<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 27, 1995
REGISTRATION NO. 33-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
AIRBORNE FREIGHT CORPORATION
(Exact name of Registrant as specified in its charter)
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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)
------------------------
<TABLE>
<S> <C> <C> <C>
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
</TABLE>
(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 ROBERT M. THOMAS, JR.
Riddell, Williams, Bullitt & Walkinshaw Sullivan & Cromwell
Suite 4400, 1001 Fourth Avenue Plaza 125 Broad Street
Seattle, Washington 98154 New York, New York 10004
(206) 624-3600 (212) 558-4000
------------------------
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. / /
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<PAGE> 2
CALCULATION OF REGISTRATION FEE
<TABLE>
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<CAPTION>
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
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<S> <C> <C> <C> <C>
Debt Securities........................... $100,000,000(1) 100%(2) $100,000,000 $34,483
Guarantees of the Debt Securities......... -- (3) (3) None
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</TABLE>
(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) Neither ABX Air, Inc. nor Airborne Forwarding Corporation will be paid any
portion of the proceeds in respect of the Guarantees.
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.
<PAGE> 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 JULY , 1995
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED , 1995
$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.
------------------------
<TABLE>
<CAPTION>
INITIAL PUBLIC UNDERWRITING PROCEEDS TO
OFFERING PRICE (1) DISCOUNT (2) COMPANY (1)(3)
------------------ ------------ --------------
<S> <C> <C> <C>
Per Note.................................... % % %
Total....................................... $ $ $
</TABLE>
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(1) Plus accrued interest, if any, from , 1995.
(2) The Company, ABX Air, Inc. and Airborne Forwarding Corporation have agreed
to indemnify the Underwriters against certain liabilities, including
liabilities under the Securities Act of 1933.
(3) Before deducting estimated expenses of $ 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.
<PAGE> 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 $ 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
<PAGE> 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.
<TABLE>
<CAPTION>
AS OF JUNE 30, 1995
---------------------------
ACTUAL AS ADJUSTED
--------- -----------
(IN THOUSANDS)
<S> <C> <C>
Current Portion of Long Term Debt................................. $ 6,152 $ 6,152
======== ========
Long Term Debt:
Senior Debt:
Bank Debt.................................................... 220,600
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
Subordinated Debt:
Convertible Subordinated Debentures.......................... 115,000 115,000
-------- --------
Total Long Term Debt less current portion............... 449,397
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 $
======== ========
</TABLE>
S-3
<PAGE> 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 March 31, 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.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
-------------------------------------------------------------- -----------------------
1990 1991 1992 1993 1994 1994 1995
---------- ---------- ---------- ---------- ---------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
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 2.95x 1.29x
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
</TABLE>
- ---------------
(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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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 for a four-year term expiring in 1998. The drivers'
contract covering parts of the Northeastern United States expired at the end of
February 1995. Negotiations are ongoing and, although there can be no assurance,
the Company believes this contract will be settled without experiencing any
significant disruption or work stoppage. The Company's pilots are covered by a
contract which becomes amendable on July 31, 1995. The Company considers its
employee relations to be good.
SHIPMENT DATA SUMMARY
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
----------------------------- ------------------
1992 1993 1994 1994 1995
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
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
</TABLE>
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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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:
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
UNDERWRITER OF NOTES
----------- ------------
<S> <C>
Goldman, Sachs & Co.......................................... $
BA Securities, Inc...........................................
------------
Total................................................... $100,000,000
============
</TABLE>
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. Richard M. Rosenberg,
Chairman, President 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 June 21, 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
<PAGE> 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
<PAGE> 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 JULY , 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. 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.
<PAGE> 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.
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;
2. The Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1995;
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 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.
2
<PAGE> 19
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"),
among the Company, ABX, AFC and The Bank of New York, as Trustee (the
"Trustee"), a copy of which is filed as an exhibit to the Registration
Statement. 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 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
3
<PAGE> 20
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 and AFC 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 and AFC may be released from
their respective obligations under the Guarantees as described under
"Defeasance."
As wholly-owned subsidiaries of the Company, ABX and AFC 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 either ABX or AFC 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 or AFC 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 or AFC 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 either ABX or AFC to finance or satisfy obligations of the
Company, ABX and AFC may from time to time transfer, dispose of or encumber
their assets as permitted by the Indenture.
