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                                RETAIL AGREEMENT

                                     BETWEEN

                        THE UNITED STATES POSTAL SERVICE

                                       AND

                           FEDERAL EXPRESS CORPORATION

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                                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.

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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.

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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.

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                                    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.

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                                    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    [*]

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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;

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        (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.

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        (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    [*]

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                                   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.

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                                   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

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        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.

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                                   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

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              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

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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

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                                    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.

                                      16
<PAGE>

          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

                                      17
<PAGE>

                 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).

                                      18

<PAGE>

                 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

                                      19
<PAGE>

                 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.

                                       20

<PAGE>

                                    EXHIBIT B

                          DEPLOYMENT AND PRICE SCHEDULE

                                       [*]

<PAGE>

                                    EXHIBIT C

                     INFORMATION REPORTING AND VERIFICATION

<TABLE>
<CAPTION>

REPORT                                            REPORTING PERIOD
<S>                                               <C>
Start date/# Drop Boxes/Tier                      Monthly

[*]                                               [*]

Overnight volume                                  Monthly

Deferred Baseline volume                          One time end of Year 3

[*]                                               [*]
</TABLE>

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.<PAGE>

                                                                   EXHIBIT 10.26

                                3COM CORPORATION

                       BRUCE CLAFLIN EMPLOYMENT AGREEMENT

   This Agreement is made by and between 3Com Corporation (the "Company"),
and Bruce Claflin ("Executive").

   DUTIES AND SCOPE OF EMPLOYMENT.

     (a) POSITIONS; CEO EMPLOYMENT COMMENCEMENT DATE; DUTIES. Executive's
coverage under this Agreement shall commence upon the date this Agreement has
been signed by both parties hereto. On January 1, 2001 (the "CEO Employment
Commencement Date"), Executive shall be promoted to Chief Executive Officer. As
of the CEO Employment Commencement Date, the Company shall employ the Executive
as the President and Chief Executive Officer of the Company reporting to the
Board of Directors of the Company (the "Board"). The period of Executive's
employment hereunder is referred to herein as the "Employment Term." During the
Employment Term, Executive shall render such business and professional services
in the performance of his duties, consistent with Executive's position within
the Company, as shall reasonably be assigned to him by the Board.

     (b) OBLIGATIONS. During the Employment Term, Executive shall devote his
full business efforts and time to the Company. Executive agrees, during the
Employment Term, not to actively engage in any other employment, occupation or
consulting activity for any direct or indirect remuneration without the prior
approval of the Board; provided, however, that Executive may serve in any
capacity with any civic, educational or charitable organization, or as a member
of corporate Boards of Directors or committees thereof, without the approval of
the Board, unless there is a conflict of interest.

     (c) EMPLOYEE BENEFITS. During the Employment Term, Executive shall be
eligible to participate in the employee benefit plans maintained by the Company
that are applicable to other senior management to the full extent provided for
under those plans.

   AT-WILL EMPLOYMENT. Executive and the Company understand and acknowledge that
Executive's employment with the Company constitutes "at-will" employment.
Subject to the Company's obligation to provide severance benefits as specified
herein and in the Management Retention Agreement previously entered into by and
between Executive and the Company (the "Management Retention Agreement"),
Executive and the Company acknowledge that this employment relationship may be
terminated at any time, upon written notice to the other party, with or without
good cause or for any or no cause, at the option either of the Company or
Executive.

   COMPENSATION.

     (d) BASE SALARY. While employed by the Company, the Company shall pay the
Executive as compensation for his services a base salary at the annualized rate
of $750,000 (the "Base Salary"). Such salary shall be paid periodically in
accordance with normal Company payroll practices and subject to the usual,
required withholding. Executive's Base Salary shall be reviewed

<PAGE>

annually by the Compensation Committee of the Board for possible adjustments in
light of Executive's performance and competitive data.

     (e) BONUSES. Executive shall be eligible to earn a target bonus under the
Company's Short-Term Cash Incentive Plan equal to 100% of Base Salary (the
"Target Bonus"). Executive's performance shall be evaluated by the Compensation
Committee of the Board of Directors based upon performance criteria specified by
that committee. The actual bonus may be smaller or greater than the Target
Bonus, based on the Compensation Committee's satisfaction with the achievement
levels.

