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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.
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<TABLE>
<CAPTION>
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 --
8% Cumulative Preferred Stock, Series B
Per Unit $ 100 None $ 100
Total $ 1,000,000 None $ 1,000,000
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 6.25% per annum and 6.5% per annum)
due October 31, 2006
Per Unit (6) 100% None $ 100/5,000
Total $ 12,500,000 None $ 12,500,000
Guaranteed, Subordinated Member Money
Market Certificates (minimums 6.75% per annum
and 7.0% per annum) due October 31, 2006
Per Unit (6) 100% None $ 100/5,000
Total $ 17,500,000 None $ 17,500,000
Guaranteed, Subordinated Money Market Certificates
(minimum 7.25% per annum) due October 31, 2000
Per Unit 100% None $ 2,000
Total $ 15,000,000 None $ 15,000,000
Guaranteed, Subordinated Money Market Certificates
(minimum 7.5% per annum) due October 31, 2002
Per Unit 100% None $ 2,000
Total $ 15,000,000 None $ 15,000,000
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,
1997 through October 31, 2008
Per Unit 100% None
Total $ 19,115,000 None $ 19,115,000
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</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 17 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 7.25% and 7.5% 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 SEPTEMBER 23, 1996
1
<PAGE>
FOOTNOTES:
(1) See pages 8 through 17 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 $114,000.
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 and/or
securities receive an Annual Report in November of each year which contains the
information called for by Rule 14A-3(b). A prospectus 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. The Securities and Exchange Commission also maintains a web
site which contains information regarding registrants who file electronically,
the "EDGAR" data base. The web site address for the EDGAR data base is
http://www.sec.gov/edgarhp.htm. 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 9, 1996, for the fiscal
year ended June 30, 1996, pursuant to Section 13 of the Securities Exchange Act
of 1934 (File Number 2-22791). In an exemptive release granted pursuant to a "no
action letter" by the staff of 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.
2
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE - CONTINUED
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
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.
TABLE OF CONTENTS
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The Companies.................................................................3
Risk Factors..................................................................4
Selected Financial Data and Ratio of Margins..................................5
Use of Proceeds...............................................................7
Description of Securities to be Registered....................................8
Legal Opinion................................................................17
Experts......................................................................18
Distribution and Redemption of Securities Offered............................18
Absence of Public Market, Redemption and Market Risk.........................18
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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 315-449-6412), 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
principally 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 bank borrowings 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 retail and wholesale sales
of farm supplies, yard and garden products, pet food and pet supplies; the
distribution of petroleum products; repackaging and marketing of vegetables;
manufacturing of pet foods; processing and marketing sunflower seeds; the
underwriting and sale of certain types of property and casualty insurance; the
sale of health insurance; and lease financing.
3
<PAGE>
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 6, 1996, Senior
Debt of $53,650,000 was outstanding. See "Description of the Certificates -
Subordination Provisions."
LIMITATIONS ON TRANSFER. The Series HM Preferred Stock, the Membership
Common Stock, the 6.75% Member Certificates and the 7.0% 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 - Limitations on Ownership and Transfer" and
"Membership Common Stock - Limitations on Ownership and Transfer." The 6.75% and
7.0% Member Certificates may not be transferred, except by will or operation of
law. The 6.25%, 6.5% and 7.25% and 7.5% 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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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 retail 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 the Company and Consolidated
Subsidiaries has been derived from consolidated financial statements audited by
Coopers & Lybrand L.L.P., whose reports for the periods ended June 30, 1996,
1995 and 1994 are included in the Annual Report on Form 10-K and should be read
in conjunction with the full financial statements of the Company and Notes
thereto.
<TABLE>
<CAPTION>
(In Thousands of Dollars Except Per Share Amounts)
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Years Ended June 30
1996 1995 1994 1993 1992
------------- ------------- -------------- ------------- --------------
<S> <C> <C> <C> <C> <C>
Net sales and revenues (1)... $ 1,662,602 $ 1,592,053 $ 1,694,274 $ 1,719,890 $ 1,815,735
Margin (loss) from
continuing operations (1).. $ 10,085 $ (7,978) $ 696 $ 25,727 $ (44,571)
Net margin (loss) (2)........ $ 11,600 $ (15,908) $ (3,304) $ 19,750 $ (58,813)
Total assets (1)............. $ 1,244,271 $ 1,224,751 $ 1,273,711 $ 1,223,462 $ 1,204,037
Total long-term debt (1) .... $ 291,666 $ 268,310 $ 253,104 $ 216,146 $ 230,135
Total long-term subordinated
debt (1)................. $ 414,927 $ 399,064 $ 407,144 $ 379,619 $ 382,862
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, 1992-1995, have been
reclassified to conform to current year presentation.
(2) The 1992 data reflect a $75,000 charge before taxes for business
restructuring; 1994 data reflect a $6,065 credit before taxes from business
restructuring and an after-tax operating loss of $4,000 from discontinued
operations; 1995 data reflect an after-tax loss of $12,360 in discontinued
operations related to H.P. Hood Inc. ("Hood"), an after-tax gain on the sale
of Curtice-Burns Foods, Inc. of $4,430 and a credit before taxes from
business restructuring of $3,248; 1996 data reflect a $1,943 credit before
taxes from business restructuring and an after-tax gain on the sale of Hood,
net of operating losses until the time of sale of $1,515. Activities related
to the 1992 restructuring plans have been concluded and no further charges
or credits will be forthcoming.
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, 1996, after giving effect to the issuance of the
certificates offered hereby would be 2.8 and 2.0, respectively.
<TABLE>
<CAPTION>
June 30,
----------------------------------------------------
1996 1995 1994 1993 1992
--------- --------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Ratio of adjusted margins to fixed charges:
Agway Inc. and Consolidated Subsidiaries (1) 1.3 * 1.1 1.4 *
========= ========= ======== ======== ========
Agway Inc. (2) 3.8 1.6 * 1.5 *
========= ========= ======== ======== ========
Ratio of margins to fixed charges and
preferred dividends combined:
Agway Inc. and Consolidated Subsidiaries (1) 1.1 * * 1.3 *
========= ========= ======== ======== ========
Agway Inc. (2) 2.5 2.0 * 1.3 *
========= ========= ======== ======== ========
<CAPTION>
*Adjusted net margin is inadequate to cover fixed charges or fixed charges
and preferred dividends combined. See below for amount deficient.
June 30,
----------------------------------------------------
1996 1995 1994 1993 1992
--------- --------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Deficiency of adjusted net margins to total fixed charges:
Agway Inc. and Consolidated Subsidiaries (1) N/D $ 6,350 N/D N/D $ 50,549
========= ========= ========= ======== ========
Agway Inc. (2) N/D N/D $ 17,330 N/D $ 51,202
========= ========= ========= ======== ========
Deficiency of adjusted net margins to
total fixed charges and preferred
dividends combined:
Agway Inc. and Consolidated Subsidiaries (1) N/D $ 12,605 $ 29,662 N/D $ 54,774
========= ========= ========= ======== ========
Agway Inc. (2) N/D N/D $ 19,619 N/D $ 55,559
========= ========= ========= ======== ========
</TABLE>
(1) Certain ratios reported in fiscal years ended June 30, 1992-1995 have
changed as a result of Hood being reclassified from continuing to
discontinued operations.
(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 $79,115,000. 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 $ 113,000 $ 114,000 .1
Repurchase of outstanding securities 13,100,000 41,142,000 54,242,000 68.6
Redemption of short- and long-term debt 24,759,000 24,759,000 31.3
----------------- ----------------- ---------------- ----------
$ 13,101,000 $ 66,014,000 $ 79,115,000 100.0%
================= ================= ================ ==========
</TABLE>
Although the exact amount is presently indeterminable, it is anticipated
that approximately $54,242,000 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 money market 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 September 6, 1996, the range of interest rates
and maturities of short-term debt that will be paid down was 5.32% - 7.70% and
September 9, 1996 - September 18, 1996, respectively. The practice of
repurchasing securities will not be followed with respect to the 7.25% and 7.5%
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 39,642,000
Preferred Stock 13,000,000
Common Stock 100,000
-----------
$54,242,000
===========
Approximately $14,600,000 of the above money market securities, at rates
of 5.0%-6.5%, will mature on October 31, 1996. 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 16, the possible range of interest rates and
maturities are 4.5% - 9.5% and 1997 - 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 8% CUMULATIVE PREFERRED STOCK, SERIES B ($100 PAR VALUE)
Agway is authorized to issue 250,000 shares of 8% cumulative preferred
stock, Series B, having a par value of $100 per share (the "Series B Preferred
Stock"). The following summary of the Series B Preferred Stock is subject in all
respects to the provisions of the amended Certificate of Incorporation and
By-laws of Agway, which are incorporated by reference to this Registration
Statement. The exhibits incorporated by reference thereto may be obtained from
the Commission or from Agway in the same manner as the documents described under
"Available Information" on page 2.
DIVIDEND RIGHTS. The holders of shares of Series B Preferred Stock are
entitled to cumulative dividends at the rate of 8% per annum. The 6% Series A
Preferred Stock has priority with respect to the payment of dividends over 8%
cumulative preferred stock, Series B (the "Series B Preferred Stock"), 8%
cumulative preferred stock, Series B-1 (the "Series B-1 Preferred Stock"), 7%
cumulative preferred stock, Series C (the "Series C Preferred Stock"), and
Series HM Preferred Stock (as defined in page 9). There are no restrictions in
any indenture or other agreement respecting the payment of dividends on
cumulative preferred stock.
VOTING RIGHTS. The holders of Series B Preferred Stock are not entitled to
vote for directors, to participate in meetings or management of Agway, or to
vote in any proceedings except in such statutory proceedings as to which their
votes are required by law.
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 A Preferred Stock shall receive the full par value
thereof, together with all cumulative dividends declared, accrued, and unpaid to
date of distribution, before any funds shall be distributed to holders of Series
B Preferred Stock, Series B-1 Preferred Stock, Series C Preferred Stock or
Series HM Preferred Stock. The holders of Series B Preferred Stock, Series B-1
Preferred Stock, Series C Preferred Stock and Series HM Preferred Stock shall
first receive the full par value thereof, together with all cumulative dividends
accrued and unpaid to date of distribution, before any funds shall be
distributed to holders of common stock of Agway, or credited to retained margins
of Agway.
GENERAL. The Series B Preferred Stock has no pre-emptive or conversion
rights. The shares of Series B 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.
TRANSFER. Shares of Series B Preferred Stock are freely transferable.
REDEMPTION PROVISIONS. The Series B 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 ($100 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 B Preferred Stock when presented for repurchase, and it is the present
intention of Agway to follow such practice in the future.
8
<PAGE>
DESCRIPTION OF SECURITIES TO BE REGISTERED (CONTINUED)
AGWAY INC. - (CONTINUED)
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 September 6, 1996, 2,447 shares are outstanding with total par value of
$61,175. 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 which are incorporated by reference to
this 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 present
intention of Agway to follow such practice in the future.
9
<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
September 6, 1996, 107,094 shares (84,610 shares active and 22,484 shares called
by the Company but not surrendered by the holder) are outstanding with total par
value of $2,677,350. 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 are
incorporated by reference to this 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 annual dividends, when and as declared by the Board of Directors.
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 present
intention of Agway to follow such practice in the future.
10
<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 6.25% per annum) due October 31,
2006 (the "6.25% 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,
2006 (the "6.75% Member Certificates")
Per Unit 100% None $ 100
Total $ 2,500,000 None $ 2,500,000
Subordinated Money Market Certificates
(minimum 6.5% per annum) due October 31,
2006 (the "6.5% Certificates")
Per Unit 100% None $ 5,000
Total $ 10,000,000 None $ 10,000,000
Subordinated Money Market Certificates
(minimum 7.0% per annum) due October 31,
2006 (the "7.0% Member Certificates")
Per Unit 100% None $ 5,000
Total $ 15,000,000 None $ 15,000,000
Subordinated Money Market Certificates
(minimum 7.25% per annum) due October 31,
2000 (the "7.25% Certificates")
Per Unit 100% None $ 2,000
Total $ 15,000,000 None $ 15,000,000
Subordinated Money Market Certificates
(minimum 7.50% per annum) due October 31,
2002 (the "7.50% Certificates")
Per Unit 100% None $ 2,000
Total $ 15,000,000 None $ 15,000,000
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, 1997 through October 31, 2008
Per Unit 100% None
Total $ 19,115,000 None $ 19,115,000
</TABLE>
11
<PAGE>
DESCRIPTION OF SECURITIES TO BE REGISTERED (CONTINUED)
AGWAY FINANCIAL CORPORATION - (CONTINUED)
DESCRIPTION OF THE CERTIFICATES
INTEREST RATES. Interest on the 6.25% Certificates and 6.75% 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 6.25% for the
6.25% Certificates and 6.75% for the 6.75% Member Certificates); and,
(2) one-half percent (.5%) below the "Treasury Bill Rate" (as defined
below).
Interest on the 6.5% Certificates and 7.0% 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 6.5% for the
6.5% Certificates and 7.0% for the 7.0% Member Certificates); and,
(2) the "Treasury Bill Rate" (as defined below).
Interest on the 7.25% and 7.5% 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 7.25% for the 7.25% Certificates
and 7.5% for the 7.5% Certificates; 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.
12
<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."
Payment
Date "Treasury Bill Rate" High Low
- --------------------------------------------------------------------------------
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%
Jan.-96 5.37% 5.61% 5.22%
Jul.-96 5.01% 5.25% 4.71%
If the Certificates currently being offered had been outstanding on July
1, 1996, the stated interest rates would have been paid. Although the period
June 1, 1996 to November 30, 1996, is not complete as of the date of this
Prospectus (and hence the Treasury Bill Rate for the January 1, 1996 interest
payment date cannot yet be determined), the Treasury Bill Rate as of September
6, 1996 was 5.38%.
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 authorized 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.
13
<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 6.25% Certificates and 6.75% Member Certificates are to
be issued in registered form only in denominations of $100 and multiples
thereof. The 6.5% Certificates and 7.0% Member Certificates are to be issued in
registered form only in denominations of $5,000 and multiples thereof. The 7.25%
and 7.5% 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 6.75% Member Certificates and
7.0% Member Certificates may be purchased only by members of Agway. The 6.25%
and 6.5% Certificates may be sold to the general public and are generally
purchased by non-member patrons of Agway, Agway employees and former employees.
The 7.25% and 7.5% 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
7.25% and 7.5% 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 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)
14
<PAGE>
DESCRIPTION OF SECURITIES TO BE REGISTERED (CONTINUED)
AGWAY FINANCIAL CORPORATION - (CONTINUED)
DESCRIPTION OF THE CERTIFICATES (CONTINUED)
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 6, 1996, Senior Debt of $53,650,000 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 reduction of
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
15
<PAGE>
DESCRIPTION OF SECURITIES TO BE REGISTERED (CONTINUED)
AGWAY FINANCIAL CORPORATION - (CONTINUED)
DESCRIPTION OF THE CERTIFICATES (CONTINUED)
August 25, 1982, September 1, 1985, and September 1, 1986. The debentures and
certificates issued under the August 25, 1982, September 1, 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 of 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>
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 6.25% 2006
7.0% 2002 6.75% 2006
7.5% 2002 6.0% 2008
6.75% 2003 6.5% 2008
7.25% 2003 8.5% 2008
8.0% 2004 9.0% 2008
8.5% 2004
</TABLE>
16
<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>
6.5% 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
4.75% 2001 6.5% 2006
5.25% 2001 7.0% 2006
</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,
----------------------- ---------------
7.75% 1997
8.0% 1998
7.25% 2000
7.5% 2002
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 hereby 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.
17
<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 7.25% and 7.5%
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.
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<PAGE>
AGWAY INC.
AGWAY
FINANCIAL
CORPORATION
[logo]
PROSPECTUS
Until November 2, 1996, 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.
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