AG SERVICES OF AMERICA INC, PRE 14A, 2000-06-19

AG SERVICES OF AMERICA INC
PRE 14A, 2000-06-19
MISCELLANEOUS NONDURABLE GOODS

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SCHEDULE 14A

(Rule 14a - 101)
INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934

Filed by the registrant [ X ]

Filed by a party other than the registrant [ ]

Check the appropriate box:
[ X ]Preliminary Proxy Statement
[ ]Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6 (e) (2) )
[ ]Definitive Proxy Statement
[ ]Definitive Additional Materials
[ ]Soliciting Material Pursuant to Rule 14a-11 (c) or Rule 14a-12

Ag Services of America, Inc.
(Name of Registrant as Specified in its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):
[ X ]No fee required.
[ ]Fee computed on table below per Exchange Act Rules 14a-6 (i) (1) and 0-11.

(1) Title of each class of securities to which transaction applies:

(2) Aggregate number of securities to which transaction applies:

(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth
the amount on which the filing fee is calculated and state how it
was determined):

(4) Proposed maximum aggregate value of transaction:

(5) Total fee paid:

[ ]Fee paid previously with preliminary materials.
[ ]Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a) (2) and identify the filing
for which the offsetting fee was paid previously. Identify the
previous filing by registration statement number,
or the Form or Schedule and the date of its filing.

<PAGE>
(1) Amount previously paid:

(2) Form, Schedule or Registration Statement No.:

(3) Filing Party:

(4) Date Filed:

<PAGE>

AG SERVICES OF AMERICA, INC.

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON AUGUST 1, 2000

To the Stockholders of Ag Services of America, Inc.

The Annual Meeting of the Stockholders of Ag Services of America, Inc. (the
"Company"), an Iowa corporation, will be held on Tuesday, August 1, 2000,
at the Company's Corporate Headquarters, 2302 West 1st Street, Cedar Falls,
Iowa, at 9:00 a.m., Central Standard Time, for the following purposes:

1. To elect six (6) directors of the Company.

2. To amend the Articles of Incorporation to establish a classified
Board of Directors

3. To amend the Articles of Incorporation to authorize preferred stock

4. To amend the Articles of Incorporation to provide for an increase
in the number of authorized shares of common stock.

5. To amend the 1993 Stock Option Plan to increase the number of
shares of common stock available under the Plan by 300,000 shares.

6. To ratify the appointment of McGladrey & Pullen, LLP, as the Company's
independent public accountants for the fiscal year ending
February 28, 2001.

7. To consider and act upon any other matters that may properly come
before the meeting or any adjournment thereof.

The Board of Directors has fixed the 5th day of June, 2000, as the record date
for the determination of stockholders entitled to notice of and to vote at the
meeting or any adjournment thereof.
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<PAGE>

You are cordially invited to attend the meeting. Whether or not you plan to be
personally present at the meeting, please complete, date and sign the enclosed
Proxy and return it promptly in the enclosed envelope. If you later desire to
revoke your Proxy, you may do so at any time before it is exercised.

By Order of the Board of Directors

\s\Kevin D. Schipper

Kevin D. Schipper
Secretary
June 28, 2000
Approximate Date First
Sent to Stockholders
Cedar Falls, Iowa

Your vote is important. Please date, sign and return your Proxy.
Your Proxy is in the enclosed envelope.

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<PAGE>

AG SERVICES OF AMERICA, INC.

PROXY STATEMENT
For the Annual Meeting of Stockholders

August 1, 2000

GENERAL INFORMATION

This Proxy Statement is furnished in connection with the solicitation of the
enclosed proxy by the Board of Directors of Ag Services of America, Inc. (the
"Company") for use at the Annual Meeting of Stockholders to be held August 1,
2000 at 9:00 a.m., Central Standard Time, at the Company's Corporate
Headquarters and any adjournment thereof, for the purposes set forth in the
Notice of Annual Meeting of Stockholders.

Shares of common stock represented by proxies in the form solicited will be
voted in the manner directed by a stockholder. If no direction is made, the
proxy will be voted for the election of nominees for director named in this
Proxy Statement, establish a classified Board of Directors, authorize
preferred stock, increasing the number of authorized shares of common stock,
amending the 1993 Stock Option Plan, ratification of the Board of Directors'
selection McGladrey & Pullen, LLP, as the Company's independent public
accountants for the 2001 fiscal year and transacting such other business as
may come before the meeting or any adjournment thereof. A stockholder may
revoke his or her proxy at any time before it is voted by delivering to the
Secretary a written notice of termination of the proxy's authority, by filing
with the Secretary another proxy bearing a later date, or by appearing and
voting at the meeting. This Proxy Statement and the form of proxy enclosed
are being mailed to stockholders commencing on or about June 28, 2000. Only
the holders of the Company's common stock whose names appear of record on the
Company's books at the close of business on June 5, 2000 will be entitled to
vote at the Annual Meeting. At the close of business on June 5, 2000, a total
of 5,266,364 shares of common stock were outstanding, each share being entitled
to one vote. There is no right of cumulative voting provided in the Company's
Articles of Incorporation or Bylaws. The affirmative vote of a majority of the
outstanding shares of the Company's common stock represented at the meeting in
person or by proxy, is necessary to effectuate all matters proposed to the
stockholders at the Annual Meeting.

Votes cast by proxy or in person at the Annual Meeting will be tabulated by the
inspectors of election appointed by the Company for the meeting, and the number
of stockholders present in person or by proxy will determine whether or not a
quorum is present. The inspectors of election will treat abstentions as shares
that are present and entitled to vote for purposes of determining the presence
of a quorum for all matters. Shares abstaining with respect to any matter will
be treated as unvoted. If a broker indicates on the proxy that it does not have
discretionary authority as to certain shares to vote on a particular matter,
those shares will not be considered as present and entitled to vote by the
inspectors of election with respect to that matter.

Expenses in connection with the solicitation of proxies will be paid by the
Company. In

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<PAGE>

addition to solicitations by mail, the Company may request banks, brokers, and
other custodians, nominees, and fiduciaries to send Proxy materials to
beneficial owners and to request voting instructions. The Company may
reimburse them for their expenses in so doing. Directors, officers and regular
employees of the Company, who will not receive extra compensation for their
services, may solicit personally or by mail, telephone, or telegraph, if Proxies
are not promptly received.

The Annual Report of the Company, including Financial Statements for the fiscal
year ended February 29, 2000, accompanies this Proxy Statement.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT

The following table sets forth as of June 5, 2000, information about the
beneficial ownership of Common Stock of the Company by each stockholder who is
known by the Company to own beneficially more than five percent of the
outstanding Common Stock of the Company, by each director, by each executive
officer named in the Summary Compensation Table, and by all officers and
directors as a group:

<TABLE>
<CAPTION>
Number of
Shares Percentage
Name and Address of Beneficially of Shares
Beneficial Owner Owned(1)(2) Outstanding
------------------- ------------ -----------
<S> <C> <C>
Gaylen D. Miller 359,884 (3) 6.77%
Henry C. Jungling, Jr. 363,934 (3) 6.85%
Kevin D. Schipper 357,134 (3) 6.72%
James D. Gerson 193,966 (4) 3.68%
Michael Lischin 11,000 (5) 0.21%
Ervin J. Mellema 10,000 (5) 0.19%
All Directors and Officers
as a Group (11 persons) 1,384,838 (6) 25.14%

<FN>
( 1 )The persons or entities identified in the above table have sole voting and
investment power with respect to all shares shown as beneficially owned
by them unless otherwise indicated. The number of shares beneficially
owned includes shares of Common Stock issuable upon exercise of options
exercisable during the next 60 days.

( 2 )Includes shares held by spouses and minor children sharing the same home.

( 3 )Includes options to purchase 50,000 shares of Common Stock exercisable
within 60 days.

( 4 )Includes options to purchase 4,500 shares of Common Stock exercisable
within 60 days.

( 5 )Includes options to purchase 6,000 shares of Common Stock exercisable
within 60 days.
</TABLE>
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<PAGE>

( 6 )Includes options to purchase 241,500 shares of Common Stock exercisable
within 60 days.

EXECUTIVE COMPENSATION AND OTHER RELATED INFORMATION

The following table sets forth the cash and certain other compensation paid or
accrued by the Company for services rendered in all capacities during the fiscal
years ended February 29, 2000 and February 28, 1999 and 1998 to all executive
officers of the Company who's total aggregate compensation was greater than
$100,000.

Summary Compensation Table
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
------------------------------- -------------------------------------
Awards Payouts
------------------- -----------------
Securities
Restricted Underlying
Name and Fiscal Stock Options LTIP All
Principal Position Year Salary Bonus Other(a) Awards(b) SARs(c) Payouts(d) Other
------------------ ------ ------- ------- -------- --------- -------- --------- -------

<S> <C> <C> <C> <C> <C> <C> <C> <C>
Gaylen D. Miller 2000 $200,603 $206,923 $0 $0 0 $0 $4,635(f)
Chairman of the 1999 200,603 161,454 0 0 15,000 0 4,635(f)
Board 1998 200,603 118,046 0 0 0 0 4,435(f)

Henry C. Jungling Jr. 2000 $200,603 $206,923 $0 $0 0 $0 $4,670(g)
President and Chief 1999 200,603 161,454 0 0 15,000 0 4,670(g)
Executive Officer 1998 200,603 118,046 0 0 0 0 4,470(g)

Kevin D. Schipper 2000 $200,603 $206,923 $0 $0 0 $0 $4,293(h)
Chief Operating 1999 200,603 161,454 0 0 15,000 0 4,292(h)
Officer 1998 200,603 118,046 0 0 0 0 4,092(h)

<FN>
(a) The table excludes noncash compensation for the use of an automobile, which
did not exceed the lesser of $50,000 or 10% of the base compensation paid
to each officer.

(b) No restricted stock awards were made in any of the periods presented.

(c) No stock appreciation rights were granted or paid in any periods presented.
Includes stock options granted on May 31, 1998, under the 1993 Stock Option
Plan of the Company, when the market value of the Company's Common Stock
was $17.375.

(d) The Company did not have a long-term incentive compensation plan for any
of the periods presented.

(e) Reflects incentive compensation accrued in fiscal 2000, 1999 and 1998
to the officers of the Company of $206,923, $161,454 and $118,046, each,
respectively, accordingly to their respective employment agreements.