     (f) STOCK OPTION. As of the CEO Employment Commencement Date, Executive
shall be granted a stock option (the "Stock Option") to purchase a total of one
million (1,000,000) shares of Company common stock with a per share exercise
price equal to 100% of the fair market value on date upon which this Agreement
has been executed by both parties. The Stock Option shall be for a term of ten
years (or shorter upon termination of employment or consulting relationship with
the Company) and, subject to accelerated vesting as set forth elsewhere herein
and in the Management Retention Agreement, shall vest as to 25% of the shares
(i.e., 250,000 shares) on each anniversary of the CEO Employment Commencement
Date, so as to be 100% vested on the four year anniversary thereof, conditioned
upon Executive's continued employment or consulting relationship with the
Company as of each vesting date. Except as specified otherwise herein, the Stock
Option is in all respects subject to the terms, definitions and provisions of
the Company's 1983 Stock Option Plan and the standard form of stock option
agreement thereunder, which documents are incorporated herein by reference.
Executive shall be considered for annual stock option grants according to the
competitive market, as is currently the practice at the Company. Executive shall
have one year following termination of employment to exercise the Stock Option
and all stock options granted to him by the Company, including stock options
granted prior to as well as on or after the CEO Employment Commencement Date.
All of Executive's stock options shall vest 100% if they are not assumed (or
equivalent options substituted) in a Change of Control as defined in the
Management Retention Agreement.

     (g) RESTRICTED STOCK. On the Employment Commencement Date, Executive shall
purchase one hundred thousand (100,000) shares of the Company's Common Stock
(the "Restricted Stock"), at a price per share equal to 100% of the par value of
the shares on the date of purchase. Subject to accelerated vesting as provided
elsewhere in this Agreement and in the Management Retention Agreement, the
Restricted Stock shall vest as to 25% of the shares (i.e., 25,000 shares) on
each anniversary of the CEO Employment Commencement Date, so as to be 100%
vested on the four year anniversary thereof, conditioned upon Executive's
continued employment or consulting relationship with the Company as of each
vesting date. This purchase is subject to Executive entering into the Company's
form of Restricted Stock Purchase Agreement which provides the Company with the
right to purchase unvested shares at the original purchase price in the event of
Executive's termination of employment or consulting relationship and other
standard terms and conditions, subject to accelerated vesting as specified in
Section 3(e) hereof.

                                      -2-
<PAGE>

     (h) SEVERANCE.

         (i) VOLUNTARY TERMINATION FOR GOOD REASON; INVOLUNTARY TERMINATION
OTHER THAN FOR CAUSE. If Executive's employment with the Company terminates due
to (i) a "Voluntary Termination for Good Reason" (as defined in the Management
Retention Agreement) where the grounds for the Good Reason are not cured by the
Company within 30 days following receipt of written notice specifying the
grounds from Executive, or (ii) an involuntary termination by the Company other
than for "Cause" (as defined in the Management Retention Agreement), then,
subject to Executive executing and not revoking a standard form of mutual
release of claims with the Company and not breaching the terms of Section 10
hereof, (i) all of Executive's Company stock options and restricted stock shall
immediately accelerate vesting as to 50% of the then unvested shares, (ii)
Executive shall receive continued payments of two year's Base Salary plus Target
Bonus, less applicable withholding, in accordance with the Company's standard
payroll practices, (iii) the Company shall pay the group health, dental and
vision plan continuation coverage premiums for Executive and his covered
dependents under Title X of the Consolidated Budget Reconciliation Act of 1985,
as amended ("COBRA") for the lesser of (A) eighteen (18) months from the date of
Executive's termination of employment, or (B) the date upon which Executive and
his covered dependents are covered by similar plans of Executive's new employer.

   "Voluntary Termination for Good Reason" and "Cause" are defined in the
Management Retention Agreement and such definitions are incorporated herein by
reference, amended as follows for purposes of both this Agreement and the
Management Retention Agreement: in the definition of "Cause," no act will be
considered willful if committed in good faith with a reasonable belief that the
act is in the Company's best interests. In addition, Executive may Voluntarily
Terminate for Good Reason if he is no longer the CEO of the Company or its
parent in the event of a Change of Control.

     The Executive shall not be required to mitigate the value of any severance
benefits contemplated by this Agreement, nor shall any such benefits be reduced
by any earnings or benefits that the Executive may receive from any other
source; provided, however, that Executive shall not receive severance benefits
under both the Management Retention Agreement and this Agreement.

         (ii) VOLUNTARY TERMINATION OTHER THAN FOR GOOD REASON; INVOLUNTARY
TERMINATION FOR CAUSE. In the event Executive terminates his employment
voluntarily other than due to a Voluntary Termination for Good Reason or is
involuntarily terminated by the Company for Cause, then all vesting of
Executive's stock options and restricted stock shall terminate immediately and
all payments of compensation by the Company to Executive hereunder shall
immediately terminate (except as to amounts already earned).

