EXHIBIT 10(b)

Aircraft Chattel Mortgage,Security Agreement, and Assignment of Rents

AIRCRAFT CHATTEL MORTGAGE, SECURITY AGREEMENT, ANDASSIGNMENT OF RENTS, dated as of June 29, 2001 (as amended, modified, orsupplemented from time to time, including, without limitation, by the executionand delivery of Supplements (as defined herein), this "Agreement"), by ABX AIR,INC., a Delaware corporation (together with its successors and assigns, the"Debtor"), and WACHOVIA BANK, N.A., a national banking association, as collateralagent (herein, together with its successors and assigns in such capacity, the"Collateral Agent"), on behalf of the Secured Creditors (as defined below):

PRELIMINARYSTATEMENTS:

(2)  This Agreement is one of the"Collateral Documents" described in, and is made pursuant to, that certainAmended and Restated Credit Agreement dated as of June 29, 2001, by and amongAirborne Express, Inc., a Delaware corporation ("Express") and formerly knownas Airborne Freight Corporation, a Delaware corporation ("AFC"), ABX Air, Inc.,a Delaware corporation ("ABX" and Express, each, a "Borrower" and together,jointly and severally, the "Borrowers"), the 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 in its capacity as collateral agent, whichagreement amends and restates that certain Credit Agreement dated as of July27, 2000, by and among AFC, the Lenders, and Wachovia as Administrative Agent,as amended by that certain First Amendment to Credit Agreement dated as ofApril 20, 2001, by and among Airborne, Inc., a Delaware corporation("Airborne"), the Lenders, and Wachovia as Administrative Agent, as furtheramended by that certain Second Amendment to Credit Agreement dated as of May31, 2001, by and among Airborne, the Lenders, and Wachovia as AdministrativeAgent (collectively, together with any and all concurrent or subsequentexhibits, schedules, extensions, supplements, amendments or modificationsthereto, the "Credit Agreement").Pursuant to a Joinder Agreement dated as of December 26, 2000, Airborneassumed AFC's obligations as "Borrower" under the Credit Agreement, and AFC wasreleased from its obligations as "Borrower" under the Credit Agreement. 

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

(4)  AFC entered into an Indenture datedas of December 15, 1992, as supplemented by that certain First SupplementalIndenture dated as of September 15, 1995, relating to Express' 7.35% Notes, asfurther supplemented by that certain Second Supplemental Indenture Relating toAFC's 8-7/8% Notes Due 2002 dated February 12, 1997, and as furthersupplemented by that certain Third Supplemental Indenture dated as of theClosing Date (herein, as amended or otherwise modified, restated, supplementedor replaced from time to time, the "Indenture"), pursuant to which Express,formerly known as AFC, (i) may issue and sell its debentures, notes, or otherevidences of indebtedness and (ii) has, prior to the date hereof, issued andsold to certain purchasers (the "Noteholders," such term to include theirsuccessors and assigns) (A) $100,000,000 aggregate original principal amount ofits "7.35% Notes due 2005," (the "1995 Notes") and (B) $100,000,000 aggregateoriginal principal amount of its "8-7/8% Notes Due December 15, 2002" (the"1992 Notes," and together with the 1995 Notes, the "Indenture Debt," such termto include all debentures, notes, or other evidences of indebtedness issuedpursuant to the Indenture in addition to, issued in exchange for, or issued inreplacement of any Indenture Debt existing on the date hereof).  Express, in itscapacity 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 whichare not applicable hereto, Section 1008 of the Indenture prohibits the Debtorfrom creating any security interests in certain of the Debtor's property unlessthe Indenture Debt is equally and ratably secured by such security interest. 

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

(7)  It is a condition precedent to themaking of Loans and the issuance of, and participation in, Letters of Creditunder the Credit Agreement that the Debtor shall have executed and delivered tothe Collateral Agent this Agreement. 

(8)  The Debtor desires to execute this Agreement to satisfy the conditions described inthe preceding paragraphs (5) and (7).

As used in this Agreement, the following terms shall havethe following definitions:

"Act" shall mean the Federal Aviation Act of 1958, asamended from time to time.

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

"Agreement" shall mean this Aircraft Chattel Mortgage,Security Agreement, and Assignment of Rents, any concurrent or subsequentexhibits or schedules to this Aircraft Chattel Mortgage, Security Agreement,and Assignment of Rents, and any extensions, supplements, amendments ormodifications to this Aircraft Chattel Mortgage, Security Agreement, andAssignment of Rents, and/or to any such exhibits or schedules, including,without limitation, any and all Supplements executed and delivered from time totime as provided herein.

"Airframe" shall mean each of those certain airframesidentified on Schedule I hereto, and each of those airframes identifiedon Schedule I to any Supplement, together with any and all Parts fromtime to time incorporated or installed in or attached to any of such Airframesor required to be subject to the lien of this Agreement, and all improvements,additions, and appurtenances thereto, substitutions thereof and replacementsthereto, whether now or hereafter attached thereto or installed thereon.

"Avoided Payment" shall have the meaning given such termin Section 4.7(c).

"Borrower" and "Borrowers" shall have the meaningsprovided in the Preliminary Statements of this Agreement.

"Collateral" shall have the meaning provided in Section2.1.

"Collateral Agent" shall mean the Administrative Agentunder the Credit Agreement, or its designee(s), in its capacity as collateralagent hereunder.

"Collateral Agent Expenses" shall mean (a) all costs orexpenses which Debtor 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 Debtor isrequired 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 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.

"Collateral Documents" shall have the meaning given suchterm in the Credit Agreement.

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

"Debtor" has the meaning given in such term in the firstparagraph of this Agreement.

"Designated Location" shall mean each of the parcels ofreal property listed on Schedule II, attached hereto and made a parthereof, and any additional parcels of real property described from time to timeon any schedules to any Supplement.

"Distributable Amount" shall have the meaning given suchterm in Section 4.7(b).

