exv4w21



 








Exhibit 4.21




REGISTRATION RIGHTS AGREEMENT




between




ATLANTIC COAST AIRLINES HOLDINGS, INC.




as Issuer,




and




MORGAN STANLEY & CO. INCORPORATED,




as Initial Purchaser




Dated as of February 25, 2004




 







 








     REGISTRATION RIGHTS AGREEMENT dated as of February 25, 2004 by and between
Atlantic Coast Airlines Holdings, Inc., a Delaware corporation (the “Company”),
and Morgan Stanley & Co. Incorporated, as the initial purchaser (the “Initial
Purchaser”) under the Purchase Agreement dated February 19, 2004 (the “Purchase
Agreement”), by and between the Company and the Initial Purchaser. In order to
induce the Initial Purchaser to enter into the Purchase Agreement, the Company
has agreed to provide the registration rights set forth in this Agreement. The
execution of this Agreement is a condition to the closing under the Purchase
Agreement.



     The Company agrees with the Initial Purchaser, (i) for its benefit as
Initial Purchaser and (ii) for the benefit of the beneficial owners (including
the Initial Purchaser) from time to time of the Convertible Notes (as defined
herein) and the beneficial owners from time to time of the Underlying Common
Shares (as defined herein) issued upon conversion of the Convertible Notes
(each of the foregoing a “Holder” and together the “Holders”), as follows:



     Section 1. Definitions. Capitalized terms used herein without
definition shall have their respective meanings set forth in the Purchase
Agreement. As used in this Agreement, the following terms shall have the
following meanings:



    “Affiliate” means with respect to any specified person, an “affiliate,” as
defined in Rule 144, of such person.



    “Amendment Effectiveness Deadline Date” has the meaning set forth in
Section 2(d) hereof.



    “Business Day” means each Monday, Tuesday, Wednesday, Thursday and Friday
that is not a day on which banking institutions in The City of New York are
authorized or obligated by law or executive order to close.



    “Common Shares” means the common shares, $0.02 par value, of the Company
and any and all securities of any kind whatsoever of the Company which are
received in exchange for Common Shares or into which the Common Shares are
converted, including the Underlying Common Shares.



    “Conversion Price” has the meaning assigned such term in the Indenture.



    “Convertible Notes” means the Company’s 6% Convertible Notes Due 2034.



    “Damages Accrual Period” has the meaning set forth in Section 2(e) hereof.



    “Damages Payment Date” means each February 15 and August 15.



    “Deferral Notice” has the meaning set forth in Section 3(i) hereof.



    “Deferral Period” has the meaning set forth in Section 3(i) hereof.



    “Effectiveness Deadline Date” has the meaning set forth in Section 2(a)
hereof.



 









 





    “Effectiveness Period” means the period commencing on the date the Initial
Shelf Registration Statement is declared effective and ending on the date that
all Registrable Securities have ceased to be Registrable Securities.



    “Exchange Act” means the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the SEC promulgated thereunder.



    “Filing Deadline Date” has the meaning set forth in Section 2(a) hereof.



    “Holder” has the meaning set forth in the second paragraph of this
Agreement.



    “indemnified party” has the meaning set forth in Section 6(c) hereof.



    “indemnifying party” has the meaning set forth in Section 6(c) hereof.



    “Indenture” means the Indenture dated February 25, 2004 between the
Company and the Trustee pursuant to which the Convertible Notes will be issued.



    “Initial Purchaser” has the meaning set forth in the preamble to this
Agreement.



    “Initial Shelf Registration Statement” has the meaning set forth in
Section 2(a) hereof.



    “Interest Payment Date” means February 15 and August 15 of each year,
beginning August 15, 2004 and ending at such time as specified in the
Indenture.



     “Issue Date” means the date the Convertible Notes are issued pursuant to
the Indenture.



    “Liquidated Damages Amount” has the meaning set forth in Section 2(e)
hereof.



    “Losses” has the meaning set forth in Section 6(a) hereof.



    “Material Event” has the meaning set forth in Section 3(i) hereof.



    “Notice and Questionnaire” means a written notice delivered to the Company
containing substantially the information called for by the Selling
Securityholder Notice and Questionnaire attached as Annex A to the Offering
Memorandum.



    “Notice Holder” means, on any date, any Holder that has delivered a
completed and signed Notice and Questionnaire to the Company on or prior to
such date.



    “Offering Memorandum” means the Offering Memorandum relating to the
Convertible Notes dated February 19, 2004



    “Prospectus” means the prospectus included in any Registration Statement
(including, without limitation, a prospectus that discloses information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated under the Securities Act), as
amended or supplemented by any amendment or prospectus supplement, including
post-effective amendments, and all materials incorporated by reference or
explicitly deemed to be incorporated by reference in such Prospectus.



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    “Purchase Agreement” has the meaning set forth in the preamble hereof.



    “Record Date” has the meaning assigned to such term in the Indenture.



    “Record Holder” means (i) with respect to any Damages Payment Date
relating to any Convertible Notes as to which any such Liquidated Damages
Amount has accumulated, the holder of record of such share of Convertible Notes
on the Record Date with respect to the Interest Payment Date on which such
Damages Payment Date shall occur and (ii) with respect to any Damages Payment
Date relating to the Underlying Common Shares as to which any such Liquidated
Damages Amount has accrued, the registered holder of such Underlying Common
Shares on the Record Date immediately preceding the relevant Damages Payment
Date.



    “Registrable Securities” means any Convertible Notes until such
Convertible Notes have been converted into the Underlying Common Shares and, at
all times subsequent to any such conversion, the Underlying Common Shares and
any securities into or for which such Underlying Common Shares have been
converted or exchanged, and any security issued with respect thereto upon any
stock dividend, split or similar event until, in the case of any such security,
the earliest of (i) its effective registration under the Securities Act and
resale in accordance with the Registration Statement covering it, (ii)
expiration of the holding period that would be applicable thereto under Rule
144(k) to a sale by a non-Affiliate of the Company or (iii) its sale to the
public pursuant to Rule 144 (or any similar provision then in force, but not
Rule 144A).



    “Registration Default” has the meaning set forth in Section 2(e) hereof.