(f) Reflects premiums paid by the Company for $250,000 term life insurance
coverage in fiscal 2000, 1999 and 1998 of $635, $635 and $635,
respectively, and $4,000,

</TABLE>
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<PAGE>

$4,000 and $3,800, respectively, contributed to the Company's 401(k) plan
by the Company on behalf of the officer listed above.

(g) Reflects premiums paid by the Company for $250,000 term life insurance
coverage in fiscal 2000, 1999 and 1998 of $670, $670, and $670,
respectively, and $4,000, $4,000 and $3,800, respectively, contributed to
the Company's 401(k) plan by the Company on behalf of the officer listed
above.

(h) Reflects premiums paid by the Company for $250,000 term life insurance
coverage in fiscal 2000, 1999 and 1998 of $293, $292, and $292,
respectively, and $4,000, $4,000 and $3,800, respectively, contributed to
the Company's 401(k) plan by the Company on behalf of the officer listed
above.

Stock Option Grants

No stock options or stock appreciation rights were granted to the Executive
officers of the Company in fiscal 2000 who's total aggregate compensation was
greater than $100,000.

Aggregated Option/SAR Exercises
in Fiscal 2000 and Year-End Option/SAR Values
<TABLE>
<CAPTION>
Number of Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Shares Options/SARS at Options/SARS at
Acquired February 29, 2000 February 29, 2000(c)
----------------- --------------------
On Value Exer- Unexer- Exer- Unexer-
Name Exercise(a) Realized(a) cisable cisable(b) cisable cisable
--------------- ----------- ----------- ------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Gaylen D. Miller 0 $0 45,000 10,000 $886,875 $73,750

Henry C. Jungling, Jr. 0 $0 45,000 10,000 $886,875 $73,750

Kevin D. Schipper 0 $0 45,000 10,000 $886,875 $73,750

<FN>
(a) No stock options were exercised in fiscal 2000. There were no stock
appreciation rights outstanding or exercised in fiscal 2000.

(b) Includes 40,000 stock options granted on May 30, 1991, under the 1991
Stock Option Plan of the Company based primarily on performance during
prior years and includes 15,000 stock options granted on May 31, 1998,
under the 1993 Stock Option Plan of the Company as part of the executive
compensation package.

(c) Reflects market value of underlying shares of Common Stock of the Company
on February 29, 2000, minus the exercise price.

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<PAGE>

Employment Agreements

Effective July 1, 1991, Messrs. Jungling, Miller and Schipper entered into
separate five-year employment agreements with the Company, each of which
provide for (i) a base salary of $155,200, subject to adjustment upward upon
annual review by the Board of Directors on March 1 of each year the agreement
is in effect, (ii) payment of an annual bonus to each of these persons in the
amount of 2% of the Company's pre-tax, pre-bonus income in excess of $2,500,000,
(iii) $250,000 in term life insurance coverage and (iv) receipt of other
Company benefits including use of an automobile. If the respective employment
agreement is terminated by the Company without "cause," the Company must
continue to pay the person salary and bonus for up to two years. "Cause" is
defined to include repeated neglect in performance, breach of the employment
agreement or indictment or conviction of a felony or misdemeanor involving moral
turpitude. In April 1995 the Board of Directors approved a four year extension
through July 2000 for each of Messrs. Jungling, Miller and Schipper. The Board
of Directors is currently reviewing proposed three-year extensions of the
employment contracts for each of Messrs. Jungling, Miller and Schipper. The
Board of Directors approved a base salary of $200,603 for each of the three
persons for fiscal year 2001.

Board Report on Executive Compensation

At present, the entire Board of Directors is responsible for approving the
compensation program and salaries for the executive officers. However,
executive officers who are also members of the board are not present when their
own compensation is under consideration.

Compensation Philosophy. It is the philosophy of the Company to ensure that
executive compensation is directly linked to sustained improvements in
corporate performance and increases in stockholder value as measured by the
Company's stock price. The following objectives have been adopted by the Board
of Directors as guidelines for compensation decisions:

Provide a competitive total compensation package that enables the
Company to attract and retain key executive talent needed to
accomplish its corporate goals.

Integrate all pay programs with the Company's annual and long-term
business objectives and strategy, and focus executive behavior on the
fulfillment of those objectives.

Provide variable compensation opportunities that are directly linked
with performance of the Company and that align executive remuneration
with the interests of stockholders.

At present, the Company's executive compensation is comprised of (i) a base
salary, (ii) an annual cash incentive bonus, (iii) additional incentive
compensation in the form of stock options, and (iv) other benefits typically
provided to executives of comparable companies, all described further below.
For each such component of compensation, the Company's compensation levels are
compared with those of comparable companies. For purpose of establishing these
comparable compensation levels, the Company compares itself to a national

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<PAGE>

group of companies selected by management and its consultants. This group
consists primarily of public and non-public companies that have revenue levels
similar to the Company's. This group does not include the companies used by
the Company in the industry peer group index in the performance graph appearing
elsewhere herein, as several of the members of the industry peer group are
considerably larger in size with executive compensation well above that of the
Company.

Base Salary. The salary of each executive officer, including the Chief
Executive Officer, is based on the officer's level of responsibility and
comparisons to prevailing salary levels for similar positions at the Company
and at comparable companies. The Board seeks to provide the Company's executive
officers with salaries that are at least commensurate with the median salary
levels at comparable companies. Each executive officer's compensation is
linked to individual employment agreements as discussed above, which are
consistent with the Company's compensation philosophy.

After taking into account the Company's increase in its revenue and earnings
growth, the Board sought to establish the fiscal 2000 salaries of each of its
executive officers at the median salary levels for similarly-situated executives
of comparable companies. The Compensation Committee believes the base salary of
the Company's Chief Executive Officer remains at the median level, and therefore
his base salary was not changed in fiscal 2000.

Annual Bonus. Each executive officer's annual bonus is linked to individual
employment agreements as discussed above, which are consistent with the
Company's compensation philosophy. The employment agreements establish target
performance levels and the amount of bonus payable if these targets are met,
which is defined in terms of pre-tax, pre-bonus income of the Company. The
Board evaluates the annual bonus through review of information furnished by its
consultants as to the bonus practices among comparable companies. The annual
bonuses paid to the Company's executive officers have typically been less than
the median annual bonuses paid by comparable companies.

As a result of the Company exceeding its income target in fiscal 2000, each
executive officer, including the Chief Executive Officer, received a cash
incentive bonus equal to 2% of pre-tax, pre-bonus income in excess of
$2,500,000.

Stock Options. The Company's 1991 and 1993 stock option plans authorize the
Board to grant stock options to key personnel. The Board's philosophy with
respect to stock option incentive awards is to strengthen the relationship
between compensation and increases in the market price of the Common Stock and
thereby ally the executive officers' financial interests with those of the
Company's stockholders. The Board determines the size of option grants based on
information furnished by consultants regarding stock option practices among
comparable companies. The Board also takes into account the number of
outstanding unexercised options held by the executive officers.

Other Benefits. The Company maintains a 401(k) plan which the executive
officers are generally permitted to participate on terms substantially similar
to those relating to all other participants, subject to certain legal
limitations on the amounts that may be contributed or benefits payable
thereunder.

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<PAGE>

Additionally, the Company makes available to its executive officers a
supplemental life insurance plan and the use of an automobile.

Retirement and Savings Plan

The Company has established a Retirement and Savings Plan (the "401(k) plan")
which became effective June 1, 1992. Currently, all employees of the Company,
including the officers, are eligible to participate in the 401(k) Plan.
Benefits provided under the 401(k) Plan are funded by a qualified retirement
trust administered by Norwest Bank Iowa, N.A. as trustee.

Participants may contribute an amount of their compensation, including base
salary and overtime, to the 401(k) Plan, which can be no more than 15% of the
participant's compensation or, if less, the maximum dollar limit allowed by
law on a pre-tax basis. The Company makes a matching contribution to the 401(k)
Plan subject to certain limitations, equal to 40% of each participant's pre-tax
contribution on an amount of up to 7% of each participant's compensation. The
plan year ends each December 31st.

The participants may direct the investment of their account balances among
several equity funds. Distributions from a participant's account (including
earnings) are made after the participant's termination of employment for any
reason and, in certain circumstances, participants may receive a distribution
during employment. All employee contributions (including earnings) are fully
vested at all times. Employer matching contributions vest over five years at
a rate of 20% per year from the date an employee becomes eligible to
participate in the 401(k) Plan. The distributions of a participant's vested
account balances will be made in the form of a lump sum or periodic
installments.

For the years ended February 29, 2000 and February 28, 1999 and 1998, $22,361,
$22,408 and $19,125, respectively, were contributed to the accounts of the
Company's executive officers.

Stock Purchase Plan

In August 1995, the Company's Board of Directors approved the "1995 Stock
Purchase Plan" which allows directors, officers and all other employees of the
Company to purchase common stock directly from the Company, subject to certain
restrictions. Common stock may be purchased at (i) the closing price of the
stock on the trading day immediately preceding the purchase date or (ii) the
cost at which the common stock may be purchased in the open market, exclusive
of brokerage commissions and fees, in the case of shares of stock acquired
through open market brokerage purchase, or (iii) 85% of the closing price if
an election to purchase common stock is made in connection with the Employee
Incentive Compensation Program. An aggregate of 150,000 authorized but
unissued shares of the Company's common stock are reserved for issuance under
the plan. The 1995 Stock Purchase Plan is administered by the Company and is
subject to termination or amendment by the Board of Directors at any time. At
February 29, 2000, 145,390 shares remained available for purchase under the
1995 Stock Purchase Plan.

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<PAGE>

Performance Graph

The following graph compares the cumulative total stockholder return on the
Common Stock of the Company with that of the Russell 2000 Index and NASDAQ
Stock Market Index (U.S. Companies), broad market indexes prepared for the
Russell 2000 and NASDAQ by Research Data Group, Inc. ("RDG"), and the
Agricultural Input Supply Index, an agricultural input supply index prepared
for the Company by RDG made up of the following NASDAQ and NYSE companies;
Agco Corporation, Agribiotech, Inc., CNH Global NV, Deere & Company, Dow
Chemical, Du Pont, Lindsay Manufacturing, Monsanto and Ag Services of America,
Inc. The comparison for each of the periods assumes that $100 was invested on
February 28, 1995, in each of the Common Stock of the Company, the stocks
included in the Russell 2000 Index, NASDAQ Stock Market Index (U.S. Companies)
and the stocks included in the Agricultural Input Supply Index. These indexes,
which reflect formulas for dividend reinvestment and weighting of individual
stocks, do not necessarily reflect returns that could be achieved by individual
investors.

