-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OORLtMpJa4x8iL0LRCaKk1g/Fqa3jW2iyyOWeeQLJykXksuLfgjwr1vhM82uGzpd S7mAf7IWHayfXc2TP21teQ== 0000002852-01-500029.txt : 20010611 0000002852-01-500029.hdr.sgml : 20010611 ACCESSION NUMBER: 0000002852-01-500029 CONFORMED SUBMISSION TYPE: S-3/A PUBLIC DOCUMENT COUNT: 7 REFERENCES 429: 333-59808 FILED AS OF DATE: 20010608 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AGWAY INC CENTRAL INDEX KEY: 0000002852 STANDARD INDUSTRIAL CLASSIFICATION: GRAIN MILL PRODUCTS [2040] IRS NUMBER: 150277720 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: S-3/A SEC ACT: SEC FILE NUMBER: 333-59808 FILM NUMBER: 1656638 BUSINESS ADDRESS: STREET 1: 333 BUTTERNUT DR CITY: DEWITT STATE: NY ZIP: 13214 BUSINESS PHONE: 3154496431 S-3/A 1 s3a0301.txt S-3 AMENDMENT NO. 1 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 8, 2001 REGISTRATION NO. 333-59808 - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION, WASHINGTON, D.C. 20549 ------------------ FORM S-3 - AMENDMENT NO. 1 REGISTRATION STATEMENT under THE SECURITIES ACT OF 1933 AGWAY AGWAY INC. FINANCIAL CORPORATION (EXACT NAME OF REGISTRANT AS SPECIFIED (EXACT NAME OF REGISTRANT AS IN ITS CHARTER) SPECIFIED IN ITS CHARTER) DELAWARE DELAWARE (STATE OF INCORPORATION) (STATE OF INCORPORATION) 15-0277720 06-1174232 (I.R.S. EMPLOYER IDENTIFICATION NO.) (I.R.S. EMPLOYER IDENTIFICATION NO.) 333 BUTTERNUT DRIVE, 1105 NORTH MARKET STREET, DEWITT, NEW YORK 13214 WILMINGTON, DELAWARE 19801 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) 315-449-6431 302-654-8371 CHRISTOPHER W. FOX, Esq. AGWAY INC. BOX 4933 Syracuse, New York 13221-4933 315-449-6436 (NAME AND ADDRESS OF AGENT FOR SERVICE) ---------------------- APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as practicable on or after the effective date of this Registration Statement. If the only securities being registered on the Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. ---- If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. X ---- If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement number of the earlier effective registration statement for the same offering. ------ If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ----- If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. ------
CALCULATION OF REGISTRATION FEE - -------------------------------------------------------------------------------------------------------------------- PROPOSED MAXIMUM PROPOSED MAXIMUM TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING AMOUNT OF SECURITIES TO BE REGISTERED REGISTERED PER UNIT PRICE REGISTRATION FEE - -------------------------------------------------------------------------------------------------------------------- AGWAY INC. Guarantee of the Debt Securities............ (1) (1) None Series HM Preferred Stock................... 4,000 shs $ 25 $ 100,000 $ 26.40 Membership Common Stock..................... 4,000 shs $ 25 $ 100,000 $ 26.40 AGWAY FINANCIAL CORPORATION (AFC) Guaranteed, Subordinated Member and Subordinated Money Market Certificates.... $ * * * Guaranteed, Subordinated Member and Subordinated Money Market Certificates under the Interest Reinvestment Option... $ * * * ------------ ---- ------------- ------------ Total AFC.................................. $350,000,000 100% $ 350,000,000 $ 92,400.00 ------------ $ 92,452.80 ============
(1) No consideration will be received by Agway Inc. for the Guarantee. - -------------------------------------------------------------------------------- We hereby amend this registration statement on such date or dates as may be necessary to delay its effective date until we shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. - -------------------------------------------------------------------------------- PROSPECTUS JUNE _____, 2001 [LOGO] YOU SHOULD CAREFULLY CONSIDER THE RISK FACTORS BEGINNING ON PAGE 6 OF THE PROSPECTUS BEFORE MAKING YOUR INVESTMENT DECISION. A DESCRIPTION OF THE SECURITIES BEING OFFERED BEGINS ON PAGE 13 OF THIS PROSPECTUS. AGWAY INC. UNCONDITIONALLY GUARANTEES THE PAYMENT OF PRINCIPAL AND INTEREST ON THE AFC CERTIFICATES. THERE ARE NO UNDERWRITING DISCOUNTS OR COMMISSIONS IN THESE OFFERINGS. THE AFC CERTIFICATES PAY INTEREST IN ARREARS ON JANUARY 1 AND JULY 1 OF EACH YEAR. WE ARE UNDER NO OBLIGATION TO REPURCHASE CERTIFICATES WHEN TENDERED. THERE IS NO MARKET FOR ANY OF THE OFFERED SECURITIES. YOU SHOULD ASSUME THAT YOU WILL HAVE TO HOLD THE CERTIFICATES UNTIL THEIR MATURITY. THE MEMBERSHIP COMMON STOCK MAY ONLY BE PURCHASED BY AGWAY MEMBERS. THE SERIES HM PREFERRED STOCK MAY ONLY BE PURCHASED BY FORMER MEMBERS OF AGWAY. THE SUBORDINATED MEMBER MONEY MARKET CERTIFICATES MAY BE PURCHASED ONLY BY CURRENT OR FORMER AGWAY MEMBERS. AGWAY FINANCIAL CORPORATION (AFC) WILL ISSUE UP TO A TOTAL OF $350,000,000 IN SUBORDINATED MONEY MARKET CERTIFICATES GUARANTEED BY AGWAY INC. AS FOLLOWS: SUBORDINATED MEMBER MONEY MARKET CERTIFICATES Minimum Interest Rate Maturity Date Minimum Denominations -------------- ------------- --------------------- 8.25% Due 10/31/16 $ 5,000 8.00% Due 10/31/16 $ 100 SUBORDINATED MONEY MARKET CERTIFICATES Minimum Interest Rate Maturity Date Minimum Denominations -------------- ------------- --------------------- 7.75% Due 10/31/16 $ 5,000 7.50% Due 10/31/16 $ 100 8.75%* Due 10/31/09 $ 2,000 8.50%* Due 10/31/05 $ 2,000 *We do not intend to repurchase, at the request of a holder, the 8.75% or 8.5% Subordinated Money Market Certificates offered in this offering. See "Risk Factors." SUBORDINATED MEMBER AND SUBORDINATED MONEY MARKET CERTIFICATES UNDER THE INTEREST REINVESTMENT OPTION If you choose the Interest Reinvestment Option, the interest you receive on your Certificates will be reinvested at the same interest rate payable on the Certificates for which you received the interest. For outstanding Certificates, interest rates range from 4.5% to 9.75% per annum and due dates range from October 31, 2001 through October 31, 2016. AGWAY INC. (AGWAY) WILL ISSUE A TOTAL OF $200,000 OF THE FOLLOWING SECURITIES: o Guarantee of Debt Securities (no consideration received) o Series HM Preferred Stock o $25 Par/Unit Value o Price to Public: $100,000 (4,000 shares) o Membership Common Stock o $25 Par/Unit Value o Price to Public: $100,000 (4,000 shares) WHILE THE AFC CERTIFICATES (CERTIFICATES) WILL PAY AT LEAST THE APPLICABLE STATED FIXED RATE OF INTEREST, THEY MAY PAY A HIGHER RATE BASED UPON A VARIABLE TREASURY BILL RATE. However, given the current spread between treasury bill rates and the interest rate of the Certificates, it is unlikely that the Treasury Bill Rate will be applicable in the near future. In addition, it is not possible at this time to determine whether the Treasury Bill Rate will be applicable at any time prior to maturity. We may, from time to time, before this offering is completed, change the interest rate or maturity date of the Certificates to be offered by filing a prospectus supplement with the Securities and Exchange Commission (SEC). We will attach the applicable supplement, if any, to this prospectus. Any change in the interest rate or maturity date offered will not affect the rate of interest on or maturity of any Certificates previously issued by AFC. The amount of Certificates sold at a particular interest rate and maturity date and the proceeds realized from those sales can vary. In no event will the aggregate price to the public for Certificates exceed $350,000,000. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THE SECURITIES OFFERED BY THIS PROSPECTUS OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. TABLE OF CONTENTS - ------------------------------------------------------------------------------- About this Prospectus............................ 2 The Companies.................................... 2 The Offering..................................... 3 Risk Factors..................................... 6 Use of Proceeds.................................. 10 Plan of Distribution............................. 10 Selected Financial Data and Ratio of Margins..... 11 Description of Securities to be Registered....... 13 Legal Opinion.................................... 25 Experts.......................................... 25 Where You Can Find More Information.............. 25 - -------------------------------------------------------------------------------- ABOUT THIS PROSPECTUS This prospectus is part of a registration statement that we filed with the SEC using a "shelf" registration process. Under this shelf process, we may sell the money market certificates, preferred stock, and common stock described in this prospectus (the "Securities") in one or more offerings up to a total dollar amount of $350,200,000 (up to $350,000,000 principal amount of Certificates, up to $100,000 par value of Series HM Preferred Stock, and up to $100,000 par value of Membership Common Stock. This prospectus provides you with a general description of the Securities. It might not contain all the information important to you. For a more complete understanding of this offering, we encourage you to read this entire document and the documents to which we have referred to under the heading "Where You Can Find More Information" on page 25 of this prospectus before making your investment decisions. In this prospectus or any prospectus supplement, unless otherwise indicated, "we," "us," and "our" refer to Agway and, where relevant, to Agway and AFC together, or to Agway and its subsidiaries. THE COMPANIES We are an agricultural cooperative owned by approximately 70,000 Northeast farmer-members. We are directly engaged in manufacturing, processing, distributing and marketing agricultural products (seeds and fertilizers) and services for our farmer-members and other customers, primarily in the northeastern United States and Ohio. We are also involved in repackaging and marketing produce and processing and marketing sunflower seeds. Through certain of our subsidiaries, we are involved in the distribution of petroleum products; the installation and servicing of heating, ventilation, and air-conditioning equipment; lease financing; the underwriting and sale of certain types of property and casualty insurance; and the sale of health insurance. Agway was incorporated under the laws of Delaware in 1964. Our principal executive offices are located at 333 Butternut Drive, DeWitt, New York 13214 and our telephone number is 315-449-6431. AFC is one of our wholly owned subsidiaries. It was incorporated in Delaware in 1986. Its principal business activities consist of securing financing through bank borrowings and the issuance of corporate debt instruments. Those funds are used for the general corporate purposes of Agway, AFC's wholly owned subsidiary, Agway Holdings Inc. (AHI), and AHI's subsidiaries. Agway guarantees the payment of principal and interest on the AFC debt. This guarantee is full and unconditional, and joint and several, which means that Agway is obligated to pay the full amount of the AFC debt if AFC fails to pay. AFC's principal executive offices are located at 1105 North Market Street, Wilmington, Delaware 19801 and the telephone number is 302-654-8371. On April 24, 2001, the Agway Board of Directors authorized the mergers of AFC and AHI into Agway. Those mergers are expected to be effective July 1, 2001. On the effective date, Agway will assume all the liabilities of AFC and AHI, including all obligations of AFC relating to the Certificates and will become the issuer of the Securities offered hereunder. All assets and liabilities of AFC and AHI, including AHI's subsidiaries, will become assets and liabilities of Agway. There will be no material change in the consolidated financial position or results of operations of Agway Inc. as a result of these mergers. THE OFFERING Agway is offering preferred and common stock and AFC is offering Guaranteed Subordinated Money Market Certificates ("Certificates"), as well as an interest reinvestment option. The terms that apply to the Securities, including the interest rate and maturity date of the Certificates, are described below and on the cover page of the prospectus. The Certificates are governed by an agreement, known as the "Indenture," between us and a bank trustee. The Indenture is described later in this prospectus and is incorporated by reference into this prospectus. See "Description of the AFC Certificates," below. We may, from time to time, before we complete the offering of Certificates, change the interest rate or the maturity date of new Certificates to be offered by amending the prospectus cover page and filing a prospectus supplement with the SEC. We will attach the applicable supplement, if any, to this prospectus. Any change in the interest rate or maturity date of future Certificates will not affect the interest rate or the maturity date of any Certificate previously issued. The aggregate price of this offering to the public will not exceed $350,200,000 principal amount of Securities. The aggregate price of Certificates offered by this prospectus will not exceed $350,000,000. The amount of Certificates sold at a particular interest rate and maturity date and the proceeds we receive can vary. SECURITIES TO BE OFFERED: Agway is offering Series HM Preferred Stock and Membership Common Stock. See "Description of the Agway Securities." AFC is offering, directly and through an interest reinvestment option, several types of Certificates. See "Description of the AFC Certificates." The Certificates that may be purchased only Agway members are referred to herein as the "Member Certificates." All other Certificates are referred to as "General Certificates." DIVIDENDS: The holders of Series HM Preferred Stock are entitled to receive non-cumulative annual dividends when and if declared by the Board of Directors. The holders of Membership Common Stock are entitled to receive non-cumulative annual dividends when and if declared by the Board of Directors. The dividends on member Common Stock may not exceed 8% per year. The AFC Certificates are entitled to receive interest, but not dividends, as described below. INTEREST RATE: Interest on the Certificates is payable at an annual rate equal to the greater of: (1) the applicable fixed rate of interest stated on the cover page of this prospectus for a particular maturity date; or (2) the variable "Treasury Bill Rate" as described under the section "Description of AFC Securities" on page 16 of this prospectus. Given the current spread between treasury bill rates and the current interest rate of the Certificates, it is unlikely that the Treasury Bill Rate will be applicable in the near future. In addition, it is not possible at this time to determine whether the Treasury Bill Rate will be applicable at any time prior to maturity. INTEREST PAYMENT DATE: We will pay interest on the Certificates semiannually in arrears on January 1 and July 1 of each year. We will also pay accrued interest on the maturity date. MATURITY DATE: The Series HM Preferred Stock and the Membership Common Stock have no "maturity date." The Certificates will mature on the date stated on the cover page of the prospectus that corresponds to the applicable minimum fixed rate of interest of the Certificates you are buying. Each Certificate will accrue interest from the original issue date. ISSUE DATE: The issue date will be set forth on your Certificate and will be no later than the day on which we receive your application and check. OPTIONAL REDEMPTION: We may redeem all or a part of the Securities at any time prior to maturity. The redemption price we will pay will be the principal amount of the relevant Security, together with accrued but unpaid interest, or declared but unpaid dividends, as applicable. Unless we have called a Security for redemption, we are not obligated to repurchase any Security presented to us for repurchase. However, we may, at our option (but subject to certain restrictions under our primary loan document), repurchase such Securities. INTEREST REINVESTMENT OPTION: You may increase the principal of a Certificate by electing to have interest payments added to the principal of the Certificate. If you elect the reinvestment option, you will receive a statement from us indicating the amounts added to the principal of your Certificate. You should bear in mind that you will be considered to have received the interest for tax purposes. RANKING: The Certificates are unsecured. They will rank equally with all our unsecured debt obligations and are subordinate to all of our Senior Debt. We define Senior Debt generally as the principal and interest we have to pay on money we have borrowed from (or guaranteed) to banks, trust companies, insurance companies and other financial institutions and lenders. For more details, see "Description of the AFC Certificates - Subordination Provisions" on page 22 of this prospectus. Because the Certificates are subordinate to Senior Debt, if our assets are distributed as a result of a bankruptcy or total liquidation or reorganization, the holders of all Senior Debt will be entitled to receive payment in full before you are entitled to receive any payment due under your Certificate. In addition, in a bankruptcy, liquidation or reorganization, Series HM Preferred Stock would rank behind Senior Debt, the Certificates and certain outstanding classes of preferred stock, and Membership Common Stock would rank behind the Series HM Preferred Stock. In those circumstance, the rights of both the Series HM Preferred Stock and the Membership Common Stock would be limited to their $25 par value per share. As of March 24, 2001, we had $84,886,143 of Senior Debt outstanding. OWNERSHIP: You may purchase Membership Common Stock only if you are entitled to be an Agway member. You may purchase Series HM Preferred Stock only if you are a former Agway member. You may purchase Member Certificates only if you are a current or former Agway member. If you are not an Agway member, you may purchase the General Certificates. TRANSFER OR RESALE OF THE SECURITIES: There is currently no trading market for the Securities offered by this prospectus and we do not expect one to develop in the future. We do not intend to apply to list the Securities on any securities exchange or to include them in any automated quotation system. MANNER OF OFFERING: We are not using an underwriter to sell the Securities offered by this prospectus. Instead, we will offer them directly through direct mailings, Agway business locations, Agway dealers and through locations of certain of our affiliates. No one is entitled to receive any commission or discount in connection with the sale of Securities. USE OF PROCEEDS: We will use the proceeds from the sale of the Securities offered by this prospectus for general corporate purposes, which may include the repayment of debt, the financing of capital expenditures, and working capital. APPLICATION PROCESS: If you are interested in purchasing the Securities offered by this prospectus, you must forward a completed application and a check (personal, cashiers or certified) or money order payable to us in an amount equal to the principal amount of the securities to be purchased. You can obtain an application and prospectus by contacting us at: Agway Inc. PHONE: 1-800-253-6729 Securities Department FAX: 1-315-449-7451 P. O. Box 4761 E-MAIL: securities@agway.com Syracuse, NY 13221-4761 You may purchase Certificates only if you live in the states listed under the "Plan of Distribution" section on page 10 of this prospectus. We reserve the right to reject any application submitted to us. RISK FACTORS You should carefully consider the following risk factors, as well as the other information presented in this prospectus and in the documents incorporated by reference into this prospectus, in deciding whether to invest in the Securities. RISK FACTORS RELATING TO THE SECURITIES THE SECURITIES ARE NOT SECURED OBLIGATIONS AND ARE SUBORDINATE TO OUR OTHER DEBT The Securities offered in this prospectus are unsecured obligations and are subordinated to all of our "Senior Debt." See "Description of the Agway Securities" and "Description of the AFC Certificates." There are no specific assets that you can look to for repayment of the Securities. If our assets are distributed as a result of bankruptcy, liquidation or reorganization, the holders of all Senior Debt will receive payment in full before you receive any payment. As a result, we might not have enough assets after paying off our Senior Debt to pay you the amounts owed to you under the Securities. As of March 24, 2001, Senior Debt outstanding totaled $84,886,143. WE ARE SUBJECT TO CERTAIN RESTRICTIONS WHICH MAY ADVERSELY AFFECT YOU. We currently borrow money under a senior debt credit agreement (the "Credit Agreement"). The Credit Agreement has a number of financial covenants which restrict our capital spending and require us to maintain minimum levels of earnings before interest, taxes, depreciation, and amortization (EBITDA), minimum ratios of EBITDA to fixed charges and interest on senior debt, and a minimum outstanding balance of preferred stock, subordinated debt, and certain debt of a subsidiary. That minimum balance requirement ranges from $440,000,000 to $450,000,000 throughout the year. (We refer to the minimum amount of capital we must maintain as the "Minimum Capital.") Other conditions of the Credit Agreement prevent us, in certain circumstances, from using funds we borrow under the Credit Agreement to pay interest or dividends on, or repurchase or repay principal of, AFC's subordinated debt or Agway's preferred stock. To avoid these use restrictions, the Credit Agreement requires us to have a minimum excess borrowing capacity under that agreement of at least $20,000,000 more than the loan amount outstanding if we are not in default under the Credit Agreement. If we are in default under the Credit Agreement, to avoid these use restrictions, the minimum excess borrowing capacity we must maintain increases to $25,000,000 more than the loan amount outstanding. Further, if we are in default under the Credit Agreement, we are subject to these use restrictions if: 1. we default on our payment of principal, interest or other amounts due to the lenders under the Credit Agreement; 2. we fail to maintain the cash management procedures we agree to with the lenders under the Credit Agreement; 3. we do not maintain the Minimum Capital balance of $440,000,000 to $450,000,000; or 4. the agent under the Credit Agreement provides us with a written notice that such payments are no longer permitted. These conditions reduce the practical availability under the Credit Agreement from $175,000,000 to $150,000,000. The Credit Agreement was designed in part to allow us to continue our past practice of repurchasing, at face value, certain subordinated debt and preferred stock when presented to us for repurchase prior to maturity. However, while we currently intend to continue this historic practice, we are under no obligation to repurchase such debt prior to its maturity and preferred stock when presented to us, and we may stop or suspend this practice at any time or may be required to stop or suspend such practice if we do not continue to meet the conditions of the Credit Agreement, including those described above. RISK FACTORS THE ABILITY OF ADJUSTED NET MARGIN TO COVER FIXED CHARGES As detailed under the section "Ratio of Earnings to Fixed Charges and Preferred Stock Combined" on page 12 of this registration statement, our adjusted net margin was inadequate to cover our fixed charges for the year ended June 1997 and for the nine months ended March 2001 for the Company, and for the nine months ended March 2001 for the Company and its consolidated subsidiaries. Our ability to cover our fixed charges with adjusted net margins for interim periods is significantly impacted by the seasonality of our business operations, since historically the majority of our earnings occur in our fiscal third and fourth quarters. THERE ARE LIMITATIONS ON TRANSFERRING THE SECURITIES. Generally speaking, you may not transfer the Securities, except in certain very limited circumstances. You may transfer the Series HM Preferred Stock and the Membership Common Stock only to Agway, unless we endorse our consent on your certificate representing that stock. Even if we provide you with our consent, under our By-laws, we will permit transfers of such stock only to persons who were Agway members. You may not transfer the Member Certificates, except by will or operation of law, which means a transfer pursuant to a will or a similar legal instrument or requirement. You may freely transfer the General Certificates. See "Description of AFC Securities - Limitations on Ownership and Transfer" on page 18. THERE IS NO PUBLIC MARKET FOR THE SECURITIES. There is no market for the Securities offered by this prospectus, we do not intend to create or encourage a trading mechanism for these Securities, and it is highly unlikely that any secondary trading market will develop. We do not intend to apply for listing of the Securities offered by this prospectus on any securities