Retail Agreement - United States Postal Service and Federal Express Corp.


                                RETAIL AGREEMENT

                                     BETWEEN

                        THE UNITED STATES POSTAL SERVICE

                                       AND

                           FEDERAL EXPRESS CORPORATION


                                RETAIL AGREEMENT

THIS RETAIL AGREEMENT (this "AGREEMENT") is entered into as of January 10, 2001
between:

THE UNITED STATES POSTAL SERVICE, an independent establishment of the United 
States of America established pursuant to 39 United States Code Section 101 
et seq., having an office at 475 L'Enfant Plaza S.W., Washington, D.C. 20260 
("USPS"), and

FEDERAL EXPRESS CORPORATION, a company organized and existing under the laws of
Delaware, having an office at 3610 Hacks Cross Roads, Memphis, Tennessee 38125
(together with its Affiliate, "FEDEX" and together with USPS, the "PARTIES" and
each individually, a "PARTY").

                                    PREAMBLE

WHEREAS, USPS owns and operates manned postal facilities, throughout the United
States,

WHEREAS, customers of USPS may require packages to be delivered on the next day
to locations not served by USPS Express Mail, or delivered the same day or the
next morning, services that are not offered by USPS,

WHEREAS, FedEx desires to place its Drop Boxes at USPS retail facilities for the
acceptance of FedEx Express shipments,

WHEREAS, FedEx desires USPS to perform and USPS is willing to provide the USPS
Services (as such term is defined in this Agreement) to FedEx.

FOR AND IN CONSIDERATION of the mutual covenants contained in this Agreement,
the Parties agree as follows:

                                    ARTICLE 1

                                   DEFINITIONS

For purposes of this Agreement and its Exhibits, the following terms shall have
the following meanings:

a)   "ADVERTISEMENT" means a free or paid mass or targeted communication under
     the control of a party intended for the general public or a specific
     potential or existing customer, the ultimate purpose of which is to promote
     the sale of such party's products or services, including, but not limited
     to, television, radio and internet commercials, out-of-home ads (e.g.,
     billboards, sports stadium displays, transit signs), direct mail ads, print
     ads and free standing inserts in newspapers, magazines, and electronic
     media.

b)   "AFFILIATE" means an entity that Controls or is directly or indirectly
     Controlled by a Party or is under joint Control with a party that Controls.
     An Affiliate is also an entity that is under the common Control of another
     entity that also Controls a Party.

                                       2


c)   "CONTROL" or "TO CONTROL" with respect to an entity shall mean ownership of
     more than 50% of the capital stock or equity interest and voting control of
     any entity and the power to designate a majority of the board of directors
     of such entity.

d)   "DROP BOX" means a  receptacle  for the  acceptance  of packages  by  
     customers  using  FedEx  Express services.

e)   "GOVERNMENTAL BODY" means any federal, state or local jurisdiction,
     government, or quasi-governmental authority of any nature (including any
     governmental agency, branch, department, official, or entity and any court
     or other tribunal) exercising, or entitled to exercise, any administrative,
     executive, judicial, legislative, police, regulatory, or taxing authority
     or power of any nature.

f)   "LEGAL REQUIREMENT" means any federal, state, local or other administrative
     order, constitution, law, ordinance, principle of common law, rule,
     regulation, statute, policy, procedure, directive, binding guideline or
     interpretation, or treaty.

g)   [*]

h)   "OPERATING SPECIFICATIONS" means the description of the services to be
     provided by USPS and the responsibilities and obligations of each of the
     parties in connection therewith as set forth in Exhibit A to this
     Agreement.

i)   "ORDER" means any award, decision, injunction, judgment, order, ruling,
     subpoena, or verdict entered, issued, made or rendered by any court,
     administrative agency, or other Governmental Body.

j)   "OVERNIGHT" means a domestic package delivery service with a published same
     or next business day delivery commitment; or FedEx international express
     services, except FedEx International Economy Service-REGISTERED TRADEMARK-;
     or international delivery services with delivery commitments comparable 
     to those of FedEx international express services, with the exception of 
     FedEx International Economy Service-REGISTERED TRADEMARK-.

k)   "PACKAGE" means any box or envelope that is accepted by FedEx for delivery
     to the consignee.

l)   "PERSON" means any individual, corporation (including any non-profit
     corporation), general or limited partnership, limited liability company,
     joint venture, estate, trust, association, organization, labor union, or
     other entity or Governmental Body.

m)   "POST OFFICE LOCATION" means any post office, station, or branch which is
     open to the public and staffed by USPS employees.

n)   "PROCEEDING" means any action, audit, hearing, investigation, litigation or
     suit (whether civil, criminal, administrative, investigative, or informal)
     commenced, brought, conducted or heard by or before, or otherwise
     involving, any Governmental Body.