</TABLE>
<TABLE>
<CAPTION>
Comparison of 5 Year Cumulative Total Return*
Among Ag Services of America, Inc.,
The NASDAQ Stock Market (U.S.) Index,
The Russell 2000 Index and the Agricultural Input Supply Index
[ Graphic included with hard copy ]

1995 1996 1997 1998 1999 2000
<S> <C> <C> <C> <C> <C> <C>
Ag Services of America, Inc. 100 130 197 199 164 283
Russell 2000 Index 100 127 154 206 169 189
NASDAQ Stock Market (U.S.) Index 100 139 166 227 296 603
Agricultural Input Supply Index 100 140 177 209 177 185

</TABLE>

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<PAGE>

PROPOSAL NO. 1
ELECTION OF DIRECTORS

The Company's Bylaws provide that the Board of Directors shall be elected at
each annual meeting of stockholders. Directors are elected for a one year term
to succeed those directors whose terms then expire.

The persons named in the accompanying proxy will vote for the election of the
nominees described herein, unless authority to vote is withheld. The Board of
Directors has been informed that each of the nominees is willing to serve as a
director; however, if any of the nominees should decline or become unable to
serve as a director for any reason, the proxy may be voted for such other person
as the proxies shall, in their discretion, determine.

The following table sets forth certain information as of June 5, 2000,
concerning the nominees for election as directors of the Company:

Name Age Position with the Company
---------------------- ----- ----------------------------
Gaylen D. Miller 53 Chairman of the Board and
Director
Henry C. Jungling, Jr. 51 President, Chief Executive
Officer and Director
Kevin D. Schipper 40 Chief Operating Officer and
Director
James D. Gerson 56 Director
Michael Lischin 49 Director
Ervin J. Mellema 54 Director

Henry C. Jungling, Jr. is a founder of the Company and has served as a
director since its formation in October 1985 and as Chairman since August 1999
and from August 1995 until August 1997 and as Chairman and Chief Operating
Officer from May 1991 until August 1993. Mr. Jungling served as President and
Chief Executive Officer from August 1997 until August 1999 and from August
1993 until August 1995, as Co-President of the Company from July 1988 until
May 1991 and as President from November 1985 until July 1988. Mr. Jungling
was raised on a farm in Iowa and managed his own farming operation for 18
years. Mr. Jungling is Mr. Schipper's uncle and Messrs. Jungling and Miller
are first cousins.

Gaylen D. Miller is a founder of the Company and has served as a director since
its formation in October 1985 and as President and Chief Executive Officer
since August 1999 and from August 1995 until August 1997 and from May 1991
until August 1993. Mr. Miller served as Chairman from August 1997 until August
1999 and from August 1993 until August 1995 and as Chairman and Chief Operating
Officer from August 1993 until July 1994, as Co-President of the Company from
July 1988 until May 1991 and as Vice President, Secretary, and Treasurer from
November 1985 until July 1988. Mr. Miller was raised on a farm in Iowa and
before joining the Company he held administrative and accounting positions with
Land-O-Lakes, Inc., an agricultural cooperative, and DEKALB Genetics
Corporation, an international seed company.

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<PAGE>

Kevin D. Schipper is a founder of the Company and has served as a director since
its formation in October 1985 and as Chief Operating Officer since July 1994 and
as Chief Operating Officer and Secretary since August 1999. Mr. Schipper served
as Vice President since its formation in October 1985 until July 1994 and as
Treasurer and Secretary since July 1988 until July 1994. Before joining the
Company, Mr. Schipper was employed by Scoular Grain Company, where he worked in
product sales.

James D. Gerson has served as a director of the Company since August 1991. For
more than five years, Mr. Gerson has been Vice President of Fahnestock & Co.
Inc., a securities firm. Mr. Gerson also serves as a director of American Power
Conversion Corp.; Evercell, Inc. and Fuel Cell Energy, Inc.

Michael Lischin has served as a director of the Company since April 1990. Mr.
Lischin is an attorney admitted to the bar in New York and Kentucky. His area
of concentration is livestock asset based financing. He has served as a
director and officer of a variety of companies that provide financing in the
agricultural industry.

Ervin J. Mellema has served as a director of the Company since May 1991. Since
1976, Mr. Mellema has been an operating principal of Campbell Mellema Insurance
Inc., a property and casualty insurance agency, and Campbell Mellema Realty, a
real estate brokerage firm.

Messrs. Jungling, Miller and Schipper served as officers of the Company pursuant
to their respective employment agreements with the Company (See "Executive
Compensation and other Related Information"). The Board of Directors intends to
alternate the officer positions of Messrs. Jungling and Miller every two years
so that commencing after the adjournment of the 2001 Annual Meeting of
Stockholders, Mr. Jungling will serve as President and Chief Executive Officer
and Mr. Miller will serve as Chairman of the Board.

Committees and Meetings of the Board of Directors

The Board of Directors of the Company has an Audit Committee consisting of
Messrs. Gerson, Lischin and Mellema. The Audit Committee's primary
responsibilities are set forth in the Audit Committee charter, a copy of which
is attached hereto as Exhibit C. The audit committee met twice during fiscal
2000. Following the Annual Meeting, subject to the election of the nominees
for Directors, the Audit Committee will consist of Messrs. Gerson, Lischin and
Mellema. Such members of the Audit Committee are all "independent" within the
meaning set forth in sections 303.01 (B)(2)(a) and (B)(3) of the New York
Stock Exchange Listing Manual.

The Board of Directors met four times in fiscal year 2000. All incumbent
directors attended at least 75% of the respective meetings of the Board and
Audit Committee, if they were directors or committee members. On March 24, 2000
the Audit Committee adopted an Audit Committee Charter which was subsequently
approved by the full Board and has been included as Exhibit C.

Directors' Fees

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<PAGE>

The Company currently pays director's fees to its non-employee directors in
the amount of $1,500 per board meeting and $250 per committee meeting plus
reimbursement for expenses incurred in connection with the performance of
their duties.

Compensation Committee Interlocks and Insider Participation

At present, the entire Board of Directors is responsible for approving the
compensation program and salaries for the executive officers. Gaylen D. Miller,
Henry C. Jungling, Jr. and Kevin D. Schipper who are members of the Board of
Directors were also executive officers of the Company during fiscal 2000.
However, the executive officers who are also members of the board are not
present when their own compensation is under consideration. There were no
director interlocks with other companies or related party transactions in
fiscal 2000.

Required Vote; Board Recommendation

Pursuant to Iowa law, the affirmative vote of the hoders of a majority of the
outstanding shares of Common Stock is required to approve the election of the
directors nominated below.

Mr. Henry C. Jungling, Jr. Mr. James Gerson
Mr. Gaylen D. Miller Mr. Michael Lischin
Mr. Kevin D. Schipper Mr. Ervin J. Mellema

THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VORE "FOR" THIS
PROPOSAL NO. 1

PROPOSAL NO. 2
AMENDMENT TO THE ARTICLES OF RESTATEMENT TO PROVIDE FOR A CLASSIFIED
BOARD OF DIRECTORS WITH STAGGERED TERMS AND REMOVAL OF DIRECTORS ONLY
FOR CAUSE.

General:

The Company's Bylaws currently provide that the Board of Directors shall be
elected at each at the annual meeting of stockholders and that each director
may be removed with or without cause. In order to amend these provisions to
establish a classified Board of Directors and to limit removal of directors
only for cause, Iowa law requires such provisions to be set forth in the
Articles of Restatement (the "Articles"). As such, on June 5, 2000, the Board
of Directors of the Company (the "Board") unanimously approved an amendment,
subject to stockholder approval, to the Articles to add Article VII, which
provides for classification of the Board and removal of directors only for
Cause (as defined below) (the "Proposed Amendment"). The text of the Proposed
Amendment to the Articles, in substantially the form in which it is to be
adopted, is set forth in Exhibit A to this Proxy Statement.

-13-
<PAGE>

Classified Board:

The Proposed Amendment will divide the Board into three classes, as equal in
number as possible. Except during the initial phase-in period, and except
with regard to directors elected to fill vacancies, each class of directors
will serve for a term of three years. Pursuant to the Company's Bylaws and
Iowa law, the term of a director elected to fill a vacancy will expire at the
next stockholders' meeting at which directors are elected.

Approval of the Proposed Amendment will nullify the election of directors
under Proposal No. 3 above, and will further provide for the election of two
directors to a one-year term, who will be designated as "Class I Directors,"
two directors to a two-year term, who will be designated as "Class II
Directors" and two directors to a three-year term, who will be designated as
"Class III Directors."

Removal Only For Cause

The Proposed Amendment also provides that directors may be removed only by
stockholders holding at least a majority of the outstanding Common Stock
acting at a meeting called for such purpose and only for Cause. For purposes
of the Proposed Amendment, "Cause" will exist only if the director whose
removal is proposed (i) has been convicted of a felony by a court of competent
jurisdiction or (ii) has been adjudged by a court of competent jurisdiction to
be liable for engaging in an act involving willful malfeasance that had a
material adverse effect on the Company.

Reasons for the Proposed Amendment

The Board believes that dividing the Board into three classes, as equal in
number as possible, and removing directors only for Cause is in the best
interests of the Company and its stockholders in order to maximize stockholder
value by ensuring the continuity of experience and stability of management of
the Company's business and affairs. Further, the Board believes that the
Proposed Amendment is desirable in order to discourage hostile attempts to
take control of the Company, thereby encouraging potential acquirers to
negotiate with the Company. The Proposed Amendment is not being proposed to
block any particular takeover attempt and the Board is not currently aware of
any issues with respect to stability or continuity.

Potential Effects of the Proposed Amendment

Classifying the terms of the Board will affect every subsequent election of
directors by requiring more time to change the composition of the Board.
Under the current provision the entire Board must be nominated and elected
each year, and therefore, the entire Board may be replaced at each annual
stockholders' meeting. If the Proposed Amendment is approved, at least two
annual stockholders' meetings would be required in order to change a majority
of the Board, unless directors are removed for cause at a meeting called for
that purpose, and three annual stockholders' meetings would be required in
order to change the composition of the entire Board.

-14-
<PAGE>

Requiring Cause for the removal of directors also makes it more difficult to
change the composition of the Board. Under the current provision, a director
can be removed with or without Cause. As such, a majority of the stockholders
can remove a director at any time, for any or no reason. The Proposed
Amendment reduces the power of stockholders by precluding them from removing
without Cause incumbent directors who are not standing for re-election.