"Engine" or "Engines" shall mean each aircraft enginedescribed in Schedule I hereto, and each of those engines identifiedfrom time to time on Schedule I to any Supplement, (or, if any suchengine shall be replaced pursuant to this Agreement, then such replacementaircraft engine) (each of which engines has 750 or more rated takeoffhorsepower or the equivalent thereof), together with any and all Parts so longas the same shall be either incorporated or installed in or attached to suchaircraft engine or required to be subject to the Lien of this Agreement asprovided herein, and all improvements, appurtenances and additions thereto,substitutions thereof and replacements thereto, whether now or hereafter attachedthereto or installed thereon.  Each such engine shall constitute an "Engine"for all purposes hereof whether or not from time to time installed on an Airframeor on any other airframe or located on the ground.

"Event of Default," as used in this Agreement, unlessotherwise stated, shall have the same meaning given such term in Section 4.1.

"FAA" shall mean the United States Federal AviationAdministration, or any successor or replacement administration or governmentalagency having the same or similar authority and responsibilities.

"Facility Notes" has the meaning given such term in thePreliminary 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 allReimbursement Obligations under the Credit Agreement, plus (c) the OutstandingLetter of Credit Exposure, plus (d) the principal amount of all other loans oradvances which constitute a portion of the Facility Obligations.

"Geneva Convention" shall mean the Convention on theInternational Recognition of Rights in Aircraft made at Geneva, Switzerland onJune 19, 1948, (effective 17 September 1953), together with the necessaryenacting rules and regulations promulgated by any particular signatory country.

"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 Debtor for the benefit of the Trustee or Noteholders.

"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 thatcertain Information Disclosure Certificate delivered by or on behalf of theDebtor pursuant to the Credit Agreement.

"Insolvency Proceeding" shall mean any proceedingcommenced by or against any person or entity, under any provision of thefederal 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.

"Judicial Officer or Assignee" shall mean any trustee,receiver, controller, custodian, assignee for the benefit of creditors or anyother person or entity having powers or duties like or similar to the powersand duties of a trustee, receiver, controller, custodian or assignee for thebenefit of 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 4.7(b).

"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 (including,without limitation, any Engine, engine, airframe, Propeller, or propeller) andany replacements of the foregoing, which may from time to time be incorporatedor installed in or attached to an Airframe, airframe, Engine, engine,Propeller, or propeller 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)).

"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 the Debtor from time to time withrespect to any of the Collateral; (ii) any and all payments (in any formwhatsoever) made or due and payable to the Debtor from time to time inconnection with any requisition, confiscation, condemnation, seizure orforfeiture of all or any part of the Collateral by any governmental authority(or any Person acting under color of governmental authority); (iii) any and allaccounts, general intangibles, contract rights, inventory, equipment, money,drafts, instruments, deposit accounts, or other tangible and intangibleproperty of Debtor resulting from the sale (authorized or unauthorized) orother disposition of the Collateral, including, without limitation, the netearnings of any lease or other agreement relative to the use of the Collateral,or any portion thereof, and any proceeds of such proceeds; and (iv) any and allother amounts from time to time paid or payable under or in connection with anyof the Collateral.

"Propeller" shall mean each aircraft propeller describedin Schedule I hereto, and each of those propellers identified on ScheduleI to any Supplement, (or, if any such propeller shall be replaced pursuantto this Agreement, then such replacement propeller) (each of which propellersis capable of absorbing 750 or more rated takeoff shaft horsepower), togetherwith, in the case of each propeller referred to above, any and all Parts solong as the same shall be either incorporated or installed in or attached tosuch propeller or required to be subject to the Lien of this Agreement asprovided in this Agreement, and all improvements and additions thereto,substitutions thereof and replacements thereto.  Each such propeller shallconstitute a "Propeller" for all purposes hereof whether or not from time totime installed on an Airframe or on any other airframe or located on the ground.

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

"Secured Debt Documents" shall mean and include each ofthe Loan Documents (including, without limitation, the Credit Agreement) andeach of the Indenture Documents.

"Secured Obligations" shall mean each of the following: 

(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 theParent, either of the Borrowers, or any other Subsidiary arising under or inconnection with the Indenture Documents; and 

(c)               all obligations and liabilities of Debtor under thisAgreement, the Credit Agreement, or any other Loan Document to which it is aparty; and 

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

(e)               all other obligations and liabilities owing by the Debtor, theother Borrower, the Parent, or any other Subsidiary to any of theAdministrative Agent, the Collateral Agent, the Trustee, any Lender, or anyNoteholder under this Agreement, the Credit Agreement or any other Loan Document,or the Indenture Documents (including, without limitation, indemnities, feesand 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 incurred under, arising out of, or in connection with, thisAgreement, the Credit Agreement, or any other Loan Document or the IndentureDocuments, including any such interest or other amounts which, but for anyautomatic stay under Section 362(a) of the Bankruptcy Code, would becomedue.  It is acknowledged and agreed thatthe term "Secured Obligations" shall include, without limitation, extensions ofcredit and issuances of securities of the types described above, whetheroutstanding on the date of this Agreement or extended or purchased from time totime after the date of this Agreement.

"Security Interest Termination Date" shall mean the dateon which each of the following shall have occurred:  (i) each and every Lender'sCommitment under the Credit Agreement shall have been terminated; (ii) noFacility Note shall be outstanding; (iii) no Letter of Credit issued underor pursuant to the Credit Agreement shall be outstanding; (iv) no otheramounts shall then be payable by the Debtor or the other Borrower to theAdministrative Agent or any Lender under the Credit Agreement or any otherLoan Document; and (v) all Facility Obligations shallhave 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.

"Supplement" shall mean each Supplemental Aircraft ChattelMortgage substantially in the form of Exhibit B, attached hereto andmade a part hereof, executed and delivered to the Administrative Agent fromtime to time by the Debtor and pursuant to which additional Collateral becomessubject to the Lien granted herein.

