<PAGE>
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
PROSPECTUS
(LOGO) AGWAY INC.
AND
AGWAY FINANCIAL CORPORATION
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
Price to Underwriting Discounts Proceeds to
Title of Class (1) Public or Commissions (2) Companies (3)
- -------------------------------------------------------------------------------------------------------
<S> <C> <S> <C>
Agway Inc.
Guarantee of Debt Securities -- None --
Series HM Preferred Stock (4)
Per Unit $ 25 None $ 25
Total $ 50,000 None $ 50,000
Membership Common Stock (5)
Per Unit $ 25 None $ 25
Total $ 100,000 None $ 100,000
Agway Financial Corporation
Guaranteed, Subordinated Member and
Subordinated Money Market Certificates
Per Unit 100% None
Total $ 50,000,000 None $ 50,000,000
Guaranteed, Subordinated Member and
Subordinated Money Market
Certificates under the Interest
Reinvestment Option
Per Unit 100% None
Total $ 18,400,000 None $ 18,400,000
</TABLE>
----------------
A complete description of the securities offered by Agway Financial
Corporation ("AFC") is set forth on pages 6 through 15 herein.
----------------
There is no market for any of the offered securities other than
that provided by Agway Inc. (Agway) and AFC (together the "Companies")
through their practice of repurchasing certain outstanding securities
whenever registered holders elect to tender them for repurchase. The
Companies do not intend to follow this practice with respect to the 7.75%
Subordinated Money Market Certificates described herein.
-----------------
Footnotes are located on Page 2
The date of this Prospectus is October 19, 1994
<PAGE>
Footnotes:
(1) See pages 6 through 15 for a description of the securities being
offered and qualifications of the purchaser.
(2) The securities offered by this Prospectus are being offered by
the Companies through their employees. No commission or
other remuneration is being paid directly or indirectly to such
persons in connection with the offer and sale of the securities.
(3) It is assumed that all securities offered are sold and the amount
of proceeds is before deduction of estimated expenses of
$102,000. Because there is no underwriting of the securities
offered, there is no assurance that all or any part of the
indicated proceeds will be received by the Companies from the
offering of the securities.
(4) The Series HM Preferred Stock may be purchased only by
former members of Agway Inc.
(5) The Membership Common Stock may be purchased only by
persons entitled to membership in Agway Inc.
------------
No person has been authorized to give any information or to make
any representations not contained in this Prospectus and, if given or
made, such information or representation must not be relied upon as
having been authorized by the Companies. This Prospectus does not
constitute an offer to sell or a solicitation of an offer to buy any of the
securities in any state to any person to whom it is unlawful to make
such offer or solicitation in such state.
AVAILABLE INFORMATION
Agway is a cooperative association as defined in the Agricultural
Marketing Act of 1929 and as such is exempt from certain registration,
proxy and insider trading provisions of the Securities Exchange Act of
1934. AFC is a wholly owned subsidiary of Agway. All holders of
Membership Common Stock receive an Annual Report in November of
each year which contains the information called for by Rule 14A-3(b). An
Annual Report of Agway is also sent in January of each year to all holders
of securities who have elected the interest reinvestment option. The
Annual Report contains financial information that has been audited and
reported upon, with an opinion expressed by certified public accountants.
Other holders of securities may obtain an Annual Report or Prospectus
upon request from: Patricia Edwards, Assistant Secretary, P. O. Box
4761, Syracuse, N.Y. 13221; Telephone: 315-449-6311. Agway shall
file with the Securities and Exchange Commission supplementary and
periodic information, documents and reports required of issuers under
Sections 13(a) and 15(d) of the Securities Exchange Act of 1934. Reports
filed with the Commission can be inspected at the Public Reference Section
of the Commission at 450 Fifth Street N.W., Washington, D.C. (20549)
as well as the following Regional Offices: 26 Federal Plaza, New York,
New York (10278); and 219 South Dearborn Street, Chicago, Illinois
(60604). Copies of such materials can be obtained from the Commission
at prescribed rates. In addition, materials may be inspected or obtained at
333 Butternut Drive, DeWitt, New York 13214 (P. O. Box 4933,
Syracuse, New York, 13221; Telephone: 315-449-6436).
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Companies hereby incorporate by reference into this Prospectus
the Annual Report of Agway on Form 10-K filed on September 23, 1994,
pursuant to Section 13 of the Securities Exchange Act of 1934, for the
fiscal year ended June 30, 1994 (File Number 2-22791).
All reports and other documents filed by Agway pursuant to Sections
13(a), 13(c), 14 and 15(d) of the 1934 Act subsequent to the date of this
Prospectus and prior to the termination of the offering of the Certificates
hereunder shall be deemed to be incorporated by reference herein and to
be a part hereof from the date of the filing of such reports and documents.
The Companies will provide a copy of any of the foregoing
documents incorporated herein by reference (other than exhibits to such
documents), without charge to each person to whom a copy of this
Prospectus is delivered, upon the request of any such person to: Patricia
Edwards, Assistant Secretary, P. O. Box 4761, Syracuse, N.Y. 13221,
Telephone: 315-449-6311.
<PAGE>
DISTRIBUTION AND REDEMPTION OF SECURITIES OFFERED
Sale of the securities offered hereby will be solicited through direct
mailings and/or personal contact by certain designated employees of
Agway. No salesmen will be employed to solicit the sale of these
securities, and no commission or discount will be paid or allowed to
anyone in connection with their sale. The individual Agway employees
who participate in the sale of these securities may be deemed to be
underwriters of this offering within the meaning of that term as defined in
Section 2(11) of the Securities Act of 1933, as amended.