As it takes more time to change the composition of the Board under the
Proposed Amendment, such amendment may have an anti-take over effect of
discouraging a merger, tender offer, proxy contest or the assumption of
control by a holder of a substantial block of the Company's stock, regardless
of whether such action might be perceived by a majority of the stockholders to
be beneficial to the Company and its stockholders. Further, the Proposed
Amendment may have an impact on the rights of stockholders by making it more
difficult to replace directors for reasons that are unrelated to a change in
control and without regard to whether a majority of stockholders believe that
such a change would be desirable.

The Board has considered the potential adverse effects of the Proposed
Amendment and has concluded that the advantages of ensuring continuity of
management, avoiding undue disruption of the Company's business and
encouraging negotiations with management and the Board outweigh any such
potential disadvantages.

Although the Company's Articles and Bylaws do not presently contain other
provisions having anti-takeover effect, Proposal Nos. 3 and 4 herein describe
the potential anti-takeover effect of the authorization of shares of Preferred
Stock and establishment of a classified Board, should such provisions be
adopted by the stockholders. Stockholders are encouraged to consider both
such proposals in conjunction with this Proposed Amendment.

Election of Directors

As the Proposed Amendment will take effect immediately, if ratified by the
stockholders, this Proposal 2 also includes the election of the initial
classes of directors. Upon passage of this Proposal 2, the previous election
of directors at this Annual Meeting under Proposal 1 above shall be nullified
upon the filing of the Articles of Restatement with the Secretary of State of
the State of Iowa.

The Board is currently composed of six members who stand for election annually.
The nominees for the proposed three classes of directors are:

Class I Directors: Mr. Gaylen Miller and Mr. James Gerson
Class II Directors: Mr. Henry C. Jungling, Jr. and Mr. Michael Lischin
Class III Directors: Mr. Kevin Schipper and Mr. Ervin J. Mellema

Upon the affirmative vote of the stockholders, Class I Directors will serve a
one-year term, Class II Directors will serve a two year term and Class III
Directors will serve a three-year

-15-
<PAGE>

term, or until such time as their successors are duly elected and qualified.
Proposal No. 1 above sets forth information with regard to each director,
including: each director's age; a description of the position and/or office
each director holds within the Company; a description of principal occupation
and business experience of each director throughout the last five years; and
certain other information, including the number of shares of common stock
beneficially owned by each director as of the Record Date.

If any nominee is unable to serve, the shares represented by all valid proxies
will be voted for the election of the remaining nominees and for such other
person or persons as may be recommended by the Board. At this time, the
Company knows of no reason why a nominee might not be able to serve.

Required Vote; Board Recommendation

Pursuant to Iowa law, the affirmative vote of the holders of a majority of the
outstanding shares of Common Stock is required to approve the Amendment to the
Articles to provide for classification of the Board.

THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE "FOR" THIS
PROPOSAL NO. 2.

PROPOSAL NO. 3
AMENDMENT TO THE ARTICLES OF RESTATEMENT TO AUTHORIZE 10,000,000
SHARES OF PREFERRED STOCK.

General:

The Company's Articles of Restatement (the "Articles") currently authorize
10,000,000 shares of capital stock, all of which are authorized shares of
common stock, no par value ("Common Stock"). On June 5, 2000, the Board of
Directors of the Company (the "Board") unanimously approved an amendment,
subject to stockholder approval, to Article IV of the Articles to increase the
number of authorized shares of Common Stock to 30,000,000 shares, and to
authorize 10,000,000 shares of preferred stock, no par value ("Preferred
Stock"), thereby increasing the number of authorized shares of capital stock
of the Company to 40,000,000 shares (the "Proposed Amendment"). The text of
the Proposed Amendment to the Articles, in substantially the form in which it
is to be adopted, is set forth in Exhibit A to this Proxy Statement. This
Proposal No. 3 relates only to the authorization of shares of Preferred Stock.
Proposal No. 4 below relates to the increase in the number of authorized
shares of Common Stock.

Reasons for the Proposed Amendment:

As of February 29, 2000, 5,249,039 shares of Common Stock were issued and
outstanding, an additional 464,665 shares of Common Stock were reserved for
issuance pursuant to stock options issued and issuable under the Company's
stock option plan and no shares of Preferred Stock were authorized for
issuance. The expansion and growth of

-16-
<PAGE>

the Company's business is dependent upon the Company's access to adequate
capital. A potential source of capital that offers additional flexibility in
terms of capital structure and is widely used by public companies is Preferred
Stock.

The Board believes that the authorization of shares of Preferred Stock is in
the best interests of the Company and its stockholders in order for the
Company to have an adequate reserve of shares available for issuance in
connection with possible future actions. Such actions may include, but are
not limited to, stock splits or stock dividends, the sale of stock to raise
additional capital, acquisitions of properties or businesses where the use of
Preferred Stock is deemed advantageous, establishing strategic relationships
with corporate partners and distributions of stock for general corporate
purposes or a Shareholder Rights Plan. Additionally, Preferred Stock may
enhance the Company's ability to accomplish any of aforementioned actions by
providing the Board with the authority to vary the preferences, limitations
and relative rights of the issued securities. Currently, there are no plans
to issue any series of Preferred Stock for any particular purposes.

Possible Effects of the Amendment:

If the Proposed Amendment is approved, the Board would be authorized, without
additional action by the stockholders, to designate one or more series of
Preferred Stock to be issued from time-to-time, to establish the preferences,
limitations and relative rights of any such series of Preferred Stock and to
authorize the issuance of shares and any such series of Preferred Stock.
Authority is limited by Iowa law, the rules of any securities exchange on
which shares of Common Stock are then listed and any other applicable laws or
regulations. Any series of Preferred Stock could have dividend, voting,
liquidation and other rights that are senior to the rights of the Common Stock.
Current holders of Common Stock have no preemptive or similar rights to
purchase shares of Preferred Stock in order to maintain their proportionate
ownership interests in the Company. As such, the issuance of any shares of
Preferred Stock likely would dilute the voting power of the outstanding shares
of Common Stock and reduce the portion of the dividends and liquidation
proceeds payable to the holders of the outstanding shares of Common Stock.

The Board may, though it is unlikely, use the authorized but unissued shares
of Preferred Stock as an anti-takeover device to impede a takeover or
acquisition of control of the Company or its stock. As such, the
authorization of Preferred Stock may deter a future takeover attempt deemed by
the stockholders to be in their best interests or in which stockholders may be
offered a premium over market price for their shares. Furthermore, the
authorization of Preferred Stock could facilitate the adoption of a
Shareholders Rights Plan ("Plan") by the Company, which is an anti-takeover
device. During the last twelve months, the Board has held discussions
concerning the adoption of a Plan as a reasonable step to protect the Company
and its stockholders against the potential threat of an unfair tender offer or
proposal to acquire the Company or its stock and to provide the Company
additional flexibility in negotiating with a potential acquirer. Although the
Board has not taken any action to adopt a Plan, following the adoption of this
Proposal No. 3, the Board expects to reconsider and may use Preferred Stock in
conjunction with the adoption of a Plan.

-17-
<PAGE>

While the Proposed Amendment may be deemed to have potential anti-takeover
effects, the Board is not currently aware of any pending or potential offer or
proposal for acquisition of the Company or its stock. Further, the Proposed
Amendment is not prompted by any specific take-over or acquisition effort or
threat.

Although the Company's Articles and Bylaws do not presently contain other
provisions having anti-takeover effect, Proposal Nos. 2 and 4 herein describe
the potential anti-takeover effect of the authorization of shares of Preferred
Stock and establishment of a classified Board, should such provisions be
adopted by the stockholders. Stockholders are encouraged to consider both
such proposals in conjunction with this Proposed Amendment.

Information Incorporated by Reference:

As required by the proxy rules, the Company incorporates the following
information by reference to the Company's Annual Report on Form 10-K for the
fiscal year ended February 29, 2000 (the "Report"); financial statement and
the notes thereto (Item 8 of the Report); the report of independent certified
public accountants (Item 8 of the Report); supplemental financial information
(Item 8 of the Report); management's discussion and analysis of financial
condition and results of operations (Item 7 of the Report); and quantitative
and qualitative disclosure about market risk (Item 7A of the Report).

The information required for changes and disagreements with accountants is not
applicable. The Company also incorporates by reference the information
contained in "Proposal No. 6: Ratification of Appointment of Independent
Public Accountants."

Required Vote; Board Recommendation:

Pursuant to Iowa law, the affirmative vote of the holders of a majority of the
outstanding shares of Common Stock is required to approve the Amendment to the
Articles to authorize the Preferred Stock.

THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE "FOR" THIS
PROPOSAL NO. 3.

PROPOSAL NO. 4
AMENDMENT TO THE ARTICLES OF RESTATEMENT TO INCREASE THE AUTHORIZED
SHARES OF COMMON STOCK FROM 10,000,000 SHARES TO 30,000,000 SHARES.

General:

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<PAGE>

Company (the "Board") unanimously approved an amendment, subject to
stockholder approval, to Article IV of the Articles to increase the number of
authorized shares of Common Stock to 30,000,000 shares, and to authorize
10,000,000 shares of preferred stock, no par value ("Preferred Stock"),
thereby increasing the number of authorized shares of capital stock of the
Company to 40,000,000 shares (the "Proposed Amendment"). The text of the
Proposed Amendment to the Articles, in substantially the form in which it is
to be adopted, is set forth in Exhibit A to this Proxy Statement. This
Proposal No. 4 relates only to the increase in the number of authorized shares
of Common Stock, which would have the same preferences, limitations and
relative rights as the shares of Common Stock currently authorized. Proposal
No. 3 above relates to the authorization of Preferred Stock.

Reasons for the Proposed Amendment:

As of February 29, 2000, 5,249,039 shares of Common Stock were issued and
outstanding, and an additional 464,665 shares were reserved for issuance
pursuant to stock options issued and issuable under the Company's stock option
plan. The number of shares of Common Stock that remain available for issuance
are not considered by the Board to be adequate for possible future actions by
the Company. As such, the Board believes that an increase in the number of
authorized shares of Common Stock is in the best interests of the Company and
its stockholders in order for the Company to have an adequate reserve of
shares available for issuance in connection with possible future actions.
Such actions may include, but are not limited to, stock splits or stock
dividends, the sale of stock to raise additional capital, acquisitions of
properties or businesses where the use of Common Stock is deemed advantageous,
establishing strategic relationships with corporate partners, distributions of
Common Stock under employee benefit and stock incentive plans and other
general corporate purposes such as a Shareholders Rights Plan. Currently,
there are no plans to use the additional shares for any of these purposes.