                                      3


o)   "SHIPMENT" means all Packages moving on an individually processed Airbill 
     or package tracking label.

p)   "USPS SERVICES" means the services  described in the Operating  
     Specifications  to be provided by USPS to FedEx.

                                    ARTICLE 2

                                  USPS SERVICES

FedEx wishes USPS to provide the USPS Services and USPS hereby agrees to perform
the USPS Services. The parties acknowledge and agree that USPS is furnishing the
USPS Services to FedEx on a non-exclusive basis and may furnish such USPS
Services to any other overnight carrier with National Reach under substantially
similar conditions, but not more favorable conditions, than those provided to
FedEx under this Agreement.

                                    ARTICLE 3

                               DISPUTE RESOLUTION

3.1     This Agreement shall be governed by and construed in accordance with
        Federal Law or, in the absence of applicable Federal Law, the internal
        laws of the State of New York.

3.2     In the event of any disputes arising out of, or in connection with this
        Agreement, including any dispute relating to the construction or
        interpretation of the rights and obligations of the parties hereto, the
        parties agree to make a good faith effort to amicably resolve any such
        dispute.

3.3     If the parties are unable to resolve the dispute through negotiations,
        either party may pursue any available remedies.

3.4     [*]


                                    ARTICLE 4

                             INDEPENDENT CONTRACTOR

The Parties intend that an independent contractor relationship will be created
by this Agreement. Each party is interested only in the results of the other
party's work and shall not exercise any control over the conduct or supervision
of the work or the means of its performance. Each party shall have full
responsibility for the collection and payment of its own international, federal,
state and local employment-related taxes and contributions, including penalties
and interest, insurance, social security, income tax, workers' compensation or
any other similar statute. Each party shall indemnify and hold the other
harmless for any liability (including taxes, interest, and penalties) resulting
from its improper or incorrect tax reporting, withholding, remitting, and
similar activities or obligations, or from the failure to file, collect, report
or pay any of the above mentioned employment taxes.


                                     4


                                    ARTICLE 5

                                      TAXES

5.1     Except as provided in 5.2 below, any and all taxes, excises, fees,
        duties and assessments whatsoever (including interest and penalties)
        ("Tax" or "Taxes") imposed on USPS and for which USPS would be primarily
        liable under applicable law, or for which USPS would be primarily liable
        but for its sovereign immunity, arising out of the sale or performance
        of the USPS Services, in any manner levied, assessed or imposed by any
        government or subdivision or agency thereof having jurisdiction shall be
        the sole responsibility and liability of USPS. If any government or
        subdivision or agency thereof attempts to or actually levies, assesses
        or imposes against FedEx any Tax or Taxes for which USPS would be
        primarily liable, USPS shall have the sole responsibility of challenging
        such levy, assessment or imposition, including paying and seeking refund
        of such Tax and paying the reasonable out-of-pocket expenses of FedEx
        attributable to such challenge. FedEx shall fully cooperate to assist
        USPS in challenging such levy, assessment or imposition of Tax.

5.2     USPS' obligations under 5.1 shall not extend to any and all Tax or Taxes
        imposed on FedEx and for which FedEx is primarily liable under
        applicable law.

5.3     Nothing in this Article or elsewhere in this Agreement is intended to
        imply that USPS is subject to any Tax or Taxes.

                                    ARTICLE 6

                                USPS COMPENSATION

As consideration for the performance of the USPS Services, USPS shall receive
compensation from FedEx in accordance with Exhibit B.



                                    ARTICLE 7

                                    PAYMENTS

7.1     Payments shall be made in accordance with the payment procedures set
        forth in Exhibit B to this Agreement. All payments shall be in United
        States Dollars in current funds.

7.2     In no event whatsoever shall either Party exercise a lien on any
        Shipment or Drop Box for reason of a claim against the other Party.

7.3     Payment by FedEx is not to be construed, in any manner, as an admission
        by FedEx of liability to USPS. Payment is not to be construed, in any
        proceeding, as evidence of entitlement on the part of USPS. FedEx
        expressly reserves its right to assert a claim under Article 3 for the
        recovery of any payment, or part of a payment, to which FedEx believes
        USPS was not entitled. By making payment FedEx is not waiving any
        claims, defenses or other matters relating to or against USPS.