"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.

2.1             Security Interest in Collateral.  To secure prompt payment and performance ofany and all Secured Obligations, Debtor hereby grants to the Collateral Agent,for the equal and ratable benefit of the Secured Creditors, a continuing, firstpriority security interest in and lien upon all of the following (collectively,the "Collateral"): 

(a)               the Airframes; 

(b)              the Engines; 

(c)               the Propellers; 

(d)              all Parts which are located on a Designated Location,including, without limitation, all Parts of the type described in Schedule II; 

(e)               all Parts located at any location other than a DesignatedLocation; 

(f)                all right, title and interest of Debtor in and to any lease,rental agreement, charter agreement, chattel paper, or other agreement(s)respecting any of the foregoing, including, but not limited to, Debtor's rightto receive, either directly or indirectly, from any Person, any accounts,rents, or other payments due under such agreement(s) and Debtor's rights underany warranties relating to any Airframe, Engines, Propellers, or Parts; 

(g)               any and all manuals, logbooks, flight records, maintenancerecords, and other books and records or information of Debtor relating to anyAirframe, Engine, Propeller, or Part; 

(h)               all other of the Debtor's general intangibles relating to orarising in connection with any Airframe, Engine, Propellers, or Parts; and 

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

The Collateral Agent's security interest in and lien uponthe Collateral shall attach to all of the Collateral upon the execution anddelivery of this Agreement, without further act being required on the part ofeither the Collateral Agent or Debtor.The security interest of the Collateral Agent under this Agreementextends to all Collateral of the kinds, items, types and descriptions which arethe subject of this Agreement and to which Debtor now has, or hereafteracquires, rights.

(a)               Record, register and file this Agreement, as well as suchnotices, financing statements, Supplements, and/or other documents orinstruments as may, from time to time, be requested by the Collateral Agent tofully carry out the intent of this Agreement, with the FAA in Oklahoma City,Oklahoma, United States of America (or at such other office as the FAA maydesignate), promptly after the execution and delivery of this Agreement or anySupplement, and such other administrations or governmental agencies, whetherdomestic or foreign, as may be determined by the Collateral Agent to be necessaryor advisable in order to establish, confirm, maintain and/or perfect thesecurity interest and Lien created hereunder, as a legal, valid, and binding,first priority security interest and Lien upon the Collateral; 

(b)              Furnish to the Collateral Agent evidence of every suchrecording, registering and filing; and 

(c)               Execute and deliver or perform, or cause to be executed anddelivered or performed, such further and other instruments and/or acts as theCollateral Agent determines are necessary or required to fully carry out theintent and purpose of this Agreement or to subject the Collateral to thesecurity interest and Lien created hereunder, including, without limitation:(i) any and all acts and things which may be reasonably requested by theCollateral Agent with respect to complying with or remaining subject to theGeneva Convention, the laws and regulations of the FAA, or the laws andregulations of any of the various states or countries in which the Collateralis or may fly over, operate in, or become located at; and (ii) defending thetitle of Debtor to the Collateral by means of negotiation and, if necessary,appropriate legal proceedings, against each and every party claiming aninterest therein contrary or adverse to Debtor's title to same. 

(d)              Upon (i) Debtor's acquiring rights in or to any airframe,engine, propeller, or "spare part" or "appliance" (as such terms are defined in49 U.S.C. Sec. 40102(a)) which, at the time Debtor acquires such rights, is notCollateral hereunder, (ii) the replacement or substitution of any item ofCollateral as described in Section 3.2, or (iii) the movement of any Collateralconstituting Parts to a location which is not a Designated Location (except asmay otherwise be allowed under this Agreement), the Debtor shall promptly notifythe Administrative Agent of such event and execute and deliver to theAdministrative Agent a Supplement in such form so as to provide, upon thefiling thereof in the manner provided in this Section 2.2, for theAdministrative Agent's having a first priority, perfected Lien in and to suchadditional asset or replacement item, or in and to any Parts kept at such newlocation.

3.                 REPRESENTATIONS, WARRANTIES, AND COVENANTS OF DEBTOR

Debtor represents and warrants and covenants as follows(without limiting any representation, warranty, or covenant relating to any ofthe following contained in any Loan Document or Indenture Document):

Without limiting the generality of the foregoing, Debtoragrees that at no time during the effectiveness of this Agreement shall theCollateral be operated in, located in, or relocated to, by Debtor or any otherperson or entity, any jurisdiction unless the Geneva Convention, together withthe necessary enacting rules and regulations therefor (or some like treaty andregulations satisfactory to the Collateral Agent) shall be in effect in suchjurisdiction and any notices, financing statements, documents, or instrumentsnecessary or required, in the opinion of counsel for the Collateral Agent, tobe filed in such jurisdiction shall have been filed and file stamped copiesthereof shall have been furnished to the Collateral Agent. The foregoingauthority to use the Collateral to the contrary notwithstanding, at no time shallthe Collateral be operated in or over any area which may expose the CollateralAgent to any penalty, fine, sanction or other liability, whether civil orcriminal, under any applicable law, rule, treaty or convention, nor may theCollateral be used in any manner which is or is declared to be illegal andwhich may thereby render the Collateral liable to confiscation, seizure,detention or destruction.