exchange or to include them in any automated quotation system. With respect to Securities that may be transferred, their value will be affected by a number of factors independent of our creditworthiness, including: o the level and direction of interest rates; o the remaining period to maturity of the Certificates; o our right to redeem the Securities; o our right to issue Certificates at interest rates higher than the rates at which the Certificates are currently offered; o the aggregate principal amount of the Securities outstanding and the terms and availability of comparable investments. In addition, the relative value of the Certificates compared to other debt instruments you could purchase from other issuers may be affected by numerous other interrelated factors, including factors that affect the U.S. corporate debt market generally and us specifically. We can't assure you that, if your Certificates are redeemed or mature, you will be able to reinvest the proceeds in comparable securities at an interest rate as high as that of the Certificates. MARKET PRICE OF AND DIVIDENDS ON AGWAY'S EQUITY. Owning Membership Common Stock and Series HM Preferred Stock is different than owning common stock and preferred stock ownership in a typical business corporation. The Membership Common Stock may be purchased only by people who are entitled to be Agway members. The only people who can be Agway members are farmers and cooperative organizations of farmers who purchase farm supplies or services or market farm products through Agway. Series HM Preferred Stock can only be purchased by former Agway members. Because Agway is an agricultural cooperative, the main benefit of owning Membership Common Stock is that it proves that you are an Agway member (or, in the case of Series HM Preferred Stock, a former member) and are entitled to certain benefits. Although owning Member Common Stock and Series HM Preferred Stock will provide you with an equity interest in Agway, your equity claim to the assets of Agway is measured by, and restricted to, the $25 par value of your share, plus dividends declared and unpaid, if any, for the current year. See "Description of Agway Inc. Securities - Membership Common Stock" and "Honorary Member Preferred Stock, Series HM." RISK FACTORS WE ARE NOT OFFERING THE SECURITIES THROUGH AN UNDERWRITER. This is not an underwritten securities offering. No underwriter, such as an investment bank, has undertaken a review of our corporate records, evaluated our financial condition, or evaluated the terms of the Securities and this offering, including our ability to meet our payment obligations on the Securities. There is no minimum amount of Securities which must be sold. If a significant portion of the Securities offered are not sold, payments due to you could be impacted by the restrictions under the Credit Agreement described above. OUR BUSINESS IS DIRECTLY AFFECTED BY THE AGRICULTURAL ECONOMY. Our financial condition can be directly affected by factors affecting the agricultural economy, since these factors impact the demand for our products and the ability of our customers to make payments for products already purchased through credit extended by us. These factors may include: o changes in the level of government expenditures on agricultural programs that may adversely affect the level of income of our customers. o weather-related conditions that negatively impact the agricultural productivity and income of our customers. o the relationship of demand relative to supply of agricultural commodities produced by our customers. o major international events, such as the downturn in foreign economies, which can affect such things as the price of commodities we use in our operations as well as the general level of interest rates. OUR BUSINESS MAY BE AFFECTED BY COMMODITY PRICES. In the normal course of our operations, we have exposure to market risk from price fluctuations associated with commodities such as corn, soy complex, oats, confection and bakery kernel sunflower seeds, gasoline, distillate and propane. These price fluctuations impact commodity inventories, product gross margins, and anticipated transactions in our Agriculture, Energy and Country Products Group businesses. We manage the risk of market price fluctuations of some of these commodities by using commodity derivative instruments. Commodity derivative instruments include exchange-traded futures and option contracts and, in limited circumstances, over-the-counter contracts with third parties. We have policies that specify what we can use commodity derivative instruments for and set limits on the maturity of contracts we enter into and the level of exposure to market price fluctuations that we are trying to protect ourselves against (or "hedge"). However, because the commodities markets are very volatile, our gains or losses on these contracts might not fully offset the corresponding change in the prices of the underlying commodity, which could lower our earnings. RISK FACTORS WE ARE SUBJECT TO GOVERNMENTAL REGULATIONS. We are subject to various laws and governmental regulations concerning environmental matters. We expect to be required to expend funds to participate in the remediation of certain sites, including sites where we have been designated by the Environmental Protection Agency (EPA) as a potentially responsible party (PRP) under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) and at sites with underground fuel storage tanks. We will also incur other expenses associated with environmental compliance. We are designated as a PRP under CERCLA or as a third party by the original PRPs in several Superfund sites. The liability under CERCLA is joint and several, meaning that we could be required to pay in excess of our pro rata share of remediation costs. As a result of the use and handling of hazardous substances in our normal operations, an unexpected environmental event or significant changes in environmental compliance requirements could have a material adverse impact on our financial condition and results of operations. We continually monitor our operations with respect to potential environmental issues, including changes in legal requirements and remediation technologies. Our recorded liability in our financial statements reflects those specific issues where we think remediation activities are likely and where we can estimate the cost of remediation. Estimating the extent of our responsibility for a particular site and the method and ultimate cost of remediation of that site require that we make a number of assumptions. As a result, the ultimate outcome of remediation of a site may differ from our estimates. However, we believe that our past experience provides us with a reasonable basis for estimating our liability. When we receive additional information we adjust our estimates as necessary. While we do not anticipate that any such adjustment will be material to our financial statements, the result of ongoing and/or future environmental studies or other factors could alter this expectation and require that we record additional liabilities. We currently can't determine whether we will incur additional liabilities in the future or, if we do, the extent or amount of such additional liabilities. OUR BUSINESS HAS A CONCENTRATION OF CREDIT RISK. Because we are an agricultural cooperative doing business primarily in the Northeast, most of our accounts and lease receivables due from farmer-members are concentrated in that region. This concentration of customers may affect our overall credit risk because repayment of these receivables may be affected by inherent risks associated with: o The economic environment of the region. o The impact of regional weather on the condition of crops. o The impact on the agricultural economy, as described above. CHANGES IN INTEREST RATES MAY AFFECT OUR PROFITABILITY. We are impacted by the general level of interest rates. However, because interest rate changes have a significant impact on Telmark, our leasing business, Telmark tries to limit the effects of changes in interest rates by matching as closely as possible, on an ongoing basis, the maturity and cost of the funds it borrows to finance its leasing activities with the maturity and repricing characteristics of its lease portfolio. A rise in interest rates would increase the cost of funds it borrows to finance its leasing business and could lower the value of the outstanding leases in the secondary market. In addition, a rise in interest rates, to the extent that they would increase the cost of financing leases, would increase the cost of leases to potential customers and could decrease the demand for leases. WE OPERATE IN A COMPETITIVE MARKET. We compete against large national and regional manufacturers, lease financing companies, insurance companies and suppliers, and small independent businesses that operate in the same territory as we do for the sales of our various products. Our competitors may have better access to capital, may offer a wider variety of products or have greater resources than we do. If we were unable to compete successfully with these competitors, it would most likely result in the loss of customers which could have a significant negative impact on our financial condition and results of operation. SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS We make statements in this prospectus or in the documents incorporated by reference into the prospectus that may constitute forward-looking statements within the meaning of a federal law, the Private Securities Litigation Reform Act of 1995. Sometimes these statements will contain words such as "believe," "expect," "intend," "plan" and other similar words. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Some of the factors that may cause such material differences are set forth under the caption "Risk Factors." USE OF PROCEEDS We cannot assure you that we will sell all or any of the Securities. There is no minimum amount of Securities that must be sold as a condition to the sale of any of the Securities. The net proceeds of the sale of the Securities offered by this prospectus will not be more than $350,200,000. We intend to use net proceeds from the sale of the Securities for general corporate purposes, which may include repayment of debt, the financing of capital expenditures, and working capital. We expect to incur approximately $275,000 in expenses in connection with this Securities offering. Those expenses include legal fees, state and federal registration fees, printing, trustee fees, accounting fees and other miscellaneous expenses. PLAN OF DISTRIBUTION We may sell the Securities to: o our customers; o our employees and former employees; o Agway members; o non-member patrons of Agway; and o the general public. We may solicit the sale of the Securities through direct mailings. We may also make applications and prospectuses available through Agway business locations, Agway dealers and locations of certain affiliates of Agway. You can obtain applications to purchase the Securities and this prospectus by contacting us at: Agway Inc. PHONE: 1-800-253-6729 Securities Department FAX: 1-315-449-7451 P.O. Box 4761 E-MAIL: securities@agway.com Syracuse, NY 13221-4761 These Securities are available only in the states of Connecticut, Delaware, Florida, Maine, Maryland, Massachusetts, New York, New Hampshire, New Jersey, Ohio, Pennsylvania, Rhode Island, and Vermont. Our employees who are involved in offering the Securities have other principal duties in connection with our business, and are not otherwise engaged in the sale of securities. We will not employ any sales people to solicit the sales of the Securities, and we will not pay, nor allow, any commission or discount to be paid or allowed to anyone in connection with the sale of the Securities. The individual Agway employees who participate in the sale of the 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. SELECTED FINANCIAL DATA OF AGWAY The following Selected Financial Data of Agway and Consolidated Subsidiaries (in thousands of dollars, except per share amounts) has been derived from consolidated financial statements audited by PricewaterhouseCoopers LLP, whose report for the three years ended June 2000 is included in the Agway Annual Report on Form 10-K, and should be read in conjunction with Agway's full consolidated financial statements and notes thereto.
(In Thousands of Dollars Except Per Share Amounts) ------------------------------------------------------------------------------------- Years Ended June 30 ------------------------------------------------------------------------------------- 2000 1999 1998 1997 1996 ------------- ------------- -------------- ------------- -------------- Net sales and revenues $ 1,426,886 $ 1,221,466 $ 1,299,797 $ 1,391,986 $ 1,371,525 Earnings from continuing operations (1) $ 6,152 $ 12,941 $ 16,016 $ 8,499 $ 8,858 Net earnings (loss) (2)(3) $ (9,377) $ 1,795 $ 41,145 $ 10,670 $ 12,662 Total assets $ 1,572,659 $ 1,437,172 $ 1,380,891 $ 1,261,763 $ 1,216,435 Total long-term debt $ 418,549 $ 371,972 $ 352,188 $ 329,969 $ 291,528 Total subordinated debt $ 474,874 $ 486,303 $ 462,196 $ 438,127 $ 414,927 Cash dividends per share of common stock $ 1.50 $ 1.50 $ 1.50 $ 1.50 $ 1.50
(1) The data reflects a credit before taxes from business restructuring of $1,943 in 1996. (2) Effective July 1, 1997, Agway changed its method of determining the market-related value of its plan assets under Statement of Financial Accounting Standards (SFAS) No. 87, "Accounting for Pensions." A cumulative effect adjustment, net of tax, of $28,956 increased net earnings in 1998. (3) The data reflects after-tax loss on disposal and loss from discontinued retail operations of $15,529, $11,146 and $3,827 for 2000, 1999 and 1998, respectively. The 1997 and 1996 data reflects after-tax earnings of $2,172 and $2,289, respectively,from discontinued retail operations. The 1996 data reflects an after-tax gain on sale of H. P. Hood, Inc. (a former food subsidiary) of $1,515, net of operating losses until the time of sale. RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED DIVIDENDS COMBINED For purposes of this ratio, earnings from continuing operations represent earnings 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.
March June ----------- ---------------------------------------------------- 2001 2000 1999 1998 1997 1996 ----------- --------- --------- -------- -------- --------- Ratio of adjusted net earnings to fixed charges: Agway and Consolidated Subsidiaries * 1.2 1.3 1.5 1.2 1.3 =========== ========= ========= ======== ======== ========= Agway (1) * 1.1 1.8 2.8 * 2.7 =========== ========= ========= ======== ======== ========= Ratio of adjusted margins to fixed charges and preferred dividends combined: Agway and Consolidated Subsidiaries * 1.1 1.2 1.3 1.1 1.1 =========== ========= ========= ======== ======== ========= Agway (1) * 5.5 2.0 2.2 * 1.8 =========== ========= ========= ======== ======== =========
*Adjusted net margin was inadequate to cover fixed charges or fixed charges and preferred dividends combined. See below for amount deficient.
March June ----------- ----------------------------------------------------- 2001 2000 1999 1998 1997 1996 ----------- --------- --------- -------- -------- --------- Deficiency of adjusted net margins to total fixed charges: Agway and Consolidated Subsidiaries $ (1,206) N/D N/D N/D N/D N/D =========== ========= ========= ======== ========= ========= Agway (1) $ (1,270) N/D N/D N/D (2,541) N/D =========== ========= ========= ======== ========= ========= Deficiency of adjusted net margins to total fixed charges and preferred dividends combined: Agway and Consolidated Subsidiaries $ (1,727) N/D N/D N/D N/D N/D =========== ========= ========= ========= ========= ========= Agway (1) $ (1,363) N/D N/D N/D (628) N/D =========== ========= ========= ========= ========= ==========
(1) Parent-company ratios are presented since all of AFC's debt is guaranteed by Agway. This guarantee is full and unconditional, and joint and several. However, see "Risk Factors" for a description of the merger of AFC and other Agway subsidiaries into Agway that was approved by the Agway Board of Directors. N/D No deficiency. DESCRIPTION OF THE AGWAY SECURITIES The Agway Securities authorized to be issued through this prospectus and the current amounts of Securities of the same class outstanding are as follows:
Outstanding at March 24, 2001 ----------------------------- Authorized Aggregate # of Shares Type/Description Par Value Shares Par Value - ----------- ---------------- --------- ------ --------- 80,000 Honorary Member Preferred Stock (HM) $25 2,392 $ 59,800 300,000 Membership Common Stock $25 97,942 $ 2,448,550
HONORARY MEMBER PREFERRED STOCK, SERIES HM The following summary of the Series HM Preferred Stock is subject in all respects to the provisions of the amended Certificate of Incorporation and By-Laws of Agway. The Certificate of Incorporation and By-Laws of Agway areincorporated by reference as exhibits to this Registration Statement. All exhibits incorporated by reference into this prospectus may be obtained from the SEC or from Agway in the same manner as the documents described under "Where You Can Find More Information" on page 25 of this prospectus. DIVIDENDS If you own Series HM Preferred Stock, you may receive non-cumulative annual dividends when and if declared by the Board of Directors. No indenture or other agreement other than the Credit Agreement restricts the payment of dividends on these shares. In certain circumstances under our Credit Agreement, as described under "Risk Factors" on Page 6 of this prospectus, we could be effectively restricted from paying dividends on these shares. VOTING RIGHTS The holders of Series HM Preferred Stock have no voting rights. LIQUIDATION RIGHTS If our assets are distributed in a liquidation or dissolution, the holders of any class or series of preferred stock or common stock are entitled to a distribution of assets only after all debts of Agway have been paid. 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 of the Series HM Preferred Stock ($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 common stock 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 debt. DESCRIPTION OF THE AGWAY SECURITIES OWNERSHIP AND TRANSFER You may buy Series HM Preferred Stock only if you previously owned Agway Membership Common Stock (that is, only if you are a former Agway member). You may not own more than one share of Series HM Preferred Stock. Agway, acting as transfer agent, will prevent two shares from being issued to you or to any other person. We will not accept a subscription for Series HM Preferred Stock unless you were an Agway member. You may not transfer Series HM Preferred Stock to anyone other than us, unless we endorse our written consent on your stock certificate. Pursuant to our By-laws, we will permit transfer of Series HM Preferred Stock only to persons who were Agway members and will limit ownership of Series HM Preferred Stock to one share per person. REDEMPTION PROVISIONS Our Board of Directors can decide to redeem the Series HM Preferred Stock at any time. If we redeem your HM Preferred Stock, we will pay you par value ($25 per share) plus any and all accrued dividends as of the redemption date. In the case of a partial redemption, shares will be redeemed in order of issuance. REPURCHASE PRACTICE We do not guarantee that we will repurchase your Series HM Preferred Stock, whether by calling your share for redemption or at your request. While we intend to continue our practice of repurchasing, at par value, shares of Series HM Preferred Stock when presented for repurchase, we are under no obligation to do so and may stop or suspend this practice at any time. In addition, under terms of the Credit Agreement, we may be required to stop or suspend this practice in the circumstances described under "Risk Factors" on page 6 of this prospectus. MEMBERSHIP COMMON STOCK The following summary of the Membership Common Stock is subject in all respects to the provisions of the amended Certificate of Incorporation and By-Laws of Agway. The Certificate of Incorporation and By-Laws of Agway are incorporated by reference as exhibits to the Registration Statement that includes this prospectus. You may obtain the exhibits incorporated by reference into this prospectus from us or from the SEC in the same manner as the documents described under "Where You Can Find More Information" on page 25 of this prospectus. DIVIDENDS If you buy Membership Common Stock, you may receive non-cumulative annual dividends when and if declared by the Board of Directors. However, dividends may not exceed 8% per year. There are no restrictions in any indenture or other agreement relating to the payment of dividends on Membership Common Stock. VOTING RIGHTS The holders of Membership Common Stock carry the exclusive voting rights of Agway and are entitled to one vote for each share of stock. LIQUIDATION RIGHTS If our assets are distributed in a liquidation or dissolution, the holders of any class or series of preferred stock or common stock are entitled to a distribution of assets only after all debts of Agway have been paid. If assets remain after all debts are paid, the holders of the Membership Common Stock would be entitled, subject to the liquidation rights of the Series A Preferred Stock, Series B Preferred Stock, Series B-1 Preferred Stock, Series C Preferred Stock, and Series HM Preferred Stock, to receive only the par value of the Membership Common Stock ($25 per share) plus accrued dividends, if any. Any net assets of Agway remaining after payment of the par value and accrued dividends on Membership Common Stock would be distributed to the members and/or patrons of Agway to whom its retained margin would be credited. DESCRIPTION OF THE AGWAY SECURITIES 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 debt. OWNERSHIP AND TRANSFER You may buy Membership Common Stock only if you are entitled to be an Agway member. You may not own more than one share of Membership Common Stock, and Agway, acting as transfer agent, will prevent two shares from being issued to you or to any other person, either through new application or a transfer. We will not accept your subscription for Membership Common Stock unless you are qualified for membership in Agway, as determined by applying the criteria set forth in our By-laws. Agway members are farmers or cooperative organizations of farmers who hold one share of Membership Common Stock and who purchase farm supplies or farm services or market farm products through us or our authorized dealers. You may not transfer your Membership Common Stock other than with our written consent. Pursuant to our By-Laws, we 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 he or she has ceased to be a farmer, or because the member has done no business with us since the beginning of its preceding fiscal year, the stock held by the member may be called for repurchase at the par value thereof, plus accrued dividends, if any. We intend to call such stock for repurchase in those circumstances. Stock not being called for repurchase would entitle the holder of the stock to the continued rights and privileges of membership. REDEMPTION PROVISIONS Our Board of Directors can decide to redeem the Membership Common Stock at any time. Also, we can redeem your Membership Common Stock if any holder ceases to be an Agway member. If your Member Common Stock is redeemed, we will pay you par value ($25 per share) plus any and all accrued dividends as of the redemption date. In the case of a partial redemption, shares will be redeemed in order of issuance. REPURCHASE PRACTICE We do not guarantee that we will repurchase your share of Member Common Stock, whether by calling it for redemption or at your request. While we intend to continue our present practice of repurchasing, at par value, shares of Membership Common Stock when presented to us for repurchase, we are under no obligation to do so and may stop or suspend this practice at any time. In addition, under terms of the Credit Agreement, we may be required to stop or suspend this practice in the circumstances described under "Risk Factors" on page 6 of this prospectus. DESCRIPTION OF THE AFC CERTIFICATES GENERAL Agway guarantees the Certificates being offered by AFC in this prospectus. Agway's guarantee is full and unconditional, and joint and several, which means that both Agway and AFC are liable for payment of the obligations under the Certificates. On April 24, 2001, the Agway Board of Directors authorized the mergers of AFC and AHI into Agway. Those mergers are expected to be effective July 1, 2001. On the effective date, Agway will assume all the liabilities of AFC and AHI, including all obligations of AFC relating to the Certificates and will become the issuer of the Securities offered hereunder. All assets and liabilities of AFC and AHI, including AHI's subsidiaries, will become assets and liabilities of Agway. There will be no material change in the consolidated financial position or results of operations of Agway Inc. as a result of these mergers. AFC is authorized to issue the Certificates pursuant to the indenture dated as of August 23, 1989, between AFC and Key Bank of New York, as Trustee at that time, as supplemented by the supplemental indenture dated August 24, 1992 (the "Indenture"). Since that time, Mellon Bank, F.S.B. assumed Trustee responsibilities from Key Bank of New York pursuant to an agreement and then Chase Manhattan Bank assumed Trustee responsibilities from Mellon Bank, F.S.B. pursuant to the purchase of the corporate trust business of Mellon Bank. The following description is a summary of material provisions of the Indenture. This description does not restate the Indenture in its entirety. We urge you to read the Indenture because it, and not this description, defines your rights as holder of the Certificates. The Indenture and supplemental indenture are listed as exhibits to the Registration Statement that includes this prospectus. We pay interest on the Certificates semiannually in arrears on January 1 and July 1 of each year. We also pay accrued interest at maturity. The interest rates to be paid on the Certificates is listed on the front page of this prospectus. Principal and interest on the Certificates will be payable at the office of the transfer agent, Agway, in DeWitt, New York. If you choose the Interest Reinvestment Option, additional amounts will be added to the principal of your Certificate. The 7.5% Certificates and 8.0% Member Certificates will be issued in registered form only in denominations of $100 and multiples of $100. The 7.75% Certificates and 8.25% Member Certificates will be issued in registered form only in denominations of $5,000 and multiples of $5,000. The 8.5% and 8.75% Certificates (not eligible for the Company's normal repurchase practice) will be issued in registered form only in denominations of $2,000 and multiples of $2,000. The Certificates are unsecured obligations of AFC, and payments under the Certificates are subordinated to other debt (except debts similarly subordinated), as described in more detail below. The indentures do not prevent us from incurring additional debt or restrict the interest rate or other terms of such other debt. INTEREST The interest rates on the Certificates (determined on the basis of a 364-day year or 52 weeks, notwithstanding the terms of the Certificates in the indenture) offered by this prospectus are shown on the cover page and are at an annual rate equal to the greater of: 1. the stated fixed rate percentage per annum; or 2. a variable "Treasury Bill Rate," as defined below. The stated fixed rate of interest is determined according to the stated rates on the cover page of this prospectus, depending on the maturity date of your Certificate. DESCRIPTION OF AFC SECURITIES INTEREST (CONTINUED) The variable "Treasury Bill Rate" for each semi-annual 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 following "Interest Determination Periods": o June 1 to November 30, inclusive, for the January 1 interest payment date; o December 1 to May 31, inclusive, for the July 1 interest payment date; o June 1 to September 30 for interest payable on the maturity date. 