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EXHIBIT 10.50(a)


                         ATLANTIC COAST AIRLINES, ISSUER
                    ATLANTIC COAST AIRLINES, INC., GUARANTOR

                               PURCHASE AGREEMENT

                                                                                September 19, 1997

Morgan Stanley & Co.
Incorporated
1585 Broadway
New York, New York  10036-8293

Dear Sirs:

                  Atlantic  Coast  Airlines,   a  California   corporation  (the
"Company"),  in  connection  with the  financing  of (i) the debt portion of ten
leveraged aircraft leases and (ii) the purchase of four aircraft,  proposes that
First National Bank of Maryland,  as trustee (the "Trustee"),  issue and sell to
you (the "Placement Agent") its Pass Through Certificates,  Series 1997-1 in the
aggregate  principal amounts and with the interest rates and final  distribution
dates set  forth on  Schedule  I hereto  (the  "Certificates")  on the terms and
conditions stated herein. The aggregate  principal amount of Certificates due on
each such final distribution date is referred to as a "Pass Through  Certificate
Designation".

                  The Certificates will be issued pursuant to four separate pass
through trust agreements each to be dated as of September 25, 1997 (collectively
the "Pass Through Trust  Agreements")  among  Atlantic Coast  Airlines,  Inc., a
Delaware  corporation (the "Guarantor"),  the Company and the Trustee.  The Pass
Through  Trust  Agreements  are related to the  creation and  administration  of
Atlantic  Coast Air Pass  Through  Trust  Series  1997-1A (the "Class A Trust"),
Atlantic Coast Airlines Pass Through Trust Series 1997-1B (the "Class B Trust"),
Atlantic  Coast Airlines Pass Through Trust Series 1997-1C (the "Class C Trust")
and Atlantic  Coast  Airlines  Pass Through  Trust Series  1997-1D (the "Class D
Trust",  and together with the Class A Trust,  the Class B Trust and the Class C
Trust, the "Trusts"). Certain amounts of interest payable on the Certificates to
be issued by the Class A Trust,  the Class B Trust and the Class C Trust will be
entitled to the benefits of a separate  liquidity  facility for each such Trust.
ING Bank  N.V.  (the  "Liquidity  Provider")  will  enter  into  three  separate
revolving  credit  agreements  (each, a "Liquidity  Facility") to be dated as of
September 25, 1997 for the benefit of the holders of the Certificates  issued by
the Class A Trust,  the Class B Trust and the Class C Trust,  respectively.  The
Liquidity  Provider and the holders of the Certificates  will be entitled to the
benefits of an Intercreditor Agreement to be dated as of September 25, 1997 (the
"Intercreditor Agreement") among the Trusts, First National Bank of Maryland, as
Subordination Agent (the "Subordination Agent"), and the Liquidity Provider.

                  The  Certificates  will be offered  without  being  registered
under the Securities Act of 1933, as amended (the "Securities Act"), in reliance
on exemptions therefrom.

                  In connection with the sale of the Certificates, the Guarantor
and  the  Company  have  prepared  a  preliminary   offering   memorandum   (the
"Preliminary  Memorandum")  and will prepare a final  offering  memorandum  (the
"Final  Memorandum" and, with the Preliminary  Memorandum,  each a "Memorandum")
setting forth or including a description of the terms of the  Certificates,  the
terms of the offering and a description of the Company and its business.

                  Capitalized  terms not  otherwise  defined  in this  Agreement
shall have the meanings  specified therefor in the Pass Through Trust Agreements
or in the Indentures referred to in the Pass Through Trust Agreements;  provided
that as used in this Agreement,  the term "Operative  Agreements"  shall include
the Pass Through Trust Agreements.

                  1.       Representations  and  Warranties.  The Guarantor and the Company  represent and
warrant to, and agree with, you that as of the date hereof:

                  (a) The Preliminary  Memorandum does not contain and the Final
Memorandum,  in the form used by the Placement Agent to confirm sales and on the
Closing Date,  will not contain any untrue  statement of a material fact or omit
to state a material fact necessary to make the statements  therein, in the light
of the circumstances under which they were made, not misleading, except that the
representations  and  warranties  set forth in this Section 1(a) do not apply to
statements or omissions in either Memorandum based upon information  relating to
the Placement  Agent furnished to the Guarantor or the Company in writing by the
Placement Agent through you expressly for use therein.

                  (b)  Each of the  Guarantor  and the  Company  has  been  duly
incorporated,  is validly  existing as a corporation  in good standing under the
laws of the  jurisdiction  of its  incorporation,  has the  corporate  power and
authority  to own its  property and to conduct its business as described in each
Memorandum and to perform its obligations under this Agreement and the Operative
Agreements  to which it is, or is to be, a party;  each of the Guarantor and the
Company is duly  qualified to transact  business and is in good standing in each
jurisdiction in which the conduct of its business or its ownership or leasing of
property requires such  qualification,  except to the extent that the failure to
be so qualified or be in good standing would not have a material  adverse effect
on the Guarantor  and its  subsidiaries,  taken as a whole (a "Material  Adverse
Effect").

                  (c) This  Agreement  has been duly  authorized,  executed  and
delivered by the Guarantor and the Company.

                  (d) On or prior  to the  Closing  Date,  the  issuance  of the
Certificates   will  be  duly   authorized  by  the  Trustee.   When   executed,
authenticated,  issued and  delivered in the manner  provided for in the related
Pass  Through  Trust  Agreement  and  sold  and  paid  for as  provided  in this
Agreement, each of the Certificates will be valid and binding obligations of the
Trustee  entitled to the benefits of the related Pass Through  Trust  Agreement,
enforceable  against the Trustee in accordance with its terms, except as limited
by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other  similar laws  relating to or affecting  creditors'  rights  generally and
general equitable principles (whether considered in a proceeding in equity or at
law).

                  (e) On or prior  to the  Closing  Date,  the  issuance  of the
Equipment  Notes will be authorized by the related Owner Trustee or the Company,
as the case may be.  When duly  executed  and  delivered  by the  related  Owner
Trustee,  or the  Company,  as the case may be,  and duly  authenticated  by the
Indenture Trustee in accordance with the terms of the related Indenture, each of
the  Equipment  Notes will be duly issued under such related  Indenture and will
constitute  the valid and  binding  obligations  of such  Owner  Trustee  or the
Company,  as the case may be, and the  holders  thereof  will be entitled to the
benefits of such related Indenture, except as limited by bankruptcy, insolvency,
fraudulent  conveyance,  reorganization,   moratorium  and  other  similar  laws
relating to or  affecting  creditors'  rights  generally  and general  equitable
principles (whether considered in a proceeding in equity or at law).

