (ii)
the transferee executes an instrument satisfactory to the Company accepting and
adopting the terms and provisions of this Agreement and (iii) the transferor
pays all reasonable expenses incurred by the Company in connection with the
Transfer and, if applicable, the transferee's admission as a new Member. The
admission of a transferee as a substitute Member shall not result in the release
of the Member who transferred the Unit from any liability that such Member may
have to the Company.

10.4 Effective Date of Transfer. Any Transfer of a Unit shall be deemed
effective as of the day of the month and year (i) which the Transfer occurs (as
reflected by the form of Assignment) and (ii) the transferee's name and address
and the nature and extent of the Transfer are reflected in the records of the
Company. The name, address, Capital Contributions, class and number of Units
held by each Member shall be set forth on the Membership Register, which shall
be modified from time to time as Transfers occur or as additional Units are
issued pursuant to the provisions of this Agreement. The appropriate Company
records shall be conspicuously noted to prevent the Transfer of Units otherwise
than in accordance with this Article X. Notwithstanding the foregoing, the
effective date of a Transfer for purposes of allocation of Profits and Losses
and for distributions shall be determined pursuant to Section 10.5. Any
transferee of a Unit shall take subject to the restrictions on transfer imposed
by this Agreement.

10.5 Distributions and Allocations in Respect to Transferred Interest. If
any Unit is transferred during any accounting period in compliance with the
provisions of this Article X, then Profits and Losses, each item thereof, and
all other items attributable to such Units for such accounting period shall be
divided and allocated between the transferor and the transferee by taking into
account their varying interests during such accounting period in accordance with
Code Section 706(d). Solely for purposes of making such allocations and
distributions, the Company shall use the interim closing of the books method and
the convention that recognizes such Transfer as of the beginning of the calendar
month following the calendar month in which the notice, documentation and
information requirements of this Article X have been substantially complied
with. All distributions on or before the end of the calendar month in which such
requirements have been substantially complied with shall be made to the
transferor and all distributions thereafter shall be made to the transferee. The
Board shall have the power and authority to adopt another reasonable method
and/or convention with respect to such allocations and distributions; provided,
that reasonable notice of any change is given to the Members in advance of the
change. Neither the Company, the Board, any Director nor any Member shall incur
any liability for making allocations and distributions in accordance with the
provisions of this Section 10.5, whether or not the Board or any Director or the
Company or any Member has knowledge of any Transfer of ownership of any interest
in the Company.

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ARTICLE XI

DISSOLUTION AND WINDING UP

11.1 Liquidating Events. The Company shall be dissolved and commence
winding up and liquidating upon the affirmative vote of at least sixty-six and
two-thirds percent (66.67%) of the Class A Members voting at a duly called
meeting.

As further provided in Article III herein, the dissociation and termination
of the continued membership of a Member shall not cause the dissolution of the
Company and shall not require the Company's business to be wound-up, so long as
the Company has the minimum number of Members required under applicable state
law within ninety (90) days following the Event of Dissociation.

11.2 Winding Up.

(a) Notice of Dissolution. As soon as possible following the
occurrence of a Liquidating Event, the appropriate representative of the Company
shall execute a notice of dissolution in such form as shall be prescribed by the
Colorado Secretary of State, setting forth the information required under the
Act, and shall file same with the Colorado Secretary of State's office.

(b) Winding Up of Business. Upon filing a notice of dissolution with
the Colorado Secretary of State, the Company shall cease to carry on its
business, except insofar as may be necessary for the winding up of its business,
but its separate existence shall continue until a certificate of termination has
been issued by the Secretary of State or until a decree dissolving the Company
has been entered by a court of competent jurisdiction.

11.3 Distributions Upon Dissolution. Upon dissolution, the business of the
Company shall be wound up, the Directors shall take full account of the Company
assets and liabilities, and all assets shall be liquidated as promptly as is
consistent with obtaining the fair value thereof. If any assets are not sold,
gain or loss shall be allocated to the Unit Holders in accordance with Article V
as if such assets had been sold at their fair market value at the time of the
liquidation. If any assets are distributed to a Unit Holder, rather than sold,
the distribution shall be treated as a distribution equal to the fair market
value of the assets at the time of the liquidation. The assets of the Company
shall be applied and distributed in the following order of priority:

(a) First, to the payment of all debts and liabilities of the Company,
including all fees due the Directors, and including any loans or advances that
may have been made by the Members to the Company, in the order of priority as
provided by law;

(b) Second, to the establishment of any reserves deemed necessary by
the Directors or the Person winding up the affairs of the Company for any
contingent liabilities or obligations of the Company; and

(c) Third, to the Unit Holders, ratably in proportion to the credit
balances in their respective Capital Accounts after and including all
allocations to the Unit Holders and holders of Special Financial Interests under
Article V herein, including the allocation of any income, gain or loss from the
sale, exchange or other disposition (including a deemed sale pursuant to this
Section 11.3) of the Company's assets, in an amount equal to value of their
units as established by the Board of Directors;

(d) Fourth, to the holders of Special Financial Interests in
proportion to their stated amounts in amounts equal to the stated amount of such
interests less any previous distributions made with respect to such Interests;
and

(e) Fifth, the balance, if any, to the Unit Holders, ratably in
proportion to the credit balances in their respective Capital Accounts, in an
amount equal to the aggregate credit balances in the Capital Accounts after and
including all allocations to the Unit Holders and holders of Special Financial
Interests under Article V herein, including the allocation of any income, gain
or loss from the sale, exchange or other disposition (including a deemed sale
pursuant to this Section 11.3) of the Company's assets.