While there is no guarantee of repurchase, the Companies intend to
continue their practice of repurchasing, when presented for redemption,
any security other than the 7.75% Subordinated Money Market Certificates
described herein.
THE COMPANIES
Agway Inc., incorporated under the Delaware General Corporation
Law in 1964 and headquartered at 333 Butternut Drive, DeWitt, New
York, 13214 (Telephone Number 315-449-6436), is an agricultural
cooperative directly engaged in product manufacturing, processing and
distribution, wholesale purchasing and marketing of agricultural related
products for its members and other patrons in twelve northeastern states.
AFC, a wholly owned subsidiary of Agway, is a Delaware
corporation incorporated in 1986 with principal executive offices at 1105
North Market Street, Wilmington, Delaware 19801 (Telephone Number
302-654-8371). AFC's business activities consist primarily of securing
financing through bank borrowings and issuance of corporate debt
instruments to provide funds to its sole stockholder, Agway, and AFC's
wholly owned subsidiary, Agway Holdings, Inc. (AHI) and its subsidiaries,
for general corporate purposes. The payment of principal and interest on
this and on the debt securities offered by this Prospectus is absolutely and
unconditionally guaranteed by Agway. AFC, through certain subsidiaries
of AHI, is involved in the retail sale of farm-related products, pet foods
and animal care products, and yard and garden products; wholesale
distribution of certain product categories to franchised representatives and
other businesses; distribution of petroleum products; repackaging and
marketing of vegetables; underwriting and sale of certain types of property
and casualty insurance; sales of health insurance; and lease financing.
On July 1, 1994, certain subsidiaries of AFC were transferred to
Agway Inc. and certain operating divisions of Agway Inc. were transferred
to AFC. Reference is made to Note 2 to the financial statements in the
Agway Inc. 10-K for the fiscal year ended June 30, 1994.
<PAGE>
SELECTED FINANCIAL DATA OF AGWAY INC. AND CONSOLIDATED SUBSIDIARIES
AND RATIO OF EARNINGS
The following "Selected Financial Data" of Agway Inc. and
Consolidated Subsidiaries has been derived from financial statements
audited by Coopers & Lybrand L.L.P., whose reports for the periods
ended June 30, 1994, 1993 and 1992 are included in the Annual Report on
Form 10-K, and should be read in conjunction with the full consolidated
financial statements and notes thereto.
<TABLE>
<CAPTION>
(Thousands of Dollars Except Per Share and Ratio Amounts)
---------------------------------------------------------------------------
Years Ended June 30,
---------------------------------------------------------------------------
1994 1993 1992 1991 1990
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net sales & revenues <F1> . . . . . . . . . . . $ 1,694,978 $ 1,720,594 $ 1,815,735 $ 1,986,253 $ 1,984,770
=========== =========== =========== =========== ===========
Margin (loss) from continuing operations <F2> . $ 696 $ 25,727 $ (44,571) $ 666 $ 18,821
=========== =========== =========== =========== ===========
Net margin (loss) <F3>. . . . . . . . . . . . . $ (3,304) $ 19,750 $ (58,813) $ (6,420) $ 8,102
=========== =========== =========== =========== ===========
Total assets <F1> . . . . . . . . . . . . . . . $ 1,274,314 $ 1,223,462 $ 1,204,037 $ 1,211,097 $ 1,125,774
=========== =========== =========== =========== ===========
Long-term debt. . . . . . . . . . . . . . . . . $ 176,567 $ 150,107 $ 155,405 $ 168,058 $ 156,244
=========== =========== =========== =========== ===========
Long-term subordinated debt . . . . . . . . . . $ 372,673 $ 379,619 $ 349,116 $ 303,337 $ 266,816
=========== =========== =========== =========== ===========
Preferred stock . . . . . . . . . . . . . . . . $ 71,338 $ 53,474 $ 64,522 $ 64,384 $ 61,698
=========== =========== =========== =========== ===========
Cash dividends per share of common stock. . . . $ 1.50 $ 1.50 $ 1.50 $ 1.50 $ 1.50
=========== =========== =========== =========== ===========
Ratio of margins to fixed charges . . . . . . . 1.1 1.4 0.1 1.2 1.6
=========== =========== =========== =========== ===========
Ratio of margins to combined fixed charges and
preferred stock dividend requirements (A):. . 0.7 1.3 0.1 0.5 1.4
=========== =========== =========== =========== ===========
<FN>
<F1> Certain amounts reported in fiscal years ended June 30, 1991-1993 have been reclassified to conform to current
year presentation.
<F2> 1994 data reflects the adoption of Statement of Financial Accounting Standard No. 106, "Accounting for
Postretirement Benefits Other Than Pensions." See Note 13 to the financial statements.
<F3> 1992 data reflects a $75,000 pre-tax charge for business restructuring; 1994 data reflects a $6,065 pre-tax credit
from business restructuring. See Note 3 to the financial statements in the Agway Inc. 10-K for the fiscal year
ended June 30, 1994.