    “Registration Statement” means any registration statement of the Company
that covers any of the Registrable Securities pursuant to the provisions of
this Agreement including the Prospectus, amendments and supplements to such
registration statement, including post-effective amendments, all exhibits, and
all materials incorporated by reference or explicitly deemed to be incorporated
by reference in such registration statement.



    “Restricted Securities” means “Restricted Securities” as defined in Rule
144.



    “Rule 144” means Rule 144 under the Securities Act, as such Rule may be
amended from time to time, or any similar rule or regulation hereafter adopted
by the SEC.



    “Rule 144A” means Rule 144A under the Securities Act, as such Rule may be
amended from time to time, or any similar rule or regulation hereafter adopted
by the SEC.



    “SEC” means the Securities and Exchange Commission.



    “Securities Act” means the Securities Act of 1933, as amended, and the
rules and regulations promulgated by the SEC thereunder.



    “Shelf Registration Statement” has the meaning set forth in Section 2(a)
hereof.



    “Special Counsel” means a nationally recognized law firm experienced in
securities law matters designated by the Company, with the written consent of
the Initial Purchaser (which



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shall not be unreasonably withheld), the reasonable fees and expenses of
which will be paid by the Company pursuant to Section 5 hereof, or one such
other successor counsel as shall be specified by the Holders of a majority of
the Registrable Securities.




    “Subsequent Shelf Registration Statement” has the meaning set forth in
Section 2(b) hereof.



    “Trustee” means U.S. Bank National Association and its successors as
defined in the Indenture.



    “Underlying Common Shares” means the Common Shares into which the
Convertible Notes are convertible or that are issued upon any such conversion,
and that are held by a Notice Holder.



     Section 2. Shelf Registration. (a) The Company shall prepare and file
or cause to be prepared and filed with the SEC, by the date (the “Filing
Deadline Date”) ninety (90) days after the Issue Date, a Registration Statement
for an offering to be made on a delayed or continuous basis pursuant to Rule
415 of the Securities Act (a “Shelf Registration Statement”) registering the
resale from time to time by Holders thereof of all of the Registrable
Securities (the “Initial Shelf Registration Statement”). The Initial Shelf
Registration Statement shall be on Form S-3 or another appropriate form
permitting registration of such Registrable Securities for resale by such
Holders in accordance with the methods of distribution elected by the Holders
and set forth in the Initial Shelf Registration Statement; provided that in no
event will such methods of distribution take the form of an underwritten
offering of the Registrable Securities without the prior agreement of the
Company. The Company shall use its reasonable best efforts to cause the
Initial Shelf Registration Statement to be declared effective under the
Securities Act as promptly as is practicable but in any event by the date (the
“Effectiveness Deadline Date”) that is one hundred eighty (180) days after the
Issue Date, and, to keep the Initial Shelf Registration Statement (or any
Subsequent Shelf Registration Statement) continuously effective under the
Securities Act until the expiration of the Effectiveness Period. At the time
the Initial Shelf Registration Statement is declared effective, each Holder
that became a Notice Holder on or prior to the date ten (10) Business Days
prior to such time of effectiveness shall be named as a selling securityholder
in the Initial Shelf Registration Statement and the related Prospectus in such
a manner as to permit such Holder to deliver such Prospectus to purchasers of
Registrable Securities in accordance with applicable law. None of the
Company’s securityholders (other than the Holders of Registrable Securities)
shall have the right to include any of the Company’s securities in the Shelf
Registration Statement.



     (b) If the Initial Shelf Registration Statement or any Subsequent Shelf
Registration Statement ceases to be effective for any reason at any time during
the Effectiveness Period (other than because all Registrable Securities
registered thereunder shall have been resold pursuant thereto or shall have
otherwise ceased to be Registrable Securities), the Company shall use its
reasonable best efforts to obtain the prompt withdrawal of any order suspending
the effectiveness thereof, and in any event shall within thirty (30) days of
such cessation of effectiveness amend the Shelf Registration Statement in a
manner reasonably expected to obtain the withdrawal of the order suspending the
effectiveness thereof, or file an additional Shelf Registration Statement
covering all of the securities that as of the date of such filing are
Registrable Securities (a



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“Subsequent Shelf Registration Statement”). If a Subsequent Shelf
Registration Statement is filed, the Company shall use its commercially
reasonable best efforts to cause the Subsequent Shelf Registration Statement to
become effective as promptly as is practicable after such filing and to keep
such Registration Statement (or subsequent Shelf Registration Statement)
continuously effective until the end of the Effectiveness Period.




     (c) The Company shall supplement and amend the Shelf Registration
Statement if required by the rules, regulations or instructions applicable to
the registration form used by the Company for such Shelf Registration
Statement, if required by the Securities Act.



     (d) Each Holder agrees that if such Holder wishes to sell Registrable
Securities pursuant to a Shelf Registration Statement and related Prospectus,
it will do so only in accordance with this Section 2(d) and Section 3(i). Each
Holder wishing to sell Registrable Securities pursuant to a Shelf Registration
Statement and related Prospectus agrees to deliver a signed Notice and
Questionnaire to the Company at least three (3) Business Days prior to any
intended distribution of Registrable Securities under the Shelf Registration
Statement. From and after the date the Initial Shelf Registration Statement is
declared effective, the Company shall, as promptly as practicable after the
date a Notice and Questionnaire is delivered, and in any event upon the later
of (x) fifteen (15) Business Days after such date or (y) fifteen (15) Business
Days after the expiration of any Deferral Period in effect when the Notice and
Questionnaire is delivered or put into effect within fifteen (15) Business Days
of such delivery date:




          (i) if required by applicable law, file with the SEC a
post-effective amendment to the Shelf Registration Statement or prepare
and, if required by applicable law, file a supplement to the related
Prospectus or a supplement or amendment to any document incorporated
therein by reference or file any other document required by applicable
law so that the Holder delivering such Notice and Questionnaire is named
as a selling securityholder in the Shelf Registration Statement and the
related Prospectus in such a manner as to permit such Holder to deliver
such Prospectus to purchasers of the Registrable Securities in accordance
with applicable law and, if the Company shall file a post-effective
amendment to the Shelf Registration Statement, use its commercially
reasonable best efforts to cause such post-effective amendment to be
declared effective under the Securities Act as promptly as is
practicable, but in any event by the date (the “Amendment Effectiveness
Deadline Date”) that is forty-five (45) days after the date such
post-effective amendment is filed;