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. o 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. o The Federal Reserve Board currently publishes such rates weekly in its Statistical Release H.15 (519). o Unlike the interest on U.S. Treasury bills, interest on the Certificates will not be exempt from state and local income taxation. If the Federal Reserve Board does not publish the weekly per annum auction average discount rate for a particular week, we will 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. We will round the Treasury Bill Rate to the nearest one hundredth of a percentage point. If we determine in good faith that for any reason a Treasury Bill Rate is not published for a particular week in an Interest Determination Period for a particular interest payment date or the maturity date, as applicable, we will substitute an "Alternate Rate" for the Treasury Bill Rate for that 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 which we have selected, for those weeks in the Interest Determination Period for which no rate is published as described above. We will round the Alternate Rate to the nearest one hundredth of a percentage point. We will pay the interest rate stated on the Certificate if we determine in good faith that neither the Treasury Bill Rate nor Alternate Rate can be computed for the following periods: o June 1 to November 30, inclusive, for the January 1 interest payment date, o December 1 to May 31, inclusive, for the July 1 interest payment date. o June 1 to September 30 for interest payable on the maturity date. The six-month U.S. Treasury bill rate has fluctuated widely during the periods shown in the chart on page 19. This rate can be expected to fluctuate in the future. Whenever the Treasury Bill Rate exceeds the fixed rate on the Certificates, these fluctuations will cause the interest rate we will pay on the Certificates to exceed the fixed rate. See "Risk Factors - There is no Public Market for the Securities" section of this prospectus. Given the current spread between the Treasury Bill Rate and the interest rate of the Certificates, it is unlikely that the Treasury Bill Rate will be applicable in the near future. In addition, it is not possible at this time to determine whether the Treasury Bill Rate will be applicable at any time prior to maturity. DESCRIPTION OF AFC SECURITIES INTEREST RATE AND/OR MATURITY DATE CHANGES We may, from time to time, before the offering of the Certificates is completed, change the rate of interest or maturity date of Certificates to be offered by filing a supplement with the SEC. We will attach the applicable supplement, if any, to this prospectus. Any change in the interest rate or maturity date offered will not affect the rate of interest on or maturity of any Certificates previously issued. LIMITATIONS ON OWNERSHIP AND TRANSFER The Member Certificates may be purchased only by current or former members of Agway. The General Certificates may be purchased by the public. Agway, as transfer agent, prevents Member Certificates from being issued or reissued to anyone other than holders of the Membership Common and Honorary Member Preferred Stock. DESCRIPTION OF AFC SECURITIES Treasury Bill Rate The following chart shows for the periods indicated: (1) the Treasury Bill Rate, (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," and (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." Average High Low 1/90 7.68 8.08 7.35 7/90 7.70 8.03 7.30 1/91 7.35 7.75 6.96 7/91 6.05 6.96 5.61 1/92 5.32 5.97 4.50 7/92 3.97 4.39 3.71 1/93 3.28 3.90 2.78 7/93 3.13 3.46 2.95 1/94 3.16 3.30 3.02 7/94 3.71 4.81 3.14 1/95 5.04 5.85 4.53 7/95 6.01 6.42 5.65 1/96 5.37 5.61 5.22 7/96 5.01 5.25 4.71 1/97 5.20 5.38 5.07 7/97 5.18 5.45 4.97 1/98 5.13 5.26 5.01 7/98 5.11 5.30 4.91 1/99 4.76 5.17 4.09 7/99 4.43 4.63 4.28 1/00 4.86 5.22 4.49 7/00 5.71 6.25 5.24 1/01 6.05 6.41 5.92 DESCRIPTION OF AFC SECURITIES REDEMPTION PROVISIONS So long as we give you at least 30 days written notice, we may, at our option, redeem all, or some of the Certificates, held by you. The price we will pay you will be the principal amount, plus accrued but unpaid interest at the stated rate, from the last interest payment date to the date fixed for redemption. If the Certificates are redeemed by lot, all Certificates not redeemed will be given equal treatment in any subsequent redemption. REPURCHASE PRACTICE We are not obligated to repurchase Certificates. It is AFC's current practice to repurchase (at face value, plus interest accrued at the stated rate) the Certificates of any holder when presented for repurchase. AFC intends to continue that practice in the future with respect to all of the Certificates offered in this prospectus, except the 8.75% and 8.50% Certificates, which AFC does not intend to repurchase. However, AFC is under no obligation to repurchase the Certificates when presented, and AFC may stop or suspend this repurchase practice at any time. In addition, the terms and conditions of the Credit Agreement, as described in the "Risk Factors" section, may cause AFC to limit or cease its past practices with regard to the repurchase of subordinated debt. INTEREST REINVESTMENT OPTION When you complete an application to purchase Certificates, or at any time after that date, you may elect to have all the future interest paid on the Certificates reinvested automatically into the Certificates. If you elect to have interest reinvested automatically, then we will add the interest due on each semiannual payment date to the principal amount of the Certificate on which interest was paid. Your interest that is reinvested will earn interest on the increased principal amount on the same basis as your original principal amount. Any interest that you reinvest will be subject to federal and state income tax as if it had been received by you on the date it was reinvested. You may revoke your election for future interest payments at any time by providing us with written notice. Your election will be effective on the date we receive it. DESCRIPTION OF AFC SECURITIES 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:
- -------------------------------- ---------------------------- --------------------------- ---------------------------- Stated Rate of Interest Due October 31, Stated Rate of Interest Due October 31, - -------------------------------- ---------------------------- --------------------------- ---------------------------- 4.5% 2001 7.25% 2006 5.0% 2001 7.75% 2006 6.5% 2001 7.50% 2007 7.0% 2001 8.00% 2007 7.0% 2002 6.0% 2008 7.5% 2002 6.5% 2008 6.75% 2003 8.5% 2008 7.25% 2003 9.0% 2008 8.0% 2004 5.75% 2013 8.5% 2004 6.25% 2013 7.5% 2005 6.75% 2013 8.0% 2005 7.25% 2013 8.5% 2005 5.75% 2014 5.5% 2006 6.25% 2014 6.0% 2006 7.25% 2014 6.25% 2006 7.75% 2014 6.75% 2006 8.50% 2015 9.00% 2015 - -------------------------------- ---------------------------- --------------------------- ---------------------------- Certificates having minimum face amounts of $5,000: - -------------------------------- ---------------------------- --------------------------- ---------------------------- Stated Rate of Interest Due October 31, Stated Rate of Interest Due October 31, - -------------------------------- ---------------------------- --------------------------- ---------------------------- 4.75% 2001 8.0% 2006 5.25% 2001 7.75% 2007 6.75% 2001 8.25% 2007 7.25% 2001 6.0% 2013 8.5% 2001 6.5% 2013 9.0% 2001 7.0% 2013 5.5% 2002 7.5% 2013 6.0% 2002 6.0% 2014 7.0% 2003 6.5% 2014 7.5% 2003 7.5% 2014 6.5% 2006 8.0% 2014 7.0% 2006 8.75% 2015 7.5% 2006 9.25% 2015
DESCRIPTION OF AFC SECURITIES Certificates having minimum face amounts of $2,000: ----------------------- ---------------------- Stated Rate of Interest Due October 31, ----------------------- ---------------------- 8.25% 2001 7.5% 2002 8.0% 2002 8.5% 2003 6.75% 2004 7.75% 2004 8.25% 2004 9.50% 2004 7.0% 2006 8.0% 2006 7.0% 2008 8.75% 2008 9.75% 2009 ---------------------- ----------------------- SUBORDINATION PROVISIONS The payment of the principal and interest on the Certificates is subordinated in right of payment, to the extent required in the Indenture, to the amounts of principal and interest due on "Senior Debt." Senior Debt consists of the principal and interest that we must pay on money which we have borrowed from (or guaranteed to) the following: o banks, o trust companies, o insurance companies, and o other financial institutions and lenders, including dealers in commercial paper, charitable trusts, pension trusts, and other investing organizations. However, if the instrument creating or evidencing the indebtedness provides that such indebtedness is not superior or is subordinate in right of payment to the Certificates, it will not be considered Senior Debt. Senior Debt includes all of our interest-bearing debt presently outstanding other than our other outstanding Certificates. As of March 24, 2001, Senior Debt of $84,886,143 was outstanding. If we are liquidated, reorganized or dissolved, we will pay the holders of all Senior Debt in full before we pay you any amount. After we pay the Senior Debt in full, you may be entitled to participate in any distribution of our remaining assets. Due to the subordination of the outstanding Certificates to the Senior Debt, Senior Debt holders may receive more assets on a percentage basis, and holders of the outstanding Certificates may receive less assets on a percentage basis, than our other creditors. MODIFICATION OF INDENTURE The Indenture permits the Trustee and us to make non-material modifications and amendments to the Indenture without your consent. Consent is required to make the following modifications or amendments: (1) reduce the amount of outstanding Certificates required to amend the Indenture, or (2) terms of payment on any outstanding Certificates. DESCRIPTION OF AFC SECURITIES EVENTS OF DEFAULT AND WITHHOLDING OF NOTICE TO CERTIFICATE HOLDERS We will be in default under the Indenture if any of the following occur: (1) we fail for a period of 30 days to pay interest upon any of the outstanding Certificates when due; (2) we fail to pay principal of the outstanding Certificates when due and payable at maturity, upon redemption or otherwise; or (3) we fail to perform any other covenant which we have committed to in the Indenture for a period of 90 days after written notice by the Trustee or the holders of at least 25% in aggregate principal amount of the outstanding Certificates. Within 90 days after the default, the Trustee is required to give the outstanding Certificate holders notice of all defaults known to the Trustee. However, the Trustee does not have to give notice if we cure the default before the Trustee gives the notice. If we fail to pay the payment of principal or interest on any of the outstanding Certificates, the Trustee may withhold notice of our default, as long as the Trustee in good faith determines that withholding the notice is in the interest of the outstanding Certificate holders. When a default occurs, or during the continuation of a default, the Trustee or the holders of 25% in aggregate principal amount of the outstanding Certificates may declare the principal of all the outstanding Certificates and the interest accrued thereon due and payable. However, the holders of a majority of the aggregate principal amount of the outstanding Debentures may waive all defaults and rescind such declaration if we cure the default. Subject to the provisions of the indenture covering the Trustee's duties on any default or continuation of default, the Trustee has no obligation to exercise any of its rights or powers at the request, order or direction of any holders of outstanding Certificates, unless they shall have offered to the Trustee reasonable security or indemnity. Also, subject to such provisions of the indenture regarding the Trustee's right to reasonable security or indemnity, a majority of the holders of the aggregate principal amount of the 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 to pay any principal and interest on time, Agway has guaranteed that any such payment punctually is made when and as such payment becomes due and payable, whether at maturity, upon acceleration or mandatory redemption or otherwise. This guarantee is full and unconditional, and joint and several, which means that both Agway and AFC are obligated to make such payments. To the extent that Agway has guaranteed payments due under the Certificates, its failure to make payment under its guarantee would 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 of Notice to Certificate Holders." DESCRIPTION OF AFC SECURITIES THE TRUSTEE On November 24, 1997, The Chase Manhattan Bank bought the corporate trust business of Mellon Bank, F.S.B. and assumed the responsibilities of Trustee that were being performed by Mellon Bank at that time. Prior to the purchase, Mellon Bank had assumed Trustee responsibilities from Key Bank of New York pursuant to an Agreement of Resignation, Appointment and Acceptance dated September 3, 1996 by and among KeyCorp, Key Bank of New York, Agway Financial Corporation and Mellon Bank. Key Bank of New York was the Trustee under a supplemental indenture dated as of October 1, 1986, between Key Bank, Agway and AFC, which amends the indentures between the Key Bank and Agway dated as of September 1, 1976, September 1, 1978, September 1, 1985, and September 1, 1986. The debentures and certificates issued under the September 1, 1976, September 1, 1978, September 1, 1985, September 1, 1986, August 24, 1987, and August 23, 1988 indentures and the supplemental indenture dated August 24, 1992 rank equally (as to priority in liquidation or dissolution) with the certificates covered by the indenture dated August 23, 1989 and described in this prospectus. 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 We may authenticate the Certificates and have them delivered to you upon our written order without any further corporate action. SATISFACTION AND DISCHARGE OF INDENTURE The Indenture may be discharged upon payment or redemption of all outstanding Certificates or if we deposit sufficient funds with the Trustee to pay off or redeem all the outstanding Certificates. EVIDENCE AS TO COMPLIANCE WITH CONDITIONS AND COVENANTS We are required to provide to the Trustee certificates from our officers stating that we have complied with all promises and conditions under the Indenture. LEGAL OPINION Christopher W. Fox, Esq., our Legal Counsel, will issue an opinion to us about the legality of the Certificates. Mr. Fox is Senior Vice President, General Counsel and Secretary of Agway. EXPERTS The financial statements incorporated in this prospectus by reference to the annual report on Form 10-K for the years ended June 24, 2000 and June 26, 1999 have been so incorporated in reliance on the report of PricewaterhouseCoopers LLP, independent accountants, given on the authority of that firm as experts in auditing and accounting. WHERE YOU CAN FIND MORE INFORMATION We are a reporting company under the Securities Exchange Act of 1934, as amended, and file annual, quarterly and current reports and other information with the SEC. You may read and copy any document we file at the SEC's public reference rooms at 450 Fifth Street, N.W., Washington, D.C. 20549, Seven World Trade Center, New York, New York 10048 and 500 West Madison Street, Chicago, Illinois 60606. You can request copies of these documents by writing to the SEC and paying a fee for the copying cost. Please call the SEC at 1/800-SEC-0330 for more information about the public reference rooms. Our SEC filings are also available at the SEC's web site at "http://www.sec.gov." We have filed a registration statement and related exhibits with the SEC under the Securities Act of 1933, as amended. The registration statement contains additional information about us and the debt securities. You may inspect the registration statement and exhibits without charge at the office of the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549, and you may obtain copies from the SEC at prescribed rates. The SEC allows us to "incorporate by reference" information that we file with them, which means that we can disclose important information to you by referring you to those documents. The information incorporated by reference is an important part of this information. We incorporate by reference the documents listed below: o Annual Report on Form 10-K for the year ended June 30, 2000. o Quarterly Reports on Form 10-Q filed subsequent to the date of such Annual Report. o Current reports on Form 8-K filed subsequent to the date of such Annual Report on Form 10-K. We also incorporate by reference all documents filed by us subsequent to the date of this prospectus pursuant to Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended, for so long as this offering continues. You may also request a copy of these filings at no cost by writing or telephoning us at the address or telephone number listed under "Plan of Distribution" on page 10. This prospectus is part of a larger registration statement we file with the SEC. You should rely only on the information incorporated by reference or provided in this prospectus or any supplement. We have not authorized anyone else to provide you with different information. We are not making an offer of these securities in any state where the offer is not permitted. You should not assume that the information in this prospectus or any supplement is accurate as of any date other than the date on the front cover of these documents. AGWAY INC. AGWAY FINANCIAL CORPORATION [LOGO] PROSPECTUS Until _____, 2001, 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. PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION*: Registration Fee...................................... $ 92,453 Printing and Engraving................................ 30,000 Registration Service and Trustee Expense.............. 70,000 Accounting Fees and Expenses.......................... 7,000 "Blue Sky" Fees and Expenses.......................... 60,000 Mailing Costs ....................................... 10,000 Miscellaneous Expenses................................ 5,547 ---------- $ 275,000 ========== *Approximate ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS. Article 11 of Agway's By-laws filed by reference to Exhibit 3ii of this Registration Statement (Form S-3A), File No. 333-59808, dated June 8, 2001, and Section 6.4 of AFC's By-laws, filed by reference to Item 15 of Registration Statement on Form S-3, File No. 333-34781 dated September 2, 1997. Section 145 of the Delaware General Corporation Law permits a corporation to indemnify its officers and directors against liabilities as provided for in the By-Laws of Agway and AFC. Under the terms of a Directors and Officers Liability and Corporation Reimbursement Policy purchased by Agway and AFC, each of the directors and officers of Agway and AFC is insured against loss arising from any claim or claims which may be made during the policy period by reason of any wrongful act (as defined in the policy) in their capacities as directors or officers. In addition, Agway and AFC are insured against loss arising from any claim or claims which may be made during the policy period against any director or officer of Agway and AFC by reason of any wrongful act (as defined in the policy) in their capacities as directors or officers, but only when the directors or officers shall have been entitled to indemnification by Agway and AFC. ITEM 16. EXHIBITS (A) EXHIBITS: 4(a) - The Indenture dated as of September 1, 1976 between Agway Inc. and First Trust and Deposit Company of Syracuse, New York, Trustee, including forms of Subordinated Debentures (Minimum 7.5% per annum) due July 1, 2001, and Subordinated Debentures (Minimum 7.0% per annum) due July 1, 2001, filed by reference to Exhibit 4 of the Registration Statement (Form S-1), File No. 2-57227, dated September 21, 1976. 4(b) - The Indenture dated as of September 1, 1978 between Agway Inc. and First Trust and Deposit Company of Syracuse, New York, Trustee, including forms of Subordinated Debentures (Minimum 8.0% per annum) due July 1, 2003, and Subordinated Debentures (Minimum 7.5% per annum) due July 1, 2003, filed by reference to Exhibit 4 of the Registration Statement (Form S-1), File No. 2-62549 dated September 8, 1978. 4(c) - The Indenture dated as of September 1, 1985, between Agway and Key Bank of Central New York of Syracuse, New York, Trustee, including forms of Subordinated Member Money Market Certificates (Minimum 8% per annum) due October 31, 2005, and Subordinated Member Money Market Certificates (Minimum 7.5% per annum) due October 31, 2005, filed by reference to Exhibit 4 of the Registration Statement (Form S-2), File No. 2-99905, dated August 27, 1985. 4(d) - The Indenture dated as of September 1, 1986, between AFC and Key Bank of Central New York of Syracuse, New York, Trustee, including forms of Subordinated Member Money Market Certificates (Minimum 6% per annum) due October 31, 2006, and Subordinated Money Market Certificates (Minimum 5.5% per annum) due October 31, 2006, filed by reference to Exhibit 4 of the Registration Statement (Form S-3), File No. 33-8676, dated September 11, 1986. 4(e) - The Supplemental Indenture dated as of October 1, 1986, among AFC, Agway Inc. and Key Bank of Central New York of Syracuse, New York, Trustee, including forms of subordinated debt securities filed by reference to Exhibit 4 of the Registration Statement (Form S-3), File No. 33-8676, dated September 11, 1986. 4(f) - The Indenture dated as of August 24, 1987, between AFC and Key Bank of Central New York of Syracuse, New York, Trustee, including forms of Subordinated Member Money Market Certificates (Minimum 6.5% per annum) due October 31, 2008, and Subordinated Money Market Certificates (Minimum 6% per annum) due October 31, 2008, filed by reference to Exhibit 4 of the Registration Statement (Form S-3), File No. 33-16734, dated August 31, 1987. 