-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, nfHUsoVWqHMkCemip8dhqkYdpfWoRl3pwN3XbCrI7I94pPFSO+s4BQBnXIFxXFGn uWwU7fWJTpGe45tvUabFCQ== 0000891020-95-000410.txt : 19950906 0000891020-95-000410.hdr.sgml : 19950906 ACCESSION NUMBER: 0000891020-95-000410 CONFORMED SUBMISSION TYPE: S-3/A PUBLIC DOCUMENT COUNT: 7 FILED AS OF DATE: 19950905 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: AIRBORNE FREIGHT CORP /DE/ CENTRAL INDEX KEY: 0000003000 STANDARD INDUSTRIAL CLASSIFICATION: AIR COURIER SERVICES [4513] IRS NUMBER: 910837469 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3/A SEC ACT: 1933 Act SEC FILE NUMBER: 033-61329 FILM NUMBER: 95570090 BUSINESS ADDRESS: STREET 1: P O BOX 662 CITY: SEATTLE STATE: WA ZIP: 98111 BUSINESS PHONE: 2062854600 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ABX AIR INC CENTRAL INDEX KEY: 0000894081 STANDARD INDUSTRIAL CLASSIFICATION: AIR COURIER SERVICES [4513] IRS NUMBER: 911091619 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3/A SEC ACT: 1933 Act SEC FILE NUMBER: 033-61329-01 FILM NUMBER: 95570091 BUSINESS ADDRESS: STREET 1: 145 HUNTER DRIVE CITY: WILIMINGTON STATE: OH ZIP: 45177 MAIL ADDRESS: STREET 1: 145 HUNTER DR CITY: WILMINGTON STATE: OH ZIP: 45177 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AIRBORNE FORWARDING CORP CENTRAL INDEX KEY: 0000894082 STANDARD INDUSTRIAL CLASSIFICATION: AIR COURIER SERVICES [4513] STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3/A SEC ACT: 1933 Act SEC FILE NUMBER: 033-61329-02 FILM NUMBER: 95570092 BUSINESS ADDRESS: STREET 1: PO BOX 662 CITY: SEATTLE STATE: WA ZIP: 98111 BUSINESS PHONE: 2062854600 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AIRBORNE FTZ INC CENTRAL INDEX KEY: 0001000119 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3/A SEC ACT: 1933 Act SEC FILE NUMBER: 033-61329-03 FILM NUMBER: 95570093 BUSINESS ADDRESS: STREET 1: 145 HUNTER DR CITY: WILMINGTON STATE: OH ZIP: 45177 BUSINESS PHONE: 5133825591 MAIL ADDRESS: STREET 1: 145 HUNTER DR CITY: WILMINGTON STATE: OH ZIP: 45177 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WILMINGTON AIR PARK INC CENTRAL INDEX KEY: 0001000120 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3/A SEC ACT: 1933 Act SEC FILE NUMBER: 033-61329-04 FILM NUMBER: 95570094 BUSINESS ADDRESS: STREET 1: 145 HUNTER DR CITY: WILMINGTON STATE: OH ZIP: 45177 BUSINESS PHONE: 5133825591 MAIL ADDRESS: STREET 1: 145 HUNTER DR CITY: WILMINGTON STATE: OH ZIP: 45177 S-3/A 1 AIRBORNE FREIGHT CORPORATION 1 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 5, 1995 REGISTRATION NO. 33-61329 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ AMENDMENT NO. 1 TO FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ------------------------ AIRBORNE FREIGHT CORPORATION (Exact name of Registrant as specified in its charter) ------------------------ Delaware 91-0837469 (State of Incorporation) (I.R.S. Employer Identification Number) 3101 Western Avenue Post Office Box 662 Seattle, Washington 98111 (206) 285-4600 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) ------------------------ ABX AIR, INC. AIRBORNE FORWARDING CORPORATION (Exact name of registrant as specified in its (Exact name of registrant as specified in its charter) charter) Delaware 91-1091619 Delaware 91-0894946 (State of (I.R.S. Employer (State of Incorporation) (I.R.S. Employer Incorporation) Identification Number) Identification Number) 145 Hunter Drive 3101 Western Avenue Wilmington, Ohio 45177 Post Office Box 662 (513) 382-5591 Seattle, Washington 98111 (206) 285-4600
(Address, including zip code, and telephone number, including area code, of registrant's executive offices) AIRBORNE FTZ, INC. WILMINGTON AIR PARK, INC. (Exact name of registrant as specified in its (Exact name of registrant as specified in its charter) charter) Ohio 34-1375411 Ohio 34-1261776 (State of (I.R.S. Employer (State of Incorporation) (I.R.S. Employer Incorporation) Identification Number) Identification Number) 145 Hunter Drive 145 Hunter Drive Wilmington, Ohio 45177 Wilmington, Ohio 45177 (513) 382-5591 (513) 382-5591
(Address, including zip code, and telephone number, including area code, of registrant's executive offices) ------------------------ ROY C. LILJEBECK Executive Vice President and Chief Financial Officer AIRBORNE FREIGHT CORPORATION 3101 Western Avenue Post Office Box 662 Seattle, Washington 98111 (206) 285-4600 (Name, address, including zip code and telephone number, including area code, of agent for service) ------------------------ Copies to: J. VERNON WILLIAMS Riddell, Williams, Bullitt & Walkinshaw Suite 4400, 1001 Fourth Avenue Plaza Seattle, Washington 98154 (206) 624-3600 ROBERT M. THOMAS, JR. Sullivan & Cromwell 125 Broad Street New York, New York 10004 (212) 558-4000 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2 ------------------------ Approximate date of commencement of proposed sale to the public: From time to time after the effective date of this Registration Statement as determined by market conditions. ------------------------ If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box: / / If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box: /X/ If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / / If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / / If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. / / CALCULATION OF REGISTRATION FEE
=========================================================================================================================== Proposed Proposed Maximum Maximum Title of Each Class of Amount to Be Offering Price Aggregate Amount of Securities to Be Registered Registered(1) Per Security Offering Price Registration Fee - --------------------------------------------------------------------------------------------------------------------------- Debt Securities........................... $100,000,000(1) 100%(2) $100,000,000 $34,483(4) Guarantees of the Debt Securities......... -- (3) (3) None ===========================================================================================================================
(1) If any Debt Securities are issued at an original issue discount, such greater amount, and if any Debt Securities are issued in a principal amount denominated in another currency, currencies or currency unit, such principal amount, as shall result in an aggregate offering price of $100,000,000. (2) Estimated solely for the purpose of computing the registration fee. (3) None of ABX Air, Inc., Airborne Forwarding Corporation, Airborne FTZ, Inc. or Wilmington Air Park, Inc. will be paid any portion of the proceeds in respect of the Guarantees. (4) All of such fee has been paid previously. The registrants hereby amend this registration statement on such date or dates as may be necessary to delay its effective date until the registrants shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. 3 INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. SUBJECT TO COMPLETION, DATED SEPTEMBER 5, 1995 PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED , 1995 [LOGO] $100,000,000 AIRBORNE FREIGHT CORPORATION % NOTES DUE , 2005 ------------------------ Interest on the Notes is payable on and of each year, commencing , 1995. The Notes are not redeemable at the option of the Company and are not entitled to a sinking fund. The Notes will be issued only in the form of Global Securities registered in the name of The Depository Trust Company or its nominee. Settlement for the Notes will be made in immediately available funds. The Notes will trade in the Depositary's Same-Day Funds Settlement System until maturity, and secondary market trading activity in the Notes will therefore settle in immediately available funds. See "Description of the Notes." ------------------------ THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS TO WHICH IT RELATES. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. ------------------------
INITIAL PUBLIC UNDERWRITING PROCEEDS TO OFFERING PRICE (1) DISCOUNT (2) COMPANY (1)(3) ------------------ ------------ --------------- Per Note.................................... % % % Total....................................... $ $ $
- --------------- (1) Plus accrued interest, if any, from , 1995. (2) The Company, ABX Air, Inc., Airborne Forwarding Corporation, Airborne FTZ, Inc. and Wilmington Air Park, Inc. have agreed to indemnify the Underwriters against certain liabilities, including liabilities under the Securities Act of 1933. (3) Before deducting estimated expenses of $239,983 payable by the Company. ------------------------ The Notes are offered severally by the Underwriters, as specified herein, subject to receipt and acceptance by them and subject to their right to reject any order in whole or in part. It is expected that the Notes will be ready for delivery in book-entry form only through the facilities of The Depository Trust Company in New York, New York, on or about , 1995 against payment therefor in immediately available funds. GOLDMAN, SACHS & CO. BA SECURITIES, INC. ------------------------ The date of this Prospectus Supplement is , 1995. 4 THE COMPANY Airborne Express provides door-to-door express delivery of small packages and documents throughout the United States and to and from most foreign countries. The Company also acts as an international and domestic freight forwarder for shipments of any size. A majority of the Company's domestic shipments are transported on its own airline and owned or contracted ground transportation vehicles through its Company-owned airport and central sorting facility in Wilmington, Ohio or one of ten regional hubs. The Company's principal operating strategy is to be the low cost provider of express services for high volume corporate customers. USE OF PROCEEDS The net proceeds to the Company from the sale of Notes offered hereby, after deducting the underwriting discount and offering expenses, are estimated to be $99.1 million and will be applied to reduce indebtedness outstanding under the Company's revolving bank credit agreement and money market lines of credit. Such indebtedness was incurred primarily to finance capital expenditures. As of June 30, 1995, the balance owed under the revolving bank credit agreement and money market lines of credit was $220.6 million. Amounts outstanding under the money market lines of credit are generally due in less than 30 days and are frequently repaid through borrowing under the revolving bank credit agreement, or reborrowing under the money market lines of credit. Borrowings under the revolving bank credit agreement are due May 31, 1998, unless extended as provided in such agreement. Outstanding borrowings under the revolving bank credit agreement and money market lines of credit bear interest at variable rates (a weighted average of 6.332% at June 30, 1995). ------------------------ IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. S-2 5 CAPITALIZATION The following table sets forth the capitalization of the Company as of June 30, 1995, and as adjusted to reflect the issuance of the Notes offered hereby and the application of the net proceeds therefrom after deducting estimated offering expenses and an assumed underwriting discount.
AS OF JUNE 30, 1995 --------------------------- ACTUAL AS ADJUSTED --------- ----------- (IN THOUSANDS) Current Portion of Long Term Debt................................. $ 6,152 $ 6,152 ========= ========= Long Term Debt: Senior Debt: Bank Debt.................................................... 220,600 121,490 Notes Offered Hereby......................................... -- 100,000 Senior Notes................................................. 100,000 100,000 Revenue Bonds and Other...................................... 13,797 13,797 --------- --------- Total Senior Debt less current portion.................. 334,397 335,287 Subordinated Debt: Convertible Subordinated Debentures.......................... 115,000 115,000 --------- --------- Total Long Term Debt less current portion............... 449,397 450,287 Redeemable Preferred Stock........................................ 3,948 3,948 Shareholders' Equity: Preferred Stock, without par value, authorized 5,200,000 shares, no shares issued............................................. -- -- Common Stock, $1.00 par value, authorized 60,000,000 shares, issued 21,365,486 shares..................................... 21,366 21,366 Additional Paid-In Capital...................................... 185,661 185,661 Retained Earnings............................................... 183,559 183,559 Treasury Stock, 315,150 shares at cost.......................... (971) (971) --------- --------- Total Shareholders' Equity................................. 389,615 389,615 --------- --------- Total Capitalization.................................... $ 842,960 $ 843,850 ========= =========
S-3 6 SELECTED CONSOLIDATED FINANCIAL DATA The Selected Consolidated Financial Data below should be read in conjunction with the more detailed information appearing in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1994 and Quarterly Report on Form 10-Q for the quarter ended June 30, 1995, and other documents available as described under "Incorporation of Certain Documents by Reference" in the Prospectus. The Selected Consolidated Financial Data for each of the five years ended December 31, 1994, except for the ratio of earnings to fixed charges, have been derived from audited financial statements certain of which are incorporated by reference herein. The Selected Consolidated Financial Data for the six-month periods ended June 30, 1994 and June 30, 1995 are derived from unaudited financial statements and, in the opinion of management, include all adjustments (consisting only of normal recurring accruals) necessary to present fairly the data for such periods.
SIX MONTHS ENDED YEAR ENDED DECEMBER 31, JUNE 30, -------------------------------------------------------------- ----------------------- 1990 1991 1992 1993 1994 1994 1995 ---------- ---------- ---------- ---------- ---------- ---------- ---------- (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) EARNINGS STATEMENT DATA: Revenues: Domestic........................... $ 982,268 $1,144,791 $1,259,792 $1,484,787 $1,660,003 $ 804,541 $ 894,808 International...................... 199,622 222,256 224,524 235,194 310,756 146,553 181,048 ---------- ---------- ---------- ---------- ---------- ---------- ---------- Total Revenues................. 1,181,890 1,367,047 1,484,316 1,719,981 1,970,759 951,094 1,075,856 Operating Expenses: Transportation Purchased........... 388,164 449,811 485,484 543,594 669,648 317,532 385,511 Station and Ground Operations...... 338,851 406,998 461,813 526,661 595,845 290,141 335,926 Flight Operations and Maintenance...................... 165,768 186,007 221,197 242,120 279,457 131,236 157,372 General and Administrative......... 109,728 120,812 119,989 139,955 145,698 72,268 74,513 Sales and Marketing................ 39,804 45,131 47,335 50,591 53,473 27,332 31,881 Depreciation and Amortization...... 75,279 99,031 120,632 133,940 137,700 67,074 69,648 ---------- ---------- ---------- ---------- ---------- ---------- ---------- Total Operating Expenses....... 1,117,594 1,307,790 1,456,450 1,636,861 1,881,821 905,583 1,054,851 Earnings From Operations............. 64,296 59,257 27,866 83,120 88,938 45,511 21,005 Interest Expense, Net................ 8,857 10,842 18,779 24,093 24,663 12,010 13,689 ---------- ---------- ---------- ---------- ---------- ---------- ---------- Earnings Before Income Taxes......... 55,439 48,415 9,087 59,027 64,275 33,501 7,316 Income Tax Expense................... 21,862 18,416 3,930 23,738 25,440 13,438 3,174 ---------- ---------- ---------- ---------- ---------- ---------- ---------- Net Earnings Before Changes in Accounting......................... 33,577 29,999 5,157 35,289 38,835 20,063 4,142 Cumulative Effect of Changes in Accounting......................... -- -- -- 3,828 -- -- -- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Net Earnings......................... 33,577 29,999 5,157 39,117 38,835 20,063 4,142 Preferred Stock Dividends............ 2,548 2,760 2,760 2,760 894 687 139 ---------- ---------- ---------- ---------- ---------- ---------- ---------- Net Earnings Available to Common Shareholders....................... $ 31,029 $ 27,239 $ 2,397 $ 36,357 $ 37,941 $ 19,376 $ 4,003 ========== ========== ========== ========== ========== ========== ========== Ratio of Earnings to Fixed Charges(1)......................... 3.60x 2.87x 1.22x 2.61x 2.69x 2.84x 1.26x BALANCE SHEET DATA (AT PERIOD END): Working Capital...................... $ 31,215 $ 26,618 $ 50,276 $ 56,521 $ 66,871 $ 57,370 $ 75,751 Property and Equipment............... 419,873 613,149 730,937 733,963 766,346 759,762 806,832 Total Assets......................... 613,534 823,647 964,739 1,002,866 1,078,506 1,046,189 1,124,477 Long-Term Debt....................... 124,163 282,569 429,055 391,400 398,002 399,513 449,397 Redeemable Preferred Stock........... 40,000 40,000 40,000 40,000 5,000 6,000 3,948 Shareholders' Equity................. 263,417 287,344 285,639 318,824 387,398 371,943 389,615
- --------------- (1) For purposes of computing the ratio of earnings to fixed charges, earnings consist of earnings before income taxes plus fixed charges excluding capitalized interest. Fixed charges consist of interest expense, including capitalized interest, and the estimated interest expense component of rental expense. S-4 7 RECENT DEVELOPMENTS Net earnings available to common shareholders for the second quarter of 1995 were $2.2 million, or $.10 per share, compared to $13.0 million, or $.61 per share, for the corresponding period in 1994. Total revenues for the second quarter of 1995 were $545.9 million, an increase of 13% over 1994 second quarter revenues of $484.5 million. Domestic revenues for the second quarter of 1995 increased 11% to $452.6 million, from 1994 second quarter revenues of $407.7 million, while international revenues increased 21% to $93.3 million compared to 1994 second quarter revenues of $76.9 million. Net earnings for the first six months of 1995 were $4.0 million, or $.19 per share, compared to $19.4 million, or $.93 per share, for the corresponding period in 1994. Total revenues increased 13% to $1,075.9 million for the first six months of 1995 compared to the corresponding period in 1994. Domestic revenues were $894.8 million for the first six months of 1995, an 11% increase over the corresponding period in 1994, while international revenues increased 24% to $181.0 million for the first six months of 1995. Earnings per share on a fully diluted basis for the second quarter of 1995 and 1994 were $.10 and $.57, respectively, and for the first six months of 1995 were $.19 compared to $.89 for the corresponding period in 1994. Total shipments for the second quarter of 1995 increased 20% to 55.7 million as compared to the second quarter of 1994. During this period domestic shipments increased 20% to 54.5 million, and international shipments increased 18% to 1.2 million. For the first six months of 1995 total shipments were 110.0 million, 20% higher than in the corresponding period in 1994. Domestic shipments increased 20% to 107.8 million, while international shipments increased 17% to 2.2 million, compared to shipments in the first six months of 1994. During the second quarter of 1995, the Company experienced similar pressures on the average weight and revenue per domestic shipment as were experienced in the first quarter of 1995, although the downward trend stabilized during the second quarter. The average weight per domestic shipment was 4.5 pounds per shipment in both the second quarter and first quarter of 1995. The average revenue per domestic shipment in the second quarter was $8.27 compared to $8.29 in the first quarter of 1995. The average weight per domestic shipment decreased 6.2% and the average revenue per domestic shipment decreased 8.0% in the second quarter of 1995 corresponding to the same period in 1994. S-5 8 BUSINESS Airborne Express provides door-to-door express delivery of small packages and documents through-out the United States and to and from most foreign countries. The Company also acts as an international and domestic freight forwarder for shipments of any size. The Company's strategy is to be the low cost provider of express services for high volume corporate customers. DOMESTIC OPERATIONS The Company's domestic operations, supported by over 250 facilities, primarily involve express door-to-door delivery of small packages and documents weighing less than 100 pounds. Shipments consist primarily of business documents and other printed matter, electronic and computer parts, machine parts, health care items, films and videotapes, and other items for which speed and reliability of delivery are important. The Company's primary service is its overnight express product. This product, which comprised approximately 59% of the Company's domestic shipments during the first six months of 1995, generally provides for before noon delivery on the next business day to most major metropolitan cities in the United States. The Company also provides Saturday and holiday pickup and delivery service for most cities. The Company offers a deferred service product, Select Delivery Service(TM) ("SDS"), which provides for next afternoon or second day delivery. SDS service generally provides for shipments weighing five pounds or less to be delivered on a next afternoon basis with shipments weighing more than five pounds being delivered on a second day basis. SDS shipments comprised approximately 41% of total domestic shipments during the first six months of 1995. SDS shipments are generally lower priced than the overnight express product reflecting the less time sensitive nature of the shipments, but are also less capital intensive to service than overnight express shipments due to reduced service requirements. While the Company's domestic airline system is designed primarily to handle express shipments, any available capacity is also utilized to carry shipments which the Company would normally move on other carriers in its role as an air freight forwarder. Pickup and Delivery. The Company accomplishes its door-to-door pickup and delivery service using approximately 11,900 radio dispatched delivery vans and trucks, of which about 4,400 are operated by the Company. Independent contractors under contract with the Company provide the balance of the pickup and delivery services. The Company's facilities are linked to FOCUS, a proprietary freight tracking and message computer system which permits monitoring of overall system performance and allows the Company and customers to ascertain the status of any specific shipment. FOCUS receives information using several methods including the use, by drivers, of hand-held scanners which read bar-coded information on shipping documents. FOCUS provides many major customers direct access to the status of their shipments 24 hours a day through the use of their own computer systems. Because convenience is an important factor in attracting business from less frequent shippers, the Company has an ongoing program to place drop boxes in convenient locations. The Company has approximately 9,000 boxes in service. Sort Facilities. The majority of overnight express deliveries are routed through the Company's main sort center located in Wilmington, Ohio. As express delivery volume has increased, the main sort center has been expanded. The sort center currently has the capacity to handle approximately 830,000 pieces during the primary 2 1/2 hour nightly sort operation. In 1995, the Company plans to expand the nightly sort capacity to handle 865,000 pieces. On average, approximately 727,000 pieces were sorted each weekday night at the sorting center during the second quarter of 1995. In addition to the sort facilities, the Wilmington hub consists of a Company-owned airport which includes maintenance, storage, training and refueling facilities; and operations and administrative offices. S-6 9 The Company also conducts a daylight sort operation at Wilmington. The day sort services SDS shipments weighing in excess of five pounds that are consolidated at certain regional hub facilities and either flown or trucked into or out of Wilmington. The operation of the Wilmington facility is critical to the Company's business. The inability to use the Wilmington airport, because of bad weather or other factors, would have a serious adverse effect on the Company's service. However, contingency plans, including landing at nearby airports and transporting packages to and from the sort center by truck, can be implemented to address temporary inaccessibility of the Wilmington airport. In addition to the main sort facility at Wilmington, ten regional hub facilities have been established primarily to sort shipments originating and having a destination within approximately a 300 mile radius of a regional hub. In the second quarter of 1995, approximately 61% and 16% of total shipment weight was handled through the night sort and day sort operations at Wilmington, respectively, with the remaining 23% being handled exclusively within the regional hubs. Shipment Routing. The logistical means of moving a shipment from its origin to destination are determined by several factors. Shipments are routed differently depending on shipment product type, weight, geographic distances between origin and destination, and locations of Company stations relative to the locations of sort facilities. Shipments generally are moved between stations and sort facilities on either Company aircraft or contracted trucks. Certain shipments are transported airport-to-airport on commercial air carriers. Overnight express shipments and SDS shipments weighing five pounds or less are picked up by local stations and generally consolidated with other stations' shipments at Company airport facilities. Shipments that are not serviced through regional hubs are loaded on Company aircraft departing each week-day evening from various points within the United States and Canada. These aircraft may stop at other airports to permit additional locations and feeder aircraft to consolidate their cargo onto the larger aircraft before completing the flight to the Wilmington hub. The aircraft are scheduled to arrive at Wilmington between approximately 11:30 p.m. and 3:00 a.m., at which time shipments are sorted and reloaded. The aircraft are scheduled to depart before 6:00 a.m. and return to their respective destinations in time to complete scheduled next business morning or next afternoon service commitments. The Wilmington hub also receives shipments via truck from selected stations in the vicinity of Wilmington for integration with the nightly sort process. For the daylight sort operation, generally five aircraft return to Wilmington from overnight service destinations on Tuesday through Thursday. These aircraft, and trucks from six regional hubs, arrive at Wilmington between 10:00 a.m. and noon, at which time shipments are sorted and reloaded on the aircraft or trucks by 3:00 p.m. for departure and return to their respective destinations. The Company also performs weekend sort operations at Wilmington to accommodate Saturday pickups and Monday deliveries of both overnight express and SDS shipments. This sort is supported by eleven Company aircraft and by contracted trucks. The Company believes its existing facilities and capacity are adequate to meet its current needs. Aircraft. The Company acquires and utilizes used aircraft manufactured in the late 1960s and early 1970s. Upon acquisition, the aircraft are substantially modified by the Company. At June 30, 1995, the Company's in-service fleet consisted of a total of 101 aircraft, including 31 DC-8s (consisting of 11 series 61, 6 series 62 and 14 series 63), 59 DC-9s (consisting of 2 series 10, 40 series 30 and 17 series 40), and 11 YS-11 turboprop aircraft. The Company owns the majority of the aircraft it operates, but has completed sale-leaseback transactions with respect to six DC-8 and six DC-9 aircraft. In addition, approximately 65 smaller aircraft are chartered nightly to connect small cities with Company aircraft that then operate to and from Wilmington. S-7 10 At June 30, 1995, the nightly lift capacity of the system was about 3.2 million pounds versus approximately 3.1 million pounds and 2.8 million pounds at years ended 1994 and 1993, respectively. Over the past several years the Company's utilization of available lift capacity has exceeded 80%. INTERNATIONAL OPERATIONS The Company provides international express door-to-door delivery and a variety of freight services. These services are provided in most foreign countries on an inbound and outbound basis through a network of Airborne offices and independent agents. Most international deliveries are accomplished within 24 to 96 hours of pickup. The Company's domestic stations are staffed and equipped to handle international shipments to or from almost anywhere in the world. In addition to its extensive domestic network, the Company operates its own offices in the Far East, Australia, New Zealand, and the United Kingdom. The Company's freight and express agents worldwide are connected to FOCUS, Airborne's on-line communication network. The Company is capable of providing its customers with immediate access to the status of shipments via FOCUS almost anywhere in the world. The Company's international air express service is intended for the movement of non-dutiable and certain dutiable shipments weighing less than 99 pounds. The Company's international air freight service handles heavier weight shipments on either an airport-to-airport, door-to-airport or door-to-door basis. In 1994, the Company began offering ocean service capabilities for customers who want a lower cost shipping option. The Company's strategy is to use a variable-cost approach in delivering and expanding international services to its customers. This strategy uses existing commercial airline lift capacity in connection with the Company's domestic network to move shipments to overseas destinations. Additionally, exclusive service arrangements with independent freight and express agents have been entered into to accommodate shipments in locations not currently served by Company-owned operations. The Company believes there are no significant service advantages which would justify the operation of its own aircraft on international routes, or making significant investment in additional offshore facilities or ground operations. As a result, the Company's ability to provide competitive international delivery service is dependent upon the continued availability and cost of other airlines' freight services. In order to expand its business at a reasonable cost, the Company continues to explore possible joint venture agreements which combine the Company's management expertise, domestic express system and information systems with local business knowledge and market reputation of suitable partners. COMPETITION The market for the Company's services has been and is expected to remain highly competitive. The principal competitive factors in both domestic and international markets are price, the ability to provide reliable pickup and delivery, and value-added services. Federal Express Corporation continues to be the dominant competitor in the domestic express business, followed by United Parcel Service. The Company currently ranks third in shipment volume behind these two companies in the domestic express business. Other domestic express competitors include the U.S. Postal Service's Express Mail Service and several other transportation companies offering next morning or next-plane-out delivery service. The Company also competes to some extent with companies offering ground transportation services and with facsimile and other forms of electronic transmission. In the international markets, in addition to Federal Express and United Parcel Service, the Company competes with DHL, TNT and other air freight forwarders or carriers and most commercial airlines. S-8 11 EMPLOYEES As of June 30, 1995, the Company and its subsidiaries had approximately 11,200 full-time employees and 7,300 part-time and casual employees. Approximately 5,100 full-time employees (including the Company's 600 pilots) and 3,100 part-time and casual employees are employed under union contracts, primarily with locals of the International Brotherhood of Teamsters and Warehousemen. Most labor agreements covering the Company's ground personnel were renegotiated in 1994 or 1995 for four-year terms expiring in 1998 or 1999. The Company's pilots are covered by a contract which became amendable on July 31, 1995. Negotiations are ongoing and, although there can be no assurance, the Company believes this contract will be settled without any significant disruption or work stoppage. The Company considers its employee relations to be good. SHIPMENT DATA SUMMARY
