Exhibit 10.3

LOAN AND SECURITY AGREEMENT

(aircraft)

Loan Number: 1000129301

This Agreement is dated as of August 24, 2006 and is executed by and between
CHASE EQUIPMENT LEASING INC. (“Lender”), with Lender’s principal office located
at 1111 Polaris Parkway, Suite A3 (OH1-1085), Columbus, Ohio 43240 and the
borrower identified below (“Borrower”):

 

Borrower Name:   ABX Air, Inc. Borrower Address:   145 Hunter Drive, Wilmington,
Ohio 45177

1. GRANT OF SECURITY INTEREST. Borrower grants, pledges and assigns to Lender a
security interest in all of Borrower’s respective right, title and interest in
and to the property described on the attached Schedule A-1, now or hereafter
arising or acquired, wherever located, together with any and all additions,
accessions, parts, accessories, substitutions and replacements thereof, now or
hereafter installed in, affixed to or used in connection with said property (the
“Equipment”), in all proceeds thereof, cash and non-cash, including, but not
limited to, proceeds of notes, checks, instruments, indemnity proceeds, or any
insurance on such and any refund or rebate of premiums on such (“Collateral”).
This Agreement secures the prompt payment and complete performance in full when
due, whether at the stated maturity, by acceleration or otherwise, of all
payment and other obligations of Borrower under or in connection with this
Agreement, the Business Purpose Promissory Note executed in connection with the
Loan Number referenced above with Borrower as the maker (the “Note”), and any
and all renewals, extensions or substitutions for any such instrument, and also
any and all other liabilities of Borrower to Lender, or any affiliate of either
Lender or JPMORGAN CHASE & CO., direct or indirect, absolute or contingent, due
or to become due, now existing or hereafter arising, and without limitation, all
indebtedness, leases, debts and liabilities (including principal, interest, late
charges, collection costs, attorney fees and the like) (collectively, the
“Obligations”). The absence of any reference to this Agreement in any documents,
instruments or agreements evidencing or relating to any Obligations secured
hereby shall not limit or be construed to limit the scope of this Agreement.
While any Obligations are outstanding, Borrower is and will continue to be (or,
with respect to after acquired property, will be when acquired) the legal and
beneficial owner of the Collateral free and clear of any Lien except for the
security interest created by this Agreement. No effective Uniform Commercial
Code (“UCC”) financing statement or other instrument providing notice of a
security interest in all or any part of the Collateral is on file in any
recording office, except those in favor of Lender. At its sole expense, Borrower
shall protect and defend Lender’s first priority security interest in the
Collateral against all claims and demands whatsoever.

2. MAINTENANCE; USE AND OPERATION; LOCATION.

2.1 At its sole expense, Borrower shall: (a) repair and maintain the Equipment
in good condition and working order and supply and install all replacement parts
or other devices when required to so maintain the Equipment or when required by
applicable law or regulation, which parts or devices shall automatically become
part of the Equipment; (b) use and operate the Equipment in a careful manner in
the normal course of its business and only for the purposes for which it was
designed in accordance with the manufacturer’s warranty requirements, and comply
with all laws and regulations relating to the Equipment, and obtain all permits
or licenses necessary to install, use or operate the Equipment; (c) make no
alterations, additions, subtractions, upgrades or improvements to the Equipment
with a cost in excess of $150,000.00 without Lender’s prior written consent
(which consent will not be unreasonably withheld), but any such alterations,
additions, upgrades or improvements shall automatically become part of the
Equipment; (d) maintain, inspect, service and repair, overhaul and test the
Equipment in accordance with the FAA approved maintenance program,
manufacturer’s approved maintenance program, FAA airworthiness directives, and
the manufacturer’s alert bulletins and urgently recommended service bulletins
and procedures, and perform all duties and tasks which would be required to
maintain the Equipment, including the engines, in full compliance with the
manufacturer’s specification (i) so as to keep the Equipment in as good
operating condition as when delivered to the Borrower hereunder, ordinary wear
and tear excepted, and (ii) so as to keep the Equipment in such operating
condition as may be necessary to enable the airworthiness certification of such
Equipment to be maintained in good standing at all times under the Act (as
defined in Section 19 hereof); and (e) maintain all records, logs and other
materials required by the FAA to be maintained in respect of the Equipment.
Lender has the right upon reasonable notice to Borrower to inspect the Equipment
wherever located. Notwithstanding anything to the contrary contained herein,
Borrower may remove an Engine from the Airframe and install an Engine on another
airframe owned or leased by Borrower provided that: (i) the Engine does not
become subject to any Lien (other than Lender’s security interest) or claim of
ownership; and (ii) Borrower installs a Replacement Engine on the Airframe.
“Airframe” means the airframe described on the Schedule A-1 attached hereto.
“Engine” shall mean any one of the engines described on the Schedule A-1
attached hereto. “Replacement Engine” shall mean an engine of the same make and
model (or an improved model engine) as the Engine.

2.2 The Equipment will not be operated, used or located outside of the United
States of America (“USA”) by Borrower or any other party; provided, that
Borrower may temporarily use, operate and locate the Equipment outside the USA