          (ii) upon request, provide such Holder copies of any documents filed
pursuant to Section 2(d)(i); and




          (iii) notify such Holder as promptly as practicable after the
effectiveness under the Securities Act of any post-effective amendment
filed pursuant to Section 2(d)(i);


provided that if such Notice and Questionnaire is delivered during a Deferral
Period, the Company shall so inform the Holder delivering such Notice and
Questionnaire and shall take the actions set forth in clauses (i), (ii) and
(iii) above upon expiration of the Deferral Period in accordance with Section
3(i). Notwithstanding anything contained herein to the contrary, (i) the
Company shall be under no obligation to name any Holder that is not a Notice
Holder as a selling




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securityholder in any Registration Statement or related Prospectus and (ii) the
Amendment Effectiveness Deadline Date shall be extended by up to ten (10)
Business Days from the expiration of a Deferral Period (and the Company shall
incur no obligation to pay Liquidated Damages during such extension) if such
Deferral Period shall be in effect on the Amendment Effectiveness Deadline
Date.




     (e) The parties hereto agree that the Holders of Registrable Securities
will suffer damages, and that it would not be feasible to ascertain the extent
of such damages with precision, if




          (i) the Initial Shelf Registration Statement has not been filed on
or prior to the Filing Deadline Date,




          (ii) the Initial Shelf Registration Statement has not been declared
effective under the Securities Act on or prior to the Effectiveness
Deadline Date,




          (iii) the Company has failed to perform its obligations set forth in
Section 2(d) within the time period required therein,




          (iv) any post-effective amendment to a Shelf Registration Statement
filed pursuant to Section 2(d)(i) has not become effective under the
Securities Act on or prior to the Amendment Effectiveness Deadline Date,




          (v) the aggregate duration of Deferral Periods in any period exceeds
the number of days permitted in respect of such period pursuant to
Section 3(i) hereof, or




          (vi) the number of Deferral Periods in any period exceeds the number
permitted in respect of such period pursuant to Section 3(i) hereof.


Each event described in any of the foregoing clauses (i) through (vi) is
individually referred to herein as a “Registration Default.” For purposes of
this Agreement, each Registration Default set forth above shall begin on the
dates set forth in the table set forth below and shall continue until the
ending dates set forth in the table below:




	 	 	 	 	 
	Type of Registration	 	 	 	 
	Default by Clause
	 	Beginning Date
	 	Ending Date

	(i)

	 	Filing Deadline Date
	 	the date the Initial Shelf Registration
Statement is filed
	 
	 	 	 	 
	(ii)

	 	Effectiveness Deadline Date
	 	the date the Initial Shelf
Registration Statement becomes effective under the
Securities Act








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	Type of Registration	 	 	 	 
	Default by Clause
	 	Beginning Date
	 	Ending Date

	(iii)

	 	the date by which the
Company is required to perform its obligations under Section 2(d)
	 	the date the Company
performs its obligations set forth in Section 2(d)
	 
	 	 	 	 
	(iv)

	 	the Amendment Effectiveness Deadline Date
	 	the date the
applicable
post-effective
amendment to a Shelf
Registration
Statement becomes
effective under the
Securities Act
	 
	 	 	 	 
	(v)

	 	the date on which the
aggregate duration of
Deferral Periods in
any period exceeds
the number of days
permitted by Section
3(i)
	 	termination of the
Deferral Period that
caused the limit on
the aggregate
duration of Deferral
Periods to be
exceeded
	 
	 	 	 	 
	(vi)

	 	the date of
commencement of a
Deferral Period that
causes the number of
Deferral Periods to
exceed the number
permitted by Section
3(i)
	 	termination of the
Deferral Period that
caused the number of
Deferral Periods to
exceed the number
permitted by Section
3(i)







     Commencing on (and including) any date that a Registration Default has
begun and ending on (but excluding) the next date on which there are no
Registration Defaults that have occurred and are continuing (a “Damages Accrual
Period”), the Company shall pay, as liquidated damages and not as a penalty, to
Record Holders of Registrable Securities an amount (the “Liquidated Damages
Amount”) accruing, for each day in the Damages Accrual Period, (i) in respect
of each Convertible Note then outstanding, at a rate per annum equal to 0.25%
for the first 90-day period after a Registration Default and 0.50% thereafter
of the aggregate principal amount of the Convertible Notes and (ii) in respect
of each share of Underlying Common Shares then outstanding, at a rate per annum
equal to 0.25% for the first 90-day period after a Registration Default and
0.50% thereafter of the Conversion Price in effect on the first day of any such
period; provided that in the case of a Damages Accrual Period that is in effect
solely as a result of a Registration Default of the type described in clause
(iii) or (iv) of the preceding paragraph, such Liquidated Damages Amount shall
be paid only to the Holders (as set forth in the succeeding paragraph) that
have delivered Notices and Questionnaires that caused the Company to incur the
obligations set forth in Section 2(d) the non-performance of which is the basis
of such Registration Default. Notwithstanding the foregoing, no Liquidated
Damages Amount shall cumulate as to any Registrable Security from and after the
earlier of (x) the date



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such security is no longer a Registrable Security and (y) expiration of
the Effectiveness Period. The rate of accumulation of the Liquidated Damages
Amount with respect to any period shall not exceed the rate provided for in
this paragraph notwithstanding the occurrence of multiple concurrent
Registration Defaults.




