PROSPECTUS
Receipts on Corporate Securities Trust, Series FDX 1997-1
Offer to Exchange Receipts of Corporate Securities,
Series FDX 1997-1, Amortizing Class, which have been
registered under the Securities Act of 1933, as amended,
for any and all outstanding
Receipts of Corporate Securities,
Series FDX 1997-1, Amortizing Class
The Exchange Offer will expire at 5:00 p.m., New York City
time, on Monday, September 21, 1998, unless extended.
The Receipts of Corporate Securities, Series FDX 1997-1,
Amortizing Class (the "New Certificates") issued by the Receipts
on Corporate Securities Trust, Series FDX 1997-1 (the "Trust"),
which have been registered under the Securities Act of 1933, as
amended (the "Securities Act"), pursuant to a Registration
Statement of which this Prospectus is a part, are hereby offered,
upon the terms and subject to the conditions set forth in this
Prospectus and the accompanying letter of transmittal (the
"Letter of Transmittal" and, together with this Prospectus, the
"Exchange Offer"), in exchange for an equal Notional Amount of
outstanding Receipts of Corporate Securities, Series FDX 1997-1,
Amortizing Class (the "Old Certificates"), of which $52,000,000
aggregate Notional Amount is outstanding as of the date hereof.
The Trust was formed pursuant to a trust agreement dated as of
August 28, 1997 as supplemented by the Series FDX 1997-1
Supplement (together, and as amended, the "Trust Agreement")
between Prudential Securities Structured Assets, Inc., as
depositor ("PSSA") and The Bank of New York, a New York banking
corporation, as trustee (the "Trustee"). The property of the
Trust will consist solely of $52,000,000 aggregate principal
amount of 7.60% Notes due July 1, 2097 (the "FedEx Notes") issued
by Federal Express Corporation ("FedEx"), having the
characteristics described in its prospectus dated June 7, 1997
and a supplement thereto dated June 7, 1997 (together, the "FedEx
Notes Prospectus"). The FedEx Notes were issued and sold as part
of an underwritten public offering of $250,000,000 aggregate
principal amount of such securities.
Any and all Old Certificates that are validly tendered and
not withdrawn on or prior to 5:00 P.M., New York City time, on
the date the Exchange Offer expires, which will be Monday,
September 21, 1998, (30 calendar days following the commencement
of the Exchange Offer) unless the Exchange Offer is extended
(such date, including as extended, the "Expiration Date"), will
be accepted for exchange. Tenders of Old Certificates may be
withdrawn at any time prior to 5:00 P.M., New York City time on
the Expiration Date. The Exchange Offer is not conditioned upon
any minimum principal amount of Old Certificates being tendered
for exchange. However, the Exchange Offer is subject to certain
customary conditions, which may be waived by the Trust, and to
the terms of the Registration Rights Agreement, dated as of
August 25, 1996 (the "Registration Rights Agreement"), between
PSSA and Prudential Securities Incorporated, as initial purchaser
("Prudential Securities"). Old Certificates may be tendered only
in minimum denominations of $100,000 Notional Amount and integral
multiples of $1,000 in excess thereof. See "The Exchange Offer".
The New Certificates will be entitled to the benefits of
the same Trust Agreement that governs the Old Certificates and
will govern the New Certificates. The form and terms of the New
Certificates are the same in all material respects as the form
and terms of the Old Certificates, except the New Certificates
have been registered under the Securities Act and therefore will
not bear certain legends restricting the transfer thereof. The
New Certificates will be issued in fully registered, certificated
form. See "The Exchange Offer" and "Description of the New
Certificates".
The Trust issued the Receipts of Corporate Securities
Series FDX 1997-1 (the "Trust Certificates") in two Series: the
Amortizing Class and the Residual Class, which collectively
represent the entire beneficial ownership of the Trust. Subject
to the occurrence of a Maturity Shortening Redemption or an
In-Kind Distribution (each as defined herein), the Amortizing
Class Certificates evidence fractional undivided beneficial
interests in all payments of interest accrued and paid on the
FedEx Notes on or before July 1, 2017 at a rate of 7.60% per
annum, compounded semiannually. Subject to such occurrences, the
Residual Class Certificates evidence fractional undivided
beneficial interests in all principal payments on the FedEx
Notes, and in interest accrued and paid on the FedEx Notes after
July 1, 2017. Trust Certificates were purchased at an original
issue discount. Subject to the occurrence of a Maturity
Shortening Redemption, no cash distributions will be made on the
Residual Class Certificates. Instead, the Residual Class
Certificates outstanding on July 1, 2017 will be terminated and
deemed involuntarily surrendered by the holders thereof in
exchange for a principal amount of the FedEx Notes underlying
<PAGE>
(continued from cover page)
such Residual Class Certificates equal to the aggregate
Certificate Principal Balance of such Residual Class
Certificates.
Upon the occurrence of a Tax Event (as defined herein) with
respect to the FedEx Notes, FedEx has the right to shorten the
maturity of the FedEx Notes to the extent required, in the
opinion of a nationally recognized independent tax counsel, such
that, after the shortening of the maturity, interest paid on the
FedEx Notes will be deductible by it for federal income tax
purposes. (Any such new maturity date is referred to herein as
the "Shortened Maturity Date.") If the Shortened Maturity Date is
on or prior to July 1, 2017, the Amortizing Class Certificates
and the Residual Class Certificates will be redeemed on the
Shortened Maturity Date (a "Maturity Shortening Redemption"). The
Trustee will distribute the payment received on the FedEx Notes
on the Shortened Maturity Date to the holders of the Residual
Class Certificates and the Amortizing Class Certificates,
respectively, in the same ratio as (i) the present value of all
originally scheduled future payments on the FedEx Notes after
July 1, 2017 bears to (ii) the present value of all originally
scheduled future payments on the Amortizing Class Certificates,
discounted semiannually in each case at a rate of 7.60% per annum
to the Shortened Maturity Date. Such ratio will be calculated by
PSSA, as calculation agent.
Losses realized on the FedEx Notes will be borne by the
holders of the Trust Certificates in the manner described herein.
See "Risk Factors--Events of Default" herein.
FedEx did not participate in, and did not receive any
proceeds in connection with, the sale of the Trust Certificates.
Based on interpretations by the staff of the Securities and
Exchange Commission (the "Commission"), as set forth in no-action
letters issued to third parties, including Exxon Capital Holdings
Corporation, SEC No-Action Letter (available April 13, 1989),
Morgan Stanley & Co. Incorporated, SEC No-Action Letter
(available June 5, 1991) and Shearman & Sterling, SEC No-Action
Letter (available July 2, 1993) (collectively, the "Exchange
Offer No-Action Letters"), PSSA believes that the New
Certificates issued pursuant to the Exchange Offer may be offered
for resale, resold or otherwise transferred by holders thereof
(other than a broker-dealer who acquires such New Certificates
directly from the Trust or PSSA for resale pursuant to Rule 144A
under the Securities Act or any other available exemption under
the Securities Act or any holder that is an "affiliate" of PSSA
as defined in Rule 405 under the Securities Act), without
compliance with the registration and prospectus delivery
provisions of the Securities Act, provided that such New
Certificates are acquired in the ordinary course of such holders'
business and such holders are not engaged in, and do not intend
to engage in, a distribution of such New Certificates and have no
arrangement with any person to participate in a distribution of
such New Certificates. By tendering the Old Certificates in
exchange for New Certificates, each holder, other than a
broker-dealer, will represent to the Trust that: (i) it is not an
affiliate of PSSA (as defined in Rule 405 under the Securities
Act) or a broker-dealer tendering Old Certificates acquired
directly from PSSA for its own account; (ii) any New Certificates
to be received by it will be acquired in the ordinary course of
its business; and (iii) it is not engaged in, and does not intend
to engage in, a distribution of such New Certificates and has no
arrangement or understanding to participate in a distribution of
the New Certificates. If a holder of Old Certificates is engaged
in or intends to engage in a distribution of the New Certificates
or has any arrangement or understanding with respect to the
distribution of the New Certificates to be acquired pursuant to
the Exchange Offer, such holder may not rely on the applicable
interpretations of the staff of the Commission and must comply
with the registration and prospectus delivery requirements of the
Securities Act in connection with any secondary resale
transaction. Each broker-dealer that receives New Certificates
for its own account pursuant to the Exchange Offer (a "Restricted
Broker-Dealer") must acknowledge that it will deliver a
prospectus in connection with any resale of such New
Certificates. The Letter of Transmittal states that by so
acknowledging and by delivering a prospectus, a Restricted
Broker-Dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act. This
Prospectus, as it may be amended or supplemented from time to
time, may be used by a Restricted Broker-Dealer in connection
with resales of New Certificates received in exchange for Old
Certificates where such Old Certificates were acquired by such
Restricted Broker-Dealer as a result of market-making activities
or other trading activities. Pursuant to the Registration Rights
Agreement, PSSA has agreed that starting on the Expiration Date
it will make this Prospectus available to any Restricted
Broker-Dealer for use in connection with any such resale for one
year. See "Plan of Distribution".
<PAGE>
(continued from cover page)
Neither the Trust nor PSSA will receive any proceeds from
this offering. PSSA has agreed to pay the expenses of the
Exchange Offer. No underwriter or dealer-manager is being
utilized in connection with the Exchange Offer.
THE EXCHANGE OFFER IS NOT BEING MADE TO, NOR WILL THE TRUST
ACCEPT SURRENDERS FOR EXCHANGE FROM, HOLDERS OF OLD CERTIFICATES
IN ANY JURISDICTION IN WHICH THE EXCHANGE OFFER OR THE ACCEPTANCE
THEREOF WOULD NOT BE IN COMPLIANCE WITH THE SECURITIES AND BLUE
SKY LAWS OF SUCH JURISDICTION.
Prior to this Exchange Offer, there has been no public
market for the New Certificates. Neither PSSA nor the Trust
intends to apply for listing of the New Certificates on any
securities exchange or for quotation of the New Certificates on
The Nasdaq Stock Market's National Market or otherwise.
Prudential Securities has previously made a market in the Old
Certificates, and the Trust has been advised that Prudential
Securities currently intends to make a market in the New
Certificates, as permitted by applicable laws and regulations,
after consummation of the Exchange Offer. Prudential Securities
is not obligated, however, to make a market in the Old
Certificates or the New Certificates and any such market-making
activity may be discontinued at any time without notice at the
sole discretion of Prudential Securities. There can be no
assurance as to the liquidity of the public market for the New
Certificates or that any active public market for the New
Certificates will develop or continue. If an active public market
does not develop or continue, the market price and liquidity of
the New Certificates may be adversely affected. See "Risk
Factors--Absence of a Public Market for the New Certificates".
--------------
FOR A DISCUSSION OF MATERIAL RISKS THAT SHOULD BE
CONSIDERED BY PARTICIPANTS IN THE EXCHANGE OFFER, SEE "RISK
FACTORS" BEGINNING ON PAGE 9 OF THIS PROSPECTUS.
--------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THIS PROSPECTUS AND THE RELATED LETTER OF TRANSMITTAL
CONTAIN IMPORTANT INFORMATION. HOLDERS OF OLD CERTIFICATES ARE
URGED TO READ THIS PROSPECTUS AND THE RELATED LETTER OF
TRANSMITTAL CAREFULLY BEFORE DECIDING WHETHER TO TENDER THEIR OLD
CERTIFICATES PURSUANT TO THE EXCHANGE OFFER.
--------------
The date of this Prospectus is August 21, 1998
<PAGE>
AVAILABLE INFORMATION REGARDING THE TRUST
PSSA on behalf of the Trust will be subject to the
informational requirements of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and in accordance
therewith will file reports and other information with the
Commission relating to the Trust. Such reports, proxy statements
and other information may be inspected and copied at the
following public reference facilities maintained by the
Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549; Seven World Trade Center, 13th Floor, New
York, New York 10048; and Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661. Copies of such
material may also be obtained from the Public Reference Section
of the Commission at Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, upon payment of prescribed
rates. The Commission maintains a Web site at http://www.sec.gov
containing reports, proxy statements and other information
regarding registrants that file electronically with the
Commission, including PSSA on behalf of the Trust.
The reports to be filed by PSSA on behalf of the Trust will
consist primarily of distribution date statements relating to the
distributions made on the Trust Certificates and certain material
events regarding the Trust, but not other financial information
or statements. The reports will also refer to the periodic
reports filed by FedEx so long as FedEx is a reporting company
under the Exchange Act. If FedEx ceases to be a reporting company
under the Exchange Act, information regarding FedEx and the FedEx
Notes will be limited to that received by the Trustee, as the
holder of the FedEx Notes, from the FedEx Notes Trustee as
required by the FedEx Notes Indenture.
This Prospectus constitutes a part of a registration
statement on Form S-4 (together with all amendments and exhibits,
the "Registration Statement") filed by the Trust and PSSA on
behalf of the Trust with the Commission, through the Electronic
Data Gathering, Analysis and Retrieval System ("EDGAR"), under
the Securities Act, with respect to the New Certificates offered
hereby. This Prospectus omits certain of the information
contained in the Registration Statement, and reference is hereby
made to the Registration Statement for further information with
respect to the Trust and Holdings and the securities offered
hereby. Although statements concerning and summaries of certain
documents are included herein, reference is made to the copy of
such document filed as an exhibit to the Registration Statement
or otherwise filed with the Commission. These documents may be
inspected without charge at the office of the Commission at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549,
and copies may be obtained at fees and charges prescribed by the
Commission.
No separate financial statements of the Trust have been
included or incorporated by reference herein. PSSA does not
believe such financial statements would be material to holders of
the New Certificates because the sole asset of the Trust consists
of debt obligations of an unaffiliated issuer that is a reporting
company under the Exchange Act. See "Description of the Trust
Assets--FedEx."
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission as
exhibits to the Registration Statement of which this Prospectus
is a part (File No. 333-59477) are hereby incorporated by
reference in this Prospectus: the Trust Agreement dated as of
August 28, 1997 between Prudential Securities Structured Assets,
Inc., as depositor, and The Bank of New York, as trustee, as
amended by Base Amendment No. 1 dated as of February 27, 1998 and
Amendment No. 2 dated as of April 28, 1998; the Series FDX 1997-1
Supplement dated as of August 28, 1997 between Prudential
Securities Structured Assets, Inc., as depositor, and The Bank of
New York, as trustee, as amended by Amendment No. 1 dated as of
December 9, 1997; and the Registration Rights Agreement dated as
of August 25, 1997 between Prudential Securities Structured
Assets, Inc. and Prudential Securities Incorporated.
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE THAT
ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS
ARE AVAILABLE WITHOUT CHARGE TO ANY PERSON TO WHOM A PROSPECTUS
IS DELIVERED, UPON WRITTEN OR ORAL REQUEST OF SUCH PERSON, FROM
PRUDENTIAL SECURITIES STRUCTURED ASSETS, INC., ONE NEW YORK
PLAZA, 14TH FLOOR, NEW YORK, N.Y. 10292-2014, ATTENTION: LINDA
MULLER. IN ORDER TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY
REQUEST SHOULD BE MADE BY SEPTEMBER 8, 1998.
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<PAGE>
PROSPECTUS SUMMARY
The following summary information is qualified in its
entirety by the detailed information appearing elsewhere or
incorporated by reference in this Prospectus. Prospective
investors are urged to read this Prospectus in its entirety.