                  (f) The Operative Agreements to which the Guarantor and/or the
Company  is,  or is to be,  a party,  have  each  been  duly  authorized  by the
Guarantor or the Company,  as the case may be, are or will be  substantially  in
the form heretofore supplied to you and, when duly executed and delivered by the
Guarantor  or  Company,  as the case may be, will  constitute  valid and binding
obligations  of the  Guarantor  or  Company,  as the case may be,  except (i) as
limited  by  bankruptcy,  insolvency,  fraudulent  conveyance,   reorganization,
moratorium  and other  similar laws relating to or affecting  creditors'  rights
generally and general equitable  principles  (whether considered in a proceeding
in equity or at law) and (ii) in the case of each Lease and each  Indenture,  as
the case may be, as limited  by  applicable  laws which may affect the  remedies
provided  in such  Lease or such  Indenture,  as the case  may be,  which  laws,
however,  do not make the  remedies  provided in such Lease  inadequate  for the
practical  realization  of the  rights and  benefits  provided  thereby.  On the
Delivery Date, the related  Leases and other  Operative  Agreements to which the
Guarantor  and/or the Company is, or is to be, a party will constitute the valid
and binding obligations of the Guarantor and/or the Company, as the case may be,
except  (i)  as  limited  by  bankruptcy,   insolvency,  fraudulent  conveyance,
reorganization,  moratorium  and other  similar  laws  relating to or  affecting
creditors' rights generally and general equitable principles (whether considered
in a proceeding in equity or at law) and (ii) in the case of each Lease and each
Indenture,  as limited by applicable laws which may affect the remedies provided
in such Lease or such Indenture, as the case may be, which laws, however, do not
make  the  remedies   provided  in  such  Lease  inadequate  for  the  practical
realization of the rights and benefits provided thereby.  The Certificates,  the
Equipment Notes, the Indentures,  and the Leases and other Operative  Agreements
to which the Guarantor  and/or the Company is, or is to be, a party will conform
in all material respects to the descriptions thereof in the Final Memorandum.

                  (g) The  execution  and delivery by the  Guarantor  and/or the
Company of this  Agreement and the  Operative  Agreements to which the Guarantor
and/or the Company is, or is to be, a party,  the  consummation by the Guarantor
and the Company of the  transactions  contemplated  in this  Agreement  and such
Operative  Agreements,  and compliance by the Guarantor and the Company with the
terms of this  Agreement and such Operative  Agreements  will not contravene (i)
the certificate of incorporation or by-laws of the Guarantor and/or the Company,
as the case may be, (ii) any  provision of  applicable  law or any  agreement or
other instrument  binding upon the Guarantor or any of its subsidiaries or (iii)
any judgment,  order or decree of any governmental  body, agency or court having
jurisdiction  over the  Guarantor or any  subsidiary  other than, in the case of
clauses (ii) and (iii) above, such contraventions that would not individually or
in the  aggregate  have a Material  Adverse  Effect,  and no consent,  approval,
authorization  or order of, or  qualification  with,  any  governmental  body or
agency  is  required  for  the  valid  authorization,  execution,  delivery  and
performance  by the  Guarantor  and/or  the  Company of this  Agreement  and the
Operative  Agreements to which the Guarantor and/or the Company is, or is to be,
a party, or the consummation by the Guarantor or the Company of the transactions
contemplated by this Agreement and such Operative Agreements, except such as may
be  required  by the  securities  or Blue  Sky  laws of the  various  states  in
connection with the offer and sale of the  Certificates  and the Equipment Notes
and except for filings or recordings  with the Federal  Aviation  Administration
(the  "FAA")  and under  the  Uniform  Commercial  Code as in effect in Utah and
Virginia,  which filings or recordings  shall have been made, or duly  presented
for filing,  on or prior to the date of issuance of the Equipment  Notes for any
Aircraft or the Delivery Date therefor, as may be applicable.

                  (h) There has not occurred any material adverse change, or any
development  involving a prospective  material adverse change, in the condition,
financial  or  otherwise,  or in the  earnings,  business or  operations  of the
Guarantor  and its  subsidiaries,  taken as a whole,  from that set forth in the
Preliminary Memorandum.

                  (i) There are no legal or governmental  proceedings pending or
threatened  to which the Guarantor or any of its  subsidiaries  is a party or to
which any of the  properties  of the  Guarantor  or any of its  subsidiaries  is
subject other than proceedings  accurately described in all material respects in
each Memorandum and proceedings  that would not have a Material  Adverse effect,
or on the power or  ability of the  Guarantor  or the  Company  to  perform  its
obligations under this Agreement or any of the Operative Agreement,  to which it
is, or is to be, a party, or to consummate the transactions  contemplated by the
Final Memorandum.

                  (j) Except as described in the Final  Memorandum,  neither the
Guarantor nor the Company is in default in the  performance or observance of any
obligation,   agreement,  covenant  or  condition  contained  in  any  contract,
indenture,   mortgage,  loan  agreement,  note,  lease  or  other  agreement  or
instrument to which it is a party or by which it may be bound or to which any of
its  properties  may be subject,  except for such defaults that would not have a
Material Adverse Effect.

                  (k) Except as disclosed in the Final Memorandum, the Guarantor
and its  subsidiaries  have good and marketable title to all real properties and
all other  properties  and assets  owned by them,  in each case free from liens,
encumbrances  and defects  except where the failure to have such title would not
have a Material Adverse Effect; and except as disclosed in the Final Memorandum,
the Guarantor  and its  subsidiaries  hold any leased real or personal  property
under valid and enforceable leases with no exceptions that would have a Material
Adverse Effect.

                  (l)  Except as  disclosed  in the Final  Memorandum,  no labor
dispute with the employees of the Guarantor or any of its subsidiaries exists or
to the  knowledge of the Guarantor or any of its  subsidiaries  is imminent that
might have a Material Adverse Effect.

                  (m) Neither the  Guarantor,  the Company nor any affiliate (as
defined in Rule 501(b) of Regulation D under the Securities Act, an "Affiliate")
of the  Guarantor or the Company has directly,  or through any agent,  (i) sold,
offered for sale, solicited offers to buy or otherwise negotiated in respect of,
any security (as defined in the  Securities  Act) which is or will be integrated
with  the  sale  of  the  Certificates  in  a  manner  that  would  require  the
registration under the Securities Act of the Certificates or (ii) engaged in any
form of general  solicitation  or general  advertising  in  connection  with the
offering of the  Certificates (as those terms are used in Regulation D under the
Securities Act) or in any manner  involving a public offering within the meaning
of Section 4(2) of the Securities Act.

                  (n) None of the Guarantor,  the Company, its Affiliates or any
person  acting on its or their  behalf  (other  than the  Placement  Agent)  has
engaged in any directed selling efforts (as that term is defined in Regulation S
under the Securities Act ("Regulation  S")) with respect to the Certificates and
the  Guarantor,  the Company and its  Affiliates and any person acting on its or
their behalf  (other than the  Placement  Agent) have complied with the offering
restrictions requirement of Regulation S.

                  (o)      The Guarantor is subject to Section 13 or 15(d) of the Securities  Exchange Act
of 1934, as amended (the "Exchange Act").

                  (p) The Certificates  satisfy the eligibility  requirements of
Rule 144A(d)(3) under the Securities Act.

                  (q) It is not necessary in connection with the offer, sale and
delivery of the  Certificates to the Placement Agent in the manner  contemplated
by this  Agreement to register the  Certificates  under the Securities Act or to
qualify any of the Indentures or Pass Through Trust  Agreements  under the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act").

                  (r) None of the  Guarantor,  the Company nor any of the Trusts
is an "investment company",  within the meaning of the Investment Company Act of
1940, as amended (the "Investment  Company Act"); and none of the Trusts,  after
giving effect to the offering and sale of the  Certificates  and the application
of the  proceeds  thereof  as  described  in the  Final  Memorandum,  will be an
"investment company" as defined in the Investment Company Act.

                  (s) The  accountants  that  examined  and  issued an  auditors
report with respect to the  consolidated  financial  statements of the Guarantor
and  its  consolidated   subsidiaries  included  in  the  Final  Memorandum  are
independent  public accountants within the meaning of the Securities Act and the
regulations thereunder.

                  (t) The  consolidated  financial  statements  included  in the
Final  Memorandum  present  fairly the  consolidated  financial  position of the
Guarantor and its  consolidated  subsidiaries  as of the dates indicated and the
consolidated  results of  operations  and cash  flows or  changes  in  financial
position of the  Guarantor  and its  consolidated  subsidiaries  for the periods
specified.  Such  financial  statements  have been prepared in  conformity  with
generally  accepted   accounting   principles  applied  on  a  consistent  basis
throughout the periods  involved.  The financial  statement  schedules,  if any,
included in the Final Memorandum  present fairly the information  required to be
stated therein.

                  (u) The Guarantor and its  subsidiaries  (i) are in compliance
in all material respects with any and all applicable foreign, federal, state and
local  laws and  regulations  relating  to the  protection  of human  health and
safety,  the environment or hazardous or toxic substances or wastes,  pollutants
or contaminants ("Environmental Laws"), (ii) have received all permits, licenses
or other  approvals  required  of them under  applicable  Environmental  Laws to
conduct their  respective  businesses and (iii) are in compliance with all terms
and  conditions  of any such  permit,  license or  approval,  except  where such
noncompliance  with  Environmental  Laws,  failure to receive required  permits,
licenses or other  approvals or failure to comply with the terms and  conditions
of such permits,  licenses or approvals  would not,  singly or in the aggregate,
have a Material Adverse Effect.

                  (v)  To  the  best  of  the   Guarantor's  and  the  Company's
knowledge,  after due inquiry, no disposal, release or discharge of hazardous or
toxic  substances or wastes,  pollutants or contaminants has occurred on, in, at
or about any of the facilities of the Guarantor or its subsidiaries;  no actions
or claims based on any  Environmental  Law,  which actions or claims  reasonably
would be likely, singly or in the aggregate,  to have a Material Adverse Effect,
are  pending or, to the best of the  Guarantor's  and the  Company's  knowledge,
threatened against the Guarantor or its subsidiaries.

                  (w) The Guarantor and its subsidiaries  have complied with all
provisions  of  Section  517.075,  Florida  Statutes  (Chapter  92-198,  Laws of
Florida).

                  (x) The  Company  is a  "citizen  of the  United  States"  (as
defined  in  Section  40102(a)(15)  of Title 49 of the United  States  Code,  as
amended)  and  is an  air  carrier  operating  under  a  certificate  of  public
convenience and necessity issued by the Secretary of Transportation  pursuant to
Section 41102 of Title 49, United States Code. There is in force with respect to
the Company an air carrier operating  certificate issued by the Federal Aviation
Administration  pursuant to 14 C.F.R. Part 119. All of the outstanding shares of
capital stock of the Company have been duly  authorized  and validly  issued and
are fully paid and non-assessable and are owned by the Guarantor, free and clear
of any pledge, lien, security interest,  charge, claim, equity or encumbrance of
any kind.

                  (y)  The  Guarantor  and  its  subsidiaries  possess  adequate
certificates,   authorities  and  permits  issued  by  appropriate  governmental
agencies or bodies necessary to conduct, in all material respects,  the business
now operated by them and have not received any notice of proceedings relating to
the revocation or modification of any such certificate, authority or permit that
reasonably would be likely to, individually or in the aggregate, have a Material
Adverse Effect.

                  (z) No  Appraiser  is an  affiliate  of the  Guarantor  or the
Company or, to the knowledge the Guarantor or of the Company,  has a substantial
interest,  direct or indirect, in the Guarantor or the Company. To the knowledge
of the  Guarantor or the Company,  none of the officers and  directors of any of
such  appraisers  are connected  with the Guarantor or the Company or any of its
affiliates as an officer,  employee,  promoter,  underwriter,  trustee, partner,
director or person performing similar functions.

                  The representations and warranties contained in this Agreement
shall be true and correct as of the date of this Agreement and as of the Closing
Date.

                  2.  Offering.  You have advised the  Guarantor and the Company
that the Placement Agent will make an offering of the Certificates  purchased by
the  Placement  Agent  hereunder  on the  terms  to be set  forth  in the  Final
Memorandum  as soon as  practicable  after this  Agreement is entered into as in
your judgment is advisable.

                  3. Purchase and Delivery. The Guarantor and the Company hereby
agree to cause the Trustee to sell to the  Placement  Agent,  and the  Placement
Agent,  upon the basis of the  representations  and warranties herein contained,
but subject to the conditions  hereinafter  stated,  agrees to purchase from the
Trustee the principal  amount of Certificates  of each Pass Through  Certificate
Designation  set forth in  Schedule I hereto at a purchase  price of 100% of the
principal amount thereof.

                  Payment for the Certificates shall be made against delivery of
the  Certificates  at a  closing  (the  "Closing")  to be held at the  office of
Shearman & Sterling,  599 Lexington  Avenue,  New York, New York, at 10:00 A.M.,
local time,  on September  25,  1997,  or at such other time on the same or such
other date, not later than September 30, 1997, as shall be designated in writing
by you. The time and date of such payment are herein  referred to as the Closing
Date.  Delivery  of the  Certificates  shall  be  made to  your  account  at The
Depository  Trust Company against payment by the Placement Agent of the purchase
price  thereof  to or upon  the  order  of the  Trustee  by wire  transfer.  The
Certificates shall be in definitive or global form and registered in the name of
Cede & Co. or in such other names, and in such  denominations as you may request
in writing at least one full  business  day in  advance of the  Closing  Date in
definitive or global form. The Company agrees to have the Certificates available
for  inspection,  checking and packaging by you in New York,  New York not later
than 1:00 P.M. on the business day prior to the Closing Date.