     The Liquidated Damages Amount shall cumulate from the first day of the
applicable Damages Accrual Period, and shall be payable in cash on each Damages
Payment Date during the Damages Accrual Period to the Record Holder of the
Registrable Securities on the record date immediately preceding the applicable
Damages Payment Date (and on the Damages Payment Date next succeeding the end
of the Damages Accrual Period if the Damages Accrual Period does not end on a
Damages Payment Date) to the Record Holders of the Registrable Securities as of
the date that such Damages Accrual Period ends; provided, that, in the case of
a Registration Default of the type described in clause (iii) or (iv) of the
first paragraph of this Section 2(e), such Liquidated Damages Amount shall be
paid only to the Holders entitled thereto pursuant to such first paragraph by
check mailed to the address set forth in the Notice and Questionnaire delivered
by such Holder or as otherwise agreed to by the Company and such Holder.
Notwithstanding the foregoing, the parties agree that the sole damages payable
for a violation of the terms of this Agreement shall be the Liquidated Damages
Amount. Nothing shall preclude any Holder from pursuing or obtaining specific
performance or other equitable relief with respect to this Agreement.



     All of the Company’s obligations set forth in this Section 2(e) that are
outstanding with respect to any Registrable Security at the time such security
ceases to be a Registrable Security shall survive until such time as all such
obligations with respect to such security have been satisfied in full
(notwithstanding termination of this Agreement pursuant to Section 8(k)) or, in
the case of the Liquidated Damages Amount payable on any Convertible Notes,
until such notes cease to be outstanding.


     The parties hereto agree that the Liquidated Damages Amount provided for
in this Section 2(e) constitutes a reasonable estimate of the damages that may
be incurred by Holders of Registrable Securities by reason of the failure of
the Shelf Registration Statement to be filed or declared effective or available
for effecting resales of Registrable Securities in accordance with the
provisions hereof.


     Section 3.
Registration Procedures. In connection with the registration
obligations of the Company under Section 2 hereof, the Company shall:



     (a) Prepare and file with the SEC a Registration Statement or
Registration Statements on any appropriate form under the Securities Act
available for the sale of the Registrable Securities by the Holders
thereof in accordance with the intended method or methods of distribution
thereof, and use its reasonable best efforts to cause each such
Registration Statement to become effective and remain effective as
provided herein; provided that before filing any Registration Statement
or Prospectus or any amendments or supplements thereto with the SEC,
furnish to the Initial Purchaser and the Special Counsel of such
offering, if any, copies of all such documents proposed to be filed and
use its commercially reasonable best efforts to reflect in each such
document when so filed with the SEC such comments as the Initial
Purchaser or the Special Counsel, if any,



8









 






reasonably shall propose within three (3) Business Days of the
delivery of such copies to the Initial Purchaser and the Special Counsel.




     (b) Prepare and file with the SEC such amendments and post-effective
amendments to each Registration Statement as may be necessary to keep
such Registration Statement continuously effective for the applicable
period specified in Section 2(a); cause the related Prospectus to be
supplemented by any required prospectus supplement, and as so
supplemented to be filed pursuant to Rule 424 (or any similar provisions
then in force) under the Securities Act; and use its commercially
reasonable best efforts to comply with the provisions of the Securities
Act applicable to it with respect to the disposition of all securities
covered by such Registration Statement during the Effectiveness Period in
accordance with the intended methods of disposition by the sellers
thereof set forth in such Registration Statement as so amended or such
Prospectus as so supplemented.




     (c) As promptly as practicable give notice to the Notice Holders,
the Initial Purchaser and the Special Counsel, (i) when any Prospectus,
prospectus supplement, Registration Statement or post-effective amendment
to a Registration Statement has been filed with the SEC and, with respect
to a Registration Statement or any post-effective amendment, when the
same has been declared effective, (ii) of any request, following the
effectiveness of the Initial Shelf Registration Statement under the
Securities Act, by the SEC or any other federal or state governmental
authority for amendments or supplements to any Registration Statement or
related Prospectus or for additional information, (iii) of the issuance
by the SEC or any other federal or state governmental authority of any
stop order suspending the effectiveness of any Registration Statement or
the initiation or threatening of any proceedings for that purpose, (iv)
of the receipt by the Company of any notification with respect to the
suspension of the qualification or exemption from qualification of any of
the Registrable Securities for sale in any jurisdiction or the initiation
or threatening of any proceeding for such purpose, (v) of the occurrence
of (but not the nature of or details concerning) a Material Event
(provided, however, that no notice by the Company shall be required
pursuant to clause (v) in the event that the Company either promptly
files or causes to be filed a prospectus supplement to update the
Prospectus or a Form 8-K or other appropriate Exchange Act report that is
incorporated by reference into the Registration Statement, which, in
either case, contains the requisite information with respect to such
Material Event) and (vi) of the determination by the Company that a
post-effective amendment to a Registration Statement will be filed with
the SEC, which notice may, at the discretion of the Company (or as
required pursuant to Section 3(i)), state that it constitutes a Deferral
Notice, in which event the provisions of Section 3(i) shall apply.




     (d) Use its reasonable best efforts to obtain the withdrawal of any
order suspending the effectiveness of a Registration Statement or the
lifting of any suspension of the qualification (or exemption from
qualification) of any of the Registrable Securities for sale in any
jurisdiction in which they have been qualified for sale, in either case
at the earliest possible moment, and provide prompt notice to each Notice
Holder and the Initial Purchaser of the withdrawal of any such order.



9









 






     (e) If reasonably requested by the Initial Purchaser or any Notice
Holder, as promptly as reasonably practicable incorporate in a prospectus
supplement or post-effective amendment to a Registration Statement such
information as the Initial Purchaser and the Special Counsel, or such
Notice Holder shall on the basis of an opinion of nationally-recognized
counsel experienced in such matters, determine to be required to be
included therein by applicable law and make any required filings of such
prospectus supplement or post-effective amendment; provided, that the
Company shall not be required to take any actions under this Section 3(e)
that are not, in the reasonable opinion of counsel for the Company, in
compliance with applicable law.




     (f) As promptly as reasonably practicable furnish to each Notice
Holder, the Special Counsel and the Initial Purchaser, without charge, at
least one (1) conformed copy of the Registration Statement and any
amendment thereto, including all exhibits, but excluding all documents
incorporated or deemed to be incorporated therein by reference.