</FN>
</TABLE>
(A) Ratio of Margins to Combined Fixed Charges and Preferred Dividend
Requirements
For purposes of this ratio, margins from continuing operations
represent margins before (i) income taxes and discontinued operations and
(ii) fixed charges and preferred stock dividend requirements. Fixed
charges include interest on debt and the interest factor of rent. The pro-
forma ratio of margins to combined fixed charges and preferred stock
dividend requirements as of June 30, 1994, after giving effect to the
issuance of the certificates offered hereby would be 0.6.
USE OF PROCEEDS
There is no underwriting of the securities offered; thus there is no
assurance that all or any of the proceeds will be received. The net
proceeds of the sale of the offered securities will be no greater than
$68,550,000. The funds received will be applied by the Companies
approximately in the relative order that follows:
<TABLE>
<CAPTION>
AGWAY AFC TOTAL %
----------- ------------ ------------ -----
<S> <C> <C> <C> <C>
Offering expenses $ 1,000 $ 101,000 $ 102,000 .1
Repurchase of outstanding securities 1,537,000 57,000,000 58,537,000 85.4
Redemption of long-term debt 9,911,000 9,911,000 14.5
----------- ------------ ------------ -----
$ 1,538,000 $ 67,012,000 $ 68,550,000 100.0%
=========== ============ ============ ======
</TABLE>
<PAGE>
USE OF PROCEEDS (Continued)
Although the exact amount is presently indeterminable, it is
anticipated that approximately $58,537,000 of the proceeds of this offering
will be used for the repurchase of outstanding securities, which is a
continuation of a practice of providing a market for the securities by
repurchasing such securities (at par value in the case of preferred and
common stock, and at the principal plus accrued interest in the case of
debentures and certificates) as the holders (members or other investors)
elect to tender the securities for repurchase. The practice of repurchasing
securities will not be followed with respect to the 7.75% Subordinated
Money Market Certificates described herein. The amounts of each type of
security estimated to be repurchased within the next year are as follows:
Subordinated Debentures $ 1,500,000
Money Market Certificates 55,500,000
Preferred Stock 1,500,000
Common Stock 37,000
------------
$ 58,537,000
============
Approximately $30,500,000 of the securities to be repurchased
represent the fiscal 1995 maturities of the debt securities at rates of 9.5%-
10.5%. Because the remaining securities to be repurchased are those
presented by the holders, the Companies cannot determine at this time the
interest rates or maturities of the debt securities which may be repurchased.
If the proceeds of this offering are not sufficient to provide funds for the
repurchase of all securities tendered for repurchase, Agway intends to
utilize available cash from other sources for additional repurchases. Long-
term debt which may be paid consists of long-term senior debt, capital
leases and non-compete payments. The long-term senior debt consists of
a loan with a variable interest rate (7.35% on September 30, 1994) that
will mature in quarterly installments beginning on October 1, 1994 through
January 1, 1996.
MARKET PRICE OF AND DIVIDENDS ON AGWAY'S COMMON EQUITY
The incidents of ownership of Agway's Membership Common Stock
differ considerably from those of common stock ownership in the usual
business corporation. The Membership Common Stock may be purchased
only by persons entitled to membership in the Company. Only farmers
and cooperative organizations of farmers who purchase farm supplies or
services or market farm products through Agway may be members. By
reason of the fact that the Company functions as an agricultural
cooperative, its Membership Common Stock primarily serves the purpose
of evidencing membership in the Company rather than of evidencing an
equity interest in the Company. The equity claim of Membership Common
stockholders to the assets of Agway is measured by, and restricted to, the
$25 par value of the share, plus dividends declared and unpaid, if any, for
the current year. Dividends which may be declared in any one year are
not to exceed 8% of the par value of Membership Common Stock ($2 per
share).
There is no market for common stock other than that provided by
Agway through its practice of repurchasing outstanding shares whenever
registered holders thereof elect to tender them for repurchase.
LEGAL OPINION
Legal matters in connection with the securities offered thereby have
been passed upon for the Companies by David M. Hayes, Esq., Senior
Vice President, General Counsel and Secretary of Agway. Mr. Hayes is
a Director and the General Counsel of AFC.
EXPERTS
The audited financial statements incorporated by reference in this
Prospectus have been audited by Coopers & Lybrand L.L.P. and Price
Waterhouse L.L.P. The companies and periods covered by these
examinations are indicated in their respective reports. Such financial
statements have been so included in reliance upon the reports of the various
independent accountants given on the authority of each firm as an expert
in accounting and auditing.
<PAGE>
DESCRIPTION OF SECURITIES TO BE REGISTERED
Agway Inc.
DESCRIPTION OF HONORARY MEMBER PREFERRED STOCK, SERIES HM ($25 Par Value)
Agway is authorized to issue 80,000 shares of Honorary Member
preferred stock having a par value of $25 per share (the "Series HM
Preferred Stock"). The summary description of the Series HM Preferred
Stock which follows is subject in all respects to the provisions of the
amended Certificate of Incorporation and By-laws of Agway, copies of
which have been filed as exhibits to the Registration Statement.
Limitations on Ownership and Transfer. Series HM Preferred Stock
may be issued only to former members of Agway and no more than one
share of such stock may be issued to any one person. No subscription for
this stock will be accepted unless the subscriber was a member of Agway.
Series HM Preferred Stock may not be transferred other than to Agway
except with its written consent endorsed on the certificate. Pursuant to its
By-laws, Agway will permit transfer of such stock only to persons who
were members in Agway and will limit ownership of the stock to one share
per person.