                  As  compensation to the Placement Agent for its commitment and
obligations hereunder in respect of the Certificates,  including its undertaking
to  distribute  the  Certificates,  each Owner Trustee will pay to the Placement
Agent an amount equal to that  percentage of the aggregate  principal  amount of
each Pass Through  Certificate  Designation (to the extent that such Designation
relates to  Equipment  Notes to be issued by such Owner  Trustee or the Company,
respectively)  purchased by it as set forth in Schedule I;  provided that if any
Owner  Trustee  fails to pay such  amounts  when due,  the Company will pay such
amounts.  Such payment shall be made by Federal funds check or other immediately
available funds.

                  4.  Conditions to Closing.  The  obligations  of the Placement
Agent under this Agreement to purchase the  Certificates  will be subject to the
following conditions:

                  (a)      Subsequent to the date of this Agreement and prior to the Closing Date,

                  (i) there shall not have occurred any  downgrading,  nor shall
         any notice have been given of any intended or potential  downgrading or
         of any  review  for a  possible  change  that  does  not  indicate  the
         direction of the  possible  change,  in the rating  accorded any of the
         Guarantor's or the Company's securities, including the Certificates, by
         any "nationally  recognized  statistical rating  organization," as such
         term is defined for  purposes of Rule  436(g)(2)  under the  Securities
         Act; and

                  (ii)  there  shall  not  have  occurred  any  change,  or  any
         development involving a prospective change, in the condition, financial
         or  otherwise,  or in the  earnings,  business  or  operations,  of the
         Guarantor and its  subsidiaries,  taken as a whole, from that set forth
         in the Preliminary  Memorandum that, in your judgment,  is material and
         adverse and that makes it, in your  judgment,  impracticable  to market
         the  Certificates  on the terms and in the manner  contemplated  in the
         Final Memorandum.

                  (b) You shall have received on the Closing Date a certificate,
dated the Closing Date and signed by an executive  officer of the  Guarantor and
the  Company,  to the effect set forth in clause  (a)(i) above and to the effect
that  the  representations  and  warranties  of the  Guarantor  and the  Company
contained in this Agreement are true and correct as of the Closing Date and that
the  Guarantor  and the Company have  complied  with all of the  agreements  and
satisfied all of the conditions on their part to be performed or satisfied on or
before the Closing Date.

                  The officer signing and delivering  such  certificate may rely
upon the best of his knowledge as to proceedings threatened.

                  (c) You shall have  received on the Closing  Date (i) opinions
of Gibson, Dunn & Crutcher and Troutman Sanders LLP, independent counsel for the
Guarantor and the Company,  each dated the Closing Date, to the effect set forth
in  Exhibit A and B,  respectively,  (ii)  opinion  of  General  Counsel  of the
Guarantor  and the Company,  dated the Closing  Date, to the effect set forth in
Exhibit C and (iii) an opinion  of Ober,  Kaler,  Grimes & Shriver,  independent
counsel  for the  Trustee,  dated the Closing  Date,  to the effect set forth in
Exhibit D.

                  (d) You shall have  received on the Closing Date an opinion of
Shearman & Sterling, counsel for the Placement Agent, dated the Closing Date, in
form and substance satisfactory to you.

                  (e) You shall have received on each of the date hereof and the
Closing Date a letter,  dated the date hereof or the Closing  Date,  as the case
may be, in form and substance  satisfactory to you, from the Guarantor's and the
Company's independent public accountants,  containing statements and information
of  the  type  ordinarily   included  in  accountants'   "comfort   letters"  to
underwriters  with respect to the  financial  statements  and certain  financial
information contained in or incorporated by reference into the Final Memorandum.

                  (f) The Guarantor and the Company shall have  furnished to you
and to counsel for the Placement  Agent,  in form and substance  satisfactory to
you,  such other  documents,  certificates  and  opinions  as such  counsel  may
reasonably request in order to pass upon the matters referred to in Section 3(d)
and  in  order  to  evidence  the  accuracy  and  completeness  of  any  of  the
representations,  warranties or statements,  the  performance of any covenant by
the Guarantor or the Company theretofore to be performed, or the compliance with
any of the conditions herein contained.

                  (g)  Each  of  the  Appraisers  shall  have  furnished  to the
Placement Agent a letter from such Appraiser, addressed to the Guarantor and the
Company and dated the Closing Date,  confirming  that such Appraiser and each of
its directors and officers (i) is not an affiliate of the Guarantor, the Company
or any of its affiliates, (ii) does not have any substantial interest, direct or
indirect,  in the  Guarantor,  the Company or any of its affiliates and (iii) is
not connected  with the  Guarantor,  the Company or any of its  affiliates as an
officer, employee, promoter,  underwriter,  trustee, partner, director or person
performing similar functions.

                  (h) On the Closing Date, the Certificates  shall be rated "A-"
in the case of the  Certificates of the Class A Trust,  "BBB" in the case of the
Certificates of the Class B Trust,  "BB-" in the case of the Certificates of the
Class C Trust and "BB-" in the case of the Certificates of the Class D Trust, by
Standard & Poor's Ratings  Service;  and "A3" in the case of the Certificates of
the Class A Trust,  "Baa3" in the case of the Certificates of the Class B Trust,
"Ba2" in the case of the  Certificates of the Class C Trust and "B1" in the case
of the Certificates of the Class D Trust by Moody's Investors Services, Inc.

                  5. Covenants of the Company.  In further  consideration of the
agreements of the Placement Agent contained in this Agreement, the Guarantor and
the Company covenant as follows:

                  (a) To  furnish  to you,  without  charge,  during  the period
         mentioned  in  paragraph  (c)  below,  as  many  copies  of  the  Final
         Memorandum,  any documents  incorporated  by reference  therein and any
         supplements and amendments thereto as you may reasonably request and to
         use its best efforts to deliver such copies to you by 12 noon (New York
         time) on the  second  business  day  following  the  execution  of this
         Agreement.

                  (b) Before amending or  supplementing  either  Memorandum,  to
         furnish to you a copy of each such proposed amendment or supplement and
         not to use any such  proposed  amendment  or  supplement  to which  you
         reasonably object.