Possible Effects of the Proposed Amendment:

If the Proposed Amendment is approved, the Board would have sole discretion to
authorize the issuance of the additional shares of Common Stock from time to
time for any corporate purpose without further action by the stockholders,
except as required under Iowa law, the rules of any securities exchange on
which shares of Common Stock are then listed or any other applicable laws or
regulations. Current holders of Common Stock have no preemptive or similar
rights to purchase any new issue of shares of Common Stock in order to
maintain their proportionate ownership interests in the Company. As such, the
issuance of any additional shares of Common Stock would likely dilute the
voting power of the outstanding shares of Common Stock and reduce the portion
of the dividend and liquidation proceeds payable to the holders of the
outstanding shares of Common Stock.

The Board may, though it is unlikely, use the authorized but unissued shares
of Common Stock as an anti-takeover device to impede a takeover or acquisition
of control the Company or its stock. As such, the authorization of additional
shares of common

-19-
<PAGE>

stock may deter a future takeover attempt deemed by the stockholders to be in
their best interests or in which stockholders may be offered a premium over
market price for their shares. Furthermore, the authorization of additional
shares of common stock could facilitate the adoption of a Shareholders Rights
Plan ("Plan") by the Company, which is an anti-takeover device. During the
last twelve months, the Board has held discussions concerning the adoption of
a Plan, as a reasonable step to protect the Company and its stockholders
against the potential threat of an unfair tender offer or proposal to acquire
the Company or its stock and to provide the Company additional flexibility in
negotiating with a potential acquirer. Although the Board has not taken any
action to adopt a Plan, following the adoption of this Proposal No. 4, the
Board expects to reconsider and may use Common Stock in conjunction with the
adoption of a Plan.

While the Proposed Amendment may be deemed to have some potential
anti-takeover effects, the Board is not currently aware of any pending or
potential offer or proposal for acquisition of the Company or its stock.
Further, the Proposed Amendment is not prompted by any specific take-over or
acquisition effort or threat.

Although the Company's Articles and Bylaws do not presently contain other
provisions having anti-takeover effect, Proposal Nos. 2 and 3 herein describe
the potential anti-takeover effect of the authorization of shares of Preferred
Stock and establishment of a classified Board, should such provisions be
adopted by the stockholders. Stockholders are encouraged to consider both
such proposals in conjunction with this Proposed Amendment.

Required Vote/ Board Recommendation:

Pursuant to Iowa law, the affirmative vote of the holders of a majority of the
outstanding shares of Common Stock is required to approve the Amendment to the
Articles to increase the number of authorized shares of Common Stock.

THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE "FOR" THIS
PROPOSAL NO. 4.

PROPOSAL NO. 5
AMENDMENT TO THE 1993 STOCK OPTION PLAN TO INCREASE THE SHARES
RESERVED FOR ISSUANCE UNDER THE PLAN FROM 400,000 SHARES TO 700,000
SHARES

General:

The 1993 Stock Option Plan (the "Plan") was approved by the Board of Directors
of the Company (the "Board") and the stockholders effective August 3, 1993. A
maximum of 400,000 shares of common stock of the Company, no par value
("Common Stock"), is currently reserved for issuance under the Plan. On
June 5, 2000, the Board unanimously approved an amendment to Section 3 of the
Plan, subject to stockholder approval, to

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<PAGE>

increase by 300,000 shares the number of shares of Common Stock reserved for
issuance under the Plan (the "Proposed Amendment").

Reasons for the Proposed Amendment:

The Company relies on stock options as an essential part of its compensation
package to attract and retain experienced officers and employees. As such,
the Board believes that increasing the number of shares of Common Stock
reserved for issuance under the Plan is in the best interests of the Company
and its stockholders in order for the Company to continue to provide
participating officers, directors, employees and other persons or entities
with long-term, equity based incentives. A summary of the Plan is set forth
below and a copy the Plan is attached hereto as Exhibit B.

Overview of 1991 and 1993 Stock Option Plans:

1991 Stock Option Plan. The Company's 1991 Stock Option Plan, which was
approved by the Board of Directors and stockholders effective May 30, 1991
(the "1991 Stock Option Plan"), provides for the grant of options to purchase
shares of Common Stock to directors, officers, employees or other persons or
entities. A total of 300,000 shares of Common Stock have been reserved for
issuance under the 1991 Stock Option Plan. Options granted under the 1991
Stock Option Plan may be either "incentive stock options" or "nonqualified
stock options." As designated by the Board of Directors, the 1991 Stock
Option Plan is administered by a committee comprised of the officers of the
Company, who designate the type of option to be granted, the number of options
to be granted, the number of shares of Common Stock to be covered by each
option (subject to a specified maximum number of shares of Common Stock which
may be purchased under all options granted), the exercise price, the period
during which the options are exercisable, the method of payment and certain
other terms. The exercise price for each share of Common Stock covered by an
option is determined by the committee, except (i) the exercise price for an
incentive stock option may not be less than the fair market value, at the time
the option is granted, of the stock subject to the option and (ii) the
exercise price for a nonqualified stock option may not be less than 85% of the
fair market value, at the time the option is granted, of the stock subject to
the option. The exercise price for an incentive stock option granted to any
individual who owns stock, at the time of grant, possessing more than 10% of
the voting power of the capital stock of the Company may not be less than 110%
of such fair market value on the date of the grant. No more than $100,000 of
stock vesting during any calendar year per person will qualify for incentive
stock option treatment. Options are nontransferable, other than by will or
the laws of descent and distribution, and may be exercised only by the
optionee while employed by or providing services to the Company or within
three months after termination of employment by reason of retirement or six
months following termination of employment resulting from death or permanent
disability. Options expire no later than ten years from the date of grant,
provided that incentive stock options granted to employees owning stock
possessing more than 10% of the total combined voting power of all classes of
stock of the Company or any of its subsidiaries expire five or fewer years
from the date of grant. At February 29, 2000, 15,350 shares remained
available for future grants under the 1991 Stock Option Plan.

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<PAGE>

1993 Stock Option Plan. The Company's 1993 Stock Option Plan, which was
approved by the Board of Directors and stockholders effective August 3, 1993
(the "1993 Stock Option Plan"), provides for the grant of options to purchase
shares of Common Stock to directors, officers, employees or other persons or
entities. A total of 400,000 shares of Common Stock have been reserved for
issuance under the 1993 Stock Option Plan. The Board is recommending under
this Proposal No. 5 that the stockholders approve an amendment to increase
the number of shares reserved under the Plan to 700,000 shares. Options
granted under the 1993 Stock Option Plan may be either "incentive stock
options" or "nonqualified stock options." As designated by the Board of
Directors, the 1993 Stock Option Plan is administered by a committee comprised
of the officers of the Company, who designate the type of option to be
granted, the number of options to be granted, the number of shares of Common
Stock to be covered by each option (subject to a specified maximum number of
shares of Common Stock which may be purchased under all options granted), the
exercise price, the period during which the options are exercisable, the
method of payment and certain other terms. The exercise price for each share
of Common Stock covered by an option is determined by the committee, except
(i) the exercise price for an incentive stock option may not be less than the
fair market value, at the time the option is granted, of the stock subject to
the option and (ii) the exercise price for a nonqualified stock option may not
be less than 85% of the fair market value, at the time the option is granted,
of the stock subject to the option. The exercise price for an incentive stock
option granted to any individual who owns stock, at the time of grant,
possessing more than 10% of the voting power of the capital stock of the
Company may not be less than 110% of such fair market value on the date of the
grant. No more than $100,000 of stock vesting during any calendar year per
person will qualify for incentive stock option treatment. Options are
non-transferable, other than by will or the laws of descent and distribution,
and may be exercised only by the optionee while employed by or providing
services to the Company or within three months after termination of employment
by reason of retirement or six months following termination of employment
resulting from death or permanent disability. Options expire no later than
ten years from the date of grant, provided that incentive stock options
granted to employees owning stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company or any of its
subsidiaries expire five or fewer years from the date of grant. At
February 29, 2000, 19,225 shares remained available for future grants under
the 1993 Stock Option Plan.

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<PAGE>

The following table summarizes the options to purchase shares of the Company's
Common Stock:
<TABLE>
<CAPTION>
Stock Options
-------------------------------------
Weighted Average
Outstanding Exercise Price
----------- --------------
<S> <C> <C>
Balance at February 28, 1997 468,600 $6.76
Granted 43,300 $17.51
Exercised (40,035) $8.65
Canceled (29,225) $11.77
-------- ------
Balance at February 28, 1998 442,640 $7.31
Granted 87,000 $16.09
Exercised (34,750) $7.96
Canceled (18,950) $14.64
-------- ------
Balance at February 28, 1999 475,940 $8.58
Granted 34,500 $19.14
Exercised (35,225) $7.69
Canceled (10,550) $14.82
-------- ------
Balance at February 29, 2000 464,665 $9.29
======== ======
</TABLE>
<TABLE>
<CAPTION>
Number of Options
------------------------------------
2000 1999 1998
-------- ------- -------
<S> <C> <C> <C>
Exercisable, end of year 360,190 355,414 349,190

Weighted-average fair value per option
of options granted during the year $8.54 $6.61 $7.40
</TABLE>

As pf February 29, 2000, there were 8 officers, 3 directors and 90 employees
eligible to receive such options. Options are exercisable over varying
periods ending on February 28, 2010.

Option Information

The following table sets forth as of February 29, 2000, options granted in the
aggregate under the Plan to: (i) the Named Executive Officers, (ii) all
current executive officers of the Company as a group, (iii) all current
directors of the Company who are not executive officers as a group, (iv) each
nominee for election as a director, (v) each associate of any of such
directors, executive officers or nominees, (vi) each other person who received
or is to receive five percent of such options, and (vii) all employees,
including all current officers who are not executive officers, as a group:

Name and Title No. of Options Granted
----------------------------------------------------- ----------------------
Gaylen D. Miller, President, CEO and Director 55,000

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<PAGE>

Henry C. Jungling, Jr., Chairman of the Board
and Director 55,000

Kevin D. Schipper, COO and Director 55,000

James D. Gerson, Director 7,000

Michael Lischin, Director 7,000

Ervin J. Mellema, Director 7,000

All current executive officers as a group (8 persons) 243,000

All current directors who are not executive officers
as a group (3 persons) 21,000

All employees, including all current officers who
are not executive officers, as a group (90) persons 200,665

Federal Income Tax Consequences

The following is a brief summary of the principal federal income tax
consequences under current federal income tax laws relating to awards under
the Plan. This summary is not intended to be exhaustive and, among other
things, does not describe state or local tax consequences.

