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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>
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PRICE TO UNDERWRITING DISCOUNTS PROCEEDS TO
TITLE OF CLASS (1) PUBLIC OR COMMISSIONS (2) COMPANIES (3)
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<S> <C> <C> <C>
AGWAY INC.
Guarantee of Debt Securities -- None --
Series HM Preferred Stock (4)
Per Unit $ 25 None $ 25
Total $ 100,000 None $ 100,000
Membership Common Stock (5)
Per Unit $ 25 None $ 25
Total $ 100,000 None $ 100,000
AGWAY FINANCIAL CORPORATION
Guaranteed, Subordinated Money Market Certificates
(minimums 6.75% per annum and 7.0% per annum)
due October 31, 2003
Per Unit (6) 100% None $ 100/5,000
Total $ 7,500,000 None $ 7,500,000
Guaranteed, Subordinated Member Money Market Certificates
(minimums 7.25% per annum and 7.5% per annum)
due October 31, 2003
Per Unit (6) 100% None $ 100/5,000
Total $ 25,000,000 None $ 25,000,000
Guaranteed, Subordinated Money Market Certificates
(minimum 8.0% per annum) due October 31, 1998
Per Unit 100% None $ 2,000
Total $ 20,000,000 None $ 20,000,000
Guaranteed, Subordinated Member and Subordinated
Money Market Certificates under the Interest
Reinvestment Option (ranging from minimum of 4.5%
to 9.5% per annum) due from October 31, 1996 through
October 31, 2008
Per Unit 100% None
Total $ 18,850,000 None $ 18,850,000
</TABLE>
------------------
The Certificates bear interest payable semiannually in arrears on
January 1 and July 1 of each year. The Certificates are redeemable at the
option of the Company. A complete description of the securities offered by
Agway Financial Corporation ("AFC") is set forth on pages 8 through 16 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 8.0% Subordinated Money
Market Certificates described herein. FOR A DISCUSSION OF CERTAIN FACTORS TO
BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE SECURITIES OFFERED
HEREBY, SEE THE "RISK FACTORS" SECTION OF THIS PROSPECTUS SET FORTH ON PAGE 4.
FOOTNOTES ARE LOCATED ON PAGE 2
THE DATE OF THIS PROSPECTUS IS NOVEMBER 20, 1995
<PAGE>
FOOTNOTES:
(1) See pages 8 through 16 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 $109,000.
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.
(6) Certificates with the same maturity date bearing lower interest
rates will be issued in minimum denominations of $100, while
Certificates bearing a higher interest rate will be issued in
minimum denominations of $5,000.
----------
NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS;
ANY INFORMATION OR REPRESENTATION NOT CONTAINED HEREIN 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 ANY OFFER TO BUY, ANY
SECURITIES OTHER THAN THE SECURITIES COVERED BY THIS PROSPECTUS; NOR DOES IT
CONSTITUTE AN OFFER TO SELL, IN ANY STATE TO ANY PERSON TO WHOM IT IS UNLAWFUL
FOR THE COMPANIES TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE
COMPANIES SINCE THE DATE HEREOF.
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 and other
information filed with the Commission can be inspected and copied at the
public reference facilities of the SEC, Judiciary Plaza, 450 Fifth Street
N.W., Washington, D.C. 20549 as well as the following Regional Offices: 7
World Trade Center, Suite 1300, New York, New York 10048; and Citicorp Center,
500 West Madison Street, Suite 1400, Chicago, IL 60661-2511. Copies of such
materials can be obtained by mail from the Commission at prescribed rates.
Requests should be directed to the SEC's Public Reference Section. 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 18, 1995, for the
fiscal year ended June 30, 1995, and the Form 10-Q filed on November 7, 1995,
for the quarter ended September 30, 1995, pursuant to Section 13 of the
Securities Exchange Act of 1934 (File Number 2-22791). In an exemptive order
granted by the Securities and Exchange Commission, AFC, as a separate company,
is not required to file periodic reports with respect to these debt securities
but does report summarized AFC financial information in Agway's financial
statement footnotes.
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.
2
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE - CONTINUED
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 written or oral request of any such person to: Patricia Edwards,
Assistant Secretary, P. O. Box 4761, Syracuse, N.Y.
13221, Telephone: 315-449-6311.
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, 1995.
