**EXHIBIT 10(c)**

STOCKPLEDGE AGREEMENT

            THISSTOCK PLEDGE AGREEMENT (as amended, modified, or supplemented from time totime, this "Agreement"), made effective June 29, 2001, by and betweenAIRBORNE, INC., a Delaware corporation, having a place of business at 3101Western Avenue, Seattle, Washington98121 (the "Grantor"), and WACHOVIA BANK, N.A., a nationalbanking association in its capacity as Collateral Agent for the Lenders (asdefined below) (the "Collateral Agent"), having offices located at191 Peachtree Street, Atlanta, GA30303.

PRELIMINARY STATEMENTS:

(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"), the Grantor, as "Parent," the financial institutions named aslenders therein (together with their respective successors and assigns, the"Lenders" and, each individually, a "Lender"), and Wachovia Bank, N.A., anational banking association ("Wachovia"), as the Administrative Agent for theLenders under the agreement and as Collateral Agent, which agreement amends andrestates that certain Credit Agreement dated as of July 27, 2000, by and amongAFC, the Lenders, and Wachovia as Administrative Agent and Collateral Agent asamended by that certain First Amendment to Credit Agreement dated as of April20, 2001, by and among Airborne, Inc., a Delaware corporation ("Airborne"), theLenders, and Wachovia as Administrative Agent, as further amended by thatcertain Second Amendment to Credit Agreement dated as of May 31, 2001, by andamong Airborne, the Lenders, and Wachovia as Administrative Agent(collectively, together with any and all concurrent or subsequent exhibits,schedules, extensions, supplements, amendments or modifications thereto, the"Credit Agreement").  Pursuant to aJoinder Agreement dated as of December 26, 2000, Airborne assumed AFC'sobligations as "Borrower" under the Credit Agreement, and AFC was released fromits obligations as "Borrower" under the Credit Agreement. 

(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) $100,000,000 aggregate original principal amount of its 7.35%Notes (the "1995 Notes") and (B) $100,000,000 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 any Grantor from creating any securityinterests in certain of the Grantor's property unless the Indenture Debt isequally and ratably secured by such security interest. 

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

(7)                                      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). 

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

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

 

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

 

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

"Collateral Agent Expenses" shall mean (a) all costs orexpenses which the Grantor 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 anyBorrower is required to pay or cause to be paid under this Agreement or anyother Collateral Document and which are paid or advanced by the CollateralAgent pursuant 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 Pledged Collateral, whether or not a saleis consummated; (e) all costs and expenses of suit paid or incurred by theCollateral Agent in enforcing or defending this Agreement or any otherCollateral Document; and (f) attorneys' fees and expenses paid or incurred bythe Collateral 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.

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

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

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

"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 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, theParent, or any subsidiary, including and without limitation either of theBorrowers and the Grantor for the benefit of the Trustee or Noteholders.

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

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

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

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

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

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

(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 Grantorarising under or in connection with the Indenture Documents; and

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

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

(e)               all other obligations and liabilities owing by Grantor to anyof the Administrative Agent, the Collateral Agent, the Trustee, any Lender, orany 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.

 

4.                 Representations and Warranties.  In order to induce the Collateral Agent toaccept this Agreement, Grantor hereby represents and warrants to the CollateralAgent:  (i) that Grantor has thecomplete and unconditional authority to pledge the Pledged Collateral, holds (orwill hold on date of pledge thereof) the Pledged Collateral free and clear ofany and all liens, charges, encumbrances and security interests thereon (otherthan in favor of Collateral Agent) and has (or will have on date of pledgethereof) good right, title and legal authority to pledge the Pledged Collateralin the manner contemplated herein; (ii) that all stock now owned or hereafterowned by Grantor and constituting or which will constitute Pledged Collateralhereunder are, or will be on date of pledge thereof, validly issued, fully paidand non‐assessable; and (iii) that no authorization, approval, or otheraction by, and no notice to or filing with, any governmental authority orregulatory body is required either (a) for the pledge by Grantor of the PledgedCollateral pursuant to this Agreement or for the execution, delivery orperformance of this Agreement by Grantor or (b) for the exercise by theCollateral Agent of the voting or other rights provided for in this Agreementor the remedies in respect of the Pledged Collateral pursuant to this Agreement(except as may be required in connection with such disposition by lawsaffecting the offering and sale of securities generally). 