     (g) During the Effectiveness Period, deliver to each Notice Holder,
the Special Counsel, if any, and the Initial Purchaser, in connection
with any sale of Registrable Securities pursuant to a Registration
Statement, without charge, as many copies of the Prospectus or
Prospectuses relating to such Registrable Securities (including each
preliminary prospectus) and any amendment or supplement thereto as such
Notice Holder may reasonably request; to provide a “reasonable number” of
copies thereof to the Nasdaq Stock Market, Inc. as contemplated by Rule
153 under the Securities Act; and the Company hereby consents (except
during such periods that a Deferral Notice is outstanding and has not
been revoked) to the use of such Prospectus or each amendment or
supplement thereto by each Notice Holder in connection with any offering
and sale of the Registrable Securities covered by such Prospectus or any
amendment or supplement thereto in the manner set forth therein.




     (h) Prior to any public offering of the Registrable Securities
pursuant to a Registration Statement, use its commercially reasonable
best efforts to register or qualify or cooperate with the Notice Holders
and the Special Counsel in connection with the registration or
qualification (or exemption from such registration or qualification) of
such Registrable Securities for offer and sale under the securities or
Blue Sky laws of such jurisdictions within the United States as any
Notice Holder reasonably requests in writing (which request may be
included in the Notice and Questionnaire); prior to any public offering
of the Registrable Securities pursuant to the Shelf Registration
Statement, use its commercially reasonable best efforts to keep each such
registration or qualification (or exemption therefrom) effective during
the Effectiveness Period in connection with such Notice Holder’s offer
and sale of Registrable Securities pursuant to such registration or
qualification (or exemption therefrom) and do any and all other acts or
things reasonably necessary or advisable to enable the disposition in
such jurisdictions of such Registrable Securities in the manner set forth
in the relevant Registration Statement and the related Prospectus;
provided that the Company will not be required to (i) qualify as a
foreign corporation or as a dealer in securities in any jurisdiction
where it would not otherwise be required to qualify but for this
Agreement or (ii) take any action that would subject it to general
service of process in suits or to taxation in any such jurisdiction where
it is not then so subject.



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     (i) Upon (A) the issuance by the SEC of a stop order suspending the
effectiveness of the Shelf Registration Statement or the initiation of
proceedings with respect to the Shelf Registration Statement under
Section 8(d) or 8(e) of the Securities Act, (B) the occurrence of any
event or the existence of any fact (a “Material Event”) as a result of
which any Registration Statement shall contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, or
any Prospectus shall contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or (C) the
occurrence or existence of any pending corporate development that, in the
reasonable discretion of the Company, makes it appropriate to suspend the
availability of the Shelf Registration Statement and the related
Prospectus for a discrete period of time:




          (i) in the case of clause (B) above, subject to clause (ii)
below, as promptly as practicable prepare and file, if necessary
pursuant to applicable law, a post-effective amendment to such
Registration Statement or a supplement to the related Prospectus or
any document incorporated therein by reference or file any other
required document that would be incorporated by reference into such
Registration Statement and Prospectus so that such Registration
Statement does not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, and such
Prospectus does not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, as
thereafter delivered to the purchasers of the Registrable
Securities being sold thereunder, and, in the case of a
post-effective amendment to a Registration Statement, subject to
the next sentence, use its commercially reasonable best efforts to
cause it to be declared effective as promptly as is practicable,
and




          (ii) give notice to the Notice Holders, and the Special
Counsel, if any, that the availability of the Shelf Registration
Statement is suspended (a “Deferral Notice”) and, upon receipt of
any Deferral Notice, each Notice Holder agrees not to sell any
Registrable Securities pursuant to the Registration Statement until
such Notice Holder’s receipt of copies of the supplemented or
amended Prospectus provided for in clause (i) above, or until it is
advised in writing by the Company that the Prospectus may be used,
and has received copies of any additional or supplemental filings
that are incorporated or deemed incorporated by reference in such
Prospectus.




     The Company will use its commercially reasonable best efforts to
ensure that the use of the Prospectus may be resumed (x) in the case of
clause (A) above, as promptly as is practicable, (y) in the case of
clause (B) above, as soon as, in the sole judgment of the Company, public
disclosure of such Material Event would not be prejudicial to or contrary
to the interests of the Company or, if necessary to avoid unreasonable
burden or expense, as soon as practicable thereafter and (z) in the case
of clause (C) above, as soon



11









 






as in the reasonable discretion of the Company, such suspension is
no longer appropriate. The Company shall be entitled to exercise its
right under this Section 3(i) to suspend the availability of the Shelf
Registration Statement or any Prospectus, without incurring or accruing
any obligation to pay liquidated damages pursuant to Section 2(e), no
more than one (1) time in any three month period or three (3) times in
any twelve month period, and any such period during which the
availability of the Registration Statement and any Prospectus is
suspended (the “Deferral Period”) shall, without incurring any obligation
to pay liquidated damages pursuant to Section 2(e), not exceed 30 days in
any three month period; provided that the aggregate duration of any
Deferral Periods shall not exceed 90 days in any twelve (12) month
period; provided further that in the case of clause (C) above, when such
corporate development relates to possible acquisitions, financings or
similar transactions, then the Deferral Periods may aggregate up to 60
days in any three month period.




     (j) If reasonably requested in writing in connection with a
disposition of Registrable Securities pursuant to a Registration
Statement and upon three (3) Business Days’ prior notice, make reasonably
available for inspection during normal business hours by a representative
for the Notice Holders of such Registrable Securities, any
broker-dealers, attorneys and accountants retained by such Notice
Holders, and any attorneys or other agents retained by a broker-dealer
engaged by such Notice Holders, all relevant financial and other records
and pertinent corporate documents and properties of the Company and its
subsidiaries, and cause the appropriate officers, directors and employees
of the Company and its subsidiaries to make reasonably available for
inspection during normal business hours on reasonable notice all relevant
information reasonably requested by such representative for the Notice
Holders, or any such broker-dealers, attorneys or accountants in
connection with such disposition, in each case as is customary for
similar “due diligence” examinations; provided that such persons shall
first agree in writing with the Company that any information that is
reasonably and in good faith designated by the Company in writing as
confidential at the time of delivery of such information shall be kept
confidential by such persons and shall be used solely for the purposes of
exercising rights under this Agreement, unless (i) disclosure of such
information is required by court or administrative order or is necessary
to respond to inquiries of regulatory authorities, (ii) disclosure of
such information is required by law (including any disclosure
requirements pursuant to federal securities laws in connection with the
filing of any Registration Statement or the use of any prospectus
referred to in this Agreement), (iii) such information becomes generally
available to the public other than as a result of a disclosure or failure
to safeguard by any such person or (iv) such information becomes
available to any such person from a source other than the Company and
such source is not bound by a confidentiality agreement, and provided
further that the foregoing inspection and information gathering shall, to
the greatest extent possible, be coordinated on behalf of all the Notice
Holders and the other parties entitled thereto by Special Counsel.