11.4 Compliance With Regulations; Deficit Capital Accounts. In the event
the Company is "liquidated" within the meaning of Regulations Section
1.704-1(b)(2)(ii)(g), distributions shall be made

D-24
<PAGE>

pursuant to this Article XI to the Unit Holders who have positive Capital
Accounts in compliance with Regulations Section 1.704-1(b)(2)(ii)(b) (2). If any
Unit Holder has a deficit balance in his Capital Account (after giving effect to
all contributions, distributions and allocations for all allocation periods,
including the allocation period during which such liquidation occurs), such Unit
Holder shall have no obligation to make any contribution to the capital of the
Company with respect to such deficit, and such deficit shall not be considered a
debt owed to the Company or to any other Person for any purpose whatsoever. In
the discretion of the Company, a pro rata portion of the distributions that
would otherwise be made to the Unit Holders pursuant to this Article XI may be:

(a) Distributed to a trust established for the benefit of the Unit
Holders for the purposes of liquidating Company assets, collecting amounts owed
to the Company, and paying any contingent or unforeseen liabilities or
obligations of the Company. The assets of any such trust shall be distributed to
the Unit Holders from time to time, in the reasonable discretion of the trustee,
in the same proportions as the amount distributed to such trust by the Company
would otherwise have been distributed to the Unit Holders pursuant to Section
11.3 hereof; or

(b) Withheld to provide a reasonable reserve for Company liabilities
(contingent or otherwise) and to reflect the unrealized portion of any
installment obligations owed to the Company, provided that such withheld amounts
shall be distributed to the Unit Holders as soon as practicable.

11.5 Deemed Distribution and Recontribution. Notwithstanding any other
provision of this Article XI, in the event the Company is liquidated within the
meaning of Regulations Section 1.704-1(b)(2)(ii)(g) but no Dissolution Event has
occurred, the Property shall not be liquidated, the Company's debts and other
liabilities shall not be paid or discharged, and the Company's affairs shall not
be wound up. Instead, solely for federal income tax purposes, the Company shall
be deemed to have distributed the property in-kind to the Unit Holders, who
shall be deemed to have taken subject to all debts of the Company and other
liabilities all in accordance with their respective Capital Accounts.
Immediately thereafter, the Unit Holders shall be deemed to have recontributed
the property in-kind to the Company, which shall be deemed to have taken subject
to all such liabilities.

11.6 Allocations During Period of Liquidation. During the period commencing
on the first day of the Fiscal Year during which a Dissolution Event occurs and
ending on the date on which all of the assets of the Company have been
distributed to the Unit Holders pursuant to Section 11.3 hereof (the
"Liquidation Period"), the Unit Holders shall continue to share Profits, Losses,
gain, loss and other items of Company income, gain, loss or deduction in the
manner provided in Article V hereof.

11.7 Character of Liquidating Distributions. All payments made in
liquidation of the interest of a Unit Holder shall be made in exchange for the
interest of such Unit Holder in property pursuant to Section 736(b)(1) of the
Code, including the interest of such Unit Holder in Company goodwill.

ARTICLE XII

MEMBERS BOUND BY AGREEMENT

By their purchase or acceptance of Units, the Initial Members and any
Person who is admitted as an additional Member or a substitute Member shall be
subject to and bound by all the provisions of this Agreement, whether or not
such Member executes this Agreement or any other document referring to this
Agreement. However, such Person shall execute and acknowledge any documents and
instruments, in form and substance satisfactory to the Board, as the Board shall
deem necessary or advisable to effect such admission and to confirm the
agreement of the Person being admitted to be bound by all the terms and
provisions of this Agreement. Upon demand by the Board, such Person shall pay
all reasonable expenses in connection with such admission as a Member,
including, without limitation, legal fees and costs of preparation of any
amendment to or restatement of this Agreement, if necessary or desirable in
connection therewith.

D-25
<PAGE>

ARTICLE XIII

INDEMNIFICATION OF DIRECTORS AND EMPLOYEES

13.1 Indemnity of Directors, Employees and Other Agents.

(a) To the fullest extent permitted by law, the Company shall
indemnify each Director from and make advances for expenses incurred by the
Director in connection with any claim made against the Director arising from an
action or omission made in good faith or which he or she reasonably believed to
be in the best interests of the Company, or any other such claim to the maximum
extent permitted under the Act, except to the extent the claim for which
indemnification is sought results from an act or omission of the Director
constituting fraud or willful misconduct.

(b) Except as may otherwise be provided in an agreement with an agent
or employee, the Company shall indemnify its employees and other agents who are
not Directors to the fullest extent permitted by law.

