EXHIBIT 10(c)

STOCK PLEDGE AGREEMENT

THIS STOCK PLEDGE AGREEMENT (as amended, modified, or supplemented from time to
time, this "Agreement"), made effective June 29, 2001, by and between AIRBORNE,
INC., a Delaware corporation, having a place of business at 3101 Western Avenue,
Seattle, Washington 98121 (the "Grantor"), and WACHOVIA BANK, N.A., a national
banking association in its capacity as Collateral Agent for the Lenders (as
defined below) (the "Collateral Agent"), having offices located at 191 Peachtree
Street, Atlanta, GA 30303.

PRELIMINARY STATEMENTS:

(1)                                       Except as otherwise defined herein,
capitalized terms used herein and defined in the Credit Agreement (as defined
below) shall be used herein as therein defined. Certain terms used herein are
defined in Section 1 hereof. 

(2)                                       This Agreement is one of the
"Collateral Documents" described in, and is made pursuant to, that certain
Amended and Restated Credit Agreement dated as of the Closing Date, by and among
Airborne Express, Inc., a Delaware corporation ("Express") and formerly known as
Airborne Freight Corporation, a Delaware corporation ("AFC"), ABX Air, Inc., a
Delaware corporation ("ABX" and Express, each, a "Borrower" and together,
jointly and severally, the "Borrowers"), the Grantor, as "Parent," the financial
institutions named as lenders therein (together with their respective successors
and assigns, the "Lenders" and, each individually, a "Lender"), and Wachovia
Bank, N.A., a national banking association ("Wachovia"), as the Administrative
Agent for the Lenders under the agreement and as Collateral Agent, which
agreement amends and restates that certain Credit Agreement dated as of July 27,
2000, by and among AFC, the Lenders, and Wachovia as Administrative Agent and
Collateral Agent as amended by that certain First Amendment to Credit Agreement
dated as of April 20, 2001, by and among Airborne, Inc., a Delaware corporation
("Airborne"), the Lenders, and Wachovia as Administrative Agent, as further
amended by that certain Second Amendment to Credit Agreement dated as of May 31,
2001, by and among Airborne, the Lenders, and Wachovia as Administrative Agent
(collectively, together with any and all concurrent or subsequent exhibits,
schedules, extensions, supplements, amendments or modifications thereto, the
"Credit Agreement"). Pursuant to a Joinder Agreement dated as of December 26,
2000, Airborne assumed AFC's obligations as "Borrower" under the Credit
Agreement, and AFC was released from its obligations as "Borrower" under the
Credit Agreement. 

(3)                                       The Credit Agreement provides for,
among other things, loans or advances, the issuance of letters of credit, and
other extensions of credit to or for the benefit of the Borrowers of up to
$275,000,000, with such loans or advances being evidenced by promissory notes
(the "Facility Notes"). 

(4)                                       AFC entered into an Indenture dated as
of December 15, 1992, as supplemented by that certain First Supplemental
Indenture dated as of September 15, 1995, relating to Express' 7.35% Notes Due
2005 as further supplemented by that certain Second Supplemental Indenture
Relating to AFC's 8-7/8% Notes Due 2002 dated February 12, 1997, and as further
supplemented by that certain Third Supplemental Indenture dated as of the
Closing Date (herein, as amended or otherwise modified, restated, supplemented
or replaced from time to time, the "Indenture"), pursuant to which Express,
formerly known as AFC, (i) may issue and sell its debentures, notes, or other
evidences of indebtedness and (ii) has, prior to the date hereof, issued and
sold to certain purchasers (the "Noteholders," such term to include their
successors and assigns) (A) $100,000,000 aggregate original principal amount of
its 7.35% Notes (the "1995 Notes") and (B) $100,000,000 aggregate original
principal amount of its "8-7/8% Notes Due December 15, 2002" (the "1992 Notes,"
and together with the 1995 Notes, the "Indenture Debt," such term to include all
debentures, notes, or other evidences of indebtedness issued pursuant to the
Indenture in addition to, issued in exchange for, or issued in replacement of
any Indenture Debt existing on the date hereof). Express, in its capacity as
issuer of the Indenture Debt, together with its successors and assigns, shall be
referred to herein as the "Indenture Debt Issuer." 

(5)                                       Subject to certain exceptions which
are not applicable hereto, Section 1008 of the Indenture prohibits any Grantor
from creating any security interests in certain of the Grantor's property unless
the Indenture Debt is equally and ratably secured by such security interest. 

