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                                                                   EXHIBIT 10.35








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               FIFTH SPECIAL FACILITY SUPPLEMENTAL LEASE AGREEMENT

                                 BY AND BETWEEN

                     MEMPHIS-SHELBY COUNTY AIRPORT AUTHORITY

                                       AND

                           FEDERAL EXPRESS CORPORATION






                            DATED AS OF JULY 1, 1997





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                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
Section                                                                     Page
-------                                                                     ----

 <S>       <C>                                                               <C>
           Parties.......................................................    1
           Recitals......................................................    1
           Habendum......................................................    1
 1         Definitions ..................................................    1
 2         Term of Lease ................................................    2
 3         Rental .......................................................    2
 4         Prepayment of Certain Rentals ................................    2

 5         Series 1997 Bonds ............................................    3
 6         Special Covenants of the Lessee ..............................    3
 7         Lease Still in Effect; Provisions Thereof Applicable
             to this Fifth Supplemental Lease............................    3
 8         Descriptive Headings .........................................    3
 9         Effectiveness of this Fifth Supplemental Lease ...............    3
 10        Execution of Counterparts ....................................    3
</TABLE>





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                             FIFTH SPECIAL FACILITY
                          SUPPLEMENTAL LEASE AGREEMENT


         THIS FIFTH SPECIAL FACILITY SUPPLEMENTAL LEASE AGREEMENT dated as of
the first day of July 1997, by and between MEMPHIS-SHELBY COUNTY AIRPORT
AUTHORITY (the "Lessor"), a public and governmental body politic and corporate
of the State of Tennessee, and FEDERAL EXPRESS CORPORATION (the "Lessee"), a
corporation duly organized and existing under the laws of the State of Delaware
and qualified to do business in the State of Tennessee;


                                   WITNESSETH:

         WHEREAS, Lessor and Lessee on August 21, 1979 entered into a Special
Facility Lease Agreement dated as of August 1, 1979 (the "Lease");

         WHEREAS, Lessor and Lessee have amended and supplemented the Lease by
First and Second Supplemental Special Facility Lease Agreements, dated as of May
1, 1982 and November 1, 1982, respectively, so as to provide for the lease by
Lessee from Lessor of additional facilities and equipment to be included in the
Special Facility as defined in the Lease (the "1982 Federal Express Project")
and have heretofore further amended and supplemented the Lease by Third and
Fourth Supplemental Special Facility Lease Agreements dated as of December 1,
1984 and July 1, 1992 (said First, Second, Third and Fourth Special Facility
Supplemental Lease Agreements being referred to herein, collectively, as the
"Supplemental Leases"); and

         WHEREAS, Lessor and Lessee have agreed to further supplement the Lease
to reflect a change in rentals resulting from the refunding of the Lessor's
Special Facilities Revenue Bonds, Series 1982B (Federal Express Corporation)
issued to finance a part of the 1982 Federal Express Project;

         NOW, THEREFORE, for and in consideration of the mutual promises,
covenants and agreements hereinafter contained to be kept and performed by the
parties hereto and upon the provisions and conditions hereinafter set forth,
Lessor and Lessee do hereby covenant and agree, and each for itself does hereby
covenant and agree, as follows:

         SECTION 1. Definitions. Except as otherwise provided herein, and unless
the context shall clearly require otherwise, all words and terms used in this
Fifth Supplemental Lease which are defined in the Lease shall, for all purposes
of this Fifth Supplemental Lease, have the respective meanings given to them in
the Lease.

         Unless the context shall clearly require otherwise, the following terms
shall, for all purposes of the Lease and of any agreement amendatory or
supplemental thereto (including for all purposes this Fifth Supplemental Lease)
have the meanings herein specified, with the following definitions to be equally
applicable to both the single and plural forms of any of the terms herein
defined:


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         (a)      Sixth Supplemental Indenture. The term "Sixth Supplemental
                  Indenture" shall mean the Sixth Supplemental Indenture dated
                  as of July 1, 1997 between the Lessor and the Trustee
                  supplementing the Indenture, as amended as provided in the
                  Indenture.

         (b)      Series 1997 Bonds. The term "Series 1997 Bonds" shall mean the
                  $20,105,000 principal amount of special obligation bonds of
                  Lessor designated Special Facilities Revenue Bonds, Refunding
                  Series 1997 (Federal Express Corporation) and issued under
                  Sections 2.07 and 2.08 of the Indenture and the Sixth
                  Supplemental Indenture and in accordance with Section 7.6 of
                  the Lease.

                  SECTION 2. Term of Lease. The term of the Lease, including
this Fifth Supplemental Lease, shall expire on, August 31, 2012 at 11:59 o'clock
P.M.; provided, that the term of the Lease, including this Fifth Supplemental
Lease, shall not expire so long as any Bonds remain outstanding under the terms
of the Indenture except as provided in subsection A of Section 9.2 of the Lease.

                  SECTION 3. Rental. Lessee shall pay the rentals reserved to
the Lessor under Section 3.3 of the Lease at the time, place and manner set
forth therein, which from and after the date specified in this Section, in
addition to the amounts otherwise payable as of the date hereof under said
Section 3.3, shall include (a) an amount equal to the principal of, premium (if
any) and interest on, the Series 1997 Bonds as and when the same become due and
payable by reason of stated maturity or redemption of such Bonds as provided in
the Indenture, and (b) all other amounts payable under said Section 3.3 in
connection with the Series 1997 Bonds.