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(any country or jurisdiction other than the USA hereinafter called a “Foreign
Jurisdiction”) so long as all of the following conditions are satisfied: (a) the
Geneva Convention on the International Recognition of Rights in Aircraft
together with the necessary enacting laws, rules and regulations for such Geneva
Convention (or some similar treaty, laws and regulations) shall be in effect in
any such Foreign Jurisdiction; (b) any notices, statements, documents and
instruments necessary or required to be filed in any such Foreign Jurisdiction
for the operation, use or location of the Equipment therein shall have been
filed in accordance with applicable law and regulation and Borrower shall
provide file stamped copies to Lender upon Lender’s request from time to time;
(c) the Equipment shall remain insured in accordance with the terms of this
Agreement at all times and shall be insured in accordance with the laws and
regulations of each Foreign Jurisdiction in or over which the Equipment will be
operated; (d) the Equipment will not be registered under the laws of any Foreign
Jurisdiction and shall remain registered under the Act at all times; and (e) the
Equipment shall not be used, operated or located in any Foreign Jurisdiction if
at the time of such use, operation or location (i) the insurance covering the
Equipment would not permit the use, operation or location of the Equipment in
such Foreign Jurisdiction or such use, operation or location would otherwise
void, result in the cancellation of, limit or diminish the coverage provided by
the applicable insurance policy, or (ii) any law, regulation or presidential
executive order of the USA prohibits the use, operation or location of the
Equipment in such Foreign Jurisdiction, or (iii) there is any material risk of
war (declared or civil), of other hostilities or of confiscation, seizure or
detention of the Equipment in such Foreign Jurisdiction, or (iv) the USA does
not have diplomatic relations with such Foreign Jurisdiction. The Equipment
shall be hangered at the location specified on Schedule A-1.

3. INSURANCE. At its sole expense, Borrower at all times shall keep the
Equipment insured against all risks of loss or damage from every cause
whatsoever (including, without limitation, standard war risk insurance coverage)
for an amount not less than the greater of the full replacement value of the
Equipment or 102% of the outstanding principal balance of the Note. All insurers
shall be reasonably satisfactory to Lender. Borrower shall deliver to Lender
satisfactory evidence of such coverage. Proceeds of any insurance covering
damage or loss of the Equipment shall be payable to Lender as loss payee and
shall be applied as set forth in Section 4 below. If an Event of Default occurs
and is continuing, then Borrower automatically appoints Lender as Borrower’s
attorney-in-fact with full power and authority in the place of Borrower and in
the name of Borrower or Lender to make claim for, receive payment of, and sign
and endorse all documents, checks or drafts for loss or damage under any such
policy. Each insurance policy will require that the insurer give Lender at least
30 days prior written notice of any cancellation of such policy and will require
that Lender’s interests remain insured regardless of any act, error, omission,
neglect or misrepresentation of Borrower. The insurance maintained by Borrower
shall be primary without any right of contribution from insurance that may be
maintained by Lender.

4. LOSS OR DAMAGE. Borrower bears the entire risk of loss, theft, damage or
destruction of Equipment in whole or in part from any reason whatsoever
(“Casualty Loss”). No Casualty Loss to Equipment shall relieve Borrower from the
obligation to pay the installment payments or from any other obligation under
this Agreement. In the event of Casualty Loss to any item of Equipment, Borrower
shall immediately notify Lender of the same and Borrower shall, if so directed
by Lender, immediately repair the same. If Lender determines that the Equipment
has suffered a Casualty Loss beyond repair or a Casualty Loss which
substantially and permanently reduces the fair market value of the Equipment
(“Lost Equipment”), then Borrower, at the option of Lender, shall:
(1) immediately replace the Lost Equipment with similar equipment in good
repair, condition and working order free and clear of any Liens and deliver to
Lender a bill of sale covering the replacement equipment, in which event such
replacement equipment shall automatically be Equipment under this Agreement; or
(2) on the installment payment due date which is at least 30 but no more than 60
days after the date of the Casualty Loss (“Loss Payment Due Date”), pay to
Lender all accrued and unpaid principal, interest, late charges and other
amounts then due and payable by Borrower under this Agreement or the Note plus
the remaining principal balance of the Note as of the Loss Payment Due Date as
determined by Lender’s records. Upon payment by Borrower of all amounts due
under the above clause (2), the security interest of the Lender in the Lost
Equipment will terminate.

5. TAXES. Borrower will pay promptly when due all taxes, assessments and
governmental charges upon or against Borrower, the Collateral or the property or
operations of Borrower, in each case before same becomes delinquent and before
penalties accrue thereon, unless and to the extent that same are being contested
in good faith by appropriate proceedings.

6. GENERAL INDEMNITY. Borrower assumes all risk and liability for, and shall
defend, indemnify and keep Lender harmless on an after-tax basis from, any and
all liabilities, obligations, losses, damages, penalties, claims, actions,
suits, costs and expenses, including reasonable attorney fees and expenses, of
whatsoever kind and nature imposed on, incurred by or asserted against Lender,
in any way relating to or arising out of the manufacture, purchase, acceptance,
rejection, ownership, possession, use, selection, delivery, operation,
condition, sale, return or other disposition of the Equipment or any part
thereof (including, without limitation, any claim for latent or other defects,
whether or not discoverable by Borrower or any other person, any claim for
negligence, tort or strict liability, any claim under any environmental
protection or hazardous waste law and any claim for patent, trademark or
copyright infringement). Borrower will not indemnify Lender under this section
for loss or liability caused by the gross negligence or willful misconduct of
Lender. In this section, “Lender” also includes any director, officer, employee,
agent, successor or assign of Lender. Borrower’s obligations under this section
shall survive the expiration, cancellation or termination of this Agreement.

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7. PERSONAL PROPERTY. Borrower represents and agrees that the Equipment is, and
shall at all times remain, separately identifiable personal property. Lender may
display notice of its interest in the Equipment by any reasonable identification
and Borrower shall not alter or deface any such indicia of Lender’s interest.