     (k) Comply with all applicable rules and regulations of the SEC and
make generally available to its securityholders earning statements (which
need not be audited) satisfying the provisions of Section 11(a) of the
Securities Act and Rule 158 thereunder (or any similar rule promulgated
under the Securities Act) for a 12-month period



12









 






commencing on the first day of the first fiscal quarter of the
Company commencing after the effective date of a Registration Statement,
which statements shall be made available no later than 45 days after the
end of the 12-month period or 90 days if the 12-month period coincides
with a fiscal year of the Company.




     (l) Cooperate with each Notice Holder to facilitate the timely
preparation and delivery of certificates representing Registrable
Securities sold or to be sold pursuant to a Registration Statement, which
certificates shall not bear any restrictive legends, and cause such
Registrable Securities to be in such denominations as are permitted by
the Indenture and registered in such names as such Notice Holder may
request in writing at least three (3) Business Days prior to any sale of
such Registrable Securities.




     (m) Provide a CUSIP number for all Registrable Securities covered
by each Registration Statement not later than the effective date of such
Registration Statement and provide the Trustee and the transfer agent
for the Common Shares with printed certificates for the Registrable
Securities that are in a form eligible for deposit with The Depository
Trust Company.




     (n) Reasonably cooperate and assist in providing such information as
is required for any filings required to be made with the National
Association of Securities Dealers, Inc. or the Nasdaq Stock Market, Inc.




     (o) Upon (i) the filing of the Initial Shelf Registration Statement
and (ii) the effectiveness of the Initial Shelf Registration Statement,
announce the same, in each case by release to Reuters Economic Services
and Bloomberg Business News or other reasonable means of distribution.



     Section 4.
Holder’s Obligations. Each Holder agrees, by acquisition of
the Registrable Securities, that no Holder shall be entitled to sell any of
such Registrable Securities pursuant to a Registration Statement or to receive
a Prospectus relating thereto, unless such Holder has furnished the Company
with a Notice and Questionnaire as required pursuant to Section 2(d) hereof
(including the information required to be included in such Notice and
Questionnaire) and the information set forth in the next sentence. Each Notice
Holder agrees promptly to furnish to the Company all information required to be
disclosed in order to make the information previously furnished to the Company
by such Notice Holder not misleading and any other information regarding such
Notice Holder and the distribution of such Registrable Securities as may be
required to be disclosed in the Registration Statement under applicable law or
pursuant to SEC comments or as the Company may from time to time reasonably
request. Any sale of any Registrable Securities by any Holder shall constitute
a representation and warranty by such Holder that the information relating to
such Holder and its plan of distribution is as set forth in the Prospectus
delivered by such Holder in connection with such disposition, that such
Prospectus does not as of the time of such sale contain any untrue statement of
a material fact relating to or provided by such Holder or its plan of
distribution and that such Prospectus does not as of the time of such sale omit
to state any material fact relating to or provided by such Holder or its plan
of distribution necessary to make the statements in such Prospectus, in the
light of the circumstances under which they were made, not misleading.




13









 





     Section 5.
Registration Expenses. The Company shall bear all fees and
expenses incurred in connection with the performance by the Company of its
obligations under Sections 2 and 3 of this Agreement whether or not any
Registration Statement is declared effective. Such fees and expenses shall
include, without limitation, (i) all registration and filing fees (including,
without limitation, fees and expenses (x) with respect to filings required to
be made with the National Association of Securities Dealers, Inc. or Nasdaq
Stock Market, Inc. and (y) of compliance with federal and state securities or
Blue Sky laws (including, without limitation, reasonable fees and disbursements
of the Special Counsel in connection with Blue Sky qualifications of the
Registrable Securities under the laws of such jurisdictions as Notice Holders
of a majority of the Registrable Securities being sold pursuant to a
Registration Statement may designate), (ii) printing expenses (including,
without limitation, expenses of printing certificates for Registrable
Securities in a form eligible for deposit with The Depository Trust Company),
(iii) duplication expenses relating to copies of any Registration Statement or
Prospectus delivered to any Holders hereunder, (iv) reasonable fees and
disbursements of counsel for the Company in connection with the Shelf
Registration Statement (provided that the Company shall not be liable for the
fees and expenses of more than one separate firm for all parties participating
in any transaction hereunder), (v) reasonable fees and disbursements of the
Trustee, registrar and transfer agent for the Common Shares and (vi) Securities
Act liability insurance obtained by the Company in its sole discretion. In
addition, the Company shall bear or reimburse the Notice Holders for the fees
and disbursements of Special Counsel, in an amount not to exceed $20,000 in the
aggregate during the term of this agreement. In addition, the Company shall
pay the internal expenses of the Company (including, without limitation, all
salaries and expenses of officers and employees performing legal or accounting
duties), the expense of any annual audit, the fees and expenses incurred in
connection with the listing by the Company of the Registrable Securities on any
securities exchange on which similar securities of the Company are then listed
and the fees and expenses of any person, including special experts, retained by
the Company. Notwithstanding the provisions of this Section 5, each seller of
Registrable Securities shall pay selling expenses and all registration expenses
to the extent required by applicable law.



     Section 6.
Indemnification.