(a)               During the effectiveness of this Agreement, Debtor shall, atits expense, do or cause to be done each and all of the following: 

        (i)                 Maintain and keep the Collateral in as good condition andrepair as it is on the date of this Agreement, ordinary wear and tear excepted; 

        (ii)               Maintain and keep the Collateral in good order and repair andairworthy condition in accordance with the requirements of each of themanufacturers' manuals and mandatory service bulletins and each of themanufacturers' non-mandatory service bulletins which relate to airworthiness; 

        (iii)              Replace in or on each Airframe, any and all Engines,Propellers, and Parts which may be worn out, lost, destroyed or otherwiserendered unfit for use; 

        (iv)             Without limiting the foregoing, cause to be performed, on allAirframes, Engines, Propellers, and Parts all applicable mandatoryAirworthiness Directives, Federal Aviation Regulations, Special FederalAviation Regulations, and manufacturers' service bulletins relating toairworthiness, the compliance date of which shall occur during the term of thisAgreement; 

(b)              Debtor shall be responsible for all required inspections ofthe Airframes, Engines, Propellers, and Parts and licensing or re‐licensingof the same in accordance with all applicable FAA and other governmentalrequirements. Debtor shall at all times cause each Airframe to have, on boardand in a conspicuous location, a current Certificate of Airworthiness issued bythe FAA. 

(c)               All inspections, maintenance, modifications, repairs, andoverhauls of any Airframe, Engine, Propeller, or Parts shall be performed bypersonnel authorized by the FAA to perform such services. 

(d)              If any item of Collateral shall reach such a condition as torequire overhaul, repair or replacement, for any cause whatever, in order tocomply with the standards for maintenance and other provisions set forth inthis Agreement, Debtor may: 

        (i)                 Replace such unsatisfactory item with an item of substantiallythe same type in temporary replacement of such unsatisfactory item, pendingoverhaul or repair of the unsatisfactory item; provided, however, thatsuch replacement items must be in such a condition as to be permissible for usein accordance with the standards for maintenance and other provisions set forthin this Agreement; provided further, however, that Debtor must,at all times, retain unencumbered title to any and all items temporarilyreplaced; or 

        (ii)               Install an item of substantially the same type in permanentreplacement of such unsatisfactory item; provided, however, that suchreplacement items must be in such condition as to be permissible for use inaccordance with the standards for maintenance and other provisions set forth inthis Agreement; provided further, however, that Debtor must firstcomply with each of the requirements of subsection (e) set out below.

 (e)               In the event that during the effectiveness of this Agreement,Debtor shall be required or permitted to permanently replace an unsatisfactoryitem of Collateral, Debtor may do so provided that, in addition to any otherrequirements provided for in this Agreement and subject to the terms of theLoan Documents and Indenture Documents regarding the disposition, maintenance,or sale of the Debtor's assets: 

        (i)                 The Collateral Agent is not divested of its security interestin and Lien upon any unsatisfactory item and that no such unsatisfactory itemshall be or become subject to the Lien of any Person, unless and until suchitem is replaced by an item of the type and condition required by thisAgreement, title to which is validly vested in Debtor, free and clear of anyLiens, of any kind or nature, of any Person other than the Collateral Agent,and if requested by the Collateral Agent, the Debtor executes and delivers aSupplement covering such replacement item; 

        (ii)               Debtor's title to every replacement item shall immediately beand become subject to the first priority security interest and Lien of theCollateral Agent, either by virtue of this Agreement or any Supplementdelivered pursuant hereto, and each of the provisions of this Agreement, andeach such replacement item shall remain so encumbered and so subject unless itis, in turn, replaced by a substitute item in the manner permitted herein; 

        (iii)              The Collateral Agent's Lien on an unsatisfactory item shall besubject to release by the Collateral Agent only if (A) such unsatisfactory itemis replaced in accordance with the requirements of this Agreement and (B) thereplacement item satisfies the requirements of this Agreement, including theterms and conditions of subsections (i) and (ii) hereinabove. 

(f)                In the event that any Engine, Propeller, or Part is installedupon an Airframe, and is not in substitution for or in replacement of anexisting item, such additional item shall be considered as an accession to theAirframe, and, if requested by the Collateral Agent, the Debtor shall executeand deliver a Supplement covering such additional item. 

(g)               Until the Security Interest Termination Date, cause to beaffixed at all times to each Engine and Propeller in a conspicuous, safelocation and cause to be displayed at all times in the cockpit of each Airframeadjacent to the certificate of airworthiness displayed therein, a metalnameplate in form satisfactory to the Collateral Agent bearing substantiallythe following inscription (or such other subscription which the CollateralAgent shall approve):  "MORTGAGED TOWACHOVIA BANK, N.A., AS COLLATERAL AGENT." 

3.3             Insurance. 

(a)               Debtor will at all times, at its own cost and expense,maintain, or cause to be maintained, a policy or policies of insurance withrespect to the Collateral, in accordance with the provisions of Section 6.08 ofthe Credit Agreement. 

(b)              Debtor shall not use or permit the Collateral to be used inany manner or for any purpose excepted from or contrary to the requirements ofany insurance policy or policies required to be carried and maintained underthe Credit Agreement or for any purpose excepted or exempted from or contraryto said insurance policies, and do any other act or permit anything to be donewhich could reasonably be expected to invalidate or limit any such insurancepolicy or policies. 

3.4             Chief Executive Office.  Debtor represents that its chief executive office is located atthe address indicated on its Information Disclosure Certificate and agrees thatsuch chief executive office will not be changed until (a) it shall have givento the Collateral Agent not less than 30 days' prior written notice of its intentionto do so, clearly describing such new location and providing such otherinformation in connection therewith as the Collateral Agent may request, and(ii) with respect to such new location, it shall have taken all action,satisfactory to the Collateral Agent, to maintain the first priority securityinterest of the Collateral Agent in the Collateral intended to be grantedhereby, at all times fully perfected and in full force and effect. 