Certain capitalized terms used herein are defined elsewhere in
this Prospectus. For an index of capitalized terms, please see
page 31.
The Issuer
Receipts on Corporate Securities Trust, Series FDX 1997-1
(the "Trust") formed pursuant to a Trust Agreement dated as of
August 28, 1997, between Prudential Securities Structured Assets,
Inc., as depositor ("PSSA"), and The Bank of New York, a New York
banking corporation, as trustee (the "Trustee"), as supplemented
by the Series FDX 1997-1 Supplement dated as of August 28, 1997
(together, and as amended, the "Trust Agreement"). PSSA is a
Delaware corporation and a wholly-owned subsidiary of Prudential
Securities Group Inc. ("PSGI"). On August 28, 1997, PSSA
deposited $52,000,000 aggregate principal amount of 7.60% Notes
due July 1, 2097 (the "FedEx Notes") issued by Federal Express
Corporation ("FedEx") with the Trustee in exchange for two
classes of Receipts of Corporate Securities, Series FDX 1997-1:
the Amortizing Class Certificates and the Residual Class
Certificates (the Old Certificates currently constitute, and the
New Certificates along with any Old Certificates not tendered in
the Exchange Offer will constitute, the entire Amortizing Class)
(together the "Trust Certificates").
The Corporate Trust Office of the Trustee is located at 101
Barclay Street, 12 East, New York, New York 10286, Attention:
Corporate Trust--Administration and its number is (212) 815-5098.
Description of the Trust Assets
The assets of the Trust consist solely of $52,000,000
aggregate principal amount of 7.60% Notes due July 1, 2097 issued
by FedEx and having the characteristics described in the FedEx
Notes Prospectus. The FedEx Notes were originally issued by FedEx
on June 10, 1997 as part of an underwritten public offering of
$250,000,000 aggregate principal amount of such securities (CUSIP
No. 313309AP1) pursuant to a registration statement on Form S-3
(File No. 333-07691) (together with all amendments and exhibits
thereto, the "FedEx Notes Registration Statement"), filed by
FedEx with the Commission under the Securities Act. Payments of
interest are required to be made on the FedEx Notes semiannually
on the first day of each January and July, commencing January 1,
1998, or if such day is not a business day, on the next
succeeding business day.
The FedEx Notes deposited in the Trust represent the sole
assets of the Trust that are available to make distributions in
respect of the Trust Certificates. Consequently, the ability of
holders of New Certificates to receive cash distributions in
respect of the New Certificates in the event of a Maturity
Shortening Redemption will depend on the Trust's receipt of
payments on, or in respect of, the FedEx Notes.
The Exchange Offer
The Exchange Offer........... New Certificates are being offered
in exchange for an equal Notional
Amount of Old Certificates. As of
the date hereof, Old Certificates
with an aggregate Notional Amount
of $52,000,000 are outstanding. Old
Certificates may be tendered only
in minimum denominations of
$100,000 and integral multiples of
$1,000 in excess thereof.
Registration Rights
Agreement.................... The Old Certificates were sold on
August 28, 1997 to Prudential
Securities. Prudential Securities
placed the Old Certificates with
institutional investors in a
transaction exempt from
registration under the Securities
Act in reliance on Rule 144A
thereunder. In
2
<PAGE>
connection therewith, PSSA and
Prudential Securities entered into
the Registration Rights Agreement,
providing, among other things, for
the Exchange Offer to occur. See
"The Exchange Offer--Terms of the
Exchange Offer".
Resale of New Certificates... Based on interpretations by the
staff of the Commission, as set
forth in no-action letters issued
to third parties, including the
Exchange Offer No-Action Letters,
PSSA believes that the New
Certificates issued pursuant to the
Exchange Offer may be offered for
resale, resold or otherwise
transferred by holders thereof
(other than a broker-dealer who
acquires such New Certificates
directly from the Trust for resale
pursuant to Rule 144A under the
Securities Act or any other
available exemption under the
Securities Act or any holder that
is an "affiliate" of PSSA as
defined under Rule 405 of the
Securities Act), without compliance
with the registration and
prospectus delivery provisions of
the Securities Act, provided that
such New Certificates are acquired
in the ordinary course of such
holders' business and such holders
are not engaged in, and do not
intend to engage in, a distribution
of such New Certificates and have
no arrangement with any person to
participate in a distribution of
such New Certificates. By tendering
the Old Certificates in exchange
for New Certificates, each holder,
other than a broker-dealer, will
represent to the Trust that: (i) it
is not an affiliate of PSSA (as
defined in Rule 405 under the
Securities Act) or a broker-dealer
tendering Old Certificates acquired
directly from PSSA for its own
account; (ii) any New Certificates
to be received by it were acquired
in the ordinary course of its
business; and (iii) it is not
engaged in, and does not intend to
engage in, a distribution of such
New Certificates and has no
arrangement or understanding to
participate in a distribution of
the New Certificates. If a holder
of Old Certificates is engaged in
or intends to engage in a
distribution of the New
Certificates or has any arrangement
or understanding with respect to
the distribution of the New
Certificates to be acquired
pursuant to the Exchange Offer,
such holder may not rely on the
applicable interpretations of the
staff of the Commission and must
comply with the registration and
prospectus delivery requirements of
the Securities Act in connection
with any secondary resale
transaction. Each Restricted
Broker-Dealer that receives New
Certificates for its own account
pursuant to the Exchange Offer must
acknowledge that it will deliver a
prospectus in connection with any
resale of such New Certificates.
The Letter of Transmittal states
that by so acknowledging and by
delivering a prospectus, a
Restricted Broker-Dealer will not
be deemed to admit that it is an
"underwriter" within the meaning of
the Securities Act. This
Prospectus, as it may be amended or
supplemented from time to time, may
be used by a Restricted
Broker-Dealer in connection with
resales of New Certificates
received in exchange for Old
Certificates where such Old
Certificates were acquired by such
Restricted Broker-Dealer as a
result of market-making activities
or other trading activities. PSSA
has agreed that it will make this
Prospectus available to any
Restricted Broker-Dealer for use in
connection with any such resale for
one year. See "Plan of
3
<PAGE>
Distribution". To comply with the
securities laws of certain
jurisdictions, it may be necessary
to qualify for sale or register the
New Certificates prior to offering
or selling such New Certificates.
PSSA has agreed, pursuant to the
Registration Rights Agreement and
subject to certain specified
limitations therein, to cause the
registration or qualification of
the New Certificates for offer or
sale under the securities or "blue
sky" laws of such jurisdictions as
may be necessary to permit the
holders of New Certificates to
trade the New Certificates without
any restrictions or limitations
under the securities laws of the
several states of the United
States.
Consequences of Failure
to Exchange Old
Certificates................. Upon consummation of the Exchange
Offer, subject to certain
exceptions, holders of Old
Certificates who do not exchange
their Old Certificates for New
Certificates in the Exchange Offer
will no longer be entitled to
registration rights and will not be
able to offer or sell their Old
Certificates, unless such Old
Certificates are subsequently
registered under the Securities Act
(which, subject to certain limited
exceptions, neither PSSA nor the
Trust will have an obligation to
do), except pursuant to an
exemption from, or in a transaction
not subject to, the Securities Act
and applicable state securities
laws. See "Risk Factors--Risk
Factors Relating to the New
Certificates and the Exchange
Offer--Consequences of Failure to
Exchange" and "The Exchange
Offer--Terms of the Exchange
Offer".
Expiration Date.............. 5:00 p.m., New York City time, on
Monday, September 21, 1998 (30
calendar days following the
commencement of the Exchange
Offer), unless the Exchange Offer
is extended, in which case the term
"Expiration Date" means the latest
date and time to which the Exchange
Offer is extended.
Conditions to the Exchange
Offer........................ The Exchange Offer is not condi-
tioned upon any minimum notional
amount of Old Certificates being
tendered for exchange. However, the
Exchange Offer is subject to
certain customary conditions, which
may be waived by the Trust. See
"The Exchange Offer--Conditions".
Except for the requirements of
applicable federal and state
securities laws, there are no
federal or state regulatory
requirements to be complied with,
or obtained by, the Trust or PSSA
in connection with the Exchange
Offer.
Procedures for Tendering
Old Certificates............. Each holder of Old Certificates
wishing to accept the Exchange
Offer must complete, sign and date
the Letter of Transmittal, or a
facsimile thereof, in accordance
with the instructions contained
herein and therein, and mail or
otherwise deliver such Letter of
Transmittal, or such facsimile,
together with the Old Certificates
to be exchanged and any other
required documentation to the
Exchange Agent at the address set
forth herein. See "The Exchange
Offer--Procedures for Tendering".
Guaranteed Delivery
Procedures................... Holders of Old Certificates who
wish to tender their Old
Certificates and whose Old
Certificates are not immediately
available or who cannot deliver
their Old Certificates and a
properly completed Letter of
Transmittal or any other documents
4
<PAGE>
required by the Letter of
Transmittal to the Exchange Agent
prior to the Expiration Date may
tender their Old Certificates
according to the guaranteed
delivery procedures set forth in
"The Exchange Offer--Guaranteed
Delivery Procedures".
Withdrawal Rights............ Tenders of Old Certificates may be
withdrawn at any time prior to 5:00
p.m., New York City time, on the
Expiration Date. To withdraw a
tender of Old Certificates, a
written or facsimile transmission
notice of withdrawal must be
received by the Exchange Agent at
its address set forth herein under
"The Exchange Offer--Exchange
Agent" prior to 5:00 p.m., New York
City time, on the Expiration Date.
Acceptance of Old Certi-
ficates and Delivery of
New Certificates............. Subject to certain conditions, any
and all Old Certificates that are
properly tendered in the Exchange
Offer prior to 5:00 p.m., New York
City time, on the Expiration Date
will be accepted for exchange. The
New Certificates issued pursuant to
the Exchange Offer will be
delivered promptly following the
Expiration Date. See "The Exchange
Offer--Terms of the Exchange
Offer".
Federal Income Tax
Consequences................. The exchange of New Certificates
for Old Certificates will not be a
sale or exchange or otherwise a
taxable event for federal income
tax purposes. See "U.S. Federal
Income Tax Consequences--Exchange
of Old Certificates for New
Certificates".
Exchange Agent............... The Bank of New York is serving as
exchange agent (the "Exchange
Agent") in connection with the
Exchange Offer. The Bank of New
York is also the Trustee.
Fees and Expenses............ All expenses incident to the
Trust's consummation of the
Exchange Offer and compliance with
the Registration Rights Agreement
will be borne by PSSA. See "The
Exchange Offer-- Fees and
Expenses".
Use of Proceeds.............. There will be no cash proceeds
payable to the Trust or PSSA from
the issuance of the New
Certificates pursuant to the
Exchange Offer. The proceeds from
the sale of the Old Certificates
were applied to the purchase of the
FedEx Notes and to pay issuance
costs. See "Use of Proceeds".
The New Certificates
The Exchange Offer relates to the exchange of up to
$52,000,000 aggregate Notional Amount of Old Certificates for up
to an equal aggregate Notional Amount of New Certificates. The
New Certificates will be entitled to the benefits of the same
Trust Agreement that governs the Old Certificates and will govern
the New Certificates. The form and terms of the New Certificates
are the same in all material respects as the form and terms of
the Old Certificates, except that the New Certificates have been
registered under the Securities Act and therefore will not bear
certain legends restricting the transfer thereof. In addition, as
a result of the rating assigned to the New Certificates, the New
Certificates will not be subject to restrictions on transfer
applicable to the Old Certificates pursuant to Rule 3a-7 under
the Investment Company Act of 1940, as amended ("Rule 3a-7"). See
"Description of the New Certificates".
5
<PAGE>
Trust Securities ............ The New Certificates (along with
any Old Certificates that are not
tendered in the Exchange Offer)
will constitute the "Amortizing
Class Certificates," one of two
classes of Trust Certificates,
which collectively represent the
entire undivided beneficial
ownership of the Trust. The
Amortizing Class Certificates have
a $52,000,000 aggregate Notional
Amount. The other class of Trust
Certificates consists of "Residual
Class Certificates" having a
$52,000,000 aggregate Certificate
Principal Balance. Subject to the
occurrence of a Maturity Shortening
Redemption or an In-Kind
Distribution, distributions on the
Amortizing Class Certificates will
be made semiannually on each
Distribution Date up to and
including July 1, 2017 in an amount
equal to the amount of interest due
and received on the FedEx Notes on
such Distribution Date.
Scheduled Distributions on
New Certificates ............ Subject to the occurrence of a
Maturity Shortening Redemption or
an In-Kind Distribution,
distributions on the New
Certificates will be made
semiannually on each Distribution
Date (as defined below) up to and
including July 1, 2017 in an amount
equal to the amount of interest due
and received on the FedEx Notes on
such Distribution Date. A
"Distribution Date" is the first
day of each January and July, or if
such day is not a Distribution
Business Day (as defined below),
then on the immediately following
Distribution Business Day. A
"Distribution Business Day" is the
first New York Business Day (as
defined below) following the FedEx
Notes Business Day (as defined
below) on which payments on the
FedEx Notes are due. A "New York
Business Day" means any day other
than a Saturday, Sunday or legal
holiday on which banking
institutions or trust companies in
New York City are authorized or
obligated by law, regulation or
executive order to be closed, and a
"FedEx Notes Business Day" is any
day other than a Saturday, Sunday
or other day on which banking
institutions in New York, Illinois
or Tennessee are obligated by law
to close.
Maturity Shortening
Redemption .................. Upon the occurrence of a Tax Event
with respect to the FedEx Notes,
FedEx has the right to shorten the
maturity of the FedEx Notes to the
extent required, in the opinion of
a nationally recognized independent
tax counsel, such that, after the
shortening of the maturity,
interest paid on the FedEx Notes
will be deductible by it for
federal income tax purposes. (Any
such new maturity date is referred
to herein as the "Shortened
Maturity Date.") If the Shortened
Maturity Date is on or prior to
July 1, 2017, the Amortizing Class
Certificates and the Residual Class
Certificates will be redeemed on
the Shortened Maturity Date (a
"Maturity Shortening Redemption").
The Trustee will distribute the
payment received on the FedEx Notes
on the Shortened Maturity Date to
the holders of the Residual Class
Certificates and the Amortizing
Class Certificates, respectively,
in the same ratio as (i) the
present value of all originally
scheduled future payments on the
FedEx Notes after July 1, 2017
bears to (ii) the present value of
all originally scheduled future
payments on the Amortizing Class
Certificates, discounted
semiannually in each case at a rate
of 7.60% per annum to the Shortened
Maturity Date. Such ratio will be
calculated by the Depositor, as
calculation agent (the "Calculation
Agent"). After
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such a distribution, holders of
Amortizing Class Certificates and
Residual Class Certificates will
receive no further distributions
from the Trust. A Maturity
Shortening Redemption as a result
of a Tax Event may increase the
amount of original issue discount
required to be included in a
holder's ordinary gross income. See
"U.S. Federal Income Tax
Consequences--Purchase and Holding
of Trust Certificates".
