-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, oAESo8DZL7TRHKpjEGGiekqe6m3ECaKMFv/6T0o6X3wFzzPq+N/hcnp8ZaJvIW93 t/Cl1lKsZ23rNN/JJhO3Qg== 0000092122-95-000076.txt : 199507100000092122-95-000076.hdr.sgml : 19950710 ACCESSION NUMBER: 0000092122-95-000076 CONFORMED SUBMISSION TYPE: POS AMC PUBLIC DOCUMENT COUNT: 14 FILED AS OF DATE: 19950707 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SOUTHERN CO CENTRAL INDEX KEY: 0000092122 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 580690070 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: POS AMC SEC ACT: 1935 Act SEC FILE NUMBER: 070-08505 FILM NUMBER: 95552703 BUSINESS ADDRESS: STREET 1: 64 PERIMETER CTR EAST CITY: ATLANTA STATE: GA ZIP: 30346 BUSINESS PHONE: 4043930650 POS AMC 1 AMENDMENT NO. 7 (POST-EFFECTIVE NO. 4) File No. 70-8505 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Amendment No. 7 (Post-Effective No. 4) to APPLICATION OR DECLARATION on FORM U-1 under The Public Utility Holding Company Act of 1935 THE SOUTHERN COMPANY MOBILE ENERGY SERVICES HOLDINGS, INC. 64 Perimeter Center East 900 Ashwood Parkway - Suite 500 Atlanta, Georgia 30346 Atlanta, Georgia 30338 SOUTHERN ELECTRIC INTERNATIONAL, INC. 900 Ashwood Parkway - Suite 500 Atlanta, Georgia 30338 (Name of company or companies filing this statement and addresses of principal executive offices) THE SOUTHERN COMPANY (Name of top registered holding company parent of each applicant or declarant) Tommy Chisholm, Secretary Thomas G. Boren, President The Southern Company Southern Electric International, 64 Perimeter Center East Inc. Atlanta, Georgia 30346 900 Ashwood Parkway - Suite 500 Atlanta, Georgia 30338 (Names and addresses of agents for service) The Commission is requested to mail signed copies of all orders, notices and communications to: W.L. Westbrook Thomas G. Boren, President Financial Vice-President Southern Electric International, The Southern Company Inc. 64 Perimeter Center East 900 Ashwood Parkway - Suite 500 Atlanta, Georgia 30346 Atlanta, Georgia 30338 John D. McLanahan, Esq. Troutman Sanders 600 Peachtree Street, N.E. Suite 5200 Atlanta, Georgia 30308-2216 The Post-Effective Amendment to the Application or Declaration, as heretofore amended, is hereby further amended as follows: Item 6, Exhibits and Financial Statements (Partially Revised), is completed with filing of the following exhibits: (a) Exhibits. (Supplemental List). A-1(a) - Amended and Restated Articles of Incorporation of Mobile Energy Services Holdings, Inc. (formerly Mobile Energy Services Company, Inc.) A-4 - Articles of Organization of Mobile Energy Services Company, L.L.C. A-5 - Operating Agreement of Project Company between Mobile Energy and Southern Electric, as its members. B-4 - First Mortgage Bond Documents. (a) Underwriting Agreement. (b) Indenture among Mobile Energy, Project Company and First Union National Bank of Georgia, as Trustee. (c) First Supplemental Indenture among Mobile Energy, Project Company and the Trustee with Form of First Mortgage Bond. (d) Appendix A - Defined Terms. B-5 - Security Documents. (a) Leasehold Mortgage between Project Company and Bankers Trust Company, as Collateral Agent. (b) Assignment and Security Agreement between Project Company and Bankers Trust Company, as Collateral Agent. (c) Intercreditor and Collateral Agency Agreement among the Collateral Agent, 2 the Senior Secured Parties, the Board, Project Company and Mobile Energy. B-8 - Revolving Credit Facility among Project Company, Mobile Energy and Banque Paribas. B-9 - Loan and Reimbursement Agreement between Southern and Banque Paribas. C - Registration Statement on Form S-1 filed pursuant to the Securities Act. (Incorporated herein by reference to Securities Act File No. 33-92776) (Previously filed). F-1 - Opinion of Troutman Sanders. G-1 - Form of Federal Register Notice. (Previously filed). (b) Financial Statements. (Supplemental List). (v) Illustration of Effect on Project Capitalization and Debt Coverage Ratios of Terminating Interest Rate Hedging Agreements. (Filed separately pursuant to Rule 104). ("P") (17 CFR section 232.101(c)(1)(i)). SIGNATURE Pursuant to the requirements of the Public Utility Holding Company Act of 1935, the undersigned companies have duly caused this Post-Effective Amendment to be signed on their behalf by the undersigned thereunto duly authorized. Dated: July 7, 1995 THE SOUTHERN COMPANY By: /s/Tommy Chisholm Tommy Chisholm Secretary (Signatures continued on next page) 3 MOBILE ENERGY SERVICES HOLDINGS, INC. By: /s/Tommy Chisholm Tommy Chisholm Vice President SOUTHERN ELECTRIC INTERNATIONAL, INC. By: /s/Tommy Chisholm Tommy Chisholm Secretary 4 EX-99 2 EXHIBIT A-1(A) Exhibit A-1(a) AMENDMENTS TO AND RESTATEMENT OF THE ARTICLES OF INCORPORATION OF MOBILE ENERGY SERVICES HOLDINGS, INC. I. The name of the corporation is MOBILE ENERGY SERVICES HOLDINGS, INC. (the "Corporation"). II. The Corporation shall have perpetual duration. III. The nature of the business of the Corporation and its objects, purposes and powers shall be limited to the following activities: (a) to acquire, finance, own, expand, improve and operate or contract for the operation of the cogeneration power production and recovery complex located on the grounds of Scott Paper Company's pulp and tissue mill in Mobile, Alabama (the "Energy Complex"); (b) to serve as a member of and to own a majority of the outstanding membership interests of Mobile Energy Services Company, L.L.C., an Alabama limited liability company (the "Company"), and to act as the sole manager thereof, provided that the foregoing shall not be construed as restraining the Corporation from transferring interests in the Company (i) in an amount not to exceed one percent (1%) of the total interests in the Company to The Southern Company, a Delaware corporation ("Southern"), prior to the issuance of the "Offered Securities" (as hereinafter defined) by the Company; (ii) on commercially reasonable terms to third parties that are not "Southern Affiliated Entities" (as hereinafter defined), and permitting such third parties to participate in the management of the Company, even if the effect thereof would be to cause (A) the Corporation's ownership interests in the Company to be reduced below a majority of the ownership interests in the Company or (B) such third parties to acquire or share managerial control of the Company; or (iii) to a Southern Affiliated Entity whose Articles of Incorporation (or other organizational documents) contain the same operative provisions as these Articles of Incorporation and which undertakes, for the benefit of the "Bondholders" (as herein defined), each of the covenants and restrictions of the Corporation set forth in the indenture relating to the initial series of first mortgage bonds (the "First Mortgage Bonds") relating to compliance with and amendment of these Articles of Incorporation. For purposes of these Articles, the term "Southern Affiliated Entities" shall mean the Corporation, Southern, Southern Electric International, Inc., a Delaware corporation ("SEI"), the Company and any other corporation, partnership, limited liability company or other business entity with respect to which the Corporation, Southern, SEI, or the Company, through ownership of voting securities, by contract or otherwise, has the power to direct (or cause the direction of) the management and policies of such corporation, partnership, limited liability company or other business entity; (c) to enter into and perform any agreement providing for or relating to the issuance or guaranty of the First Mortgage Bonds or the $85,000,000 aggregate principal amount of tax-exempt bonds due _______, 2___ (the "Tax-Exempt Bonds") (and to receive and dispose of proceeds in exchange therefor), or relating to the incurrence or guaranty of obligations under the $15,000,000 principal amount of working capital to be provided to the Company by Banque Paribas (the "Working Capital Facility") (the First Mortgage Bonds, the Tax-Exempt Bonds and the Working Capital Facility are sometimes collectively referred to as the "Offered Securities"); (d) to take all actions necessary to offer the First Mortgage Bonds and the Tax-Exempt Bonds to the purchasers thereof (the "Bondholders"); (e) to enter into and perform any agreement for or relating to the management and administration of the activities of the Corporation or the Company; (f) to enter into and perform any agreements to accomplish the purposes set forth in paragraphs (a), (b), (c), (d) or (e) above; and (g) to engage in any lawful act or activity, and to exercise any powers permitted to corporations organized under the laws of the State of Alabama, that are incidental to and necessary, suitable or convenient for the accomplishment of the purposes set forth in (a), (b), (c), (d), (e) or (f) above. IV. The Corporation shall be authorized to issue One Thousand (1,000) shares of One Dollar ($1.00) par value capital stock, all of which shall be designated "Common Stock." The shares of Common Stock shall have unlimited voting rights and shall be entitled to receive all of the net assets of the Corporation upon dissolution or liquidation. V. The Board of Directors of the Corporation shall have the power to adopt, amend and repeal the By-Laws of the Corporation. VI. To the fullest extent that the General Corporation Law of Alabama, as it exists on the date hereof or as it may hereafter be amended, permits the limitation or elimination of the liability of directors, no director of the Corporation shall be personally liable to the Corporation or its stockholders for monetary damages for breach of duty of care or other duty as a director. No amendment to or repeal of this Article shall apply to or have any effect on the liability or alleged liability of any director of the Corporation for or with respect to any acts or omissions of such director occurring prior to such amendment or repeal. VII. The initial registered office of the Corporation in the State of Alabama shall be located at 60 Commerce Street, Montgomery, Montgomery Co., Alabama 36104. The initial registered agent of the Corporation at such address shall be The Corporation Company. VIII. The affairs of the Corporation shall be managed by a Board of Directors and as otherwise provided in the By-Laws of the Corporation. The unanimous approval of the Board of Directors of the Corporation is required: (a) to file a bankruptcy or insolvency petition or otherwise institute insolvency proceedings under Section 301 of the Bankruptcy Code, 11 U.S.C. section 301, or any successor thereto, or any similar statute, seeking protection of the Corporation as a debtor in such proceedings; (b) to consent to the filing of a bankruptcy or insolvency petition or to the institution of an insolvency proceeding under Section 301 of the Bankruptcy Code, 11 U.S.C. section 301, or any successor thereto, or any similar statute, or (c) to amend, repeal or supersede any provision of Articles III, VIII, IX, X, or XI hereof; -3- The Board of Directors of the corporation shall consist of a number as determined by the By-Laws of the Corporation, provided one director at all times shall constitute an "Independent Director" (as hereinafter defined). For purposes of the foregoing, the term "Independent Director" shall mean an individual who, at all times during such individual's service as a director of the Corporation, is not any of the following: (a) a person who received more than eight percent (8%) of his or her gross income (as defined for Federal income tax purposes) during either of the preceding two calendar years ended December 31 from wages, dividends, distributions or other payments received directly from the Southern Affiliated Entities; (b) a director, general partner, member, trustee, beneficiary or the holder of ten percent (10%) or more of the equity interests of any corporation, partnership, limited liability company, trust or other entity which received more than eight (8%) of its gross revenues during either of the preceding two calendar years ended December 31 from wages, dividends, distributions or other payments received from the Southern Affiliated Entities; (c) a person who possesses equity or other interests in the Southern Affiliated Entities, or debt of any of the Southern Affiliated Entities, which, in the aggregate, have a fair market value in excess of eight percent (8%) of the net worth of such person; (d) a person who, on such date or at any time during the two years preceding such date, was a director of any of the Southern Affiliated Entities (other than the Corporation) or was an officer or employee of any of the Southern Affiliated Entities (including the Corporation); or (e) a parent, child, sibling or spouse of any person described in clauses (a), (b), (c) or (d) above. IX. Neither the Corporation's funds nor any other assets thereof shall be commingled with those of any other person or entity, and the Corporation's funds shall be clearly traceable at all times and in all transactions. The Corporation's assets shall remain identifiably separate from those of all other entities such that there shall be no material difficulty in segregating and ascertaining the assets of the Corporation as distinct from those of the other Southern Affiliated Entities or any other person or entity. Notwithstanding the foregoing: (a) equity or other contributions from any shareholder of the Corporation may be received by the Corporation, deposited to the account of the -4- Corporation and treated as funds of the Corporation, and (b) revenues of the Corporation or the Company may be collected by affiliates of the Corporation and such affiliates may pay liabilities of the Corporation or the Company, as applicable, therewith pursuant to the "Relevant Documents" (as hereinafter defined), so long as appropriate records are maintained by the Corporation to identify at all times funds belonging to the Corporation or the Company, respectively. For purposes of these Articles, the "Relevant Documents" shall mean: (1) the Registration Statement filed on Form S-1 under the Securities Act of 1933, as amended, and the Prospectus dated _______, 1995, each relating to the issuance of the First Mortgage Bonds, and the Official Statement dated _______, 1995, issued in connection with the sale of the Tax-Exempt Bonds; (2) the Articles of Incorporation of SEI and Southern, the Articles of Organization of the Company, and these Articles of Organization; (3) the By- Laws of the Corporation, SEI and Southern; (4) the indenture dated as of ______, 1995, (the "Indenture") among the Company, the Corporation, as guarantor, and First Union National Bank of Georgia, as trustee, entered into in connection with the issuance of the First Mortgage Bonds, the indenture dated as of _______, 1995 (the "Tax-Exempt Indenture") among the IDB and First Union National Bank of Georgia, as tax-exempt trustee, entered into in connection with the issuance of the Tax-Exempt Bonds, and Tax- Exempt Lease Agreement; (5) the Working Capital Facility and the Corporation's guaranty in respect thereof; (6) the guaranty from Southern or the appropriate letter of credit necessary to cover the Company's reserve requirements under the Indenture, the Tax- Exempt Indenture, and the "Intercreditor Agreement"(as hereinafter defined); (7) the Intercreditor Agreement entered into between and among the Corporation, the Company, First Union National Bank of Georgia, as trustee with respect to the First Mortgage Bonds, First Union National Bank of Georgia, as trustee with respect to the Tax-Exempt Bonds, the IDB, and Banque Paribas (the "Intercreditor Agreement"); (8) the Asset Purchase Agreement dated as of December 12, 1994, between Scott Paper Company, a Pennsylvania corporation ("Scott") and the Corporation; (9) the Pulp Mill Environmental Indemnity Agreement, dated as December 12, 1994, between Scott and the Corporation, the Tissue Mill Environmental Indemnity Agreement, dated as December 12, 1994, between Scott and the Corporation, the Paper Mill Environmental Indemnity Agreement, dated as December 12, 1994, between S.D. Warren Company, a Pennsylvania corporation and the Corporation, and the Environmental Guaranty dated as of December 12, 1994, made by Southern in favor of the owners of the pulp mill, the tissue mill, and the paper mill located in Mobile, Alabama; (10) the Administrative Services Agreement (the "SCS Agreement"), pursuant to which Southern Company Services, Inc. ("SCS") will provide certain administrative services to the Corporation and the Company, and the Operations and Maintenance Agreement, dated as of December 12, 1994 between the Corporation and SEI; and (iii) the Southern Master Tax Sharing Agreement. -5- X. The Corporation: (a) shall maintain corporate records and books of account which at all times shall be separate from those of any other person or entity and shall be materially correct and complete; (b) shall conduct its own business solely in its own name or through its authorized agents, and not in the name of any of the other Southern Affiliated Entities, in a manner which is not likely to mislead others as to the identity of the legal entity with which such others are dealing, shall not permit any person or entity to conduct any business of such person or entity in the Corporation's name, and without limiting the generality of the foregoing: (i) shall ensure that all oral and written communications, including without limitation, letters, invoices, purchase orders, contracts, statements and applications, are and will be made solely in the name of the entity to which they relate or in the name of such entity's authorized agents, and (ii) shall not refer, and shall ensure that the other Southern Affiliated Entities do not refer, to the Corporation or the Company as a division or department of any other entity; (c) shall prepare financial statements separate from any other person or entity, which shall disclose its separate existence and the transactions contemplated by the Relevant Documents in accordance with generally accepted accounting principles, and shall disclose that the assets of the Corporation are not available to any creditor of any affiliate of the Corporation (other than as contemplated by the Relevant Documents); (d) except to the extent set forth in the Relevant Documents, shall pay its liabilities out of its own funds, and, except as set forth in the Relevant Documents, shall not permit any of the other Southern Affiliated Entities to pay such liabilities; (e) shall not hold out employees or officers of any of the other Southern Affiliated Entities as employees or officers of the Corporation, nor permit employees or officers of the Corporation to be held out as employees or officers of any of the other Southern Affiliated Entities; provided that said restrictions shall not preclude a particular employee or officer of any of the other Southern Affiliated Entities from also holding a position as an employee or officer of the Corporation, so long as the Corporation takes reasonably appropriate steps to assure that unaffiliated parties -6- dealing with such employee or officer are able to distinguish the particular entity which such person is representing at any particular time; (f) shall not guarantee or become obligated for the debts of any of the other Southern Affiliated Entities or hold out its credit as being available to satisfy the obligations of any of the other Southern Affiliated Entities, other than (i) obligations to reimburse SEI for expenses paid by SEI on behalf of the Corporation in connection with the operation and maintenance of the Energy Complex in accordance with the Relevant Documents, (ii) obligations of the Company related to the First Mortgage Bonds, the Tax-Exempt Bonds or the Working Capital Facility, and (iii) obligations to indemnify SEI for certain claims and losses relating to SEI's operation and maintenance of the Energy Complex in accordance with the Relevant Documents; (g) shall allocate fairly and equitably any overhead for office space shared with any of the other Southern Affiliated Entities; (h) shall use stationery, invoices, checks and other business forms identifiably separate and distinct from those of any of the other Southern Affiliated Entities. Such items shall bear a mailing address and telephone number for the Corporation which is different from that used by any of the other Southern Affiliated Entities. The Corporation further shall maintain, as its principal address and telephone number for receipt of notices and other communications under the Relevant Documents, a mailing address and telephone number separate from those of any of the other Southern Affiliated Entities; (i) shall not pledge its funds or assets for the benefit of any of the other Southern Affiliated Entities, except as set forth in the Relevant Documents; and (j) at all times shall hold itself out to the public as an entity legally separate and distinct from any of the other Southern Affiliated Entities. XI. The Corporation shall at all times maintain and observe all corporate formalities in the conduct of its affairs and with respect to the acquisition, ownership, encumbrance or transfer of any material assets or the incurrence of any material -7- indebtedness. Such formalities shall include without limitation the holding of appropriate periodic meetings of its Board of Directors and shareholders in accordance with Alabama law, the recording of minutes of such meetings and any other proceedings of its shareholders and Board of Directors, the adoption by the Board of Directors (and, as appropriate, the shareholders) of resolutions to approve material actions of the Corporation and the execution and maintenance of appropriate documentation with respect to and in order to evidence the acquisition, ownership, encumbrance or transfer of any material assets or the incurrence of any material indebtedness. -8- EX-99 3 EXHIBIT A-4 Exhibit A-4 TS DRAFT NO. 1 June 30, 1995 ARTICLES OF ORGANIZATION OF MOBILE ENERGY SERVICES COMPANY, L.L.C. I. The name of the limited liability company is Mobile Energy Services Company, L.L.C. (the "Company"). II. The Company shall have perpetual duration. III. The nature of business to be conducted or promoted by the Company shall be limited to the following activities: (a) to acquire, finance, refinance, own, expand, improve and operate or contract for the operation of the cogeneration power production and recovery complex located on the grounds of Scott Paper Company's pulp and tissue mill in Mobile, Alabama (the "Energy Complex"); (b) to enter into and perform any agreement providing for or relating to the issuance by the Company of the initial series of first mortgage bonds (the "First Mortgage Bonds"), the issuance by the Industrial Development Board of the City of Mobile, Alabama (the "IDB"), for the benefit of the Company of $85,000,000 aggregate principal amount of tax-exempt bonds due _______, 2___ (the "Tax-Exempt Bonds"), or the $15,000,000 principal amount of working capital to be provided to the Company by Banque Paribas (the "Working Capital Facility"), and in each case to receive and dispose of proceeds thereunder or in exchange therefor (the First Mortgage Bonds, the Tax-Exempt Bonds and the Working Capital Facility are sometimes collectively referred to as the "Offered Securities"); (c) to take all actions necessary to offer the First Mortgage Bonds and the Tax-Exempt Bonds to the purchasers thereof; (d) to enter into and perform any agreement providing for or relating to the management and administration of the activities of the Company; (e) to enter into and perform any agreements to accomplish the purposes set forth in paragraphs (a), (b), (c) and (d) of this Article III; and (f) to engage in any lawful act or activity, and to exercise any powers permitted to limited liability companies organized under the laws of the State of Alabama, that are incidental to and necessary, suitable or convenient for the purposes set forth in paragraphs (a), (b), (c), (d) and (e) of this Article III. IV. The initial registered office of the Company in the State of Alabama shall be located at 60 Commerce Street, Montgomery, Montgomery County, Alabama 36104. The initial registered agent of the Company at such address shall be _____________________. V. The names and addresses of the initial members of the Company are: Members Address Mobile Energy Services Holdings, Inc. ___________________________ ___________________________ ___________________________ Southern Electric International, Inc. 900 Ashwood Parkway Suite 500 Atlanta, Georgia 30338 VI. The Company may admit additional members with the prior written consent of all the members. 2 VII. The business of the Company may be continued in accordance with the terms of Section 10-12-37 of the Alabama Code following the dissociation of a member. VIII. The sole manager of the Company shall be Mobile Energy Services Holdings, Inc. ("Mobile Energy"), an Alabama corporation, which shall be responsible for all day-to-day operations of the Company. The foregoing shall not be construed as restraining Mobile Energy from transferring interests in the Company (i) in an amount not to exceed one percent (1 o/o) of the total interests in the Company to The Southern Company, a Delaware corporation ("Southern") prior to the issuance of the Offered Securities; (ii) on commercially reasonable terms to third parties that are not "Southern Affiliated Entities" (as hereinafter defined), and permitting such third parties to participate in the management of the Company, even if the effect thereof would be to cause: (A) Mobile Energy's ownership interest in the Company to be reduced below a majority of the ownership interests in the Company; or (B) such third parties to acquire control of the Company; or (iii) to a Southern Affiliated Entity whose Articles of Incorporation (or other organizational documents) contain the same operative provisions as the Articles of Incorporation of Mobile Energy and which undertakes each of the covenants and restrictions of Mobile Energy set forth in the indenture (the "Indenture") dated as of ______, 1995, among the Company, Mobile Energy, as guarantor, and First Union National Bank of Georgia, as trustee, entered into in connection with the issuance of the First Mortgage Bonds, and the lease agreement (the "Tax-Exempt Lease") dated as of ____, 1995, among the Company, Mobile Energy, as guarantor, and the IDB entered into in connection with the issuance of the Tax-Exempt Bonds. For purposes of these Articles the term "Southern Affiliated Entities" shall mean the Company, Southern, Southern Electric International, Inc., a Delaware corporation ("SEI"), or Mobile Energy and any other corporation, partnership, limited liability company or other business entity with respect to which the Company, Southern, SEI, or Mobile Energy, through ownership of voting securities, by contract or otherwise, has the power to direct (or cause the direction of) the management and policies of such corporation, partnership, limited liability company or other business entity. The mailing address of Mobile Energy is _______________________________________________________. IX. 3 The unanimous approval of all members of the Company is required: (a) to file a bankruptcy or insolvency petition or otherwise institute insolvency proceedings under Section 301 of the Bankruptcy Code, 11 U.S.C. section 301, or any successor thereto, or any similar statute, or (b) to amend, repeal or supersede any provision of Articles III, VIII, IX, X, XI and XII hereof. X. Neither the Company's funds nor any other assets thereof shall be commingled with those of any other person or entity, and the Company's funds shall be clearly traceable at all times and in all transactions. The Company's assets shall remain identifiably separate from those of all other entities such that there shall be no material difficulty in segregating and ascertaining the assets of the Company as distinct from those of its affiliates or any other person or entity. Notwithstanding the foregoing, (a) equity or other contributions from any member of the Company may be received by the Company, deposited to the account of the Company and treated as funds of the Company and (b) revenues of Mobile Energy or the Company may be collected by affiliates of Mobile Energy and such affiliates may pay liabilities of Mobile Energy or the Company, as applicable, therewith pursuant to the "Relevant Documents" (as hereinafter defined) so long as appropriate records are maintained by Mobile Energy or the Company to identify at all times funds belonging to Mobile Energy and the Company. For purposes of these Articles, the "Relevant Documents" shall mean: (1) the Registration Statement filed on Form S-1 under the Securities Act of 1933, as amended, and the Prospectus dated _______, 1995, each relating to the issuance of the First Mortgage Bonds, and the Official Statement dated _______, 1995, issued in connection with the sale of the Tax-Exempt Bonds; (2) the Articles of Incorporation of Mobile Energy, SEI and Southern, and these Articles of Organization; (3) the By-Laws of Mobile Energy, SEI and Southern; (4) the Indenture, the indenture dated as of _______, 1995 (the "Tax-Exempt Indenture") among the IDB and First Union National Bank of Georgia, as tax-exempt trustee, entered into in connection with the issuance of the Tax-Exempt Bonds, and Tax- Exempt Lease Agreement; (5) the Working Capital Facility and Mobile Energy's guaranty in respect thereof; (6) the guaranty from Southern or the appropriate letter of credit necessary to cover the Company's reserve requirements under the Indenture, the Tax-Exempt Indenture, and the "Intercreditor Agreement"(as hereinafter defined); (7) the Intercreditor Agreement entered into between and among the Company, Mobile Energy, First Union National Bank of Georgia, as trustee with respect to the First Mortgage Bonds, First Union National Bank of Georgia, as trustee with respect to the Tax-Exempt Bonds, the IDB, and Banque Paribas (the "Intercreditor Agreement"); (8) the Asset Purchase Agreement dated as of December 12, 1994, between Scott Paper Company, a 4 Pennsylvania corporation ("Scott") and Mobile Energy; (9) the Pulp Mill Environmental Indemnity Agreement, dated as December 12, 1994, between Scott and Mobile Energy, the Tissue Mill Environmental Indemnity Agreement, dated as December 12, 1994, between Scott and Mobile Energy, the Paper Mill Environmental Indemnity Agreement, dated as December 12, 1994, between S.D. Warren Company, a Pennsylvania corporation and Mobile Energy, and the Environmental Guaranty dated as of December 12, 1994, made by Southern in favor of the owners of the pulp mill, the tissue mill, and the paper mill located in Mobile, Alabama; and (10) the Administrative Services Agreement (the "SCS Agreement"), pursuant to which Southern Company Services, Inc. ("SCS") will provide certain administrative services to Mobile Energy, and the Company and the Operations and Maintenance Agreement, dated as of December 12, 1994 between Mobile Energy and SEI. XI. The Company: (a) shall maintain complete records and books of account which at all times shall be separate from those of any other person or entity and shall be materially correct and complete; (b) shall conduct its own business solely in its own name or through its authorized agents, and not in the name of any affiliate of the Company, in a manner which is not likely to mislead others as to the identity of the legal entity with which such others are dealing, and the Company does not and shall not permit any person or entity to conduct any business of such person or entity in the Company's name, and without limiting the generality of the foregoing: (i) shall ensure that all oral and written communications, including without limitation, letters, invoices, purchase orders, contracts, statements and applications, are and will be made solely in the name of the entity to which they relate or in the name of such entity's authorized agents, and (ii) shall not refer, and shall ensure that its affiliates do not refer, to Mobile Energy or the Company as a division or department of any other entity (including any affiliate thereof); (c) shall prepare financial statements separate from any other person or entity, which shall disclose its separate existence and the transactions contemplated by the Relevant Documents in accordance with generally accepted accounting principles, and shall disclose that the assets of the Company are not available to any creditor of the other Southern Affiliated Entities; 5 (d) except to the extent set forth in the Relevant Documents, shall pay its liabilities out of its own funds, and, except as set forth in the Relevant Documents, shall not permit any other Southern Affiliated Entities to pay such liabilities; (e) shall not hold out employees or officers of the other Southern Affiliated Entities as employees or officers of the Company, nor permit employees or officers of the Company to be held out as employees or officers of any of the other Southern Affiliated Entities; provided that such restrictions shall not preclude a particular employee or officer of the Company from also holding a position as an employee or officer of any of the other Southern Affiliated Entities, so long as the Company takes reasonably appropriate steps to assure that unaffiliated parties dealing with such employee or officer are able to distinguish the particular entity which such person is representing at any particular time; (f) shall not guarantee or become obligated for the debts of any of the other Southern Affiliated Entities or hold out its credit as being available to satisfy the obligations of any of the other Southern Affiliated Entities, other than (i) obligations to reimburse SEI or SCS for expenses paid by SEI or SCS on behalf of the Company in connection with the operation and maintenance of the Energy Complex in accordance with the Relevant Documents and (ii) obligations to indemnify SEI for certain claims and losses relating to SEI's operation and maintenance of the Energy Complex, in accordance with the Relevant Documents and SCS for certain claims and losses relating to SCS's performance of its obligations under the SCS Agreement; (g) shall allocate fairly and equitably any overhead for office space shared with any of the other Southern Affiliated Entities; (h) shall use stationery, invoices, checks and other business forms identifiably separate and distinct from those of any of the other Southern Affiliated Entities. Such items shall bear a mailing address and telephone number of the Company which is different from that used by any of the other Southern Affiliated Entities. The Company further shall maintain, as its principal address and telephone number for receipt of notices and other communications under the Relevant Documents, a mailing address and telephone number separate from those of any of the other Southern Affiliated Entities; 6 (i) shall not pledge its funds or assets for the benefit of any of the other Southern Affiliated Entities, except as set forth in the Relevant Documents; and (j) at all times shall hold itself out to the public as an entity legally separate and distinct from any of the other Southern Affiliated Entities. XII. The Company shall at all times maintain and observe all corporate formalities in the conduct of its affairs and with respect to the acquisition, ownership, encumbrance or transfer of any material assets or the incurrence of any material indebtedness. Such formalities shall include, without limitation, the recording of any proceedings of its members and the approval by its members, to the extent appropriate under Alabama law, of material actions of the Company and the execution and maintenance of appropriate documentation with respect to and in order to evidence the acquisition, ownership, encumbrance or transfer of any material assets or the incurrence of any material indebtedness. IN WITNESS WHEREOF, the undersigned members have caused these Articles of Organization to be executed as of the ___ day of July, 1995. MOBILE ENERGY SERVICES HOLDINGS, INC. By: Its: SOUTHERN ELECTRIC INTERNATIONAL, INC. By: Its: 7 EX-99 4 EXHIBIT A-5 Exhibit A-5 OPERATING AGREEMENT OF MOBILE ENERGY SERVICES COMPANY, L.L.C. Dated as of July __, 1995 TABLE OF CONTENTS Page ARTICLE I . . . . . . . . . . . . 1 OFFICES . . . . . . . . . . . . 1 Section 1.1 Principal Office . . . . . . . . . . 1 Section 1.2 Registered Office . . . . . . . . . 1 ARTICLE II . . . . . . . . . . . 1 DEFINITIONS . . . . . . . . . . . 1 ARTICLE III . . . . . . . . . . . 3 CAPITAL CONTRIBUTIONS . . . . . . . . . . . . . . . . . 3 Section 3.1 Names, Addresses and Capital Contributions of Members . . . . . . 3 Section 3.2 Additional Capital Contributions . . 3 Section 3.3 Summary of Capital Contributions . . 3 Section 3.4 Capital Accounts . . . . . . . . . . 4 Section 3.5 Capital Account of Assignee . . . . 4 ARTICLE IV . . . . . . . . . . . 4 PROFITS, LOSSES AND DISTRIBUTIONS . . . . . . 4 Section 4.1 Profits and Losses . . . . . . . . . 4 Section 4.2 Special Allocations . . . . . . . . 5 Section 4.3 Other Allocation Rules . . . . . . . 6 Section 4.4 Tax Allocations; Code Section 704(c) . . . . . . . . . . . . . . . 7 Section 4.5 Property Distributions . . . . . . . 7 ARTICLE V . . . . . . . . . . . . 7 ACCOUNTING AND RECORDS . . . . . . . . 7 Section 5.1 Accountant . . . . . . . . . . . . . 7 Section 5.2 Legal Counsel . . . . . . . . . . . 7 Section 5.3 Books and Records . . . . . . . . . 7 Section 5.4 Right of Inspection . . . . . . . . 8 Section 5.5 Reports . . . . . . . . . . . . . . 8 Section 5.6 Tax Returns . . . . . . . . . . . . 8 Section 5.7 Special Basis Adjustment . . . . . . 8 Section 5.8 Tax Matters Partner . . . . . . . . 8 Section 5.9 Fiscal Year . . . . . . . . . . . . 9 Section 5.10 Bank Accounts . . . . . . . . . . . 9 Section 5.11 Loans . . . . . . . . . . . . . . . 9 Section 5.12 Contracts . . . . . . . . . . . . . 9 ARTICLE VI . . . . . . . . . . . 9 MANAGEMENT, OFFICERS, ELECTIONS AND APPROVALS . . . 9 Section 6.1 Voting . . . . . . . . . . . . . . . 9 Section 6.2 Management . . . . . . . . . . . . . 9 Section 6.3 Officers . . . . . . . . . . . . . . 9 i Section 6.5 Independent Activities . . . . . . . 11 ARTICLE VII . . . . . . . . . . . 12 ADMISSION OF ADDITIONAL MEMBERS, DEATH OF A MEMBER, AND TRANSFER OF INTERESTS . . . . . . . . 12 Section 7.1 Addition of Additional Members . . . 12 Section 7.2 Death of an Individual Member . . . 12 Section 7.3 Restrictions on Transfer . . . . . . 12 Section 7.4 Right of First Refusal . . . . . . . 12 Section 7.5 General Transfer Provision . . . . . 14 Section 7.6 Compliance . . . . . . . . . . . . . 14 Section 7.7 Waiver of Partition . . . . . . . . 14 ARTICLE VIII . . . . . . . . . . . 15 DISSOLUTION AND WINDING UP . . . . . . . 15 Section 8.1 Dissolution . . . . . . . . . . . . 15 Section 8.2 Winding Up . . . . . . . . . . . . . 15 Section 8.3 Compliance with Timing Requirements of Regulations . . . . . . . . . . . 15 Section 8.4 Rights of Members . . . . . . . . . 16 ARTICLE IX . . . . . . . . . . . 16 MISCELLANEOUS . . . . . . . . . . . 16 Section 9.1 Notices . . . . . . . . . . . . . . 16 Section 9.2 Waiver of Notice . . . . . . . . . . 16 Section 9.3 Indemnification by the Company . . . 16 Section 9.4 Governing Law . . . . . . . . . . . 18 Section 9.5 Construction . . . . . . . . . . . . 18 Section 9.6 Reimbursement of Members . . . . . . 18 Section 9.7 Binding Effect . . . . . . . . . . . 18 Section 9.8 Headings . . . . . . . . . . . . . . 18 Section 9.9 Severability . . . . . . . . . . . . 19 Section 9.10 Additional Documents . . . . . . . . 19 Section 9.11 Variation of Pronouns . . . . . . . 19 Section 9.12 Counterpart Execution . . . . . . . 19 Section 9.13 Amendments . . . . . . . . . . . . . 