4(g) - The Indenture dated as of August 23, 1988, between AFC and Key Bank of Central New York of Syracuse, New York, Trustee, including forms of Subordinated Member Money Market Certificates (Minimum 9% per annum) due October 31, 2008, and Subordinated Money Market Certificates (Minimum 8.5% per annum) due October 31, 2008, filed by reference to Exhibit 4 of the Registration Statement (Form S-3), File No. 33-24093, dated August 31, 1988. 4(h) - The Supplemental Indenture dated as of October 14, 1988, among AFC, Agway Inc. and Key Bank of Central New York, National Association, Trustee, amending the Indentures dated as of August 23, 1988, and August 24, 1988, filed on October 18, 1988. ITEM 16. EXHIBITS (CONTINUED) 4(i) - The Indenture dated as of August 23, 1989, among AFC, Agway Inc. and Key Bank of Central New York of Syracuse, New York, Trustee, including forms of Subordinated Money Market Certificates and Subordinated Member Money Market Certificates, filed by reference to Exhibit 4 of the Registration Statement (Form S-3), File No. 33-30808, dated August 30, 1989. 4(j) - The Supplemental Indenture dated as of August 24, 1992, among AFC, Agway Inc. and Key Bank of New York, Trustee, amending the Indenture dated as of August 23, 1989, filed by reference to Exhibit 4 of the Registration Statement (Form S-3), File No. 33-52418, dated September 25, 1992. 4(k) - Agreement of Resignation, Appointment and Acceptance among KeyCorp, Key Bank of New York, AFC and Mellon Bank, F.S.B., dated as of September 3, 1996, five agreements, filed by reference to Exhibit 4(o) of Form S-3, File No. 333-34781, dated September 2, 1997. 4(l) - Letter dated November 14, 1997 from Chase Manhattan Bank, as Successor Trustee, to Mellon Bank, F.S.B., filed by reference to Exhibit 4(a) of the Annual Report on Form 10-K, dated September 21, 2000. 4(m) - Agway Board of Directors resolutions authorizing the issuance of Honorary Member Preferred Stock, Series HM and Membership Common Stock and authorizing AFC to issue Money Market Certificates under Indentures dated as of August 23, 1989. 4(n) - AFC Board of Directors resolutions authorizing the issuance of Money Market Certificates under Indentures dated as of August 23, 1989. The following exhibits are filed as a separate section of this report. 3ii - Agway Inc. By - laws as amended May 4, 2001, filed herewith 5 - Opinion of Christopher W. Fox, Esq., dated June 6, 2001, filed herewith. 12 - Statements regarding computation of ratios, filed herewith. 23 - Consents of experts, PricewaterhouseCoopers LLC, and counsel, Christopher W. Fox, filed herewith. 25 - Statement of Eligibility and Qualification of Trustee on Form T-1, filed herewith. Exhibit numbers 1, 2, 8, 15, 24, 26 through 28 and 99 are inapplicable and exhibit numbers 6, 7, 9, 10, 11, 13, 14 and 16 through 22 are not required. ITEM 17. UNDERTAKINGS The undersigned registrants hereby undertake: A. 1. To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: a. To include any Prospectus required by Section 10(a)(3) of the Securities Act of 1933; b. To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of a prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in the volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; c. To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; provided, however, that paragraphs 1(a) and 1(b) of this section do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to the SEC by the registrants pursuant to Section 13 or Section 15(d) of the Securities Exchange Act that are incorporated by reference into this registration statement. 2. That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof; Provided, however, that paragraphs 1(a) and 1(b) of this section do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to the SEC by the registrants pursuant to Section 13 or Section 15d of the Securities Exchange Act that are incorporated by reference to the registration statement. B. That,for purposes of determining liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. ITEM 17. UNDERTAKINGS (CONTINUED) C. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, Officers and controlling persons of the registrants pursuant to the foregoing provisions, or otherwise, the registrants have been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by either of the registrants of expenses incurred or paid by a director, officer or controlling person of such registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the questions whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. D. To remove from registration by means of a post- effective amendment any of the securities which remain unsold at the termination of the offering. SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this registration statement or amendment thereto to be signed on its behalf by the undersigned, thereunto duly authorized, in the Town of DeWitt, State of New York, on June 7, 2001. AGWAY INC. (Registrant) By /s/ Donald P. Cardarelli ------------------------------------------- DONALD P. CARDARELLI PRESIDENT AND CHIEF EXECUTIVE OFFICER (PRINCIPAL EXECUTIVE OFFICER) Pursuant to the requirements of the Securities Act of 1933, this registration statement or amendment thereto has been signed by the following persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE --------- ----- ---- /s/ Donald P. Cardarelli President and Chief Executive Officer June 7, 2001 (DONALD P. CARDARELLI) (Principal Executive Officer) /s/ Peter J. O'Neill Senior Vice President, June 7, 2001 (PETER J. O'NEILL) Finance & Control, (Principal Financial Officer & Principal Accounting Officer) /s/ Gary K. Van Slyke Chairman of the June 7, 2001 (GARY K. VAN SLYKE) Board and Director /s/ Andrew J. Gilbert Vice Chairman of the June 7, 2001 (ANDREW J. GILBERT) Board and Director /s/ Keith H. Carlisle Director June 7, 2001 (KEITH H. CARLISLE) /s/ D. Gilbert Couser Director June 7, 2001 (D. GILBERT COUSER)
SIGNATURE TITLE DATE --------- ----- ---- /s/ Robert L. Marshman Director June 7, 2001 (ROBERT L. MARSHMAN) /s/ Jeffrey B. Martin Director June 7, 2001 (JEFFREY B. MARTIN) /s/ Samuel F. Minor Director June 7, 2001 (SAMUEL F. MINOR) /s/ Richard H. Skellie Director June 7, 2001 (RICHARD H. SKELLIE) /s/ Carl D. Smith Director June 7, 2001 (CARL D. SMITH) /s/ Thomas E. Smith Director June 7, 2001 (THOMAS E. SMITH) /s/ Joel L. Wenger Director June 7, 2001 (JOEL L. WENGER) /s/ Edwin C. Whitehead Director June 7, 2001 (EDWIN C. WHITEHEAD) /s/ Dennis C. Wolff Director June 7, 2001 (DENNIS C. WOLFF) /s/ William W. Young Director June 7, 2001 (WILLIAM W. YOUNG)
SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this registration statement or amendment thereto to be signed on its behalf by the undersigned, thereunto duly authorized, in the Town of DeWitt, State of New York, on June 7, 2001. AGWAY FINANCIAL CORPORATION (Registrant) By /s/ Donald P. Cardarelli ------------------------------- DONALD P. CARDARELLI CHAIRMAN OF THE BOARD, PRESIDENT, AND DIRECTOR (PRINCIPAL EXECUTIVE OFFICER) Pursuant to the requirements of the Securities Act of 1933, this registration statement or amendment thereto has been signed by the following persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE /s/ Donald P. Cardarelli Chairman of the Board, June 7, 2001 (DONALD P. CARDARELLI) President and Director (Principal Executive Officer) /s/ Peter J. O'Neill Vice President, Treasurer and Director June 7, 2001 (PETER J. O'NEILL) (Principal Financial Officer and Principal Accounting Officer) /s/ Christopher W. Fox Director June 7, 2001 (CHRISTOPHER W. FOX)
SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------ EXHIBITS FILED WITH FORM S-3 - Amendment No. 1 JUNE 8, 2001 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 --------- AGWAY INC. AGWAY FINANCIAL CORPORATION EXHIBIT INDEX Exhibit Number - -------------- 3ii. Agway Inc. By-laws as amended May 4, 2001 4. Instruments defining the rights of security holders 4(m) Agway Board of Directors resolutions authorizing the issuance of Honorary Member Preferred Stock, Series HM and Membership Common Stock and authorizing AFC to issue Money Market Certificates under Indentures dated as of August 23, 1989. 4(n) AFC Board of Directors resolutions authorizing the issuance of Money Market Certificates under indentures dated as of August 23, 1989. 5. Opinions of Christopher W. Fox, Esq., dated June 6, 2001 12. Statements regarding computation of ratios 23. Consents of experts and counsel 25. Statement of Eligibility and Qualification of Trustee on Form T-1 EX-3.(II) 2 exh3ii.txt BY-LAWS EXHIBIT 3ii BY-LAWS of AGWAY INC. As Amended to May 4, 2001 ------------------------------ GENERAL 1.1 Certificate of Incorporation. The certificate of incorporation ---------------------------- of the corporation is hereby made a part of these by-laws and all matters hereinafter contained in these by-laws shall be subject to such provisions in regard thereto, if any, as are set forth in the certificate of incorporation. All references in these by- laws to the certificate of incorporation shall be construed to mean the certificate of incorporation as from time to time amended. The name and purposes of the corporation shall be as set forth in the certificate of incorporation. 1.2 Definitions. As used in these by-laws, the following terms have ----------- the following meanings: (a) "Person" means any individual, partnership, firm, corporation, association, or any other form of business organization. (b) "Farmer" means any person who produces agricultural products for sale. (c) "Member" means any person meeting the qualifications specified in section 2.1 of these by-laws; and for purposes solely of sections 9.1-9.4 of these by-laws, also includes any contract patron. (d) "Contract Patron" means any person who is a party to a contract with the corporation providing for the payment of patronage refunds authorized by section 9.6 of these by-laws. MEMBERSHIP 2.1 Members. The following persons shall be members of the ------- corporation: (a) Any farmer or cooperative organization of farmers which: 1 (1) is a record holder of one share of $25 par value membership common stock of this corporation, and (2) has purchased farm supplies or farm services or has marketed farm products through this corporation since the beginning of the preceding fiscal year of the corporation. A cooperative organization of farmers, which acts only as a dealer of the corporation in the distribution of farm supplies, shall not thereby be qualified for membership. 2.2 Non-Members. All persons or organizations, not qualified for ----------- membership under section 2.1 of these by-laws, who shall purchase from or market through the corporation shall be non-members of the corporation, and, except in the case of contract patrons, shall not be entitled to share in refunds based on their patronage. 2.3 Privileges of Membership. Each member shall have the following ------------------------ rights and privileges: (a) As a stockholder, to participate in and vote at meetings of stockholders as provided in section 2.4 of these by-laws. (b) To participate in patronage refunds as provided in sections 9.1-9.5 of these by-laws. 2.4 Voting. ------ (a) All voting rights shall be vested in the $25 par value membership common stock of the corporation, the record holder of which shall be entitled to only one vote to be cast by the holder thereof in person, or by proxy, at any meeting of stockholders; each holder of membership common stock shall be entitled to only one vote regardless of the number of shares held. (b) At any meeting of stockholders at which there is an election of directors, directors shall be elected by a vote of the holders of a plurality of the outstanding shares present in person or represented by proxy at the meeting and entitled to vote thereon. (c) Except as otherwise provided by the laws of Delaware, the certificate of incorporation or these by-laws, all other actions taken at a meeting of stockholders shall be determined by a majority vote at a meeting at which a quorum is present. 2 2.5 Representative of a Member or Stockholder. If any member or -------------------------------------------- stockholder is other than a natural person, such member or stockholder may be represented by any officer thereof or by any other individual duly authorized by a writing executed and filed with the secretary of the corporation. 2.6 Non-Transferability of Membership. No membership shall be ----------------------------------- assigned or transferred either voluntarily or involuntarily or by operation of law. 2.7 Termination of Membership. A membership shall be terminated: --------------------------- (a) By transfer or the tender for purchase by the corporation by a member of the member's share of $25 par value membership common stock of the corporation, such termination to be effective upon the recording of such transfer or purchase upon the stock records of the corporation. (b) By the call for redemption by the corporation of the member's share of $25 par value membership common stock of the corporation because the person has ceased to be a member of the corporation as defined in section 2.1 of these by-laws. (c) By the call for redemption by the corporation of the member's share of $25 par value membership common stock of the corporation because such redemption is necessary to maintain the status of the corporation as an agricultural cooperative under applicable law. 2.8 Membership Common Stock. The ownership of $25 par value ------------------------- membership common stock of the corporation is limited to one share per holder. CAPITAL STOCK AND PATRONS' INTERESTS 3.1 Capital Stock. The amount of the authorized capital stock and -------------- the par value of the shares shall be as fixed in the certificate of incorporation. The issuance of any shares of capital stock of any class shall be authorized by the board of directors by resolution fixing the consideration for such issue. 3.2 Certificates of Stock. Certificates of stock will be signed in --------------------- the name of the corporation by the president or a vice-president and the treasurer or an assistant treasurer or the secretary or an assistant secretary. Such signatures may be facsimile. Certificates shall be numbered and registered in the order in which they are issued and the seal of the corporation shall be affixed thereto. 3 Notwithstanding anything to the contrary in this section 3.2 of these by-laws, certificates of stock shall be in such form as shall, in conformity to law, be prescribed from time to time by the board of directors. 3.3 Loss of Certificate. In case of the alleged loss or destruction ------------------- or of the mutilation of a certificate of stock, a duplicate certificate may be issued in place thereof, upon such terms in conformity with law as the board of directors may prescribe. The corporation may issue a new certificate of stock in the place of any certificate theretofore issued by it, alleged to have been lost, stolen or destroyed, and the corporation may, in its discretion and as a condition precedent to the issuance thereof, require the owner of the lost, stolen or destroyed certificate, or the owner's legal representative, to give the corporation (i) an affidavit (in form and substance satisfactory to the corporation) describing the loss, theft or destruction of any such certificate, and/or (ii) a bond sufficient to indemnify it against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate. 3.4 Transfer of Shares of Stock. Shares of stock of the corporation ---------------------------- shall be transferable only on the books of the corporation by assignment in writing by the owner thereof, the owner's attorney legally constituted, or the owner's legal representatives, upon surrender and cancellation of the certificates therefor and, in the case of common stock, only with the written consent of the corporation, endorsed on the certificate of stock. Any actual or attempted transfer of the corporation's stock in violation of this Section 3.4 shall be void and the corporation shall treat the original owner as the continuing owner of the stock for all purposes. Shares of common stock may not be transferred except absolutely. The corporation and its transfer agents and registrars, if any, shall be entitled to treat the holder of record of any share or shares of stock as the absolute owner thereof for all purposes except as otherwise expressly provided by the laws of the State of Delaware. 3.5 Redemption or Purchase of Shares of Stock. Whenever any stock -------------------------------------------- is called by the corporation for redemption, or whenever any $25 par value membership common stock held by a person who has ceased to be a member is presented by the holder for sale to the corporation, the certificates representing such stock duly endorsed for transfer and bearing any appropriate transfer stamps shall be delivered at the principal office of the corporation or at such bank or trust company as may be specified in the call by the corporation. Payment for any stock so delivered shall be made by the corporation promptly after such delivery. After call duly made in accordance with the foregoing provisions (unless such stock shall have been duly delivered as required by such call and the corporation shall have failed to make payment therefor within one week after such delivery), the stock covered by such call shall be deemed to have been purchased by the corporation on the date fixed by the call for redemption and the holder thereof shall not thereafter be entitled 4 to vote in respect to such stock, or otherwise to enjoy any of the privileges and benefits of ownership thereof, but only to receive, after delivery of the certificates therefor, payment for such stock as hereinbefore provided. 3.6 Record Date. The board of directors may fix in advance a date not ----------- exceeding sixty (60) nor less than ten (10) days preceding the date of any meeting of the stockholders, or not exceeding sixty (60) days preceding the date for payment of any dividend, as a record date for the determination of the stockholders entitled to notice of, and to vote at any such meeting or entitled to receive a payment of any such dividend; and in such case such stockholders and only such stockholders as shall be stockholders of record on the date so fixed shall be entitled to such notice of, and to vote at such meeting, or to receive payment of such dividend, notwithstanding any transfer of any stock on the books of the corporation after such record date so fixed. 3.7 Rights, Limitations and Priorities of Patrons' Interest. ------------------------------------------------------- (a) Revolving Fund Certificates. Revolving fund certificates ----------------------------- issued by any predecessor corporation in lieu of cash patronage refunds, or by this corporation in exchange for such certificates issued by a predecessor corporation, shall be redeemed at face amount, fully or pro rata, in the order of issuance by year if and when the board of directors in its sole discretion considers the funds represented thereby no longer necessary for corporate purposes. In the event of dissolution, such certificates shall be retired in full or on a pro rata basis. No interest shall be paid on revolving fund certificates. (b) Retained Margins and Patrons' Equities. Retained margins ----------------------------------------- (any net margin retained by the corporation or any predecessor and apportioned to patrons on the books of the corporation or of predecessor corporations, but not allocated to patrons in the form of any written notice) and patrons' equities (retained net margin of the corporation or any predecessor allocated to patrons in the form of a written notice other than a revolving fund certificate) constitute the residual equity of the corporation which, subject to reduction by losses, shall be held for the benefit of patrons, past as well as present, having an interest therein pursuant to the provisions of these by-laws or the by-laws of any predecessor corporation. Retained margins and patrons' equities entitle the holders thereof to the same rights and privileges, and neither shall enjoy any preference over the other. No person shall be entitled to any distribution of assets with respect of retained margins or patrons' equities prior to the dissolution of the corporation. In the event of dissolution, after payment in full of all debts and of any amounts to which the holders of preferred stock, revolving fund certificates and common stock shall be entitled pursuant to the provisions of these by-laws, the remaining assets of the corporation shall be distributed proportionately among those persons having interests in retained margins and patrons' equities and in accordance with such 5 interests as reflected on the books of the corporation and predecessor corporations. MEETINGS OF STOCKHOLDERS 4.1 Annual Meeting. The annual meeting of stockholders shall be held --------------- each year on a date and at a time designated by the board of directors. The annual meeting shall be held at such place, within or without the State of Delaware, or, if so determined by the board of directors in its sole discretion, at no place (but rather by means of remote communication), as may be fixed by the board of directors. At the meeting, directors shall be elected and any other business properly brought before the meeting pursuant to these by-laws may be transacted. 4.2 Special Meeting. Except as otherwise provided in the Certificate --------------- of Incorporation or in these by-laws, a special meeting of stockholders for the transaction of business as may properly come before the meeting may be called at any time by the chairman, or in the chairman's absence by the vice-chairman, or by a majority of the board of directors. Only such business may be transacted as is specified in the notice of the special meeting. The board of directors or, in the absence of action by the board of directors, the chairman of the board or, in the chairman's absence the vice-chairman, shall have the sole power to determine the time, place and date for any special meeting of stockholders. Following such determination, it shall be the duty of the secretary to cause notice to be given to the stockholders entitled to vote at such meeting that a meeting will be held at the time, place and date and in accordance with the record date determined by the board of directors or by the chairman of the board, or in the chairman's absence by the vice- chairman. 4.3 Notice of Meetings. Notice of all meetings of stockholders, ------------------ stating the time, place, if any, date, and the means of remote communication, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such meeting and the place within the city, other municipality or community or electronic network at which the list of stockholders may be examined, shall be delivered in accordance with applicable law to each stockholder entitled to vote not less than ten (10) days nor more than sixty (60) days before the time of such meeting unless the lapse of the prescribed period of time shall have been waived. 4.4 Adjournment and Notice. Any meeting of stockholders, annual or ---------------------- special, may be adjourned from time to time solely by the chair of the meeting because of the absence of a quorum or for any other reason and to reconvene at the same or some other time, date and place, if any. The stockholders present at a meeting shall not have the authority to adjourn the meeting. If the time, date, and place, if any, thereof, and the means of remote communication, if any, by which the stockholders and the proxy holders may be deemed to be present and 6 in person and vote at such adjourned meeting are announced at the meeting at which the adjournment is taken and the adjournment is for less than thirty (30) days, no notice need be given of any such adjourned meeting. If the adjournment is for more than thirty (30) days, if the time, date and place, if any, and the means of remote communication, if any, by which the stockholders and the proxy holders may be deemed to be present and in person are not announced at the meeting at which the adjournment is taken, or if after the adjournment a new record date is fixed for the adjourned meeting, then notice shall be given by the Secretary as required for the original meeting. 