EXHIBIT 10(e)

 

SECURITY AGREEMENT

THIS SECURITY AGREEMENT, dated as of June 29, 2001 (asamended, modified, or supplemented from time to time, "this Agreement"), amongeach of the undersigned (each, together with its successors and assigns, andtogether with any other Person which may become party to this Agreement as anAssignor as provided for below, an "Assignor" and, collectively, the"Assignors") and WACHOVIA BANK, N.A., a national banking association, ascollateral agent (herein, together with its successors and assigns in suchcapacity, the "Collateral Agent"), for the benefit of the Secured Creditors (asdefined below):

PRELIMINARYSTATEMENTS:

(2)              This Agreement is one of the "Collateral Documents" describedin, and is made pursuant to, that certain Amended and Restated Credit Agreementdated as of the Closing Date by and among Airborne Express, Inc., a Delawarecorporation ("Express") and formerly known as Airborne Freight Corporation, aDelaware corporation ("AFC"), ABX Air, Inc., a Delaware corporation ("ABX" andExpress, each, a "Borrower" and together, jointly and severally, the"Borrowers"), Airborne, Inc., a Delaware corporation, as the "Parent," thefinancial institutions named as lenders therein (together with their respectivesuccessors and assigns, the "Lenders" and, each individually, a "Lender"), andWachovia Bank, N.A., a national banking association ("Wachovia"), as theAdministrative Agent for the Lenders under the agreement and in its capacity ascollateral agent, which agreement amends and restates that certain CreditAgreement dated as of July 27, 2000, by and among AFC, the Lenders, andWachovia as Administrative Agent, as amended by that certain First Amendment toCredit Agreement dated as of April 20, 2001, by and among Airborne, Inc., aDelaware corporation ("Airborne"), the Lenders, and Wachovia as AdministrativeAgent, as further amended by that certain Second Amendment to Credit Agreementdated as of May 31, 2001, by and among Airborne, the Lenders, and Wachovia asAdministrative Agent (collectively, together with any and all concurrent orsubsequent exhibits, schedules, extensions, supplements, amendments ormodifications 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 CreditAgreement. 

(3)              The Credit Agreement provides for, among other things, loansor advances, the issuance of letters of credit, and other extensions of creditto or for the benefit of the Borrowers of up to $275,000,000, with such loansor 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 ofSeptember 15, 1995, relating to Express' 7.35% Notes Due 2005, as furthersupplemented by that certain Second Supplemental Indenture Relating to AFC's8-7/8% Notes Due 2002 dated February 12, 1997, and as further supplemented bythat certain Third Supplemental Indenture dated as of the Closing Date (herein,as amended or otherwise modified, restated, supplemented or replaced from timeto time, the "Indenture"), pursuant to which Express, formerly known as AFC,(i) may issue and sell its debentures, notes, or other evidences ofindebtedness and (ii) has, prior to the date hereof, issued and sold to certainpurchasers (the "Noteholders," such term to include their successors andassigns) (A) $100,000 aggregate original principal amount of its "7.35% NotesDue 2005" (the "1995 Notes") and (B) $100,000 aggregate original principalamount of its "8-7/8% Notes Due December 15, 2002" (the "1992 Notes," andtogether with the 1995 Notes, the "Indenture Debt," such term to include alldebentures, notes, or other evidences of indebtedness issued pursuant to theIndenture in addition to, issued in exchange for, or issued in replacement ofany 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 the any Assignor from creating anysecurity interests in certain of the Assignors' property unless the IndentureDebt is equally and ratably secured by such security interest. 

(6)              This Agreement is made in favor of the Collateral Agent forthe benefit of the Lenders and the Noteholders (collectively the "SecuredCreditors") to equally and ratably secure the Secured Obligations (as definedherein). 

(7)              It is a condition precedent to the making of Loans and theissuance of, and participation in, Letters of Credit under the Credit Agreementthat the Assignors shall have executed and delivered to the Collateral Agentthis Agreement.

(8)            TheAssignors desire to execute this Agreement to satisfy the conditions describedin the preceding paragraphs (5) and (7).

NOW, THEREFORE, in consideration of the benefits accruingto each Assignor, the receipt and sufficiency of which are hereby acknowledged,each Assignor hereby makes the following representations and warranties to theCollateral Agent and hereby covenants and agrees with the Collateral Agent asfollows:

1.                 CERTAIN DEFINITIONS.

The following terms shall have the meanings hereinspecified unless the context otherwise requires. Such definitions shall beequally applicable to the singular and plural forms of the terms defined.

"Aggregate Principal Obligations" shall mean the sum of(a) the Indenture Principal Obligations, plus (b) the Facility PrincipalObligations.

"Agreement" shall mean this Security Agreement as the samemay be modified, supplemented or amended from time to time in accordance withits terms.

"Assignor" shall have the meaning provided in the firstparagraph of this Agreement, and shall include any Person who executes anddelivers to the Collateral Agent a joinder agreement in form satisfactory tothe Collateral Agent, thereby becoming an Assignor for purposes of this Agreement.

"Avoided Payment" shall have the meaning given such termin Section 5.4(c).

"Borrower" shall have the meaning provided in thePreliminary Statements of this Agreement.

"Collateral" shall have the meaning provided in Section2.1(a).

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

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

"Contract Rights" shall mean all rights of an Assignorunder any Scheduled Contract but shall not include the right to paymentthereunder.  

"Copyrights" shall mean any copyright to which an Assignornow or hereafter has title, as well as any application for a copyrightcurrently pending or hereafter made by such Assignor.

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

"Distributable Amount" shall have the meaning given suchterm in Section 5.4(b).

"Documents" shall have the meaning assigned that termunder the UCC.

"Event of Default," as used in this Agreement, unlessotherwise stated, shall have the same meaning given such term in the CreditAgreement.

"Facility Notes" shall have the meaning given such term inthe Preliminary Statements.  

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

"Facility Principal Obligations" shall mean, at any time,the sum of (a) aggregate outstanding principal amount of all Loans under theCredit Agreement, plus (b) the outstanding principal amount of all ReimbursementObligations under the Credit Agreement, plus (c) the  Outstanding Letter of Credit Exposure, plus (d) the principalamount of all other loans or advances which constitute a portion of theFacility Obligations.

"General Intangibles" shall have the meaning assigned thatterm under the UCC.

"Goods" shall have the meaning assigned that term underthe UCC.

"Indemnitee" shall have the meaning provided in Section6.1.

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

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

"Indenture Debt Issuer" shall the meaning given such termin the Preliminary Statements of this Agreement.