SIX MONTHS ENDED YEAR ENDED DECEMBER 31, JUNE 30, ----------------------------- ------------------ 1992 1993 1994 1994 1995 ------- ------- ------- ------- ------- Number of Shipments (in thousands): Domestic Overnight............................ 96,715 109,863 118,055 58,062 63,349 Select Delivery Service.............. 33,136 50,355 69,053 31,504 44,280 100 lbs. and over.................... 335 350 352 176 162 ------- ------- ------- ------- ------- Total Domestic.................. 130,186 160,568 187,460 89,742 107,791 ------- ------- ------- ------- ------- International Express.............................. 2,886 3,139 3,473 1,663 1,949 All Other............................ 416 406 481 234 272 ------- ------- ------- ------- ------- Total International............. 3,302 3,545 3,954 1,897 2,221 ------- ------- ------- ------- ------- Total Shipments......................... 133,488 164,113 191,414 91,639 110,012 ======= ======= ======= ======= ======= Average Pounds Per Shipment: Domestic................................ 4.8 4.8 4.8 4.7 4.5 International........................... 46.7 47.1 64.1 63.2 65.0 Average Revenue Per Pound: Domestic................................ $ 2.04 $ 1.94 $ 1.85 $ 1.89 $ 1.81 International........................... $ 1.46 $ 1.41 $ 1.22 $ 1.21 $ 1.26 Average Revenue Per Shipment: Domestic................................ $ 9.68 $ 9.23 $ 8.84 $ 8.97 $ 8.28 International........................... $ 68.00 $ 66.35 $ 78.59 $ 77.26 $ 81.52
In recent periods, the lower yielding SDS shipments have grown at a faster rate than the Company's higher yielding overnight shipments. SDS shipments increased 37% in 1994 compared to 1993, and 41% in the first six months of 1995 compared to the same period in 1994. Overnight shipments increased 7% and 9% in 1994 and the first six months of 1995, respectively. Domestic yields in the first six months of 1995 were negatively impacted by a decline in the average weight per shipment. Coupled with the higher growth rate of lower yielding SDS shipments, this resulted in a higher than normal decline in the average revenue per domestic shipment. For a discussion of the Company's results of operations, reference is made to "Management's Discussion and Analysis of Results of Operations and Financial Condition" in the Company's Annual Report on Form 10-K for the year ended December 31, 1994 and the Company's Quarterly Reports on Form 10-Q which are incorporated herein by reference. S-9 12 LIQUIDITY AND CAPITAL RESOURCES The Company's principal sources of liquidity for financing capital expenditures and operations have included cash provided by operations, bank borrowings, aircraft sale-leaseback financings and public and private offerings of debt and equity. Capital expenditures and associated financing continue to be the primary factors affecting the financial condition of the Company. The Company currently anticipates total capital expenditures to approximate $230 million in 1995, of which a significant portion is related to the acquisition and modification of aircraft. During the first six months of 1995, total capital expenditures net of dispositions were $106 million. The principal sources of liquidity for financing capital expenditures during the first six months of 1995 were cash provided by operations and financing under the Company's bank lines of credit. The Company's unsecured revolving bank credit agreement has traditionally been used as a major source of liquidity for periods between other financing transactions. The Company also currently has available $65 million under unsecured uncommitted money market lines of credit with several banks, used in conjunction with the revolving credit agreement to facilitate settlement and accommodate short-term borrowing fluctuations. At June 30, 1995, a total of $220.6 million was outstanding under the revolving bank credit and money market credit lines. The Company amended its revolving bank credit agreement effective March 31, 1995, increasing the total commitment to $250 million, subject to a maximum level of Company indebtedness permitted by certain covenants in the agreement and other loan agreements. The amended agreement is effective through May 31, 1998, with options to extend to May 31, 2000. In management's opinion, proceeds from the offering made hereby, coupled with anticipated cash provided by operations and borrowing capacity available under the existing bank credit agreements, will provide adequate flexibility for financing future growth. S-10 13 DESCRIPTION OF THE NOTES The Notes are a series of Debt Securities described in the accompanying Prospectus. The following description of the terms of the Notes, referred to in the Prospectus as "Offered Securities," supplements, and to the extent inconsistent therewith, replaces, the description of the general terms and provisions of Debt Securities set forth in the Prospectus, to which description reference is hereby made. Capitalized terms not otherwise defined herein shall have the meanings given to them in the Prospectus. GENERAL The Notes will be limited to $100,000,000 aggregate principal amount and will mature on , 2005. The Notes will bear interest at the rate per annum shown on the cover of this Prospectus Supplement from , 1995 or from the most recent Interest Payment Date to which interest has been paid or provided for, payable semi-annually on and of each year to the Person in whose name the Note (or any predecessor Note) is registered at the close of business on the or , as the case may be, next preceding such Interest Payment Date. The Notes will be issued in registered form in denominations of $1,000 and integral multiples thereof. Interest will be calculated on the basis of a 360-day year of twelve 30-day months. The Notes are not redeemable at the option of the Company and are not entitled to a sinking fund. BOOK-ENTRY SYSTEM The Notes will be represented by Global Securities that will be deposited with, or on behalf of, The Depository Trust Company (the "Depositary") and registered in the name of a nominee of the Depositary. The Depositary has advised the Company and the Underwriters as follows: The Depositary is a limited-purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. The Depositary was created to hold securities of its participating organizations ("participants") and to facilitate the clearance and settlement of securities transactions, such as transfers and pledges, among its participants in such securities through electronic computerized book-entry changes in accounts of the participants, thereby eliminating the need for physical movement of securities certificates. Participants include securities brokers and dealers (including the Underwriters), banks, trust companies, clearing corporations and certain other organizations, some of whom (and/or their representatives) own the Depositary. Access to the Depositary's book-entry system is also available to others, such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a participant, either directly or indirectly. Persons who are not participants may beneficially own securities held by the Depositary only through participants. Unless and until they are exchanged in whole or in part for certificated Notes in definitive form, the Global Securities may not be transferred except as a whole by the Depositary to a nominee of such Depositary or by a nominee of such Depositary to such Depositary or another nominee of such Depositary. The Notes represented by the Global Securities are exchangeable for certificated Notes in definitive registered form of like tenor as such Notes in denominations of $1,000 and in any greater amount that is an integral multiple thereof if (i) the Depositary notifies the Company that it is unwilling or unable to continue as Depositary for the Global Securities or if at any time the Depositary ceases to be a clearing agency registered under the Securities Exchange Act of 1934, as amended, (ii) the Company in its discretion at any time determines not to have all of the Notes represented by the Global Securities and notifies the Trustee thereof or (iii) an Event of Default with respect to the Notes represented by such Global Securities has occurred and is continuing. Any Notes that are exchangeable pursuant to the preceding sentence are exchangeable for certificated Notes issuable in authorized denominations and S-11 14 registered in such names as the Depositary shall direct. Subject to the foregoing, the Global Securities are not exchangeable except for a Global Security or Global Securities of the same aggregate denominations to be registered in the name of the Depositary or its nominee. Payments of principal of and interest on the Notes will be made by the Company through the Trustee to the Depositary or its nominee, as the case may be, as the registered owner of the Global Securities. Neither the Company nor the Trustee will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests of the Global Securities or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests. The Company expects that the Depositary, upon receipt of any payment of principal or interest in respect of the Global Securities, will credit the accounts of the related participants with payment in amounts proportionate to their respective holdings in principal amount of beneficial interest in the Global Securities as shown on the records of the Depositary. The Company also expects that payments by participants to owners of beneficial interests in the Global Securities will be governed by standing customer instructions and customary practices, as is now the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such participants. Secondary trading in notes and debentures of corporate issuers is generally settled in clearing-house or next-day funds. In contrast, beneficial interests in a Global Securities will trade in the Depositary's Same-Day Funds Settlement System, in which secondary market trading activity in those beneficial interests will be required by the Depositary to settle in immediately available funds. No assurance can be given as to the effect, if any, of settlement in immediately available funds on trading activity in such beneficial interests. A further description of the Depositary's procedures with respect to the Notes is set forth in the accompanying Prospectus under the heading "Description of Debt Securities -- Book-Entry Debt Securities." S-12 15 UNDERWRITING Subject to the terms and conditions set forth in the Underwriting Agreement, the Company has agreed to sell to each of the Underwriters named below (the "Underwriters"), and each of the Underwriters has severally agreed to purchase, the principal amount of the Notes set forth opposite its name below:
PRINCIPAL AMOUNT UNDERWRITER OF NOTES ----------- --------- Goldman, Sachs & Co.......................................... $ BA Securities, Inc........................................... ------------ Total................................................... $100,000,000 ============
Under the terms and conditions of the Underwriting Agreement, the Underwriters are committed to take and pay for all of the Notes, if any are taken. The Underwriters propose to offer the Notes in part directly to the public at the initial public offering price set forth on the cover page of this Prospectus Supplement and in part to certain securities dealers at such price less a concession of % of the principal amount of the Notes. The Underwriters may allow, and such dealers may reallow, a concession not to exceed % of the principal amount of the Notes to certain brokers and dealers. After the Notes are released for sale to the public, the offering price and other selling terms may from time to time be varied by the Underwriters. The Notes are a new issue of securities with no established trading market. The Company has been advised by the Underwriters that they intend to make a market in the Notes but are not obligated to do so and may discontinue market making at any time without notice. No assurance can be given as to the liquidity of the trading market for the Notes. Affiliates of BA Securities, Inc. have performed commercial banking services for the Company in the past for which they received customary compensation. In addition, Bank of America, N.T. & S.A., and Seattle-First National Bank, affiliates of BA Securities, Inc., are lenders under the Company's revolving bank credit agreement and Seattle-First National Bank has extended a money market line of credit to the Company. Affiliates of BA Securities, Inc. may receive more than 10% of the net proceeds from this offering (not including any underwriting compensation) in repayment of certain indebtedness of the Company. Accordingly, this offering is being made in accordance with Section 44(c)(8) of Article III of the Rules of Fair Practice of the National Association of Securities Dealers, Inc. Richard M. Rosenberg, Chairman and Chief Executive Officer of BankAmerica Corporation, the parent of BA Securities, Inc., is a director of the Company and Robert S. Cline, Chief Executive Officer of the Company, is a director of Seattle-First National Bank. The Company and the Guarantors have agreed to indemnify the Underwriters against certain liabilities, including liabilities under the Securities Act of 1933. VALIDITY OF SECURITIES The validity of the Notes offered hereby will be passed upon for the Company by Riddell, Williams, Bullitt & Walkinshaw, Seattle, Washington, and for the Underwriters by Sullivan & Cromwell, New York, New York. Members of the firm of Riddell, Williams, Bullitt & Walkinshaw owned an aggregate of approximately 13,565 shares of the Company's Common Stock as of September 1, 1995. Mr. J. Vernon Williams, a partner of Riddell, Williams, Bullitt & Walkinshaw, serves as assistant secretary of the Company, and other partners of the firm serve as officers and/or directors of certain subsidiaries of the Company. S-13 16 EXPERTS The consolidated financial statements of the Company as of December 31, 1994 and 1993, and for each of the three years in the period ended December 31, 1994, have been audited by Deloitte & Touche LLP, independent auditors, as set forth in their report with respect thereto (which report expresses an unqualified opinion and includes an explanatory paragraph referring to the adoption, as of January 1, 1993, of Statements of Financial Accounting Standards No. 109, "Accounting for Income Taxes" and No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions"), and are incorporated by reference herein in reliance upon such report given upon the authority of said firm as experts in accounting and auditing. S-14 17 INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. SUBJECT TO COMPLETION, DATED SEPTEMBER 5, 1995 AIRBORNE FREIGHT CORPORATION DEBT SECURITIES ------------------------ The Company may from time to time offer Debt Securities consisting of debentures, notes and/or other unsecured evidences of indebtedness in one or more series at an aggregate initial offering price not to exceed $100,000,000 or its equivalent in any other currency or composite currency. The Debt Securities may be offered as separate series in amounts, at prices and on terms to be determined at the time of sale. The accompanying Prospectus Supplement sets forth with regard to the series of Debt Securities in respect of which this Prospectus is being delivered the title, aggregate principal amount, denominations (which may be in United States dollars, in any other currency or in a composite currency), maturity, rate, if any (which may be fixed or variable), and time of payment of any interest, any terms for redemption at the option of the Company or the holder, any terms for sinking fund payments, any listing on a securities exchange and the initial public offering price and any other terms in connection with the offering and sale of such series of Debt Securities. The Debt Securities will be fully and unconditionally, and jointly and severally, guaranteed by ABX Air, Inc. ("ABX") and Airborne Forwarding Corporation ("AFC"), wholly-owned subsidiaries of the Company, and Airborne FTZ, Inc. ("FTZ") and Wilmington Air Park, Inc. ("WAP"), wholly-owned subsidiaries of ABX. ABX, AFC, FTZ and WAP are referred to collectively as the "Guarantors." These guarantees will rank pari passu with the guarantees provided to the banks under the Company's revolving bank credit agreement. The Company may sell Debt Securities to or through underwriters, and also may sell Debt Securities directly to other purchasers or through agents. Such underwriters may include Goldman, Sachs & Co. and BA Securities, Inc., or may be a group of underwriters represented by firms including Goldman, Sachs & Co. and BA Securities, Inc. Goldman, Sachs & Co. and BA Securities, Inc. may also act as agents. The accompanying Prospectus Supplement sets forth the names of any underwriters or agents involved in the sale of the Debt Securities in respect of which this Prospectus is being delivered, the principal amounts, if any, to be purchased by underwriters and the compensation, if any, of such underwriters or agents. See "Plan of Distribution" for possible indemnification arrangements for underwriters, agents and their controlling persons. ------------------------ THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. ------------------------ GOLDMAN, SACHS & CO. BA SECURITIES, INC. ------------------------ The date of this Prospectus is , 1995. 18 AVAILABLE INFORMATION Airborne Freight Corporation ("Airborne," "Airborne Express" or the "Company," which terms include its subsidiaries unless the context indicates otherwise) is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance therewith files reports, proxy statements and other information with the Securities and Exchange Commission (the "Commission"). Reports, proxy statements and other information filed by the Company may be inspected and copied at the public reference facilities maintained by the Commission at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at the Commission's Regional Offices located at 7 World Trade Center, Suite 1300, New York, New York 10048 and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such materials can be obtained by mail from the Public Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. In addition, such material may also be inspected and copied at the offices of the New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005, and the Pacific Stock Exchange, 301 Pine Street, San Francisco, California 94104. The Company has filed with the Commission a registration statement on Form S-3 (herein, together with all amendments and exhibits, referred to as the "Registration Statement") under the Securities Act of 1933, as amended. This Prospectus does not contain all of the information set forth in the Registration Statement, certain parts of which are omitted in accordance with the rules and regulations of the Commission. For further information, reference is hereby made to the Registration Statement. Any statements contained herein concerning the provisions of any document are not necessarily complete, and, in each instance, reference is made to the copy of each document filed as an exhibit to the Registration Statement or otherwise filed with the Commission. Each statement is qualified in its entirety by such reference. No separate financial statements of the Guarantors are included herein. The Company and the Guarantors do not consider such financial statements to be material to holders of the Debt Securities. The Company's non-guarantor subsidiaries are inconsequential, both individually and in the aggregate, to the Company's consolidated financial statements. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The following documents filed with the Commission (File No. 1-6512) pursuant to the Exchange Act are incorporated herein by reference: 1. The Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1994, as amended; 2. The Company's Quarterly Reports on Form 10-Q for the quarter ended March 31, 1995 and for the quarter ended June 30, 1995, as amended; 3. The Company's Current Report on Form 8-K, dated April 25, 1995; and 4. All other documents filed by the Company pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to the termination of this offering. The Company will provide without charge to each person, including any beneficial owner, to whom a copy of this Prospectus is delivered, upon the written or oral request of any such person, a copy of any or all of the documents which are incorporated herein by reference, other than exhibits to such documents (unless such exhibits are specifically incorporated by reference into such documents). Requests should be directed to the Company, P.O. Box 662, Seattle, Washington 98111, Attention: David C. Anderson, Corporate Secretary/Counsel, telephone: (206) 285-4600. Any statement contained in a document all or a portion of which is incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such 2 19 statement. Any statement so modified shall not be deemed to constitute a part of this Prospectus except as so modified, and any statement so superseded shall not be deemed to constitute part of this Prospectus. THE COMPANY Airborne Express provides door-to-door express delivery of small packages and documents throughout the United States and to and from most foreign countries. The Company also acts as an international and domestic freight forwarder for shipments of any size. A majority of the Company's domestic shipments are transported on its own airline and owned or contracted ground transportation vehicles through its Company-owned airport and central sorting facility in Wilmington, Ohio or one of ten regional hubs. The Company's principal operating strategy is to be the low cost provider of express services for high volume corporate customers. Airborne is a Delaware corporation organized on May 10, 1968. The Company's executive offices are located at 3101 Western Avenue, Post Office Box 662, Seattle, Washington 98111, telephone: (206) 285-4600. USE OF PROCEEDS Except as may be set forth in an applicable Prospectus Supplement accompanying this Prospectus, the net proceeds to be received by the Company from the issuance of up to $100,000,000 aggregate principal amount of the Company's debt securities (the "Debt Securities") offered hereby will be used to reduce indebtedness outstanding under the Company's revolving bank credit agreement and money market lines of credit. DESCRIPTION OF DEBT SECURITIES The Debt Securities are to be issued under an Indenture (the "Indenture"), as amended by a First Supplemental Indenture among the Company, ABX, AFC, FTZ, WAP and The Bank of New York, as Trustee (the "Trustee"). The following summaries of certain provisions of the Indenture do not purport to be complete and are subject to, and are qualified in their entirety by reference to, all the provisions of the Indenture, including the definitions therein of certain terms. Wherever particular Sections or defined terms of the Indenture are referred to herein or in a Prospectus Supplement, such Sections or defined terms are incorporated herein or therein by reference. The Debt Securities may be issued from time to time in one or more series. The particular terms of each series of Debt Securities offered by any Prospectus Supplement will be described in such Prospectus Supplement relating to such series. GENERAL The Indenture does not limit the aggregate amount of Debt Securities which may be issued thereunder, and Debt Securities may be issued thereunder from time to time in separate series up to the aggregate amount from time to time authorized by the Company for each series. The Debt Securities will be unsecured and unsubordinated obligations of the Company. The Debt Securities will rank senior in right of payment to all subordinated indebtedness of the Company, presently consisting of 10% Senior Subordinated Debt and 6 3/4% Convertible Subordinated Debentures, and will rank pari passu in right of payment with all borrowings and other obligations of the Company and its subsidiaries under the Company's revolving bank credit agreement. The applicable Prospectus Supplement will describe the following terms of the series of Debt Securities ("Offered Securities") in respect of which this Prospectus is being delivered: (1) the title of the Offered Securities; (2) any limit on the aggregate principal amount of the Offered Securities; (3) whether any of the Offered Securities are to be issuable in permanent global form and, if so, the 3 20 terms and conditions, if any, upon which interests in such Offered Securities in global form may be exchanged, in whole or in part, for the individual Offered Securities represented thereby; (4) the person to whom any interest on any Offered Security of the series shall be payable if other than the person in whose name the Offered Security is registered on the Regular Record Date; (5) the date or dates on which the principal of the Offered Securities will be payable; (6) the rate or rates at which the Offered Securities will bear interest, if any; (7) the date or dates from which any such interest will accrue, the Interest Payment Dates on which any such interest on the Offered Securities will be payable and the Regular Record Date for any interest payable on any Interest Payment Date; (8) the place or places where the principal of, premium (if any) and interest on the Offered Securities will be payable; (9) the period or periods within which, and the price or prices at which, the Offered Securities may, pursuant to any optional or mandatory provisions, be redeemed or purchased, in whole or in part, by the Company and any terms and conditions relevant thereto; (10) the denominations in which any Offered Securities will be issuable, if other than denominations of $1,000 and any integral multiple thereof; (11) the currency, currencies or currency units of payment of principal of and any premium and interest on the Offered Securities if other than U.S. dollars; (12) any index used to determine the amount of payments of principal of and any premium and interest on the Offered Securities; (13) if the principal of or premium (if any) or interest on the Offered Securities is to be payable, at the election of the Company or a Holder thereof, in one or more currencies or currency units other than that or those in which the Offered Securities are stated to be payable, such currency, currencies or currency units and the periods within which and the terms and conditions upon which such election is to be made; (14) if other than the principal amount thereof, the portion of the principal amount of the Offered Securities of the series which will be payable upon declaration of the acceleration of the Maturity thereof; (15) any Events of Default with respect to the Offered Securities, if not otherwise set forth under "Events of Default;" (16) the applicability of the provisions described under "Defeasance;" and (17) any other terms of the Offered Securities not inconsistent with the provisions of the Indenture. Debt Securities may be issued at a discount from their principal amount. Federal income tax considerations and other special considerations applicable to any such Original Issue Discount Securities will be described in the applicable Prospectus Supplement. If the purchase price of any of the Debt Securities is denominated in a foreign currency or currencies or a foreign currency unit or units or if the principal of and any premium and interest on any series of Debt Securities is payable in a foreign currency or currencies or a foreign currency unit or units, the restrictions, elections, general tax considerations, specific terms and other information with respect to such issue of Debt Securities and such foreign currency or currencies or foreign currency unit or units will be set forth in the applicable Prospectus Supplement. GUARANTEES The Debt Securities will be fully and unconditionally, and jointly and severally, guaranteed as to the payment of principal, premium (if any) and interest by ABX, AFC, FTZ and WAP pursuant to guarantees (the "Guarantees"). These Guarantees will rank pari passu with the guarantees provided to the banks under the Company's revolving bank credit agreement. ABX, AFC, FTZ and WAP may be released from their respective obligations under the Guarantees as described under "Defeasance." As wholly-owned direct or indirect subsidiaries of the Company and ABX, ABX, AFC, FTZ and WAP are subject to control by the Company with respect to their financing activities, the disposition of their assets and otherwise. The Indenture contains no restriction on the ability of ABX, AFC, FTZ or WAP to transfer their assets to the Company, by dividend or otherwise, or on the ability of the Company to dispose of or encumber the assets of ABX, AFC, FTZ or WAP to finance or satisfy obligations of the Company, except to the extent limited by the covenants described in "Limitations on Liens" and "Limitations on Sale and Leaseback Transactions" in "Certain Covenants," below. Accordingly, there can be no assurance that there would be sufficient assets available at ABX, AFC, FTZ or WAP to satisfy any claim of the Holders of the Debt Securities under the Guarantees. Although the Company has no present intent to transfer by dividend or otherwise, dispose of, or otherwise encumber the assets of ABX, 4 21 AFC, FTZ or WAP to finance or satisfy obligations of the Company, ABX, AFC, FTZ and WAP may from time to time transfer, dispose of or encumber their assets as permitted by the Indenture. In addition, various laws, including laws relating to fraudulent conveyances, enacted for the protection of creditors may be utilized to challenge the Guarantees to the extent that ABX, AFC, FTZ or WAP did not receive fair consideration or reasonably equivalent value for the Guarantees. To the extent that the Guarantees were voided or held unenforceable as a fraudulent conveyance or otherwise, the Holders of the Debt Securities would cease to be creditors of ABX, AFC, FTZ or WAP as the case may be, and would be creditors solely of the Company. In such event, the claims of the Holders of the Debt Securities against the assets of ABX, AFC, FTZ or WAP would be subject, to such extent, to the prior payment of all liabilities of ABX, AFC, FTZ or WAP, respectively. EXCHANGE, REGISTRATION, TRANSFER AND PAYMENT Unless otherwise indicated in the applicable Prospectus Supplement, payment of principal, premium (if any) and interest on the Debt Securities will be payable, and the exchange of and the transfer of Debt Securities will be registrable, at the office or agency of the Company maintained for such purpose and at any other office or agency maintained for such purpose. (Sections 301, 305 and 1002) Unless otherwise indicated in the applicable Prospectus Supplement, the Debt Securities will be issued in denominations of $1,000 and any integral multiple thereof. (Section 302) No service charge will be made for any registration of transfer or exchange of the Debt Securities, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge imposed in connection therewith. (Section 305) All moneys paid by the Company to a Paying Agent for the payment of principal of any premium or interest on any Debt Security which remain unclaimed for two years after such principal, premium or interest has become due and payable may be repaid to the Company