4.5 Order of Business. Meetings of stockholders shall be presided ------------------- over by the vice-chairman of the board or by another chair designated by the board of directors. The date and time of the opening and closing of the polls for each matter upon which the stockholders will vote at a meeting shall be determined by the chair of the meeting and announced at the meeting. The board of directors may adopt by resolution such rules and regulations for the conduct of the meeting of stockholders as it shall deem appropriate. Unless otherwise determined by the board of directors, the chairman of the stockholders' meeting shall have the exclusive right to determine the order of business and to prescribe other such rules, regulations and procedures and shall have the authority in his or her discretion to regulate the conduct of any such meeting. Such rules, regulations or procedures, whether adopted by the board of directors or prescribed by the chair of the meeting, may include, without limitation, the following: (i) rules and procedures for maintaining order at the meeting and the safety of those present; (ii) limitations on attendance at or participation in the meeting to stockholders of record of the corporation, their duly authorized and constituted proxies or such other persons as the chair of the meeting shall determine; (iii) restrictions on entry to the meeting after the time fixed for the commencement thereof; and (iv) limitations on the time allotted to questions or comments by participants. Unless and to the extent determined by the board of directors or the chair of the meeting, meetings of stockholders shall not be required to be held in accordance with the rules of parliamentary procedure. The secretary of the corporation, or any other person appointed by the chair of the meeting, shall act as secretary of each meeting. 4.6 Quorum. The presence in person or by proxy at any meeting of ------ stockholders of the greater of (i) one hundred (100) persons each holding a share of $25 par value membership common stock, or (ii) the minimum number of stockholders required under applicable law to establish a quorum, shall constitute a quorum for the transaction of business. The chair of the meeting shall have the power and duty to determine whether a quorum is present at any meeting of stockholders. The stockholders present at a duly called and held meeting at which a quorum is present may continue to do business until adjournment notwithstanding the subsequent withdrawal of stockholders from the 7 meeting. Shares of its own stock belonging to the corporation or to another corporation, if a majority of the shares entitled to vote in the election of directors of such other corporation is held, directly or indirectly, by the corporation, shall neither be entitled to vote nor be counted for quorum purposes; provided, however, that the foregoing shall not limit the right of the corporation or any subsidiary of the corporation to vote stock, including, but not limited to, its own stock, held by it in a fiduciary capacity. 4.7 Postponement or Cancellation of Meeting. Any previously ------------------------------------------- scheduled annual or special meeting of the stockholders may be postponed or canceled by resolution of the board of directors upon public notice given prior to the time previously scheduled for such meeting of stockholders. 4.8 Inspectors of Election. In advance of any meeting of ------------------------- stockholders, the board of directors may appoint Inspectors of Election to act at such meeting or any adjournment thereof. If Inspectors of Election are not so appointed, the person acting as chair of any such meeting may, and on the request of any stockholder or proxy holder shall, make such appointment. There shall be at least two (2) Inspectors of Election at any such meeting. In case any person appointed as Inspector of Election shall fail to appear or to act, the vacancy may be filled by the person acting as chair of the meeting. 4.9 Notice of Stockholder Business. ------------------------------ (a) At an annual meeting of the stockholders, only such business shall be conducted as shall have been properly brought before the meeting. To be properly brought before an annual meeting, business must be (i) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the board of directors (or any duly authorized committee thereof), (ii) otherwise properly brought before the meeting by or at the direction of the board of directors (or any duly authorized committee thereof), or (iii) otherwise properly be requested to be brought before the meeting by a stockholder in compliance with the procedures set forth in this paragraph. For business to be properly requested to be brought before an annual meeting by a stockholder, the stockholder must have given timely notice thereof in proper written form to the secretary of the corporation. To be timely, a stockholder's notice must be delivered to or mailed and received at the principal executive offices of the corporation (x) in the case of an annual meeting that is called for a date that is within thirty (30) days before or after the anniversary date of the immediately preceding annual meeting of stockholders, not less than ninety (90) days nor more than one-hundred twenty (120) days prior to the meeting, and (y) in the case of an annual meeting that is called for a date that is not within thirty (30) days before or after the anniversary date of the immediately preceding annual meeting, not later than the close of business on the tenth day following the day on which notice 8 of the date of the meeting was communicated to stockholders or public disclosure of the date of the meeting was made, whichever occurs first. In no event shall the public announcement of an adjournment or postponement of a meeting of stockholders commence a new time period (or extend any time period) for the giving of a stockholder notice as described herein. Only such business shall be conducted at a special meeting of stockholders as shall have been described in the corporation's notice of meeting given pursuant to these by-laws. (b) To be in proper written form, such stockholder's notice to the secretary shall set forth in writing (x) as to each matter the stockholder proposes to bring before the annual meeting (i) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meting, (ii) the text of the proposal or business (including the text of any resolutions proposed for consideration and in the event that such business includes a proposal to amend the by-laws of the corporation, the language of the proposed amendment), (iii) any material interest of the stockholder and beneficial owner in such business, and (iv) any other information relating to such stockholder, beneficial owner or business that is required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies relating to the proposed item of business pursuant to Section 14 of the Securities Exchange Act of 1934 (the "Exchange Act") and the rules and regulations promulgated thereunder; and (y) as to such stockholder giving notice and the beneficial owner, if any, on whose behalf the proposal is made (i) the name and address, as they appear on the corporation's books, of such stockholder and of such beneficial owner, (ii) the class or series and number of shares of the capital stock of the corporation that are owned beneficially and of record by such stockholder and such beneficial owner, (iii) a description of all arrangements or understandings between such stockholder and/or beneficial owner and any other person or persons (including their names) pursuant to which the proposals are to be made by such stockholder, (iv) a representation that such stockholder or beneficial owner intends to appear in person or by proxy at the meeting to propose the items of business set forth in its notice, (v) a representation whether the stockholder or the beneficial owner, if any, intends to (1) deliver a proxy statement and/or form of proxy to holders of at least the percentage of the corporation's outstanding capital stock required to approve or adopt the proposal and/or (2) otherwise solicit proxies from stockholders in support of such proposal, and (vi) any other information relating to such stockholder or beneficial owner that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies in support of such proposal pursuant to Section 14 of the Exchange Act, and any rules and regulations promulgated thereunder. (c) Notwithstanding anything in the by-laws to the contrary, no business shall be conducted at an annual meeting except in accordance with the procedures set forth in these by-laws. The chairman of an annual meeting has 9 the power and authority to, and shall, if the facts warrant, determine and declare to the meeting that business was not properly brought before the meeting and in accordance with the provisions of section 4.9 of these by-laws, and if he should so determine, he shall so declare to the meeting and any such business not properly brought before the meeting shall not be transacted. Notwithstanding the foregoing provisions of this section 4.9, if the stockholder (or a qualified representative of the stockholder) does not appear at the annual or special meeting of stockholders of the corporation to present the proposed business, such proposed business shall not be transacted, notwithstanding that proxies in respect of such vote may have been received by the corporation. (d) Notwithstanding the foregoing provisions of this section 4.9, a stockholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations promulgated thereunder with respect to the matters set forth in this section 4.9. 4.10 Director Nominations. -------------------- (a) Only persons who are nominated in accordance with the procedures set forth in this paragraph shall be eligible for election as directors of the corporation. Nominations for the election of directors may be made at a meeting of stockholders pursuant to the corporation's notice of meeting (or any supplement thereto) (i) by the board of directors (or a duly authorized committee thereof), (ii) by any stockholder entitled to vote in the election of directors generally who complies with the procedures set forth in this paragraph, or (iii) by the secretary of the corporation pursuant to section 5.3 of these by-laws. Elections of directors shall be conducted at a special meeting of stockholders only as described in the corporation's notice of meeting given pursuant to these by-laws. (b) All nominations by stockholders shall be made pursuant to timely notice in proper written form to the secretary of the corporation. To be timely, a stockholder's notice shall be given, either by personal delivery or by United States mail, postage prepaid, to the secretary of the corporation at the principal executive offices of the corporation not later than (x) with respect to an election to be held at an annual meeting of stockholders which is called for a date that is within thirty (30) days before or after the anniversary date of the immediately preceding annual meeting of stockholders, not less than ninety (90) days nor more than one hundred twenty (120) days prior to such anniversary date, and (y) with respect to an election to be held at an annual meeting of stockholders which is called for a date that is not within thirty (30) days before or after the anniversary date of the immediately preceding annual meeting of stockholders or to be held at a special meeting of stockholders for the election of directors, not later than the close of business on the tenth day 10 following the date on which notice of the date of such meeting is first mailed to stockholders or public disclosure of the date of the meeting was made, whichever occurs first. In no event shall the public announcement of an adjournment or postponement of a meeting of stockholders commence a new time period (or extend any time period) for the giving of a stockholder notice as described herein. (c) Notwithstanding anything in the second sentence of section 4.10(b) to the contrary, in the event that the number of directors to be elected to the board of directors of the corporation at a meeting is increased and there is no public announcement by the corporation naming all of the nominees for director or specifying the size of the increased board of directors at least one hundred (100) days prior to the anniversary date of the immediately preceding annual meeting, a stockholder's notice required by this section 4.10 shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to the secretary at the principal executive offices of the corporation not later than the close of business on the tenth day following the day on which such public announcement is first made by the corporation. (d) To be in proper written form, such stockholder's notice shall set forth, (x) as to each person whom such stockholder proposes to nominate for election or re-election as a director, (i) the name, age, business address and residence address of the person, (ii) the principal occupation and employment of the person, (iii) the written consent of each proposed nominee to being named as a nominee and to serve as a director if elected, (iv) the class or series and number of shares of capital stock of the corporation which are owned beneficially or of record by the person and (v) all information relating to such person that is required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors, or is otherwise required, in each case pursuant to Section 14 of the Exchange Act, and the rules and regulations promulgated thereunder; and (y) as to such stockholder giving notice and the beneficial owner, if any, (i) the name and address, as they appear on the corporation's books, of the stockholder, and the beneficial owner, if any, who intends to make the nomination and of the person or persons to be nominated, (ii) the class or series and number of shares of the capital stock owned beneficially and of record by such stockholder and by such beneficial owner, (iii) a representation that the stockholder is a holder of record of stock of the corporation entitled to vote at such meeting and that the stockholder or the beneficial owner, if any, intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice, (iv) a description of all arrangements or understandings between the stockholder and/or beneficial owner and each nominee and any other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made by the stockholder, (v) such other information regarding each nominee proposed by such stockholder as would be required to be included in a proxy statement filed 11 pursuant to the proxy rules of the Securities and Exchange Commission, (vi) a representation whether the stockholder or the beneficial owner, if any, intends or is part of a group which intends to (1) deliver a proxy statement and/or form of proxy to holders of at least the percentage of the corporation's outstanding capital stock required to elect the nominee and/or (2) otherwise solicit proxies from stockholders in support of such nomination, and (vii) any other information relating to such stockholder or beneficial owner that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Exchange Act, and the rules and regulations promulgated thereunder. At the request of the board of directors, any person nominated by the board of directors for election as a director shall furnish to the secretary of the corporation that information required to be set forth in a stockholder's notice of nomination which pertains to the nominee. (e) No person shall be eligible for election as a director unless nominated in accordance with the procedures set forth in the by-laws of the corporation. The chair of the meeting has the power and the authority to and shall, if the facts warrant, determine and declare to the meeting that a nomination of a person was not made in compliance with the foregoing procedure, and if he or she shall so determine, he or she shall declare to the meeting and the defective nomination shall be disregarded. Notwithstanding the foregoing provisions of this section 4.10, if the stockholder (or a qualified representative of the stockholder) does not appear at the annual or special meeting of stockholders of the corporation to present a nomination, such nomination shall be disregarded, notwithstanding that proxies in respect of such vote may have been received by the corporation. (f) For purposes of these by-laws, "public announcement" shall mean disclosure in a press release reported by a national news service or in a document publicly filed by the corporation with the Securities and Exchange Commission pursuant to the Exchange Act. (g) Notwithstanding the foregoing paragraphs of this section 4.10, a stockholder shall also comply with all applicable requirements of the Exchange Act, and the rules and regulations promulgated thereunder with respect to the matters set forth in this section 4.10. 4.11 Procedures for Action By Written Consent. ---------------------------------------- (a) (i) The record date for determining stockholders entitled to express consent to corporate action in writing without a meeting shall be as fixed by the board of directors or as otherwise established under this section 4.11(a). Any person seeking to have the stockholders authorize or take corporate action by written consent without a meeting shall, by written notice addressed to the secretary and 12 delivered to the corporation and signed by a stockholder of record, request that a record date be fixed for such purpose. The written notice shall contain at a minimum the information set forth in section 4.11(a)(ii) below. The board of directors shall have ten (10) days following the date of receipt of the notice to determine the validity of the request. Following the determination of the validity of the request, and (subject to section 4.11(a)(ii)) no later than ten (10) days after the date on which such request is received by the corporation, the board of directors may fix a record date for such purpose. (ii) Any stockholder's notice required by this section 4.11(a) shall describe each action that the stockholder proposes to take by consent. For each such proposal of business or nomination for election as a director, the notice shall comply with the notice requirements set forth in sections 4.9 and 4.10, as they are applicable. (b) Every written consent purporting to take or authorize the taking of corporate action and/or related revocations (each such written consent and related revocation is referred to in this section 4.11 as a "Consent") shall bear the date of signature of each stockholder who signs the Consent, and no Consent shall be effective to take the corporate action referred to therein unless, within sixty (60) days of the earliest dated Consent delivered in the manner required by this section 4.11, Consents signed by a sufficient number of stockholders to take such action are so delivered to the corporation. (c) A Consent shall be delivered to the corporation by delivery to its registered office in the State of Delaware or to the secretary at the principal executive offices of the corporation. Delivery to the corporation's registered office shall be made by hand or by certified or registered mail, return receipt requested. In the event of the delivery to the corporation of a Consent, the secretary shall provide for the safekeeping of such Consent and shall promptly conduct such ministerial review of the sufficiency of the Consents and of the validity of the action to be taken by stockholder consent as the secretary deems necessary or appropriate, including, without limitation, whether the holders of a number of shares having the requisite voting power to authorize or take the action specified in the Consent have given consent; provided, however, that if the corporate action to which the Consent relates is the removal or replacement of one or more members of the board of directors, the secretary shall promptly designate, in accordance with the terms of section 4.8 hereof, two persons, who shall not be members of the Board, to serve as Inspectors with respect to such Consent and such Inspectors shall discharge the functions of the Secretary under this section 4.11(c). If after such investigation the secretary or the Inspectors (as the case may be) shall determine that the Consent is valid and that the action therein specified has been validly authorized, 13 that fact shall forthwith be certified on the records of the Corporation kept for the purpose of recording the proceedings of meetings of stockholders, and the Consent shall be filed in such records, at which time the Consent shall become effective as stockholder action. In conducting the investigation required by this section 4.11(c), the secretary or the Inspectors (as the case may be) may, at the expense of the corporation, retain special legal counsel and any other necessary or appropriate professional advisors, and such other personnel as they may deem necessary or appropriate to assist them, and shall be fully protected in relying in good faith upon the opinion of such counsel or advisors. No action by written consent without a meeting shall be effective until such date as the secretary or the Inspectors (as the case may be) certify to the corporation that the Consents delivered to the Corporation in accordance with section 4.11(c) represent at least the minimum number of votes that would be necessary to take the action. Nothing contained in this section 4.11 shall in any way be construed to suggest or imply that the board of directors or any stockholder shall not be entitled to contest the validity of any Consent or revocation thereof, whether before or after such certification by the secretary or the Inspectors, or to take any other action (including, without limitation, the commencement, prosecution, or defense of any litigation with respect thereto, and the seeking of injunctive relief in such litigation). DIRECTORS 5.1 Number and Qualification. The board of directors shall -------------------------- consist of not less than twelve (12) nor more than seventeen (17) people, as fixed from time to time by the board of directors. At least twelve (12) of the directors shall be members of the corporation, except that members who are employees of the corporation or dealers of the corporation's farm supplies shall not be eligible for election as member directors. Up to two (2) directors shall be other directors who are not required to be members of the corporation. Without regard to the foregoing limitations, the corporation shall nominate the chief executive officer for election at any meeting at which such person is subject to election as a director. The term of any director who is also the chief executive officer of the corporation shall expire immediately and automatically upon the termination for any reason or for no reason of such person as the chief executive officer of the corporation. All directors shall represent the interests of all common stockholders. 5.2 Nomination Regions. The territory in which the corporation ------------------- primarily operates shall be divided into nomination regions, three (3) in number, described as follows: 14 Region A. Commonwealth of Massachusetts; States of Connecticut; Maine; New Hampshire; New Jersey (northern half); State of New York, counties of Albany, Dutchess, Clinton, Columbia, Essex, Franklin, Fulton, Greene, Hamilton, Herkimer (northern half), Jefferson, Lewis, Montgomery, Orange, Putnam, Rensselaer, Rockland, Saratoga, Schenectady, Schoharie, St. Lawrence, Sullivan, Ulster, Warren, Washington, Westchester; New York City and Long Island counties; States of Rhode Island; and, Vermont. Region B. State of New York, counties of Allegany, Broome, Cattaraugus, Cayuga, Chautauqua, Chemung, Chenango, Cortland, Delaware, Erie, Genesee, Herkimer (southern half), Livingston, Madison, Monroe, Niagara, Oneida, Onondaga, Ontario, Orleans, Oswego, Otsego, Schuyler, Seneca, Steuben, Tioga,Tompkins, Wayne, Wyoming and Yates. Region C. Commonwealth of Pennsylvania; States of Delaware; Maryland; New Jersey (southern half); Ohio; and, northern West Virginia. 5.3 Nomination Procedures. --------------------- (a) The Membership and Nominating Committee of the board of directors, appointed under section 7.3 of these by-laws, shall have the responsibility for identifying persons to be nominated by the board of directors for election at any meeting of the stockholders. (b) For each year, there shall be appointed by the chairman of the board, or by the chairman's designee, three (3) Region Nominating Task Forces to identify and recommend at least one potential member candidate who resides in the region for each member director position to be filled in that region. Each Region Nominating Task Force shall consist of a chairman who shall be a member director and one member director from the region, neither of whom is standing for re-election during such year, and at least four (4) members from the director nominating forum of the region. The Region Nominating Task Force may supply initial recommendations to and solicit recommendations from the director nominating forum regarding potential candidates for election to the board of directors. (c) In each region there shall be a director nominating forum comprised of members who reside in the region. The members of the director nominating forums shall represent a majority of members' purchases of farm supplies 15 from the corporation during the preceding fiscal year as determined annually by the board of directors. (d) Each Region Nominating Task Force shall request recommendations from each director nominating forum with respect to potential member candidates who reside in the region for each member director position to be filled in that region for election to the board of directors. Each member of the director nominating forum shall have one vote in the director nomination process. (e) Each Region Nominating Task Force shall recommend to the Membership and Nominating Committee the member who resides in that region, who need not be the person recommended by the director nominating forum, it deems best qualified to serve as member director from such region for each member director position to be filled in that region. (f) The Membership and Nominating Committee shall recommend to the board of directors the member candidates and other candidates for each director position to be filled, who need not be any of the persons recommended by the Region Nominating Task Force, it deems best qualified to be nominated by the board of directors for election at any meeting of stockholders. (g) The board of directors shall select the candidates, who need not be any of the persons recommended by the Membership and Nominating Committee, to be nominated on behalf of the board for each election of directors. 