"Indenture Documents" shall mean the Indenture, alldocuments or instruments evidencing the Indenture Debt and all other documentsnow or hereafter executed and delivered by the Indenture Debt Issuer, either ofthe Borrowers, or any other Assignor for the benefit of the Trustee orNoteholders.

"Indenture Principal Obligations" shall mean, at any time,the outstanding principal amount of all debentures, notes, or other evidencesof indebtedness issued under or pursuant to the Indenture Documents.

"Information Disclosure Certificate" shall mean, as to anyAssignor, the Information Disclosure Certificate delivered by or on behalf ofsuch Assignor pursuant to the Credit Agreement.

"Instrument" shall have the meaning assigned that termunder the UCC.

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

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

"Lenders' Percentage" shall mean, with respect to a givenamount, the portion of such amount determined by the ratio by which theFacility Principal Obligations bear to the Aggregate Principal Obligations.

"Letter of Credit Reserve Account" shall have the meaninggiven such term in Section 5.4(b).

"Marks" shall mean any and all trademarks and service marks(whether registered or unregistered) and trade dress (including withoutlimitation any logos or designs used in connection with any trademarks orservice marks) now owned by, or hereafter acquired by, any Assignor.

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

"Noteholders' Percentage" shall mean, with respect to agiven amount, the portion of such amount determined by the ratio by which theIndenture Principal Obligations bear to the Aggregate Principal Obligations.

"Outstanding Letters of Credit Exposure" shall mean at anytime the undrawn face amount of all outstanding Letters of Credit then issuedand outstanding under the Credit Agreement (assuming compliance with allrequirements for drawing).

"Parts" shall mean all appliances, avionics (including,without limitation, radio, radar, navigation systems, or other electronicequipment), parts, components, instruments, appurtenances, attachments,accessories, furnishings and other equipment of whatever nature and anyreplacements of the foregoing, which may from time to time be incorporated orinstalled in or attached to an airframe or any aircraft engine or aircraftpropeller or located on the ground (and includes, without limitation, the terms"Spare Parts" and "Appliances" as defined in 49 U.S.C. Sec. 40102(a)).

"Patents" shall mean any patent to which an Assignor nowor hereafter has title, as well as any application for a patent currentlypending or hereafter made by an Assignor.

"Permitted Encumbrances" shall have the meaning given suchterm in the Credit Agreement.  

"Proceeds" shall have the meaning assigned that term underthe UCC or under other relevant law and, in any event, shall include, but notbe limited to (i) any and all proceeds of any insurance, indemnity, warranty orguaranty payable to the Collateral Agent or an Assignor from time to time withrespect to any of the Collateral, (ii) any and all payments (in any formwhatsoever) made or due and payable to an Assignor from time to time in connectionwith any requisition, confiscation, condemnation, seizure or forfeiture of allor any part of the Collateral by any governmental authority (or any Personacting 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 theAssignors resulting from the sale (authorized or unauthorized) or otherdisposition of the Collateral, including, without limitation, the net earningsof any lease or other agreement relative to the use of the Collateral, or anyportion thereof, and any proceeds of such proceeds; and (iv) any and all otheramounts from time to time paid or payable under or in connection with any ofthe Collateral.

"PTO" means the United States Patent and Trademark Office.

"Scheduled Contracts" shall mean, to the extent permittedto be assigned by the terms thereof or by applicable law, each of thosecontracts identified on Schedule 1, attached hereto and made a parthereof.  

"Scheduled Equipment" shall mean (a) all Parts, (b) eachspecific item listed on Schedule 2, attached hereto and made a parthereof, and (c) all items of the type or types described on Schedule 2,regardless, in each of the foregoing cases, whether such items constitute"equipment" as such term is defined in the UCC or other relevant law.

"Scheduled Inventory" shall mean (a) all Parts, (b) allmaterials, regardless of where stored or maintained, which constitute fuel foruse in any aircraft, including, without limitation, jet or propeller poweredaircraft, and (c) all materials of the type or types described on Schedule 3,attached hereto and made a part hereof, regardless, in each of the foregoingcases, whether such items constitute "inventory" as such term is defined in theUCC or other relevant law.

"Scheduled Permits" shall mean, to the extent permitted tobe assigned by the terms thereof or by applicable law, each of those permitslisted on Schedule 4, attached hereto and made a part hereof.

"Secured Creditors" shall have the meaning provided in thePreliminary Statements of this Agreement.

"Secured Obligations" shall mean each of the following: 

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

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

(c)              all obligations and liabilities of any Assignor under thisAgreement, any Subsidiary Guaranty, Parent Guaranty, or any other Loan Documentto which any Assignor is a party; and

(d)              all obligations and liabilities of any Assignor under theIndenture Documents to which it is a party; and

(e)              all other obligations and liabilities owing by any Assignor toany of the Administrative Agent, the Collateral Agent, the Trustee, any Lender,or any Noteholder under this Agreement, the Credit Agreement or any other LoanDocument, 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 CollateralAgent Expenses;

in all cases whether now existing, or hereafter incurredunder, arising out of, or in connection with, this Agreement, the CreditAgreement or any other Loan Document, or the Indenture Documents, including anysuch interest or other amounts which, but for any automatic stay under Section362(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 ofsecurities of the types described above, whether outstanding on the date ofthis Agreement or extended or purchased from time to time after the date ofthis Agreement.

 

"Security Interest Termination Date" shall mean the dateon which each of the following shall have occurred:  (i) each and every Lender's Commitment under the Credit Agreementshall have been terminated; (ii) no Facility Note shall be outstanding; (iii)no Letter of Credit issued under or pursuant to the Credit Agreement shall beoutstanding; (iv) no other amounts shall then be payable by either of theBorrowers or any Assignor to the Administrative Agent or any Lender under theCredit Agreement or any other Loan Document; and (v) all Facility Obligationsshall have been fully, finally, and indefeasibly paid or performed to theAdministrative Agent's satisfaction, unless at such time (x) an Event ofDefault relating to a default in the payment when due of principal of orinterest on the Indenture Debt, shall have occurred and be continuing; (y) thematurity of any portion of the Indenture Debt shall have been accelerated; and(z) the Collateral Agent shall have received written notice from any Noteholderor the Trustee to such effect.

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

"UCC" shall mean the Uniform Commercial Code as enacted bythe State of Georgia, as amended from time to time, and any and all terms usedin this Agreement which are defined in the UCC shall be construed and definedin accordance with the meaning and definition ascribed to such terms under theUCC.  

"Wachovia" has the meaning given such term in thePreliminary Statements of this Agreement.