Dividend Rights. The holders of the Series HM Preferred Stock are
entitled to receive annual dividends, when and as declared by the Board of
Directors. Dividends are non-cumulative. There are no restrictions in any
indenture or other agreement respecting the payment of dividends on Series
HM Preferred Stock.
Voting Rights. The holders of Series HM Preferred Stock have no
voting rights.
Liquidation Rights. In the event of any distribution of assets in
liquidation or dissolution of Agway, all debts of Agway shall be paid
before the holders of any class or series of preferred stock or common
stock are entitled to any distribution of assets. If assets remain after all
debts are paid, the holders of the Series HM Preferred Stock would be
entitled, subject to the liquidation rights of the Series A Preferred Stock,
Series B Preferred Stock, Series B-1 Preferred Stock and Series C
Preferred Stock, to receive only the par value thereof ($25 per share) plus
accrued dividends, if any. Any net assets of Agway remaining after
payment of the par value and accrued dividends on the Series HM
Preferred Stock would be distributed to the holders of the common stock
of Agway and any net assets remaining after the rights of such holders had
been satisfied would be distributed to the members and/or patrons of
Agway to whom its retained margin would be credited.
General. The Series HM Preferred Stock has no pre-emptive or
conversion rights. The shares of Series HM Preferred Stock will be, when
issued, duly authorized, validly issued and fully paid and non-assessable
and the holders thereof will not be liable for any payment of Agway's
debts.
Redemption Provisions. The Series HM Preferred Stock is subject,
at the option of the Board of Directors, to redemption as a whole or in
part, upon payment of the par value thereof ($25 per share) with all
accrued dividends to the date fixed for redemption. In case of partial
redemption, shares to be redeemed shall be drawn by lot. There are no
restrictions in any indenture or other document respecting the redemption
or purchase of shares by Agway.
Repurchase Practice. While there is no guarantee of repurchase, it
is the present practice of Agway to repurchase, at par, the share of any
holder of Series HM Preferred Stock when presented for repurchase, and
it is the intention of Agway to follow such practice in the future.
<PAGE>
DESCRIPTION OF SECURITIES TO BE REGISTERED (Continued)
Agway Inc. - (continued)
DESCRIPTION OF MEMBERSHIP COMMON STOCK ($25 Par Value)
Agway is authorized to issue 300,000 shares of membership common
stock having a par value of $25 per share (the "Membership Common
Stock"). The summary description of the Membership Common Stock
which follows is subject in all respects to the provisions of the amended
Certificate of Incorporation and By-laws of Agway, copies of which have
been filed as exhibits to the Registration Statement.
Limitations on Ownership and Transfer. Membership Common
Stock may be issued only to persons entitled to membership in Agway, and
no more than one share of such stock may be issued to any one person.
No subscription for Membership Common Stock will be accepted unless
the subscriber is qualified for membership in Agway. Membership in
Agway consists of farmers or cooperative organizations of farmers who are
record holders of one share of Membership Common Stock of Agway and
who purchase farm supplies or farm services or market farm products
through Agway or franchised representatives. Membership Common Stock
may not be transferred other than to Agway except with its written consent
endorsed on the certificate. Pursuant to its By-laws, Agway will permit
transfer of such stock only to persons entitled to membership in Agway and
will limit ownership of the stock to one share per person. If any holder of
Membership Common Stock has ceased to be a member of Agway because
the member has ceased to be a farmer, or because the member has done
no business with Agway since the beginning of its preceding fiscal year,
such stock held by the member may be called for repurchase at the par
value thereof, plus accrued dividends, if any. It is the present intention of
Agway to call such stock for repurchase under such circumstances.
Dividend Rights. The holders of the Membership Common Stock are
entitled to receive, when and as declared by the Board of Directors, annual
dividends not to exceed 8% of par value ($2 per share). Dividends are
non-cumulative. The holders of preferred stock are entitled to receive,
when and as declared by the Board of Directors, preferential dividends
before any dividends shall be declared or paid or set aside for the
Membership Common Stock. Such dividends are cumulative except in the
case of HM Preferred Stock. There are no other restrictions in any
indenture or other agreement respecting the payment of dividends on
Membership Common Stock.
Voting Rights. The Membership Common Stock carries the exclusive
voting rights of Agway, on the basis of one vote for each share of such
stock.
Liquidation Rights. In the event of any liquidation of Agway or
other disposition of its assets, the holders of the Membership Common
Stock would be entitled, after all debts of Agway are paid, subject to the
liquidation rights of the Series A Preferred Stock, the Series B Preferred
Stock, the Series B-1 Preferred Stock, the Series C Preferred Stock and the
Series HM Preferred Stock to receive only the par value thereof ($25 per
share) plus dividends declared and unpaid, if any, for the current year.
Any net assets of Agway remaining after payment of the par value and
accrued dividends on the Membership Common Stock would be distributed
to the members and/or patrons of Agway to whom its retained margin
would be credited. No person is entitled to any distribution of assets with
respect to the retained margin or otherwise prior to the dissolution of
Agway.
General. The Membership Common Stock has no pre-emptive or
conversion rights. The shares of Membership Common Stock will be,
when issued, duly authorized, validly issued and fully-paid and non-
assessable and the holders thereof will not be liable for any payment of
Agway's debts.
Redemption Provisions. The Membership Common Stock is subject
to redemption if any holder ceases to be a member of Agway.