and thereafter the Holder of such Debt Security may look only to the Company for payment thereof. (Section 1003) BOOK-ENTRY DEBT SECURITIES The Debt Securities of a series may be issued in the form of one or more Global Securities that will be deposited with a Depositary or its nominee identified in the applicable Prospectus Supplement. In such a case, one or more Global Securities will be issued in a denomination or aggregate denominations equal to the portion of the aggregate principal amount of Outstanding Debt Securities of the series to be represented by such Global Security or Securities. Unless and until it is exchanged in whole or in part for Debt Securities in registered form, a Global Security may not, subject to certain exceptions, be registered for transfer or exchange except to the Depositary for such Global Security or a nominee of such Depositary. (Sections 204 and 305) The specific terms of the depositary arrangement with respect to any portion of a series of Debt Securities to be represented by a Global Security will be described in the applicable Prospectus Supplement. The Company expects that the following provisions will apply to depositary arrangements. Unless otherwise specified in the applicable Prospectus Supplement, Debt Securities which are to be represented by a Global Security to be deposited with or on behalf of a Depositary will be represented by a Global Security registered in the name of such Depositary or its nominee. Upon the issuance of such Global Security, and the deposit of such Global Security with or on behalf of the Depositary for such Global Security, the Depositary will credit, on its book-entry registration and transfer system, the respective principal amounts of the Debt Securities represented by such Global Security to the accounts of institutions that have accounts with such Depositary or its nominee ("participants"). The accounts to be credited will be designated by the underwriters or agents of such Debt Securities or by the Company, if such Debt Securities are offered and sold directly by the Company. Ownership of beneficial interest in such Global Security will be limited to participants or Persons that may hold interests through participants. Ownership of beneficial interests by participants in such Global Security will be shown on, and the transfer of that ownership interest will be effected only through, records maintained by the 5 22 Depositary for such Global Security. Ownership of beneficial interests in such Global Security by Persons that hold through participants will be shown on, and the transfer of that ownership interest within such participant will be effected only through, records maintained by such participant. The laws of some jurisdictions require that certain purchasers of securities take physical delivery of such securities in certificated form. The foregoing limitations and such laws may impair the ability to transfer beneficial interests in such Global Securities. So long as the Depositary for a Global Security, or its nominee, is the registered owner of such Global Security, such Depositary or such nominee, as the case may be, will be considered the sole owner or Holder of the Securities represented by such Global Security for all purposes under the Indenture. Unless otherwise specified in the applicable Prospectus Supplement, owners of beneficial interests in such Global Security will not be entitled to have Debt Securities of the series represented by such Global Security registered in their names, will not receive or be entitled to receive physical delivery of Debt Securities of such series in certificated form and will not be considered the Holders thereof for any purposes under the Indenture. (Sections 204 and 305) Accordingly, each Person owning a beneficial interest in such Global Security must rely on the procedures of the Depositary and, if such person is not a participant, on the procedures of the participant through which such Person owns its interest, to exercise any rights of a Holder under the Indenture. The Company understands that under existing industry practices, if the Company requests any action of Holders or an owner of a beneficial interest in such Global Security desires to give any notice or take any action a Holder is entitled to give or take under the Indenture, the Depositary would authorize the participants to give such notice or take such action, and participants would authorize beneficial owners owning through such participants to give such notice or take such action or would otherwise act upon the instructions of beneficial owners owning through them. Principal of and any premium and interest on a Global Security will be payable in the manner described in the applicable Prospectus Supplement. CERTAIN COVENANTS Limitation on Liens. The Indenture provides that the Company will not, and will not permit any Restricted Subsidiary (as defined below), to incur any lien on any Principal Property (as defined below) to secure any debt without making, or causing such Restricted Subsidiary to make, effective provision for securing the Debt Securities (and, if the Company shall so determine, any other debt of the Company which is not subordinate to the Debt Securities or of such Restricted Subsidiary) (x) equally and ratably with such debt as to such Principal Property for so long as such debt shall be so secured or (y) in the event such debt is debt of the Company which is subordinate in right of payment to the Debt Securities, prior to such debt as to such Principal Property for so long as such debt shall be so secured unless the sum of (i) the amount of debt secured by a lien and otherwise prohibited by the Indenture and (ii) the Attributable Value (as defined below) of all sale and leaseback transactions otherwise prohibited by the Indenture does not exceed 15% of Consolidated Net Tangible Assets (as defined below). (Section 1008) This limitation does not apply to (i) liens with respect to debt existing on the date of the Indenture, (ii) liens securing only the Debt Securities, (iii) liens in favor of the Company, (iv) liens on property existing immediately prior to the time of acquisition thereof and not in anticipation of the financing of such acquisition, (v) liens to secure industrial revenue or development bonds, (vi) liens on property to secure debt incurred to finance all or part of the cost of acquiring, repairing, constructing or improving such property so long as the commitment of the creditor to extend the credit secured by such lien is made no later than 120 days after the later of (A) the completion of the acquisition, substantial repair or substantial improvement of such Principal Property and (B) the placing in operation of such Principal Property, (vii) liens to secure debt incurred to extend, renew, refinance or refund debt secured by liens referred to in the foregoing clauses (i) to (vi) so long as such lien does not extend to any other property and the debt so secured is not increased, and (viii) subject to certain conditions, liens securing debt owing by the Company to a wholly-owned subsidiary. Limitation on Sale and Leaseback Transactions. The Indenture provides that the Company will not, and will not permit any Restricted Subsidiary to, enter into any sale and leaseback transaction with 6 23 respect to any Principal Property (except for a term, including any renewal thereof, not exceeding 36 months), unless (i) the Company or such Restricted Subsidiary would be entitled to enter into such sale and leaseback transaction as described in the first sentence of the immediately preceding paragraph without equally and ratably securing the Debt Securities, (ii) the commitment by the purchaser is obtained no later than 120 days after the later of (A) the completion of the acquisition, substantial repair or substantial improvement of such Principal Property or (B) the placing in operation of such Principal Property, or (iii) the Company or such Restricted Subsidiary applies to the retirement of Debt Securities or other debt of the Company or a Restricted Subsidiary (other than debt that is subordinated in right of payment to the Debt Securities) an amount equal to (A) either (i) the lesser of the net proceeds of the sale or transfer or the book value at the date of such sale or transfer of the Principal Property leased, if the transaction is for cash, or (ii) the fair market value of the Principal Property leased, if the transaction is for other than cash, minus (B) an amount equal to the principal amount of Debt Securities delivered to the Trustee within such 90 days for cancellation and the principal amount of debt voluntarily retired within such 90 days. (Section 1009) Certain Definitions. "Restricted Subsidiary" means, at any time, any corporation of which: (i) more than 50% of the voting stock at such time is owned or controlled by the Company or by one or more of the other Restricted Subsidiaries, (ii) the operating assets and principal business at such time shall be carried on within the United States or Canada and (iii) which at such time owns a Principal Property. "Principal Property" means any property of whatever character owned by or leased to the Company or a Restricted Subsidiary having an acquisition cost plus capitalized improvements in excess of 0.5% of Consolidated Net Tangible Assets as well as capital stock and indebtedness of all Restricted Subsidiaries. The Company estimates that as of June 30, 1995, the book value of the Principal Property of the Company and its subsidiaries, consisting primarily of aircraft, was approximately $603 million. "Attributable Value" means (i) as to any particular lease under which the Company or a Restricted Subsidiary is at the time liable other than a capital lease obligation, and at any date as of which the amount thereof is to be determined, the total net amount of rent required to be paid by the Company or such Restricted Subsidiary under such lease during the initial term thereof as determined in accordance with generally accepted accounting principles, discounted from the last date of such initial term to the date of determination at a rate per annum equal to the discount rate which would be applicable to a capital lease obligation with like term in accordance with generally accepted accounting principles and (ii) as to a capital lease obligation under which the Company or such Restricted Subsidiary is at the time liable and at any date as of which the amount thereof is to be determined, the capitalized amount thereof that would appear on the face of a balance sheet of such Person in accordance with generally accepted accounting principles. "Consolidated Net Tangible Assets" means the aggregate amount of assets (less applicable reserves and other properly deductible items) after deducting therefrom (i) all current liabilities and (ii) all goodwill, trade names, trademarks, patents, unamortized debt discount and expense and other like intangibles of the Company and its consolidated subsidiaries, all as set forth on the most recent balance sheet of the Company and its consolidated subsidiaries prepared in accordance with generally accepted accounting principles. As of June 30, 1995, the Consolidated Net Tangible Assets of the Company and its subsidiaries was approximately $894 million. EVENTS OF DEFAULT The following are Events of Default under the Indenture with respect to the Debt Securities of any series: (a) failure to pay the principal of or premium (if any) on any Debt Security of that series when due; (b) failure to pay any interest on any Debt Security of that series when due, continued for 30 days; (c) default in the deposit of any sinking fund payment when and as due by the terms of a Debt Security of that series; (d) failure to perform any other covenant of the Company in the Indenture (other than a covenant included in the Indenture solely for the benefit of a series of Debt Securities other than that series), continued for 60 days after written notice as provided in the Indenture; (e) a default under any indebtedness for money borrowed by the Company or a Restricted Subsidiary (including a default with respect to Debt Securities of any series other than that series) which default shall constitute a failure to pay any portion of such indebtedness in an amount exceeding $5,000,000 when due and payable after 7 24 the expiration of any applicable grace period with respect thereto or shall have resulted in such indebtedness in an amount exceeding $5,000,000 becoming or being declared due and payable prior to the date on which it would otherwise have become due and payable, if such indebtedness is not discharged, or such acceleration is not annulled, within 10 days after written notice as provided in the Indenture; and (f) certain events in bankruptcy, insolvency or reorganization relating to the Company. (Section 501) Subject to the provisions of the Indenture relating to the duties of the Trustee in case an Event of Default (as defined) shall occur and be continuing, the Trustee will be under no obligation to exercise any of its rights or powers under the Indenture at the request or direction of any of the Holders, unless such Holders shall have offered to the Trustee reasonable indemnity. (Section 603) Subject to such provisions for the indemnification of the Trustee, the Holders of a majority in aggregate principal amount of the Outstanding Debt Securities of any series will have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee, with respect to the Debt Securities of that series. (Section 512) If an Event of Default with respect to Outstanding Debt Securities of any series shall occur and be continuing, either the Trustee or the Holders of at least 25% in aggregate principal amount of the Outstanding Debt Securities of that series may declare the principal amount (or, if the Debt Securities of that series are Original Issue Discount Securities, such portion of the principal amount as may be specified in the terms of that series) of all Debt Securities of that series to be due and payable immediately; provided, however, that after such acceleration, but before a judgment or decree based on acceleration, the Holders of a majority in aggregate principal amount of the Outstanding Debt Securities of that series may, under certain circumstances, rescind and annul such acceleration if all Events of Default, other than the non-payment of accelerated principal, have been cured or waived as provided in the Indenture. (Section 502) For information as to waiver of defaults, see "Modification and Waiver." No Holder of any Debt Security of any series will have any right to institute any proceeding with respect to the Indenture or for any remedy thereunder, unless such Holder shall have previously given to the Trustee written notice of a continuing Event of Default and unless also the Holders of at least 25% in aggregate principal amount of the Outstanding Debt Securities of that series shall have made written request, and offered reasonable indemnity, to the Trustee to institute such proceeding as trustee, and the Trustee shall not have received from the Holders of a majority in aggregate principal amount of the Outstanding Debt Securities of that series a direction inconsistent with such request and shall have failed to institute such proceeding within 60 days. (Section 507) However, such limitations do not apply to a suit instituted by a Holder of a Debt Security for the enforcement of payment of the principal of or premium (if any) or interest on such Debt Security on or after the respective due dates expressed in such Debt Security. (Section 508) The Company will be required to furnish to the Trustee annually a statement as to the performance by the Company of certain of its obligations under the Indenture and as to any default in such performance. (Section 1004) MERGER AND CONSOLIDATION The Company may not consolidate with or merge into any other corporation or transfer or lease all or substantially all of its assets to any person unless, after giving effect to such transaction, no Event of Default, and no event which, after notice or lapse of time or both, would become an Event of Default, shall have happened and be continuing and the corporation formed by such consolidation or into which the Company is merged or the corporation which acquires or leases all or substantially all of its assets, (i) is organized under the laws of the United States or any state thereof or the District of Columbia and (ii) assumes all the obligations of the Company under the Debt Securities and the Indenture. (Section 801) Unless otherwise disclosed in the applicable Prospectus Supplement, the provisions of the Indenture would not necessarily afford Holders of the Debt Securities protection in the event of a highly leveraged 8 25 transaction, reorganization, restructuring, merger, change of control or similar transaction involving the Company that may adversely affect the Holders. MODIFICATION AND WAIVER Modifications and amendments of the Indenture may be made by the Company and the Trustee with the consent of the Holders of 66 2/3% in aggregate principal amount of the Outstanding Debt Securities of each series affected thereby; provided, however, that no such modification or amendment may, without the consent of the Holder of each Outstanding Debt Security affected thereby, (a) change the Stated Maturity of the principal of, or any installment of interest on, any Debt Security, (b) reduce the principal amount of, or the premium (if any) or the interest on, any Debt Security, (c) reduce the amount of principal of an Original Issue Discount Security payable upon acceleration of the maturity thereof, (d) change the place or currency of payment of principal of, or the premium (if any) or interest on, any Debt Security, (e) impair the right to institute suit for the enforcement of any payment on or with respect to any Debt Security, (f) reduce the above-stated percentage of Outstanding Debt Securities of that series necessary to modify or amend the Indenture, or (g) reduce the percentage of aggregate principal amount of Outstanding Debt Securities of that series necessary for waiver of compliance with certain provisions of the Indenture or for waiver of certain defaults. (Section 902) The Holders of 66 2/3% in aggregate principal amount of the Outstanding Debt Securities of any series may on behalf of the Holders of all Debt Securities of that series waive compliance by the Company with the restrictive covenants contained in Sections 1008 and 1009. (Section 1010) The Holders of a majority in aggregate principal amount of the Outstanding Debt Securities of any series may on behalf of the Holders of all Debt Securities of that series waive any past default under the Indenture, except a default in the payment of principal, premium (if any) or interest. (Section 513) DEFEASANCE Unless otherwise indicated in the applicable Prospectus Supplement with respect to the Debt Securities of a series (i) the Company will be discharged from any and all obligations in respect of the Debt Securities of such series (except for certain obligations to register the transfer or exchange of Debt Securities of such series to replace destroyed, stolen, lost or mutilated Debt Securities of such series, and to maintain Paying Agents and hold moneys for payment in trust) ("legal defeasance") and ABX, AFC, FTZ and WAP will be released from the Guarantees or (ii) the Company will be released from its obligations with respect to the Debt Securities of such series under Sections 801, 1008 and 1009 in the Indenture, and the occurrence of an event described in clause (c) under "Events of Default" above with respect to any defeased covenant and clause (d) under "Events of Default" above shall no longer be an Event of Default with respect to such series ("covenant defeasance") and ABX, AFC, FTZ and WAP will be released from the Guarantees if, in either case, the Company deposits with the Trustee, in trust, money or U.S. Government Obligations that through the payment of interest thereon and principal thereof in accordance with their terms will provide money in an amount sufficient to pay all the principal of and premium (if any) and interest on the Debt Securities of such series on the dates such payments are due in accordance with the terms of the Debt Securities of such series. Such a trust may only be established if, among other things, (a) no Event of Default or event which with notice or lapse of time, or both, would become an Event of Default with respect to the Debt Securities of such series shall have occurred and be continuing on the date of such deposit, (b) no Event of Default described under clause (f) under "Events of Default" above or event which with the giving of notice or lapse of time, or both, would become an Event of Default described under such clause (f) shall have occurred and be continuing at any time during the period ending on the 90th day following such date of deposit, and (c) the Company shall have delivered an Opinion of Counsel to the effect that the Holders of the Debt Securities of such series will not recognize gain or loss for Federal income tax purposes as a result of such deposit or defeasance and will be subject to Federal income tax on the same amount, in the same manner and at the same times as if such defeasance had not occurred. Such opinion, in the case of a legal defeasance, must refer to and be based upon a ruling of the Internal Revenue Service or a change in applicable federal 9 26 income tax law occurring after the date of the Indenture. In the event the Company omits to comply with its remaining obligations under the Indenture after a defeasance of the Indenture with respect to the Debt Securities of any series as described under clause (ii) above and the Debt Securities of such series are declared due and payable because of the occurrence of any undefeased Event of Default, the amount of money and U.S. Government Obligations on deposit with the Trustee may be insufficient to pay amounts due on the Debt Securities of such series at the time of the acceleration resulting from such Event of Default. However, the Company will remain liable in respect of such payments. (Article Thirteen) REGARDING THE TRUSTEE The Trustee maintains an office at 101 Barclay Street, New York, NY 10286, for the transfer and exchange of and the payment of principal of and interest on the Debt Securities. PLAN OF DISTRIBUTION The Company may sell Debt Securities to or through underwriters and also may sell Debt Securities directly to other purchasers or through agents. Such underwriters may include Goldman, Sachs & Co. and BA Securities, Inc., or a group of underwriters represented by firms including Goldman, Sachs & Co. and BA Securities, Inc. Goldman, Sachs & Co. and BA Securities, Inc. may also act as agents. The distribution of the Debt Securities may be effected from time to time in one or more transactions at a fixed price or prices, which may be changed, or at market prices prevailing at the time of sale, at prices related to such prevailing market prices or at negotiated prices. In connection with the sale of Debt Securities, underwriters may receive compensation from the Company or from purchasers of Debt Securities for whom they may act as agents in the form of discounts, concessions or commissions. Underwriters may sell Debt Securities to or through dealers, and such dealers may receive compensation in the form of discounts, concessions or commissions from the underwriters and/or commissions from the purchasers for whom they may act as agents. Underwriters, dealers and agents that participate in the distribution of Debt Securities may be deemed to be underwriters, and any discounts or commissions received by them from the Company and any profit on the resale of Debt Securities by them may be deemed to be underwriting discounts and commissions, under the Securities Act of 1933 (the "Act"). Any such underwriter or agent will be identified, and any such compensation received from the Company will be described, in the Prospectus Supplement. Under agreements which may be entered into by the Company, underwriters and agents who participate in the distribution of Debt Securities may be entitled to indemnification by the Company against certain liabilities, including liabilities under the Act. VALIDITY OF SECURITIES Unless otherwise provided in the Prospectus Supplement, the validity of the Debt Securities will be passed upon for the Company by Riddell, Williams, Bullitt & Walkinshaw, Seattle, Washington, and for any underwriters or agents by Sullivan & Cromwell, New York, New York. EXPERTS The consolidated financial statements of the Company as of December 31, 1994 and 1993, and for each of the three years in the period ended December 31, 1994, have been audited by Deloitte & Touche LLP, independent auditors, as set forth in their report with respect thereto (which report expresses an unqualified opinion and includes an explanatory paragraph referring to the adoption, as of January 1, 1993, of Statements of Financial Accounting Standards No. 109, "Accounting for Income Taxes" and No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions"), and are incorporated by reference herein in reliance upon such report given upon the authority of said firm as experts in accounting and auditing. 10 27 - ------------------------------------------------------ - ------------------------------------------------------ NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES DESCRIBED IN THIS PROSPECTUS SUPPLEMENT OR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS NOR ANY SALE MADE HEREUNDER OR THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN OR THEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE OF SUCH INFORMATION. ------------------ TABLE OF CONTENTS PROSPECTUS SUPPLEMENT
PAGE The Company.......................... S-2 Use of Proceeds...................... S-2 Capitalization....................... S-3 Selected Consolidated Financial Data............................... S-4 Recent Developments.................. S-5 Business............................. S-6 Description of the Notes............. S-11 Underwriting......................... S-13 Validity of Securities............... S-13 Experts.............................. S-14 PROSPECTUS Available Information................ 2 Incorporation of Certain Documents by Reference.......................... 2 The Company.......................... 3 Use of Proceeds...................... 3 Description of Debt Securities....... 3 Plan of Distribution................. 10 Validity of Securities............... 10 Experts.............................. 10 - -------------------------------------------- - --------------------------------------------
- ------------------------------------------------------ - ------------------------------------------------------ $100,000,000 AIRBORNE FREIGHT CORPORATION % NOTES DUE , 2005 ------------------------ PROSPECTUS SUPPLEMENT ------------------------ GOLDMAN, SACHS & CO. BA SECURITIES, INC. - ------------------------------------------------------ - ------------------------------------------------------ 28 PART II INFORMATION NOT REQUIRED IN THE PROSPECTUS ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION* Registration Fee -- Securities and Exchange Commission........... $ 34,483 Rating Agencies' Fees............................................ 77,500 Accountants' Fees and Expenses................................... 25,000 Blue Sky Fees and Expenses....................................... 25,000 Printing......................................................... 30,000 Legal Fees and Expenses.......................................... 40,000 Trustee's Fees and Expenses...................................... 5,000 Miscellaneous Expenses........................................... 3,000 -------- TOTAL.................................................. $239,983 ========
- --------------- * All expenses other than the Securities and Exchange Commission Registration Fee and Rating Agencies' Fees are estimated. ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS The Restated Certificate of Incorporation of the Company provides: TWELFTH. 12.1 No director of the corporation shall be personally liable to the corporation or its stockholders for monetary damages for breach of his or her fiduciary duty as a director; provided, however, that this Article TWELFTH shall not eliminate or limit the liability of a director to the extent provided by applicable law (i) for any breach of the director's duty of loyalty to the corporation of its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the General Corporation Law of the State of Delaware (or successor provision), or (iv) for any transaction from which the director derived an improper personal benefit. No amendment to or repeal of this Article TWELFTH shall apply to or have any effect on the liability or alleged liability of any director of the corporation for or with respect to any acts or omissions of such director occurring prior to such amendment or repeal. The Restated Certificate of Incorporation of the Company requires the Company to indemnify its officers and directors from all expenses and liabilities to the full extent permitted by Delaware law, specifically providing for indemnities to any director, officer or former director or officer or any person who may have served at the Company's request as a director or officer of another corporation (including any heirs, personal representatives and estates of any indemnified parties), against all costs and expenses, including attorneys' fees reasonably incurred by him/her or imposed on him/her in connection with any action, proceeding or investigation, whether civil, administrative or criminal (including any shareholder's action and any other action in which the Company is a party, plaintiff or defendant), in which he/she is or may be made a party or is proceeded against or involved by reason of any action alleged to have been taken by him/her or omitted by him/her in such action, proceeding or investigation, or sums paid in settlement or compromise thereof with the approval of the Board of Directors. The indemnification provisions do not apply unless the indemnified party acted in a manner reasonably believed by him/her to be in or not opposed to the best interests of the corporation, and do not apply if such person is found (1) to be guilty of willful misconduct, bad faith or gross negligence in the performance of his/her duties to the corporation, in a derivative action or one brought by the corporation, or (2) to be guilty of willful misconduct or bad faith, if such action or proceeding is brought by a third party. Expenses incurred in defending such action, proceeding or investigation may be paid by the Company in advance of the final disposition upon receipt of an undertaking by the indemnified party to II-1 29 repay such amount if it shall ultimately be determined that he/she is not entitled to be indemnified by the Company. In addition to the indemnification provision described above, the Company maintains a directors' and officers' liability policy which insures its officers and directors against certain liabilities. ITEM 16. EXHIBITS
EXHIBIT NUMBER DESCRIPTION OF INSTRUMENT ------- ------------------------- (1) Form of Underwriting Agreement. (4)(a) Form of Indenture among Airborne Freight Corporation, ABX Air Inc., Airborne Forwarding Corporation and The Bank of New York, as Trustee (incorporated by reference from the Company's registration statement filed with the Securities and Exchange Commission (File No. 33-54560)). (4)(b) Form of First Supplemental Indenture among the Registrants and The Bank of New York, as Trustee. (4)(c) Form of Debt Security, including Form of Guarantee (included in Exhibits 4(a) and (b)). (5) Opinion of Riddell, Williams, Bullitt & Walkinshaw. (12) Computation of ratio of earnings to fixed charges. (23)(a) Consent of Riddell, Williams, Bullitt & Walkinshaw (included in its opinion filed as Exhibit 5 to this Registration Statement). (23)(b) Consent of Deloitte & Touche LLP. (24) Power of Attorney (included in Part II).* (25) Statement of Eligibility of Trustee.