3
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE - CONTINUED
RISK FACTORS
SUBORDINATION. The Money Market Certificates ("the Certificates")
offered by this prospectus are unsecured obligations of the Company and are
subordinated to all Senior Debt (as defined in "Description of the
Certificates Subordination Provisions") of the Company. Therefore, in the
event of bankruptcy, liquidation or reorganization of the Company, its assets
will be available to pay obligations under the Certificates only after all
Senior Debt has been paid in full, and there may not be sufficient assets
remaining to pay amounts due on any or all of the Certificates then
outstanding. As of September 30, 1995, Senior Debt of $73,200,000 was
outstanding. See "Description of the Certificates - Subordination Provisions."
LIMITATIONS ON TRANSFER. The Series HM Preferred Stock, the Membership
Common Stock, the 7.25% Member Certificates and the 7.5% Member Certificates
may not be transferred, except in certain very limited circumstances. The
Series HM Preferred Stock and the Membership Common Stock may not be
transferred other than to Agway, except with Agway's written consent endorsed
on the relevant certificate. Pursuant to its By-laws, Agway will permit
transfers of such stock only to persons who were Agway members. See
"Description of Honorary Member Preferred Stock, Series HM" and "Membership
Common Stock" - "Limitations on Ownership and Transfer." The 7.25% and 7.5%
Member Certificates may not be transferred, except by will or operation of
law. The 6.75%, 7.0% and 8.0% Certificates are freely transferable. See
"Description of Certificates - Transfer."
ABSENCE OF PUBLIC MARKET, REDEMPTION AND MARKET RISK. As noted above,
there are substantial restrictions on the transfer of the Membership Common
Stock, Series HM Preferred Stock and the Member Certificates. With respect to
Certificates that are freely transferable, there is no market for such
securities and there is no intention on the part of the Companies to create or
encourage a trading mechanism for those Certificates. The Companies do not
intend to apply for a listing of the Certificates on any securities exchange.
The secondary market for, and the market value of, the Certificates will be
affected by a number of factors independent of the creditworthiness of Agway
and AFC, including the level and direction of interest rates, the remaining
period to maturity of the Certificates, the right of the Companies to redeem
the Certificates, the aggregate principal amount of the Certificates and the
availability of comparable investments. In addition, the market value of the
Certificates may be affected by numerous other interrelated factors, including
factors that affect the U. S. corporate debt market generally and Agway and
AFC specifically. There is no assurance that in the event of redemption the
investor will be able to reinvest the proceeds in comparable securities at an
effective interest rate as high as that of the Certificates. Debenture holders
should rely solely on the Companies' ability to repay principal at maturity of
the offered Certificates as the source for liquidity in this investment. See
"Description of Certificates" - "Interest Rates," "Redemption Provisions" and
"Repurchase Practice."
MARKET PRICE OF AND DIVIDENDS ON AGWAY'S EQUITY. The incidents of
ownership of Agway's Membership Common Stock and Series HM Preferred Stock
differ considerably from those of common stock and preferred 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. Series HM
Preferred Stock can only be purchased by former Agway members. By reason of
the fact that Agway functions as an agricultural cooperative, its Membership
Common Stock primarily serves the purpose of evidencing membership in Agway
(or, in the case of Series HM Preferred Stock, Former membership) rather than
of evidencing an equity interest in Agway. The equity claim of Membership
Common stockholders and Series HM Preferred 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. See "Description
of Membership Common Stock," Description of Honorary Member Preferred Stock,
Series HM," and "Market Price of and Dividends on Agway's Equity."
4
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE - CONTINUED
RISK FACTORS (CONTINUED)
AGRICULTURAL AND OTHER FACTORS. The financial condition of the Company
can be directly affected by factors affecting the agricultural economy, since
these factors impact the demand for the Company's products and the ability of
its customers to make payments for products already purchased through credit
extended by the Company. These factors include: (i) changes in the level of
government expenditures on farm programs (e.g., milk marketing orders) and
other changes in governmental agricultural programs (e.g., acreage reduction
programs) that may adversely affect the level of income of customers of the
Company, (ii) weather-related conditions which periodically occur that can
positively or negatively impact the agricultural productivity and income of
the customers of the Company; and (iii) the relationship of demand relative to
supply of agricultural commodities produced by customers of the Company. In
addition, the Company's energy business is also impacted by factors beyond its
control such as weather conditions in the Northeast and the relationship of
supply and demand for petroleum-related products worldwide as well as within
Agway's market. Agway's consumer business can be impacted by fluctuations in
the economy and particularly those fluctuations that in general affect
consumer demand for products in the Northeast. To the extent that these
factors adversely affect the customers of the Company, the financial condition
of the Company and the ability of the Company to make payments on the
Certificates could be adversely affected.