Repurchase Practice. While there is no guarantee of repurchase, it
is the present practice of Agway to repurchase, at par, the share of any
holder of Membership Common Stock when presented for repurchase, and
it is the intention of Agway to follow such practice in the future.
<PAGE>
DESCRIPTION OF SECURITIES TO BE REGISTERED (Continued)
Agway Financial Corporation
The following are the securities currently being issued by AFC, which
are absolutely and unconditionally guaranteed by Agway (such securities
being referred to herein as the "Certificates"). In addition, AFC may
change the minimum rate of interest offered for certificates sold after the
date of such change by filing a supplement to this Prospectus with the
Securities and Exchange Commission setting forth the new terms.
<TABLE>
<CAPTION>
Price to Underwriting Discounts Proceeds to
Title of Class Public or Commissions AFC
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <S> <C>
Certificates:
Subordinated Money Market Certificates
(minimum 6.5% per annum) due October 31, 2001
(the "6.5% Certificates")
Per Unit 100% None $ 100
Total $ 2,500,000 None $ 2,500,000
Subordinated Money Market Certificates
(minimum 7% per annum) due October 31, 2001
(the "7% Member Certificates")
Per Unit 100% None $ 100
Total $ 2,500,000 None $ 2,500,000
Subordinated Money Market Certificates
(minimum 6.75% per annum) due October 31, 2001
(the "6.75% Certificates")
Per Unit 100% None $ 5,000
Total $ 10,000,000 None $ 10,000,000
Subordinated Money Market Certificates
(minimum 7.25% per annum) due October 31, 2001
(the "7.25% Member Certificates")
Per Unit 100% None $ 5,000
Total $ 10,000,000 None $ 10,000,000
Subordinated Money Market Certificates
(minimum 7.75% per annum) due October 31, 1997
(the "7.75% Certificates")
Per Unit 100% None $ 2,000
Total $ 25,000,000 None $ 25,000,000
Subordinated Member and Subordinated Money Market
Certificates under the Interest Reinvestment
Option (ranging from minimum of 4.5% to 10.5%
per annum) due from October 31, 1994 through
October 31, 2008
Per Unit 100% None
Total $ 18,400,000 None $ 18,400,000
</TABLE>
<PAGE>
DESCRIPTION OF SECURITIES TO BE REGISTERED (Continued)
Agway Financial Corporation - (continued)
DESCRIPTION OF THE CERTIFICATES
Interest Rates. Interest on the 6.5% Certificates and 7% Member
Certificates, issued in $100 denominations, is payable semiannually on
January 1 and July 1, and at maturity, at a rate per annum for each
semiannual period equal to the greater of:
(1) the Certificates' "stated rate" (the "stated rate" is 6.5% for the
6.5% Certificates, and 7% for the 7% Member Certificates);
and,
(2) one-half percent (.5%) below the "Treasury Bill Rate" (as
defined below).
Interest on the 6.75% Certificates and 7.25% Member Certificates,
issued in $5,000 denominations, is payable semiannually on January 1 and
July 1, and at maturity, at a rate per annum for each semiannual period
equal to the greater of:
(1) the Certificates' "stated rate" (the "stated rate" is 6.75% for the
6.75% Certificates and 7.25% for the 7.25% Member
Certificates; and,
(2) the "Treasury Bill Rate" (as defined below).
Interest on the 7.75% Certificates, issued in $2,000 denominations,
is payable semiannually on January 1 and July 1, and at maturity, at a rate
per annum for each semiannual period equal to the greater of:
(1) the Certificates' "stated rate" of 7.75%; and,
(2) the "Treasury Bill Rate" (as defined below).
U.S. Treasury bills are issued and traded on a discount basis, the
amount of the discount being the difference between their face value at
maturity and their sales price. The per annum discount rate on a U.S.
Treasury bill is the percentage obtained by dividing the amount of the
discount on such U.S. Treasury bill by its face value at maturity and
annualizing such percentage on the basis of a 360-day year. The Federal
Reserve Board currently publishes such rates weekly in its Statistical
Release H.15 (519). Unlike the interest on U.S. Treasury bills, interest
on the certificates will not be exempt from state and local income taxation.
The "Treasury Bill Rate" for each semiannual interest payment date
is the arithmetic average of the weekly per annum auction average discount
rates at issue date for U.S. Treasury bills with maturities of 26 weeks
(which may vary from the market discount rates for the same weeks), as
published weekly by the Federal Reserve Board, during the period June 1
to November 30, inclusive, for the January 1 interest payment date or
during the period December 1 to May 31 inclusive, for the July 1 interest
payment date. In the event that the Federal Reserve Board does not
publish the weekly per annum auction average discount rate, AFC shall
select a publication of such rate by any Federal Reserve Bank or any U.S.
Government department or agency. The resulting rate will be rounded to
the nearest one hundredth of a percentage point. See "Description of
Certificates" for a further explanation of the manner of calculating the
interest rate on the certificates if the interest rate cannot be calculated
as provided above.
The following chart sets forth for the periods indicated:
(1) The "Treasury Bill Rate", as defined above.
(2) The highest per annum discount rate on six month U.S.
Treasury Bills at one of the 26 auctions during the
period used to calculate the "Treasury Bill Rate".
(3) The lowest per annum discount rate on six month U.S.
Treasury Bills at one of the 26 auctions during the
period used to calculate the "Treasury Bill Rate".