                                      5


                                    ARTICLE 8

                     INFORMATION REPORTING AND VERIFICATION

During the term of this Agreement, FedEx will provide to USPS certain data
reports related to Drop Box placements and traffic volumes, as more specifically
provided in Exhibit C.


                                    ARTICLE 9

                              OBLIGATIONS OF FEDEX

9.1     FedEx shall remain a company in good standing under the laws of the
        State of Delaware.

9.2     FedEx shall obtain and keep current all government licenses, permits and
        approvals as are necessary for FedEx to perform its obligations under
        this Agreement.

9.3     FedEx shall comply with all laws and regulations that may be applicable
        to this Agreement and to all transactions and activities to be performed
        hereunder.

9.4     FedEx shall be immediately relieved of any obligation to perform under
        this Agreement if it has been determined by a court of competent
        jurisdiction or by a Governmental Body with subject matter jurisdiction
        that such performance would be in violation of any applicable law or
        regulation.

                                   ARTICLE 10

                              DISCLOSURE/TRADEMARKS

[*]

                                   ARTICLE 11

                               OBLIGATIONS OF USPS

11.1    USPS shall obtain and keep current all government licenses, permits and
        approvals as are necessary for USPS to perform its obligations under
        this Agreement.

11.2    USPS shall comply with all laws and regulations that may be applicable
        to it with regard to this Agreement and to all transactions and
        activities to be performed hereunder. USPS shall not be required to
        perform any of its obligations hereunder that have been determined by a
        court of competent jurisdiction or by a Governmental Body with subject
        matter jurisdiction to be in violation of any applicable law or
        regulation.

11.3    [*]


                                      6


11.4    USPS shall render all reasonable assistance to FedEx in the placement of
        Drop Boxes pursuant to this Agreement, including but not limited to
        ensuring that local USPS management are informed of their
        responsibilities under this Agreement and are instructed to fully
        cooperate with designated FedEx personnel. USPS shall provide the USPS
        resources necessary to complete USPS obligations with respect to this
        Agreement, specifically including those resources needed to implement
        the obligations set forth in Exhibit A and Exhibit B on a timely basis.


                                   ARTICLE 12

                           LIABILITIES OF THE PARTIES

12.1    Subject to Article 13, USPS shall be liable to FedEx for all Losses (as
        defined in Article 12.3) to the extent such Losses arise out of or
        result from (directly or indirectly), or are in connection with:
        
        (a) any breach by USPS of any of the terms of this Agreement;

        (b) any breach of any representation or warranty made by USPS in this
            Agreement, the Schedules hereto or any other certificate or document
            delivered by USPS pursuant to this Agreement;

        (c) any failure by USPS to perform or comply with any of its covenants
            or obligations under this Agreement; or

        (d) injuries to persons or property on or at USPS's property including
            but not limited to property where FedEx Drop Boxes are placed
            pursuant to this Agreement.

         USPS agrees to provide FedEx Drop Boxes the same level of protection
         from harm that it provides to its own property at Post Office
         Locations. However, notwithstanding any other provision of this
         Agreement, USPS is not liable to FedEx for any loss of, or damage to,
         FedEx Drop Boxes or their contents resulting from the criminal or
         mischievous acts of anyone other than a USPS employee or agent. FedEx
         accepts the level of security at Post Office Locations on an "as is"
         basis and will not assert a cause of action against USPS for lack of
         adequate security.

12.2    FedEx shall be liable to USPS for all Losses (as defined in Article
        12.3), to the extent such Losses arise out of, result from, or are in
        connection with:

        (a) any breach by FedEx of any of the terms of this Agreement;

        (b) any breach of any representation or warranty made by FedEx in this
            Agreement, or any other certificate or document delivered by FedEx
            pursuant to this Agreement;

        (c) any failure by FedEx to perform or comply with any of its covenants
            or obligations under this Agreement;


                                     7


        (d) any third party customer claims arising from or in connection with
            the loss, damage or delay of any Shipment; or

        (e) any injuries to persons or property caused by FedEx's property
            (including but not limited to the FedEx Drop Boxes).