4
<PAGE> 21
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 or AFC 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 or AFC, 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 or AFC would be subject, to such extent, to the prior payment of all
liabilities of ABX or AFC, 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
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
5
<PAGE> 22
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 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
6
<PAGE> 23
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 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
7
<PAGE> 24
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 transaction,
reorganization, restructuring, merger or similar transaction involving the
Company that may adversely affect the Holders.
8
<PAGE> 25
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 and AFC 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 and AFC 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 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
9
<PAGE> 26
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
<PAGE> 27
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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
<TABLE>
<CAPTION>
PAGE
<S> <C>
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
- --------------------------------------------
- --------------------------------------------
</TABLE>
- ------------------------------------------------------
- ------------------------------------------------------
$100,000,000
AIRBORNE FREIGHT
CORPORATION
% NOTES
DUE , 2005
------------------------
PROSPECTUS SUPPLEMENT
------------------------
GOLDMAN, SACHS & CO.
BA SECURITIES, INC.
- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 28
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION*
<TABLE>
<S> <C>
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
========
</TABLE>
- ---------------
* 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
<PAGE> 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
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF INSTRUMENT
------- -------------------------------------------------------------------
<S> <C>
(1) Form of Underwriting Agreement.
(4)(a) Form of Indenture among the Registrants 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 Debt Security, including Form of Guarantee (included in
Exhibit 4(a)).
(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.
</TABLE>
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 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.
II-2
<PAGE> 30
(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 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
<PAGE> 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 Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Seattle, State of Washington, on July 26, 1995.
AIRBORNE FREIGHT CORPORATION
By: /s/ ROBERT S. CLINE
--------------------------------------
Robert S. Cline
Chief Executive Officer
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 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.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ ROBERT S. CLINE Chairman of the July 26, 1995
- ----------------------------------------------- Board of Directors and
Robert S. Cline Chief Executive Officer
(Principal Executive Officer)
/s/ ROY C. LILJEBECK Executive Vice President and July 26, 1995
- ----------------------------------------------- Chief Financial Officer
Roy C. Liljebeck (Principal Financial Officer)
/s/ LANNY H. MICHAEL Senior Vice President, July 26, 1995
- ----------------------------------------------- Treasurer and Controller
Lanny H. Michael (Principal Accounting Officer)
/s/ ROBERT G. BRAZIER Director July 26, 1995
- -----------------------------------------------
Robert G. Brazier
/s/ ANDREW F. BRIMMER Director July 26, 1995
- -----------------------------------------------
Andrew F. Brimmer
/s/ JAMES H. CAREY Director July 26, 1995
- -----------------------------------------------
James H. Carey
/s/ ANDREW B. KIM Director July 26, 1995
- -----------------------------------------------
Andrew B. Kim
</TABLE>
II-4
<PAGE> 32
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ HAROLD M. MESSMER, JR. Director July 26, 1995
- -----------------------------------------------
Harold M. Messmer, Jr.
/s/ RICHARD M. ROSENBERG Director July 26, 1995
- -----------------------------------------------
Richard M. Rosenberg
/s/ ANDREW V. SMITH Director July 26, 1995
- -----------------------------------------------
Andrew V. Smith
/s/ WILLIAM SWINDELLS Director July 26, 1995
- -----------------------------------------------
William Swindells
</TABLE>
II-5
<PAGE> 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 Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Seattle, State of Washington, on July 26, 1995.
ABX AIR, INC.
By: /s/ CARL D. DONAWAY
--------------------------------------
Carl D. Donaway
President and Chief Executive Officer
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 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.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ CARL D. DONAWAY President and Chief Executive July 26, 1995
--------------------------- Officer and Director
Carl D. Donaway (Principal Executive Officer)
/s/ JOSEPH C. HETE Senior Vice President, July 26, 1995
--------------------------- Administration, Treasurer and
Joseph C. Hete Director (Principal Financial
and Accounting Officer)
/s/ STEPHEN E. DEFOREST Director July 26, 1995
---------------------------
Stephen E. DeForest
</TABLE>
II-6
<PAGE> 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 Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Seattle, State of Washington, on July 26, 1995.
AIRBORNE FORWARDING CORPORATION
By: /s/ ROBERT S. CLINE
------------------------------------
Robert S. Cline
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 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.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
---------- ----- ----
<S> <C> <C>
/s/ ROBERT S. CLINE President and Director July 26, 1995
(Principal Executive Officer)
- -----------------------------------------------
Robert S. Cline
/s/ ROBERT G. BRAZIER Director July 26, 1995
- -----------------------------------------------
Robert G. Brazier
/s/ ROY C. LILJEBECK Director July 26, 1995
- -----------------------------------------------
Roy C. Liljebeck
/s/ LANNY H. MICHAEL Treasurer July 26, 1995
- ----------------------------------------------- (Principal Financial and
Lanny H. Michael Accounting Officer)
</TABLE>
II-7
<PAGE> 35
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF INSTRUMENT
------- -------------------------
<S> <C>
(1) Form of Underwriting Agreement.