(c) Expenses (including legal fees and expenses) incurred by a
Director in defending any claim, demand, action, suit or proceeding subject to
subsection (a) above shall be paid by the Company in advance of the final
disposition of such claim, demand, action, suit or proceeding upon receipt of an
undertaking (which need not be secured) by or on behalf of the Director to repay
such amount if it shall ultimately be finally determined by a court of competent
jurisdiction and not subject to appeal, that the Director is not entitled to be
indemnified by the Company as authorized hereunder.

ARTICLE XIV

MISCELLANEOUS

14.1 Entire Agreement. This Agreement constitutes the entire agreement
among the parties and supersedes any prior agreement or understanding among them
with respect to the subject matter hereof.

14.2 Amendment. This Agreement may not be modified, amended, or
supplemented, without (a) the affirmative vote or prior consent of sixty-six and
two-thirds percent (66.67%) of the Class A Members voting in person, by proxy,
or by mail ballot at a duly called Members meeting (except that the Board may
amend Section 6.17 without the consent or approval of any Class A Members), and
(b) in the case of any modification, amendment or supplement which otherwise
modifies or amends Section 6.17 hereof, the last sentence of Section 4.3(b)
hereof, or this Section 14.2(b), or which otherwise modifies the rights and
benefits afforded to the holders of Class B Units, the prior written consent of
the holders of sixty-six and two-thirds percent (66.67%) of the Class B Units.

14.3 Conflict with Articles. In the event of any conflict between the
Articles of Organization and this Agreement, the provisions of this Agreement
shall govern to the extent not contrary to law.

14.4 Certificates of Membership Interest. Units shall be evidenced by
certificates of membership interest. At the effective time of the merger of MCP
Colorado into the Company pursuant to the Transaction Agreement, the Company
adopts the certificates of the Cooperative as the Certificates of Membership
Interest of the Company. Upon any Transfer of Units in accordance with Article
X, the Board of Directors will issue a new form of certificate under the
Company's own name (a "LLC Certificate") representing the Units so transferred;
provided, however, that the issuance of LLC Certificates shall not invalidate or
otherwise affect the validity of certificates of the Cooperative representing
outstanding Units owned by the Initial Members. Each LLC Certificate shall bear
a legend referring to the restrictions set forth in Article X.

14.5 Severability. If any provision of this Agreement is held to be
illegal, invalid, or unenforceable under the present or future laws effective
during the term of this Agreement, such provision will be fully severable. This
Agreement will be construed and enforced as if such illegal, invalid, or
unenforceable provision had never comprised a part of this Agreement. The
remaining provisions of this Agreement will remain in full force and effect and
will not be affected by the illegal, invalid, or unenforceable provision or by
its severance from this Agreement. In lieu of such illegal, invalid, or
unenforceable

D-26
<PAGE>

provision, there will be added automatically as a part of this Agreement a
provision as similar in terms to such illegal, invalid, or unenforceable
provision as may be possible and be legal, valid, and enforceable.

14.6 Remedies. The parties agree that in the event of a breach of this
Agreement, the non-breaching party or parties shall be entitled to the remedies
of specific performance and injunctive relief, except to the extent prohibited
by the Act. Such remedies shall be in addition to any other remedies available
at law or in equity with the pursuit of any one or more remedies not being a bar
to the pursuit of other remedies which may be available. The parties further
agree that the breaching party or parties shall pay all reasonable costs,
expenses, and attorneys' fees incurred by the non-breaching party or parties in
pursuing their remedies for a breach of this Agreement.

14.7 Consent and Waiver. No consent under and no waiver of any provision of
this Agreement on any one occasion shall constitute a consent under or waiver of
any other provision on said occasion or on any other occasion, nor shall it
constitute a consent under or waiver of the consented to or waived provision on
any other occasion. No consent or waiver shall be enforceable unless it is in
writing and signed by the party against whom such consent or waiver is sought to
be enforced.

14.8 No Third Party Beneficiary. This Agreement is made solely and
specifically among and for the benefit of the Company, the Members and the Unit
Holders, and their respective successors and assigns. No other Person will have
any rights, interest, or claims hereunder or be entitled to any benefits under
or on account of this Agreement as a third party beneficiary or otherwise;
provided, however, that the Company shall have standing to bring an action to
recover damages provided for by the Act or to seek remedies otherwise provided
by law in the event of a breach or threatened breach of this Agreement.

14.9 Notices. All notices, offers, demands, or other communications
required or permitted under this Agreement shall be in writing, signed by the
Person giving the same. Notice shall be treated as given when personally
received or (except in the event of a mail strike) when sent by United States
Mail to a Member or Unit Holder at the address as shown from time to time on the
records of the Company. Any Member or Unit Holder may specify a different
address by written notice to the Company.

14.10 Binding Effect. Except as herein otherwise specifically provided,
this Agreement shall be binding upon and inure to the benefit of the Company,
the Members and Unit Holders, parties and their legal representatives, heirs,
administrators, executors, successors and assigns. Members and Unit Holders
shall be bound by and shall be entitled to the benefits of this Agreement by
their purchase or acceptance of Units whether or not they sign this Agreement or
any document referring to this Agreement.

14.11 Necessary Instruments and Acts. The parties covenant and agree that
they shall execute any further instruments and shall perform any acts which are
or may become necessary to effectuate and to carry out the terms and conditions
of this Agreement.