A "Tax Event" means that FedEx has
received an opinion of a nationally
recognized independent tax counsel
experienced in such matters to the
effect that on or after the date of
issuance of the FedEx Notes, as a
result of (a) any amendment to,
clarification of, or change
(including any announced
prospective change) in laws, or any
regulations thereunder, of the
United States; (b) any judicial
decision, official administrative
pronouncement, ruling, regulatory
procedure, notice or announcement,
including any notice or
announcement of intent to adopt
such procedures or regulations (an
"Administrative Action"); or (c)
any amendment to, clarification of
or change in the official position
or the interpretation of such
Administrative Action or judicial
decision that differs from the
therefore generally accepted
position, in each case, on or after
the date of this issuance of the
FedEx Notes, such change in tax law
creates a more than insubstantial
risk that interest paid by FedEx on
the FedEx Notes is not, or will not
be, deductible, in whole or in
part, by FedEx for purposes of
federal income tax. See
"Description of the New
Certificates--Maturity Shortening
Redemption".
In-Kind Distribution ........ Upon a Payment Default or an
Acceleration of the FedEx Notes
under the terms of the trust
indenture relating to the FedEx
Notes (the "FedEx Notes Indenture")
on or before July 1, 2017, the
Trustee will make an In-Kind
Distribution of the FedEx Notes to
the holders of the Trust
Certificates. Such distribution
will be made to the holders of the
Residual Class Certificates and the
Amortizing Class Certificates,
respectively, in the same ratio as
(i) the present value of all
originally scheduled future
payments on the FedEx Notes after
July 1, 2017 bears to (ii) the
present value of all originally
scheduled future payments on the
Amortizing Class Certificates,
discounted semiannually in each
case at a rate of 7.60% per annum
to the date of such Payment Default
or Acceleration. Such ratio will be
calculated by the Calculation
Agent. See "Description of New
Certificates--In-Kind
Distribution". After such a
distribution, holders of Amortizing
Class Certificates will receive no
further distributions from the
Trust. An In-Kind Distribution may
be treated in whole or in part as
equivalent to a taxable sale or
exchange. See "U.S. Federal Income
Tax Consequences--Distributions".
Record Dates ................ The fifth day immediately preceding
each Distribution Date.
Denominations ............... The New Certificates will be
denominated and payable in U.S.
dollars and will be issued in
definitive, fully-registered form
in minimum denominations of
$100,000 Notional Amount and
integral multiples of $1,000 in
excess thereof.
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<PAGE>
Federal Income Tax
Consequences ................ For U.S. federal income tax
purposes, the Trust will not be
treated as an association taxable
as a corporation (or a publicly
traded partnership treated as an
association). Although the
characterization of the Trust is
not certain, the Trust should be
treated for U.S. federal income tax
purposes as a grantor trust, and
the Trustee intends to report
income, gain, loss and deductions
to the Internal Revenue Service on
that basis. If the Trust were not
classified as a grantor trust, it
would be classified as a
partnership. In either event, the
Trust will not be subject to U.S.
federal income taxation.
Under the grantor trust
characterization, each holder of a
Trust Certificate will be treated
as owning the rights to those
payments on the FedEx Notes that
are allocable to that Trust
Certificate and will be taxed under
the "stripped bond" rules of the
Internal Revenue Code of 1986.
Under those rules, a holder of a
Trust Certificate will be required
to include in ordinary gross income
original issue discount income
based on the holder's yield to
maturity for the Trust Certificate.
The exchange of New Certificates
for Old Certificates will not be a
sale or exchange or otherwise a
taxable event for Federal income
tax purposes. See "U.S. Federal
Income Tax Consequences--Exchange
of Old Certificates for New
Certificates".
Ratings ..................... The New Certificates will be rated
"Baa2" by Moody's Investors
Service, Inc. and "BBB" by Standard
& Poor's Rating Services at
issuance. A security rating is not
a recommendation to buy, sell or
hold securities and may be subject
to revision or withdrawal at any
time by the assigning rating
organization.
8
<PAGE>
RISK FACTORS
Prior to tendering Old Certificates in the Exchange Offer,
holders of Old Certificates should carefully review the
information contained and incorporated by reference in this
Prospectus and should particularly consider the following
matters.
Limited Obligations and Interests
The New Certificates will not represent an obligation of,
or interest in, PSSA or any of its affiliates. The New
Certificates will not be insured or guaranteed by any government
agency or instrumentality, PSSA, any Person affiliated with PSSA
or the Trustee, or any other Person.
No Detailed Information About FedEx or the FedEx Notes
This Prospectus provides limited information with respect
to the FedEx Notes and FedEx, any risk factors relating thereto,
and any rights or obligations, legal, financial or otherwise,
arising under or related to the FedEx Notes. See "Description of
the Trust Assets".
Events of Default
If an event of default on the FedEx Notes occurs, the risk
of loss with respect to the FedEx Notes lies entirely with the
holders of the Trust Certificates. If a Payment Default or
Acceleration occurs with respect to the FedEx Notes, the Trustee
will distribute the FedEx Notes to the holders of the Trust
Certificates in an In-Kind Distribution. In connection with an
In-Kind Distribution, a holder will recognize gain or loss on
such exchange equal to the difference between the portion of the
amount realized on the exchange allocable to the holder and the
allocable portion of the holder's basis in the Certificate. See
"Description of the New Certificates--Distribution of the FedEx
Notes on Payment Default or Acceleration" herein. An In-Kind
Distribution may be treated in whole or in part as equivalent to
a taxable sale or exchange. See "U.S. Federal Income Tax
Consequences--Distributions".
Bankruptcy Risks
The New Certificates are payable solely from payments made
on the FedEx Notes by FedEx. FedEx is subject to laws permitting
bankruptcy, moratorium, reorganization or other actions which, in
the event of financial difficulties of FedEx, could result in
delays in distribution, partial distribution or non-distribution,
on the New Certificates. See "Description of the New Certifi-
cates--Distribution of the FedEx Notes on Payment Default or
Acceleration" herein.
Maturity and Redemption Considerations
The Amortizing Class Certificates are scheduled to receive
semiannual distributions as described in "Description of the New
Certificates--Collections and Distributions on New Certificates."
Potentially, the maturity and yield of the New Certificates could
be affected by (i) a cash distribution to holders of the Trust
Certificates upon a Shortened Maturity Redemption or (ii) a
distribution of the FedEx Notes to such holders upon an In-Kind
Distribution. In the event of a cash distribution on a Shortened
Maturity Date, holders of Trust Certificates will receive their
respective share (determined pursuant to a formula described in
"Description of the New Certificates--Maturity Shortening
Redemption") of the redemption price (which price will consist of
principal and accrued and unpaid interest, without premium);
holders may then need to reinvest at the then-prevailing market
rates rather than receiving a fixed-rate coupon of 7.60 percent
per annum for the period remaining prior to July 1, 2017. A
Maturity Shortening as a result of a Tax Event may increase the
amount of original issue discount required to be included in a
holder's ordinary gross income. See "U.S. Federal Income Tax
Consequences--Purchase and Holding of Trust Certificates". In the
event of an In-Kind Distribution, holders of New Certificates
will receive their share of the FedEx Notes (determined pursuant
to a formula described in "Description of the New Certificates--
Distribution of the FedEx Notes on Payment Default or
Acceleration") at the time of such distribution. An In-Kind
Distribution
9
<PAGE>
may be treated in whole or in part as equivalent to a taxable
sale or exchange. See "U.S. Federal Income Tax
Consequences--Distributions".
Passive Nature of the Trust
The Trustee with respect to the Trust Certificates will
hold the FedEx Notes for the benefit of the holders of the Trust
Certificates. The Trust will generally hold the FedEx Notes to
maturity and not dispose of them, regardless of adverse events,
financial or otherwise, which may affect FedEx or the value of
the FedEx Notes, except pursuant to an In-Kind Distribution to
holders of the Trust Certificates in exchange for their Trust
Certificates.
Risk Factors Relating to the Certificates and the Exchange Offer
Consequences of Failure to Exchange
Holders of Old Certificates who do not exchange their Old
Certificates for New Certificates pursuant to the Exchange Offer
will continue to be subject to the restrictions on transfer of
such Old Certificates as set forth in the legend thereon as a
consequence of the issuance of the Old Certificates pursuant to
exemptions from, or in transactions not subject to, the
registration requirements of the Securities Act and applicable
state securities laws. In addition, the Old Certificates will
remain subject to the transfer restrictions described therein
pursuant to Rule 3a-7. In general, the Old Certificates may not
be offered or sold, unless registered under the Securities Act,
except pursuant to an exemption from, or in a transaction not
subject to, the Securities Act and applicable state securities
laws. PSSA does not currently anticipate that it will register
the Old Certificates under the Securities Act. To the extent that
Old Certificates are tendered and accepted in the Exchange Offer,
the trading market for Old Certificates could be adversely
affected.
Absence of a Public Market for the New Certificates
Prior to the Exchange Offer, there has been no public
market for the New Certificates and it is uncertain whether such
a market will develop. Neither PSSA nor the Trust intends to
apply for listing of the New Certificates on any securities
exchange or for quotation of the New Certificates on The Nasdaq
Stock Market's National Market or otherwise. The Trust has been
advised by Prudential Securities that it currently intends to
make a market in the New Certificates, as permitted by applicable
laws and regulations, after consummation of the Exchange Offer.
Prudential Securities is not obligated, however, to make a market
in the New Certificates, and any such market-making activity may
be discontinued at any time without notice at the sole discretion
of Prudential Securities. There can be no assurance as to the
liquidity of the market for the New Certificates or that any
active market for the New Certificates will develop or continue.
If an active market does not develop or continue, the market
price and liquidity of the New Certificates may be adversely
affected.
USE OF PROCEEDS
There will be no cash proceeds payable to PSSA or the Trust
from the issuance of the New Certificates pursuant to the
Exchange Offer. PSSA sold the Old Certificates to Prudential
Securities, an affiliate of PSSA, as initial purchaser. The
proceeds from the sale of the Old Certificates were received by
PSSA and were applied to its purchase of the FedEx Notes, which,
after the purchase thereof, were deposited by PSSA in the Trust.
PSSA also paid the issuance costs out of the proceeds from the
sale of Old Certificates. PSSA obtained an intercompany loan from
PSGI to the extent the net proceeds from the sale of the Old
Certificates were insufficient to pay the full purchase price of
the FedEx Notes and issuance expenses. Such intercompany loan was
repaid in full from the proceeds of a subsequent sale of the
Amortizing Class Certificates.
FORMATION OF THE TRUST
Receipts on Corporate Securities Trust, Series FDX 1997-1
was formed under New York law pursuant to the Trust Agreement
dated as of August 28, 1997, as amended by Base Amendment No. 1
dated as of February 27,
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<PAGE>
1998 and Amendment No. 2 dated as of April 28, 1998, and as
supplemented by the Series FDX 1997-1 Supplement dated as of
August 28, 1997, as amended by Amendment No. 1 dated as of
December 9, 1997. Concurrently with the execution and delivery of
the Trust Certificates, PSSA deposited the FedEx Notes with the
Trustee. The Trustee, on behalf of the Trust, accepted the FedEx
Notes and delivered the Trust Certificates to PSSA. The Trustee
is holding the FedEx Notes for the benefit of the holders of the
Trust Certificates.
DESCRIPTION OF THE TRUST ASSETS
The assets of the Trust consist solely of $52,000,000
aggregate principal amount of 7.60% Notes due July 1, 2097 issued
by FedEx and having the characteristics described in the FedEx
Notes Prospectus. The FedEx Notes were originally issued by FedEx
on June 10, 1997 as part of an underwritten public offering of
$250,000,000 aggregate principal amount of such securities (CUSIP
No. 313309AP1) pursuant to a registration statement on Form S-3
(File No. 333-07691) (together with all amendments and exhibits
thereto, the "FedEx Notes Registration Statement"), filed by
FedEx with the Commission under the Securities Act. Payments of
interest are required to be made on the FedEx Notes semiannually
on the first day of each January and July, commencing January 1,
1998, or if such day is not a business day, on the next
succeeding business day.
The FedEx Notes deposited in the Trust represent the sole
assets of the Trust that are available to make distributions in
respect of the Trust Certificates. Consequently, the ability of
holders of New Certificates to receive cash distributions in
respect of the New Certificates in the event of a Maturity
Shortening Redemption will depend on the Trust's receipt of
payments on, or in respect of, the FedEx Notes in such an event.
Subject to the occurrence of a Maturity Shortening
Redemption or an In-Kind Distribution, holders of New
Certificates have rights to semiannual distributions up to and
including July 1, 2017 in an amount equal to the amount of
interest due and received on the FedEx Notes.
The FedEx Notes rank pari passu with all other unsecured
and unsubordinated indebtedness of FedEx. Under the FedEx Notes
Indenture, the events of default are as follows: (a) default for
more than 30 days in the payment of any interest; (b) default in
the payment of principal of, or premium, if any, at its maturity;
(c) default in the performance, or breach, of any other covenant
of FedEx in the FedEx Notes Indenture for more than 60 days after
written notice as provided in the FedEx Notes Indenture; and (d)
certain events in bankruptcy, insolvency or reorganization in
respect of FedEx.
The FedEx Notes may not be redeemed by FedEx prior to
maturity and are not subject to a sinking fund.
The FedEx Notes are denominated in United States dollars
and issued in fully registered form without coupons in
denominations of $1,000 and any integral multiples thereof. The
FedEx Notes were issued in book-entry form only and are held
through participants in the Depository Trust Company.
Shortening Maturity
The FedEx Notes Prospectus states as follows: FedEx intends
to deduct interest paid on the FedEx Notes for federal income tax
purposes. However, there have been proposed tax law changes that,
among other things, would have prohibited an issuer from
deducting interest payments on debt instruments with a maturity
of more than 40 years. While none of these proposals have become
law, there can be no assurance that similar legislation affecting
FedEx's ability to deduct interest paid on the FedEx Notes will
not be enacted in the future or that such legislation would not
have a retroactive effective date.
The FedEx Notes Prospectus states as follows: Upon the
occurrence of a Tax Event, FedEx will have the right to shorten
the maturity of the FedEx Notes to the extent required, in the
opinion of a nationally recognized independent tax counsel
experienced in such matters, so that, after such shortening of
the maturity, interest paid on the FedEx Notes will be deductible
for federal income tax purposes.
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<PAGE>
The FedEx Notes Prospectus states as follows: If the
maturity of the FedEx Notes is shortened on the occurrence of a
Tax Event, FedEx will mail a notice to each holder of record of
the FedEx Notes by first-class mail not more than 60 days after
the occurrence of such Tax Event, stating the new maturity date
of the FedEx Notes. Such notice will be effective immediately
upon mailing.
The FedEx Notes Prospectus states as follows: FedEx
believes that the FedEx Notes constitute indebtedness for federal
income tax purposes under current law and that the shortening of
the maturity of the FedEx Notes will not be a taxable event to
holders. Prospective investors should be aware, however, that the
shortening of the maturity of the FedEx Notes will be a taxable
event to holders if the FedEx Notes are treated as equity for
purposes of federal income taxation before the maturity is
shortened.
FedEx Notes Indenture
The FedEx Notes were issued under the Indenture, dated July
1, 1996, as amended or supplemented, between FedEx and The First
National Bank of Chicago, as trustee.