     (i) TERM LIFE INSURANCE POLICY. From the date upon which both parties
hereto have signed this Agreement until the earlier of (1) the four year
anniversary of the CEO Employment Commencement Date, or (ii) Executive's
termination of employment, the Company agrees to either (i) pay 100% of the
premiums on a $20 million life insurance policy covering Executive, or (ii)
self-insure Executive's life for $20 million; provided, however, that with
respect to any such self-insurance, (A) it shall not cover Executive's suicide,
and (B) Executive represents to the Company that he is not aware of any
life-threatening condition to which he is subject.

                                      -3-
<PAGE>

     DEATH OR TOTAL DISABILITY OF EXECUTIVE. Upon Executive's death or becoming
permanently and totally disabled (as defined in accordance with Internal Revenue
Code Section 22(e)(3) or its successor provision) while Executive is an employee
or consultant of the Company, then (i) employment hereunder shall automatically
terminate and all payments of compensation by the Company to Executive hereunder
shall immediately terminate (except as to amounts already earned), and all
vesting of Executive's stock options and restricted stock shall terminate
immediately.

     ASSIGNMENT. This Agreement shall be binding upon and inure to the benefit
of (a) the heirs, beneficiaries, executors and legal representatives of
Executive upon Executive's death and (b) any successor of the Company. Any such
successor of the Company shall be deemed substituted for the Company under the
terms of this Agreement for all purposes. As used herein, "successor" shall
include any person, firm, corporation or other business entity which at any
time, whether by purchase, merger or otherwise, directly or indirectly acquires
all or substantially all of the assets or business of the Company. None of the
rights of Executive to receive any form of compensation payable pursuant to this
Agreement shall be assignable or transferable except through a testamentary
disposition or by the laws of descent and distribution upon the death of
Executive. Any attempted assignment, transfer, conveyance or other disposition
(other than as aforesaid) of any interest in the rights of Executive to receive
any form of compensation hereunder shall be null and void.

     NOTICES. All notices, requests, demands and other communications called for
hereunder shall be in writing and shall be deemed given if (i) delivered
personally or by facsimile, (ii) one (1) day after being sent by Federal Express
or a similar commercial overnight service, or (iii) three (3) days after being
mailed by registered or certified mail, return receipt requested, prepaid and
addressed to the parties or their successors in interest at the following
addresses, or at such other addresses as the parties may designate by written
notice in the manner aforesaid:

     If to the Company:    3Com Corporation
                           5400 Bayfront Plaza
                           Santa Clara, CA  95052
                           Attn: General Counsel

     If to Executive:      Bruce Claflin
                           at the last residential address known by the Company.

     SEVERABILITY. In the event that any provision hereof becomes or is declared
by a court of competent jurisdiction to be illegal, unenforceable or void, this
Agreement shall continue in full force and effect without said provision.

     ENTIRE AGREEMENT. This Agreement, the Stock Plan, the Option Agreement, the
Management Retention Agreement, the restricted stock and option agreements, the
Confidential Information and Invention Assignment Agreement previously entered
into by and between the Company and Executive and the indemnification agreement
previously entered into by and between the Company and Executive represent the
entire agreement and understanding between the Company and Executive concerning
Executive's employment relationship with the Company, and supersede and replace
any and all prior agreements and understandings concerning Executive's
employment relationship with the Company, including the offer letter to
Executive dated June 16, 1998.

                                      -4-
<PAGE>

   DISPUTE RESOLUTION.

     (j) The parties shall first meet to settle any dispute through good faith
negotiation or non-binding mediation. If not settled by good faith negotiation
or non-binding mediation between the parties within 30 days from the date one
party requests in writing to meet the other party, then to the extent permitted
by law, any dispute or controversy arising out of, relating to, or in connection
with this Agreement, or the interpretation, validity, construction, performance,
breach, or termination thereof shall be finally settled by binding arbitration
to be held in Santa Clara County, California, in accordance with the National
Rules for the Resolution of Employment Disputes then in effect of the American
Arbitration Association (the "Rules"). The arbitrator may grant injunctions or
other relief in such dispute or controversy. The decision of the arbitrator
shall be confidential, final, conclusive and binding on the parties to the
arbitration. Judgment may be entered under a protective order on the
arbitrator's decision in any court having jurisdiction. The Company shall pay
all costs of any mediation or arbitration; provided, however, that each party
shall pay its own attorney and advisor fees.

     (k) The arbitrator shall apply California law to the merits of any dispute
or claim, without reference to rules of conflict of law. The arbitration
proceedings shall be governed by federal arbitration law and by the Rules,
without reference to state arbitration law. Executive hereby expressly consents
to the personal jurisdiction of the state and federal courts located in
California for any action or proceeding arising from or relating to this
Agreement and/or relating to any arbitration in which the parties are
participants.