14.12 Number and Gender. Wherever from the context it appears appropriate,
each term stated in either the singular or the plural shall include the singular
and the plural and pronouns stated in either the masculine, the feminine or the
neuter gender shall include the masculine, feminine and neuter.

14.13 Interpretation. All references herein to Articles, Sections and
subsections refer to Articles, Sections and subsections of this Agreement. All
Article, Section and subsection headings are for reference purposes only and
shall not affect the interpretation of this Agreement.

14.14 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one agreement binding
on all parties. Each party shall become bound by this Agreement immediately upon
signing any counterpart, independently of the signature of any other party.

14.15 Governing Law. This Agreement and the rights of the parties hereunder
shall be governed by and interpreted in accordance with the internal laws of the
State of Colorado, without regard to its conflicts or choice-of-law rules.

* * * * * * *

D-27
<PAGE>

IN WITNESS WHEREOF, this Agreement has been executed by the duly authorized
representatives of the Company and the Cooperative as of the date set forth in
the first paragraph.

MINNESOTA CORN PROCESSORS, INC.

By:
--------------------------------------

Its:
--------------------------------------

MINNESOTA CORN PROCESSORS, LLC

By:
--------------------------------------

Its:
--------------------------------------

D-28
<PAGE>

SCHEDULE A

COMPETITORS

Archer Daniels Midland Company
Cargill, Incorporated
Corn Products Company (Corn Products International, Inc.)
A.E. Staley Manufacturing Company (Tate & Lyle, PLC)
Cerestar USA, Inc.
National Starch and Chemical Company
Penford Products Company (Penford Corporation)
Roquette America, Inc.

D-29
<PAGE>

APPENDIX E

SUMMARIZATION LETTER
OF
APPRAISAL OPINION

AMERICAN APPRAISAL ASSOCIATES SUMMARIZATION LETTER PAGE 1
- --------------------------------------------------------------------------------

February 1, 1999

Minnesota Corn Processors
Marshall, Minnesota

In order to assist you, we are providing this summarization letter of our
appraisal report, dated January 26, 1999. All terms and conditions contained in
the report apply fully herein. To understand the procedures followed and the
conclusions reached, the reader is advised to read the report in its entirety.

In accordance with your authorization, we made an investigation and
appraisal of the business enterprise headquartered in MARSHALL, MINNESOTA, and
identified to us as

MINNESOTA CORN PROCESSORS

Our report, intended to comply with the purpose and reporting requirements
set forth by the Uniform Standards of Professional Appraisal Practice ("USPAP")
for a summary appraisal report was prepared for Minnesota Corn Processors ("MCP"
or "the company") regarding their contemplated conversion ("the Contemplated
Transaction") that would restructure the company from a cooperative entity to a
limited liability company ("LLC"). Our opinions are as of September 30, 1998
("the appraisal date"), of the fair market value under the premise of continued
use of (i) the business enterprise of MCP prior to the Contemplated Transaction,
and (ii) the minority common equity value of MCP on a per-share basis
immediately following the consummation of the Contemplated Transaction. These
opinions have been prepared for MCP and its equity holders for tax and corporate
planning purposes. It is entirely inappropriate to use these opinions of value
for any other purpose.

FAIR MARKET VALUE is defined as the estimated amount at which the business
enterprise might exchange between a willing buyer and a willing seller, neither
being under compulsion, each having reasonable knowledge of all relevant facts.

When fair market value is established under the premise of CONTINUED USE,
it is assumed that the buyer and the seller would be contemplating retention of
the assets at their present location as part of the current operations. An
estimate of fair market value arrived at under the premise of continued use does
not represent the amount that might be realized from piecemeal disposition of
the assets in the open market or from an alternative use of the assets.

BUSINESS ENTERPRISE is defined as the combination of all tangible assets
(property, plant, and equipment, and normal working capital) and intangible
assets of a continuing business. Alternatively, it is equivalent to the invested
capital of the business; that is, the combination of the value of the
stockholders' equity and long-term debt.

Our appraisal report identifies the property appraised, states the
objective and extent of the appraisal, and presents the conclusion of value. The
report discusses the economic and industry outlook, the history and nature of
the business, an explanation of the valuation techniques employed, and the
conclusion of value. The report contains exhibits on (A) Historical Income
Statement; (B) Historical Balance Sheet; (C) Guideline Company Weighting
Process; (D) Market Approach -- Guideline Company Method; (E) Discount Rate
Development; (F) Income Approach -- Discounted Cash Flow Method; (G) Valuation
of St. Paul Bank Investment; (H) Valuation of Member Loss Allocation

E-1
<PAGE>

AMERICAN APPRAISAL ASSOCIATES SUMMARIZATION LETTER PAGE 2
- --------------------------------------------------------------------------------

Receivable; (I) Discount for Lack of Marketability Data; (J) Analysis of Court
Cases; (K) Assumptions and Limiting Conditions; (L) Certificate of Appraiser
and a statement of general service conditions.