2.                 SECURITY INTERESTS.

**2.1.           **Grant of Security Interests. (a)  As security for the prompt and completepayment and performance when due of all of the Secured Obligations, eachAssignor does hereby sell, assign and transfer unto the Collateral Agent, anddoes hereby grant to the Collateral Agent, for the benefit of the CollateralAgent and the Secured Creditors, a continuing security interest of firstpriority in, all of the right, title and interest of such Assignor in, to andunder all of the following, whether now existing or hereafter from time to timeacquired (collectively, the "Collateral"):

(i)                 all Scheduled Contracts, together with all Contract Rightsarising thereunder,

(ii)               all Scheduled Inventory,

(iii)              all Scheduled Equipment,

(iv)             all Scheduled Permits,

(v)               all General Intangibles, including, without limitation, (A)all Marks, together with the registrations and right to all renewals thereof,and the goodwill of the business of such Assignor associated with orattributable to such Marks, (B) all Patents and Copyrights, and (C) allcomputer programs of such Assignor and all intellectual property rightstherein, and

(vi)             all Proceeds and products of any and all of the foregoing.

(b)              The Collateral Agent's security interest in and lien upon theCollateral shall attach to all of the Collateral upon the execution and deliveryof this Agreement, without further act being required on the part of either theCollateral Agent or any Assignor.  Thesecurity interest of the Collateral Agent under this Agreement extends to allCollateral of the kinds, items, types and descriptions which are the subject ofthis Agreement and to which any Assignor now has, or hereafter acquires,rights.

**2.2.           **Power of Attorney.Each Assignor hereby irrevocably appoints the Collateral Agent as itsattorney‐in‐fact and agent with full power of substitution andre-substitution for such Assignor and in its name to do, at the CollateralAgent's option, any one or more of the following acts, upon the occurrence ofan Event of Default: (a) to receive, open and examine all mail addressed tosuch Assignor and to retain any such mail relating to the Collateral and toreturn to such Assignor only that mail which is not so related; (b) to endorsethe name of such Assignor on any checks or other instruments or evidences ofpayment or other documents, drafts, or instruments arising in connection withor pertaining to the Collateral, to the extent that any such items come intothe possession of the Collateral Agent; (c) to compromise, prosecute or defendany action, claim, or proceeding concerning the Collateral; (d) to do any andall acts which such Assignor is obligated to do under this Agreement, theCredit Agreement or any other Loan Document, or the Indenture Documents; (e) toexercise such rights as such Assignor might exercise relative to theCollateral, including, without limitation, the leasing, chartering, or otherutilization thereof; (f) to give notice of the Collateral Agent's securityinterest in and Lien upon the Collateral, including, without limitation,notification to lessees and/or other account debtors of the Collateral Agent'ssecurity interest in the accounts, general intangibles, rents, and otherpayments due to such Assignor relative to the Collateral, and the collection ofany such rents or other payments; and (g) to execute in such Assignor's name andfile any notices, financing statements, and other documents or instruments theCollateral Agent determines are necessary or required to fully carry out theintent and purpose of this Agreement or to perfect the Collateral Agent'ssecurity interest and Lien in and upon the Collateral.  Each Assignor hereby ratifies and approvesall that the Collateral Agent shall do or cause to be done by virtue of thepower of attorney granted in this Section 2.2 and agrees that neither theCollateral Agent, nor any of its employees, agents, officers, or its attorneys,will be liable for any acts or omissions or for any error of judgment ormistake of fact or law made while acting pursuant to the provisions of thisSection 2.2 and in good faith.  Theappointment of the Collateral Agent as such Assignor's attorney-in-fact, andeach and every one of the Collateral Agent's rights and powers in connectiontherewith, being coupled with an interest, are and shall remain irrevocableuntil the Security Interest Termination Date.

3.                 GENERALREPRESENTATIONS, WARRANTIES AND COVENANTS.

Each Assignor jointly and severally represents, warrantsand covenants, which representations, warranties and covenants shall surviveexecution and delivery of this Agreement, as follows:

**3.1.           **Necessary Filings.  Assuming the filing in the appropriate filing offices of thoseUCC-1 financing statements delivered to the Collateral Agent pursuant toSection 4.01 of the Credit Agreement and any filings of  patent, trademark and copyright securityagreements with the PTO and the United States Copyright Office which may berequired under applicable law, all filings, registrations and recordingsnecessary or appropriate to create, preserve, protect and perfect the securityinterest granted by such Assignor to the Collateral Agent hereby in respect ofthe Collateral have been accomplished and the security interest granted to theCollateral Agent pursuant to this Agreement in and to the Collateralconstitutes a perfected security interest therein, superior and prior to the rightsof all other Persons therein and subject to no other Liens other than PermittedEncumbrances, and is entitled to all the rights, priorities and benefitsafforded by the UCC or other relevant law as enacted in any relevantjurisdiction to perfected security interests, subject to compliance with theAssignment of Claims Act of 1940, as amended.

**3.2.           **No Liens.Each Assignor is, and as to Collateral acquired by it from time to timeafter the date hereof such Assignor will be, the owner of all Collateral free fromany Lien other than Permitted Encumbrances, and such Assignor shall defend theCollateral against all claims and demands of all Persons at any time claimingthe same or any interest therein adverse to the Collateral Agent's interest insuch Collateral.

**3.3.           **Other Financing Statements.  There is no financing statement (or similarstatement or instrument of registration under the law of any jurisdiction)covering or purporting to cover any interest of any kind in the Collateralexcept as disclosed in Schedule 6.17 of the Credit Agreement; and, prior to theSecurity Interest Termination Date, no Assignor will execute or authorize to befiled in any public office any financing statement or statements (or similarstatement or instrument of registration under the law of any jurisdiction)relating to the Collateral, except financing statements filed or to be filed inrespect of and covering the security interests granted to the Collateral Agentunder this Agreement.

**3.4.           **Chief Executive Office, etc; Records.  The chief executive office (and theregistered office of each Assignor which is a corporation) of each Assignor islocated at the address indicated on such Assignor's Information DisclosureCertificate.  The U.S. Federal Tax I.D.Number of each Assignor is set forth on such Assignor's Information DisclosureCertificate.  No Assignor will move itschief executive office (or registered office in the case of an Assignor whichis a corporation) except to such new location as such Assignor may establish inaccordance with the last sentence of this Section 3.4.  The originals of all documents evidencingall Contract Rights of such Assignor and the only original books of account andrecords of such Assignor relating thereto are, and will continue to be, kept atsuch chief executive office, or at such new locations as such Assignor mayestablish in accordance with the last sentence of this Section 3.4.  All Contract Rights of such Assignor are,and will continue to be, maintained at, and controlled and directed (including,without limitation, for general accounting purposes) from, the office locationsdescribed above, or such new locations as such Assignor may establish inaccordance with the last sentence of this Section 3.4.  No Assignor shall establish new locationsfor such offices until (i) it shall have given to the Collateral Agent not lessthan 30 days' prior written notice of its intention so to do, clearlydescribing such new location and providing such other information in connectiontherewith as the Collateral Agent may request, and (ii) with respect to suchnew location, it shall have taken all action, satisfactory to the CollateralAgent, to maintain the first priority security interest of the Collateral Agentin the Collateral intended to be granted hereby, at all times fully perfectedand in full force and effect.