3.5             Further Representations, Warranties, and Covenants. Debtor further represents, warrants,and covenants with the Collateral Agent as follows (without limiting anyrepresentation, warranty, or covenant relating to any of the followingcontained in any Loan Document or Indenture Document): 

(a)               Debtor shall pay, or cause to be paid, when due all taxes,assessments, charges (including license and registration fees and all taxes,levies, imposts, duties, charges or withholdings of any nature whatsoever,together with any penalties, fines or interest thereon) imposed upon Debtor byany federal, state or local government or taxing authority upon or with respectto the Collateral or any portion thereof, or upon the purchase, ownership,delivery, leasing, possession, use, operation, return or other dispositionthereof, or upon the rentals, receipts or earnings arising therefrom, or uponor with respect to this Agreement, or any of the other agreements relatinghereto, excepting from such requirements any taxes or charges which are basedon, or measured by, the net income of the Collateral Agent; 

(b)              Debtor shall, on demand by the Collateral Agent, and atDebtor's sole cost and expense, cause the Collateral (including the logs,books, manuals, and records comprising the Collateral) to be exhibited to theCollateral Agent (or persons designated by the Collateral Agent) for purposesof inspection and copying; 

(c)               Except as may otherwise be permitted under the Loan Documentand the Indenture Documents, Debtor is the registered owner of the Airframesand owner of the Engines, the Propellers, and the Parts, and will be theregistered owner of any Airframes and owner of the Engines, Propellers, andParts listed on any Supplement from time to time delivered hereunder, pursuantto proper registration under the Act, as amended, as required for each such itemof Collateral, and Debtor qualifies in all respects as a "citizen" of theUnited States as defined in the Act. 

(d)              Debtor shall keep accurate and complete logs, manuals, books,and records relating to the Collateral, and provide, at Debtor's sole cost andexpense, the Collateral Agent with copies of reports and information relatingto the Collateral as the Collateral Agent may require from time to time; 

(e)               Debtor shall not sell or otherwise dispose of or transfer theCollateral, or any right or interest of Debtor therein, except as permitted,and on the terms set forth, herein and in the Credit Agreement.  Debtor shall not locate any of theCollateral constituting Parts at any location other than at a DesignatedLocation, unless (i) such Part shall have been installed on or incorporatedinto an Airframe, Engine, or Propeller and (ii) the Collateral Agent shallcontinue to have a first priority, perfected Lien in such Part as so installedor incorporated. 

(f)                Debtor shall not suffer or permit any Lien other than PermittedEncumbrances to attach to or exist relative to the Collateral, whethervoluntarily or involuntarily, and whether by issuance of judicial process, levyor otherwise, until the Security Interest Termination Date. 

(g)               Debtor shall promptly give the Collateral Agent notice of anyDefault or Event of Default or event which, after notice or lapse of time orboth, would constitute an Event of Default hereunder; 

(h)               Debtor shall indemnify each of the Secured Parties and theirrespective agents, representatives, officers, directors, and employees and holdeach of them harmless from and against all liabilities, claims and/or demandsarising from any cause whatsoever, including the doctrine of strict liability,in connection with this Agreement or such Person's rights herein or in theCollateral and/or the use, sale, operation or possession of the Collateral. 

(i)                 Debtor certifies that it is an air carrier certified under 49U.S.C. Sec. 44705 and that the Parts are maintained by or on behalf of the Debtorat the Designated Locations.

4.1             Events of Default.The occurrence of any one or more of the following events shallconstitute an "Event of Default" under this Agreement: 

 (a)               The occurrence of any "Event of Default" under the CreditAgreement, the pertinent provisions of which are attached hereto as ExhibitA; 

 (b)              Debtor shall fail to perform, keep, or observe any of theSecured Obligations; 

 (c)               If any representation, statement, report, or certificate madeor delivered by Debtor, or any of its officers, employees or agents, to theCollateral Agent is not true and correct when made; 

 (d)              If there is a material impairment of the value of, or the lossof the priority of the Collateral Agent's security interests in, theCollateral; 

 (e)               If all or any of the Collateral is attached, seized, subjectedto a writ or distress warrant, or are levied upon, or comes into the possessionof any Judicial Officer or Assignee; or 

 (f)                If a judgment or other claim becomes a Lien upon all or any ofthe Collateral.