<PAGE>
DESCRIPTION OF SECURITIES TO BE REGISTERED (Continued)
Agway Financial Corporation - (continued)
<TABLE>
<CAPTION>
Payment Average
Date "Treasury Bill Rate" High Low
- ----------------------------------------------------------------------------
<C> <C> <C> <C>
Jan.-90 7.68% 8.08% 7.35%
Jul.-90 7.70% 8.03% 7.30%
Jan.-91 7.35% 7.75% 6.96%
Jul.-91 6.05% 6.96% 5.61%
Jan.-92 5.32% 5.97% 4.50%
Jul.-92 3.97% 4.39% 3.71%
Jan.-93 3.28% 3.90% 2.78%
Jul.-93 3.13% 3.46% 2.95%
Jan.-94 3.16% 3.30% 3.02%
Jul.-94 3.71% 4.81% 3.14%
</TABLE>
If the Certificates currently being offered had been outstanding on
July 1, 1994, the stated interest rates would have been paid. Although the
period June 1, 1994 to November 30, 1994, is not complete as of the date
of this Prospectus (and hence the Treasury Bill Rate for the January 1,
1995 interest payment date cannot yet be determined), the Treasury Bill
Rate as of September 26, 1994, was 5.22%.
The six-month U.S. Treasury bill rate has fluctuated widely during
the periods shown in the chart. This rate can be expected to fluctuate in
the future. These fluctuations will cause the rate of interest payable on the
Certificates issued in $5,000 and $2,000 denominations to exceed the stated
rate whenever the Treasury Bill Rate exceeds the stated rate. Interest
payable on the Certificates issued in $100 denominations will exceed the
stated rate when the Treasury Bill Rate exceeds the stated rate by more
than one-half percent (.5%).
In the event that AFC in good faith determines that for any reason a
Treasury Bill Rate is not published during the period June 1 to November
30, inclusive, for the January 1 interest payment date or during the period
December 1 to May 31, inclusive, for the July 1 interest payment date, an
"Alternate Rate" will be substituted for the Treasury Bill Rate. The
Alternate Rate for each semiannual interest payment date is the arithmetic
average of the weekly per annum auction average discount rates or market
discount rates or stated interest rates for comparable issue(s) of securities
as is selected by AFC, with the concurrence of the Trustee. The Alternate
Rate will be rounded to the nearest one hundredth of a percentage point.
In the further event that AFC in good faith determines that neither the
Treasury Bill Rate nor Alternate Rate can be computed for the period June
1 to November 30, inclusive, for the January 1 interest payment date or for
the period December 1 to May 31, inclusive, for the July 1 interest
payment date, the rate of interest payable with respect to any Certificate
will be the rate stated thereon.
The last interest payment date for the Certificates is the date of
maturity. Interest payable on the Certificates at maturity shall be
calculated as described above, during the period June 1 to September 1 in
the year of maturity.
General. AFC is empowered to issue the Certificates pursuant to the
indenture dated as of August 23, 1989, between AFC and the Key Bank of
New York, as Trustee, as supplemented by the supplemental indenture
dated August 24, 1992. The indenture and supplemental indenture are
filed as exhibits to the Registration Statement and reference is made thereto
for a complete statement of the terms and provisions of these Certificates.
<PAGE>
DESCRIPTION OF SECURITIES TO BE REGISTERED (Continued)
Agway Financial Corporation - (continued)
The Certificates bear interest payable semiannually on January 1 and
July 1 of each year and at maturity at the rates quoted herein. Principal
and interest on the Certificates will be payable at the office of the
transfer agent, Agway, in DeWitt, New York. Additional amounts may be added
to the principal of any Certificate pursuant to an election by the holder
thereof to have the semiannual interest payments added to and increase the
principal amount of the Certificate. The 6.5% Certificates and 7%
Member Certificates are to be issued in registered form only in
denominations of $100 and multiples thereof. The 6.75% Certificates and
7.25% Member Certificates are to be issued in registered form only in
denominations of $5,000 and multiples thereof. The 7.75% Certificates
(not eligible for the Company's normal repurchase practice) are to be
issued in registered form only in denominations of $2,000 and multiples
thereof. The 7% Member Certificates and 7.25% Member Certificates
may be purchased only by members of Agway. The 6.5% and 6.75%
Certificates may be sold to the general public and are generally purchased
by non-member patrons of Agway, Agway employees and former
employees. The 7.75% Certificates (not subject to repurchase practice)
may be purchased by both members of Agway and the general public.
The Certificates are unsecured obligations of AFC, and the payment
thereof is to be subordinated to other debt (except debts similarly
subordinated) as hereinafter mentioned. There is no provision in the
indentures that would prevent AFC or Agway from incurring additional
debt or which would restrict the interest rate or other terms of such other
debt.
Transfer. The 7% Member Certificates, the 7.25% Member
Certificates and the 7.75% Certificates are not transferable by the holder
thereof except by will or by operation of law. The 6.5% and 6.75%
Certificates are freely transferable.
Redemption Provisions. Upon not less than 30 days written notice,
AFC may, at its option, redeem all, or by lot, from time to time any part
of the Certificates at the principal amount thereof, together with accrued
interest from the last interest payment date to the date fixed for redemption
at the stated rate. Should the Certificates be redeemed by lot, all
Certificates not redeemed will be accorded equal treatment in any
subsequent redemption.