12.3    For purposes of this Agreement "Losses" shall mean the aggregate of any
        and all payments for claims, liabilities, suits, actions, proceedings,
        demands, charges, damages, impositions, assessments, levies, duties,
        losses, diminution in value, costs, or expenses (including reasonable
        attorney fees, expert witness fees, court costs and other costs of
        investigation and defense) of every kind and nature, whether or not
        involving a third-party claim, incurred by the party suffering the
        Losses.

12.4    Neither party shall be liable to the other for the payment of any
        indirect, special or consequential damages arising as a result of the
        performance, non-performance or malperformance hereunder.

12.5    The liability of the parties set forth in this Article 12 shall not be
        the exclusive area of liability of the Parties under this Agreement.


                                   ARTICLE 13

                      RISK OF LOSS; LIMITATION OF LIABILITY

[*]

                                   ARTICLE 14

                         REPRESENTATIONS AND WARRANTIES

14.1    USPS makes the followings representations and warranties:

        (a) The execution and delivery by USPS of this Agreement and the
            performance by USPS of its obligations hereunder have been duly
            authorized by all necessary action of USPS, and this Agreement has
            been executed and delivered by duly authorized officers of USPS.

        (b) No authorization, approval, consent, permit, license, order,
            designation, or declaration of or filing by or with any Governmental
            Body under the federal laws of the United States is necessary in
            connection with the execution and delivery of this Agreement by USPS
            and the consummation of each of the transactions contemplated
            hereby. As promptly as possible after the date of this Agreement,
            USPS will make all notices and/or filings required by Legal
            Requirements to be made by USPS in order to consummate the
            transactions contemplated by this Agreement, and, as promptly as
            possible after the date of this Agreement, USPS will cooperate with
            FedEx with respect to any and all notices and/or filings that FedEx
            is required by Legal Requirements to make.


                                       8


        (c) To the best of the USPS' knowledge, there is no Proceeding pending
            that challenges, or that prevents, delays, makes illegal, or
            otherwise interferes with, this Agreement and the transactions
            contemplated hereunder.

        (d) To the best of the USPS' knowledge, there is no Order to which USPS
            is subject that challenges, or that may have the effect of
            preventing, delaying, making illegal, or otherwise interferes with,
            this Agreement and the transactions contemplated hereunder.

        (e) To the best of USPS' knowledge, there is no constitutional,
            statutory, common law, or other basis on which USPS could terminate
            this Agreement that would not be available to a private party. USPS
            shall not assert the defense of sovereign immunity to a claim
            brought by FedEx under this Agreement

14.2    FedEx makes the following representations and warranties:

        (a) The execution and delivery by FedEx of this Agreement and the
            performance by FedEx of its obligations hereunder have been duly
            authorized by all necessary corporate or other action of FedEx, and
            this Agreement has been executed and delivered by duly authorized
            officers of FedEx.

        (b) No authorization, approval, consent, permit, license, order,
            designation, or declaration of or filing by or with any Governmental
            Body under the federal laws of the United States is necessary in
            connection with the execution and delivery of this Agreement by
            FedEx and the consummation of each of the transactions contemplated
            hereby. As promptly as possible after the date of this Agreement,
            FedEx will make all notices and/or filings required by Legal
            Requirements to be made by FedEx in order to consummate the
            transactions contemplated by this Agreement, and, as promptly as
            possible after the date of this Agreement, FedEx will cooperate with
            USPS with respect to any and all notices and/or filings that USPS is
            required by Legal Requirements to make.

        (c) To the best of FedEx's knowledge, there is no Proceeding pending
            that challenges, or that prevents, delays, makes illegal, or
            otherwise interferes with, this Agreement and the transactions
            contemplated hereunder.

                                   ARTICLE 15

                              TERM AND TERMINATION

15.1    INITIAL TERM

         This Agreement shall commence on January 10, 2001 and shall expire on
         June 8, 2008. Not later than eighteen (18) months prior to the
         expiration date, the Parties shall commence discussions with a view to
         renewing this Agreement. The Parties shall agree not later than twelve
         (12) months prior to the expiration of this Agreement whether this
         Agreement shall be renewed. If the parties have not agreed to renew
         this Agreement by such date, this Agreement shall expire in accordance
         with its terms.