4.2             Remedies Upon Default.   If an Event of Default shall occur and be continuing, theCollateral Agent may (or, if directed to do so in writing by the RequiredLenders, shall) without notice of any kind to Debtor to the extent permitted bylaw, carry out or enforce the actions or remedies provided in this Section 4 orelsewhere in this Agreement or otherwise available to a secured party under theUCC or other applicable Uniform Commercial Code as in effect at the time in anyapplicable jurisdiction. 
4.3             Possession of Aircraft.  The Collateral Agent may, without notice, take possession of allor any part of the Collateral and may exclude Debtor, and all persons claimingunder the Debtor, wholly or partly therefrom.At the request of the Collateral Agent, Debtor shall promptly deliver orcause to be delivered to the Collateral Agent or whosoever the Collateral Agentshall designate, at such time or times and place or places as the CollateralAgent may specify, and fly or cause to be flown to such airport or airports inthe United States as the Collateral Agent may specify, without risk or expenseto the Collateral Agent or any Secured Creditor, all or any part of theCollateral.  In addition, Debtor willprovide, without cost or expense to the Collateral Agent, storage facilitiesfor such Collateral.  If Debtor shallfor any reason fail to deliver such Collateral or any part thereof after demandby the Collateral Agent, the Collateral Agent may, without being responsiblefor loss or damage, (i) obtain a judgment conferring on the Collateral Agentthe right to immediate possession or requiring Debtor to deliver immediatepossession of all or part of such Collateral to the Collateral Agent, to theentry of which judgment Debtor hereby specifically consents, or (ii) with or,to the fullest extent provided by law, without such judgment, pursue all orpart of such Collateral wherever it may be found and may enter any of thepremises of Debtor where such Collateral may be and search for such Collateraland take possession of and remove the same.Debtor agrees to pay to the Collateral Agent, upon demand, all expensesincurred in taking any such action; and all such expenses shall, until paid, besecured by the Lien of this Agreement.Upon every such taking of possession, the Collateral Agent may, fromtime to time, make all such reasonable expenditures for maintenance, insurance,repairs, replacements, alterations, additions and improvements to and of theCollateral, as it may deem proper. 
4.4             Receiver.  TheCollateral Agent shall be entitled, as a matter of right as against Debtor,without notice or demand and without regard to the adequacy of the security forthe Secured Obligations by virtue of this Agreement or any other collateral orto the solvency of Debtor, upon the commencement of judicial proceedings by itto enforce any right under this Agreement, to the appointment of a receiver ofall or any part of the Collateral and of the Proceeds. 
4.5             Sale and Suits for Enforcement.   
 (a)               The Collateral Agent, with or without taking possession of theCollateral may, without notice,
        (i)                 to the extent permitted by law, sell at one or more sales, asan entirety or in separate lots or parcels, all or any part of the Collateral,at public or private sale, at such place or places and at such time or timesand upon such terms, including terms of credit (which may include the retentionof title by the Collateral Agent to the property so sold), as the CollateralAgent may determine, whether or not such Collateral shall be at the place ofsale; and
        (ii)               proceed to protect and enforce its rights and the rights ofthe Secured Creditors under this Agreement by suit, whether for specificperformance of any covenant herein contained or in aid of the exercise of anypower herein granted or for the foreclosure of this Agreement and the sale ofthe Collateral under the judgment or decree of a court of competentjurisdiction or for the enforcement of any other right. 
 (b)              At any public sale of the Collateral or any part thereof theCollateral Agent pursuant to paragraph (a)(i) above, the Collateral Agent mayconsider and accept bids requiring the extension of credit to the bidder andmay determine in its sole discretion the highest bidder at such sale, whetheror not the bid of such bidder shall be solely for cash or shall require theextension of credit. 
 (c)               Subject to the requirements of any law or order of courtapplicable thereto, notice of any sale under paragraph (a)(i) above shallcontain a brief description of the property to be sold, shall state, in thecase of a public sale, the time when and the place where the same is to be madeand shall briefly describe any terms or conditions of sale, or shall state, ifthe sale is not to be public, the price to be received for the property to besold and if such price is not to be paid entirely in cash shall briefly describethe terms and conditions of sale.  Anysuch notice of public sale shall be sufficiently given if published once ineach of any two successive weeks in a daily newspaper published in the Boroughof Manhattan in The City of New York. 
 (d)              The Collateral Agent, to the extent permitted by law, may fromtime to time adjourn any sale under paragraph (a)(i) above by announcement atthe time and place appointed for such sale or for any adjournment thereof; andwithout further notice or publication, except as may be required by law,such  sale may be made at the time andplace to which the same shall have been so adjourned. 
 (e)               Upon the completion of any sale under paragraph (a)(i) above,full title and right of possession to the Collateral so sold shall (subject toany retention of title by the Collateral Agent as part of the terms of suchsale) pass to the accepted purchaser forthwith upon the completion of suchsale, and Debtor shall deliver, in accordance with the instructions of theCollateral Agent (including flying any Collateral or causing the same to beflown to such airports in the United States as the Collateral Agent mayspecify), such Collateral so sold.  IfDebtor shall for any reason fail to deliver such Collateral, the CollateralAgent shall have all of the rights granted by Section 4.03 hereof.  The Collateral Agent is hereby irrevocablyappointed the true and lawful attorney of Debtor, in its name and stead, tomake all necessary conveyances of the Collateral so sold.  Nevertheless, if so requested by the CollateralAgent or by any purchaser, Debtor shall confirm any such sale or conveyance byexecuting and delivering all proper instruments of conveyance or releases asmay be designated in any such request. 
4.6             Waiver.  Exceptas otherwise provided in this Agreement, **DEBTORHEREBY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, NOTICE AND JUDICIALHEARING IN CONNECTION WITH THE COLLATERAL AGENT'S TAKING POSSESSION OR THECOLLATERAL AGENT'S DISPOSITION OF ANY OF THE COLLATERAL, INCLUDING, WITHOUTLIMITATION, ANY AND ALL PRIOR NOTICE AND HEARING FOR ANY PREJUDGMENT REMEDY ORREMEDIES AND ANY SUCH RIGHT WHICH THE ASSIGNOR WOULD OTHERWISE HAVE UNDER THECONSTITUTION OR ANY STATUTE OF THE UNITED STATES OR OF ANY STATE**, andDebtor hereby further 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, moratorium, or redemption law now or hereafter in force under anyapplicable law in order to prevent or delay the enforcement of this Agreementor the absolute sale of the Collateral or any portion thereof, and Debtor, foritself and all who may claim under it, insofar as it or they now or hereafterlawfully may, hereby waives the benefit of all such laws.
Any sale of, or the grant of options to purchase, or anyother realization upon, any Collateral shall operate to divest all right,title, interest, claim and demand, either at law or in equity, of  Debtor therein and thereto, and shall be aperpetual bar both at law and in equity against the Debtor and against any andall Persons claiming or attempting to claim the Collateral so sold, optioned orrealized upon, or any part thereof, from, through and under Debtor.