5.                 Delivery of Additional Securities; Further Assurances.  Grantor further covenants with theCollateral Agent that Grantor will cause any additional securities or otherproperty issued to or received by Grantor with respect to any of the PledgedCollateral, whether for value paid by the Grantor or otherwise, and includingstock dividends, to be deposited forthwith with the Collateral Agent and bepledged hereunder, in each case accompanied by blank stock powers or otherproper instruments of assignment duly executed by Grantor in such form as maybe required by the Collateral Agent.Grantor agrees that at any time and from time to time, at the expense ofGrantor, Grantor will promptly execute and deliver all further instruments anddocuments, and take all further action that the Collateral Agent may reasonablyrequest, in other to perfect and protect the security interest granted orpurported to be granted hereby or to enable the Collateral Agent to exerciseand enforce its rights, powers and remedies hereunder with respect to anyPledged Collateral. 

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

7.                 Voting Rights; Dividends, Etc.

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

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

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

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

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

(a)               All rights of Grantor to exercise the voting and otherconsensual rights which it would otherwise be entitled to exercise pursuant toSection 7.1(a) shall cease, and all such rights shall thereupon become vestedin the Collateral Agent who shall thereupon have the sole right to exercisesuch voting and other consensual rights; provided, however, Grantor shallcontinue to have the rights to exercise such voting and other consensual rightsnotwithstanding the occurrence and continuance of an Event of Default until theCollateral Agent delivers a notice to Grantor of its intention to exercise suchvoting and other consensual rights.

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

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

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

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

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

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

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

            12.1            Collateral Agent may exercise (incompliance with all applicable securities laws) in respect of the PledgedCollateral, in addition to other rights and remedies provided for herein orotherwise available to it, all the rights and remedies of a secured party on defaultunder the Uniform Commercial Code in effect in the State of Georgia at thattime, and the Collateral Agent may also, without notice except as specifiedbelow, sell (in compliance with all applicable securities laws) the PledgedCollateral or any part thereof in one or more parcels at public or privatesale, at any exchange, over the counter or at any of the Collateral Agent'soffices or elsewhere, for cash, on credit or for future delivery, and at suchprice or prices and upon such other terms as the Collateral Agent may deemcommercially reasonable or otherwise in such manner as necessary to comply withapplicable federal and state securities laws.Collateral Agent shall be authorized at any such sale (if it deems itadvisable to do so) to restrict the prospective bidders or purchasers topersons who will represent and agree that they are purchasing the PledgedCollateral for their own account for investment and not with a view to thedistribution or sale thereof, and upon consummation of any such sale theCollateral Agent shall have the right to assign, transfer and deliver to thepurchaser or purchasers at any such sale and such purchasers shall hold theproperty sold absolutely, free from any claim or right on the part of Grantor,and Grantor hereby waives (to the extent permitted by law) all rights ofredemption, stay and/or appraisal which it now has or may at any time in thefuture have under any rule of law or statute now existing or hereafterenacted.  To the extent notice of saleshall be required by law, Collateral Agent shall give Grantor at least fivedays' notice of the time and place of any public sale or the time after whichany private sale is to be made, which Grantor agrees shall constitutereasonable notification.  At any suchsale, the Collateral Agent may bid (which bid may be, in whole or in part, inthe form of cancellation of Secured Obligations) for and purchase the whole orany part of the Pledged Collateral.Collateral Agent shall not be obligated to make any sale of Pledged Collateralregardless of notice of sale having been given.  Collateral Agent may adjourn any public or private sale from timeto time by announcement at the time and place fixed therefor, and such salemay, without further notice, be made at the time and place to which it was soadjourned.  If sale of all or any partof the Pledged Collateral is made on credit or for future delivery, the PledgedCollateral so sold may be retained by the Collateral Agent until the sale priceis paid by the purchaser or purchasers thereof, but Collateral Agent shall notincur any liability in case any such purchaser or purchasers shall fail to takeup and pay for the Pledged Collateral so sold and, in case of any such failure,such Pledged Collateral may be sold again upon like notice.  Grantor agrees that any sale of the PledgedCollateral conducted by the Collateral Agent in accordance with the foregoingprovisions of this Section 12 shall be deemed to be a commercially reasonablesale under Uniform Commercial Code as adopted in the State of Georgia.  As an alternative to exercising the power ofsale herein conferred upon it, Collateral Agent may proceed by a suit or suitsat law or in equity to foreclose the security interest granted under thisAgreement and to sell the Pledged Collateral, or any portion thereof, pursuantto a judgment or decree of a court or courts of competent jurisdiction.