19 ii OPERATING AGREEMENT OF MOBILE ENERGY SERVICES COMPANY, L.L.C. THIS OPERATING AGREEMENT (the "Agreement") of Mobile Energy Services Company, L.L.C. (the "Company") is entered into and shall be effective as of the ____ day of July, 1995, by and between Mobile Energy Services Holdings, Inc., an Alabama corporation ("MESH"), and Southern Electric International, Inc., a Delaware corporation ("SEI") and all additional and substitute Members, pursuant to the provisions of the Alabama Limited Liability Company Act, Code of Alabama of 1975, Section 10-2-1, et. seq. (the "Act"), on the following terms and conditions: ARTICLE I OFFICES Section 1.1 Principal Office. The principal office of the Company in the State of Alabama shall be located at _____________________________________________________. The Company may have such other offices, either within or without the State of Alabama as the Members may designate or as the business of the Company may from time to time require. Section 1.2 Registered Office. The registered office of the Company, required by the Act to be maintained in the State of Alabama, may, but need not, be identical with the principal office in the State of Alabama. The address of the initial registered office of the Company is _______________________________________________________, and the initial registered agent at such address is _________________________________. The registered office and the registered agent may be changed from time to time by action of the Members and by filing a statement of such change with the Alabama Secretary of State. ARTICLE II DEFINITIONS Defined terms used in this Agreement shall, unless the context otherwise requires, have the meanings specified below. Certain additional defined terms are set forth elsewhere in this Agreement. (a) "Assignee" means a person reflected in the records of the Company as the owner of financial rights in the Company. An Assignee does not have governance or management rights. (b) "Code" means the Internal Revenue Code of 1986, as amended from time to time, any successor thereto and applicable regulations thereunder. Any reference herein to a specific section or sections of the Code shall be deemed to include a reference to any corresponding provision of future law. (c) "Company Interest" means the interest of a Member or an Assignee in the Company as represented by such Member's or Assignee's Percentage Interest. (d) "Company Minimum Gain" shall have the meaning of "Partnership Minimum Gain", set forth in Regulations sections 1.704-2(b)(2) and 1.704-2(d). (e) "Manager" shall mean MESH together with any substitute or replacement Manager selected by the Members from time to time. (f) "Member" means a person reflected in the records of the Company as the owner of all rights and benefits of a membership interest in the Company specified in this Agreement, including governance or management rights. (g) "Member Nonrecourse Debt" shall have the meaning of "Partner Nonrecourse Debt" set forth in Regulation section 1.704- 2(b)(4). (h) "Member Nonrecourse Debt Minimum Gain" means an amount, with respect to each Member Nonrecourse Debt, equal to the Company Minimum Gain that would result if such Member Nonrecourse Debt were treated as a Nonrecourse Liability, determined in accordance with section 1.704-2(i)(3) of the Regulations. (i) "Member Nonrecourse Deductions" shall have the meaning of "Partner Nonrecourse Deductions" set forth in Regulation section 1.704-2(i)(2). (j) "Nonrecourse Deductions" shall have the meaning set forth in Regulation section 1.704-2(b)(1). (k) "Nonrecourse Liability" shall have the meaning set out in sections 1.704-2(b)(3) and 1.752-1(a)(2) of the Regulations. (l) "Percentage Interest" means the percentage interest of a Member in the Company including, without limitation, such Member's right (i) to a distributive share of the profits or losses and distributions of cash and/or other Company property and (ii) to a distributive share of the Company's assets. (m) "Person" means any individual, corporation, association, partnership, limited liability company, joint venture, trust, estate or other entity, or organization. 2 (n) "Regulations" means the permanent, temporary, proposed or proposed and temporary regulations of Department of the Treasury under the Code as such regulations may be lawfully changed from time to time. (o) "Transfer" means to sell, convey, transfer, assign, mortgage, pledge, hypothecate, or otherwise encumber in any way all or any portion of a Company Interest. ARTICLE III CAPITAL CONTRIBUTIONS Section 3.1 Names, Addresses and Capital Contributions of Members. The following is a listing of the names, mailing addresses, initial contributions to the capital of the Company and Percentage Interest of each of the Members: Capital Percentage Name Address Contribution Interest Mobile Energy ______________ Services ______________ _____________ 99% Holdings, Inc. ______________ Southern 900 Ashwood Electric Parkway, Suite ______________ 1% International, 500 Inc. Atlanta, GA 30338 Total ______________ ______________ Section 3.2 Additional Capital Contributions. Any Member may make additional capital contributions to the Company. Such contributions (if other than in cash) shall be valued at their net fair market value on the date of such contribution. Such value (the "Agreed Value") shall be agreed upon by the non- contributing Members owning a majority of the Percentage Interests of the Company, exclusive of the Percentage Interest owned by the contributing Member. Section 3.3 Summary of Capital Contributions. For the purposes of this Agreement, the capital contributions to the 3 Company shall be deemed to include the initial capital contributions to the Company made by the Members, plus any amounts subsequently contributed to the capital of the Company by the Members. No Member shall be entitled to interest on its capital account. Section 3.4 Capital Accounts. An individual capital account shall be established and maintained for each Member. The capital account of each Member shall consist of such Member's original cash contribution and any additional cash contributions of capital, increased by (1) cash and the net fair market value of property other than cash contributed to capital by such Member (net of liabilities assumed by the Company or subject to which the Company takes such property within the meaning of section 752 of the Code), and (2) such Member's distributive share of income and gains of the Company, including items of income and gain specifically allocated to such Member or Assignee pursuant to Article IV and the Code, and decreased by (a) distributions of cash or other property to such Member (net of liabilities of the Company assumed by the Member or subject to which the Member takes such property within the meaning of section 752 of the Code), and (b) such Member's distributive share of losses of the Company, including items of expense, loss, and deduction specifically allocated to such Member pursuant to Article IV and the Code. Notwithstanding anything to the contrary contained herein, the capital account of a Member shall maintained in all events in accordance with the rules set forth in Regulation section 1.704-1(b)(2)(iv). Section 3.5 Capital Account of Assignee. In the event of a Transfer of some or all of a Member's Company Interest, the capital account of the transferor shall become the capital account of the transferee, to the extent it relates to the portion of the Company Interest transferred. ARTICLE IV PROFITS, LOSSES AND DISTRIBUTIONS Section 4.1 Profits and Losses. After giving effect to the special allocations in Sections 4.2 and 4.3, all profits and losses derived from the Company, and each item of income, gain, loss, deduction and credit entering into the computation thereof, shall be allocated among the Members in accordance with their respective Percentage Interests. A separate account shall be maintained for each Member. Company profits and losses shall be charged or credited to the separate capital account of each Member as provided. 4 Section 4.2 Special Allocations. The following special allocations shall be made in the following order: (a) Minimum Gain Chargeback. Except as otherwise provided in section 1.704-2(f) of the Regulations, notwithstanding any other provision of this Article IV, if there is a net decrease in Company Minimum Gain during any Company fiscal year, each Member shall be specially allocated items of Company income and gain for such fiscal year (and, if necessary, subsequent fiscal years) in an amount equal to such Member's share of the net decrease in Company Minimum Gain, determined in accordance with Regulation section 1.704-2(g). Allocations pursuant to the previous sentence shall be made in proportion to the respective amounts required to be allocated to each Member pursuant thereto. The items to be so allocated shall be determined in accordance with sections 1.704-(f)(6) and 1.704-2(j)(2) of the Regulations. This Section 4.2(a) is intended to comply with the minimum gain chargeback requirement in such section of the Regulations and shall be interpreted consistently therewith. (b) Member Minimum Gain Chargeback. Except as otherwise provided in section 1.704-2(i)(4) of the Regulations, notwithstanding any other provision of this Article IV, if there is a net decrease in Member Nonrecourse Debt Minimum Gain attributable to a Member Nonrecourse Debt during any Company fiscal year, each Member who has a share of the Member Nonrecourse Debt Minimum Gain attributable to such Member Nonrecourse Debt (determined in accordance with Regulation section 1.704-2(i)(5)) as of the beginning of such fiscal year, shall be specially allocated items of Company income and gain for such fiscal year (and, if necessary, subsequent fiscal years) in an amount equal to such Member's share of the net decrease in Member Nonrecourse Debt Minimum Gain attributable to such Member Nonrecourse Debt, determined in accordance with Regulation section 1.704-2(i)(4). Allocations pursuant to the previous sentence shall be made in proportion to the respective amounts required to be allocated to each Member pursuant thereto. The items to be so allocated shall be determined in accordance with sections 1.704-2(i)(4) and 1.704-2(j)(2) of the Regulations. This Section 4.2(b) is intended to comply with the minimum gain chargeback requirement in such section of the Regulations and shall be interpreted consistently therewith. (c) Qualified Income Offset. In the event that any Member unexpectedly receives any adjustments, allocations, or distributions described in sections 1.704-1(b)(2)(ii)(d)(4)-(6) of the Regulations, items of Company income and gain shall be specially allocated to each such Member in an amount and manner sufficient to eliminate, to the extent required by the Regulations, the deficit capital account at the end of any fiscal year of such Member as quickly as possible, provided that an 5 allocation pursuant to this Section 4.2 (c) shall be made if and only if and to the extent that such Member would have a deficit capital account at the end of any fiscal year after all other allocations provided for in this Agreement have been tentatively made as if this Section 4.2(c) were not in the Agreement. (d) Code Section 754 Adjustment. To the extent an adjustment to the adjusted tax basis of any Company asset pursuant to Code section 734(b) or Code section 743(b) is required, pursuant to Regulation section 1.704-1(b)(2)(iv)(m)(2) or Regulation section 1.704-l(b)(2)(iv)(m)(4), to be taken into account in determining capital accounts as a result of a distribution to a Member in complete liquidation of its interest, the amount of such adjustment to the capital accounts shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases such basis) and such gain or loss shall be specifically allocated to the Members in accordance with their Percentage Interests in the event Regulation section 1.704-1(b)(2)(iv)(m)(2) applies or to the Members to whom such distribution was made in the event that Regulation section 1.704-1(b)(2)(iv)(m)(4) applies. (e) Nonrecourse Deductions. Nonrecourse Deductions for any fiscal year or other period shall be specially allocated among the Members in proportion to their Percentage Interests. (f) Member Nonrecourse Deductions. Any Member Nonrecourse Deductions for any fiscal year or other period shall be specially allocated to the Member who bears the economic risk of loss with respect to the Member Nonrecourse Debt to which such Member Nonrecourse Deductions are attributable in accordance with Regulation section 1.704-2(i)(2). Section 4.3 Other Allocation Rules. (a) The Members are aware of the income tax consequences of the allocations made by this Article IV and hereby agree to be bound by the provisions of this Article IV in reporting their shares of Company income and loss for income tax purposes. (b) For purposes of determining the profits, losses, or any other items allocable to any period, profits, losses, and any such other items shall be determined on a daily, monthly, or other basis, as determined by the Members using any permissible method under Code section 706 and the Regulations thereunder. (c) Solely for purposes of determining a Member's proportionate share of the "excess nonrecourse liabilities" of the Company within the meaning of Regulation section 1.752-3(a)(3), the Members' interests in Company profits are in proportion to their Percentage Interests. 6 Section 4.4 Tax Allocations; Code Section 704(c). In accordance with Code section 704(c) and the Regulations thereunder, income, gain, loss, and deduction with respect to any property contributed to the capital of the Company shall, solely for tax purposes, be allocated among the Members so as to take account of any variation between the adjusted basis of such property to the Company for federal income tax purposes and its initial fair market value. In the event that the Agreed Value of any Company asset is adjusted pursuant to Regulation section 1.704-1(b)(2)(iv)(f), subsequent allocations of income, gain, loss and deduction with respect to such asset shall take account of any variation between the adjusted basis to the Company at the time of the contribution for federal income tax purposes and the Agreed Value of such property. Any elections or other decisions relating to such allocations shall be made by the Manager in any manner that reasonably reflects the purpose and intention of this Agreement. Allocations pursuant to this Section 4.4 are solely for purposes of federal, state, and local taxes and shall not affect, or in any way be taken into account in computing, any Member's capital account or share of profits, losses, other items, or distributions pursuant to any provisions of this Agreement. Section 4.5 Property Distributions. The Company shall not make any distributions of property (including cash) unless the Members unanimously vote for the Company to make such distributions. ARTICLE V ACCOUNTING AND RECORDS Section 5.1 Accountant. An accountant may be selected from time to time by the Manager to perform such tax and accounting services as may from time to time be required. The accountant may be removed by the Manager without assigning any cause. Section 5.2 Legal Counsel. One or more attorney(s) at law may be selected from time to time by the Manager to review the legal affairs of the Company and to perform such other services as may be required and to report to the Manager with respect thereto. Such attorney(s) may be removed by the Manager without assigning any cause. Section 5.3 Books and Records. The Company's books and records shall be kept at the principal place of business of the 7 Company. The Company's books of account shall show a true and accurate record of all costs and expenses incurred, all charges made, all credits made and received and all income derived in connection with the operation of the Company business in accordance with generally accepted accounting principles consistently applied. The Company shall use the [cash] method of accounting in preparation of its annual reports and for tax purposes and shall keep its books accordingly. The expenses chargeable to the Company shall include only those which are reasonable and necessary for the ordinary and efficient operation of the Company business. Section 5.4 Right of Inspection. Each Member shall, at its sole expense, have the right, at any time without notice to the other Members, to examine, copy and audit the Company's books and records during normal business hours. Such inspections may be made by any agent or attorney of a Member. Section 5.5 Reports. Unless otherwise agreed by the Members, annual statements showing the Company's profits and losses for the fiscal year and indicating the share of profit or loss of each Member for income tax purposes shall be prepared by the accountants of the Company and distributed to all Members within a reasonable time after the close of each fiscal year. Section 5.6 Tax Returns. The Company's accountants shall prepare all income and other tax returns of the Company and shall cause the same to be filed in a timely manner. The Company shall furnish to each Member a copy of each such return, together with any schedules or other information which each Member may require in connection with its own tax affairs. Section 5.7 Special Basis Adjustment. In connection with any Transfer of a Company Interest permitted by the terms of this Agreement and a subsequent admission of a "Transferee" (as hereinafter defined) as a Member of the Company, the Company, at the written request of the "Selling Owner" (as hereinafter defined) or Transferee, and at the time and in the manner provided in Regulation section 1.754-1(b), shall make an election to adjust the basis of the Company's property in the manner provided in sections 734(b) and 743(b) of the Code, and such Transferee shall pay all costs incurred by the Company in connection therewith, including, without limitation, reasonable attorneys' and accountants' fees. Section 5.8 Tax Matters Partner. MESH shall be the "Tax Matters Partner" pursuant to the Code, and shall be the party designated to receive all notices from the Internal Revenue Service which pertain to the tax affairs of the Company. The Tax Matters Partner must be a Member and shall not take any action in its capacity as such without the prior approval of the other Members. 8 Section 5.9 Fiscal Year. The fiscal year of the Company shall be the calendar year, unless otherwise approved by the Members. As used in this Agreement, a fiscal year shall include any partial fiscal year at the beginning and end of the Company term. Section 5.10 Bank Accounts. The bank accounts of the Company shall be maintained in such banking institutions as shall be determined by the Manager. Withdrawals shall be made only in the regular course of Company business and as otherwise authorized in this Agreement on such signature or signatures as the Manager may determine. The funds of the Company shall not be commingled with the funds of any other person or employee in any manner except for the benefit of the Company. Section 5.11 Loans. No loans shall be contracted on behalf of the Company and no evidences of indebtedness shall be issued in its name unless authorized by the Manager. Such authority may be general or confined to specific instances. Section 5.12 Contracts. The Manager may authorize any Member or agent of the Company to enter into any contract or execute any instrument in the name of and on behalf of the Company, and such authority may be general or confined to specific instances. ARTICLE VI MANAGEMENT, OFFICERS, ELECTIONS AND APPROVALS Section 6.1 Voting. Each Member shall have management participation rights equal to its Percentage Interest in the Company. Section 6.2 Management. Except as otherwise set forth in this Agreement, whenever any determination is required to be made hereunder concerning the conduct of the Company business, such determination shall be made by the officers of the Company as authorized by the Manager. Section 6.3 Officers. (a) The officers of the Company shall be chosen by the Manager and shall be at a minimum a president, secretary and controller. The Manager may also choose one or more vice-presidents, assistant secretaries and assistant controllers. Any number of offices may be held by the same person, unless this Agreement otherwise provides. The Manager may appoint such other officers and agents as it shall deem necessary who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Manager. The salaries of all 9 officers and agents of the Company shall be fixed by the Manager. The officers of the Company shall hold office until their successors are chosen and qualified. Any officer appointed by the Manager may be removed at any time by the Manager. Any vacancy occurring in any office of the Company shall be filled by the Manager. Each officer of the Company shall have the authority to execute and deliver any and all applications and filings as are necessary to be filed with federal, state and local regulatory agencies on behalf of the Company. (b) The following officers shall have the following powers and duties: (i) President. The president shall be the chief executive officer of the Company, shall preside at all meetings of the Members, shall have general and active management of the business of the Company and shall see that all orders and resolutions of the Manager are carried into effect. The president shall execute bonds, mortgages and other contracts requiring a seal, under the seal of the Company, except where required or permitted by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the Manager to some other officer or agent of the Company. (ii) Vice-Presidents. In the absence of the president or in the event of its inability or refusal to act, the vice-president (or in the event there be more than one vice-president, the vice-presidents in the order designated by the Manager, or in the absence of any designation, then in the order of their election) shall perform the duties of the president, and when so acting, shall have all the powers of and be subject to all the restrictions upon the president. The vice-presidents shall perform such other duties and have such other powers as the Manager may from time to time prescribe. (iii) Secretary. The secretary shall attend all meetings of the Members and record all the proceedings of the meetings of the Company and of the Members in a book to be kept for that purpose and shall perform like duties for the standing committees when required. It shall give, or cause to be given, notice of all special meetings of the Members, and shall perform such other duties as may be prescribed by the Manager or president, under whose supervision it shall be. It shall have custody of the seal of the Company and he, or an assistant secretary, shall have authority to affix the same to any instrument requiring it and when so affixed, it may be attested by its signature or by the signature of such assistant secretary. The Manager may give general authority to any other officer to affix the seal of the Company and to attest the affixing by its signature. 10 (iv) Assistant Secretary. The assistant secretary, or if there be more than one, the assistant secretaries in the order determined by the Manager (or if there be no such determination, then in the order of their election) shall, in the absence of the secretary or in the event of its inability or refusal to act, perform the duties and exercise the powers of the secretary and shall perform such other duties and have such other powers as the Manager may from time to time prescribe. (v) Controller. The controller shall have the custody of the Company funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the Company and shall deposit all moneys and other valuable effects in the name and to the credit of the Company in such depositories as may be designated by the Manager. The controller shall disburse the funds of the Company as may be ordered by the Manager, taking proper vouchers for such disbursements, and shall render to the president and the Members, at their regular meetings, or when the Manager so requires, an account of all its transactions as controller and of the financial condition of the Company. If required by the Manager, the controller shall give the Company a bond (which shall be renewed every six years) in such sum and with such surety or sureties as shall be satisfactory to the Manager for the faithful performance of the duties of its office and for the restoration to the Company, in case of its death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in its possession or under its control belonging to the Company. (vi) Assistant Controller. The assistant controller, or if there shall be more than one, the assistant controllers in the order determined by the Manager (or if there be no such determination, then in the order of their election) shall, in the absence of the controller or in the event of its inability or refusal to act, perform the duties and exercise the powers of the controller and shall perform such other duties and have such other powers as the Manager may from time to time prescribe. Section 6.4 Elections and Approvals. Except as otherwise set forth in this Agreement, any election or any matter that is subject to approval by the Members shall require the simple majority vote of the Members. Section 6.5 Independent Activities. The Manager and each Member may, notwithstanding this Agreement, engage in whatever activities it may choose, whether the same are competitive with the Company or otherwise, without having or incurring any obligation to offer any interest in such activities to the Company or any other Member. Neither this Agreement nor any 11 activity undertaken pursuant hereto shall prevent the Manager or any Member from engaging in such activities, or require the Manager or any Member to permit the Company or any other Member to participate in any such activities, and as a material part of the consideration for the execution of this Agreement by each Member, each Member hereby waives, relinquishes and renounces any such right or claim of participation against the Manager and any other Member. ARTICLE VII ADMISSION OF ADDITIONAL MEMBERS, DEATH OF A MEMBER, AND TRANSFER OF INTERESTS Section 7.1 Addition of Additional Members. No additional Members shall be admitted to the Company without the unanimous consent of the Members. Section 7.2 Death of an Individual Member. (a) If any of the Members who is a natural person should die during the term of the Company, the Company shall be automatically continued between the surviving Members and the estate of the deceased Member; and the personal representative of the deceased Member shall immediately succeed to the Company Interest of the deceased Member and shall be deemed to be an Assignee but shall have no management rights in the Company. (b) Similarly, upon distribution of the deceased Member's Company Interest to such Member's devisees, legatees, heirs, or trustees, such devisees, legatees, heirs or trustees, shall become an Assignee and shall have a Company Interest proportionate to their respective distributive interests in the deceased Member's Company Interest. Such devisees, legatees, heirs or trustees shall become Members of the Company only upon unanimous consent of the remaining Members. Section 7.3 Restrictions on Transfer. Except as expressly provided for in this Agreement, no Member or Assignee may, without the unanimous consent of the other Members, Transfer all or any portion of its Company Interest or withdraw or retire from the Company. Any such attempted Transfer, withdrawal or retirement not permitted hereunder shall be null and void. Section 7.4 Right of First Refusal. If the Members approve a proposed Transfer or the prohibitions contained in Section 7.3 are determined by a court of competent jurisdiction to be unenforceable, then the Member or Assignee desiring to Transfer all or a portion of its Company Interest (the "Selling Owner") shall deliver a written notice ("Offering Notice") to the other Members (the "Offeree Members") of its intention to do so. 12 The Offering Notice shall specify the nature of the Transfer, the consideration to be received therefor, the identity of the proposed purchaser, and the terms upon which it intends to undertake such Transfer. Each Offeree Member shall have the right to elect to purchase from the Selling Owner a part of the Company Interest of the Selling Owner in the proportion that such Offeree Member's Percentage Interest bears to the total Percentage Interests of all of the Offeree Members who wish to participate in the purchase of all of the Company Interest referred to in the Offering Notice, at the same price and on the same terms as specified in the Offering Notice, for a period of 60 days after the giving of the Offering Notice, by delivering in writing to the Selling Owner an offer to purchase that portion of the Company Interest of the Selling Owner covered by the Offering Notice; provided, however, that the Offeree Members may not, in the aggregate, purchase less than the entire Company Interest of the Selling Owner. Within 45 days, after notice to purchase is provided by the Offeree Members to the Selling Owner, the purchase by the Offeree Members of said Company Interest shall be consummated on the terms and conditions set forth in the Offering Notice of the Selling Owner. If within the 60-day period during which the Offeree Members have the right to elect to purchase the Selling Owner's Company Interest, they do not make such election, then the Selling Owner, within 30 days after the expiration of said 60-day period, may undertake and complete the Transfer to any person the identity of which was disclosed in the Offering Notice. The Transfer shall not be undertaken at a lower price or upon more favorable terms to the purchaser than specified in the Offering Notice. If the Selling Owner does not consummate such Transfer within 90 days after the date of the Offering Notice, or within the time scheduled for closing pursuant to the Offering Notice, whichever is later, then all restrictions of this Section 7.4 shall apply as though no Offering Notice had been given. The purchaser of the Selling Owner's Company Interest (the "Transferee") shall become a substitute Member upon satisfaction of the following requirements: (a) the Transferee signs and accepts the terms and conditions of this Agreement; (b) the Transferee satisfies the Members that such Transfer does not violate any federal or state securities laws, or might cause the termination of the Company under the Code; (c) the Transferee pays all related expenses, including legal fees and recording costs as may be incurred by the Company in connection with such Transfer; and (d) the Offeree Members unanimously agree to admit the Transferee as a substitute Member. 13 If the Offeree Members do not agree to admit the Transferee as a substitute Member, the Transferee is merely an Assignee and the Selling Owner, if a Member, remains a Member of the Company pursuant to sections 10-12-32 and 10-12-33 of the Act. As an Assignee, the Transferee is reflected in the records of the Company as the owner of financial rights in the Company, but does not have governance or management rights. Section 7.5 General Transfer Provision. All Transfers shall be by instrument in form and substance satisfactory to counsel for the Company and shall contain an expression by the Transferee of its intention to accept the Transfer and to accept and adopt all of the terms and provisions of this Agreement, as the same may have been amended, and shall provide for the payment by the Transferee of all reasonable expenses incurred by the Company in connection with such Transfer, including, without limitation, the necessary amendments to this Agreement to reflect such Transfer. The Selling Owner shall execute and acknowledge all such instruments, in form and substance reasonably satisfactory to the Company's counsel, as may be necessary or desirable to effectuate such Transfer. In no event shall the Company dissolve, liquidate or terminate upon the admission of any Member to the Company or upon any permitted Transfer of an interest in the Company by any Member or Assignee. Each Member hereby waives its right to dissolve, liquidate or terminate the Company in such event. Upon completion of a Transfer in compliance with this Agreement, the Selling Owner shall be released from all future obligations arising to third parties after the date of such Transfer, provided the Transferee assumes all such obligations of the Selling Owner. However, the Selling Owner shall remain liable for liabilities to third parties occurring on or prior to the date of such Transfer and for its obligations under this Agreement when arising. Section 7.6 Compliance. Notwithstanding anything to the contrary in this Agreement, at law or in equity, no Member shall Transfer or otherwise deal with any Company Interest in a way that would cause a default under any material agreement to which the Company is a party or by which it is bound. Section 7.7 Waiver of Partition. No Member shall either directly or indirectly take any action to require partition or appraisal of the Company or of any of its assets or properties or cause the sale of any Company property, and notwithstanding any provisions of applicable law to the contrary, each Member (and its legal representatives, successors or assigns) hereby irrevocably waives any and all right to maintain any action for partition or to compel any sale with respect to its Company Interest, or with respect to any assets or properties of the Company, except as expressly provided in this Agreement, and each Assignee shall have no such right. 14 ARTICLE VIII DISSOLUTION AND WINDING UP Section 8.1 Dissolution. The Company shall dissolve upon the first to occur of any of the following events: (a) The election of all of the Members to dissolve the Company; and (b) An event of dissociation of a Member, as defined in section 10-12-36 of the Act, unless both of the following apply: (1) there are at least two remaining Members or at least one remaining Member and a new Member is admitted; and (2) the legal existence and business of the Company is continued by the written consent of all of the remaining Members within 90 days after the occurrence of the event of dissociation. Section 8.2 Winding Up. Upon a dissolution of the Company, the Members shall take full account of the Company's assets and liabilities, the Company's assets shall be liquidated as promptly as is consistent with obtaining the fair value thereof, and the proceeds therefrom, to the extent sufficient therefor, shall be applied and distributed in the following order: (a) To the payment and discharge of all of the Company's liabilities, including the establishment of any necessary reserves; and (b) The balance, if any, to the Members in accordance with their capital accounts. Section 8.3 Compliance with Timing Requirements of Regulations. In the event the Company is "liquidated" within the meaning of Regulation section 1.704-1(b)(2)(ii)(g), distributions shall be made pursuant to this Article VIII (if such liquidation constitutes a dissolution of the Company) or Article IV hereof (if it does not) to the Members who have positive capital accounts in compliance with Regulation section 1.704-1(b)(2)(ii)(b)(2). 15 Section 8.4 Rights of Members. Except as otherwise provided in this Agreement, each Member shall look solely to the assets of the Company for the return of its capital contributions and shall have no right or power to demand or receive property other than cash from the Company. No Member shall have priority over the other Members as to the return of its capital contributions, distributions or allocations unless otherwise provided in this Agreement. ARTICLE IX MISCELLANEOUS Section 9.1 Notices. Any notice, payment, demand, or communication required or permitted to be given by any provision of this Agreement shall be in writing and shall be deemed to have been delivered, given and received for all purposes (i) if delivered personally to the Member or to an officer of the Member to whom the same is directed, or (ii) whether or not the same is actually received, if sent by registered or certified mail, postage and charges prepaid, addressed as follows: if to the Company, to the Company at the address set forth in Section 1.2 hereof; if to any Member, to the address set forth in Section 3.1 hereof; or to such other address as the Company or any Member may from time to time specify by notice to the Company and the Members. Any such notice shall be deemed to be delivered, given and received as of the date so delivered, if delivered personally, or as of the date on which the same was deposited in a regularly maintained receptacle for the deposit of United States mail, addressed and sent as aforesaid. Section 9.2 Waiver of Notice. Whenever any notice is required to be given pursuant to the provisions of the Act, the Articles of Organization of the Company or this Agreement, a waiver thereof, in writing, signed by the persons entitled to such notice, whether before or after the time stated therein, shall be deemed equivalent to the giving of such notice. Section 9.3 Indemnification by the Company. The Company shall indemnify persons who may be indemnified by the Company as follows: (a) Each person who is or was a Member, Manager, officer, employee or agent of the Company and who was or is a party or was or is threatened to be made a party to any threatened, pending or completed claim, action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that it is or was a Member, Manager, officer, employee or agent of the Company, or is or was 16 serving at the request of the Company as a director, alternate director, officer, employee, agent or trustee of another company, partnership, joint venture, trust, employee benefit plan or other enterprise, shall be indemnified by the Company as a matter of right against any and all expenses (including attorneys' fees) actually and reasonably incurred by him and against any and all claims, judgments, fines, penalties, liabilities and amounts paid in settlement actually incurred by him in defense of such claim, action, suit or proceeding, including appeals, to the full extent permitted by applicable law. The indemnification provided by this section shall inure to the benefit of the heirs, executors and administrators of such person. (b) Expenses (including attorneys' fees) incurred by a Member, Manager, officer, employee or agent of the Company with respect to the defense of any such claim, action, suit or proceeding may be advanced by the Company prior to the final disposition of such claim, action, suit or proceeding, as authorized by the Manager in the specific case, upon receipt of an undertaking by or on behalf of such person to repay such amount unless it shall ultimately be determined that such person is entitled to be indemnified by the Company under this Agreement or otherwise; provided, however, that the advancement of such expenses shall not be deemed to be indemnification unless and until it shall ultimately be determined that such person is entitled to be indemnified by the Company. (c) The Company may purchase and maintain insurance at the expense of the Company on behalf of any person who is or was a Member, Manager, officer, employee or agent of the Company, or any person who is or was serving at the request of the Company as a director (or the equivalent), alternate director, officer, employee, agent or trustee of another company, partnership, joint venture, trust, employee benefit plan or other enterprise, against any liability or expense (including attorneys' fees) asserted against him and incurred by him in any such capacity, or arising out of its status as such, whether or not the Company would have the power to indemnify him against such liability or expense under this Agreement or otherwise. (d) Without limiting the generality of the foregoing provisions, no present or future Member, Manager, officer, employee or agent of the Company, or its heirs, executors, or administrators, shall be liable for any act, omission, step, or conduct taken or had in good faith, which is required, authorized, or approved by any order or orders issued pursuant to the Public Utility Holding Company Act of 1935, the Federal Power Act, or any federal or state statute or municipal ordinance regulating the Company or its parent by reason of their being holding or investment companies, public utility companies, public utility holding companies, or subsidiaries of public utility holding companies. In any action, suit, or proceeding based on 17 any act, omission, step, or conduct, as described in this paragraph, the provisions hereof shall be brought to the attention of the court. In the event that the foregoing provisions of this paragraph are found by the court not to constitute a valid defense on the grounds of not being applicable to the particular class of plaintiff, each such Member, Manager and officer, and its heirs, executors, and administrators, shall be reimbursed for, or indemnified against, all expenses and liabilities incurred by him or imposed on him, in connection with, or arising out of, any such action, suit, or proceeding based on any act, omission, step, or conduct taken or had in good faith as in this paragraph described. Such expenses and liabilities shall include, but shall not be limited to, judgments, court costs, and attorneys' fees. (e) The foregoing rights shall not be exclusive of any other rights to which any such Member, Manager, officer, employee or agent may otherwise be entitled and shall be available whether or not the Member, Manager, officer, employee or agent continues to be a Member, Manager, officer, employee or agent at the time of incurring any such expenses and liabilities. (f) If any word, clause or provision of the Agreement or any indemnification made under this Section 9.3 hereof shall for any reason be determined to be invalid, the provisions of the Agreement shall not otherwise be affected thereby but shall remain in full force and effect. Section 9.4 Governing Law. This Agreement shall be construed under the substantive laws of the State of Alabama as now adopted or as may hereafter be amended, and such laws shall govern the limited liability company aspects of this Agreement. Section 9.5 Construction. Every covenant, term and provision of this Agreement shall be construed simply according to its fair meaning and not strictly for or against any Member. Section 9.6 Reimbursement of Members. Members shall receive reimbursement for expenses reasonably incurred in the performance of their duties. Section 9.7 Binding Effect. This Agreement shall be binding upon and inure to the benefit of the Members and their legal representatives, heirs, administrators, executors, successors and permitted assigns. Section 9.8 Headings. Section and other headings contained in this Agreement are for reference purposes only and are not intended to describe, interpret, define or limit the scope, extent or intent of this Agreement or any provision hereof. 