Modification, Amendment and Waiver
The FedEx Notes Prospectus states as follows: Modifications
and amendments of the FedEx Notes Indenture may be made by FedEx
and the FedEx Notes Trustee with the consent of the Holders of a
majority in principal amount of each series of debt securities
issued under the FedEx Notes Indenture (the FedEx Notes along
with the other $198,000,000 aggregate principal amount of 7.60%
Notes due July 1, 2097 issued by FedEx constitute one such series
(the "FedEx Notes Series")) to be affected if less than all
series are to be affected by such modification; provided,
however, that no such modification or amendment may, without the
consent of the Holder of each debt security affected thereby, (a)
change the Stated Maturity of the principal of, or any
installment of interest on, any such debt security; (b) reduce
the principal amount of, rate of interest on, or premium payable
upon the redemption of, any such debt security; (c) change any
place of payment where, or the currency in which, any debt
security or the interest or any premium thereon is payable; (d)
impair the right to institute suit for the enforcement of any
payment on or with respect to any such debt security on or after
the Stated Maturity thereof (or, in the case of redemption, on or
after the Redemption Date); or (e) reduce the percentage in
principal amount of outstanding debt securities the consent of
whose Holders is required for modification or amendment of the
FedEx Notes Indenture, for waiver of compliance with certain
provisions of the FedEx Notes Indenture or for waiver of certain
defaults.
The FedEx Notes Prospectus states as follows: The Holders
of a majority in principal amount of the outstanding notes of the
FedEx Notes Series may on behalf of the Holders of all notes of
the FedEx Notes Series waive any past default under the FedEx
Notes Indenture and its consequences, except a default in the
payment of the principal, premium, if any, or interest on any
notes of the FedEx Notes Series or in respect of a covenant or
provision which under the FedEx Notes Indenture cannot be
modified or amended without the consent of the Holder of each
outstanding of the debt securities affected.
The information under this caption is derived solely from
the description of the FedEx Notes contained in the FedEx Notes
Prospectus. An investor may wish to read this Prospectus in
conjunction with (i) the FedEx Notes Prospectus and (ii) the
FedEx Notes Registration Statement, of which the FedEx Notes
Prospectus is a part. This Prospectus relates only to New
Certificates offered hereby and does not relate to an offering of
the FedEx Notes. No representation is made by the Trust, the
Trustee or PSSA as to the accuracy or completeness of the
information contained in the FedEx Notes Prospectus or the FedEx
Notes Registration Statement.
FedEx
This Prospectus does not provide information with respect
to FedEx. No investigation has been made of the financial
condition or creditworthiness of FedEx or any of its subsidiaries
in connection with the issuance of the New Certificates. PSSA is
not an affiliate of FedEx. Prospective purchasers of the New
Certificates should
12
<PAGE>
consider carefully FedEx's financial condition and its ability to
make payments in respect of the FedEx Notes. All information
contained in this Prospectus regarding FedEx is derived from the
FedEx Notes Prospectus. Neither PSSA nor the Trust nor any of
their respective affiliates has participated in the preparation
of the FedEx Notes Prospectus or the FedEx Notes Registration
Statement, and takes no responsibility for the accuracy or
completeness of the information provided therein.
FedEx is presently subject to the informational
requirements of the Exchange Act, and in accordance therewith
files reports and other information (including financial
information) with the Commission. Copies of such reports and
other information may be inspected and copied at the public
reference facilities maintained by the Commission at 450 Fifth
Street, N.W., Room 1024, Washington, D.C. 20549; Seven World
Trade Center, Suite 1300, New York, New York 10048; and
Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661, and may be obtained from the Public
Reference Section of the Commission at Washington, D.C. 20549, at
prescribed rates. The Commission maintains a Web site at
http://www.sec.gov containing reports, proxy statements and other
information regarding registrants that file electronically with
the Commission. In addition, certain material described above and
other information will also be available for inspection at the
offices of the New York Stock Exchange at 20 Broad Street, New
York, New York. Neither PSSA nor the Trust nor any of their
respective affiliates has participated in the preparation of any
of the foregoing reports or other information filed by FedEx with
the Commission or the New York Stock Exchange or has made any
investigation with respect to the information contained therein.
If FedEx ceases to be a reporting company under the
Exchange Act, information regarding the FedEx Notes will be
limited to any information received by the Trustee, as the holder
of the FedEx Notes, pursuant to the FedEx Notes Indenture from
FedEx or the trustee under the FedEx Notes Indenture (the "FedEx
Notes Trustee"). The Trustee will furnish such information to
registered holders of the Trust Certificates promptly following
receipt.
The Trust will have no assets other than the FedEx Notes
from which to make distributions of amounts due in respect of the
Trust Certificates. Consequently, the ability of holders of Trust
Certificates to receive distributions and the timeliness of such
distributions in respect of the New Certificates will depend on
the Trust's receipt of payments on the FedEx Notes from FedEx.
Ratings
The FedEx Notes have been rated "Baa2" and "BBB" by Moody's
Investors Service, Inc. and Standard & Poor's Rating Services,
respectively. The New Certificates will be rated "Baa2" by
Moody's Investors Service, Inc. and "BBB" by Standard & Poor's
Rating Services at initial issuance. Any rating of the FedEx
Notes or the New Certificates is not a recommendation to
purchase, hold or sell the New Certificates, and there can be no
assurance that a rating will remain for any given period of time
or that a rating will not be revised or withdrawn entirely by a
rating agency if in its judgment circumstances in the future so
warrant.
Prudential Securities and FedEx
From time to time, Prudential Securities may be engaged by
FedEx as an underwriter or placement agent, in an advisory
capacity or in other business arrangements. In addition,
Prudential Securities or another affiliate of PSSA may make a
market in other outstanding securities of FedEx.
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<PAGE>
THE EXCHANGE OFFER
The summary herein of certain provisions of the
Registration Rights Agreement does not purport to be complete and
reference is made to the provisions of the Registration Rights
Agreement, filed as an exhibit to the Registration Statement of
which this Prospectus is a part.
Terms of the Exchange Offer
In connection with the sale of the Old Certificates
pursuant to a Purchase Agreement dated as of August 25, 1997,
between PSSA and Prudential Securities, their respective
assignees became entitled to the benefits of the Registration
Rights Agreement incorporated by reference hereto as described
under "Incorporation of Certain Documents by Reference".
Under the Registration Rights Agreement, except in certain
circumstances, PSSA is obligated to use its best efforts to (i)
file a Registration Statement (the "Exchange Offer Registration
Statement"), of which this Prospectus is a part, for a registered
exchange offer with respect to an issue of New Certificates
identical in all material respects to the Old Certificates within
60 calendar days after August 28, 1997, the date the Old
Certificates were issued, (ii) cause the Registration Statement
to become effective at the earliest possible time, (iii) in
connection with the foregoing, (A) file all pre-effective
amendments to such Exchange Offer Registration Statement as may
be necessary in order to cause such Exchange Offer Registration
Statement to become effective, (B) file, if applicable, a
post-effective amendment to such Exchange Offer Registration
Statement pursuant to Rule 430A under the Act and (C) cause all
necessary filings, if any, in connection with the registration
and qualification of the Exchange Certificates to be made under
the Blue Sky laws of such jurisdictions as are necessary to
permit consummation of the Exchange Offer and (iv) promptly after
the effectiveness of such Exchange Offer Registration Statement,
commence and consummate the Exchange Offer. The Trust will keep
the Exchange Offer open for a period of not less than 30 calendar
days and not more than 45 days after the date notice of the
Exchange Offer is mailed to Holders. The Exchange Offer being
made hereby, if commenced and consummated within the time periods
described in this paragraph, will satisfy those requirements
under the Registration Rights Agreement.
Upon the terms and subject to the conditions set forth in
this Prospectus and in the Letter of Transmittal (which together
constitute the Exchange Offer), all Old Certificates validly
tendered and not withdrawn prior to 5:00 p.m., New York City
time, on the Expiration Date will be accepted for exchange. New
Certificates of the same class will be issued in exchange for an
equal principal amount of outstanding Old Certificates accepted
in the Exchange Offer. Old Certificates may be tendered only in
minimum denominations of $100,000 Notional Amount and integral
multiples of $1,000 in excess thereof. This Prospectus, together
with the Letter of Transmittal, is being sent to all registered
holders as of August 21, 1998. The Exchange Offer is not
conditioned upon any minimum principal amount of Old Certificates
being tendered in exchange. However, the obligation to accept Old
Certificates for exchange pursuant to the Exchange Offer is
subject to certain conditions as set forth herein under
"--Conditions".
Old Certificates shall be deemed to have been accepted as
validly tendered when, as and if the Trustee has given oral or
written notice thereof to the Exchange Agent. The Exchange Agent
will act as agent for the tendering holders of Old Certificates
for the purposes of receiving the New Certificates and delivering
New Certificates to such holders.
Based on interpretations by the staff of the Commission, as
set forth in no-action letters issued to third parties, including
the Exchange Offer No-Action Letters, PSSA believes that the New
Certificates issued pursuant to the Exchange Offer may be offered
for resale, resold or otherwise transferred by holders thereof
(other than a broker-dealer who acquires such New Certificates
directly from PSSA for resale pursuant to Rule 144A under the
Securities Act or any other available exemption under the
Securities Act or any holder that is an "affiliate" of PSSA as
defined in Rule 405 under the Securities Act), without compliance
with the registration and prospectus delivery provisions of the
Securities Act, provided that such New Certificates are acquired
in the ordinary course of such holders' business and such holders
are not engaged in, and do not intend to engage in, a
distribution of such New Certificates and have no arrangement
with any person to participate in a distribution of such New
Certificates. By
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tendering the Old Certificates in exchange for New Certificates,
each holder, other than a broker-dealer, will represent to the
Trust that (i) it is not an affiliate of PSSA (as defined in Rule
405 under the Securities Act) or a broker-dealer tendering Old
Certificates acquired directly from the Trust or PSSA for its own
account; (ii) any New Certificates to be received by it will be
acquired in the ordinary course of its business; and (iii) it is
not engaged in, and does not intend to engage in, a distribution
of such New Certificates and has no arrangement or understanding
to participate in a distribution of the New Certificates. If a
holder of Old Certificates is engaged in or intends to engage in
a distribution of the New Certificates or has any arrangement or
understanding with respect to the distribution of the New
Certificates to be acquired pursuant to the Exchange Offer, such
holder may not rely on the applicable interpretations of the
staff of the Commission and must comply with the registration and
prospectus delivery requirements of the Securities Act in
connection with any secondary resale transaction. Each
Broker-Dealer that receives New Certificates for its own account
("Restricted Broker-Dealer") pursuant to the Exchange Offer must
acknowledge that it will deliver a prospectus in connection with
any resale of such New Certificates. The Letter of Transmittal
states that by so acknowledging and by delivering a prospectus, a
Restricted Broker-Dealer will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act. This
Prospectus, as it may be amended or supplemented from time to
time, may be used by a Restricted Broker-Dealer in connection
with resales of New Certificates received in exchange for Old
Certificates where such Old Certificates were acquired by such
Restricted Broker-Dealer as a result of market-making activities
or other trading activities. PSSA has agreed that for a period of
one year it will cause this Prospectus to be made available to
any Restricted Broker-Dealer for use in connection with any such
resale. See "Plan of Distribution".
If (i) PSSA is not required to file an Exchange Offer
Registration Statement with respect to the New Certificates
because the Exchange Offer is not permitted by applicable law or
(ii) if any holder of Old Certificates shall notify PSSA within
20 Business Days following the consummation of the Exchange Offer
that (A) such holder was prohibited by law or Commission policy
from participating in the Exchange Offer or (B) such holder may
not resell the Exchange Certificates acquired by it in the
Exchange Offer to the public without delivering a prospectus and
the prospectus contained in the Exchange Offer Registration
Statement is not appropriate or available for such resales by
such holder or (C) such holder is a Broker-Dealer and holds Old
Certificates acquired directly from any of the Trust or PSSA or
one of their respective Affiliates, then PSSA shall (x) cause to
be filed, on or prior to 60 days after the date on which PSSA
determines that it is not required to file the Exchange Offer
Registration Statement pursuant to clause (i) above, or 60 days
after the date on which PSSA receives the notice specified in
clause (ii) above, a shelf registration statement pursuant to
Rule 415 under the Securities Act (which may be an amendment to
the Exchange Offer Registration Statement (in either event, the
"Shelf Registration Statement") relating to all Old Certificates
the holders of which shall have provided the information required
by the Registration Rights Agreement, and shall (y) use its best
efforts to cause such Shelf Registration Statement to become
effective within 90 days after the date on which PSSA becomes
obligated to file such Shelf Registration Statement. PSSA shall
use its best efforts to keep the Shelf Registration Statement
continuously effective, supplemented and amended to the extent
necessary to ensure that it is available for sales of Old
Certificates by the holders thereof entitled to the benefit of
the Shelf Registration Statement, and to ensure that it conforms
with the requirements of the Registration Rights Agreement, the
Securities Act and the policies, rules and regulations of the
Commission as announced from time to time, for a period of not
more than one year following the date on which such Shelf
Registration Statement first becomes effective under the
Securities Act or such shorter period that will terminate when
all the Old Certificates covered by the Shelf Registration
Statement have been sold pursuant to the Shelf Registration
Statement.
Upon consummation of the Exchange Offer, subject to certain
exceptions, holders of Old Certificates who do not exchange their
Old Certificates for New Certificates in the Exchange Offer will
no longer be entitled to registration rights and will not be able
to offer or sell their Old Certificates, unless such Old
Certificates are subsequently registered under the Securities Act
(which, subject to certain limited exceptions, PSSA will have no
obligation to do), except pursuant to an exemption from, or in a
transaction not subject to, the Securities Act and applicable
state securities laws. See "Risk Factors--Risk Factors Relating
to the New Certificates and the Exchange Offer".
NEITHER PSSA NOR THE TRUSTEE MAKES ANY RECOMMENDATION TO
HOLDERS OF OLD CERTIFICATES AS TO WHETHER TO TENDER OR REFRAIN
FROM TENDERING ALL OR ANY
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PORTION OF THEIR OLD CERTIFICATES PURSUANT TO THE EXCHANGE OFFER.
IN ADDITION, NO ONE HAS BEEN AUTHORIZED TO MAKE ANY SUCH
RECOMMENDATION. HOLDERS OF OLD CERTIFICATES MUST MAKE THEIR OWN
DECISION WHETHER TO TENDER PURSUANT TO THE EXCHANGE OFFER AND, IF
SO, THE AGGREGATE AMOUNT OF OLD CERTIFICATES TO TENDER AFTER
READING THIS PROSPECTUS AND THE LETTER OF TRANSMITTAL AND
CONSULTING WITH THEIR ADVISERS, IF ANY, BASED ON THEIR OWN
FINANCIAL POSITION AND REQUIREMENTS.
Expiration Date; Extensions; Amendments; Termination
The term "Expiration Date" shall mean 5:00 p.m., New York
City time, on Monday, September 21, 1998 (30 calendar days
following the commencement of the Exchange Offer), unless PSSA,
in its sole discretion, instructs the Exchange Agent to extend
the Exchange Offer, in which case the term "Expiration Date"
shall mean the latest date to which the Exchange Offer is
extended.
In order to extend the Expiration Date, PSSA will notify
the Exchange Agent of any extension by oral or written notice and
will cause the Exchange Agent to notify the holders of the Old
Certificates by means of a press release or other public
announcement prior to 9:00 A.M., New York City time, on the next
business day after the previously scheduled Expiration Date. Such
announcement may state that the Trust is extending the Exchange
Offer for a specified period of time.