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

 

14.             Registration Rights.In furtherance of the right of the Collateral Agent to sell any or allof the Pledged Collateral pursuant to Section 12 hereof, Grantor agrees that,following the occurrence of an Event of Default upon request of the CollateralAgent and without expense to the Collateral Agent, it will (a) use its bestefforts to obtain all necessary governmental approvals for the sale by theCollateral Agent of the Pledged Collateral or any part thereof, (b) prepare,cause to be filed and use its best efforts to cause to become effective withrespect to the Pledged Collateral, regardless of the number of shares orprincipal amount thereof, then held by the Collateral Agent one or moreregistration statements under the Securities Act of 1933, as amended (the"Act"), or one or more qualifications for exemption from registrationunder the Act, or one or more similar documents pursuant to any statute then ineffect corresponding to the Act, relating to any public offering or sale by theCollateral Agent of such Pledged Collateral, (c) prepare, cause to be filed anduse its best efforts to have such Pledged Collateral qualified or registeredunder the securities laws of such other jurisdictions as Collateral Agent mayrequest in connection with any such offering or sale, (d) include in any suchregistration statement, qualification statement or similar document allappropriate information relating to the transaction or transactions in whichthe Collateral Agent proposes to offer or sell such Pledged Collateral, (e)cause to be filed such post‐effective amendments and supplements to eachsuch registration statement, qualification statement or similar document(including, without limitation, any prospectus or offering circular) as may benecessary to make any statement therein contained not untrue or misleading, andsuch filing, qualification or registration to be kept effective for such periodas the Collateral Agent may deem appropriate to facilitate the sale or otherdisposition of such Pledged Collateral, (f) furnish Collateral Agent with suchnumber of copies of each such registration statement, qualification statementor similar document, preliminary prospectus, prospectus, offering circular andany post‐effective amendments or supplements thereto as the CollateralAgent may request, and (g) do such further acts and things as the CollateralAgent may deem necessary or advisable to effectuate the offering and sale bythe Collateral Agent of such Pledged Collateral.  Grantor further agrees  toindemnify and hold harmless the Collateral Agent and each underwriter (withinthe meaning of the Act or any statute then in effect corresponding to the Act)acting in the transaction, and each person, firm or corporation controlling(within the meaning of the Act or such corresponding statute) Collateral Agentor underwriter, from and against any and all claims, actions, damages, demands,judgments, losses, liabilities and expenses based upon or arising out of anyactual or alleged untrue statement of a material fact contained in any suchregistration statement, qualification statement or similar document, or partthereof, or any actual or alleged omission to state a material fact required tobe stated in any such registration statement, qualification statement orsimilar document, or part thereof, or necessary to make the statementscontained therein not misleading; provided, however, that Grantor shall have noliability to any Person under the foregoing indemnity on account of any actualor alleged untrue or misleading statement contained in, or any actual oralleged omission from, any information furnished in writing to Grantor by suchPerson specifically for use in such registration statement, qualificationstatement or similar document.  The registrationrights provided in this Section 14 may be transferred to any purchaser of thePledged Collateral, or any portion thereof, at any sale described in Section 12hereof.  Collateral Agent may exerciseits rights and powers under this Section prior to any sale pursuant to Section12 or, alternatively, Collateral Agent may assign such rights to the purchaserat any such sale who shall then have the registration rights specified herein. 