In general, an option holder will be subject to tax at the time a Non-
Qualified Option is exercised (but not at the time of grant), and he or she
will include in ordinary income in the taxable year in which he or she
exercises a Non-Qualified Option an amount equal to the difference between the
exercise price and the fair market value of the shares acquired on the date of
exercise. The Company will generally be entitled to deduct such amount for
federal income tax purposes except as such deductions may be limited by the
Revenue Reconciliation Act of 1993 ("1993 Tax Act"), described below. Upon
disposition of shares, the appreciation (or depreciation) after the date of
exercise will be treated by the option holder as either short-term or long-
term capital gain or loss depending on whether the shares have been held for
the then-required holding period.

In general, an option holder will not be subject to tax at the time an
Incentive Stock Option is granted or exercised. Upon disposition of the
shares acquired upon exercise of an Incentive Stock Option, long-term capital
gain or loss will be recognized in an amount equal to the difference between
the disposition price and the exercise price, provided that the option holder
has not disposed of the shares within two years of the date of grant or within
one year from the date of exercise. If the option holder disposes of the
shares without satisfying both holding period requirements (a "Disqualifying
Disposition"), the option holder will recognize ordinary income at the time of
such Disqualifying Disposition to the extent of the difference between the
exercise price and the lesser of the fair market value of the share on the
date the Incentive Stock Option was exercised or the date of sale. Any
remaining gain or loss is treated as short-term or long-term capital gain or
loss depending upon how long the shares have been held. The Company is not
entitled to a tax deduction upon either the exercise of an Incentive Stock
Option or upon disposition of the shares acquired pursuant to such exercise,
except to the extent that the option holder

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<PAGE>

recognizes ordinary income in a Disqualifying Disposition, and then only to
the extent that such deduction is not limited by the 1993 Tax Act.

If the option holder pays the exercise price, in full or in part, with
previously acquired shares, the exchange will not affect the tax treatment of
the exercise. If such exercise is effected using shares previously acquired
through the exercise of an Incentive Stock Option, however, the exchange of
the previously acquired shares will be considered a disposition of such
shares for the purpose of determining whether a Disqualifying Disposition has
occurred.

Under the provisions of the 1993 Tax Act, the Company will be limited as to
the deduction that it may take for otherwise deductible compensation payable
to executive officers who, on the last day of the fiscal year, are treated as
"named executive officers" in the Proxy Statement. The deduction limit on
compensation will apply to all compensation, except compensation deemed under
the 1993 Tax Act to be "performance-based" and certain compensation related to
retirement and other employee benefit plans. The determination of whether
compensation related to the Plan is performance-based for purposes of the 1993
Tax Act will be dependent upon a number of factors, including stockholder
approval of the Plan, and the exercise price at which options are granted.
The 1993 Tax Act also prescribes certain limitations and procedural
requirements in order for compensation to qualify as performance-based,
including rules which require that in the case of compensation paid in the
form of stock options, the option price be not less than the fair market
value of the stock at date of grant and that the plan under which the options
are granted states the maximum number of shares with respect to which options
may be granted during a specified period to any employee.

Required Vote; Board Recommendation

The affirmative vote of the holders of a majority of the outstanding shares
of Common Stock is required to approve the Amendment to the Company's 1993
Stock Option Plan.

THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE "FOR" THIS
PROPOSAL NO. 5.

PROPOSAL NO. 6
RATIFICATION OF APPOINTMENT OF
INDEPENDENT PUBLIC ACCOUNTANTS

The Stockholders are being requested to approve the resolution ratifying the
action of the Board of Directors in appointing McGladrey & Pullen, LLP as the
Company's independent public accountants for the fiscal year ending
February 28, 2001.

It is not expected that a member of McGladrey & Pullen, LLP will be present at
the Annual

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Meeting. However, we will forward any questions that arise to
McGladrey & Pullen, LLP, who will have the opportunity to respond.

Required Vote; Board Recommendation:

The affirmative vote of the holders of a majority of the outstanding shares of
Common Stock is required to ratify the action of the Board of Directors in
appointing McGladrey & Pullen, LLP, as the Company's independent public
accountants for the fiscal year ending February 28, 2001. Option Plan.

THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE "FOR" THIS
PROPOSAL NO. 6.

OTHER MATTERS

The Board of Directors of the Company knows of no other matters which may come
before the meeting. However, if any matters other than those referred to above
should properly come before the meeting calling for a vote of the stockholders,
it is the intention of the persons named in the enclosed proxy to vote such
proxy in accordance with their best judgment.

DEADLINE FOR SUBMISSION OF STOCKHOLDER
PROPOSALS FOR 2001 ANNUAL MEETING

Proposals of Stockholders to be presented at the Company's 2001 Annual
Stockholders' Meeting must be received at the Company's corporate headquarters
no later than February 15, 2001, for inclusion in the agenda for the 2001
Annual Meeting.

By Order of the Board of Directors

/s/ Kevin D. Schipper

Kevin D. Schipper
Secretary

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EXHIBIT A

ARTICLES OF AMENDMENT
OF
AG SERVICES OF AMERICA, INC.

Pursuant to Section 490.1006 of the Iowa Business Corporation Act, the
undersigned, Ag Services of America, an Iowa corporation (the "Corporation")
hereby adopts the following Amendments to the Articles of Restatement:

1. Article IV of the Articles of Restatement of the Corporation is hereby
amended to read as follows:

The aggregate number of shares of stock which the corporation is authorized to
issue is 40,000,000 shares, 30,000,000 of which shall be no par value common
stock and 10,000,000 of which shall be no par value preferred stock.

The Board of Directors shall have the authority to establish one or more
series of preferred stock and to determine the preferences, limitations and
relative rights of any such different series.

2. The Articles of Restatement of the Corporation are hereby amended by the
addition of the following Article VII:

The number of directors of the Corporation shall not be less than three (3)
nor more than nine (9). The exact number of directors shall be determined from
time to time by resolution of the Board of Directors. The directors shall be
divided into three classes, as nearly equal in number as reasonably possible
and shall be designated as Class I, Class II or Class III directors. The term
of office of the Class I directors elected at the 2000 Annual Meeting of
Stockholders shall expire at the 2001 Annual Meeting of Stockholders; the term
of office of the Class II directors elected at the 2000 Annual Meeting of
Stockholders shall expire at the 2002 Annual Meeting of Stockholders; and the
term of office of the Class III directors elected at the 2000 Annual Meeting of
Stockholders shall expire at the 2003 Annual meeting of Stockholders. At each
Annual Meeting of Stockholders following such initial classification and
election, each director elected to succeed a director whose term is expiring
shall be elected for a three (3) year term.

At any meeting of stockholders called expressly for that purpose, any director
may be removed from office at any time but only for Cause by the affirmative
vote of the holders of a majority of the shares then entitled to vote at an
election of such director. For purposes of this Article VII, "Cause" shall be
construed to exist only if the director whose removal is proposed (i) has been
convicted of a felony by a court of competent jurisdiction or (ii) has been

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adjudged by a court of competent jurisdiction to be liable for engaging in an
act involving willful malfeasance which had a material adverse effect on this
corporation.

Where a question of removal of a director for Cause is to be presented for
stockholder consideration, an opportunity must be provided such director to
present his or her defense to the stockholders by a statement that must
accompany or precede the notice of the meeting at which removal of such
director for Cause shall be considered. Under such circumstances the director
involved shall be served with notice of the meeting at which such action is
proposed to be taken together with a statement of the specific charges and
shall be given an opportunity to be present and to be heard at the meeting at
which his or her removal is considered.

3. The date of adoption of the amendments by the stockholders was
[August 1, 2000].

4. The designation, number of outstanding shares, number of votes entitled to
be cast by each voting group entitled to vote separately on the amendments,
and the number of votes of each voting group indisputably represented at the
meeting are as follows:

Number of Votes Votes
Outstanding Entitled Indisputably
Designation Shares To Be Cast Represented
------------ -------- ------------ -------------

Common Stock

5. The total number of undisputed votes cast for the amendments by the sole
voting group was . The number of votes cast for the amendments
by the sole voting group was sufficient for approval by that voting group.

Dated effective this day of , 2000.

AG SERVICES OF AMERICA, INC.

---------------------------------
Gaylen D. Miller, President

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EXHIBIT B

AG SERVICES OF AMERICA, INC.
1993 STOCK OPTION PLAN AS AMENDED

Section 1: Purpose. The Board of Directors of Ag Services of America, Inc.
(the "Corporation") believes this Plan is in the best interest of the
Corporation and will promote the success of the Corporation. Options granted
under this Plan may either be Incentive Stock Options qualified under Section
422 of the Code or Non-Qualified Options.

Section 2: Definitions. For purposes of this Plan, the following terms shall
have the meanings indicated below:

(a) "Capital Stock": any of the Corporation's authorized but unissued shares
of voting common stock, each share without par value.

(b) "Code": The Internal Revenue Code of 1986, as amended from time to time.

(c) "Disability" or "Disabled": when an individual is permanently and
totally disabled because he or she is unable to engage in any substantial
gainful activity by reason of any medically determinable physical or mental
impairment which can be expected to result in death or which has lasted or can
be expected to last for a continuous period of not less than twelve (12)
months.

(d) "Fair Market Value": the price per share determined by the Board of
Directors in the manner provided by the Code and Regulations, at the time any
Option is granted.

(e) "Incentive Stock Option": an option defined in Section 422 of the Code to
purchase shares of the common stock of the Corporation.

(f) "Non-Qualified Stock Option": an option, not intended to qualify as an
Incentive Stock Option as defined in Section 422 of the Code, to purchase
common stock of the Corporation.

(g) "Option": the term shall refer to either an Incentive Stock Option or a
Non-Qualified Stock Option.

(h) "Option Agreement": a written agreement pursuant to which the Corporation
grants an option to an Optionee and sets the terms and conditions of the
option.

(i) "Option Date": the date upon which an Option Agreement for an option
granted pursuant to this Plan is duly executed by or on behalf of the
Corporation.