PSSA reserves the right to cause the Trust and the Exchange
Agent (i) to delay acceptance of any Old Certificates, to extend
the Exchange Offer or to terminate the Exchange Offer and not
permit acceptance of Old Certificates not previously accepted if
any of the conditions set forth herein under "-- Conditions"
shall have occurred and shall not have been waived by PSSA, by
giving oral or written notice of such delay, extension or
termination to the Exchange Agent, or (ii) to cause the Trustee
to amend the terms of the Exchange Offer in any manner deemed by
it to be advantageous to the holders of the Old Certificates. Any
such delay in acceptance, extension, termination or amendment
will be followed as promptly as practicable by oral or written
notice thereof to the Exchange Agent. If the Exchange Offer is
amended in a manner determined by PSSA to constitute a material
change, PSSA will promptly cause such amendment to be disclosed
in a manner reasonably calculated to inform the holders of the
Old Certificates of such amendment.
Without limiting the manner in which the Exchange Agent may
choose to make public announcement of any delay, extension,
amendment or termination of the Exchange Offer, the Exchange
Agent shall have no obligation to publish, advertise, or
otherwise communicate any such public announcement, other than by
making a timely release to an appropriate news agency.
Procedures for Tendering
To tender in the Exchange Offer, a holder must complete,
sign and date the Letter of Transmittal, or a facsimile thereof,
have the signatures thereon guaranteed if required by the Letter
of Transmittal, and mail or otherwise deliver such Letter of
Transmittal or such facsimile, together with any other required
documents, to the Exchange Agent prior to 5:00 p.m., New York
City time, on the Expiration Date. In addition, either (i)
certificates for such Old Certificates must be received by the
Exchange Agent along with the Letter of Transmittal or (ii) the
holder must comply with the guaranteed delivery procedures
described below. THE METHOD OF DELIVERY OF OLD CERTIFICATES,
LETTERS OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS IS AT THE
ELECTION AND RISK OF THE HOLDERS. IF SUCH DELIVERY IS BY MAIL, IT
IS RECOMMENDED THAT REGISTERED MAIL, PROPERLY INSURED, WITH
RETURN RECEIPT REQUESTED, BE USED. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ASSURE TIMELY DELIVERY. NO LETTERS OF
TRANSMITTAL OR OLD CERTIFICATES SHOULD BE SENT TO PSSA. Delivery
of all documents must be made to the Exchange Agent at its
address set forth below. Holders may also request their
respective brokers, dealers, commercial banks, trust companies or
nominees to effect such tender for such holders.
The tender by a holder of Old Certificates will constitute
an agreement between such holder and the Trust in accordance with
the terms and subject to the conditions set forth herein and in
the Letter of Transmittal.
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Only a holder of Old Certificates may tender such Old
Certificates in the Exchange Offer. The term "holder" with
respect to the Exchange Offer means any person in whose name Old
Certificates are registered on the books of the Trustee or any
other person who has obtained a properly completed bond power
from the registered holder.
Any beneficial owner whose Old Certificates are registered
in the name of a broker, dealer, commercial bank, trust company
or other nominee and who wishes to tender should contact such
registered holder promptly and instruct such registered holder to
tender on his behalf. If such beneficial owner wishes to tender
on his own behalf, such beneficial owner must, prior to
completing and executing the Letter of Transmittal and delivering
his Old Certificates, either make appropriate arrangements to
register ownership of the Old Certificates in such owner's name
or obtain a properly completed bond power from the registered
holder. The transfer of registered ownership may take
considerable time.
Signatures on a Letter of Transmittal or a notice of
withdrawal, as the case may be, must be guaranteed by any member
firm of a registered national securities exchange or of the
National Association of Securities Dealers, Inc., a commercial
bank or trust company having an office or correspondent in the
United States or an "eligible guarantor" institution within the
meaning of Rule 17Ad-15 under the Exchange Act (each an "Eligible
Institution") unless the Old Certificates tendered pursuant
thereto are tendered (i) by a registered holder who has not
completed the box entitled "Special Issuance Instructions" or
"Special Delivery Instructions" on the Letter of Transmittal or
(ii) for the account of an Eligible Institution.
If the Letter of Transmittal is signed by a person other
than the registered holder of any Old Certificates listed
therein, such Old Certificates must be endorsed or accompanied by
bond powers and a proxy which authorizes such person to tender
the Old Certificates on behalf of the registered holder, in each
case as the name of the registered holder or holders appears on
the Old Certificates.
If the Letter of Transmittal or any Old Certificates or
bond powers are signed by trustees, executors, administrators,
guardians, attorneys-in-fact, officers of corporations or others
acting in a fiduciary or representative capacity, such persons
should so indicate when signing, and unless waived by the
Trustee, evidence satisfactory to the Trustee of their authority
to so act must be submitted with the Letter of Transmittal.
All questions as to the validity, form, eligibility
(including time of receipt) and withdrawal of the tendered Old
Certificates will be determined by the Trustee in its sole
discretion, which determination will be final and binding. The
Trustee reserves the absolute right to reject any and all Old
Certificates not properly tendered or any Old Certificates which,
if accepted, would, in the opinion of counsel for PSSA, be
unlawful. The Trustee also reserves the absolute right to waive
any irregularities or conditions of tender as to particular Old
Certificates. The Trustee's interpretation of the terms and
conditions of the Exchange Offer (including the instructions in
the Letter of Transmittal) will be final and binding on all
parties. Unless waived, any defects or irregularities in
connection with tenders of Old Certificates must be cured within
such time as the Trustee shall determine. Neither the Trustee nor
PSSA, nor the Exchange Agent nor any other person shall be under
any duty to give notification of defects or irregularities with
respect to tenders of Old Certificates, nor shall any of them
incur any liability for failure to give such notification.
Tenders of Old Certificates will not be deemed to have been made
until such irregularities have been cured or waived. Any Old
Certificates received by the Exchange Agent that are not properly
tendered and as to which the defects or irregularities have not
been cured or waived will be returned without cost to such holder
by the Exchange Agent to the tendering holders of Old
Certificates, unless otherwise provided in the Letter of
Transmittal, as soon as practicable following the Expiration
Date.
In addition, PSSA reserves the right in its sole discretion
(i) to purchase or make offers for any Old Certificates that
remain outstanding subsequent to the Expiration Date or, as set
forth under "-- Conditions", to terminate the Exchange Offer in
accordance with the terms of the Registration Rights Agreement
and (ii) to the extent permitted by applicable law, to purchase
Old Certificates in the open market, in privately negotiated
transactions or otherwise. The terms of any such purchases or
offers could differ from the terms of the Exchange Offer.
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Acceptance of Old Certificates for Exchange; Delivery of New
Certificates
Upon satisfaction or waiver of all of the conditions to the
Exchange Offer, all Old Certificates properly tendered will be
accepted, promptly after the Expiration Date, and the New
Certificates will be issued promptly after acceptance of the Old
Certificates. For purposes of the Exchange Offer, Old
Certificates shall be deemed to have been accepted as validly
tendered for exchange when, as and if the Trustee has given oral
or written notice thereof to the Exchange Agent.
In all cases, issuance of New Certificates for Old
Certificates that are accepted for exchange pursuant to the
Exchange Offer will be made only after timely receipt by the
Exchange Agent of certificates for such Old Certificates, a
properly completed and duly executed Letter of Transmittal and
all other required documents. If any tendered Old Certificates
are not accepted for any reason set forth in the terms and
conditions of the Exchange Offer or if Old Certificates are
submitted for a greater principal amount than the holder desires
to exchange, such unaccepted or nonexchanged Old Certificates
will be returned without expense to the tendering holder thereof
as promptly as practicable after the expiration or termination of
the Exchange Offer.
Guaranteed Delivery Procedures
If a registered holder of the Old Certificates desires to
tender such Old Certificates, and the Old Certificates are not
immediately available, or time will not permit such holder's Old
Certificates or other required documents to reach the Exchange
Agent before the Expiration Date, a tender may be effected if (i)
the tender is made through an Eligible Institution, (ii) prior to
the Expiration Date, the Exchange Agent receives from such
Eligible Institution a properly completed and duly executed
Letter of Transmittal (or a facsimile thereof) and Notice of
Guaranteed Delivery, substantially in the form provided by PSSA
(by facsimile transmission, mail or hand delivery), setting forth
the name and address of the holder of Old Certificates and the
amount of Old Certificates tendered, stating that the tender is
being made thereby and guaranteeing that within three New York
Stock Exchange (the "NYSE") trading days after the date of
execution of the Notice of Guaranteed Delivery, the certificates
for all physically tendered Old Certificates, in proper form for
transfer, and any other documents required by the Letter of
Transmittal will be deposited by the Eligible Institution with
the Exchange Agent and (iii) the certificates for all physically
tendered Old Certificates, in proper form for transfer, and all
other documents required by the Letter of Transmittal are
received by the Exchange Agent within three NYSE trading days
after the date of execution of the Notice of Guaranteed Delivery.
Withdrawal of Tenders
Tenders of Old Certificates may be withdrawn at any time
prior to 5:00 p.m., New York City time on the Expiration Date.
For a withdrawal to be effective, a written notice of
withdrawal must be received by the Exchange Agent prior to 5:00
p.m., New York City time on the Expiration Date at one of the
addresses set forth below under "--Exchange Agent". Any such
notice of withdrawal must specify the name of the person having
tendered the Old Certificates to be withdrawn, identify the Old
Certificates to be withdrawn (including the principal amount of
such Old Certificates) and (where certificates for Old
Certificates have been transmitted) specify the name in which
such Old Certificates are registered, if different from that of
the withdrawing holder. If certificates for Old Certificates have
been delivered or otherwise identified to the Exchange Agent,
then, prior to the release of such certificates, the withdrawing
holder must also submit the serial numbers of the particular
certificates to be withdrawn and a signed notice of withdrawal
with signatures guaranteed by an Eligible Institution unless such
holder is an Eligible Institution. All questions as to the
validity, form and eligibility (including time of receipt) of
such notices will be determined by the Trustee, whose
determination shall be final and binding on all parties. Any Old
Certificates so withdrawn will be deemed not to have been validly
tendered for exchange for purposes of the Exchange Offer. Any Old
Certificates which have been tendered for exchange but which are
not exchanged for any reason will be returned to the holder
thereof without cost to such holder as soon as practicable after
withdrawal, rejection of tender or termination of the Exchange
Offer. Properly withdrawn Old Certificates may be retendered by
following one of the procedures described under "-- Procedures
for Tendering" above at any time on or prior to the Expiration
Date.
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Conditions
Notwithstanding any other term of the Exchange Offer, Old
Certificates will not be required to be accepted for exchange,
nor will New Certificates be issued in exchange for any Old
Certificates, and PSSA may cause the Trustee to terminate or
amend the Exchange Offer as provided herein before the acceptance
of such Old Certificates, if because of any change in law, or
applicable interpretations thereof by the Commission, PSSA
determines that the Trust is not permitted to effect the Exchange
Offer. PSSA has no obligation to, and will not knowingly, permit
acceptance of tenders of Old Certificates by the Trust from
affiliates of PSSA (within the meaning of Rule 405 under the
Securities Act) or from any other holder or holders who are not
eligible to participate in the Exchange Offer under applicable
law or interpretations thereof by the Commission, or if the New
Certificates to be received by such holder or holders of Old
Certificates in the Exchange Offer, upon receipt, will not be
tradable by such holder without restriction under the Securities
Act and the Exchange Act and without material restrictions under
the "blue sky" or securities laws of substantially all of the
states of the United States.
Exchange Agent
The Bank of New York has been appointed as Exchange Agent
for the Exchange Offer. Questions and requests for assistance and
requests for additional copies of this Prospectus or of the
Letter of Transmittal should be directed to the Exchange Agent
addressed as follows:
By Mail or By Hand:
The Bank of New York
101 Barclay Street, 12 East
New York, N.Y. 10286
Attention: Corporate Trust--Administration
Telephone: (212) 815-5098
Facsimile: (212) 815-5999
Fees and Expenses
The expenses of soliciting tenders pursuant to the Exchange
Offer will be borne by PSSA on behalf of the Trust pursuant to
the Registration Rights Agreement. The principal solicitation for
tenders pursuant to the Exchange Offer is being made by mail;
however, additional solicitations may be made by telegraph,
telephone, telecopy or in person by officers and regular
employees or agents of PSSA on behalf of the Trust.
PSSA will not make any payments to brokers, dealers or
other persons soliciting acceptances of the Exchange Offer. PSSA,
however, will pay on behalf of the Trust the Exchange Agent's
reasonable and customary fees for its services and will reimburse
the Exchange Agent for its reasonable out-of-pocket expenses in
connection therewith. PSSA may also pay on behalf of the Trust,
the reasonable out-of-pocket expenses incurred by brokerage
houses and other custodians, nominees and fiduciaries in
forwarding copies of the Prospectus and related documents to the
beneficial owners of the Old Certificates, and in handling or
forwarding tenders for exchange.
The expenses to be incurred in connection with the Exchange
Offer will be paid by PSSA on behalf of the Trust, including fees
and expenses of the Exchange Agent and Trustee and accounting,
legal, printing and related fees and expenses.
PSSA will pay all transfer taxes, if any, applicable to the
exchange of Old Certificates pursuant to the Exchange Offer. If,
however, certificates representing New Certificates or Old
Certificates for principal amounts not tendered or accepted for
exchange are to be delivered to, or are to be registered or
issued in the name of, any person other than the registered
holder of the Old Certificates tendered, or if tendered Old
Certificates are registered in the name of any person other than
the person signing the Letter of Transmittal, or if a transfer
tax is imposed for any reason other than the exchange of Old
Certificates pursuant to the Exchange Offer, then the amount of
any such transfer taxes (whether imposed on the registered holder
or any other persons) will be payable by the tendering
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holder. If satisfactory evidence of payment of such taxes or
exemption therefrom is not submitted with the Letter of
Transmittal, the amount of such transfer taxes will be billed
directly to such tendering holder.
DESCRIPTION OF THE NEW CERTIFICATES
General
The New Certificates will be denominated and distributions
with respect thereto will be payable in United States Dollars.
The Trust Certificates represent in the aggregate the entire
beneficial ownership interest in the Trust. The property of the
Trust will consist of (i) the FedEx Notes, (ii) all payments on
or collections in respect of the FedEx Notes received on or after
August 28, 1997, together with any proceeds thereof, and (iii)
all funds from time to time deposited with the Trustee in
accounts related to the Trust. The property of the Trust will be
held for the benefit of the holders of the Trust Certificates by
the Trustee. Holders of the New Certificates will receive
payments or distributions on each Distribution Date as described
herein. See "--Collections and Distributions."