                  SECTION 4. Prepayment of Certain Rentals. (a) Lessee may
prepay the rentals required hereby in accordance with subsections A, B and C of
Section 3.4 of the Lease and receive the credits provided therein.

                  (b) In the event a judgment or order of a court of competent
jurisdiction which is final (either because the time for appeal thereof has
expired or because the judgment or order is issued by that court having final
appellate jurisdiction over the matter and is not subject to collateral attack),
or a determination of the Internal Revenue Service which is final (because the
tax has been paid pursuant thereto and the time for filing a claim for refund of
such tax has expired) to the effect that the interest paid or payable on any
Series 1997 Bond to other than a substantial user of the Special Facility or a
related person is or was includable in the gross income of the holder thereof
for federal income tax purposes as a result of a failure by the Lessee to
observe or perform any covenant or agreement to be observed or performed by it
under the Lease or as a result of facts within the control of the Lessee which
are contradictory to any representation or warranty made by the Lessee under the
Lease, the Lessee shall prepay on the next scheduled rent payment date the
entire amount of rent due under subparagraph (b) of Section 3.3 of the Lease
pursuant to Section 3 hereof to effect redemption of the then outstanding Series
1997 Bonds in accordance with the Indenture.


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                  SECTION 5. Series 1997 Bonds. Lessor shall apply the proceeds
of the Series 1997 Bonds in accordance with the terms of the Sixth Supplemental
Indenture, the form, terms and provisions of which the Lessee hereby
acknowledges.

                  SECTION 6. Special Covenants of the Lessee. The Lessee
covenants and agrees with the Lessor that so long as the Series 1997 Bonds are
outstanding, it will provide the Lessor with copies of all publicly available
reports, notices, financial statements or other documents that the Lessee is
required to provide the Securities and Exchange Commission and major lenders and
shall include the Lessor on its list of major lenders of Lessee for receipt of
all information made available to such lenders.

                  SECTION 7. Lease Still in Effect; Provisions Thereof
Applicable to this Fifth Supplemental Lease. All of the terms, provisions,
conditions, covenants and agreements of the Lease as supplemented by the
Supplemental Leases, shall continue in full force and effect as supplemented
hereby, and shall be applicable to each of the provisions of this Fifth
Supplemental Lease during the term hereof with the same force and effect as
though the provisions hereof were set forth in the Lease.

                  SECTION 8. Descriptive Headings. The descriptive headings of
the sections of this Fifth Supplemental Lease are inserted for convenience of
reference only and do not constitute a part of this Fifth Supplemental Lease and
shall not affect the meaning, construction, interpretation or effect of this
Fifth Supplemental Lease.

                  SECTION 9. Effectiveness of this Fifth Supplemental Lease.
This Fifth Supplemental Lease shall become effective upon delivery of and
payment for the Series 1997 Bonds.

                  SECTION 10. Execution of Counterparts. This Fifth Supplemental
Lease may be simultaneously executed in several counterparts, each of which
shall be an original and all of which shall constitute but one and the same
instrument.






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         IN WITNESS WHEREOF, MEMPHIS-SHELBY COUNTY AIRPORT AUTHORITY and FEDERAL
EXPRESS CORPORATION have caused this Fifth Special Facility Supplemental Lease
Agreement to be duly executed as of the date first above written.


                                         MEMPHIS-SHELBY COUNTY AIRPORT
                                           AUTHORITY

                                         By /s/ LARRY D. COX
                                           -----------------------------
ATTEST:                                              President
 /s/ JERRY L. MCMICHAEL
-----------------------------
         Secretary




                                         FEDERAL EXPRESS CORPORATION


                                         By /s/ BURNETTA B. WILLIAMS
                                           -----------------------------
ATTEST:                                  Name: Burnetta B. Williams
                                         Title: Assistant Treasurer
                                                   and Managing Director,
                                                   Corporate Finance
 /s/ SCOTT E. HANSON
-----------------------------
     Assistant Secretary





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STATE OF TENNESSEE   )
                     )  ss:
COUNTY OF SHELBY     )


                  On this 29th day of July 1997 before me appeared Larry D.
Cox, to me personally known, who, being by me duly sworn (or affirmed) did say
that he is the President of Memphis-Shelby County Airport Authority, and that
the seal affixed to the foregoing instrument is the corporate seal of said
Authority, and that said instrument was signed and sealed on behalf of said
Authority, by authority of its Board of Commissioners and he acknowledged said
instrument to be the free act and deed of said Authority.

(SEAL)

                                                   /s/ MARY JO JOHNSON
                                                  -------------------------
                                                      Notary Public
                                                  My Commission Expires 9/6/99

















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STATE OF TENNESSEE  )
                    )  ss:
COUNTY OF SHELBY    )


         On this 29th day of July 1997 before me appeared Burnetta B. Williams, 
to me personally known, who, being by me duly sworn (or affirmed) did say that
she is Assistant Treasurer and Managing Director, Corporate Finance of Federal
Express Corporation, and that the seal affixed to the foregoing instrument is
the corporate seal of said corporation, and that said instrument was signed and
sealed on behalf of said corporation by authority of its Board of Directors and
she acknowledged said instrument to be the free act and deed of said
corporation.

(SEAL)

                                            /s/ ETHELDA D. MCKEEVER
                                           ---------------------------------
                                                   Notary Public

                                           My Commission Expires: March 27, 2001


























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