(6)                                       The Grantor is the owner of certain
securities of Airborne Credit, Inc., set forth and described on Exhibit "A"
attached hereto and by reference made part hereof, together with any and all
other securities, cash or other property at any time and from time to time
receivable or otherwise distributed in respect of or in exchange for any or all
of such securities, and together with the proceeds thereof (herein collectively
the "Pledged Collateral"). The Pledged Collateral shall constitute "Collateral"
as such term is used in the Credit Agreement. 

(7)                                       This Agreement is made in favor of the
Collateral Agent for the benefit of the Lenders and the Noteholders
(collectively the "Secured Creditors") to equally and ratably secure the Secured
Obligations (as defined herein). 

(8)                                       It is a condition precedent to the
making of Loans and the issuance of, and participation in, Letters of Credit
under the Credit Agreement that the Grantor shall have executed and delivered to
the Collateral Agent this Agreement. 

(9)                                       The Grantor's desire to execute this
Agreement to satisfy the conditions described in the preceding paragraphs (5)
and (8).

 

NOW, THEREFORE, in consideration of the foregoing and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
to induce the Collateral Agent to extend credit from time to time to the Grantor
and/or to either of the Borrowers, Grantor and Collateral Agent hereby agree as
follows:

 

1.                  Certain Definitions. The following terms shall have the
meanings herein specified unless the context otherwise requires. Such
definitions shall be equally applicable to the singular and plural forms of the
terms defined.

"Collateral Agent" shall have the meaning provided in the first paragraph of
this Agreement.

"Collateral Agent Expenses" shall mean (a) all costs or expenses which the
Grantor is required to pay or cause to be paid under this Agreement or any other
Collateral Document and which are paid or advanced by the Collateral Agent
pursuant to the provisions of the Collateral Documents; (b) all taxes and
insurance premiums of every nature and kind which any Borrower is required to
pay or cause to be paid under this Agreement or any other Collateral Document
and which are paid or advanced by the Collateral Agent pursuant to the
provisions of any Collateral Document; (c) all filing, recording, publication
and search fees paid or incurred by the Collateral Agent in connection with the
transactions contemplated by this Agreement or the other Collateral Documents;
(d) all costs and expenses paid or incurred by the Collateral Agent (with or
without suit), to correct any default or enforce any provisions of any
Collateral Document or in gaining possession of, maintaining, handling,
preserving, storing, refurbishing, appraising, selling, preparing for sale
and/or advertising to sell the Pledged Collateral, whether or not a sale is
consummated; (e) all costs and expenses of suit paid or incurred by the
Collateral Agent in enforcing or defending this Agreement or any other
Collateral Document; and (f) attorneys' fees and expenses paid or incurred by
the Collateral Agent in advising, structuring, drafting, reviewing, amending,
terminating, enforcing, defending or concerning this Agreement or any other
Collateral Document, whether or not suit is brought, and including any action
brought in any Insolvency Proceeding.

"Credit Agreement" shall have the meaning provided in the Preliminary Statements
of this Agreement.

"Event of Default" shall have the meaning given to such term in Section 11.

"Facility Obligations" shall mean all "Obligations" as such term is defined in
the Credit Agreement.

"Indenture" shall have the meaning given such term in the Preliminary Statements
of this Agreement.

"Indenture Debt" shall have the meaning provided in the Preliminary Statements
of this Agreement.

"Indenture Documents" shall mean the Indenture, all documents or instruments
evidencing the Indenture Debt and all other documents now or hereafter executed
and delivered by the Indenture Debt Issuer, the Parent, or any subsidiary,
including and without limitation either of the Borrowers and the Grantor for the
benefit of the Trustee or Noteholders.

"Insolvency Proceeding" shall mean any proceeding commenced by or against any
person or entity, under any provision of the federal Bankruptcy Code, as
amended, or under any other bankruptcy or insolvency law, including, but not
limited to, assignments for the benefit of creditors, formal or informal
moratoriums, compositions or extensions with some or all creditors.

"Lender" and "Lenders" shall have the meaning provided in the Preliminary
Statements of this Agreement.

"Noteholder" shall have the meaning provided in the Preliminary Statements of
this Agreement.

"Pledged Collateral" shall have the meaning given such term in Section 2.

"Pledged Proceeds" shall have the same meaning as the term "proceeds" under the
UCC or under other relevant law and, in any event, shall include, but not be
limited to (i) any and all proceeds of any insurance, indemnity, warranty or
guaranty payable to the Collateral Agent or Grantor from time to time with
respect to any of the Pledged Collateral, (ii) any and all payments (in any form
whatsoever) made or due and payable to the Grantor from time to time in
connection with any requisition, confiscation, condemnation, seizure or
forfeiture of all or any part of the Pledged Collateral by any governmental
authority (or any Person acting under color of governmental authority); (iii)
any and all accounts, general intangibles, contract rights, inventory,
equipment, money, drafts, instruments, deposit accounts, or other tangible and
intangible property of the Grantor resulting from the sale (authorized or
unauthorized) or other disposition of the Pledged Collateral, and any proceeds
of such proceeds; (iv) any and all other amounts from time to time paid or
payable under or in connection with any of the Pledged Collateral; and (v)
proceeds from the sale, transfer, or other disposition of the Pledged Collateral
by the Collateral Agent.