**3.5.           **Location of Scheduled Inventory and Scheduled Equipment.  All Scheduled Inventory and ScheduledEquipment (other than Scheduled Inventory or Scheduled Equipment which (a)constitutes fuel and (b) has been dispensed into an aircraft as fuel for suchaircraft) held on the date hereof by each Assignor is located at one of thelocations shown on such Assignor's Information Disclosure Certificate.  Each Assignor agrees that all ScheduledInventory and Scheduled Equipment now held or subsequently acquired by it shallbe kept at (or shall be in transport to or from) any one of such locations, orsuch new location as such Assignor may establish in accordance with the lastsentence of this Section 3.5.  AnAssignor may establish a new location for Scheduled Inventory and ScheduledEquipment only if (i) it shall have given to the Collateral Agent not less than30 days' prior written notice of its intention so to do, clearly describingsuch new location and providing such other information in connection therewithas the Collateral Agent may request, and (ii) with respect to such newlocation, it shall have taken all action satisfactory to the Collateral Agentto maintain the first priority security interest of the Collateral Agent in theCollateral intended to be granted hereby, or in any other Collateral Document,at all times in fully perfected and in full force and effect.

**3.6.           **Trade Names; Change of Name.  No Assignor has or operates in anyjurisdiction under, or in the preceding five years has had or has operated inany jurisdiction under, any trade names, fictitious names or other names(including, without limitation, any names of divisions or operations) exceptits legal name and such other trade, fictitious or other names as are listed onsuch Assignor's Information Disclosure Certificate.  Each Assignor has operated only under each name set forth in suchAssignor's Information Disclosure Certificate in the jurisdiction or jurisdictionsset forth opposite each such name on such Information DisclosureCertificate.  No Assignor shall changeits legal name or assume or operate in any jurisdiction under any trade,fictitious or other name except those names listed on its Information DisclosureCertificate and in the jurisdictions listed with respect to such names and newnames (including, without limitation, any names of divisions or operations)and/or jurisdictions established in accordance with the last sentence of thisSection 3.6.  No Assignor shall assumeor operate in any jurisdiction under any new trade, fictitious or other name oroperate under any existing name in any additional jurisdiction until (i) itshall have given to the Collateral Agent not less than 30 days' prior writtennotice of its intention so to do, clearly describing such new name and/orjurisdiction and, in the case of a new name, the jurisdictions in  which such new name shall be used andproviding such other information in connection therewith as the CollateralAgent may request, and (ii) with respect to such new name and/or newjurisdiction, it shall have taken all action to maintain the first prioritysecurity interest of the Collateral Agent in the Collateral intended to begranted hereby, at all times fully perfected and in full force and effect.

**3.7.           **Recourse.This Agreement is made with full recourse to the relevant Assignor andpursuant to and upon all the warranties, representations, covenants, andagreements on the part of such Assignor contained herein, in the other LoanDocuments, in the Indenture Documents, and otherwise in writing in connectionherewith or therewith.

4.                 PROVISIONS CONCERNINGCOLLATERAL.

**4.1.           **Protection of Collateral Agent's Security.  Each Assignor will do nothing to impair therights of the Collateral Agent in the Collateral.  Each Assignor will at all times keep its Scheduled Inventory andScheduled Equipment insured in favor of the Collateral Agent, at its ownexpense, to the extent required of the Parent and the Borrowers under theCredit Agreement against fire, theft and all other risks to which suchCollateral may be subject; all policies or certificates with respect to suchinsurance shall be endorsed to the Collateral Agent's satisfaction for thebenefit of the Collateral Agent (including, without limitation, by naming theCollateral Agent as an additional insured and loss payee) and copies thereofshall be delivered upon request to the Collateral Agent.  If an Assignor shall fail to insure suchScheduled Inventory and/or Scheduled Equipment to the extent required of theParent and the Borrowers under the Credit Agreement, or if such Assignor shallfail to so endorse all policies or certificates with respect thereto, theCollateral Agent shall have the right (but shall be under no obligation) toprocure such insurance and such Assignor agrees to reimburse the CollateralAgent for all costs and expenses of procuring such insurance.  Any proceeds of such insurance shall beapplied in accordance with the Credit Agreement.  Each Assignor assumes all liability and responsibility in connectionwith the Collateral acquired by it, and the liability of such Assignor to payits obligations shall in no way be affected or diminished by reason of the factthat such Collateral may be lost, destroyed, stolen, damaged or for any reasonwhatsoever unavailable to such Assignor.

**4.2.           **Further Actions.Each Assignor will, at its own expense, make, execute, endorse,acknowledge, file and/or deliver to the Collateral Agent from time to time suchlists, descriptions and designations of its Collateral, warehouse receipts,receipts in the nature of warehouse receipts, bills of lading, documents oftitle, vouchers, invoices, schedules, confirmatory assignments, conveyances,financing statements, transfer endorsements, powers of attorney, certificates,reports and other assurances or instruments and take such further stepsrelating to the Collateral and other property or rights covered by the securityinterest hereby granted, which the Collateral Agent reasonably deemsappropriate or advisable to perfect, preserve or protect its security interestin the Collateral.  

**4.3.           **Financing Statements.  Each Assignor agrees to sign and deliver to the Collateral Agentsuch financing statements, in form acceptable to the Collateral Agent, as theCollateral Agent may from time to time request or as are necessary or desirablein the opinion of the Collateral Agent to establish and maintain a valid,enforceable, first priority security interest in the Collateral as providedherein and the other rights and security contemplated hereby all in accordancewith the Uniform Commercial Code as enacted in any and all relevantjurisdictions or any other relevant law.The Assignors will pay any applicable filing fees and related expenses.  Each Assignor authorizes the CollateralAgent to file any such financing statements without the signature of suchAssignor.