- --------------- * The Powers of Attorney for Airborne Freight Corporation, ABX Air, Inc. and Airborne Forwarding Corporation have been previously filed. ITEM 17. UNDERTAKINGS Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrants pursuant to the provisions described in Item 15 above, or otherwise, the Registrants have been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. The undersigned registrants hereby undertake: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement: (i) To include any Prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) To reflect in the Prospectus any facts or events arising after the effective date of the Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the Registration Statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range II-2 30 may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement. (iii) To include any material information with respect to the plan of distribution not previously disclosed in the Registration Statement or any material change to such information in the Registration Statement; provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the Registration Statement is on Form S-3, and the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed with the Commission by the Registrant pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the Registration Statement. (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment and each post-effective amendment that contains a form of prospectus shall be deemed to be a new Registration Statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (4) For the purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be a part of this registration statement as of the time it was declared effective. (5) For purposes of determining any liability under the Securities Act of 1933, each filing of the Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of Securities Exchange Act of 1934) that is incorporated by reference in this Registration Statement shall be deemed to be a new registration statement relating to the securities offered herein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. II-3 31 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Amendment No. 1 to the Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Seattle, State of Washington, on September 1, 1995. AIRBORNE FREIGHT CORPORATION By: /s/ ROBERT S. CLINE -------------------------------------- Robert S. Cline Chief Executive Officer Pursuant to the requirements of the Securities Act of 1933, this Amendment No. 1 to the Registration Statement has been signed below by the following persons in the capacities and on the dates indicated below.
SIGNATURE TITLE DATE --------- ----- ---- /s/ ROBERT S. CLINE Chairman of the September 1, 1995 - ----------------------------------------------- Board of Directors and Robert S. Cline Chief Executive Officer (Principal Executive Officer) /s/ ROY C. LILJEBECK* Executive Vice President September 1, 1995 - ----------------------------------------------- and Chief Financial Roy C. Liljebeck Officer (Principal Financial Officer) /s/ LANNY H. MICHAEL* Senior Vice President, September 1, 1995 - ----------------------------------------------- Treasurer and Controller Lanny H. Michael (Principal Accounting Officer) /s/ ROBERT G. BRAZIER* Director September 1, 1995 - ---------------------------------------------- Robert G. Brazier /s/ ANDREW F. BRIMMER Director September 1, 1995 - ----------------------------------------------- Andrew F. Brimmer /s/ JAMES H. CAREY* Director September 1, 1995 - ----------------------------------------------- James H. Carey /s/ ANDREW B. KIM* Director September 1, 1995 - ----------------------------------------------- Andrew B. Kim
II-4 32
SIGNATURE TITLE DATE --------- ----- ---- /s/ HAROLD M. MESSMER, JR.* Director September 1, 1995 - ----------------------------------------------- Harold M. Messmer, Jr. /s/ RICHARD M. ROSENBERG* Director September 1, 1995 - ----------------------------------------------- Richard M. Rosenberg /s/ ANDREW V. SMITH* Director September 1, 1995 - ----------------------------------------------- Andrew V. Smith /s/ WILLIAM SWINDELLS* Director September 1, 1995 - ----------------------------------------------- William Swindells * By: /s/ ROBERT S. CLINE - ----------------------------------------------- Robert S. Cline, Attorney-in-Fact
II-5 33 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Amendment No. 1 to the Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Seattle, State of Washington, on September 1, 1995. ABX AIR, INC. By: /s/ CARL D. DONAWAY* -------------------------------------- Carl D. Donaway President and Chief Executive Officer Pursuant to the requirements of the Securities Act of 1933, this Amendment No. 1 to the Registration Statement has been signed below by the following persons in the capacities and on the dates indicated below.
SIGNATURE TITLE DATE --------- ----- ---- /s/ CARL D. DONAWAY* President and Chief September 1, 1995 - ---------------------------------------------- Executive Officer and Carl D. Donaway Director (Principal Executive Officer) /s/ JOSEPH C. HETE* Senior Vice President, September 1, 1995 - ---------------------------------------------- Administration, Joseph C. Hete Treasurer and Director (Principal Financial and Accounting Officer) /s/ STEPHEN E. DEFROST* Director September 1, 1995 - ---------------------------------------------- Stephen E. DeForest *By: /s/ ROBERT S. CLINE - ---------------------------------------------- Robert S. Cline, Attorney-in-Fact
II-6 34 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Amendment No. 1 to the Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Seattle, State of Washington, on September 1, 1995. AIRBORNE FORWARDING CORPORATION By: /s/ ROBERT S. CLINE ------------------------------------ Robert S. Cline President Pursuant to the requirements of the Securities Act of 1933, this Amendment No. 1 to the Registration Statement has been signed below by the following persons in the capacities and on the dates indicated below.
SIGNATURE TITLE DATE --------- ----- ---- /s/ ROBERT S. CLINE President and Director September 1, 1995 - ----------------------------------------------- (Principal Executive Robert S. Cline Officer) /s/ ROBERT G. BRAZIER* Director September 1, 1995 - ----------------------------------------------- Robert G. Brazier /s/ ROY C. LILJEBECK* Director September 1, 1995 - ----------------------------------------------- Roy C. Liljebeck /s/ LANNY H. MICHAEL* Treasurer September 1, 1995 - ----------------------------------------------- (Principal Financial and Lanny H. Michael Accounting Officer) *By: /s/ ROBERT S. CLINE - ----------------------------------------------- Robert S. Cline, Attorney-in-Fact
II-7 35 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Amendment No. 1 to the Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Seattle, State of Washington, on September 1, 1995. AIRBORNE FTZ, INC. By: /s/ CARL D. DONAWAY --------------------------------- Carl D. Donaway President POWER OF ATTORNEY Each person whose individual signature appears below hereby constitutes and appoints Robert S. Cline as his true and lawful attorney-in-fact with full power of substitution to execute in the name and on behalf of such person, individually and in each capacity stated below, and to file, any and all amendments to this Amendment No. 1 to the Registration Statement, including any and all post-effective amendments. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities and on the dates indicated below.
SIGNATURE TITLE DATE --------- ----- ---- /s/ CARL D. DONAWAY President and Director September 1, 1995 - ----------------------------------------------- (Principal Executive Carl D. Donaway Officer) /s/ JOSEPH C. HETE Vice President September 1, 1995 - ----------------------------------------------- (Principal Financial Joseph C. Hete and Accounting Officer) /s/ STEPHEN E. DEFOREST Director September 1, 1995 - ----------------------------------------------- Stephen E. DeForest
II-8 36 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Amendment No. 1 to the Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Seattle, State of Washington, on September 1, 1995. WILMINGTON AIR PARK, INC. By: /s/ CARL D. DONAWAY --------------------------- Carl D. Donaway President POWER OF ATTORNEY Each person whose individual signature appears below hereby constitutes and appoints Robert S. Cline as his true and lawful attorney-in-fact with full power of substitution to execute in the name and on behalf of such person, individually and in each capacity stated below, and to file, any and all amendments to this Amendment No. 1 to the Registration Statement, including any and all post-effective amendments. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities and on the dates indicated below.
SIGNATURE TITLE DATE --------- ----- ---- President and Director September 1, 1995 /s/ CARL D. DONAWAY (Principal Executive - ----------------------------------------------- Officer) Carl D. Donaway Vice President September 1, 1995 /s/ JOSEPH C. HETE (Principal Financial and - ----------------------------------------------- Accounting Officer) Joseph C. Hete /s/ STEPHEN E. DEFOREST Director September 1, 1995 - ----------------------------------------------- Stephen E. DeForest
II-9 37 EXHIBIT INDEX
SEQUENTIALLY EXHIBIT NUMBERED NUMBER DESCRIPTION OF INSTRUMENT PAGES ------- ------------------------- ------------ (1) Form of Underwriting Agreement . . . . . . . . . . . . . . . . . . . . (4)(a) Form of Indenture among Airborne Freight Corporation, ABX Air Inc., Airborne Forwarding Corporation and The Bank of New York, as Trustee (incorporated by reference from the Company's registration statement filed with the Securities and Exchange Commission (File No. 33-54560)). . . . . . . . . . . . . . . . . . . . (4)(b) Form of First Supplemental Indenture among the Registrants and The Bank of New York, as Trustee . . . . . . . . . . . . . . . . . . . (4)(c) Form of Debt Security, including Form of Guarantee (included in Exhibit 4(a) and (b)) . . . . . . . . . . . . . . . . . . . . . . . . (5) Opinion of Riddell, Williams, Bullitt & Walkinshaw . . . . . . . . . . (12) Computation of ratio of earnings to fixed charges. . . . . . . . . . . (23)(a) Consent of Riddell, Williams, Bullitt & Walkinshaw (included in its opinion filed as Exhibit 5 to this Registration Statement) . . . . . . (23)(b) Consent of Deloitte & Touche LLP . . . . . . . . . . . . . . . . . . . (24) Power of Attorney (included in Part II)*. . . . . . . . . . . . . . . (25) Statement of Eligibility of Trustee . . . . . . . . . . . . . . . . .
- --------- *The powers of attorney for Airborne Freight Corporation, ABX Air, Inc. and Airborne Forward Corporation have been previously filed. EX-1 2 EXHIBIT 1: UNDERWRITING AGREEMENT 1 EXHIBIT 1 Draft of August 31, 1995 AIRBORNE FREIGHT CORPORATION Underwriting Agreement ___________, 1995 Goldman, Sachs & Co., 555 California Street, San Francisco, California 94104. BA Securities, Inc., 555 California Street, San Francisco, California 94104. Dear Sirs: From time to time Airborne Freight Corporation, a Delaware corporation (the "Company"), proposes to enter into one or more Pricing Agreements (each a "Pricing Agreement") in the form of Annex I hereto, with such additions and deletions as the parties thereto may determine, and, subject to the terms and conditions stated herein and therein, to issue and sell to the firms named in Schedule I to the applicable Pricing Agreement (such firms constituting the "Underwriters" with respect to such Pricing Agreement and the securities specified therein) certain of its debt securities (the "Securities") specified in Schedule II to such Pricing Agreement (with respect to such Pricing Agreement, the "Designated Securities"). The Securities will be guaranteed pursuant to guarantees (the "Guarantees") as to payment of principal, premium, if any, and interest, by ABX Air, Inc., a Delaware corporation ("ABX"), Airborne Forwarding Corporation, a Delaware corporation, Wilmington Air Park, Inc., an Ohio corporation ("Wilmington") and Airborne FTZ, Inc., an Ohio corporation, each a wholly-owned direct or indirect subsidiary of the Company (together, the "Guarantors"). The terms and rights of any particular issuance of Designated Securities and the Guarantees shall be as specified in the Pricing Agreement relating thereto and in or pursuant to the indenture (the "Indenture") identified in such Pricing Agreement. 1. Particular sales of Designated Securities may be made from time to time to the Underwriters of such Securities, for whom the firms designated as representatives of the Underwriters of such Securities in the Pricing Agreement relating thereto will act as representatives (the "Representatives"). The term "Representatives" also refers to a single firm acting as 2 sole representative of the Underwriters and to Underwriters who act without any firm being designated as their representative. This Underwriting Agreement shall not be construed as an obligation of the Company or the Guarantors to sell any of the Securities or as an obligation of any of the Underwriters to purchase the Securities. The obligation of the Company to issue and sell any of the Securities and the obligation of any of the Underwriters to purchase any of the Securities shall be evidenced by the Pricing Agreement with respect to the Designated Securities specified therein. Each Pricing Agreement shall specify the aggregate principal amount of such Designated Securities, the initial public offering price of such Designated Securities, the purchase price to the Underwriters of such Designated Securities, the names of the Underwriters of such Designated Securities, the names of the Representatives of such Underwriters and the principal amount of such Designated Securities to be purchased by each Underwriter and shall set forth the date, time and manner of delivery of such Designated Securities and payment therefor. The Pricing Agreement shall also specify (to the extent not set forth in the Indenture and the registration statement and prospectus with respect thereto) the terms of such Designated Securities. A Pricing Agreement shall be in the form of an executed writing (which may be in counterparts), and may be evidenced by an exchange of telegraphic communications or any other rapid transmission device designed to produce a written record of communications transmitted. The obligations of the Underwriters under this Agreement and each Pricing Agreement shall be several and not joint. 2. Each of the Company and the Guarantors jointly and severally represents and warrants to, and agrees with, each of the Underwriters that: (a) A registration statement in respect of the Securities and the Guarantees thereof has been filed with the Securities and Exchange Commission (the "Commission"); such registration statement and any post-effective amendment thereto, each in the form heretofore delivered or to be delivered to the Representatives and, excluding exhibits to such registration statement, but including all documents incorporated by reference in the prospectus contained therein, to the Representatives for each of the other Underwriters, have been declared effective by the Commission in such form; no other document with respect to such registration statement or document incorporated by reference therein has heretofore been filed or transmitted for filing with the Commission (other than prospectuses filed pursuant to Rule 424(b) of the rules and regulations of the Commission under the Securities Act of 1933, as amended (the "Act"), each in the form heretofore delivered to the Representatives); and no stop order suspending the -2- 3 effectiveness of such registration statement has been issued and no proceeding for that purpose has been initiated or threatened by the Commission (any preliminary prospectus included in such registration statement or filed with the Commission pursuant to Rule 424(a) under the Act, is hereinafter called a "Preliminary Prospectus"; the various parts of such registration statement, including all exhibits thereto and the documents incorporated by reference in the prospectus contained in the registration statement at the time such part of the registration statement became effective but excluding Form T-1, each as amended at the time such part of the registration statement became effective, are hereinafter collectively called the "Registration Statement"; the prospectus relating to the Securities and the Guarantees thereof, in the form in which it has most recently been filed, or transmitted for filing, with the Commission on or prior to the date of this Agreement, being hereinafter called the "Prospectus"; any reference herein to any Preliminary Prospectus or the Prospectus shall be deemed to refer to and include the documents incorporated by reference therein pursuant to the applicable form under the Act, as of the date of such Preliminary Prospectus or Prospectus, as the case may be; any reference to any amendment or supplement to any Preliminary Prospectus or the Prospectus shall be deemed to refer to and include any documents filed after the date of such Preliminary Prospectus or Prospectus, as the case may be, under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and incorporated by reference in such Preliminary Prospectus or Prospectus, as the case may be; any reference to any amendment to the Registration Statement shall be deemed to refer to and include any annual report of the Company filed pursuant to Section 13(a) or 15(d) of the Exchange Act after the effective date of the Registration Statement that is incorporated by reference in the Registration Statement; and any reference to the Prospectus as amended or supplemented shall be deemed to refer to the Prospectus as amended or supplemented in relation to the applicable Designated Securities and the Guarantees thereof in the form in which it is filed with the Commission pursuant to Rule 424(b) under the Act in accordance with Section 5(a) hereof, including any documents incorporated by reference therein as of the date of such filing); (b) The documents incorporated by reference in the Prospectus, when they became effective or were filed with the Commission, as the case may be, conformed in all material respects to the requirements of the Act or the Exchange Act, as applicable, and the rules and regulations of the Commission thereunder, and none of such documents contained an untrue statement of a material fact or omitted -3- 4 to state a material fact required to be stated therein or necessary to make the statements therein not misleading; and any further documents so filed and incorporated by reference in the Prospectus or any further amendment or supplement thereto, when such documents become effective or are filed with the Commission, as the case may be, will conform in all material respects to the requirements of the Act or the Exchange Act, as applicable, and the rules and regulations of the Commission thereunder and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; provided, however, that this representation and warranty shall not apply to any statements or omissions made in reliance upon and in conformity with information furnished in writing to the Company by an Underwriter of Designated Securities through the Representatives expressly for use in the Prospectus as amended or supplemented relating to such Securities and the Guarantees thereof; (c) The Registration Statement and the Prospectus conform, and any further amendments or supplements to the Registration Statement or the Prospectus will conform, in all material respects to the requirements of the Act and the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), and the rules and regulations of the Commission thereunder and do not and will not, as of the applicable effective date as to the Registration Statement and any amendment thereto and as of the applicable filing date as to the Prospectus and any amendment or supplement thereto, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; provided, however, that this representation and warranty shall not apply to any statements or omissions made in reliance upon and in conformity with information furnished in writing to the Company by an Underwriter of Designated Securities through the Representatives expressly for use in the Prospectus as amended or supplemented relating to such Securities and the Guarantees thereof; (d) Neither the Company nor any of its subsidiaries has sustained since the date of the latest audited financial statements included or incorporated by reference in the Prospectus any material loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree, otherwise than as set forth or contemplated in the Prospectus; and, since the respective dates as of which information is given in the Registration Statement and the -4- 5 Prospectus, there has not been any change in the capital stock, other than an issuance of shares of Common Stock under the Company's 1979, 1983, 1989 and 1994 Airborne Key Employee Stock Option and Stock Appreciation Rights Plans and the Directors Stock Option Plan (the "Plans"), or long-term debt of the Company or any of its subsidiaries or any decrease in consolidated earnings available to common stockholders or consolidated total assets of the Company and its subsidiaries or any material adverse change, or any development involving a prospective material adverse change, in or affecting the general affairs, management, financial position, shareholders' equity or results of operations of the Company and its subsidiaries, otherwise than as set forth or contemplated in the Prospectus; (e) Wilmington has good and marketable title in fee simple to its facilities in Clinton County, Ohio, and ABX has good and marketable title to all aircraft owned by it, in each case free and clear of all liens, encumbrances and defects except such as are described in the Prospectus or such as do not materially affect the value of such property and do not interfere with the use made and proposed to be made of such property by the Company and its subsidiaries; and all aircraft held under lease by ABX are held by ABX under valid, subsisting and enforceable leases with such exceptions as are not material and do not interfere with the use made and proposed to be made of such aircraft by ABX; (f) Each of the Company and the Guarantors has been duly incorporated and is validly existing as a corporation in good standing under the laws of its jurisdiction of incorporation, with power and authority (corporate and other) to own its properties and conduct its business as described in the Prospectus, and each has been duly qualified as a foreign corporation for the transaction of business and is in good standing under the laws of the states listed in Annex II, Annex III, Annex IV, Annex V and Annex VI, respectively, hereto; neither the Company nor any Guarantor owns any substantial properties or conducts substantial business so as to require any of them to be qualified as a foreign corporation for the transaction of business under the laws of any other jurisdiction or, if any of them does own such substantial properties or conduct such substantial business so as to be so required, is subject to no material liability or disability by reason of the failure to be so qualified; and each subsidiary of the Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of its jurisdiction of incorporation; -5- 6 (g) The Company has an authorized capitalization as set forth in the Prospectus, and all of the issued shares of capital stock of the Company have been duly and validly authorized and issued, are fully paid and non-assessable and conform to the description thereof contained in the Prospectus; and all of the issued shares of capital stock of each of the Guarantors have been duly and validly authorized and issued, are fully paid and non-assessable and are owned directly or indirectly by the Company, free and clear of all liens, encumbrances, equities or claims; (h) The Securities have been duly authorized, and, when Designated Securities are issued and delivered pursuant to this Agreement and the Pricing Agreement with respect to such Designated Securities, such Designated Securities will have been duly executed, authenticated, issued and delivered and will constitute valid and legally binding obligations of the Company entitled to the benefits provided by the Indenture, which will be substantially in the form filed as an exhibit to the Registration Statement; the Indenture has been duly authorized and duly qualified under the Trust Indenture Act and, at the Time of Delivery for such Designated Securities (as defined in Section 4 hereof), the Indenture will constitute a valid and legally binding instrument, enforceable in accordance with its terms, subject, as to enforcement, to bankruptcy, insolvency, reorganization and other laws of general applicability relating to or affecting creditors' rights and to general equity principles; and the Indenture conforms, and the Designated Securities will conform, to the descriptions thereof contained in the Prospectus as amended or supplemented with respect to such Designated Securities; (i) The Guarantees have been duly authorized and, when executed and delivered pursuant to the Indenture, will constitute valid and legally binding obligations of the Guarantors enforceable in accordance with their terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles; (j) The issue and sale of the Securities, the issue of the Guarantees thereof and the compliance by such of the Company and the Guarantors as is a party thereto with all of the provisions of the Securities, the Guarantees thereof, the Indenture, this Agreement and any Pricing Agreement, and the consummation of the transactions herein and therein contemplated will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of -6- 7 trust, loan agreement or other agreement or instrument to which the Company or any of the Guarantors is a party or by which the Company or any of the Guarantors is bound or to which any of the property or assets of the Company or any of the Guarantors is subject, nor will such action result in any violation of the provisions of the Certificate of Incorporation or By-laws of the Company or any of the Guarantors or any statute or any order, rule or regulation of any court or governmental agency or body having jurisdiction over the Company or any of the Guarantors or any of their respective properties; and no consent, approval, authorization, order, registration or qualification of or with any such court or governmental agency or body is required for the issue and sale of the Securities or the issuance of the Guarantees thereof or the consummation by the Company and the Guarantors of the transactions contemplated by this Agreement or any Pricing Agreement or the Indenture, except such as have been, or will have been prior to the Time of Delivery, obtained under the Act and the Trust Indenture Act and such consents, approvals, authorizations, registrations or qualifications as may be required under state securities or Blue Sky laws in connection with the purchase and distribution of the Securities, including the Guarantees thereof, by the Underwriters; (k) Other than as set forth in the Prospectus, there are no legal or governmental proceedings pending to which the Company or any of its subsidiaries is a party or of which any property of the Company or any of its subsidiaries is the subject which, if determined adversely to the Company or any of its subsidiaries, would individually or in the aggregate have a material adverse effect on the consolidated financial position, shareholders' equity or results of operations of the Company and its subsidiaries; and, to the best of the Company's and the Guarantors' knowledge, no such proceedings are threatened or contemplated by governmental authorities or threatened by others; (l) The Company is not and, after giving effect to the offering and sale of the Securities, will not be an "investment company" or an entity "controlled" by an "investment company", as such terms are defined in the Investment Company Act of 1940, as amended (the "Investment Company Act"); (m) The name "Airborne Express" is a trademark of the Company which has been registered with the United States Patent and Trademark Office; the Company has the right to use such trademark in connection with its business as currently and as proposed to be conducted, and the Company -7- 8 has not received any notice that its current and proposed use of such trademark infringes any rights of any other party; (n) Neither the Company nor any of its affiliates does business with the government of Cuba or with any person or affiliate located in Cuba within the meaning of Section 517.075, Florida Statutes; (o) The Company and its subsidiaries hold all licenses, certificates and permits of and from the Federal Aviation Administration (including, without limitation, certificates issued pursuant to Sections 418 and 401 of the Federal Aviation Act of 1958, as amended, and Part 121 of the Federal Aviation Regulations), the Interstate Commerce Commission and all other civil authorities which are required to operate its and their businesses as currently conducted and as proposed to be conducted; such licenses are valid and in good standing; and the Company and its subsidiaries are not aware of any dispute with any licensing or regulatory authority having jurisdiction over its or their businesses; (p) The statements set forth in the Prospectus and the Prospectus as amended or supplemented, as applicable, under the captions "Description of Debt Securities" and "Description of the Debentures", insofar as they purport to constitute a summary of the terms of the Securities, and under the captions "Plan of Distribution" and "Underwriting", insofar as they purport to describe the provisions of the laws and documents referred to therein, are accurate, complete and fair; and (q) Deloitte & Touche, who have certified certain financial statements of the Company and its subsidiaries, are independent public accountants as required by the Act and the rules and regulations of the Commission thereunder. 