15.2    [*]

                                       9


                                   ARTICLE 16

                                EVENTS OF DEFAULT

16.1    The occurrence of any one or more of the following events (the "Events
        of Default") will constitute a default and breach of this Agreement:

    (i)   Failure by either Party to pay any fee, reimbursable or other payment
          due pursuant to this Agreement and the continuance of that failure 
          for more than thirty (30) days after the date on which the payment 
          was due;

    (ii)  Failure of either Party to observe or perform any of the material 
          covenants, conditions or provisions of this Agreement, other than 
          the late payment of fees, reimbursables or other payments, where 
          the failure continues for a period of sixty (60) days after the 
          defaulting Party's receipt of notice of such failure; or

    (iii) Failure of either Party to observe or perform its obligations in 
          accordance with the provisions of Section 10.1 of this Agreement.

16.2    Upon the occurrence of an Event of Default specified in Sections 16.1
        (i), (ii) or (iii) the non-defaulting Party may exercise and shall be
        entitled to any remedies available to it in law or equity, including the
        right to terminate this Agreement in whole, without demand or judicial
        resolution, by written notice effective upon three hundred sixty-five
        (365) days notice to the defaulting party.

16.3    Upon the occurrence of an Event of Default specified in Section
        16.1(iii), the defaulting Party will immediately discontinue all use of
        the Public Statement or Advertisement identified in the notice of
        default.


                                       10



                                   ARTICLE 17

                                 CONFIDENTIALITY

17.1    During the term of this Agreement and until the earlier of five (5)
        years after such termination or until such time as the information is no
        longer confidential as described in Article 17.2, each Party shall treat
        as confidential and appropriately safeguard and shall not use for the
        benefit of any person or corporation other than the other Party:

        (i)   written information identified in writing as confidential or 
              oral information promptly confirmed in writing as being 
              confidential, including such information disclosed by the 
              Parties during negotiations preceding the execution of this 
              Agreement;

        (ii)  written information or oral information promptly confirmed in 
              writing as confidential pertaining to a Party's business or 
              assets which is received at any time from a Party or its 
              Affiliates;

        (iii) any information or knowledge concerning the methods of 
              operation, promotion, sale, or distribution used by a Party or 
              its Affiliates which may be communicated to the other Party or 
              its Affiliates or which a Party may otherwise acquire by virtue 
              of its performance of this Agreement, including but not limited 
              to FedEx customer information; or

        (iv)  any information that the recipient of which actually knows or
              should reasonably have known is confidential or proprietary to the
              other party, including but not limited to information related to
              FedEx or USPS product mix.

17.2    Information shall not be considered confidential if it is:

        (i)   Generally known to the trade or public;

        (ii)  Rightfully possessed by a Party prior to the date of this
              Agreement;

        (iii) Received by a Party from a third party which rightfully possesses
              it;

        (iv)  Independently developed by the other Party; or

        (v)   Releasable pursuant to Postal regulations addressing how 
              information is maintained by USPS. Those regulations are contained
              at 39 CFR Part 265.

17.3    PERMITTED RELEASE: USPS and FedEx will not voluntarily release or
        disclose Confidential Information to any other person, except, as
        appropriate, to contractors and consultants used to implement this
        Agreement, and to their outside auditors and attorneys. USPS and FedEx
        are also permitted to release Confidential Information requested by
        Congress or by any agency, branch, or other component of the United
        States Government in the appropriate exercise of its oversight or
        investigatory jurisdiction. Before releasing information in response to
        such a request, a party will provide the other party with advance notice
        of the impending release and, to ensure against 

                                      11


        further dissemination or disclosure by the requester, must include a 
        restrictive legend on all released information. Notwithstanding the 
        preceding sentence, if a federal law enforcement agency lawfully demands
        the release of Confidential Information and advance notice is 
        impracticable, the disclosing party will immediately notify the other
        party after such release.

17.4    REQUIRED RELEASE: Permission from the other party shall not be necessary
        for disclosures to any federal, state or local governmental body, or to
        a requester seeking documents under the Freedom of Information Act, 5
        U.S.C. Section 552, provided such disclosures are required by applicable
        law or regulation. Before releasing confidential information in response
        to such a request, a party must provide the other party with advance 
        notice of the impending release, and, to ensure against further 
        dissemination or disclosure by the requester, must include a restrictive
        legend on all released information.