"Trustee" shall mean the trustee under the Indenture and includes its successors
and assigns.

2.                  Pledge of Pledged Collateral. Grantor does hereby pledge,
hypothecate, assign, transfer, set over, deliver and grant a security interest
in and to the Collateral Agent in all that stock of Grantor set forth and
described on Exhibit "A" attached hereto and by reference made part hereof
(which stock is simultaneously herewith being delivered to the Collateral Agent,
accompanied by blank stock powers signed by Grantor), together with any and all
other securities, cash or other property at any time and from time to time
receivable or otherwise distributed in respect of or in exchange for any or all
of such pledged stock, and together with the proceeds thereof (hereinafter said
property being collectively referred to as the "Pledged Collateral"), all as
security for the payment and performance when due of all the following
(collectively, the "Secured Obligations"):

(a)                the Borrowers' full and prompt payment when due (whether at
the stated maturity, by acceleration or otherwise), and the due performance, of
all Facility Obligations; and

(b)               the full and prompt payment when due (whether at the stated
maturity, by acceleration or otherwise) of all principal of, and interest on,
the Indenture Debt, and the due performance of all other obligations of Grantor
arising under or in connection with the Indenture Documents; and

(c)                all obligations and liabilities of Grantor under this
Agreement, the Parent Guaranty, or any other Loan Document to which the Grantor
is a party; and

(d)               all obligations and liabilities of Grantor under the Indenture
Documents to which it is a party; and

(e)                all other obligations and liabilities owing by Grantor to any
of the Administrative Agent, the Collateral Agent, the Trustee, any Lender, or
any Noteholder under this Agreement, the Credit Agreement or any other Loan
Document, or the Indenture Documents (including, without limitation,
indemnities, fees and other amounts payable thereunder); and

(f)                 the full and prompt payment when due of any and all
Collateral Agent Expenses;

in all cases whether now existing, or hereafter incurred under, arising out of,
or in connection with, this Agreement, the Credit Agreement or any other Loan
Document, or the Indenture Documents, including any such interest or other
amounts which, but for any automatic stay under Section 362(a) of the Bankruptcy
Code, would become due. It is acknowledged and agreed that the term "Secured
Obligations" shall include, without limitation, extensions of credit and
issuances of securities of the types described above, whether outstanding on the
date of this Agreement or extended or purchased from time to time after the date
of this Agreement.

 

3.                  Holding of Pledged Collateral and Rights. Grantor
acknowledges and agrees that the Collateral Agent shall hold the Pledged
Collateral, together with all right, title, interest, powers, privileges and
preferences pertaining or incidental thereto forever, subject, however, to
return of the Pledged Collateral (or such portion thereof as may be existing
from time to time hereafter after giving effect to the terms hereof) by the
Collateral Agent to the Grantor upon payment and performance in full of all the
Secured Obligations and termination by the Lenders in writing of any and all
Commitments. 

4.                  Representations and Warranties. In order to induce the
Collateral Agent to accept this Agreement, Grantor hereby represents and
warrants to the Collateral Agent: (i) that Grantor has the complete and
unconditional authority to pledge the Pledged Collateral, holds (or will hold on
date of pledge thereof) the Pledged Collateral free and clear of any and all
liens, charges, encumbrances and security interests thereon (other than in favor
of Collateral Agent) and has (or will have on date of pledge thereof) good
right, title and legal authority to pledge the Pledged Collateral in the manner
contemplated herein; (ii) that all stock now owned or hereafter owned by Grantor
and constituting or which will constitute Pledged Collateral hereunder are, or
will be on date of pledge thereof, validly issued, fully paid and
non‑assessable; and (iii) that no authorization, approval, or other action by,
and no notice to or filing with, any governmental authority or regulatory body
is required either (a) for the pledge by Grantor of the Pledged Collateral
pursuant to this Agreement or for the execution, delivery or performance of this
Agreement by Grantor or (b) for the exercise by the Collateral Agent of the
voting or other rights provided for in this Agreement or the remedies in respect
of the Pledged Collateral pursuant to this Agreement (except as may be required
in connection with such disposition by laws affecting the offering and sale of
securities generally). 

5.                  Delivery of Additional Securities; Further Assurances.
Grantor further covenants with the Collateral Agent that Grantor will cause any
additional securities or other property issued to or received by Grantor with
respect to any of the Pledged Collateral, whether for value paid by the Grantor
or otherwise, and including stock dividends, to be deposited forthwith with the
Collateral Agent and be pledged hereunder, in each case accompanied by blank
stock powers or other proper instruments of assignment duly executed by Grantor
in such form as may be required by the Collateral Agent. Grantor agrees that at
any time and from time to time, at the expense of Grantor, Grantor will promptly
execute and deliver all further instruments and documents, and take all further
action that the Collateral Agent may reasonably request, in other to perfect and
protect the security interest granted or purported to be granted hereby or to
enable the Collateral Agent to exercise and enforce its rights, powers and
remedies hereunder with respect to any Pledged Collateral. 

6.                  Name in Which Pledged Collateral Held. Grantor further
acknowledges and agrees that the Collateral Agent may hold any of the Pledged
Collateral in its own name, endorsed or assigned in blank or in the name of any
nominee or nominees, and that the Collateral Agent may deliver any or all of the
Pledged Collateral to the issuer or issuers thereof for the purpose of making
denominational exchanges or registrations or transfer or for such other purposes
in furtherance of this Agreement as the Collateral Agent may deem advisable. 

7.                  Voting Rights; Dividends, Etc.

7.1 So long as no Event of Default (as defined in Section 11 hereof) shall have
occurred and be continuing:

(a)                Grantor shall be entitled to exercise any and all voting and
other consensual rights pertaining to the Pledged Collateral or any part thereof
for any purpose not prohibited by the terms of this Agreement; provided,
however, that following request therefor by the Collateral Agent, Grantor shall
not exercise or refrain from exercising any such right if such action would have
a material adverse effect on the value of the Pledged Collateral or any part
thereof; and, provided further, that Grantor shall give the Collateral Agent at
least ten days' written notice of the manner in which it intends to exercise any
such right.

(b)               Collateral Agent shall execute and deliver (or cause to be
executed and delivered) to Grantor all such proxies and other instruments as
Grantor may reasonably request for the purpose of enabling Grantor to exercise
the voting and other rights which it is entitled to exercise pursuant to clause
(a) above.

(c)                Grantor shall be entitled to receive and retain any cash
dividends, interest or any other distribution of property paid, payable or
otherwise distributed in cash in respect of the Pledged Collateral.

7.2 Upon the occurrence and during the continuance of an Event of Default:

(a)                All rights of Grantor to exercise the voting and other
consensual rights which it would otherwise be entitled to exercise pursuant to
Section 7.1(a) shall cease, and all such rights shall thereupon become vested in
the Collateral Agent who shall thereupon have the sole right to exercise such
voting and other consensual rights; provided, however, Grantor shall continue to
have the rights to exercise such voting and other consensual rights
notwithstanding the occurrence and continuance of an Event of Default until the
Collateral Agent delivers a notice to Grantor of its intention to exercise such
voting and other consensual rights.

(b)               All rights of Grantor to receive cash dividends, interest, or
other distributions in cash, which it would otherwise be authorized to receive
and retain pursuant to Section 7.1(a) shall cease and all rights to dividends,
interest and other distributions shall thereupon be vested in the Collateral
Agent, who shall thereupon have the sole right to receive and hold as Pledged
Collateral such interest or other distributions. All dividends, interest and
other distributions which are received by Grantor contrary to these provisions
shall be received in trust for the benefit of the Collateral Agent, shall be
segregated from other property or funds of Grantor and shall be forthwith
delivered to the Collateral Agent as Pledged Collateral in the same form as so
received (with any necessary endorsement).

8.                  Lender Appointed Attorney‑in‑Fact. Grantor hereby
irrevocably appoints the Collateral Agent as Grantor's attorney‑in‑fact
following an Event of Default, with full authority in the place and stead of
Grantor and in the name of Grantor or otherwise, from time to time in the
Collateral Agent's discretion, to take any action and to execute any instrument
which the Collateral Agent may deem reasonably necessary or advisable to
accomplish the purposes of this Agreement, including, without limitation, to
receive, endorse and collect all instruments made payable to Grantor
representing any dividend, interest payment or other distribution in respect of
the Pledged Collateral or any part thereof and to give full discharge for the
same, when and to the extent permitted by this Agreement. 

9.                  Lender May Perform. If Grantor fails to perform any
agreement contained herein, Collateral Agent may itself perform, or cause
performance of, such agreement, and the expenses of the Collateral Agent
incurred in connection therewith shall constitute Collateral Agent Expenses and
be payable as provided herein. 

10.              Reasonable Care. Collateral Agent shall be deemed to have
exercised reasonable care in the custody and preservation of the Pledged
Collateral in its possession if the Pledged Collateral is accorded treatment
substantially equal to that which the Collateral Agent accords its own property,
it being understood that the Collateral Agent shall not have responsibility for
(i) ascertaining or taking action with respect to calls, conversions, exchanges,
maturities, tenders or other matters relative to any Pledged Collateral, whether
or not the Collateral Agent has or is deemed to have knowledge of such matters,
unless reasonably requested to do so by Grantor, or (ii) taking any necessary
steps to preserve rights against any parties with respect to any Pledged
Collateral. 

11.              Events of Default. The following shall constitute "Events of
Default" hereunder:

11.1 Should Grantor assign, attempt to encumber, subject to further pledge or
security interest, sell, transfer or otherwise dispose of any of the Pledged
Collateral without the prior written consent of the Collateral Agent;

11.2 If an "Event of Default" occurs under Article 7 of the Credit Agreement or
under any other Loan Document; or

11.3 If Grantor shall fail to perform any covenant or agreement set forth
herein, or in any document, instrument or agreement evidencing, securing,
guaranteeing or pertaining to any of the Secured Obligations.

12.              Remedies. If any Event of Default shall have occurred and be
continuing:

12.1 Collateral Agent may exercise (in compliance with all applicable securities
laws) in respect of the Pledged Collateral, in addition to other rights and
remedies provided for herein or otherwise available to it, all the rights and
remedies of a secured party on default under the Uniform Commercial Code in
effect in the State of Georgia at that time, and the Collateral Agent may also,
without notice except as specified below, sell (in compliance with all
applicable securities laws) the Pledged Collateral or any part thereof in one or
more parcels at public or private sale, at any exchange, over the counter or at
any of the Collateral Agent's offices or elsewhere, for cash, on credit or for
future delivery, and at such price or prices and upon such other terms as the
Collateral Agent may deem commercially reasonable or otherwise in such manner as
necessary to comply with applicable federal and state securities laws.
Collateral Agent shall be authorized at any such sale (if it deems it advisable
to do so) to restrict the prospective bidders or purchasers to persons who will
represent and agree that they are purchasing the Pledged Collateral for their
own account for investment and not with a view to the distribution or sale
thereof, and upon consummation of any such sale the Collateral Agent shall have
the right to assign, transfer and deliver to the purchaser or purchasers at any
such sale and such purchasers shall hold the property sold absolutely, free from
any claim or right on the part of Grantor, and Grantor hereby waives (to the
extent permitted by law) all rights of redemption, stay and/or appraisal which
it now has or may at any time in the future have under any rule of law or
statute now existing or hereafter enacted. To the extent notice of sale shall be
required by law, Collateral Agent shall give Grantor at least five days' notice
of the time and place of any public sale or the time after which any private
sale is to be made, which Grantor agrees shall constitute reasonable
notification. At any such sale, the Collateral Agent may bid (which bid may be,
in whole or in part, in the form of cancellation of Secured Obligations) for and
purchase the whole or any part of the Pledged Collateral. Collateral Agent shall
not be obligated to make any sale of Pledged Collateral regardless of notice of
sale having been given. Collateral Agent may adjourn any public or private sale
from time to time by announcement at the time and place fixed therefor, and such
sale may, without further notice, be made at the time and place to which it was
so adjourned. If sale of all or any part of the Pledged Collateral is made on
credit or for future delivery, the Pledged Collateral so sold may be retained by
the Collateral Agent until the sale price is paid by the purchaser or purchasers
thereof, but Collateral Agent shall not incur any liability in case any such
purchaser or purchasers shall fail to take up and pay for the Pledged Collateral
so sold and, in case of any such failure, such Pledged Collateral may be sold
again upon like notice. Grantor agrees that any sale of the Pledged Collateral
conducted by the Collateral Agent in accordance with the foregoing provisions of
this Section 12 shall be deemed to be a commercially reasonable sale under
Uniform Commercial Code as adopted in the State of Georgia. As an alternative to
exercising the power of sale herein conferred upon it, Collateral Agent may
proceed by a suit or suits at law or in equity to foreclose the security
interest granted under this Agreement and to sell the Pledged Collateral, or any
portion thereof, pursuant to a judgment or decree of a court or courts of
competent jurisdiction.

12.2 Any cash held by the Collateral Agent as Pledged Proceeds (including,
without limitation, all Pledged Proceeds received by the Collateral Agent in
respect of any sale of, collection from, or other realization upon or any part
of the Pledged Collateral following the occurrence of an Event of Default, shall
be applied in the same manner as "Proceeds" are applied pursuant to Section 5.4
of that certain Security Agreement dated as of the Closing Date by and among
Airborne Express, Inc., ABX Air, Inc., Airborne, Inc., Wilmington Air Park,
Inc., Sky Courier, Inc., Aviation Fuel, Inc., Sound Suppression, Inc., Airborne
FTZ, Inc., and other parties which may from time to time be joined as Assignors
thereunder, and Wachovia Bank, N.A., as Collateral Agent. The Grantor shall be
liable for any deficiency.

 

13.              Expenses. Grantor will upon demand pay to the Collateral Agent
the amount of any and all Collateral Agent Expenses. 

14.              Registration Rights. In furtherance of the right of the
Collateral Agent to sell any or all of the Pledged Collateral pursuant to
Section 12 hereof, Grantor agrees that, following the occurrence of an Event of
Default upon request of the Collateral Agent and without expense to the
Collateral Agent, it will (a) use its best efforts to obtain all necessary
governmental approvals for the sale by the Collateral Agent of the Pledged
Collateral or any part thereof, (b) prepare, cause to be filed and use its best
efforts to cause to become effective with respect to the Pledged Collateral,
regardless of the number of shares or principal amount thereof, then held by the
Collateral Agent one or more registration statements under the Securities Act of
1933, as amended (the "Act"), or one or more qualifications for exemption from
registration under the Act, or one or more similar documents pursuant to any
statute then in effect corresponding to the Act, relating to any public offering
or sale by the Collateral Agent of such Pledged Collateral, (c) prepare, cause
to be filed and use its best efforts to have such Pledged Collateral qualified
or registered under the securities laws of such other jurisdictions as
Collateral Agent may request in connection with any such offering or sale, (d)
include in any such registration statement, qualification statement or similar
document all appropriate information relating to the transaction or transactions
in which the Collateral Agent proposes to offer or sell such Pledged Collateral,
(e) cause to be filed such post‑effective amendments and supplements to each
such registration statement, qualification statement or similar document
(including, without limitation, any prospectus or offering circular) as may be
necessary to make any statement therein contained not untrue or misleading, and
such filing, qualification or registration to be kept effective for such period
as the Collateral Agent may deem appropriate to facilitate the sale or other
disposition of such Pledged Collateral, (f) furnish Collateral Agent with such
number of copies of each such registration statement, qualification statement or
similar document, preliminary prospectus, prospectus, offering circular and any
post‑effective amendments or supplements thereto as the Collateral Agent may
request, and (g) do such further acts and things as the Collateral Agent may
deem necessary or advisable to effectuate the offering and sale by the
Collateral Agent of such Pledged Collateral. Grantor further agrees to indemnify
and hold harmless the Collateral Agent and each underwriter (within the meaning
of the Act or any statute then in effect corresponding to the Act) acting in the
transaction, and each person, firm or corporation controlling (within the
meaning of the Act or such corresponding statute) Collateral Agent or
underwriter, from and against any and all claims, actions, damages, demands,
judgments, losses, liabilities and expenses based upon or arising out of any
actual or alleged untrue statement of a material fact contained in any such
registration statement, qualification statement or similar document, or part
thereof, or any actual or alleged omission to state a material fact required to
be stated in any such registration statement, qualification statement or similar
document, or part thereof, or necessary to make the statements contained therein
not misleading; provided, however, that Grantor shall have no liability to any
Person under the foregoing indemnity on account of any actual or alleged untrue
or misleading statement contained in, or any actual or alleged omission from,
any information furnished in writing to Grantor by such Person specifically for
use in such registration statement, qualification statement or similar document.
The registration rights provided in this Section 14 may be transferred to any
purchaser of the Pledged Collateral, or any portion thereof, at any sale
described in Section 12 hereof. Collateral Agent may exercise its rights and
powers under this Section prior to any sale pursuant to Section 12 or,
alternatively, Collateral Agent may assign such rights to the purchaser at any
such sale who shall then have the registration rights specified herein. 

15.              Security Interest Absolute. All rights of the Collateral Agent
hereunder, the security interest granted to the Collateral Agent hereunder, and
all obligations of Grantor hereunder, shall be absolute and unconditional
irrespective of any of the following, and Grantor expressly consents to the
occurrence of any of such events and waives any defense arising therefrom:

(a)                any lack of validity or enforceability of the Credit
Agreement or any other agreement or instrument relating thereto;

(b)               any change in the time, manner or place of payment of, or in
any other term of, all or any of the Secured Obligations, or any other amendment
or waiver of or any consent to any departure from the Credit Agreement, the Loan
Documents, the Indenture Documents, or any other agreement or instrument
relating thereto;

(c)                any exchange, release or non‑perfection of any other
collateral, or any release or amendment or wavier of or consent to or departure
from the Parent Guaranty, the Subsidiary Guaranty, or any other guaranty, for
all or any of the Secured Obligations; or

(d)               any other circumstance which might otherwise constitute a
defense available to, or a discharge of, the Grantor in respect of the Secured
Obligations or in respect of this Agreement.

16.              Stock of Receivables Subsidiary; Limitation on Actions. The
parties hereto acknowledge that the pledge hereunder of the Pledged Collateral
is prohibited by the terms of that certain Amended and Restated Receivables
Purchase Agreement dated as of December 28, 2000 (the "Purchase Agreement")
among ACI, as Seller, Airborne Express, Inc., as Servicer ("Airborne Express"),
Blue Ridge Asset Funding Corporation, as Purchaser ("Blue Ridge") and Wachovia
Bank, N.A., as Agent ("Blue Ridge Agent"), as the same may be amended,
supplemented, restated or otherwise modified from time to time. To induce Blue
Ridge and Blue Ridge Agent to permit the pledge of the Pledged Collateral, the
parties hereto agree to the following limitations.

(a)                Anything herein or any other Collateral Document to the
contrary notwithstanding:

(i)                  The Collateral Agent, for itself and for the Secured
Creditors, agrees that, upon exercising its rights with respect to the Pledged
Collateral, it will not take any action adverse to the interests of Blue Ridge
and/or the Blue Ridge Agent, including, without limitation, (A) causing ACI to
violate or breach any term or provision in any Transaction Documents (as defined
in the Purchase Agreement), (B) making any dividends or distributions on such
Pledged Collateral, (C) amending or altering any of ACI's organizational
documents, or (D) causing ACI to incur any debt, other than, in each case, as
may be allowed in the Transaction Documents; provided that any prepayment or
termination of the Purchase Agreement in accordance with the terms of the
Transaction Documents shall not be deemed adverse to the interests of Blue Ridge
and/or the Blue Ridge Agent;

(ii)                In the event that the Collateral Agent receives any payments
or funds relating to the Securitization Assets prior to the date on which the
Aggregate Unpaids and all other amounts owed under the Transaction Documents
have been indefeasibly paid in full in cash in accordance with the terms of the
Transaction Documents, the Collateral Agent shall hold such payments or funds in
trust for the benefit of the Blue Ridge Agent, and shall promptly transfer such
payments or funds to the Blue Ridge Agent;

(iii)               The provisions of this Section 16 shall continue to be
effective or be reinstated, as the case may be, if at any time any payment of
the Aggregate Unpaids or any other amounts owed under the Transaction Documents
is rescinded or must otherwise be returned by the Blue Ridge Agent or any
Purchaser (as such term is defined in the Purchase Agreement) upon the
insolvency, bankruptcy or reorganization of the Airborne Express or ACI or
otherwise, all as though such payment had not been made; and

(iv)              Prior to the date on which the Aggregate Unpaids and all other
amounts owed under the Transaction Documents have been indefeasibly paid in full
in cash in accordance with the terms of the Transaction Documents, neither the
Collateral Agent nor any Secured Creditor shall object to or contest in any
administrative, legal or equitable action or proceeding including, without
limitation, any insolvency, bankruptcy, receivership, liquidation,
reorganization, winding up, readjustment, composition or other similar
proceeding relating to the Borrowers or the Receivables Subsidiary or their
respective property) or object to or contest in any other manner (1) the
interests of ACI and its successors and assigns in any of the assets transferred
by Airborne Express to ACI pursuant to the Transaction Documents and/or (2) the
interests of the Blue Ridge Agent, the Purchaser and/or any Liquidity Bank (as
defined in the Purchase Agreement) in the Securitization Assets. Neither the
Collateral Agent nor any Secured Creditor shall object to or contest in any
manner the receipt of any payment by the Blue Ridge Agent and/or the Purchaser
with respect to the Securitization Assets for the satisfaction of the Aggregate
Unpaids; and

(b)               The Blue Ridge Agent shall be a third-party beneficiary with
respect to this Section 16.

(c)                So long as the Aggregate Unpaids and all other amounts owed
under the Transaction Documents have not been indefeasibly paid in full in cash
in accordance with the terms of the Transaction Documents, this Section 16 shall
not be amended, modified or supplemented without the prior written consent of
the Blue Ridge Agent, which consent shall be at the sole discretion of the Blue
Ridge Agent, and the provisions of this Section 16 shall be contained in any
agreement that amends and restates this Agreement.

17.              Amendments, Etc. No amendment or waiver of any provision of
this Agreement nor consent to any departure by Grantor herefrom shall in any
event be effective unless the same shall be in writing and signed by the
Collateral Agent and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given. 