     (a) Indemnification by the Company. The Company shall indemnify and hold
harmless each Notice Holder and each person, if any, who controls any Notice
Holder (within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act) from and against any and all losses, claims,
damages and liabilities (including, without limitation, any legal or other
expenses reasonably incurred in connection with defending or investigating any
such action or claim) (collectively, “Losses”) caused by any untrue statement
or alleged untrue statement of a material fact contained in any Registration
Statement or any amendment thereof, any preliminary prospectus or the
Prospectus (as amended or supplemented if the Company shall have furnished any
amendments or supplements thereto), or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein in light of the circumstances under
which they were made not misleading, except insofar as such Losses are caused
by any such untrue statement or omission or alleged untrue statement or
omission based upon information relating to the Holders furnished to the
Company in writing by or on behalf of a Holder or any underwriter (in the case
of an underwritten offering) expressly for use therein; provided that if any
Losses arise out of or are based upon an untrue statement, alleged untrue
statement, omission or alleged omission



14









 




contained in any preliminary prospectus that is corrected in the final
prospectus, the Company shall not have any liability with respect thereto to
any Holder if any Holder delivered a copy of the preliminary prospectus to the
person alleging such Losses and failed to deliver a copy of the final
prospectus, as amended or supplemented if it has been amended or supplemented,
to such person at or prior to the written confirmation of the sale to that
person; provided, further, that this indemnity agreement shall not apply to any
losses arising from an offer or sale of Registrable Securities occurring during
a Deferral Period and after the Notice Holder has received a Deferral Notice.




     (b) Indemnification by Holders. Each Holder agrees severally and not
jointly to indemnify and hold harmless the Company, the directors of the
Company, the officers of the Company who sign the Registration Statement, and
each person, if any, who controls the Company (within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act) each
underwriter and each person who controls any underwriter within the meaning of
the Securities Act (in the case of an underwritten offering), and any other
Holder, from and against all Losses caused by any untrue statement or alleged
untrue statement of a material fact contained in any Registration Statement or
any amendment thereof, any preliminary prospectus or the Prospectus (as amended
or supplemented if the Company shall have furnished any amendments or
supplements thereto), or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, but only with reference to information
relating to such Holder furnished to the Company in writing by or on behalf of
such Holder expressly for use in such Registration Statement, any preliminary
prospectus, the Prospectus or any amendments or supplements thereto. In no
event shall the liability of any Holder hereunder be greater in amount than the
dollar amount of the proceeds received by such Holder upon the sale of the
Registrable Securities pursuant to the Registration Statement giving rise to
such indemnification obligation.



     (c) Conduct of Indemnification Proceedings. In case any proceeding
(including any governmental investigation) shall be instituted involving any
person in respect of which indemnity may be sought pursuant to Section 6(a) or
6(b) hereof, 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 respect of the legal
expenses of any indemnified party 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 Holders
and all persons, if any, who control any Holder within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act and (ii) the
fees and expenses of more than one separate firm (in addition to any local
counsel) for the Company, its



15









 




directors, its officers who sign the Registration Statement and each
person, if any, who controls the Company within the meaning of either such
Section, and that all such fees and expenses shall be reimbursed as they are
incurred. In the case of any such separate firm for the Holders and such
control persons of any Holders, such firm shall be designated in writing by the
Holders of a majority of the Registrable Securities covered by the Registration
Statement held by Holders that are indemnified parties pursuant to Section
6(a). In the case of any such separate firm for the Company, and such
directors, officers and control persons of the Company, such firm shall be
designated in writing by the Company. 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) Contribution. To the extent that the indemnification provided for in
Section 6(a) or 6(b) is unavailable to an indemnified party or insufficient in
respect of any Losses referred to therein, 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 (i) in such proportion as is appropriate to reflect the
relative benefits received by the indemnifying party or parties on the one hand
and the indemnified party or parties on the other hand from the offering of the
Registrable Securities 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 of the indemnifying party or parties on the one hand and of
the indemnified party or parties on the other hand in connection with the
statements or omissions that resulted in such Losses, as well as any other
relevant equitable considerations. Benefits received by the Company shall be
deemed to be equal to the total net proceeds from the initial placement
pursuant to the Purchase Agreement (after deducting expenses) of the
Registrable Securities to which such Losses relate. Benefits received by any
Holder shall be deemed to be equal to the value of receiving Registrable
Securities that are registered under the Securities Act. The relative fault of
the Holders on the one hand and the Company 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 or on behalf of the
Holders or by the Company, and the parties’ relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or
omission. The Holders’ respective obligations to contribute pursuant to this
paragraph are



16









 




several in proportion to the respective number of Registrable Securities
they have sold pursuant to a Registration Statement, and not joint.




     The parties hereto agree that it would not be just or equitable if
contribution pursuant to this Section 6(d) were determined by pro rata
allocation (even if the Holders were treated as one entity for such purpose) or
by any other method of allocation that does not take account of the equitable
considerations referred to in the immediately preceding paragraph. The amount
paid or payable by an indemnified party as a result of the Losses referred to
in the immediately preceding paragraph 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 this Section 6(d), an
indemnifying party that is a selling Holder shall not be required to contribute
any amount in excess of the amount by which the total price at which the
Registrable Securities sold by such indemnifying party and distributed to the
public were offered to the public exceeds the amount of any damages that such
indemnifying party 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 remedies provided for in this
Section 6 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.



     (e) The indemnity, contribution and expense reimbursement obligations of
the parties hereunder shall be in addition to any liability any indemnified
party may otherwise have hereunder, under the Purchase Agreement or otherwise.



     (f) The indemnity and contribution provisions contained in this Section 6
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
any Holder or any person controlling any Holder, or the Company, or the
Company’s officers or directors or any person controlling the Company and (iii)
the sale of any Registrable Securities by any Holder.



     Section 7.
Information Requirements. The Company covenants that, if at
any time before the end of the Effectiveness Period the Company is not subject
to the reporting requirements of the Exchange Act, it will cooperate with any
Holder and take such further reasonable action as any Holder may reasonably
request in writing (including, without limitation, making such reasonable
representations as any such Holder may reasonably request), all to the extent
required from time to time to enable such Holder to sell Registrable Securities
without registration under the Securities Act within the limitation of the
exemptions provided by Rule 144 and Rule 144A and customarily taken in
connection with sales pursuant to such exemptions. Upon the written request of
any Holder, the Company shall deliver to such Holder a written statement as to
whether it has complied with such filing requirements, unless such a statement
has been included in the Company’s most recent report filed pursuant to Section
13 or Section 15(d) of Exchange Act. Notwithstanding the foregoing, nothing in
this Section 7 shall be deemed to require the Company to register any of its
securities (other than the Common Shares) under any section of the Exchange
Act.