8. FINANCIAL & OTHER REPORTS. Borrower agrees to furnish to Lender: (a) annual
audited financial statements setting forth the financial condition and results
of operation of Borrower (financial statements shall include balance sheet,
income statement and statement of cash flows and all notes and auditor’s report
thereto) within 90 days of the end of each fiscal year of Borrower; (b) upon
Lender’s request, quarterly financial statements setting forth the financial
condition and results of operation of Borrower within 45 days of the end of each
of the first three fiscal quarters of Borrower; and (c) such other financial
information as Lender may from time to time reasonably request including,
without limitation, financial reports filed by Borrower with federal or state
regulatory agencies. All such financial information shall be prepared in
accordance with generally accepted accounting principles on a basis consistently
applied. Borrower will promptly notify Lender in writing with full details if
any event occurs or any condition exists which constitutes, or which but for a
requirement of lapse of time or giving of notice or both would constitute, an
Event of Default under this Agreement or which might materially and adversely
affect the financial condition or operations of Borrower or any affiliate of
Borrower. Borrower will promptly notify Lender in writing of the commencement of
any litigation to which Borrower or any of its subsidiaries or affiliates may be
a party (except for litigation in which Borrower’s or the affiliate’s contingent
liability is fully covered by insurance) which, if decided adversely to Borrower
would materially adversely affect or impair the security interest of Lender to
the Equipment or which, if decided adversely to Borrower would materially
adversely affect the business operations or financial condition of Borrower.
Borrower will immediately notify Lender, in writing, of any judgment against
Borrower if such judgment would have the effect described in the preceding
sentence.

9. NO CHANGES IN BORROWER. Borrower shall not: (a) liquidate, dissolve or
suspend its business; (b) sell, transfer or otherwise dispose of all or a
majority of its assets, except that Borrower may sell its inventory in the
ordinary course of its business; (c) enter into any merger, consolidation or
similar reorganization unless it is the surviving corporation; (d) transfer all,
or any substantial part of, its operations or assets outside of the United
States of America; or (e) without 30 days advance written notice to Lender,
change its name, state of incorporation or organization, or chief place of
business. There shall be no transfer of more than a 25% ownership interest in
Borrower or any Guarantor (as defined in Section 12 hereof) by shareholders,
partners, members or proprietors thereof in any calendar year without Lender’s
prior written consent. All financial covenants of Borrower and any Guarantor
under any Affiliate Credit Agreement (as defined in Section 12 hereof) shall
remain fully applicable to Borrower and any Guarantor (as the case may be) and
shall not be violated by Borrower or any Guarantor (as the case may be) at any
time. If for any reason whatsoever an Affiliate Credit Agreement is canceled,
discharged or otherwise terminated and if no other Affiliate Credit Agreement
remains in effect as to Borrower or any Guarantor, then, automatically and
without any action by Lender or any other party, all financial covenants which
are in effect as of the date immediately prior to the cancellation, discharge or
termination of such Affiliate Credit Agreement shall remain in full force and
effect, shall be incorporated in this Agreement by reference, and shall be made
a part of this Agreement.

10. REPRESENTATIONS. Borrower represents and warrants that: (a) Borrower is a
corporation, limited liability company, partnership or proprietorship as stated
below Borrower’s signature duly organized, validly existing and in good standing
under the laws of the state of its organization as stated below Borrower’s
signature and Borrower is qualified to do business and is in good standing under
the laws of each other state in which the Equipment is or will be located;
(b) Borrower’s name as set forth at the outset of this Agreement is its complete
and correct legal name as indicated in the public records of Borrower’s state of
organization; (c) Borrower has full power, authority and legal right to sign,
deliver and perform this Agreement, the Note and all related documents and such
actions have been duly authorized by all necessary corporate, company,
partnership or proprietorship action; (d) this Agreement, the Note and each
related document has been duly signed and delivered by Borrower and each such
document constitutes a legal, valid and binding obligation of Borrower
enforceable in accordance with its terms; (e) there is no litigation or other
proceeding pending, or to the best of the Borrower’s knowledge, threatened
against or affecting Borrower which, if decided adversely to Borrower, would
adversely affect, impair or encumber the interest of Lender in the Equipment or
would materially adversely affect the business operations or financial condition
of Borrower; (f) all balance sheets, income statements and other financial data
that have been delivered to Lender (or JPMorgan Chase Bank, N.A.) with respect
to Borrower are complete and correct in all material respects, fairly present
the financial condition of Borrower on the dates for which, and the results of
its operations for the periods for which, the same have been furnished and have
been prepared in accordance with generally accepted accounting principles
consistently applied, (g) there has been no material adverse change in the
condition of Borrower, financial or otherwise, since the date of the most recent
financial statements delivered to Lender (or JPMorgan Chase Bank, N.A.),
(h) Borrower’s organizational number assigned to Borrower by the state of its
organization is correctly stated below Borrower’s signature; (i) this Agreement
and the Note evidence a loan made primarily for business, commercial or
agricultural purposes and not primarily for personal, family, or household
purposes; (j) the Equipment is not, and will not, be registered under the laws
of any foreign country; (k) the Equipment is, and shall remain at all times,
eligible for registration under the Act (as defined in Section 19 hereof);
(l) the Equipment shall be based in, and primarily used in, the United States
all as required by the Act; and (m) the Equipment will not be used in violation
of any law, regulation, ordinance or policy of insurance affecting the
maintenance, use or flight of the Equipment; and (n) Borrower qualifies as a
citizen of the United States as defined in the Act and will continue to qualify
as a United States citizen in all respects.

 

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11. OTHER DOCUMENTS; EXPENSES; APPOINTMENT OF ATTORNEY-IN-FACT. Borrower agrees
to sign and deliver to Lender any additional documents deemed desirable by
Lender to effect the terms of the Note or this Agreement including, without
limitation, Uniform Commercial Code financing statements and instruments to be
filed with the Federal Aviation Administration, all of which Lender is
authorized to file with the appropriate filing officers. Borrower hereby
irrevocably appoints Lender as Borrower’s attorney-in-fact with full power and
authority in the place of Borrower and in the name of Borrower to prepare, sign,
amend, file or record any Uniform Commercial Code financing statements or other
documents deemed desirable by Lender to perfect, establish or give notice of
Lender’s interests in the Equipment or in any collateral as to which Borrower
has granted Lender a security interest. Borrower agrees to sign and deliver to
Lender any additional documents deemed desirable by Lender to effect the terms
of this Agreement. Borrower shall pay upon Lender’s request any out-of-pocket
costs and expense paid or incurred by Lender in connection with the above terms
of this Agreement or the funding and closing of this Agreement (including,
without limitation, all out-of-pocket fees and expenses of any outside counsel
to Lender).