SELECTED FINANCIAL DATA OF AGWAY INC. AND CONSOLIDATED SUBSIDIARIES
AND RATIO OF MARGINS (EARNINGS)
(Thousands of Dollars Except Per Share and Ratio Amounts)
The following "Selected Financial Data" of Agway Inc. and Consolidated
Subsidiaries has been derived from consolidated financial statements audited
by Coopers & Lybrand L.L.P., whose unqualified reports for the periods ended
June 30, 1995, 1994 and 1993 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>
Years Ended June 30,
-----------------------------------------------------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net sales & revenues (1)................. $ 2,082,861 $ 2,187,193 $ 2,278,829 $ 2,390,652 $2,577,706
============ ============ ============ ============ ==========
Margin (loss) from continuing
operations (1 & 2)................... $ (22,962) $ (5,682) $ 24,218 $ (59,188) $ (6,049)
============ ============ ============ ============ ===========
Net margin (loss) (3).................... $ (15,908) $ (3,304) $ 19,750 $ (58,813) $ (6,420)
============ ============ ============ ============ ===========
Total assets (1)......................... $ 1,354,091 $ 1,400,314 $ 1,352,064 $ 1,372,992 $1,385,681
============ ============ ============ ============ ==========
Total long-term debt (1)................. $ 301,190 $ 291,587 $ 261,690 $ 278,314 $ 284,258
============ ============ ============ ============ ==========
Total long-term subordinated debt (1).... $ 406,258 $ 414,306 $ 386,303 $ 389,551 $ 327,650
============ ============ ============ ============ ==========
Preferred stock.......................... $ 65,635 $ 71,338 $ 53,474 $ 64,522 $ 64,384
============ ============ ============ ============ ==========
Cash dividends per share of common stock $ 1.50 $ 1.50 $ 1.50 $ 1.50 $ 1.50
============ ============ ============ ============ ==========
</TABLE>
(1) Certain amounts reported in fiscal years ended June 30, 1991-1994
have been reclassified to conform to current year presentation of
Hood being re-introduced as a continuing operation.
(2) 1995 and 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 in the
Agway Inc. 10-K for the fiscal year ended June 30, 1995.
(3) 1992 data reflects a $75,000 charge before taxes for business
restructuring; 1994 data reflects a $6,065 credit before taxes from
business restructuring; 1995 data reflects a $16,724 loss before
taxes on investment value and divestiture expenses related to Hood,
an after-tax gain on the sale of Curtice Burns of $4,430 and a credit
before taxes from business restructuring of $3,248. See Note 3 and 17
to the financial statements in the Agway Inc.
10-K for the fiscal year ended June 30, 1995.
5
<PAGE>
SELECTED FINANCIAL DATA OF AGWAY INC. AND CONSOLIDATED SUBSIDIARIES
AND RATIO OF MARGINS (EARNINGS)
(Thousands of Dollars Except Per Share and Ratio Amounts)
RATIO OF MARGINS (EARNINGS)
For purposes of this ratio, margins from continuing operations
represent margins before (i) income taxes and discontinued operations and (ii)
fixed charges and preferred dividend requirements. Fixed charges include
interest on debt and the interest factor of rent. The pro-forma ratio of
margins to fixed charges and to fixed charges and preferred dividends combined
of Agway Inc. (parent) as of June 30, 1995, after giving effect to the
issuance of the certificates offered hereby would be 1.1 and 1.3,
respectively. The pro forma ratio of margins to fixed charges and to fixed
charges and preferred dividends combined of Agway Inc. and Consolidated
Subsidiaries and Agway Inc. as of September 30, 1995 reflect a deficiency of
adjusted margin which is detailed below:
<TABLE>
<CAPTION>
Sept. 30, June 30,
----------------------------------------------------
1995 1995 1994 1993 1992 1991
--------- --------- --------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Ratio of margins to fixed charges:
Agway Inc. and Consolidated Subsidiaries (1) * * * 1.2 * *
========= ========= ========= ======== ======== ========
Agway Inc. (2) * 1.6 * 1.5 * 2.0
========= ========= ========= ======== ======== ========
Ratio of margins to fixed charges and
preferred dividends combined:
Agway Inc. and Consolidated Subsidiaries (1) * * * 1.1 * *
========= ========= ========= ======== ======== ========
Agway Inc. (2) * 2.0 * 1.4 * 1.5
========= ========= ========= ======== ======== ========
</TABLE>
*Adjusted net margin is inadequate to cover fixed charges or fixed charges
and preferred dividends combined. See below.
<TABLE>
<CAPTION>
Sept. 30, June 30,
----------------------------------------------------
1995 1995 1994 1993 1992 1991
--------- --------- --------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Deficiency of adjusted net margins to
total fixed charges:
Agway Inc. and Consolidated Subsidiaries (1) $ 14,217 $ 26,740 $ 4,556 N/D $ 62,432 $ 2,388
========= ========= ========= ======== ======== ========
Agway Inc. (2) $ 2,559 N/D $ 17,330 N/D $ 51,202 N/D
========= ========= ========= ======== ======== ========
Deficiency of adjusted net margins to
total fixed charges and preferred
dividends combined:
Agway Inc. and Consolidated Subsidiaries (1) $ 14,264 $ 30,789 $ 11,034 N/D $ 66,719 $ 1,162
========= ========= ========= ======== ======== ========
Agway Inc. (2) $ 2,600 N/D $ 19,604 N/D $ 55,560 N/D
========= ========= ========= ======== ======== ========
</TABLE>
The pro forma September 30, 1995 calculation resulted in deficiencies in
the adjusted net margins to total fixed charges and net margins to total fixed
charges and preferred dividends combined of $17,330 and $17,247, respectively,
for Agway Inc. and Consolidated Subsidiaries and $5,672 and $5,769,
respectively, for Agway Inc. (Parent).
(1) Certain ratios reported in fiscal years ended June 30, 1991-1994 have
changed as a result of Hood being re-introduced as a continuing operation.
(2) Parent-company ratios are presented since all of AFC's debt is
unconditionally guaranteed by Agway Inc.
N/D No deficiency.
6
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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 $71,350,000. 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 $ 108,000 $ 109,000 .2
Repurchase of outstanding securities 1,252,000 54,000,000 55,252,000 77.4
Redemption of long-term debt 15,989,000 15,989,000 22.4
-------------- -------------- ------------- --------
$ 1,253,000 $ 70,097,000 $ 71,350,000 100.0%
============== ============== ============= ========
</TABLE>
Although the exact amount is presently indeterminable, it is anticipated
that approximately $55,252,000 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. Proceeds from the offering pending its actual use will be used to
pay down short-term debt. As of November 15, 1995, the range of interest rates
and maturities of short-term debt that will be used to pay down short-term
debt pending its actual use was 5.8% - 8.1% and November 16, 1995 - December
13, 1995, respectively. The practice of repurchasing securities will not be
followed with respect to the 8.0% 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 $ 3,348,000
Money Market Certificates 50,652,000
Preferred Stock 1,200,000
Common Stock 52,000
-----------
$55,252,000
===========
Approximately $30,700,000 of the securities, at rates of 7.0%-8.5%, will
mature on October 31, 1995. Because the remaining securities estimated 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. However, as described in detail under the heading "Description
of the Certificates - Description of the Interest Reinvestment Option" on page
14, the possible range of interest rates and maturities are 4.5% - 9.5% and
1996 - 2008, respectively. 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 capital leases and
non-compete payments.
7
<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").
As of November 3, 1995, 2,387 shares are outstanding with total par value of
$59,675. 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 individuals who have previously held Agway Membership Common
Stock or to their spouses and no more than one share of such stock may be
issued to any one person, and Agway, acting in its capacity as transfer agent,
prevents two shares being issued to the same 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.
8
<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"). As of
November 3, 1995, 108,326 shares (86,078 shares active and 22,248 shares
called by the Company but not surrendered by the holder) are outstanding with
total par value of $2,708,150. 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, and Agway, acting in its
capacity as transfer agent, prevents two shares being issued to the same
person either through new application or transfer. No subscription for
Membership Common Stock will be accepted unless the subscriber is qualified
for membership in Agway, as determined by a local geographic committee
applying criteria set forth in Agway's By-Laws. 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. Stock not being
called for repurchase would allow the continued rights and privileges of
membership.
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.
9
<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 or the maturity date 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. Any change
in the interest rate or maturity date offered will not affect the rate of
interest on or maturity date of any Debentures theretofore issued.
<TABLE>
<CAPTION>
PRICE TO UNDERWRITING DISCOUNTS PROCEEDS TO
TITLE OF CLASS PUBLIC OR COMMISSIONS AFC
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CERTIFICATES:
Subordinated Money Market Certificates
(minimum 6.75% per annum) due October 31, 2003
(the "6.75% Certificates")
Per Unit 100% None $ 100
Total $ 2,500,000 None $ 2,500,000
Subordinated Money Market Certificates
(minimum 7.25% per annum) due October 31, 2003
(the "7.25% Member Certificates")
Per Unit 100% None $ 100
Total $ 5,000,000 None $ 5,000,000
Subordinated Money Market Certificates
(minimum 7.0% per annum) due October 31, 2003
(the "7.0% Certificates")
Per Unit 100% None $ 5,000
Total $ 5,000,000 None $ 5,000,000
Subordinated Money Market Certificates
(minimum 7.50% per annum) due October 31, 2003
(the "7.50% Member Certificates")
Per Unit 100% None $ 5,000
Total $ 20,000,000 None $ 20,000,000
Subordinated Money Market Certificates
(minimum 8.0% per annum) due October 31, 1998
(the "8.0% Certificates")
Per Unit 100% None $ 2,000
Total $ 20,000,000 None $ 20,000,000
Subordinated Member and Subordinated Money Market
Certificates under the Interest Reinvestment
Option (ranging from minimum of 4.5% to 9.5%
per annum) due from October 31, 1996 through
October 31, 2008
Per Unit 100% None
Total $ 18,850,000 None $ 18,850,000
</TABLE>
10
<PAGE>
DESCRIPTION OF SECURITIES TO BE REGISTERED (CONTINUED)
AGWAY FINANCIAL CORPORATION - (CONTINUED)
DESCRIPTION OF THE CERTIFICATES
INTEREST RATES. Interest on the 6.75% Certificates and 7.25% 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 6.75% for the
6.75% Certificates, and 7.25% for the 7.25% Member Certificates);
and,
(2) one-half percent (.5%) below the "Treasury Bill Rate" (as defined
below).
Interest on the 7.0% Certificates and 7.5% 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 7.0% for the
7.0% Certificates and 7.5% for the 7.5% Member Certificates); and,
(2) the "Treasury Bill Rate" (as defined below).
Interest on the 8.0% 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 8.0%; 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 for each
week 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 or during
the period June 1 to September 30 for interest payable on the maturity date
(each such period, an "Interest Determination Period"). In the event that the
Federal Reserve Board does not publish the weekly per annum auction average
discount rate for a particular week, AFC shall select a publication of such
rate by any Federal Reserve Bank or any U.S. Government department or agency
to be used in computing the arithmetic average. The Treasury Bill Rate will be
rounded to the nearest one hundredth of a percentage point.
In the event that AFC in good faith determines that for any reason a
Treasury Bill Rate is not published for a particular week in an Interest
Determination Period with respect to a particular interest payment date or the
maturity date, as applicable, an "Alternate Rate" will be substituted for the
Treasury Bill Rate for such period and date. The Alternate Rate will be the
arithmetic average of the weekly per annum auction average discount rates for
those weeks in the relevant Interest Determination Period for which rates are
published as described above, if any, and 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, for those weeks in the Interest Determination Period for which
no rate is published as described above. The Alternate Rate will be rounded to
the nearest one hundredth of a percentage point.
11
<PAGE>
DESCRIPTION OF SECURITIES TO BE REGISTERED (CONTINUED)
AGWAY FINANCIAL CORPORATION - (CONTINUED)
DESCRIPTION OF THE CERTIFICATES (CONTINUED)
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 30 in the year of
maturity.
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".
<TABLE>
<CAPTION>
Payment Average
Date "Treasury Bill Rate" High Low
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
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%
Jan.-95 5.04% 5.85% 4.53%
Jul.-95 6.01% 6.42% 5.65%
</TABLE>
If the Certificates currently being offered had been outstanding on July
1, 1995, the stated interest rates would have been paid. Although the period
June 1, 1995 to November 30, 1995, 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 November
3, 1995 was 5.29%.
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%).
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.
12
<PAGE>
DESCRIPTION OF SECURITIES TO BE REGISTERED (CONTINUED)
AGWAY FINANCIAL CORPORATION - (CONTINUED)
DESCRIPTION OF THE CERTIFICATES (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 6.75% Certificates and 7.25% Member
Certificates are to be issued in registered form only in denominations of $100
and multiples thereof. The 7.0% Certificates and 7.5% Member Certificates are
to be issued in registered form only in denominations of $5,000 and multiples
thereof. The 8.0% 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 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.
LIMITATIONS ON OWNERSHIP AND TRANSFER. The 7.25% Member Certificates and
7.5% Member Certificates may be purchased only by members of Agway. The 6.75%
and 7.0% Certificates may be sold to the general public and are generally
purchased by non-member patrons of Agway, Agway employees and former
employees. The 8.0% Certificates (not subject to repurchase practice) may be
purchased by both members of Agway and the general public.
Agway, acting as transfer agent, is able to prevent issuing or reissuing
a Member Money Market Certificate to other than holders of the Membership
Common and Honorary Member Preferred Stock.
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 offered in this Prospectus except the
8.0% 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, 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 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
13
<PAGE>
DESCRIPTION OF SECURITIES TO BE REGISTERED (CONTINUED)
AGWAY FINANCIAL CORPORATION - (CONTINUED)
DESCRIPTION OF THE CERTIFICATES (CONTINUED)
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, 1995, Senior Debt of $73,200,000 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 Certificates,
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. If AFC or any of its successors fails punctually to
pay any such principal and interest, Agway has unconditionally agreed to cause
any such payment to be punctually made when and as such payment becomes due
and payable, whether at maturity, upon acceleration or mandatory redemption or
otherwise. To the extent that Agway has unconditionally guaranteed payments
due under the Certificates, its failure to make payment under its guarantee
shall constitute an Event of Default under the Indenture, and Certificate
holders may proceed against Agway to the same extent, and in the same manner,
as described above under "Events of Default and Withholding Notice Thereof to
Certificate Holders."
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, September 1, 1985, September 2, 1985,
and September 1, 1986. The debentures and certificates issued under the August
25, 1982, September 1, 1985, September 2, 1985, September 1, 1986, August 24,
1987, August 23, 1988, and August
14
<PAGE>
DESCRIPTION OF SECURITIES TO BE REGISTERED (CONTINUED)
AGWAY FINANCIAL CORPORATION - (CONTINUED)
DESCRIPTION OF THE CERTIFICATES (CONTINUED)
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.
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,
----------------------- --------------- ----------------------- ---------------
<S> <C> <C> <C>
5.0% 1996 8.0% 2004
5.5% 1996 8.5% 2004
9.0% 1997 7.5% 2005
9.5% 1997 8.0% 2005
4.5% 2001 8.5% 2005
5.0% 2001 5.5% 2006
6.5% 2001 6.0% 2006
7.0% 2001 6.0% 2008
7.0% 2002 6.5% 2008
7.5% 2002 8.5% 2008
6.75% 2003 9.0% 2008
7.25% 2003
</TABLE>
15
<PAGE>
DESCRIPTION OF SECURITIES TO BE REGISTERED (CONTINUED)
AGWAY FINANCIAL CORPORATION - (CONTINUED)
DESCRIPTION OF THE INTEREST REINVESTMENT OPTION (CONTINUED)
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,
----------------------- --------------- ----------------------- ---------------
<S> <C> <C> <C>
6.0% 1996 4.75% 2001
6.5% 1996 5.25% 2001
6.5% 1998 6.75% 2001
7.0% 1998 7.25% 2001
8.5% 1998 8.5% 2001
9.0% 1998 9.0% 2001
7.5% 1999 5.5% 2002
8.0% 1999 6.0% 2002
9.0% 2000 7.0% 2003
9.5% 2000 7.5% 2003
</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) the "Treasury Bill Rate," as defined above.
Certificates having minimum face amounts of $2,000:
Stated Rate of Interest Due October 31,
----------------------- ---------------
5.5% 1996
7.75% 1997
8.0% 1998
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.
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.
16
<PAGE>
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.
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 being offered in this Prospectus, other than the 8.0% Subordinated
Money Market Certificates described herein.
ABSENCE OF PUBLIC MARKET, REDEMPTION AND MARKET RISK
There is no market for the Debentures and there is no intent on the part of
the Companies to create or encourage a trading mechanism for these Debentures.
The Companies do not intend to apply for listing of the Debentures on any
securities exchange. Any secondary market for, and the market value of, the
Debentures will be affected by a number of factors independent of the
creditworthiness of Agway and AFC, including the level and direction of
interest rates, the remaining period to maturity of the Debentures, the right
of the Companies to redeem the Debentures, the aggregate principal amount of
the Debentures and the availability of comparable investments. In addition,
the market value of the Debentures may be affected by numerous other
interrelated factors, including factors that affect the U.S. corporate debt
market generally, and Agway and AFC specifically.
17
<PAGE>
AGWAY INC.
AGWAY
FINANCIAL
CORPORATION
(logo)
PROSPECTUS
Until December 30, 1995, 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.