(4)(a) Form of Indenture among the Registrants 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 Debt Security, including Form of Guarantee (included in
Exhibit 4(a)).
(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.
</TABLE>
<PAGE> 1
Draft of June 16, 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"), and Airborne Forwarding Corporation, a Delaware
corporation, each a wholly-owned 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 sole representative of the Underwriters and to Underwriters who act
without any firm being designated as their representative.
<PAGE> 2
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 effectiveness of such registration statement has been
issued and no proceeding for that purpose has been initiated or
-2-
<PAGE> 3
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 to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; and
-3-
<PAGE> 4
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 Prospectus, there has not been any change in the
capital stock, other than an issuance of shares of Common Stock
-4-
<PAGE> 5
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 Air Park, Inc., an Ohio Corporation
("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 the State of Delaware, 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
and Annex IV, respectively, hereto; neither the Company nor either
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;
(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
-5-
<PAGE> 6
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 Wilmington and 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 trust, loan agreement
or other agreement or instrument to which the Company or either
Guarantor is a party or by which
-6-
<PAGE> 7
the Company or either Guarantor is bound or to which any of the
property or assets of the Company or either Guarantor 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 either
Guarantor or any statute or any order, rule or regulation of any court
or governmental agency or body having jurisdiction over the Company or
either Guarantor 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 has not received any notice that its current and proposed
use of such trademark infringes any rights of any other party;
-7-
<PAGE> 8
(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 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
-8-
<PAGE> 9
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 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
-9-
<PAGE> 10
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 either Guarantor 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;
(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
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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 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,
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<PAGE> 12
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 V(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;
(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 V(b) hereto), dated the Time of Delivery for such Designated
Securities, in form
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<PAGE> 13
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 and Annex IV,
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 Wilmington 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; and all of the issued shares of
capital stock of Wilmington and 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);
(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
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<PAGE> 14
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 Securities, the Guarantees thereof and the
Indenture conform to the descriptions thereof in the
Prospectus as amended or supplemented;
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<PAGE> 15
(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 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,
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<PAGE> 16
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 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
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<PAGE> 17
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 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
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<PAGE> 18
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 and Wilmington, 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 V(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
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 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 VI hereto,
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<PAGE> 19
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 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;
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<PAGE> 20
(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 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
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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 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
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<PAGE> 22
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.
(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
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<PAGE> 23
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 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
-23-
<PAGE> 24
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 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
-24-
<PAGE> 25
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 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,
-25-
<PAGE> 26
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 either
Guarantor, 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; 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,
-26-
<PAGE> 27
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-
<PAGE> 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:
Accepted as of the date hereof:
Goldman, Sachs & Co.
BA Securities, Inc.
By:__________________________
(Goldman, Sachs & Co.)
-28-
<PAGE> 29
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") and Airborne Forwarding
Corporation ("AFC, and, together with ABX, 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.
<PAGE> 30
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
I-2
<PAGE> 31
Underwriters is or will be pursuant to the authority 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:
Accepted as of the date hereof:
Goldman, Sachs & Co.
BA Securities, Inc.
By:__________________________
(Goldman, Sachs & Co.)
I-3
<PAGE> 32
SCHEDULE I
<TABLE>
<CAPTION>
Principal
Amount of
Designated
Securities
to be
Purchased
---------
Underwriter
-----------
<S> <C>
Goldman, Sachs & Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
BA Securities, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
---------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
=========
</TABLE>
<PAGE> 33
SCHEDULE II
TITLE OF DESIGNATED SECURITIES:
[___%] [Floating Rate] [Zero Coupon] [Notes]
[Debentures] due
AGGREGATE PRINCIPAL AMOUNT:
[$]
PRICE TO PUBLIC:
___% of the principal amount of the Designated Securities, plus
accrued interest from ___________ to ___________ [and accrued
amortization, if any, from ___________ to ___________]
PURCHASE PRICE BY UNDERWRITERS:
___% of the principal amount of the Designated Securities, plus
accrued interest from __________ to __________ [and accrued
amortization, if any, from __________ to __________]
FORM OF DESIGNATED SECURITIES:
[Definitive form to be made available for checking and packaging at
least twenty-four hours prior to the Time of Delivery at the office of
[The Depository Trust Company or its designated custodian] [the
Representatives]] [Book-entry only form represented by one or more
global securities deposited with The Depository Trust Company ("DTC")
or its designated custodian, to be made available for checking by the
Representatives at least twenty-four hours prior to the Time of
Delivery at the office of DTC.]