12. EVENTS OF DEFAULT. Each of the following events shall constitute an Event of
Default under this Agreement and the Note: (a) Borrower fails to pay any
installment payment or other amount due under this Agreement or the Note within
10 days of its due date; or (b) Borrower fails to perform or observe any of its
obligations in Sections 3, 9, or 18 hereof; or (c) Borrower fails to perform or
observe any of its other obligations in this Agreement or the Note within 30
days after Lender notifies Borrower of such failure; or (d) Borrower or any
Guarantor fails to pay or perform or observe any term, covenant (including, but
not limited to, any financial covenant), agreement or condition contained in, or
there shall occur any payment or other default under or as defined in, any loan,
credit agreement, extension of credit or lease in which Lender or any subsidiary
(direct or indirect) of JPMorgan Chase & Co. (or its successors or assigns) is
the lender, creditor or lessor (each an “Affiliate Credit Agreement”) that shall
not be remedied within the period of time (if any) within which such Affiliate
Credit Agreement permits such default to be remedied; or (e) any statement,
representation or warranty made by Borrower in this Agreement or in any
document, certificate or financial statement in connection with this Agreement
proves at any time to have been untrue or misleading in any material respect as
of the time when made; or (f) Borrower or any Guarantor becomes insolvent or
bankrupt, or admits its inability to pay its debts as they mature, or makes an
assignment for the benefit of creditors, or applies for, institutes or consents
to the appointment of a receiver, trustee or similar official for it or any
substantial part of its property or any such official is appointed without its
consent, or applies for, institutes or consents to any bankruptcy, insolvency,
reorganization, debt moratorium, liquidation or similar proceeding relating to
it or any substantial part of its property under the laws of any jurisdiction or
any such proceeding is instituted against it without stay or dismissal for more
than 60 days, or it commences any act amounting to a business failure or a
winding up of its affairs, or it ceases to do business as a going concern; or
(g) with respect to any guaranty, letter of credit, pledge agreement, security
agreement, mortgage, deed of trust, debt subordination agreement or other credit
enhancement or credit support agreement (whether now existing or hereafter
arising) signed or issued by any party (each a “Guarantor”) in connection with
all or any part of Borrower’s obligations under this Agreement or the Note, the
Guarantor defaults in its obligations thereunder or any such agreement shall
cease to be in full force and effect or shall be declared to be null, void,
invalid or unenforceable by the Guarantor; or (h) Borrower or any Guarantor
fails to pay or perform or observe any term, covenant (including, but not
limited to, any financial covenant), agreement or condition contained in, or
there shall occur any payment or other default under or as defined in any Other
Credit Agreement (as defined in Section 19 hereof) that shall not be remedied
within the period of time (if any) within which such Other Credit Agreement
permits such default to be remedied, regardless of whether such default is
waived by any other party to such Other Agreement or such default produces or
results in the cancellation of such Other Credit Agreement or the acceleration
of the liability, indebtedness or other obligation under such Other Credit
Agreement; or (i) Borrower or any Guarantor shall suffer the loss of any
material license or franchise when Lender shall reasonably conclude that such
loss fairly impairs Borrower’s or such Guarantor’s ability to perform its
obligations required under this Agreement or the Note; or (j) Borrower or any
Guarantor shall fail to pay any final judgment for the payment of money in an
amount equal to or in excess of $50,000.00; or (k) there shall occur in Lender’s
reasonable opinion any material adverse change in the financial condition,
business or operations of Borrower or any Guarantor that will impair or impede
Borrower’s ability to meet its financial obligations hereunder or under the
Note.

13. RIGHTS UPON DEFAULT.

13.1 If any Event of Default exists, Lender may exercise in any order one or
more of the remedies described in the lettered subparagraphs of this section,
and Borrower shall perform its obligations imposed thereby:

(a) Lender may require Borrower to turnover any and all Collateral to Lender.

(b) Lender or its agent may repossess any or all Collateral wherever found, may
enter the premises where the Collateral is located and remove it, may use such
premises without charge to store or show the Collateral for sale for up to 90
days, and may demand that Borrower cease using the Collateral.

(c) Lender may sell any or all Collateral at public or private sale, with or
without advertisement or publication, may lease or otherwise dispose of it or
may use, hold or keep it.

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(d) Lender may require Borrower to pay to Lender on a demand date specified by
Lender, (i) all accrued and unpaid interest, late charges and other amounts due
under the Note or this Agreement as of such demand date, plus (ii) the remaining
principal balance of the Note as of such demand date, plus (iii) interest at the
Overdue Rate on the total of the foregoing from such demand date to the date of
payment. “Overdue Rate” means an interest rate per annum equal to the higher of
18% or 2% over the Prime Rate, but not to exceed the highest rate permitted by
applicable law. If an Event of Default under section 12(f) of this Agreement
exists, then Borrower will be automatically liable to pay Lender the foregoing
amounts as of the next installment payment date under the Note unless Lender
otherwise elects in writing.

(e) Borrower shall pay all costs, expenses and damages incurred by Lender
because of the Event of Default or its actions under this section, including,
without limitation any collection agency and/or attorney fees and expenses, and
any costs related to the repossession, safekeeping, storage, repair,
reconditioning or disposition of the Collateral.