At September 30, 1998, MCP was a wet corn milling plant that produced
value-added corn-related products for its cooperative members. The products
produced for sale by MCP include ethanol, cornstarch, 55 high fructose corn
syrup ("55-HFCS"), 42 high fructose corn syrup ("42-HFCS"), and corn syrup.
Co-products ("feeds") consisting of gluten feed, gluten meal, corn germ, and
steepwater are also produced and sold.

The investigation included discussions with MCP's management concerning the
history and nature of the business, its economic status, and its prospects. For
the purpose of preparing the appraisal, we were furnished with audited and
unaudited financial statements, as well as other records, documents, and
forecasts germane to the appraisal. The historical data have been utilized
without further verification as correctly representing the results of the
operation and the financial condition of the enterprise. In addition, a study of
market conditions and an analysis of published information were used to evaluate
the company's past performance and to assess its ability and capacity to
generate future investment returns.

The appraisal investigation included a study of the factors having a
bearing on determining the fair market value. A listing of these factors is
contained in the report. Primary consideration was given to the company's
earning capacity and a comparative evaluation of its financial results with
other similar enterprises.

As a result of our study, it is our opinion that as of September 30, 1998,
the fair market value under the premise of continued use of the Minnesota Corn
Processors business enterprise prior to the Contemplated Transaction is
reasonably represented in the amount of SIX HUNDRED ELEVEN MILLION DOLLARS
($611,000,000). On the same date, the fair market value under the premise of
continued use of the minority common equity value of MCP immediately following
the consummation of the Contemplated Transaction is ONE DOLLAR TEN CENTS ($1.10)
per share, based on 195,428,000 shares outstanding.

No investigation was made of the title to or any liability against the
interest appraised. Further, we have not investigated the title to or any
liabilities against the property appraised.

Respectfully submitted,

AMERICAN APPRAISAL ASSOCIATES, INC.

E-2
<PAGE>

PART II.

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Chapter 308A.325 of the Minnesota cooperative law authorizes
indemnification of directors and officers of a Minnesota cooperative under
certain circumstances against expenses, judgments and the like in connection
with an action, suit or proceeding. Indemnification is not available to
directors for breaches of duty of loyalty to the cooperative or its members,
acts or omissions not in good faith or which involve intentional misconduct or
knowing violation of law or any transaction from which the director derived as
improper personal benefit. Minnesota Corn Processors' articles of incorporation
and bylaws provide for indemnification of directors and officers to the fullest
extent permitted under Minnesota law.

ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Exhibits. See Exhibit Index.

(b) Financial Statement Schedules. Not applicable.

ITEM 22. UNDERTAKINGS

(a) The undersigned registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:

(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;

(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement;

(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change in such information in the
registration statement;

(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be
deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities
at the time shall be deemed to be the initial bona fide offering
thereof.

(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.

(b) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or
otherwise, the registrant has been advised that in the opinion of the
Securities and exchange Commission such indemnification is against
public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be
governed by the final adjudication of such issue.

(c) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section

II-1
<PAGE>

13(a) or Section 15(d) of the Exchange Act (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Exchange Act) that is incorporated by reference
in the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering
of such securities at that time shall be deemed to be the initial bona
fide offering thereof.

(d) The undersigned registrant hereby undertakes that prior to any public
reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any
person or party who is deemed to be an underwriter within the meaning
of Rule 145(c), the issuer undertakes that such reoffering prospectus
will contain the information called for by the applicable registration
form with respect to reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other
items of the applicable form.

(e) The undersigned registrant hereby undertakes that every prospectus:
(i) that is filed pursuant to paragraph (d) immediately preceding, or
(ii) that purports to meet the requirements of Sections 10(a)(3) of
the Securities Act and is used in connection with an offering of
securities subject to Rule 415, will be filed as a part of an
amendment to the registration statement and will not be used until
such amendment is effective, and that, for purposes of determining any
liability under the Securities Act, each such post-effective amendment
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof.

(f) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and
the company being acquired involved therein, that was not the subject
of and included in the registration statement when it became
effective.

II-2
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Amendment No. 3 to the Registration Statement on Form S-4
to be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Marshall, State of Minnesota on October 15, 1999.

MINNESOTA CORN PROCESSORS, LLC

By /S/ L. DAN THOMPSON
-------------------------------------
L. Dan Thompson
President and Chief Executive Officer

POWER OF ATTORNEY

Each person whose signature appears below hereby constitutes and appoints
each of L. Dan Thompson and Daniel H. Stacken, such person's true and lawful
attorney-in-fact and agent with full power of substitution and resubstitution
for such person and in such name, place and stead, in any and all capacities, to
sign the Registration statement on Form S-4 of Minnesota Corn Processors, LLC
and any or all amendments (including post-effective amendments) to this
Registration Statement (or to any other registration statement for the same
offering that is to be effective upon filing pursuant to Rule 462(b) under the
Securities Act), and to file the same, with all exhibits hereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as such person might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or either of them, or
their substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.

Pursuant to the requirements of the Securities Act of 1933, this Amendment No. 3
to the Registration Statement on Form S-4 has been signed by the following
persons in the capacities indicated on October 15, 1999.