3. Upon the execution of the Pricing Agreement applicable to any Designated Securities and authorization by the Representatives of the release of such Designated Securities, the several Underwriters propose to offer such Designated Securities for sale upon the terms and conditions set forth in the Prospectus as amended or supplemented. 4. Designated Securities to be purchased by each Underwriter pursuant to the Pricing Agreement relating thereto, in the form specified in such Pricing Agreement, and in such authorized denominations and registered in such names as the Representatives may request upon at least forty-eight hours' prior notice to the Company, shall be delivered by or on behalf -8- 9 of the Company to the Representatives for the account of such Underwriter, against payment by such Underwriter or on its behalf of the purchase price therefor by certified or official bank check or checks, payable to the order of the Company in the funds specified in such Pricing Agreement, all in the manner and at the place and time and date specified in such Pricing Agreement or at such other place and time and date as the Representatives and the Company may agree upon in writing, such time and date being herein called the "Time of Delivery" for such Securities. 5. The Company and the Guarantors jointly and severally agree with each of the Underwriters of any Designated Securities: (a) To prepare the Prospectus as amended or supplemented in relation to the applicable Designated Securities and the Guarantees thereof in a form approved by the Representatives and to file such Prospectus pursuant to Rule 424(b) under the Act not later than the Commission's close of business on the second business day following the execution and delivery of the Pricing Agreement relating to the applicable Designated Securities and the Guarantees thereof or, if applicable, such earlier time as may be required by Rule 424(b); to make no further amendment or any supplement to the Registration Statement or Prospectus as amended or supplemented after the date of the Pricing Agreement relating to such Securities and the Guarantees thereof and prior to the Time of Delivery for such Securities and the Guarantees thereof which shall be disapproved by the Representatives for such Securities and Guarantees thereof promptly after reasonable notice thereof; to advise the Representatives promptly of any such amendment or supplement after such Time of Delivery and furnish the Representatives with copies thereof; to file promptly all reports and any definitive proxy or information statements required to be filed by the Company with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act for so long as the delivery of a prospectus is required in connection with the offering or sale of such Securities and the Guarantees thereof, and during such same period to advise the Representatives, promptly after it receives notice thereof, of the time when any amendment to the Registration Statement has been filed or becomes effective or any supplement to the Prospectus or any amended Prospectus has been filed with the Commission, of the issuance by the Commission of any stop order or of any order preventing or suspending the use of any prospectus relating to the Securities and the Guarantees thereof, of the suspension of the qualification of such Securities or such Guarantees thereon for offering or sale in any jurisdiction, of the initiation or threatening of any proceeding for any -9- 10 such purpose, or of any request by the Commission for the amending or supplementing of the Registration Statement or Prospectus or for additional information; and, in the event of the issuance of any such stop order or of any such order preventing or suspending the use of any prospectus relating to the Securities or the Guarantees or suspending any such qualification, to use promptly its best efforts to obtain its withdrawal; (b) Promptly from time to time to take such action as the Representatives may reasonably request to qualify the Securities and the Guarantees thereof for offering and sale under the securities laws of such jurisdictions as the Representatives may request and to comply with such laws so as to permit the continuance of sales and dealings therein in such jurisdictions for as long as may be necessary to complete the distribution of such Securities, provided that in connection therewith neither the Company nor any of the Guarantors shall be required to qualify as a foreign corporation or to file a general consent to service of process in any jurisdiction; (c) Prior to 10:00 a.m. New York City time, on the New York business day next succeeding the date of the Pricing Agreement for such Designated Securities and from time to time, to furnish the Underwriters with copies of the Prospectus in New York City as amended or supplemented with respect to such Designated Securities in such quantities as the Representatives may reasonably request, and, if the delivery of a prospectus is required at any time in connection with the offering or sale of such Designated Securities and the Guarantees thereof and if at such time any event shall have occurred as a result of which the Prospectus as then amended or supplemented would include an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made when such Prospectus is delivered, not misleading, or, if for any other reason it shall be necessary during such same period to amend or supplement the Prospectus or to file under the Exchange Act any document incorporated by reference in the Prospectus in order to comply with the Act, the Exchange Act or the Trust Indenture Act, to notify the Representatives and upon their request to file such document and to prepare and furnish without charge to each Underwriter and to any dealer in securities as many copies as the Representatives may from time to time reasonably request of an amended Prospectus or a supplement to the Prospectus which will correct such statement or omission or effect such compliance; -10- 11 (d) To make generally available to its security holders as soon as practicable, but in any event not later than eighteen months after the effective date of the Registration Statement (as defined in Rule 158(c)), an earning statement of the Company and its subsidiaries (which need not be audited) complying with Section 11(a) of the Act and the rules and regulations of the Commission thereunder (including, at the option of the Company, Rule 158); and (e) During the period beginning from the date of the Pricing Agreement for such Designated Securities and continuing to and including the later of (i) the termination of trading restrictions for such Designated Securities, as notified to the Company by the Representatives and (ii) the Time of Delivery for such Designated Securities, not to offer, sell, contract to sell or otherwise dispose of any debt securities of the Company which mature more than one year after such Time of Delivery and which are substantially similar to such Designated Securities, without the prior written consent of the Representatives. 6. The Company and the Guarantors jointly and severally covenant and agree with the several Underwriters that the Company and the Guarantors will pay or cause to be paid the following: (i) the fees, disbursements and expenses of the Company's and the Guarantors' counsel and accountants in connection with the registration of the Securities and the Guarantees thereof under the Act and all other expenses in connection with the preparation, printing and filing of the Registration Statement, any Preliminary Prospectus and the Prospectus and amendments and supplements thereto and the mailing and delivering of copies thereof to the Underwriters and dealers; (ii) the cost of printing or producing any Agreement among Underwriters, this Agreement, any Pricing Agreement, any Indenture, any Blue Sky and legal investment surveys and any other documents in connection with the offering, purchase, sale and delivery of the Securities and the Guarantees thereof; (iii) all expenses in connection with the qualification of the Securities and the Guarantees thereof for offering and sale under state securities laws as provided in Section 5(b) hereof, including the fees and disbursements of counsel for the Underwriters in connection with such qualification and in connection with the Blue Sky and any legal investment surveys; (iv) any fees charged by securities rating services for rating the Securities and the Guarantees thereof; (v) any filing fees incident to any required review by the National Association of Securities Dealers, Inc. of the terms of the sale of the Securities and the Guarantees thereof; (vi) the cost of preparing the Securities and the Guarantees thereof; (vii) the fees and expenses of any Trustee and any agent of any Trustee and the fees and disbursements of counsel for any Trustee in connection with -11- 12 any Indenture, the Securities and the Guarantees thereof; and (viii) all other costs and expenses incident to the performance of its obligations hereunder which are not otherwise specifically provided for in this Section. It is understood, however, that, except as provided in this Section, Section 8 and Section 11 hereof, the Underwriters will pay all of their own costs and expenses, including the fees of their counsel, transfer taxes on resale of any of the Securities and the Guarantees thereof by them, and any advertising expenses connected with any offers they may make. 7. The obligations of the Underwriters of any Designated Securities under the Pricing Agreement relating to such Designated Securities and the Guarantees thereof shall be subject, in the discretion of the Representatives, to the condition that all representations and warranties and other statements of the Company and the Guarantors in or incorporated by reference in the Pricing Agreement relating to such Designated Securities are, at and as of the Time of Delivery for such Designated Securities, true and correct, the condition that the Company and the Guarantors shall have performed all of its obligations hereunder theretofore to be performed, and the following additional conditions: (a) The Prospectus as amended or supplemented in relation to the applicable Designated Securities and the Guarantees thereof shall have been filed with the Commission pursuant to Rule 424(b) within the applicable time period prescribed for such filing by the rules and regulations under the Act and in accordance with Section 5(a) hereof; no stop order suspending the effectiveness of the Registration Statement or any part thereof shall have been issued and no proceeding for that purpose shall have been initiated or threatened by the Commission; and all requests for additional information on the part of the Commission shall have been complied with to the Representatives' reasonable satisfaction; (b) Counsel for the Underwriters shall have furnished to the Representatives such opinion or opinions (a final draft of each such opinion is attached as Annex VII(a) hereto), dated the Time of Delivery for such Designated Securities, with respect to the incorporation of the Company, the validity of the Indenture, the Designated Securities, the Registration Statement, the Prospectus as amended or supplemented and other related matters as the Representatives may reasonably request, and such counsel shall have received such papers and information as they may reasonably request to enable them to pass upon such matters; -12- 13 (c) Counsel for the Company and the Guarantors satisfactory to the Representatives shall have furnished to the Representatives their written opinion (a final draft of each such opinion is attached as Annex VII(b) hereto), dated the Time of Delivery for such Designated Securities, in form and substance satisfactory to the Representatives, to the effect that: (i) The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of Delaware, with power and authority to own its properties and conduct its business as described in the Prospectus as amended or supplemented; (ii) The Company has an authorized capitalization as set forth in the Prospectus as amended or supplemented, and all of the issued shares of capital stock (including the preferred stock purchase rights described in the Prospectus as amended or supplemented) of the Company have been duly and validly authorized and issued and are fully paid and non- assessable; (iii) Each of the Company and the Guarantors has been duly qualified as a foreign corporation for the transaction of business and is in good standing under the laws of the states listed in Annex II, Annex III Annex IV, Annex V and Annex VI, respectively, hereto (such counsel being entitled to rely in respect of the opinion in this clause upon opinions of local counsel and in respect of matters of fact upon certificates of officers of the Company and each of the Guarantors, provided that such counsel shall state that they believe that both you and they are justified in relying upon such opinions and certificates); (iv) Each of the Guarantors has been duly incorporated and is validly existing as a corporation in good standing under the laws of its jurisdiction of incorporation; and all of the issued shares of capital stock of the Guarantors have been duly and validly authorized and issued, are fully paid and non-assessable, and are owned directly or indirectly by the Company, free and clear of all liens, encumbrances, equities or claims (such counsel being entitled to rely in respect of the opinion in this clause upon opinions of local counsel and in respect of matters of fact upon certificates of officers of the Company or its subsidiaries, provided that such counsel shall state that they believe that both the Representatives and they are justified in relying upon such opinions and certificates); -13- 14 (v) Wilmington has good and marketable title in fee simple to its facilities in Clinton County, Ohio free and clear of all liens, encumbrances and defects except such as are described in the Prospectus as amended or supplemented or such as do not materially affect the value of such property and do not interfere with the use made and proposed to be made of such property by the Company and its subsidiaries (in giving the opinion in this clause, such counsel may state that no examination of record titles for the purpose of such opinion has been made, and that they are relying upon a general review of the titles of the Company and its subsidiaries, upon opinions of local counsel and abstracts, reports and policies of title companies rendered or issued at or subsequent to the time of acquisition of such property by the Company or its subsidiaries, upon opinions of counsel to the lessors of such property and, in respect of matters of fact, upon certificates of officers of the Company or its subsidiaries, provided that such counsel shall state that they believe that both the Representatives and they are justified in relying upon such opinions, abstracts, reports, policies and certificates); (vi) To the best of such counsel's knowledge and other than as set forth in the Prospectus as amended or supplemented, there are no legal or governmental proceedings pending to which the Company or any of its subsidiaries is a party or of which any property of the Company or any of its subsidiaries is the subject which, if determined adversely to the Company or any of its subsidiaries, would individually or in the aggregate have a material adverse effect on the consolidated financial position, shareholders' equity or results of operations of the Company and its subsidiaries; and, to the best of such counsel's knowledge, no such proceedings are threatened or contemplated by governmental authorities or threatened by others; (vii) This Agreement and the Pricing Agreement with respect to the Designated Securities have been duly authorized, executed and delivered by the Company and the Guarantors; (viii) The Designated Securities and the Guarantees thereof have been duly authorized, executed, authenticated, issued and delivered and constitute valid and legally binding obligations of the Company and the Guarantors, respectively, entitled to the benefits provided by the Indenture; and the Designated -14- 15 Securities, the Guarantees thereof and the Indenture conform to the descriptions thereof in the Prospectus as amended or supplemented; (ix) The Indenture has been duly authorized, executed and delivered by the parties thereto and constitutes a valid and legally binding instrument, enforceable in accordance with its terms, subject, as to enforcement, to bankruptcy, insolvency, reorganization and other laws of general applicability relating to or affecting creditors' rights and to general equity principles; and the Indenture has been duly qualified under the Trust Indenture Act; (x) The issue and sale of the Designated Securities, the issuance of the Guarantees and the compliance by such of the Company and the Guarantors as is a party thereto with all of the provisions of the Designated Securities, the Guarantees, the Indenture, this Agreement and the Pricing Agreement with respect to the Designated Securities and the Guarantees thereof and the consummation of the transactions herein and therein contemplated will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument known to such counsel to which the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries is bound or to which any of the property or assets of the Company or any of its subsidiaries is subject, nor will such action result in any violation of the provisions of the Certificate of Incorporation or By-laws of the Company or any of its subsidiaries or any statute or any order, rule or regulation known to such counsel of any court or governmental agency or body having jurisdiction over the Company or any of its subsidiaries or any of their properties; (xi) No consent, approval, authorization, order, registration or qualification of or with any such court or governmental agency or body is required for the issue and sale of the Designated Securities, the issuance of the Guarantees thereof or the consummation by the Company and the Guarantors of the transactions contemplated by this Agreement or such Pricing Agreement or the Indenture, except such as have been obtained under the Act and the Trust Indenture Act and such consents, approvals, authorizations, registrations or qualifications as may be required under state securities or Blue Sky laws in connection with the -15- 16 purchase and distribution of the Designated Securities and the Guarantees thereof by the Underwriters; provided, however, that in rendering the opinion set forth in this clause (xi), such counsel may state that, to the extent that such opinion relates to the laws of any jurisdiction other than the states of Washington and Delaware and the federal laws of the United States, or any regulations promulgated thereunder, such opinion is to the best knowledge of such counsel after reasonable investigation; (xii) The documents incorporated by reference in the Prospectus as amended or supplemented (other than the financial statements and related schedules therein, as to which such counsel need express no opinion), when they became effective or were filed with the Commission, as the case may be, complied as to form in all material respects with the requirements of the Act or the Exchange Act and the rules and regulations of the Commission thereunder; and they have no reason to believe that any of such documents, when such documents became effective or were so filed, as the case may be, contained, in the case of a registration statement which became effective under the Act, an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading; or in the case of other documents which were filed under the Act or the Exchange Act with the Commission, an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made when such documents were so filed, not misleading; and (xiii) The Registration Statement and the Prospectus as amended or supplemented and any further amendments and supplements thereto made by the Company prior to the Time of Delivery for the Designated Securities (other than the financial statements and related schedules therein, as to which such counsel need express no opinion) comply as to form in all material respects with the requirements of the Act and the Trust Indenture Act and the rules and regulations thereunder; they have no reason to believe that, as of its effective date, the Registration Statement or any further amendment thereto made by the Company or the Guarantors prior to the Time of Delivery (other than the financial statements and related schedules therein, as to which such counsel need express no opinion) contained an untrue statement of a material fact or -16- 17 omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading or that, as of its date, the Prospectus as amended or supplemented or any further amendment or supplement thereto made by the Company prior to the Time of Delivery (other than the financial statements and related schedules therein, as to which such counsel need express no opinion) contained an untrue statement of a material fact or omitted to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading or that, as of the Time of Delivery, either the Registration Statement or the Prospectus as amended or supplemented or any further amendment or supplement thereto made by the Company prior to the Time of Delivery (other than the financial statements and related schedules therein, as to which such counsel need express no opinion) contains an untrue statement of a material fact or omits to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; and they do not know of any amendment to the Registration Statement required to be filed or of any contracts or other documents of a character required to be filed as an exhibit to the Registration Statement or required to be incorporated by reference into the Prospectus as amended or supplemented or required to be described in the Registration Statement or the Prospectus as amended or supplemented which are not filed or incorporated by reference or described as required; (xiv) The name "Airborne Express" is a trademark of the Company which has been duly registered with the U.S. Patent and Trademark Office; (xv) ABX is a duly certified cargo carrier with a certificate issued and in full force and effect under Sections 401 and 418 of the Federal Aviation Act of 1958, as amended, and is the holder of a valid and effective operating certificate issued pursuant to Part 121 of the Federal Aviation Regulations, and while such counsel has not conducted any investigation as to the continued eligibility of ABX to hold such certificates under such act and is not expressing any opinion as to such eligibility, no facts have come to the attention of such counsel that have caused such counsel to conclude that ABX is ineligible to hold such certificates by virtue of the ownership of in excess of 25% of the Company's outstanding Common Stock by -17- 18 persons who are not "citizens of the United States" within the meaning of such Act; and (xvi) Such counsel is not aware of any additional material regulatory authority, permits or licenses beyond those held by the Company and its subsidiaries which are required to enable the Company and its subsidiaries legally to carry on its business as described in the Prospectus as amended or supplemented, provided that such counsel need express no opinion as to aircraft regulatory authority permits or licenses. In rendering such opinion, such counsel may rely as to matters of Ohio law upon the opinion of Vorys, Sater, Seymour & Pease, counsel for the Guarantors, provided such counsel states that they believe the Representatives and they are entitled to rely on such opinion. (d) Counsel for ABX satisfactory to the Representatives, shall have furnished to the Representatives their written opinion (a final draft of each such opinion is attached as Annex VII(c) hereto), dated the Time of Delivery, in form and substance satisfactory to the Representatives, to the effect that ABX has such licenses, certificates and permits from the Federal Aviation Administration as are necessary to own its properties and conduct its business in the manner described in the Prospectus; such counsel has no reason to believe that the Federal Aviation Administration is considering modifying, suspending or revoking any such licenses, certificates or permits; to the best of such counsel's knowledge, ABX is in compliance in all material respects with the provisions of such licenses, certificates and permits; and the matters set forth in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1994, as heretofore amended, and the Prospectus as amended or supplemented relating to aircraft regulatory authorities and regulations are accurate and fairly summarize the principal regulatory considerations therein described. (e) On the date of the Pricing Agreement for such Designated Securities at a time prior to the execution of the Pricing Agreement with respect to such Designated Securities and the Guarantees thereof and at the Time of Delivery for such Designated Securities and the Guarantees thereof, the independent accountants of the Company who have certified the financial statements of the Company and its subsidiaries included or incorporated by reference in the Registration Statement shall have furnished to the Representatives a letter, dated the effective date of the Registration Statement or the date of the most recent report -18- 19 filed with the Commission containing financial statements and incorporated by reference in the Registration Statement, if the date of such report is later than such effective date, and a letter dated such Time of Delivery, respectively, to the effect set forth in Annex VIII hereto, and with respect to such letter dated such Time of Delivery, as to such other matters as the Representatives may reasonably request and in form and substance satisfactory to the Representatives; (f)(i) Neither the Company nor any of its subsidiaries shall have sustained since the date of the latest audited financial statements included or incorporated by reference in the Prospectus as amended prior to the date of the Pricing Agreement relating to the Designated Securities any loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree, otherwise than as set forth or contemplated in the Prospectus as amended prior to the date of the Pricing Agreement relating to the Designated Securities, and (ii) since the respective dates as of which information is given in the Prospectus as amended prior to the date of the Pricing Agreement relating to the Designated Securities, there shall not have been any change in the capital stock, other than an issuance of shares of Common Stock upon exercise of employee stock options under the Plans, or long-term debt of the Company or any of its subsidiaries or any decrease in consolidated earnings available to common shareholders or consolidated total assets of the Company and its subsidiaries or any change, or any development involving a prospective change, in or affecting the general affairs, management, financial position, shareholders' equity or results of operations of the Company and its subsidiaries, otherwise than as set forth or contemplated in the Prospectus as amended prior to the date of the Pricing Agreement relating to the Designated Securities, the effect of which, in any such case described in Clause (i) or (ii), is in the judgment of the Representatives so material and adverse as to make it impracticable or inadvisable to proceed with the public offering or the delivery of the Designated Securities and the Guarantees thereof on the terms and in the manner contemplated in the Prospectus as first amended or supplemented relating to the Designated Securities; (g) On or after the date of the Pricing Agreement relating to the Designated Securities (i) no downgrading shall have occurred in the rating accorded the Company's debt securities by any "nationally recognized statistical rating organization," as that term is defined by the -19- 20 Commission for purposes of Rule 436(g)(2) under the Act and (ii) no such organization shall have publicly announced that it has under surveillance or review, with possible negative implications, its rating of any of the Company's debt securities; (h) On or after the date of the Pricing Agreement relating to the Designated Securities and the Guarantees thereof there shall not have occurred any of the following: (i) a suspension or material limitation in trading in securities generally on the New York Stock Exchange; (ii) a suspension or material limitation in trading in the Company's securities on the New York Stock Exchange; (iii) a general moratorium on commercial banking activities in New York declared by either Federal or New York State authorities; or (iv) the outbreak or escalation of hostilities involving the United States or the declaration by the United States, of a national emergency or war if the effect of any such event specified in this Clause (iv) in the judgment of the Representatives makes it impracticable or inadvisable to proceed with the public offering or the delivery of the Designated Securities and the Guarantees thereof on the terms and in the manner contemplated in the Prospectus as first amended or supplemented relating to the Designated Securities; (i) The Company shall have complied with the provisions of Section 5(c) hereof with respect to the furnishing of prospectuses on the New York business day next succeeding the date of the Pricing Agreement relating to such Designated Securities; and (j) The Company and each of the Guarantors shall have furnished or caused to be furnished to the Representatives at the Time of Delivery for the Designated Securities a certificate or certificates of officers of the Company and each of the Guarantors, respectively, satisfactory to the Representatives as to the accuracy of the representations and warranties of the Company and each of the Guarantors, respectively, herein at and as of such Time of Delivery, as to the performance by the Company and each of the Guarantors, respectively, of all of their respective obligations hereunder to be performed at or prior to such Time of Delivery, as to the matters set forth in subsections (a) and (f) of this Section and as to such other matters as the Representatives may reasonably request. 