(f) Lender may sue to enforce Borrower’s performance of its obligations under
the Note and this Agreement and/or may exercise any other right or remedy then
available to Lender at law or in equity.

13.2 Except as otherwise expressly required by Section 12 hereof or by
applicable law, Lender is not required to take any legal process or give
Borrower any notice before exercising any of the above remedies. If Lender is
required to give notice, 10 calendar days advanced notice is reasonable
notification. None of the above remedies is exclusive, but each is cumulative
and in addition to any other remedy available to Lender. Lender’s exercise of
one or more remedies shall not preclude its exercise of any other remedy. No
action taken by Lender shall release Borrower from any of its obligations to
Lender. No delay or failure on the part of Lender to exercise any right
hereunder shall operate as a waiver thereof nor as an acquiescence in any
default, nor shall any single or partial exercise of any right preclude any
other exercise thereof or the exercise of any other right. After any Event of
Default, Lender’s acceptance of any payment by Borrower under the Note or this
Agreement shall not constitute a waiver by Lender of such default, regardless of
Lender’s knowledge or lack of knowledge at the time of such payment, and shall
not constitute a reinstatement of the Note or this Agreement if this Agreement
has been declared in default by Lender, unless Lender has agreed in writing to
reinstate this Agreement and to waive the default. With respect to any
Collateral or any Obligation, Borrower assents to all extensions or
postponements to the time of payment thereof or any other indulgence in
connection therewith, to each substitution, exchange or release of Collateral,
to the release of any party primarily or secondarily liable, to the acceptance
of partial payment thereof or to the settlement or compromise thereof, all in
such matter and such time or times as Lender may deem advisable.

13.3 If Lender actually repossesses any Collateral, then it will use
commercially reasonable efforts under the then current circumstances to attempt
to mitigate its damages; provided, that Lender shall not be required to sell,
lease or otherwise dispose of any Collateral prior to Lender enforcing any of
the remedies described above. Lender may sell or lease the Collateral in any
manner it chooses, free and clear of any claims or rights of Borrower and
without any duty to account to Borrower with respect thereto except as provided
below. If Lender actually sells or leases the Collateral, it will credit the net
proceeds of any sale of the Collateral, or the net present value (discounted at
the then current Prime Rate) of the rents payable under any lease of the
Collateral, against the amounts Borrower owes Lender. The term “net” as used
above shall mean such amount after deducting the costs and expenses described in
clause (e) of Section 13.1 above. Borrower shall remain liable for any
deficiency if the net proceeds are insufficient to pay all amounts to which
Lender is entitled hereunder.

14. LATE CHARGES. If any installment payment or other amount payable under the
Note or this Agreement is not paid within 5 business days of its due date, then
as compensation for the administration and enforcement of Borrower’s obligation
to make timely payments, Borrower shall pay with respect to each overdue payment
on demand an amount equal to the greater of fifteen dollars ($15.00) or five
percent (5%) of the each overdue payment (but not to exceed the highest late
charge permitted by applicable law) plus any collection agency fees and
expenses. The failure of Lender to collect any late charge will not constitute a
waiver of Lender’s right with respect thereto.

15. LENDER’S RIGHT TO PERFORM. If Borrower fails to make any payment under this
Agreement or fails to perform any of its other obligations in this Agreement
(including, without limitation, its agreement to provide insurance coverage),
Lender may itself make such payment or perform such obligation, and the amount
of such payment and the amount of the reasonable expenses of Lender incurred in
connection with such payment or performance shall be deemed to be additional
principal under the Note which is payable by Borrower on demand.

16. NOTICES; POWER OF ATTORNEY. (a) Service of all notices under this Agreement
shall be sufficient if given personally or couriered or mailed to the party
involved at its respective address set forth herein or at such other address as
such party may provide in writing from time to time. Any such notice mailed to
such address shall be effective three days after deposit in the United States
mail with postage prepaid. Notice by overnight courier shall be deemed given and
received on the date scheduled for delivery. (b) With respect to any power of
attorney covered by this Agreement, the powers conferred on Lender thereby: are
powers coupled with an interest; are irrevocable; are solely to protect Lender’s
interests under this Agreement; and do not impose any duty on Lender to exercise
such powers. Lender shall be accountable solely for amounts it actually receives
as a result of its exercise of such powers.

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17. ASSIGNMENT BY LENDER. Lender and any assignee of Lender, with notice to, but
not consent of, Borrower, may sell, assign, transfer or grant a security
interest in all or any part of Lender’s rights, obligations, title or interest
in the Collateral, the Note, this Agreement, or the amounts payable under the
Note or this Agreement to any entity (“transferee”). The transferee shall
succeed to all of Lender’s rights in respect to this Agreement (including,
without limitation, all rights to insurance and indemnity protection described
in this Agreement). Borrower agrees to sign any acknowledgment and other
documents reasonably requested by Lender or the transferee in connection with
any such transfer transaction. Borrower, upon receiving notice of any such
transfer transaction, shall comply with the terms and conditions thereof.
Borrower agrees that Lender may provide loan information and financial
information about Borrower on a confidential basis to any prospective
transferee.

18. NO ASSIGNMENT OR LEASING BY BORROWER. BORROWER SHALL NOT, DIRECTLY OR
INDIRECTLY, WITHOUT THE PRIOR WRITTEN CONSENT OF LENDER: (a) MORTGAGE, ASSIGN,
SELL, TRANSFER, OR OTHERWISE DISPOSE OF INTEREST IN THIS AGREEMENT OR THE
COLLATERAL OR ANY PART THEREOF; OR (b) WITHOUT THE PRIOR WRITTEN CONSENT OF
LENDER, WHICH CONSENT SHALL NOT BE UNREASONABLY WITHHELD, LEASE, RENT, LEND OR
TRANSFER POSSESSION OR USE OF THE EQUIPMENT OR ANY PART THEREOF TO ANY PARTY; OR
(c) CREATE, INCUR, GRANT, ASSUME OR ALLOW TO EXIST ANY LIEN ON ITS INTEREST IN
THIS AGREEMENT, THE COLLATERAL OR ANY PART THEREOF.