5.                 REMEDIES; APPLICATIONOF PROCEEDS, ETC.

**5.1.           **Remedies; Obtaining the Collateral Upon Default.  Each Assignor agrees that, if any Event ofDefault shall have occurred and be continuing, then and in every such case,subject to any mandatory requirements of applicable law then in effect, theCollateral Agent, in addition to any rights now or hereafter existing underapplicable law, shall have all rights as a secured creditor under the UniformCommercial Code in all relevant jurisdictions and may:

(a)              personally, or by agents or attorneys, immediately retakepossession of the Collateral or any part thereof, from such Assignor or anyother Person who then has possession of any part thereof with or without noticeor process of law, and for that purpose may enter upon such Assignor's premiseswhere any of the Collateral is located and remove the same and use inconnection with such removal any and all services, supplies, aids and otherfacilities of such Assignor;

(b)              sell, assign or otherwise liquidate, or direct such Assignorto sell, assign or otherwise liquidate, any or all of the Collateral or anypart thereof, and take possession of the proceeds of any such sale orliquidation;

(c)              take possession of the Collateral or any part thereof, bydirecting such Assignor in writing to deliver the same to the Collateral Agentat any place or places designated by the Collateral Agent, in which event suchAssignor shall at its own expense;

(i)                 forthwith cause the same to be moved to the place or places sodesignated by the Collateral Agent and there delivered to the Collateral Agent,

(ii)               store and keep any Collateral so delivered to the CollateralAgent at such place or places pending further action by the Collateral Agent asprovided in Section 5.2, and

(iii)              while the Collateral shall be so stored and kept, provide suchguards and maintenance services as shall be necessary to protect the same andto preserve and maintain them in good condition;

it being understood that suchAssignor's obligation so to deliver the Collateral is of the essence of thisAgreement and that, accordingly, upon application to a court of equity havingjurisdiction, the Collateral Agent shall be entitled to a decree requiringspecific performance by the Assignor of said obligation.

**5.2.           **Remedies; Disposition of the Collateral.  Upon the occurrence and continuance of anEvent of Default, any Collateral repossessed by the Collateral Agent under orpursuant to Section 5.1 and any other Collateral whether or not so repossessedby the Collateral Agent, may be sold, assigned, leased or otherwise disposed ofunder one or more contracts or as an entirety, and without the necessity ofgathering at the place of sale of the property to be sold, and in general insuch manner, at such time or times, at such place or places and on such termsas the Collateral Agent may, in compliance with any mandatory requirements ofapplicable law, determine to be commercially reasonable. Any of the Collateralmay be sold, leased or otherwise disposed of, in the condition in which thesame existed when taken by the Collateral Agent or after any overhaul or repairwhich the Collateral Agent shall determine to be commercially reasonable. Anysuch disposition which shall be a private sale or other private proceedingspermitted by such requirements shall be made upon not less than 10 days'written notice to such Assignor specifying the time at which such dispositionis to be made and the intended sale price or other consideration therefor, andshall be subject, for the 10 days after the giving of such notice, to the rightof the relevant Assignor or any nominee of the relevant Assignor to  acquire the Collateral involved at a priceor for such other consideration at least equal to the intended sale price orother consideration so specified. Any such disposition which shall be a publicsale permitted by such requirements shall be made upon not less than 10 days'written notice to the relevant Assignor specifying the time and place of suchsale and, in the absence of applicable requirements of law, shall be by publicauction (which may, at the Collateral Agent's option, be subject to reserve),after publication of notice of such auction not less than 10 days prior theretoin two newspapers in general circulation in the city where such Collateral isthen located. To the extent permitted by any such requirement of law, theCollateral Agent on behalf of the Secured Creditors (or certain of them) maybid for and become the purchaser (by bidding in Secured Obligations or otherwise)of the Collateral or any item thereof, offered for sale in accordance with thissection without accountability to the relevant Assignor (except to the extentof surplus money received as provided in Section 5.4).  If, under mandatory requirements ofapplicable law, the Collateral Agent shall be required to make disposition ofthe Collateral within a period of time which does not permit the giving ofnotice to the Assignor as hereinabove specified, the Collateral Agent need givethe relevant Assignor only such notice of disposition as shall be reasonablypracticable in view of such mandatory requirements of applicable law.

**5.3.           **Waiver of Claims.Except as otherwise provided in this Agreement, EACH ASSIGNOR HEREBYWAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, NOTICE AND JUDICIAL HEARINGIN CONNECTION WITH THE COLLATERAL AGENT'S TAKING POSSESSION OR THE COLLATERALAGENT'S DISPOSITION OF ANY OF THE COLLATERAL, INCLUDING, WITHOUT LIMITATION,ANY AND ALL PRIOR NOTICE AND HEARING FOR ANY PREJUDGMENT REMEDY OR REMEDIES ANDANY SUCH RIGHT WHICH THE ASSIGNOR WOULD OTHERWISE HAVE UNDER THE CONSTITUTIONOR ANY STATUTE OF THE UNITED STATES OR OF ANY STATE, and each Assignor herebyfurther waives, to the extent permitted by law:

(i)                 all damages occasioned by such taking of possession except anydamages which are the direct result of the Collateral Agent's gross negligenceor willful misconduct;

(ii)               all other requirements as to the time, place and terms of saleor other requirements with respect to the enforcement of the Collateral Agent'srights hereunder; and

(iii)              all rights of redemption, appraisement, valuation, stay,extension or moratorium now or hereafter in force under any applicable law inorder to prevent or delay the enforcement of this Agreement or the absolutesale of the Collateral or any portion thereof, and each Assignor, for itselfand all who may claim under it, insofar as it or they now or hereafter lawfullymay, hereby waives the benefit of all such laws.

Any sale of, or the grant ofoptions to purchase, or any other realization upon, any Collateral shalloperate to divest all right, title, interest, claim and demand, either at lawor in equity, of the relevant Assignor therein and thereto, and shall be aperpetual bar both at law and in equity against the relevant Assignor andagainst any and all Persons claiming or attempting to claim the Collateral sosold, optioned or realized upon, or any part thereof, from, through and underthe relevant Assignor.

**5.4.           **Application of Proceeds.  

(a)              The Proceeds actually collected by the Collateral Agent as aresult of the exercise of any of the rights, powers and remedies of theCollateral Agent herein granted, shall be applied as follows:

(i)                 First, to the payment or reimbursement of all Collateral AgentExpenses, to the extent such costs and expenses have not been indefeasibly paidor reimbursed by the Assignors;  

(ii)               Second, subject to Section 5.4(b) and until all SecuredObligations owed to the Secured Creditors have been fully, finally, andindefeasibly paid or performed, each Lender's Commitment has been terminated,and the Letter of Facility Obligations have been reduced to zero, on a paripassu basis without any preference or priority to the Noteholders or theLenders, to the Trustee, in an amount equal to the Noteholders' Percentage ofsuch Proceeds, and to the Administrative Agent, in an amount equal to theLenders' Percentage of such Proceeds, for distribution by the Trustee under theIndenture Documents and by the Administrative Agent under the Loan Documents;

(iii)              Finally, to the relevant Assignor or such other Person orPersons as shall be lawfully entitled thereto.