5.4 Vacancies. --------- (a) Any vacancy on the board of directors of a member director occurring during the term of such member director, caused by an increase in the authorized number of directors, death, resignation or otherwise may be filled for the unexpired portion of the term or until a successor shall be elected, by a vote of a majority of the directors then in office, even if less than a quorum, at any regular or special meeting of the board. If the term of a member director being replaced extends beyond the next annual meeting, the newly elected director shall stand for election by the stockholders at the next annual meeting for the balance of the term. Any vacancy shall be filled by a person from the same region as the member director being replaced. (b) Any vacancy on the board of directors of any other director occurring during the term of such other director, caused by an increase in the authorized number of directors, death, resignation or otherwise may be filled for the unexpired portion of the term or until a successor shall be elected by a vote of a majority of the directors then in office, even if less than a quorum, at any regular or 16 special meeting of the board. If the term of any other director being replaced extends beyond the next annual meeting, the newly elected director shall stand for election by the stockholders at the next annual meeting for the balance of the term. (c) In case the entire board of directors shall die or resign, the president or secretary of the Corporation, or any ten (10) stockholders may call and cause notice to be given for a special meeting in the same manner that the chairman may call such a meeting, and directors for the unexpired terms may be elected at such special meeting. 5.5 Regular Meetings. Regular meetings of the board of directors may ---------------- be held at such time, date and place as may be appointed by the board, which time may be changed from time to time. At least annually, at a regular meeting of the board of directors, the election of officers, including the chairman of the board, the vice-chairman and the president and chief executive officer shall be conducted. 5.6 Special Meetings. A special meeting of the board of directors ---------------- shall be held whenever and at such location called by the chairman, or by the vice- chairman of the board in the absence of the chairman, or by any five (5) directors. The purpose or purposes of any special meeting will be specified in the notice relating thereto. Any and all business may be transacted at a special meeting. 5.7 Notice of Meetings of Directors. Three (3) day's notice of ----------------------------------- regular meetings of the directors need be given except that in case of a change in the time for regular meetings written notice of such change shall be given to directors who were not present at the meeting when such change was made. Notice of each special meeting shall be given pursuant to section 12.3 of these by-laws, showing the time and place, at least twenty-four (24) hours prior to the time of such meeting. 5.8 Conference Telephone Meetings. Members of the board of directors, ----------------------------- or any committee thereof, may participate in a meeting of the board of directors or such committee by means of conference telephone or other similar communications equipment by means of which all persons participating in the meeting can hear each other and communicate with each other, and such participation in a meeting shall constitute presence in person at such meeting. 5.9 Adjournment. Notice of the time, date and place of holding an ----------- adjourned meeting shall be given to all directors. 5.10 Quorum. Except as herein provided, a majority of the directors ------ in office shall be necessary to constitute a quorum for the transaction of business. In the event of an extreme emergency, including a substantial disruption of communication as a result of a disaster, whether nuclear, labor strike, flood, hurricane 17 or any other cause, making it extremely difficult or impossible to assemble a majority of the board for a duly called meeting, and such emergency has been declared, either by the president, or, in his or her absence, the chairman of the board, or by the President of the United States, or by any of the Governors of the states in which the corporation does business, a quorum of the board of directors for the transaction of business at a meeting duly called shall not be less than one-third of the directors. 5.11 Compensation of Directors. Directors, as such, shall not receive ------------------------- any stated compensation for their services unless its payment has been first authorized by the board of directors. In addition to an annual retainer, the board of directors may allow a reasonable per diem and expenses for attendance at any meeting of the board or of the Executive and Compensation Committee, and any other meeting or official business. 5.12 Removal for Cause. A director may be removed for failure to ------------------- attend three (3) consecutive meetings of the board without adequate cause, or for other neglect of duty, or for any other cause. Such removal may be effected in either of the following two ways: (a) Removal may be by the vote or consent of the holders of a majority of the shares entitled to vote at an election of directors; or (b) Removal may be by the affirmative vote of three-fourths (3/4) of the entire board (excluding the director complained of) at any regular or special meeting of the board, following reasonable notice to the director complained of and a hearing by the board of directors; provided, however, that in the event of any such removal, the board of directors, if requested in writing by the director subject to removal within ten (10) days of the removal decision by the board of directors, shall call a special meeting of the stockholders to confirm or overrule the decision of the board of directors. If the earliest practicable date to hold the special meeting of the stockholders falls within ninety (90) days of the date of the annual meeting as provided in section 4.1 of these by-laws, the matter shall be presented to the stockholders for a vote at the annual meeting. At the meeting of stockholders at which the question of the removal of the director is presented for a vote, the director complained of shall be provided a reasonable opportunity to present his or her position. The vote of the holders of a majority of the shares, present and voting, entitled to vote at an election of directors shall confirm or overrule the decision of the board of directors. Until such time as the stockholders act on the removal of the director complained of, if the stockholders are required to do so, neither the board of directors nor the stockholders shall fill the vacancy caused by the removal of the director. 18 A vacancy resulting from a vote of the stockholders may be filled by the stockholders at the meeting voting the removal and if not so filled shall be filled by the board of directors as provided in section 5.4 of these by-laws. POWERS OF DIRECTORS 6.1 General Powers. Subject to the limitations of the certificate -------------- of incorporation, of the by-laws and of the statutes of the State of Delaware relating to action which shall be authorized or approved by stockholders, all corporate powers shall be exercised by or under the authority of, and the business and affairs of the corporation shall be controlled by, the board of directors. Without prejudice to such general powers, but subject to the same limitations, it is expressly declared that the board of directors shall have the following powers to wit: (a) To control the affairs and business of the corporation and to establish and enforce rules and regulations not inconsistent with the laws of the State of Delaware, the certificate of incorporation or by-laws, for the guidance of its officers and the management and conduct of its affairs and business. (b) To borrow money and incur indebtedness for corporate purposes, and to cause to be executed and delivered therefor, in the corporate name, promissory notes, bonds, debentures, deeds of trust, mortgages, pledges, hypothecations and other evidences of indebtedness and securities therefor, and to do every act and thing necessary to effectuate the same. COMMITTEES OF THE BOARD 7.1 Executive and Compensation Committee. An Executive and --------------------------------------- Compensation Committee may be established by resolution adopted by a majority of the whole board, to consist of such number of directors as may be specified, which shall have and may exercise, in the intervals between meetings of the board, all the powers and authority of the board of directors, and may authorize the seal of the corporation to be affixed to all papers which may require it. 7.2 Audit Committee. An Audit Committee may be established by ---------------- resolution adopted by a majority of the whole board, to consist of at least three (3) financially literate member or other directors one of whom has financial expertise, to assure members, investors, and others that the system of internal controls established by management effectively safeguard the corporation's assets, real and intangible; that the corporation's financial reporting meets generally accepted standards and the directors' expectations for quality and integrity. The chief executive officer shall not be eligible for appointment to the Audit Committee. The board of directors shall adopt a charter for the Audit Committee, and the Audit Committee shall review this 19 charter annually to assess the charter's adequacy. This charter shall specify the scope of the Audit Committee's responsibilities, including the selection, evaluation and replacement of auditors and overseeing auditor independence. 7.3 Membership and Nominating Committee. A Membership and -------------------------------------- Nominating Committee may be established by resolution adopted by a majority of the whole board, to consist of such number of directors as may be specified, to review and make recommendations on membership issues and to conduct the director nomination procedures as set forth in section 5.3 of these by-laws. 7.4 Other Committees of the Board. Other committees may be --------------------------------- established, from time to time, by resolution adopted by a majority of the whole board specifying the number of members and prescribing the committee functions and duties. In the absence or disqualification of a member of a committee, the member or members present at any meeting and not disqualified from voting, whether or not the member or members present constitute a quorum, may unanimously appoint another member of the board of directors to act at the meeting in the place of any such absent or disqualified member. OFFICERS AND MANAGEMENT 8.1 Corporate Officers. The officers of the corporation shall ------------------- be elected by the board of directors and shall be three (3) board officers, a chairman of the board, a vice-chairman, a president and chief executive officer; and, executive officers consisting of one or more vice-presidents, a secretary, a controller, a treasurer and a general counsel. The board may also appoint any other employee officers whom the board of directors may see fit in its discretion to designate. The chairman of the board and the vice-chairman shall be elected by the member directors from their number. The president and chief executive officer shall recommend executive and employee officers to the board of directors. 8.2 Election and Term of Office. On the recommendation of the ------------------------------ president and chief executive officer, executive and employee officers shall be elected annually at the first meeting of the board of directors following the annual meeting of stockholders, or at such other time as the board of directors shall determine. Unless sooner removed by the board of directors, or unless they resign or become disqualified, all officers shall hold office until their successors are chosen and have qualified. Any officer, whether elected or appointed by the board of directors, may be removed at any time by a majority vote of all of the directors. 8.3 Powers and Duties. Subject at all times to the control and ------------------ direction of the board of directors, the president and chief executive officer shall conduct the business of the corporation in accordance with its purposes, and shall 20 have administrative authority over all personnel, including executive employee officers, in the employ of the corporation; and each employee officer shall have and exercise the powers and duties usual to his or her office or delegated to him or her by the board of directors. 8.4 Compensation of Officers. Officers shall each receive such ------------------------ compensation as may be fixed by the directors. The president and chief executive officer shall recommend compensation for executive officers to the board of directors. 8.5 Vacancies. A vacancy occurring in any office may be filled by --------- a majority of the directors then in office at any regular or special meeting of the board. 8.6 Checks, Bills and Notes. All checks, drafts, bills of -------------------------- exchange, notes, orders for the payment of money and other negotiable instruments of the corporation shall be made in the name of the corporation, and shall be signed by any one of the following: the president, any vice president, the secretary, treasurer, controller, or any assistant secretary, assistant treasurer or assistant controller. The board of directors may also delegate to other officers or agents the power to sign or countersign such instruments. No officers or agents of the corporation singly or jointly with others shall have the power to make any bill payable, note or check or other negotiable instrument or endorse the same in the name of the corporation, or contract or cause to be contracted any debt or liability in the name or on behalf of the corporation, except as provided in these by-laws, and as authorized by the board of directors. Bills of exchange, checks, notes and other negotiable instruments received by the corporation shall be endorsed for collection by such officers or agents as may be designated by the board of directors for that purpose. PATRONAGE ACCOUNTING 9.1 Scope of Patronage Refund Provisions. The provisions of ---------------------------------------- sections 9.2-9.5 of these by-laws provide for patronage refunds only with respect to that portion of the corporation's business consisting of sales of farm supplies. Patronage refunds, if any, with respect to marketing operations will be paid only pursuant to marketing contracts with members and contract patrons providing for the payment of such refunds. 9.2 Definitions. As used in sections 9.2-9.5 of these by-laws: ----------- (a) Member. The term "member" includes any member of the ------ corporation as defined in section 1.2(c) of these by-laws and also any person who has entered into a patronage refund contract with the corporation as authorized by section 9.5 of these by-laws. The term "non-member" refers to any person who is not a member as that term is defined in the preceding sentence. 21 (b) Net Margin. The "net margin" of the corporation shall ---------- be taxable income from sales of farm supplies for the fiscal year, as computed for federal income tax purposes, but without taking into account any deductions for patronage refunds. (c) Member Margin. "Member margin" shall be that portion of ------------- the net margin derived from sales of farm supplies to members, determined by multiplying the net margin by the percentage of gross purchasing volume which is attributable to sales of farm supplies to members. (d) Volume Subject to Refund. "Volume subject to refund" is ------------------------ the gross volume of the corporation from sales of farm supplies for any fiscal year, reduced by that portion of such volume attributable to business with non-members, and increased by the average percentage mark-up necessary to reflect an equivalent volume at the retail level. (e) Member's Pro Rata Share. Each "member's pro rata share" ----------------------- of any refund or reserve shall be computed by multiplying the amount or volume subject to refund attributable to such member by a percentage determined by dividing the total refund or reserve to be allocated, as the case may be, by the total amount of volume subject to refund. (f) Patronage Refund. The term "patronage refund" shall ---------------- include a patronage refund or rebate or any amount paid to a patron pursuant to section 9.5 of these by-laws on the basis of business done with or for such a patron. 9.3 Reasonable Reserves. The board of directors may set aside each ------------------- fiscal year, from the net margin of the corporation, such amounts as the board of directors in its discretion deems necessary for the efficient prosecution of the corporation's business, provided however, that no amounts shall be set aside which are not reasonable in amount, giving due regard to the purposes thereof (such amounts being sometimes hereinafter referred to as "reasonable reserves"). Any reserves set aside pursuant to section 9.3 of these by-laws shall be allocated first to all net earnings, as defined in (ii) of section 9.4 of these by-laws, of the corporation other than member margin and, to the extent that such reserves exceed such net earnings, to member margin. Such reasonable reserves may be used for such proper corporate purposes as shall be determined by the board of directors, including, but not limited to the accumulation of working capital, contributions to sinking funds to meet future indebtedness, payment of Federal income and excess profits taxes, acquisition of funds for expansion or replacement, or accumulations of reserves to offset price declines. The corporation shall maintain records sufficient to afford permanent means for apportioning to each member his or her pro rata share of all amounts retained by the corporation as reasonable reserves for each fiscal year. 22 9.4 Dividends on Capital Stock. The board of directors may set ----------------------------- aside each fiscal year from funds available therefor such amounts as the board deems appropriate for payment as dividends on issued and outstanding capital stock. Such amounts shall be allocated pro rata between (i) member margin and (ii) all other net earnings of the corporation (including both net margin derived from purchasing business conducted with non-members, and earnings not derived from purchasing). 9.5 Payment of Patronage Refunds. ---------------------------- (a) Obligation to Pay Patronage Refunds. The corporation ------------------------------------ shall be obligated, as soon as practicable after the close of each fiscal year and in no event later than 8 1/2 months after the close thereof, to pay each member in cash as a patronage refund his or her pro rata share of all member margin remaining after deducting amounts, if any, set aside therefrom by the board of directors (1) as reasonable reserves pursuant to section 9.3 of these by-laws and (2) for payment as dividends on issued and outstanding capital stock pursuant to section 9.4 of these by-laws; provided that the amount of patronage refunds thus determined shall be increased or decreased to the extent necessary to enable the obligation for the payment of such refunds to be expressed as a percentage of volume. (b) Minimum Payment of Patronage Refunds. Notwithstanding ------------------------------------ the provisions of paragraph (a) of section 9.5 of these by-laws, the board of directors shall fix and/or amend from time to time the minimum amount which shall be paid as a patronage refund and any amount less than that so fixed shall not be distributed to the member entitled thereto (unless he claims it in cash) but shall be retained by the corporation as through it were part of a reasonable reserve set aside pursuant to section 9.3 of these by-laws. (c) Obligation to Pay Patronage Refunds Absolute. The ------------------------------------------------ corporation shall be absolutely liable for the payment of patronage refunds as provided herein without further action on the part of any officer or of the board of directors. (d) Place of Purchase. Each member shall be entitled to ------------------- his or her respective pro rata share of any patronage refunds paid with respect to Agway distributed goods purchased from Agway and certain dealers. The corporation may enter into such contracts, undertakings and understandings with certain dealers as may be necessary and proper to insure that each member will receive his or her pro rata share of such refunds. 9.6 Contract Patrons. The board of directors may authorize the ---------------- appropriate officers and/or employees of the corporation to contract to pay and to pay patronage refunds to patrons other than the members as defined in section 1.2(c) 23 of these by-laws, provided the amounts of such patronage refunds are determined upon the same basis and under the same terms and conditions as those of such members, and provided further that any such contract shall be entered into prior to the accumulation of any gross receipts subject to the charge of such patronage refunds. MARKETING 10.1 Marketing Contracts. The terms and conditions under which ------------------- agricultural products of members shall be marketed may be established by marketing contracts to be executed by the corporation and its members on an individual commodity or commodity group basis, not inconsistent with the provisions of these by-laws. INDEMNIFICATION 11.1 Right to Indemnification. The corporation shall indemnify ------------------------ and hold harmless, as such separate and independent rights shall be applicable to the fullest extent possible under applicable law as it presently exists or may hereafter be amended, any person (an "Indemnitee") who was or is made or is threatened to be made a party or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (a "proceeding"), by reason of the fact that he or she, or a person for whom he or she is the legal representative, is or was a director, officer, employee or agent of the corporation or, while a director or officer of the corporation, is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation or of a partnership, limited liability company, joint venture, trust, enterprise or nonprofit entity, including service with respect to employee benefit plans, against all liability and loss suffered and expenses (including attorneys' fees) reasonably incurred by such Indemnitee. Notwithstanding the preceding sentence, except as otherwise provided in section 11.3, the corporation shall be required to indemnify an Indemnitee in connection with a proceeding (or part thereof) commenced by such Indemnitee only if the commencement of such proceeding (or part thereof) by the Indemnitee was authorized by the board of directors of the corporation. 11.2 Prepayment of Expenses. The corporation shall pay the ------------------------ expenses (including attorneys' fees) incurred by an Indemnitee of the corporation in defending any proceeding in advance of its final disposition, provided, however, that, to the extent required by law, such payment of expenses in advance of the final disposition of the proceeding shall be made only upon receipt of an undertaking by the Indemnitee to repay all amounts advanced if it should be ultimately determined that the Indemnitee is not entitled to be indemnified under sections 11.1-11.7 of these by- laws or otherwise. Except as otherwise provided in Section 11.3, the corporation 24 shall be required to pay expenses in advance in connection with a proceeding (or part thereof) commenced by such Indemnitee only if the commencement of such proceeding (or part thereof) by the Indemnitee was authorized by the board of directors of the corporation. 