SIGNATURE TITLE
--------- -----

/S/ L. DAN THOMPSON President and Chief Executive Officer
- ---------------------------------
L. Dan Thompson

/S/ DANIEL H. STACKEN Principal Financial and Accounting Officer
- --------------------------------- and Director
Daniel H. Stacken

/S/ GALEN RUD Director
- ---------------------------------
Galen Rud

II-3
<PAGE>

INDEX TO EXHIBITS

EXHIBIT NO. DESCRIPTION
- ---------- -------------------------------------------------------------------

2.1 Plan of Merger by and between Minnesota Processors, Inc. and
Minnesota Corn Processors of Colorado, dated January __, 1999.*
2.2 Plan of Merger by and between Minnesota Corn Processors Colorado
and Minnesota Corn Processors, LLC, dated January __, 1999.*
2.3 Amended and Restated Transaction Agreement by and among Minnesota
Corn Processors, Inc., Minnesota Corn Processors Colorado and
Minnesota Corn Processors, LLC, dated as of May __, 1999.
3.1 Articles of Organization of Minnesota Corn Processors, LLC, filed
December 10, 1998.*

3.2 Second Amended and Restated Operating Agreement of Minnesota Corn
Processors, LLC. - See Appendix D to Information Statement -
Prospectus.

3.3 Articles of Incorporation of Minnesota Corn Processors Colorado,
filed December 10, 1998.*
3.4 Amended and Restated Articles of Incorporation of Minnesota Corn
Processors Colorado, filed January 22, 1999*

3.5 Bylaws of Minnesota Corn Processors Colorado.*

5.1 Form of Legal Opinion of Dorsey & Whitney, LLP with respect to the
securities being registered.
8 Form of Legal Opinion of Lindquist & Vennum, P.L.L.P. with respect
to certain tax matters.
10.1 Transaction Agreement between Archer Daniels Midland Company and
Minnesota Corn Processors, Inc., dated July 9, 1997.*
10.2 Stockholder Agreement between Archer Daniels Midland Company and
Minnesota Corn Processors, Inc., dated August 27, 1997.*
10.3 Master Equipment Lease Agreement between Fleet Capital Corporation
and Minnesota Corn Processors, Inc., dated April 9, 1998.**
10.4 Firm Sales/Purchase Agreement between Minnesota Corn Processors,
Inc. and Wascana Energy Marketing (U.S.) Inc., dated December 30,
1996.**
10.5 Natural Gas Purchase and Sale Contract between Minnesota Corn
Processors, Inc. and Husky Gas Marketing Inc., dated November 1,
1996.**
10.6 Amended and Restated Secured Credit Agreement among Minnesota Corn
Processors, Inc., Liquid Sugars, Inc., Harris Trust and Savings
Bank and U.S. Bancorp Ag Credit, dated as of November 4, 1998.*
10.7 Note Purchase Agreement dated as of August 26, 1997.*
10.8 Employment Agreement of L. Daniel Thompson, dated August 15, 1997.*
10.9 Employment Agreement of George A. Lamberth, dated November 11,
1997.*
10.10 Form of Management Stock Purchase Option Agreement.*
10.11 Corn Steep Agreement between Minnesota Corn Processors and Liquid
Corn, Inc.*
23.1 Consent of Dorsey & Whitney, LLP (included in the opinion filed as
Exhibit 5.1).
23.2 Consent of American Appraisal Associates.
23.3 Consent of Clifton Gunderson, LLC.
23.4 Consent of Doug Finstrom*
23.5 Consent Carl Just*
23.6 Consent of Duane Adams*
23.7 Consent of Howard Dahlager*
23.8 Consent of Ken Robinson*
23.9 Consent of David Scheibel*
23.10 Consent of Steve Lipetzky*
23.11 Consent of John Zwach, Jr.*
23.12 Consent of Roger Fjerkenstad*
23.13 Consent of Donald Lindblad*
23.14 Consent of Daniel Dybsetter*
23.15 Consent of John Jerzak*
23.16 Consent of Dean Buesing*

<PAGE>

23.17 Consent of Sandy Ludeman*
23.18 Consent of John P. Hennen*
23.19 Consent of John Nelson*
23.20 Consent of James Gervais*
23.21 Consent of Ron Kirchner*
23.22 Consent of Kenneth Regier*
23.23 Consent of Larry Dowd*
23.24 Consent of Andrew Jensen*
23.25 Consent of Patrick L. Meuret*
23.26 Consent of Robert Bender*

23.27 Consent of Jerry Jacoby*

23.28 Consent of Lindquist & Vennum, P.L.L.P. (included in the opinion
filed as Exhibit 8).

23.29 Consent of Galen Rud

24 Power of Attorney*

27 Financial Data Schedule*

- --------------------------
* Previously filed.
** To be filed by amendment.

Exhibit 2.3

AMENDMENT TO TRANSACTION AGREEMENT

THIS AMENDMENT (the "Amendment") is made as of October 18, 1999, to that
certain Amended and Restated Transaction Agreement (the "Transaction Agreement")
May 17, 1999, by and among MINNESOTA CORN PROCESSORS, INC. a Minnesota
cooperative association (the "Cooperative"), MINNESOTA CORN PROCESSORS COLORADO,
a Colorado cooperative association ("MCP Colorado") and MINNESOTA CORN
PROCESSORS, LLC, a Colorado limited liability company ("LLC") (collectively, the
"Parties").