The Trust Certificates represent two classes of undivided
fractional beneficial interests in the assets of the Trust, and
all distributions to holders of the Trust Certificates will be
made only from the property of the Trust as described herein. The
Trust Certificates are comprised of two classes representing the
entire undivided beneficial ownership of the Trust: the
Amortizing Class and the Residual Class (the Old Certificates
currently constitute, and the New Certificates along with any Old
Certificates not tendered in the Exchange Offer, will constitute
the entire Amortizing Class). The Amortizing Class is made up of
$52,000,000 aggregate notional amount of Amortizing Class
Certificates. Subject to the occurrence of a Maturity Shortening
Redemption or an In-Kind Distribution, distributions on the
Amortizing Class Certificates will be made semiannually on each
Distribution Date up to and including July 1, 2017 in an amount
equal to the amount of interest due and received on the FedEx
Notes on such Distribution Date. The Trust Certificates do not
represent an interest in or obligation of PSSA, FedEx, the FedEx
Notes Trustee or the Trustee or any affiliate of any of the
foregoing.
Subject to the occurrence of a Maturity Shortening
Redemption or an In-Kind Distribution, the Residual Class
Certificates evidence fractional undivided beneficial interests
in all principal payments on the FedEx Notes and in interest
accrued and paid on the FedEx Notes after July 1, 2017 at a rate
of 7.60% per annum.
The aggregate "Notional Amount" of the Amortizing Class
Certificates on any determination date will equal the aggregate
principal amount of the FedEx Notes in the Trust as of such date.
The Notional Amount of any Amortizing Class Certificate will
represent a pro rata portion of the then-current aggregate
Notional Amount of all outstanding Amortizing Class Certificates.
New Certificates may be transferred or exchanged for like
Certificates of the same Class at the corporate trust office or
agency of the Trustee in the City and State of New York, subject
to the limitations provided in the Trust Agreement, without the
payment of any service charge, other than any tax or governmental
charge payable in connection therewith.
Form of the New Certificates
The New Certificates will be issued in definitive
registered form in minimum denominations of $100,000 Notional
Amount and integral multiples of $1,000 in excess thereof.
Collections and Distributions on New Certificates
Subject to the occurrence of a Maturity Shortening
Redemption or an In-Kind Distribution, distributions on the New
Certificates will be made semiannually up to and including July
1, 2017 in an amount equal to the amount of interest due and
received on the FedEx Notes on such Distribution Date. The amount
of interest due on the FedEx Notes on each Distribution Date is
the product of (i) 7.60%, (ii) 180 divided by 360, and (iii)
$52,000,000. A "Distribution Date" is the first day of each
January and July, or if such day is not a Distribution
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Day (as defined below), then on the immediately following
Distribution Business Day. A "Distribution Business Day" is the
first New York Business Day (as defined below) following the
FedEx Notes Business Day (as defined below) on which payments on
the FedEx Notes are due. A "New York Business Day" means any day
other than a Saturday, Sunday or legal holiday on which banking
institutions or trust companies in New York City are authorized
or obligated by law, regulation or executive order to be closed,
and a "FedEx Notes Business Day" is any day other than a
Saturday, Sunday or other day on which banking institutions in
New York, Illinois or Tennessee are obligated by law to close.
Distributions with respect to New Certificates will be made
at the corporate trust office or agency of the Trustee in The
City of New York.
Any cash distribution on the New Certificates, upon a
liquidation of the Trust as described below, will be made (i) in
U.S. Dollars by or on behalf of the Trustee on the date of the
distribution and (ii) by check drawn on, or wire transfer, of
immediately available funds, but, with respect to the latter,
only if appropriate wire transfer instructions have been received
in writing by the Trustee not later than fifteen calendar days
prior to the date of the distribution. If a holder of New
Certificates wishes to receive cash payments by wire transfer,
such holder shall provide appropriate wire transfer instructions
by delivery of a written notice to the Trustee not later than
fifteen calendar days prior to the date of the distribution,
which will remain in effect until revoked by written notice to
such Trustee received not later than fifteen calendar days prior
to the date of the distribution. Any cash distribution by the
Trustee to the New Certificates shall be made, subject to timely
receipt of payments on the FedEx Notes and solely to the extent
of Available Funds. See "--Maturity Shortening Redemption."
"Available Funds" means, as of any date of the distribution, the
aggregate amount received on or with respect to the FedEx Notes
during the period from the preceding date of the distribution up
to and including such date of the distribution (each such period,
a "Collection Period"), and deposited in the Collection Account
and available for distribution on such date of the distribution.
If a payment with respect to the FedEx Notes is made to the
Trustee after the date on which such payment was due, the Trustee
will distribute any such amounts received on the Business Day
thereafter as if such funds had constituted Available Funds on
the date of the distribution immediately preceding such Business
Day; provided, however, that the Record Date for such
distribution shall be fifteen days prior to such Business Day and
no additional amounts will accrue on the Trust Certificates or be
owed to holders of Trust Certificates in respect of such
distribution.
All amounts received on or with respect to the FedEx Notes
shall be held uninvested by the Trustee. On July 1, 2017, the
Trustee will distribute the FedEx Notes in kind to the holders of
Residual Class Certificates, unless a Maturity Shortening
Redemption or an In-Kind Special Distribution has occurred on or
prior to such date.
In the event that PSSA is required to repurchase the FedEx
Notes as a result of a breach of its representation and warranty
as to its title to the FedEx Notes immediately prior to the
transfer thereof to the Trustee, the Trustee will distribute the
repurchase price received from PSSA to the holders of the
Residual Class Certificates and the Amortizing Class
Certificates, respectively, in the same ratio as (i) the present
value of all originally scheduled future payments on the FedEx
Notes after July 1, 2017 bears to (ii) the present value of all
originally scheduled future payments on the Amortizing Class
Certificates, discounted semiannually in each case at a rate of
7.60 percent per annum to the date on which the repurchase price
is distributed. Such ratio will be calculated by PSSA, as
calculation agent, and such distribution will be made fifteen
days after receipt of the repurchase price.
Maturity Shortening Redemption
Upon occurrence of a Tax Event, FedEx will have the right
to shorten the maturity of the FedEx Notes to the extent
required, in the opinion of a nationally recognized independent
tax counsel selected by FedEx, such that, after the shortening of
the maturity, interest paid on the FedEx Notes will be deductible
by it for federal income tax purposes. In the event that the
Shortened Maturity Date is on or prior to July 1, 2017, the Trust
Certificates will be redeemed on the Shortened Maturity Date. The
Trustee will distribute the payment received on the FedEx
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Notes on the Shortened Maturity Date, which will equal principal
plus accrued interest on the FedEx Notes and will not contain any
premium, to the holders of the Residual Class Certificates and
Amortizing Class Certificates, respectively, in the same ratio as
(i) the present value of all originally scheduled future payments
on the FedEx Notes after July 1, 2017 bears to (ii) the present
value of all originally scheduled future payments on the
Amortizing Class Certificates, discounted semiannually in each
case at a rate of 7.60 percent per annum to the Shortened
Maturity Date. Such ratio will be calculated by the Calculation
Agent. After such a distribution, holders of Amortizing Class
Certificates will receive no further distributions. A Maturity
Shortening as a result of a Tax Event may increase the amount of
original issue discount required to be included in a holder's
ordinary gross income. See "U.S. Federal Income Tax
Consequences--Purchase and Holding of Trust Certificates". A
table showing the percentages of such distribution that would be
distributable to the Amortizing Class Certificates and the
Residual Class Certificates, respectively, assuming that such
distribution occurs on a scheduled Distribution Date, is attached
hereto as Appendix A.
"Tax Event" means that FedEx shall have received an opinion
of a nationally recognized independent tax counsel to the effect
that on or after the date of the issuance of the FedEx Notes, as
a result of (a) any amendment to, clarification of, or change
(including any announced prospective change) in laws, or any
regulations thereunder, of the United States, (b) any judicial
decision, official administrative pronouncement, ruling,
regulatory procedure, notice or announcement, including any
notice or announcement of intent to adopt such procedures or
regulations (an "Administrative Action"), or (c) any amendment
to, clarification of or change in the official position of the
interpretation of such Administrative Action or judicial decision
that differs from the theretofore generally accepted position, in
each case, or after the date of the issuance of the FedEx Notes,
such change in tax law creates a more than insubstantial risk
that interest paid by FedEx on the FedEx Notes is not, or will
not be, deductible, in whole or in part, by FedEx for purposes of
United States federal income tax.
Distribution of the FedEx Notes on Payment Default or
Acceleration
If a Payment Default or an Acceleration with respect to the
FedEx Notes occurs on or prior to July 1, 2017, the Trustee will
make an in-kind distribution (an "In-Kind Distribution") of the
FedEx Notes to the holders of the Trust Certificates. A "Payment
Default" means a default in the payment of any amount due on the
FedEx Notes from FedEx after the same becomes due and payable
(and the expiration of any applicable grace period on the FedEx
Notes). An "Acceleration" means the acceleration of the maturity
of the FedEx Notes following the occurrence of any default on the
FedEx Notes other than a Payment Default, notwithstanding any
subsequent recission and annulment of such Acceleration by the
requisite holders of the entire series of the FedEx Notes. The
In-Kind Distribution will be made to the holders of the Residual
Class Certificates and Amortizing Class Certificates,
respectively, in the same ratio as (i) the present value of all
originally scheduled future payments on the FedEx Notes after
July 1, 2017 bears to (ii) the present value of all originally
scheduled future payments on the Amortizing Class Certificates,
discounted semiannually in each case at a rate of 7.60 percent
per annum to the date of such distribution. Such ratio will be
calculated by the Calculation Agent. To the extent necessary to
avoid a distribution of the FedEx Notes in unauthorized
denominations, the Trustee will cause the liquidation in a
commercially reasonable manner of the FedEx Notes as are
necessary, and will distribute the proceeds therefrom to holders
of Trust Certificates based on their respective rights to the
FedEx Notes in unauthorized denominations. An In-Kind
Distribution may be treated in whole or in part as equivalent to
a taxable sale or exchange. A table showing the percentages of
such distribution that would be distributable to the Amortizing
Class Certificates and the Residual Class Certificates,
respectively, assuming that such distribution occurs on a
scheduled Distribution Date, is attached hereto as Appendix A.
See "U.S. Federal Income Tax Consequences--Distributions".
No Further Rule 3a-7 Limitation
As a result of the rating assigned to the New Certificates
at initial issuance, they will not be subject to restrictions on
transfer applicable to the Old Certificates pursuant to Rule
3a-7.
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DESCRIPTION OF THE TRUST AGREEMENT
General
The following summary of certain provisions of the Trust
Agreement and the Trust Certificates does not purport to be
complete and such summary is qualified in its entirety by
reference to the detailed provisions of the Trust Agreement
incorporated by reference hereto as described under
"Incorporation of Certain Documents by Reference." Article and
section references in parentheses below are to articles and
sections in the Trust Agreement. Wherever particular sections or
defined terms of the Trust Agreement are referred to, such
sections or defined terms are incorporated herein by reference as
part of the statement made, and the statement is qualified in its
entirety by such reference.
The Trustee
The Bank of New York, a New York banking corporation, acts
as trustee of the Trust pursuant to the Trust Agreement. The
Trustee's offices are located at 101 Barclay Street, 12 East
Street, New York, New York 10286, Attention: Corporate Trust.
The Trust Agreement provides that the Trustee and any
director, officer, employee or agent thereof will be indemnified
by PSSA and held harmless against any loss, liability or expense
incurred in connection with any legal action relating to the
Trust Agreement or the Trust Certificates or the performance of
the Trustee's duties under the Trust Agreement, other than any
loss, liability or expense (i) that constitutes a specific
liability of the Trustee under the Trust Agreement or (ii)
incurred by reason of willful misfeasance, bad faith or
negligence in the performance of the Trustee's duties under the
Trust Agreement or as a result of a breach, or by reason of
reckless disregard, of the Trustee's obligations and duties under
the Trust Agreement. Pursuant to the Trust Agreement, as
compensation for the performance of its duties thereunder, the
Trustee is entitled to payment of trustee fees and reimbursement
of expenses by PSSA pursuant to a separate agreement with PSSA,
but shall not have any claim against the Trust with respect
thereto.
The Trustee makes no representations as to the validity or
sufficiency of the Trust Agreement, the New Certificates or the
FedEx Notes or any related document. The Trustee is required to
perform only those duties specifically required under the Trust
Agreement. However, upon receipt of the various certificates,
reports or other instruments required to be furnished to it, the
Trustee is required to examine such documents and to determine
whether they conform to the applicable requirements of the Trust
Agreement.
The Trustee is unaffiliated with, but may have normal
banking relationships with, PSSA and its affiliates.
The Trust Agreement and, upon consummation of the Exchange
Offer, the provisions of the Trust Indenture Act of 1939, as
amended, incorporated by reference therein, contain limitations
on the rights of the Trustee thereunder, should it become a
creditor of the Trust, to obtain payment of claims in certain
cases or to realize on certain property received by it in respect
of any such claims, as security or otherwise. The Trustee is
permitted to engage in other transactions; provided, however,
that if it acquires any conflicting interest (as defined) it must
eliminate such conflict or resign.
Event of Default
There are no events of default with respect to the Trust
Certificates.
Voting Rights
Voting rights will be allocated between the holders of
Residual Class Certificates, on the one hand, and the holders of
Amortizing Class Certificates on the other, respectively, at any
date of determination in the same ratio as (i) the present value
of all originally scheduled future payments on the FedEx Notes
after July 1, 2017 bears to (ii) the present value of all
originally scheduled future payments on the Amortizing Class
Certificates,
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discounted semiannually in each case at a rate of 7.60 percent
per annum to the date of determination. Such ratio will be
calculated by the Calculation Agent. All voting rights with
respect to the Amortizing Class Certificates will be allocated
among all holders of Amortizing Class Certificates in proportion
to the respective Notional Amounts of the then-outstanding
Amortizing Class Certificates held by such holders on any date of
determination. All voting rights with respect to the Residual
Class Certificates will be allocated among all holders of
Residual Class Certificates in proportion to the respective
Certificate Principal Balances of the then-outstanding Residual
Class Certificates held by such holders on any date of
determination.
The required percentage of Voting Rights of those Classes
of Trust Certificates that are materially adversely affected by
any modification or amendment of the Trust Agreement necessary to
consent to such modification or amendment is 100%.
Voting with Respect to the FedEx Notes
The Trustee, as the holder of the FedEx Notes, has the
right to vote and give consents and waivers in respect of the
FedEx Notes as permitted by the depositary with respect thereto
and except as otherwise limited by the Trust Agreement. In the
event that the Trustee receives a request from FedEx for its
consent to any amendment, modification or waiver of the FedEx
Notes or any document relating thereto, or receives any other
solicitation for any action with respect to the FedEx Notes, the
Trustee shall mail a notice of such proposed amendment,
modification, waiver or solicitation to each holder of Trust
Certificates of record as of such date. The Trustee shall request
instructions from the holders of Trust Certificates as to whether
or not to consent to or vote to accept such amendment,
modification, waiver or solicitation. The Trustee shall consent
or vote, or refrain from consenting or voting, in the same
proportion (based on the relative voting rights of the Trust
Certificates) as the Trust Certificates of the Trust were
actually voted or not voted by the holders of Trust Certificates
thereof as of a date determined by the Trustee prior to the date
on which such consent or vote is required; provided, however,
that, notwithstanding anything to the contrary herein, the
Trustee shall at no time vote in favor of or consent to any
matter (i) which would alter the timing or amount of any payment
on the FedEx Notes, including, without limitation, any demand to
accelerate the FedEx Notes or (ii) which would result in the
exchange or substitution of any the FedEx Notes pursuant to a
plan for the refunding or refinancing of such the FedEx Notes,
except in each case with the unanimous consent of the holders of
Trust Certificates, and subject to the requirement that such vote
or consent would not, based on an Opinion of Counsel, cause the
Trust to fail to be characterized as a grantor trust for U.S.
federal income tax purposes or result in a sale or exchange of
any Trust Certificate for federal income tax purpose. The Trustee
shall have no liability for any failure to act resulting from
holders of Trust Certificates' late return of, or failure to
return, directions requested by the Trustee from the holders of
Trust Certificates. In the event of an In-Kind Distribution,
holders of Residual Class Certificates would become holders of
FedEx Notes and, as such, would be entitled to vote through their
participant in the Depository Trust Company.