18.              No Waiver; Cumulative Remedies. No failure on the part of the
Collateral Agent to exercise, and no delay in exercising, any right, power or
remedy hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right, power or remedy by the Collateral Agent
preclude any other or further exercise thereof or the exercise of any other
right, power or remedy. All remedies hereunder are cumulative and are not
exclusive of any other remedies provided by law. 

19.              Severability. If any provision of any of this Agreement or the
application thereof to any party hereto or circumstances shall be invalid or
unenforceable to the extent, the remainder of this Agreement and the application
of such provisions to any other party thereto or circumstances shall not be
affected thereby and shall be enforced to the greatest extent permitted by law. 

20.              Notices. All notices, requests and demands to or upon the
respective parties hereto shall be deemed to have been given or made when
personally delivered or deposited in the mail, registered or certified mail,
postage prepaid, addressed as follows or to such other address as may be
designated hereafter in writing by the respective parties hereto:

Grantor:

AIRBORNE, INC.
3101 Western Avenue
Seattle, Washington 98121
Attn: CFO and General Counsel

Collateral Agent:

WACHOVIA BANK, N.A.
191 Peachtree Street, N.E.
Atlanta, Georgia 30303
Attn: Syndications Group

except in cases where it is expressly provided herein or by applicable law that
such notice, demand or request is not effective until received by the party to
whom it is addressed.

 

21.              Time is of the Essence. Time is of the essence in this
Agreement. 

22.              Interpretation. No provision of this Agreement shall be
construed against or interpreted to the disadvantage of any party hereto by any
court or other governmental or judicial authority by reason of such party having
or being deemed to have structured or dictated such provision. 

23.              Lender Not a Joint Venturer. Neither this Agreement nor any
agreements, instruments, documents or transactions contemplated hereby shall in
any respect be interpreted, deemed or construed as making the Collateral Agent a
partner or joint venturer with Grantor or as creating any similar relationship
or entity, and Grantor agrees that it will not make any contrary assertion,
contention, claim or counterclaim in any action, suit or other legal proceeding
involving the Collateral Agent and Grantor. 

24.              Jurisdiction. GRANTOR AGREES THAT ANY LEGAL ACTION OR
PROCEEDING WITH RESPECT TO THIS AGREEMENT MAY BE BROUGHT IN THE COURTS OF THE
STATE OF GEORGIA OR THE UNITED STATES OF AMERICA FOR THE NORTHERN DISTRICT OF
GEORGIA, ATLANTA DIVISION, ALL AS THE COLLATERAL AGENT MAY ELECT. BY EXECUTION
OF THIS AGREEMENT, THE GRANTOR HEREBY SUBMITS TO EACH SUCH JURISDICTION, HEREBY
EXPRESSLY WAIVING WHATEVER RIGHTS MAY CORRESPOND TO IT BY REASON OF ITS PRESENT
OR FUTURE DOMICILE. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE COLLATERAL
AGENT TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE GRANTOR IN
ANY OTHER JURISDICTION OR TO SERVE PROCESS IN ANY MANNER PERMITTED OR REQUIRED
BY LAW. IN FURTHERANCE OF THE FOREGOING, THE GRANTOR HEREBY APPOINTS THE
SECRETARY OF STATE OF THE STATE OF GEORGIA AS ITS AGENT FOR SERVICE OF PROCESS. 

25.              Acceptance. This Agreement shall not become effective unless
and until delivered to the Collateral Agent at its principal office in Atlanta,
Fulton County, Georgia and accepted in writing by the Collateral Agent
thereafter at such office as evidenced by its execution hereof (notice of which
delivery and acceptance are hereby waived by Grantor). 

26.              Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Georgia and shall inure to
the benefit of and be binding upon the successors and assigns of the parties
hereto. 

27.              WAIVER OF JURY TRIAL. THE GRANTOR AND THE COLLATERAL AGENT
HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING
OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

IN WITNESS WHEREOF, Grantor has caused this Agreement to be duly executed under
seal as of the date first above written.

GRANTOR:

 

AIRBORNE, INC., a Delaware corporation

(SEAL)

 

 

By:_/s/ Lanny H. Michael    
Title: Senior Vice President and CFO

 

 

Attest:_/s/_David C. Anderson    
Title: Secretary

COLLATERAL AGENT:

 

WACHOVIA BANK, N.A., as
Collateral Agent

 

 

By:_/s/ Howard Kim    
Title: Senior Vice President

 

 

EXHIBIT "A"

Description of Securities

10,000 shares of the common stock of Airborne Credit, Inc., a Delaware
corporation, which shares represent all of the issued and outstanding shares of
Airborne Credit, Inc.