(b)              The amount of any Proceeds distributed to the AdministrativeAgent on account of any Outstanding Letter of Credit Exposure shall be held bythe Administrative Agent and deposited by the Administrative Agent in a specialinterest bearing account (the "Letter of Credit Reserve Account") under thesole dominion and control of the Administrative Agent, and shall be applied anddistributed to the appropriate Issuer of the applicable Letter of Credit if andto the extent that such Letter of Credit is honored.  If such Letter of Credit is not drawn upon, or is not fully drawnupon, the balance of the funds in the Letter of Credit Reserve Accountattributable to such Letter of Credit shall be distributed to the SecuredCreditors pursuant to clause (ii) of Section 5.4(a) hereof.

(c)              Notwithstanding Section 5.4(a),

(i)                 if any payment by the Collateral Agent to a Secured Creditorpursuant to Section 5.4(a) would cause any amount recovered by the CollateralAgent from or in respect of the Collateral to be invalidated, declaredfraudulent or preferential, set aside or required to be repaid, returned orrestored to a trustee, receiver, or any other Person under any bankruptcy,reorganization, insolvency, or liquidation statute, state or federal law,common law or equitable cause (an "Avoided Payment"), such Secured Creditorshall not participate in the distribution of any portion of the AvoidedPayment; instead the Avoided Payment shall be distributable to the Trustee andAdministrative Agent pro rata in accordance with Section 5.4(a)(ii), for thebenefit of the remaining Secured Creditors as to whom no such repayment, returnor restoration would be applicable;

(ii)               the Collateral Agent may condition a payment to the Trustee orthe Administrative Agent on behalf of a Secured Creditor pursuant to Section5.4(a) on the specific condition that, in the event such amount is subsequentlydetermined to be an Avoided Payment, such Secured Creditor will be required,upon written demand, to return promptly to the Collateral Agent all or itsratable part, as the case may be, of the Avoided Payment (and any interestthereon to the extent the same is required to be paid in respect of the returnor restoration of the Avoided Payment), for distribution pro rata in accordancewith Section 5.4(a)(ii) to the remaining Secured Creditors as to whom no suchrepayment, return or restoration would be applicable, or to the applicableobligor, as the case may be; and

(iii)              the Collateral Agent, in making any payments to the Trusteeand the Administrative Agent on behalf of the Secured Creditors under Section5.4(a), may require the Secured Creditors to agree that if any amounts are notdistributed to a particular Secured Creditor pursuant to clause (i) above orare returned by a Secured Creditor under clause (ii) above, the SecuredCreditors will make such adjustments or arrangements among themselves, whetherby purchasing undivided interests in the Secured Obligations or otherwise, in orderto equitably adjust for any non-pro rata distribution under clause (i) aboveand/or the return of all or part of any payment or amount under clause (ii)above, and to give effect to the intended equal and ratable benefits of thisAgreement as security for the Secured Obligations.

(d)              All payments required to be made to (i) the Lenders hereundershall be made to the Administrative Agent on behalf of and for the account ofthe respective Lenders, and (ii) the Noteholders hereunder shall be made to theTrustee on behalf of and for the account of the Noteholders.

(e)              For purposes of applying payments received in accordance withthis Section 5.4, the Collateral Agent shall be entitled to rely upon (i) theAdministrative Agent for a determination (which the Administrative Agent agreesto provide upon request by the Collateral Agent) of the outstanding FacilityPrincipal Obligations, and(ii) the Trustee for determinations of the outstanding IndenturePrincipal Obligations owed to the Noteholders.

(f)                It is understood and agreed that each Assignor shall remainliable to the extent of any deficiency between (i) the amount of the proceedsof the Collateral applied pursuant to Section 5.4(a) and (ii) the aggregateoutstanding amount of the Secured Obligations.

**5.5.           **Remedies Cumulative.  Each and every right, power and remedy hereby specifically givento the Collateral Agent shall be in addition to every other right, power andremedy specifically given under this Agreement or any of the other LoanDocument or Indenture Document or now or hereafter existing at law or inequity, or by statute and each and every right, power and remedy whetherspecifically herein given or otherwise existing may be exercised from time totime or simultaneously and as often and in such order as may be deemedexpedient by the Collateral Agent.  Allsuch rights, powers and remedies shall be cumulative and the exercise or thebeginning of exercise of one shall not be deemed a waiver of the right toexercise of any other or others.  Nodelay or omission of the Collateral Agent in the exercise of any such right,power or remedy and no renewal or extension of any of the Secured Obligationsshall impair any such right, power or remedy or shall be construed to be awaiver of any Default or Event of Default or an acquiescence therein. In theevent that the Collateral Agent shall bring any suit to enforce any of itsrights hereunder and shall be entitled to judgment, then in such suit theCollateral Agent may recover reasonable expenses, including attorneys' fees,and the amounts thereof shall be included in such judgment.

**5.6.           **Discontinuance of Proceedings.  In case the Collateral Agent shall haveinstituted any proceeding to enforce any right, power or remedy under thisAgreement by foreclosure, sale, entry or otherwise, and such proceeding shallhave been discontinued or abandoned for any reason or shall have beendetermined adversely to the Collateral Agent, then and in every such case therelevant Assignor, the Collateral Agent and each holder of any of the SecuredObligations shall be restored to their former positions and rights hereunderwith respect to the Collateral subject to the security interest created underthis Agreement, and all rights, remedies and powers of the Collateral Agentshall continue as if no such proceeding had been instituted.

**5.7.           **Collateral Agent to Act on Behalf of Secured Creditors.  No Secured Creditor shall have any rightindividually to seek to enforce or to enforce this Agreement or to realize uponthe security to be granted hereby, it being understood and agreed that suchrights and remedies may be exercised only by the Collateral Agent, for thebenefit of the Secured Creditors, by itself or upon instructions from theRequired Lenders, and the Secured Creditors agree by their acceptance of any ofthe benefits or Proceeds hereof that this Agreement may be enforced on theirbehalf only by the action of the Collateral Agent, acting in accordance withthe terms of this Agreement.

**5.8.           **Separate Actions.A separate action or actions may be brought and prosecuted against anyAssignor whether or not action is brought against any other Assignor orguarantor of any of the Secured Obligations, or either of the Borrowers, andwhether or not any other Assignor, guarantor or either of the Borrowers bejoined in any such action or actions.