4.7             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 Debtor or some other Person on behalf of Debtor;
        (ii)               Second, subject to Section 4.7(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 Debtor or such other Person or Persons asshall 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 4.7(a) hereof. 
 (c)               Notwithstanding Section 4.7(a),
        (i)                 if any payment by the Collateral Agent to a Secured Creditorpursuant to Section 4.7(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 4.7(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 Section4.7(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 4.7(a)(ii) to the remaining Secured Creditors as to whom no suchrepayment, return or restoration would be applicable, or to the applicable obligor,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 Section4.7(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, inorder to equitably adjust for any non-pro rata distribution under clause (i)above and/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 ofthis Agreement 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 4.7, 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 Debtor shall remain liable tothe extent of any deficiency between (i) the amount of the proceeds of theCollateral applied pursuant to Section 4.7(a) and (ii) the aggregateoutstanding amount of the Secured Obligations. 
4.8             Right of Set-off.Debtor agrees that the Collateral Agent may exercise a right of set‐offwith respect to any amounts owed to the Collateral Agent in the same manner asif the amounts owed were unsecured hereby. 
4.9             Exercise of Remedies.Each right, power and remedy herein granted the Collateral Agent iscumulative and in addition to every other right, power and remedy hereinspecifically given or now or hereafter existing under or by virtue of theprovisions of any other agreement between Debtor and the Collateral Agent or inequity, at law or by virtue of statute or otherwise.  No failure to exercise, and no delay in exercising, any right,power or remedy held by the Collateral Agent hereunder or otherwise, shalloperate as a waiver thereof, nor shall any single or partial exercise of anysuch right, power or remedy held hereunder or otherwise, preclude any other orfurther exercise thereof or the exercise of any other right, power or remedy. 
4.10         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 been determinedadversely to the Collateral Agent, then and in every such case Debtor, theCollateral Agent and each holder of any of the Secured Obligations shall berestored to their former positions and rights hereunder with respect to theCollateral subject to the security interest created under this Agreement, andall rights, remedies and powers of the Collateral Agent shall continue as if nosuch proceeding had been instituted. 
4.11         Collateral Agent to Act on Behalf of Secured Creditors**.**No Secured Creditor shall have any right individually to seek to enforceor to enforce this Agreement or to realize upon the security to be grantedhereby, it being understood and agreed that such rights and remedies may beexercised only by the Collateral Agent, for the benefit of the SecuredCreditors, by itself or upon instructions from the Required Lenders, and theSecured Creditors agree by their acceptance of any of the benefits or Proceedshereof that this Agreement may be enforced on their behalf only by the actionof the Collateral Agent, acting in accordance with the terms of this Agreement. 
4.12         Separate Actions**.**  A separate action or actions may be broughtand prosecuted against the Debtor whether or not action is brought againsteither of the Borrowers or any guarantor of any of the Secured Obligations, andwhether or not any other guarantor or either of the Borrowers be joined in anysuch action or actions. 
4.13         Termination.Upon the Security Interest Termination Date, the security interest andLien of the Collateral Agent in the Collateral shall thereupon terminate. Inany such case, the Collateral Agent shall, upon the request of Debtor, executeand deliver to Debtor proper instruments acknowledging the termination of thesecurity interest and Liens. 
5.                 MISCELLANEOUS PROVISIONS 
5.1             Successors and Assigns.  All the covenants, promises, stipulations and agreementscontained herein shall bind each party and its successors and assigns, andshall inure to the benefit of the other party and its respective successors andassigns.
5.2             Entire Agreement.This Agreement, together with the exhibits, Supplements, schedules, andother agreements referred to herein, constitutes the entire understandingbetween the parties with respect to the subject matter hereof. All prioragreements, understandings, representations, warranties and negotiations, ifany, are merged into this Agreement, and this Agreement is the entire agreementbetween Debtor and the Collateral Agent relating to the subject matter hereof.This Agreement may be amended only by a writing signed by all parties hereto. 
5.3             Captions.Captions to the Articles and Sections of this Agreement are for theconvenience of the parties, are not a part of this Agreement, and shall not beused for the interpretation of any provision hereof. 
5.4             Notices.  Anynotice given with respect to this Agreement may be personally served or givenin writing by depositing such notice in the United States mail, first classpostage prepaid, or by telex or telegram, charges prepaid, addressed to theparties (a) for Debtor, at the address set forth next to its signature belowand (b) for the Collateral Agent, at the address set forth next to itssignature below, or at such other address as a party may from time to timedesignate by written notice to the other.
5.5             Severability.Each provision of this Agreement shall be severable from every otherprovision of this Agreement for the purpose of determining the legalenforceability of any specific provision hereof.
5.6             Counterparts.This Agreement may be signed in any number of counterparts, each ofwhich shall be an original, with the same effect as if the signatures theretoand hereto were upon the same instrument.
5.7             Waiver of Jury Trial and Jurisdiction.
**THE COLLATERALAGENT, THE DEBTOR, AND EACH OF THE NOTEHOLDERS AND LENDERS WHICH ACCEPTS ANY PROCEEDSDISTRIBUTED PURSUANT TO THIS AGREEMENT, IRREVOCABLY WAIVES, TO THE FULLESTEXTENT PERMITTED BY LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGALPROCEEDING ARISING OUT OF THIS AGREEMENT OR ANY OTHER COLLATERAL DOCUMENT, ORANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, (B) SUBMITS TO THENONEXCLUSIVE PERSONAL JURISDICTION IN THE STATE OF GEORGIA, THE COURTS THEREOFAND THE UNITED STATES DISTRICT COURTS SITTING THEREIN, FOR THE ENFORCEMENT OFTHIS AGREEMENT AND THE OTHER COLLATERAL DOCUMENTS, (C) WAIVES ANY AND ALLPERSONAL RIGHTS UNDER THE LAW OF ANY JURISDICTION TO OBJECT ON ANY BASIS(INCLUDING, WITHOUT LIMITATION, INCONVENIENCE OF FORUM) TO JURISDICTION ORVENUE WITHIN THE STATE OF GEORGIA FOR THE PURPOSE OF LITIGATION TO ENFORCE THISAGREEMENT, THE NOTES OR THE OTHER LOAN DOCUMENTS, AND (D) AGREES THAT SERVICEOF PROCESS MAY BE MADE UPON IT IN THE MANNER PRESCRIBED IN SECTION 5.4 FOR THEGIVING OF NOTICE TO THE DEBTOR.  NOTHINGHEREIN CONTAINED, HOWEVER, SHALL PREVENT THE COLLATERAL AGENT FROM BRINGING ANYACTION OR EXERCISING ANY RIGHTS AGAINST THE COLLATERAL, AGAINST DEBTORPERSONALLY, OR AGAINST ANY ASSETS OF DEBTOR, WITHIN ANY OTHER STATE ORJURISDICTION.**

[SIGNATURESCONTAINED ON NEXT PAGE]

IN WITNESS WHEREOF,the parties have caused this Agreement to be executed and delivered under seal,by their duly authorized officers, as of the day and year first written above.