8. (a) Each of the Company and the Guarantors jointly and severally will indemnify and hold harmless each Underwriter against any losses, claims, damages or liabilities, joint or several, to which such Underwriter may -20- 21 become subject, under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in any Preliminary Prospectus, any preliminary prospectus supplement, the Registration Statement, the Prospectus as amended or supplemented and any other prospectus relating to the Securities or the Guarantees thereof, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse each Underwriter for any legal or other expenses reasonably incurred by such Underwriter in connection with investigating or defending any such action or claim as such expenses are incurred; provided, however, that neither the Company nor the Guarantors shall be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in any Preliminary Prospectus, any preliminary prospectus supplement, the Registration Statement, the Prospectus as amended or supplemented and any other prospectus relating to the Securities or the Guarantees thereof, or any such amendment or supplement in reliance upon and in conformity with written information furnished to the Company by any Underwriter of Designated Securities or the Guarantees thereof through the Representatives expressly for use in the Prospectus as amended or supplemented relating to such Securities or the Guarantees thereof. (b) Each Underwriter will indemnify and hold harmless the Company and the Guarantors against any losses, claims, damages or liabilities to which the Company or the Guarantors may become subject, under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in any Preliminary Prospectus, any preliminary prospectus supplement, the Registration Statement, the Prospectus as amended or supplemented and any other prospectus relating to the Securities or the Guarantees thereof, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in any Preliminary Prospectus, any preliminary prospectus supplement, the Registration Statement, the Prospectus as -21- 22 amended or supplemented and any other prospectus relating to the Securities or the Guarantees thereof, or any such amendment or supplement in reliance upon and in conformity with written information furnished to the Company by such Underwriter through the Representatives expressly for use therein; and will reimburse the Company and the Guarantors for any legal or other expenses reasonably incurred by the Company or the Guarantors, respectively, in connection with investigating or defending any such action or claim as such expenses are incurred. (c) Promptly after receipt by an indemnified party under subsection (a) or (b) above of notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party under such subsection, notify the indemnifying party in writing of the commencement thereof; but the omission so to notify the indemnifying party shall not relieve it from any liability which it may have to any indemnified party otherwise than under such subsection. In case any such action shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it shall wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel satisfactory to such indemnified party (who shall not, except with the consent of the indemnified party, be counsel to the indemnifying party), and, after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party shall not be liable to such indemnified party under such subsection for any legal expenses of other counsel or any other expenses, in each case subsequently incurred by such indemnified party, in connection with the defense thereof other than reasonable costs of investigation. No indemnifying party shall, without the written consent of the indemnified party, effect the settlement or compromise of, or consent to the entry of any judgment with respect to, any pending or threatened action or claim in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified party is an actual or potential party to such action or claim) unless such settlement, compromise or judgment (i) includes an unconditional release of the indemnified party from all liability arising out of such action or claim and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act, by or on behalf of any indemnified party. -22- 23 (d) If the indemnification provided for in this Section 8 is unavailable to or insufficient to hold harmless an indemnified party under subsection (a) or (b) above in respect of any losses, claims, damages or liabilities (or actions in respect thereof) referred to therein, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (or actions in respect thereof) in such proportion as is appropriate to reflect the relative benefits received by the Company and the Guarantors on the one hand and the Underwriters of the Designated Securities on the other from the offering of the Designated Securities and the Guarantees thereof to which such loss, claim, damage or liability (or action in respect thereof) relates. If, however, the allocation provided by the immediately preceding sentence is not permitted by applicable law or if the indemnified party failed to give the notice required under subsection (c) above, then each indemnifying party shall contribute to such amount paid or payable by such indemnified party in such proportion as is appropriate to reflect not only such relative benefits but also the relative fault of the Company and the Guarantors on the one hand and the Underwriters of the Designated Securities on the other in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities (or actions in respect thereof), as well as any other relevant equitable considerations. The relative benefits received by the Company and the Guarantors on the one hand and such Underwriters on the other shall be deemed to be in the same proportion as the total net proceeds from such offering (before deducting expenses) received by the Company bear to the total underwriting discounts and commissions received by such Underwriters. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company and the Guarantors on the one hand or such Underwriters on the other and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company, the Guarantors and the Underwriters agree that it would not be just and equitable if contribution pursuant to this subsection (d) were determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to above in this subsection (d). The amount paid or payable by an indemnified party as a result of the losses, claims, damages or liabilities (or actions in respect thereof) referred to above in this subsection (d) shall be deemed to include any -23- 24 legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this subsection (d), no Underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the applicable Designated Securities underwritten by it and distributed to the public were offered to the public exceeds the amount of any damages which such Underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The obligations of the Underwriters of Designated Securities in this subsection (d) to contribute are several in proportion to their respective underwriting obligations with respect to such Securities and not joint. (e) The obligations of the Company under this Section 8 shall be in addition to any liability which the Company and the Guarantors may otherwise have and shall extend, upon the same terms and conditions, to each person, if any, who controls any Underwriter within the meaning of the Act; and the obligations of the Underwriters under this Section 8 shall be in addition to any liability which the respective Underwriters may otherwise have and shall extend, upon the same terms and conditions, to each officer and director of the Company and the Guarantors and to each person, if any, who controls the Company or the Guarantors within the meaning of the Act. 9. (a) If any Underwriter shall default in its obligation to purchase the Designated Securities which it has agreed to purchase under the Pricing Agreement relating to such Designated Securities, the Representatives may in their discretion arrange for themselves or another party or other parties to purchase such Designated Securities on the terms contained herein. If within thirty-six hours after such default by any Underwriter the Representatives do not arrange for the purchase of such Designated Securities, then the Company shall be entitled to a further period of thirty-six hours within which to procure another party or other parties satisfactory to the Representatives to purchase such Designated Securities on such terms. In the event that, within the respective prescribed period, the Representatives notify the Company that they have so arranged for the purchase of such Designated Securities, or the Company notifies the Representatives that it has so arranged for the purchase of such Designated Securities, the Representatives or the Company shall have the right to -24- 25 postpone the Time of Delivery for such Designated Securities for a period of not more than seven days, in order to effect whatever changes may thereby be made necessary in the Registration Statement or the Prospectus as amended or supplemented, or in any other documents or arrangements, and the Company agrees to file promptly any amendments or supplements to the Registration Statement or the Prospectus which in the opinion of the Representatives may thereby be made necessary. The term "Underwriter" as used in this Agreement shall include any person substituted under this Section with like effect as if such person had originally been a party to the Pricing Agreement with respect to such Designated Securities. (b) If, after giving effect to any arrangements for the purchase of the Designated Securities of a defaulting Underwriter or Underwriters by the Representatives and the Company as provided in subsection (a) above, the aggregate principal amount of such Designated Securities which remains unpurchased does not exceed one-eleventh of the aggregate principal amount of the Designated Securities, then the Company shall have the right to require each non-defaulting Underwriter to purchase the principal amount of Designated Securities which such Underwriter agreed to purchase under the Pricing Agreement relating to such Designated Securities and, in addition, to require each non-defaulting Underwriter to purchase its pro rata share (based on the principal amount of Designated Securities which such Underwriter agreed to purchase under such Pricing Agreement) of the Designated Securities of such defaulting Underwriter or Underwriters for which such arrangements have not been made; but nothing herein shall relieve a defaulting Underwriter from liability for its default. (c) If, after giving effect to any arrangements for the purchase of the Designated Securities of a defaulting Underwriter or Underwriters by the Representatives and the Company as provided in subsection (a) above, the aggregate principal amount of Designated Securities which remains unpurchased exceeds one-eleventh of the aggregate principal amount of the Designated Securities, as referred to in subsection (b) above, or if the Company shall not exercise the right described in subsection (b) above to require non-defaulting Underwriters to purchase Designated Securities of a defaulting Underwriter or Underwriters, then the Pricing Agreement relating to such Designated Securities shall thereupon terminate, without liability on the part of any non-defaulting Underwriter or the Company, except for the expenses to be borne by the Company and the Underwriters as provided in Section 6 hereof and the indemnity and contribution agreements in Section 8 hereof; but nothing -25- 26 herein shall relieve a defaulting Underwriter from liability for its default. 10. The respective indemnities, agreements, representations, warranties and other statements of the Company and the Guarantors and the several Underwriters, as set forth in this Agreement or made by or on behalf of them, respectively, pursuant to this Agreement, shall remain in full force and effect, regardless of any investigation (or any statement as to the results thereof) made by or on behalf of any Underwriter or any controlling person of any Underwriter, the Company or the Guarantors, or any officer or director or controlling person of the Company or the Guarantors, and shall survive delivery of and payment for the Securities. 11. If any Pricing Agreement shall be terminated pursuant to Section 9 hereof, the Company and the Guarantors shall not then be under any liability to any Underwriter with respect to the Designated Securities covered by such Pricing Agreement except as provided in Sections 6 and 8 hereof; but, if for any other reason Designated Securities are not delivered by or on behalf of the Company as provided herein, the Company and the Guarantors will reimburse the Underwriters through the Representatives for all out-of-pocket expenses approved in writing by the Representatives, including fees and disbursements of counsel, reasonably incurred by the Underwriters in making preparations for the purchase, sale and delivery of such Designated Securities, but the Company and the Guarantors shall then be under no further liability to any Underwriter with respect to such Designated Securities except as provided in Sections 6 and 8 hereof. 12. In all dealings hereunder, the Representatives of the Underwriters of Designated Securities and the Guarantees thereof shall act on behalf of each of such Underwriters, and the parties hereto shall be entitled to act and rely upon any statement, request, notice or agreement on behalf of any Underwriter made or given by such Representatives jointly or by such of the Representatives, if any, as may be designated for such purpose in the Pricing Agreement. All statements, requests, notices and agreements hereunder shall be in writing, and if to the Underwriters shall be delivered or sent by mail, telex or facsimile transmission to the address of the Representatives as set forth in the Pricing Agreement; if to the Company, shall be delivered or sent by mail, telex or facsimile transmission to the address of the Company set forth in the Registration Statement: Attention: Secretary; and if to any of the Guarantors, shall be delivered or sent by mail, telex or facsimile transmission to the address of such Guarantor set forth in the Registration Statement: Attention: Secretary; -26- 27 provided, however, that any notice to an Underwriter pursuant to Section 8(c) hereof shall be delivered or sent by mail, telex or facsimile transmission to such Underwriter at its address set forth in its Underwriters' Questionnaire, or telex constituting such Questionnaire, which address will be supplied to the Company by the Representatives upon request. Any such statements, requests, notices or agreements shall take effect upon receipt thereof. 13. This Agreement and each Pricing Agreement shall be binding upon, and inure solely to the benefit of, the Underwriters, the Company, the Guarantors and, to the extent provided in Sections 8 and 10 hereof, the officers and directors of the Company and the Guarantors and each person who controls the Company, the Guarantors or any Underwriter, and their respective heirs, executors, administrators, successors and assigns, and no other person shall acquire or have any right under or by virtue of this Agreement or any such Pricing Agreement. No purchaser of any of the Securities from any Underwriter shall be deemed a successor or assign by reason merely of such purchase. 14. Time shall be of the essence of each Pricing Agreement. As used herein, "business day" shall mean any day when the Commission's office in Washington, D.C. is open for business. 15. THIS AGREEMENT AND EACH PRICING AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. 16. This Agreement and each Pricing Agreement may be executed by any one or more of the parties hereto and thereto in any number of counterparts, each of which shall be deemed to be an original, but all such respective counterparts shall together constitute one and the same instrument. -27- 28 If the foregoing is in accordance with your understanding, please sign and return to us four counterparts hereof. Very truly yours, AIRBORNE FREIGHT CORPORATION By:_________________________ Name: Title: ABX AIR, INC. By:_________________________ Name: Title: AIRBORNE FORWARDING CORPORATION By:_________________________ Name: Title: WILMINGTON AIR PARK, INC. By:_________________________ Name: Title: AIRBORNE FTZ, INC. By:_________________________ Name: Title: -28- 29 Accepted as of the date hereof: Goldman, Sachs & Co. BA Securities, Inc. By:__________________________ (Goldman, Sachs & Co.) -29- 30 ANNEX I PRICING AGREEMENT Goldman, Sachs & Co., 555 California Street, San Francisco, California 94104. BA Securities, Inc., 555 California Street, San Francisco, California 94104. _________________ Dear Sirs: Airborne Freight Corporation, a Delaware corporation (the "Company"), proposes, subject to the terms and conditions stated herein and in the Underwriting Agreement, dated __________, 1995 (the "Underwriting Agreement"), between the Company, ABX Air, Inc. ("ABX"), Airborne Forwarding Corporation ("AFC"), Wilmington Air Park, Inc. ("Wilmington"), and Airborne FTZ, Inc. ("FTZ") (together, the "Guarantors") on the one hand and Goldman, Sachs & Co. and BA Securities, Inc. on the other hand, to issue and sell to the Underwriters named in Schedule I hereto (the "Underwriters") the Securities specified in Schedule II hereto (the "Designated Securities"). Each of the provisions of the Underwriting Agreement is incorporated herein by reference in its entirety, and shall be deemed to be a part of this Agreement to the same extent as if such provisions had been set forth in full herein; and each of the representations and warranties set forth therein shall be deemed to have been made at and as of the date of this Pricing Agreement, except that each representation and warranty which refers to the Prospectus in Section 2 of the Underwriting Agreement shall be deemed to be a representation or warranty as of the date of the Underwriting Agreement in relation to the Prospectus (as therein defined), and also a representation and warranty as of the date of this Pricing Agreement in relation to the Prospectus as amended or supplemented relating to the Designated Securities which are the subject of this Pricing Agreement. Each reference to the Representatives herein and in the provisions of the Underwriting Agreement so incorporated by reference shall be deemed to refer to you. Unless otherwise defined herein, terms defined in the Underwriting Agreement are used herein as therein defined. The Representatives designated to act on behalf of the Representatives and on behalf of each of the Underwriters of the Designated Securities pursuant to Section 12 of the Underwriting Agreement and the address of the Representatives referred to in such Section 12 are set forth at the end of Schedule II hereto. 31 An amendment to the Registration Statement, or a supplement to the Prospectus, as the case may be, relating to the Designated Securities, in the form heretofore delivered to you is now proposed to be filed with the Commission. Subject to the terms and conditions set forth herein and in the Underwriting Agreement incorporated herein by reference, the Company and the Guarantors agree to issue and sell to each of the Underwriters, and each of the Underwriters agrees, severally and not jointly, to purchase from the Company, at the time and place and at the purchase price to the Underwriters set forth in Schedule II hereto, the principal amount of Designated Securities set forth opposite the name of such Underwriter in Schedule I hereto. If the foregoing is in accordance with your understanding, please sign and return to us one for the issuers and each of the Representatives plus one for each counsel counterparts hereof, and upon acceptance hereof by you, on behalf of each of the Underwriters, this letter and such acceptance hereof, including the provisions of the Underwriting Agreement incorporated herein by reference, shall constitute a binding agreement between each of the Underwriters and the Company. It is understood that your acceptance of this letter on behalf of each of the Underwriters is or will be pursuant to the authority I-2 32 set forth in a form of Agreement among Underwriters, the form of which shall be submitted to the Company for examination upon request, but without warranty on the part of the Representatives as to the authority of the signers thereof. Very truly yours, AIRBORNE FREIGHT CORPORATION By: ________________________ Name: Title: ABX AIR, INC. By: ________________________ Name: Title: AIRBORNE FORWARDING CORPORATION By: ________________________ Name: Title: WILMINGTON AIR PARK, INC. By: ________________________ Name: Title: AIRBORNE FTZ, INC. By: ________________________ Name: Title: I-3 33 Accepted as of the date hereof: Goldman, Sachs & Co. BA Securities, Inc. By:__________________________ (Goldman, Sachs & Co.) I-4 34 SCHEDULE I
Principal Amount of Designated Securities to be Purchased --------- Underwriter ----------- Goldman, Sachs & Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ BA Securities, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . --------- Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ =========