(j) "Option Stock": the voting common stock of the Corporation, each share
without par value (subject to adjustment as described in Section 8) reserved
for options pursuant to this Plan, or any other class of stock of the
Corporation which may be substituted therefore by exchange, stock split or
otherwise.

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(k) "Optionee": an officer, director, employee or other person or entity
designated by the Corporation or one of its Subsidiaries to whom an option
has been granted under the Plan.

(l) "Plan": this 1993 Stock Option Plan, and as amended hereafter from time
to time.

(m) A "Subsidiary": any corporation in an unbroken chain of corporations
beginning with the Corporation, if, at the time of granting the option, each
of the corporations other than the last corporation in the chain owns stock
possessing fifty percent (50%) or more of the total combined voting power of
all classes of stock in one of the other corporations in such chain. The term
shall include any subsidiaries which become such after adoption of this Plan.

Section 3: Options Available Under Plan. An aggregate of 400,000 shares of
the Corporation's authorized but unissued shares of voting common stock, each
share without par value, is hereby made available, and shall be reserved for
issuance, under this Plan. The aggregate number of shares available under
this Plan shall be subject to adjustment on the occurrence of any of the
events and in the manner set forth in Section 8. If an Option shall expire or
terminate for any reason without having been exercised in full, the
unpurchased shares, shall (unless the Plan shall have been terminated) become
available for other Options under the Plan. The total number of shares
reserved under this Plan, or any portion thereof, may be issued upon exercise
of Options granted under this Plan provided that the total number of shares
subject to Options cannot, in the aggregate, exceed 400,000, subject to
adjustment as described in Section 8.

Section 4: Administration. The Plan shall be administered by the Board of
Directors of the Corporation. At all times subject to the authority of the
Board of Directors, the Board of Directors may from time to time delegate some
or all of its authority under the Plan to one or more officers of the Company,
with respect to eligible option recipients who are not officers or directors
of the Company, or two or more directors of the Company (the "Committee").

The Corporation shall grant Options pursuant to the Plan upon determinations
of the Board of Directors or Committee as to which of the eligible persons
shall be granted Options, the number of shares to be Optioned and the term
during which any such Options may be exercised. At all times, the members of
the Committee making determinations about the grant of Options to
employee-officers must be disinterested in the grant being made, within the
meaning under Section 16(b) of the Securities Exchange Act of 1934, as
amended, and the rules thereunder. The Board of Directors or Committee may
from time to time adopt rules and regulations for carrying out the Plan and
interpretations and constructions of any provision of the Plan, which shall
be final and conclusive.

Section 5: Eligibility for Incentive Stock Options. Incentive Stock Options
may only be granted to an officer, management level employee or other employee
of the Corporation or any of its Subsidiaries. A director of the Corporation
who is not also an employee shall not be eligible to receive an Incentive
Stock Option.

In selecting the employees to whom Incentive Stock Options shall be granted,
as well as determining the number of shares subject to each Option, the
Committee shall take into consideration such factors as it deems relevant in
connection with accomplishing the purpose of the Plan. For any calendar year,
the aggregate Fair Market Value (determined at the Option Date) of the stock
with respect to which any Incentive Stock Options are exercisable for the
first time by any individual employee (under all Incentive

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Stock Option plans of the Corporation and all Subsidiary corporations) shall
not exceed $100,000. Subject to the provisions of Section 3, an employee who
has been granted an Option may, if he or she is otherwise eligible, be
granted an additional Option or Options if the Board of Directors or
Committee shall so determine.

No Incentive Stock Option may be granted under this Plan later than the
expiration of ten (10) years from the effective date.

Section 6: Eligibility for Non-Qualified Options. Non-Qualified Options may
be granted to any officer, director, employee or other person or entity
designated by the Corporation or one of its Subsidiaries. No further
restrictions are placed on the Board of Directors or Committee in determining
eligibility for granting Non-Qualified Options.

Section 7: Terms and Conditions of Options. Whenever the Board of Directors
or Committee shall designate an Optionee, it shall communicate to the
Secretary of the Corporation the name of the Optionee, the number of shares
to be Optioned and such other terms and conditions as it shall determine, not
inconsistent with the provisions of this Plan. The President or other
officer of the Corporation shall then enter into an Option Agreement with the
Optionee, complying with an subject to the following terms and conditions and
setting forth such other terms and conditions of the Option as determined by
the Committee:

(a) Number of shares and option price. The Option Agreement shall state the
total number of shares to which it pertains. The price of Option Stock for a
Nonqualified Stock Option shall be determined by the Committee and may be
less than the Fair Market Value at the Option Date. The Option price shall
be subject to adjustment as provided in Section 8 hereof. The Option price
of each Incentive Stock Option shall be at least 100% of the Fair Market
Value of the common stock on the Option Date.

(b) Termination of Employment, Except Death or Disability. In the event that
an Optionee shall cease to be employed by the Corporation for any reason other
than his death, disability or "for cause", such Optionee shall have the right
to exercise any outstanding Options at any time within three (3) months after
the termination of the employee. Subject to Section 7(c) below, in the event
of termination of employment of an Optionee, with or without cause, Options
previously granted to the Optionee shall be exercisable only to the extent
that the right to purchase the Shares under the Option has accrued and is in
effect at the date of such cessation of employment. In the event that
Optionee shall be terminated "for cause" including but not limited to (i) his
or her willful breach of any agreement entered into with the Corporation, (ii)
misappropriation of the Corporation's property, fraud, embezzlement, other
acts of dishonesty against the Corporation, (iii) conviction of any felony or
crime involving moral turpitude or (iv) termination "for cause" as defined
under any applicable written employment agreement between the Corporation and
the Optionee, the Option may be terminated as of the date of the Optionee's
termination of employment.

(c) Death or Disability of Optionee. If the Optionee shall die or become
Disabled, (i) while in the employ of the Corporation or any Subsidiary, or
(ii) within a period of three (3) months after the termination of his or her
employment with the Corporation or any Subsidiary as provided in paragraph
(c) of this section, and in either case shall not have fully exercised his or
her Options, any Options granted pursuant to the Plan shall be exercisable
only within six (6) months following his death or date of disability or until
the earlier originally stated expiration thereof. In the case of death,

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such Option shall be exercised pursuant to this Section 6 by the person or
persons to whom the Optionee's rights under the Option shall pass by the
Optionee's will or by the laws of descent and distribution, and only to the
extent that such Options were exercisable at the time of his death.

(d) Transfer of Option. Each Option granted hereunder shall, by its terms
be not transferable by the Optionee other than by will or by the laws of
descent and distribution, and shall be, during the Optionee's lifetime,
exercisable only by the Optionee. Except as permitted by the preceding
sentence each Option granted under the Plan and the rights and privileges
thereby conferred shall not be transferred, assigned or pledged in any way
(whether by operation of law or otherwise), and shall not be subject to
execution, attachment or similar process. Upon any attempt to so transfer,
assign, pledge, or otherwise dispose of the Option, or of any right or
privilege conferred thereby, contrary to the provisions of the Option or the
Plan, or upon levy of any attachment or similar process upon such rights and
privileges, the Option, and such rights and privileges, shall immediately
become null and void.

(e) Manner of Exercise of Options. An Option may be exercised, in whole or
in part, at such time or times and rights with respect to such shares which
have accrued and are in effect. Such Option shall be exercisable only within
the Option period and only by (i) written notice to the Corporation of intent
to exercise the Option with respect to a specified number of shares of stock;
(ii) tendering the original Option Agreement to the Corporation; and (iii)
either (a) payment to the Corporation of the amount of the Option purchase
price for the number of shares of stock with respect to which the Option is
then exercised or (b) delivery to the Corporation of a notice from a
securities brokerage firm stating that such firm will deliver such payment to
the Corporation within five business days after the date of the written notice
of intent to exercise. Payment of the Option purchase price may be made in
cash (including certified check, brokerage firm check, bank draft, or postal
or express money order (or personal check unless an officer of the Corporation
determines, at his or her discretion, that a personal check is not appropriate
from an Option holder)), by delivery of shares of common stock of the
Corporation with a Fair Market Value equal to the Option purchase price, by a
combination of cash and such shares, whose value together with such cash shall
equal the Option purchase price or by any other method of payment which the
Board shall approve, and, in the case of an Incentive Stock Option, which
shall not be inconsistent with the provisions of Section 422A of the Code,
provided, however, that there shall be no such exercise at any one time as to
fewer than ten (10) shares or all of the remaining shares then purchasable by
the Optionee or person exercising the Option. When shares of stock are issued
to the Optionee pursuant to the exercise of an Option, the fact of such
issuance shall be noted on the Option Agreement by the Corporation before the
Agreement is returned to the Optionee. When all shares of Optioned stock
covered by the Option Agreement have been issued to the Optionee, or the
Option shall expire, the Option Agreement shall be cancelled and retained by
the Corporation.

(f) Delivery of Certificate. Between one (1) and thirty (30) days after
receipt of the written notice and payment specified above, the Corporation
shall deliver to the Optionee certificates for the number of shares with
respect to which the Option has been exercised, issued in the Optionee's name;
provided, however, that such delivery shall be deemed effected for all
purposes when the Corporation, or the stock transfer agent for the
Corporation, shall have deposited such certificates in the United States mail,
postage prepaid, addressed to the Optionee and the address specified in the
written notice of exercise.

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(g) Term of Incentive Stock Options. Incentive Stock Options may not be
exercisable for more than ten (10) years after the Option Date.

(h) Ten Percent Shareholder Rule. Notwithstanding any other provision of
this Plan, no Optionee may receive an Incentive Stock Option under the Plan
if the Optionee owns, at the Option Date, Capital Stock possessing more than
ten percent (10%) of the combined voting power of all classes of Capital Stock
of the Corporation or its parent or subsidiaries unless the price of such
Incentive Stock Option is at least 110% of the Fair Market Value of the common
stock on the Option Date and the Option is not exercisable for more than five
(5) years after the Option Date.

(i) Other Provisions. The Option Agreements authorized under this Section
shall contain such other provisions as the Committee shall deem advisable.