SPECIFIED FUNDS FOR PAYMENT OF PURCHASE PRICE:
[[New York] Clearing House (next day) funds]
[Same day funds]
INDENTURE:
Indenture dated ___________, 1995, among the Company ABX Air, Inc., Airborne
Forwarding Corporation and The Bank of New York, as
Trustee
MATURITY:
______________,
INTEREST RATE:
[___%] [Zero Coupon] [See Floating Rate Provisions]
<PAGE> 34
INTEREST PAYMENT DATES:
[months and dates, commencing _________, 19__]
REDEMPTION PROVISIONS:
[No provisions for redemption]
[The Designated Securities may be redeemed, otherwise than through the
sinking fund, in whole or in part at the option of the Company, in the
amount of [$]______ 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 ____________,
<TABLE>
<CAPTION>
<S> <C>
REDEMPTION
YEAR PRICE
---- ----------
</TABLE>
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
<PAGE> 35
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
<PAGE> 36
Designated Representatives:
Address for Notices, etc.:
[OTHER TERMS]
II-4
<PAGE> 37
ANNEX II
AIRBORNE FREIGHT CORPORATION
States Where Qualified to do Business
and in Good Standing
<TABLE>
<S> <C> <C>
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
</TABLE>
<PAGE> 38
ANNEX III
ABX AIR, INC.
States Where Qualified to do Business
and in Good Standing
<TABLE>
<S> <C>
Colorado Texas
Maryland Washington
Ohio
</TABLE>
<PAGE> 39
ANNEX IV
AIRBORNE FORWARDING CORPORATION
States Where Qualified to do Business
and in Good Standing
<TABLE>
<S> <C>
California Illinois
</TABLE>
<PAGE> 40
ANNEX VI
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
<PAGE> 41
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
VI-2
<PAGE> 42
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
VI-3
<PAGE> 43
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.
VI-4
<PAGE> 1
[Riddell, Williams, Bullitt & Walkinshaw Letterhead]
July 26, 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 and by Airborne Forwarding Corporation,
a Delaware corporation ("AFC"), a wholly-owned subsidiary of the Company. 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 and AFC, 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; and (iii) the Certificate of
Incorporation, Bylaws and corporate proceedings of AFC. 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
<PAGE> 2
Airborne Freight Corporation
July 26, 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. 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 and AFC, respectively.
With respect to our opinion in paragraph 4, 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,
RIDDELL, WILLIAMS, BULLITT & WALKINSHAW
<PAGE> 1
EXHIBIT 12
AIRBORNE FREIGHT CORPORATION
RATIO OF EARNINGS TO FIXED CHARGES
(In thousands)
<TABLE>
<CAPTION>
ACTUALS FOR THE
SIX MONTHS ENDED
ACTUALS FOR YEAR ENDED DECEMBER 31, ------------------------
--------------------------------------------------- June 30, June 30,
DESCRIPTION 1990 1991 1992 1993 1994 1994 1995
- ----------- ------- ------- ------- ------- ------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
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 16,789 18,667
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 $49,390 $23,962
======= ======= ======= ======= ======= ======= =======
Calculation of fixed charges
Interest expense $12,964 $15,318 $21,245 $26,187 $26,790 $12,010 $13,689
Add interest income 795 677 587 704 537 306 128
------- ------- ------- ------- ------- ------- -------
Gross interest expense 13,759 15,995 21,832 26,891 27,327 12,316 13,817
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 $16,789 $18,667
======= ======= ======= ======= ======= ======= =======
Ratio of earnings to fixed charges 3.60 2.87 1.22 2.61 2.69 2.94 1.28
==== ==== ==== ==== ==== ==== ====
</TABLE>
<PAGE> 1
INDEPENDENT AUDITORS' CONSENT
Board of Directors
Airborne Freight Corporation
Seattle, Washington
We consent to the incorporation by reference in the Registration Statement on
Form S-3 of Airborne Freight relating to $100,000,000 of notes of our report,
dated February 10, 1995, on the consolidated financial statements of Airborne
Freight Corporation and subsidiaries appearing on page 16 of the Company's 1994
Annual Report to Shareholders and incorporated by reference in the Company's
Annual Report on Form 10-K 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. We also consent to the incorporation of our report dated March 27,
1995, on the schedule to such consolidated financial statements contained in
such Annual Report on Form 10-K.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Seattle, Washington
July 26, 1995
<PAGE> 1
THIS CONFORMING PAPER FORMAT DOCUMENT IS BEING SUBMITTED
PURSUANT TO RULE 901(d) OF REGULATION S-T
================================================================================
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)
<TABLE>
<S> <C>
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)
</TABLE>
______________________
AIRBORNE FREIGHT CORPORATION
(Exact name of obligor as specified in its charter)
<TABLE>
<S> <C>
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 98103
(Address of principal executive offices) (Zip code)
</TABLE>
______________________
ABX AIR, INC.