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

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

(b)              any change in the time, manner or place of payment of, or inany other term of, all or any of the Secured Obligations, or any otheramendment  or waiver of or any consentto any departure from the Credit Agreement, the Loan Documents, the IndentureDocuments, or any other agreement or instrument relating thereto;

(c)               any exchange, release or non‐perfection of any othercollateral, or any release or amendment or wavier of or consent to or departurefrom the Parent Guaranty, the Subsidiary Guaranty, or any other guaranty, forall or any of the Secured Obligations; or

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

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

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

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

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

(iv)             Prior to the date on which the Aggregate Unpaids and all otheramounts owed under the Transaction Documents have been indefeasibly paid infull in cash in accordance with the terms of the Transaction Documents, neitherthe Collateral Agent nor any Secured Creditor shall object to or contest in anyadministrative, legal or equitable action or proceeding including, withoutlimitation, any insolvency, bankruptcy, receivership, liquidation,reorganization, winding up, readjustment, composition or other similar proceedingrelating to the Borrowers or the Receivables Subsidiary or their respectiveproperty) or object to or contest in any other manner (1) the interests of ACIand its successors and assigns in any of the assets transferred by AirborneExpress to ACI pursuant to the Transaction Documents and/or (2) the interestsof the Blue Ridge Agent, the Purchaser and/or any Liquidity Bank (as defined inthe Purchase Agreement) in the Securitization Assets.  Neither the Collateral Agent nor any Secured Creditor shall objectto or contest in any manner the receipt of any payment by the Blue Ridge Agentand/or the Purchaser with respect to the Securitization Assets for thesatisfaction of the Aggregate Unpaids; and

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

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

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

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

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

Grantor:

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

Collateral Agent:

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

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

 

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

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

24.             Jurisdiction.GRANTOR AGREES THAT ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THISAGREEMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF GEORGIA OR THE UNITEDSTATES OF AMERICA FOR THE NORTHERN DISTRICT OF GEORGIA, ATLANTA DIVISION, ALLAS THE COLLATERAL AGENT MAY ELECT.  BYEXECUTION OF THIS AGREEMENT, THE GRANTOR HEREBY SUBMITS TO EACH SUCHJURISDICTION, HEREBY EXPRESSLY WAIVING WHATEVER RIGHTS MAY CORRESPOND TO IT BYREASON OF ITS PRESENT OR FUTURE DOMICILE.NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE COLLATERAL AGENT TOCOMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE GRANTOR  IN ANY OTHER JURISDICTION OR TO SERVEPROCESS IN ANY MANNER PERMITTED OR REQUIRED BY LAW.  IN FURTHERANCE OF THE FOREGOING, THE GRANTOR HEREBY APPOINTS THESECRETARY OF STATE OF THE STATE OF GEORGIA AS ITS AGENT FOR SERVICE OFPROCESS. 

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

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

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

 

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IN WITNESS WHEREOF, Grantorhas caused this Agreement to be duly executed under seal as of the date firstabove written.

GRANTOR:

 

AIRBORNE, INC., a Delaware corporation

(SEAL)

 

 

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

 

 

Attest:_/s/_DavidC. Anderson     Title: Secretary

COLLATERAL AGENT:

 

WACHOVIA BANK, N.A., as Collateral Agent

 

 

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

 

 

EXHIBIT "A"

Description of Securities

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