                  (c) If,  during such period after the date hereof and prior to
         the date on which all of the  Certificates  shall have been sold by the
         Placement  Agent,  any event shall occur or condition exist as a result
         of which it is necessary in your  judgment to amend or  supplement  the
         Final Memorandum in order to make the statements  therein, in the light
         of the circumstances  when such Memorandum is delivered to a purchaser,
         not  misleading,  or if, with the  opinion of counsel to the  Placement
         Agent it is necessary to amend or supplement  such Memorandum to comply
         with  applicable  law,  forthwith to prepare and furnish,  at their own
         expense,  to the Placement Agent,  either  amendments or supplements to
         such Memorandum so that the statements in such Memorandum as so amended
         or supplemented will not, in the light of the  circumstances  when such
         Memorandum  is delivered to a purchaser,  be misleading or so that such
         Memorandum, as so amended or supplemented,  will comply with applicable
         law.

                  (d) To endeavor to qualify the Certificates for offer and sale
         under  the  securities  or Blue Sky laws of such  jurisdictions  as you
         shall reasonably request.

                  (e) To cause the Financing  Agreements to be duly executed and
         delivered by each of the parties  thereto on or before the Closing Date
         or such later date as may be agreed by the  Guarantor,  the Company and
         the  Placement  Agent  (which later date shall in no case be later than
         October 2, 1997); the  representations  and warranties of the Guarantor
         and the Company contained in each of the Financing  Agreements shall be
         true and  correct  as of the date of  execution  and  delivery  thereof
         (except to the extent  that they  relate  solely to an earlier  date in
         which case they shall be true and correct as of such earlier  date) and
         the  Placement  Agent  shall  have  received  a  certificate  of a Vice
         President of each of the  Guarantor  and the  Company,  dated as of the
         Closing Date (or such later date,  as the case may be), to such effect.
         The Company  agrees to furnish to the Placement  Agent,  promptly after
         the  Closing  Date (or  such  later  date,  as the case may be) and the
         applicable  Delivery  Date  as  defined  in  the  applicable  Financing
         Agreement,  a copy of each opinion  required to be delivered  under the
         applicable  Financing Agreement addressed to the Placement Agent and of
         such other  documents  furnished in connection  with the fulfillment of
         the conditions  precedent therein as the Placement Agent or counsel for
         the Placement Agent may reasonably request.

                  (f)  Whether  or  not  any  sale  of  such   Certificates   is
         consummated,  to pay all expenses  incident to the performance of their
         obligations  under this  Agreement,  including:  (i) the preparation of
         each  Memorandum and all amendments and supplements  thereto,  (ii) the
         preparation,  issuance and delivery of the Certificates, (iii) the fees
         and  disbursements  of the Company's  counsel and  accountants  and the
         Indenture  Trustee,  the  Subordination  Agent,  the Trustees and their
         counsel,  (iv) the qualification of such Certificates  under securities
         or Blue Sky laws in  accordance  with the  provisions  of Section 5(d),
         including filing fees and the fees and disbursements of counsel for the
         Placement  Agent in connection  therewith  and in  connection  with the
         preparation  of any  Blue Sky or legal  investment  memoranda,  (v) the
         printing  and  delivery  to  the  Placement   Agent  in  quantities  as
         hereinabove  stated of copies of the  Memorandum  and any amendments or
         supplements  thereto,  (vi) any fees charged by rating agencies for the
         rating of such Certificates,  (vii) all document production charges and
         expenses of counsel to the  Placement  Agent (but not  including  their
         fees for  professional  services) in connection with the preparation of
         this  Agreement,  (viii) the fees and  expenses,  if any,  incurred  in
         connection  with the  admission  of such  Certificates  for  trading in
         PORTAL  or any  other  appropriate  market  system,  (ix) the costs and
         expenses of the Company relating to investor presentations on any "road
         show" undertaken in connection with the marketing of the  Certificates,
         including, without limitation,  expenses associated with the production
         of road show slides and graphics,  fees and expenses of any consultants
         engaged in connection with the road show  presentations  with the prior
         approval  of  the   Company,   travel  and   lodging   expense  of  the
         representatives  and officers of the Company and any such  consultants,
         and the cost of any  aircraft  chartered  in  connection  with the road
         show, and (x) all other costs and expenses  incident to the performance
         of the obligations of the Guarantor and the Company hereunder for which
         provision is not otherwise made in this Section.

                  (g) Neither the Guarantor,  the Company nor any Affiliate will
         sell, offer for sale or solicit offers to buy or otherwise negotiate in
         respect of any security (as defined in the Securities  Act) which could
         be integrated with the sale of the Certificates in a manner which would
         require the registration under the Securities Act of such Certificates.

                  (h) Not to  solicit  any  offer  to buy or  offer  or sell the
         Certificates  by means of any form of general  solicitation  or general
         advertising  (as  those  terms  are  used in  Regulation  D  under  the
         Securities Act) or in any manner involving a public offering within the
         meaning of Section 4(2) of the Securities Act.

                  (i) While any of the Certificates remain outstanding,  to make
         available,  upon  request,  to any  seller  of  such  Certificates  the
         information  specified in Rule  144A(d)(4)  under the  Securities  Act,
         unless  the  Guarantor  is then  subject  to Section 13 or 15(d) of the
         Exchange Act.

                  (j) None of the Guarantor,  the Company,  their  Affiliates or
         any person  acting on its or their  behalf  (other  than the  Placement
         Agent) will  engage in any  directed  selling  efforts (as that term is
         defined in  Regulation  S) with  respect to the  Certificates,  and the
         Company and their  Affiliates  and each  person  acting on its or their
         behalf (other than the  Placement  Agent) will comply with the offering
         restrictions of Regulation S.

                  (k) For a period of five years after the Closing Date, to make
         available  to  the  Placement  Agent  copies  of  all  annual  reports,
         quarterly  reports and current  reports filed by the Guarantor with the
         Securities and Exchange  Commission (the  "Commission")  on Forms 10-K,
         10-Q and 8-K, or such other  similar  forms as may be designated by the
         Commission, and such other documents,  reports and information as shall
         be  furnished  by the  Company to the  holders of  Certificates  or the
         Guarantor to its security holders generally; provided that at such time
         the Guarantor has securities registered under Section 12(b) or 12(g) of
         the Exchange Act.

                  (l)  During the period of two years  after the  Closing  Date,
         upon  request,  to  furnish  to the  Placement  Agent and any holder of
         Certificates a copy of the  restrictions on transfer  applicable to the
         Certificates.

                  (m) During the period of two years the Closing  Date,  not to,
         and not to permit any of their affiliates (as defined in Rule 144 under
         the Securities Act) to, resell any of the  Certificates  that have been
         reacquired by any of them.