                                   ARTICLE 18

                                  FORCE MAJEURE

Each Party shall be excused from performance under this Agreement resulting in
whole or in part from any of the following: perils of the air, public enemies,
criminal acts of any person or entity, public authorities acting with actual or
apparent authority (including U. S. Postal Inspectors), civil commotion, hazards
incident to a state of war, local or national weather conditions, national or
local disruptions in transportation networks or operations (of any mode) of
FedEx or any other entity, strikes or anticipated strikes of FedEx, USPS or any
other Person, natural disasters, disruption or failure of communication and
information systems, or any conditions that present a danger to each Party's
personnel. Notwithstanding, if an event of force majeure prevents USPS from
performing the USPS Services, in whole or in substantial part (affecting not
less than five hundred (500) Drop Boxes) for more than fourteen (14) consecutive
days, FedEx shall be entitled to a pro-rata reduction in the Drop Box Fees,
retroactive to the first day of the event of force majeure.

                                   ARTICLE 19

                                ENTIRE AGREEMENT

This Agreement, together with all Exhibits, constitute the entire agreement and
understanding between the Parties in connection with the subject matter
described, and supersedes and cancels all previous negotiations, commitments and
writings related to the subject matter.

                                   ARTICLE 20

                           AMENDMENTS OR MODIFICATIONS

In order to be binding upon USPS or FedEx any amendment, extension or renewal of
this Agreement must be in writing and signed by an Officer of USPS authorized to
bind the USPS and by an officer of FedEx authorized to bind the company.



                                      12


                                   ARTICLE 21

                                   ASSIGNMENT

Neither Party shall, directly or indirectly (whether by succession, merger, or
otherwise) assign, delegate or otherwise transfer this Agreement or any of its
rights or obligations hereunder, without the prior written approval of the other
(provided that FedEx may assign this Agreement to any of its Affiliates without
first obtaining such consent).

                                   ARTICLE 22

                                WAIVER OF BREACH

No waiver of breach of any of the provisions of this Agreement shall be
construed to be a waiver of any succeeding breach of the same or any other
provision.

                                   ARTICLE 23

                                     NOTICES

Any notice, report, demand, acknowledgement or other communication which under
the terms of this Agreement or otherwise must be given or made by either Party,
unless specifically otherwise provided in this Agreement, shall be in the
English language and in writing, and shall be given or made by express delivery
service with proof of delivery, Certified Mail (return receipt requested),
facsimile with acknowledgement of receipt/proof of receipt, or personal
delivery, addressed to the respective parties as follows, or as the Parties may
otherwise notify each other:

To USPS:      Vice President, Retail, Consumers & Small Businesses
              U.S. Postal Service
              1735 N. Lynn St.
              Arlington, VA  22209

              With a copy to:

              General Counsel
              U.S. Postal Service
              475 L'Enfant Plaza, S.W.
              Washington, DC  20260

To FedEx:     Executive Vice President
              Operations & System Support
              Federal Express Corporation
              3610 Hacks Cross Road
              Building A, 3rd Floor
              Memphis, TN 38125

                                       13



              With a copy to:

              Senior Vice President & General Counsel
              Federal Express Corporation
              3620 Hacks Cross Road
              Building B, 3rd Floor
              Memphis, TN  38125

Such notice, report, demand, acknowledgement or other communication shall be
deemed to have been given or made in the case of express delivery service with
tracking and tracing capability on the date of signature of the proof of
delivery, in the case of Certified Mail on the fifth business day in the place
of receipt after the date sent, in the case of telex and facsimile on the date
of the acknowledgement of receipt/proof of receipt and in the case of personal
delivery upon receipt evidencing such delivery.

                                   ARTICLE 24

                                  SEVERABILITY

24.1    If any term, provision, covenant or condition of this Agreement is held
        by a court or board of competent jurisdiction to be invalid or
        unenforceable, or the actions of a Governmental Body have the effect of
        causing a term, provision, covenant or condition of this Agreement to be
        invalid, the remainder of the provisions shall continue in full force
        and effect unless the rights and obligations of the parties have been
        materially altered or abridged by such invalidation or unenforceability.

24.2    If this Agreement is materially altered or abridged, then USPS and FedEx
        will meet to negotiate in good faith to reach a mutually satisfactory
        modification to this Agreement. If the Parties are unable to reach a
        mutually satisfactory modification within thirty (30) days of the
        effective date of the Order, then either Party may elect to treat such
        alteration or abridgement as a court ordered termination of this
        Agreement.

                                   ARTICLE 25

                           ORDER OF PRECEDENCE CLAUSE

Any inconsistency in the provisions of this agreement will be resolved by giving
precedence in the following order:

a.      Clauses of the Agreement.

b.      Provisions contained in the Exhibits



                                       14





IN WITNESS WHEREOF, the Parties have signed this Agreement in duplicate, one for
each of the parties, as of January 10, 2001.



