Document:

<PAGE>
                                                                   Exhibit 10.3

                                    GUARANTY

         THIS GUARANTY (this "Guaranty") is made as of the 13th day of December,
2000, by Federal Express Corporation, a Delaware corporation, Viking Freight,
Inc., a California corporation, FedEx Ground Package System, Inc., a Delaware
corporation, and FedEx Custom Critical, Inc., an Ohio corporation (collectively,
the "Initial Guarantors" and along with any Significant Subsidiaries which
become parties to this Agreement by executing an Addendum hereto in the form
attached as Annex I, the "Guarantors") in favor of the Administrative Agent, for
the ratable benefit of the Lenders, under (and as defined in) the Credit
Agreement referred to below. Unless otherwise defined herein, capitalized terms
used herein shall have the meanings ascribed to them in the Credit Agreement.

                              W I T N E S S E T H:
                              - - - - - - - - - --

         WHEREAS, FedEx Corporation, a Delaware corporation (the "Borrower"),
The Chase Manhattan Bank, as administrative agent (the "Administrative Agent"),
and certain Lenders have entered into a certain Credit Agreement dated as of
December 13, 2000 (as the same may be amended, modified, supplemented and/or
restated, and as in effect from time to time, the "Credit Agreement"),
providing, subject to the terms and conditions thereof, for extensions of credit
to be made by the Lenders to the Borrower;

         WHEREAS, it is a condition precedent to the initial extensions of
credit by the Lenders under the Credit Agreement that each of the Guarantors
execute and deliver this Guaranty, whereby each of the Guarantors shall
guarantee the payment when due, subject to SECTION 8 hereof, of any and all of
the Obligations; and

         WHEREAS, in consideration of the financial and other support that the
Borrower has provided, and such financial and other support as the Borrower may
in the future provide, to the Guarantors, and in order to induce the Lenders and
the Administrative Agent to enter into the Credit Agreement, each of the
Guarantors is willing to guarantee the Obligations of the Borrower under the
Credit Agreement;

         NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

<PAGE>

                                                                               2

         SECTION 1. DEFINITIONS. Terms defined in the Credit Agreement and not
otherwise defined herein have, as used herein, the respective meanings provided
for therein.

         SECTION 2. REPRESENTATIONS AND WARRANTIES. Each of the Guarantors
represents and warrants (which representations and warranties shall be deemed to
have been renewed at the time of the making of any Advance) that:

               (a)  It is a corporation, limited liability company, partnership
                    or other commercial entity duly incorporated or formed,
                    validly existing and in good standing under the laws of its
                    jurisdiction of incorporation or formation and has all
                    requisite authority to conduct its business as a foreign
                    Person in each jurisdiction in which its business is
                    conducted, except where the failure to have such requisite
                    authority would not have a Material Adverse Effect.

               (b)  It has the power and authority and legal right to execute
                    and deliver this Guaranty and to perform its obligations
                    hereunder. The execution and delivery by it of this Guaranty
                    and the performance by it of its obligations hereunder have
                    been duly authorized by proper proceedings, and this
                    Guaranty constitutes a legal, valid and binding obligation
                    of such Guarantor enforceable against such Guarantor in
                    accordance with its terms, except as enforceability may be
                    limited by bankruptcy, insolvency or similar laws affecting
                    the enforcement of creditors' rights generally, and subject
                    also to the availability of equitable remedies if equitable
                    remedies are sought.

               (c)  Neither the execution and delivery by it of this Guaranty,
                    nor the consummation by it of the transactions herein
                    contemplated, nor compliance by it with the terms and
                    provisions hereof, will violate any law, rule, regulation,
                    order, writ, judgment, injunction, decree or award binding
                    on it or its certificate or articles of incorporation or
                    by-laws, limited liability company or partnership agreement
                    or the provisions of any indenture, instrument or material
                    agreement to which it is a party or is subject, or by which
                    it, or its property, is bound, or conflict with or
                    constitute a default thereunder, or result in the creation
                    or imposition of any Lien in, of or on its property pursuant
                    to the term of any such indenture, instrument or material
                    agreement. No order, consent, approval, license,
                    authorization, or validation of, or filing, recording or
                    registration with, or exemption by, any governmental
                    authority, is required to authorize, or is required in
                    connection with the execution, delivery and performance by
                    it of, or the legality, validity, binding effect or
                    enforceability of, this Guaranty.

<PAGE>
                                                                               3

         SECTION 3. THE GUARANTY. Subject to SECTION 8 hereof, each of the
Guarantors hereby unconditionally guarantees, jointly with the other Guarantors
and severally, the full and punctual payment when due (whether at stated
maturity, upon acceleration or otherwise) of the Obligations, (the foregoing,
subject to the provisions of SECTION 8 hereof, being referred to collectively as
the "Guaranteed Obligations"). Upon failure by the Borrower to pay punctually
any such amount, each of the Guarantors agrees that it shall forthwith on demand
pay such amount at the place and in the manner specified in the Credit Agreement
or the relevant Loan Document, as the case may be. Each of the Guarantors hereby
agrees that this Guaranty is an absolute, irrevocable and unconditional guaranty
of payment and is not a guaranty of collection.

         SECTION 4. GUARANTY UNCONDITIONAL. Subject to SECTION 8 hereof, the
obligations of each of the Guarantors hereunder shall be unconditional and
absolute and, without limiting the generality of the foregoing, shall not be
released, discharged or otherwise affected by:

                  (i) any extension, renewal, settlement, indulgence,
                  compromise, waiver or release of or with respect to the
                  Guaranteed Obligations or any part thereof or any agreement
                  relating thereto, or with respect to any obligation of any
                  other guarantor of any of the Guaranteed Obligations, whether
                  (in any such case) by operation of law or otherwise, or any
                  failure or omission to enforce any right, power or remedy with
                  respect to the Guaranteed Obligations or any part thereof or
                  any agreement relating thereto, or with respect to any
                  obligation of any other guarantor of any of the Guaranteed
                  Obligations;

                  (ii) any modification or amendment of or supplement to the
                  Credit Agreement or any other Loan Document, including,
                  without limitation, any such amendment which may increase the
                  amount of the Obligations guaranteed hereby;

                  (iii) any release, surrender, compromise, settlement, waiver,
                  subordination or modification, with or without consideration,
                  of any collateral securing the Guaranteed Obligations or any
                  part thereof, any other guaranties with respect to the
                  Guaranteed Obligations or any part thereof, or any other
                  obligation of any person or entity with respect to the
                  Guaranteed Obligations or any part thereof, or any
                  nonperfection or invalidity of any direct or indirect security
                  for the Guaranteed Obligations;