11.3 Claims. If a claim for indemnification or advancement of ------ expenses under sections 11.1-11.7 of these by-laws is not paid in full within sixty days after a written claim therefor by the Indemnitee has been received by the corporation, the Indemnitee may file suit to recover the unpaid amount of such claim and, if successful in whole or in part, shall be entitled to be paid the reasonable expense of prosecuting such claim. In any such action the corporation shall have the burden of proving that the Indemnitee is not entitled to the requested indemnification or advancement of expenses under applicable law. 11.4 Nonexclusivity of Rights. The rights conferred on any -------------------------- Indemnitee by sections 11.1-11.7 of these by-laws shall not be exclusive of any other rights which such Indemnitee may have or hereafter acquire under any statute, provision of the certificate of incorporation, these by-laws, agreement, vote of stockholders or disinterested directors or otherwise. 11.5 Other Sources. The corporation's obligation, if any, to ------------- indemnify or to advance expenses to any Indemnitee who was or is serving at its request as a director, officer, employee or agent of another corporation, partnership, limited liability company, joint venture, trust, enterprise or nonprofit entity shall be reduced by any amount such Indemnitee may collect as indemnification or advancement of expenses from such other corporation, partnership, limited liability company, joint venture, trust, enterprise or non-profit enterprise. 11.6 Amendment or Repeal. Any repeal or modification of the --------------------- foregoing provisions of sections 11.1-11.5 of these by-laws shall not adversely affect any right or protection hereunder of any Indemnitee in respect of any act or omission occurring prior to the time of such repeal or modification. 11.7 Other Indemnification and Prepayment of Expenses . Sections -------------------------------------------------- 11.1-11.6 of these by-laws shall not limit the right of the corporation, to the extent and in the manner permitted by law, to indemnify or to advance expenses to persons other than Indemnitees when and as authorized by appropriate corporate action. MISCELLANEOUS 12.1 Principal Office. The principal office of the corporation in ----------------- the State of Delaware shall be located at 1209 Orange Street in the City of Wilmington, County of New Castle. 25 12.2 Other Offices. The principal office outside the State of ------------- Delaware shall be at DeWitt, New York. The corporation may also have an office or offices at such other place or places, within or without the State of Delaware as the board of directors may from time to time appoint, or the business of the corporation may require. 12.3 Method of Giving Notice. Whenever in these by-laws notice is ----------------------- required to be given, it may be given by any one or more of the following methods: (a) Delivered personally; or (b) Written notice either deposited in the mail postage prepaid or sent by telegraph, addressed to the residence or place of business of the person to be notified as the same shall appear on the records of the corporation; or (c) To members or stockholders by publication in any corporation bulletin or other periodical mailed to members or stockholders; or (d) Any other means permitted under applicable law,including by means of electronic transmission pursuant to Section 232 of the Delaware General Corporation Law. 12.4 Waiver of Notice. The transactions of any meeting of the board ---------------- of directors or any committee however called and noticed or wherever held, shall be as valid as though had at a meeting duly held, after regular call and notice, if a quorum be present, and if, either before or after the meeting, each of the directors or committee members not present signs a written waiver of notice, a waiver of notice by electronic transmission or a consent to holding such meeting. All such waivers or consents shall be filed with the corporate records or made a part of the minutes of the meeting. 12.5 Effect of Holiday. If the time designated herein for any ------------------- meeting shall fall upon a legal holiday, then any such meeting shall be held on the next day following which is not a holiday. 12.6 Fiscal Year. The fiscal year of the corporation shall extend ----------- from July 1 to June 30 following. 12.7 Seal. The seal of the corporation shall be circular in form ---- and shall have inscribed thereon the name of the corporation, the year of organization and the words: "Corporate Seal, Delaware." 26 12.8 Amendments. These by-laws may be amended or repealed or new ---------- by-laws adopted as follows: (a) At any meeting of stockholders, by a vote of a majority of the stockholders present and voting, provided that the notice of the meeting shall have set forth the substance of the proposed amendment, repeal or new by-law provision upon which the vote is taken, or (b) By vote of a majority of the directors present at a meeting at which a quorum is present unless otherwise provided by law, the certificate of incorporation or these by-laws. 27 EX-4 3 exh4a.txt EXHIBIT 4 RESOLUTIONS ----------- The following resolutions were approved and adopted by the Board of Directors of AGWAY, INC.: RESOLVED, That the Company offer for sale to its members, potential members, other interested parties, and to the Trustee of the Agway, Inc. Employees' 401(k) Thrift Investment Plan, the following securities at the prices indicated:
TITLE AMOUNT PRICE - ----- ------ ----- Preferred Stock, Series B $100 par value up to 100% 10,000 Shares Preferred Stock, Series C $100 par value up to 100% 70,000 Shares Honorary Member Preferred Stock up to 100% $25 par value 4,000 shares Common Stock $25 par value up to 100% 4,000 shares
pursuant to the By-Laws of the Company through designated employees, provided that no commission or other remuneration shall be paid to any person with respect to the sale of such securities; and be it FURTHER RESOLVED, That the Company approves Agway Financial Corporation (AFC), a wholly-owned subsidiary of Agway (or Agway, if AFC is merged with Agway or if Agway assumes the obligations of AFC), offering for sale to Agway members, other interested parties, to the Trustee of the Agway, Inc. Employees' 401(k) Thrift Investment Plan, and to the Trustee of the Employees' Retirement Plan of Agway, Inc. a total principal amount of $495,000,000, guaranteed as to payment of interest and principal by Agway to be allocated among the securities described below by the AFC Board of Directors: PRICE ----- Subordinated Money Market Certificates 100% due October 31, 2016 (Minimum 8.25% per annum; Member; denomination of $5,000) Subordinated Money Market Certificates 100% due October 31, 2016 (Minimum 7.75% per annum; General; denomination of $5,000) Subordinated Money Market Certificates 100% due October 31, 2016 (Minimum 8.00% per annum; Member; denomination of $100) Subordinated Money Market Certificates 100% due October 31, 2016 (Minimum 7.50% per annum; General; denomination of $100) Subordinated Money Market Certificates 100% due October 31, 2009 (Minimum 8.75% per annum; General; denomination of $2,000) Subordinated Money Market Certificates 100% due October 31, 2005 (Minimum 8.50% per annum; General; denomination of $2,000) provided that no commission or other remuneration shall be paid to any person with respect to the sale of such securities; and be it FURTHER RESOLVED, That the Company approves Agway Financial Corporation, a wholly-owned subsidiary, offering for sale to Agway members, other interested parties, and to the Trustee of the Agway, Inc. Employees' 401(k) Thrift Investment Plan, the following securities registered under the reinvestment option: Subordinated Money Market Certificates 100% (due from October 31, 2001 through October 31, 2016; minimum 4.5% to 9.75% per annum) provided that no commission or other remuneration shall be paid to any person with respect to the sale of such securities; and be it FURTHER RESOLVED, That the AFC Board of Directors (or Agway, if AFC is merged with Agway or if Agway assumes the obligations of AFC, through a Committee designated by Agway's President) is hereby authorized to allocate the principal amount of the securities, within the offering approved by the Company, not to exceed the total principal amount approved. In the event that the principal amount of the securities is reallocated, a prospectus supplement may be filed with the Securities and Exchange Commission and a copy of the resolution may be filed; and be it FURTHER RESOLVED, That the AFC Board of Directors (or Agway, if AFC is merged with Agway or if Agway assumes the obligations of AFC, through a Committee designated by Agway's President) is hereby authorized to revise the minimum interest rates and maturity dates on certificates of any class or series to be issued. In the event that the minimum interest rates or maturity dates are so revised, an officer's certificate with a copy of the resolution of the AFC Board certified by the President or any Vice President and by the Treasurer, the Secretary or any Assistant Treasurer or Assistant Secretary shall be delivered to the Trustee under the Indenture for such certificate. A prospectus supplement may be filed with the Securities and Exchange Commission and a copy of the resolution may be filed; and be it FURTHER RESOLVED, That the appropriate officers and employees of the Company with the assistance of its accountants and attorneys be, and they hereby are, authorized and directed to prepare, execute and file with the Securities and Exchange Commission on behalf of the Company Registration Statements including any and all documents and exhibits related thereto for registration under the Securities Act of 1933 of the Common Stock and Preferred Stock as well as any and all amendments to said Registration Statements in such form as the officers executing same on advice of counsel may deem necessary and appropriate so as to secure and maintain the effectiveness of said Registration Statements; and be it FURTHER RESOLVED, That Christopher W. Fox, Esq., Senior Vice President, General Counsel and Secretary of the Company, Nels G. Magnuson, Esq., Deputy General Counsel and Assistant Secretary of the Company and Theresa A. Szuba, Esq., Associate General Counsel and Assistant Secretary of the Company, be, and they hereby are, each of them appointed and designated as persons duly authorized to receive communications and notices from the Securities and Exchange Commission with respect to the aforesaid Registration Statements; and be it FURTHER RESOLVED, That the Common Stock and Preferred Stock when issued and sold for cash as provided here and above shall be fully paid and nonassessable; and be it FURTHER RESOLVED, That the President or any Vice President, the Secretary or any Assistant Secretary, and the Treasurer of this Company be, and each of them hereby is, authorized to take, on behalf of and in the name of this Company, any and all actions, which, in the judgment of the officer taking the action, is necessary, useful or appropriate in order to render Common Stock or Preferred Stock of this Company, to be issued and sold pursuant to resolutions adopted by this Board at this meeting, to be eligible for offering and sale within or from any state of the United States under the securities regulation laws of such state, and to qualify the Company as a securities dealer under any such laws, including, but without limiting the generality of the foregoing, making or filing applications for any and all licenses, permits, orders or other approvals or clearances under such laws, and in that connection, executing and filing any and all documents, including but without limiting the generality of the foregoing, consents to service of process and appointment of agents to accept service of process on behalf of this Company with respect to any matter as to which such consent or appointment may be required by such securities laws and making such agreements, covenants and undertakings as may be necessary, useful or appropriate, and all such consents, appointments, agreements, covenants and undertakings heretofore or hereinafter given or entered into pursuant to the authority of this resolution shall be binding upon this Company with the same effect as though set forth in full herein and expressly authorized hereby; and be it further FURTHER RESOLVED, that it is desirable and in the best interest of this Corporation that its securities be qualified or registered for sale in various states; that the President or any Vice President and the Secretary or an Assistant Secretary hereby are authorized to determine the states in which appropriate action shall be taken to qualify or register for sale all or such part of the securities of this Corporation as said officers may deem advisable; that said officers are hereby authorized to perform on behalf of this Corporation any and all such acts as they may deem necessary or advisable in order to comply with the applicable laws of any such states, and in connection therewith to execute and file all requisite papers and documents, including, but not limited to, applications, reports, surety bonds, irrevocable consents and appointments of attorneys for service of process; and the execution by such officers of any such paper or document or the doing by them of any act in connection with the foregoing matters shall conclusively establish their authority therefor from this Corporation and the approval and ratification by this Corporation of the papers and documents so executed and the action so taken. I, Christine M. Stilwell, Assistant Secretary of AGWAY, INC., hereby certify that the foregoing is a true and complete copy of the resolutions duly approved and duly adopted by the Board of Directors of this Corporation at a meeting held on the 28th day of March, 2001, at which a quorum was present and more than a majority of the Directors voted in the affirmative. The foregoing resolutions have not been amended, modified, rescinded, revoked or terminated. WITNESS my signature and seal of this Corporation this 6th day of April, 2001. Assistant Secretary RESOLUTIONS The following resolutions were approved and adopted by the Board of Directors of AGWAY FINANCIAL CORPORATION: RESOLVED, That the Company (or Agway, Inc., if the Company is merged with Agway or if Agway assumes the obligations of the Company), offer for sale to Agway members, other interested parties, to the Trustee of the Agway, Inc. Employees' 401(k) Thrift Investment Plan, and to the Trustee of the Employees' Retirement Plan of Agway, Inc. a total principal amount of $495,000,000, guaranteed as to payment of interest and principal by Agway to be allocated among the securities described below: PRICE ----- Subordinated Money Market Certificates 100% due October 31, 2016 (Minimum 8.25% per annum; Member; denomination of $5,000) Subordinated Money Market Certificates 100% due October 31, 2016 (Minimum 7.75% per annum; General; denomination of $5,000) Subordinated Money Market Certificates 100% due October 31, 2016 (Minimum 8.00% per annum; Member; denomination of $100) Subordinated Money Market Certificates 100% due October 31, 2016 (Minimum 7.50% per annum; General; denomination of $100) Subordinated Money Market Certificates 100% due October 31, 2009 (Minimum 8.75% per annum; General; denomination of $2,000) Subordinated Money Market Certificates 100% due October 31, 2005 (Minimum 8.50% per annum; General; denomination of $2,000) provided that no commission or other remuneration shall be paid to any person with respect to the sale of such securities; and be it FURTHER RESOLVED, That the Company (or Agway, Inc., if the Company is merged with Agway or if Agway assumes the obligations of the Company) offer for sale to Agway members, -2- other interested parties, and to the Trustee of the Agway, Inc. Employees' 401(k) Thrift Investment Plan, the following securities registered under the reinvestment option: Subordinated Money Market Certificates 100% (due from October 31, 2001 through October 31, 2016; minimum 4.5% to 9.75% per annum) provided that no commission or other remuneration shall be paid to any person with respect to the sale of such securities; and be it FURTHER RESOLVED, That the Company's Board of Directors (or Agway, Inc., if the Company is merged with Agway or if Agway assumes the obligations of the Company, through a Committee designated by Agway's President) is hereby authorized to allocate the principal amount of the securities, within the offering approved by the Company, not to exceed the total principal amount approved. In the event that the principal amount of the securities is reallocated, a prospectus supplement may be filed with the Securities and Exchange Commission and a copy of the resolution may be filed; and be it FURTHER RESOLVED, That the Company's Board of Directors (or Agway, Inc., if the Company is merged with Agway or if Agway assumes the obligations of the Company, through a Committee designated by Agway's President) is hereby authorized to revise the minimum interest rates and maturity dates on certificates of any class or series to be issued. In the event that the minimum interest rates or maturity dates are so revised, an officer's certificate with a copy of the resolution of the AFC Board certified by the President or any Vice President and by the Treasurer, the Secretary or any Assistant Treasurer or Assistant Secretary shall be delivered to the Trustee under the Indenture for such certificate. A prospectus supplement may be filed with the Securities and Exchange Commission and a copy of the resolution may be filed; and be it FURTHER RESOLVED, That the appropriate officers and employees of the Company with the assistance of its accountants and attorneys be, and they hereby are, authorized and directed to prepare, execute and file with the Securities and Exchange Commission on behalf of the Company Registration Statements including any and all documents and exhibits related thereto for registration under the Securities Act of 1933 of the Subordinated Money Market Certificates as well as any and all amendments to said Registration Statements in such form as the officers -3- executing same on advice of counsel may deem necessary and appropriate so as to secure and maintain the effectiveness of said Registration Statements; and be it FURTHER RESOLVED, That Christopher W. Fox, Esq., Senior Vice President,General Counsel and Secretary of the Company, Nels G. Magnuson, Esq., Deputy General Counsel and Assistant Secretary of the Company and Theresa A. Szuba, Esq., Associate General Counsel and Assistant Secretary of the Company, be, and they hereby are, each of them appointed and designated as persons duly authorized to receive communications and notices from the Securities and Exchange Commission with respect to the aforesaid Registration Statements; and be it FURTHER RESOLVED, That the President or any Vice President, the Secretary or any Assistant Secretary, and the Treasurer of this Company be, and each of them hereby is, authorized to take, on behalf of and in the name of this Company, any and all actions, which, in the judgment of the officer taking the action, is necessary, useful or appropriate in order to render Subordinated Money Market Certificates of this Company, to be issued and sold pursuant to resolutions adopted by this Board, to be eligible for offering and sale within or from any state of the United States under the securities regulation laws of such state, and to qualify the Company as a securities dealer under any such laws, including, but without limiting the generality of the foregoing, making or filing applications for any and all licenses, permits, orders or other approvals or clearances under such laws, and in that connection, executing and filing any and all documents, including but without limiting the generality of the foregoing, consents to service of process and appointment of agents to accept service of process on behalf of this Company with respect to any matter as to which such consent or appointment may be required by such securities laws and making such agreements, covenants and undertakings as may be necessary, useful or appropriate, and all such consents, appointments, agreements, covenants and undertakings heretofore or hereinafter given or entered into pursuant to the authority of this resolution shall be binding upon this Company with the same effect as though set forth in full herein and expressly authorized hereby; and be it further FURTHER RESOLVED, that it is desirable and in the best interest of this Corporation that its securities be qualified or registered for sale in various states; that the President or any Vice President and the Secretary or an Assistant Secretary hereby are authorized to determine the states in which appropriate action shall be taken to qualify or register for sale all or such -4- part of the securities of this Corporation as said officers may deem advisable; that said officers are hereby authorized to perform on behalf of this Corporation any and all such acts as they may deem necessary or advisable in order to comply with the applicable laws of any such states, and in connection therewith to execute and file all requisite papers and documents, including, but not limited to, applications, reports, surety bonds, irrevocable consents and appointments of attorneys for service of process; and the execution by such officers of any such paper or document or the doing by them of any act in connection with the foregoing matters shall conclusively establish their authority therefor from this Corporation and the approval and ratification by this Corporation of the papers and documents so executed and the action so taken. I, Christine M. Stilwell, Secretary of AGWAY FINANCIAL CORPORATION, hereby certify that the foregoing is a true and complete copy of the resolutions duly approved and duly adopted by unanimous written consent of the Directors of this Corporation as of the 30th day of March, 2001. The foregoing resolutions have not been amended, modified, rescinded, revoked or terminated. WITNESS my signature and seal of this Corporation this 12th day of April, 2001. Secretary EX-5 4 exh5a.txt (logo) AGWAY INC., PO BOX 4933, SYRACUSE, NEW YORK 13221-4933 June 6, 2001 Agway Inc. 333 Butternut Drive DeWitt, NY 13214 Re: File No. 333-59808, Form S-3 ---------------------------- Gentlemen: As General Counsel of Agway Inc., I am acting as your legal counsel in connection with the registration of 4,000 shares ($25 par value) of Series HM Preferred Stock and 4,000 shares ($25 par value) of Membership Common Stock (hereinafter referred to as the "Equity Securities"), being registered with the Securities and Exchange Commission on Form S-3. I am familiar with the relevant documents and materials used in preparing such registration. Based upon my review of the relevant documents and materials, it is my opinion that: (a) Agway Inc. is a valid and existing Delaware corporation; (b) The Equity Securities being registered with the Securities and Exchange Commission on Form S-3 will, when sold, be legally issued, fully paid and non-assessable subject to bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting creditors' rights and remedies generally and subject, as to enforceability, to general principles of equity, involving, without limitation, principles of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in a proceeding at law or in equity) so long as (i) the Registration Statement remains effective under the Securities Act of 1933, as amended, and (ii) the Equity Securities shall have been duly executed and shall have been duly delivered to the purchasers thereof against payment of the agreed consideration therefor; and (c) The matters of law and legal conclusions set forth under "Description of Honorary Member Preferred Stock, Series HM", and "Description of Membership Common Stock" in the Prospectus filed as a part of said registration are correct. This letter is written to be used as an exhibit in the filing of the Registration Statement, and I hereby consent to the reference to my name under the caption "LEGAL OPINION" in the Prospectus. Very truly yours, /s/ Christopher W. Fox ---------------------- Christopher W. Fox Senior Vice President General Counsel Agway Inc. (LOGO) AGWAY FINANCIAL CORPORATION, PO BOX 8985, WILMINGTON, DE 19899 302-654-8371 June 6, 2001 Agway Financial Corporation Suite 1300 1105 North Market Street Wilmington, Delaware 19801 Re: File No. 333-59808, Form S-3 ---------------------------- Gentlemen: As General Counsel of Agway Financial Corporation ("AFC"), I am acting as your legal counsel in connection with the registration of $350,000,000 in principal amount of Subordinated Member Money Market Certificates, Subordinated Money Market Certificates and Money Market Certificates, member and general, under the interest reinvestment option (hereinafter referred to as the "Debt Securities"), being registered with the Securities and Exchange Commission on Form S-3. I am familiar with the relevant documents and materials used in preparing such registration. Based upon my review of the relevant documents and materials, it is my opinion that: (a) AFC is a valid and existing Delaware corporation; (b) The Debt Securities being registered with the Securities and Exchange Commission on Form S-3 will, when sold, be legally issued and binding obligations of Agway Financial Corporation enforceable in accordance with their terms subject to bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting creditors' rights and remedies generally and subject, as to enforceability, to general principles of equity, involving, without limitation, principles of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in a proceeding at law or in equity) so long as (i) the Registration Statement remains effective under the Securities Act of 1933, as amended, and the Indentures continue to qualify under the Trust Indenture Act of 1939, as amended, and (ii) the Debt Securities shall have been duly executed and authenticated as provided in the Indentures, and shall have been duly delivered to the purchasers thereof against payment of the agreed consideration therefor; and (c) The matters of law and legal conclusions set forth under "Description of the Certificates" in the Prospectus filed as a part of said registration are correct. This letter is written to be used as an exhibit in the filing of the Registration Statement, and I hereby consent to the reference to my name under the caption "LEGAL OPINION" in the Prospectus. Very truly yours, /s/ Christopher W. Fox ---------------------- Christopher W. Fox General Counsel Agway Financial Corporation EX-12 5 exh12a.txt EXHIBIT 12 COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED DIVIDENDS COMBINED