6.                 INDEMNITY.

**6.1.           **Indemnity.  (a)  The Assignors jointly and severally agree toindemnify, reimburse and hold the Collateral Agent, each Secured Creditor andits respective successors, assigns, employees, agents and servants (hereinafterin this Section 6.1 referred to individually as "Indemnitee," and collectivelyas "Indemnitees") harmless from any and all liabilities, obligations, losses,damages, penalties, claims, demands, actions, suits, judgments and any and allreasonable out-of-pocket costs and expenses (including reasonable attorneys'fees and expenses) (for the purposes of this Section 6.1 the foregoing arecollectively called "expenses") of whatsoever kind and nature imposed on,asserted against or incurred by any of the Indemnitees in any way relating toor arising out of this Agreement, any other Loan Document, Indenture Document,or the documents executed in connection herewith and therewith or in any otherway connected with the enforcement of any of the terms of, or the preservationof any rights under any thereof, or in any way relating to or arising out ofthe manufacture, ownership, ordering, purchase, delivery, control, acceptance,lease, financing, possession, operation, condition, sale, return or other disposition,or use of the Collateral (including, without limitation, latent or otherdefects, whether or not discoverable), the violation of the laws of anycountry, state or other governmental body or unit, any tort (including, withoutlimitation, claims arising or imposed under the doctrine of strict liability,or for or on account of injury to or the death of any Person (including anyIndemnitee), or property damage), or contract claim; provided that noIndemnitee shall be indemnified pursuant to this Section 6.1(a) for losses,damages or liabilities to the extent caused by the gross negligence or willfulmisconduct of such Person to be indemnified or of any other Indemnitee who issuch Person or an affiliate of such Person. If any claim is asserted against anyIndemnitee, such Indemnitee shall promptly notify the Assignor and eachIndemnitee may, and if requested by the Assignor shall, in good faith, contestthe validity, applicability and amount of such claim with counsel selected bysuch Indemnitee, and shall permit the Assignor to participate in suchcontest.  In addition, in connectionwith any claim covered by this Section 6.1(a) against more than one Indemnitee,all such Indemnitees shall be represented by the same legal counsel selected bysuch Indemnitees; provided, however, that if such legal counsel determines ingood faith that representing all such Indemnitees would or could result in aconflict of interest under the laws or ethical principles applicable to suchlegal counsel or that a defense or counterclaim is available to an Indemniteethat is not available to all such Indemnitees, then to the extent reasonablynecessary to avoid such a conflict of interest or to permit unqualifiedassertion of such defense or counterclaim, each Indemnitee shall be entitled toseparate representation by a legal counsel selected by that Indemnitee.  Each Assignor agrees that upon writtennotice by any Indemnitee of the assertion of such a liability, obligation,loss, damage, penalty, claim, demand, action, judgment or suit, such Assignorshall assume full responsibility for the defense thereof. Each Indemniteeagrees to use its best efforts to promptly notify the relevant Assignor of anysuch assertion of which such Indemnitee has knowledge.

(b)              Without limiting the application of Section 6.1(a), theAssignors jointly and severally agree to pay, or reimburse the Collateral Agentfor all Collateral Agent Expenses as incurred.

(c)              Without limiting the application of Section 6.1(a) or (b), theAssignors jointly and severally agree to pay, indemnify and hold eachIndemnitee harmless from and against any loss, costs, damages and expenseswhich such Indemnitee may suffer, expend or incur in consequence of or growingout of any material misrepresentation by an Assignor in this Agreement, or inany statement or writing contemplated by or made or delivered pursuant to or inconnection with this Agreement.

(d)              If and to the extent that the obligations of any Assignorunder this Section 6.1 are unenforceable for any reason, each Assignor herebyagrees to make the maximum contribution to the payment and satisfaction of suchobligations which is permissible under applicable law.

**6.2.           **Indemnity Obligations Secured by Collateral; Survival.  Any amounts paid by any Indemnitee as towhich such Indemnitee has the right to reimbursement shall constitute SecuredObligations secured by the Collateral.The indemnity obligations of the Assignors contained in this Section 6shall continue in full force and effect notwithstanding the full, final, andindefeasible payment and performance of all of the Secured Obligations, thetermination of each Lender's Commitment, and the reduction of the Letter ofCredit Obligations to zero.

7.                 THE COLLATERAL AGENT.

The Collateral Agent will hold in accordance with thisAgreement all items of the Collateral at any time received under thisAgreement.  It is expressly understoodand agreed that the obligations of the Collateral Agent as holder of theCollateral and interests therein and with respect to the disposition thereof,and otherwise under this Agreement, are only those expressly set forth in thisAgreement.  The Collateral Agent shallact hereunder on the terms and conditions set forth herein and in Section 8 ofthe Credit Agreement.  Unless theCollateral Agent has received written notice from a Noteholder or the Trusteeto the effect that an "Event of Default" (as defined in the Indenture) hasoccurred and is continuing under any of the Indenture Documents, the CollateralAgent may assume that no such "Event of Default" is in existence.

8.                 TERMINATION.

After the Security Interest Termination Date, thisAgreement shall terminate (provided that all indemnities set forth hereinincluding, without limitation, in Section 6 hereof shall survive any suchtermination) and the Collateral Agent, at the request and expense of therelevant Assignor, will execute and deliver to the relevant Assignor a properinstrument or instruments acknowledging the satisfaction and termination ofthis Agreement as provided above, and will duly assign, transfer and deliver tothe relevant Assignor (without recourse and without any representation orwarranty) such of the Collateral as may be in the possession of the CollateralAgent and as has not theretofore been sold or otherwise applied or releasedpursuant to this Agreement, together with any moneys at the time held by theCollateral Agent hereunder.

9.                 NOTICES, ETC.

Any notice given with respect to this Agreement may bepersonally served or given in writing by depositing such notice in the UnitedStates mail, first class postage prepaid, or by telex or telegram, chargesprepaid, addressed to any Assignor at the address and telecopy number set forthnext to such Assignor's signature  onthe signature pages hereto, or at such other address and telecopy number assuch Assignor may from time to time designate in writing to the CollateralAgent, and, to the Collateral Agent at the address and telecopy number fornotices set forth in the Credit Agreement, or at such other address andtelecopy number as the Collateral Agent may designate by written notice to theParent or either of the Borrowers.

10.             WAIVER; AMENDMENT.

None of the terms and conditions of this Agreement may bechanged, waived, modified or varied in any manner whatsoever unless in writingduly signed by each Assignor and the Collateral Agent (with the consent of theRequired Lenders or, to the extent required by Section 10.06 of the CreditAgreement, all of the Lenders).  