                                   UNITED STATES POSTAL SERVICE



                                   By:      /s/ Patricia M. Gibert             
                                           ---------------------------

                                           Title: Vice President, Retail,
                                           Consumers & Small Businesses



                                   FEDERAL EXPRESS CORPORATION



                                   By:      /s/ Leonard B. Feiler              
                                            ---------------------------

                                            Title: Senior Vice President, 
                                            Central Support Services




                                       15





                                    EXHIBIT A

                           OPERATIONAL SPECIFICATIONS


1.      PLACEMENT OF DROP BOXES

          1.1.   FedEx may place a Drop Box at any Post Office Location.

          1.2.   Wherever feasible, FedEx Drop Boxes will be installed out of
                 doors. If no outdoor location is feasible, and if conditions
                 permit, the USPS will provide space inside a Post Office
                 Location for installation of a Drop Box or an appropriately
                 sized slot.

          1.3.   FedEx and USPS officials will agree upon the siting of Drop
                 Boxes on a facility-by-facility basis. The site selection
                 process will take the following factors into account:

                 1.3.1.  No other drop box or collection box will be placed in
                         front of the FedEx Drop Box, or no closer than 36
                         inches on either side;

                 1.3.2.  FedEx Drop Boxes will be placed so as to provide a safe
                         and unencumbered environment for customers, FedEx
                         couriers, and representatives;

                 1.3.3.  Safety, lighting, and visibility;

                 1.3.4.  High customer traffic, parking, traffic flow, and ease
                         of access;

                 1.3.5.  Applicable local ordinances;

                 1.3.6.  FedEx Drop Boxes will be visible, and unobstructed from
                         view or access; and

                 1.3.7.  No other device, box or material may be placed on,
                         attached to, or removed from the FedEx Drop Box,
                         without prior written consent of FedEx.


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          1.4.   FedEx Drop Boxes may not be removed or relocated without the
                 prior written consent of FedEx, except in case of emergency.
                 Following any such emergency removal or relocation, USPS will
                 promptly notify FedEx and work with FedEx to facilitate
                 redeployment of such box as quickly as possible;

          1.5.   FedEx and the USPS will agree on a process for determining the
                 proper siting of Drop Boxes and for resolving any disputes that
                 may arise between the parties.

          1.6.   FedEx will be solely responsible for determining whether any
                 local ordinances apply to the placement of Drop Boxes at a
                 particular Post Office Location, for complying with such
                 ordinances, and for paying any costs associated with complying
                 with such ordinances.

          1.7.   Installation of FedEx Drop Boxes may begin no earlier than 30
                 days after the Agreement is signed by both parties.

2.      DIMENSIONS AND DESIGN OF DROP BOXES

          2.1.   FedEx Drop Boxes may not exceed the following dimensions: 53
                 inches in height, 27 inches in width, and 30 inches in depth.

          2.2.   If FedEx wishes to materially alter the design of Drop Boxes to
                 be installed at Post Office Locations, FedEx will submit a
                 proposed new design to the USPS for prior approval. The USPS
                 may disapprove a design change only if it reasonably believes
                 the change would: (a) increase one of the dimensions beyond the
                 parameters set forth in clause 2.1, or (b) create a significant
                 problem with regard to safety, security, or customer confusion.

3.      OPERATIONS

          3.1.   FedEx is solely responsible for retrieving packages from its
                 Drop Boxes. The USPS will not interfere with the ability of
                 FedEx customers to deposit packages in FedEx Drop Boxes or the
                 ability of FedEx personnel to retrieve packages from these
                 boxes.

          3.2.   The USPS will not be responsible for any actions by a third
                 party that might have an impact on a FedEx Drop Box at a Post
                 Office Location, unless the third party is acting under the
                 direction and control of the USPS.

          3.3.   FedEx is solely responsible for the costs and labor of Drop Box
                 installation and maintenance, including the stocking of
                 envelopes and labels. The USPS will not maintain supplies for
                 FedEx.

          3.4.   To avoid upsetting customers, USPS employees may allow
                 customers to mistakenly hand FedEx Packages to them. However,
                 USPS employees will 


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                 not weigh or rate FedEx packages or respond to customer 
                 inquiries regarding FedEx service features.