WHEREAS, the Parties believe the interests of their respective members will
best be benefitted and served if the parties reorganize their business
operations and corporate structure whereby: (i) the Cooperative will merge into
MCP Colorado, with MCP Colorado being the surviving entity (the "MCP Merger");
and (ii) MCP Colorado will then merge into LLC, with LLC being the surviving
entity (the "LLC Merger"); the MCP Merger and the LLC Merger may be referred to
in this Agreement individually as a "Merger" or "Transaction" and collectively
as the "Mergers" or "Transactions"; and

WHEREAS, the Parties entered into the Transaction Agreement on May 17,
1999, in connection with the aforementioned reorganization of the Parties'
business operations and corporate structure; and

WHEREAS, the Parties have now agreed to revise the final terms and
conditions of the Mergers, and wish to: (i) memorialize these agreements as more
particularly described herein; and (ii) enter into this Amendment for the
purpose of modifying the Transaction Agreement effecting the Mergers;

WHEREAS, the Transaction Agreement contains as EXHIBIT D thereto the
Surviving Entity Operating Agreement (the "Operating Agreement"), which
Operating Agreement the Parties wish to amend; and

NOW, THEREFORE, the Parties hereto hereby agree that the Transaction
Agreement shall be amended as follows:

1. The Second Amended Operating Agreement attached hereto as EXHIBIT A
shall as of the date first mentioned above replace in its entirety the
Operating Agreement as EXHIBIT D to the Transaction Agreement.

2. All references in the Transaction Agreement (or in any Exhibit
thereto) to the Operating Agreement or to the Surviving Entity
Operating Agreement shall be understood to mean the Second Amended
Operating Agreement attached hereto as EXHIBIT A.

3. The List of Consents and Approvals attached hereto as EXHIBIT B shall
as of the date first mentioned above replace in its entirety the List
of Consents and Approvals as EXHIBIT E to the Transaction Agreement.

4. All references in the Transaction Agreement to EXHIBIT F are hereby
deleted.

5. Section 8.01(d) of the Transaction Agreement is deleted in its
entirety and replaced with the following:

"(d) The Closing has not occurred on or before April 1, 2000, or such
later date as the parties may mutually agree upon."

6. All references to the Transaction Agreement in the Transaction
Agreement or in any Exhibits thereto shall mean the Transaction
Agreement as amended by this Amendment.

7. Except as expressly modified by the terms of this Amendment, the terms
and conditions of the Transaction Agreement shall remain in full force
and effect.

<PAGE>

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first set forth above.

MINNESOTA CORN PROCESSORS, INC.

By:
--------------------------------------

Its:
--------------------------------------

MINNESOTA CORN PROCESSORS COLORADO

By:
--------------------------------------

Its:
--------------------------------------

MINNESOTA CORN PROCESSORS, LLC

By:
--------------------------------------

Its:
--------------------------------------

Exhibit 5.1

[Form of Legal Opinion of Dorsey & Whitney LLP]

[Dorsey & Whitney Letterhead]

Securities and Exchange Commission
Washington, D.C. 20549

Re: Minnesota Corn Processors, LLC
Registration Statement on Form S-4

Ladies and Gentlemen:

We have acted as counsel to Minnesota Corn Processors, LLC, a Colorado
limited liability company (the "Company"), in connection with the merger of
Minnesota Corn Processors, Inc., a Minnesota cooperative, into Minnesota Corn
Processors Colorado and the subsequent merger of Minnesota Corn Processors
Colorado into the Company (these mergers collectively, the "Conversion"), such
Conversion proceeding according to the terms of the Transaction Agreement, as
amended, by and among the parties.

We have examined such documents and have reviewed such questions of law as
we have considered necessary and appropriate for the purposes of our opinions
set forth below.

In rendering our opinions set forth below, we have assumed the authenticity
of all documents submitted to us as originals, the genuineness of all signatures
and the conformity to authentic originals of all documents submitted to us as
copies. We have also assumed the legal capacity for all purposes relevant hereto
of all natural persons and, with respect to all parties to agreements or
instruments relevant hereto other than the Company, that such parties had the
requisite power and authority (corporate or otherwise) to execute, deliver and
perform such agreements or instruments, that such agreements or instruments have
been duly authorized by all requisite action (corporate or otherwise), executed
and delivered by such parties and that such agreements or instruments are the
valid, binding and enforceable obligations of such parties. As to questions of
fact material to our opinions, we have relied upon certificates of officers of
the Company and of public officials.

Based on the foregoing, we are of the opinion that:

1. The Company is a limited liability company duly incorporated, validly
existing and in good standing under the laws of the State of Colorado.

2. The Company's Units of Participation have been duly authorized and, when
issued upon the Conversion in accordance with the terms thereof, will be validly
issued, fully paid and nonassessable.

3. The Transaction Agreement, as amended, has been duly authorized by all
requisite corporate action, executed and delivered by the parties thereto.

Our opinions expressed above are limited to the laws of the State of
Minnesota and Colorado and the federal laws of the United States of America.