Modification and Waiver
The Trust Agreement may be amended by PSSA and the Trustee,
without notice to or consent of the holders of Trust
Certificates, for certain purposes including (i) to cure any
ambiguity, (ii) to correct or supplement any provision therein
which may be inconsistent with any other provision therein, (iii)
to add or supplement any Credit Support (as defined in the Trust
Agreement) for the benefit of any holders of Trust Certificates,
(iv) to add to the covenants, restrictions or obligations of PSSA
or the Trustee for the benefit of the holders of Trust
Certificates, (v) to add, change or eliminate any other
provisions with respect to matters or questions arising under
such Trust Agreement, or (vi) to comply with any requirements
imposed by the Internal Revenue Code of 1986 (the "Code");
provided that (x) any such amendment described in (i) through
(vi) will not, as evidenced by an Opinion of Counsel, cause the
Trust to fail to qualify as a grantor trust for federal income
tax purposes or result in a sale or exchange of any Certificate
for tax purposes and (y) the Trustee has received (1) a
certificate of PSSA to the effect that such amendment will not
have a material adverse effect on any class of holders of Trust
Certificates and (2) written confirmation from each Rating Agency
rating such Trust Certificates, if any, that such amendment will
not cause such Rating Agency to reduce or withdraw the then
current rating thereof. Without limiting the generality of the
foregoing, the Trust Agreement may also be modified or amended
from time to time by PSSA and the Trustee, with the consent of
the holders of Certificates of each class evidencing not less
than the "Required
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Percentage--Amendment" of the Voting Rights of those Trust
Certificates of such Classes that are affected by such
modification or amendment for the purpose of adding any provision
to or changing in any manner or eliminating any provision of the
Trust Agreement or of modifying in any manner the rights of such
holders of Trust Certificates; provided that any such amendment
shall not, as evidenced by an Opinion of Counsel, cause the Trust
to fail to qualify as a grantor trust for federal income tax
purposes.
No such modification or amendment may, however, (i) reduce
in any manner the amount of or alter the timing of, distributions
or payments which are required to be made on any Certificate
without the consent of the holder of such Trust Certificate or
(ii) reduce the aforesaid Required Percentage of Voting Rights
required for the consent to any such amendment without the
consent of the holders of all Certificates covered by the Trust
Agreement then outstanding.
Reports to Holders of Trust Certificates; Notices
Reports to Holders of Trust Certificates. With each
distribution to holders of Trust Certificates, the Trustee will
forward or cause to be forwarded to each such holder of Trust
Certificates and to PSSA a statement setting forth: (i) the
amount of such distribution to holders of Trust Certificates of
such Class allocable to principal, if any, on the Trust
Certificates of such Class; (ii) the amount of compensation
received by the Trustee for the period relating to such
Distribution Date, (iii) the aggregate stated principal amount
or, if applicable, notional principal amount of the FedEx Notes
and the current interest rate thereon at the close of business on
such Distribution Date; and (iv) the aggregate Certificate
Principal Balance or aggregate Notional Amount, if applicable, of
each Class of Trust Certificates at the close of business on such
Distribution Date, separately identifying any reduction in such
aggregate Certificate Principal Balance or aggregate Notional
Amount due to the allocation of any Realized Losses or otherwise.
In the case of information furnished pursuant to subclauses (i)
and (ii) above, the amounts shall be expressed as a U.S. dollar
amount per minimum denomination of Trust Certificates or for such
other specified portion thereof. Subject to the occurrence of a
Maturity Shortening Redemption or an In-Kind Distribution, the
holders of New Certificates will receive no such reports until
the distribution in-kind on July 1, 2017. Within a reasonable
period of time after the end of each calendar year, the Trustee
shall furnish to each person who at any time during the calendar
year was a holder of Trust Certificates a statement containing
the information set forth in subclauses (i) and (ii) above,
aggregated for such calendar year or the applicable portion
thereof during which such person was a holder of Trust
Certificates. Such obligation of the Trustee shall be deemed to
have been satisfied to the extent that substantially comparable
information shall be provided by the Trustee pursuant to any
requirements of the Code as are from time to time in effect.
Notices. Any notice required to be given to a holder of a
Registered Certificate will be mailed to the address of such
holder set forth in the applicable Certificate Register.
Replacement Certificates
If a New Certificate is mutilated, destroyed, lost or
stolen, it may be replaced at the corporate trust office or
agency of the applicable Trustee in the City and State of New
York, upon payment by the holder of such expenses as may be
incurred by the applicable Trustee in connection therewith and
the furnishing of such evidence and indemnity as such Trustee may
require. Mutilated Certificates must be surrendered before new
Certificates will be issued.
Termination of the Trust
The Trust shall terminate upon the earliest of (i) the
distribution of the FedEx Notes to holders of the Residual Class
Certificates on July 1, 2017, (ii) the date of any Maturity
Shortening Redemption or (iii) the date of an In-Kind
Distribution.
The final distribution will be made only upon surrender and
cancellation of the Trust Certificates at an office or agency
appointed by the Trustee.
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Governing Law
The Trust Agreement and the Trust Certificates will be
governed by, and construed in accordance with, the laws of the
State of New York. Upon consummation of the Exchange Offer, the
Trust Agreement will be subject to the provisions of the Trust
Indenture Act of 1939, as amended, that are required to be part
of the Trust Agreement and will, to the extent applicable, be
governed by such provisions.
U.S. FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of U.S. federal income tax
consequences material to the purchase, ownership and disposition
of Trust Certificates and the exchange of Old Certificates for
New Certificates (the "Exchange") pursuant to the Exchange Offer.
The summary does not purport to be a comprehensive description of
all of the tax consequences that may be relevant to a decision to
purchase Trust Certificates by any particular investor, including
tax consequences that arise from rules of general application to
all taxpayers or to certain classes of taxpayers or that are
generally assumed to be known by investors. Thus, for example,
except where otherwise noted, the discussion below is addressed
to holders that are "U.S. persons" and that hold Trust
Certificates as capital assets. It does not discuss state, local
or foreign tax consequences, nor does it discuss all the tax
consequences that may be relevant to a holder subject to special
rules, including dealers in securities or commodities, banks,
savings and loan associations and similar financial institutions,
tax-exempt organizations, insurance companies, taxpayers that
hold Trust Certificates as part of a hedged or integrated
transaction (such as a "straddle" or "conversion transaction")
for U.S. federal income tax purposes, or taxpayers whose
functional currency is other than the U.S. dollar. It also does
not discuss tax consequences for individuals or entities taxed as
individuals. The discussion below is based on the Code and the
regulations issued thereunder, and interpretations of law,
rulings and decisions currently in effect, all of which are
subject to change. Any such change may be applied retroactively,
and may adversely affect the U.S.
federal income tax consequences described herein.
The term "U.S. person" means a citizen or resident of the
United States, a corporation, partnership or other entity created
or organized in or under the laws of the United States or any
political subdivision thereof, an estate the income of which is
subject to U.S. federal income taxation regardless of its source,
or a trust if (i) a U.S. court is able to exercise primary
supervision over the trust's administration and (ii) one or more
U.S. persons have the authority to control all of the trust's
substantial decisions.
PROSPECTIVE HOLDERS SHOULD CONSULT THEIR TAX ADVISORS AS TO
THE U.S. FEDERAL TAX CONSEQUENCES TO THEM OF THE EXCHANGE, AND OF
ACQUIRING, HOLDING AND DISPOSING OF TRUST CERTIFICATES,
INCLUDING, IN PARTICULAR, THE APPLICATION IN THEIR PARTICULAR
CIRCUMSTANCES OF THE TAX CONSEQUENCES DISCUSSED BELOW, AS WELL AS
THE APPLICATION OF STATE, LOCAL, FOREIGN OR OTHER TAX LAWS.
Exchange of Old Certificates for New Certificates
In the opinion of Cleary, Gottlieb, Steen & Hamilton, the
Exchange will not be a taxable event for U.S. federal income tax
purposes. As a result, a holder of an Old Certificate whose Old
Certificate is accepted in the Exchange Offer will not recognize
gain on the Exchange. The New Certificates will have the same
"issue price" (and "adjusted issue price" immediately after the
Exchange) as the Old Certificates, and each tendering holder will
have the same adjusted basis and holding period in the New
Certificates as it had in the Old Certificates immediately before
the Exchange.
Characterization of the Trust
For U.S. federal income tax purposes, the Trust will not be
treated as an association taxable as a corporation (or a publicly
traded partnership treated as an association) in the opinion of
Cleary, Gottlieb, Steen & Hamilton. Although the characterization
of the Trust is not certain, the Trust should be treated for U.S.
federal income tax purposes as a grantor trust, and the Trustee
intends to report income, gain, loss and deductions to the
Internal Revenue Service ("IRS") on that basis. If the Trust were
not classified as a grantor trust, it would be classified as a
partnership. As a consequence, the Trust will not be subject to
U.S. federal income taxation.
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Prospective investors should be aware that no rulings have
been or are expected to be sought from the IRS with respect to
the classification of the Trust (or any of the other U.S. federal
income tax consequences discussed in this summary) and there can
be no assurance that the IRS will agree with the characterization
of the Trust as a grantor trust (or with the other U.S. federal
income tax consequences discussed herein). See "--Alternative
Characterizations." Accordingly, prospective purchasers are urged
to consult their tax advisers regarding the U.S. federal income
tax classification of the Trust.
Under the U.S. federal income tax rules applicable to
grantor trusts, a holder of a Trust Certificate will be treated
as owning the rights to those payments on the FedEx Notes that
are allocable to that Trust Certificate. The sale of a Trust
Certificate will be considered a sale of a holder's interest in
those payments. In addition, a holder may deduct its pro rata
share of the fees and other deductible expenses paid by the
Trust, at the same time and to the same extent as such items
would be deducted by the holder if the holder paid directly a pro
rata portion of the amounts paid by the Trust.
The FedEx Notes Prospectus indicates that the FedEx Notes
underlying the Trust Certificates were sold based on FedEx's
belief that they constitute indebtedness of FedEx for U.S.
federal income tax purposes. The following discussion is based on
the assumption that the FedEx Notes will constitute debt
instruments in their entirety. Except for the discussion under
"--Alternative Characterizations," the following also assumes
that the Trust will be classified as a grantor trust.
Purchase and Holding of Trust Certificates
A purchaser of a Trust Certificate will be treated as
having acquired the rights to those payments on the FedEx Notes
that are allocable to that Trust Certificate and will be taxed
under the "stripped bond" rules of the Code. The holder will be
treated as having purchased a newly issued, single debt
instrument providing for payments equal to the payments on the
FedEx Notes allocable to the Trust Certificate, and having
original issue discount ("OID") equal to the excess of the sum of
such payments over the holder's purchase price for the Trust
Certificate (which would be treated as the "issue price"). In
determining the purchase price for a Trust Certificate for this
purpose, a portion of the purchase price of the Trust Certificate
may be separately allocated to amounts held by the Trust pending
distribution to holders (the recovery of which amounts would not
be taxable). Any such allocation would reduce the amount paid for
(and the amount payable on) such Trust Certificate.
Under the OID rules, in general, each holder of a Trust
Certificate, whether such holder uses the cash or the accrual
method of tax accounting, will be required to include in ordinary
gross income the sum of the "daily portions" of OID on the Trust
Certificate for all days during the taxable year that the holder
owns the Trust Certificate. The daily portions of OID on a Trust
Certificate are determined by allocating to each day in any
accrual period a ratable portion of the OID allocable to that
accrual period. Accrual periods may be any length and may vary in
length over the term of a Trust Certificate, provided that no
accrual period is longer than one year and each scheduled payment
of principal or interest occurs on either the final day or the
first day of an accrual period. The amount of OID on a Trust
Certificate allocable to each accrual period is determined by
multiplying the "adjusted issue price" of the Trust Certificate
at the beginning of the accrual period by the yield to maturity
of such Trust Certificate (appropriately adjusted to reflect the
length of the accrual period). The yield to maturity of a Trust
Certificate is the discount rate that causes the present value of
all payments on the Trust Certificate as of its issue date to
equal the issue price of such Trust Certificate. The "adjusted
issue price" of a Trust Certificate at the beginning of any
accrual period will generally be the sum of its issue price and
the amount of OID allocable to all prior accrual periods, reduced
by the amount of all payments made with respect to such Trust
Certificate in all prior accrual periods.
It is not clear how the possibility of a Maturity
Shortening as a result of a Tax Event, and the resulting
distribution to Amortizing Class Certificate holders of a portion
of the payment received by the Trust on the Shortened Maturity
Date, should be taken into account for purposes of determining
the taxation of holders at, and prior to, the Shortened Maturity
Date (including, but not limited to, the amount of OID required
to be included by holders in ordinary gross income). The Trustee
intends to take the position that the possibility of a Maturity
Shortening should not affect the U.S. federal income tax
consequences to holders prior to the Maturity Shortening.
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Under this treatment, if the maturity of the FedEx Notes was
shortened as a result of a Tax Event, a holder would be treated,
solely for OID purposes, as acquiring a newly issued OID bond,
and would be required to determine OID on the newly issued bond
taking into account the Shortened Maturity Date and the amount
required to be distributed to the holder on that date. The amount
of OID required to be included in the holder's ordinary gross
income as a result of the redetermination could be more or less
than the amount determined without taking into account the
Maturity Shortening. There can be no assurance, however, that the
IRS will not take a different position on the effect of a
potential Maturity Shortening, which position may have less
favorable tax consequences. See "-Alternative Characterizations."
Prospective purchasers should consult their tax advisers with
respect to the effect of a potential Maturity Shortening.
The Trust currently intends, for information reporting
purposes, to account for OID reportable by holders of Trust
Certificates by reference to the first price at which a
substantial amount of the Trust Certificates is sold to
purchasers (other than Prudential Securities), even though the
amount of OID will differ for subsequent purchasers. Such
prospective purchasers should consult their tax advisers
regarding the proper calculation of OID.
Distributions
Cash distributions on the Trust Certificates will not be
subject to additional taxation. An In-Kind Distribution may be
treated in whole or in part as equivalent to a sale or exchange.
Sale or Exchange of Trust Certificates or the FedEx Notes
The tax basis of a holder of a Trust Certificate in a Trust
Certificate generally will equal the cost of the Trust
Certificate increased by any amounts includible in income as OID,
and reduced by any payments made on the Trust Certificate.