17









 





     Section 8.
Miscellaneous.



     (a) No Conflicting Agreements. The Company is not, as of the date hereof,
a party to, nor shall it, on or after the date of this Agreement, enter into,
any agreement with respect to its securities that conflicts with the rights
granted to the Holders in this Agreement. The Company represents and warrants
that the rights granted to the Holders hereunder do not in any way conflict
with the rights granted to the holders of the Company’s securities under any
other agreements.



     (b) Amendments and Waivers. The provisions of this Agreement, including
the provisions of this sentence, may not be amended, modified or supplemented,
and waivers or consents to departures from the provisions hereof may not be
given, unless the Company has obtained the written consent of Holders of a
majority of the then outstanding Underlying Common Shares constituting
Registrable Securities (with Holders of Convertible Notes deemed to be the
Holders, for purposes of this Section, of the number of outstanding shares of
Underlying Common Shares into which such Convertible Notes are or would be
convertible as of the date on which such consent is requested).
Notwithstanding the foregoing, a waiver or consent to depart from the
provisions hereof with respect to a matter that relates exclusively to the
rights of Holders whose securities are being sold pursuant to a Registration
Statement and that does not directly or indirectly affect the rights of other
Holders may be given by Holders of at least a majority of the Registrable
Securities being sold by such Holders pursuant to such Registration Statement;
provided, that the provisions of this sentence may not be amended, modified, or
supplemented except in accordance with the provisions of the immediately
preceding sentence. Each Holder of Registrable Securities outstanding at the
time of any such amendment, modification, supplement, waiver or consent or
thereafter shall be bound by any such amendment, modification, supplement,
waiver or consent effected pursuant to this Section 8(b), whether or not any
notice, writing or marking indicating such amendment, modification, supplement,
waiver or consent appears on the Registrable Securities or is delivered to such
Holder.



     (c) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand delivery, by telecopier,
by courier guaranteeing overnight delivery or by first-class mail, return
receipt requested, and shall be deemed given (i) when made, if made by hand
delivery, (ii) upon confirmation, if made by telecopier, (iii) one (1) Business
Day after being deposited with such courier, if made by overnight courier or
(iv) on the date indicated on the notice of receipt, if made by first-class
mail, to the parties as follows:




          (i) if to a Holder, at the most current address given by such Holder
to the Company in a Notice and Questionnaire or any amendment thereto;




          (ii) if to the Company, to:




	 	 	 	Atlantic Coast Airlines Holdings, Inc.

45200 Business Court

Dulles, Virginia 20166

Attention: Vice-President, Secretary and General Counsel

Telephone: 703-650-6000

Telecopy No.: 703-650-6294




18









 






	 	 	 	with a copy to:

Gibson, Dunn & Crutcher LLP

1050 Connecticut Avenue, NW

Washington, DC 20036

Attention: Ronald O. Mueller

Telecopy No.: 202-467-0539





	 	 	(iii)	if to the Initial Purchaser, to:
	 
	 	 	 	Morgan Stanley & Co. Incorporated

1585 Broadway

New York, New York 10036

Attention: Equity Capital Markets

Telecopy No.: 212-761-0538




or to such other address as such person may have furnished to the other persons
identified in this Section 8(c) in writing in accordance herewith.




     (d) Approval of Holders. Whenever the consent or approval of Holders of
a specified percentage of Registrable Securities is required hereunder,
Registrable Securities held by the Company or its affiliates (as such term is
defined in Rule 405 under the Securities Act) (other than the Initial Purchaser
or subsequent Holders if such subsequent Holders are deemed to be such
affiliates solely by reason of their holdings of such Registrable Securities)
shall not be counted in determining whether such consent or approval was given
by the Holders of such required percentage.



     (e) Successors and Assigns. Any person who purchases any Registrable
Securities from the Initial Purchaser shall be deemed, for purposes of this
Agreement, to be an assignee of the Initial Purchaser. This Agreement shall
inure to the benefit of and be binding upon the successors and assigns of each
of the parties and shall inure to the benefit of and be binding upon each
Holder of any Registrable Securities.



     (f) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be original and all of which taken together
shall constitute one and the same agreement.



     (g) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.



     (h) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.



     (i) Severability. If any term, provision, covenant or restriction of
this Agreement is held to be invalid, illegal, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions set forth herein
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated thereby, and the parties hereto shall use their commercially
reasonable best efforts to find and employ an alternative means to achieve the



19









 




same or substantially the same result as that contemplated by such term,
provision, covenant or restriction, it being intended that all of the rights
and privileges of the parties shall be enforceable to the fullest extent
permitted by law.




     (j) Entire Agreement. This Agreement is intended by the parties as a
final expression of their agreement and is intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein and the registration rights
granted by the Company with respect to the Registrable Securities. Except as
provided in the Purchase Agreement, there are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein,
with respect to the registration rights granted by the Company with respect to
the Registrable Securities. This Agreement supersedes all prior agreements and
undertakings among the parties with respect to such registration rights. No
party hereto shall have any rights, duties or obligations other than those
specifically set forth in this Agreement. In no event will such methods of
distribution take the form of an underwritten offering of the Registrable
Securities without the prior agreement of the Company.



     (k) Termination. This Agreement and the obligations of the parties
hereunder shall terminate upon the end of the Effectiveness Period, except for
any liabilities or obligations under Section 4, 5 or 6 hereof and the
obligations to make payments of and provide for the Liquidated Damages Amount
under Section 2(e) hereof to the extent such damages cumulate prior to the end
of the Effectiveness Period, each of which shall remain in effect in accordance
with its terms.



20









 





     IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.


	 	 	 	 	 
	 	ATLANTIC COAST AIRLINES HOLDINGS, INC.

	 
	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 




Confirmed and accepted as of

the date first above written:




MORGAN STANLEY & CO. INCORPORATED




	 	 	 
	By:
	 
	 

	Name:
	 

	Title: