SC 14D9

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                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

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                                 SCHEDULE 14D-9

          Solicitation/Recommendation Statement under Section 14(d)(4)
                     of the Securities Exchange Act of 1934

                        American Freightways Corporation
                           (Name of Subject Company)

                        American Freightways Corporation
                      (Names of Persons Filing Statement)

                          Common Stock Par Value $.01
                         (Title of Class of Securities)

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                                   02629V108
                     (CUSIP Number of Class of Securities)

                                  Frank Conner
                        American Freightways Corporation
                               2200 Forward Drive
                               Harrison, AR 72601
                                  870-741-9000

     (Name, address, and telephone numbers of person authorized to receive
     notices and communications on behalf of the persons filing statement)

                                   Copies to:
                              Jeffrey J. Gearhart
                               Goodloe M. Partee
                                Holly L. Larkin
                                 Kutak Rock LLP
                            425 West Capitol Avenue
                                   Suite 1100
                             Little Rock, AR 72201
                                  501-975-3000

[_] Check the box if the filing relates solely to preliminary communications
made before the commencement of a tender offer.

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Item 1. Subject Company Information.

   The name of the subject company to which this Solicitation/Recommendation
Statement on Schedule 14D-9 (this "Statement") relates is American Freightways
Corporation, an Arkansas corporation (the "Company"). The address of the
principal executive offices of the Company is 2200 Forward Drive, Harrison,
Arkansas 72601. The telephone number of the principal executive offices of the
Company is (870) 741-9000.

   The title of the class of securities to which this Statement relates is the
common stock of the Company, $.01 par value (the "Shares"). As of November 10,
2000, there were 32,521,705 Shares outstanding, and 2,717,510 Shares issuable
upon exercise of outstanding stock options.

Item 2. Identity and Background of Filing Person.

   The name, address and telephone number of the Company, which is the person
filing this Statement, are set forth in Item 1 above.

   This Statement relates to the offer by FDX, Inc., a Delaware corporation
("Purchaser") and a wholly-owned subsidiary of FedEx Corporation, a Delaware
corporation ("FedEx"), disclosed in a Tender Offer Statement on Schedule TO
filed by Purchaser and FedEx (the "Schedule TO") with the Securities and
Exchange Commission (the "SEC") on November 20, 2000, to purchase up to 50.1%
(the "Maximum Amount") of the outstanding Shares and associated rights at a
purchase price of $28.13 per Share, net to the seller in cash (the "Offer
Price"), upon the terms and subject to the conditions set forth in the Offer
to Purchase, dated November 20, 2000 and filed as Exhibit (a)(1) to the
Schedule TO (the "Offer to Purchase"). The Offer to Purchase and the related
Letter of Transmittal, as they may be amended and supplemented from time to
time, together constitute the "Offer".

   The Offer is being made pursuant to the Agreement and Plan of Merger, dated
as of November 12, 2000, among FedEx, Purchaser and the Company (the "Merger
Agreement"). The Merger Agreement provides, among other things, that as soon
as practicable after consummation of the Offer and the satisfaction or waiver
of certain conditions set forth in the Merger Agreement, in accordance with
the relevant provisions of the General Corporation Law of the State of
Delaware and the Arkansas Business Corporation Act of 1987 ("ABCA"), the
Company will be merged with and into the Purchaser (the "Merger"). Following
the effective time of the Merger (the "Effective Time"), Purchaser will
continue as the surviving corporation (the "Surviving Corporation").

   In the Merger, each of the Shares issued and outstanding immediately prior
to the Effective Time (other than Shares held by Purchaser, FedEx or any other
subsidiary of FedEx, which Shares shall be canceled and retired, and other
than the Shares, if any, held by shareholders who have properly demanded and
perfected their dissenter's rights under Arkansas Code Annotated Section 4-27-
1301 et seq.) will, by virtue of the Merger and without any action on the part
of the holders of the Shares, be converted into the right to receive the
number of shares of FedEx common stock, par value $.10 per share ("FedEx
Common Stock"), determined by dividing $28.13 by the market price per share of
FedEx common stock, defined as the average closing price per FedEx share on
the New York Stock Exchange (the "NYSE") for the 10 trading days selected by
FedEx and the Company by lot out of 20 trading days ending on and including
the fifth trading day prior to the Effective Time of the Merger.

   As set forth in the Schedule TO, the address of the principal executive
offices of FedEx and Purchaser is 942 South Shady Grove Road, Memphis,
Tennessee.

Item 3. Past Contacts, Transactions, Negotiations and Agreements.

   Certain contracts, agreements, arrangements or understandings between the
Company or its affiliates with certain of its directors and executive officers
are, except as noted below, described in the Information Statement pursuant to
Schedule 14f-1 (the "Information Statement") that is attached as Annex I and
is incorporated herein by reference. Except as described or referred to in
this Schedule 14D-9 and in Annex I, to the knowledge of the Company, as of the
date hereof, there are no material agreements, arrangements or understandings,
or any actual or potential conflicts of interest, between the Company or its
affiliates and (i) the Company's executive officers, directors or affiliates;
or (ii) FedEx or the Purchaser, or their respective officers, directors or
affiliates.

                                       2


   In considering the recommendation of the Board of Directors of the Company
(the "Company Board") set forth in Item 4 below, the Company's shareholders
should be aware that certain members of the Company's management and certain
members of the Company's Board of Directors have interests in the Offer and
the Merger, which are described herein and in Annex I hereto and which may
present them with certain conflicts of interest. The Board of Directors is
aware of these potential conflicts and considered them along with the other
factors described in Item 4 below.

 THE MERGER AGREEMENT

   A summary of the material provisions of the Merger Agreement is set forth
below. The summary is qualified in its entirety by reference to the complete
text of the Merger Agreement, which is filed as an exhibit to the Company's
Form 10-Q filed with the SEC on November 14, 2000 and is incorporated herein
by reference. The summary is qualified in its entirety by reference to the
complete text of the Merger Agreement.

  The Offer

   The Merger Agreement provides for the making of the Offer. The Offer is
subject to the conditions described in "Conditions to the Offer", including,
among other things, (i) there being validly tendered and not withdrawn prior
to the Expiration Date (as defined below) a number of Shares representing
50.1% of the total number of Shares outstanding (the "Minimum Condition") and
(ii) any waiting periods under applicable antitrust laws having expired or
been terminated. The Offer is also subject to other conditions. Subject to the
provisions of the Merger Agreement, Purchaser may waive, in whole or in part
at any time or from time to time, any condition to the Offer; provided that
without the prior written consent of the Company Purchaser cannot make any
change that changes the form of consideration to be paid in the Offer or the
Merger, decreases the price per Share, increases the Minimum Condition or the
Maximum Amount, imposes additional conditions to the Offer or amends any term
or any condition to the Offer in a manner materially adverse to the holders of
the Shares.

   Purchaser has the right, without the consent of the Company, to waive the
Minimum Condition and extend the Offer (i) from time to time if, at the
scheduled or extended expiration date of the Offer, any of the conditions to
the Offer have not been satisfied or waived (until such conditions are
satisfied or waived) for a number of days not to exceed 60 in the aggregate
and (ii) for any period required by any rule, regulation, interpretation or
position of the SEC or the staff of the SEC applicable to the Offer or any
period required by applicable law.

   "Expiration Date" means 12:00 Midnight, New York City time, on Thursday,
December 21, 2000, unless Purchaser extends the period of time for which the
Offer is open under the terms set forth in the Merger Agreement, in which
event "Expiration Date" means the latest time and date at which the Offer, as
so extended, shall expire.

  Recommendation

   The Company Board has unanimously (i) determined that each of the Merger
Agreement, the Offer and the Merger is fair to, and in the best interest of,
the holders of Shares, (ii) approved the Merger Agreement and the transactions
contemplated thereby, including each of the Offer and the Merger and
(iii) resolved to recommend that the shareholders of the Company who desire to
receive cash for their Shares accept the Offer and tender their Shares and
that, following consummation of the Offer, the shareholders of the Company
adopt the Merger Agreement and vote in favor of the Merger.

   The Company's financial advisor, Credit Suisse First Boston Corporation,
and, as a consequence of a merger of Donaldson, Lufkin and Jenrette Securities
Corporation ("DLJ") with an affiliate of Credit Suisse First Boston
Corporation in November 2000, its affiliate DLJ ("CSFB"), has delivered to the
Company Board its opinion dated November 12, 2000, to the effect that, as of
such date, and based on and subject to the matters stated in the opinion, the
consideration to be received by holders of Shares in the Offer and in the
Merger is fair from a financial point of view to those shareholders. The full
text of the opinion, including the assumptions made, matters considered and
limits on the review undertaken, is attached as Annex II.

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  The Merger

   The Merger Agreement provides that as soon as practicable after the
purchase of the Shares pursuant to the Offer, the approval of the Merger
Agreement by the Company's shareholders and the satisfaction or waiver of the
other conditions to the Merger, the Company will be merged with and into
Purchaser, and Purchaser will be the Surviving Corporation.

   Pursuant to the Merger Agreement, each Share outstanding at the Effective
Time (other than Shares owned by FedEx or any of its subsidiaries or by the
Company as treasury stock, all of which will be cancelled, and other than
Shares that are held by shareholders, if any, who properly exercise their
dissenters' rights under the ABCA) will be converted into the right to receive
that number of shares of FedEx Common Stock (rounded to the nearest ten-
thousandth of a share) determined by dividing $28.13 by the market price per
share of FedEx Common Stock. The "market price" per share of FedEx Common
Stock is the average closing price per share of FedEx Common Stock on the NYSE
at the end of the regular session as reported on the Consolidated Tape,
Network A for the ten trading days selected by FedEx and the Company by lot
out of the 20 trading days ending on and including the fifth trading day prior
to the Effective Time. Shareholders who perfect their dissenters' rights under
the ABCA will be entitled to the amounts determined pursuant to such
proceedings.

  Employee Stock Options

   At or immediately prior to the Effective Time, (1) each employee stock
option or director stock option to purchase Shares outstanding under any stock
option plan of the Company, whether or not vested or exercisable (each, a
"Company Option") will, by virtue of the Merger and without any further action
on the part of any holder thereof, be assumed by FedEx and deemed to
constitute an option (each, a "FedEx Option") to acquire, on the same terms
and conditions as were applicable under such Company Option, the same number
of shares of FedEx Common Stock as the holder of such Company Option would
have been entitled to receive had such holder exercised such Company Option in
full immediately prior to the Effective Time (rounded to the nearest whole
number), at a price per share (rounded down to the nearest whole cent) equal
to (x) the aggregate exercise price for the Shares otherwise purchasable
pursuant to such Company Option divided by (y) the number of whole shares of
FedEx Common Stock purchasable pursuant to the FedEx Option in accordance with
the foregoing, (2) each share appreciation right issued under any stock option
plan of the Company (each, an "SAR") shall be terminated and payment therefor
shall be made in accordance with the terms of such plan and (3) FedEx shall
assume the obligations of the Company under the stock option plans of the
Company, each of which will continue in effect after the Effective Time, and
all references to the Company in such plans, and any option granted
thereunder, will be deemed to refer to FedEx, where appropriate. The other
terms of each such Company Option, and the plans under which they were issued,
shall continue to apply in accordance with their terms.

   Prior to the Effective Time, the Company will (i) obtain any consents from
holders of Company Options and (ii) make any amendments to the terms of such
stock option plans of the Company that, in the case of either clauses (i) or
(ii), are necessary or appropriate to give effect to the above transactions;
provided, however, that lack of consent of any holder of a Company Option will
in no way affect the obligations of the parties to consummate the Merger.
Prior to the Effective Time, the Company will take such actions and make any
amendments to the Company's stock option plans necessary or appropriate to
cause the Company Options outstanding thereunder to (x) not terminate at the
Effective Time, (y) continue to remain outstanding and vest in accordance with
their terms and (z) in the case any holder of such Company Options ceases to
be a director for any reason, expire in accordance with their respective terms
without regard to any provisions in the plans which provide for an earlier
expiration date.

   At or prior to the Effective Time, FedEx will take all corporate action
necessary to reserve for issuance a sufficient number of shares of FedEx
Common Stock for delivery upon exercise of the FedEx Options. At or prior to
the Effective Time, FedEx will file a registration statement on Form S-8, with
respect to the shares of FedEx Common Stock subject to such FedEx Options.


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   Neither FedEx nor the Surviving Corporation will assume or substitute
equivalent options under the Company's 1999 Employee Stock Purchase Plan (the
"ESPP"). Accordingly, pursuant to Section 19(c) of the ESPP, as of the 15th
day prior to the Effective Time, the Offering Period (as defined in the ESPP)
then in progress under the ESPP will terminate. The Company will notify each
participant in the ESPP in writing of the New Exercise Date (as defined in the
ESPP) for such Offering Period. All Shares purchased under the ESPP and
outstanding as of the Effective Time will be treated in the same manner as
other Shares outstanding as of the Effective Time. The Offering Period ending
as of the 15th day prior to the Effective Time will be the final Offering
Period under the ESPP and the ESPP will be terminated as of the Effective
Time.

  Representations and Warranties

   Pursuant to the Merger Agreement, the Company has made customary
representations and warranties to us and to FedEx, including representations
relating to its organization and qualification and subsidiaries; its articles
of incorporation and bylaws; capitalization; corporate authorizations; absence
of conflicts; required filings and consents; compliance with laws; SEC
filings; financial statements; absence of certain changes or events (including
any material adverse effect on the financial condition, business, assets or
results of operations of the Company); absence of undisclosed liabilities;
litigation; employee benefit plans; tax matters; intellectual property;
environmental matters; insurance and other matters.

   Certain of the Company's representations and warranties are qualified as to
"materiality" or "Material Adverse Effect." When used in connection with the
Company or any of its subsidiaries, the term "Material Adverse Effect" means
any effect that would be materially adverse to the financial condition,
business, assets or results of operations of the Company and its subsidiaries
taken as a whole. In certain instances in the Merger Agreement, "Material
Adverse Effect" excludes any effects, resulting events, occurrences, or
developments (i) relating to, arising from or caused by (x) the economy or
securities markets in general, or (y) the LTL segment of the transportation
industry in general or (ii) arising from or caused by the announcement or
pendency of the Merger Agreement or the transactions contemplated thereby.

   Pursuant to the Merger Agreement, FedEx has made customary representations
and warranties to the Company, including representations relating to its
corporate organization; authority relative to the Merger Agreement; absence of
conflicts; financial statements; finders fees and other matters.

  Covenants of the Company

   Pursuant to the Merger Agreement, the Company has agreed to comply with
various covenants.

   Conduct of the Company. Prior to the Effective Time, except as expressly
permitted by the Merger Agreement, the Company and its subsidiaries will
conduct business in the ordinary course consistent with past practices, and
the Company will not and will not permit its subsidiaries to, among other
things:

     (a) amend its organizational documents;

     (b) make changes in its capital structure;

     (c) merge or consolidate, or make material acquisitions or dispositions;

     (d) pay dividends;

     (e) issue additional shares of capital stock or rights to acquire
  capital stock or amend the terms of any existing equity securities;

     (f) repurchase or redeem its capital stock;

     (g) incur additional indebtedness, except indebtedness in an aggregate
  principal amount not in excess of $15 million incurred in the ordinary
  course of business on terms consistent with past practices;

     (h) enter into any contract, except contracts entered into in the
  ordinary course of business on terms consistent with past practice and so
  long as the aggregate amount of payments to be made under any single
  contract does not exceed $700,000 in any fiscal year or $10 million during
  the term of such contract;

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     (i) make any capital expenditures, except capital expenditures for the
  2000 fiscal year set forth in the Company's capital expenditures budget for
  the 2000 fiscal year and capital expenditures for subsequent periods in
  amounts and at times consistent with the Company's capital expenditures
  budget for the 2000 fiscal year;

     (j) create or incur any liens other than in the ordinary course of
  business consistent with past practices;

     (k) make any loan, advance, capital contributions or investments except
  to wholly-owned subsidiaries in the ordinary course of business consistent
  with past practices;

     (l) grant any severance or termination pay (except for routine severance
  payments granted to employees other than officers and directors in the
  ordinary course of business consistent with past practice and not exceeding
  (x) $75,000 in the aggregate with respect to any single employee and (y)
  $300,000 in the aggregate with respect to all employees); increase benefits
  payable under any existing severance or termination pay policies or
  employment agreements; enter into any employment, deferred compensation or
  other similar agreement; establish, adopt or amend (except as required by
  applicable law) any collective bargaining, bonus, compensation, option or
  other benefit plan; or increase compensation, bonus or other
  benefits payable to any officer, director or employee (other than in the
  ordinary course of business consistent with past practice);

     (m) take any action to consummate the Company's proposed
  royalty/financing company restructuring;

     (n) grant any option pursuant to any director or employee stock option
  plan or accelerate the vesting of any options under such plans; or

     (o) take any action that would cause a representation or warranty of the
  Company contained in the Merger Agreement to be inaccurate.

   Company Shareholder Meeting. The Company will cause a meeting of its
shareholders to be duly called and held as soon as reasonably practicable after
consummation of the Offer for the purpose of voting on the approval and
adoption of the Merger Agreement and the Merger.

   Recommendations. Except as provided in the next sentence, the Company Board
will recommend that all shareholders of the Company who desire to receive cash
for their Shares tender their Shares in the Offer and that, following
acceptance for payment of the Shares pursuant to the Offer, the shareholders of
the Company approve the Merger. The Company Board is permitted to withdraw, or
modify in a manner adverse to FedEx, its recommendation to its shareholders,
and approve or recommend an Acquisition Proposal (as defined below), if (i) the
Company has complied with the terms of the "No Solicitation" covenant below,
(ii) the Company Board, based on the advice of its outside legal counsel,
determines in good faith by a majority vote that failure to take such action
would be reasonably likely to be inconsistent with fulfilling its fiduciary
duties under applicable law and (iii) the Acquisition Proposal is a Superior
Proposal. "Acquisition Proposal" means, other than the transactions
contemplated by the Merger Agreement, any Third Party offer or any proposal or
inquiry relating to, or any Third Party indication of interest in, (1) any
acquisition or purchase, direct or indirect, of 20% or more of the consolidated
assets of the Company and its subsidiaries or over 20% of any class of equity
or voting securities of the Company or any of its subsidiaries whose assets,
individually or in the aggregate, constitute more than 20% of the consolidated
assets of the Company, (2) any tender offer (including a self-tender offer) or
exchange offer that, if consummated, would result in any Third Party
beneficially owning 20% or more of any class of equity or voting securities of
the Company or any of its subsidiaries whose assets, individually or in the
aggregate, constitute more than 20% of the consolidated assets of the Company,
(3) a merger, consolidation, share exchange, business combination, sale of
substantially all the assets, reorganization, recapitalization, liquidation,
dissolution or other similar transaction involving the Company or any of its
subsidiaries whose assets, individually or in the aggregate, constitute more
than 20% of the consolidated assets of the Company or (4) solely for purposes
of the provisions described in the "No Solicitation" covenant below, any other
transaction the consummation of which would reasonably be likely to impede,
interfere with, prevent or materially delay the Offer or Merger or that would
reasonably be likely to dilute materially the benefits to FedEx of the
transactions

                                       6


contemplated by the Merger Agreement. "Third Party" means any person as
defined in Section 13(d) of the Exchange Act, other than FedEx or any of its
affiliates. "Superior Proposal" means any bona fide, unsolicited written
Acquisition Proposal for at least a majority of the outstanding Shares on
terms that the Company Board determines in good faith by a majority vote, on
the basis of the advice of a financial advisor of nationally recognized
reputation and taking into account all the terms and conditions of the
Acquisition Proposal, including any break-up fees, expense reimbursement
provisions and conditions to consummation, are more favorable to the Company
and all the Company's shareholders than as provided under the Merger Agreement
and is reasonably likely to be completed, taking into account all legal,
financial, regulatory and other aspects of the proposal and the third party
making the proposal available to the Company Board.

   No Solicitation. The Merger Agreement provides that neither the Company nor
any of its subsidiaries will, or will authorize or permit any of their
officers, directors, employees, investment bankers, attorneys, accountants,
consultants or other agents or advisors to, directly or indirectly, (i)
solicit, initiate or knowingly take any action to facilitate or encourage the
submission of any Acquisition Proposal, (ii) enter into or participate in any
discussions or negotiations with, furnish any information relating to the
Company or any of its subsidiaries or afford access to the business,
properties, assets, books or records of the Company or any of its subsidiaries
to,
otherwise cooperate in any way with, or knowingly assist, participate in,
facilitate or encourage any effort by any Third Party that is seeking to make,
or has made, an Acquisition Proposal, or (iii) grant any waiver or release
under any standstill or similar agreement with respect to any class of equity
securities of the Company or any of its subsidiaries.

   Notwithstanding the foregoing, the Company Board may, prior to the approval
and adoption of the Merger Agreement by the shareholders of the Company, (i)
engage in negotiations or discussions with any Third Party that has made a
Superior Proposal, (ii) furnish to such Third Party nonpublic information
relating to the Company or any of its subsidiaries pursuant to a
confidentiality agreement with terms no less favorable to the Company than
those contained in the confidentiality agreement between FedEx and the
Company, (iii) following receipt of such Superior Proposal, take and disclose
to its shareholders a position contemplated by Rule 14e-2(a) under the
Exchange Act or otherwise make disclosure to them, (iv) following receipt of
such Superior Proposal, fail to make, withdraw, or modify in a manner adverse
to FedEx its recommendation to its shareholders and/or (v) take any non-
appealable, final action ordered to be taken by the Company by any court of
competent jurisdiction, but in the cases described in clauses (i) through
(iv), only if the Company Board determines in good faith by a majority vote,
on the basis of advice from Kutak Rock LLP, outside legal counsel to the
Company, that its failure to take such action would be reasonably likely to be
inconsistent with fulfilling its fiduciary duties under applicable law, and
only so long as prior to taking any of these actions the Company has delivered
to FedEx a prior written notice advising FedEx that it intends to take such
action, and the Company continues to advise FedEx after taking such action.

   Reorganization Matters. Neither the Company nor any of its subsidiaries
will take any action that would reasonably be likely to prevent the Merger
from qualifying as a reorganization under Section 368 of the Code and, prior
to the Effective Time, the Company and its subsidiaries will use their
reasonable best efforts to cause the Merger to so qualify.

   Covenants of FedEx

   Pursuant to the Merger Agreement, FedEx has agreed to comply with various
covenants.

   Conduct of FedEx. Prior to the Effective Time, except as expressly
permitted by the Merger Agreement, FedEx and its subsidiaries will conduct
business in the ordinary course consistent with past practices, and FedEx will
not:

     (i) amend its organizational documents; or

     (ii) take any action that would cause a representation or warranty of
  FedEx contained in the Merger Agreement to be inaccurate.

                                       7


   FedEx's Obligations. FedEx will take all action necessary to cause the
Purchaser to perform its obligations under the Merger Agreement and to
consummate the Merger on the terms and conditions set forth in the Merger
Agreement.

   Voting of Shares. FedEx has agreed to vote all Shares beneficially owned by
it or any of its subsidiaries in favor of approval and adoption of the Merger
Agreement, the Merger and any related actions at the Company shareholder
meeting, and at any adjournment.

   Director and Officer Liability. FedEx will cause the Surviving Corporation
to indemnify the present and former officers and directors of the Company
(each an "Indemnified Person") in respect of acts or omissions occurring at or
prior to the Effective Time to the fullest extent provided under the Company's
articles of incorporation and bylaws in effect on the date of the Merger
Agreement, subject to any limitation imposed from time to time under
applicable law. For six years after the Effective Time, the Surviving
Corporation will provide officers' and directors' liability insurance in
respect of acts or omissions occurring prior to the Effective Time covering
each Indemnified Person currently covered by the Company's officers' and
directors' liability insurance policy on terms with respect to coverage and
amount no less favorable than those of such policy in effect on the date of
the Merger Agreement. In satisfying this obligation, the Surviving Corporation
will not be obligated to pay premiums in any one year in excess of 200% of the
amount per annum the Company paid in its last full fiscal year.

   Form S-4. FedEx will promptly prepare and file with the SEC a registration
statement on Form S-4 (the "Form S-4") and will use its reasonable best
efforts to cause the Form S-4 to be declared effective by the SEC as promptly
as practicable.

   Stock Exchange Listing. FedEx will use its reasonable best efforts to cause
the shares of FedEx Common Stock to be issued in connection with the Merger to
be listed on the NYSE, subject to official notice of issuance.

   Employee Matters. FedEx will cause the Surviving Corporation to provide to
the employees of the Surviving Corporation and its subsidiaries, for a period
of at least two years after the Effective Time, benefits (excluding stock or
other equity-based compensation) that are no less favorable in the aggregate
than the benefits currently being provided by the Company and its
subsidiaries, subject to applicable law.

   The Surviving Corporation will also assume, honor and perform the
provisions of the Company's Director Compensation Health Benefit Plan for each
director of the Company. This plan provides that retired members of the
Company's Board of Directors and their dependents will be provided the
opportunity to purchase health insurance, at the director's expense (at COBRA
rates) under the company's health care plan from the beginning of their
retirement until they reach the age of 65 or they are covered by Medicare.

   Reorganization Matters. Neither FedEx nor any of its subsidiaries will take
any action that would reasonably be likely to prevent the Merger from
qualifying as a reorganization under Section 368 of the Code and, prior to the
Effective Time, FedEx and its subsidiaries will use their reasonable best
efforts to cause the Merger to so qualify.

   Mutual Covenants of FedEx and the Company

   Pursuant to the Merger Agreement, FedEx and the Company have agreed to
comply with various mutual covenants.

   Reasonable Best Efforts. The Company and FedEx have agreed to use their
reasonable best efforts to take, or cause to be taken, all actions and to do,
or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate the transactions contemplated by
the Merger Agreement including taking all actions necessary to cause the
expiration or termination of the waiting period under the HSR Act. However,
FedEx is not required, in doing so, to divest or hold separate any business or
assets of the Company or FedEx.

                                       8


   Certain Filings. The Company and FedEx have agreed to cooperate with one
another in connection with the preparation of the proxy or information
statement of the Company (the "Company Proxy Statement"), the Form S-4, the
Schedule TO, the Schedule 14D-9 and in determining whether any other actions
or filings or consents are necessary in connection with the transactions
contemplated by the Merger Agreement.

   Public Announcements. The Company and FedEx have agreed to consult with
each other regarding timing and content before issuing any press release or
making any public statement with respect to the Merger Agreement, except as
may be required by applicable law or any listing agreement with any national
securities exchange.

   Confidentiality. The Merger Agreement contains customary provisions
requiring FedEx and the Company to maintain confidential documents and
information received in connection with the transactions contemplated by the
Merger Agreement, and to provide each other with access to properties, books
and records.

   Notices. FedEx and the Company have agreed to notify each other promptly of
any notices or communications received from any governmental or regulatory
agency or authority in connection with the transactions contemplated by the
Merger Agreement and of certain other events.

   Conditions to the Offer

   Notwithstanding any other provision of the Offer, the Purchaser is not
required to accept for payment or pay for any Shares, and the Purchaser may
terminate the Offer, if:

     (1) prior to the expiration date of the Offer, the Minimum Condition has
  not been satisfied, or the waiting period applicable to the Offer under the
  HSR Act or any other laws, rules and regulations in foreign jurisdictions
  governing antitrust or merger control matters (if any) shall not have
  expired or been terminated; and

     (2) at any time on or after November 12, 2000 and prior to the
  expiration date of the Offer, any of the following conditions exists:

       (a) (x) there shall be instituted or pending any action or
    proceeding by any government or governmental authority or agency,
    domestic, foreign or supranational, before any court or governmental
    authority or agency, domestic, foreign or supranational, (1)
    challenging or seeking to make illegal, delay materially or otherwise
    directly or indirectly restrain or prohibit the making of the Offer,
    the acceptance for payment of or payment for some or all of the Shares
    by FedEx or the Purchaser or the consummation of the Merger, (2)
    seeking to restrain or prohibit FedEx's ownership or operation (or that
    of its affiliates) of all or any material portion of the business or
    assets of the Company and its subsidiaries, taken as a whole, or of
    FedEx and its subsidiaries, taken as a whole, or to compel FedEx or any
    of its affiliates to dispose of or hold separate all or any material
    portion of the business or assets of the Company and its subsidiaries,
    taken as a whole, or of FedEx and its subsidiaries, taken as a whole,
    (3) seeking to impose or confirm material limitations on the ability of
    FedEx, the Purchaser or any of FedEx's other affiliates effectively to
    exercise full rights of ownership of the Shares, including the right to
    vote any Shares acquired or owned by FedEx, the Purchaser or any of
    FedEx's other affiliates on all matters properly presented to the
    Company's shareholders, (4) seeking to require divestiture by FedEx,
    the Purchaser or any of FedEx's other affiliates of any Shares or (5)
    that otherwise is reasonably likely to have a Material Adverse Effect
    on the Company or FedEx or (y) there shall have been any action taken,
    or any statute, rule, regulation, injunction, order or decree proposed,
    enacted, enforced, promulgated, issued or deemed applicable to the
    Offer or the Merger, by any court, government or governmental authority
    or agency, domestic, foreign or supranational, other than the
    application of the waiting period provisions of the HSR Act to the
    Offer or the Merger that is reasonably likely, directly or indirectly,
    to result in any of the consequences referred to in clause (x) above;
    or

                                       9


       (b) any change shall have occurred (or any development shall have
    occurred involving a prospective change) in the business, assets,
    liabilities, financial condition, capitalization, operations or results
    of operations of the Company or any of its subsidiaries that has had or
    is reasonably likely to have a Material Adverse Effect on the Company,
    except for events, occurrences, or developments (i) relating to,
    arising from or caused by (x) the economy or securities markets in
    general or (y) the LTL segment of the transportation industry in
    general or (ii) arising from or caused by the announcement or pendency
    of the Merger Agreement or the transactions contemplated hereby; or

       (c) (i) the Company shall have breached or failed to perform in all
    material respects any of its obligations under the Merger Agreement, or
    (ii) any of the representations and warranties of the Company contained
    in the Merger Agreement and qualified by materiality or "Material
    Adverse Effect" shall not be true or any of the representations and
    warranties not so qualified shall not be true in all material respects,
    in each case when made or at any time prior to the consummation of the
    Offer as if made at and as of such time (except to the extent that any
    such representation or warranty is made as of a specific date, in which
    case such representation or warranty (x) if qualified by materiality or
    "Material Adverse Effect," shall be true as of such specific date and
    (y) if not so qualified, shall be true in all material respects as of
    such specific date) and in each case such breach shall not be subject
    to cure; or

       (d) the Merger Agreement shall have been terminated in accordance
    with its terms; or

       (e) there shall have occurred any general suspension of trading in,
    or limitation on prices for, securities on the NYSE or in the over-the-
    counter market in the United States, any declaration of a banking
    moratorium by Federal or New York authorities or general suspension of
    payments in respect of banks in the United States that regularly
    participate in the United States market in loans to large corporations,
    any material limitation by any Federal, state or local government in
    the United States or any court, administrative or regulatory agency or
    commission or other governmental authority or agency in the United
    States that materially affects the extension of credit generally by
    banks in the United States that regularly participate in the United
    States market in loans to large corporations, any commencement of a war
    involving the United States or any commencement of armed hostilities or
    other national or international calamity involving the United States
    that has a material adverse effect on bank syndication or financial
    markets in the United States or, in the case of any of the foregoing
    occurrences existing on or at the time of the commencement of the
    Offer, a material acceleration or worsening thereof;

which, in the reasonable judgment of FedEx in any such case, and regardless of
the circumstances (including any action or omission by FedEx but excluding any
willful action or omission by FedEx not permitted or contemplated by the
Merger Agreement) giving rise to any such condition, makes it inadvisable to
proceed with such acceptance for payment or payment.

   Conditions to the Merger

   The Merger Agreement provides that the obligations of the Company, FedEx
and Purchaser consummate the Merger are subject to the satisfaction or, to the
extent permitted by law, waiver of the following conditions:

     (a) the Merger Agreement has been approved and adopted by the
  shareholders of the Company in accordance with Arkansas law;

     (b) no provision of any applicable law or regulation and no judgment,
  injunction, order or decree prohibits the consummation of the Merger;

     (c) Purchaser has purchased Shares pursuant to the Offer;

     (d) the Form S-4 has been declared effective, no stop order suspending
  the effectiveness of the Form S-4 will be in effect and no proceedings for
  such purpose will be pending before or threatened by the SEC;

                                      10


     (e) the shares of FedEx Common Stock to be issued in the Merger have
  been approved for listing on the NYSE, subject to official notice of
  issuance; and

     (f) FedEx has received an opinion of Davis Polk & Wardwell in an agreed
  upon form.

   The Merger Agreement provides that any of the conditions described above
that is not satisfied as a result of a breach by a party to the Merger
Agreement of any provision of the Merger Agreement ceases to be a condition to
the obligations of such party to consummate the Merger, from and after the
time of such breach.

   The obligation of the Company to consummate the Merger is also subject to
the condition that the Company will have received an opinion of Kutak Rock LLP
in an agreed upon form.

   Termination

   The Merger Agreement may be terminated and the Merger may be abandoned at
any time prior to the Effective Time (notwithstanding any approval of the
Merger Agreement by the shareholders of the Company):

     (a) by mutual written agreement of the Company and FedEx;

     (b) by either the Company or FedEx, if:

       (i) the Offer has not been consummated on or before March 1, 2001;
    provided that this right to terminate the Merger Agreement is not
    available to any party whose breach of any provision of the Merger
    Agreement results in the failure of the Offer to be consummated by
    March 1, 2001;

       (ii) there is any law or regulation that makes acceptance for
    payment of, and payment for, the Shares pursuant to the Offer, or
    consummation of the Merger illegal or otherwise prohibited or any
    judgment, injunction, order or decree of any court or governmental body
    having competent jurisdiction permanently enjoins us from accepting for
    payment of, and paying for, the Shares pursuant to the Offer or we, the
    Company or FedEx from consummating the Merger and such judgment,
    injunction, order or decree has become final and nonappealable; or

       (iii) prior to the acceptance for payment of the Shares under the
    Offer, the Company Board has failed to make, withdrawn, or modified in
    a manner adverse to FedEx, its approval or recommendation of the Merger
    Agreement, the Offer or the Merger, as permitted by the Merger
    Agreement; provided that the Company has paid all fees and expenses
    payable under the Merger Agreement and, in the case of any termination
    by the Company, (x) the Company notifies FedEx promptly in writing and
    at least 72 hours prior to termination of its intention to terminate
    and to enter into a binding written agreement concerning an Acquisition
    Proposal that constitutes a Superior Proposal, attaching the most
    current version of such agreement (or a description of all material
    terms and conditions thereof), and (y) FedEx does not make, within 72
    hours of receipt of such written notification, an offer that the
    Company Board determines, in good faith after consultation with its
    financial advisors, is at least as favorable to the shareholders of the
    Company as such Superior Proposal (it being understood that the Company
    will not enter into any such binding agreement during such 72-hour
    period); or

     (c) by FedEx, if prior to the acceptance for payment of the Shares under
  the Offer, there has been a breach by the Company of any representation,
  warranty, covenant or agreement contained in the Merger Agreement that is
  not curable and such breach would give rise to a failure of the condition
  described in clause 2(c) of "Conditions to the Offer" above; or

     (d) by the Company, if prior to the acceptance for payment of the Shares
  under the Offer there has been a breach by FedEx of any representation,
  warranty, covenant or agreement contained in the Merger Agreement that is
  not curable and such breach would give rise to a failure of the condition
  set forth in clause 2(c) of "Conditions to the Offer" above (which shall be
  construed to apply to FedEx).

                                      11


   Fees and Expenses

   Except as otherwise specified below, all fees and expenses incurred in
connection with the Merger Agreement and the transactions contemplated thereby
will be paid by the party incurring such expenses.

   The Company will pay FedEx $33 million if the Merger Agreement is
terminated as described in (b)(iii) under "Termination" above, or if (1)
within 12 months after the Merger Agreement is terminated as described in
(b)(i) or (c) under "Termination" above the Company (i) merges with or into,
or is acquired, directly or indirectly, by merger or otherwise by, a Third
Party; (ii) a Third Party, directly or indirectly, acquires more than 50% of
the total assets of the Company and its subsidiaries, taken as a whole; (iii)
a Third Party, directly or indirectly, acquires more than 50% of the
outstanding Shares; or (iv) the Company adopts or implements a plan of
liquidation, recapitalization or share repurchase relating to more than 50% of
the outstanding Shares or an extraordinary dividend relating to more than 50%
of the outstanding Shares or 50% of the assets of the Company and its
subsidiaries, taken as a whole and (2) prior to such termination, an
Acquisition Proposal is made to the Company or its shareholders.

   If the Merger Agreement is terminated by the Company as described in
(b)(iii) under "Termination" above, or by FedEx as described in (b)(iii) or
(c) above, the Company will reimburse FedEx and its affiliates for all
reasonable out-of-pocket fees and expenses.

   Amendments

   At any time prior to the Effective Time, the Merger Agreement may be
amended by an instrument signed by the Purchaser, FedEx and the Company.
However, after adoption of the Merger Agreement by the shareholders of the
Company, the Merger Agreement may not be amended by any amendment which by law
requires the further approval of the shareholders of the Company unless the
shareholders of the Company have given their approval.

 THE VOTING AGREEMENT

   A summary of the material provisions of the Voting Agreement is set forth
below. The summary is qualified in its entirety by reference to the complete
text of the Voting Agreement, which is filed as an exhibit to this Schedule
14D-9 and is incorporated herein by reference. The summary is qualified in its
entirety by reference to the complete text of the Voting Agreement.

   In connection with the execution of the Merger Agreement, FedEx entered
into the Irrevocable Proxy and Voting Agreement dated as of November 12, 2000
with F.S. Garrison, Tom Garrison, Will Garrison and certain other members of
the Garrison family (the "Garrison Family") (the "Voting Agreement"). The
Garrison Family has agreed to vote all Shares that each member is entitled to
vote, at the time of any vote to approve and adopt the Merger Agreement, the
Merger and all agreements related to the Merger and any actions related
thereto at any meeting of the shareholders of the Company, and at any
adjournment thereof, at which such Merger Agreement and other related
agreements (or any amended version thereof), or such other actions, are
submitted for the consideration and vote of the shareholders of the Company,
in favor of the approval and adoption of the Merger Agreement, the Merger and
the transactions contemplated by the Merger Agreement.

   The Garrison Family also has agreed that it would not vote any Shares that
it is entitled to vote in favor of the approval of any (i) Acquisition
Proposal, (ii) reorganization, recapitalization, liquidation or winding up of
the Company or any other extraordinary transaction involving the Company,
(iii) corporate action the consummation of which would frustrate the purposes,
or prevent or delay the consummation, of the transactions contemplated by the
Merger Agreement or (iv) other matter relating to, or in connection with, any
of the foregoing matters. The Garrison Family has granted FedEx an irrevocable
proxy coupled with an interest to vote any of the Shares it is entitled to
vote or otherwise use such voting power in the manner contemplated by the
foregoing.


                                      12


   The Voting Agreement prohibits the Garrison Family from granting any
proxies or entering into any voting trust or other agreement or arrangement
with respect to the voting of any Shares beneficially owned by them and from
acquiring, selling, assigning, transferring, encumbering or otherwise
disposing of any Shares during the term of the Voting Agreement, subject to
the exceptions described in this paragraph. The Garrison Family has the right
to tender, at its option, up to 1.0 million Shares into the Offer. In
addition, to satisfy the Minimum Condition FedEx has the right to require
members of the Garrison Family to tender up to an additional 1.0 million
Shares into the Offer, and members of the Garrison Family, at their option,
may tender additional Shares into the Offer, so long as the total number of
Shares tendered by the Garrison Family into the Offer (including any Shares
that FedEx has required members of the Garrison Family to tender into the
Offer) is not more than 3.2 million.

   The Voting Agreement terminates four months after the termination of the
Merger Agreement, except that when the Merger Agreement is terminated, the
number of Shares subject to the Irrevocable Proxy and Voting Agreement is
reduced by 1.0 million (net of any Shares tendered by the Garrison Family into
the Offer) and if the Merger Agreement is terminated because the Company Board
has failed to make, withdrawn or modified in a manner adverse to FedEx its
approval or recommendation of the Merger Agreement, the Offer or the Merger,
the obligation of the Garrison Family to tender up to 1.0 million Shares into
the Offer at the request of FedEx automatically terminates.

 EMPLOYMENT AGREEMENTS

   In connection with the Merger, American Freightways, Inc., a wholly-owned
subsidiary of the Company ("AFI"), will enter into standard forms of
employment agreements with 26 associates of the Company, including Tom
Garrison, Will Garrison, Frank Conner and Ken Reeves, each of whom is an
executive officer and director of the Company. A summary of the material
provisions of the employment agreements is set forth below. The summary is
qualified in its entirety by reference to the complete text of the form of
employment agreement, which is filed as an Exhibit hereto and is incorporated
herein by reference.

   The employment agreements run for a term of two or three years, depending
on the associate's job level, and provide compensation and benefits similar to
those currently received by the associates of AFI. All employment agreements
require the associate to devote substantially all of his or her business time
and attention to the affairs of the AFI, except for the employment agreement
with Mr. Reeves, which requires, consistent with his existing employment
arrangement, that he devote one-half of his business time to the affairs of
AFI. The employment agreements with Messrs. T. Garrison, W. Garrison, Conner
and Reeves run for a term of three years, and provide for an annual salary of
$400,000, $370,000, $235,000 and $120,000, respectively.

   Under the employment agreements, if an executive's employment is
involuntarily terminated without Cause or the executive resigns for Good
Reason (as those terms are defined in the employment agreements), the
executive will receive an amount equal to the greater of the executive's base
salary through the end of the original term of the employment agreement or one
and one-half times the executive's annual base salary. In the event of such a
termination, the executive will also receive continued medical, dental and
life insurance benefits for the duration of the original term of the
employment agreement, full vesting of all stock options and other equity
awards, if any, and a gross-up payment for any excise taxes that may apply to
the severance benefits provided. As of the Effective Time of the Merger, the
Surviving Corporation will assume the employment agreements.

Item 4. The Solicitation or Recommendation.

   Recommendation of the Board of Directors. The Board of Directors of the
Company, by unanimous vote, has approved the Merger Agreement and the
transactions contemplated by it, including the Offer and the Merger, and has
determined that the Offer and the Merger are fair to, and in the best
interests of, the shareholders of the Company and recommends that shareholders
of the Company who desire to receive cash for their Shares accept the Offer
and tender their Shares pursuant to the Offer.

                                      13


 Background Of the Offer.

   As part of the continuous evaluation of its businesses and plans, FedEx
regularly considers a variety of strategic options and transactions. In recent
years, as part of this process, FedEx has evaluated various alternatives for
expanding its LTL (less than truckload) business, including through
acquisitions.

   Since mid-1998, senior management at FedEx has periodically engaged in
discussions with F. S. (Sheridan) Garrison, the Chairman of the Board of the
Company, and other members of the Company's senior management, regarding a
possible business combination. In particular, Frederick W. Smith, the Chairman
of the Board, President and Chief Executive Officer of FedEx, met with Mr.
Garrison on a number of occasions, including on June 18, 1998, on June 24,
1999 and again on February 4, 2000. These discussions covered a wide range of
topics, including the potential acquisition of the Company by FedEx, as well
as the potential sale of FedEx's Viking Freight operations to the Company.
During these meetings, Mr. Garrison expressed his and the Company's Board of
Directors' desire to remain independent. Additionally, the parties were unable
to reach an agreement regarding the terms upon which the Company would acquire
Viking Freight. During this time period, management of FedEx also considered
other strategies for expanding into the LTL sector.

   In late August 2000, management of FedEx determined again to approach Mr.
Garrison to discuss a purchase of the Company by FedEx. On August 30, 2000,
Alan B. Graf, Jr., the Executive Vice President and Chief Financial Officer of
FedEx, telephoned representatives of CSFB, the Company's financial advisors
who had assisted the Company in considering the potential acquisition of
Viking Freight, to discuss the possibility of a business combination between
FedEx and the Company. Shortly thereafter, Mr. Smith and Mr. Garrison agreed
to meet to resume discussions regarding a possible business combination.

   On September 17, 2000, Mr. Smith and Mr. Graf met in Harrison, Arkansas
with Mr. Garrison, Tom Garrison, the Company's President and Chief Executive
Officer, and Will Garrison, the Company's Chief Operating Officer, to further
explore the possibility of a business combination. At this meeting, Mr. Smith
indicated FedEx's desire to pursue an acquisition of all the outstanding
Shares of the Company. Mr. Smith emphasized FedEx's intent, based on its
perception of customer needs and the success of Viking Freight, to expand its
freight capacity by acquiring an LTL carrier. While no specific price or other
terms were discussed, Mr. Smith and Mr. Graf indicated that FedEx would be
willing to pay an attractive premium for the Shares. Mr. Smith also confirmed
FedEx's willingness to make a portion of the consideration available in FedEx
Common Stock in order to provide for a partially tax-free transaction.
Finally, Mr. Smith stated that FedEx's strategic plans for the Company did not
involve making substantial changes in the Company's operations or personnel.

   Following the September 17, 2000 meeting, Mr. Garrison informally informed
the other members of the Company Board about FedEx's proposal and the
substance of the September 17th meeting. Mr. Garrison indicated to the Company
Board his intention to continue discussions and exchange information with
FedEx in order to obtain a better understanding of FedEx's proposal. Mr.
Garrison also discussed with the Company Board the need to retain a financial
advisor in order to assist the Company Board in developing a full
understanding of the Company's strategic alternatives in light of FedEx's
proposal.

   On September 20, 2000, Mr. Graf telephoned Mr. Garrison and reiterated
FedEx's desire to proceed with the acquisition of the Company. The parties
discussed various practical aspects of the proposed transaction, including the
need to enter into mutual confidentiality agreements and to engage financial
advisors. Shortly thereafter, representatives of FedEx and the Company
exchanged confidentiality agreements and engaged their respective financial
advisors to advise on the proposed transaction.

   On September 21, 2000, Mr. Smith and Mr. Graf called Mr. Garrison to convey
the proposed terms upon which FedEx would be willing to acquire the Company.
FedEx's proposal contemplated an acquisition of the Company for a price per
Share of $22.50. The acquisition would be made in two steps: first, a cash
tender offer to acquire approximately 50% of the outstanding Shares of the
Company for $22.50 per Share; and second, a

                                      14


merger of the Company into a subsidiary of FedEx, in which the remaining
shareholders of the Company would receive shares of FedEx Common Stock having
a value of $22.50 per Share. FedEx also indicated that it would, as a
condition to its willingness to proceed with the transaction, require an
undertaking from the Garrison Family to vote in favor of and support the
transaction.

   After informing the Company Board of the terms of the proposal received
from FedEx, and after discussions with financial and legal advisors, it was
determined that FedEx's proposal to acquire the Company at a price of $22.50
per Share was inadequate. On September 25, 2000, at the direction of the
Company, CSFB advised Merrill Lynch & Co. ("Merrill Lynch"), FedEx's financial
advisors, that the Company was not prepared to accept FedEx's proposal.
Although the Company did not make a counter-proposal, representatives of CSFB
invited representatives of FedEx to conduct a preliminary due diligence
investigation of the business and prospects of the Company in order to allow
FedEx to determine whether it would be willing to make a higher offer.

   At the invitation of CSFB, representatives of FedEx and Merrill Lynch met
with representatives of the Company and CSFB at the New York offices of CSFB
on October 2, 2000. At the meeting, representatives of the Company provided an
overview of the Company's operations, as well as certain financial
information. The meeting concluded, however, with neither party proposing a
new acquisition price. After the meeting, Mr. Garrison advised the Company
Board as to the status of the discussions with FedEx.

   On October 4, 2000, representatives of CSFB contacted Mr. Graf and advised
him that the Company was interested in pursuing discussions with FedEx, but
only in a transaction valued at a price in excess of $30 per Share. Following
the call and at the direction of FedEx, representatives of Merrill Lynch
telephoned CSFB and advised them that FedEx was not interested in pursuing a
transaction priced at that level and that FedEx would pursue other
alternatives. No further discussions between FedEx and the Company took place
until October 13, 2000, when Mr. Smith and Mr. Garrison spoke by telephone to
discuss the status of the transaction. Based upon this discussion, another
meeting was proposed to determine whether the parties could reach an agreement
regarding a price that they both would be willing to propose to their
respective Boards of Directors.

   On October 18, 2000 at the regularly scheduled quarterly meeting of the
Company Board, the Company's senior management and its financial and legal
advisors advised the Company Board as to the status of discussions with FedEx.
At this meeting, the Company's legal advisors summarized for the directors
their fiduciary duties and other legal considerations. The Company's senior
management and CSFB representatives provided the Company Board with an
overview of the previous proposal received from FedEx and reviewed the
Company's current and projected financial performance, business strategy and
various valuation models for the Company. At the conclusion of this meeting
the Company Board determined that it would be appropriate for the Company's
senior management and financial and legal advisors to continue to provide
information to and pursue negotiations with FedEx in order to determine
whether an acceptable transaction could be negotiated for subsequent
consideration by the Company Board.

   On October 22, 2000, Mr. Smith and Mr. Graf met in Harrison, Arkansas with
Mr. Garrison, Tom Garrison, Will Garrison and Frank Conner, the Company's
Chief Financial Officer. After lengthy discussion, the parties agreed upon a
price of $28.13 per Share, which FedEx indicated was its final offer.
Mr. Garrison agreed that he would be willing to support a transaction with
FedEx at that price, subject to further negotiation of the other terms and
structure of the transaction and the consideration and approval by the Company
Board. At the conclusion of the meeting, FedEx committed to promptly commence
its due diligence review of the Company and its legal counsel began preparing
the appropriate acquisition documents. Mr. Garrison informed the Company's
directors as to the substance of the meeting.

   A special meeting of the Company Board was held on October 25, 2000. At
that meeting, the Company's senior management and financial and legal advisors
reviewed the status of discussions with FedEx. CSFB and senior management made
a presentation regarding the strategic and financial rationale supporting a
transaction between the companies. Additionally, CSFB presented for the Board
a detailed financial analysis concerning the Company, as well as a detailed
review of the risks and benefits of pursuing other potential business
alternatives

                                      15


and combinations. Although no formal opinion was rendered by CSFB at this
meeting, it did provide a preliminary indication of its views regarding the
fairness of the $28.13 per Share price. While no determination was made by the
Company Board as to whether the price of $28.13 per Share was acceptable, the
Company's directors authorized management and the Company's financial and
legal advisors to negotiate definitive agreements with FedEx, for subsequent
review by the Company Board.

   During the week of October 30, 2000, representatives of FedEx conducted a
due diligence review of the Company, which included extensive interviews with
Company management. In addition, counsel for FedEx delivered to counsel for
the Company a draft of the Merger Agreement and the Voting Agreement (as
defined in "The Offer--the Voting Agreement").

   On November 6, 2000, senior management of the Company and FedEx, along with
their respective legal and financial advisors, met at FedEx's corporate
headquarters in Memphis to negotiate the terms of the proposed Merger
Agreement, the Voting Agreement and other related agreements, including
customary provisions relating to the exercise of the fiduciary duties of
directors of the Company. Negotiations continued through the remainder of the
week, with senior management of the Company advising members of the Company
Board as to the status of the discussions.

   On the afternoon of November 12, 2000, the Board of Directors of FedEx met
and, after reviewing all the aspects of the proposed transaction, unanimously
authorized FedEx to enter into the Merger Agreement and the Voting Agreement.

   Following the meeting of the FedEx Board of Directors, the Company Board
met to consider the transaction. Representatives of CSFB were present and
delivered their opinion that the consideration to be received by the
shareholders of the Company in the Offer and the Merger was fair from a
financial point of view. Representatives of CSFB also presented the Company
Board with more detailed information regarding other potential business
combinations. Representatives of the Company's management also made a
presentation and the Company's legal advisors summarized for the directors
their fiduciary duties, the terms of the Merger Agreement and other legal
considerations. After reviewing all the aspects of the proposed transaction
and considerable discussion, the Company Board authorized the Company to enter
into the Merger Agreement and resolved to recommend approval of the
transaction to the Company shareholders.

   On the evening of November 12, 2000, representatives of FedEx and the
Company, after finalizing the terms of the transaction, executed the Merger
Agreement. At the same time, FedEx and Mr. Garrison, along with the members of
the Garrison Family, executed the Voting Agreement. The parties announced the
transaction on the morning of November 13, 2000.

   Reasons for the Recommendation of the Board of Directors. In making the
determination and recommendation described above, the Board considered a
number of factors, including, without limitation, the following:

  .  The fact that the $28.13 price per share to be paid to the Company's
     shareholders represents (1) a premium of approximately 61% over the
     closing price of the Company's Shares on The Nasdaq National Market on
     November 10, 2000, the trading day immediately preceding the public
     announcement of the transaction, and (2) a premium of approximately 71%
     and 60%, respectively, over the 5-day and 20-day average closing prices
     of the Company's shares as of November 10, 2000, and the fact that these
     premiums compare favorably to premiums paid in other similarly sized
     acquisition transactions;

  .  The Company's business, its current financial condition and results of
     operations, and its future prospects, and the Board's belief, on the
     basis of their familiarity with these matters, that the consideration to
     be received by the Company's shareholders in the transaction fairly
     reflects the Company's intrinsic value, including its potential for
     future growth;


                                      16


  .  The Company's business, strategic objectives and prospects if it did not
     pursue the transaction, and the risks and uncertainties associated
     therewith, including risks associated with (1) increased competition as
     larger companies, like FedEx, enter the LTL market; (2) the Company's
     planned growth and geographic expansion westward and the fact that if
     the Company were to maintain operations in its present markets, growth
     and shareholder value creation opportunities could be limited, and
     (3) increased governmental regulation of the transportation industry;

  .  The fact that the public equity markets have historically given a low
     valuation to the Company's equity, thereby making its cost of capital
     high and its growth more difficult;

  .  A review of FedEx's financial condition and future financial prospects;

  .  The strategic fit between the Company and FedEx, including the fact that
     the combined company will have opportunities for significant revenue
     synergies resulting from the creation of a flexible national LTL network
     allowing for movement of shipments seamlessly on a multi-regional basis;

  .  The opinion of CSFB dated as of November 12, 2000, to the effect that as
     of such date the $28.13 per share to be received by the holders of
     Common Stock in the Offer and the Merger is fair to such holders from a
     financial point of view. The full text of the written opinion of CSFB,
     which sets forth assumptions made, matters considered and limitations on
     the review undertaken in connection with such opinion, is attached
     hereto as Annex II. HOLDERS OF SHARES ARE ENCOURAGED TO READ SUCH
     OPINION IN ITS ENTIRETY;

  .  The terms of the Merger Agreement which, subject to certain
     restrictions, allow the Company to terminate the Merger Agreement upon
     payment of a $33 million termination fee if a superior proposal with
     respect to the Company is made;

  .  The Board's conclusion, based upon the advice of CFSB, that the size of
     the termination fee, and the circumstances when such fee is payable,
     were reasonable in light of the benefits of the Offer and the Merger;

  .  The belief, based in part upon the analysis of CSFB and the opinion of
     senior management, that it was unlikely that a third party would propose
     a transaction superior to the FedEx transaction;

  .  The course of negotiations between the parties, including the initial
     price indication given by FedEx on September 21, 2000 and the discussion
     that occurred on October 22, 2000 at which FedEx informed the Company
     that $28.13 per share represented FedEx's final offer;

  .  The fact that the Merger Agreement allows the Company's shareholders the
     option of receiving cash for their shares pursuant to the Offer, subject
     to certain conditions, or shares of FedEx common stock on a tax-free
     basis in the Merger;

  .  The high likelihood that the transactions contemplated by the Merger
     Agreement and the Offer will be consummated, particularly in light of
     FedEx's reputation, ability to finance the transaction, lack of any
     financing condition in the Merger Agreement and the ability to terminate
     the Offer and Merger Agreement only in limited circumstances;

  .  The support for the transaction by the Garrison Family, the Company's
     largest shareholder; and

  .  The other terms and conditions of the Offer and the Merger.

   The Board did not assign relative weights to the above factors or determine
that any factor was of particular importance. Rather the Board viewed its
position and recommendations as being based on the totality of the information
presented to and considered by it.

 Intent To Tender.

   Pursuant to the Voting Agreement, the Garrison Family has agreed to vote in
favor of the Merger. The Garrison Family has the right to tender, at its
option, up to 1 million Shares into the Offer. The Garrison Family

                                      17


has indicated its intention to exercise these tender rights. In addition,
under certain circumstances, if the Minimum Condition (as defined in the Offer
to Purchase) would not otherwise be met, FedEx has the right to require
members of the Garrison Family to tender up to an additional 1 million Shares
into the Offer, and members of the Garrison Family, at their option, may
tender additional Shares into the Offer, so long as the total number of Shares
tendered by the Garrison Family into the Offer (including any Shares that
FedEx has required members of the Garrison Family to tender into the Offer)
does not exceed 3.2 million in the aggregate. The members of the Garrison
Family who have signed the voting agreement own approximately 12.2 million
Shares, representing collectively approximately 37% of the currently
outstanding Shares.

   Although each of the Company's directors and executive officers will make
his own determination, based on individual and personal financial and other
circumstances, after reasonable inquiry and to the best of the Company's
knowledge, each executive officer and director of the Company currently
intends to either tender his Shares held of record or beneficially owned by
such person to the Purchaser in the Offer or vote his Shares in favor of the
Merger.

Item 5. Person/Assets, Retained, Employed, Compensated or Used.

   Pursuant to an engagement letter agreement dated October 4, 2000 (the
"Engagement Letter"), the Company retained DLJ to act as its exclusive
financial advisor to provide strategic advice with respect to the sale,
merger, consolidation or any other business combination in one or a series of
transactions involving the acquisition of a substantial amount of the
business, securities or assets of the Company. As a consequence of the merger
of DLJ with an affiliate of CSFB in early November 2000, the Company and DLJ
agreed that CFSB would deliver the opinion requested by the Company pursuant
to the Engagement Letter that the consideration to be received by the holders
of the Company common stock in the Offer and Merger is fair to such holders
(other than FedEx and its affiliates) from a financial point of view.

   As compensation for the services provided by DLJ and CFSB, the Company
agreed to pay DLJ (a) a retainer fee of $100,000, (b) a fee of $900,000, if
after being requested by the Company's Board to deliver an opinion as to the
fairness from a financial point of view of the consideration to be received by
the Company or its shareholders, as the case may be, in any proposed
transaction, DLJ notified the Company's Board that it was prepared to deliver
such opinion, irrespective of the conclusion reached therein, and (c) a fee
equal to .39% of the aggregate value of outstanding common stock of the
Company, plus the amount of any debt assumed, acquired, remaining outstanding,
retired or defeased or preferred stock redeemed or remaining outstanding in
connection with the proposed Merger and the transactions contemplated thereby;
less the amount paid by the Company pursuant to (a) and (b) above. In
addition, the Company also agreed, upon request by DLJ from time to time, to
reimburse DLJ promptly for all out-of-pocket expenses (including the
reasonable fees and expenses of counsel) incurred by DLJ in connection with
its engagement thereunder and to indemnify DLJ and certain related persons
(including its affiliate, CFSB) against certain liabilities in connection with
its engagement. In the past, DLJ and its affiliates have provided certain
financial and investment banking services to the Company and have received
compensation for such services.

   The Company selected DLJ as its financial advisor and agreed that CFSB may
provide the fairness opinion on behalf of its affiliate, DLJ, because each of
DLJ and CFSB is an internationally recognized investment banking firm that has
substantial experience providing strategic advice and services in connection
with mergers, acquisitions and similar transactions. As part of their
investment banking and financial advisory business, each of DLJ and CFSB is
continuously engaged in the valuation of businesses and securities in
connection with mergers and acquisitions, negotiated underwritings,
competitive biddings, secondary distributions of listed and unlisted
securities, private placements and valuations for corporate and other
purposes. In addition, each of DLJ and CFSB is a full service securities firm
engaged in securities trading, brokerage and financing activities. Each of DLJ
and CFSB has informed the Company that, in the ordinary course of their
trading and brokerage activities, they or their affiliates may at any time
hold long or short positions and may trade or otherwise effect transactions,
for their own accounts and the accounts of customers, in debt or equity
securities of the Company or FedEx.

                                      18


   Except as set forth above, neither the Company nor any person acting on its
behalf has or currently intends to employ, retain or compensate any other
person to make solicitations or recommendations to stockholders of the Company
on the Company's behalf with respect to the Offer and the Merger.

Item 6. Interest in Securities of the Subject Company.

   Except as described below, no transactions in Shares have been effected
during the past 60 days by the Company or, to the knowledge of the Company, by
any executive officer, director, affiliate or subsidiary of the Company.

   On October 31, 2000, Dennie Carey and Pat Reed purchased 54 and 145 Shares,
respectively, pursuant to the Company's ESPP at a purchase price per Share of
$13.7063.

   The following table sets forth Shares issued by the Company pursuant to
cash exercises of options during the past 60 days:



                                             Number of   Date of  Exercise Price
      Name                                 Shares Issued Issuance   per Share
      ----                                 ------------- -------- --------------
                                                         
      Frank Conner........................      400      10/30/00    $ 6.3125
      Frank Conner........................     2000      10/30/00    $ 7.6250
      Frank Conner........................     2000      10/30/00    $13.0625
      Ken Reeves..........................     1200      11/09/00    $13.4375
      Ken Reeves..........................     2000      11/09/00    $11.1600
      Ken Reeves..........................     1600      11/09/00    $10.5000
      Ken Reeves..........................     2000      11/09/00    $13.0625
      Ken Reeves..........................     4000      11/09/00    $ 9.6875


Item 7. Purposes of the Transaction and Plans or Proposals.

   The Company is not currently undertaking or engaged in any negotiations in
response to the Offer that relate to (1) a tender offer for or other
acquisition of the Company's securities by the Company, any subsidiary of the
Company or any other person; (2) an extraordinary transaction, such as a
merger, reorganization or liquidation, involving the Company or any subsidiary
of the Company; (3) a purchase, sale or transfer of a material amount of
assets of the Company or any subsidiary of the Company; or (4) any material
change in the present dividend rate or policy, or indebtedness or
capitalization of the Company.

   There are no transactions, resolutions of the Board, agreements in
principle, or signed contracts in response to the Offer that relate to one or
more of the events referred to in the preceding paragraph.

Item 8. Additional Information.

   Information Statement Provided Pursuant to Section 14(f) of the Exchange
Act. The Information Statement attached hereto as Annex I is being furnished
to the Company's shareholders in connection with the possible designation by
FedEx, pursuant to the Merger Agreement, of certain individuals to be
appointed to the Company's Board other than at a meeting of the Company's
shareholders.

   Rights Agreement. The Company and EquiServe Trust Company, N.A. are parties
to a First Amended and Restated Rights Agreement (the "Rights Agreement")
pursuant to which the Company authorized and declared a dividend distribution
of one common stock purchase right for each outstanding share of common stock
to shareholders of record at the close of business on August 17, 1998
("Right"), and authorized the issuance of one Right with each future share of
common stock issued by the Company before the Distribution Date (as defined in
the Rights Agreement). The Rights attach to all certificates representing
shares of outstanding common stock of the Company and are not exercisable or
transferable apart from the common stock until ten days after, among other
things, another person or group of persons acquires 15 percent or more of the
Company's outstanding common stock or commences a tender or exchange offer for
at least 15 percent of the Company's common stock.

                                      19


   On November 12, 2000, the Rights Agreement was amended (the "Amendment to
Rights Agreement") in order to, among other things, (i) ensure that neither
FedEx nor Purchaser would be an Acquiring Person (as defined in the Rights
Agreement); and (ii) revise the definition of the "Expiration Date" (as
defined in the Rights Agreement) to include the time immediately prior to the
Effective Time. A copy of the Amendment to Rights Agreement is filed herewith
as Exhibit (e)(4) and is incorporated herein by reference.

   Dissenters' Rights. No dissenters' rights are available to holders of
Shares in connection with the Offer. However, if the Merger is consummated,
holders of Shares who have not voted in favor of the Merger may have certain
rights under the ABCA to dissent and demand payment of the fair value of their
Shares. Such rights, if the statutory procedure is followed and dissenting
holders and the Company do not otherwise agree on the value of the holder's
shares, could lead to a judicial determination of the fair value required to
be paid to such dissenting holders for their Shares. The ABCA defines "fair
value" as the value of the Shares immediately before consummation of the
Merger, excluding any appreciation or depreciation in anticipation of the
Merger unless exclusion would be unequitable, but does not prescribe a method
for determining fair value. Consequently, any judicial determination of the
fair value of Shares could be based upon any valuation method or combination
of methods the court deems appropriate, and the value so determined could be
more or less than the consideration paid in the Merger. If any holder of
Shares who demands payment under the ABCA fails to perfect, or effectively
waives, his or her right to payment, as provided in the ABCA, each of the
Shares of such holder will be converted into the consideration paid in the
Merger in accordance with the Merger Agreement. Shareholders who wish to
exercise dissenters' rights in connection with the Merger do not need to take
any action at this time. If the Offer is consummated, the Company will
distribute to the remaining shareholders additional information on the
procedures to be followed to perfect their dissenters' rights.

   Regulatory Approvals. The Company is not aware of any licenses or
regulatory permits that appear to be material to the business of the Company
that might be adversely affected by the acquisition of the Shares in the
Offer. In addition, except as set forth below, the Company is not aware of any
filings, approvals or other actions by or with any governmental authority or
administrative or regulatory agency that would be required for the acquisition
or ownership of the Shares by Purchaser. Should any such approval or other
action be required, the Company, FedEx and Purchaser expect to seek that
approval or action, except as described below in "Arkansas Investor Protection
Takeover Act and Other State Takeover Statutes." However, the Company cannot
be certain that it, FedEx and Purchaser would be able to obtain such approval
or action required, with or without substantial conditions, or that adverse
consequence might not result to the Company's business or that certain parts
of the Company's business might not have to be disposed of or held separate in
order to obtain the required approval or action. In that event, FedEx and
Purchaser may not be required to purchase any Shares under the Offer.

   Arkansas Investor Protection Takeover Act and Other State Takeover
Statutes. The Arkansas Investor Protection Takeover Act, codified at Arkansas
Code Annotated Section 23-43-101 et seq. (the "Act"), prohibits a third party
from making a takeover offer for shares of a corporation organized under the
laws of the State of Arkansas unless (i) the offer is registered with the
Arkansas Securities Department (the "Department"), or (ii) an order of
exemption is granted by the commissioner of the Department (the
"Commissioner"). The Offer qualifies as a "takeover offer." However, FedEx
requested that the Commissioner issue an order exempting the Offer from the
provisions of the Act. The Commissioner granted an order of exemption on
November 16, 2000.

   A number of states have adopted laws which purport, to varying degrees, to
apply to attempts to acquire corporations that have substantial assets,
principal executive offices or principal places of business or whose business
operations otherwise have substantial economic effects in, such states. The
Company, directly or through subsidiaries, conducts business in a number of
states throughout the Untied States, some of which have enacted such laws.
Except for the Act, the Company does not know whether any of these laws will,
by their terms, apply to the Offer or any merger or other business combination
between the Company and Purchaser or
FedEx and the Company has not complied with any such laws. To the extent that
certain provisions of these laws purport to apply to the Offer or any such
merger or other business combination, the Company, based on legal precedent,
believes that there are reasonable bases for contesting such laws.


                                      20


   If any government official or third party should seek to apply any state
takeover law to the Offer or any merger or other business combination between
the Company and Purchaser or FedEx, FedEx has stated that it will take such
action as then appears desirable, which action may include challenging the
applicability or validity of such statute in appropriate proceedings. In the
event it is asserted that one or more state takeover statutes is applicable to
the Offer or any such merger or other business combination and an appropriate
court does not determine that it is inapplicable or invalid as applied to the
Offer or any such merger or other business combination, Purchaser might be
required to file certain information with, or to receive approvals from, the
relevant state authorities or holders of Shares, and Purchaser might be unable
to accept for payment or pay for Shares tendered pursuant to the Offer, or be
delayed in continuing or consummating the Offer or any such merger or other
business combination. In such case, FedEx and Purchaser may not be obligated
to accept for payment or pay for any tendered Shares.

   Antitrust. Under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended (the "HSR Act"), and the rules that have been promulgated
thereunder by the Federal Trade Commission (the "FTC"), certain acquisition
transactions may not be consummated unless certain information has been
furnished to the Antitrust Division of the Department of Justice (the
"Antitrust Division") and the FTC and certain waiting period requirements have
been satisfied. The purchase of Shares pursuant to the Offer is subject to
such requirements.

   Pursuant to the requirements of the HSR Act, the Company and FedEx each
filed a Notification and Report Form with respect to the Offer and Merger with
the Antitrust Division and the FTC on November 14, 2000. The initial waiting
period applicable to the purchase of Shares pursuant to the Offer will expire
at 11:59 p.m., Eastern Standard Time, on November 29, 2000, which is the
fifteenth calendar day following filing of the Notification and Report Form by
FedEx. However, prior to such time, the Antitrust Division or the FTC may
extend the waiting period by requesting additional information or documentary
material relevant to the Offer from FedEx or the Company. If such a request is
made, the waiting period will be extended until 11:59 p.m., Eastern Standard
Time, on the tenth day after FedEx's or the Company's, as applicable,
substantial compliance with such request. Thereafter, such waiting period can
be extended only by court order. A request has been made pursuant to the HSR
Act for early termination of the waiting period applicable to the Offer. There
can be no assurance, however, that the 15-day HSR Act waiting period will be
terminated early.

   Shares will not be accepted for payment or paid for pursuant to the Offer
until the expiration or earlier termination of the applicable waiting period
under the HSR Act. Any extension of the waiting period will not give rise to
any withdrawal rights not otherwise provided for by applicable law. If
Purchaser's acquisition of Shares is delayed pursuant to a request by the
Antitrust Division or the FTC for additional information or documentary
material pursuant to the HSR Act, the Offer may be extended.

   The Antitrust Division and the FTC frequently scrutinize the legality under
the antitrust laws of transactions such as the acquisition of Shares by
Purchaser pursuant to the Offer. At any time before or after the consummation
of any such transactions, the Antitrust Division or the FTC could take such
action under the antitrust laws as it deems necessary or desirable in the
public interest, including seeking to enjoin the purchase of Shares pursuant
to the Offer or seeking divestiture of the Shares so acquired or divestiture
of substantial assets of FedEx or the Company. Under certain circumstances,
Purchaser may not be required to proceed with the Offer if divestiture of
substantial assets of FedEx or the Company would materially harm the business
of such entities.

   Private parties (including individual states) may also bring legal actions
under the antitrust laws. The Company does not believe that the consummation
of the Offer will result in a violation of any applicable antitrust laws.
However, there can be no assurance that a challenge to the Offer on antitrust
grounds will not be made, or if a challenge on antitrust grounds is made, what
the result will be.

                                      21


Item 9. Exhibits.

   The following Exhibits are filed herewith:



 Exhibit
   No.                                 Description
 -------                               -----------
      
 (a)(1)  Offer to Purchase, dated November 20, 2000 (incorporated by reference
         to Exhibit (a)(1) to the Schedule TO filed by Purchaser on November
         20, 2000).
 (a)(2)  Form of Letter of Transmittal (incorporated by reference to Exhibit
         (a)(2) to the Schedule TO filed by Purchaser on November 20, 2000).
 (a)(3)  Letter to holders of American Freightways Corporation common stock,
         dated November 20, 2000 (included with Schedule 14D-9 mailed to
         shareholders).*
 (a)(4)  Fairness Opinion of Credit Suisse First Boston Corporation, dated
         November 12, 2000 (included as Annex II hereto).*
 (a)(5)  Joint Press Release of American Freightways Corporation and FedEx
         Corporation, dated November 13, 2000 (incorporated by reference to
         Exhibit (a)(99) to the Company's Form 10-Q for the period ended
         September 30, 2000, filed by the Company on November 14, 2000).
 (e)(1)  Agreement and Plan of Merger, dated as of November 12, 2000, among FDX
         Inc., FedEx Corporation (incorporated by reference to Exhibit (a)(2)
         to the Company's Form 10-Q for the period ended September 30, 2000,
         filed by the Company on November 14, 2000).
 (e)(2)  Irrevocable Proxy and Voting Agreement, dated as of November 12, 2000,
         among FDX Inc., FedEx Corporation and certain shareholders of American
         Freightways Corporation.
 (e)(3)  Form of Employment Agreement.
 (e)(4)  First Amendment to the First Amended and Restated Rights Agreement,
         dated November 12, 2000, among American Freightways Corporation and
         EquiServe Trust Company, N.A.
 (e)(5)  Information Statement of the Company (included as Annex I to this
         Statement).*

- --------
*Included in copy mailed to shareholders.

                                       22


                                   SIGNATURE

   After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and
correct.

                                          American Freightways Corporation

                                          By: /s/ F. S. (Sheridan) Garrison
                                              ---------------------------------
                                                F. S. (Sheridan) Garrison
                                                        Chairman

Dated: November 20, 2000

                                      23


                                                                        ANNEX I

                       INFORMATION STATEMENT PURSUANT TO
                   SECTION 14(f) OF THE SECURITIES EXCHANGE
                     ACT OF 1934 AND RULE 14f-1 THEREUNDER

 NO VOTE OR OTHER ACTION OF AMERICAN FREIGHTWAYS CORPORATION'S SHAREHOLDERS IS
                 REQUIRED IN CONNECTION WITH THIS INFORMATION
        STATEMENT. NO PROXIES ARE BEING SOLICITED AND YOU ARE REQUESTED
            NOT TO SEND A PROXY TO AMERICAN FREIGHTWAYS CORPORATION

                                    GENERAL

   This Information Statement is being mailed on or about November 20, 2000 as
part of the Solicitation/Recommendation Statement on Schedule 14D-9 (the
"Schedule 14D-9") of American Freightways Corporation, an Arkansas corporation
(the "Company"), to the holders of record of shares of common stock, par value
$0.01 per share, of the Company (the "Shares"). Capitalized terms used and not
otherwise defined herein shall have the meanings set forth in the Schedule
14D-9. You are receiving this Information Statement in connection with the
possible election of persons designated by FedEx (as defined below) to the
Board of Directors of the Company. Such designation is to be made pursuant to
an Agreement and Plan of Merger, dated November 12, 2000 (the "Merger
Agreement"), among FedEx Corporation, a Delaware corporation ("FedEx"), FDX,
Inc., a Delaware corporation (the "Purchaser"), and the Company.

   The Merger Agreement provides that, after the purchase by the Purchaser
pursuant to the Offer, FedEx will be entitled to designate the number of
directors, rounded up to the next whole number, on the Company's Board (the
"FedEx Designees") as will give FedEx representation on the Company's Board
equal to the product of (i) the total number of directors on the Company's
Board and (ii) the percentage that the aggregate number of Shares beneficially
owned by FedEx bears to the total number of Shares then outstanding. The
Company has agreed in the Merger Agreement to take all action necessary to
cause the FedEx Designees to be elected to the Company's Board, including, in
connection therewith, increasing the size of the Company's Board or securing
the resignations of incumbent directors.

   You are urged to read this Information Statement carefully. You are not,
however, required to take any action in connection with this Information
Statement. The information contained in this Information Statement concerning
FedEx and the Purchaser has been furnished to the Company by FedEx. The
Company assumes no responsibility for the accuracy or completeness of such
information.

                       VOTING SECURITIES OF THE COMPANY

   The Shares belong to the only class of equity securities of the Company
outstanding which is entitled to vote at a meeting of shareholders of the
Company. Each Share is entitled to one vote. As of the close of business on
November 10, 2000, there were 32,521,705 Shares outstanding.

                   BOARD OF DIRECTORS AND EXECUTIVE OFFICERS

   The Board of Directors of the Company currently consists of nine members.
FedEx has informed the Company that FedEx will choose the FedEx Designees from
the directors and executive officers of FedEx and Purchaser listed in the
Schedule I attached hereto. FedEx has also informed the Company that each of
the individuals listed in the Schedule I has consented to act as a director of
the Company if appointed or elected. The business address of each person
listed on the Schedule is 942 South Shady Grove Road, Memphis, Tennessee


38120. FedEx and the Purchaser have advised the Company that none of the
individuals referenced in Schedule I (i) is currently a director of, or holds
any position with, the Company, (ii) has any familial relationship with any
directors or executive officers of the Company or any other FedEX Designee or
(iii) to the knowledge of FedEx and the Purchaser, beneficially owns any
equity securities (or rights to acquire any such securities) of the Company.
The Company has been advised by FedEx and the Purchaser that, to FedEx's and
the Purchaser's knowledge, none of the individuals referenced above has been
involved in any (y) transaction with the Company or any of its directors,
executive officers or affiliates that are required to be disclosed pursuant to
the rules and regulations of the Securities and Exchange Commission (the
"SEC"), except as may be disclosed herein, in the Schedule 14D-9, Schedule TO,
or this Information Statement, or (z) legal proceeding required to be
disclosed pursuant to the rules and regulations of the SEC in this Information
Statement. It is expected that FedEx Designees may assume office at any time
following the purchase by Purchaser of a specified minimum number of Shares
pursuant to the Offer, and that, upon assuming office, the FedEx Designees
will thereafter constitute at least a majority of the Board. This step will be
accomplished at a meeting or by written consent of the Board providing that
the size of the Board will be increased and/or sufficient numbers of current
directors will resign such that, immediately following such action, the number
of vacancies to be filled by the FedEx Designees will constitute at least a
majority of the available positions on the Board. It is currently not known
which of the current directors of the Company will resign.

                       CURRENT DIRECTORS OF THE COMPANY

   The Board of Directors presently consists of nine members divided into
three classes, with three directors in each class serving three-year terms
(and, in each case, until their respective successors are duly elected and
qualified). The terms of the directors in Class I will expire at the 2002
Annual Meeting, the terms of the directors in Class II will expire at the 2003
Annual Meeting and the terms of the directors in Class III will expire at the
2001 Annual Meeting.

Class II Directors--Terms Ending in 2003

   Tom Garrison has been with American Freightways since 1982 and serves as
President, Chief Executive Officer and as a Director. He assumed the
responsibility of President on July 1, 1998 and the additional responsibility
of Chief Executive Officer on July 1, 1999.

   Frank Conner has been the Executive Vice President--Accounting & Finance
and Chief Financial Officer since November 1995, and a Director since March
1989. He joined American Freightways in 1994 as Vice President--Special
Projects. He previously was the Executive Vice President/General Manager of
McKesson Service Merchandising, Harrison, Arkansas. He had been with McKesson
Service Merchandising for over fifteen years, including serving as its Chief
Financial Officer. Mr. Conner, a CPA, was with the firm of Peat Marwick
Mitchel & Co. for seven years prior to his joining McKesson.

   T.J. Jones has served on the Board of Directors since March 1989. Mr. Jones
helped organize the Company in 1982 and previously served as the Company's
Executive Vice President-Operations until retirement in 1994.

Class III Directors--Terms Ending in 2001

   F.S. (Sheridan) Garrison founded American Freightways in 1982, serving as
its President as well as Chief Executive Officer and Chairman, the latter
being the position he currently holds. Mr. Garrison serves his industry as a
member of the board of directors of both American Trucking Association and
Arkansas Trucking Association.

   Ken Reeves, a Director since March 1989, has been an attorney-at-law in
private practice since 1973 in Harrison, Arkansas. Mr. Reeves has served on
the Arkansas Supreme Court Committee on Professional Conduct since 1990 and is
currently Chairman of the Committee. He is a Director of Regions Bank of
Harrison, Arkansas.

                                      I-2


   Doyle Z. Williams, a Director since November 1997, is the Dean of the Sam
M. Walton College of Business Administration and the holder of the Sam M.
Walton Leadership Chair at the University of Arkansas. The College houses the
Supply Chain Management Research Center, which is involved with transportation
and logistics issues. Dr. Williams was the founding Dean of the School of
Accounting at the University of Southern California. Prior to that he served
as coordinator for the area of accounting at Texas Tech University. He is also
a Director of McIlroy Bank & Trust.

Class I Directors--Terms Ending in 2002

   Will Garrison has been with American Freightways since 1986 and serves as
Secretary/Treasurer, Corporate Vice President, and Chief Operating Officer. He
assumed the responsibility of Secretary/Treasurer and Corporate Vice President
on July 1, 1998 and the additional responsibility of Chief Operating Officer
on July 1, 1999.

   John Paul Hammerschmidt has served on the Board of Directors since May
1997. Mr. Hammerschmidt served twenty-six years as the U. S. Representative
for the Third District of Arkansas until his retirement in 1993. He was the
ranking minority member of the House Transportation Infrastructure Committee
and the House Veterans Affairs Committee. He served on various sub-committees
and co-authored the Intermodal Surface Transportation Efficiency Act (ISTEA).
Mr. Hammerschmidt also serves as a member of the Board of Directors of the
following companies: Dillard's Department Stores, Inc., Southwestern Energy
Co., First Federal Bancshares of Arkansas, the Metropolitan Washington Airport
Authority and Ozark Aircraft Systems.

   William P. Stiritz has served on the Board of Directors since April 1999.
Mr. Stiritz served Ralston Purina Company for the past thirty-five years, as
its Chief Executive Officer from 1981 until 1997 and its Chairman from 1981
until present. Mr. Stiritz also serves as Chairman of the Board of Directors,
Chief Executive Officer and President of Agribrands International and Chairman
of the Board of Directors of Ralcorp Holdings, Inc. In addition, he serves on
the Board of Directors of the following public companies: Angelica
Corporation, Ball Corporation, May Department Stores Company, Reinsurance
Group of America and Vail Resorts, Inc.

   Messrs. Tom and Will Garrison are sons of Mr. F.S. (Sheridan) Garrison.
Except for the foregoing, no family relationships exist among any of the
persons named above.

                         BOARD COMMITTEES AND MEETINGS

   The Company presently does not have a standing nominating committee. The
Board of Directors nominates persons for director. The Board will consider
suggestions by shareholders for names of nominees as Class III Directors of
the Board of Directors for the 2001 Annual Meeting, provided that such
suggestions are made in writing and delivered to Mr. Will Garrison,
Secretary/Treasurer of the Company, on or before December 20, 2000.

   The Company has a standing Compensation Committee, which is currently
composed of Mr. T.J. Jones, Mr. John Paul Hammerschmidt, Dr. Doyle Z. Williams
and Mr. William P. Stiritz. The Compensation Committee is charged with, among
other things, the supervision and administration of the Company's employee
benefit plans and the review and approval of the Company's executive officers'
salaries, as well as review of the general wage policy of the Company.

   The Company has an Audit Committee which is currently composed Mr. T.J.
Jones, Mr. John Paul Hammerschmidt, Dr. Doyle Z. Williams and Mr. William P.
Stiritz. The Audit Committee recommends candidates to serve as the Company's
auditors, reviews the reports of the Company's auditors and has the authority
to investigate the financial and business affairs of the Company.

   During the past fiscal year, the Board of Directors met on five occasions,
the Compensation Committee met on two occasions and the Audit Committee met on
three occasions. Each Director attended at least 75% of the total of such
meetings of the Board and committees of the Board on which such Director
served.

                                      I-3


                            PRINCIPAL SHAREHOLDERS

   As of November 10, 2000, the only shareholders known by the Company to own,
directly or indirectly, more than 5% of the Company's common stock, the only
class of the Company's capital stock presently outstanding, are reflected in
the following table:



                                                        Number of
                                                          Shares     Percent of
                                                       Beneficially Total Shares
                      Name and Address                  Owned (c)       (d)
                      ----------------                 ------------ ------------
                                                              
      F.S. (Sheridan) Garrison (a)....................  10,919,708      32.0%
      Dimensional Fund Advisors (b)...................   1,956,050       5.8%
      Tom Garrison (a)................................     291,204       0.9%
      Will Garrison (a)...............................     133,068       0.4%

- --------
(a) The address of this shareholder is 2200 Forward Drive, Harrison, Arkansas
    72601. Amounts shown include shares held under trust or otherwise by or
    for the benefit of certain immediate family members.
(b) The address of this shareholder is 1299 Ocean Avenue, 11th Floor, Santa
    Monica, California 90401.
(c) Includes shares issuable upon exercise of options which are currently
    exercisable or which will become exercisable within 60 days from the
    record date.
(d) Percentage based upon 34,115,685 shares of the Company's common stock as
    of November 10, 2000. Includes 32,521,705 shares outstanding and 1,593,980
    shares issuable upon exercise of options which are currently exercisable
    or which will become exercisable within 60 days from the record date.

   On November 12, 2000, FedEx Corporation, a Delaware corporation, entered
into an Irrevocable Proxy and Voting Agreement with certain shareholders who
in the aggregate own approximately 37% of the outstanding shares of the
Company's common stock. For a description of the voting agreement, see "The
Voting Agreement" under Item 3 of the Schedule 14D-9 to which this Information
Statement is attached.


                                      I-4


                       SECURITY OWNERSHIP OF MANAGEMENT

   The following table sets forth the name, age, term of office as director of
the Company, and ownership of the Company's common stock with respect to each
member of the Board of Directors, the executive officers of the Company named
under the caption "Executive Compensation" and the directors and officers of
the Company as a group as of November 10, 2000.



                                          Year First
                                          Serving As   Shares
                Name                  Age  Director  Owned (a)  Percentage (b)
                ----                  --- ---------- ---------- --------------
                                                    
F.S. (Sheridan) Garrison.............  66    1982    10,919,708      32.0%
Tom Garrison.........................  40    1982       291,204       0.9%
Will Garrison........................  37    1995       133,068       0.4%
Frank Conner.........................  50    1989             *         *
John Paul Hammerschmidt..............  78    1997             *         *
T.J. Jones...........................  63    1989             *         *
Ken Reeves...........................  52    1989             *         *
William P. Stiritz...................  66    1999       420,000       1.2%
Doyle Z. Williams....................  60    1997             *         *
Pat Reed.............................  42                     *         *
All directors and executive officers
 (including 14 persons)..............                11,978,433      35.1%

- --------
(a)  Includes shares issuable upon exercise of options which are currently
     exercisable or which will become exercisable within 60 days from the
     record date.
(b)  Percentage based upon 34,115,685 shares of the Company's common stock as
     of November 10, 2000. Includes 32,521,705 shares outstanding and
     1,593,980 shares issuable upon exercise of options which are currently
     exercisable or which will become exercisable within 60 days from November
     10, 2000.
*  Denotes ownership of less than 1% of the total shares of common stock.

                             CERTAIN TRANSACTIONS

   Any transactions between the Company and its officers, directors, principal
shareholders or other affiliates will be approved by a majority vote of the
Company's disinterested directors and will continue to be on terms no less
favorable to the Company than could be obtained from unaffiliated third
parties.

   Certain members of the Company's management and certain members of the
Company's Board of Directors have interests in the transactions contemplated
by the Merger Agreement. These interests, which are described in the Schedule
14D-9 to which this Information Statement is attached, may present those
individuals with certain conflicts of interest.

            SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

   Under the Securities Exchange Act of 1934, the Company's executive
officers, directors and those persons who own more than ten percent of the
Company's common stock are required to file reports of ownership and
subsequent changes of ownership with the Securities and Exchange Commission.
Specific due dates have been established for these reports, and the Company is
required to disclose in this Information Statement any failure to file by
these dates. Based upon a review of the copies of such reports filed with the
Commission and written representations from the Company's directors and
executive officers, the Company believes that during the preceding year all
filing requirements applicable to executive officers and directors have been
met.

                                      I-5


                 EXECUTIVE COMPENSATION AND OTHER INFORMATION

   The following table shows all of the cash compensation paid or to be paid
by the Company, as well as certain other compensation paid, to the Chief
Executive Officer and the four highest paid executive officers of the Company
for such period in all capacities in which they served:

                          SUMMARY COMPENSATION TABLE



                                     Annual         Long-Term      All Other
                                Compensation (a)   Compensation   Compensation
                                ---------------- ---------------- ------------
                                                      Awards
    Name and Position      Year  Salary ($)(b)   Options/SARs (#)    ($)(c)
    -----------------      ---- ---------------- ---------------- ------------
                                                      
F.S. (Sheridan) Garrison   1999     325,000          50,000/0        6,400
 Chairman                  1998     295,000          50,000/0        6,400
                           1997     270,000               0/0        9,125
Tom Garrison               1999     282,500          30,000/0        4,000
 President and CEO         1998     210,000          20,000/0        6,400
                           1997     185,000          20,000/0        4,625
Will Garrison
 COO, Corporate Vice       1999     260,000          30,000/0        6,400
 President                 1998     210,000          20,000/0        6,400
 and Secretary/Treasurer   1997     185,000          20,000/0        7,000
Pat Reed                   1999     210,000          12,000/0        6,400
 Executive Vice President  1998     150,000           5,000/0        5,438
 Operations                1997     121,667           5,000/0          844
Frank Conner
 Executive Vice President  1999     200,000          15,000/0        6,400
 Accounting & Finance and  1998     190,000          15,000/0        6,400
 CFO                       1997     180,000          15,000/0        6,875

- --------
(a)  Does not include the value of perquisites and other benefits where the
     aggregate value of such compensation, if any, does not exceed the lesser
     of $50,000 or 10% of the total amount of annual salary and bonus for any
     named executive.
(b)  Amounts shown include cash and non-cash compensation earned and received
     by executive officers as well as amounts earned but deferred at the
     election of those officers.
(c)  Amounts consist solely of Company contributions to executives' accounts
     under the Company's defined contribution plan.

Director Compensation

   Non-employee directors are paid an annual retainer of $24,000 plus $1,000
per board meeting attended and $500 per committee meeting attended or $1,000
per committee meeting if serving as chairman. The Company reimburses all
directors for their travel expenses. The Company has adopted a non-employee
elected director stock option plan and a non-employee appointed director stock
option plan. The plans provide for the automatic granting of 6,000 options to
purchase shares of the Company's common stock at the fair market value of such
common stock on January 2 of each year or at the date such director was
appointed to the Board. The options vest and become exercisable at 33 1/3% per
year for three years and may not be exercised later than ten years after the
date of grant. During 1999, the Company granted to Mr. John Paul
Hammerschmidt, Mr. T. J. Jones, Mr. Ken Reeves and Dr. Doyle Z. Williams
options to acquire 6,000 shares of the Company's common stock each at a
purchase price of $11.16 per share. Mr. William P. Stiritz was granted options
to acquire 6,000 shares of the Company's common stock each at a purchase price
of $14.97 per share. Except as indicated above, the Company's officers are not
compensated for their services as directors.

                                      I-6


Employment Agreements

   The Company has entered, or intends to enter, into employment agreements
with certain employees. For a discussion of these employment agreements, see
"Employment Agreements" under Item 3 of the Schedule 14D-9 to which this
Information Statement is attached.

Options/Stock Appreciation Right ("SAR") Grants

   The following table sets forth information with respect to the named
executives concerning options granted in the last fiscal year and their
potential realizable value:

                    OPTIONS/SAR GRANTS IN LAST FISCAL YEAR


                                                                            Potential
                                                                        Realizable Value
                                       Individual Grants                at Assumed Annual
                         ----------------------------------------------  Rates of Stock
                                      % of Total                              Price
                          Number of   Option/SARs                       Appreciation for
                          Securities  Granted to   Exercise              Option Term (c)
                          Underlying   Employees   or Base              -----------------
                         Options/SARs  in Fiscal    Price    Expiration   5%       10%
        Name (a)         Granted (#)    Yr (%)    ($/Sh) (b)    Date      ($)      ($)
        --------         ------------ ----------- ---------- ---------- ------- ---------
                                                              
F.S. (Sheridan)
 Garrison...............    50,000        7.4       12.69     1/20/09   399,034 1,011,230
Tom Garrison............    30,000        4.5       11.16     1/04/09   210,554   533,585
Will Garrison...........    30,000        4.5       11.16     1/04/09   210,554   533,585
Pat Reed................    12,000        1.8       11.16     1/04/09    84,222   213,434
Frank Conner............    15,000        2.2       11.16     1/04/09   105,277   266,792

- --------
(a)  Options granted in 1999 are exercisable starting 12 months after the
     grant date with 20% of the shares covered thereby becoming exercisable at
     that time and with an additional 20% of the option shares vesting and
     becoming exercisable on each successive anniversary date with full
     vesting occurring on the fifth anniversary date. Unvested portions of
     options are forfeited upon termination of employment. Under the terms of
     the Stock Option Plans, the Board of Directors retains discretion subject
     to plan limits to modify terms of outstanding options. The options were
     granted for a term of 10 years subject to earlier termination in certain
     events related to termination of employment. The options qualify as
     "incentive stock options" under the Internal Revenue Code, with the
     exception of the options granted to Mr. F.S. (Sheridan) Garrison.

(b)  The exercise price reflects the fair market value of the underlying
     shares on the grant date. The exercise price may be paid by delivery of
     shares, subject to certain conditions and limitations.

(c)  As required by rules of the Securities and Exchange Commission, potential
     values stated are based on the prescribed assumption that the Company's
     common stock will appreciate in value from the date of grant to the end
     of the option term (ten years from the date of grant) at annualized rates
     of 5% and 10% (total appreciation of 63% and 159%), respectively, and
     therefore are not intended to forecast possible future appreciation, if
     any, in the price of the Company's common stock.

                                      I-7


   The following table sets forth information with respect to the named
executives concerning options granted through November 10 of fiscal 2000 and
their potential realizable value:

             OPTIONS/SAR GRANTS THROUGH NOVEMBER 10 OF FISCAL 2000


                                                                            Potential
                                                                        Realizable Value
                                       Individual Grants                at Assumed Annual
                         ----------------------------------------------  Rates of Stock
                                      % of Total                              Price
                          Number of   Option/SARs                       Appreciation for
                          Securities  Granted to   Exercise              Option Term (c)
                          Underlying   Employees   or Base              -----------------
                         Options/SARs  in Fiscal    Price    Expiration   5%       10%
        Name (a)         Granted (#)    Yr (%)    ($/Sh) (b)    Date      ($)      ($)
        --------         ------------ ----------- ---------- ---------- ------- ---------
                                                              
F.S. (Sheridan)
 Garrison...............    50,000        7.4       16.34     1/01/10   513,807 1,302,088
Tom Garrison............    30,000        4.4       15.81     1/03/10   298,285   755,912
Will Garrison...........    30,000        4.4       15.81     1/03/10   298,285   755,912
Pat Reed................    15,000        2.2       15.81     1/03/10   149,142   377,956
Frank Conner............    15,000        2.2       15.81     1/03/10   149,142   377,956

- --------
(a)  Options granted in 2000 are exercisable starting 12 months after the
     grant date with 20% of the shares covered thereby becoming exercisable at
     that time and with an additional 20% of the option shares vesting and
     becoming exercisable on each successive anniversary date with full
     vesting occurring on the fifth anniversary date. Unvested portions of
     options are forfeited upon termination of employment. Under the terms of
     the Stock Option Plans, the Board of Directors retains discretion subject
     to plan limits to modify terms of outstanding options. The options were
     granted for a term of 10 years subject to earlier termination in certain
     events related to termination of employment. The options qualify as
     "incentive stock options" under the Internal Revenue Code, with the
     exception of the options granted to Mr. F.S. (Sheridan) Garrison.
(b) The exercise price reflects the fair market value of the underlying shares
    on the grant date. The exercise price may be paid by delivery of shares,
    subject to certain conditions and limitations.
(c) As required by rules of the Securities and Exchange Commission, potential
    values stated are based on the prescribed assumption that the Company's
    common stock will appreciate in value from the date of grant to the end of
    the option term (ten years from the date of grant) at annualized rates of
    5% and 10% (total appreciation of 63% and 159%), respectively, and
    therefore are not intended to forecast possible future appreciation, if
    any, in the price of the Company's common stock.

Option/SAR Exercises and Holdings

   The following table sets forth information with respect to the named
executives concerning exercise of options during the last fiscal year and
unexercised options and SARs held as of the end of the fiscal year:

             AGGREGATED OPTIONS/SAR EXERCISES IN LAST FISCAL YEAR
                         AND FY-END OPTION/SAR VALUES



                                              Number of Securities     Value of
                                                   Underlying       Unexercised In-
                                                  Unexercised      the-Money Options
                           Shares             Options and SARs at   and SARs at FY-
                         Acquired on  Value   FY-End Exercisable/  End Exercisable/
                          Exercise   Realized  Unexercisable (#)   Unexercisable ($)
          Name               (#)     ($) (a)          (b)                 (c)
          ----           ----------- -------- -------------------- -----------------
                                                       
F.S. (Sheridan)
 Garrison...............        0          0    580,000/100,000    1,627,755/434,920
Tom Garrison............   29,000    336,938       3,600/62,800        2,350/332,606
Will Garrison...........   18,600    214,038      25,200/62,800      100,759/332,606
Pat Reed................    2,400     26,213       1,000/19,400        5,188/101,977
Frank Conner............        0          0      23,400/40,500      111,710/217,620


                                      I-8


- --------
(a) Market price of underlying securities at exercise date, minus exercise or
    base price of "in the money" options.
(b) Unexercised options include certain options granted under the Company's
    1989 Stock Option Plan which are due to expire May 2001 and February 2002.
(c) Market value of the Company's common stock at December 31, 1999 was $16.19
    per share and was used to calculate the value.

   The following table sets forth information with respect to the named
executives concerning exercise of options through November 10 of fiscal 2000
and unexercised options and SARs held as of November 10, 2000:

      AGGREGATED OPTIONS/SAR EXERCISES THROUGH NOVEMBER 10 OF FISCAL 2000
                 AND OPTION/SAR VALUES AS OF NOVEMBER 10, 2000



                                              Number of Securities     Value of
                                                   Underlying       Unexercised In-
                                                  Unexercised      the-Money Options
                           Shares             Options and SARs at   and SARs at FY-
                         Acquired on  Value   FY-End Exercisable/  End Exercisable/
                          Exercise   Realized  Unexercisable (#)   Unexercisable ($)
          Name               (#)     ($) (a)          (b)                 (c)
          ----           ----------- -------- -------------------- -----------------
                                                       
F.S. (Sheridan)
 Garrison...............        0          0    610,000/120,000    2,423,100/484,775
Tom Garrison............        0          0      20,400/76,000      110,540/356,985
Will Garrison...........        0          0      40,000/76,000      232,040/356,985
Pat Reed................        0          0       5,600/29,800       36,829/122,452
Frank Conner............    4,400     25,125      30,500/44,000      178,895/220,618

- --------
(a) Market price of underlying securities at exercise date, minus exercise or
    base price of "in the money" options.
(b) Unexercised options include certain options granted under the Company's
    1989 Stock Option Plan which are due to expire May 2001 and February 2002.
(c) Market value of the Company's common stock at November 10, 2000 was $17.50
    per share and was used to calculate the value.

                     REPORT OF THE COMPENSATION COMMITTEE
                            (for last fiscal year)

   The Compensation Committee of the Company's Board of Directors consisted of
Messrs. T. J. Jones (Chairman), Ken Reeves and John Paul Hammerschmidt. The
Compensation Committee is responsible for recommending to the Board of
Directors compensation levels for the Company's Executive Officers and the
policies that govern the Company's compensation and benefit plans. The
Company's compensation programs consist of base compensation, stock options
and contributions to its 401(k) retirement plan. The programs are intended to
enable the Company to attract, retain, reward and motivate management required
to achieve the Company's corporate objectives.

   In reviewing the total compensation of the Company's Executive Officers,
the Compensation Committee compares American Freightways' corporate
performance with its industry peer group included in the performance graph
(see page I-11) and a broader more generalized group of similarly sized and
geographically located companies. The Compensation Committee then evaluates
the current Company performance (in particular revenue growth, operating ratio
and net margin), its financial position (in particular debt to equity, current
ratio and asset utilization) and its long range goals against contributions
made by key employees in current performance and contribution toward achieving
future objectives. In dealing with the above factors the Compensation
Committee must use some subjectivity in assigning weights to each factor.

                                      I-9


   In evaluating compensation levels for 2000 the Compensation Committee
considered a number of factors relating to the Company's results for 1999.
During 1999 the Company realized strong revenue growth and successfully
introduced the new "American Flyer" service along with the "American Flyer
Guaranteed" and "American Expediter" guaranteed services. These products have
better positioned the Company to compete in its markets. As a result of
management's efforts, the Company exceeded its 1999 revenue growth goals while
achieving improved revenue yield. The Company made substantial progress in
achieving its long standing operating margin and net income margin goals of
10% and 5% respectively while maintaining high levels of customer service. The
Committee also believes that management's efforts have positioned the Company
for continuing growth.

   The Committee felt that the 1999 improvements in Company performance along
with the positioning of the Company to meet long term goals reflected
favorably on the performance of the Company's management.

   The annual compensation programs of the Company are weighted heavily
towards a base salary. In setting executive base salaries, subject to approval
of the Board of Directors, the Committee considers many factors including
corporate performance in meeting both long and short term objectives, current
market conditions and relative size of the Company. The Compensation Committee
places the most weight (over 60%) on corporate performance with other
considerations given between 15-20% of the weight. Among other things, the
Compensation Committee evaluates the individual's experience,
responsibilities, management and leadership abilities and job performance and
the necessity of qualifying compensation under Section 162(m) of the Code
(which is not currently relevant).

   The Company currently has no long term incentive program other than stock
option grants. The Compensation Committee is of the view that options more
closely align the interests of the Company's executive officers with the
interests of its shareholders. The Compensation Committee believes in the
longer term the value of the stock will be most directly related to revenue
growth and earnings per share. The base salaries for Mr. F. S. (Sheridan)
Garrison, Chairman who also served as CEO through June 30, 1999, and Mr. Tom
Garrison, President and also CEO as of July 1, 1999, were determined by
evaluating the same factors generally considered for the Company's other
executives. The Committee was of the view that in consideration of their
contribution to the Company, as well as a comparison of the overall
compensation package for the CEO of similar sized companies, their overall
compensation is at the low end of the range for their peer group.

   The stock option plan for the Chairman is a non-discretionary plan with the
number of options granted tied to the annual growth rate in earnings per
share. The formula is set in the plan that was approved by the shareholders in
the 1999 annual shareholders' meeting. It cannot be materially modified by the
Committee or the Board without amending the plan and obtaining shareholder
approval. The Committee believes the compensation package of base salary and
stock options has fairly compensated the Company's executives in the past. The
overall compensation package is in the mid to low range in comparison to both
its industry peers represented in the performance graph (see page I-11) and
the generalized group of companies. The Committee will continue to review the
programs to ensure that the combination of base salary and incentives are fair
to the Company and the employees and that the compensation package is related
to overall performance of both the employees and the Company in relation to
long term objectives of the Company.

                          The Compensation Committee

                                    T.J. Jones
                                    Ken Reeves
                             John Paul Hammerschmidt

          COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

   During the last completed fiscal year, executive compensation was
administered by the Compensation Committee comprised of the individuals listed
above. Mr. Jones previously served as the Company's Executive Vice President-
Operations until his retirement in 1994.

                                     I-10


                              COMPANY PERFORMANCE

   The following graph shows a five year comparison of cumulative total returns
for American Freightways, the S&P 500 index and an index of peer companies
selected by the Company:

                       [PERFORMANCE GRAPH APPEARS HERE]
EDGAR PRESENTATION OF
DATA POINTS USED IN
PRINTED GRAPH:

                     5 YEAR CUMULATIVE TOTAL RETURN SUMMARY



                               Starting
                                Basis
         Description             1994    1995    1996    1997    1998    1999
         -----------           -------- ------- ------- ------- ------- -------
                                                      
AMERICAN FREIGHTWAYS (%)......           -47.80    7.23  -11.24   16.77   40.39
AMERICAN FREIGHTWAYS ($)...... $100.00  $ 52.20 $ 55.97 $ 49.69 $ 58.02 $ 81.45
S & P 500 (%).................            37.58   22.96   33.36   28.58   21.05
S & P 500 ($)................. $100.00  $137.58 $169.17 $225.60 $290.08 $351.12
PEER GROUP ONLY (%)...........           -15.38    5.24   48.60  -10.41    8.15
PEER GROUP ONLY ($)........... $100.00  $ 84.62 $ 89.05 $132.33 $118.56 $128.22

- --------
   (a) Total return based on $100 initial investment and reinvestment of
dividends, if applicable
   (b) Peer group total return based on market capitalization.

                                      I-11


   Peer group comprised of nine publicly-traded, less-than-truckload carriers.

   The total cumulative return on investments (change in the year-end stock
price plus applicable reinvested dividends) for each of the periods for the
Company, the peer group and the S&P 500 is based on the stock price or market
index at the end of fiscal year 1994.

   The above graph compares the Company with that of the S&P 500 and a group
of peer companies with the investment weighted on market capitalization.
Companies in the peer group are as follows: Arkansas Best Corporation, Arnold
Industries, Inc., CNF Transportation, Inc., Consolidated Freightways, Old
Dominion Freight Line, Inc., Roadway Express, US Freightways Corporation,
Vitran Corporation, Inc. and Yellow Corporation.

   For fiscal year 1999 the following changes were made to the peer group:
Vitran Corporation was added to replace Jevic Transportation. Jevic
Transportation was deleted from the peer group as a result of its acquisition
by Yellow Corporation.

   The stock price performance depicted in the above graph is not necessarily
indicative of future price performance.

                                     I-12


                                                                      SCHEDULE I
                                                        TO INFORMATION STATEMENT

            DIRECTORS AND EXECUTIVE OFFICERS OF FEDEX AND PURCHASER
                   DIRECTORS AND EXECUTIVE OFFICERS OF FEDEX

   The name, current principal occupation or employment and material
occupations, positions, offices or employment for the past five years, of each
director and executive officer of FedEx are set forth below. References herein
to "FedEx" mean FedEx Corporation and references to "FedEx Express" mean its
subsidiary, Federal Express Corporation. Unless otherwise indicated below, the
business address of each director and officer is c/o FedEx Corporation, 942
South Shady Grove Road, Memphis, TN. Where no date is shown, the individual has
occupied the position indicated for the past five years. Unless otherwise
indicated, each occupation set forth opposite an individual's name refers to
employment with FedEx. None of the directors and officers of FedEx listed below
has, during the past five years, (i) been convicted in a criminal proceeding or
(ii) been a party to any judicial or administrative proceeding that resulted in
a judgment, decree or final order enjoining the person from future violations
of, or prohibiting activities subject to, federal or state securities laws, or
a finding of any violation of federal or state securities laws. All directors
and officers listed below are citizens of the United States, except for Paul S.
Walsh, who is a British citizen.

1. Directors of FedEx



                                     Current Principal Occupation or Employment
                Name                      and Five-Year Employment History
                ----                -------------------------------------------
                                 
 James L. Barksdale...............  Managing Partner, The Barksdale Group, a
                                    venture capital firm, from April 1999 to
                                    present; President and Chief Executive
                                    Officer of Netscape Communications
                                    Corporation, a provider of software,
                                    services and Web site resources to Internet
                                    users, from January 1995 to March 1999;
                                    President, Chief Executive Officer and
                                    Chief Operating Officer of AT&T Wireless
                                    Services (formerly McCaw Cellular
                                    Communications, Inc. (collectively,
                                    "McCaw")), a cellular telecommunications
                                    company, from September 1994 to January
                                    1995; President and Chief Operating Officer
                                    of McCaw from January 1992 to September
                                    1994; Executive Vice President and Chief
                                    Operating Officer of FedEx Express from
                                    April 1983 to January 1992; Director of
                                    FedEx Express from April 1983 to October
                                    1991; Senior Vice President-Data Systems of
                                    FedEx Express from February 1979 to April
                                    1983. Director, America Online, Inc.,
                                    HomeGrocer.com, Inc., Liberate
                                    Technologies, The Robert Mondavi
                                    Corporation, Sun Microsystems, Inc. and
                                    3Com Corporation.
 Robert L. Cox....................  Partner, Waring Cox, a law firm, for more
                                    than the past five years; Secretary of
                                    FedEx Express from June 1971 to September
                                    1993.
 Ralph D. DeNunzio................  President of Harbor Point Associates, Inc.,
                                    a private investment and consulting firm,
                                    since October 1987. Director, Harris
                                    Corporation and NIKE, Inc.
 Judith L. Estrin.................  President and Chief Executive Officer of
                                    Packet Design, Inc., an Internet technology
                                    company, since May 2000; Senior Vice
                                    President and Chief Technology Officer of
                                    Cisco Systems, Inc., a networking systems
                                    company, from April 1998 to April 2000;
                                    President and Chief Executive Officer of
                                    Precept Software, Inc., a computer software
                                    company, from March 1995 to April 1998;
                                    Consultant from September 1994 to March
                                    1995. Director, Sun Microsystems, Inc. and
                                    The Walt Disney Company.