18 Section 9.9 Severability. Every provision of this Agreement is intended to be severable. If any term or provision hereof is illegal or invalid for any reason whatsoever, such illegality or invalidity shall not affect the validity or legality of the remainder of this Agreement. Section 9.10 Additional Documents. Each member agrees to perform all further acts and execute, acknowledge and deliver any documents which may be reasonably necessary, appropriate or desirable to carry out the provisions of this Agreement. Section 9.11 Variation of Pronouns. All pronouns and any variations thereof shall be deemed to refer to masculine, feminine or neuter, singular or plural, as the identity of the person or persons may require. Section 9.12 Counterpart Execution. This Agreement may be executed in one or more counterparts each of which shall be deemed an original and all of which shall constitute one and the same instrument. Section 9.13 Amendments. This Agreement may be altered, amended, restated, or repealed and a new Agreement may be adopted by a unanimous vote of the Members, after notice and opportunity for discussion of the proposed alteration, amendment, restatement, or repeal. 19 CERTIFICATION THE UNDERSIGNED, being all of the Members of Mobile Energy Services Company, L.L.C., hereby evidence their adoption and ratification of the foregoing Agreement of the Company. EXECUTED by each Member on the ____ day of July, 1995. "MESH" Mobile Energy Services Holdings, Inc. ________________________________ By:_______________________________ Witness Title:__________________________ "SEI" Southern Electric International, Inc. ________________________________ By:_______________________________ Witness Title:__________________________ 20 EX-99 5 EXHIBIT B-4(A) Exhibit B-4(a) DRAFT 6/1/95 MOBILE ENERGY SERVICES COMPANY, L.L.C. ___% Series ____ First Mortgage Bonds due _____ ___% Series ____ First Mortgage Bonds due 2017 unconditionally guaranteed by MOBILE ENERGY SERVICES HOLDINGS, INC. Underwriting Agreement _____, 1995 Goldman, Sachs & Co. Bear, Stearns & Co. Inc. Lehman Brothers Inc. c/o Goldman, Sachs & Co. 85 Broad Street New York, New York 10004 Ladies and Gentlemen: Mobile Energy Services Company, L.L.C., an Alabama limited liability company (the "Company"), proposes, subject to the terms and conditions stated herein, to issue and sell to you severally (the "Underwriters") an aggregate of $(260,000,000) principal amount of its First Mortgage Bonds set forth above (the "Securities") to be issued pursuant to the provisions of the Trust Indenture dated as of _____, 1995 (the "Indenture") among the Company, Mobile Energy Services Holdings, Inc., an Alabama corporation ("Mobile Energy"), and First Union National Bank of Georgia ("First Union"), as trustee (the "Trustee"). The Company's obligations with respect to the Securities will be guaranteed by Mobile Energy. Capitalized terms used but not otherwise defined herein shall have the respective meanings assigned to them in the Indenture. #20103025.5 1. Each of the Company and Mobile Energy jointly and severally represents and warrants to, and agrees with, each of the Underwriters that: (a) A registration statement on Form S-1 (File No. 33- _____) in respect of the Securities has been filed with the Securities and Exchange Commission (the "Commission"); such registration statement and any post-effective amendment thereto, each in the form heretofore delivered to the Underwriters, have been declared effective by the Commission in such form; no other document with respect to such registration statement has heretofore been filed with the Commission; and no stop order suspending the effectiveness of such registration statement has been issued and no proceeding for that purpose has been initiated or threatened by the Commission; any preliminary prospectus included in such registration statement or filed with the Commission pursuant to Rule 424(a) of the rules and regulations of the Commission under the Securities Act of 1933, as amended (the "Act"), is hereinafter called a "Preliminary Prospectus"; the various parts of such registration statement, including all exhibits (other than Form T-1) thereto and including the information contained in the form of final prospectus filed with the Commission pursuant to Rule 424(b) under the Act in accordance with Section 5(a) hereof and deemed by virtue of Rule 430A under the Act to be part of such registration statement at the time it was declared effective, each as amended at the time such part of such registration statement became effective, are hereinafter collectively called the "Registration Statement"; and such form of final prospectus, in the form first filed pursuant to Rule 424(b) under the Act, is hereinafter called the "Prospectus." (b) No order preventing or suspending the use of any Preliminary Prospectus has been issued by the Commission, and each Preliminary Prospectus, at the time of filing thereof, conformed in all material respects to the requirements of the Act and the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), and the rules and regulations of the Commission thereunder, and did not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that this representation and warranty shall not apply to any statements or omissions made in reliance upon and in conformity with information furnished in writing to the Company and Mobile Energy by the Underwriters expressly for use therein. (c) The Registration Statement conforms, and the Prospectus and any further amendments or supplements to the Registration Statement or the Prospectus will conform, in all material respects to the requirements of the Act and the #20103025.5 -2- Trust Indenture Act and the rules and regulations of the Commission thereunder and do not and will not, as of the applicable effective date as to the Registration Statement and any amendment thereto and as of the applicable filing date as to the Prospectus and any amendment or supplement thereto, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; provided, however, that this representation and warranty shall not apply to any statements or omissions made in reliance upon and in conformity with information furnished in writing to the Company and Mobile Energy by the Underwriters expressly for use therein. (d) None of the Company, Mobile Energy, The Southern Company, a Georgia corporation ("Southern"), Southern Electric International, Inc., a Delaware corporation ("Southern Electric"), Scott Paper Company, a Pennsylvania corporation ("Scott"), S.D. Warren Company, a Pennsylvania corporation ("S.D. Warren"), and the other parties to the Project Contracts (each, a "Project Participant" and, collectively, the "Project Participants") has sustained, since the date of the latest audited financial statements included in the Prospectus, any material loss or interference with its business from fire, explosion, flood, hurricane or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree, otherwise than as set forth or contemplated in the Prospectus; and, since the respective dates as of which information is given in the Registration Statement and the Prospectus, there has not been any change in the capital stock or long-term debt of the Company or Mobile Energy or any material adverse change, or any development involving a prospective material adverse change, in or affecting the general affairs, management, properties, financial position, business prospects, shareholders' or other equity, results of operations or otherwise of the Company, Mobile Energy, Southern, Southern Electric, Scott, S.D. Warren or the other Project Participants otherwise than as set forth or contemplated in the Prospectus. (e) The Company and Mobile Energy have good and marketable title in fee simple to all real property and good and marketable title to all personal property owned by them, in each case free and clear of all liens, encumbrances and defects except such as are described in the Prospectus or such as do not materially affect the value of such property and do not interfere with the use made and proposed to be made of such property by the Company and Mobile Energy; any real property and buildings held under lease by the Company are held by the Company under valid, subsisting and enforceable leases with such exceptions as are not material and do not interfere with the use made and proposed to be #20103025.5 -3- made of such property and buildings by the Company; the easements, licenses and other rights granted or to be granted to the Company and Mobile Energy pursuant to the terms of the Project Contracts provide or will provide the Company with all rights and property interests required to enable the Company to obtain all services, materials or rights (including access) required for the operation and maintenance of the Energy Complex, as contemplated by the Prospectus, other than those services, materials or rights that reasonably can be expected to be obtainable in the ordinary course of business; and Mobile Energy's sole assets consist of its ownership interest in the Company and its rights in respect of the Southern Master Tax Sharing Agreement. (f) The Company has been duly formed and is validly existing as a limited liability company in good standing under the laws of the State of Alabama, with power and authority (limited liability company and other) to own its properties and conduct its business as described in the Prospectus and to execute, deliver and perform its obligations under this Agreement and each other Project Document to which it is a party or will be a party as of the Time of Delivery (as defined in Section 4(a) hereof), and to consummate the transactions contemplated hereby and thereby, including the issuance and sale of the Securities as provided herein, and has been duly qualified as a foreign limited liability company for the transaction of business and is in good standing under the laws of each other jurisdiction in which it owns or leases property or conducts any business so as to require such qualification, or is subject to no material liability or disability by reason of the failure to be so qualified in any such jurisdiction. (g) Mobile Energy has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of Alabama, with power and authority (corporate and other) to own its properties and conduct its business as described in the Prospectus, and to execute, deliver and perform its obligations under this Agreement and each other Project Document to which it is a party or will be a party as of the Time of Delivery, and to consummate the transactions contemplated hereby and thereby, including the issuance of the Guaranty as provided in the Indenture, and has been duly qualified as a foreign corporation for the transaction of business and is in good standing under the laws of each other jurisdiction in which it owns or leases properties or conducts any business so as to require such qualification, or is subject to no material liability or disability by reason of the failure to be so qualified in any such jurisdiction. (h) The Company is, and as of the Time of Delivery will be, wholly-owned by Mobile Energy and Southern #20103025.5 -4- Electric; each of Mobile Energy and Southern Electric is, and as of the Time of Delivery will be, wholly-owned by Southern; each of the Company and Mobile Energy has an authorized capitalization as set forth in the Prospectus, and all of the outstanding equity interests of the Company and Mobile Energy have been duly and validly authorized and issued, are fully paid, nonassessable and not subject to any preemptive or similar rights and have been issued in accordance with applicable federal and state securities laws; as of the Time of Delivery, the equity interests of the Company and Mobile Energy will be free and clear of any security interest, mortgage, pledge, lien, encumbrance, claim or adverse interest of any nature; and the Company and Mobile Energy do not have outstanding any securities convertible into or exchangeable for any of its equity interests or any rights to subscribe for or to purchase, or any warrants or options for the purchase of, or any agreements providing for the issuance (contingent or otherwise) of, or any calls, commitments or claims of any character relating to, any such equity interests. (i) Neither the Company nor Mobile Energy has engaged in any business or activity other than in connection with the acquisition, development, ownership, operation and financing of the Energy Complex as contemplated by the Project Documents to which either the Company or Mobile Energy is a party. (j) The Securities have been duly authorized and, when issued and delivered pursuant to this Agreement, will have been duly executed, authenticated, issued and delivered and will constitute valid and legally binding obligations of the Company entitled to the benefits provided by the Indenture, which will be substantially in the form filed as an exhibit to the Registration Statement; the Indenture has been duly authorized and duly qualified under the Trust Indenture Act and, when executed and delivered by the Company, Mobile Energy and the Trustee, will constitute a valid and legally binding instrument, enforceable in accordance with its terms, subject, as to enforcement, to bankruptcy, insolvency, reorganization and other similar laws of general applicability relating to or affecting creditors' rights and to general equity principles; and the Securities and the IndenturewillconformtothedescriptionsthereofintheProspectus. (k) This Agreement has been duly authorized, executed and delivered by each of the Company and Mobile Energy and constitutes a valid and legally binding obligation of the Company and Mobile Energy, enforceable in accordance with its terms, subject, as to enforcement, to bankruptcy, insolvency, reorganization and other similar laws of general applicability relating to or affecting creditors' rights and to general equity principles and to public policy or federal #20103025.5 -5- or state securities law that may limit rights to indemnification. (l) Each of the Intercreditor and Collateral Agency Agreement dated as of _____, 1995 among Bankers Trust Company ("Bankers Trust"), as collateral agent (the "Collateral Agent"), the Trustee, the Tax-Exempt Trustee, the Working Capital Facility Provider, the IDB, the Company and Mobile Energy (the "Intercreditor Agreement") and the other Financing Documents (other than the Securities, the Indenture and this Agreement), which will be substantially in the form filed as exhibits to the Registration Statement, to which either the Company or Mobile Energy is, or as of the Time of Delivery will be, a party has been duly authorized and, when executed and delivered by the parties thereto, will constitute a valid and legally binding obligation of the parties thereto, enforceable in accordance with its terms, subject, as to enforcement, to bankruptcy, insolvency, reorganization and other similar laws of general applicability relating to or affecting creditors' rights and to general equity principles; and the Financing Documents will conform to the descriptions thereof in the Prospectus. (m) Each of the Project Contracts to which the Company or Mobile Energy is a party has been duly authorized, executed and delivered by the parties thereto, and constitutes a valid and legally binding obligation of each party thereto, enforceable against each party thereto in accordance with its terms, subject, as to enforcement, to bankruptcy, insolvency, reorganization, and other similar laws of general applicability relating to or affecting creditors' rights and to general equity principles; and the Project Contracts conform to the descriptions thereof in the Prospectus; and none of the Company, Mobile Energy or any other party to any Project Contract is in default (and no event has occurred that with lapse of time or notice or action by a third party could result in a default) in any material respect in the performance of or compliance with any term or provision in any Project Contract and no force majeure event has occurred under any Project Contract. (n) The issue and sale of the Securities by the Company, the issue of the Guaranty by Mobile Energy, the execution, delivery and performance by the Company and Mobile Energy of the Securities, the Indenture, this Agreement and the other Project Documents to which the Company or Mobile Energy is, or as of the Time of Delivery will be, a party and the consummation of the transactions contemplated hereby and thereby will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, sale/leaseback agreement, loan agreement or other similar financing agreement or instrument or other agreement or instrument to which the Company or #20103025.5 -6- Mobile Energy is a party or by which the Company or Mobile Energy is bound or to which any of the property or assets of the Company or Mobile Energy is subject, nor will such action result in any violation of the provisions of the Articles of Organization (or Operating Agreement) of the Company or the Certificate of Incorporation or By-laws of Mobile Energy or any law or statute or any order, rule or regulation, judgment or decree of any Governmental Authority having jurisdiction over the Company or Mobile Energy or any of their properties; and no Governmental Approval (including any Environmental Requirement) of any Governmental Authority having jurisdiction over the Company or Mobile Energy or any of their properties is required for the issue and sale of the Securities by the Company, the issue of the Guaranty by Mobile Energy, the execution, delivery and performance by the Company and Mobile Energy of the Securities, the Indenture, this Agreement and the other Project Documents to which the Company or Mobile Energy is, or as of the Time of Delivery will be, a party, or the consummation by the Company or Mobile Energy of the transactions contemplated hereby and thereby, except for the registration of the Securities and the Guaranty under the Act, the qualification of the Indenture under the Trust Indenture Act and the approval of the Commission under the Public Utility Holding Company Act of 1935, as amended (the "PUHCA"), and such consents, approvals, authorizations, registrations or qualifications as may be required under state securities or blue sky laws in connection with the purchase and distribution of the Securities by the Underwriters. (o) The issue and sale of the Securities by the Company, the issue of the Guaranty by Mobile Energy, the execution, delivery and performance by the Company and Mobile Energy of the Securities, the Indenture, this Agreement and the other Project Documents to which the Company or Mobile Energy is, or as of the Time of Delivery will be, a party, and the consummation of any of the other transactions contemplated hereby or thereby, do not and will not result in the creation or imposition of any Liens (other than Permitted Liens) on any of the Collateral. (p) When the Securities are issued and delivered pursuant to this Agreement, (i) the Securities will rank pari passu without any preference among themselves, (ii) the Security Documents will, in the aggregate, constitute a valid, direct first Lien to the extent provided in the Security Documents on the Indenture Accounts and the monies on deposit therein and, subject to the Working Capital Facility Provider's prior Lien on Receivables and Fuel Inventory Proceeds, the other First Mortgage Bond Collateral, (iii) the Security Documents will constitute the only Lien on the Collateral except for Permitted Liens, (iv) the Security Documents will, in the aggregate, constitute a valid, direct first Lien on all assets hereafter acquired by #20103025.5 -7- the Company, to the extent contemplated by the Security Documents, (v) the Indenture Accounts and the monies on deposit therein and, subject to Liens of the Working Capital Facility Provider and the Tax-Exempt Trustee, the other First Mortgage Bond Collateral are not, and as of the Time of Delivery will not be, subject to any Lien ranking on a parity with the Lien of the Security Documents and (vi) the Underwriters will have good and marketable title to the Securities, subject to no defenses by the Company or Mobile Energy (all of which are hereby waived). (q) The Company is not in violation of its Articles of Organization (or Operating Agreement) and Mobile Energy is not in violation of its Certificate of Incorporation or By- laws; and neither the Company nor Mobile Energy is in default in the performance or observance of any material obligation, covenant or condition contained in any indenture, mortgage, deed of trust, loan agreement, lease or other agreement or instrument to which it is a party or by which it or any of its properties may be bound. (r) The statements set forth in the Prospectus, insofar as they purport to (i) constitute a summary of the terms of the Securities, (ii) describe the provisions of the Project Documents and Debt of the Company referred to therein and (iii) describe the provisions of the laws and the other regulatory and environmental matters referred to therein, are accurate, complete and fair. (s) There are no legal or governmental proceedings pending to which the Company or Mobile Energy is a party or to which any of the properties of the Company or Mobile Energy is subject that (i) if determined adversely to the Company or Mobile Energy would individually or in the aggregate have a material adverse effect on the business (financial or otherwise), properties or business prospects of the Company or Mobile Energy or materially and adversely affect the ability of either the Company or Mobile Energy to perform its obligations hereunder or under any other Project Document or materially and adversely affect the ownership, use, possession, operations or maintenance of the Energy Complex or any part thereof or the transactions contemplated hereunder or under any other Project Document or (ii) questions the validity, enforceability or performance of this Agreement or any other Project Document to which the Company or Mobile Energy is, or as of the Time of Delivery will be, a party and to the best of the Company's and Mobile Energy's knowledge, no such proceedings are threatened or contemplated by any Governmental Authority or threatened by others. (t) The assumptions described as part of (i) the financial projections for the Company and Mobile Energy (the "Projections") contained in the report with respect to #20103025.5 -8- certain technical, environmental and economic aspects of the Energy Complex prepared by Stone & Webster Engineering Corporation (the "Independent Engineer"), which is included in the Prospectus as Appendix B thereto (the "Independent Engineer's Report"), and (ii) the assessment of the long- term business viability of and the risk of production curtailment at the Mills (the "Mill Assessment") contained in the report with respect to the Mills prepared by Jaakko Poyry Consulting, Inc. (the "Paper Consultant"), which is included in the Prospectus as Appendix C thereto (the "Paper Consultant's Report"), are, in the opinion of the Company and Mobile Energy, reasonable; the information provided by the Company and Mobile Energy to the Independent Engineer and the Paper Consultant as the basis for the Projections and in connection with the Mill Assessment, respectively, has been prepared in good faith by the Company and Mobile Energy (as the case may be); neither the Company nor Mobile Energy knows of any facts or circumstances relating to its present or proposed business that should be set forth in the Prospectus as assumptions for purposes of consideration of the Projections or the Mill Assessment, taken as a whole, and are not so set forth; the Projections and the Mill Assessment have been reviewed by, and accepted as having a reasonable basis and included in the Prospectus in good faith by, each of the Company and Mobile Energy; and the statements made in the Prospectus (other than the Projections and the Mill Assessment) within the coverage of Rule 175(b) under the Act were made by the Company and Mobile Energy with a reasonable basis and in good faith. (u) Except as disclosed in the Prospectus, the Company, Mobile Energy, Southern, Southern Electric, Scott, S.D. Warren and the other Project Participants have complied and are complying in all material respects with all environmental laws pertaining to the Energy Complex, the Site and the site of the Mobile Facility; there are no circumstances that may prevent or interfere with the abilities of the Company, Mobile Energy and Southern Electric to operate and maintain the Energy Complex or the abilities of Scott and S.D. Warren to operate and maintain the Mills as contemplated by the Project Documents in compliance with all environmental laws; all governmental actions required under environmental laws to operate the Energy Complex and the Mills are identified in the Prospectus; except as disclosed in the Prospectus, there is no governmental claim or environmental law pending or threatened against the Company, Mobile Energy, Southern, Southern Electric, Scott, S.D. Warren or any other Project Participant or their respective properties that would be material to the business (financial or otherwise), properties or business prospects of the Company or Mobile Energy; none of such environmental matters so disclosed, either individually or in the aggregate, has resulted in or will result in a material adverse change in the business #20103025.5 -9- (financial or otherwise) of the Company, Mobile Energy, Southern, Southern Electric, Scott, S.D. Warren or any other Project Participant; except as disclosed in the Prospectus, the Site and the site of the Mobile Facility do not contain or have deposited thereon any hazardous material in excess of permitted levels or other concentrations, standards or limitations under environmental laws; except for such disclosed environmental items, there are no present or past actions, activities, circumstances and conditions, events or incidents, including the release, emission, discharge, presence or disposal of hazardous materials, for which environmental laws could provide the basis to incur any material obligation, liability, loss, claim, judgment, discharge, penalty, fee or other cost arising from (i) the presence or release into the environment of any hazardous material or (ii) any violation of any environmental law; and except as disclosed in the Prospectus, (A) no underground storage tanks are located on the Site and the site of the Mobile Facility, (B) there is no asbestos contained in, forming part of or contaminating any part of the Site or the site of the Mobile Facility, (C) no poly chlorinated biphenyls are used or stored at or contaminate any part of the Site or the site of the Mobile Facility and (D) no nuclear material has been brought onto the Site or the site of the Mobile Facility that, in each case, would be material to the business (financial or otherwise), properties or business prospects of the Company, Mobile Energy, Southern, Southern Electric, Scott, S.D. Warren or any other Project Participant. (v) Neither the Company nor Mobile Energy is and, after giving effect to the offering and sale of the Securities, neither the Company nor Mobile Energy will be, an "investment company" or an entity "controlled" by an "investment company," as such terms are defined in the Investment Company Act of 1940, as amended (the "Investment Company Act"). (w) Neither First Union, in its capacity as the Trustee and the Tax-Exempt Trustee, or Bankers Trust, in its capacity as the Collateral Agent, nor any holder of the Securities will be (under applicable law as of the date hereof and solely as a result of the ownership, maintenance and operation of the Energy Complex by the Company or Mobile Energy as described in the Prospectus, the purchase and ownership of the Securities or any other transaction contemplated by the Financing Documents) subject to regulation under the Federal Power Act of 1920, as amended (the "FPA"), or by the State of Alabama Public Service Commission or otherwise be subject to rate regulation under federal, state or local law; neither the Company nor Mobile Energy is and, after giving effect to the offering and sale of the Securities, will be subject to rate regulation under federal, state or local law; and neither the execution, #20103025.5 -10- delivery and performance by each of the Company and Mobile Energy of all the provisions of the Project Documents to which the Company or Mobile Energy is, as of the date hereof or at the Time of Delivery, a party nor the consummation of the transactions contemplated thereby will violate Chapter 14 of Title 37 of the Code of Alabama (1975): Service Territories for Electric Suppliers (the "Alabama Territorial Law"). (x) Each of the Company and Mobile Energy has filed, or caused to be filed, all tax and information returns that are required to have been filed by it in any jurisdiction and has paid (prior to their delinquency dates) all taxes shown to be due and payable on such returns and all other taxes and assessments payable by it, to the extent the same have become due and payable, except to the extent there is a Good Faith Contest thereof by the Company or Mobile Energy. (y) Neither the Company or Mobile Energy nor any other Person who is a member of a controlled group of corporations or a group of trades or businesses under common control with the Company, within the meaning of Section 414 of the Code, has (i) failed to fulfill its obligations under or to comply in any material respect with the requirements of ERISA or the Code with respect to any employee benefit plans, (ii) sought a waiver of the minimum funding standard of Section 412 of the Code, (iii) failed to make any contribution or payment to or in respect of any employee benefit plan required to be made by law or by the terms of such plan, (iv) made any amendment to any employee benefit plan that has resulted or could result in the imposition of a lien or the posting of a bond or other security under ERISA or the Code or (v) incurred any liability under Title IV of ERISA other than a liability to the Pension Benefit Guaranty Corporation for premiums under Section 4007 of ERISA, if as a result of such events or conditions, together with all such other events or conditions, the Company or any other member of such controlled group has incurred or is reasonably likely to incur a liability that is material in relation to the financial position of the Company. (z) There are no statutes, regulations, contracts or other documents that are required to be described in the Registration Statement or the Prospectus or to be filed as exhibits to the Registration Statement that are not so described or filed. (aa) None of the Company, Mobile Energy or their respective affiliates does business with the government of Cuba within the meaning of Section 517.075, Florida Statutes. (ab) Arthur Andersen L.L.P., who have certified certain consolidated financial statements of Mobile Energy, #20103025.5 -11- are independent public accountants as required by the Act and the rules and regulations of the Commission thereunder. 2. Subject to the terms and conditions herein set forth, the Company agrees to issue and sell to each of the Underwriters, and the Underwriters agree, severally and not jointly, to purchase from the Company, at a purchase price of ___% of the principal amount thereof, (plus accrued interest, if any, from _____, 1995 to the Time of Delivery,) the principal amount of Securities set forth opposite the name of such Underwriter in Schedule I hereto. 3. Upon the authorization by the Underwriters of the release of the Securities, the several Underwriters propose to offer the Securities for sale upon the terms and conditions set forth in the Prospectus. 4. (a) The Securities to be purchased by each Underwriter hereunder will be represented by one or more definitive global Securities in book-entry form that will be deposited by or on behalf of the Company with The Depository Trust Company ("DTC") or its designated custodian. The Company will deliver the Securities to Goldman, Sachs & Co., for the account of each Underwriter, against payment by or on behalf of such Underwriters of the purchase price therefor by certified official bank check or checks, payable to the order of the Company in federal (same day) funds, by causing DTC to credit the Securities to the account of Goldman, Sachs & Co. at DTC. The Company will cause the certificates representing the Securities to be made available to Goldman, Sachs & Co. for checking at least twenty-four hours prior to the Time of Delivery at the office of DTC or its designated custodian (the "Designated Office"). The time and date of such delivery and payment shall be 9:30 a.m., New York City time, on _____, 1995 or such other time and date as the Underwriters and the Company may agree upon in writing. Such time and date are herein called the "Time of Delivery." (b) The documents to be delivered at the Time of Delivery by or on behalf of the parties hereto pursuant to Section 7 hereof, including the cross-receipt for the Securities and any additional documents requested by the Underwriters pursuant to Section 7(aa) hereof, will be delivered at the offices of Winthrop, Stimson, Putnam & Roberts, One Battery Park Plaza, New York, New York (the "Closing Location"), and the Securities will be delivered at the Designated Office, all at the Time of Delivery. A meeting will be held at the Closing Location at 9:30 a.m., New York City time, on the New York Business Day next preceding the Time of Delivery, at which meeting the final drafts of the documents to be delivered pursuant to the preceding sentence will be available for review by the parties hereto. For the purposes of this Section 4, "New York Business Day" shall mean each Monday, Tuesday, Wednesday, Thursday and Friday that is not a day on which banking institutions in New York City are #20103025.5 -12- generally authorized or obligated by law or executive order to close. 5. Each of the Company and Mobile Energy agrees with each of the Underwriters: (a) To prepare the Prospectus in a form approved by the Underwriters and to file such Prospectus pursuant to Rule 424(b) under the Act not later than the Commission's close of business on the second business day following the execution and delivery of this Agreement or, if applicable, such earlier time as may be required by Rule 430A(a)(3) under the Act; to make no further amendment or any supplement to the Registration Statement or the Prospectus that shall be disapproved by the Underwriters promptly after reasonable notice thereof; to advise the Underwriters, promptly after it receives notice thereof, of the time when the Registration Statement, or any amendment thereto, has been filed or becomes effective or any supplement to the Prospectus or any amended Prospectus has been filed and to furnish the Underwriters with copies thereof; to advise the Underwriters, promptly after it receives notice thereof, of the issuance by the Commission of any stop order or of any order preventing or suspending the use of any Preliminary Prospectus or other prospectus relating to the Securities, of the suspension of the qualification of the Securities for offering or sale in any jurisdiction, of the initiation or threatening of any proceeding for any such purpose or of any request by the Commission for the amending or supplementing of the Registration Statement or the Prospectus or for additional information; and, in the event of the issuance of any stop order or of any order preventing or suspending the use of any Preliminary Prospectus or other prospectus relating to the Securities or suspending any such qualification, to promptly use its best efforts to obtain the withdrawal of such order. (b) Promptly from time to time to take such action as the Underwriters may reasonably request to qualify the Securities for offering and sale under the securities laws of such jurisdictions as the Underwriters may request and to comply with such laws so as to permit the continuance of sales and dealings therein in such jurisdictions for as long as may be necessary to complete the distribution of the Securities, provided that in connection therewith the Company and Mobile Energy shall not be required to qualify as a foreign corporation or to file a general consent to service of process in any jurisdiction. (c) To furnish the Underwriters with copies of the Prospectus in such quantities as the Underwriters may from time to time reasonably request, and, if the delivery of a prospectus relating to the Securities is required at any time prior to the expiration of nine months after the time #20103025.5 -13- of issue of the Prospectus in connection with the offering or sale of the Securities and if at such time any event shall have occurred as a result of which the Prospectus as then amended or supplemented would include an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made when such Prospectus is delivered, not misleading, or, if for any other reason it shall be necessary during such same period to amend or supplement the Prospectus in order to comply with the Act or the Trust Indenture Act, to notify the Underwriters and upon the request of the Underwriters to prepare and furnish without charge to the Underwriters and to any dealer in securities as many copies as the Underwriters may from time to time reasonably request of an amended Prospectus or a supplement to the Prospectus that will correct such statement or omission or effect such compliance; and, in case the Underwriters are required to deliver a prospectus in connection with sales of any of the Securities at any time nine months or more after the time of issue of the Prospectus, upon request of the Underwriters but at the expense of the Underwriters, to prepare and deliver to the Underwriters as many copies as the Underwriters may request of an amended or supplemented Prospectus complying with Section 10(a)(3) of the Act. (d) To make generally available to its securityholders as soon as practicable, but in any event not later than eighteen months after the effective date of the Registration Statement (as defined in Rule 158(c) under the Act), an earning statement of the Company and Mobile Energy (which need not be audited) complying with Section 11(a) of the Act and the rules and regulations of the Commission thereunder (including, at the option of the Company and Mobile Energy, Rule 158 under the Act). (e) During the period beginning from the date hereof and continuing to and including the Time of Delivery, not to offer, sell, contract to sell or otherwise dispose of, except as provided hereunder, any securities of the Company or Mobile Energy (other than the Tax-Exempt Bonds) that are substantially similar to the Securities. (f) To furnish to the Trustee and the holders of the Securities (or any beneficial interest therein requesting the same in writing) the documents specified in, and otherwise in accordance with the provisions of, Section 5.3 of the Indenture as in effect at the Time of Delivery. (g) During a period of five years from the effective date of the Registration Statement, to furnish to the Underwriters copies of all reports or other communications (financial or other) furnished to securityholders of the Company or Mobile Energy; and to deliver to the Underwriters #20103025.5 -14- (i) as soon as they are available, (A) copies of any reports and financial statements furnished to or filed with the Commission or any national securities exchange on which the Securities or any class of securities of the Company or Mobile Energy may be listed and (B) the documents specified in Sections 5.3 and 10.4 of the Indenture as in effect at the Time of Delivery and (ii) such additional information concerning the business and financial condition of the Company or Mobile Energy as the Underwriters may from time to time reasonably request (such financial statements to be on a consolidated basis to the extent the accounts of the Company and Mobile Energy are consolidated in reports furnished to securityholders generally or to the Commission). (h) To use the net proceeds received by it from the sale of the Securities pursuant to this Agreement in the manner specified in the Prospectus under the caption "Use of Proceeds." (i) To file with the Commission such reports on Form SR as may be required by Rule 463 under the Act. 6. Whether or not the transactions contemplated by this Agreement are consummated or this Agreement is terminated, the Company and Mobile Energy covenant and agree with the several Underwriters that they will pay or cause to be paid the following: (i) the fees, disbursements and expenses of counsel and accountants for the Company and Mobile Energy in connection with the registration of the Securities under the Act and all other expenses in connection with the preparation, printing and filing of the Registration Statement, any Preliminary Prospectus and the Prospectus and amendments and supplements thereto and the mailing and delivering of copies thereof to the Underwriters and dealers; (ii) the cost of printing or producing this Agreement, the other Financing Documents, the blue sky survey and any legal investment memoranda relating to the qualification of the Securities for offering and sale under state securities laws as provided in Section 5(b) hereof, closing documents (including any compilations thereof) and any other documents in connection with the offering, purchase, sale and delivery of the Securities; (iii) all expenses in connection with the qualification of the Securities for offering and sale under state securities laws as provided in Section 5(b) hereof, including the fees and disbursements of counsel for the Underwriters in connection with such qualification and in connection with the blue sky survey and any legal investment memoranda relating thereto; (iv) any fees charged by securities rating services for rating the Securities; (v) the filing fees incident to, and the fees and disbursements of counsel for the Underwriters in connection with, any required review by the National Association of Securities Dealers, Inc. of the terms of the sale of the Securities; (vi) the cost of preparing the Securities; (vii) the fees, disbursements and expenses of each of the Trustee, the Tax-Exempt Trustee and the #20103025.5 -15- Collateral Agent and any agents thereof (or any agent of the Company or Mobile Energy appointed under the Financing Documents) and the fees and disbursements of their respective counsel; (viii) the fees, disbursements and expenses of counsel for the Underwriters and all other expenses incurred by or on behalf of the Underwriters in connection with the offering of the Securities, including, without limitation, advertising, marketing and other out-of-pocket expenses; (ix) the fees, disbursements and expenses of the Independent Engineer, the Paper Consultant, the Environmental Consultant (as defined in Section 7(s) hereof), the Independent Insurance Consultant (as defined in Section 7(t) hereof) and the Engineering Consultant (as defined in Section 7(u) hereof); (x) the fees and expenses relating to the issuance of the Title Policy (as defined in Section 7(n) hereof), the preparation of any surveys relating to the Site or the site of the Mobile Facility and the filing and/or recordation of certain of the Financing Documents; and (xi) all other costs and expenses incident to the performance of its obligations hereunder that are not otherwise specifically provided for in this Section 6. 