11.             MISCELLANEOUS.

**11.1.       **Successors and Assigns.  This Agreement shall be binding upon each Assignor and itssuccessors and assigns and shall inure to the benefit of the Collateral Agentand its successors and assigns, provided that no Assignor may transfer orassign any or all of its rights or obligations hereunder without the writtenconsent of the Collateral Agent. All agreements, statements, representationsand warranties made by each Assignor herein or in any certificate or otherinstrument delivered by such Assignor or on its behalf under this Agreementshall be considered to have been relied upon by the Secured Creditors and shallsurvive the execution and delivery of this Agreement and the other LoanDocuments  and the Indenture Documentsregardless of any investigation made by the Secured Creditors or on theirbehalf.

**11.2.       **Headings Descriptive.  The headings of the several sections of this Agreement areinserted for convenience only and shall not in any way affect the meaning orconstruction of any provision of this Agreement.

**11.3.       **Severability.Any provision of this Agreement which is prohibited or unenforceable inany jurisdiction shall, as to such jurisdiction, be ineffective to the extentof such prohibition or unenforceability without invalidating the remainingprovisions hereof, and any such prohibition or unenforceability in anyjurisdiction shall not invalidate or render unenforceable such provision in anyother jurisdiction.

**11.4.       **Governing Law.THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDERSHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE STATEOF GEORGIA.

**11.5.       **Assignors' Duties.It is expressly agreed, anything herein contained to the contrarynotwithstanding, that each Assignor shall remain liable to perform all of theobligations, if any, assumed by it with respect to the Collateral and theCollateral Agent shall not have any obligations or liabilities with respect toany Collateral by reason of or arising out of this Agreement, nor shall theCollateral Agent be required or obligated in any manner to perform or fulfillany of the obligations of an Assignor under or with respect to any Collateral.

**11.6.       **Counterparts.This Agreement may be executed in multiple counterparts, and bydifferent parties in separate counterparts, each of which shall be an originaland all of which collectively shall constitute one and the same Agreement.

**11.7.       **WAIVER OF JURY TRIAL.

EACH OF THE ASSIGNORS, THECOLLATERAL AGENT, AND EACH LENDER AND NOTEHOLDER WHICH ACCEPTS ANY PROCEEDSUNDER THIS AGREEMENT OR ANY OTHER COLLATERAL DOCUMENT HEREBY IRREVOCABLY WAIVESALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISINGOUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

[SIGNATURES BEGIN ON NEXT PAGE]

INWITNESS WHEREOF, the parties hereto have caused this Agreement to be executedand delivered under seal by their duly authorized officers as of the date firstabove written.
| ASSIGNORS:

 

AIRBORNE EXPRESS, INC.             (SEAL)

 

 

By: _/s/ Lanny H. Michael   

 

Title:_Senior Vice   President and CFO

 

P.O. Box 662

Seattle, Washington  98111

Attention:  Chief Financial Officer and

  General Counsel

CFO Telecopier number:  206-281-1444

Confirmation number:  206-281-1003

GC Telecopier number:  206-281-1444

Confirmation number:  206-281-1005

  |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                 |

 

 
| ABX AIR, INC.                                   (SEAL)

 

 

By: _/s/ Joseph C. Hete

 

Title:__President and COO

 

P.O. Box 662

Seattle, Washington  98111

Attention:  Chief Financial Officer and

  General Counsel

CFO Telecopier number:  206-281-1444

Confirmation number:  206-281-1003

GC Telecopier number:  206-281-1444

Confirmation number:  206-281-1005

  |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

 
| AIRBORNE, INC.                              (SEAL)

 

 

By: _/s/ Lanny H. Michael   

 

Title:_Senior Vice   President and CFO

 

P.O. Box 662

Seattle, Washington  98111

Attention:  Chief Financial Officer and

  General Counsel

CFO Telecopier number:  206-281-1444

Confirmation number:  206-281-1003

GC Telecopier number:  206-281-1444

Confirmation number:  206-281-1005

  |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

 
| WILMINGTON AIR PARK, INC.                                                                 (SEAL)

 

 

By: _/s/ Joseph C. Hete

 

Title:__President

 

P.O. Box 662

Seattle, Washington  98111

Attention:  Chief Financial Officer and

  General Counsel

CFO Telecopier number:  206-281-1444

Confirmation number:  206-281-1003

GC Telecopier number:  206-281-1444

Confirmation number:  206-281-1005

  |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                          |

 

 
| SKY COURIER, INC.                        (SEAL)

 

 

By:   _________________________________

 

Title:________________________________

 

P.O. Box 662

Seattle, Washington  98111

Attention:  Chief Financial Officer and

  General Counsel

CFO Telecopier number:  206-281-1444

Confirmation number:  206-281-1003

GC Telecopier number:  206-281-1444

Confirmation number:  206-281-1005

  |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

 
| AVIATION FUEL, INC.                     (SEAL)

 

 

By: __/s/ Robert R. Hanke

 

Title:___President_______________

 

P.O. Box 662

Seattle, Washington  98111

Attention:  Chief Financial Officer and

  General Counsel

CFO Telecopier number:  206-281-1444

Confirmation number:  206-281-1003

GC Telecopier number:  206-281-1444

Confirmation number:  206-281-1005

  |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

 
| SOUND SUPPRESSION, INC.         (SEAL)

 

 

By:   _________________________________

 

Title:________________________________

 

P.O. Box 662

Seattle, Washington  98111

Attention:  Chief Financial Officer and

  General Counsel

CFO Telecopier number:  206-281-1444

Confirmation number:  206-281-1003

GC Telecopier number:  206-281-1444

Confirmation number:  206-281-1005

  |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

 
| AIRBORNE FTZ, INC.                       (SEAL)

 

 

By: _/s/ Joseph C. Hete

 

Title:__President

 

 

P.O. Box 662

Seattle, Washington  98111

Attention:  Chief Financial Officer and

  General Counsel

CFO Telecopier number:  206-281-1444

Confirmation number:  206-281-1003

GC Telecopier number:  206-281-1444

Confirmation number:  206-281-1005

  |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

 
| COLLATERAL AGENT:

 

WACHOVIA BANK, N.A.

 

 

 

By: __/s/ Howard Kim

 

Title: Senior Vice   President

 

  |
|------------------------------------------------------------------------------------------------------------------------------------------------------|

 

SCHEDULE 1

to

SECURITY AGREEMENT

 

SCHEDULED CONTRACTS

 

NONE.

SCHEDULE 2

to

SECURITY AGREEMENT

 

SCHEDULED EQUIPMENT

 

NONE.

SCHEDULE 3

to

SECURITY AGREEMENT

 

SCHEDULED INVENTORY

 

NONE.

SCHEDULE4

to

SECURITYAGREEMENT

 

SCHEDULEDPERMITS

 

NONE.