          3.5    FedEx and the USPS will jointly develop procedures for
                 exchanging packages and mail mistakenly deposited in each
                 other's collection boxes or tendered to each other's personnel.
                 Recognizing that customers of both FedEx and the USPS will from
                 time to time mistakenly deposit packages or mail into the wrong
                 Drop Box for the service selected, the following process must
                 be followed by each respective organization:

                 (a)     As soon as a pick up carrier or courier discovers that
                         Packages have been deposited into the wrong Drop Box or
                         collection box, he or she will immediately transfer the
                         Packages to the correct receptacle. If the pick up time
                         has already occurred for the correct Drop Box or
                         collection box, meaning the package will not "go out"
                         on the day deposited, USPS will call the local FedEx
                         dispatch office, whose phone number will be provided by
                         FedEx and kept on file by the local Post Office.

                 (b)     [*]

4.      Operational Procedures

          4.1    Standard Operational Procedures will be developed and agreed to
                 by both parties. These Operational procedures will be
                 maintained, and signed off on by:

                 -       For FedEx, the Managing Director of Retail Operations

                 -       For the USPS, the Manager, Retail Operations

          4.2    A quarterly business review meeting or conference call will
                 take place during the term of this Agreement, held by the above
                 mentioned representatives, and /or their designees, to review
                 operational issues, concerns, and in general the operational
                 performance of this program.

          4.3    FedEx Drop Box Placement Process for USPS Locations

                 4.3.1   The USPS will create internal communications pieces for
                         the local USPS Postmaster, Branch Manager, Station
                         Manager and anyone else impacted by the Drop Box
                         placements, reinforcing the existence of the Drop Box
                         program, what to expect and the duty of USPS and FedEx
                         personnel to cooperate in placement of FedEx Drop Box
                         at USPS Post Office Locations. This communication will
                         outline general guidelines and responsibilities of both
                         FedEx and USPS personnel and the process for site
                         selection and box installation.

                 4.3.2   A FedEx Retail Account Executive will make contact with
                         the USPS installation contact person (postmaster,
                         branch manager).


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                 4.3.3   A FedEx Retail representative and USPS installation
                         contact person will cooperatively determine the
                         specific placement of the Drop Box.

                 4.3.4   A copy of the FedEx placement order will be left with
                         USPS personnel with placement specifics.

                 4.3.5   Then FedEx will proceed with normal Drop Box placement
                         process.

                 4.3.6   Then, a FedEx vendor will contact the USPS Installation
                         contact person to coordinate installation.

          4.4    FedEx Drop Box Placement Responsibilities

                 4.4.1   USPS shall be responsible for the following activities
                         with respect to the Drop Box:

                         Snow/ice removal
                         Landscaping/maintenance of the adjacent property
                         Good neighbor vigilance
                         Calling the FedEx Hotline [*] when appropriate

                 4.4.2   FedEx shall be responsible for the following activities
                         with respect to the Drop Box:

                         Daily pick up
                         General mechanical repair/maintenance
                         Removal/relocation
                         Site restoration
                         Supplies
                         Marketing material
                         Good Neighbor Vigilance


                 4.4.3   Operational Exceptions. USPS shall instruct its local
                         personnel to contact FedEx at [*] to address
                         operational exceptions that may arise (damaged boxes,
                         graffiti, etc.).

          4.5    Drop Box Removals

                 FedEx may remove or replace the Drop Box from any Post Office
                 Location during the term of this Agreement. Upon the expiration
                 or early termination of this Agreement, FedEx and USPS will
                 coordinate the orderly removal of all Drop Boxes from Post
                 Office Locations. [*]

          4.6    Post Office Location Openings and Closures




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                 USPS will notify FedEx as soon as possible after a decision has
                 been made to open, close or relocate a Post Office Location.
                 Unless an emergency, such as a fire or flood, compels USPS to
                 close a Post Office Location, USPS will notify FedEx not later
                 than ninety (90) days in advance of the implementation date of
                 any such decision.









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                                    EXHIBIT B


                          DEPLOYMENT AND PRICE SCHEDULE

                                       [*]







                                    EXHIBIT C

                     INFORMATION REPORTING AND VERIFICATION


REPORT REPORTING PERIOD Start date/# Drop Boxes/Tier Monthly [*] [*] Overnight volume Monthly Deferred Baseline volume One time end of Year 3 [*] [*]
Prior to or during the operations tests described in Exhibit B to this Agreement, FedEx will provide USPS and USPS consultants a detailed demonstration of the data collection system that will be used in generating these reports. [*] * BLANK SPACES CONTAINED CONFIDENTIAL INFORMATION WHICH HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.