35 ANNEX II AIRBORNE FREIGHT CORPORATION States Where Qualified to do Business and in Good Standing Alaska Kansas Ohio California Kentucky Oklahoma Colorado Maryland Oregon Connecticut Massachusetts Pennsylvania Florida Michigan Puerto Rico Georgia Missouri Tennessee Hawaii New Jersey Texas Illinois New York Washington Indiana North Carolina 36 ANNEX III ABX AIR, INC. States Where Qualified to do Business and in Good Standing Colorado Texas Maryland Washington Ohio 37 ANNEX IV AIRBORNE FORWARDING CORPORATION States Where Qualified to do Business and in Good Standing California Illinois 38 ANNEX V WILMINGTON AIR PARK, INC. States Where Qualified to do Business and in Good Standing 39 ANNEX VI AIRBORNE FTZ, INC. States Where Qualified to do Business and in Good Standing 40 SCHEDULE II TITLE OF DESIGNATED SECURITIES: [___%] [Floating Rate] [Zero Coupon] [Notes] [Debentures] due AGGREGATE PRINCIPAL AMOUNT: [$] PRICE TO PUBLIC: ___% of the principal amount of the Designated Securities, plus accrued interest from ___________ to ___________ [and accrued amortization, if any, from ___________ to ___________] PURCHASE PRICE BY UNDERWRITERS: ___% of the principal amount of the Designated Securities, plus accrued interest from __________ to __________ [and accrued amortization, if any, from __________ to __________] FORM OF DESIGNATED SECURITIES: [Definitive form to be made available for checking and packaging at least twenty-four hours prior to the Time of Delivery at the office of [The Depository Trust Company or its designated custodian] [the Representatives]] [Book-entry only form represented by one or more global securities deposited with The Depository Trust Company ("DTC") or its designated custodian, to be made available for checking by the Representatives at least twenty-four hours prior to the Time of Delivery at the office of DTC.] SPECIFIED FUNDS FOR PAYMENT OF PURCHASE PRICE: [[New York] Clearing House (next day) funds] [Same day funds] INDENTURE: Indenture dated ___________, 1995, among the Company ABX Air, Inc., Airborne Forwarding Corporation and The Bank of New York, as Trustee, as amended by [______________]. MATURITY: ______________, INTEREST RATE: [___%] [Zero Coupon] [See Floating Rate Provisions] 41 INTEREST PAYMENT DATES: [months and dates, commencing _________, 19__] REDEMPTION PROVISIONS: [No provisions for redemption] [The Designated Securities may be redeemed, otherwise than through the sinking fund, in whole or in part at the option of the Company, in the amount of [$]______ or an integral multiple thereof, [on or after _________, ____ at the following redemption prices (expressed in percentages of principal amount). If [redeemed on or before ____________, ___%, and if] redeemed during the 12-month period beginning ____________, REDEMPTION YEAR PRICE ---- ---------- and thereafter at 100% of their principal amount, together in each case with accrued interest to the redemption date.] [on any interest payment date falling on or after ___________, ____, at the election of the Company, at a redemption price equal to the principal amount thereof, plus accrued interest to the date of redemption.] [Other possible redemption provisions, such as mandatory redemption upon occurrence of certain events or redemption for changes in tax law.] [Restriction on refunding] SINKING FUND PROVISIONS: [No sinking fund provisions] [The Designated Securities are entitled to the benefit of a sinking fund to retire [$]______ principal amount of Designated Securities on _______________ in each of the years _____ through _____ at 100% of their principal amount plus accrued interest][, together with [cumulative] [noncumulative] redemptions at the option of the Company to retire an additional [$]_______ principal amount of Designated Securities in the years _____ through _____ at 100% of their principal amount plus accrued interest]. [If Securities are extendable debt securities, insert -- II-2 42 EXTENDABLE PROVISIONS: Designated Securities are repayable on ___________, ____ [insert date and years], at the option of the holder, at their principal amount with accrued interest. The initial annual interest rate will be ___%, and thereafter the annual interest rate will be adjusted on ____________, ____ and ________ to a rate not less than ___% of the effective annual interest rate on U.S. Treasury obligations with ______-year maturities as of the [insert date 15 days prior to maturity date] prior to such [insert maturity date].] [If Designated Securities are floating rate debt securities, insert -- FLOATING RATE PROVISIONS: Initial annual interest rate will be ___% through ____________ [and thereafter will be adjusted [monthly] [on each ____________, ____________, ____________, and ____________] [to an annual rate of ___% above the average rate for ______- year [month] [securities] [certificates of deposit] issued by _______________ and _______________ [insert names of banks].] [and the annual interest rate [thereafter] [from ____________ through ____________] will be the interest yield equivalent to the weekly average per annum market discount rate for _______-month Treasury bills plus ___% of Interest Differential (the excess, if any, of (i) the then current weekly average per annum secondary market yield for _____-month certificates of deposit over (ii) the then current interest yield equivalent of the weekly average per annum market discount rate for _____-month Treasury bills); [from ____________ and thereafter the rate will be the then current interest yield equivalent plus ___% of Interest Differential].] DEFEASANCE PROVISIONS: TIME OF DELIVERY: CLOSING LOCATION: NAMES AND ADDRESSES OF REPRESENTATIVES: II-3 43 Designated Representatives: Address for Notices, etc.: [OTHER TERMS] II-4 44 ANNEX VIII Pursuant to Section 7(e) of the Underwriting Agreement, the accountants shall furnish letters to the Underwriters to the effect that: (i) They are independent certified public accountants with respect to the Company and its subsidiaries within the meaning of the Act and the applicable published rules and regulations thereunder; (ii) In their opinion, the financial statements and any supplementary financial information and schedules audited (and, if applicable, prospective financial statements and/or pro forma financial information examined) by them and included or incorporated by reference in the Registration Statement or the Prospectus comply as to form in all material respects with the applicable accounting requirements of the Act or the Exchange Act, as applicable, and the related published rules and regulations thereunder; and, if applicable, they have made a review in accordance with standards established by the American Institute of Certified Public Accountants of the consolidated interim financial statements, selected financial data, pro forma financial information, prospective financial statements and/or condensed financial statements derived from audited financial statements of the Company for the periods specified in such letter, as indicated in their reports thereon, copies of which have been furnished to the representatives of the Underwriters (the "Representatives"); (iii) The unaudited selected financial information with respect to the consolidated results of operations and financial position of the Company for the five most recent fiscal years included in the Prospectus and included or incorporated by reference in Item 6 of the Company's Annual Report on Form 10-K for the most recent fiscal year agrees with the corresponding amounts (after restatement where applicable) in the audited consolidated financial statements for five such fiscal years which were included or incorporated by reference in the Company's Annual Reports on Form 10-K for such fiscal years: (iv) On the basis of limited procedures, not constituting an audit in accordance with generally accepted auditing standards, consisting of a reading of the unaudited financial statements and other information referred to below, a reading of the latest available interim financial statements of the Company and its subsidiaries, inspection of the minute books of the Company and its subsidiaries since the date of the latest audited financial statements included or incorporated by reference in the Prospectus, inquiries of officials of the Company and its subsidiaries 45 responsible for financial and accounting matters and such other inquiries and procedures as may be specified in such letter, nothing came to their attention that caused them to believe that: (A) the unaudited condensed consolidated statements of income, consolidated balance sheets and consolidated statements of cash flows included or incorporated by reference in the Company's Quarterly Reports on Form 10-Q incorporated by reference in the Prospectus do not comply as to form in all material respects with the applicable accounting requirements of the Exchange Act as it applies to Form 10-Q and the related published rules and regulations thereunder or are not in conformity with generally accepted accounting principles applied on a basis substantially consistent with the basis for the audited consolidated statements of income, consolidated balance sheets and consolidated statements of cash flows included or incorporated by reference in the Company's Annual Report on Form 10-K for the most recent fiscal year; (B) any other unaudited income statement data and balance sheet items included in the Prospectus do not agree with the corresponding items in the unaudited consolidated financial statements from which such data and items were derived, and any such unaudited data and items were not determined on a basis substantially consistent with the basis for the corresponding amounts in the audited consolidated financial statements included or incorporated by reference in the Company's Annual Report on Form 10-K for the most recent fiscal year; (C) the unaudited financial statements which were not included in the Prospectus but from which were derived the unaudited condensed financial statements referred to in Clause (A) and any unaudited income statement data and balance sheet items included in the Prospectus and referred to in Clause (B) were not determined on a basis substantially consistent with the basis for the audited financial statements included or incorporated by reference in the Company's Annual Report on Form 10-K for the most recent fiscal year; (D) any unaudited pro forma consolidated condensed financial statements included or incorporated by reference in the Prospectus do not comply as to form in all material respects with the applicable accounting requirements of the Act and the published rules and regulations thereunder or the pro forma adjustments VIII-2 46 have not been properly applied to the historical amounts in the compilation of those statements; (E) as of a specified date not more than five days prior to the date of such letter, there have been any changes in the consolidated capital stock (other than issuances of capital stock upon exercise of options and stock appreciation rights, upon earn-outs of performance shares and upon conversions of convertible securities, in each case which were outstanding on the date of the latest balance sheet included or incorporated by reference in the Prospectus) or any increase in the consolidated long-term debt of the Company and its subsidiaries, or any decreases in consolidated net current assets or net assets or other items specified by the Representatives, or any increases in any items specified by the Representatives, in each case as compared with amounts shown in the latest balance sheet included or incorporated by reference in the Prospectus, except in each case for changes, increases or decreases which the Prospectus discloses have occurred or may occur or which are described in such letter; and (F) for the period from the date of the latest financial statements included or incorporated by reference in the Prospectus to the specified date referred to in Clause (E) there were any decreases in consolidated net revenues or operating profit or the total or per share amounts of consolidated net income or other items specified by the Representatives, or any increases in any items specified by the Representatives, in each case as compared with the comparable period of the preceding year and with any other period of corresponding length specified by the Representatives, except in each case for increases or decreases which the Prospectus discloses have occurred or may occur or which are described in such letter; and (v) In addition to the audit referred to in their report(s) included or incorporated by reference in the Prospectus and the limited procedures, inspection of minutes books, inquiries and other procedures referred to in paragraphs (iii) and (iv) above, they have carried out certain specified procedures, not constituting an audit in accordance with generally accepted auditing standards, with respect to certain amounts, percentages and financial information specified by the Representatives which are derived from the general accounting records of the Company and its subsidiaries, which appear in the Prospectus (excluding documents incorporated by reference), or in VIII-3 47 Part II of, or in exhibits and schedules to, the Registration Statement specified by the Representatives or in documents incorporated by reference in the Prospectus specified by the Representatives, and have compared certain of such amounts, percentages and financial information with the accounting records of the Company and its subsidiaries and have found them to be in agreement. All references in this Annex VI to the Prospectus shall be deemed to refer to the Prospectus (including the documents incorporated by reference therein) as defined in the Underwriting Agreement as of the date of the letter delivered on the date of the Pricing Agreement for purposes of such letter and to the Prospectus as amended or supplemented (including the documents incorporated by reference therein) in relation to the applicable Designated Securities for purposes of the letter delivered at the Time of Delivery for such Designated Securities. VIII-4 EX-4.B 3 EXHIBIT 4(B): SUPPLEMENTAL INDENTURE 1 EXHIBIT 4(b) Draft of August 30, 1995 FIRST SUPPLEMENTAL INDENTURE, dated as of September , 1995, among AIRBORNE FREIGHT CORPORATION, a corporation duly organized and existing under the laws of the State of Delaware (herein called the "Company"), having its principal office at 3101 Western Avenue, Seattle, Washington 98111, ABX AIR, INC., a corporation duly organized and existing under the laws of the State of Delaware (herein called "ABX"), having its principal office at 145 Hunter Drive, Wilmington, Ohio 45177, AIRBORNE FORWARDING CORPORATION, a corporation duly organized under the laws of the State of Delaware (herein called "Airborne Forwarding"), having its principal office at 3101 Western Avenue, Seattle, Washington 98111, WILMINGTON AIR PARK, INC., a corporation duly organized and existing under the laws of the State of Ohio (herein called "Wilmington Air Park"), having its principal office at 145 Hunter Drive, Wilmington, Ohio 45177, AIRBORNE FTZ, INC., a corporation duly organized under the laws of the State of Ohio (herein called "Airborne FTZ"), having its principal office at 145 Hunter Drive, Wilmington, Ohio 45177, (ABX, Airborne Forwarding, Wilmington Air Park and Airborne FTZ, being herein collectively referred to as the "Guarantors" and each being individually referred to as a "Guarantor") and THE BANK OF NEW YORK, a New York banking corporation, as Trustee (herein called the "Trustee"), supplementing that certain Indenture, dated as of December 15, 1992 (the "Indenture"), among the Company, ABX, Airborne Forwarding and the Trustee. RECITALS OF THE COMPANY AND THE GUARANTORS The Company, ABX and Airborne Forwarding have heretofore executed and delivered to the Trustee the Indenture providing for the issuance from time to time of its unsecured debentures, notes or other evidences of indebtedness (herein and therein called the "Securities"), to be issued in one or more series as in the Indenture provided. Section 201 of the Indenture permits the form of the Securities of any series to be established pursuant to an indenture supplemental to the Indenture. Section 301 of the Indenture permits the terms of the Securities of any series to be established pursuant to an indenture supplemental to the Indenture. Section 901 of the Indenture provides, among other things, that, without the consent of any Holders, the 2 Company, when authorized by a Board Resolution of the Company, the Guarantors, when authorized by respective Board Resolutions of the Guarantors, and the Trustee, at any time and from time to time, may enter into one or more indentures supplemental thereto, in form satisfactory to the Trustee, to (I) establish the form or terms of the Securities of any series as permitted by Sections 201 and 301 of the Indenture and (II) add to, change or eliminate any of the provisions of the Indenture in respect of one or more series of Securities, provided that any such addition, change or elimination (A) shall neither (i) apply to any Security of any series created prior to the execution of such supplemental indenture and entitled to the benefit of such provision nor (ii) modify the rights of the Holder of any such Security with respect to such provision or (B) shall become effective only when there is no such Security Outstanding. The Company and the Guarantors, pursuant to the foregoing authority, propose in and by this First Supplemental Indenture to establish the terms and form of the Securities of a new series denominated its "___% Notes Due _____, 2005" (the "Designated Securities") and to supplement the Indenture in certain respects with respect to the Designated Securities of such series, including the addition of Wilmington Air Park and Airborne FTZ as Guarantors. All things necessary to make this First Supplemental Indenture a valid agreement of the Company and the Guarantors, and a valid supplement to the Indenture, in accordance with its terms, have been done. NOW, THEREFORE, THIS FIRST SUPPLEMENTAL INDENTURE WITNESSETH: For and in consideration of the premises and the purchase of the Designated Securities by the Holders thereof, it is mutually agreed, for the equal and proportionate benefit of all Holders of the Designated Securities, as follows: ARTICLE ONE Definitions and Other Provisions of General Application Section 101. Definitions. (a) For all purposes of this First Supplemental Indenture, except as otherwise expressly provided or unless the context otherwise requires: 3 (1) the terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the singular; (2) capitalized terms used herein without definition shall have the meanings specified in the Indenture; (3) unless the context otherwise requires, any reference to an "Article" or a "Section" refers to an Article or a Section, as the case may be, of this First Supplemental Indenture; and (4) the words "herein," "hereof" and "hereunder" and other words of similar import refer to this First Supplemental Indenture as a whole and not to any particular Article, Section or other subdivision. (b) The Indenture is hereby amended solely with respect to the Designated Securities by amending and restating in its entirety the definition of "Guarantors" set forth in Section 101 of the Indenture to read as follows: "Guarantors" means ABX Air, Inc., a corporation duly organized and existing under the laws of the State of Delaware, Airborne Forwarding Corporation, a corporation duly organized under the laws of the State of Delaware, Wilmington Air Park, Inc., a corporation duly organized and existing under the laws of the State of Ohio, and Airborne FTZ, Inc., a corporation duly organized under the laws of the State of Ohio, except in the case any of such Persons has been released from its Guarantees hereunder in accordance with Section 1404 hereof. ARTICLE TWO Security Form Section 201. Form of Securities of this Series. The Designated Securities shall be in the form attached hereto as Exhibit A. -3- 4 ARTICLE THREE The Series of Securities Section 301. Title and Terms. There is hereby created a series of Securities designated as the "_____% Notes Due __________, 2005" of the Company. The stated maturity of the Designated Securities shall be __________, 2005, on which date all principal of the Designated Securities shall become payable. The Designated Securities shall bear interest at the rate of _____% per annum from __________, 1995. Interest on the Designated Securities shall be payable semi-annually on __________ and __________ of each year, commencing __________, 1996, until the principal thereof is made available for payment. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will be paid to the Persons in whose names the Designated Securities are registered at the close of business on the Regular Record Date for such interest, which shall be the __________ or __________ (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date. The aggregate principal amount of Designated Securities which may be authenticated and delivered under this First Supplemental Indenture shall be limited to $100,000,000, except for Securities authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Securities of the same series pursuant to Section 304, 305, 306, 906 or 1107 of the Indenture and except for any Securities which, pursuant to Section 303 of the Indenture, are deemed never to have been authenticated and delivered hereunder and under the Indenture. The principal of and interest on the Designated Securities shall be payable at the office or agency of the Company in the Borough of Manhattan, the City of New York, maintained for such purpose, and at any other office or agency maintained by the Company for such purpose. The Designated Securities shall be subject to both Defeasance and Covenant Defeasance as provided in Article Thirteen of the Indenture. The Designated Securities shall be issued in the form of one or more Global Securities, and The Depository Trust Company shall act as Depositary in respect thereof. -4- 5 The Designated Securities may not be redeemed and shall not be subject to any sinking fund. ARTICLE FOUR Obligation of Guarantors Section 401. Guarantee by Wilmington Air Park and Airborne FTZ. By execution and delivery hereof, Wilmington Air Park and Airborne FTZ each expressly agrees, solely with respect to the Designated Securities, to become a Guarantor under the Indenture and to be bound by all terms and provisions therein made applicable thereby to Wilmington Air Park and Airborne FTZ, including without limitation those set forth in Article Fourteen of the Indenture providing for the joint and several and unconditional guarantees of the Designated Securities by the Guarantors. ARTICLE FIVE Miscellaneous Section 501. Miscellaneous. (a) The Trustee accepts the trusts created by the Indenture, as supplemented by this First Supplemental Indenture, and agrees to perform the same upon the terms and conditions of the Indenture, as supplemented hereby. (b) The recitals contained herein shall be taken as statements of the Company or the Guarantors, as applicable, and the Trustee assumes no responsibility for their correctness. (c) Each of the Company, ABX, Airborne Forwarding and the Trustee makes and reaffirms as of the date of execution of this First Supplemental Indenture all of its respective representations, covenants and agreements set forth in the Indenture as supplemented hereby. (d) Each of Wilmington Air Park and Airborne FTZ makes, as of the date of execution of this First Supplemental Indenture, all of the respective representations, covenants and agreements set forth by the Guarantors in the Indenture as supplemented hereby. -5- 6 (e) All covenants and agreements in this First Supplemental Indenture by the Company, the Guarantors or the Trustee shall bind its respective successors and assigns, whether so expressed or not. (f) Except as otherwise provided herein, the Indenture shall remain in full force and effect in accordance with its terms. (g) This First Supplemental Indenture shall have effect only with respect to the Designated Securities. (h) This First Supplemental Indenture shall be governed by and construed in accordance with the law of the State of New York, but without regard to principles of conflicts of laws. (i) This First Supplemental Indenture shall be deemed to be incorporated in, and made a part of, the Indenture; and the Indenture, as supplemented hereby, shall be read, taken and construed as one and the same instrument. This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. IN WITNESS WHEREOF, the parties hereto have caused this First Supplemental Indenture to be duly executed, and their respective corporate seals to be hereunto affixed, all as of the day and year first above written. [SEAL] AIRBORNE FREIGHT CORPORATION By________________________________ Attest: _____________________________ -6- 7 [SEAL] ABX AIR, INC. By____________________________ Attest: _______________________________ [SEAL] AIRBORNE FORWARDING CORPORATION By___________________________ Attest: ____________________________ [SEAL] WILMINGTON AIR PARK, INC. By___________________________ Attest: __________________________ -7- 8 [SEAL] AIRBORNE FTZ, INC. By___________________________ Attest: _____________________________ [SEAL] THE BANK OF NEW YORK By__________________________ Attest: ___________________________ -8- 9 State of Washington ) ) ss.: King County ) On the _____ day of __________, 1995, before me personally came ____________________, to me known, who, being by me duly sworn, did depose and say that he is _______________ of Airborne Freight Corporation, one of the corporations described in and which executed the foregoing instrument; that he knows the seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by authority of the Board of Directors of said corporation; and that he signed his name thereto by like authority. _________________________ State of Washington ) ) ss.: King County ) On the _____ day of __________, 1995, before me personally came ____________________, to me known, who, being by me duly sworn, did depose and say that he is _______________ of ABX Air, Inc., one of the corporations described in and which executed the foregoing instrument; that he knows the seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by authority of the Board of Directors of said corporation; and that he signed his name thereto by like authority. _________________________ -9- 10 State of Washington ) ) ss.: King County ) On the _____ day of __________, 1995, before me personally came ____________________, to me known, who, being by me duly sworn, did depose and say that he is _______________ of Airborne Forwarding Corporation, one of the corporations described in and which executed the foregoing instrument; that he knows the seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by authority of the Board of Directors of said corporation; and that he signed his name thereto by like authority. _________________________ State of _________ ) ) ss.: County of ________ ) On the _____ day of __________, 1995, before me personally came ____________________, to me known, who, being by me duly sworn, did depose and say that he is _______________ of Wilmington Air Park, Inc., one of the corporations described in and which executed the foregoing instrument; that he knows the seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by authority of the Board of Directors of said corporation; and that he signed his name thereto by like authority. _________________________ -10- 11 State of _________ ) ) ss.: County of ________ ) On the _____ day of __________, 1995, before me personally came ____________________, to me known, who, being by me duly sworn, did depose and say that he is _______________ of Airborne FTZ, Inc., one of the corporations described in and which executed the foregoing instrument; that he knows the seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by authority of the Board of Directors of said corporation; and that he signed his name thereto by like authority. _________________________ State of New York ) ) ss.: City of New York ) On the _____ day of __________, 1995, before me personally came ____________________, to me known, who, being by me duly sworn, did depose and say that he is _______________ of The Bank of New York, one of the corporations described in and which executed the foregoing instrument; that he knows the seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by authority of the Board of Directors of said corporation; and that he signed his name thereto by like authority. _________________________ -11- 12 Draft of August 30, 1995 Exhibit A [Insert for Securities issued in the form of one or more Global Securities --]: THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS SECURITY MAY NOT BE TRANSFERRED TO, OR REGISTERED OR EXCHANGED FOR SECURITIES REGISTERED IN THE NAME OF, ANY PERSON OTHER THAN THE DEPOSITARY OR A NOMINEE THEREOF AND NO SUCH TRANSFER MAY BE REGISTERED, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE. EVERY SECURITY AUTHENTICATED AND DELIVERED UPON REGISTRATION OF TRANSFER OF, OR IN EXCHANGE FOR OR IN LIEU OF, THIS SECURITY SHALL BE A GLOBAL SECURITY SUBJECT TO THE FOREGOING, EXCEPT IN SUCH LIMITED CIRCUMSTANCES. AIRBORNE FREIGHT CORPORATION ____________________________________________ No. ......... $ ........ CUSIP No. Airborne Freight Corporation, a corporation duly organized and existing under the laws of Delaware (herein called the "Company", which term includes any successor Person under the Indenture hereinafter referred to), for value received, hereby promises to pay to _______________________________________________, or registered assigns, the principal sum of ______________________________________ Dollars on ________________________________________________________, and to pay interest thereon from _________, 1995 or from the most recent Interest Payment Date to which interest has been paid or duly provided for, semi-annually on ____________ and ____________ in each year, commencing _________, 1996, at the rate of ....% per annum, until the principal hereof is paid or made available for payment. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in such Indenture, be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest, which shall be the _______ or _______ (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date. Any such interest not so punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of Securities of this 13 series not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities of this series may be listed, and upon such notice as may be required by such exchange, all as more fully provided in said Indenture. Payment of the principal of (and premium, if any) and interest on this Security will be made at the office or agency of the Company maintained for that purpose in the Borough of Manhattan, the City of New York, in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts; provided, however, that at the option of the Company payment of interest may be made by check mailed to the address of the Person entitled thereto as such address shall appear in the Security Register. Reference is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place. Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed under its corporate seal. AIRBORNE FREIGHT CORPORATION By__________________________ Attest: ___________________________ This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture. Dated: The Bank of New York, As Trustee By___________________________ Authorized Signatory -A-2- 14 This Security is one of a duly authorized issue of securities of the Company (herein called the "Securities"), issued and to be issued in one or more series under an Indenture, dated as of December 15, 1992, as amended (herein called the "Indenture"), among the Company, ABX Air, Inc. ("ABX"), Airborne Forwarding Corporation ("Airborne Forwarding"), Wilmington Air Park, Inc. ("Wilmington Air Park") and Airborne FTZ, Inc. ("Airborne FTZ") (ABX, Airborne Forarding, Wilmington Air Park and Airborne FTZ being herein collectively referred to as the "Guarantors" and each being individually referred to as a "Guarantor"), and The Bank of New York, as Trustee (herein referred to as the "Trustee", which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties, obligations and immunities thereunder of the Company, the Guarantors and the Trustee and the Holders of the Securities and of the terms upon which the Securities and Guarantees endorsed thereon are, and are to be, authenticated and delivered. Except as otherwise specified as contemplated by Section 301 of the Indenture, interest, if any, on the Securities of each series shall be computed on the basis of a 360-day year of twelve 30-day months. This Security is one of the series designated on the face hereof, limited in aggregate principal amount to $100,000,000. The Indenture contains provisions for defeasance at any time of (1) the entire indebtedness of this Security or (2) certain restrictive covenants and Events of Default with respect to this Security, in each case upon compliance with certain conditions set forth in the Indenture. If an Event of Default with respect to Securities of this series shall occur and be continuing, the principal of the Securities of this series may be declared due and payable in the manner and with the effect provided in the Indenture. The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the Guarantors and the rights of the Holders of the Securities of each series to be affected under the Indenture at any time by the Company, the Guarantors and the Trustee with the consent of the Holders of 66 2/3% in principal amount of the Securities at the time Outstanding of each series to be affected. The Indenture also contains provisions permitting the Holders of specified percentages in principal amount of the Securities of each series at the time Outstanding, on -A-3- 15 behalf of the Holders of all Securities of such series, to waive compliance by the Company or the Guarantors with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security. As provided in and subject to the provisions of the Indenture, the Holder of this Security shall not have the right to institute any proceeding with respect to the Indenture or for the appointment of a receiver or trustee or for any other remedy thereunder, unless such Holder shall have previously given the Trustee written notice of a continuing Event of Default with respect to the Securities of this series, the Holders of not less than 25% in principal amount of the Securities of this series at the time Outstanding shall have made written request to the Trustee to institute proceedings in respect of such Event of Default as Trustee and offered the Trustee reasonable indemnity and the Trustee shall not have received from the Holders of a majority in principal amount of Securities of this series at the time Outstanding a direction inconsistent with such request, and shall have failed to institute any such proceeding, for 60 days after receipt of such notice, request and offer of indemnity. The foregoing shall not apply to any suit instituted by the Holder of this Security for the enforcement of any payment of principal hereof or any premium or interest hereon on or after the respective due dates expressed herein. No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and any premium and interest on this Security at the times, place and rate, and in the coin or currency, herein prescribed. As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Security is registerable in the Security Register, upon surrender of this Security for registration of transfer at the office or agency of the Company in any place where the principal of and any premium and interest on this Security are payable, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and -A-4- 16 thereupon one or more new Securities of this series and of like tenor, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees. The Securities of this series are issuable only in registered form without coupons in denominations of $1,000 and any integral multiple thereof. As provided in the Indenture and subject to certain limitations therein set forth, Securities of this series are exchangeable for a like aggregate principal amount of Securities of this series and of like tenor of a different authorized denomination, as requested by the Holder surrendering the same. No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. Prior to due presentment of this Security for registration of transfer, the Company, the Guarantors, the Trustee and any agent of the Company, the Guarantors or the Trustee may treat the Person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security be overdue, and neither the Company, the Guarantors, the Trustee nor any such agent shall be affected by notice to the contrary. All terms used in this Security which are defined in the Indenture shall have the meanings assigned to them in the Indenture. -A-5- 17 Guarantee For value received, each of the Guarantors hereby unconditionally Guarantees, to the Holder of the Security upon which this Guarantee is endorsed, and to the Trustee on behalf of such Holder, the due and punctual payment of the principal of (and premium, if any) and interest on such Security when and as the same shall become due and payable, whether at the Stated Maturity, by acceleration, or otherwise, according to the terms thereof and of the Indenture referred to therein. In case of the failure of the Company punctually to make any such payment, each of the Guarantors hereby agrees to cause such payment to be made punctually when and as the same shall become due and payable, whether at the Stated Maturity or by acceleration, or otherwise, and as if such payment were made by the Company. Each of the Guarantors hereby agrees that its obligations hereunder shall be unconditional, irrespective of the validity, regularity or enforceability of such Security or the Indenture, the absence of any action to enforce the same, the election by the Trustee or any of the Holders in any proceeding under Chapter 11 of the Bankruptcy Code of the application of Section 1111(b)(2) of the Bankruptcy Code, any borrowing or grant of a security interest by the Company, as debtor-in-possession, under Section 364 of the Bankruptcy Code, the disallowance, under Section 502 of the Bankruptcy Code, of all or any portion of the claims of the Trustee or any of the Holders for payment of any of the Securities, any waiver or consent by the Holder of such Security or by the Trustee or either of them with respect to any provisions thereof or of the Indenture, the obtaining of any judgment against the Company or any action to enforce the same or any other circumstances which might otherwise constitute a legal or equitable discharge or defense of a guarantor. Each of the Guarantors hereby waives the benefits of diligence, presentment, demand of payment, or exhaust any right or take any action against the Company or any other Person, filing of claims with a court in the event of insolvency or bankruptcy of the Company, any right to require a proceeding first against the Company, protest or notice with respect to such Security or the Indebtedness evidenced thereby and all demands whatsoever, and covenants that this Guarantee will not be discharged except by complete performance of the obligations contained in such Security and in this Guarantee. Each of the Guarantors hereby agrees that, in the event of a default in payment of principal (or premium, if any) or any interest on such Security, whether at their Stated Maturity, by acceleration, call for redemption or otherwise, legal -A-6- 18 proceedings may be instituted by the Trustee on behalf of, or by, the Holder of such Security, subject to the terms and conditions set forth in the Indenture, directly against such Guarantor to enforce this Guarantee without first proceeding against the Company. Each of the Guarantors agrees that if, after the occurrence and during the continuance of an Event of Default, the Trustee or any of the Holders are prevented by applicable law from exercising their respective rights to accelerate the maturity of the Securities, to collect any interest on the Securities, or to enforce or exercise any other right or remedy with respect to the Securities, such Guarantor agrees to pay to the Trustee for the account of the Holders, upon demand therefor, the amount that would otherwise have been due and payable had such rights and remedies been permitted to be exercised by the Trustee or any of the Holders. No reference herein to the Indenture and no provision of this Guarantee or of the Indenture shall alter or impair the Guarantee of any Guarantor, which is absolute and unconditional, of the due and punctual payment of the principal (and premium, if any) and any interest on the Security upon which this Guarantee is endorsed. Each of the Guarantors shall be subrogated to all rights of the Holder of this Security against the Company in respect of any amounts paid by such Guarantor on account of this Security pursuant to the provisions of its Guarantee or the Indenture; provided, however, that such Guarantor shall not be entitled to enforce or to receive any payments arising out of, or based upon, such right of subrogation until the principal of (and premium, if any) and any interest on this Security and all other Securities issued under the Indenture shall have been paid in full. This Guarantee shall remain in full force and effect and continue to be effective should any petition be filed by or against the Company for liquidation or reorganization, should the Company become insolvent or make an assignment for the benefit of creditors or should a receiver or trustee be appointed for all or any significant part of the Company's assets, and shall, to the fullest extent permitted by law, continue to be effective or be reinstated, as the case may be, if at any time payment and performance of the Securities, is, pursuant to applicable law, rescinded or reduced in amount, or must otherwise be restored or returned by any obligee on the Securities, whether as a "voidable preference," "fraudulent transfer," or otherwise, all as though such payment or performance had not been made. In the event that any payment, or any part thereof, is rescinded, reduced, restored or returned, the -A-7- 19 Securities shall, to the fullest extent permitted by law, be reinstated and deemed reduced only by such amount paid and not so rescinded, reduced, restored or returned. No stockholder, officer, director, employer or incorporator, past, present or future, of any Guarantor, as such, shall have any personal liability under this Guarantee by reason of his, her or its status as such stockholder, officer, director, employer or incorporator. The Guarantors shall be released from this Guarantee upon the terms and subject to the conditions provided in the Indenture. All terms used in this Guarantee which are defined in the Indenture referred to in the Security upon which this Guarantee is endorsed shall have the meanings assigned to them in such Indenture. This Guarantee shall not be valid or obligatory for any purpose until the certificate of authentication on the Security upon which this Guarantee is endorsed shall have been executed by the Trustee under the Indenture by manual signature. Reference is made to Article Fourteen of the Indenture for further provisions with respect to this Guarantee. THIS GUARANTEE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. -A-8- 20 IN WITNESS WHEREOF, each of the Guarantors has caused this Guarantee to be duly executed. ABX AIR, INC. As Guarantor By________________________ Attest: __________________________ AIRBORNE FORWARDING CORPORATION As Guarantor By________________________ Attest: __________________________ WILMINGTON AIR PARK, INC. As Guarantor By________________________ Attest: __________________________ AIRBORNE FTZ, INC. As Guarantor By________________________ Attest: __________________________ -A-9- EX-5 4 EXHIBIT 5: OPINION OF RIDDELL, WILLIAMS ET AL. 1 EXHIBIT 5 [Riddell, Williams, Bullitt & Walkinshaw Letterhead] September 1, 1995 Airborne Freight Corporation 3101 Western Avenue Post Office Box 662 Seattle, Washington 98111 Re: Registration on Form S-3, Relating to the Offering of up to $100,000,000 of Notes Ladies and Gentlemen: You have requested our opinion as to the legality of issuance of up to $100,000,000 of Notes (the "Notes") of Airborne Freight Corporation, a Delaware corporation (the "Company"), as well as guarantees of such Notes (the "Guarantees") issued by ABX Air, Inc., a Delaware corporation ("ABX"), a wholly-owned subsidiary of the Company, by Airborne Forwarding Corporation, a Delaware corporation ("AFC"), a wholly-owned subsidiary of the Company, Airborne FTZ, Inc., an Ohio corporation ("AFTZ"), a wholly-owned subsidiary of ABX, and Wilmington Air Park, Inc., an Ohio corporation ("WAP"), a wholly-owned subsidiary of ABX. The Notes and Guarantees are to be offered pursuant to the above-referenced Registration Statement. This opinion is being furnished in response to Item 601 of Regulation S-K and the instructions to Form S-3. As general counsel for the Company, ABX, AFC, AFTZ and WAP, we are familiar with (i) the Restated Certificate of Incorporation, as amended, Bylaws, and corporate proceedings of the Company; (ii) the Certificate of Incorporation, as amended, Bylaws and corporate proceedings of ABX; (iii) the Certificate of Incorporation, Bylaws and corporate proceedings of AFC; (iv) the Articles of Incorporation, Bylaws and corporate proceedings of AFTZ; and (v) the Articles of Incorporation, Bylaws and corporate proceedings of WAP. We have assisted in the preparation of the above-referenced Registration Statement, including the Prospectus contained therein. Based upon the foregoing, we are of the opinion that: 1. the Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of Delaware; and 2. ABX has been duly incorporated and is validly existing as a corporation in good standing under the laws of Delaware; and 2 Airborne Freight Corporation September 1, 1995 Page 2 3. AFC has been duly incorporated and is validly existing as a corporation in good standing under the laws of Delaware; and 4. AFTZ has been duly incorporated and is validly existing as a corporation in good standing under the laws of Ohio; 5. WAP has been duly incorporated and is validly existing as a corporation in good standing under the laws of Ohio; and 6. when the Registration Statement, as amended, shall have been declared effective by order of the Securities and Exchange Commission, and when up to $100,000,000 of Notes and Guarantees shall have been issued pursuant to the Indenture relating thereto (the "Indenture") and sold upon the terms and conditions contemplated by the Underwriting Agreement in substantially the form filed as Exhibit 1 to the Registration Statement, at such price and underwriting discount as shall have been duly approved by the Pricing Committee of the Board of Directors in accordance with the authority delegated to such committee, then such Notes and Guarantees will be valid and legally binding obligations of the Company, ABX, AFC, AFTZ and WAP, respectively. With respect to our opinion in paragraph 6, we express no opinion as to the effect of federal or state laws regarding fraudulent conveyances, preferential transfers or distributions by corporations to stockholders. We do not purport to be expert on, or to express any opinions herein concerning any laws other than the substantive law of the State of Washington, the corporate law of the State of Delaware, and the federal laws of the United States. We hereby consent to the filing of this opinion letter as an exhibit to the Registration Statement, and to the inclusion in the Prospectus of the reference to our firm under the heading "Validity of Securities." Very truly yours, /s/ Riddell, Williams, Bullitt & Walkinshaw RIDDELL, WILLIAMS, BULLITT & WALKINSHAW EX-12 5 EXHIBIT 12: COMPUTATION OF RATIOS 1 EXHIBIT 12 AIRBORNE FREIGHT CORPORATION RATIO OF EARNINGS TO FIXED CHARGES (In thousands)
ACTUALS FOR THE SIX MONTHS ENDED ACTUALS FOR YEAR ENDED DECEMBER 31, ------------------------ --------------------------------------------------- June 30, June 30, DESCRIPTION 1990 1991 1992 1993 1994 1994 1995 - ----------- ------- ------- ------- ------- ------- --------- --------- Earnings: Earnings before taxes $55,439 $48,415 $ 9,087 $59,027 $64,275 $33,501 $ 7,316 Fixed charges 19,776 23,491 29,764 35,390 36,758 17,689 20,688 Less Capitalized interest expense (4,107) (4,476) (2,466) (2,094) (2,127) (900) (2,021) ------- ------- ------- ------- ------- ------- ------- Total Earnings $71,108 $67,430 $36,385 $92,323 $98,906 $50,290 $25,983 ======= ======= ======= ======= ======= ======= ======= Calculation of fixed charges Interest expense $12,964 $15,318 $21,245 $26,187 $26,790 $12,910 $15,710 Add interest income 795 677 587 704 537 306 128 ------- ------- ------- ------- ------- ------- ------- Gross interest expense 13,759 15,995 21,832 26,891 27,327 13,216 15,838 Amortization of debt expense 98 166 291 385 433 216 216 Rental expense Total 59,192 73,301 76,414 81,138 89,975 42,569 46,338 Factor 10% 10% 10% 10% 10% 10% 10% ------- ------- ------- ------- ------- ------- ------- Net "interest" component 5,919 7,330 7,641 8,114 8,998 4,257 4,634 ------- ------- ------- ------- ------- ------- ------- Total fixed charges $19,776 $23,491 $29,764 $35,390 $36,758 $17,689 $20,688 ======= ======= ======= ======= ======= ======= ======= Ratio of earnings to fixed charges 3.60 2.87 1.22 2.61 2.69 2.84 1.26 ==== ==== ==== ==== ==== ==== ====
EX-23.B 6 EXHIBIT 23(B): CONSENT OF DELOITTE & TOUCHE LLP 1 Exhibit 23(b) INDEPENDENT AUDITORS' CONSENT Board of Directors Airborne Freight Corporation Seattle, Washington We consent to the incorporation by reference in Amendment No. 1 to Registration Statement No. 33-61329 on Form S-3 of Airborne Freight Corporation and subsidiaries (the Company) of our reports, dated February 10, 1995, on the consolidated financial statements and financial statement schedule of the Company and appearing in the Company's Annual Report on Form 10-K/A for the year ended December 31, 1994, and to the reference to us under the heading "Experts" in the Prospectus Supplement and "Experts" in the Prospectus, both of which are part of the Registration Statement. DELOITTE & TOUCHE LLP Seattle, Washington September 1, 1995 EX-25 7 EXHIBIT 25: STATEMENT OF ELIGIBILITY OF TRUSTEE 1 EXHIBIT 25 CONFORMED COPY ================================================================================ FORM T-1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) |__| -------------------- THE BANK OF NEW YORK (Exact name of trustee as specified in its charter) New York 13-5160382 (State of incorporation (I.R.S. employer if not a U.S. national bank) identification no.) 48 Wall Street, New York, N.Y. 10286 (Address of principal executive offices) (Zip code) -------------------- AIRBORNE FREIGHT CORPORATION (Exact name of obligor as specified in its charter) Delaware 91-0837469 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) 3101 Western Avenue Post Office Box 662 Seattle, Washington 98111 (Address of principal executive offices) (Zip code) ____________________ ABX AIR, INC. (Exact name of guarantor as specified in its charter) Delaware 91-1091619 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) 145 Hunter Drive Wilmington, Ohio 45177 (Address of principal executive offices) (Zip code) 2 ____________________ AIRBORNE FORWARDING CORPORATION (Exact name of guarantor as specified in its charter) Delaware 91-0894946 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) 3101 Western Avenue Post Office Box 662 Seattle, Washington 98111 (Address of principal executive offices) (Zip code) -------------------- AIRBORNE FTZ, INC. (Exact name of guarantor as specified in its charter) Ohio 34-1375411 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) 145 Hunter Drive Wilmington, Ohio 45177 (Address of principal executive offices) (Zip code -------------------- WILMINGTON AIR PARK, INC. (Exact name of guarantor as specified in its charter) Ohio 34-1261776 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) 145 Hunter Drive Wilmington, Ohio 45177 (Address of principal executive offices) (Zip code) -------------------- Debt Securities (Title of the indenture securities) ================================================================================ 3 1. General information. Furnish the following information as to the Trustee: (a) Name and address of each examining or supervising authority to which it is subject. - -------------------------------------------------------------------------------- Name Address - -------------------------------------------------------------------------------- Superintendent of Banks of the State of 2 Rector Street, New York, New York N.Y. 10006, and Albany, N.Y. 12203 Federal Reserve Bank of New York 33 Liberty Plaza, New York, N.Y. 10045 Federal Deposit Insurance Corporation Washington, D.C. 20549 New York Clearing House Association New York, New York (b) Whether it is authorized to exercise corporate trust powers. Yes. 2. Affiliations with Obligors. If any of the obligors is an affiliate of the trustee, describe each such affiliation. None. (See Note on page 3.) 16. List of Exhibits. Exhibits identified in parentheses below, on file with the Commission, are incorporated herein by reference as an exhibit hereto, pursuant to Rule 7a-29 under the Trust Indenture Act of 1939 (the "Act") and Rule 24 of the Commission's Rules of Practice. 1. A copy of the Organization Certificate of The Bank of New York (formerly Irving Trust Company) as now in effect, which contains the authority to commence business and a grant of powers to exercise corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1 filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1 to Form T-1 filed with Registration Statement No. 33-29637.) 4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1 filed with Registration Statement No. 33-31019.) 6. The consent of the Trustee required by Section 321(b) of the Act. (Exhibit 6 to Form T-1 filed with Registration Statement No. 33-44051.) 7. A copy of the latest report of condition of the Trustee published pursuant to law or to the requirements of its supervising or examining authority. - 2 - 4 NOTE Inasmuch as this Form T-1 is filed prior to the ascertainment by the Trustee of all facts on which to base a responsive answer to Item 2, the answer to said Item is based on incomplete information. Item 2 may, however, be considered as correct unless amended by an amendment to this Form T-1. - 3 - 5 SIGNATURE Pursuant to the requirements of the Act, the Trustee, The Bank of New York, a corporation organized and existing under the laws of the State of New York, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in The City of New York, and State of New York, on the 31st day of August, 1995. THE BANK OF NEW YORK By: /S/ MARY LAGUMINA -------------------------------- Name: MARY LAGUMINA Title: ASSISTANT VICE PRESIDENT - 4 - 6 EXHIBIT 7 _____________________________________________________________________________ Consolidated Report of Condition of THE BANK OF NEW YORK of 48 Wall Street, New York, N.Y. 10286 And Foreign and Domestic Subsidiaries, a member of the Federal Reserve System, at the close of business June 30, 1995, published in accordance with a call made by the Federal Reserve Bank of this District pursuant to the provisions of the Federal Reserve Act.
Dollar Amounts ASSETS in Thousands Cash and balances due from depos- itory institutions: Noninterest-bearing balances and currency and coin .................. $ 3,025,419 Interest-bearing balances .......... 881,413 Securities: Held-to-maturity securities ........ 1,242,368 Available-for-sale securities ...... 1,774,079 Federal funds sold in domestic offices of the bank ................ 5,503,445 Securities purchased under agreements to resell........................... 200,634 Loans and lease financing receivables: Loans and leases, net of unearned income .................26,599,533 LESS: Allowance for loan and lease losses ..............516,283 Loans and leases, net of unearned income and allowance.............. 26,083,250 Assets held in trading accounts ...... 1,455,639 Premises and fixed assets (including capitalized leases) ................ 612,547 Other real estate owned .............. 79,667 Investments in unconsolidated subsidiaries and associated companies .......................... 196,737 Customers' liability to this bank on acceptances outstanding ............ 1,111,464 Intangible assets .................... 105,263 Other assets ......................... 1,237,264 ----------- Total assets ......................... $43,511,189 =========== LIABILITIES Deposits: In domestic offices ................ $19,233,885 Noninterest-bearing .......7,677,954 Interest-bearing .........11,555,931 In foreign offices, Edge and Agreement subsidiaries, and IBFs ... 12,641,676 Noninterest-bearing ..........72,479 Interest-bearing .........12,569,197 Federal funds purchased and secu- rities sold under agreements to re- purchase in domestic offices of the bank and of its Edge and Agreement subsidiaries, and in IBFs: Federal funds purchased ............ 1,747,659 Securities sold under agreements to repurchase .................... 73,553 Demand notes issued to the U.S. Treasury ........................... 300,000 Trading liabilities .................. 738,317 Other borrowed money: With original maturity of one year or less .......................... 1,586,443 With original maturity of more than one year ......................... 220,877 Bank's liability on acceptances exe- cuted and outstanding .............. 1,113,102 Subordinated notes and debentures .... 1,053,860 Other liabilities .................... 1,489,252 ----------- Total liabilities .................... 40,198,624 ----------- EQUITY CAPITAL Common stock ........................ 942,264 Surplus ............................. 525,666 Undivided profits and capital reserves .......................... 1,849,221 Net unrealized holding gains (losses) on available-for-sale securities ........................ ( 662) Cumulative foreign currency transla- tion adjustments .................. ( 3,944) ----------- Total equity capital ................ 3,312,565 ----------- Total liabilities and equity capital ........................... $43,511,189 ===========
I, Robert E. Keitman, Senior Vice President and Comptroller of the above-named bank do hereby declare that this Report of Condition has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true to the best of my knowledge and belief. Robert E. Keitman We, the undersigned directors, attest to the correctness of this Report of Condition and declare that it has been examined by us and to the best of our knowledge and belief has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true and correct. J. Carter Bacot ) Thomas A. Renyi ) Directors Samuel F. Chevalier) ___________________________________________________________________________ -----END PRIVACY-ENHANCED MESSAGE-----