Upon the sale or exchange of a Trust Certificate (other
than the Exchange), a holder generally will recognize gain or
loss equal to the difference between the amount realized on the
sale or exchange and the holder's tax basis in the Trust
Certificate. Gain or loss recognized by an individual holder on
the sale or exchange of a Trust Certificate generally will be
capital gain or loss, and will be long-term capital gain or loss
if the holder is considered to have held the Trust Certificate
for more than one year at the time of the disposition. Long-term
capital gain recognized by an individual holder generally will be
subject to a maximum tax rate of 28 percent in respect of Trust
Certificates treated as held for more than one year and to a
maximum rate of 20 percent in respect of Trust Certificates
treated as held in excess of 18 months. Legislation currently
pending in Congress generally would, if enacted in its current
form, subject long-term capital gain recognized by an individual
holder to a maximum rate of 20 percent in respect of property
held for more than one year, effective for amounts properly taken
into account on or after January 1, 1998.
A holder will recognize gain or loss on any sale by the
Trust of the FedEx Notes, including in connection with an In-Kind
Distribution, equal to the difference between the portion of the
amount realized on the sale allocable to the holder and the
allocable portion of the holder's basis in the Trust Certificate.
Alternative Characterizations
As noted above, there can be no assurance that the IRS will
agree with the characterization of the Trust as a grantor trust.
It is possible that the IRS could seek to classify the Trust as a
partnership, although even if the IRS were successful the Trust
would not be subject to U.S. federal income tax. While not
certain, if the Trust is classified as a partnership, it should
be eligible for the election out of the partnership tax rules of
subchapter K of the Code, under Treasury Regulation Section
1.761-2. In mutual consideration for each holder's purchase of a
Trust Certificate, each holder of a Trust Certificate is deemed
to have consented to the making of such a protective election as
of the date of formation of the Trust. As a result of the
election, each holder of a Trust Certificate would be required to
report its respective share of the items of income, deductions
and credits of the Trust on its respective U.S. federal income
tax return in a manner substantially similar to the U.S. federal
income tax reporting required under the grantor trust rules.
However, if the Trust were not eligible to make the election, the
method of taxation of
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holders of Trust Certificates could differ significantly from the
treatment described in this summary. Among those differences, (i)
the Trust would be required to account for its income and
deductions at the Trust level, and to utilize a taxable year for
reporting purposes, (ii) income from the FedEx Notes would be
taxed under the rules of the Code applicable to whole debt
instruments rather than under the "stripped bond" rules described
above, and (iii) each holder would be required to separately take
into account such holder's distributive share of income and
deductions of the Trust. A holder would take into account its
distributive share of Trust income and deductions for each
taxable year of the Trust in the holder's taxable year which ends
with or within the Trust's taxable year. Prospective purchasers
are urged to consult their tax advisers regarding the U.S.
federal income tax classification of the Trust.
Adverse tax consequences might also result if the IRS takes
a different position than the position described above under
"--Purchase and Holding of Trust Certificates" with respect to
the effect on holders of a potential distribution to Amortizing
Class Certificate holders of a portion of the payment received by
the Trust on a Shortened Maturity Date. For example, the IRS
might treat the Amortizing Class Certificate as a right to
payments on the FedEx Notes coupled with a separate agreement, in
the nature of a put option, between Amortizing Class Certificate
holders, on the one hand, and Residual Class Certificate holders,
on the other hand. Under this characterization, a Maturity
Shortening event would be a taxable event. Moreover, the
existence of a deemed put option might trigger the Code's
"straddle" rules, in which case, among other matters, gain or
loss on the sale of a Trust Certificate would be short-term
capital gain or loss regardless of the period during which the
holder held the Trust Certificate.
Non-U.S. Holders
A holder that is not a U.S. person and that is not subject
to U.S. federal income tax as a result of any direct or indirect
connection to the United States other than its ownership of a
Trust Certificate will not be subject to United States income or
withholding tax, except as described below and under
"--Information Reporting and Backup Withholding," in respect of
interest income or gain on the FedEx Notes if the holder provides
an appropriate statement (generally on IRS Form W-8), signed
under penalties of perjury, identifying the holder and stating,
among other things, that the holder is not a U.S. person and if
the holder is not a "10-percent shareholder" or related
"controlled foreign corporation" with respect to FedEx. If these
conditions are not met, a 30 percent withholding tax will apply
to interest income from the Trust Certificates, unless an income
tax treaty reduces or eliminates such tax or unless the interest
is effectively connected with the conduct of a trade or business
within the United States by such holder. In the latter case, such
holder will be subject to U.S. federal income tax with respect to
all income from the FedEx Notes at regular rates applicable to
U.S. taxpayers.
A holder that is not a U.S. person may also be subject to
U.S. federal income taxation with respect to a Trust Certificate
if it is a personal holding company, a corporation that
accumulates earnings to avoid U.S. taxes on shareholders or a
private foundation under the Code.
Information Reporting and Backup Withholding
The Trustee will furnish or make available to each party
registered during such calendar year as a holder, such
information as is required under the Code or regulations under
the Code to enable each holder to file its U.S.
federal income tax returns.
Certain holders that are U.S. persons or that otherwise are
subject to United States federal income taxation on a net income
basis in respect of the Note ("U.S. holders") may be subject to a
31 percent backup withholding tax in respect of distributions
made on a Trust Certificate and proceeds from the sale of a Trust
Certificate to or through certain brokers if they do not provide
their taxpayer identification numbers (generally on IRS Form
W-9). Persons who are not U.S. holders may be required to comply
with applicable certification procedures to establish that they
are not U.S. holders in order to avoid the application of
information reporting requirements and backup withholding tax.
Any amounts so withheld from distributions on the Trust
Certificate would be allowed as a credit against the holder's
U.S. federal income tax liability, or upon application by the
holder to the IRS, would be refunded by the IRS to the extent it
exceeds such liability.
29
<PAGE>
PLAN OF DISTRIBUTION
Each broker or dealer that receives New Certificates for
its own account pursuant to the Exchange Offer must acknowledge
that it will deliver a prospectus in connection with any resale
of such New Certificates. This Prospectus, as it may be amended
or supplemented from time to time, may be used by a broker or
dealer in connection with resales of New Certificates received in
exchange for Old Certificates where such Old Certificates were
acquired as a result of market-making activities or other trading
activities. PSSA has agreed that it will make this Prospectus, as
amended or supplemented, available to any broker or dealer for
use in connection with any such resale for a period of one year.
In addition, until such date, all brokers or dealers effecting
transactions in the New Certificates may be required to deliver a
prospectus.
PSSA will not receive any proceeds from any sale of New
Certificates by brokers or dealers. New Certificates received by
brokers or dealers for their own account pursuant to the Exchange
Offer may be sold from time to time in one or more transactions
in the over-the-counter market, in negotiated transactions,
through the writing of options on the New Certificates or a
combination of such methods of resale, at market prices
prevailing at the time of resale, at prices related to such
prevailing market prices or negotiated prices. Any such resale
may be made directly to purchasers or to or through brokers or
dealers who may receive compensation in the form of commissions
or concessions from any such broker or dealer and/or the
purchasers of any such New Certificates. Any broker or dealer
that resells New Certificates that were received by it for its
own account pursuant to the Exchange Offer and any broker or
dealer that participates in a distribution of such New
Certificates may be deemed to be an "underwriter" within the
meaning of the Securities Act and any profit on any such resale
of New Certificates and any commissions or concessions received
by any such persons may be deemed to be underwriting compensation
under the Securities Act. The Letter of Transmittal states that
by acknowledging that it will deliver and by delivering a
prospectus, a broker or dealer will not be deemed to admit that
it is an "underwriter" within the meaning of the Securities Act.
Starting on the Expiration Date, PSSA will promptly send
additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker or dealer that
requests such documents in the Letter of Transmittal. PSSA has
agreed to pay all expenses incident to the Exchange Offer
(including the expenses of one counsel for the Holders of the
Certificates) other than commissions or concessions of any
brokers or dealers and will indemnify the Holders of the New
Certificates (including any broker or dealers) against certain
liabilities, including liabilities under the Securities Act.
LEGAL MATTERS
The validity of the New Certificates and certain United
States federal income taxation matters will be passed upon for
the Trust by Cleary, Gottlieb, Steen & Hamilton, New York, New
York.
30
<PAGE>
INDEX OF DEFINED TERMS
Administrative Action................................. 7
Acceleration.......................................... 22
Amortizing Class Certificates......................... 6
Available Funds....................................... 21
Calculation Agent..................................... 6
Certificate Principal Balance......................... 20
Code.................................................. 25
Collection Period..................................... 21
Commission............................................ cover
Distribution Business Day............................. 6
Distribution Date..................................... 6
EDGAR................................................. 1
Eligible Institution.................................. 17
Exchange.............................................. 26
Exchange Act.......................................... 1
Exchange Agent........................................ 5
Exchange Offer........................................ cover
Exchange Offer No-Action Letters...................... cover
Exchange Offer Registration Statement................. 14
Expiration Date....................................... cover
FedEx................................................. cover
FedEx Notes........................................... cover
FedEx Notes Business Day.............................. 6
FedEx Notes Indenture................................. 7
FedEx Notes Prospectus................................ cover
FedEx Notes Registration Statement.................... 2
FedEx Notes Series.................................... 12
FedEx Notes Trustee................................... 13
holder................................................ 17
In-Kind Distribution.................................. 22
IRS................................................... 27
Letter of Transmittal................................. cover
Maturity Shortening Redemption........................ cover
New Certificates...................................... cover
NYSE.................................................. 18
OID................................................... 28
Old Certificates...................................... cover
Payment Default....................................... 22
PSGI.................................................. 2
Prudential Securities................................. cover
PSSA.................................................. cover
Registration Rights Agreement......................... cover
Registration Statement................................ 1
Restricted Broker-Dealer.............................. cover
Residual Class Certificates........................... 6
Rule 3a-7............................................. 5
Securities Act........................................ cover
Shelf Registration Statement.......................... 15
Shortened Maturity Date............................... cover
Tax Event............................................. 7
Trust................................................. cover
Trust Agreement....................................... cover
Trust Certificates.................................... cover
31
<PAGE>
Trustee............................................... cover
U.S. holders.......................................... 30
U.S. person........................................... 27
<PAGE>
APPENDIX A
RECEIPTS ON CORPORATE SECURITIES TRUST, SERIES FDX 1997-1
ALLOCATION SCHEDULE FOR DISTRIBUTIONS FOLLOWING ANY MATURITY
SHORTENING REDEMPTION OR IN-KIND DISTRIBUTION*
DISTRIBUTION DISTRIBUTION
JUST PRIOR JUST AFTER INTEREST
TO INTEREST PAYMENT PAYMENT
-------------------- --------------------
Amortizing Residual Amortizing Residual
Date Class Class Class Class
- ---- ----- ----- ----- -----
January 1, 1999 75.76% 24.24% 74.84% 25.16%
July 1, 1999 74.84% 25.16% 73.88% 26.12%
January 1, 2000 73.88% 26.12% 72.89% 27.11%
July 1, 2000 72.89% 27.11% 71.86% 28.14%
January 1, 2001 71.86% 28.14% 70.79% 29.21%
July 1, 2001 70.79% 29.21% 69.68% 30.32%
January 1, 2002 69.88% 30.32% 68.53% 31.47%
July 1, 2002 68.53% 31.47% 67.34% 32.66%
January 1, 2003 67.34% 32.66% 66.09% 33.91%
July 1, 2003 66.09% 33.91% 64.81% 35.19%
January 1, 2004 64.81% 35.19% 63.47% 36.53%
July 1, 2004 63.47% 36.53% 62.08% 37.92%
January 1, 2005 62.08% 37.92% 60.64% 39.36%
July 1, 2005 60.64% 39.36% 59.14% 40.86%
January 1, 2006 59.14% 40.86% 57.59% 42.41%
July 1, 2006 57.59% 42.41% 55.98% 44.02%
January 1, 2007 55.98% 44.02% 54.31% 45.69%
July 1, 2007 54.31% 45.69% 52.57% 47.43%
January 1, 2008 52.57% 47.43% 50.77% 49.23%
July 1, 2008 50.77% 49.23% 48.90% 51.10%
January 1, 2009 48.90% 51.10% 46.95% 53.05%
July 1, 2009 46.95% 53.05% 44.94% 55.06%
January 1, 2010 44.94% 55.06% 42.85% 57.15%
July 1, 2010 42.85% 57.15% 40.68% 59.32%
January 1, 2011 40.68% 59.32% 38.42% 61.58%
July 1, 2011 38.42% 61.58% 36.08% 63.92%
January 1, 2012 36.08% 63.92% 33.65% 66.35%
July 1, 2012 33.65% 66.35% 31.13% 68.87%
January 1, 2013 31.13% 68.87% 28.51% 71.49%
July 1, 2013 28.51% 71.49% 25.80% 74.20%
January 1, 2014 25.80% 74.20% 22.98% 77.02%
July 1, 2014 22.98% 77.02% 20.05% 79.95%
January 1, 2015 20.05% 79.95% 17.01% 82.99%
July 1, 2015 17.01% 82.99% 13.86% 86.14%
January 1, 2016 13.86% 86.14% 10.59% 89.41%
July 1, 2016 10.59% 89.41% 7.19% 92.81%
January 1, 2017 7.19% 92.81% 3.66% 95.34%
July 1, 2017 3.66% 96.34% 0.00% 100.00%
A-1
<PAGE>
- ----------------------------
* The proceeds of any Maturity Shortening Redemption or In-Kind
Distribution occurring on any of the above Scheduled
Distribution Dates with respect to the FedEx Notes will be
allocated according to the above percentages if such proceeds
are distributed on the above scheduled Distribution Dates. The
proceeds of any such event occurring on dates other than
scheduled Distribution Dates will be distributed in accordance
with the ratio described in the Prospectus.
<PAGE>
=================================================================
No person has been authorized to give any information or to make
any representations other than those contained or incorporated by
reference in this Prospectus and the accompanying Letter of
Transmittal and, if given or made, such information or
representations must not be relied upon as having been authorized
by the Trust, PSSA or the Exchange Agent. Neither this Prospectus
nor the accompanying Letter of Transmittal, or both together,
constitute an offer to sell or the solicitation of an offer to
buy securities in any jurisdiction to any person to whom it is
unlawful to make such offer or solicitation. Neither the delivery
of this Prospectus, nor the accompanying Letter of Transmittal,
or both together, nor any sale made hereunder shall, under any
circumstances, create an implication that there has been no
change in the affairs of the Trust since the date hereof or
thereof or that the information contained herein is correct at
any time subsequent to the date hereof or thereof.
TABLE OF CONTENTS
Page
Available Information............................1
Incorporation of Certain Documents
by Reference................................1
Prospectus Summary...............................2
Risk Factors.....................................9
Use of Proceeds.................................10
Formation of the Trust..........................10
Description of the Trust Assets.................11
The Exchange Offer..............................14
Description of the New Certificates.............20
Description of the Trust Agreement..............23
Certain U.S. Federal Income
Tax Consequences.............................26
Plan of Distribution............................30
Legal Matters...................................30
Index of Defined Terms..........................31
Appendix A -- Allocation Schedule..............A-1
=================================================================
=================================================================
Receipts on Corporate
Securities Trust, Series FDX 1997-1
Offer to Exchange
Receipts of Corporate Securities,
Series FDX 1997-1, Amortizing Class
which have been registered under the
Securities Act of 1933, as amended,
for any and all outstanding
Receipts of Corporate Securities,
Series FDX 1997-1, Amortizing Class
August 21, 1998
=================================================================