Repurchase Practice. While there is no guarantee of repurchase, it
is the present practice of AFC to repurchase at face value, plus interest
accrued at the stated rate, the Certificates of any holder whenever
presented for repurchase. It is the intention of AFC to follow such
practice in the future with respect to all of the Certificates except the
7.75% Certificates, which AFC does not intend to repurchase.
Interest Reinvestment Option. At the time of application for
purchase of the Certificates, or at any time thereafter, the holder may elect
to have all interest paid on the Certificate reinvested automatically. In the
event that the automatic reinvestment option is elected, the interest due on
each semiannual interest payment date will be added to the principal
amount of the Certificate and will earn interest thereafter on the same basis
as the original principal amount. This election may be revoked only as to
future interest payments at any time by written notice to AFC, effective on
the date when the revocation notice is duly received by AFC. Interest
reinvested will be subject to federal income tax as if it had been received
by the certificate holder at the time reinvested.
Subordination Provisions. The payment of the principal and interest
on the Certificates is subordinated in right of payment, to the extent set
forth in the indenture, to the prior payment in full of all "Senior Debt."
Senior Debt is defined as the principal of, and interest on (a) indebtedness
(other than the indebtedness of AFC with respect to its debentures and
Certificates issued under indentures dated as of August 25, 1982, August
1, 1984, August 2, 1984, September 1, 1985, September 2, 1985,
September 1, 1986, August 24, 1987, August 23, 1988 and August 23,
1989 and supplemental indenture dated August 24, 1992) of AFC for
money borrowed from or guaranteed to banks, trust companies, insurance
companies, and other financial institutions, including dealers in commercial
paper, charitable trusts, pension trusts, and other investing organizations,
evidenced by notes or similar obligations, or (b) indebtedness (other than
with respect to the indentures noted in clause (a) above) of AFC evidenced
by notes, debentures or certificates issued under the provisions of an
indenture of similar instrument between AFC and a bank
<PAGE>
DESCRIPTION OF SECURITIES TO BE REGISTERED (Continued)
Agway Financial Corporation - (continued)
trust company, unless in any case covered by clause (a) or (b) the
instrument creating or evidencing the indebtedness provides that such
indebtedness is not superior or is subordinate in right of payment to the
certificates. Senior Debt, as thus defined, includes all debt presently
outstanding except indebtedness with respect to the debentures described
in clause (a) above. As of September 30, 1994, Senior Debt of
$78,900,000 was outstanding.
In the event of any distribution of assets of AFC under any total
liquidation or reorganization of AFC, the holders of all Senior Debt shall
be entitled to receive payment in full before the holders of the Certificates
are entitled to receive any payment. After payment in full of the Senior
Debt, the holders of the Certificates will be entitled to participate in any
distribution of assets, both as such holders and by virtue of subrogation to
the rights of the holders of Senior Debt, to the extent that the Senior Debt
was benefited by the receipt of distributions to which the holders of the
Certificates would have been entitled if there had been no subordination.
By reason of such subordination, in the event of AFC's insolvency, holders
of Senior Debt may receive more, ratably, and holders of the certificates
may receive less, ratably, than other creditors of AFC. The subordinated
debentures and Certificates rank pari passu with each other.
Modification of Indentures. The indentures permit modification or
amendment thereof, but no modification of the terms of payment or
reducing the percentage required for modification will be effective against
any certificate holder without his consent.
Events of Default and Withholding of Notice Thereof to Certificate
Holders. The indentures provide for the following Events of Default: (i)
failure to pay interest upon any of the Certificates when due, continued for
a period of 30 days; (ii) failure to pay principal of the Certificates or
Senior Debt when due; (iii) failure to perform any other covenant of AFC
as set forth in the indentures, continued for 90 days after written notice by
the Trustee or the holders of at least 25% in principal amount of the
Certificates then outstanding.
The Trustee, within 90 days after the occurrence of the default, is to
give the certificate holders notice of all defaults known to Trustee, unless
cured prior to the giving of such notice, provided that, except in the case
of default in the payment of principal or interest on any of the Certifi-
cates, the Trustee may withhold such notice if and so long as it in good
faith determines that the withholding of such notice is in the interest of
the certificate holders.
Upon the happening and during the continuance of a default, the
Trustee or the holders of 25% in aggregate principal amount of the
Certificates may declare the principal of all the Certificates and the
interest accrued thereon due and payable, but the holders of a majority of
the Certificates may waive all defaults and rescind such declaration if the
default is cured. Subject to the provisions of the indenture relating to the
duties of the Trustee in case any such default shall have occurred and be
continuing, the Trustee will be under no obligation to exercise any of its
rights or powers at the request, order or direction of any of the certificate
holders unless they shall have offered to the Trustee reasonable security or
indemnity. Subject to such provisions for security or indemnity, a majority
of the holders of outstanding Certificates will have the right to direct the
time, method and place of conducting any proceeding for exercising any
remedy available to the Trustee.
Guarantee by Agway. Agway has guaranteed absolutely and
unconditionally the payment of principal, premium and interest of the
Certificates. The guarantee is subordinated to Senior Debt of Agway and
of AFC to the same extent that the Certificates are subordinated.