                  (iv) any change in the corporate, partnership or other
                  existence, structure or ownership of the Borrower or any other
                  guarantor of any of the Guaranteed Obligations, or any
                  insolvency, bankruptcy, reorganization or other similar
                  proceeding affecting the Borrower or any other guarantor of
                  the Guaranteed Obligations, or any of their respective assets
                  or any resulting release or discharge of any obligation of the
                  Borrower or any other guarantor of any of the Guaranteed
                  Obligations;

                  (v) the existence of any claim, setoff or other rights which
                  the Guarantors may have at any time against the Borrower, any
                  other guarantor of any of the Guaranteed Obligations, the
                  Administrative Agent, any Lender or any other Person, whether
                  in connection herewith or in connection with any unrelated

<PAGE>

                                                                               4

                  transactions, PROVIDED that nothing herein shall prevent the
                  assertion of any such claim by separate suit or compulsory
                  counterclaim;

                  (vi) the enforceability or validity of the Guaranteed
                  Obligations or any part thereof or the genuineness,
                  enforceability or validity of any agreement relating thereto
                  or with respect to any collateral securing the Guaranteed
                  Obligations or any part thereof, or any other invalidity or
                  unenforceability relating to or against the Borrower or any
                  other guarantor of any of the Guaranteed Obligations, for any
                  reason related to the Credit Agreement, any other Loan
                  Document, or any provision of applicable law or regulation
                  purporting to prohibit the payment by the Borrower or any
                  other guarantor of the Guaranteed Obligations, of any of the
                  Guaranteed Obligations;

                  (vii) the failure of the Administrative Agent to take any
                  steps to perfect and maintain any security interest in, or to
                  preserve any rights to, any security or collateral for the
                  Guaranteed Obligations, if any;

                  (viii) the election by, or on behalf of, any one or more of
                  the Lenders, in any proceeding instituted under Chapter 11 of
                  Title 11 of the United States Code (11 U.S.C. 101 et seq.)
                  (the "Bankruptcy Code"), of the application of Section
                  1111(b)(2) of the Bankruptcy Code;

                  (ix) any borrowing or grant of a security interest by the
                  Borrower, as debtor-in-possession, under Section 364 of the
                  Bankruptcy Code;

                  (x) the disallowance, under Section 502 of the Bankruptcy
                  Code, of all or any portion of the claims of any of the
                  Lenders or the Administrative Agent for repayment of all or
                  any part of the Guaranteed Obligations;

                  (xi) the failure of any other Guarantor to sign or become
                  party to this Guaranty or any amendment, change, or
                  reaffirmation hereof; or

                  (xii) any other act or omission to act or delay of any kind by
                  the Borrower, any other guarantor of the Guaranteed
                  Obligations, the Administrative Agent, any Lender or any other
                  Person or any other circumstance whatsoever which might, but
                  for the provisions of this Section 4, constitute a legal or
                  equitable discharge of any Guarantor's obligations hereunder.

         SECTION 5. DISCHARGE ONLY UPON PAYMENT IN FULL; REINSTATEMENT IN
CERTAIN CIRCUMSTANCES. Except as otherwise provided in Section 9.16 of the
Credit Agreement, each of the Guarantors' obligations hereunder shall remain in
full force and effect until all Guaranteed Obligations shall have been paid in
full and the Revolving Commitments under the Credit Agreement shall have
terminated or expired. If at any time any payment of any portion of the
Obligations is rescinded or must be otherwise restored or returned upon the
insolvency, bankruptcy or reorganization of the Borrower or otherwise, each
Guarantor's obligations hereunder with respect to such payment shall be
reinstated as though such payment had been due but not made at such time.

         SECTION 6. GENERAL WAIVERS. Each of the Guarantors irrevocably waives
acceptance hereof, presentment, demand or action on delinquency, protest, the
benefit of any statutes of

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                                                                               5

limitations and, to the fullest extent permitted by law, any notice not provided
for herein, as well as any requirement that at any time any action be taken by
any Person against the Borrower, any other guarantor of the Guaranteed
Obligations, or any other Person.

         SECTION 7. SUBORDINATION OF SUBROGATION. Until the Obligations have
been indefeasibly paid in full in cash, the Guarantors (i) shall have no right
of subrogation with respect to such Obligations and (ii) waive any right to
enforce any remedy which the Lenders or the Administrative Agent now have or may
hereafter have against the Borrower, any endorser or any guarantor of all or any
part of the Obligations or any other Person, and the Guarantors waive any
benefit of, and any right to participate in, any security or collateral given to
the Lenders and the Administrative Agent to secure the payment or performance of
all or any part of the Obligations or any other liability of the Borrower to the
Lenders. Should any Guarantor have the right, notwithstanding the foregoing, to
exercise its subrogation rights, each Guarantor hereby expressly and irrevocably
(a) subordinates any and all rights at law or in equity to subrogation,
reimbursement, exoneration, contribution, indemnification or set off that the
Guarantor may have to the indefeasible payment in full in cash of the
Obligations and (b) waives any and all defenses available to a surety, guarantor
or accommodation co-obligor until the Obligations are indefeasibly paid in full
in cash. Each Guarantor acknowledges and agrees that this subordination is
intended to benefit the Administrative Agent and the Lenders and shall not limit
or otherwise affect such Guarantor's liability hereunder or the enforceability
of this Guaranty, and that the Administrative Agent, the Lenders and their
respective successors and assigns are intended third party beneficiaries of the
waivers and agreements set forth in this SECTION 7.

         SECTION 8. LIMITATION. Notwithstanding any provision herein contained
to the contrary, each Guarantor's liability under this Guaranty (which liability
is in any event in addition to amounts for which such entity may be primarily
liable) shall be limited to an amount not to exceed as of any date of
determination the greater of:

               (a)  the net amount of all Loans advanced to the Borrower under
                    this Agreement and then re-loaned or otherwise transferred
                    to, or for the benefit of, such Guarantor; and

               (b)  the amount which could be claimed by the Administrative
                    Agent and the Lenders from such Guarantor under this
                    Guaranty without rendering such claim voidable or avoidable
                    under Section 548 of Chapter 11 of the Bankruptcy Code or
                    under any applicable state Uniform Fraudulent Transfer Act,
                    Uniform Fraudulent Conveyance Act or similar statute or
                    common law after taking into account, among other things,
                    such Guarantor's right of contribution and indemnification
                    from each other Guarantor under SECTION 9.

         SECTION 9. CONTRIBUTION WITH RESPECT TO GUARANTY OBLIGATIONS.