The foregoing opinions are being furnished to you solely for your benefit
and may not be used, circulated, quoted or relied upon by any other person
without our prior written consent.

Dated: [date of delivery], 1999

Very truly yours,

Exhibit 8

[Lindquist & Vennum P.L.L.P. Letterhead]

Minnesota Corn Processors, Inc.
Minnesota Corn Processors, LLC
901 North Highway 59
Marshall, MN 56258-2744

Ladies and Gentlemen:

We have acted as special counsel to Minnesota Corn Processors, Inc. in
connection with certain aspects of its proposed conversion from a Minnesota
cooperative association to a Colorado limited liability company to be known as
Minnesota Corn Processors, LLC. Our representation has been a joint
representation with Dorsey & Whitney, LLP, in which we have had primary
responsibility for tax law and securities law matters in effecting the proposed
conversion. As such, we have participated in the preparation and filing with the
Securities and Exchange Commission under the Securities Act of 1933, as amended,
of a Form S-4 Registration Statement dated __________ and amended relating to
the proposed conversion (the "Registration Statement").

You have requested our opinion as to the accuracy of the description in the
Registration Statement of Federal Income Tax Considerations for the respective
entities and their members. We have examined the Registration Statement and such
other documents as we have deemed necessary to render our opinion expressed
below.

Based on the foregoing, it is our opinion that the discussion of Federal Income
Tax Considerations within the Registration Statement is an accurate description
of the principal United States federal income tax consequences to Minnesota Corn
Processors, Inc., Minnesota Corn Processors, LLC, and their members that will
result from the proposed conversion, subject to the limitations noted in the
discussion. We emphasize that the expected tax consequences depend in
significant part on the accuracy of the Appraisal Opinion described in the
Registration Statement and, as also described in the Registration Statement,
there are anti-netting rules that might be successfully asserted by the Internal
Revenue Service to impose taxes on Minnesota Corn Processors, Inc. where none
are anticipated under our legal analysis. We also note that the recommendation
by management and the Board of Directors of Minnesota Corn Processors, Inc. that
the members approve the conversion is essentially a business decision that is
based in part on an evaluation and balancing of the tax risks involved in
maintaining the status quo and the tax risks involved in the conversion and
other alternatives considered by them.

An opinion of legal counsel represents an expression of legal counsel's
professional judgment regarding the subject matter of the opinion. It is neither
a guarantee of the indicated result nor is an undertaking to defend the
indicated result should it be challenged by the Internal Revenue Service.
Neither this opinion nor the Appraisal Opinion is in any way binding on the
Internal Revenue Service or on any court of law.

We consent to the filing of this opinion as an exhibit to the Registration
Statement and to the reference to our firm in the Registration Statement.

Sincerely,

Lindquist & Vennum P.L.L.P.

Exhibit 23.2

CONSENT OF APPRAISER

We hereby consent to the references made to us and/or our appraisal by
Minnesota Corn Processors, LLC under the captions(s) "SUMMARY"; "RISK FACTORS --
Certain Risks Related to Federal Income Tax Consequences"; and "THE CONVERSION
- -- Reasons for Conversion, Appraisal Opinion, Material Federal Income Tax
Consequences" in the Prospectus constituting a part of Amendment No. 3 to
Registration Statement No. 33-71213 on Form S-4. In addition we consent to the
filing of our appraisal report referred to therein as an exhibit to the
Registration Statement. In giving such consent, we do not thereby admit that we
come within the category of persons whose consent is required under Section 7 of
the Securities Act of 1933, as amended, or the rules and regulations of the
Securities and Exchange Commission thereunder.

AMERICAN APPRAISAL ASSOCIATES, INC.

/s/ PAULA D. BOST
--------------------------------------
Paula D. Bost
Assistant Corporate Secretary

Milwaukee, Wisconsin
October 13, 1999

Exhibit 23.3

[Clifton Gunderson L.L.C. Letterhead]

INDEPENDENT AUDITORS' CONSENT

Board of Directors
Minnesota Corn Processors and Consolidated Entities

We consent to the use in this Registration Statement of Minnesota Corn
Processors, LLC on Form S-4 of our report dated April 30, 1999 relating to the
consolidated financial statements of Minnesota Corn Processors and Consolidated
Entities, appearing as part of this Registration Statement, and to the reference
to us under the headings "Summary of Financial Information", "Selected Financial
Data", and "Experts" in such Registration Statement.

/s/ CLIFTON GUNDERSON L.L.C.

Marshfield, Wisconsin
October 13, 1999

EXHIBIT 23.29

CONSENT

Reference is made to the Registration Statement on Form S-4, and to the
Information Statement/Prospectus which forms a part thereof (together, the
"Registration Statement"), to be filed with the Securities and Exchange
Commission by Minnesota Corn Processors, LLC ("MCP LLP") in connection with the
conversion of Minnesota Corn Processors, Inc. into a Colorado limited liability
company. In accordance with Rule 438 under the Securities Act of 1933, the
undersigned hereby consents to being named in the Registration Statement, and
any subsequent amendments thereto, as a person who is about to become a director
of MCP LLP.

/s/ GALEN RUD
----------------------------------------
Galen Rud

October 8, 1999