<PAGE>
DESCRIPTION OF SECURITIES TO BE REGISTERED (Continued)
Agway Financial Corporation - (continued)
The Trustee. AFC will maintain a demand account and conduct
routine banking business with the Key Bank of New York, Trustee. The
Trustee is also the Trustee of a supplemental indenture dated as of October
1, 1986, between the Trustee, Agway and AFC, which amends the
indentures between the Trustee and Agway dated as of August 25, 1982,
August 1, 1984, August 2, 1984, September 1, 1985, September 2, 1985,
and September 1, 1986. The debentures and certificates issued under the
August 25, 1982, August 1, 1984, August 2, 1984, September 1, 1985,
September 2, 1985, September 1, 1986, August 24, 1987,
August 23, 1988, and August 23, 1989 indentures and the supplemental
indenture dated August 24, 1992 rank equally as debt instruments of AFC
with the certificates covered by the indenture dated August 23, 1989 being
described herewith.
The indentures contain certain limitations on the right of the Trustee,
as a creditor of AFC, to obtain payment of claims in certain cases, or to
realize on certain property received in respect of any such claim as security
or otherwise.
Authentication and Delivery. The Certificates may be authenticated
and delivered upon the written order or AFC without any further corporate
action.
Satisfaction and Discharge of Indentures. The indentures may be
discharged upon payment or redemption of all Certificates or upon deposit
with the Trustee of funds sufficient therefor.
Evidence as to Compliance with Conditions and Covenants. As
evidence of compliance with the covenants and conditions provided for in
the indentures, AFC is to furnish to the Trustee Officer's Certificates each
year stating that such covenants and conditions have been complied with.
On October 1, 1986, AFC assumed Agway's obligations under the
indentures between the Trustee and Agway. A supplemental indenture was
filed as an exhibit to the Registration Statement No. 33-8676, dated
September 11, 1986, and reference is made thereto for a complete
statement of the terms and provisions of such obligations.
<PAGE>
DESCRIPTION OF SECURITIES TO BE REGISTERED (Continued)
Agway Financial Corporation - (continued)
DESCRIPTION OF THE INTEREST REINVESTMENT OPTION
General. If the Certificate holder has elected to have all interest
paid on the Certificate reinvested automatically, the interest due on each
semiannual interest payment date will be added to the principal amount of
the certificate and will earn interest thereafter on the same basis as the
original principal amount. This election may be revoked - as to future
interest payments only - by written notice to AFC, effective on the date
when the revocation notice is duly received by AFC. Interest reinvested
will be subject to federal income tax as if it had been received by the
certificate holder at the time reinvested.
Rates on Previously Issued Certificates. The stated rates of interest
on Certificates previously issued by AFC that remain outstanding (and
upon which the interest reinvestment option might be exercised by any
holder thereof) are as follows:
Certificates having minimum face amounts of $100:
<TABLE>
<CAPTION>
Stated Rate of Interest Due October 31, Stated Rate of Interest Due October 31,
----------------------- --------------- ----------------------- ---------------
<C> <C> <C> <C>
9.5% 1994 8.0% 2004
10.0% 1994 8.5% 2004
5.0% 1996 7.5% 2005
5.5% 1996 8.0% 2005
9.0% 1997 8.5% 2005
9.5% 1997 5.5% 2006
4.5% 2001 6.0% 2006
5.0% 2001 6.0% 2008
6.5% 2001 6.5% 2008
7.0% 2001 8.5% 2008
7.0% 2002 9.0% 2008
7.5% 2002
</TABLE>
Interest on these outstanding Certificates is payable semiannually
on January 1 and July 1, and at maturity, at the rate per annum for each
semiannual period equal to the greater of:
(1) the Certificates' "stated rate"; and
(2) one-half percent (.5%) below the "Treasury Bill Rate", as
defined above.
Certificates having minimum face amounts of $5,000:
<TABLE>
<CAPTION>
Stated Rate of Interest Due October 31, Stated Rate of Interest Due October 31,
----------------------- --------------- ----------------------- ---------------
<C> <C> <C> <C>
10.0% 1994 8.0% 1999
10.5% 1994 9.0% 2000
8.0% 1995 9.5% 2000
8.5% 1995 4.75% 2001
6.0% 1996 5.25% 2001
6.5% 1996 6.75% 2001
6.5% 1998 7.25% 2001
7.0% 1998 8.5% 2001
8.5% 1998 9.0% 2001
9.0% 1998 5.5% 2002
7.5% 1999 6.0% 2002
</TABLE>
<PAGE>
DESCRIPTION OF SECURITIES TO BE REGISTERED (Continued)
Agway Financial Corporation - (continued)
DESCRIPTION OF THE INTEREST REINVESTMENT OPTION
Interest on these outstanding Certificates is payable semiannually on
January 1 and July 1, and at maturity, at the rate per annum for each
semiannual period equal to the greater of:
(1) the Certificates' "stated rate"; and
(2) the "Treasury Bill Rate," as defined above.
Certificates having minimum face amounts of $2,000:
Stated Rate of Interest Due October 31,
----------------------- ---------------
7.0% 1995
5.5% 1996
7.75% 1997
Interest on these outstanding Certificates is payable semiannually on
January 1 and July 1, and at maturity, at the rate per annum for each
semiannual period equal to the greater of:
(1) the Certificates' "stated rate"; and
(2) the "Treasury Bill Rate," as defined above.
<PAGE>
AGWAY INC.
AGWAY
FINANCIAL
CORPORATION
(LOGO)
PROSPECTUS
Until November 28, 1994 all dealers effecting
transactions in the registered securities, whether
or not participating in this distribution, may be
required to deliver a Prospectus. This is in
addition to the obligations of dealers to deliver
a Prospectus when acting as underwriters and
with respect to their unsold allotments or
subscriptions.