(Exact name of guarantor as specified in its charter)
<TABLE>
<S> <C>
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)
</TABLE>
<PAGE> 2
THIS CONFORMING PAPER FORMAT DOCUMENT IS BEING SUBMITTED
PURSUANT TO RULE 901(d) OF REGULATION S-T
_____________________
AIRBORNE FOWARDING CORPORATION
(Exact name of guarantor as specified in its charter)
<TABLE>
<S> <C>
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)
</TABLE>
______________________
Debt Securities
(Title of the indenture securities)
================================================================================
<PAGE> 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.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Name Address
- --------------------------------------------------------------------------------
<S> <C>
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
</TABLE>
(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 -
<PAGE> 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 -
<PAGE> 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 24th day of July, 1995.
THE BANK OF NEW YORK
By: /S/ MARY JANE MORRISSEY
--------------------------------
Name: MARY JANE MORRISSEY
Title: ASSISTANT VICE PRESIDENT
- 4 -
<PAGE> 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
March 31, 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.
<TABLE>
<CAPTION>
Dollar Amounts
ASSETS in Thousands
<S> <C>
Cash and balances due from depos-
itory institutions:
Noninterest-bearing balances and
currency and coin .................. $ 3,575,856
Interest-bearing balances .......... 747,540
Securities:
Held-to-maturity securities ........ 1,283,688
Available-for-sale securities ...... 1,615,292
Federal funds sold in domestic
offices of the bank ................ 5,577,896
Loans and lease financing
receivables:
Loans and leases, net of unearned
income .................24,763,265
LESS: Allowance for loan and
lease losses ..............532,411
LESS: Allocated transfer risk
reserve .....................28,558
Loans and leases, net of unearned
income, allowance, and reserve 24,202,296
Assets held in trading accounts ...... 1,502,750
Premises and fixed assets (including
capitalized leases) ................ 618,958
Other real estate owned .............. 47,755
Investments in unconsolidated
subsidiaries and associated
companies .......................... 184,149
Customers' liability to this bank on
acceptances outstanding ............ 1,018,696
Intangible assets .................... 101,149
Other assets ......................... 1,227,291
-----------
Total assets ......................... $41,703,316
===========
LIABILITIES
Deposits:
In domestic offices ................ $18,543,633
Noninterest-bearing .......6,949,896
Interest-bearing .........11,593,737
In foreign offices, Edge and
Agreement subsidiaries, and IBFs ... 11,303,075
Noninterest-bearing ..........65,927
Interest-bearing .........11,237,148
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 ............ 1,327,537
Securities sold under agreements
to repurchase .................... 37,400
Demand notes issued to the U.S.
Treasury ........................... 97,827
Trading liabilities .................. 1,349,293
Other borrowed money:
With original maturity of one year
or less .......................... 2,027,148
With original maturity of more than
one year ......................... 313,877
Bank's liability on acceptances exe-
cuted and outstanding .............. 1,018,848
Subordinated notes and debentures .... 1,056,320
Other liabilities .................... 1,435,093
-----------
Total liabilities .................... 38,510,051
-----------
EQUITY CAPITAL
Common stock ........................ 942,284
Surplus ............................. 525,666
Undivided profits and capital
reserves .......................... 1,753,592
Net unrealized holding gains
(losses) on available-for-sale
securities ........................ ( 22,501)
Cumulative foreign currency transla-
tion adjustments .................. ( 5,776)
Total equity capital ................ 3,193,265
-----------
Total liabilities and equity
capital ........................... $41,703,316
===========
</TABLE>
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
Alan R. Griffith )
___________________________________________________________________________