 

DEBTOR:(SEAL)

ABX AIR, INC., a Delaware corporation

 

By: /s/Joe Hete

 

Title: _President and COO____

 

Address for Notices

 

3101 Western Avenue

Seattle, Washington 98121

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.(SEAL)

 

By:/s/ Howard Kim

 

Title:__Senior Vice President______

 

Address for Notices:

 

191 Peachtree Street, N.E.

Atlanta, Georgia 30303-1757

Attention:  Syndications Group

Telecopier number: 404-332-1394

Confirmation number: 404-332-6971

 

**SCHEDULEI**

**TO**

**AIRCRAFT CHATTEL MORTGAGE**

**LISTING OF AIRFRAMES, ENGINES, ANDPROPELLERS**

[Add the following language as applicable:]

 

[ENGINES:  "Each of which Engines has 750 or more rated takeoffhorsepower or the equivalent therof."]

[PROPELLERS:  "Each of which Propellers is capable of absorbing750 or more rated takeoff shaft horsepower."]

 

**SCHEDULEII**

**TO**

**AIRCRAFT CHATTEL MORTGAGE, SECURITYAGREEMENT, AND ASSIGNMENT OF RENTS**

**PARTS TYPE DESCRIPTION**

**All Parts used on or in, or maintained foruse on or in, any of the following types of aircraft and engines:**

**[INSERT LIST OF EACH TYPE OF AIRCRAFT ABXHAS]**

**[INSERT LIST OF EACH TYPE OF ENGINE ABXHAS]**

**DESIGNATED LOCATIONS**

**[INSERT DESCRIPTION FOR EACH LOCATION WHEREABX HOLDS PARTS]**

**145 Hunter Drive, Wilmington, Ohio 45177,or on any parcel of real property owned by Airborne, Inc., or any of itssubsidiaries, which parcel forms a part of the airport facility commonlyreferred to as "Wilmington Air Park" in or near Wilmington, Ohio, inthe County of Clinton, Ohio.**

**EXHIBITA**

**TO**

**AIRCRAFT CHATTEL MORTGAGE, SECURITYAGREEMENT, AND ASSIGNMENT OF RENTS**

**PERTINENT PROVISIONS OF THE CREDITAGREEMENT**EXHIBIT BtoAircraft Chattel Mortgage, Security Agreement, andAssignment of Rents

SUPPLEMENTAL AIRCRAFT CHATTEL MORTGAGE NO. [____]

SUPPLEMENTAL AIRCRAFT CHATTEL MORTGAGE dated asof [_______________ __], 20[__], by [_________________], a [____________](together with its successors and assigns, the "Debtor"), and WACHOVIA BANK,N.A., a national banking association, as collateral agent (herein, togetherwith its successors and assigns in such capacity, the "Collateral Agent"), forthe benefit of the Secured Creditors as defined and referred to in the AircraftChattel Mortgage referred to below.

WHEREAS, the Debtor has heretofore executed anddelivered to the Collateral Agent an Aircraft Chattel Mortgage, SecurityAgreement, and Assignment of Rents dated [_______ __], 2001, (as amended,modified, or supplemented from time to time, the "Aircraft Chattel Mortgage"),covering certain Airframes, Engines, Propellers, and Parts of the Debtor (termsused in this instrument having the meanings assigned thereto in the AircraftChattel Mortgage):

WHEREAS, the Aircraft Chattel Mortgage has beenduly recorded with the FAA at Oklahoma City, Oklahoma on [___________ __],2001, as Conveyance No.[___] pursuant to the Act; 

WHEREAS, this Supplemental Aircraft ChattelMortgage relates to the Airframes, Engines, Propellers, and Parts described in ScheduleI hereto; 

WHEREAS, each of the Engines described onSchedule I hereto has 750 or more rated takeoff horsepower or the equivalentthereof, and each of the Propellers described on Schedule I hereto is capableof absorbing 750 or more rated takeoff shaft horsepower; and

WHEREAS, the Aircraft Chattel Mortgage providesfor the execution and delivery from time to time of Supplemental AircraftChattel Mortgages, each substantially in the form hereof, for the purpose ofsubjecting additional Airframes, Engines, Propellers, and Parts to the Lien ofthe Aircraft Chattel Mortgage;

NOW, THEREFORE, as contemplated by the AircraftChattel Mortgage, the Debtor hereby grants to the Collateral Agent, for theequal and ratable benefit of the Secured Creditors, a security interest in theproperty described in Schedule I hereto as security for the due andprompt payment of the Secured Obligations.

This Supplemental Aircraft Chattel Mortgageshall be construed as supplemental to the Aircraft Chattel Mortgage and shallform a part thereof; and the Aircraft Chattel Mortgage is hereby incorporatedby reference herein to the same extent as if fully set forth herein and ishereby ratified, approved and confirmed in all respects.

IN WITNESSWHEREOF, the parties hereto have caused this Supplemental Aircraft ChattelMortgage to be duly executed under seal, as of the day and year first abovewritten.

 

DEBTOR:(SEAL)

[]

 

By:

 

Title:  _______________________________

 

 

 

COLLATERAL AGENT:

 

WACHOVIA BANK, N.A.

 

By:

 

Title:_______________________________

 

**SCHEDULE ITOSUPPLEMENTAL AIRCRAFT CHATTEL MORTGAGE**

 

[The same type of information should be inserted

herein as is described in brackets in

Schedule I to the Aircraft Chattel Mortgage, including each ofthe following clauses, to the extent applicable:

 

[ENGINES:  "Each ofwhich Engines has 750 or more rated takeoff horsepower or the equivalenttherof."]

[PROPELLERS:  "Each ofwhich Propellers is capable of absorbing 750 or more rated takeoff shafthorsepower."]