19. CERTAIN DEFINITIONS. “Act” means subtitle VII of Title 49 of the United
States Code. “Lien” means any security interest, lien, mortgage, pledge,
encumbrance, judgment, execution, attachment, warrant, writ, levy, other
judicial process or claim of any nature whatsoever by or of any person. “Prime
Rate” means the prime rate of interest announced from time to time as the prime
rate by JPMorgan Chase Bank, N.A. (or its successors or assigns); provided, that
the parties acknowledge that the Prime Rate is not intended to be the lowest
rate of interest charged by said bank in connection with extensions of credit.
“Other Credit Agreement” means any agreement applicable to Borrower or any
Guarantor or by which Borrower or any Guarantor is bound involving a liability,
indebtedness or performance obligation of Borrower or any Guarantor with a
potential liability to Borrower or any Guarantor in an amount equal to or in
excess of $500,000.00. “Convention” means the Convention on International
Interests in Mobile Equipment as implemented and modified by the Aircraft
Protocol. “Aircraft Protocol” means the Protocol to the Convention on Matters
Specific to Aircraft Equipment as adopted by the United States of America.
“International Registry” means the International Registry formed pursuant to the
Convention. All terms defined herein are equally applicable to both the singular
and plural form of such terms.

20. CONDITIONS. Lender is not obligated to make any loan or disburse any
principal hereunder unless: (a) Lender has received the Note signed by the
Borrower; (b) Lender has received evidence of all required insurance; (c) in
Lender’s sole judgment, there has been no material adverse change in the
financial condition or business of Borrower or any Guarantor that adversely
impacts Borrower’s ability to perform its obligations hereunder or under the
Note; (d) Borrower has signed and delivered to Lender this Agreement and Lender
has signed and accepted this Agreement; (e) Lender has received the documents,
instruments and evidence as to satisfaction of the matters specified in Schedule
2 attached hereto, each of which shall be satisfactory to Lender in form and
substance and each document or instrument to be duly authorized, executed and
delivered and in full force and effect; (f) Lender has received, in form and
substance satisfactory to Lender, such other documents and information as Lender
shall reasonably request; and (g) Borrower has satisfied all other reasonable
conditions established by Lender.

21. USURY. It is not the intention of the parties to this Agreement to make an
agreement that violates any of the laws of any applicable jurisdiction relating
to usury (“Usury Laws”). Regardless of any provision in this Agreement, the
Note, or any document in connection therewith, Lender shall not be entitled to
receive, collect or apply, as interest on any Obligation, any amount in excess
of the Maximum Amount (the “Excess”). As used herein, “Maximum Amount” shall
mean the maximum amount of interest which would have accrued if the unpaid
principal amount of the Obligation outstanding from time to time had borne
interest each day at the maximum amount of interest which lender is permitted to
charge on the Obligation under the Usury Laws. If Lender ever receives, collects
or applies as interest any Excess, such Excess shall be deemed a partial
repayment of principal and treated hereunder as such; and if principal is paid
in full, any remaining Excess shall be paid to Borrower. In determining whether
or not the interest paid or payable under any specific contingency exceeds the
Maximum Amount, Borrower and Lender shall, to the maximum extent permitted under
the Usury Laws, (a) characterize any non-principal payment as an expense, fee or
premium rather than as interest, (b) exclude voluntary prepayments and the
effect thereof, and (c) amortize, prorate, allocate and spread in equal parts,
the total amount of interest throughout the entire contemplated term of the
Obligation so that the interest rate is uniform throughout the entire term of
the Obligation; provided that if the Obligation is paid and performed in full
prior to the full contemplated term thereof, and if the interest received for
the actual period of existence thereof exceeds the Maximum Amount, Lender shall
refund to Borrower the Excess, and, such event shall not be subject to any
penalties provided by the Usury Laws.

22. GOVERNING LAW. THE INTERPRETATION, CONSTRUCTION AND VALIDITY OF THIS
AGREEMENT AND THE NOTE SHALL BE GOVERNED BY THE LAWS OF THE STATE OF OHIO
WITHOUT REFERENCE TO CONFLICT OF LAW PROVISIONS.

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23. MISCELLANEOUS. (a) Subject to the limitations herein, this Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective heirs, administrators, successors and assigns. (b) This Agreement may
be executed in any number of counterparts, which together shall constitute a
single instrument. (c) Section and paragraph headings in this Agreement are for
convenience only and have no independent meaning. (d) The terms of this
Agreement shall be severable and if any term thereof is declared unconscionable,
invalid, illegal or void, in whole or in part, the decision so holding shall not
be construed as impairing the other terms of this Agreement and this Agreement
shall continue in full force and effect as if such invalid, illegal, void or
unconscionable term were not originally included herein. (e) All indemnity
obligations of Borrower under this Agreement and all rights, benefits and
protections provided to Lender by warranty disclaimers shall survive the
cancellation, expiration or termination of this Agreement. (f) Lender shall not
be liable to Borrower for any indirect, consequential or special damages for any
reason whatsoever. (g) This Agreement may be amended, but only by a written
amendment signed by Lender and Borrower. (h) If this Agreement is signed by more
than one Borrower, each of such Borrowers shall be jointly and severally liable
for payment and performance of all of Borrower’s obligations under this
Agreement. (i) This Agreement represents the final, complete and entire
agreement between the parties hereto, and there are no oral or unwritten
agreements or understandings affecting this Agreement or the Collateral.
(j) Borrower agrees that Lender is not the agent of any manufacturer or
supplier, that no manufacturer or supplier is an agent of Lender, and that any
representation, warranty or agreement made by manufacturer, supplier or by their
employees, sales representatives or agents shall not be binding on Lender.
(k) In order to secure all obligations of Borrower under this Agreement and the
Note, Borrower assigns and grants to Lender a security interest in: all rights,
powers and privileges of Borrower under any lease of any Equipment hereafter
authorized in writing by Lender; and all funds, balances, accounts, proceeds of
collateral and/or other property of any kind of Borrower or in which Borrower
has an interest now or hereafter in the possession, custody, or control of
Lender or JPMorgan Chase Bank, N.A. and any of its direct or indirect affiliates
and subsidiaries, including, without limitation, J.P. Morgan Securities Inc.

24. GOVERNMENT REGULATION. Borrower shall not (a) be or become subject, at any
time, to any law, regulation, or list of any government agency (including,
without limitation, the U.S. Office of Foreign Asset Control list) that
prohibits or limits Lender from making any advance or extension of credit to
Borrower or from otherwise conducting business with Borrower or (b) fail to
provide documentary and other evidence of Borrower’s identity as may be
requested by Lender at any time to enable Lender to verify Borrower’s identity
or to comply with any applicable law or regulation, including, without
limitation, Section 326 of the USA Patriot Act of 2001, 31 U.S.C. Section 5318.

25. USA PATRIOT ACT NOTIFICATION. The following notification is provided to
Borrower pursuant to Section 326 of the USA Patriot Act of 2001, 31 U.S.C.
Section 5318:

IMPORTANT INFORMATION ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT. To help the
government fight the funding of terrorism and money laundering activities,
Federal law requires all financial institutions to obtain, verify, and record
information that identifies each person or entity that opens an account,
including any deposit account, treasury management account, loan, other
extension of credit, or other financial services product. What this means for
Borrower: When Borrower opens an account, if Borrower is an individual, Lender
will ask for Borrower’s name, tax payer identification number, residential
address, date of birth, and other information that will allow Lender to identify
Borrower, and if Borrower is not an individual, Lender will ask for Borrower’s
name, taxpayer identification number, business address, and other information
that will allow Lender to identify Borrower. Lender may also ask, if Borrower is
an individual, to see Borrower’s driver’s license or other identifying
documents, and if Borrower is not an individual, to see Borrower’s legal
organizational documents or other identifying documents.

26. COMPLIANCE WITH CONVENTION; RECORDATION WITH THE INTERNATIONAL REGISTRY.
Without limiting any other terms or conditions of this Agreement, Borrower
agrees as follows, all of which shall be undertaken at Borrower’s sole expense:

(a) Prior to the closing and funding of any loan hereunder, Borrower shall
register and be approved as a “user” with the International Registry.

(b) Prior to the closing and funding of any loan hereunder, Borrower shall take
any and all such action, and shall execute and deliver such instruments,
documents and certificates, as Lender may require in order to accurately
register and timely record the respective interests of Borrower and Lender in
the Equipment with the International Registry pursuant to the Convention, such
interests to be searchable in the International Registry to the satisfaction of
the Lender, and with the FAA pursuant to the Act, including, without limitation,
providing such consents as may be required to permit Lender to give effect to
the timely registration and recordation with the International Registry of the
respective interests of Borrower and Lender in the Equipment.

(c) Upon Lender’s request, Borrower shall execute and deliver to Lender a fully
completed and originally executed Irrevocable De-Registration and Export Request
Authorization (“IDERA”), in the form required by the Protocol and acceptable to
the Lender in its sole and absolute discretion.

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(d) Borrower shall take any and all such action, and shall execute and deliver
such instruments, documents and certificates, as Lender may require in order to
maintain the registration and recordation of the respective interests of
Borrower and Lender in the Equipment with the International Registry pursuant to
the Convention and with the FAA pursuant to the Act.

ALL PARTIES TO THIS AGREEMENT IRREVOCABLY CONSENT TO THE JURISDICTION AND VENUE
OF ANY STATE OR FEDERAL COURT IN OHIO, AND WAIVE ALL RIGHTS TO TRIAL BY JURY, IN
ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY ANY PARTY AGAINST ANY OTHER
PARTY ON ANY MATTER WHATSOEVER ARISING OUT OF, IN CONNECTION WITH OR IN ANY WAY
RELATED TO THE NOTE OR THIS AGREEMENT.

 

CHASE EQUIPMENT LEASING INC.     ABX AIR, INC. (Lender)       (Borrower) By:  

/s/ Stacey R. Roth

    By:  

/s/ Joseph C. Hete and Quint O. Turner

Title:   Funding Manager     Title:   Chief Executive Officer and Chief
Financial Officer Acceptance Date: August 24, 2006     Borrower’s Witness:  

/s/ Joseph E. Roux

Borrower Organization Information:

A corporation organized under the laws of the State of Delaware with State
Organization # 0885720

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SCHEDULE A-1

Loan No.  1000129301

 

  DESCRIPTION OF EQUIPMENT Airframe Make/Model:   BOEING 767-232 Airframe Serial
No.:   22213 U.S. Identification No.:   N740AX Engine Quantity/Make/Model:   (2)
GENERAL ELECTRIC CF6-80A2 Engine Serial No(s).:   580126 and 580200

Together with all engines, propellers, avionics, communication equipment,
navigation equipment, instruments, accessories, attachments, parts,
appurtenances, accessions, furnishings and other equipment attached to,
installed in or relating to any of the foregoing property and all maintenance
and service logs and records relating to the foregoing property.

Each engine has 550 or more rated takeoff horsepower or the equivalent of such
horsepower.