                  (n) During the period of two years after the Closing Date, not
         to be or become an open-end investment  company,  unit investment trust
         or  face-amount  certificate  company  that  is  or is  required  to be
         registered  under  Section  8  of  the  Investment  Company  Act,  or a
         closed-end  investment  company  required  to be  registered,  but  not
         registered, under the Investment Company Act.

                  (o) In connection with the offering, until the Placement Agent
         shall have notified the Guarantor and the Company of the  completion of
         the resale of the  Certificates,  neither  the  Company  nor any of its
         affiliates has bid for or purchased or will bid for or purchase, either
         alone or with one or more other persons, for any account in which it or
         any of its affiliates has a beneficial  interest any Certificates;  and
         neither it nor any of its  affiliates  will make bids or purchases  for
         the purpose of creating actual,  or apparent,  active trading in, or of
         raising the price of, the Certificates.

                  (p) Between the date of this  Agreement  and the Closing Date,
         neither the  Guarantor  nor the Company will without your prior written
         consent  offer,  sell, or enter into any agreement to sell,  any public
         debt  securities  registered  under  the  Securities  Act or  any  debt
         securities  which  may be  resold  in a  transaction  exempt  from  the
         registration  requirements  of the  Securities  Act in reliance on Rule
         144A thereunder and which are marketed  through the use of a disclosure
         document containing  substantially the same information as a prospectus
         for similar debt securities  registered under the Securities Act (other
         than the Certificates).

                  (q) If  requested  by you, to use their best efforts to permit
         the Certificates to be designated  PORTAL securities in accordance with
         the  rules and  regulations  adopted  by the  National  Association  of
         Securities  Dealers,  Inc.  relating  to trading in the PORTAL  Market;
         unless so requested by you, the  Guarantor or the Company will not take
         any  action  to  permit  the  Certificates  to  be  designated   PORTAL
         securities without your prior consent,  which shall not be unreasonably
         withheld.

                  6. Offering of Certificates; Restrictions on Transfer. (a) The
Placement  Agent  represents  and warrants that it is a qualified  institutional
buyer as defined in Rule 144A under the Securities Act (a "QIB").  The Placement
Agent, agrees with the Company that (i) it will not solicit offers for, or offer
or sell,  such  Certificates  by any form of  general  solicitation  or  general
advertising  (as those terms are used in Regulation D under the Securities  Act)
or in any manner  involving a public offering within the meaning of Section 4(2)
of the Securities Act and (ii) it will solicit offers for such Certificates only
from,  and will offer such  Certificates  only to,  persons  that it  reasonably
believes to be (A) in the case of offers inside the United  States,  (x) QIBs or
(y) other  institutional  accredited  investors  (as defined in Rule 501(a) (1),
(2), (3) or (7) under the Securities Act) ("institutional accredited investors")
that,  prior to their  purchase of the  Certificates,  deliver to the  Placement
Agent a letter  containing  the  representations  and  agreements  set  forth in
Appendix III to the Final  Memorandum  and (B) in the case of offers outside the
United States, to persons other than U.S. persons ("foreign  purchasers",  which
term shall  include  dealers  or other  professional  fiduciaries  in the United
States acting on a discretionary basis for foreign beneficial owners (other than
an estate or trust)) that, in each case, in  purchasing  such  Certificates  are
deemed to have  represented and agreed as provided in the Final Memorandum under
the caption "Transfer Restrictions."

                  (b) The Placement Agent, represents, warrants, and agrees with
respect to offers and sales outside the United States that:

                  (i) it understands that no action has been or will be taken in
         any  jurisdiction  by the  Guarantor or the Company that would permit a
         public offering of the  Certificates,  or possession or distribution of
         either Memorandum or any other offering or publicity  material relating
         to the  Certificates,  in any country or jurisdiction  where action for
         that purpose is required;

                  (ii) it will comply with all applicable  laws and  regulations
         in each  jurisdiction in which it acquires,  offers,  sells or delivers
         Certificates or has in its possession or distributes  either Memorandum
         or any such other material, in all cases at its own expense;

                  (iii)  the  Certificates   have  not  been  and  will  not  be
         registered  under the  Securities  Act and may not be  offered  or sold
         within the United  States or to, or for the account or benefit of, U.S.
         persons except in accordance with Regulation S under the Securities Act
         or pursuant to an exemption from the  registration  requirements of the
         Securities Act;

                  (iv) it has offered the  Certificates  and will offer and sell
         the  Certificates  (A) as part of its  distribution at any time and (B)
         otherwise  until 40 days  after  the later of the  commencement  of the
         offering of the  Certificates  and the Closing Date, only in accordance
         with  Rule  903  of  Regulation  S  or  another   exemption   from  the
         registration  requirements of the Securities Act. Accordingly,  neither
         the Placement  Agent,  its  Affiliates nor any persons acting on its or
         their  behalf  have  engaged  or will  engage in any  directed  selling
         efforts  (within  the  meaning  of  Regulation  S) with  respect to the
         Certificates,  and any the Placement Agent, its Affiliates and any such
         persons have  complied  and will comply with the offering  restrictions
         requirements of Regulation S;

                  (v) it has not  offered or sold and will not offer or sell any
         Certificates  to persons in the United Kingdom prior to the expiring of
         the period six months from the issue date of the Certificates except to
         persons whose ordinary  activities involve them in acquiring,  holding,
         managing or disposing of  investments  (as  principal or agent) for the
         purposes of their businesses or otherwise in  circumstances  which have
         not  resulted  and will not  result  in an offer to the  public  in the
         United  Kingdom  within the meaning of the Public  Offers of Securities
         Regulations 1995 (the "Regulations");  (B) has complied and will comply
         with all applicable  provisions of the Financial  Services Act 1986 and
         the Regulations  with respect to anything done by it in relation to the
         Certificates  in, from or otherwise  involving the United Kingdom;  and
         (C) has only  issued or passed on and will only issue or pass on in the
         United Kingdom any document received by it in connection with the issue
         of the  Certificates  to a person who is of a kind described in Article
         11(3) of the Financial  Services Act 1986  (Investment  Advertisements)
         (Exemptions)  Order  1996 or is a  person  to whom  such  document  may
         otherwise lawfully be issued or passed on;

                  (vi) it understands  that the  Certificates  have not been and
         will not be registered  under the Securities and Exchange Law of Japan,
         and represents that it has not offered or sold, and agrees that it will
         not offer or sell, any Certificates, directly or indirectly in Japan or
         to any resident of Japan  except (A) pursuant to an exemption  from the
         registration  requirements  of the Securities and Exchange Law of Japan
         and  (B) in  compliance  with  any  other  applicable  requirements  of
         Japanese law.

Terms used in this Section 6 have the meanings given to them by Regulation S.

                  7. Indemnification and Contribution. (a) The Guarantor and the
Company,  jointly  and  severally,  agree to  indemnify  and hold  harmless  the
Placement  Agent,  and each person,  if any, who  controls the  Placement  Agent
within the meaning of either  Section 15 of the  Securities Act or Section 20 of
the Exchange Act, or is under common  control  with,  or is  controlled  by, the
Placement  Agent,  from and  against  any and all  losses,  claims,  damages and
liabilities  (including,   without  limitation,  any  legal  or  other  expenses
reasonably incurred by the Placement Agent or any such controlling or affiliated
person in connection with defending or  investigating  any such action or claim)
caused by any untrue  statement or alleged  untrue  statement of a material fact
contained in either  Memorandum (as amended or  supplemented if the Guarantor or
the Company shall have  furnished any  amendments or  supplements  thereto),  or
caused by any  omission  or alleged  omission to state  therein a material  fact
necessary to make the  statements  therein in light of the  circumstances  under
which they were made not  misleading,  except  insofar as such  losses,  claims,
damages or  liabilities  are caused by any such untrue  statement or omission or
alleged  untrue  statement or omission  based upon  information  relating to the
Placement  Agent  furnished  to the  Guarantor  or the Company in writing by the
Placement Agent through you expressly for use therein;  provided,  however, that
the foregoing  indemnity  agreement with respect to any  Preliminary  Memorandum
shall not inure to the benefit of the Placement Agent or any person  controlling
the  Placement  Agent if a copy of the  Final  Memorandum  (as then  amended  or
supplemented if the Guarantor or the Company shall have furnished any amendments
or  supplements  thereto) was not sent or given by or on behalf of the Placement
Agent to the person asserting any such losses,  claims,  damages or liabilities,
if  required  by law so to have  been  delivered,  at or  prior  to the  written
confirmation of the sale of the  Certificates  to such person,  and if the Final
Memorandum  (as so amended or  supplemented)  would have cured the defect giving
rise to such losses, claims, damages or liabilities,  unless such failure is the
result of  noncompliance  by the  Guarantor  or the Company  with  Section  5(a)
hereof.

                  (b) The Placement  Agent agrees to indemnify and hold harmless
the Guarantor and the Company, each of their directors,  their officers and each
person,  if any, who controls the Guarantor or the Company within the meaning of
either Section 15 of the Securities Act or Section 20 of the Exchange Act to the
same extent as the foregoing indemnity from the Guarantor and the Company to the
Placement  Agent,  but  only  with  reference  to  information  relating  to the
Placement  Agent  furnished  to the  Guarantor  or the Company in writing by the
Placement  Agent  through  you  expressly  for use in either  Memorandum  or any
amendments or supplements thereto.

                  (c)  In  case  any  proceeding   (including  any  governmental
investigation)  shall be  instituted  involving  any  person in respect of which
indemnity  may be sought  pursuant to either  paragraph  (a) or (b) above,  such
person (the  "indemnified  party") shall promptly notify the person against whom
such  indemnity  may be sought  (the  "indemnifying  party") in writing  and the
indemnifying  party, upon request of the indemnified party, shall retain counsel
reasonably  satisfactory to the  indemnified  party to represent the indemnified
party and any others the indemnifying party may designate in such proceeding and
shall pay the fees and disbursements of such counsel related to such proceeding.
In any such proceeding, any indemnified party shall have the right to retain its
own counsel,  but the fees and expenses of such counsel  shall be at the expense
of such indemnified party unless (i) the indemnifying  party and the indemnified
party shall have  mutually  agreed to the  retention of such counsel or (ii) the
named parties to any such proceeding  (including any impleaded  parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel  would be  inappropriate  due to actual or potential
differing  interests between them. It is understood that the indemnifying  party
shall not, in connection with any proceeding or related  proceedings in the same
jurisdiction, be liable for the fees and expenses of more than one separate firm
(in addition to any local counsel) for all such indemnified parties and that all
such fees and expenses shall be reimbursed as they are incurred. Such firm shall
be designated  in writing by Morgan  Stanley & Co.  Incorporated  in the case of
parties indemnified  pursuant to paragraph (a) above and by the Guarantor or the
Company in the case of parties indemnified  pursuant to paragraph (b) above. The
indemnifying  party  shall not be liable for any  settlement  of any  proceeding
effected  without its written  consent,  but if settled  with such consent or if
there be a final judgment for the plaintiff,  the  indemnifying  party agrees to
indemnify the indemnified party from and against any loss or liability by reason
of such settlement or judgment.  Notwithstanding the foregoing  sentence,  if at
any time an  indemnified  party shall have  requested an  indemnifying  party to
reimburse the indemnified party for fees and expenses of counsel as contemplated
by the second and third  sentences of this  paragraph,  the  indemnifying  party
agrees that it shall be liable for any  settlement  of any  proceeding  effected
without its written  consent if (i) such settlement is entered into more than 30
days after receipt by such indemnifying  party of the aforesaid request and (ii)
such  indemnifying  party shall not have  reimbursed  the  indemnified  party in
accordance  with  such  request  prior  to  the  date  of  such  settlement.  No
indemnifying  party shall,  without the prior written consent of the indemnified
party, effect any settlement of any pending or threatened  proceeding in respect
of which any indemnified party is or could have been a party and indemnity could
have been sought  hereunder by such  indemnified  party,  unless such settlement
includes an unconditional  release of such indemnified  party from all liability
on claims that are the subject matter of such proceeding.

                  (d)  To  the  extent  the  indemnification   provided  for  in
paragraph (a) or (b) of this Section 7 is unavailable to an indemnified party or
insufficient in respect of any losses, claims, damages or liabilities, then each
indemnifying   party  under  such  paragraph,   in  lieu  of  indemnifying  such
indemnified party thereunder,  shall contribute to the amount paid or payable by
such  indemnified  party  as  a  result  of  such  losses,  claims,  damages  or
liabilities  (i) in such  proportion as is  appropriate  to reflect the relative
benefits  received by the  Guarantor and the Company,  on the one hand,  and the
Placement  Agent, on the other hand,  from the offering of such  Certificates or
(ii) if the  allocation  provided  by  clause  (i)  above  is not  permitted  by
applicable  law, in such  proportion as is  appropriate  to reflect not only the
relative  benefits  referred to in clause (i) above but also the relative  fault
the Guarantor and of the Company on the one hand and the Placement  Agent on the
other hand in connection  with the statements or omissions that resulted in such
losses, claims, damages or liabilities,  as well as any other relevant equitable
considerations.  The relative benefits received by the Guarantor and the Company
on the one hand and the Placement Agent on the other hand in connection with the
offering  of such  Certificates  shall be  deemed  to be in the same  respective
proportions as the net proceeds from the offering of such  Certificates  (before
deducting  expenses)  received  by  the  Trusts  and  the  total  discounts  and
commissions  received  by the  Placement  Agent in respect  thereof  bear to the
aggregate  offering  price  of such  Certificates.  The  relative  fault  of the
Guarantor  and the  Company  on the one hand and of the  Placement  Agent on the
other hand 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
Guarantor or the Company or by the  Placement  Agent and the  parties'  relative
intent,  knowledge,  access to information and opportunity to correct or prevent
such statement or omission.

                  (e) The Guarantor,  the Company and the Placement  Agent agree
that it would not be just or equitable if contribution  pursuant to this Section
7 were  determined  by pro rata  allocation or by any other method of allocation
that  does not take  account  of the  equitable  considerations  referred  to in
paragraph  (d) above.  The amount paid or payable by an  indemnified  party as a
result of the losses,  claims,  damages and liabilities referred to in paragraph
(d) above  shall be deemed to  include,  subject  to the  limitations  set forth
above, 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 Section 7, the Placement Agent shall not
be required to contribute  any amount in excess of the amount by which the total
price at which the  Certificates  resold by it in the initial  placement of such
Certificates  were offered to  investors  exceeds the amount of any damages that
the Placement  Agent 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
Securities  Act) shall be entitled to  contribution  from any person who was not
guilty of such  fraudulent  misrepresentation.  The indemnity  and  contribution
provisions contained in this Section 7 and the representations and warranties of
the Guarantor and the Company contained in this Agreement shall remain operative
and in  full  force  and  effect  regardless  of (i)  any  termination  of  this
Agreement, (ii) any investigation made by or on behalf of the Placement Agent or
any person  controlling  the Placement Agent or by or on behalf of the Guarantor
or the  Company,  its  officers  or  directors  or any  person  controlling  the
Guarantor  or the  Company  and (iii)  acceptance  of and payment for any of the
Certificates.  The remedies provided for in this Section 7 are not exclusive and
shall not limit any rights or remedies  which may  otherwise be available to any
indemnified party at law or in equity.

                  8. Termination. This Agreement shall be subject to termination
by notice given by you to the Company,  if (a) after the  execution and delivery
of this Agreement and prior to the Closing Date (i) trading generally shall have
been  suspended or  materially  limited on or by, as the case may be, any of the
New York Stock Exchange,  the American Stock Exchange,  the National Association
of Securities Dealers,  Inc., the Chicago Board of Options Exchange, the Chicago
Mercantile  Exchange  or  the  Chicago  Board  of  Trade,  (ii)  trading  of any
securities  of the Company  shall have been  suspended on any exchange or in any
over-the-counter  market,  (iii) a  general  moratorium  on  commercial  banking
activities  in New York shall have been  declared by either  Federal or New York
State  authorities  or (iv) there shall have occurred any outbreak or escalation
of  hostilities  or any change in  financial  markets or any  calamity or crisis
that,  in your  judgment,  is material and adverse and (b) in the case of any of
the events  specified  in clauses  (a)(i)  through  (iv),  such event  singly or
together with any other such event makes it, in your judgment,  impracticable to
market the Certificates on the terms and in the manner contemplated in the Final
Memorandum. If this Agreement is terminated by the Placement Agent in accordance
with the  provisions  of this  Section 8, the  Guarantor  and the Company  shall
reimburse the Placement  Agent for all its  reasonable  out-of-pocket  expenses,
including the fees and disbursements of counsel for the Placement Agent.

                  9. All notices and other  communications  under this Agreement
shall be in  writing,  and,  if sent to the  Placement  Agent,  shall be mailed,
delivered or sent by facsimile transmission to:

         Morgan Stanley & Co. Incorporated
         1585 Broadway
         New York, New York 10036
         Attention:  Bruce Paone
         Facsimile number: (212) 761-0786

or, if sent to the Guarantor or the Company, will be mailed,  delivered or sent by facsimile  transmission
to it at:

         Atlantic Coast Airlines
         515 A Shaw Road
         Dulles, VA  20166
         Attention:  General Counsel
         Facsimile number:  (703) 925-6294

with a copy to:

         Gibson, Dunn & Crutcher
         1050 Connecticut Ave., N.W.
         Washington, DC  20036
         Attention:  Ronald O. Mueller, Esq.
         Facsimile number:  (202) 530-9316

                  10.   This   Agreement   may  be  signed  in  any   number  of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.

                  If this Agreement  shall be terminated by the Placement  Agent
because of any failure or refusal on the part of the Guarantor or the Company to
comply with the terms or to fulfill any of the conditions of this Agreement,  or
if for any reason the  Guarantor  or the Company  shall be unable to perform its
obligations  under this Agreement,  the Guarantor and the Company will,  jointly
and  severally,  reimburse the Placement  Agent for all  out-of-pocket  expenses
(including the fees and disbursements of their counsel)  reasonably  incurred by
the  Placement   Agent  in  connection  with  this  Agreement  or  the  offering
contemplated hereunder.

                  This   Agreement   shall  be  governed  by  and  construed  in
accordance with the internal laws of the State of New York.

                  The  headings  of the  sections  of this  Agreement  have been
inserted for  convenience  of  reference  only and shall not be deemed a part of
this Agreement.


<PAGE>


                  Please  confirm your  agreement to the foregoing by signing in
the space  provided  below for that  purpose and  returning to us a copy hereof,
whereupon this Agreement shall constitute a binding agreement between us.


                                                                       Very truly yours,

                                                                       ATLANTIC COAST AIRLINES, INC.


                                                                       By



                                                                       ATLANTIC COAST AIRLINES


                                                                       By


Agreed, September 19, 1997

Morgan Stanley & Co.
    Incorporated


By


<PAGE>


                                                         3










SS_NYL4/246328
SS_NYL4/246328




SS_NYL4/246328
                                   SCHEDULE I


<PAGE>


                                                         3










SS_NYL4/246328



        Pass Through                              Aggregate                                                  Final
         Certificate                              Principal                     Interest                  Distribution
          Designation                              Amounts                        Rate                        Date

           1997-1A                             $57,714,000                        7.20%                    1/1/2014
           1997-1B                              24,734,000                        7.35                     1/1/2011
           1997-1C                              23,333,000                        8.75                     1/1/2007
           1997-1D                               5,805,000                        7.97                     1/1/2000
                                                 ---------

           Total:                             $111,586,000


         Fees payable to the Placement Agent:
         $1,180,766  (1.058 % of the aggregate  principal amount of the  Certificates;  includes  $125,000
         advisory fee pursuant to Engagement Letter of September 9, 1997)


<PAGE>


                                       A-1



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