AGWAY INC. AND CONSOLIDATED SUBSIDIARIES (THOUSANDS OF DOLLARS) --------------------------------------------------------------------- FOR THE 9 MONTHS ENDED MARCH FOR THE YEARS ENDED JUNE ---------------------------------------------------------- 2001 2000 1999 1998 1997 1996 --------- ---------- ----------- --------- --------- -------- Earnings before income taxes and member refunds ............ $ (1,206) $ 13,015 $ 23,200 $ 30,184 $ 13,226 $ 17,531 Fixed charges - Interest ...... 60,794 71,580 62,369 61,395 58,016 58,450 - Rentals ....... 3,954 5,272 4,768 4,131 3,434 2,828 -------- -------- -------- -------- -------- -------- Total fixed charges ........... 64,748 76,852 67,137 65,526 61,450 61,278 -------- -------- -------- -------- -------- -------- Adjusted net earnings ......... $ 63,542 $ 89,867 $ 90,337 $ 95,710 $ 74,676 $ 78,809 ======== ======== ======== ======== ======== ======== Ratio of adjusted net earnings to total fixed charges ........ (a) 1.2 1.3 1.5 1.2 1.3 ======== ======== ======== ======== ======== ======== Deficiency of adjusted net earnings to total fixed charges $ (1,206) N/D N/D N/D N/D N/D ======== ======== ======== ======== ======== ======== Fixed charges and preferred dividends combined: Preferred dividend factor: Preferred dividend requirements ............... $ 1,429 $ 3,060 $ 3,287 $ 3,522 $ 4,115 $ 4,255 Ratio of pre-tax earnings to after-tax earnings* ........ 274.4% 47.3% 55.8% 53.0% 64.3% 50.5% Preferred dividend factor on pre-tax basis .............. 521 6,469 5,891 6,645 6,400 8,426 Total fixed charges (above) ... 64,748 76,852 67,137 65,526 61,450 61,278 -------- -------- -------- -------- -------- -------- Fixed charges and preferred dividends combined ............ $ 65,269 $ 83,321 $ 73,028 $ 72,171 $ 67,850 $ 69,704 ======== ======== ======== ======== ======== ======== Ratio of adjusted net earnings to fixed charges and preferred dividends combined** .......... (b) 1.1 1.2 1.3 1.1 1.1 ======== ======== ======== ======== ======== ======== Deficiency of adjusted net earnings to fixed charges and preferred dividends combined ...................... $ (1,727) N/D N/D N/D N/D N/D ======== ======== ======== ======== ======== ========
* Represents after-tax earnings (loss) from continuing operations divided by pre-tax earnings (loss) from continuing operations, which adjusts dividends on preferred stock to a pre-tax basis. ** Represents adjusted net earnings divided by fixed charges and preferred dividends combined. N/D No deficiency. (a) Adjusted net earnings are inadeequate to cover total fixed charges. (b) Adjusted net earnings are inadequate to cover total fixed charges and preferred dividends combined. COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED DIVIDENDS COMBINED
AGWAY INC. (PARENT) (THOUSANDS OF DOLLARS) ------------------------------------------------------------------------- FOR THE 9 MONTHS ENDED MARCH FOR THE YEARS ENDED JUNE ------------------------------------------------------------ 2001 2000 1999 1998 1997 1996 ----------- --------- --------- --------- --------- --------- Earnings before income taxes and member refunds .............. $(12,270) $ 1,993 $ 14,077 $ 20,243 $ (2,541) $ 19,323 Fixed charges - Interest....... 17,325 18,085 13,660 8,575 10,626 9,723 - Rentals ....... 2,395 3,193 3,017 2,604 2,135 1,614 -------- -------- -------- -------- -------- -------- Total fixed charges ............. 19,720 21,278 16,677 11,179 12,761 11,337 -------- -------- -------- -------- -------- -------- Adjusted net earnings ........... $ 7,450 $ 23,271 $ 30,754 $ 31,422 $ 10,220 $ 30,660 ======== ======== ======== ======== ======== ======== Ratio of adjusted net earnings to total fixed charges .......... (a) 1.1 1.8 2.8 (a) 2.7 ======== ======== ======== ======== ======== ======== Deficiency of adjusted net earnings to total fixed charges . $(12,270) N/D N/D N/D $ (2,541) N/D ======== ======== ======== ======== ======== ======== Fixed charges and preferred dividends combined: Preferred dividend factor: Preferred dividend requirements ......... $ 1,429 $ 3,060 $ 3,287 $ 3,522 $ 4,115 $ 4,255 Ratio of pre-tax earnings to after-tax earnings* .......... 46.2% (12.0%) 143.2% 124.6% (215.2%) 95.8% Preferred dividend factor on . pre-tax basis ................ 3,093 (25,500) 2,295 2,826 (1,913) 4,441 Total fixed charges (above) ..... 19,720 21,278 16,677 11,179 12,761 11,337 -------- -------- -------- -------- -------- -------- Fixed charges and preferred dividends combined .............. $ 22,813 $ (4,222) $ 18,972 $ 14,005 $ 10,848 $ 15,778 ======== ======== ======== ======== ======== ======== Ratio of adjusted net earnings to fixed charges and preferred dividends combined** ............ (b) 5.5 2.0 2.2 (b) 1.9 ======== ======== ======== ======== ======== ======== Deficiency of adjusted net earnings to fixed charges and preferred dividends combined ........................ $(15,363) N/D N/D N/D $ (628) N/D ======== ======== ======== ======== ======== ========
* Represents after-tax net earnings (loss) from continuing operations divided by pre-tax earnings (loss) from continuing operations, which adjusts dividends on preferred stock to a pre-tax basis. ** Represents adjusted net earnings divided by fixed charges and preferred dividends combined. N/D No deficiency. (a) Adjusted net earnings are inadequate to cover total fixed charges. (b) Adjusted net earnings are inadequate to cover total fixed charges and preferred dividends combined. EX-23 6 exh23a.txt EXHIBIT 23 CONSENT OF COUNSEL The consent of Christopher W. Fox, Esq., Deputy General Counsel of Agway Inc. and General Counsel of Agway Financial Corporation, is included in his opinions, copies of which are filed as Exhibit 5. Mr. Fox is also a director of Agway Financial Corporation. CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in this Registration Statement on Form S-3 of our report dated August 30, 2000 relating to the financial statements and financial statement schedules, which appears in Agway Inc.'s Annual Report on Form 10-K for the year ended June 24, 2000. We also consent to the references to us under the headings "Experts" and "Selected Financial Data" in such Registration Statement. PricewaterhouseCoopers LLP Syracuse, New York June 7, 2001 EX-25 7 exh25a.txt EXHIBIT 25 ------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 ------------------------- FORM T-1 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE ------------------------------------------- CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) ________ ---------------------------------------- THE CHASE MANHATTAN BANK (Exact name of trustee as specified in its charter) New York 13-4994650 (State of incorporation (I.R.S. employer if not a national bank) identification No.) 270 Park Avenue New York, New York 10017 (Address of principal executive offices) (Zip Code) William H. McDavid General Counsel 270 Park Avenue New York, New York 10017 Tel: (212) 270-2611 (Name, address and telephone number of agent for service) --------------------------------------------- Agway, Inc. (Exact name of obligor as specified in its charter) Delaware 15-0277720 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification No.) 333 Butternut Drive DeWitt, New York 13214 (Address of principal executive offices) (Zip Code) ----------- Debt Securities GENERAL Item 1. General Information. Furnish the following information as to the trustee: (a) Name and address of each examining or supervising authority to which it is subject. New York State Banking Department, State House, Albany, New York 12110. Board of Governors of the Federal Reserve System, Washington, D.C., 20551 Federal Reserve Bank of New York, District No. 2, 33 Liberty Street, New York, N.Y. Federal Deposit Insurance Corporation, Washington, D.C., 20429. (b) Whether it is authorized to exercise corporate trust powers. Yes. Item 2. Affiliations with the Obligor. If the obligor is an affiliate of the trustee, describe each such affiliation. None. - 2 - Item 16. List of Exhibits List below all exhibits filed as a part of this Statement of Eligibility. 1. A copy of the Articles of Association of the Trustee as now in effect, including the Organization Certificate and the Certificates of Amendment dated February 17, 1969, August 31, 1977, December 31, 1980, September 9, 1982, February 28, 1985, December 2, 1991 and July 10, 1996 (see Exhibit 1 to Form T-1 filed in connection with Registration Statement No. 333-06249, which is incorporated by reference). 2. A copy of the Certificate of Authority of the Trustee to Commence Business (see Exhibit 2 to Form T-1 filed in connection with Registration Statement No. 33-50010, which is incorporated by reference. On July 14, 1996, in connection with the merger of Chemical Bank and The Chase Manhattan Bank (National Association), Chemical Bank, the surviving corporation, was renamed The Chase Manhattan Bank). 3. None, authorization to exercise corporate trust powers being contained in the documents identified above as Exhibits 1 and 2. 4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to Form T-1 filed in connection with Registration Statement No. 333-06249, which is incorporated by reference). 5. Not applicable. 6. The consent of the Trustee required by Section 321(b) of the Act (see Exhibit 6 to Form T-1 filed in connection with Registration Statement No. 33-50010, which is incorporated by reference. On July 14, 1996, in connection with the merger of Chemical Bank and The Chase Manhattan Bank (National Association), Chemical Bank, the surviving corporation, was renamed The Chase Manhattan Bank). 7. A copy of the latest report of condition of the Trustee, published pursuant to law or the requirements of its supervising or examining authority. 8. Not applicable. 9. Not applicable. SIGNATURE Pursuant to the requirements of the Trust Indenture Act of 1939 the Trustee, The Chase Manhattan Bank, a corporation organized and existing under the laws of the State of New York, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of New York and State of New York, on the 8th day of March, 1999. THE CHASE MANHATTAN BANK By /s/ Sheik Wiltshire ------------------------------------------- /s/ Sheik Wiltshire, -------------------------------------------- Assistant Vice President - 3 - Exhibit 7 to Form T-1 Bank Call Notice RESERVE DISTRICT NO. 2 CONSOLIDATED REPORT OF CONDITION OF The Chase Manhattan Bank of 270 Park Avenue, New York, New York 10017 and Foreign and Domestic Subsidiaries, a member of the Federal Reserve System, at the close of business December 31, 2000, in accordance with a call made by the Federal Reserve Bank of this District pursuant to the provisions of the Federal Reserve Act. Dollar Amounts ASSETS in Millions Cash and balances due from depository institutions: Noninterest-bearing balances and currency and coin .......................................... $ 22,648 Interest-bearing balances .................................. 6,608 Securities: Held to maturity securities ..................................... 556 Available for sale securities ................................... 66,556 Federal funds sold and securities purchased under agreements to resell ....................................... 35,508 Loans and lease financing receivables: Loans and leases, net of unearned income $158,034 Less: Allowance for loan and lease losses 2,399 Less: Allocated transfer risk reserve .. 0 -------- Loans and leases, net of unearned income, allowance, and reserve ..................................... 155,635 Trading Assets .................................................. 59,802 Premises and fixed assets (including capitalized leases) .................................................... 4,398 Other real estate owned ......................................... 20 Investments in unconsolidated subsidiaries and associated companies ....................................... 338 Customers' liability to this bank on acceptances outstanding ................................................ 367 Intangible assets ............................................... 4,794 Other assets .................................................... 19,886 -------- TOTAL ASSETS .................................................... $377,116 ======== - 4 - LIABILITIES Deposits In domestic offices ............................................... $132,165 Noninterest-bearing .................................. $ 54,608 Interest-bearing ..................................... 77,557 In foreign offices, Edge and Agreement subsidiaries and IBF's ............................................ 106,670 Noninterest-bearing .................................... $ 6,059 Interest-bearing ....................................... 100,611 Federal funds purchased and securities sold under agree- ments to repurchase ............................................... 45,967 Demand notes issued to the U.S. Treasury .......................... 500 Trading liabilities ............................................... 41,384 Other borrowed money (includes mortgage indebtedness and obligations under capitalized leases): With a remaining maturity of one year or less ..................... 6,722 With a remaining maturity of more than one year through three years ........................................ 0 With a remaining maturity of more than three years ......... 276 Bank's liability on acceptances executed and outstanding .......... 367 Subordinated notes and debentures ................................. 6,349 Other liabilities ................................................. 14,515 TOTAL LIABILITIES ................................................. 354,915 EQUITY CAPITAL Perpetual preferred stock and related surplus ..................... 0 Common stock ...................................................... 1,211 Surplus (exclude all surplus related to preferred stock).......... 12,614 Undivided profits and capital reserves ............................ 8,658 Net unrealized holding gains (losses) on available-for-sale securities .................................. (298) Accumulated net gains (losses) on cash flow hedges ................ 0 Cumulative foreign currency translation adjustments ............... 16 TOTAL EQUITY CAPITAL .............................................. 22,201 --------- TOTAL LIABILITIES AND EQUITY CAPITAL .............................. $ 377,116 ========= I, Joseph L. Sclafani, E.V.P. & Controller of the above-named bank, do hereby declare that this Report of Condition has been prepared in conformance with the instructions issued by the appropriate Federal regulatory authority and is true to the best of my knowledge and belief. /s/ JOSEPH L. SCLAFANI ----------------------- We, the undersigned directors, attest to the correctness of this Report of Condition and declare that it has been examined by us, and to the best of our knowledge and belief has been prepared in conformance with the in- structions issued by the appropriate Federal regulatory authority and is true and correct. DOUGLAS A. WARNER III ) WILLIAM B. HARRISON JR. )DIRECTORS ELLEN V. FUTTER ) -5- ------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 ------------------------- FORM T-1 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE ------------------------------------------- CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) ________ ---------------------------------------- THE CHASE MANHATTAN BANK (Exact name of trustee as specified in its charter) New York 13-4994650 (State of incorporation (I.R.S. employer if not a national bank) identification No.) 270 Park Avenue New York, New York 10017 (Address of principal executive offices) (Zip Code) William H. McDavid General Counsel 270 Park Avenue New York, New York 10017 Tel: (212) 270-2611 (Name, address and telephone number of agent for service) --------------------------------------------- Agway Financial Corporation (Exact name of obligor as specified in its charter) Delaware 06-1174232 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification No.) 1105 North Market Street, Suite 1300 Wilmington, Delaware 19801 (Address of principal executive offices) (Zip Code) ----------- Debt Securities Item 16. List of Exhibits List below all exhibits filed as a part of this Statement of Eligibility. 1. A copy of the Articles of Association of the Trustee as now in effect, including the Organization Certificate and the Certificates of Amendment dated February 17, 1969, August 31, 1977, December 31, 1980, September 9, 1982, February 28, 1985, December 2, 1991 and July 10, 1996 (see Exhibit 1 to Form T-1 filed in connection with Registration Statement No. 333-06249, which is incorporated by reference). 2. A copy of the Certificate of Authority of the Trustee to Commence Business (see Exhibit 2 to Form T-1 filed in connection with Registration Statement No. 33-50010, which is incorporated by reference. On July 14, 1996, in connection with the merger of Chemical Bank and The Chase Manhattan Bank (National Association), Chemical Bank, the surviving corporation, was renamed The Chase Manhattan Bank). 3. None, authorization to exercise corporate trust powers being contained in the documents identified above as Exhibits 1 and 2. 4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to Form T-1 filed in connection with Registration Statement No. 333-06249, which is incorporated by reference). 5. Not applicable. 6. The consent of the Trustee required by Section 321(b) of the Act (see Exhibit 6 to Form T-1 filed in connection with Registration Statement No. 33-50010, which is incorporated by reference. On July 14, 1996, in connection with the merger of Chemical Bank and The Chase Manhattan Bank (National Association), Chemical Bank, the surviving corporation, was renamed The Chase Manhattan Bank). 7. A copy of the latest report of condition of the Trustee, published pursuant to law or the requirements of its supervising or examining authority. 8. Not applicable. 9. Not applicable. SIGNATURE Pursuant to the requirements of the Trust Indenture Act of 1939 the Trustee, The Chase Manhattan Bank, a corporation organized and existing under the laws of the State of New York, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of New York and State of New York, on the 8th day of March, 1999. THE CHASE MANHATTAN BANK By /s/ Sheik Wiltshire ------------------------------------------- /s/ Sheik Wiltshire, Assistant Vice President -------------------------------------------- - 3 - Exhibit 7 to Form T-1 Bank Call Notice RESERVE DISTRICT NO. 2 CONSOLIDATED REPORT OF CONDITION OF The Chase Manhattan Bank of 270 Park Avenue, New York, New York 10017 and Foreign and Domestic Subsidiaries, a member of the Federal Reserve System, at the close of business December 31, 2000, in accordance with a call made by the Federal Reserve Bank of this District pursuant to the provisions of the Federal Reserve Act. Dollar Amounts ASSETS in Millions Cash and balances due from depository institutions: Noninterest-bearing balances and currency and coin .......................................... $ 22,648 Interest-bearing balances .................................. 6,608 Securities: Held to maturity securities ..................................... 556 Available for sale securities ................................... 66,556 Federal funds sold and securities purchased under agreements to resell ....................................... 35,508 Loans and lease financing receivables: Loans and leases, net of unearned income $158,034 Less: Allowance for loan and lease losses 2,399 Less: Allocated transfer risk reserve .. 0 -------- Loans and leases, net of unearned income, allowance, and reserve ..................................... 155,635 Trading Assets .................................................. 59,802 Premises and fixed assets (including capitalized leases) .................................................... 4,398 Other real estate owned ......................................... 20 Investments in unconsolidated subsidiaries and associated companies ....................................... 338 Customers' liability to this bank on acceptances outstanding ................................................ 367 Intangible assets ............................................... 4,794 Other assets .................................................... 19,886 -------- TOTAL ASSETS .................................................... $377,116 ======== - 4 - LIABILITIES Deposits In domestic offices ............................................... $132,165 Noninterest-bearing .................................. $ 54,608 Interest-bearing ..................................... 77,557 In foreign offices, Edge and Agreement subsidiaries and IBF's ............................................ 106,670 Noninterest-bearing .................................... $ 6,059 Interest-bearing ....................................... 100,611 Federal funds purchased and securities sold under agree- ments to repurchase ............................................... 45,967 Demand notes issued to the U.S. Treasury .......................... 500 Trading liabilities ............................................... 41,384 Other borrowed money (includes mortgage indebtedness and obligations under capitalized leases): With a remaining maturity of one year or less ..................... 6,722 With a remaining maturity of more than one year through three years ........................................ 0 With a remaining maturity of more than three years ......... 276 Bank's liability on acceptances executed and outstanding .......... 367 Subordinated notes and debentures ................................. 6,349 Other liabilities ................................................. 14,515 TOTAL LIABILITIES ................................................. 354,915 EQUITY CAPITAL Perpetual preferred stock and related surplus ..................... 0 Common stock ...................................................... 1,211 Surplus (exclude all surplus related to preferred stock).......... 12,614 Undivided profits and capital reserves ............................ 8,658 Net unrealized holding gains (losses) on available-for-sale securities .................................. (298) Accumulated net gains (losses) on cash flow hedges ................ 0 Cumulative foreign currency translation adjustments ............... 16 TOTAL EQUITY CAPITAL .............................................. 22,201 --------- TOTAL LIABILITIES AND EQUITY CAPITAL .............................. $ 377,116 ========= I, Joseph L. Sclafani, E.V.P. & Controller of the above-named bank, do hereby declare that this Report of Condition has been prepared in conformance with the instructions issued by the appropriate Federal regulatory authority and is true to the best of my knowledge and belief. /s/ JOSEPH L. SCLAFANI ----------------------- We, the undersigned directors, attest to the correctness of this Report of Condition and declare that it has been examined by us, and to the best of our knowledge and belief has been prepared in conformance with the in- structions issued by the appropriate Federal regulatory authority and is true and correct. DOUGLAS A. WARNER III ) WILLIAM B. HARRISON JR. )DIRECTORS ELLEN V. FUTTER ) -5- -----END PRIVACY-ENHANCED MESSAGE-----