The Equipment shall be hangered at the following location:

 

Airborne Park, 145 Hunter Drive,    Wilmington,    Ohio 45177,    Clinton County
Name of Airport and Street Address    City    State    County

This Schedule A-1 is attached to, and made a part of, the Loan Agreement and
Security Agreement with the Loan Number referenced above and contains a true and
accurate description of the Equipment.

ABX AIR, INC.

(Borrower)

 

By:  

/s/ Joseph C. Hete and Quint O. Turner

Title:   Chief Executive Officer and Chief Financial Officer

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SCHEDULE 2

Attached to Loan and Security Agreement for Loan No. 1000129301

ADDITIONAL CONDITIONS TO FUNDING THE LOAN*

1. Lender shall been offered an opportunity to inspect the maintenance and
service logs and records relating to the Collateral and such logs and records
shall be reasonably satisfactory to Lender.

2. Lender shall receive terminations or releases of liens in a form recordable
with the Federal Aviation Administration from all creditors with a lien on any
part of the Collateral as shown in the FAA lien records.

3. Lender shall receive UCC-3 terminations or release of liens in recordable
form from all creditors with a lien on any part of the Collateral as shown in
state or local lien records.

 

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* The inclusion of additional funding conditions in this Schedule 2 shall not
limit the generality of the conditions set forth in the Agreement.

ABX AIR, INC.

(Borrower)

 

By:  

/s/ Joseph C. Hete and Quint O. Turner

Title:   Chief Executive Officer and Chief Financial Officer

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BUSINESS PURPOSE PROMISSORY NOTE

(fixed rate/principal and interest)

Loan Number: 1000129301

 

Amount $17,500,000.00

  Date: August 24, 2006

 

This Note is executed together with the Loan and Security Agreement dated as of
                                                          (the “Loan Agreement”)
and is executed at        Wilmington                                     ,   
    Ohio                        .   

    (City)

       (State)

For value received, receipt of which is hereby acknowledged, the undersigned
(“Borrower”) promises to pay to the order of CHASE EQUIPMENT LEASING INC.
(“Lender”) at its principal office or at such other place as Lender may
designate from time to time in lawful money of the United States of America, the
principal sum of Seventeen Million Five Hundred Thousand and 00/100ths Dollars
($17,500,000.00), or such lesser portion thereof as may have from time to time
been disbursed to, or for the benefit of Borrower, and as remains unpaid
pursuant to the books or records of Lender, together with interest at the
Interest Rate set forth below on the unpaid balance of principal advanced from
the date(s) of disbursement until paid in full as set forth below. Principal
sums(s) disbursed and repaid will not be available for redisbursement. Interest
shall be calculated on a 360 day year basis with each month consisting of 30
days.

Interest Rate: Seven and 07/100ths percent (7.07%) per annum.

1. The term of this Note consists of the Interim Term plus the Base Term. The
Interim Term begins on the Acceptance Date and continues up to the Commencement
Date of the Base Term. The Acceptance Date is the date that Lender accepts this
Note by initially disbursing principal hereunder. If the Acceptance Date is on
the first (1st) day of the month or the fifteenth (15th) day of the month, then
the Commencement Date shall be the Acceptance Date; if the Acceptance Date is on
or after the second (2nd) day of the month and up to and including the
fourteenth (14th) day of the month, then the Commencement Date shall be the
fifteenth (15th) day of such month; and if the Acceptance Date is on or after
the sixteenth (16th) day of the month and up to the last day of the month, then
the Commencement Date shall be first (1st) day of the month following the
Acceptance Date. The Base Term begins on the Commencement Date and continues for
the number of months after the Commencement Date as stated in Section 3 below.

2. If the Acceptance Date is before the Commencement Date, then on the
Commencement Date of the Base Term, Borrower shall pay one installment of
interest only based upon the number of days in the Interim Term.

3. During the Base Term, Borrower shall pay installments of principal and
interest in the amounts and on the dates stated below:

(a) Base Term: 120 months

(b) Amount of each installment payment due during the Base Term (includes
principal and interest):

119 @ $176,628.00

1 @ $4,901,628.00

(c) The first installment payment during the Base Term shall be paid one month
after the Commencement Date and all subsequent installment payments shall be
paid on the same day of each month thereafter until paid in full.

4. On or before the date of this Note, Borrower shall pay a set-up/filing fee in
the amount of $0.00.

5. Payments shall be allocated between principal, interest and fees, if any, in
the discretion of Lender. Borrower may not prepay the principal sum. Borrower’s
obligation to pay all installment payments and all other

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amounts payable under this Note is absolute and unconditional under any and all
circumstances and shall not be affected by any circumstances of any character
including, without limitation, (a) any setoff, claim, counterclaim, defense or
reduction which Borrower may have at any time against Lender or any other party
for any reason, or (b) any defect in the condition, design or operation of, any
lack of fitness for use of, any damage to or loss of, or any lack of maintenance
or service for any of the Equipment (as defined in the Loan Agreement).

6. This Note is entitled to the benefits, and is subject to the terms and
requirements of, the Loan Agreement executed by Borrower and Lender, which Loan
Agreement, among other things, (a) provides for the making of the loan evidenced
hereby, and (b) provides for events of default, acceleration and other remedies.
Borrower waives presentment, demand, protest or notice of any kind in connection
with this Note.

7. LENDER AND BORROWER IRREVOCABLY CONSENT TO THE JURISDICTION AND VENUE OF ANY
STATE OR FEDERAL COURT IN OHIO, AND WAIVE ALL RIGHTS TO TRIAL BY JURY, IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY
ON ANY MATTER WHATSOEVER ARISING OUT OF, IN CONNECTION WITH OR IN ANY WAY
RELATED TO THIS INSTRUMENT.

 

ABX Air, Inc.

 

 

(“Borrower”)   Witness as to Borrower’s signature By:  

/s/ Joseph C. Hete and Quint O. Turner

  Title:   Chief Executive Officer and Chief Financial Officer