               (a)  To the extent that any Guarantor shall make a payment under
                    this Guaranty (a "Guarantor Payment") which, taking into
                    account all other Guarantor Payments then previously or
                    concurrently made by any other Guarantor, exceeds the amount
                    which such Guarantor would otherwise have paid if each
                    Guarantor had paid the aggregate Obligations satisfied by
                    such Guarantor Payment in the same proportion that such
                    Guarantor's "Allocable Amount" (as defined below) (as
                    determined immediately prior to such Guarantor

<PAGE>

                                                                               6

                    Payment) bore to the aggregate Allocable Amounts of each of
                    the Guarantors as determined immediately prior to the making
                    of such Guarantor Payment, THEN, following indefeasible
                    payment in full in cash of the Obligations and termination
                    of the Revolving Commitments, such Guarantor shall be
                    entitled to receive contribution and indemnification
                    payments from, and be reimbursed by, each other Guarantor
                    for the amount of such excess, PRO RATA based upon their
                    respective Allocable Amounts in effect immediately prior to
                    such Guarantor Payment.

               (b)  As of any date of determination, the "Allocable Amount" of
                    any Guarantor shall be equal to the maximum amount of the
                    claim which could then be recovered from such Guarantor
                    under this Guaranty without rendering such claim voidable or
                    avoidable under Section 548 of Chapter 11 of the Bankruptcy
                    Code or under any applicable state Uniform Fraudulent
                    Transfer Act, Uniform Fraudulent Conveyance Act or similar
                    statute or common law.

               (c)  This SECTION 9 is intended only to define the relative
                    rights of the Guarantors and nothing set forth in this
                    SECTION 9 is intended to or shall impair the obligations of
                    the Guarantors, jointly and severally, to pay any amounts as
                    and when the same shall become due and payable in accordance
                    with the terms of this Agreement.

               (d)  The parties hereto acknowledge that the rights of
                    contribution and indemnification hereunder shall constitute
                    assets of the Guarantor to which such contribution and
                    indemnification is owing.

               (e)  The rights of the indemnifying Guarantors against other
                    Guarantors under this SECTION 9 shall be exercisable upon
                    the full and indefeasible payment of the Obligations and the
                    termination of the Revolving Commitments.
<PAGE>

                                                                               7

         SECTION 10. STAY OF ACCELERATION. If acceleration of the time for
payment of any of the Obligations is stayed upon the insolvency, bankruptcy or
reorganization of the Borrower, all such amounts otherwise subject to
acceleration under the terms of the Credit Agreement, or any other Loan Document
shall nonetheless be payable by each of the Guarantors hereunder forthwith on
demand by the Administrative Agent.

         SECTION 11. NO WAIVERS. No failure or delay by the Administrative Agent
or any Lender in exercising any right, power or privilege hereunder shall
operate as a waiver thereof nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The rights and remedies provided in this Guaranty,
the Credit Agreement, and the other Loan Documents shall be cumulative and not
exclusive of any rights or remedies provided by law.

         SECTION 12. SUCCESSORS AND ASSIGNS. This Guaranty is for the benefit of
the Administrative Agent and the Lenders and their respective successors and
permitted assigns and in the event of an assignment of any amounts payable under
the Credit Agreement, or the other Loan Documents in accordance with the
respective terms thereof, the rights hereunder, to the extent applicable to the
indebtedness so assigned, may be transferred with such indebtedness. This
Guaranty shall be binding upon each of the Guarantors and their respective
successors and assigns.

         SECTION 13. CHANGES IN WRITING. Neither this Guaranty nor any provision
hereof may be changed, waived, discharged or terminated orally, but only in
writing signed by each of the Guarantors and the Administrative Agent with the
consent of the Lenders required for such change, waiver, discharge or
termination pursuant to the terms of the Credit Agreement.

         SECTION 14. GOVERNING LAW. ANY DISPUTE BETWEEN ANY GUARANTOR AND THE
ADMINISTRATIVE AGENT OR ANY LENDER ARISING OUT OF, CONNECTED WITH, RELATED TO,
OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH,
THIS GUARANTY OR ANY OF THE OTHER LOAN DOCUMENTS, AND WHETHER ARISING IN
CONTRACT, TORT, EQUITY, OR OTHERWISE, SHALL BE RESOLVED IN ACCORDANCE WITH THE
INTERNAL LAWS (WITHOUT REGARD TO THE CONFLICTS OF LAWS PROVISIONS) OF THE STATE
OF NEW YORK.

         SECTION 15. CONSENT TO JURISDICTION; SERVICE OF PROCESS; JURY TRIAL.

                    (A) EXCLUSIVE JURISDICTION. EXCEPT AS PROVIDED IN
SUBSECTION (B), EACH OF THE PARTIES HERETO AGREES THAT ALL DISPUTES AMONG THEM
ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP
ESTABLISHED AMONG THEM IN CONNECTION WITH, THIS GUARANTY OR ANY OF THE OTHER
LOAN DOCUMENTS WHETHER ARISING IN CONTRACT, TORT, EQUITY, OR OTHERWISE, SHALL BE
RESOLVED EXCLUSIVELY BY STATE OR FEDERAL COURTS LOCATED IN NEW YORK, BUT THE
PARTIES HERETO ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE
HEARD BY A COURT LOCATED OUTSIDE OF NEW YORK. EACH OF THE PARTIES HERETO WAIVES
IN ALL DISPUTES BROUGHT PURSUANT TO THIS SUBSECTION (A) ANY OBJECTION THAT IT
MAY HAVE TO THE LOCATION OF THE COURT CONSIDERING THE DISPUTE.

<PAGE>

                                                                               8

                    (B) OTHER JURISDICTIONS. EACH OF THE GUARANTORS AGREES THAT
THE ADMINISTRATIVE AGENT, ANY LENDER OR ANY INDEMNITEE SHALL HAVE THE RIGHT TO
PROCEED AGAINST SUCH GUARANTOR OR ITS PROPERTY IN A COURT IN ANY LOCATION TO
ENABLE SUCH PERSON TO (1) OBTAIN PERSONAL JURISDICTION OVER SUCH GUARANTOR OR
(2) ENFORCE A JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF SUCH PERSON.
EACH OF THE GUARANTORS AGREES THAT IT WILL NOT ASSERT ANY PERMISSIVE
COUNTERCLAIMS IN ANY PROCEEDING BROUGHT BY SUCH PERSON TO ENFORCE A JUDGMENT OR
OTHER COURT ORDER IN FAVOR OF SUCH PERSON. EACH OF THE GUARANTORS WAIVES ANY
OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT IN WHICH SUCH PERSON HAS
COMMENCED A PROCEEDING DESCRIBED IN THIS SUBSECTION (B).

                    (C) WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO
IRREVOCABLY WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY
DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE, ARISING OUT OF,
CONNECTED WITH, RELATED TO OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG
THEM IN CONNECTION WITH THIS GUARANTY OR ANY OTHER INSTRUMENT, DOCUMENT OR
AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH. EACH OF THE PARTIES
HERETO AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT ANY PARTY HERETO
MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS GUARANTY WITH ANY COURT AS
WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR
RIGHT TO TRIAL BY JURY.

                    (D) ADVICE OF COUNSEL. EACH OF THE PARTIES REPRESENTS TO
EACH OTHER PARTY HERETO THAT IT HAS DISCUSSED THIS AGREEMENT AND, SPECIFICALLY,
THE PROVISIONS OF THIS SECTION 15, WITH ITS COUNSEL.

         SECTION 16. NO STRICT CONSTRUCTION. The parties hereto have
participated jointly in the negotiation and drafting of this Guaranty. In the
event an ambiguity or question of intent or interpretation arises, this Guaranty
shall be construed as if drafted jointly by the parties hereto and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any provisions of this Guaranty.

         SECTION 17. TAXES, EXPENSES OF ENFORCEMENT, ETC. All payments required
to be made by any of the Guarantors hereunder shall be made without setoff or
counterclaim and free and clear of and without deduction or withholding for or
on account of, any present or future taxes, levies, imposts, duties or other
charges of whatsoever nature imposed by any government or any political or
taxing authority thereof, PROVIDED, HOWEVER, that if any of the Guarantors is
required by law to make such deduction or withholding, such Guarantor shall
forthwith pay to the Administrative Agent or any Lender, as applicable, such
additional amount as results in the net amount received by the Administrative
Agent or any Lender, as applicable, equaling the full amount which would have
been received by the Administrative Agent or any Lender, as applicable, had no
such deduction or withholding been made. The Guarantors also agree to reimburse
the Administrative Agent and the Lenders for any reasonable costs, internal
charges and out-of-pocket expenses (including reasonable attorneys' fees and
time charges of attorneys for the Administrative Agent and the Lenders, which
attorneys may be employees of the Administrative Agent or the Lenders) paid or
incurred by the

<PAGE>

                                                                               9

Administrative Agent or any Lender in connection with the collection and
enforcement of amounts due under the Loan Documents, including without
limitation this Guaranty.

         SECTION 18. SETOFF. At any time after all or any part of the Guaranteed
Obligations have become due and payable (by acceleration or otherwise), each
Lender and the Administrative Agent may, without notice to any Guarantor and
regardless of the acceptance of any security or collateral for the payment
hereof, appropriate and apply toward the payment of all or any part of the
Guaranteed Obligations (i) any indebtedness due or to become due from such
Lender or the Administrative Agent to any Guarantor, and (ii) any moneys,
credits or other property belonging to any Guarantor, at any time held by or
coming into the possession of such Lender or the Administrative Agent or any of
their respective affiliates.

         SECTION 19. FINANCIAL INFORMATION. Each Guarantor hereby assumes
responsibility for keeping itself informed of the financial condition of the
Borrower and any and all endorsers and/or other Guarantors of all or any part of
the Guaranteed Obligations, and of all other circumstances bearing upon the risk
of nonpayment of the Guaranteed Obligations, or any part thereof, that diligent
inquiry would reveal, and each Guarantor hereby agrees that none of the Lenders
or the Administrative Agent shall have any duty to advise such Guarantor of
information known to any of them regarding such condition or any such
circumstances. If any Lender or the Administrative Agent, in its sole
discretion, undertakes at any time or from time to time to provide any such
information to a Guarantor, such Lender or the Administrative Agent shall be
under no obligation (i) to undertake any investigation not a part of its regular
business routine, (ii) to disclose any information which such Lender or the
Administrative Agent, pursuant to accepted or reasonable commercial finance or
banking practices, wishes to maintain confidential or (iii) to make any other or
future disclosures of such information or any other information to such
Guarantor.

         SECTION 20. SEVERABILITY. Wherever possible, each provision of this
Guaranty shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Guaranty shall be prohibited by or
invalid under such law, such provision shall be ineffective to the extent of
such prohibition or invalidity without invalidating the remainder of such
provision or the remaining provisions of this Guaranty.

         SECTION 21. MERGER. This Guaranty represents the final agreement of
each of the Guarantors with respect to the matters contained herein and may not
be contradicted by evidence of prior or contemporaneous agreements, or
subsequent oral agreements, between the Guarantor and any Lender or the
Administrative Agent.

         SECTION 22. EXECUTION IN COUNTERPARTS. This Guaranty may be executed in
any number of counterparts, all of which taken together shall constitute one
agreement, and any of the parties hereto may execute this Guaranty by signing
any such counterpart.

         SECTION 23. HEADINGS. Section headings in this Guaranty are for
convenience of reference only and shall not govern the interpretation of any
provision of this Guaranty.

<PAGE>

                                                                              10

         IN WITNESS WHEREOF, each of the Guarantors has caused this Guaranty to
be duly executed by its authorized officer as of the day and year first above
written.

                         FEDERAL EXPRESS CORPORATION

                         By:      /s/ Tracy G. Schmidt
                                  --------------------------------------
                         Name:    Tracy G. Schmidt
                                  -----------------------------------
                         Title:   Senior Vice President and Chief
                                  ------------------------------------
                                  Financial Officer
                                  -----------------------------------

                         FEDEX GROUND PACKAGE SYSTEM, INC.

                         By:      /s/ Daniel J. Sullivan
                                  --------------------------------------
                         Name:    Daniel J. Sullivan
                                  --------------------------------------
                         Title:   President and Chief Executive Officer
                                  --------------------------------------

                         FEDEX CUSTOM CRITICAL, INC.

                         By:      /s/ R. Bruce Simpson
                                  --------------------------------------
                         Name:    R. Bruce Simpson
                                  -----------------------------------
                         Title:   President and Chief Executive Officer
                                  --------------------------------------

                         VIKING FREIGHT, INC.

                         By:      /s/ Douglas G. Duncan
                                  --------------------------------------
                         Name:    Douglas G. Duncan
                                  -----------------------------------
                         Title:   President and Chief Executive Officer
                                  --------------------------------------

<PAGE>

                               ANNEX I TO GUARANTY

         Reference is hereby made to the Guaranty (the "Guaranty") made as of
the _____ day of December, 2000 by Federal Express Corporation, a Delaware
corporation, Viking Freight, Inc., a California corporation, FedEx Ground
Package System, Inc., a Delaware corporation, and FedEx Custom Critical, Inc.,
an Ohio corporation (collectively, the "Initial Guarantors" and along with any
Significant Subsidiaries which have become parties thereto and together with the
undersigned, the "Guarantors") in favor of the Administrative Agent, for the
ratable benefit of the Lenders, under the Credit Agreement. Capitalized terms
used herein and not defined herein shall have the meanings given to them in the
Guaranty. By its execution below, the undersigned [NAME OF NEW GUARANTOR], a
_______________________, agrees to become, and does hereby become, a Guarantor
under the Guaranty and agrees to be bound by such Guaranty as if originally a
party thereto. By its execution below, the undersigned represents and warrants
as to itself that all of the representations and warranties contained in SECTION
2 of the Guaranty are true and correct in all respects as of the date hereof.

         IN WITNESS WHEREOF, [NAME OF NEW GUARANTOR], a ________________________
has executed and delivered this Annex I counterpart to the Guaranty as of this
________________  day of _______________, ________________.

                          [NAME OF NEW GUARANTOR]

                          By:
                              -------------------------------------------------
                          Name:
                                -----------------------------------------------
                          Title:
                                 ----------------------------------------------<PAGE>
                                                                  EXHIBIT 4.32

                          NHANCEMENT TECHNOLOGIES INC.

                               Warrant No. 2000-01

Issued as of the 31st day              (1)  Aggregate Price: $1,800,000.00
Of July, 2000                          (2)  Initial Warrant Price:  $6.00
                                       (3)  Number of Shares Initially Subject
                                            to Warrant: 300,000

NEITHER THIS WARRANT, NOR THE COMMON STOCK TO BE ISSUED UPON EXERCISE HEREOF,
HAS BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED ("1933
SECURITIES ACT"), OR QUALIFIED OR REGISTERED UNDER CALIFORNIA OR OTHER
APPLICABLE SECURITIES LAWS ("STATE SECURITIES LAWS"), AND THIS WARRANT HAS BEEN,
AND THE COMMON STOCK TO BE ISSUED UPON EXERCISE HEREOF WILL BE, ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO, OR FOR RESALE IN CONNECTION WITH, ANY
DISTRIBUTION THEREOF. NO SUCH SALE OR OTHER DISPOSITION MAY BE MADE WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 SECURITIES ACT AND COMPLIANCE
WITH THE APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL, REASONABLY
SATISFACTORY TO THE ISSUER AND ITS COUNSEL, THAT SAID REGISTRATION IS NOT
REQUIRED UNDER THE 1933 SECURITIES ACT AND THAT APPLICABLE STATE SECURITIES LAWS
HAVE BEEN SATISFIED.

                              COMMON STOCK WARRANT

          This certifies that LUCIAN THOMAS BALDWIN III, ("PURCHASER"), whose
address for notice is located at Suite 2850, 141 West Jackson, Illinois 60604 or
any party to whom this Warrant is assigned in compliance with the terms hereof
(Purchaser and any such assignee being hereinafter sometimes referenced as
"HOLDER"), is entitled to subscribe for and purchase, in whole or in part,
during the period commencing at the issue date set forth above and ending at
5:00 p.m., California, local time, on the first (1st) anniversary of such issue
date, the number of shares of fully paid and non-assessable Common Stock
("COMMON STOCK") of NHANCEMENT TECHNOLOGIES INC, A DELAWARE CORPORATION (the
"COMPANY"), that have an aggregate purchase price equal to the Aggregate Price
as defined below; provided that the Purchaser remains as a Director of the
Company at the time of exercise of this warrant. The purchase price of each such
share shall be equal to the Warrant Price, as defined below.

                                    ARTICLE 1
                                   DEFINITIONS

1.1               "AGGREGATE PRICE" shall be $1,800,000.00.

1.2               "WARRANT PRICE" shall be $6.00 as adjusted herein.

                                    ARTICLE 2
                              EXERCISE AND PAYMENT

2.1       CASH EXERCISE. The purchase rights represented by this Warrant may be
exercised by Holder, in whole or in part, by the surrender of this Warrant at
the principal office of the Company, located at the address set forth on the
signature page hereof, accompanied by the form of Notice of Cash Exercise
attached hereto as Exhibit "B-1", and by the payment to the Company, by cash or
by certified, cashier's or other check acceptable to the Company, of an amount
equal to the aggregate Warrant Price of the shares being purchased.

2.2       NET ISSUE EXERCISE. In lieu of exercising this Warrant pursuant to
Section 2.1, Holder may elect to receive shares of Common Stock equal to the
value of this Warrant determined in the manner described below (or of any
portion thereof remaining unexercised) by surrender of this

<PAGE>

Common Stock Warrant
Page 2

Warrant at the principal office of the Company together with the form of Notice
of Cashless Exercise attached hereto as Exhibit "B-2", in which event the
Company shall issue to Holder a number of shares of the Company's Common Stock
computed using the following formula:

                               Y (A-B)
                           X = -------
                                  A

Where X = the number of shares of Common Stock to be issued to Holder.

      Y = the number of shares of Common Stock purchasable under this Warrant
          (at the date of such calculation).

      A = the fair market value of one share of the Company's Common Stock
          (at the date of such calculation).

      B = Warrant Price.

2.3       FAIR MARKET VALUE. For purposes of this Article II, fair market value
of one share of the Company's Common Stock shall mean:

          (i)       The average of the closing bid and asked prices of the
          Common Stock quoted in the Over-The-Counter Market Summary, the last
          reported sale price of the Common Stock or the closing price quoted on
          the Nasdaq National Market System ("NMS") or on any exchange on which
          the Common Stock is listed, whichever is applicable, as published in
          the Western Edition of The Wall Street Journal for the trading day
          prior to the date of determination of fair market value; or

          (ii)      If the Common Stock is not traded Over-The-Counter, on the
          NMS or on an exchange, the per share fair market value of the Common
          Stock shall be as determined by mutual agreement of the Company and
          the Holder; provided, however that if such agreement cannot be reached
          within twenty (20) calendar days, such value shall be determined by an
          independent appraiser appointed in good faith by the Company's Board
          of Directors. The cost of such appraisal shall be borne equally by the
          Company and the Holder. Such appraiser shall meet the following
          criteria: (a) it shall not be associated or affiliated with the
          Company in any fashion and shall not have previously provided services
          to the Company; (b) the appraiser shall have reasonable qualifications
          to appraise the value of the Common Stock; (c) it is not (and none of
          its affiliates is) a promoter, director or officer of the Company or
          any of its affiliates or an underwriter with respect to any of the
          securities of the Company; and (d) it does not provide any advice or
          opinions of the Company except as an appraiser under this section. In
          the event such an appraisal is required it should be conducted under
          the following procedures: the Company shall select the appraiser
          within ten (10) days of receipt of written notice from the Holder that
          agreement cannot be reached and the Company shall submit the name of
          such appraiser to Holder. Twenty (20) days after selection of the
          appraiser, the Company and the Holder shall each submit to the
          appraiser a single value representing such party's contention as to
          the fair market value of one share of the Company's Common Stock.
          Within fifteen (15) days after receipt of the submission of the
          Company and the Holder, the appraiser shall select one of the two
          values submitted by the parties, and such value shall be the fair
          market value of one share of the Common Stock for purpose of this
          Warrant. The appraiser shall have no discretion to take any action
          other than selection of one of the two values submitted to the
          appraiser. The parties may submit to the appraiser and one another, at
          the time they submit their respective single values, such supporting
          documentation as they deem necessary or appropriate. The parties shall
          have the opportunity seven (7) business days after receipt of the
          other party's proposed valuation and supporting documentation to
          provide the appraiser and each other with supplemental written
          information. The appraiser may, in its discretion, hold a single six
          (6) hour hearing on valuation issues. If a hearing is held, each party
          shall be allocated three (3) hours. The appraiser may conduct the
          hearing in accordance with any rules of

<PAGE>

Common Stock Warrant
Page 3

          procedure it deems appropriate. The value selected by the appraiser
          shall be final and binding upon the parties without any further right
          of appeal.

2.4       STOCK CERTIFICATES. In the event of any exercise of the rights
represented by this Warrant, certificates for the shares of Common Stock so
purchased shall be delivered to Holder within a reasonable time and, unless this
Warrant has been fully exercised or has expired, a new Warrant representing the
remaining unexercised Aggregate Price shall also be issued to Holder at such
time.

2.5       STOCK FULLY PAID; RESERVATION OF SHARES. The Company covenants and
agrees that all Common Stock which may be issued upon the exercise of the rights
represented by this Warrant will, upon issuance, be fully paid and nonassessable
and free from all taxes, liens and charges with respect to the issue thereof
(excluding taxes based on the income of Holder). The Company further covenants
and agrees that during the period within which the rights represented by this
Warrant may be exercised, the Company will at all times have authorized and
reserved for issuance a sufficient number of shares of its Common Stock or other
securities as would be required upon the full exercise of the rights represented
by this Warrant (including conversion of all such Common Stock issuable
hereunder).

2.6       FRACTIONAL SHARES. No fractional share of Common Stock will be issued
in connection with any exercise hereof; in lieu of a fractional share upon
complete exercise hereof, Holder may purchase a whole share by delivering
payment equal to the appropriate portion of the then effective Warrant Price.

                                    ARTICLE 3
      CERTAIN ADJUSTMENTS OF NUMBER OF SHARES PURCHASABLE AND WARRANT PRICE

          The number and kind of securities purchasable upon the exercise of
this Warrant and the Warrant Price shall be subject to adjustment from time to
time upon the happening of certain events, as follows:

3.1       RECLASSIFICATION, CONSOLIDATION OR MERGER. In case of: (i) any
reclassification or change of outstanding securities issuable upon exercise of
this Warrant; (ii) any consolidation or merger of the Company with or into
another corporation (other than a merger with another corporation in which the
Company is a continuing corporation and which does not result in any
reclassification, change or exchange of outstanding securities issuable upon
exercise of this Warrant); or (iii) any sale or transfer to another corporation
of all, or substantially all, of the property of the Company, then, and in each
such event, the Company or such successor or purchasing corporation, as the case
may be, shall execute a new Warrant of like form, tenor and effect and which
will provide that Holder shall have the right to exercise such new Warrant and
purchase upon such exercise, in lieu of each share of Common Stock theretofore
issuable upon exercise of this Warrant, the kind and amount of securities, money
and property receivable upon such reclassification, change, consolidation,
merger, sale or transfer by a holder of one share of Common Stock issuable upon
exercise of this Warrant had this Warrant been exercised immediately prior to
such reclassification, change, consolidation, merger, sale or transfer. Such new
Warrant shall be as nearly equivalent in all substantive respects as practicable
to this Warrant and the adjustments provided in this Article III and the
provisions of this Section 3.1, shall similarly apply to successive
reclassifications, changes, consolidations, mergers, sales and transfers.

3.2       SUBDIVISION OR COMBINATION OF SHARES. If the Company shall at any time
while this Warrant remains outstanding and less than fully exercised: (i) divide
its Company Stock, the Warrant Price shall be proportionately reduced; or (ii)
shall combine shares of its Common Stock, the Warrant Price shall be
proportionately increased.

3.3       STOCK DIVIDENDS. If the Company, at any time while this Warrant is
outstanding and unexpired, shall pay a dividend payable in, or make any other
distribution to holders of, Common Stock (except any distribution described in
Sections 3.1 and 3.2 hereof) then the

<PAGE>

Common Stock Warrant
Page 4

Warrant Price shall be adjusted to that price determined by multiplying the
Warrant Price then in effect by a fraction, the numerator of which shall be the
total number of shares of Common Stock outstanding immediately prior to such
dividend or distribution, and the denominator of which shall be the total number
of shares of Common Stock outstanding immediately after such dividend or
distribution.

3.4       TIME OF ADJUSTMENTS TO THE WARRANT PRICE. All adjustments to the
Warrant Price and the number of shares purchasable hereunder, unless otherwise
specified herein, shall be effective as of the earlier of:

          (i)       the date of issue of the security causing the adjustment;

          (ii)      the date of sale of the security causing the adjustment;

          (iii)     the effective date of a division or combination of shares;

          (iv)      the record date of any action of holders of any class of the
          Company's capital stock taken for the purpose of entitling
          shareholders to receive a distribution or dividend payable in equity
          securities, provided that such division, combination, distribution or
          dividend actually occurs.

3.5       NOTICE OF ADJUSTMENTS. In each case of an adjustment in the Warrant
Price and the number of shares purchasable hereunder, the Company, at its
expense, shall cause the Chief Financial Officer of the Company to compute such
adjustment and prepare a certificate setting forth such adjustment and showing
in detail the facts upon which such adjustment is based. The Company shall
promptly mail a copy of each such certificate to Holder pursuant to Section 6.8
hereof.

3.6       DURATION OF ADJUSTED WARRANT PRICE. Following each adjustment of the
Warrant Price, such adjusted Warrant Price shall remain in effect until a
further adjustment of the Warrant Price.

3.7       ADJUSTMENT OF NUMBER OF SHARES. Upon each adjustment of the Warrant
Price pursuant to this Article III, the number of shares of Common Stock
purchasable hereunder shall be adjusted to the nearest whole share, to the
number obtained by dividing the Aggregate Price by the Warrant Price as
adjusted.

                                    ARTICLE 4
                           TRANSFER, EXCHANGE AND LOSS

4.1       TRANSFER. This Warrant is transferable on the books of the Company at
its principal office by the registered Holder hereof upon surrender of this
Warrant properly endorsed, subject to compliance with federal and state
securities laws. The Company shall issue and deliver to the transferee a new
Warrant or Warrants representing the Warrants so transferred. Upon any partial
transfer, the Company will issue and deliver to Holder a new Warrant or Warrants
with respect to the Warrants not so transferred. Notwithstanding the foregoing,
Holder shall not be entitled to transfer a number of shares or an interest in
this Warrant representing less than five percent (5%) of the aggregate shares
initially covered by this Warrant (as presently constituted, with appropriate
adjustment being made in the event of stock splits, combinations,
reorganizations and the like occurring after the issue date hereof). Any
transferee shall be subject to the same restrictions on transfer with respect to
this Warrant as the Purchaser.

4.2       SECURITIES LAWS. Upon any issuance of shares of Common Stock upon
exercise of this Warrant, it shall be the Company's responsibility to comply
with the requirements of: (1) the Securities Act of 1933, as amended; (2) the
Securities Exchange Act of 1934, as amended; (3) any applicable listing
requirements of any national securities exchange; (4) any state securities
regulation or "Blue Sky" laws; and (5) requirements under any other law or
regulation applicable to the issuance or transfer of such shares. If required by
the Company, in connection

<PAGE>

Common Stock Warrant
Page 5

with each issuance of shares of Common Stock upon exercise of this Warrant, the
Holder will give: (i) assurances in writing, satisfactory to the Company, that
such shares are not being purchased with a view to the distribution thereof in
violation of applicable laws, (ii) sufficient information, in writing, to enable
the Company to rely on exemptions from the registration or qualification
requirements of applicable laws, if available, with respect to such exercise,
and (iii) its cooperation to the Company in connection with such compliance.

4.3       EXCHANGE. This Warrant is exchangeable at the principal office of the
Company for Warrants which represent, in the aggregate, the Aggregate Price
hereof; each new Warrant to represent the right to purchase such portion of the
Aggregate Price as Holder shall designate at the time of such exchange. Each new
Warrant shall be identical in form and content to this Warrant, except for
appropriate changes in the number of shares of Common Stock covered thereby, the
percentage stated in Section 4.1 above, and any other changes which are
necessary in order to prevent the Warrant exchange from changing the respective
rights and obligations of the Company and the Holder as they existed immediately
prior to such exchange.

4.4       LOSS OR MUTILATION. Upon receipt by the Company of evidence
satisfactory to it of the ownership of, and the loss, theft, destruction or
mutilation of, this Warrant and (in the case of loss, theft, or destruction) of
indemnity satisfactory to it, and (in the case of mutilation) upon surrender and
cancellation hereof, the Company will execute and deliver in lieu hereof a new
Warrant.

                                    ARTICLE 5
                                  HOLDER RIGHTS

5.1       NO SHAREHOLDER RIGHTS UNTIL EXERCISE. No Holder hereof, solely by
virtue hereof, shall be entitled to any rights as a shareholder of the Company.
Holder shall have all rights of a shareholder with respect to securities
purchased upon exercise hereof at the time: (i) the cash exercise price for such
securities is delivered pursuant to Section 2.1 hereof and this Warrant is
surrendered, (ii) of delivery of notice of cashless exercise pursuant to Section
2.2 hereof and this Warrant is surrendered, or (iii) of automatic exercise
hereof (even if not surrendered) pursuant to Section 2.5 hereof.

                                    ARTICLE 6
                                  MISCELLANEOUS

6.1       GOVERNMENTAL APPROVALS. The Company will from time to time take all
action which may be necessary to obtain and keep effective any and all permits,
consents and approvals of governmental agencies and authorities and securities
acts filings under federal and state laws, which may be or become requisite in
connection with the issuance, sale, and delivery of this Warrant, and the
issuance, sale and delivery of the Common Stock or other securities or property
issuable or deliverable upon exercise of this Warrant.

6.2       GOVERNING LAWS. IT IS THE INTENTION OF THE PARTIES HERETO THAT EXCEPT
AS SET FORTH BELOW, THE INTERNAL LAWS OF THE STATE OF CALIFORNIA, U.S.A.
(IRRESPECTIVE OF ITS CHOICE OF LAW PRINCIPLES) SHALL GOVERN THE VALIDITY OF THIS
WARRANT, THE CONSTRUCTION OF ITS TERMS, AND THE INTERPRETATION AND ENFORCEMENT
OF THE RIGHTS AND DUTIES OF THE PARTIES HERETO.

6.3       BINDING UPON SUCCESSORS AND ASSIGNS. Subject to, and unless otherwise
provided in, this Warrant, each and all of the covenants, terms, provisions, and
agreements contained herein shall be binding upon, and inure to the benefit of
the permitted successors, executors, heirs, representatives, administrators and
assigns of the parties hereto.

6.4       SEVERABILITY. If any one or more provisions of this Warrant, or the
application thereof, shall for any reason and to any extent be invalid or
unenforceable, the remainder of this Warrant and the application of such
provisions to other persons or circumstances shall be interpreted so as

<PAGE>

Common Stock Warrant
Page 6

best to reasonably effect the intent of the parties hereto. The parties further
agree to replace any such void or unenforceable provisions of this Warrant with
valid and enforceable provisions which will achieve, to the extent possible, the
economic, business and other purposes of the void or unenforceable provisions.

6.5       DEFAULT, AMENDMENT AND WAIVERS. This Warrant may be amended upon the
written consent of the Company and the holders in the aggregate of the right to
purchase a majority of the number of unexercised shares covered by the Warrant
initially issued by the Company pursuant to the Consulting Agreement. The waiver
by a party of any breach hereof for default in payment of any amount due
hereunder or default in the performance hereof shall not be deemed to constitute
a waiver of any other default or any succeeding breach or default. The failure
to cure any breach of any term of this Warrant within ten (10) days of written
notice thereof shall constitute an event of default under this Warrant.

6.6       NO WAIVER. The failure of any party to enforce any of the provisions
hereof shall not be construed to be a waiver of the right of such party
thereafter to enforce such provisions.

6.7       ATTORNEYS' FEES. Should suit be brought to enforce or interpret any
part of this Warrant, the prevailing party shall be entitled to recover, as an
element of the costs of suit and not as damages, reasonable attorneys' fees to
be fixed by the court (including without limitation, costs, expenses and fees on
any appeal). The prevailing party shall be the party entitled to recover its
costs of suit, regardless of whether such suit proceeds to final judgment. A
party not entitled to recover its costs shall not be entitled to recover
attorneys' fees. No sum for attorneys' fees shall be counted in calculating the
amount of a judgment for purposes of determining if a party is entitled to
recover costs or attorneys' fees.

6.8       NOTICES. Whenever any party hereto desires or is required to give any
notice, demand, or request with respect to this Warrant, each such communication
shall be in writing and shall be effective only if it is delivered by personal
service or mailed, United States certified mail, postage prepaid, return receipt
requested, addressed as follows:

                  Company:          NHancement Technologies Inc.
                                    6663 Owens Drive
                                    Pleasanton
                                    California 94588
                                    Attn:  Douglas S. Zorn

                   Holder:          Lucian Thomas Baldwin III
                                    Suite 2850, 141 West Jackson
                                    Il 60604

Such communications shall be effective when they are received by the addressee
thereof; but if sent by certified mail in the manner set forth above, they shall
be effective three (3) business days after being deposited in the United States
mail. Any party may change its address for such communications by giving notice
thereof to the other party in conformity with this Section.

6.9       TIME. Time is of the essence of this Warrant.

6.10      CONSTRUCTION OF AGREEMENT. A reference in this Warrant to any Section
shall include a reference to every Section the number of which begins with the
number of the Section to which reference is specifically made (E.G., a reference
to Section 3 shall include a reference to Sections 3.5 and 3.7). The titles and
headings herein are for reference purposes only and shall not in any manner
affect the interpretation of this Warrant.

6.11      NO ENDORSEMENT. Holder understands that no federal or state securities
administrator has made any finding or determination relating to the fairness of
investment in the Company or

<PAGE>

Common Stock Warrant
Page 7

purchase of the Common Stock hereunder and that no federal or state securities
administrator has recommended or endorsed the offering of securities by the
Company hereunder.

6.12      PRONOUNS. All pronouns and any variations thereof shall be deemed to
refer to the masculine, feminine or neuter, singular or plural, as the identity
of the person, persons, entity or entities may require.

6.13      FURTHER ASSURANCES. Each party agrees to cooperate fully with the
other parties and to execute such further instruments, documents and agreements
and to give such further written assurances, as may be reasonably requested by
any other party to better evidence and reflect the transactions described herein
and contemplated hereby, and to carry into effect the intents and purposes of
this Warrant.

                           NHancement Technologies Inc., a Delaware corporation

                           By:
                              ---------------------------
                              Douglas S. Zorn, Chief Executive Officer

<PAGE>

Common Stock Warrant
Page 8

         EXHIBIT B-1

                   NOTICE OF EXERCISE OF COMMON STOCK WARRANT
                        BY CASH PAYMENT OF WARRANT PRICE

                                      DATE: __________________________

_________________________              Aggregate Price of Warrant
_________________________              Before Exercise:  $__________________
_________________________              Aggregate Price
Attention: Chief Financial Officer     Being Exercised:  $__________________

                                       Warrant Price:    $___________ per share

                                       Number of Shares of Common Stock to be
                                       Issued Under this Notice: _______________

                                       Remainder Aggregate
                                       Price (if any) After Issuance: $_________

                                  CASH EXERCISE

Gentlemen:

          The undersigned registered Holder of the Common Stock Warrant
delivered herewith ("WARRANT"), hereby irrevocably exercises such Warrant for,
and purchases thereunder, shares of the Common Stock of NHancement Technologies,
Inc., a Delaware corporation, as provided below. Capitalized terms used herein,
unless otherwise defined herein, shall have the meanings given in the Warrant.
The portion of the Aggregate Price (as defined in the Warrant) to be applied
toward the purchase of Common Stock pursuant to this Notice of Exercise is
$_______, thereby leaving a remainder Aggregate Price (if any) equal to
$_______. Such exercise shall be pursuant to the cash exercise provisions of
Section 2.1 of the Warrant. Therefore, Holder makes payment with this Notice of
Exercise by way of check payable to the Company in the amount of $______. Such
check is payment in full under the Warrant for ________ shares of Common Stock
based upon the Warrant Price of $________ per share, as currently in effect
under the Warrant. Holder requests that the certificates for the purchased
shares of Common Stock be issued in the name of and delivered to
"_______________________", __________________________________. To the extent the
foregoing exercise is for less than the full Aggregate Price, a Replacement
Warrant representing the remainder of the Aggregate Price and otherwise of like
form, tenor and effect should be delivered to Holder along with the share
certificates evidencing the Common Stock issued in response to this Notice of
Exercise.

                                              By:_______________________________
                                                           (NAME)

                                      NOTE

          The execution to the foregoing Notice of Exercise must exactly
correspond to the name of the Holder on the Warrant.

<PAGE>

Common Stock Warrant
Page 9

         EXHIBIT B-2

                   NOTICE OF EXERCISE OF COMMON STOCK WARRANT
             PURSUANT TO NET ISSUE ("CASHLESS") EXERCISE PROVISIONS

                                  DATE:

_________________________              Aggregate Price of Warrant
_________________________              Before Exercise:  $__________________
_________________________              Aggregate Price
Attention: Chief Financial Officer     Being Exercised:  $__________________

                                       Warrant Price:    $___________ per share

                                       Number of Shares of Common Stock to be
                                       Issued Under this Notice: _______________

                                       Remainder Aggregate
                                       Price (if any) After Issuance: $_________

                                CASHLESS EXERCISE

Gentlemen:

          The undersigned, registered Holder of the Common Stock Warrant
delivered herewith ("WARRANT", hereby irrevocably exercises such Warrant for,
and purchases thereunder, shares of the Common Stock of NHancement Technologies
Inc., a Delaware corporation, as provided below. Capitalized terms used herein,
unless otherwise defined herein, shall have the meanings given in the Warrant.
The portion of the Aggregate Price (as defined in the Warrant) to be applied
toward the purchase of Common Stock pursuant to this Notice of Exercise is
$_________, thereby leaving a remainder Aggregate Price (if any) equal to
$_______. Such exercise shall be pursuant to the net issue exercise provisions
of Section 2.2 of the Warrant; therefore, Holder makes no payment with this
Notice of Exercise. The number of shares to be issued pursuant to this exercise
shall be determined by reference to the formula in Section 2.2 of the Warrant
which, by reference to Section 2.3, requires the use of the current per share
fair market value of the Company's Common Stock. The current fair market value
of one share of the Company's Common Stock shall be determined in the manner
provided in Section 2.3, which amount has been determined or agreed to by Holder
and the Company to be $_______, which figure is acceptable to Holder for
calculations of the number of shares of Common Stock issuable pursuant to this
Notice of Exercise (SPECIFY ANY ALTERNATIVE ARRANGEMENTS TO THE FOREGOING, IF
NECESSARY OR APPLICABLE). Holder requests that the certificates for the
purchased shares of Common Stock be issued in the name of and delivered to
"___________________________", ______________________. To the extent the
foregoing exercise is for less than the full Aggregate Price of the Warrant, a
replacement Warrant representing the remainder of the Aggregate Price (and
otherwise of like form, tenor and effect) shall be delivered to Holder along
with the share certificate evidencing the Common Stock issued in response to
this Notice of Exercise.

                                    By:_________________________________________
                                                       (NAME)

                                      NOTE
         The execution to the foregoing Notice of Exercise must exactly
correspond to the name of the Holder on the Warrant.

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