                                     Current Principal Occupation or Employment
                Name                      and Five-Year Employment History
                ----                -------------------------------------------
                                 
 Philip Greer.....................  Senior Managing Director of Weiss, Peck &
                                    Greer, L.L.C., an investment management
                                    firm, since 1995; General Partner of Weiss,
                                    Peck & Greer from 1970 to 1995. Director,
                                    Network Computing Devices, Inc. and The
                                    Robert Mondavi Corporation.
 J. R. Hyde, III..................  Chairman of Pittco Management, LLC, an
                                    investment management company, since
                                    January 1998; President of Pittco, Inc., an
                                    investment company, since April 1989;
                                    Chairman of AutoZone, Inc., an auto parts
                                    retail chain, from May 1986 to March 1997;
                                    Chief Executive Officer of AutoZone, Inc.
                                    from May 1986 to December 1996. Director,
                                    AutoZone, Inc.
 Shirley A. Jackson...............  President of Rensselaer Polytechnic
                                    Institute, a technological university,
                                    since July 1999; Chairman and Commissioner
                                    of the United States Nuclear Regulatory
                                    Commission from July 1995 to June 1999;
                                    Commissioner of the United States Nuclear
                                    Regulatory Commission from May 1995 to July
                                    1995; Professor of Physics at Rutgers
                                    University from July 1991 to May 1995.
                                    Director, Newport News Shipbuilding Inc.,
                                    Sealed Air Corporation, USX Corporation and
                                    UtiliCorp United Inc.
 George J. Mitchell...............  Special Counsel to Verner, Liipfert,
                                    Bernhard, McPherson and Hand, a law firm,
                                    since January 1995; Member of the United
                                    States Senate from May 1980 to January
                                    1995. Director, Casella Waste Systems,
                                    Inc., Staples, Inc., Starwood Hotels &
                                    Resorts Worldwide, Inc., Unilever PLC,
                                    UnumProvident Corporation, The Walt Disney
                                    Company and Xerox Corporation.
 Joshua I. Smith..................  Vice Chairman and President of iGate, Inc.,
                                    a broadband networking company, since June
                                    2000; Chairman, President and Chief
                                    Executive Officer of The MAXIMA
                                    Corporation, an information and data
                                    processing firm, from 1978 to June 2000.
                                    The MAXIMA Corporation filed for
                                    reorganization in federal bankruptcy court
                                    in June 1998. Director, The Allstate
                                    Corporation, CardioComm Solutions Inc. and
                                    Caterpillar Inc.
 Frederick W. Smith...............  Chairman, President and Chief Executive
                                    Officer of FedEx since January 1998;
                                    Chairman of FedEx Express since 1975;
                                    Chairman, President and Chief Executive
                                    Officer of FedEx Express from 1983 to
                                    January 1998; Chief Executive Officer of
                                    FedEx Express from 1977 to January 1998;
                                    President of FedEx Express from 1971 to
                                    1975. Director, Value America, Inc.
 Paul S. Walsh....................  Group Chief Operating Officer of Diageo
                                    plc, a consumer food and beverage company,
                                    since January 2000; Chairman, President and
                                    Chief Executive Officer of The Pillsbury
                                    Company, a wholly-owned subsidiary of
                                    Diageo plc, from April 1996 to January
                                    2000; Chief Executive Officer of The
                                    Pillsbury Company from January 1992 to
                                    April 1996. Director, Ceridian Corporation
                                    and Diageo plc.
 Peter S. Willmott................  Chairman and Chief Executive Officer of
                                    Willmott Services, Inc., a retail and
                                    consulting firm, since June 1989; Chief
                                    Executive Officer and President of Zenith
                                    Electronics Corporation, an electronics
                                    manufacturing company, from July 1996 to
                                    January 1998 (Zenith Electronics
                                    Corporation filed for reorganization in
                                    federal bankruptcy court in August 1999);
                                    President and Chief Operating Officer of
                                    FedEx Express from September 1980 to May
                                    1983; Executive Vice President of FedEx
                                    Express from 1977 to 1980; Senior Vice
                                    President-Finance and Administration of
                                    FedEx Express from 1974 to 1977. Director,
                                    Security Capital Group Incorporated.



                                       2


2. Executive Officers of FedEx



                                     Current Principal Occupation or Employment
                Name                      and Five-Year Employment History
                ----                -------------------------------------------
                                 
 Robert B. Carter.................  Executive Vice President and Chief
                                    Information Officer of FedEx since June
                                    2000; Corporate Vice President and Chief
                                    Technology Officer of FedEx from February
                                    1998 to June 2000; Vice President--
                                    Corporate Systems Development of FedEx
                                    Express from September 1993 to February
                                    1998; Managing Director--Systems
                                    Development of FedEx Express from April
                                    1993 to September 1993.
 T. Michael Glenn.................  Executive Vice President--Market
                                    Development and Corporate Communications of
                                    FedEx since January 1998; Senior Vice
                                    President--Marketing, Customer Service and
                                    Corporate Communications of FedEx Express
                                    from June 1994 to January 1998; Senior Vice
                                    President--Marketing and Corporate
                                    Communications of FedEx Express from
                                    December 1993 to June 1994; Senior Vice
                                    President--Worldwide Marketing Catalog
                                    Services and Corporate Communications of
                                    FedEx Express from June 1993 to December
                                    1993; Senior Vice President--Catalog and
                                    Remail Services of FedEx Express from
                                    September 1992 to June 1993; Vice
                                    President--Marketing of FedEx Express from
                                    August 1985 to September 1992; and various
                                    management positions in sales and marketing
                                    and senior sales specialist of FedEx
                                    Express from 1981 to 1985.
 Alan B. Graf, Jr.................  Executive Vice President and Chief
                                    Financial Officer of FedEx since January
                                    1998; Executive Vice President and Chief
                                    Financial Officer of FedEx Express from
                                    February 1996 to January 1998; Senior Vice
                                    President and Chief Financial Officer of
                                    FedEx Express from December 1991 to
                                    February 1996; Vice President and Treasurer
                                    of FedEx Express from August 1987 to
                                    December 1991; and various management
                                    positions in finance and a senior financial
                                    analyst of FedEx Express from 1980 to 1987.
 James S. Hudson..................  Corporate Vice President--Strategic
                                    Financial Planning and Control and
                                    Principal Accounting Officer of FedEx since
                                    January 1998; Vice President--Corporate and
                                    Strategic Financial Planning of FedEx
                                    Express from January 1997 to January 1998;
                                    Vice President, Controller and Chief
                                    Accounting Officer of FedEx Express from
                                    December 1994 to January 1997; Vice
                                    President-Finance--Europe, Africa and
                                    Mediterranean of FedEx Express from July
                                    1992 to December 1994; and various
                                    management positions in finance at FedEx
                                    Express from 1974 to 1992.
 Kenneth R. Masterson.............  Executive Vice President, General Counsel
                                    and Secretary of FedEx since January 1998;
                                    Executive Vice President, General Counsel
                                    and Secretary of FedEx Express from
                                    February 1996 to January 1998; Senior Vice
                                    President, General Counsel and Secretary of
                                    FedEx Express from September 1993 to
                                    February 1996; Senior Vice President and
                                    General Counsel of FedEx Express from
                                    February 1981 to September 1993; and Vice
                                    President--Legal of FedEx Express from
                                    January 1980 to February 1981.
 Frederick W. Smith...............  Chairman, President and Chief Executive
                                    Officer of FedEx since January 1998;
                                    Chairman of FedEx Express since 1975;
                                    Chairman, President and Chief Executive
                                    Officer of FedEx Express from April 1993 to
                                    January 1998; Chief Executive Officer of
                                    FedEx Express from 1977 to January 1998;
                                    and President of FedEx Express from June
                                    1971 to February 1975.


                                       3


                 DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER

   The name, current principal occupation or employment and material
occupations, positions, offices or employment for the past five years of each
director and executive officer of Purchaser are set forth below. Unless
otherwise indicated below, the business address of each director and officer
is c/o FedEx Corporation, 942 South Shady Grove Road, Memphis, TN. Unless
otherwise indicated, each occupation set forth opposite an individual's name
refers to employment with Purchaser. None of the directors and officers of
Purchaser listed below has, during the past five years, (i) been convicted in
a criminal proceeding or (ii) been a party to any judicial or administrative
proceeding that resulted in a judgement, decree or final order enjoining the
person from future violations of, or prohibiting activities subject to,
federal or state securities laws, or a finding of any violation of federal or
state securities laws. All directors and officers listed below are citizens of
the United States.

1. Directors of Purchaser



                                     Current Principal Occupation or Employment
                Name                      and Five-Year Employment History
                ----                -------------------------------------------
                                 
 Robert B. Carter.................  Executive Vice President and Chief
                                    Information Officer of FedEx since June
                                    2000; Corporate Vice President and Chief
                                    Technology Officer of FedEx from February
                                    1998 to June 2000; Vice President--
                                    Corporate Systems Development of FedEx
                                    Express from September 1993 to February
                                    1998; Managing Director--Systems
                                    Development of FedEx Express from April
                                    1993 to September 1993.
 T. Michael Glenn.................  Executive Vice President--Market
                                    Development and Corporate Communications of
                                    FedEx since January 1998; Senior Vice
                                    President--Marketing, Customer Service and
                                    Corporate Communications of FedEx Express
                                    from June 1994 to January 1998; Senior Vice
                                    President--Marketing and Corporate
                                    Communications of FedEx Express from
                                    December 1993 to June 1994; Senior Vice
                                    President--Worldwide Marketing Catalog
                                    Services and Corporate Communications of
                                    FedEx Express from June 1993 to December
                                    1993; Senior Vice President--Catalog and
                                    Remail Services of FedEx Express from
                                    September 1992 to June 1993; Vice
                                    President--Marketing of FedEx Express from
                                    August 1985 to September 1992; and various
                                    management positions in sales and marketing
                                    and senior sales specialist of FedEx
                                    Express from 1981 to 1985.
 Alan B. Graf, Jr.................  Executive Vice President and Chief
                                    Financial Officer of FedEx since January
                                    1998; Executive Vice President and Chief
                                    Financial Officer of FedEx Express from
                                    February 1996 to January 1998; Senior Vice
                                    President and Chief Financial Officer of
                                    FedEx Express from December 1991 to
                                    February 1996; Vice President and Treasurer
                                    of FedEx Express from August 1987 to
                                    December 1991; and various management
                                    positions in finance and a senior financial
                                    analyst of FedEx Express from 1980 to 1987.
 Kenneth R. Masterson.............  Executive Vice President, General Counsel
                                    and Secretary of FedEx since January 1998;
                                    Executive Vice President, General Counsel
                                    and Secretary of FedEx Express from
                                    February 1996 to January 1998; Senior Vice
                                    President, General Counsel and Secretary of
                                    FedEx Express from September 1993 to
                                    February 1996; Senior Vice President and
                                    General Counsel of FedEx Express from
                                    February 1981 to September 1993; and Vice
                                    President--Legal of FedEx Express from
                                    January 1980 to February 1981.


                                       4




                                         Current Principal Occupation or
                                                   Employment
                Name                    and Five-Year Employment History
                ----                ----------------------------------------
                                 
 Frederick W. Smith...............  Chairman, President and Chief Executive
                                    Officer of FedEx since January 1998;
                                    Chairman of FedEx Express since 1975;
                                    Chairman, President and Chief Executive
                                    Officer of FedEx Express from 1983 to
                                    January 1998; Chief Executive Officer of
                                    FedEx Express from 1977 to January 1998;
                                    President of FedEx Express from 1971 to
                                    1975. Director, Value America, Inc.


2. Executive Officers of Purchaser



                                     Current Principal Occupation or Employment
                Name                      and Five-Year Employment History
                ----                -------------------------------------------
                                 
 Kenneth R. Masterson.............  President and Secretary of Purchaser since
                                    November 2000. Executive Vice President,
                                    General Counsel and Secretary of FedEx
                                    since January 1998; Executive Vice
                                    President, General Counsel and Secretary of
                                    FedEx Express from February 1996 to January
                                    1998; Senior Vice President, General
                                    Counsel and Secretary of FedEx Express from
                                    September 1993 to February 1996; Senior
                                    Vice President and General Counsel of FedEx
                                    Express from February 1981 to September
                                    1993; and Vice President--Legal of FedEx
                                    Express from January 1980 to February 1981.


                                       5


                                                                        ANNEX II

                                                               November 12, 2000

Board of Directors
American Freightways Corporation
2200 Forward Drive
Harrison, Arkansas 72601

Members of the Board:

   You have asked us to advise you with respect to the fairness to the holders
of common stock, par value $0.01 per share ("Company Common Stock"), of
American Freightways Corporation (the "Company") from a financial point of view
of the Consideration (as defined below) to be received by such holders pursuant
to the terms of the Agreement and Plan of Merger, dated as of November 12, 2000
(the "Merger Agreement"), by and among the Company, FedEx Corporation (the
"Acquiror") and FDX, Inc., a wholly owned subsidiary of the Acquiror ("Merger
Sub"). Pursuant to the Merger Agreement (i) Merger Sub will commence a tender
offer (the "Tender Offer") for 50.1% of the outstanding shares of Company
Common Stock at a price of $28.13 per share, in cash (the "Cash Consideration")
and (ii) following consummation of the Tender Offer, Merger Sub will be merged
with the Company (the "Merger" and, together with the Tender Offer, the
"Transaction"), the Company will become a wholly owned subsidiary of the
Acquiror and each outstanding share of Company Common Stock (other than shares
owned by the Acquiror, the Company and their subsidiaries) will be converted
into the right to receive a number of shares of common stock, par value $0.10
per share of the Acquiror ("Acquiror Common Stock"), equal to the ratio
determined by dividing $28.13 by the average closing price per share of
Acquiror Common Stock for the ten (10) trading days selected by the Acquiror
and the Company by lot out of the 20 trading days ending on and including the
fifth trading day prior to the date the Merger becomes effective (such number
of shares of Acquiror Common Stock, the "Stock Consideration" and, together
with the Cash Consideration, the "Consideration").

   In arriving at our opinion, we have reviewed certain publicly available
business and financial information relating to the Company and the Acquiror, as
well as the Merger Agreement and certain related documents. We have also
reviewed certain other information, including financial forecasts, provided to
or discussed with us by the Company and the Acquiror and have discussed the
business and prospects of the Company and the Acquiror with the Company's and
the Acquiror's management. We have also considered certain financial and stock
market data of the Company and the Acquiror, and we have compared those data
with similar data for other publicly held companies in businesses similar to
the Company and the Acquiror and we have considered the financial terms of
certain other business combinations and other transactions which have recently
been effected. We also considered such other information, financial studies,
analyses and investigations and financial, economic and market criteria which
we deemed relevant.

   In connection with our review, we have not assumed any responsibility for
independent verification of any of the foregoing information and have relied on
its being complete and accurate in all material respects. We have assumed that
the financial forecasts provided to us by the Company have been reasonably
prepared on bases reflecting the best currently available estimates and
judgements of the Company's management as to the future financial performance
of the Company, and we have been advised by management of the Acquiror and have
assumed that the publicly available forecasts with respect to the Acquiror
discussed with us represent reasonable estimates as to the future financial
performance of the Acquiror. You also have informed us, and we have


assumed, that the Merger will be treated as a tax-free reorganization for
federal income tax purposes. In addition, we have not been requested to make,
and have not made, an independent evaluation or appraisal of the assets or
liabilities (contingent or otherwise) of the Company or the Acquiror, nor have
we been furnished with any such evaluations or appraisals. Our opinion is
necessarily based upon financial, economic, market and other conditions as
they exist and can be evaluated on the date hereof. We are not expressing any
opinion as to the actual value of Acquiror Common Stock when issued to holders
of Company Common Stock pursuant to the Merger or the prices at which such
shares will trade at any time. We were not requested to, and did not, solicit
third party indications of interest in acquiring all or any part of the
Company.

   We and our affiliate, Donaldson, Lufkin & Jenrette Securities Corporation,
have acted as financial advisor to the Company in connection with the
Transaction and will receive a fee for such services, a portion of which will
be paid in connection with the delivery of this opinion and a significant
portion of which is contingent upon the consummation of the Tender Offer. In
the past, we or our affiliates have provided certain financial and investment
banking services to the Company and have received compensation for such
services. In the ordinary course of business, we and our affiliates may
actively trade the debt and equity securities of both the Company and the
Acquiror for our and such affiliates' own accounts and for the accounts of
customers and, accordingly, may at any time hold a long or short position in
such securities.

   It is understood that this letter is for the information of the Board of
Directors of the Company in connection with its consideration of the
Transaction and does not constitute a recommendation to any holder of Company
Common Stock whether or not such holder should tender shares pursuant to the
Tender Offer or how such holder should vote or act on any matter relating to
the Merger.

   Based upon and subject to the foregoing, it is our opinion that, as of the
date hereof, the Consideration to be received by the holders of Company Common
Stock in the Transaction is fair to such holders (other than the Acquiror and
its affiliates) from a financial point of view.

                                          Very truly yours,

                                          Credit Suisse First Boston
                                          Corporation

                                                 /s/ L. Price Blackford
                                          By: _________________________________
                                                   L. Price Blackford
                                                    Managing Director


                                     II-2


                                                                  EXHIBIT (a)(3)

                                                              November 20, 2000

Dear Shareholder:

   As you know, American Freightways Corporation has entered into a merger
agreement providing for the acquisition of American Freightways by FedEx
Corporation ("FedEx"). In accordance with the merger agreement, FedEx, through
its wholly-owned subsidiary, FDX, Inc., has today commenced a tender offer to
purchase up to 50.1% of the outstanding shares of American Freightways common
stock for $28.13 per share in cash.

   The tender offer is conditioned upon, among other things, (i) a number of
shares which represents 50.1% of American Freightways' outstanding shares
being validly tendered and not withdrawn prior to the expiration of the offer
and (ii) the waiting periods under applicable antitrust laws having expired or
been terminated. The tender offer will be followed by a merger in which each
share of American Freightways common stock not purchased in the tender offer
will be converted into the right to receive that number of shares of FedEx
common stock determined by dividing $28.13 by the average closing price per
share of FedEx common stock for a defined period of trading days prior to the
closing of the merger.

   Your Board of Directors, by unanimous vote, has approved the merger
agreement and the transactions contemplated by it, including the offer and the
merger, and has determined that the offer and the merger are fair to, and in
the best interests of, the shareholders of American Freightways and recommends
that shareholders of American Freightways who desire to receive cash for their
shares accept the offer and tender their shares pursuant to the offer.

   In arriving at its recommendation, the Board of Directors considered a
number of factors, which are described in the attached Schedule 14D-9,
including, among other things, the written opinion of American Freightways'
financial advisor, Credit Suisse First Boston Corporation ("CSFB"), that, as
of the date of the opinion, the consideration to be received pursuant to the
offer and the merger is fair to American Freightways shareholders from a
financial point of view. A copy of CSFB's written opinion, which describes the
assumptions made, procedures followed, matters considered and qualifications
and limitations of the review undertaken, can be found in Annex II to the
Schedule 14D-9. You should read the opinion carefully and in its entirety.

   In addition to the attached Schedule 14D-9 relating to the offer, also
enclosed are FedEx's Offer to Purchase, dated November 20, 2000, and related
materials to be used for tendering your shares. These documents set forth the
terms and conditions of the offer and provide instructions as to how to tender
your shares. I urge you to read all the enclosed materials carefully.

                                          Very truly yours,

                                          /s/ F.S. (Sheridan) Garrison

                                          F.S. (Sheridan) Garrison
                                          Chairman

EX-99.(E)(2)

                                                                    EXHIBIT E(2)


                                                                  CONFORMED COPY
                    IRREVOCABLE PROXY AND VOTING AGREEMENT

        AGREEMENT dated as of November 12, 2000 among FEDEX CORPORATION, a
Delaware corporation ("Buyer"), and each other Person set forth on the signature
pages hereof (each a "Shareholder" and collectively the "Shareholders").
Capitalized terms used but not separately defined herein shall have the meanings
assigned to such terms in the Merger Agreement (as defined below).

        WHEREAS, in order to induce Buyer and Merger Subsidiary to enter into
an Agreement and Plan of Merger dated as of the date hereof (as amended, the
"Merger Agreement") with American Freightways Corporation, an Arkansas
corporation (the "Company"), Buyer, which is also a shareholder of the
Company, has requested the Shareholders, and each Shareholder has agreed, to
enter into this Agreement with respect to all shares of common stock, par value
$0.01 per share, of the Company that such Shareholder beneficially owns and may
hereafter acquire (collectively, the "Shares");

             NOW, THEREFORE, the parties hereto agree as follows:

                                   ARTICLE 1
                       GRANT OF PROXY; VOTING AGREEMENT

        SECTION 1.01. Voting Agreement. (a) Each Shareholder hereby irrevocably
and unconditionally agrees to vote all Shares that such Shareholder is entitled
to vote, at the time of any vote to approve and adopt the Merger Agreement, the
Merger and all agreements related to the Merger and any actions related thereto
at any meeting of the shareholders of the Company, and at any adjournment
thereof, at which such Merger Agreement and other related agreements (or any
amended version thereof), or such other actions, are submitted for the
consideration and vote of the shareholders of the Company, in favor of the
approval and adoption of the Merger Agreement, the Merger and the transactions
contemplated by the Merger Agreement.

        (b) Each Shareholder hereby agrees that it will not vote any Shares that
such Shareholder is entitled to vote in favor of the approval of any (i)
Acquisition Proposal, (ii) reorganization, recapitalization, liquidation or
winding up of the Company or any other extraordinary transaction involving the
Company, (iii) corporate action the consummation of which would frustrate the
purposes, or prevent or delay the consummation, of the transactions contemplated
by the

                                       1


Merger Agreement or (iv) other matter relating to, or in connection with, any of
the foregoing matters.

        SECTION 1.02. Irrevocable Proxy. Each Shareholder hereby revokes any and
all previous proxies granted with respect to the Shares beneficially owned by
such Shareholder. By entering into this Agreement, each Shareholder hereby
grants a proxy appointing Buyer as such Shareholder's attorney-in-fact and
proxy, with full power of substitution, for and in such Shareholder's name, to
vote, express, consent or dissent, or otherwise to utilize such voting power
solely for the purposes contemplated by Section 1.01 above as Buyer or its proxy
or substitute shall, in Buyer's sole discretion, deem proper with respect to the
Shares beneficially owned by such Shareholder. THE PROXY GRANTED BY EACH
SHAREHOLDER PURSUANT TO THIS ARTICLE 1 IS IRREVOCABLE AND THE APPOINTMENT IS
COUPLED WITH AN INTEREST, HAVING BEEN GRANTED IN CONSIDERATION OF BUYER ENTERING
INTO THIS AGREEMENT AND THE MERGER AGREEMENT, AND INCURRING CERTAIN RELATED FEES
AND EXPENSES. The proxy granted by each Shareholder shall be revoked upon
termination of this Agreement in accordance with its terms.

                                   ARTICLE 2
              REPRESENTATIONS AND WARRANTIES OF EACH SHAREHOLDER

        Each Shareholder, severally and not jointly, represents and warrants to
Buyer that:

        SECTION 2.01. Authorization, Enforceability. If such Shareholder is not
a natural Person, the execution, delivery and performance by such Shareholder of
this Agreement and the consummation by such Shareholder of the transactions
contemplated hereby are within the powers of such Shareholder. This Agreement
constitutes a valid and binding Agreement of such Shareholder. If such
Shareholder is executing this Agreement in a representative or fiduciary
capacity, the Person signing this Agreement has full power and authority to
enter into and perform this Agreement. If such Shareholder is a natural Person,
the Shares beneficially owned by such Shareholder do not constitute marital
property under the laws of the State of Arkansas or any other applicable laws,
or if such Shares constitute marital property, the consent of such Shareholder's
spouse is not required for the execution and delivery of this Agreement or the
performance by such Shareholder of the obligations of the Shareholder hereunder.

        SECTION 2.02. Non-Contravention. The execution, delivery and performance
by such Shareholder of this Agreement and the consummation of the

                                       2


transactions contemplated hereby do not and will not (i) violate any applicable
law, rule, regulation, judgment, injunction, order or decree to which
Shareholder is a party or by which such Shareholder is bound, (ii) require any
consent or other action by any Person under, constitute a default under, or give
rise to any right of termination, cancellation or acceleration or to a loss of
any benefit to which such Shareholder is entitled under any provision of any
agreement or other instrument binding on such Shareholder or (iii) result in the
imposition of any Lien on any asset of such Shareholder.

        SECTION 2.03. Ownership of Shares. Such Shareholder is the record and
beneficial owner of the Shares listed on the signature pages hereof opposite
such Shareholder's name, free and clear of any Liens and any other limitations
or restrictions (including any restriction on the right to vote or otherwise
dispose of such Shares). None of the Shares held by such Shareholder are subject
to any voting trust, irrevocable proxy or other agreement or arrangement with
respect to the voting of such Shares (other than this Agreement).

        SECTION 2.04. Total Shares. Except for the Shares set forth on the
signature page hereto opposite such Shareholder's name or except for options
issued pursuant to the Company Plans or Director Plans, such Shareholder does
not beneficially own any (i) shares of capital stock or voting securities of the
Company, (ii) securities of the Company convertible into or exchangeable for
shares of capital stock or voting securities of the Company or (iii) options or
other rights to acquire from the Company any capital stock, voting securities or
securities convertible into or exchangeable for capital stock or voting
securities of the Company.

        SECTION 2.05. Finder's Fees. No investment banker, broker, finder or
other intermediary is entitled to a fee or commission from Buyer or the Company
in respect of this Agreement based upon any arrangement or agreement made by or
on behalf of such Shareholder.

                                   ARTICLE 3
                    REPRESENTATIONS AND WARRANTIES OF BUYER

        Buyer represents and warrants to each Shareholder that:

        SECTION 3.01. Corporate Authorization. The execution, delivery and
performance by Buyer of this Agreement and the consummation by Buyer of the
transactions contemplated hereby are within the corporate powers of Buyer and
have been duly authorized by all necessary corporate action. This Agreement
constitutes a valid and binding Agreement of Buyer.

                                       3


                                   ARTICLE 4
                           COVENANTS OF SHAREHOLDER
   Each Shareholder, severally and not jointly, hereby covenants and agrees
that:

   SECTION 4.01. No Proxies for or Encumbrances on Shares. Except pursuant to
the terms of this Agreement, such Shareholder shall not, without the prior
written consent of Buyer, directly or indirectly, (i) grant any proxies or enter
into any voting trust or other agreement or arrangement with respect to the
voting of any Shares beneficially owned by such Shareholder or (ii) acquire,
sell, assign, transfer, encumber or otherwise dispose of, or enter into any
contract, option or other arrangement or understanding with respect to the
direct or indirect acquisition or sale, assignment, transfer, encumbrance or
other disposition of, any such Shares during the term of this Agreement.
Notwithstanding the preceding sentence, (i) the Shareholders may at any time
tender in the Offer a number of Shares not to exceed 1,000,000 Shares in the
aggregate and (ii) in the event that immediately prior to such time as the Offer
is scheduled to expire (after giving effect to any extensions of the Offer), all
conditions to the Offer other than the Minimum Condition shall have been
satisfied or, to the extent permitted under applicable law, waived, unless
Parent shall have agreed to waive the Minimum Condition, then, in addition to
any Shares tendered by the Shareholders in reliance on clause (i) of this
sentence, (A) if so requested by Parent, the Shareholders shall and (B) the
Shareholders, at their option, may tender in the Offer such number of Shares as,
when added to that number of other Shares which shall then have been validly
tendered in the Offer and not withdrawn, would equal 50.1% of Shares
outstanding, but in the case of clause (A) not more than 1,000,000 Shares in the
aggregate regardless of whether any other Shares shall theretofore have been
tendered by any Shareholder pursuant to clause (i) of this sentence, and in the
case of clause (B) up to an aggregate maximum, including any Shares previously
tendered by the Shareholders pursuant to clause (i) or clause (ii) (A) of this
sentence, of 3,200,000 Shares. In no event shall the Shareholders tender in the
Offer any Shares in excess of 3,200,000 Shares. Parent shall (i) use its
reasonable best efforts to cause any depositary or agent effecting the Offer to
provide one representative of the Shareholders designated by the Shareholders
current information regarding the status of the Offer and the number of Shares
tendered and not validly withdrawn and (ii) coordinate with any such depositary
or agent, in each case so as to afford to the Shareholders the right to tender
Shares in the Offer as permitted pursuant to this Section 4.01 on a timely
basis. Such Shareholder shall not seek or solicit any such acquisition or sale,
assignment, transfer, encumbrance or other disposition or any such contract,
option or other arrangement or understanding and agrees to notify Buyer
promptly, and to provide all details requested by Buyer, if such Shareholder
shall be approached or
                                       4


solicited, directly or indirectly, by any Person with respect to any of the
foregoing.

        SECTION 4.02. Other Offers. (a) Such Shareholder, in its capacity as a
holder of Shares, shall not, directly or indirectly, (i) solicit, initiate or
take any action to facilitate or encourage the submission of any Acquisition
Proposal, (ii) enter into or participate in any discussions or negotiations
with, furnish any information relating to the Company or any of its Subsidiaries
or afford access to the business, properties, assets, books or records of the
Company or any of its Subsidiaries to, otherwise cooperate in any way with, or
knowingly assist, participate in, facilitate or encourage any effort by any
Third Party that is seeking to make, or has made, an Acquisition Proposal, or
(iii) grant any waiver or release under any standstill or similar agreement with
respect to any class of equity securities of the Company or any of its
Subsidiaries; provided that if such Shareholder or any trustee of any
Shareholder is a director of the Board of Directors of the Company, such
Shareholder or trustee, as the case may be, may take any action in such capacity
permitted to be taken pursuant to Section 7.04(b) of the Merger Agreement.

        (b) Such Shareholder will promptly notify Buyer upon obtaining any
knowledge of any Acquisition Proposal or any request for nonpublic information
relating to the Company or any of its Subsidiaries or for access to the
properties, books or records of the Company or any of its Subsidiaries, or any
request for a waiver or release under any standstill or similar agreement by any
Person who indicates that it is considering making, or has made, an Acquisition
Proposal and will keep Buyer fully informed, on a current basis, of any material
developments with respect to any such Acquisition Proposal, indication or
request.

        SECTION 4.03. Appraisal Rights. Shareholder agrees not to exercise any
rights (including, without limitation, under Section 4-27-1302 of Arkansas-1987
Business Corporation Act) to demand appraisal of any Shares which may arise with
respect to the Merger.

                                   ARTICLE 5
                                 MISCELLANEOUS

        SECTION 5.01. Further Assurances. Buyer and each Shareholder will
execute and deliver, or cause to be executed and delivered, all further
documents and instruments and use its best efforts to take, or cause to be
taken, all actions and to do, or cause to be done, all things necessary, proper
or advisable under applicable laws and regulations, to consummate and make
effective the transactions contemplated by this Agreement.

                                       5


        SECTION 5.02. Notices. All notices, requests and other communications to
any party hereunder shall be in writing (including facsimile transmission) and
shall be given,

        if to Buyer, to:

               FedEx Corporation
               942 South Shady Grove Road
               Memphis, Tennessee 38120
               Fax: (901) 818-7590
               Attention: Kenneth R. Masterson

               with a copy to:

               Davis Polk & Wardwell
               450 Lexington Avenue
               New York, New York 10017
               Fax: (212) 450-4800
               Attention: Dennis Hersch

               if to any Shareholder, to the address set forth on the signature
pages hereof below such Shareholder's name

      or such other address or facsimile number as such party may hereafter
specify for the purpose by notice to the other parties hereto. All such notices,
requests and other communications shall be deemed received on the date of
receipt by the recipient thereof if received prior to 5 p.m. in the place of
receipt and such day is a Business Day. Otherwise, any such notice, request or
communication shall be deemed not to have been received until the next
succeeding Business Day.

      SECTION 5.03. Amendments; Termination. Any provision of this Agreement may
be amended or waived if, but only if, such amendment or waiver is in writing and
is signed, in the case of an amendment, by each party to this Agreement or in
the case of a waiver, by the party against whom the waiver is to be effective.
This Agreement and all rights and obligations of the parties hereto shall
terminate on the date that is four months after the termination of the Merger
Agreement; provided, however, that (A) upon the termination of the Merger
Agreement, the aggregate number of Shares subject to this Agreement shall be
reduced by 1,000,000 (net of any Shares tendered in the Offer as permitted by
Section 4.01 hereof) pro rata among the Shareholders on the basis of the number
of Shares beneficially owned and (B) upon a termination of the Merger Agreement
pursuant to Section 11.03(b)(iii) thereof, the obligation of the Shareholders to
tender in the Offer pursuant to clause (ii)(A) of the second sentence of Section
4.01 shall automatically terminate. For the avoidance of doubt

                                       6


in the event 1,000,000 or more Shares are tendered in the Offer by the
Shareholders, clause (A) of the proviso in the preceding sentence shall be
without effect.

        SECTION 5.04. Expenses. All costs and expenses incurred in connection
with this Agreement shall be paid by the party incurring such cost or expense.

        SECTION 5.05. Successors and Assigns. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; provided that no party may assign, delegate
or otherwise transfer any of its rights or obligations under this Agreement
without the consent of the other parties hereto, except that Buyer may transfer
or assign its rights and obligations to any Affiliate of Buyer.

        SECTION 5.06. Governing Law. This Agreement shall be governed by and
construed in accordance with the law of the State of Delaware, without regard to
the conflicts of law rules of such state.

        SECTION 5.07. Jurisdiction. Any suit, action or proceeding seeking to
enforce any provision of, or based on any matter arising out of or in connection
with, this Agreement or the transactions contemplated hereby may be brought in
any federal court located in the State of Delaware or any Delaware state court,
and each of the parties hereby consents to the jurisdiction of such courts (and
of the appropriate appellate courts therefrom) in any such suit, action or
proceeding and irrevocably waives, to the fullest extent permitted by law, any
objection that it may now or hereafter have to the laying of the venue of any
such suit, action or proceeding in any such court or that any such suit, action
or proceeding brought in any such court has been brought in an inconvenient
forum. Process in any such suit, action or proceeding may be served on any party
anywhere in the world, whether within or without the jurisdiction of any such
court.

        SECTION 5.08. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.

        SECTION 5.09. Counterparts; Effectiveness. This Agreement may be signed
in any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement shall become effective when each party hereto shall have received
counterparts hereof signed by all of the other parties hereto.

        SECTION 5.10. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to

                                       7


be invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated so long as the
economic or legal substance of the transactions contemplated hereby is not
affected in any manner materially adverse to any party. Upon such a
determination, the parties shall modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner in
order that the transactions contemplated hereby be consummated as originally
contemplated to the fullest extent possible.

        SECTION 5.11. Specific Performance. The parties hereto agree that
irreparable damage would occur if any provision of this Agreement were not
performed in accordance with the terms hereof and that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
or to enforce specifically the performance of the terms and provisions hereof in
any federal court located in the State of Delaware or any Delaware state court,
in addition to any other remedy to which they are entitled at law or in equity.

                                       8


        IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.


                                        FEDEX CORPORATION

                                        By: /s/ Kenneth R. Masterson
                                            ------------------------------
                                            Name:  Kenneth R. Masterson
                                            Title: Executive Vice President,
                                                   General Counsel and Secretary

                                       9


IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.


                        /s/ F.S. Garrison
                        -------------------------
                        F.S. Garrison

                        F.S. GARRISON REVOCABLE
                        CHILDREN'S TRUST

                        /s/ F.S. Garrison
                        -------------------------
                        F.S. Garrison
                        Trustee

                        F.S. GARRISON FAMILY LIMITED
                        PARTNERSHIP NO. ONE

                        /s/ F.S. Garrison
                        -------------------------
                        F.S. Garrison
                        General Partner


                        F.S. GARRISON FAMILY LIMITED
                        PARTNERSHIP NO. TWO

                        /s/ F.S. Garrison
                        -------------------------
                        F.S. Garrison
                        General Partner

                                      10


                                CYNTHIA KAYE GARRISON TRUST
                                NO. ONE

                                /s/ Cynthia Kaye Garrison
                                --------------------------------
                                Cynthia Kaye Garrison
                                Trustee


                                LISA RAE GARRISON TRUST

                                /s/ F.S. Garrison
                                --------------------------------
                                F.S. Garrison
                                Trustee

                                LISA GARRISON UTMA

                                /s/ Tom Garrison
                                --------------------------------
                                Tom Garrison
                                Trustee

                                SARAH ANNE GARRISON TRUST

                                /s/ Tom Garrison
                                --------------------------------
                                Tom Garrison
                                Trustee

                                      11


                                SARAH ANNE GARRISON UTMA

                                /s/ Tom Garrison
                                --------------------------------
                                Tom Garrison
                                Trustee

                                /s/ Tom Garrison
                                --------------------------------
                                Tom Garrison


                                SARAH ANNE GARRISON TRUST 2000


                                /s/ William P. Garrison
                                --------------------------------
                                William P. Garrison
                                Trustee

                                F.S. GARRISON IRA


                                /s/ F.S. Garrison
                                --------------------------------
                                F.S. Garrison

                                /s/ William P. Garrison
                                --------------------------------
                                William P. Garrison

                                      12


                               /s/ Daniel A. Garrison
                               --------------------------------
                               Daniel A. Garrison

                               GARRISON LIVING TRUST

                               /s/ Elizabeth W. Garrison
                               --------------------------------
                               Elizabeth W. Garrison
                               Attorney-in-Fact

                               SHERYL ANN GARRISON NEE TRUST

                               /s/ Elizabeth W. Garrison
                               --------------------------------
                               Elizabeth W. Garrison
                               Attorney-in-Fact

                               DEBORAH ANN BROWN HUDSON
                               TRUST

                               /s/ Elizabeth W. Garrison
                               --------------------------------
                               Elizabeth W. Garrison
                               Attorney-in-Fact

                                      13


                               MICHAEL C. BROWN TRUST

                               /s/ Elizabeth W. Garrison
                               --------------------------------
                               Elizabeth W. Garrison
                               Attorney-in-Fact

                               ELIZABETH JEAN GARRISON TRUST
                               /s/ Elizabeth W. Garrison
                               --------------------------------
                               Elizabeth W. Garrison
                               Attorney-in-Fact

                               PATRICK W. BROWN TRUST

                               /s/ Elizabeth W. Garrison
                               --------------------------------
                               Elizabeth W. Garrison
                               Attorney-in-Fact

                               DAVID PERRY GARRISON TRUST

                               /s/ William Paul Garrison
                               --------------------------------
                               William Paul Garrison
                               Trustee

                                      14


                               F.S. GARRISON RETAINED
                               ANNUITY TRUST FIVE

                               /s/ F.S. Garrison
                               --------------------------------
                               F.S. Garrison
                               Trustee

                                      15





                                                       Class of         Shares
    Name                                                Stock            Owned           Address for Notices
- ---------------                                         -----           -------          -------------------

                                                                  
F.S. Garrison                                           Common          2,397,164                 *
F.S. Garrison Revocable Children's Trust                Common            882,164                 *
F.S. Garrison Family Limited Partnership No. One        Common          2,000,000                 *
F.S. Garrison Family Limited Partnership No. Two        Common          4,000,000                 *
Cynthia Kay Garrison Trust No. One                      Common            420,000                 *
Lisa Rae Garrison Trust                                 Common            101,230                 *
Lisa Garrison UTMA                                      Common              2,000                 *
Sarah Anne Garrison Trust                               Common              2,250                 *
Sarah Anne Garrison UTMA                                Common              2,000                 *
Tom Garrison                                            Common            186,204                 *
Sarah Anne Garrison Trust 2000                          Common             60,000                 *
F.S. Garrison I.R.A.                                    Common              1,400                 *
David Perry Garrison Trust                              Common              2,250                 *
William P. Garrison                                     Common             68,468                 *
Daniel A. Garrison                                      Common            264,410                 *
Garrison Living Trust                                   Common            790,000                 *
Sheryl Ann Garrison Nee Trust                           Common            100,000                 *
Deborah Ann Brown Hudson Trust                          Common            100,000                 *
Michael C. Brown Trust                                  Common            100,000                 *
Elizabeth Jean Garrison Trust                           Common            100,000                 *
Patrick W. Brown Trust                                  Common            100,000                 *
F.S. Garrison Retained Annuity Trust Five               Common            500,000                 *


*c/o   F.S. Garrison
       American Freightways Corporation
       2200 Forward Drive
       Harrison, AR 72602

                                      16

EX-99.(E)(3)

                                                                    Exhibit E(3)

                              EMPLOYMENT AGREEMENT

     AGREEMENT, made on this _____ day of November, 2000 by and between American
Freightways Inc., an Arkansas corporation (the "Company"), and a wholly-owned
subsidiary of American Freightways Corporation ("AFC") and __________
("Executive").

                                    RECITALS

     WHEREAS, AFC, FDX, Inc. ("Merger Subsidiary") and FedEx Corporation
("Parent") have entered into an Agreement and Plan of Merger dated as of
November 12, 2000 (the "Merger Agreement") which, subject to satisfaction of
certain conditions, provides for the merger (the "Merger") of AFC with and into
Merger Subsidiary, with Merger Subsidiary surviving as a wholly-owned subsidiary
of Parent;

     WHEREAS, in order to induce Executive to serve as an executive officer of
the Company after the consummation of the Merger, the Company desires to provide
Executive with compensation and other benefits on the terms and conditions set
forth in this Agreement;

     WHEREAS, Executive is willing to accept such employment and perform
services for the Company on the terms and conditions hereinafter set forth;

     NOW THEREFORE, it is hereby agreed by and between the parties as follows:

     1.  Employment.  (a)  Executive shall serve as an officer of the Company or
         ----------
its affiliates or related entities.  In such capacity, Executive will be
responsible for areas materially consistent with those over which Executive had
responsibility as an officer of the Company prior to the execution of this
Agreement.

     (b) During the Term, as defined below, and except for illness or
incapacity, Executive shall devote all/1/, of his business time, attention,
skill and efforts to the business and affairs of the Company and its affiliates;
provided, however, that nothing in this Agreement shall preclude Executive from
devoting time during reasonable periods and in accordance with the Company's
policies required for: (i) serving as a director or member of a committee of any
company or organization involving no conflict of interest with the Company or
any of its affiliates; (ii) delivering lectures and fulfilling speaking
engagements; (iii) engaging in charitable and community activities; (iv)
investing his personal assets; and (v) other activities that do not otherwise
conflict with the provisions of this Agreement.

     (c) Executive's principal place of employment shall be at the same location
as existed immediately prior to the execution of this Agreement, or such other
location as shall be mutually agreeable to Executive and Company.

     2.  Term of Employment. Executive's term of employment under this Agreement
         ------------------
shall commence on the effective date of the Merger (the "Commencement Date") and
shall terminate on the earlier of (i) [__________]years from the effective date
of the Merger (the

- ----------------------
/1/ This provision will be modified to require devotion of 1/2 time for one
Executive of the Company as noted on Schedule 5.16 to the Merger Agreement.


"Expiration Date") or (ii) termination of Executive's employment pursuant to
this Agreement (alternatively, the "Term").

     3.  Compensation.
         ------------

     3.1  Salary.  Effective January 1, 2001 and during the Term, the Company
          ------
shall pay Executive a base salary at the rate of $__________ per annum, subject
to increase (but not decrease) from time to time by the Board of Directors of
the Company.  The base salary, as increased from time to time, shall be referred
to as the "Base Salary" herein.  The Base Salary shall be payable in accordance
with the ordinary payroll practices of the Company, but no less frequently than
monthly.

     3.2  Long Term Incentive Compensation Plans and Programs.  Executive shall
          ---------------------------------------------------
be eligible to participate in equity-based awards (including, but not limited
to, stock options, restricted stock and incentive stock units) which may be
offered by the Parent in which other similar level executives of the
subsidiaries of Parent participate on terms comparable to those applicable to
such other executives.  In addition, the provisions of Section 3.05 of the
Merger Agreement, as they relate to (i) stock options granted to Executive under
the Company's stock option plans and (ii) the termination of AFC's 1999 Employee
Stock Purchase Plan, are hereby incorporated by reference.

     4.  Employee Benefits.
         -----------------

     4.1  Employee Benefit Programs, Plans and Practices.  The Company shall
          ----------------------------------------------
provide Executive during the term of his employment hereunder with coverage
under all employee pension and welfare benefit programs, plans and practices
(commensurate with his positions with the Company and to the extent permitted
under any employee benefit plan) in accordance with the terms thereof, on a
basis no less favorable to the Executive on the whole than the programs, plans
and practices in existence immediately prior to the execution of this Agreement.

     4.2  Vacation and Fringe Benefits.  Executive shall be entitled to paid
          ----------------------------
business vacation days under Company policies as determined from time to time by
the Board of Directors of the Company, but in no event less than the number of
paid business vacation days in which the Executive is entitled under the
Company's policies in existence on the date of this Agreement.  In addition,
Executive shall be entitled to the perquisites and other fringe benefits made
available to similar level executives of the Company.

     5.  Expenses.  Executive is authorized to incur reasonable expenses in
         --------
carrying out his duties and responsibilities under this Agreement, including,
without limitation, expenses for travel and similar items related to such duties
and responsibilities consistent with the travel and entertainment policy of the
Company as in effect from time to time.  The Company shall reimburse Executive
for all such expenses upon presentation by Executive from time to time of
appropriately itemized and approved accounts of such expenditures.

     6.  Termination of Employment.
         -------------------------

     6.1  Compensation Upon Termination of Employment.  (a) If, prior to the
          -------------------------------------------
Expiration Date, Executive's employment shall be terminated by the Company or
the Parent for any reason

                                       2


other than (i) Executive's Disability or (ii) for Cause, or if during the term
hereof, Executive terminates his employment for Good Reason, the Company shall
pay or cause to be paid to Executive a cash amount equal to the greater of (x)
the aggregate unpaid Base Salary for all periods from the date of termination to
the Expiration Date or (y) one and one-half (1.5) times the Executive's Base
Salary as in effect on the date of termination (without regard to any decrease
in Base Salary which could constitute Good Reason under this Agreement). In
addition, Executive shall be entitled to (i) the unpaid portion of his Base
Salary accrued to the date of termination, and any accrued vacation as of the
date of termination; (ii) continued medical, dental and life insurance coverage
for Executive and Executive's eligible dependents on the same basis as in effect
immediately prior to Executive's termination of employment (without regard to
any decreases in such benefits which would constitute "Good Reason" under this
Agreement) until the earlier of (A) the Expiration Date, and (B) the
commencement of coverage with a subsequent employer; and (iii) full acceleration
of vesting and exercisability of any equity-based awards (including, but not
limited to, stock options, restricted stock and incentive stock units) granted
to Executive prior to Executive's termination of employment. Any cash payments
required hereunder shall be made within 10 business days following the
termination of Executive's employment.

     (b) In the event of the termination of Executive's employment prior to the
Expiration Date due to Executive's death or Disability, or if Executive's
employment is terminated by the Company or by Parent for Cause or if Executive
resigns from his employment without Good Reason, the Company shall pay to
Executive (or Executive's beneficiaries, if applicable) a lump sum cash amount
equal to any unpaid Base Salary provided for in Section 3.1 accrued through the
date of such termination and any accrued vacation as of the date of termination,
in each case within 10 business days following the termination of Executive's
employment.

     (c) In the event of any termination of employment hereunder, Executive
shall also receive, when due, any other compensation or benefit payable to him
under any plan, program or arrangement maintained by the Company or Parent,
other than a severance plan or arrangement.

     6.2  Definitions.  For purposes of this Agreement, the following
          -----------
definitions shall apply:

     (a) Disability.  "Disability" shall mean Executive's absence from the full-
         ----------
time performance of Executive's duties for a period of 180 consecutive days as a
result of Executive's incapacity due to physical or mental illness.

     (b)  Cause.  "Cause" shall mean:
          -----

          (1) a material breach by Executive of his duties and responsibilities
     under this Agreement that results in material harm to the Company or the
     Parent, which breach is (A) either the product of willful malfeasance or
     gross neglect, and (B) committed in bad faith or without reasonable belief
     that such breach is in, or not contrary to, the best interests of the
     Company; or

                                       3


          (2) Executive's plea of guilty or nolo contendere to, or nonappealable
     conviction of, a felony, which conviction or plea causes material damage to
     the reputation or financial position of the Company (or the Parent).

     (c) Good Reason.  For purposes of this Agreement, "Good Reason" shall mean
         -----------
the occurrence of any of the following without Executive's express written
consent:

          (1) The assignment to Executive of any duties materially inconsistent
     with the Executive's position, duties and responsibilities with the Company
     and its subsidiaries, as set forth herein, a change in Executive's title or
     offices, as set forth herein or any removal of Executive from or failure to
     elect or re-elect Executive to any position with the Company set forth
     herein, except in connection with Executive's promotion or a termination of
     employment for Cause;

          (2) A reduction in Executive's Base Salary;

          (3) Any relocation of Executive's principal place of business to a
     location that is more than fifty (50) miles from the location set forth
     herein; and

          (4) Any material breach by the Company or the Parent of any provisions
     of this Agreement.;

     provided, however, that an event specified in (1), (2), (3) or (4) shall
     not constitute "Good Reason" if it is remedied within 30 days after receipt
     of written notice from Executive specifying such event.

     6.3  Notice of Termination.  Any purported termination of Executive's
          ---------------------
employment with the Company or the Parent shall be communicated by Notice of
Termination to Executive, if such termination is by the Company for Cause, or to
the Company, if such termination is by Executive for Good Reason. For purposes
of this Agreement, "Notice of Termination" shall mean a written notice which
shall indicate the specific termination provision in this Agreement relied upon
and shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of Executive's employment under the provisions
so indicated.

     6.4  Gross Up.  (a) Subject to the provisions of Section 6.4(d), in the
          --------
event it shall be determined that any payment, benefit or distribution, or any
acceleration of vesting (or combination thereof) by the Company, the Parent or
one or more trusts established by the Company or the Parent for the benefit of
its employees, to or for the benefit of Executive (whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement, or under
the terms of any other plan, program agreement or arrangement) (a "Payment")
would be subject to the excise tax imposed by Section 4999 of the Code or any
interest or penalties are incurred by Executive with respect to such excise tax
(such excise tax, together with any such interest and penalties, hereinafter
collectively referred to as the "Excise Tax"), Executive shall be entitled to
receive an additional payment (a "Gross-Up Payment") in an amount such that
after payment by Executive of all taxes (including any interest or penalties
imposed with respect to such taxes), including, without limitation, any income
taxes (and any interest and penalties imposed with respect thereto) and the
Excise Tax imposed upon the Gross-Up Payment,

                                       4


Executive retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments.

     (b) Subject to the provisions of Section 6.4(c), all determinations
required to be made under this Section 6.4, including whether and when a Gross-
Up Payment is required and the amount of such Gross-Up Payment and the
assumptions to be utilized in arriving at such determination, may be made at the
election of Executive by a nationally recognized certified public accounting
firm as may be designated by Executive (the "Accounting Firm") which shall
provide detailed supporting calculations both to the Parent and Executive within
fifteen (15) business days after the receipt of notice from Executive that there
has been a Payment, or such earlier time as is requested by the Parent. All fees
and expenses of the Accounting Firm shall be borne solely by the Company.  Any
Gross-Up Payment shall be paid by the Company to Executive within five (5) days
after the receipt of the Accounting Firm's determination.

     (c) As soon as practicable, Executive shall notify the Company in writing
of any claim by the Internal Revenue Service that, if successful, would require
the payment by the Company of the Gross-Up Payment.  If the Company notifies
Executive in writing that it desires to contest such claim, Executive shall
cooperate in all reasonable ways with the Company in such contest and the
Company shall be entitled to participate in all proceedings relating to such
claim; provided, however, that the Company shall bear and pay directly all costs
and expenses (including  additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold Executive harmless, on
an after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provisions of
this Section 6.4, the Company shall control all proceedings taken in connection
with such contest and, at its sole option, may pursue or forego any and all
administrative appeals, proceedings, hearings and conferences with the taxing
authority in respect of such claim and may, at its sole option, either direct
Executive to pay the tax claimed and sue for a refund or contest the claim in
any permissible manner, and Executive agrees to prosecute such contest to a
determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs Executive to pay such
claim and sue for a refund, the Company shall advance the amount of such payment
to Executive, on an interest- free basis, and shall indemnify and hold Executive
harmless, on an after-tax basis, from any Excise Tax or income tax (including
interest or penalties with respect thereto) imposed with respect to such advance
or with respect to any imputed income with respect to such advance; and
provided, further, that if Executive is required to extend the statute of
limitations to enable the Company to contest such claim, Executive may limit
this extension solely to such contested amount.  The Company's control of and
obligations with respect to the contest shall be limited to issues with respect
to which a Gross-Up Payment would be payable hereunder and Executive shall be
entitled to settle or contest, as the case may be, any other issue raised by the
Internal Revenue Service or any other taxing authority.

     (d) Notwithstanding the foregoing provisions of this Section 6.4, if the
aggregate value of the Payments described in Section 6.4(a) are more than 100%
but less than 110% of the Executive's "base amount" (as defined in Section
280G(b)(3) of the Code) multiplied by three (the "Golden Parachute Threshold"),
then the Executive shall not be entitled to any Gross-Up

                                       5


Payment hereunder and, instead, the Payments shall be reduced to an amount equal
to $1.00 less than the Golden Parachute Threshold.

     7.  Obligations Absolute.  Except as set forth in this Agreement, the
         --------------------
obligations of the Company and the Parent to make the payments to, or other
arrangements with respect to, Executive provided for herein shall be absolute
and unconditional and shall not be reduced by any circumstances, including
without limitation any setoff, counterclaim, recoupment, defense or other right
which the Company may have against Executive or any third party at any time.

     8.  No Mitigation.  Executive shall not be required to mitigate damages or
         -------------
the amount of any payment provided for under this Agreement by seeking other
employment or otherwise. No amounts paid to or earned by Executive following his
termination of employment with the Company or the Parent shall reduce or be set
off against any amounts payable to Executive under this Agreement.

     9.  Dispute Resolution.  Any dispute or controversy arising under or in
         ------------------
connection with this Agreement shall be resolved exclusively by arbitration in
Little Rock, Arkansas or, at the option of Executive, in the county where
Executive then resides in accordance with the Rules of the American  Arbitration
Association then in effect, except that if Executive institutes an action
relating to this Agreement, Executive may, at Executive's option bring such
action in a court of competent jurisdiction. Judgment may be entered on an
arbitrator's award relating to this Agreement in any court having jurisdiction.

     10.  Legal Fees.  The Company shall pay all costs and expenses, including
          ----------
attorney's fees and disbursements, at least monthly, of Executive in connection
with any legal proceeding (including arbitration) instituted by the Company
relating to the interpretation or enforcement of any provision of this
Agreement.  The Executive shall pay all costs and expenses, including attorney's
fees and disbursements of Executive in connection with any legal proceeding
(including arbitration) instituted by Executive relating to the interpretation
or enforcement of any provision of this Agreement; provided, however, that if
Executive prevails on the central issue in dispute, the Company shall pay all
costs and expenses of Executive.

     11.  Notices.  All notices or communications hereunder shall be in writing,
          -------
addressed as follows:

          To the Company:  American Freightways Corporation
                           2200 Forward Drive
                           Harrison, Arkansas 722601
                           Attn: Frank Connor


          To the Parent:   FedEx Corporation
                           942 South Shady Grove Road
                           Memphis, TN 38120
                           Attn: Ken Masterson

                                       6


          To Executive:  ______________________
                         ______________________
                         ______________________


Any such notice or communication shall be delivered by hand or by courier or
sent certified or registered mail, return receipt requested, postage prepaid,
addressed as above (or to such other address as such party may designate in a
notice duly delivered as described above), and the third business day after the
actual date of mailing shall constitute the time at which notice was given.

     12.  Assignment.  This Agreement shall be binding upon and inure to the
          ----------
benefit of the heirs and representatives of Executive and the assigns and
successors of the Company and the Parent, but neither this Agreement nor any
rights or obligations hereunder shall be assignable or otherwise subject to
hypothecation by Executive (except by will or by operation of the laws of
intestate succession) or by the Company or the Parent, except that the Company
or the Parent must assign this Agreement to any successor (whether by merger,
purchase or otherwise) to all or substantially all of the stock, assets or
businesses of the Company (or the Parent, as the case may be), and shall require
such successor to assume expressly the obligations of the Company hereunder.

     13.  Entire Agreement; Modification.  This Agreement sets forth the entire
          ------------------------------
understanding between the parties hereto regarding the subject matter contained
herein. There are no terms, conditions, representations, warranties or covenants
with respect to Executive's employment other than those contained herein.  No
term or provision of this Agreement may be amended, waived, released, discharged
or otherwise modified in any respect except in writing and signed by the
parties.  No waiver of any breach or default shall constitute a waiver of any
other breach or default, whether of the same or any other covenant or condition
contained herein. A delay or failure to assert any right or breach of this
Agreement shall not be deemed to be a waiver of such right or breach either with
respect to that right or breach or any subsequent right or breach.

     15.  Survivorship.  The respective rights and obligations of the parties
          ------------
hereunder shall survive any termination of this Agreement to the extent
necessary to the intended preservation of such rights and obligations.  The
provisions of this Section 15 are in addition to the survivorship provisions of
any other section of this Agreement.

     16.  Separability.  If any provision of this Agreement shall be declared to
          ------------
be invalid or unenforceable,  in whole or in part, such invalidity or
unenforceability shall not affect the remaining provisions hereof which shall
remain in full force and effect.

     17.  Governing Law.  This Agreement shall be construed, interpreted and
          -------------
governed in accordance with the laws of the State of Arkansas, without reference
to rules relating to conflicts of law.

     18.  Indemnification.  The Company shall continue to (i) indemnify
          ---------------
Executive for any actions taken or omitted in his capacity as an officer and
director of the Company and (ii) provide expense advances to Executive in
connection therewith, in each case to the same extent

                                       7


as is provided by the Company to its officers and directors immediately prior to
the execution of this Agreement. This obligation shall survive this Agreement.

     19.  Withholding.  The Company and the Parent shall be entitled to withhold
          -----------
from payment any amount of withholding required by law.

     20.  Counterparts.  This Agreement may be executed in two or more
          ------------
counterparts, each of which will be deemed an original.

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first written above.


                                    EXECUTIVE


                                    ____________________
                                    [Name]


                                    AMERICAN FREIGHTWAYS CORPORATION



                                    By:__________________

                                    Name:________________

                                    Title:_______________


                                       8

EX-99.(E)(4)

                                                                    EXHIBIT E(4)


                            FIRST AMENDMENT TO THE
                  FIRST AMENDED AND RESTATED RIGHTS AGREEMENT

     First Amendment ("Amendment"), dated as of November 12, 2000 to the First
                       ----------
Amended and Restated Rights Agreement, dated as of October 20, 1999 ("Rights
                                                                      ------
Agreement"), between American Freightways Corporation (the "Company") and
- ---------
EquiServe Trust Company, N.A. (the "Rights Agent").
                                    ------------

    WHEREAS, the Board of Directors of the Company has determined it advisable
and in the best interest of the Company and its stockholders to amend the Rights
Agreement as set forth herein immediately prior to and in connection with the
execution and delivery of that certain Agreement and Plan of Merger, dated as of
the date hereof, among FedEx Corporation, a Delaware corporation (the "Parent"),
FDX, Inc., a Delaware corporation and wholly-owned subsidiary of Parent, and the
Company ("Merger Agreement");

    NOW THEREFORE, in consideration of the premises and mutual agreements set
forth herein and in the Rights Agreement, the parties hereby agree as follows:

    Section 1. Amendment to Rights Agreement. The Rights Agreement is hereby
               -----------------------------
amended as set forth in this Section 1.

    (a) The definition of "Acquiring Person" set forth in Section 1(b) of the
Rights Agreement is hereby amended and restated in its entirety as follows:

       "(b) "Acquiring Person" means any Person that, together with all
Affiliates and Associates of such Person, is the Beneficial Owner of 15% or more
of the shares of the Common Stock then outstanding, but does not include (i) the
Company; (ii) any Subsidiary of the Company; (iii) any employee benefit plan of
the Company or of any Subsidiary of the Company; (iv) any Person organized,
appointed or established by the Company for or pursuant to the terms of any such
plan; (v) any person that becomes an Acquiring Person pursuant to a Permitted
Transaction; (vi) any Person that has become an Acquiring Person inadvertently
and, within five Business Days of being requested by the Company to advise it
regarding the same, certifies to the Company that such Person acquired
beneficial ownership of shares of Common Stock in excess of 14.9% inadvertently
or without knowledge of the terms of the Rights and such certification is
accepted as true by a Requisite Majority acting in good faith, and such Person
divests as promptly as practicable a sufficient amount of Common Stock so that
such Person would no longer hold in excess of 14.9% of the Common ,Stock then
outstanding; (vii) any Person that becomes an Acquiring Person solely as a
result of a reduction in the number of outstanding shares of the Common Stock in
a transaction that is approved by a Requisite Majority, provided that such
person will immediately be an Acquiring Person in the event such Person
thereafter acquires any additional shares of Common Stock (other than as a


    result of a stock split or stock dividend) while the Beneficial Owner of 15%
    or more of the shares of the Common Stock then outstanding; (viii) any
    Person who is the Beneficial Owner of 15% or more of the shares of Common
    Stock outstanding on the Rights Dividend Declaration Date and any transferee
    of any of the shares of Common Stock Beneficially Owned by such Person; and
    (ix) FedEx or its wholly-owned Subsidiary, FDX, provided, that the exception
    contained in this Section 1(b)(ix) will be void and of no effect in the
    event that any of FedEx, FDX or any Affiliate or Associate thereof becomes
    the beneficial owner of 15% or more of the shares of Common Stock then
    outstanding other than pursuant to the terms of the Merger Agreement."

  (b)    Section 7(a) of the Rights Agreement is hereby amended and restated in
its entirety as follows:

      " Subject to Section 7(e), the registered holder of any Rights Certificate
    may exercise the Rights evidenced thereby (except as otherwise provided in
    this agreement including, without limitation, the restriction on
    exercisability set forth in Section 9(c), Section 11(a)(iii), Section 23(a)
    and Section 24) in whole or in part at anytime after the Distribution Date
    upon surrender of the Rights Certificate, with the form of election to
    purchase the certificate on the reverse side of the Rights Certificate duly
    executed, to the Rights Agent at the principal office or offices of the
    Rights Agent designated for such purpose, together with payment of the
    aggregate Purchase Price for each share of Common Stock (or other
    securities, cash or other assets, as the case may be) as to which such
    surrendered Rights are then exercisable, at or prior to the earlier of (i)
    the Close of Business on August 31, 2003, (the "Final Expiration Date"),
    (ii) the time at which the Rights are redeemed as provided in Section 23,
    (iii) the time at which such Rights are exchanged as provided in Section 24,
    or (iv) the time immediately prior to the Effective Time (as defined in the
    Merger Agreement) (the earlier of such times being the "Expiration Date").

      (c) A new Section 1(x) of the Rights Agreement is hereby added to read in
its entirety as follows:

     "(x) "FedEx" shall mean FedEx Corporation, a Delaware corporation."

      (d) A new Section 1(y) of the Rights Agreement is hereby added to read in
its entirety as follows:

     "(y) "FDX" shall mean FDX, Inc., a Delaware corporation and wholly-owned
subsidiary of FedEx."

      (e) A new Section 1(z) of the Rights Agreement is hereby added to read in
its entirety as follows:




           "(z) "Merger Agreement" shall mean the Agreement and Plan of Merger,
           dated as of November 12, 2000 among the Company, FedEx and FDX, as
           the same may from time to time be amended."

        Section 2. Miscellaneous
                   -------------

        (a) Capitalized terms used and not otherwise defined herein shall have
the meaning assigned to such terms in the Rights Agreement.

        (b) The term "Agreement" as used in the Rights Agreement shall be deemed
to refer to the Rights agreement as amended hereby.

        (c) This Amendment shall be effective as of the time immediately prior
to the execution and delivery of the Merger Agreement, and, except as set forth
herein, the Rights Agreement shall remain in full force and effect and shall be
otherwise unaffected hereby.

        (d) This Amendment may be executed in two or more counterparts each of
which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.


        IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.

                                          AMERICAN FREIGHTWAYS
                                          CORPORATION


                                          By: /s/ F.S. (Sheridan) Garison
                                          Name: F.S. (Sheridan) Garrison


                                          Title: Chairman


                                          EQUISERVE TRUST COMPANY, N.A.

                                          By: /s/ Michael J. Connor


                                          Name: Michael J. Connor
                                          Title: Director, Client Administration