Section 8: Adjustments. In the event that the outstanding shares of the
common stock of the Corporation are changed into or exchanged for a different
number or kind of shares or other securities of the Company or of another
corporation by reasons of any reorganization, merger, consolidation,
recapitalization, reclassification, stock split-up; combination of shares or
dividends payable in capital stock, appropriate adjustment shall be made in
the number and kind of shares as to which Options may be granted under the
Plan and as to which outstanding Options or portions thereof then unexercised
shall be exercisable, to the end that the proportionate interest of the
participant shall be maintained as before the occurrence of such event; such
adjustment in outstanding Options shall be made without change in the total
price applicable to the unexercised portion of such Options and with a
corresponding adjustment in the Option Price per share. No such adjustment
shall be made which shall, within the meaning of any applicable sections of
the Code, constitute a modification, extension or renewal of an Option or a
grant of additional benefits to a participant.

If the Corporation is a party to a merger, consolidation, reorganization or
similar corporate transaction and if, as a result of that transaction, its
shares of common stock are exchanged for (i) other securities of the Company
or (ii) securities of another corporation which has assumed the outstanding
Options under the Plan or has substituted for such Options its own Options,
then each Optionee shall be entitled (subject to the conditions stated
herein or in such substituted Options, if any), in respect of that
Optionee's Options, to purchase that amount of such other securities of the
Corporation or of such other corporation as is sufficient to ensure that the
value of the Optionee's Options immediately before the corporate transaction
is equivalent to the value of such Options immediately after the transaction,
taking into account the Option Price of the Option before such transaction,
the fair market value per share of the common stock immediately before such
transaction and the fair market value immediately after the transaction, of
the securities then subject to that Option (or to the Option substituted for
that Option, if any). Upon the happening of any such corporate transaction,
the class and aggregate number of shares subject to the Plan which have been
heretofore or may be hereafter granted under the Plan shall be appropriately
adjusted to reflect the events specified in this clause.

Section 9: No Rights as Stockholder. An Optionee shall not, by reason of
any Option granted hereunder, have any right of a stockholder of the
Corporation with respect to the shares covered by his Option until such
shares shall have been issued to the Optionee.

Section 10: No Obligation to Exercise Option. The granting of any Option
shall impose no obligation upon the Optionee to exercise such Option.
Neither shall the Plan confer upon the Optionee any

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<PAGE>

rights respecting continued employment nor limit the Optionee's rights or the
employer corporation's rights to terminate such employment.

Section 11: Withholding Taxes. Whenever under the Plan shares of Option
Stock are to be issued upon exercise of the Options granted hereunder and
prior to the delivery of any certificates or certificates for said shares by
the Corporation, the Corporation shall have the right to require the employee
to remit to the Corporation an amount sufficient to satisfy any federal and
state withholding or other employment taxes resulting from such exercise.

In lieu of remitting additional amounts to satisfy withholding tax liabilities,
an employee may (a) request that shares otherwise issuable upon exercise of an
Option having a fair market value equal to the required withholding amounts be
withheld, or (b) deliver previously owned shares that have a fair market value
equal to the required withholding amount. All requests are subject to review
by the Board of Directors or Committee and will be denied if, in the opinion
of counsel for the Company, such election will violate any federal or state
securities or income tax laws or regulations. In the case of participants who
are subject to Section 16(b) of the Securities Exchange Act of 1934, for which
the participant is relying on the exemption contained in Rule 16b-3, such
withholding of shares of Common Stock shall be made in accordance therewith.

Section 12: Purchase for Investment; Rights of Holder on Subsequent
Registration. Unless the shares to be issued upon exercise of an Option
granted under the Plan have been effectively registered under the Securities
Act of 1933 as now in force or hereafter amended (the "1933 Act"), the
Corporation shall be under no obligation to issue any shares covered by any
Option unless the person who exercises such Option, whether such exercise is
in whole or in part, shall give a written representation and undertaking to
the Corporation which is satisfactory in form and scope to counsel for the
Corporation and upon which, in the opinion of such counsel, the Corporation
may reasonably rely, that he or she is acquiring the shares issued to him or
her pursuant to such exercise of the Option for his or her own account as an
investment and not with a view to, or for sale in connection with, the
distribution of any such shares, and that he or she will make no transfer of
the same except in compliance with any rules and regulations in force at the
time of such transfer under the 1933 Act, or any other applicable law, and
that if shares are issued without such registration a legend to this effect
may be endorsed on the securities so issued. In the event that the Company
shall, nevertheless, deem it necessary or desirable to register under the 1933
Act or other applicable statues any shares with respect to which an Option
shall have been exercised, or to qualify any such shares for exemption from
the 1933 Act or other applicable statutes, then the Corporation shall take
such action at its own expense and may require from each participant such
information in writing for use in any registration statement, prospectus,
preliminary prospectus or offering circular as is reasonably necessary for
such purpose and may require reasonable indemnity to the Company and its
officers and Directors from such holder against all losses, claims, damage and
liabilities arising from such use of the information so furnished and caused
by any untrue statement of any material fact required to be stated therein or
necessary to make the statement therein not misleading in light of the
circumstances under which they were made.

Section 13: Modification of Outstanding Options. The Board may accelerate
the exercisability of an outstanding Option and may authorize the modification
of any outstanding Option with the consent of the participant when and subject
to such conditions as are deemed to be in the best interests of the
Corporation and in accordance with the purposes of the Plan.

Section 14: Effective Date. This Plan was adopted by the Board of Directors
of the Corporation

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effective as of May 30, 1993 (the "Effective Date").

Section 15: Liquidation. Upon the complete liquidation of the Corporation,
any unexercised Options theretofore granted under this Plan shall be deemed
cancelled, except as otherwise provided in Section 8 in connection with a
merger, consolidation or reorganization of the Corporation.

Section 16: Restrictions on Issuance of Shares. Notwithstanding the
provisions of Section 7, the Corporation may delay the issuance of shares
covered by the exercise of any Option and the delivery of a certificate for
such shares until one of the following conditions shall be satisfied:

(a) The shares with respect to which the Option has been exercised are at
the time of the issue of such shares effectively registered under applicable
federal and state securities acts as now in force or hereafter amended; or

(b) A no-action letter in respect of the issuance of such shares shall have
been obtained by the Corporation from the Securities and Exchange Commission
and any applicable state securities commissioner; or

(c) Counsel for the Corporation shall have given an opinion, which opinion
shall not be unreasonably conditioned or withheld, that such shares are exempt
from registration under applicable federal and state securities acts as now in
force or hereafter amended.

It is intended that all exercise of Options shall be effective, and the
Corporation shall use its best efforts to bring about compliance with the
above conditions within a reasonable time, except that the Company shall be
under no obligation to cause a registration statement or a post-effective
amendment to any registration statement to be prepared at its expense solely
for the purpose of covering the issue of shares in respect of which any option
may be exercised.

In addition, notwithstanding the provisions of Section 7, if the Corporation's
Capital Stock is publicly traded the Corporation may delay the issuance of
shares covered by the exercise of any Option and the delivery of a certificate
for such shares until such time as the Corporation elects to make a public
release of material "inside information" concerning the Corporation (as such
term is customarily used under federal securities laws), if the Corporation
reasonably believes, at its discretion, that the Optionee possesses such
information or the exercise of the Option would create an obligation to
disclose publicly such information.

Section 17: Termination and Amendment of the Plan. This Plan shall terminate
ten (10) years after the Effective Date or at such earlier time as the Board
of Directors shall determine. Any termination shall not affect any Options
then outstanding under the Plan. The Board may make such modifications of the
Plan as it shall deem advisable.

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EXHIBIT C

Ag Services of America, Inc.
Audit Committee Charter

Organization

There shall be a committee of the board of directors to be known as the audit
committee. The audit committee shall be composed of directors who are
independent of he management of the corporation and are free of any
relationship that, in the opinion of the board of directors, would interfere
with their exercise of independent judgement as a committee member.

Purpose

The audit committee shall provide assistance to the corporate directors in
fulfilling their responsibility to the shareholders, potential shareholders,
and investment community relating to corporate accounting, reporting
practices of the corporation, and the quality and integrity of the financial
reports of the corporation. In so doing, it is the responsibility of the
audit committee to maintain free and open means of communication between the
directors, the independent auditors and the financial management of the
corporation.

Responsibilities

In carrying out its responsibilities, the audit committee believes its
policies and procedures should remain flexible, in order to best react to
changing conditions and to ensure to the directors and shareholders that the
corporate accounting and reporting practices of the corporation are in
accordance with all requirements and are of the highest quality. The audit
committee for the purpose of carrying out the above responsibilities shall:

Hold such regular meetings as may be necessary and such special meetings as
may be called by the Chairman of the Audit Committee or at the request of the
independent accountants;

Create an agenda for the ensuing year;

Review the performance of the independent accountants concerning the scope of
their examination of the books and records of the Company and its subsidiaries;
review and approve the independent accountants' annual engagement letter;
annual audit plans; direct the special attention of the auditors to specific
matters or areas deemed by the Committee or the auditors to be of significance;
and authorize the auditors to perform such supplemental reviews or audits as
the Committee may deem desirable;

Review with management, the independent accountants significant risks and
exposures, audit activities and significant audit findings;

Review the range and cost of audit and non-audit services performed by the
independent accountants;

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Review the Company's audited financial statements and the independent
accountants' opinion rendered with respect to such financial statements,
including reviewing the nature and extent of any significant changes in
accounting principles or the application therein;

Review the adequacy of the Company's systems of internal control;

Obtain from the independent accountants their recommendations regarding
internal controls and other matters relating to the accounting procedures and
the books and records of the Company and its subsidiaries and review the
correction of controls deemed to be deficient;

Have the ability to recommend the addition of the internal audit function
within the Company, and the ability for that internal audit function to have
direct contact with the audit committee;

Provide an independent, direct communication between the Board of Directors
and independent accountants;

Review with the appropriate Company personnel the actions taken to ensure
compliance with the Company's Code of Conduct and the results of confirmations
and violations of such Code;

Review the programs and policies of the Company designed to ensure compliance
with the applicable laws and regulations and monitor the results of these
compliance efforts;

Review the procedures established by the Company that monitor the compliance
by the Company with is loan and indenture covenants and restrictions;

Report to the Board of Directors following the meetings of the Audit
Committee;

Maintain minutes or other records of meetings and activities of the Audit
Committee;

Review the powers of the Committee annually and report and make
recommendations to the Board of Directors on these responsibilities;

Conduct or authorize investigations into any matters within the Audit
Committee's scope of responsibilities. The Audit Committee shall be empowered
to retain independent counsel, accountants or others to assist it in the
conduct of any investigation;

Consider such other matters in relation to the financial affairs of the
Company and its accounts, and in relation to the audit of the Company as the
Audit Committee may, in its discretion, determine to be advisable.

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