     (l) Executive understands that nothing in Section 9 modifies Executive's
at-will status. Either the Company or Executive can terminate the employment
relationship at any time, with or without cause.

     (m) EXECUTIVE HAS READ AND UNDERSTANDS SECTION 9, WHICH DISCUSSES
ARBITRATION. EXECUTIVE UNDERSTANDS THAT BY SIGNING THIS AGREEMENT, EXECUTIVE
AGREES, TO THE EXTENT PERMITTED BY LAW, TO SUBMIT ANY FUTURE CLAIMS ARISING OUT
OF, RELATING TO, OR IN CONNECTION WITH THIS AGREEMENT, OR THE INTERPRETATION,
VALIDITY, CONSTRUCTION, PERFORMANCE, BREACH, OR TERMINATION THEREOF TO BINDING
ARBITRATION, AND THAT THIS ARBITRATION CLAUSE CONSTITUTES A WAIVER OF
EXECUTIVE'S RIGHT TO A JURY TRIAL AND RELATES TO THE RESOLUTION OF ALL DISPUTES
RELATING TO ALL ASPECTS OF THE EMPLOYER/EMPLOYEE RELATIONSHIP.

   COVENANTS NOT TO COMPETE AND NOT TO SOLICIT.

     (n) COVENANT NOT TO COMPETE. In consideration for the benefits Executive is
to receive herein Executive agrees that, until the end of the twenty-four month
period following the date of his termination of employment with the Company for
any reason or no reason, Executive will not directly engage in (whether as an
employee, consultant, proprietor, partner, director or otherwise), or have any
ownership interest in, or participate in the financing, operation, management

                                      -5-
<PAGE>

or control of, any person, firm, corporation or business that engages or
participates anywhere in the world in providing goods and services similar to
those provided by the Company upon the date of Executive's termination of
employment. Ownership of less than 3% of the outstanding voting stock of a
corporation or other entity will not constitute a violation of this provision.
The Company agrees not to unreasonably withhold consent from Executive to engage
in any activity that is not competitive with the Company.

     (o) COVENANT NOT TO SOLICIT. In consideration for the benefits Executive is
to receive herein Executive agrees that he (i) will not, at any time during the
one year following his termination date, directly or indirectly solicit any
individuals to leave the Company's employ for any reason or interfere in any
other manner with the employment relationships at the time existing between the
Company and its current or prospective employees.

     (p) REPRESENTATIONS. The parties intend that the covenants contained in
Section 10(a) and (b) shall be construed as a series of separate covenants, one
for each county, city and state (or analogous entity) and country of the world.
If, in any judicial proceeding, a court shall refuse to enforce any of the
separate covenants, or any part thereof, then such unenforceable covenant, or
such part thereof, shall be deemed eliminated from this Agreement for the
purpose of those proceedings to the extent necessary to permit the remaining
separate covenants, or portions thereof, to be enforced.

     (q) REFORMATION. In the event that the provisions of this Section 10 should
ever be deemed to exceed the time or geographic limitations, or scope of this
covenant, permitted by applicable law, then such provisions shall be reformed to
the maximum time or geographic limitations, as the case may be, permitted by
applicable laws.

     (r) REASONABLENESS OF COVENANTS. Employee represents that he (i) is
familiar with the covenants not to compete and solicit, and (ii) is fully aware
of his obligations hereunder, including, without limitation, the reasonableness
of the length of time, scope and geographic coverage of these covenants.

   NO ORAL MODIFICATION, CANCELLATION OR DISCHARGE. This Agreement may only be
amended, canceled or discharged in writing signed by Executive and the Chairman
of the Board.

   WITHHOLDING. The Company shall be entitled to withhold, or cause to be
withheld, from payment any amount of withholding taxes required by law with
respect to payments made to Executive in connection with his employment
hereunder.

   GOVERNING LAW. This Agreement shall be governed by the laws of the State of
California.

   EFFECTIVE DATE. This Agreement is effective upon the date it has been
executed by both parties.

   ACKNOWLEDGMENT. Executive acknowledges that he has had the opportunity to
discuss this matter with and obtain advice from his private attorney, has had
sufficient time to, and has carefully read and fully understands all the
provisions of this Agreement, and is knowingly and voluntarily entering into
this Agreement.

                                      -6-
<PAGE>

   IN WITNESS WHEREOF, the undersigned have executed this Agreement:

3COM CORPORATION

/s/ Eric Benhamou
---------------------------
Eric Benhamou

EXECUTIVE

/s/ Bruce Claflin
---------------------------
Bruce Claflin

Date: December 22, 2000
      -----------------

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