7. The obligations of the Underwriters hereunder shall be subject, in the sole discretion of the Underwriters, to the condition that all representations and warranties and other statements of the Company and Mobile Energy herein are, at and as of the Time of Delivery, true and correct, to the condition that the Company and Mobile Energy shall have performed all of their respective obligations hereunder theretofore to be performed and to the following additional conditions: (a) The Prospectus shall have been filed with the Commission pursuant to Rule 424(b) within the applicable time period prescribed for such filing by the rules and regulations under the Act and in accordance with Section 5(a) hereof; no stop order suspending the effectiveness of the Registration Statement or any part thereof shall have been issued and no proceeding for that purpose shall have been initiated or threatened by the Commission; and all requests for additional information on the part of the Commission shall have been complied with to the reasonable satisfaction of the Underwriters. (b) Winthrop, Stimson, Putnam & Roberts, counsel for the Underwriters, shall have furnished to the Underwriters their written opinion, dated the Time of Delivery, with respect to such matters as the Underwriters may reasonably request, and such counsel shall have received such papers and information as they may reasonably request to enable them to pass upon such matters. (c) Counsel for the Company and Mobile Energy shall have furnished to the Underwriters their written opinion or opinions, dated the Time of Delivery and in form and substance satisfactory to the Underwriters, to the effect that: #20103025.5 -16- (i) The Company has been duly formed and is validly existing as a limited liability company in good standing under the laws of the State of Alabama, with power and authority (limited liability company and other) to own its properties and conduct its business as described in the Prospectus, to execute, deliver and perform its obligations under this Agreement and each other Project Document to which it is a party as of the Time of Delivery and to consummate the transactions contemplated hereby and thereby, including the issuance and sale of the Securities as provided herein; (ii) Mobile Energy has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of Alabama, with power and authority (corporate and other) to own its properties and conduct its business as described in the Prospectus, to execute, deliver and perform its obligations under this Agreement and each other Project Document to which it is a party as of the Time of Delivery and to consummate the transactions contemplated hereby and thereby, including the issuance of the Guaranty as provided in the Indenture; (iii) Each of the Company and Mobile Energy has been duly qualified as a foreign corporation for the transaction of business and is in good standing under the laws of each other jurisdiction in which it owns or leases properties or conducts any business so as to require such qualification, or is subject to no material liability or disability by reason of the failure to be so qualified in any such jurisdiction; (iv) The Company is wholly-owned by Mobile Energy and Southern Electric, and Mobile Energy is wholly- owned by Southern; each of the Company and Mobile Energy has an authorized capitalization as set forth in the Prospectus, and all of the outstanding equity interests of the Company and Mobile Energy have been duly and validly authorized and issued, are fully paid and non-assessable and are not subject to any preemptive or similar rights and have been issued in accordance with applicable federal and state securities law; the outstanding equity interests of the Company and Mobile Energy are free and clear of any security interest, mortgage, pledge, lien, encumbrance, claim or adverse interest of any nature; and the Company and Mobile Energy do not have outstanding any securities convertible into or exchangeable for any of its equity interests or any rights to subscribe for or to purchase, or any warrants or options for the purchase of, or any #20103025.5 -17- agreement providing for the issuance (contingent or otherwise) of, or any calls, commitments or claims of any character relating to, any such equity interests; (v) To the best of such counsel's knowledge and other than as set forth in the Prospectus, there are no legal or governmental proceedings pending or threatened to which the Company or Mobile Energy is a party, or of which any property of the Company or Mobile Energy is the subject, that (A) if determined adversely to the Company or Mobile Energy would individually or in the aggregate have a material adverse effect on the business (financial or otherwise), properties or business prospects of the Company or Mobile Energy or materially and adversely affect the ability of the Company or Mobile Energy to perform the obligations hereunder or under any other Project Document or materially and adversely affect the ownership, use, possession, operation or maintenance of the Energy Complex in any part thereof or the transactions contemplated hereunder or under any other Project Document or (B) questions the validity, enforceability or performance of this Agreement or any other Project Document to which the Company or Mobile Energy is, as of the Time of Delivery, a party; and, to the best of such counsel's knowledge, no such proceedings are threatened or contemplated by any Governmental Authority or threatened by others; (vi) This Agreement has been duly authorized, executed and delivered by each of the Company and Mobile Energy; (vii) The Securities have been duly authorized, executed, authenticated, issued and delivered, constitute valid and legally binding obligations of the Company, enforceable in accordance with their terms, subject, as to enforcement, to bankruptcy, insolvency, reorganization and other similar laws of general applicability relating to or affecting creditors' rights and to general equity principles, and are entitled to the benefits provided by the Indenture; and the Securities conform to the description thereof in the Prospectus; (viii) The Indenture has been duly authorized, executed and delivered by the parties thereto and constitutes a valid and legally binding instrument, enforceable in accordance with its terms, subject, as to enforcement, to bankruptcy, insolvency, reorganization and other similar laws of general applicability relating to or affecting creditors' rights and to general equity principles; the Indenture #20103025.5 -18- has been duly qualified under the Trust Indenture Act; and the Indenture conforms to the description thereof in the Prospectus; (ix) Each of the Financing Documents (other than the Securities, this Agreement and the Indenture) to which either the Company or Mobile Energy is a party has been duly authorized, executed and delivered by the parties thereto and constitutes a valid and legally binding obligation of the parties thereto, enforceable in accordance with their terms, subject, as to enforcement, to bankruptcy, insolvency, reorganization, and other similar laws of general applicability relating to or affecting creditor's rights and to general equitable principles; and such Financing Documents conform to the descriptions thereof in the Prospectus; (x) Each of the Project Contracts to which either the Company or Mobile Energy is a party has been duly authorized, executed and delivered by Mobile Energy or the Company and is in full force and effect and constitutes a valid and legally binding obligation of the parties thereto, enforceable in accordance with their terms, subject, as to enforcement, to bankruptcy, insolvency, reorganization and other similar laws of general applicability relating to or affecting creditors' rights and to general equitable principles; and the Project Contracts conform to the descriptions thereof in the Prospectus; (xi) The Company is not in violation of its Articles of Organization (or Operating Agreement) and Mobile Energy is not in violation of its Certificate of Incorporation or By-laws; and neither the Company nor Mobile Energy is in default in the performance or observance of any material obligation, covenant or condition contained in any indenture, mortgage, deed of trust, loan agreement, lease or other agreement or instrument to which it is a party or by which it or any of its properties may be bound; (xii) The issue and sale of the Securities by the Company, the issue of the Guaranty by Mobile Energy and the execution, delivery and performance by each of the Company and Mobile Energy of, all the provisions of the Securities, the Indenture, this Agreement and the other Project Documents to which the Company or Mobile Energy is, as of the Time of Delivery, a party and the consummation of the transactions contemplated hereby and thereby, do not and will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, sale/leaseback #20103025.5 -19- agreement, loan agreement or other similar financing agreement or instrument or other agreement to which the Company or Mobile Energy is bound or to which any of the property or assets of the Company or Mobile Energy is subject, nor does or will any such action result in any violation of the provisions of the Articles of Organization (or Operating Agreement) of the Company or the Certificate of Incorporation or By- laws of Mobile Energy or any law or statute or any order, rule or regulation, judgment or decree of any Governmental Authority having jurisdiction over the Company or Mobile Energy or any of their properties; and no Governmental Approval (including any Environmental Requirement) of any Governmental Authority having jurisdiction over the Company or Mobile Energy or any of their properties is required for the issue and sale of the Securities by the Company, the issue of the Guaranty by Mobile Energy, the execution, delivery and performance by the Company and Mobile Energy of the Securities, the Indenture, this Agreement and the other Project Documents to which the Company or Mobile Energy is, as of the Time of Delivery, a party, or the consummation of the transactions contemplated hereby and thereby, except for the registration of the Securities and the Guaranty under the Act, the qualification of the Indenture under the Trust Indenture Act and the approval of the Commission under the PUHCA and such consents, approvals, authorizations, registrations or qualifications as may be required under state securities or Blue Sky laws in connection with the purchase and distribution of the Securities by the Underwriters; (xiii) The issue and sale of the Securities by the Company, the issue of the Guaranty by Mobile Energy, the execution, delivery and performance by the Company and Mobile Energy of the Securities, the Indenture, this Agreement and the other Project Documents to which either the Company or Mobile Energy is a party, and the consummation of any of the other transactions contemplated hereby or thereby, do not and will not result in the creation or imposition of any Liens (other than Permitted Liens) on any of the Collateral; (xiv) Neither First Union, in its capacity as the Trustee and the Tax-Exempt Trustee, or Bankers Trust, in its capacity as the Collateral Agent, nor any holder of the Securities will be (under applicable law as of the date hereof and solely as a result of the ownership, maintenance and operation of the Energy Complex by the Company or Mobile Energy as described in the Prospectus, the purchase and ownership of the Securities or any other transaction contemplated by #20103025.5 -20- the Financing Documents) subject to regulation under the FPA or by the State of Alabama Public Service Commission; neither the Company nor Mobile Energy is and, after giving effect to the offering and sale of the Securities, will be subject to rate regulation under federal law or the laws of the State of Alabama; and neither the execution, delivery and performance by each of the Company and Mobile Energy of all the provisions of the Project Documents to which the Company or Mobile Energy is, as of the date hereof or at the Time of Delivery, a party nor the consummation of the transactions contemplated thereby will violate the Alabama Territorial Law. (xv) When the Securities are issued and delivered pursuant to this Agreement, (A) the Securities will rank pari passu without any preference among themselves, (B) the Security Documents will, in the aggregate, constitute a valid, direct first Lien to the extent provided in the Security Documents on the Indenture Accounts and the monies on deposit therein and, subject to the Working Capital Facility Provider's prior Lien on Receivables and Fuel Inventory Proceeds, the other First Mortgage Bond Collateral, (C) the Security Documents will constitute the only Liens on the Collateral except for Permitted Liens, (D) the Security Documents will, in the aggregate, constitute a valid, direct first Lien on all assets hereafter acquired by the Company, to the extent contemplated by the Security Documents, (E) the Indenture Accounts and the monies on deposit therein and, subject to the Liens of the Working Capital Facility Provider and the Tax-Exempt Trustee, the other First Mortgage Bond Collateral will not be subject to any Lien ranking on a parity with the Lien of the Security Documents and (F) the Underwriters will have good and marketable title to the Securities, subject to no defenses by the Company or Mobile Energy (all of which are hereby waived); (xvi) The Security Documents to be recorded with the appropriate filing offices in the State of Alabama and the counties of Mobile and DeKalb, Alabama, and in any other jurisdiction necessary for the perfection of the Lien of the Security Documents described in paragraph (xv) above, are in appropriate form for filing under the laws of the State of Alabama and, other than fees specified in such opinion, no taxes or recording or filing fees will be incurred by any party as a result of the execution, recordation or filing of any of the Security Documents or any financing statements in respect thereof; and the priority of the Lien of the Security Documents described in paragraph (xv) above will not be affected by any repayment, amortization or #20103025.5 -21- other reduction of all or, from time to time, any part of the outstanding principal amount of the Securities; (xvii) The Company and Mobile Energy have good and marketable title in fee simple to all real property and good and marketable title to all personal property owned by them, in each case free and clear of all liens, encumbrances and defects except such as are described in the Prospectus or such as do not materially affect the value of such property and do not interfere with the use made and proposed to be made of such property by the Company and Mobile Energy; and any real property and buildings held under lease by the Company are held by the Company under valid, subsisting and enforceable leases with such exceptions as are not material and do not interfere with the use made and proposed to be made of such properties and buildings by the Company; (xviii) Provided that the net proceeds received by the Company from the sale of the Securities pursuant to this Agreement are used in the manner specified in the Prospectus under "Use of Proceeds," the consummation of the transactions contemplated by the Project Documents will not violate or result in a violation of Regulation U or X of the Board of Governors of the Federal Reserve System; (xix) The Company will be treated as a partnership for federal income tax purposes and will not be liable for any federal, state or local income tax; (xx) Neither the Company nor Mobile Energy is an "investment company" or an entity "controlled" by an "investment company," as such terms are defined in the Investment Company Act; (xxi) The statements set forth in the Prospectus, insofar as they purport to (A) constitute a summary of the terms of the Securities, (B) describe the provisions of the Project Documents and Debt of the Company referred to therein and (C) describe the provisions of the laws and the other regulatory and environmental matters referred to therein, are accurate, complete and fair; and (xxii) The Registration Statement and the Prospectus and any further amendments and supplements thereto made by the Company and Mobile Energy prior to the Time of Delivery (other than the financial statements and related schedules therein, as to which such counsel need express no opinion) comply as to form in all material respects with the requirements of the Act and the Trust Indenture Act and the rules and #20103025.5 -22- regulations thereunder; although they do not assume any responsibility for the accuracy, completeness or fairness of the statements contained in the Registration Statement or the Prospectus, except for those referred to in the opinion in paragraphs (vii) through (xi) and paragraph (xxi) of this Section 7(c), they have no reason to believe that, as of its effective date, the Registration Statement or any further amendment thereto made by the Company and Mobile Energy prior to the Time of Delivery (other than the financial statements and related schedules therein, as to which such counsel need express no opinion) contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading or that, as of its date, the Prospectus or any further amendment or supplement thereto made by the Company and Mobile Energy prior to the Time of Delivery (other than the financial statements and related schedules therein, as to which such counsel need express no opinion) contained an untrue statement of a material fact or omitted to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading or that, as of the Time of Delivery, either the Registration Statement or the Prospectus or any further amendment or supplement thereto made by the Company and Mobile Energy prior to the Time of Delivery (other than the financial statements and related schedules therein, as to which such counsel need express no opinion) contains an untrue statement of a material fact or omits to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; and they do not know of any amendment to the Registration Statement required to be filed or of any contracts or other documents of a character required to be filed as an exhibit to the Registration Statement or required to be described in the Registration Statement or the Prospectus that are not so filed or described. With respect to paragraph (xxii) of this Section 7(c), counsel for the Company and Mobile Energy may state that their opinion and belief are based upon their participation in the preparation of the Registration Statement and the Prospectus and any amendments or supplements thereto and their review and discussion of the contents thereof, but are without independent check or verification except as specified. If in rendering any such opinion opinions, such counsel or counsels rely upon the report, certificate or opinion of any third party, such third party and its report, certificate or opinion must be satisfactory to the Underwriters, and such report, certificate or opinion must #20103025.5 -23- be addressed and delivered to the Underwriters at or prior to the Time of Delivery. Such opinion or opinions shall be rendered to the Underwriters at the request of the Company and Mobile Energy and shall so state therein. Any legal opinion delivered to any party other than the Underwriters by counsel for the Company or Mobile Energy in connection with the satisfaction of the conditions precedent to the effectiveness of any of the Financing Documents shall be accompanied by a letter from such counsel stating that the Underwriters may rely on such opinion as if it were also addressed to them. (d) Troutman Sanders, counsel for Southern, and, insofar as such opinion or opinions relate to matters governed by the laws of the State of New York, Latham & Watkins, special New York counsel for Southern, shall have furnished to the Underwriters their written opinion or opinions, dated the Time of Delivery and in form and substance satisfactory to the Underwriters, to the effect that: (i) Southern has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of Georgia, with power and authority (corporate and other) to own its properties and conduct its business, to execute, deliver and perform its obligations under each of the Southern Guaranties and the capital infusion arrangements provided with respect to the Mill Owner Maintenance Reserve Account and to consummate the transactions contemplated thereby; (ii) Each of the Southern Guaranties and the capital infusion arrangements provided with respect to the Mill Owner Maintenance Reserve Account has been duly authorized, executed and delivered by Southern and constitutes a valid and legally binding obligation of Southern, enforceable in accordance with its terms, subject, as to enforcement, to bankruptcy, insolvency, reorganization and other similar laws of general applicability relating to or affecting creditors' rights as such laws would apply in the event of the bankruptcy, insolvency or reorganization of, or other similar occurrence with respect to, Southern and to general equity principles; (iii) The execution, delivery and performance by Southern of each of the Southern Guaranties and the capital infusion arrangements provided with respect to the Mill Owner Maintenance Reserve Account and the consummation of the transactions contemplated thereby do not and will not conflict with or result in a breach or violation of any of the terms of provisions of, or constitute a default under, any indenture, mortgage, #20103025.5 -24- deed of trust, sale/leaseback agreement, loan agreement or other similar financing agreement or instrument or other agreement or instrument to which Southern or any of its subsidiaries is bound or to which any of the property or assets of Southern or any of its subsidiaries is subject, nor does or will any such action result in any violation of the provisions of the organizational documents of Southern or any law or statute or any order, rule or regulation, judgment or decree of any Governmental Authority having jurisdiction over Southern or any of its subsidiaries or any of their respective properties; and no consent, approval, authorization, order, registration or qualification or with any such Governmental Authority is required for the consummation by Southern of the transactions contemplated by any of the Southern Guaranties and the capital infusion arrangements provided with respect to the Mill Owner Maintenance Reserve Account; and (iv) There are no legal or governmental proceedings pending to which Southern or any of its subsidiaries is a party, or to which any of their respective properties is subject, that (A) if determined adversely to Southern or such subsidiary would individually or in the aggregate have a material adverse effect on the business (financial or otherwise), properties or business prospects of Southern or materially and adversely affect the ability of Southern to perform its obligations under any of the Southern Guaranties and the capital infusion arrangements provided with respect to the Mill Owner Maintenance Reserve Account, or any part thereof, or the transactions contemplated by any of the Southern Guaranties and the capital infusion arrangements provided with respect to the Mill Owner Maintenance Reserve Account or (B) questions the validity, enforceability or performance of any Project Contract to which it is party. Such opinion or opinions shall be rendered to the Underwriters at the request of the Company and Mobile Energy and shall so state therein. (e) Counsel for each of Southern Electric, Scott, S.D. Warren and the other Project Participants (other than the Company, Mobile Energy and Southern), which shall be acceptable to the Underwriters, shall have furnished to the Underwriters their written opinion or opinions, dated the Time of Delivery and in form and substance satisfactory to the Underwriters, to the effect that: (i) Such Project Participant has been duly formed and is validly existing and in good standing under the #20103025.5 -25- laws of its jurisdiction of organization, with power and authority (corporate and other) to own its properties and conduct its business, to execute, deliver and perform its obligations under its Consent to Assignment and each of the Project Contracts to which it is a party and to consummate the transactions contemplated thereby; (ii) Each of the Project Contracts to which such Project Participant is a party and such Project Participant's Consent to Assignment has been duly authorized, executed and delivered by such Project Participant and constitutes a valid and legally binding obligation of such Project Participant, enforceable in accordance with its terms, subject, as to enforcement, to bankruptcy, insolvency, reorganization and other similar laws of general applicability relating to or affecting creditors' rights and to general equity principles; (iii) The execution, delivery and performance by such Project Participant of the Project Contracts to which it is a party and its Consent to Assignment and the consummation of the transactions contemplated thereby do not and will not conflict with or result in a breach or violation of any of the terms of provisions of, or constitute a default under, any indenture, mortgage, deed of trust, sale/leaseback agreement, loan agreement or other similar financing agreement or instrument or other agreement or instrument to which such Project Participant or any of its subsidiaries is bound or to which any of the property or assets of the Project Participant or any of its subsidiaries is subject, nor did or will such action result in any violation of the provisions of the organizational documents of such Project Participant or any law or statute or any order, rule or regulation, judgment or decree of any Governmental Authority having jurisdiction over such Project Participant or any of its subsidiaries; and no consent, approval, authorization, order, registration or qualification of any such Governmental Authority is required for the consummation by such Project Participant of the transactions contemplated by the Project Contracts to which it is a party and its Consent to Assignment; (iv) There are no legal or governmental proceedings pending to which such Project Participant or any of its subsidiaries is a party, or to which any of its properties is subject, that (i) if determined adversely to such Project Participant or such subsidiary would individually or in the aggregate, have a material adverse effect on the business (financial or otherwise), properties or business prospects of such #20103025.5 -26- Project Participant or materially and adversely affect the ability of such Project Participant to perform its obligations under the Project Contracts to which it is a party or its Consent to Assignment (or, in the case of a Mill Owner, such Mill Owner's Mill), or any part thereof, or the transactions contemplated under such Project Contracts and Consent to Assignment or (ii) questions the validity, enforceability or performance of any Project Contract to which it is a party or its Consent to Assignment; and (v) No Governmental Approval (including any Environmental Requirement) of any Governmental Authority having jurisdiction over such Project Participant or any of its properties is required for the execution, delivery and performance by such Project Participant of the Project Contracts to which it is a party or the consummation of the transactions contemplated thereby. Such opinion or opinions shall be rendered to the Underwriters at the request of the Company and Mobile Energy and shall so state therein. (f) Counsel for First Union, which shall be acceptable to the Underwriters, shall have furnished to the Underwriters their written opinion or opinions, dated the Time of Delivery and in form and substance satisfactory to the Underwriters, to the effect that: (i) First Union has been duly formed and is validly existing as a national banking association and in good standing under the laws of its jurisdiction of organization, with power and authority (corporate and other) to own its properties and conduct its business, to execute, deliver and perform its obligations under the Financing Documents to which it is a party and to consummate the transactions contemplated thereby; (ii) Each of the Financing Documents to which First Union is a party has been duly authorized, executed and delivered by First Union, in its capacity as the Trustee or the Tax-Exempt Trustee, as the case may be, and constitutes a valid and legally binding obligation of First Union, in such capacity, enforceable in accordance with its terms, subject, as to enforcement, to bankruptcy, insolvency, reorganization and other similar laws of general applicability relating to or affecting creditors' rights and to general equity principles; (iii) The execution, delivery and performance by First Union, in its capacity as the Trustee and the Tax-Exempt Trustee, as the case may be, of the #20103025.5 -27- Financing Documents to which it is a party and the consummation of the transactions contemplated thereby do not and will not result in any violation of the provisions of the organizational documents of First Union or any law or statute or any order, rule or regulation, judgment or decree of any Governmental Authority having jurisdiction over First Union; and no consent, approval, authorization, order, registration or qualification of any such Governmental Authority is required for the consummation by First Union, in such capacity, of the transactions contemplated by the Financing Documents to which it is a party; and (iv) First Union has authorized the acceptance of the trusts contemplated by the Indenture and the Tax- Exempt Indenture to be accepted by the Trustee and the Tax-Exempt Trustee, respectively, thereunder and by the Intercreditor Agreement to be accepted by the Trustee and the Tax-Exempt Trustee thereunder; and all requirements of the Indenture in respect of the authentication and delivery by the Trustee of the Securities have been complied with. Such opinion or opinions shall be rendered to the Underwriters at the request of the Company and Mobile Energy and shall so state therein. (g) Counsel for Bankers Trust, which shall be acceptable to the Underwriters, shall have furnished to the Underwriters their written opinion or opinions, dated the Time of Delivery and in form and substance satisfactory to the Underwriters, to the effect that: (i) Bankers Trust has been duly formed and is validly existing and in good standing under the laws of its jurisdiction of organization, with power and authority (corporate and other) to own its properties and conduct its business, to execute, deliver and perform its obligations under the Financing Documents to which it is a party and to consummate the transactions contemplated thereby; (ii) Each of the Financing Documents to which Bankers Trust is a party has been duly authorized, executed and delivered by Bankers Trust, in its capacity as the Collateral Agent, and constitutes a valid and legally binding obligation of Bankers Trust, in such capacity, enforceable in accordance with its terms, subject, as to enforcement, to bankruptcy, insolvency, reorganization and other similar laws of general applicability relating to or affecting creditors' rights and to general equity principles; #20103025.5 -28- (iii) The execution, delivery and performance by Bankers Trust, in its capacity as the Collateral Agent, of the Financing Documents to which it is a party and the consummation of the transactions contemplated thereby do not and will not result in any violation of the provisions of the organizational documents of Bankers Trust or any law or statute or any order, rule or regulation, judgment or decree of any Governmental Authority having jurisdiction over Bankers Trust; and no consent, approval, authorization, order, registration or qualification of any such Governmental Authority is required for the consummation by Bankers Trust, in such capacity, of the transactions contemplated by the Financing Documents to which it is a party; and (iv) Bankers Trust has authorized the acceptance of the trusts contemplated by the Intercreditor Agreement to be accepted by the Collateral Agent thereunder. Such opinion or opinions shall be rendered to the Underwriters at the request of the Company and Mobile Energy and shall so state therein. (h) Counsel for the Working Capital Facility Provider, which shall be acceptable to the Underwriters, shall have furnished to the Underwriters their written opinion or opinions, dated the Time of Delivery and in form and substance satisfactoryto theUnderwriters, to theeffect that: (i) The Working Capital Facility Provider has been duly formed and is validly existing and in good standing under the laws of its jurisdiction of organization, with power and authority (corporate and other) to own its properties and conduct its business, to execute, deliver and perform its obligations under the Financing Documents to which it is a party and to consummate the transactions contemplated thereby; (ii) Each of the Financing Documents to which the Working Capital Facility Provider is a party has been duly authorized, executed and delivered by the Working Capital Facility Provider and constitutes a valid and legally binding obligation of the Working Capital Facility Provider, enforceable in accordance with its terms, subject, as to enforcement, to bankruptcy, insolvency, reorganization and other similar laws of general applicability relating to or affecting creditors' rights and to general equity principles; and (iii) The execution, delivery and performance by the Working Capital Facility Provider of the Financing Documents to which it is a party and the consummation #20103025.5 -29- of the transactions contemplated thereby do not and will not result in any violation of the provisions of the organizational documents of the Working Capital Facility Provider or any law or statute or any order, rule or regulation, judgment or decree of any Governmental Authority having jurisdiction over the Working Capital Facility Provider; and no consent, approval, authorization, order, registration or qualification of any such Governmental Authority is required for the consummation by the Working Capital Facility Provider of the transactions contemplated by the Financing Documents to which it is a party. Such opinion or opinions shall be rendered to the Underwriters at the request of the Company and Mobile Energy and shall so state therein. (i) The Underwriters shall have received, on each of the date hereof and at the Time of Delivery, a letter dated the date hereof or the Time of Delivery, as the case may be, and in form and substance satisfactory to the Underwriters, from Arthur Andersen L.L.P., independent public accountants for the Company and Mobile Energy, substantially in the form attached hereto as Exhibit A. (j) (i) None of the Company, Mobile Energy, Southern, Southern Electric, Scott, S.D. Warren or any other Project Participant shall have sustained, since the date of the latest audited financial statements included in the Prospectus, any loss or interference with its business from fire, explosion, flood, hurricane or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree, otherwise than as set forth or contemplated in the Prospectus and (ii) since the respective dates as of which information is given in the Prospectus, there shall not have been any change in the capital stock or long-term debt of the Company or Mobile Energy or any change, or any development involving a prospective change, in or affecting the general affairs, management, financial position, shareholders' or other equity or results of operations of the Company, Mobile Energy, Southern, Southern Electric, Scott, S.D. Warren or any other Project Participant, otherwise than as set forth or contemplated in the Prospectus, the effect of which, in any such case described in clause (i) or (ii) above, is in the judgment of the Underwriters so material and adverse as to make it impracticable or inadvisable to proceed with the public offering or the delivery of the Securities on the terms and in the manner contemplated in the Prospectus. (k) On or after the date hereof there shall not have occurred any of the following: (i) a suspension or material limitation in trading in securities generally on the New York Stock Exchange or other national securities exchange; #20103025.5 -30- or (ii) a suspension or material limitation in trading in Southern's or any of its subsidiaries' securities on the New York Stock Exchange or other national securities exchange; or (iii) a general moratorium on commercial banking activities declared by federal authorities or authorities of the State of Alabama, Georgia or New York; or (iv) the outbreak or escalation of hostilities involving the United States or the declaration by the United States of a national emergency or war, if the effect of any such event specified in this clause (iv) in the judgment of the Underwriters makes it impracticable or inadvisable to proceed with the public offering or the delivery of the Securities on the terms and in the manner contemplated in the Prospectus; or (v) the occurrence of any material adverse change in the existing financial, political or economic conditions in the United States or elsewhere that, in the judgment of the Underwriters, would materially and adversely affect the financial markets or the market for the Securities and other debt securities; or (vi) the enactment or active consideration for enactment by any governmental body, department or agency of the United States or the State of Alabama or Georgia, or the rendering of a decision by any federal court or any court within the State of Alabama or Georgia, that in the judgment of the Underwriters would materially and adversely affect the financial markets or the market for the Securities or other debt securities. (l) Each of the Company and Mobile Energy shall have furnished, or caused to be furnished, to the Underwriters a certificate of an officer of the Company and Mobile Energy, respectively, dated the Time of Delivery and in form and substance satisfactory to the Underwriters, as to the accuracy of the respective representations and warranties of the Company and Mobile Energy herein at and as of the Time of Delivery, as to the performance by the Company and Mobile Energy of all of their respective obligations hereunder to be performed at or prior to the Time of Delivery, as to the matters set forth in Sections 7(a), 7(j) and 7(m) hereof and as to such other matters as the Underwriters may reasonably request; and Southern shall have furnished, or caused to be furnished, to the Underwriters a certificate of an officer of Southern, dated the Time of Delivery and in form and substance satisfactory to the Underwriters, as to the due incorporation and valid existence of Southern at the Time of Delivery and the due authorization, execution and delivery by Southern of, and the valid, binding and enforceable nature at the Time of Delivery of, each of the Southern Guaranties and the capital infusion arrangements with respect to the Mill Owner Maintenance Reserve Account. (m) On or prior to the Time of Delivery, the Underwriters shall have received executed copies, in the form previously approved by the Underwriters, of the Project Documents and, to the best knowledge of the Company and #20103025.5 -31- Mobile Energy after due inquiry, no default shall have occurred thereunder. (n) On or prior to the Time of Delivery, the Company or Mobile Energy shall have delivered to the Underwriters evidence reasonably satisfactory to the Underwriters and their counsel that a title policy or title policies in favor of the Collateral Agent, in an aggregate amount equal to or greater than the maximum aggregate principal amount of Senior Debt to be outstanding immediately after the Time of Delivery, insuring the validity of the Mortgage and the priority of the Lien of the Mortgage have been obtained (the "Title Policy"); and the Title Policy shall be satisfactory in form and substance to the Underwriters and their counsel. (o) On or prior to the Closing Date, the Mortgage shall have been delivered to a title company for due recordation as a mortgage of real estate, and any required filings with respect to personal property and fixtures subject to the Lien of the Mortgage or any other Security Document shall have been delivered to a title company for filing, in each place in which such recording or filing is required to protect, preserve and perfect the Lien of the Mortgage as a valid, direct first Lien on the real estate and as a valid, first Lien on the personal property and fixtures covered or purported to be covered by the Mortgage, in each case subject only to Permitted Liens, and except for such recordation or filing no further action shall be required to create, preserve or protect such Liens and security interests; all financing statements shall have been delivered for filing, recordation and/or registration in each office and in each jurisdiction where required to create and perfect a valid, direct first Lien on the Collateral; and all taxes and recording and filing fees required to be paid with respect to the execution, recording or filing of the Mortgage and such financing statements shall have been paid or provided for. (p) The Underwriters shall have received (i) a certified copy of, or binder for, each of the insurance policies required by Section 5.2 of the Indenture, together with evidence satisfactory to the Underwriters that such insurance complies with the provisions thereof and the provisions of each of the other Project Documents and that all premiums then due with respect to such insurance have been paid, and (ii) a written report of the Independent Insurance Consultant describing the insurance obtained by the Company as of the Time of Delivery with respect to the Energy Complex and stating that the insurance required to be obtained as of the Time of Delivery pursuant to the Project Documents is in full force and effect and provides reasonable and adequate coverage for the Energy Complex. #20103025.5 -32- (q) The Underwriters shall have received a certificate of the Independent Engineer, signed by an authorized officer thereof, dated the Time of Delivery and in form and substance satisfactory to the Underwriters, confirming that (i) the Independent Engineer's Report was prepared in accordance with generally accepted engineering and consulting services practices; (ii) the conclusions and opinions of the Independent Engineer contained in the Independent Engineer's Report are true and correct in all material respects as of the date of the Prospectus and as of the Time of Delivery; (iii) the Independent Engineer consents to the references in the Prospectus to its authority as an expert in the design, development and operation of power projects and other industrial facilities and the use of the Independent Engineer's Report prepared by the Independent Engineer in and included as Appendix B to the Prospectus; (iv) the descriptions of the Independent Engineer's Report contained in the Prospectus (other than Appendix B thereto) conforms to, and constitutes a fair and accurate summary of, the material provisions thereof; (v) nothing has come to the attention of the Independent Engineer in relation to the preparation of the Independent Engineer's Report that causes it to believe that the Independent Engineer's Report, as of the date of the Prospectus or as of the Time of Delivery, or any of the statements in the Prospectus specifically attributed to the Independent Engineer, as of the date of the Prospectus or as of the Time of Delivery, contained or contains any untrue statement of a material fact or omitted or omits a material fact necessary in order to make the statements made therein with respect to any of such matters, in the light of the circumstances under which they were made, not misleading; and (vi) attached to such certificate is a complete and executed copy of the Independent Engineer's Report. (r) The Underwriters shall have received a certificate of the Paper Consultant, signed by an authorized officer thereof, dated the Time of Delivery and in form and substance satisfactory to the Underwriters, confirming that (i) the Paper Consultant's Report was prepared in accordance with generally accepted economics research and consulting services practices; (ii) the conclusions and opinions of the Paper Consultant contained in the Paper Consultant's Report are true and correct in all material respects as of the date of the Prospectus and as of the Time of Delivery; (iii) the Paper Consultant consents to the references in the Prospectus to its authority as an expert in the review of the pulp, paper and tissue industries and its experience in the design, development and undertaking of studies similar to the Paper Consultant's Report and knowledge of the United States and international paper industry and the use of the Paper Consultant's Report prepared by the Paper Consultant in and included as Appendix C to the Prospectus; (iv) the assumptions attributed to the Paper Consultant's Report #20103025.5 -33- contained in the Independent Engineer's Report are reasonable; (v) the descriptions of the Paper Consultant's Report contained in the Prospectus (other than Appendix C thereto) conforms to, and constitutes a fair and accurate summary of, the material provisions thereof; (vi) nothing has come to the attention of the Paper Consultant in relation to the preparation of the Paper Consultant's Report that causes it to believe that the Paper Consultant's Report, as of the date of the Prospectus or as of the Time of Delivery, or any of the statements in the Prospectus specifically attributed to the Paper Consultant, as of the date of the Prospectus or as of the Time of Delivery, contained or contains any untrue statement of a material fact or omitted or omits a material fact necessary in order to make the statements made therein with respect to any of such matters, in the light of the circumstances under which they were made, not misleading; and (vii) attached to such certificate is a complete and executed copy of the Paper Consultant's Report. (s) The Underwriters shall have received a certificate of Dames & Moore (the "Environmental Consultant"), signed by an authorized officer thereof, dated the Time of Delivery and in form and substance satisfactory to the Underwriters, confirming that (i) the report prepared by the Environmental Consultant with respect to the environmental site assessment of the Energy Complex (the "Environmental Consultant's Report") was prepared in accordance with generally accepted engineering and consulting services practices; (ii) the conclusions and opinions of the Environmental Consultant contained in the Environmental Consultant's Reports are true and correct in all material respects as of the date of the Prospectus and as of the Time of Delivery; (iii) the Environmental Consultant consents to the references in the Prospectus to its experience in the design, development and undertaking of studies similar to the Environmental Consultant's Reports; (iv) the assumptions attributed to the Environmental Consultant's Reports contained in the Independent Engineer's Report are reasonable; (v) the description of the Environmental Consultant's Reports contained in the Prospectus conforms to, and constitutes a fair and accurate summary of, the material provisions thereof; (vi) nothing has come to the attention of the Environmental Consultant in relation to the preparation of the Environmental Consultant's Reports that causes it to believe that the Environmental Consultant's Reports, as of the date of the Prospectus or as of the Time of Delivery, or any of the statements in the Prospectus specifically attributed to the Environmental Consultant, as of the date of the Prospectus or as of the Time of Delivery, contained or contain any untrue statement of a material fact or omitted or omit a material fact necessary in order to make the statements made therein with respect to any of such matters, in the light of the circumstances under which they #20103025.5 -34- were made, not misleading; and (vii) attached to such certificate are complete and executed copies of the Environmental Consultant's Reports. (t) The Underwriters shall have received a certificate of Sedgwick James (the "Independent Insurance Consultant"), signed by an authorized officer thereof, dated the Time of Delivery and in form and substance satisfactory to the Underwriters, confirming that (i) the report prepared by the Independent Insurance Consultant with respect to the adequacy of insurance coverage of the Energy Complex (the "Independent Insurance Consultant's Report") was prepared in accordance with generally accepted insurance and consulting services practices; (ii) the conclusions and opinions of the Independent Insurance Consultant contained in the Independent Insurance Consultant's Report are true and correct in all material respects as of the date of the Prospectus and as of the Time of Delivery; and (iii) attached to such certificate is a complete and executed copy of the Independent Insurance Consultant's Report. (u) The Underwriters shall have received a certificate of Rust Engineering Company (the "Engineering Consultant"), signed by an authorized officer thereof, dated the Time of Delivery and in form and substance satisfactory to the Underwriters, confirming that (i) the report prepared by the Engineering Consultant with respect to the assessment of the Energy Complex (the "Engineering Consultant's Report") was prepared in accordance with generally accepted engineering and consulting services practices; (ii) the conclusions and opinions of the Engineering Consultant contained in the Engineering Consultant's Report are true and correct in all material respects as of the date of the Prospectus and as of the Time of Delivery; and (vii) attached to such certificate is a complete and executed copy of the Engineering Consultant's Report. (v) In accordance with the Indenture and the Intercreditor Agreement, the Company shall have endorsed monies over to the Trustee and the Collateral Agent for the deposits of such monies contemplated to have been made on or before the Time of Delivery. (w) The Company or Mobile Energy shall have entered into each of the Project Documents, including the Consents to Assignment from each Project Participant (other than the Company, Mobile Energy and Southern), in such forms as shall be reasonably satisfactory to the Underwriters and their counsel, each of which shall have been fully executed and shall be in full force and effect at the Time of Delivery. (x) The Tax-Exempt Bonds shall have been issued; and the conditions precedent to the effectiveness of the Working #20103025.5 -35- Capital Facility, as specified in Section __ thereof, shall have been satisfied or waived with the consent of the Underwriters; and the Underwriters shall have received a certificate of the Working Capital Facility Provider, dated the Time of Delivery, to such effect. (y) The Underwriters shall have received evidence of the appointment of an Independent Engineer, and the acceptance by the Independent Engineer of such appointment, pursuant to the Intercreditor Agreement. (z) The Underwriters shall have received evidence that there are in effect ratings on the Securities of "BBB-" by Standard & Poor's Ratings Group and "BBB-" by Fitch Investors Service, Inc., and no notice shall have been given of (i) any intended or potential downgrading of any of such ratings or (ii) any review or possible change that does not indicate the direction of a possible change in any of such ratings. (aa) The Underwriters shall have received such additional legal opinions, certificates, instruments and other documents as the Underwriters may reasonably request. 8. (a) The Company and Mobile Energy, jointly and severally, will indemnify and hold harmless each Underwriter against any losses, claims, damages or liabilities, joint or several, to which such Underwriter may become subject, under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in any Preliminary Prospectus, the Registration Statement or the Prospectus, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse each Underwriter for any legal or other expenses reasonably incurred by such Underwriter in connection with investigating or defending any such action or claim as such expenses are incurred; provided, however, that the Company and Mobile Energy shall not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in any Preliminary Prospectus, the Registration Statement or the Prospectus or any such amendment or supplement in reliance upon and in conformity with written information furnished to the Company by any Underwriter through Goldman, Sachs & Co. expressly for use therein. (b) Each Underwriter will indemnify and hold harmless the Company and Mobile Energy against any losses, claims, damages or liabilities to which the Company or Mobile Energy may become subject, under the Act or otherwise, insofar as such losses, #20103025.5 -36- claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in any Preliminary Prospectus, the Registration Statement or the Prospectus, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in any Preliminary Prospectus, the Registration Statement or the Prospectus or any such amendment or supplement in reliance upon and in conformity with written information furnished to the Company by such Underwriter through Goldman, Sachs & Co. expressly for use therein, and will reimburse the Company or Mobile Energy (as the case may be) for any legal or other expenses reasonably incurred by the Company in connection with investigating or defending any such action or claim as such expenses are incurred. (c) Promptly after receipt by an indemnified party under Section 8(a) or 8(b) hereof of notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party under such Section 8(a) or 8(b), notify the indemnifying party in writing of the commencement thereof, but the omission so to notify the indemnifying party shall not relieve it from any liability that it may have to any indemnified party otherwise than under such Section 8(a) or 8(b). In case any such action shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it shall wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel satisfactory to such indemnified party (who shall not, except with the consent of the indemnified party, be counsel to the indemnifying party), and, after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party shall not be liable to such indemnified party under such Section 8(a) or 8(b) for any legal expenses of other counsel or any other expenses, in each case subsequently incurred by such indemnified party, in connection with the defense thereof other than reasonable costs of investigation. No indemnifying party shall, without the written consent of the indemnified party, effect the settlement or compromise of, or consent to the entry of any judgment with respect to, any pending or threatened action or claim in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified party is an actual or potential party to such action or claim) unless such settlement, compromise or judgment (i) includes an unconditional release of the indemnified party from all liability arising out of such action or claim and (ii) does not include a statement as #20103025.5 -37- to or an admission of fault, culpability or a failure to act, by or on behalf of any indemnified party. (d) The obligations of the Company and Mobile Energy under this Section 8 shall be in addition to any liability that the Company and Mobile Energy may otherwise have and shall extend, upon the same terms and conditions, to each person, if any, who controls any Underwriter within the meaning of the Act; and the obligations of the Underwriters under this Section 8 shall be in addition to any liability that the respective Underwriters may otherwise have and shall extend, upon the same terms and conditions, to each officer and director of the Company and Mobile Energy (including any person who, with his or her consent, is named in the Registration Statement as about to become a director of the Company or Mobile Energy) and to each person, if any, who controls the Company or Mobile Energy within the meaning of the Act. 9. (a) If any Underwriter shall default in its obligation to purchase the Securities that it has agreed to purchase hereunder, the non-defaulting Underwriters may in their discretion arrange for such non-defaulting Underwriters or another party or other parties to purchase such Securities on the terms contained herein. If within thirty-six hours after such default by any Underwriter such non-defaulting Underwriters do not arrange for the purchase of such Securities, then the Company shall be entitled to a further period of thirty-six hours within which to procure another party or other parties satisfactory to such non-defaulting Underwriters to purchase such Securities on such terms. In the event that, within the respective periods prescribed above, such non-defaulting Underwriters notify the Company that they have so arranged for the purchase of such Securities, or the Company notifies the Representatives that it has so arranged for the purchase of such Securities, the such non-defaulting Underwriters or the Company shall have the right to postpone the Time of Delivery, for a period of not more than seven days, in order to effect whatever changes may thereby be made necessary in the Registration Statement or the Prospectus, or in any other documents or arrangements, and the Company agrees to file promptly any amendments to the Registration Statement or the Prospectus that in the opinion of such non-defaulting Underwriters may thereby be made necessary. The term "Underwriters" as used in this Agreement shall include any party substituted under this Section 9(a) with like effect as if such party had originally been a party to this Agreement with respect to such Securities. (b) If, after giving effect to any arrangements for the purchase of the Securities of a defaulting Underwriter or Underwriters by the non-defaulting Underwriter or Underwriters and the Company as provided in Section 9(a) hereof, the aggregate principal amount of such Securities that remains unpurchased does not exceed one-eleventh of the aggregate principal amount of all the Securities, then the Company shall have the right to require #20103025.5 -38- each non-defaulting Underwriter to purchase the principal amount of Securities that such Underwriter agreed to purchase hereunder and, in addition, to require each non-defaulting Underwriter to purchase its pro rata share (based on the principal amount of Securities that such Underwriter agreed to purchase) of the Securities of such defaulting Underwriter or Underwriters for which such arrangements have not been made, but nothing herein shall relieve a defaulting Underwriter from liability for its default. (c) If, after giving effect to any arrangements for the purchase of the Securities of a defaulting Underwriter or Underwriters by the non-defaulting Underwriter or Underwriters and the Company as provided in Section 9(a) hereof, the aggregate principal amount of Securities that remains unpurchased exceeds one-eleventh of the aggregate principal amount of all the Securities, or if the Company shall not exercise the right provided in Section 9(b) hereof to require such non-defaulting Underwriters to purchase Securities of such a defaulting Underwriter or Underwriters, then this Agreement shall thereupon terminate, without liability on the part of any such non- defaulting Underwriter or the Company or Mobile Energy, except for the expenses to be borne by the Company and Mobile Energy as provided in Section 6 hereof and the indemnity agreements in Section 8 hereof, but nothing herein shall relieve a defaulting Underwriter from liability for its default. 10. The respective indemnities, agreements, representations, warranties and other statements of the Company, Mobile Energy and the several Underwriters, as set forth in this Agreement or made by or on behalf of them, respectively, pursuant to this Agreement, shall remain in full force and effect, regardless of any investigation (or any statement as to the results thereof) made by or on behalf of the Underwriters or any controlling person of any Underwriter, the Company or Mobile Energy, or any officer or director or controlling person of the Company or Mobile Energy, and shall survive delivery of and payment for the Securities. 11. If this Agreement shall be terminated (whether pursuant to Section 9 hereof or for any other reason), neither the Company nor Mobile Energy shall then be under any liability to any Underwriter except as provided in Sections 6 and 8 hereof. 12. All statements, requests, notices, and agreements hereunder shall be in writing, and if to the Underwriters shall be delivered or sent by mail, telex or facsimile transmission to the Underwriters in care of Goldman, Sachs & Co., 85 Broad Street, New York, New York 10004, Attention: Registration Department; and if to the Company or Mobile Energy shall be delivered or sent by mail, telex or facsimile transmission to the address of the Company and Mobile Energy set forth in the Registration Statement, Attention: Secretary; provided, however, that any notice to an Underwriter pursuant to Section 8(c) hereof #20103025.5 -39- shall be delivered or sent by mail, telex or facsimile transmission to such Underwriter at its address, which will be supplied to the Company by Goldman, Sachs & Co. Any such statements, requests, notices or agreements shall take effect upon receipt thereof. 13. This Agreement shall be binding upon, and inure solely to the benefit of, the Underwriters, the Company, Mobile Energy and, to the extent provided in Sections 8 and 10 hereof, the officers and directors of the Company and Mobile Energy and each person who controls the Company and Mobile Energy or any Underwriter, and their respective heirs, executors, administrators, successors and assigns, and no other person shall acquire or have any right under or by virtue of this Agreement. No purchaser of any of the Securities from any Underwriter shall be deemed a successor or assign by reason merely of such purchase. 14. Time shall be of the essence of this Agreement. As used herein, the term "business day" shall mean any day when the Commission s office in Washington, D.C. is open for business. 15. This Agreement shall be governed by and construed in accordance with the laws of the State of New York. 16. This Agreement may be executed by any one or more of the parties hereto in any number of counterparts, each of which shall be deemed to be an original, but all such respective counterparts shall together constitute one and the same instrument. #20103025.5 -40- If the foregoing is in accordance with your understanding, please sign and return to us the counterpart hereof, and upon the acceptance hereof by the Underwriters, this letter and such acceptance hereof shall constitute a binding agreement between the Underwriters and the Company and Mobile Energy. Very truly yours, Mobile Energy Services Company, L.L.C. By:_______________________________ Name: Title: Mobile Energy Services Holdings, Inc. By:_______________________________ Name: Title: Accepted as of the date hereof: Goldman, Sachs & Co. Bear, Stearns & Co. Inc. Lehman Brothers Inc. By:_____________________________ (Goldman, Sachs & Co.) #20103025.5 -41- SCHEDULE I Principal Amount of Securities to be Purchased Underwriters Goldman, Sachs & Co. Bear, Stearns & Co. Inc. Lehman Brothers Inc. Total $(260,000,000) #20103025.5 Annex I Pursuant to Section 7(i) of the Underwriting Agreement, Arthur Andersen L.L.C., independent public accountants for Mobile Energy and its subsidiary, shall furnish letters to the Underwriters to the effect that: (i) they are independent certified public accountants with respect to Mobile Energy and its subsidiary within the meaning of the Act and the applicable published rules and regulations thereunder; (ii) in their opinion, the financial statements and any supplementary financial information and schedules (and, if applicable, financial forecasts and/or pro forma financial information) examined by them and included in the Prospectus or the Registration Statement comply as to form in all material respects with the applicable accounting requirements of the Act and the related published rules and regulations thereunder; and, if applicable, they have made a review in accordance with standards established by the American Institute of Certified Public Accountants of the unaudited consolidated interim financial statements, selected financial data, pro forma financial information, financial forecasts and/or condensed financial statements derived from audited financial statements of Mobile Energy for the periods specified in such letter, as indicated in their reports thereon, copies of which have been furnished to the representatives of the Underwriters (the "Representatives") and are attached hereto; (iii) they have made a review in accordance with standards established by the American Institute of Certified Public Accountants of the unaudited condensed consolidated statements of income, consolidated balance sheets and consolidated statements of cash flows included in the Prospectus as indicated in their reports thereon, copies of which are attached hereto, and on the basis of specified procedures including inquiries of officials of Mobile Energy and its subsidiary who have responsibility for financial and accounting matters regarding whether or not the unaudited condensed consolidated financial statements referred to in paragraph (vi)(A)(i) below comply as to form in all material respects with the applicable accounting requirements of the Act and the related published rules and regulations, nothing came to their attention that cause them to believe that the unaudited condensed consolidated financial statements do not comply as to form in all material respects with the applicable accounting requirements of the Act and the related published rules and regulations; #20103025.5 (iv) the unaudited selected financial information with respect to the consolidated results of operations and financial position of Mobile Energy for the period from inception to December 31, 1994 included in the Prospectus agrees with the corresponding amounts (after restatements where applicable) in the audited consolidated financial statements for such period that are included in the Prospectus; (v) they have compared the information in the Prospectus under selected captions with the disclosure requirements of Regulation S-K and on the basis of limited procedures specified in such letter nothing came to their attention as a result of the foregoing procedures that caused them to believe that this information does not conform in all material respects with the disclosure requirements of Items 301, 302, 402 and 503(d), respectively, of Regulation S-K; (vi) on the basis of limited procedures, not constituting an examination in accordance with generally accepted auditing standards, consisting of a reading of the unaudited financial statements and other information referred to below, a reading of the latest available interim financial statements of Mobile Energy and its subsidiary, inspection of the minute books of Mobile Energy and its subsidiary since the date of the latest audited financial statements included in the Prospectus, inquiries of officials of Mobile Energy and its subsidiary responsible for financial and accounting matters and such other inquiries and procedures as may be specified in such letter, nothing came to their attention that caused them to believe that: (A) (i) the unaudited consolidated statements of income, consolidated balance sheets and consolidated statements of cash flows included in the Prospectus do not comply as to form in all material respects with the applicable accounting requirements of the Act and the related published rules and regulations or (ii) any material modifications should be made to the unaudited condensed consolidated statements of income, consolidated balance sheets and consolidated statements of cash flows included in the Prospectus for them to be in conformity with generally accepted accounting principles; (B) any other unaudited income statement data and balance sheet items included in the Prospectus do not agree with the corresponding items in the unaudited consolidated financial statements from which such data and items were derived, and any such unaudited data and items were not determined on a basis substantially consistent with the basis for the corresponding amounts #20103025.5 -2- in the audited consolidated financial statements included in the Prospectus; (C) the unaudited financial statements that were not included in the Prospectus but from which were derived any unaudited condensed financial statements referred to in clause (A) above and any unaudited income statement data and balance sheet items included in the Prospectus and referred to in clause (B) above were not determined on a basis substantially consistent with the basis for the audited consolidated financial statements included in the Prospectus; (D) any unaudited pro forma consolidated condensed financial statements included in the Prospectus do not comply as to form in all material respects with the applicable accounting requirements of the Act and the published rules and regulations thereunder or the pro forma adjustments have not been properly applied to the historical amounts in the compilation of those statements; (E) as of a specified date not more than five days prior to the date of such letter, there have been any changes in the consolidated capital stock (other than issuances of capital stock upon exercise of options and stock appreciation rights, upon earn-outs of performance shares and upon conversions of convertible securities, in each case that were outstanding on the date of the latest financial statements included in the Prospectus) or any increase in the consolidated long-term debt of Mobile Energy and its subsidiary, or any decreases in consolidated net current assets or stockholders' equity of Mobile Energy and its subsidiary or other items specified by the Underwriters, or any increases in any items specified by the Underwriters, in each case as compared with amounts shown in the most recent balance sheet included in the Prospectus, except in each case for changes, increases or decreases that the Prospectus discloses have occurred or may occur or that are described in such letter; and (F) for the period from the date of the most recent financial statements included in the Prospectus to the specified date referred to in clause (E) above, there were any decreases in consolidated net revenues or operating profit or the total or per share amounts of consolidated net income of Mobile Energy and its subsidiary or other items specified by the Underwriters, or any increases in any items specified by the Underwriters, in each case as compared with any other period of corresponding length specified by the Underwriters, except in each case for decreases or #20103025.5 -3- increases that the Prospectus discloses have occurred or may occur or that are described in such letter; and (vii) In addition to the examination referred to in their report included in the Prospectus and the limited procedures, inspection of minute books, inquiries and other procedures referred to in paragraphs (iii) and (vi) above, they have carried out certain specified procedures, not constituting an examination in accordance with generally accepted auditing standards, with respect to certain amounts, percentages and financial information specified by the Underwriters, that are derived from the general accounting records of Mobile Energy and its subsidiary or that appear in the Prospectus, or in Part II of, or in exhibits and schedules to, the Registration Statement specified by the Underwriters, and have compared certain of such amounts, percentages and financial information with the accounting records of Mobile Energy and its subsidiary and have found them to be in agreement. #20103025.5 -4- EX-99 6 EXHIBIT B-4(B) Exhibit B-4(b) WSP&R DRAFT 6/29/95 TRUST INDENTURE dated as of ( ), 1995 among MOBILE ENERGY SERVICES COMPANY, L.L.C., MOBILE ENERGY SERVICES HOLDINGS, INC. and FIRST UNION NATIONAL BANK OF GEORGIA, as Trustee Providing for the Issuance from Time to Time of Securities in One or More Series CROSS-REFERENCE TABLE */ TIA Section Indenture Section 310(a)(1) 9.9 (a)(2) 9.9 (a)(3) N.A. (a)(4) N.A. (a)(5) 9.8 (b) 9.8 (c) N.A. 311(a) 9.13 (b) 9.13 (c) N.A. 312(a) 10.1; 10.2 (b) 10.2 (c) 10.2 313(a) 10.3 (b)(1) 10.3 (b)(2) 10.3 (c) 10.3 (d) 10.3 314(a) 5.3; 10.4 (b) N.A. (c)(1) 1.2 (c)(2) 1.2 (c)(3) N.A. (d) 1.7 (e) 1.2 (f) N.A. 315(a) 9.1(a) (b) 9.2 (c) 9.1(b) (d) 9.1(c) (e) 8.9 316(a)(1)(A) 8.6 (a)(1)(B) 8.7 (a)(2) N.A. (a) 1.1 (b) 8.10 316(c) N.A. 317(a)(1) 8.4 (a)(2) 8.4 (b) 9.14 318(a) 1.7 N.A. means not applicable. ___________________ */ Note: This Cross-Reference Table shall not, for any purpose, be deemed to be a part of the Indenture. TABLE OF CONTENTS Page ARTICLE I. DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 SECTION 1.1. Definitions; Construction . . . . . . . . 2 SECTION 1.2. Compliance Certificates and Opinions . . 2 SECTION 1.3. Form of Documents Delivered to Trustee . 3 SECTION 1.4. Acts of Holders . . . . . . . . . . . . . 4 SECTION 1.5. Notices, etc. to Trustee and Mobile Energy Parties. . . . . . . . . . . . . . 5 SECTION 1.6. Notices to Holders; Waiver . . . . . . . 6 SECTION 1.7. Conflict with Trust Indenture Act . . . . 6 SECTION 1.8. Effect of Headings and Table of Contents. . . . . . . . . . . . . . . . . 6 SECTION 1.9. Successors and Assigns . . . . . . . . . 6 SECTION 1.10. Severability Clause . . . . . . . . . . . 6 SECTION 1.11. Benefits of Indenture . . . . . . . . . . 6 SECTION 1.12. Governing Law . . . . . . . . . . . . . . 6 SECTION 1.13. Legal Holidays . . . . . . . . . . . . . 7 SECTION 1.14. Execution in Counterparts . . . . . . . . 7 SECTION 1.15. Projections . . . . . . . . . . . . . . . 7 ARTICLE II. THE SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 SECTION 2.1. Form of Security to be Established by Series Supplemental Indenture . . . . . . 7 SECTION 2.2. Form of Trustee's Authentication . . . . 8 SECTION 2.3. Amount Unlimited; Issuable in Series; Limitations on Issuance . . . . . . . . . 8 SECTION 2.4. Authentication and Delivery of Securities. . . . . . . . . . . . . . . . 9 SECTION 2.5. Form and Denominations . . . . . . . . . 11 SECTION 2.6. Execution of Securities . . . . . . . . . 11 SECTION 2.7. Temporary Securities . . . . . . . . . . 12 SECTION 2.8. Registration, Transfer and Exchange . . . 12 SECTION 2.9. Mutilated, Destroyed, Lost and Stolen Securities. . . . . . . . . . . . . . . . 13 SECTION 2.10. Payment of Principal and Interest; Principal and Interest Rights Preserved . 14 SECTION 2.11. Persons Deemed Owners . . . . . . . . . . 15 SECTION 2.12. Cancellation . . . . . . . . . . . . . . 16 SECTION 2.13. Dating of Securities; Computation of Interest. . . . . . . . . . . . . . . . . 16 SECTION 2.14. Source of Payments Limited; Rights and Liabilities of the Mobile Energy Parties. 16 SECTION 2.15. Parity of Securities . . . . . . . . . . 16 i SECTION 2.16. Allocation of Principal and Interest . . 17 ARTICLE III. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 SECTION 3.1. Organization, Power and Status of Mobile Energy Parties. . . . . . . . . . . . . . 17 SECTION 3.2. Authorization; Enforceability; Execution and Delivery. . . . . . . . . . . . . . . 17 SECTION 3.3. No Conflicts; Laws and Contracts; No Default . . . . . . . . . . . . . . . . . 18 SECTION 3.4. Governmental Approvals . . . . . . . . . 19 SECTION 3.5. Litigation . . . . . . . . . . . . . . . 19 SECTION 3.6. Utility Regulation . . . . . . . . . . . 19 SECTION 3.7. Collateral . . . . . . . . . . . . . . . 20 SECTION 3.8. Taxes . . . . . . . . . . . . . . . . . . 20 SECTION 3.9. Environmental Matters . . . . . . . . . . 20 SECTION 3.10. Business; Mobile Energy Assets . . . . . 21 SECTION 3.11. Employee Benefit Plans. . . . . . . . . . 21 ARTICLE IV. INDENTURE ACCOUNTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 SECTION 4.1. Establishment of Indenture Securities Account . . . . . . . . . . . . . . . . . 21 SECTION 4.2. Payments into Indenture Securities Account . . . . . . . . . . . . . . . . . 21 SECTION 4.3. Application of Funds in Indenture Securities Account. . . . . . . . . . . . 22 SECTION 4.4. Payments into Debt Service Reserve Accounts. . . . . . . . . . . . . . . . . 22 SECTION 4.5. Application of Funds in Debt Service Reserve Accounts. . . . . . . . . . . . . 23 SECTION 4.6. Reserve Account Security . . . . . . . . 23 SECTION 4.7. Investment of Monies in the Indenture Accounts. . . . . . . . . . . . . . . . . 24 SECTION 4.8. Monies to be Held in Trust . . . . . . . 25 SECTION 4.9. Dominion and Control . . . . . . . . . . 25 ARTICLE V. COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 SECTION 5.1. Payment of Principal, Premium, if any, and Interest; Mobile Energy as Guarantor. 26 SECTION 5.2. Maintenance of Insurance . . . . . . . . 26 SECTION 5.3. Reporting Requirements . . . . . . . . . 26 SECTION 5.4. Maintenance of Existence and Governmental Approvals; Rate Regulation . 28 SECTION 5.5. Nature of Business . . . . . . . . . . . 29 SECTION 5.6. Operation and Maintenance . . . . . . . . 29 SECTION 5.7. Compliance with Law and Organizational Documents . . . . . . . . . . . . . . . . 30 ii SECTION 5.8. Prohibition on Fundamental Changes and Disposition of Assets . . . . . . . . . . 30 SECTION 5.9. Transactions with Affiliates . . . . . . 30 SECTION 5.10. Amendments to Project Documents . . . . . 31 SECTION 5.11. Performance Under Project Contracts . . . 32 SECTION 5.12. Annual Budget . . . . . . . . . . . . . . 32 SECTION 5.13. Insurance Reports . . . . . . . . . . . . 33 SECTION 5.14. Liens . . . . . . . . . . . . . . . . . . 33 SECTION 5.15. Permitted Investments . . . . . . . . . . 33 SECTION 5.16. Indebtedness . . . . . . . . . . . . . . 33 SECTION 5.17. Debt for Modifications; Replacement Debt; Refunding Debt. . . . . . . . . . . 33 SECTION 5.18. Application of Proceeds from Sale of Securities. . . . . . . . . . . . . . . . 35 SECTION 5.19. Restricted Payments . . . . . . . . . . . 36 SECTION 5.20. Casualty Proceeds; Eminent Domain Proceeds. . . . . . . . . . . . . . . . . 37 SECTION 5.21. Benefit Plan Liabilities . . . . . . . . 37 ARTICLE VI. REDEMPTION AND PREPAYMENT OF SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 SECTION 6.1. Applicability of Article . . . . . . . . 38 SECTION 6.2. Election to Redeem or Prepay; Notice to Trustee . . . . . . . . . . . . . . . . . 38 SECTION 6.3. Optional Redemption; Mandatory Redemption; Prepayment; Selection of Securities to Be Redeemed or Prepaid. . . 38 SECTION 6.4. Notice of Redemption or Prepayment . . . 40 SECTION 6.5. Securities Payable on Redemption Date or Prepayment Date . . . . . . . . . . . . . 41 SECTION 6.6. Securities Redeemed or Prepaid in Part . 42 ARTICLE VII. SINKING FUNDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 SECTION 7.1. Applicability of Article . . . . . . . . 42 SECTION 7.2. Sinking Funds for Securities . . . . . . 42 ARTICLE VIII. EVENTS OF DEFAULT; REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 SECTION 8.1. Events of Default . . . . . . . . . . . . 42 SECTION 8.2. Enforcement of Remedies . . . . . . . . . 46 SECTION 8.3. Specific Remedies . . . . . . . . . . . . 47 SECTION 8.4. Judicial Proceedings Instituted by Trustee . . . . . . . . . . . . . . . . . 47 SECTION 8.5. Holders May Demand Enforcement of Rights by Trustee. . . . . . . . . . . . . . . . 49 SECTION 8.6. Control by Holders . . . . . . . . . . . 50 SECTION 8.7. Waiver of Past Events of Defaults . . . . 50 SECTION 8.8. Holder May Not Bring Suit Except Under iii Certain Conditions. . . . . . . . . . . . 50 SECTION 8.9. Undertaking to Pay Court Costs . . . . . 51 SECTION 8.10. Right of Holders to Receive Payment Not to Be Impaired. . . . . . . . . . . . . . 51 SECTION 8.11. Application of Monies Collected by Trustee . . . . . . . . . . . . . . . . . 52 SECTION 8.12. Securities Held by Certain Persons Not to Share in Distribution. . . . . . . . . 53 SECTION 8.13. Waiver of Appraisement, Valuation, Stay, Right to Marshalling. . . . . . . . . . . 53 SECTION 8.14. Remedies Cumulative; Delay or Omission Not a Waiver. . . . . . . . . . . . . . . 53 SECTION 8.15. Intercreditor Agreement . . . . . . . . . 54 ARTICLE IX. THE TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 SECTION 9.1. Certain Duties and Responsibilities . . . 54 SECTION 9.2. Notice of Events of Defaults . . . . . . 55 SECTION 9.3. Certain Rights of Trustee . . . . . . . . 56 SECTION 9.4. Not Responsible for Recitals or Issuance of Securities . . . . . . . . . . . . . . 57 SECTION 9.5. May Hold Securities . . . . . . . . . . . 57 SECTION 9.6. Funds May Be Held by Trustee or Paying Agent . . . . . . . . . . . . . . . . . . 57 SECTION 9.7. Compensation, Reimbursement and Indemnification . . . . . . . . . . . . . 57 SECTION 9.8. Disqualification; Conflicting Interests . 58 SECTION 9.9. Corporate Trustee Required; Eligibility . 64 SECTION 9.10. Resignation and Removal; Appointment of Successor . . . . . . . . . . . . . . . . 64 SECTION 9.11. Acceptance of Appointment by Successor . 65 SECTION 9.12. Merger, Conversion, Consolidation or Succession to Business. . . . . . . . . . 66 SECTION 9.13. Preferential Collection of Claims Against any Obligor . . . . . . . . . . . 66 SECTION 9.14. Maintenance of Offices and Agencies . . . 69 SECTION 9.15. Co-Trustee or Separate Trustee . . . . . 72 SECTION 9.16. Taxes . . . . . . . . . . . . . . . . . . 73 ARTICLE X. HOLDERS' LISTS AND REPORTS BY TRUSTEE AND MOBILE ENERGY PARTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73 SECTION 10.1. Company to Furnish Trustee Names and Addresses of Holders. . . . . . . . . . . 73 SECTION 10.2. Preservation of Information; Communications to Holders . . . . . . . . 73 SECTION 10.3. Reports by Trustee . . . . . . . . . . . 75 SECTION 10.4. Reports by Mobile Energy Parties . . . . 76 ARTICLE XI. iv SUPPLEMENTAL INDENTURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77 SECTION 11.1. Supplemental Indentures Without Consent of Holders. . . . . . . . . . . . . . . . 77 SECTION 11.2. Supplemental Indenture with Consent of Holders . . . . . . . . . . . . . . . . . 78 SECTION 11.3. Documents Affecting Immunity or Indemnity . . . . . . . . . . . . . . . . 79 SECTION 11.4. Execution of Supplemental Indentures . . 80 SECTION 11.5. Effect of Supplemental Indentures . . . . 80 SECTION 11.6. Conformity with Trust Indenture Act . . . 80 SECTION 11.7. Reference in Securities to Supplemental Indentures. . . . . . . . . . . . . . . . 80 ARTICLE XII. SATISFACTION AND DISCHARGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80 SECTION 12.1. Satisfaction and Discharge of Securities. . . . . . . . . . . . . . . . 80 SECTION 12.2. Satisfaction and Discharge of Indenture . 84 SECTION 12.3. Application of Trust Money . . . . . . . 85 ARTICLE XIII. MEETINGS OF HOLDERS OF SECURITIES; ACTION WITHOUT MEETING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86 SECTION 13.1. Purposes for Which Meetings May Be Called. . . . . . . . . . . . . . . . . . 86 SECTION 13.2. Call, Notice and Place of Meetings . . . 86 SECTION 13.3. Persons Entitled to Vote at Meetings . . 86 SECTION 13.4. Quorum; Action . . . . . . . . . . . . . 87 SECTION 13.5. Attendance at Meetings; Determination of Voting Rights; Conduct and Adjournment of Meetings. . . . . . . . . . . . . . . . . 87 SECTION 13.6. Counting Votes and Recording Action of Meetings. . . . . . . . . . . . . . . . . 88 SECTION 13.7. Action Without Meeting . . . . . . . . . 89 ARTICLE XIV. GUARANTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89 SECTION 14.1. Guaranty of Payment and Performance . . . 89 SECTION 14.2. Continuance and Acceleration of Guaranteed Obligations upon Certain Events. . . . . . . . . . . . . . . . . . 89 SECTION 14.3. Recovered Payments . . . . . . . . . . . 90 SECTION 14.4. Evidence of Guaranteed Obligations . . . 90 SECTION 14.5. Binding Nature of Certain Adjudications . 90 SECTION 14.6. Nature of Mobile Energy's Obligations . . 90 SECTION 14.7. No Release of Mobile Energy . . . . . . . 90 SECTION 14.8. Certain Waivers . . . . . . . . . . . . . 91 SECTION 14.9. Independent Credit Evaluation . . . . . . 92 SECTION 14.10. Subordination of Rights Against Company, v Other Guarantors and Collateral . . . . . 92 SECTION 14.11. Payments by Mobile Energy . . . . . . . . 92 SECTION 14.12. Continuance of Guaranty; Survival . . . . 94 SECTION 14.13. Assignments and Participations . . . . . 94 SECTION 14.14. Benefit and Enforcement . . . . . . . . . 94 ARTICLE XV. NONRECOURSE LIABILITY OF MOBILE ENERGY PARTIES . . 94 Appendix A Definitions Schedule 5.2 Insurance Policies Exhibit A Form of Southern Guaranty . . . . . . . S(5.2)-4 vi TRUST INDENTURE, dated as of ( ), 1995, among MOBILE ENERGY SERVICES COMPANY, L.L.C., an Alabama limited liability company (the "Company"), its principal office and mailing address being at ( ), MOBILE ENERGY SERVICES HOLDINGS, INC., an Alabama corporation ("Mobile Energy"), its principal office and mailing address being at ( ), and FIRST UNION NATIONAL BANK OF GEORGIA, as trustee (the "Trustee"), its corporate trust office and mailing address being at ( ). W I T N E S S E T H : WHEREAS, the Company has duly authorized the creation of an issue of bonds, debentures, promissory notes or other evidences of indebtedness to be issued in one or more series (the "Securities") up to such principal amount or amounts as may from time to time be authorized in accordance with the terms of this Indenture; the Company has duly authorized the execution, delivery and performance by it of this Indenture to secure the Securities and to provide for the authentication and delivery thereof by the Trustee; WHEREAS, the Company wishes to secure the payment of the principal of and premium, if any, and interest on all the Securities authenticated and delivered hereunder by the Trustee and issued hereunder by the Company and the covenants therein and herein contained and to mortgage, pledge and assign substantially all of its assets, including certain of the proceeds of the sale of the Securities; WHEREAS, Mobile Energy will benefit from the sale of the Securities of the Company and the use of the net proceeds therefrom as contemplated herein and has duly authorized the execution, delivery and performance by it of this Indenture; WHEREAS, Mobile Energy wishes to provide its guaranty to secure the Guaranteed Obligations (as defined below), including the payment of the principal of and premium, if any, and interest on all the Securities authenticated and delivered hereunder and issued by the Company and the covenants therein and herein contained; and WHEREAS, all acts necessary to make this Indenture a valid instrument for the security of the Securities, in accordance with its and their terms, have been done. NOW, THEREFORE, THIS INDENTURE WITNESSETH, that, for and in consideration of the premises and of the purchase of the Securities by the Holders (as defined below) thereof, and in order to secure the payment of the principal of and premium, if any, and interest on all Securities from time to time outstanding and the performance of the covenants therein and herein contained and to declare the terms and conditions on which such Securities are secured, the Company hereby grants, bargains, mortgages, sells, releases, conveys, assigns, transfers, pledges, sets over and confirms to the Trustee, and grants to the Trustee a security interest in, all right, title and interest of the Company in and to the Indenture Accounts (as defined below), including any and all monies contained therein or hereafter delivered to the Trustee for deposit therein and, in each case, all monies received and the right to receive monies thereunder; TO HAVE AND TO HOLD all the same with all privileges and appurtenances hereby given, granted, pledged and assigned or agreed or intended so to be, unto the Trustee and its successors in said trust and to it and its assigns forever; IN TRUST, NEVERTHELESS, for the equal and proportionate benefit and security of the Holders from time to time of all Outstanding (as defined below) Securities without any priority of any such Security over any other such Security; PROVIDED, HOWEVER, that the right, title and interest of the Company in and to any Debt Service Reserve Account (as defined below), including any and all monies contained therein or hereafter delivered to the Trustee for deposit therein and, in each case, all monies received and the right to receive monies thereunder, shall be held in trust solely for the equal and proportionate benefit and security of the Holders from time to time of the Outstanding Securities for the benefit of whom such Debt Service Reserve Account was established; and PROVIDED FURTHER, HOWEVER, that if, after the right, title and interest of the Trustee in and to the Indenture Accounts shall have ceased, terminated and become void in accordance with Article XII, and the principal of and premium, if any, and interest on the Securities shall have been paid to the Holders thereof, then and in that case this Indenture and the estate and rights hereby granted shall cease, terminate and be void, and the Trustee shall cancel and discharge this Indenture and execute and deliver to the Company such instruments as the Company shall require to evidence the discharge hereof; otherwise this Indenture shall be and remain in full force and effect; and THE PARTIES HEREBY COVENANT AND AGREE AS FOLLOWS: ARTICLE I. DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION SECTION 1.1. Definitions; Construction. (a) For all purposes of this Indenture, except as otherwise expressly provided in this Indenture or unless the context otherwise requires, all terms used herein shall have the meanings set forth 2 in Appendix A. SECTION 1.2. Compliance Certificates and Opinions. Except as otherwise expressly provided by this Indenture, upon any application or request by either of the Mobile Energy Parties to the Trustee to take any action under any provision of this Indenture, either of the Mobile Energy Parties shall furnish to the Trustee an Officer's Certificate stating that all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with and an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent, if any, have been complied with, except that in the case of any such application or request as to which the furnishing of documents is specifically required by any provision of this Indenture relating to such particular application or request, no additional certificate or opinion need be furnished. Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture shall include: (a) a statement that each individual signing such certificate or opinion has read such covenant or condition and the definitions herein relating thereto; (b) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (c) a statement that, in the opinion of each such individual, such individual has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; (d) a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with; and (e) in the case of an Officer's Certificate, a statement as to whether or not any Event of Default under this Indenture has occurred and is continuing. SECTION 1.3. Form of Documents Delivered to Trustee. In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such 3 Person may certify or give an opinion as to such matters in one or several documents. Any certificate or opinion of an officer of the Company or of Mobile Energy may be based, insofar as it relates to legal matters, upon an Opinion of Counsel or a certificate of counsel unless such officer knows or has reason to believe that such Opinion of Counsel or certificate with respect to the matters upon which such officer's certificate or opinion is based are erroneous. Any such Opinion of Counsel or certificate may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an Authorized Officer of either of the Mobile Energy Parties stating that the information with respect to such factual matters is in the possession of such Mobile Energy Party, unless such counsel knows that the certificate or opinion or representations with respect to such matters are erroneous. Any Opinion of Counsel stated to be based on the opinion of other counsel shall be accompanied by a copy of such other opinion. Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument. SECTION 1.4. Acts of Holders. (a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by an agent duly appointed in writing or, alternatively, may be embodied in and evidenced by the record of Holders of Securities voting in favor thereof, either in person or by proxies duly appointed in writing, at any meeting of Holders of Securities duly called and held in accordance with the provisions of Article XIII, or a combination of such instruments and any such record. Except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments or record, or both are delivered to the Trustee and, when it is specifically required herein, to either of the Mobile Energy Parties. Such instrument or instruments and any such record (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "Act" of the Holders signing such instrument or instruments and so voting at any such meeting. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and (subject to Section 9.1) conclusive in favor of the Trustee and the Mobile Energy Parties, if made in the manner provided in this Section 1.4. The record of any meeting of Holders of Securities shall be proved in the manner provided in Section 4 13.6. (b) The fact and date of the execution by any Person of any such instrument or writing may be proved by the certificate of any notary public or other officer of any jurisdiction authorized to take acknowledgments of deeds or administer oaths that the Person executing such instrument acknowledged to such officer the execution thereof, or by an affidavit of a witness to such execution sworn to before any such notary or other such officer, and where such execution is by an officer of a corporation or association or a member of a partnership or limited liability company, on behalf of such corporation, association, partnership or limited liability company, such certificate or affidavit shall also constitute sufficient proof of such Person's authority. The fact and date of the execution of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other manner that the Trustee deems sufficient. (c) The principal amount and serial numbers of Securities held by any Person, and the date or dates of holding the same, shall be proven by the Security Register and the Trustee shall not be affected by notice to the contrary. (d) Any request, demand, authorization, direction, notice, consent, waiver or other action by the Holder of any Security shall bind every future Holder of the same Security, the Holder of every Security issued upon the transfer thereof or in exchange therefor or in lieu thereof, whether or not notation of such action is made upon such Security. (e) Until such time as written instruments shall have been delivered with respect to the requisite percentage of principal amount of Securities for the action contemplated by such instruments, any such instrument executed and delivered by or on behalf of a Holder of Securities may be revoked with respect to any or all of such Securities by written notice by such Holder or any subsequent Holder, proven in the manner in which such instrument was proven. (f) Securities of any series authenticated and delivered after any Act of Holders may, and shall if required by the Trustee, bear a notation in form approved by the Trustee as to any action taken by such Act of Holders. If the Company shall so determine, new Securities of any series so modified as to conform, in the opinion of the Trustee and the Company, to such action may be prepared and executed by the Company and authenticated and delivered by the Trustee in exchange for Outstanding Securities of such series. (g) The Company may, in the circumstances permitted by the Trust Indenture Act, fix any day as the record date for the purpose of determining the Holders entitled to give or take any 5 request, demand, authorization, direction, notice, consent, waiver or other action, or to vote on any action, authorized or permitted to be given or taken by Holders. If not set by the Company prior to the first solicitation of a Holder made by any Person in respect of any such action, or, in the case of any such vote, prior to such vote, the record date for any such action or vote shall be the thirtieth (30th) day (or, if later, the date of the most recent list of Holders required to be provided pursuant to Section 10.1) prior to such first solicitation or vote, as the case may be. With regard to any record date, only the Holders on such date (or their duly designated proxies) shall be entitled to give or take, or vote on, the relevant action. SECTION 1.5. Notices, etc. to Trustee and Mobile Energy Parties. Any request, demand, authorization, direction, notice, consent, waiver or Act of Holders or other document provided or permitted by this Indenture to be made upon, given or furnished to, or filed with, (a) the Trustee by any Holder, by the Company, by Mobile Energy or by an Authorized Agent shall be sufficient for every purpose hereunder if made, given, furnished or filed in writing to the Trustee at its Corporate Trust Office, or (b) the Company by the Trustee, by any Holder, by Mobile Energy or by an Authorized Agent shall be sufficient for every purpose hereunder if in writing and mailed, first-class postage prepaid, to the Company addressed to it at the address of its principal office specified in the first paragraph of this Indenture or at any other address previously furnished in writing to the Trustee, each Holder and Mobile Energy by the Company for such purpose, or (c) Mobile Energy by the Trustee, by any Holder, by the Company or by an Authorized Agent shall be sufficient for every purpose hereunder if in writing and mailed, first-class postage prepaid, to Mobile Energy addressed to it at the address of its principal office specified in the first paragraph of this Indenture or at any other address previously furnished in writing to the Trustee, each Holder and the Company by Mobile Energy for such purpose. SECTION 1.6. Notices to Holders; Waiver. Where this Indenture provides for notice to Holders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to each Holder, at its address as it appears in the Security Register, not later than the latest date, and not earlier than the earliest date, prescribed for the giving of such notice. Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to 6 receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. In any case where notice to Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder shall affect the sufficiency of such notice with respect to other Holders, and any notice that is mailed in the manner herein provided shall be conclusively presumed to have been duly given. SECTION 1.7. Conflict with Trust Indenture Act. If any provision hereof limits, qualifies or conflicts with another provision hereof that is required to be included in this Indenture by any of the provisions of the Trust Indenture Act, such required provision shall control. SECTION 1.8. Effect of Headings and Table of Contents. The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof. SECTION 1.9. Successors and Assigns. All covenants, agreements, representations and warranties in this Indenture by the Trustee and the Mobile Energy Parties shall bind and, to the extent permitted hereby, shall inure to the benefit of and be enforceable by their respective successors and assigns, whether so expressed or not. SECTION 1.10. Severability Clause. In case any provision in this Indenture or in the Securities shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION 1.11. Benefits of Indenture. Nothing in this Indenture or in the Securities, expressed or implied, shall give to any Person, other than the parties hereto and their successors hereunder and the Holders of Securities, any benefit or any legal or equitable right, remedy or claim under this Indenture. SECTION 1.12. Governing Law. THIS INDENTURE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN THE STATE OF NEW YORK EXCEPT THAT SUCH LAWS SHALL NOT APPLY WITH RESPECT TO ANY COLLATERAL WHERE IT IS NECESSARY TO APPLY THE LAWS OF ANOTHER JURISDICTION TO PERFECT LIENS RELATING TO DEBT ISSUED HEREUNDER. SECTION 1.13. Legal Holidays. In any case where any Redemption Date or Prepayment Date or the date of any Stated 7 Maturity of any Security or of any installment of principal thereof or payment of interest thereon shall not be a Business Day, then (notwithstanding any other provision of this Indenture or such Security) payment of interest or principal, or premium, if any, need not be made on such date, but may be made on the next succeeding Business Day with the same force and effect as if made on such Redemption Date or Prepayment Date or the date of such Stated Maturity and, except as provided in the Series Supplemental Indenture establishing the terms of such Security, if such payment is timely made, no interest shall accrue for the period from and after such Redemption Date or Prepayment Date or the date of such Stated Maturity (as the case may be) to the date of such payment. SECTION 1.14. Execution in Counterparts. This instrument may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. SECTION 1.15. Projections. All projections contemplated herein (including projections prepared in connection with the determination of any Revenue Sufficiency Certification, Senior Debt Service Coverage Ratio, Senior Debt Service Requirement or Total Debt Service Coverage Ratio for a period that includes, or consists entirely of, future periods) shall be prepared by the Company in good faith based upon assumptions reasonably believed by the Company to be consistent with the Project Documents and the historical operating results of the Energy Complex as adjusted by reasonable assumptions as to future operating results; provided, however, that all projections prepared by the Company in connection with the determination of Senior Debt Service Coverage Ratios pursuant to Section 5.19(b) shall assume that (a) the Company shall receive no revenues under the Tissue Mill Energy Services Agreement upon the occurrence and during the continuation of an ESA Blockage Event with respect to the Tissue Mill Owner, the Tissue Mill Energy Services Agreement or the Tissue Mill and (b) the Company shall receive no revenues under the Paper Mill Energy Services Agreement upon the occurrence and during the continuation of an ESA Blockage Event with respect to the Paper Mill Owner, the Paper Mill Energy Services Agreement or the Paper Mill. ARTICLE II. THE SECURITIES SECTION 2.1. Form of Security to be Established by Series Supplemental Indenture. The Securities of each series shall be substantially in the form (not inconsistent with this Indenture, including Section 2.5 hereof) established in the Series 8 Supplemental Indenture relating to the Securities of such series. SECTION 2.2. Form of Trustee's Authentication. The Trustee's certificate of authentication on all Securities shall be in substantially the following form: This Security is one of the Securities referred to in the within-mentioned Indenture. FIRST UNION NATIONAL BANK OF GEORGIA, as Trustee By________________________ Authorized Trust Officer SECTION 2.3. Amount Unlimited; Issuable in Series; Limitations on Issuance. The aggregate principal amount of Securities that may be authenticated and delivered under this Indenture is unlimited. The provisions of this Section 2.3 shall not be deemed in any way to supersede the restrictions contained in Sections 5.16 and 5.17. The Securities may be issued in one or more series. There shall be established in one or more Series Supplemental Indentures, prior to the issuance of Securities of any series: (a) the title of the Securities of such series (which shall distinguish the Securities of such series from all other Securities) and the form or forms of Securities of such series; (b) any limit upon the aggregate principal amount of the Securities of such series that may be authenticated and delivered under this Indenture (except for Securities authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Securities of such series pursuant to Section 2.7, 2.8, 2.9, 6.6 or 11.7 and except for Securities that, pursuant to Section 2.4, are deemed never to have been authenticated and delivered hereunder); (c) the date or dates on which the principal of the Securities of such series is payable, the amounts of principal payable on such date or dates and the Regular Record Dates for the determination of Holders to whom principal is payable; and the date or dates on or as of which the Securities of such series shall be dated, if other than as provided in Section 2.13; (d) the rate or rates at which the Securities of such series shall bear interest, or the method by which such rate or rates shall be determined, the date or dates from which 9 such interest shall accrue, the Regular Record Dates for the determination of Holders to whom interest is payable and the basis of computation of interest, if other than as provided in Section 2.13(b); (e) if other than as provided in Section 9.14(a), the place or places where (i) the principal of and premium, if any, and interest on Securities of such series shall be payable, (ii) Securities of such series may be surrendered for registration of transfer or exchange and (iii) notices and demands to or upon the Mobile Energy Parties in respect of the Securities of such series and this Indenture may be served; (f) the price or prices at which, the period or periods within which and the terms and conditions upon which Securities of such series may be redeemed, in whole or in part, at the option of the Company; (g) the obligation, if any, of the Company to redeem, purchase or repay Securities of such series pursuant to any sinking fund or analogous provisions or at the option of a Holder thereof and the price or prices at which and the period or periods within which and the terms and conditions upon which Securities of such series shall be redeemed, purchased or repaid, in whole or in part, pursuant to such obligations; (h) if other than denominations of $100,000 and integral multiples of $5,000 in excess thereof, the denominations in which Securities of such series shall be issuable; (i) if the Securities are to be issued in whole or in part in the form of one or more global securities registered in the name of a clearing corporation or clearing agency registered under the Exchange Act, as depositary for such Securities, or a nominee of such clearing corporation or clearing agency, (i) the name of such depositary and any such nominee, (ii) any limitations on the rights of beneficial holders thereof to transfer or exchange the same or to obtain the registration of transfer thereof, (iii) any limitations on the rights of beneficial holders thereof to obtain certificates therefor in definitive form and (iv) any and all other matters incidental to such Securities; (j) any other terms of such series (which terms shall not be inconsistent with the provisions of this Indenture); and (k) any trustees, authenticating or paying agents, warrant agents, transfer agents or registrars with respect 10 to the Securities of such series. SECTION 2.4. Authentication and Delivery of Securities. Subject to Section 2.3, at any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Securities of any series executed by the Mobile Energy Parties to the Trustee for authentication, together with a Company Order for the authentication and delivery of such Securities, and the Trustee shall thereupon authenticate and make available for delivery such Securities in accordance with such Company Order, without any further action by the Company. No Security shall be secured by or entitled to any benefit under this Indenture or be valid or obligatory for any purpose unless there appears on such Security a certificate of authentication, in the form provided for herein, executed by the Trustee by the manual signature of any Authorized Trust Officer, and such certificate upon any Security shall be conclusive evidence, and the only evidence, that such Security has been duly authenticated and delivered hereunder. In authenticating such Securities and accepting the additional responsibilities under this Indenture in relation to such Securities, the Trustee shall be entitled to receive, and (subject to Section 9.1) shall be fully protected in relying upon: (a) an executed Series Supplemental Indenture with respect to the Securities of such series; (b) an Officer's Certificate of the Company certifying (i) as to resolutions of the Manager or Managers of the Company by or pursuant to which the terms of the Securities of such series were established, (ii) that all conditions precedent under this Indenture to the Trustee's authentication and delivery of such Securities have been complied with and (iii) as to the incumbency of the persons named in such Officer's Certificate; (c) an Officer's Certificate of Mobile Energy to the effect set forth in clause (b) above; (d) an Opinion of Counsel to the effect that (i) the form or forms and the terms of such Securities have been established by a Series Supplemental Indenture as permitted by Sections 2.1 and 2.3 in accordance with the provisions of this Indenture, (ii) the Securities of such series, when authenticated and made available for delivery by the Trustee and issued by the Company and guaranteed by Mobile Energy in the manner and subject to any conditions specified in such Opinion of Counsel, will constitute legal, valid and binding obligations of each of the Mobile Energy Parties, 11 enforceable against such Mobile Energy Party in accordance with their terms, except as such enforceability (A) may be limited by applicable bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium and other similar laws relating to or affecting the enforcement of creditors' rights and remedies generally and (B) is subject to general principles of equity (regardless of whether considered in a proceeding in equity or at law) and the discretion of the court before which proceedings may be brought and (iii) all laws of the State of Alabama and New York and the requirements of this Indenture, in each case in respect of the execution and delivery by the Mobile Energy Parties of such Securities, have been complied with; and (e) such other documents and evidence with respect to the Mobile Energy Parties as the Trustee may reasonably request. Prior to the authentication and delivery of a series of Securities, the Trustee shall also receive such other funds, accounts, documents, certificates, instruments or opinions as may be required by the related Series Supplemental Indenture. Notwithstanding the foregoing, if any Security shall have been authenticated and delivered hereunder but never issued and sold by the Company, and the Company shall deliver such Security to the Trustee for cancellation as provided in Section 2.12 together with a written statement (which need not comply with Section 1.2 and need not be accompanied by an Opinion of Counsel) stating that such Security has never been issued and sold by the Company, for all purposes of this Indenture such Security shall be deemed never to have been authenticated and delivered hereunder and shall never have been or be entitled to the benefits hereof. SECTION 2.5. Form and Denominations. The Securities of each series shall be in registered form and may have such letters, numbers or other marks of identification and such legends or endorsements printed, lithographed, engraved, typewritten or photocopied thereon, as may be required to comply with any applicable law and the rules of any securities exchange (if any) upon which the Securities are to be listed or of any clearing corporation or clearing agency that is a Holder of such Securities in accordance with Section 2.3(i) or to conform to any usage in respect thereof, or as may, consistently herewith, be prescribed by the Manager or Managers of the Company or by the officers executing such Securities, such determination by said officers to be evidenced by their signing the Securities. The definitive Securities shall be printed, lithographed, engraved, typewritten, photocopied or produced by any combination of these methods or may be produced in any other manner permitted 12 by the rules of any securities exchange upon which the Securities of such series are to be listed (if any) or of any clearing corporation or clearing agency that is a Holder of such Securities in accordance with Section 2.3(i), all as determined by the officers executing such Securities, as evidenced by their execution of such Securities. All Securities of any one series shall be substantially identical except as to denomination and except as may otherwise be provided herein or in the Series Supplemental Indenture setting forth the terms of the Securities of such series. All Securities in whole or in part in the form of one or more global securities in accordance with Section 2.3(i) shall comply with the requirements of the clearing corporation or clearing agency with whom the registered form of such Security will be deposited. SECTION 2.6. Execution of Securities. The Securities shall be executed on behalf of the Company by its president or any of its vice presidents and its secretary under its limited liability company seal reproduced thereon and on behalf of Mobile Energy by its president or any of its vice presidents and its secretary under its corporate seal reproduced thereon. The signature of any such officers on the Securities may be manual or facsimile. Securities bearing the manual or facsimile signatures of individuals who were at the time such signatures were affixed the proper officers of either of the Mobile Energy Parties shall bind such Mobile Energy Party notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Securities or did not hold such offices at the date of such Securities. SECTION 2.7. Temporary Securities. Pending the preparation of definitive Securities of any series, the Mobile Energy Parties may execute, and upon receipt of a Company Order the Trustee shall authenticate and make available for delivery, temporary Securities of such series that are printed, lithographed, typewritten, photocopied or otherwise produced, in any denomination, substantially of the tenor of the definitive Securities in lieu of which they are issued and with such appropriate insertions, omissions, substitutions and other variations as the officers executing such Securities may determine, as evidenced by their execution of such Securities. If temporary Securities of any series are issued, the Company will cause definitive Securities of such series to be prepared without unreasonable delay. After the preparation of definitive Securities of such series, the temporary Securities of such series shall be exchangeable for definitive Securities of such series upon surrender of the temporary Securities of such 13 series at the Corporate Trust Office or at the Place of Payment, without charge to the Holder. Upon surrender for cancellation of any one or more temporary Securities of any series, the Mobile Energy Parties shall execute and the Trustee shall authenticate and make available for delivery, in exchange therefor, definitive Securities of such series of authorized denominations and of like tenor and aggregate principal amount. Until so exchanged such temporary Securities of any series shall in all respects be entitled to the same benefits under this Indenture as definitive Securities of such series. SECTION 2.8. Registration, Transfer and Exchange. The Company shall cause to be kept a register that, subject to such reasonable regulations as the Company may prescribe, shall provide for the registration of Securities and for the registration of transfers and exchanges of Securities. This register and, if there shall be more than one Security Registrar, the combined registers maintained by all such Security Registrars, are herein sometimes referred to as the "Security Register." The Trustee is hereby appointed as the initial "Security Registrar" for the purpose of registering Securities. If a Person other than the Trustee is appointed by the Company as Security Registrar, the Company will give the Trustee prompt notice of the appointment of the Security Registrar, and the Trustee shall have the right to inspect the Security Register at all reasonable times and to obtain copies thereof, and the Trustee shall have the right to rely upon an Officer's Certificate executed on behalf of the Security Registrar as to the names and addresses of the Holders of the Securities and the principal amounts and numbers of such Securities. At the option of any Holder, Securities of any series may be exchanged for other Securities of the same series to be registered in the name of such Holder, of authorized denominations and of like tenor, maturity and aggregate principal amount, upon surrender of the Securities to be exchanged at any office or agency maintained for such purpose pursuant to Section 9.14(a). Whenever any Securities are so surrendered for exchange, the Mobile Energy Parties shall execute, and the Trustee shall authenticate and make available for delivery, the Securities that the Holder making the exchange is entitled to receive. All Securities issued upon any registration of transfer or exchange of Securities shall be the valid obligations of each of the Mobile Energy Parties, evidencing the same debt, and entitled to the same security and benefits under this Indenture, as the Securities surrendered upon such registration of transfer or exchange. Every Security presented or surrendered for registration of 14 transfer or exchange shall be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar or any transfer agent, duly executed by the Holder thereof or such Holder's attorney duly authorized in writing. No service charge shall be required of any Holders participating in any transfer or exchange of Securities in respect of such transfer or exchange, but the Security Registrar may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any transfer or exchange of Securities, other than exchanges pursuant to Section 2.7, 6.6 or 11.7 not involving any transfer. The Security Registrar shall not be required (a) to issue, register the transfer of or exchange any Security of any series during a period (i) beginning at the opening of business fifteen (15) days before the day of the mailing of a notice of redemption of Securities of such series selected for redemption under Section 6.2 or 7.2 and ending at the close of business on the day of such mailing and (ii) beginning on the Regular Record Date for the Stated Maturity of any installment of principal of or payment of interest on the Securities of such series and ending on the Stated Maturity of such installment of principal or payment of interest or (b) to issue, register the transfer of or exchange any Security so selected for redemption in whole or in part, except the unredeemed portion of any Security selected for redemption in part. Notwithstanding anything herein to the contrary, any transfer of the Securities of any series may be subject to restrictions, if any, set forth in the Series Supplemental Indenture relating to such series. SECTION 2.9. Mutilated, Destroyed, Lost and Stolen Securities. If (a) any mutilated Security is surrendered to the Trustee or either of the Mobile Energy Parties, or the Company, the Security Registrar and the Trustee receive evidence to their satisfaction of the destruction, loss or theft of any Security, and (b) there is delivered to the Company, the Security Registrar and the Trustee evidence to their satisfaction of the ownership and authenticity thereof, and such security or indemnity as may be required by them to save each of them harmless, the Company shall execute and upon the Company's request the Trustee shall authenticate and make available for delivery, in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Security, a new Security of the same series and of like tenor and principal amount, bearing a number not then outstanding. Notwithstanding the foregoing, in case any such mutilated, destroyed, lost or stolen Security has become or is about to become due and payable, the Company, upon satisfaction of the 15 conditions set forth in clauses (a) and (b) of the immediately preceding paragraph, may, instead of issuing a new Security, pay such Security. Upon the issuance of any new Security under this Section 2.9, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses connected therewith. Every new Security issued pursuant to this Section 2.9 in lieu of any destroyed, lost or stolen Security shall constitute an original additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Security shall be at any time enforceable by anyone, and shall be entitled to all the security and benefits of this Indenture equally and proportionately with any and all other Securities duly issued hereunder (except as otherwise specifically provided in this Indenture and in the other Security Documents). The provisions of this Section 2.9 are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities. SECTION 2.10. Payment of Principal and Interest; Principal and Interest Rights Preserved. Principal of or interest on any Security that is payable, and is punctually paid or duly provided for, at any Stated Maturity shall be paid to the Person in whose name that Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such principal or interest. Payment of principal of and interest on the Securities of any series shall be made at the Corporate Trust Office or at the Place of Payment (or, if such office is not in the Borough of Manhattan, the City of New York, at either such office or an office to be maintained in such Borough), or by check or in another manner or manners if so provided in the Series Supplemental Indenture creating the Securities of such series. Any principal of or interest on any Security of any series that is payable, but is not punctually paid or duly provided for, at any Stated Maturity of an installment of principal or payment of interest shall forthwith cease to be payable to the Holder on the relevant Regular Record Date by virtue of having been such Holder to the extent that such defaulted principal or interest may be paid by the Company, at its election in each case, as provided in paragraph (a) or paragraph (b) below: (a) The Company may elect to make payment of all or any portion of such defaulted principal or interest to the Persons in whose names the Securities of such series (or their respective Predecessor Securities) in respect of which 16 principal or interest is in default are registered at the close of business on a Special Record Date for the payment of such defaulted principal or interest, which shall be fixed in the following manner. The Company shall notify the Trustee and the Paying Agent in writing of the amount of defaulted principal or interest proposed to be paid on each Security of such series and the date of the proposed payment, and concurrently there shall be deposited with the Trustee or the Paying Agent an amount of money equal to the aggregate amount proposed to be paid in respect of such defaulted principal or interest or there shall be made arrangements satisfactory to the Trustee or the Paying Agent for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such defaulted principal or interest as provided in this paragraph. Thereupon, the Trustee shall fix a Special Record Date for the payment of such defaulted principal or interest (together with other amounts payable with respect to such defaulted principal or interest) that shall not be more than fifteen (15) nor less than ten (10) days prior to the date of the proposed payment and not less than ten (10) days after the receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Company and the Security Registrar of such Special Record Date and, in the name and at the expense of the Company, shall cause notice of the proposed payment of such defaulted principal or interest and the Special Record Date therefor to be mailed, first class postage prepaid, to each Holder of a Security of such series at such Holder's address as it appears in the Security Register, not less than ten (10) days prior to such Special Record Date. Notice of the proposed payment of such defaulted principal or interest and the Special Record Date therefor having been mailed as aforesaid, such defaulted principal or interest shall be paid to the Persons in whose names the Securities of such series (or their respective Predecessor Securities) are registered on such Special Record Date. (b) The Company may make, or cause to be made, payment of any defaulted principal or interest (together with other amounts payable with respect to such defaulted interest) in any other lawful manner not inconsistent with the requirements of any securities exchange (if any) on which the Securities in respect of which principal or interest is in default may be listed, and upon such notice as may be required by such exchange, if, after notice given by the Company to the Trustee of the proposed payment pursuant to this paragraph, such payment shall be deemed practicable by the Trustee. Subject to the foregoing provisions of this Section 2.10, 17 each Security delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any other Security shall carry the rights to interest accrued and unpaid, and to accrue, that were carried by such other Security, and each such Security shall bear interest from whatever date shall be necessary so that neither gain nor loss in interest shall result from such registration of transfer, exchange or replacement. SECTION 2.11. Persons Deemed Owners. Prior to due presentment of a Security for registration of transfer, the Person in whose name any Security is registered shall be deemed to be the owner of such Security for the purpose of receiving payment of principal of and premium, if any, and (subject to Section 2.10) interest on such Security and (subject to Section 5.3) for all other purposes whatsoever, whether or not such Security be overdue, regardless of any notice to anyone to the contrary. SECTION 2.12. Cancellation. All Securities surrendered for payment, redemption, credit against any Sinking Fund payment or registration of transfer or exchange shall, if surrendered to any Person other than the Trustee, be delivered to the Trustee for cancellation. The Company may at any time deliver to the Trustee for cancellation any Securities previously authenticated and delivered hereunder that the Company may have acquired in any manner whatsoever, and all Securities so delivered shall be promptly canceled by the Trustee. No Securities shall be authenticated in lieu of or in exchange for any Securities canceled as provided in this Section, except as expressly permitted by this Indenture. All canceled Securities held by the Trustee shall be destroyed and certification of their destruction delivered to the Company unless, by Company Request, the Company otherwise directs. SECTION 2.13. Dating of Securities; Computation of Interest. (a) Except as otherwise provided in the Series Supplemental Indenture relating to the Securities of a series, each Security of such series shall be dated the date of its authentication. (b) Except as otherwise provided in the Series Supplemental Indenture relating to the Securities of a series, interest on the Securities of such series shall be computed on the basis of a 360-day year consisting of twelve 30-day months and, for any period shorter than a full calendar month, on the basis of the actual number of days elapsed in such period. SECTION 2.14. Source of Payments Limited; Rights and Liabilities of the Mobile Energy Parties. Except as otherwise specifically provided in this Indenture and in the Guaranty, all payments of principal and premium, if any, and interest to be made in respect of the Securities and this Indenture shall be made only from, the Indenture Securities Collateral, the payments 18 therefrom and the income and proceeds received by the Trustee or the Collateral Agent and allocable to the Trustee therefrom. Each Holder, by its acceptance of a Security, agrees that (a) it will look solely to the Indenture Securities Collateral, the payments therefrom and the income and proceeds received by the Trustee or the Collateral Agent and allocable to the Trustee therefrom to the extent available for distribution to such Holder as herein provided or provided in the Security Documents and the Guaranty and (b) recourse shall be limited in accordance with Article XV. SECTION 2.15. Parity of Securities. (a) Except as otherwise specifically provided in this Indenture and the other Security Documents, all Securities of a series issued and Outstanding hereunder rank on a parity with each other Security of the same series and with all Securities of each other series and each Security of a series shall be secured equally and ratably by this Indenture and the Security Documents with each other Security of the same series and with all Securities of each other series, without preference, priority or distinction of any one thereof over any other by reason of difference in time of issuance or otherwise, and each Security of a series shall be entitled to the same benefits and security in this Indenture and the Security Documents as each other Security of the same series and with all Securities of each other series. (b) Notwithstanding anything herein to the contrary, the right, title and interest of the Company in and to any Debt Service Reserve Account, including all monies contained therein or hereafter delivered to the Trustee for deposit therein and, in each case, all monies received and the right to receive monies thereunder, shall be held in a separate account in trust solely for the equal and proportionate benefit and security of the Holders from time to time of the Outstanding Securities for the benefit of whom such Debt Service Reserve Account was established. SECTION 2.16. Allocation of Principal and Interest. Each payment of principal of and premium, if any, and interest on each Security shall be applied, first, to the payment of accrued but unpaid interest on such Security (as well as any interest on overdue principal or, to the extent permitted by applicable Law, overdue interest) to the date of such payment, second, to the payment of the principal amount of and premium, if any, on such Security then due (including any overdue installment of principal) thereunder and, third, the balance, if any, to the payment of the principal amount of and premium, if any, on such Security remaining unpaid. 19 ARTICLE III. REPRESENTATIONS AND WARRANTIES Each of the Mobile Energy Parties represents and warrants, as of the Closing Date, to the Trustee as follows: SECTION 3.1. Organization, Power and Status of Mobile Energy Parties. The Company (a) is a limited liability company duly formed, validly existing and in good standing under the laws of the State of Alabama and (b) is duly authorized to do business and is in good standing in each jurisdiction where the character of its properties or the nature of its activities makes such qualification necessary. Mobile Energy (i) is a corporation duly formed, validly existing and in good standing under the laws of the State of Alabama and (ii) is duly authorized to do business and is in good standing in each jurisdiction where the character of its properties or the nature of its activities makes such qualification necessary. Each of the Mobile Energy Parties has all requisite limited liability company or corporate (as the case may be) power and authority to own and operate the property it purports to own and to carry on its business as now being conducted and as proposed to be conducted in respect of the Energy Complex. SECTION 3.2. Authorization; Enforceability; Execution and Delivery. (a) Each of the Mobile Energy Parties has all necessary limited liability company or corporate (as the case may be) power and authority to execute, deliver and perform its obligations under this Indenture, the Securities and each other Project Document to which it is a party. (b) All action on the part of each of the Mobile Energy Parties that is required for the authorization, execution, delivery and performance of this Indenture, the Securities and each other Project Document to which such Mobile Energy Party is a party has been duly and effectively taken, except (in the case of the Project Contracts) such actions the failure to take would not reasonably be expected to have a Material Adverse Effect; and the execution, delivery and performance by each of the Mobile Energy Parties of this Indenture, the Securities and each such other Project Document does not require the approval or consent of any holder or trustee of any Debt or other obligations of such Mobile Energy Party that has not been obtained. (c) This Indenture and each other Project Document to which either of the Mobile Energy Parties is a party has been duly executed and delivered by such Mobile Energy Party. Each of this Indenture, the Securities and each other Project Document to which either of the Mobile Energy Parties is a party constitutes a legal, valid and binding obligation of such Mobile Energy Party, enforceable against it in accordance with the terms 20 thereof (other than with respect to step-in rights or arbitration provisions, as to which no representation or warranty is made), except as such enforceability (i) may be limited by applicable bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium and similar laws relating to or affecting the enforcement of creditors' rights and remedies generally and (ii) is subject to general principles of equity (regardless of whether enforceability is considered in a proceeding in equity or at law) and the discretion of the court before which any proceeding therefor may be brought and to public policy or Federal or state laws that may limit rights to indemnification. SECTION 3.3. No Conflicts; Laws and Contracts; No Default. (a) Neither the execution and delivery of this Indenture, the Securities and each other Project Document to which either of the Mobile Energy Parties is a party nor the consummation of any of the transactions contemplated hereby or thereby nor performance of or compliance with the terms and conditions hereof or thereof (i) contravenes any Governmental Approvals or any provision of Law applicable to either of the Mobile Energy Parties or to any of the Collateral, (ii) conflicts or is inconsistent with or constitutes a default under or results in the violation of the provisions of the Articles of Organization or (Operating Agreement) of the Company or certificate of incorporation or by- laws of Mobile Energy or, unless such conflict, inconsistency, default or violation would not reasonably be expected to have a Material Adverse Effect, of any other Project Documents or any indenture, mortgage, deed of trust, sale/leaseback agreement, loan agreement or other similar financing agreement or instrument or other agreement or instrument to which either of the Mobile Energy Parties is a party or by which either of the Mobile Energy Parties or any of its property or assets is bound or to which either may be subject or (iii) results in the creation or imposition of any Liens (other than Permitted Liens) on any of the property or assets of either of the Mobile Energy Parties, or results in the acceleration of any obligation of either of the Mobile Energy Parties, that would reasonably be expected to have a Material Adverse Effect. (b) Each of the Mobile Energy Parties and the Energy Complex is in compliance with all Laws applicable to the Mobile Energy Parties or the Energy Complex (as the case may be), unless such non-compliance would not reasonably be expected to have a Material Adverse Effect. (c) Neither of the Mobile Energy Parties nor (to the knowledge of the Mobile Energy Parties) any other party to a Project Document is in material default in the performance of any term, covenant or obligation under any Project Document; no event has occurred that with lapse of time, notice or both could result in a default under a Project Document by either of the Mobile Energy Parties or (to the knowledge of the Mobile Energy Parties) 21 any other party thereto that would reasonably be expected to have a Material Adverse Effect; no material force majeure event has occurred and is continuing under any Project Document; and (to the knowledge of the Mobile Energy Parties) each Project Document is in full force and effect. SECTION 3.4. Governmental Approvals. All material Governmental Approvals that are required to be obtained as of the date hereof by or on behalf of either of the Mobile Energy Parties in connection with (a) the capital improvements contemplated by the Capital Budget, and operation and maintenance of the Energy Complex (including the provision of Processing Services pursuant to the Energy Services Agreements and the Master Operating Agreement) and (b) the issuance of the Securities and the Guaranty and the execution, delivery and performance by the Mobile Energy Parties of the Project Documents are in effect on the date hereof. Each of the material Governmental Approvals required to be obtained as of the date hereof by either of the Mobile Energy Parties has been duly obtained, was (to the knowledge of the Mobile Energy Parties) validly issued and is in full force and effect. The Mobile Energy Parties are in compliance with all material Governmental Approvals required to be obtained as of the Closing Date unless such noncompliance would not reasonably be expected to result in a Material Adverse Effect. Neither of the Mobile Energy Parties have any reason to believe that it will be unable to obtain the Governmental Approvals that are not required to be obtained prior to the Closing Date in the ordinary course of business, without substantial expense, and at such time or times as may be necessary to avoid any delay in, or material impairment to, the consummation and performance of the transactions as contemplated by this Indenture and the other Project Documents. SECTION 3.5. Litigation. There are no claims, actions, suits, investigations or proceedings at law or in equity by or before any arbitrator or any Governmental Authority now pending or (to the knowledge of the Mobile Energy Parties) threatened against either of the Mobile Energy Parties or (to the knowledge of the Mobile Energy Parties) now pending or threatened against any Affiliate thereof, or any property or other assets or rights of either of the Mobile Energy Parties or any Affiliate thereof with respect to this Indenture, any other Project Document or the Energy Complex, that would reasonably be expected to result in a Material Adverse Effect. SECTION 3.6. Utility Regulation. (a) Neither the Trustee or the Collateral Agent nor any Holder will be (under applicable Law as of the date hereof and solely as a result of the ownership, operation and maintenance of the Energy Complex by either of the Mobile Energy Parties, the purchase and ownership of the Securities or any other transaction contemplated by the Financing Documents) subject to regulation under the Federal 22 Power Act of 1920 or by the State of Alabama Public Service Commission or otherwise be subject to rate regulation under Federal, state or local Law as of the Closing Date; neither of the Mobile Energy Parties is, nor as of the Closing Date will be, subject to rate regulation under Federal, state or local Law; and neither the execution, delivery and performance by each of the Mobile Energy Parties of all the provisions of the Project Documents to which such Mobile Energy Party is a party or the consummation of the transactions contemplated thereby will violate Chapter 14 of Title 37 of the Code of Alabama (1975): Service Territories for Electric Suppliers. SECTION 3.7. Collateral. (a) The Company has, or has valid and enforceable rights to acquire, good, valid title or valid leasehold rights in and to all of the Collateral purported to be covered by the Security Documents to which it is a party and is the owner and holder of a valid and subsisting leasehold estate to the interests in the Site and the tangible personal property forming a part of the Collateral purported to be covered by the Security Documents to which it is a party, subject only to Permitted Liens, and is lawfully possessed of, or has valid and enforceable rights to acquire, a valid and subsisting grant for a term in and of the Easements, subject only to Permitted Liens. (b) With respect to the personal property forming a part of the Collateral, all filings, recordings, registrations and other actions have been made, obtained and taken in all relevant jurisdictions that are necessary to create and perfect the Liens in all right, title, estate and interest of the Company in the Collateral covered thereby subject to no Liens other than Permitted Liens. (c) The Mobile Energy Parties have obtained and hold in full force and effect, or have the right to obtain (or are in the process of obtaining and expect to obtain in the ordinary course of business), all patents, trademarks, copyrights and other such rights or adequate licenses therein, free from restrictions that could reasonably be expected to result in a Material Adverse Effect, that are necessary for the ownership, construction, operation and maintenance of the Energy Complex. SECTION 3.8. Taxes. Each of the Mobile Energy Parties has filed, or caused to be filed, all tax and information returns that are required to have been filed by it in any jurisdiction and has paid (prior to their delinquency dates) all taxes shown to be due and payable on such returns and all other taxes and assessments payable by it, to the extent the same have become due and payable, except to the extent there is a Good Faith Contest thereof by either of the Mobile Energy Parties. SECTION 3.9. Environmental Matters. (a) To the knowledge of the Mobile Energy Parties, neither the Site nor the Energy 23 Complex has been contaminated with Hazardous Materials that requires remediation under any applicable Environmental Requirement, except where such remediation would not have a Material Adverse Effect. (b) The Company, the Energy Complex and the Site are in compliance with all applicable Environmental Requirements affecting the Site and the Energy Complex, except where noncompliance would not reasonably be expected to have a Material Adverse Effect; and (to the knowledge of the Mobile Energy Parties) there are no environmental conditions that could reasonably be expected to materially interfere with the commercial operation of the Energy Complex. SECTION 3.10. Business; Mobile Energy Assets. (a) Neither of the Mobile Energy Parties has engaged in any business or activity other than in connection with the acquisition, development, ownership, operation and financing of the Energy Complex as contemplated by the Project Documents to which such Mobile Energy Party is a party (or, in the case of Mobile Energy, the ownership of the Company). (b) Mobile Energy's sole material non-cash assets consist of its ownership interest in the Company and its rights in respect of the Southern Master Tax Sharing Agreement. SECTION 3.11. Employee Benefit Plans. Neither of the Mobile Energy Parties, nor any other Person who is a member of a controlled group of corporations or a group of trades or businesses under common control with the Mobile Energy Parties (within the meaning of Section 414 of the Code), has (a) failed to fulfill its obligations under or to comply in any material respect with the requirements of ERISA or the Code with respect to any employee benefit plans, (b) sought a waiver of the minimum funding standard of Section 412 of the Code, (c) failed to make any contribution or payment to or in respect of any employee benefit plan required to be made by law or by the terms of such plan, (d) made any amendment to any employee benefit plan that has resulted or should result in the imposition of a lien or the posting of a bond or other security under ERISA or the Code or (e) incurred any liability under Title IV of ERISA other than a liability to the Pension Benefit Guaranty Corporation for premiums under Section 4007 of ERISA, and has caused, as a result of such events or conditions, together with all such other events or conditions, either of the Mobile Energy Parties to incur or be reasonably likely to incur a liability that is material in relation to the financial position of such Mobile Energy Party. 24 ARTICLE IV. INDENTURE ACCOUNTS SECTION 4.1. Establishment of Indenture Securities Account. An account designated the "Indenture Securities Account" is hereby established and created with the Trustee. The following subaccounts of the Indenture Securities Account are hereby established and created with the Trustee: (a) "Indenture Securities Interest Subaccount"; (b) "Indenture Securities Principal Subaccount"; and (c) "Indenture Securities Redemption Subaccount." SECTION 4.2. Payments into Indenture Securities Account. The Indenture Securities Account shall be funded with (a) monies transferred by the Collateral Agent from the Revenue Account pursuant to Sections 3.11(a)(v) and 3.11(a)(vi) of the Intercreditor Agreement, (b) monies transferred by the Collateral Agent from the Maintenance Reserve Account pursuant to Section 3.5(b) of the Intercreditor Agreement, (c) monies transferred by the Collateral Agent from the Distribution Account pursuant to Section 3.8(b) of the Intercreditor Agreement, (d) monies transferred by the Collateral Agent from the Subordinated Fee Account pursuant to Section 3.7(b) of the Intercreditor Agreement, (e) monies transferred by the Collateral Agent from the Subordinated Debt Account pursuant to Section 3.6(b) of the Intercreditor Agreement and (f) Eminent Domain Proceeds and Casualty Proceeds transferred by the Collateral Agent from the Loss Proceeds Account pursuant to Section 3.10 of the Intercreditor Agreement. The Trustee shall deposit all monies received by it for (i) payment of interest on the Securities at Stated Maturity into the Indenture Securities Interest Subaccount, (ii) payment of principal of the Securities at Stated Maturity into the Indenture Securities Principal Subaccount and (iii) redemption of Securities other than at Stated Maturity into the Indenture Securities Redemption Subaccount, in each case for disbursement in accordance with Section 4.3. SECTION 4.3. Application of Funds in Indenture Securities Account. (a) The Trustee is hereby authorized and directed to disburse from (i) the Indenture Securities Interest Subaccount, the amount required to pay interest on Securities when due (whether on an Interest Payment Date or at any other Stated Maturity, but not upon acceleration or on any Redemption Date or Prepayment Date), (ii) the Indenture Securities Principal Subaccount, the amount required to pay principal of the Securities when due (whether on a Principal Payment Date or at any other Stated Maturity, but not upon acceleration or on any Redemption Date or Prepayment Date) and (iii) the Indenture Securities Redemption Subaccount, the amount required to pay principal of and premium, if any, and interest on the Securities when due (whether upon acceleration or on a Redempton Date or 25 Prepayment Date in accordance with Section 6.3 or otherwise); provided, however, that if there are insufficient monies in (A) the Indenture Securities Interest Subaccount to pay the interest then due on the Securities, then the Trustee shall, in the following order of priority: first, transfer monies on deposit in the Indenture Securities Redemption Subaccount and, second, transfer monies on deposit in the Indenture Securities Principal Account to the Indenture Securities Interest Subaccount to be applied to make such payment, (B) the Indenture Securities Principal Subaccount to pay the principal then due on the Securities, then the Trustee shall transfer monies on deposit in the Indenture Securities Redemption Subaccount to the Indenture Securities Principal Subaccount to be applied to make such payment and (C) the Indenture Securities Redemption Subaccount to pay the principal, premium, if any, and interest then due on the Securities, then the Trustee shall transfer monies on deposit in the Indenture Securities Principal Subaccount and the Indenture Securities Interest Subaccount to be applied to make such payment. SECTION 4.4. Payments into Debt Service Reserve Accounts. Subject to Section 4.6, each Debt Service Reserve Account (if any) shall be funded (a) with monies to be deposited therein on the date of original issuance of any Securities for whose benefit any such Debt Service Reserve Account was established and created, in accordance with the Series Supplemental Indenture establishing such Securities, and (b) with monies to be transferred thereto by the Collateral Agent pursuant to Section 3.11(a)(viii) of the Intercreditor Agreement, in the case of clauses (a) and (b) above, to the extent necessary so that the amount of monies, together with the Available Amount under any Reserve Account Security, then on deposit in such Debt Service Reserve Account shall be equal to the Debt Service Reserve Account Required Balance in respect of such Debt Service Reserve Account. SECTION 4.5. Application of Funds in Debt Service Reserve Accounts. If, following the application of monies on deposit in the Indenture Securities Account in accordance with Section 4.3, amounts are due and owing in respect of principal of or premium, if any, or interest on any Securities for whose benefit a Debt Service Reserve Account was established and created, in accordance with the Series Supplemental Indenture establishing such Securities, the Trustee shall, in the following order of priority: first, apply monies then on deposit in such Debt Service Reserve Account; second, draw upon any Reserve Account Letter of Credit on deposit in such Debt Service Reserve Account pursuant to Section 4.6(d) in an amount up to the Available Amount thereunder and apply the monies in respect thereof; and third, call upon any Southern Guaranty on deposit in such Debt Service Reserve Account pursuant to Section 4.6(d) in an amount up to the Available Amount thereunder and apply the monies in 26 respect thereof, in each case, directly to the payment (to the extent necessary) of such amounts due and owing in respect of such Securities; provided, however, that if an Event of Default has occurred and is then continuing, the Trustee shall provide notice thereof to the Collateral Agent, and the Collateral Agent shall, in the following order of priority, transfer monies on deposit in the Distribution Account, the Subordinated Fee Account and the Subordinated Debt Account (including then Available Amounts under any Reserve Account Security on deposit therein) pursuant to Sections 3.8, 3.7 and 3.6, respectively, of the Intercreditor Agreement, to the Trustee for application to the payment (to the extent necessary) of such amounts due and payable in respect of such Securities, prior to the application of monies pursuant to clauses first, second and third above. SECTION 4.6. Reserve Account Security. (a) Subject to Section 4.6(c), the Company shall not be required at any time to deposit any monies in any Debt Service Reserve Account, and the Company shall be entitled from time to time to withdraw monies on deposit in such Debt Service Reserve Account, provided that and for so long as Reserve Account Security having an Available Amount thereunder equal to the amount of such monies otherwise required to be and not so deposited or the amount of such monies so withdrawn (as the case may be) shall have been delivered to the Trustee, at or prior to such time, for deposit into such Debt Service Reserve Account. At the time of any such deposit, the Trustee shall be entitled to receive, and (subject to Section 9.1) shall be fully protected in relying upon, an Opinion of Counsel to the effect that (i) such Reserve Account Security is permitted by this Section 4.6 and has been delivered in accordance with the provisions hereof, (ii) such Reserve Account Security has been duly authorized, executed and delivered by the provider thereof and constitutes a legal, valid and binding obligation of such provider, enforceable against such provider in accordance with its terms, except as such enforceability (A) may be limited by applicable bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium and other similar laws relating to or affecting the enforcement of creditors' rights and remedies generally as such laws would apply in the event of a bankruptcy, insolvency or reorganization of, or other similar occurrence with respect to, such provider and (B) is subject to general principles of equity (regardless of whether considered in a proceeding in equity or at law) or other customary qualifications and limitations and (iii) payments under such Reserve Account Security would not constitute avoidable preferences under Section 547 of the Bankruptcy Code or similar state laws by or against the provider thereof (or any other account party thereunder). The Company may from time to time, at its discretion, replace or reduce the Available Amount (in whole or in part) under any Reserve Account Security on deposit in any Debt Service Reserve Account with other Reserve Account Security having an Available Amount thereunder, or with monies in an amount, equal to the 27 Available Amount so replaced or reduced. (b) Each Reserve Account Security on deposit in any Debt Service Reserve Account shall provide that not less than forty- five (45) days prior to the occurrence of a Termination Event with respect to such Reserve Account Security, the provider thereof shall deliver written notice to the Trustee and the Company of such occurrence. The Company shall provide notice to the Trustee of the occurrence of any Credit Standard Event or Default Event within three (3) Business Days of its actual or constructive knowledge of the event giving rise to such occurrence. (c) If (in lieu of any monies required to be deposited into, or in replacement of monies or other Reserve Account Security on deposit in, any Debt Service Reserve Account) any Reserve Account Security is on deposit in such Debt Service Reserve Account pursuant to Section 4.6(a), then, immediately upon the occurrence of a Required Deposit Event with respect to such Reserve Account Security, the Company agrees to deposit into such Debt Service Reserve Account an amount of monies equal to the Required Deposit with respect to such Required Deposit Event. (d) If the Company fails to make any Required Deposit pursuant to Section 4.6(c) as and when due, then the Trustee shall, and is hereby authorized to, draw or call upon such Reserve Account Security in an amount equal to the amount of such Required Deposit that the Company so failed to deposit; provided, however, that, if a Required Deposit Event occurs at a time when more than one Reserve Account Letter of Credit or Southern Guaranty is on deposit in such Debt Service Reserve Account, the Trustee may elect, in its sole discretion but subject to Section 4.5, the order in which the Trustee shall draw upon such Reserve Account Letters of Credit or call upon such Southern Guaranties (as the case may be). Any amounts drawn or called upon by the Trustee under any Reserve Account Security on deposit in any Debt Serve Reserve Account shall be deposited into such Debt Service Reserve Account. The Company's obligations under Section 4.6(c) shall be satisfied to the extent of any such deposit. SECTION 4.7. Investment of Monies in the Indenture Accounts. (a) Amounts deposited in the Indenture Accounts, at the written request and direction of the Company, shall be invested by the Trustee in Permitted Investments. Such investments shall mature in such amounts and not later than such times as may be necessary to provide monies when needed to make payments from such monies as provided in this Indenture. Net interest or gain received from such investments shall remain in the respective subaccounts of the Indenture Securities Account and in each Debt Service Reserve Account (if any) pending application as provided in this Indenture, provided that (i) to the extent that monies on deposit in any Debt Service Reserve 28 Account (together with then Available Amounts under any Reserve Account Security deposited therein) exceed the Debt Service Reserve Account Required Balance therefor, such monies shall be transferred to the Collateral Agent for deposit into the Revenue Account and (ii) net interest on monies deposited into the Indenture Securities Account Principal Subaccount shall be transferred monthly to the Indenture Securities Account Interest Subaccount. In the event monies are required for payment of any amounts to be paid by the Trustee pursuant to Article VI in respect of any series of Securities and for any payment of the principal of or premium, if any, or interest on any series of Securities, the Trustee shall, at the written request and direction of the Company, sell such Permitted Investments as required to restore to cash such amounts as are needed for any such payments. Absent written instructions from the Company, the Trustee shall invest the amounts held in the Indenture Securities Account and each Debt Service Reserve Account (if any) in Permitted Investments described in clause (a) of the definition thereof. (b) Each month (including on the Business Day prior to each Interest Payment Date) and immediately following any withdrawal of monies on deposit in each Indenture Account, the Trustee shall "mark-to-market" each Permitted Investment on deposit in such Indenture Account (including accrued interest) and shall promptly thereafter notify the Company, the Collateral Agent and the Independent Engineer as to the amount of any deficiency or surplus in such Indenture Account as of such date based on such revaluation. Any deficiency shall be funded from the Revenue Account, as specified in Section 3.11(a)(v) of the Intercreditor Agreement. (c) In computing the amount in any Indenture Account (or any other separate account or fund created under the provisions of, and for any purpose provided in, this Indenture), obligations purchased as an investment of monies therein shall be valued at the market value of, including interest on, such obligations. SECTION 4.8. Monies to be Held in Trust. All monies required to be deposited with or paid to the Trustee for the account of any Indenture Account under any provision of this Indenture and all investments made therewith, and all monies of this Indenture and all investments made therewith, and all monies withdrawn from any Indenture Account and held by the Trustee or any Paying Agent, shall be held by the Trustee or the Paying Agent in trust, and while so held shall be held in trust for the Holders of the Securities. SECTION 4.9. Dominion and Control. The Company hereby transfers, assigns and sets over all of its right, title and interest in and to all amounts deposited or held in any Indenture Account and grants the Trustee (acting on behalf of the Holders 29 of the Securities) sole dominion and control over such amounts. Neither of the Mobile Energy Parties shall have the right to withdraw monies from any Indenture Account hereunder. ARTICLE V. COVENANTS Each of the Mobile Energy hereby covenants and agrees that so long as this Indenture is in effect and any Securities remain Outstanding: SECTION 5.1. Payment of Principal, Premium, if any, and Interest; Mobile Energy as Guarantor. (a) The Company shall duly and punctually pay, or cause to be paid, the principal of and premium, if any, and interest on, and all other amounts payable in respect of, the Securities of each series in accordance with their terms and the terms of this Indenture and of the related Series Supplemental Indenture. (b) Mobile Energy agrees to act as guarantor on the Securities, and agrees that the Trustee on behalf of the Holders of the Securities may enforce payment of the principal of and premium, if any, and interest on, and all other amounts payable in respect of, the Securities against Mobile Energy to the same extent as the Trustee may against the Company. SECTION 5.2. Maintenance of Insurance. The Company shall maintain or cause to be maintained on its behalf the required insurance policies in accordance with Schedule 5.2. All property and liability insurance policies shall name the Collateral Agent as an additional insured and as loss payee. If at any time any of the required insurance (other than lenders' policy title insurance) shall no longer be available on commercially reasonable terms and premiums, the Company shall procure substitute insurance coverage that is the most equivalent to the required coverage and that is available on commercially reasonable terms and premiums. SECTION 5.3. Reporting Requirements. The Mobile Energy Parties shall furnish to the Trustee, and to any Holder of a Security or an owner of a beneficial interest therein requesting the same in writing (whether or not either of the Mobile Energy Parties is then required to file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act): (a) As soon as practicable and in any event within sixty (60) days after the end of the first, second and third Fiscal Quarters of each Fiscal Year of Mobile Energy (commencing with the Fiscal Quarter ending September 30, 1995) or, in the case of any such request made after such 30 sixty (60) day period, promptly thereafter, an unaudited consolidated balance sheet of Mobile Energy as of the last day of such Fiscal Quarter and the related consolidated statements of income, cash flows and stockholders' capital of Mobile Energy and (in the case of such second and third Fiscal Quarters) for the portion of the Fiscal Year ending with the last day of such Fiscal Quarter, setting forth (except in the case of any such Fiscal Quarter ending prior to September 30, 1996) in each case in comparative form corresponding unaudited figures from the preceding Fiscal Year, all in accordance with GAAP, and accompanied by a written statement of an Authorized Officer of each of the Mobile Energy Parties to the effect that such financial statements fairly represent such Mobile Energy Party's financial condition and results of operations at and as of their date in accordance with GAAP. (b) As soon as practicable and in any event within 120 days after the end of each Fiscal Year of Mobile Energy (commencing with the Fiscal Year ending December 31, 1995) or, in the case of any such request made after such period, promptly thereafter, (i) a consolidated balance sheet of Mobile Energy as of the end of such Fiscal Year and the related consolidated statements of income, cash flow and stockholders' capital of Mobile Energy during such Fiscal Year setting forth (except in the case of the Fiscal Year ending December 31, 1995) in each case in comparative form corresponding figures from the preceding Fiscal Year, all in accordance with GAAP, accompanied by an audit report thereon of a firm of independent public accountants of recognized national standing, which opinion shall state that such financial statements fairly represent Mobile Energy's consolidated financial condition and results of operations at and as of their date in accordance with GAAP, (ii) a certification of such accountants stating that, in the course of making the examinations necessary for their opinion, they obtained no knowledge, except as specifically stated, of any event or condition that constitutes (or that, upon notice or lapse of time or both, would constitute) an Event of Default, (iii) management's discussion and analysis of financial condition and results of operations prepared in accordance with Item 303 of Regulation S-K under the Securities Act and (iv) such other matters as determined by the Mobile Energy Parties. (c) With each annual or quarterly consolidated financial statement furnished pursuant to Section 5.3(a) or 5.3(b), an Officer's Certificate of the Company certifying as to (i) the aggregate amount of all Restricted Payments made by the Company and (ii) the entering into by the Company of any additional Project Documents or of any amendments, replacements or modifications of, or any notices 31 of termination received by either of the Mobile Energy Parties with respect to, any of the Project Documents (together with copies of any such additional Project Documents or amendments, replacements, modifications or notices attached to such Officer's Certificate), in the case of clauses (i) and (ii) above, during the period covered by such financial statement. (d) Not less often than annually, a brief certificate (complying with the provisions of Section 314(a)(4) of the Trust Indenture Act) from the principal executive officer, principal financial officer or principal accounting officer of each of the Mobile Energy Parties as to such officer's knowledge of such Mobile Energy Party's compliance with all conditions and covenants under this Indenture (or, if either of the Mobile Energy Parties is not so in compliance, a description of any such non-compliance). For purposes of this paragraph, such compliance shall be determined without regard to any period of grace or requirement of notice provided under this Indenture. (e) Each of the following items: (i) promptly after any Authorized Officer of either of the Mobile Energy Parties learns or shall become aware of the occurrence thereof, written notice of the occurrence of any event or condition that constitutes (or that, upon notice or lapse of time or both, would constitute) an Event of Default, specifically stating that such event or condition has occurred and describing it and the action being or proposed to be taken with respect thereto; (ii) written notice of the occurrence of any Event of Eminent Domain or any Event of Loss and an Officer's Certificate of the Company setting forth the details thereof and the action being or proposed to be taken with respect thereto; (iii) written notice of the occurrence of any event giving rise, or reasonably expected to give rise, to a claim under any insurance policy maintained in respect of the Energy Complex in an amount greater than $5,000,000; (iv) promptly after any Authorized Officer of either of the Mobile Energy Parties learns or shall become aware of the occurrence thereof, written notice of the occurrence of any event or condition that constitutes a material violation by either of the Mobile Energy Parties of any Environmental Requirement; and 32 (v) any other information required to be furnished by the Mobile Energy Parties to the Tax-Exempt Trustee pursuant to the Tax-Exempt Security Documents. (f) If and for so long as the Company has deposited a Southern Guaranty into any Reserve Account Security Account pursuant to the terms of this Indenture or the other Security Documents, the Company shall cause Southern to provide to the Collateral Agent or the Trustee (as the case may be) no later than forty-five (45) days after the end of each fiscal quarter of Southern, an Officer's Certificate of Southern certifying as to the determination of whether or not the Southern Credit Standard has been satisfied as of the end of such fiscal quarter. SECTION 5.4. Maintenance of Existence and Governmental Approvals; Rate Regulation. (a) Each of the Mobile Energy Parties shall at all times preserve and maintain in full force and effect (i) its existence and form as a limited liability company or corporation (as the case may be) and its good standing under the laws of its state of organization or incorporation (as the case may be) and (ii) its qualification to do business in each jurisdiction in which the character of the properties owned or leased by it or in which the transaction of its business as conducted or proposed to be conducted makes such qualification necessary. (b) Each of the Mobile Energy Parties shall obtain and maintain in full force and effect all Governmental Approvals (including maintaining compliance with Environmental Requirements) except where the failure to obtain and maintain in full force and effect such Governmental Approvals or the noncompliance with such Environmental Requirements would not have a Material Adverse Effect. (c) Each of the Mobile Energy Parties shall preserve and maintain good and marketable title to its properties and assets (subject to no liens other than Permitted Liens). (d) Each of the Mobile Energy Parties shall pay all taxes and other governmental charges except where such taxes or charges are being contested in a Good Faith Contest and where the failure to pay such taxes or charges does not affect the enforceability of the Project Documents. (e) Neither of the Mobile Energy Parties shall be subject to regulation as to rates with respect to the provision of Processing Services, nor shall the revenues or other amounts received or receivable by the Company for the use of Processing Services or other services and facilities of the Energy Complex be subject to regulation, in either case by any Governmental Authority having jurisdiction over either of the Mobile Energy 33 Parties under Federal, state or local law, unless the Company shall (i) be contesting such regulation in a Good Faith Contest and (ii) have provided a Revenue Sufficiency Certification (based upon and after giving effect to such regulation) to the Trustee (A) within fifteen (15) days following the issuance of a binding order (which shall be final and not be subject to review on appeal) of such Governmental Authority to the effect that either of the Mobile Energy Parties, or such revenues or other amounts, shall be subject to such regulation and (B) within fifteen (15) days following any amendment or other modification of such order by, or the issuance of another binding order (which shall be final and not be subject to review on appeal) of, or the taking of other action relating to any such order that would reasonably be expected to have a Material Adverse Effect by, such Governmental Authority (or another Governmental Authority having jurisdiction over either of the Mobile Energy Parties under Federal, state or local law) affecting such regulation. SECTION 5.5. Nature of Business. Neither of the Mobile Energy Parties shall engage in any business other than the ownership, financing, operation, maintenance and improvement of the Energy Complex as contemplated by the Project Documents. If Mobile Energy acquires more than nominal assets (excluding its ownership of equity interests in the Company and its rights under the Southern Master Tax Sharing Agreement), Mobile Energy shall immediately grant a first priority security interest therein to the Collateral Agent on behalf of the Senior Secured Parties on the same conditions as set forth in the Mortgage and the other Security Documents. SECTION 5.6. Operation and Maintenance. The Company shall, and shall cause the Operator to, use, maintain and operate the Energy Complex and the Site in compliance with Prudent Plant Operating Standards and the material provisions of all relevant Project Documents, except where noncompliance would not have a Material Adverse Effect. SECTION 5.7. Compliance with Law and Organizational Documents. (a) Each of the Mobile Energy Parties shall comply with, and the Company shall ensure that the Energy Complex is maintained and operated in compliance with, and shall make such alterations to the Energy Complex and the Site as may be required for compliance with, all applicable Governmental Approvals and all material applicable Laws, except where noncompliance would not have a Material Adverse Effect. (b) Each of the Mobile Energy Parties shall comply with all material provisions of its Articles of Organization or Articles of Incorporation (as the case may be). SECTION 5.8. Prohibition on Fundamental Changes and Disposition of Assets. (a) Neither of the Mobile Energy Parties 34 shall enter into any transaction of merger or consolidation, change its form of organization, liquidate or dissolve itself (or suffer any liquidation or dissolution). Neither of the Mobile Energy Parties shall purchase or otherwise acquire all or substantially all of the assets of any other Person. (b) Neither of the Mobile Energy Parties shall amend, modify or otherwise change its Articles of Organization or its Articles of Incorporation (as the case may be) in any manner that would reasonably be expected to have a Material Adverse Effect or that alters or supersedes any of the provisions of such organizational documents concerning (i) nature of business, (ii) the requirement of an independent director (with respect to Mobile Energy), (iii) the Manager of the Company, (iv) unanimous votes for certain matters, (v) commingling of funds and (vi) maintaining separateness and observing corporate or other entity formalities. (c) Except as contemplated by the Financing Documents, neither of the Mobile Energy Parties shall sell, lease (as lessor) or transfer (as transferor) any property or assets material to the operation of the Energy Complex except in the ordinary course of business to the extent that such property is worn out or is no longer useful or necessary in connection with the operation of the Energy Complex; provided, however, that to the extent the aggregate fair market value of all sales, leases and transfers in any Fiscal Year exceeds $2,000,000 (multiplied by the GDPIPD Factor), neither of the Mobile Energy Parties shall be permitted to sell, lease or transfer any of such property or assets during the remainder of such Fiscal Year unless the Company delivers an Officer's Certificate to the Trustee and the Collateral Agent (together with an Independent Engineer Confirmation) to the effect that such property or assets is worn out or is no longer useful or necessary in connection with the operation of the Energy Complex; provided further, however, that notwithstanding anything in this Section 5.8 to the contrary, Mobile Energy shall be permitted to transfer its ownership interests in the Company, subject only to Section 8.1(k). SECTION 5.9. Transactions with Affiliates. Neither of the Mobile Energy Parties shall enter into or permit the Operator to enter into any Contract related to the Energy Complex with any of its Affiliates, other than (a) the Project Documents entered into as of the Closing Date and, in the case of Mobile Energy, the Southern Master Tax Sharing Agreement, (b) transactions in the ordinary course of business on fair and reasonable terms no less favorable to either of the Mobile Energy Parties or to the Operator (as the case may be) than either of the Mobile Energy Parties or the Operator (as the case may be) would obtain in an arm's length transaction with a Person that is not an Affiliate thereof (it being understood that transactions involving the provision of goods or services to either of the Mobile Energy 35 Parties or the Operator in exchange for reimbursement of costs and expenses (including reasonably allocated overhead expenses) shall be deemed to be in compliance with this Section 5.9), (c) transactions or Contracts involving Affiliate Subordinated Debt (to the extent such Affiliate Subordinated Debt constitutes Permitted Indebtedness) and (d) transactions or Contracts involving the provision of goods or services to either of the Mobile Energy Parties in exchange for Subordinated Fees. SECTION 5.10. Amendments to Project Documents. (a) The Company shall not terminate, amend, replace or otherwise modify (other than any such amendments or modifications that are immaterial or any such replacement entered into in satisfaction of the Event of Default Alternative Agreement Requirements) any of the Project Contracts to which it is a party (other than any such Project Contracts that are immaterial), unless the Company delivers to the Trustee an Officer's Certificate, together with an Independent Engineer Confirmation, certifying that (i) such termination, amendment, replacement, modification or addition would not reasonably be expected to have a Material Adverse Effect or (ii) such termination, amendment, replacement, modification or addition is reasonably required to comply with Law or any Governmental Approval and would not have a Material Adverse Effect in light of the consequences of not terminating, amending, replacing, modifying or adding such Project Contract. Promptly upon the execution of any replacement or additional Project Contract, the Company shall take all actions necessary to grant the Collateral Agent (A) an assignment of the Company's rights under such Project Contract (including causing each Project Participant (other than the Mobile Energy Parties) party thereto to execute and deliver to the Collateral Agent a Consent to Assignment having terms no less favorable to the Collateral Agent and the Holders than (1) in the case of a replacement Project Contract, the Consent to Assignment delivered to the Collateral Agent in respect of the Project Contract being replaced and (2) in the case of an additional Project Contract, the form of Consent to Assignment attached as Exhibit ( ) to the Intercreditor Agreement) and (B) a Lien on all property interests acquired by the Company in connection therewith (perfected to the extent such Lien can be perfected by filing a mortgage or fixture filing under local law or a financing statement under the Uniform Commercial Code, provided that no such assignment or Lien shall be required with respect to equipment financed with purchase money obligations permitted under this Indenture if prohibited by the terms of such purchase money obligations). (b) Without the consent of the Holders of a majority in aggregate principal amount of the Outstanding Securities, the Mobile Energy Parties shall not terminate, amend, replace or otherwise modify any of the Financing Documents to which neither the Collateral Agent nor the Trustee is a party (other than the Working Capital Facility) unless the Company delivers to the 36 Trustee an Officer's Certificate, together with an Independent Engineer Confirmation, certifying that such termination, amendment, replacement or modification would not reasonably be expected to reduce the likelihood of payment on the Outstanding Securities or otherwise materially and adversely affect the Holders of the Outstanding Securities. SECTION 5.11. Performance Under Project Contracts. The Company shall perform all covenants, undertakings, stipulations and provisions contained in each Project Contract to which neither the Trustee nor the Collateral Agent is a party, except to the extent that the failure to so perform would not reasonably be expected to have a Material Adverse Effect. SECTION 5.12. Annual Budget. The Company shall submit to the Independent Engineer, in draft form and detailed by month, an operating plan and budget with respect to the Energy Complex (a) on or prior to the Closing Date covering the period from the Closing Date through the end of the Fiscal Year in which the Closing Date occurs (unless such period consists of less than five (5) months, in which case through the end of the immediately succeeding Fiscal Year) and (b) sixty (60) days prior to the commencement of each Fiscal Year commencing after the Closing Date covering such Fiscal Year (each such budget, an "Annual Budget"). Each Annual Budget shall specify the estimated project revenues, the estimated rates and revenues for each category of Processing Services, all Operation and Maintenance Costs and a maintenance plan covering all projected Maintenance Expenditures required during a period of seventeen (17) Fiscal Quarters commencing with the first Fiscal Quarter covered by such Annual Budget (the "Maintenance Plan"). Each Annual Budget shall also include, solely for informational purposes and based upon projections prepared by the Company in accordance with Section 1.15, the projected Senior Debt Service Coverage Ratio for the Fiscal Year then ending and the immediately succeeding Fiscal Year. The Independent Engineer shall provide its comments, if any, to the Company within thirty (30) days of its receipt of the proposed Annual Budget and the Company shall incorporate the Independent Engineer's reasonable suggestions into a final Annual Budget, which shall then be provided to the Collateral Agent. If, after reasonable efforts, the Company and the Independent Engineer cannot agree on a final Annual Budget, the Company may invoke the Third Party Engineer Dispute Resolution as set forth in Section 11.2 of the Intercreditor Agreement. If a final Annual Budget for a given Fiscal Year is not established by the process described above by the end of the prior Fiscal Year, the Annual Budget for such Fiscal Year shall, until a final Annual Budget is so established, be deemed to consist of the previous year's Annual Budget, escalated at the GDPIPD for the previous Fiscal Year; provided, however, that with respect to any Fiscal Year that a final Annual Budget has not been established, the Company may, with the Independent Engineer's reasonable approval, 37 amend the prior Fiscal Year's Annual Budget to make reasonable and adequate provision for scheduled Maintenance Expenditures. The Company shall operate and maintain the Energy Complex, or cause the Energy Complex to be operated and maintained, in accordance with such final Annual Budget as approved by the Independent Engineer, other than deviations resulting from dispatch and other operating requirements, provided that any deviations that would reasonably be expected to result in a Material Adverse Effect shall be approved by the Independent Engineer as being reasonably necessary to comply with Project Contracts or for operation of the Energy Complex in compliance with Prudent Plant Operating Standards, and provided further that withdrawals from the Operating Account in any Fiscal Year not in excess of one hundred ten percent (110%) of the aggregate amount of Operation and Maintenance Costs (other than Maintenance Expenditures) set forth in the Annual Budget for such Fiscal Year shall be deemed not to reasonably be expected to have a Material Adverse Effect. Each Annual Budget and the Maintenance Plan may be amended, restated, supplemented or otherwise modified from time to time, at the request of the Company with the approval of the Independent Engineer. SECTION 5.13. Insurance Reports. Not later than thirty (30) days prior to the expiration of any insurance required to be maintained by the Company pursuant to the Project Documents, the Company shall submit to the Trustee an Officer's Certificate certifying that such insurance (a) has been renewed or replaced and will continue in full force and effect and all premiums for such renewal or replacement term have been fully paid, together with evidence of such renewal or replacement, or (b) will not be required to be maintained pursuant to the Project Documents following its expiration. Within thirty (30) days after the end of each Fiscal Year, the Company shall submit to the Trustee an Officer's Certificate (accompanied by a certificate signed by the Independent Insurance Advisor) (i) listing all insurance being carried by, or on behalf of, the Company pursuant to the Project Documents and (ii) certifying that all insurance required to be maintained pursuant to the Project Documents is in full force and effect and all premiums therefor have been fully paid. SECTION 5.14. Liens. Neither of the Mobile Energy Parties shall create or suffer to exist or permit any Lien upon or with respect to any of its properties other than Permitted Liens. SECTION 5.15. Permitted Investments. Neither of the Mobile Energy Parties shall make any investment other than Permitted Investments. SECTION 5.16. Indebtedness. Neither of the Mobile Energy Parties shall create or incur or suffer to exist any Debt or lease obligations other than Permitted Indebtedness. 38 SECTION 5.17. Debt for Modifications; Replacement Debt; Refunding Debt. The Company may incur Permitted Indebtedness to be used for Required Modifications, Optional Modifications, Replacement Debt and Refunding Debt provided that: (a) the Company shall not issue Senior Debt for Required Modifications or Optional Modifications unless (i) such Senior Debt is issued under the Indenture or the Tax- Exempt Indenture, (ii) the Company delivers to the Trustee an Officer's Certificate (together with an Independent Engineer Confirmation) certifying that (A) based upon projections prepared by the Company in accordance with Section 1.15, the average annual Senior Debt Service Coverage Ratio (after giving effect to the proposed issuance of such Senior Debt) through the final maturity date of the Outstanding Securities is projected to be equal to or greater than the lesser of (1) the then projected average annual Senior Debt Service Coverage Ratio (without giving effect to such proposed issuance) and (2) 1.25 to 1.0 (in the case of Required Modifications) and 1.5 to 1.0 (in the case of Optional Modifications), (B) in the case of Optional Modifications, based upon projections prepared by the Company in accordance with Section 1.15, the minimum annual Senior Debt Service Coverage Ratio (after giving effect to such proposed issuance) in each year through the final maturity date of the Outstanding Securities is projected to be equal to or greater than the lesser of (1) the then projected minimum annual Senior Debt Service Coverage Ratio (without giving effect to such proposed issuance) and (2) 1.35 to 1.0 and (C) (1) there will be no fundamental change in the use of the Energy Complex as a result of such proposed issuance, (2) the proceeds of such proposed issuance, together with proceeds of additional equity funds provided by the Company or of Subordinated Debt, will be sufficient for the proposed purpose of such proposed issuance and (3) in the case of Optional Modifications, the proposed purpose of such proposed issuance will not impair the operations or reliability of the Energy Complex, (iii) the assets to be financed with such proposed issuance (and all tangible and intangible rights related to the construction, operation or ownership of such assets) will be subject to the Lien of the Security Documents and (iv) in the case of Optional Modifications, the Company provides to the Trustee a letter from two of the Rating Agencies (then currently rating the Outstanding Securities) confirming that the issuance of such Senior Debt and the obligations to be undertaken by the Company in connection with the facilities to be constructed with the proceeds of such proposed issuance will not, solely as a result thereof, result in any downgrading of the rating on the Outstanding Securities. (b) the Company shall not issue Senior Debt for 39 Replacement Debt or Refunding Debt unless (i) such Senior Debt is issued under the Indenture or the Tax-Exempt Indenture, (ii) (A) monies in an amount sufficient to effect payment of the principal of and premium, if any, and interest on the Senior Debt to be redeemed are held in trust or (B) U.S. Government Obligations in an amount sufficient and having such terms and qualifications so as to defease the Senior Debt to be redeemed in accordance with the Indenture or the Tax-Exempt Indenture (as the case may be) are held in trust, (iii) in the case of Replacement Debt, the Company provides an Officer's Certificate to the Trustee stating that (A) based upon projections prepared by the Company in accordance with Section 1.15, the average annual Senior Debt Coverage Ratio (after giving effect to the proposed issuance of such Senior Debt and the repayment or defeasance of any Tax-Exempt Indenture Securities occasioned thereby) through the final maturity date of the Outstanding Securities is projected to be equal to or greater than the lesser of (1) the then projected average annual Senior Debt Service Coverage Ratio (without giving effect to such proposed issuance) and (2) 1.25 to 1.0 and (iv) in the case of Refunding Debt, the Company delivers to the Trustee an Officer's Certificate (together with an Independent Engineer Confirmation) certifying that, based upon projections prepared by the Company in accordance with Section 1.15, (A) the projected Senior Debt Service Requirement (after giving effect to the proposed issuance of such Senior Debt) will not exceed the projected Senior Debt Service Requirement immediately prior to such proposed issuance by more than ten percent (10%) for any Fiscal Year through the final maturity of the Outstanding Securities and (B) either (1) the projected average Senior Debt Service Requirement (after giving effect to the proposed issuance of such Senior Debt) will not exceed the average Senior Debt Service Requirement (without giving effect to such proposed issuance) or (2) the minimum annual Senior Debt Service Coverage Ratio (after giving effect to the proposed issuance of such Senior Debt) in each year through the final maturity date of the Outstanding Securities is projected to be equal to or greater than 1.35 to 1.0 and the projected average annual Senior Debt Service Coverage Ratio (after giving effect to the proposed issuance of such Senior Debt) through the final maturity date of the Outstanding Securities is projected to be equal to or greater than 1.5 to 1.0. (c) the Company shall not issue Subordinated Debt for Required Modifications unless the Company delivers to the Trustee an Officer's Certificate (together with an Independent Engineer Confirmation) certifying that, based upon projections prepared by the Company in accordance with Section 1.15, the average Total Debt Service Coverage Ratio (after giving effect to the proposed issuance of such 40 Subordinated Debt) through the final maturity of the Outstanding Securities is projected to be (i) equal to or greater than 1.15 to 1.0 or (ii) equal to or greater than 1.0 to 1.0 if the Trustee does not, within sixty (60) days of notice to the holders of the Senior Debt setting forth a description of the Required Modification to be made with the proceeds of such Subordinated Debt and such projected average Total Debt Service Coverage Ratio, receive a written notice from the Collateral Agent attaching Senior Creditor Certificates representing a majority in principal amount of the Combined Exposure not to permit such proposed issuance; provided, however, that if the Company proposes to issue Subordinated Debt for Required Modifications other than as described in clause (ii) above, and such projected average Total Debt Service Coverage Ratio (after giving effect to such proposed issuance) is less than 1.25 to 1.0, such additional Subordinated Debt shall not be issued unless the Company provides proceeds of additional equity funds or of Affiliate Subordinated Debt such that the ratio of such additional equity (including the Affiliate Subordinated Debt) to total funds used for the Required Modifications is equal to or greater than the ratio of the Company's equity to total capitalization on the Closing Date. (d) the Company shall not issue Subordinated Debt for Optional Modifications unless (i) the Company delivers to the Trustee an Officer's Certificate (together with an Independent Engineer Confirmation) certifying that such proposed Optional Modifications (A) are not reasonably likely to result in a Material Adverse Effect, (B) are technically feasible and (C) are not reasonably expected to materially and adversely affect the operation or reliability of the Energy Complex and (ii) the Company provides to the Trustee a letter from two Rating Agencies (then currently rating the Outstanding Securities) confirming that the proposed issuance of such Subordinated Debt and the obligations to be undertaken by the Company in connection with the facilities to be constructed with the proceeds of such Subordinated Debt will not, solely as a result thereof, result in any downgrading on the Outstanding Securities. SECTION 5.18. Application of Proceeds from Sale of Securities. (a) Promptly upon receipt by the Company of the proceeds from the sale of the First Mortgage Bonds, the Company shall (i) apply $190,000,000 to repay to Southern a bridge loan in the principal amount of $190,000,000, (ii) apply $( ) to return to Southern certain paid-in capital, (iii) apply $( ) to repay to Southern Electric amounts advanced to pay certain costs associated with the acquisition of the Energy Complex from Scott and certain Project Costs incurred in accordance with the Capital Budget, (iv) transfer $( ) to the Collateral Agent for deposit into the Completion Account to finance Project Costs 41 in accordance with the Capital Budget, (v) apply $( ) for the payment of certain development and start-up costs, (vi) apply $( ) to pay certain financing costs incurred in connection with the transactions contemplated by the Financing Documents, including certain financing costs incurred in connection with the offering of the Tax-Exempt Bonds, and (vi) apply $( ) to pay breakage costs in connection with the termination of the interest hedging arrangements entered into in connection with the acquisition of the Energy Complex from Scott. (b) Promptly upon receipt by the Company of the proceeds from any sale of Securities (other than the First Mortgage Bonds) of any series (net of any underwriting commission) for purposes of (i) financing Optional Modifications or Required Modifications, the Company shall deposit all such proceeds into the Optional Modifications Subaccount or the Required Modifications Subaccount (as the case may be) for application in accordance with the Intercreditor Agreement or (ii) Replacement Debt or Refunding Debt (as the case may be), the Company shall apply such proceeds for such purposes. SECTION 5.19. Restricted Payments. (a) The Company shall not make any Restricted Payments unless, in the case of any Restricted Payment proposed to be made on a Distribution Date, the Company delivers an Officer's Certificate to the Collateral Agent certifying that as of such Distribution Date (i) no Event of Default has occurred and is continuing, and no breach of this Section 5.19 then exists (whether or not such breach is a matured Event of Default), (ii) the Company is not insolvent and would not be rendered insolvent by the making of such proposed Restricted Payment and no Bankruptcy Event has occurred and is continuing in respect of either of the Mobile Energy Parties, (iii) no ESA Blockage Event with respect to the Pulp Mill Owner or its Energy Services Agreement or its Mill has occurred and is continuing, (iv) the provisions of the Indenture, the Intercreditor Agreement and the Tax-Exempt Indenture relating to the funding of the Accounts established thereunder have been complied with as of such Distribution Date, and amounts on deposit in the Debt Service Reserve Account are equal to the Debt Service Reserve Account Required Balance, amounts on deposit in the Tax-Exempt Debt Service Reserve Account are equal to the Tax- Exempt Debt Service Reserve Account Required Balance and amounts on deposit in each of the other Accounts are equal to the then required balances, (v) no Mill Owner is then exercising Mill Owners Step-In Rights and (vi) neither of the Mobile Energy Parties shall be subject to regulation as to rates, nor shall the revenues or other amounts received or receivable by the Company for the use of Processing Services or other services and facilities of the Energy Complex be subject to regulation, in either case by any Governmental Authority having jurisdiction over either of the Mobile Energy Parties under Federal, state or local law, unless the Company has provided a Revenue Sufficiency 42 Certification (based upon and after giving effect to such regulation) to the Trustee upon the earlier of (A) the issuance of a binding order (which shall be final and not subject to review on appeal) of such Governmental Authority to the effect that either of the Mobile Energy Parties, or such revenues or other amounts, shall be subject to such regulation and (B) the application of regulation as to the rates, or revenues or other amounts, received or receivable by the Company, including the imposition of any order or other action by a Governmental Authority to the effect that revenues and other amounts received or receivable by the Company shall be subject to refund. (b) The Company shall not make any Restricted Payments permitted pursuant to Section 5.19(a) on any Distribution Date unless the Company provides an Officer's Certificate to the Collateral Agent certifying that as of such Distribution Date (i) the average Senior Debt Service Coverage Ratio for the two semi- annual payment periods immediately preceding such Distribution Date was equal to at least 1.25 to 1 and (ii) based upon projections prepared by the Company in accordance with Section 1.15 (which projections shall, at the request of the Collateral Agent be reviewed by the Independent Engineer if the Senior Debt Service Coverage Ratio referred to below is less than 1.30 to 1), the average Senior Debt Service Coverage Ratio for the current semi-annual payment period and the next succeeding semi-annual payment period is projected to be at least 1.25 to 1; provided, however, that notwithstanding the requirements of this Section 5.19(b), the Company shall be permitted to make Restricted Payments solely to fund an Income Tax Deficiency if the Company provides an Officer's Certificate to the Collateral Agent stating that (A) the average Senior Debt Service Coverage Ratio for the two semi-annual payment periods immediately prior to the Distribution Date was equal to at least 1.10 to 1 and (B) based upon projections prepared by the Company in accordance with Section 1.15, the average Senior Debt Service Coverage Ratio for the current semi-annual payment period and the next succeeding semi-annual payment period is projected to be at least 1.10 to 1; provided further, however, that the historical tests set forth in clause (i) of this Section 5.19(b) and in clause (A) of the immediately preceding proviso (1) are not required to be satisfied on the first Distribution Date following the Closing Date and (2) are required to be satisfied only for the semi- annual payment immediately preceding such Distribution Date on the second Distribution Date following the Closing Date. SECTION 5.20. Casualty Proceeds; Eminent Domain Proceeds. The Company shall cause all Casualty Proceeds and Eminent Domain Proceeds to be deposited into the Loss Proceeds Account and applied in accordance with the provisions of this Indenture and the Intercreditor Agreement. SECTION 5.21. Benefit Plan Liabilities. Neither of the 43 Mobile Energy Parties shall, nor shall they permit any Person who is a member of a controlled group of corporations, or a group of trades or businesses under common control with the Company (within the meaning of Section 414 of the Code) to, (a) fail to fulfill its obligations under or to comply in any material respect with the requirements of ERISA or the Code with respect to any employee benefit plans, (b) seek a waiver of the minimum funding standard of Section 412 of the Code, (c) fail to make any contribution or payment to or in respect of any employee benefit plan required to be made by Law or by the terms of such plan, (d) make any amendment to any employee benefit plan that has resulted or could result in the imposition of a lien or the posting of a bond or other security under ERISA or the Code or (e) incur any liability under Title IV of ERISA other than a liability to the Pension Benefit Guaranty Corporation for premiums under Section 4007 of ERISA, if as a result of such event or conditions set forth in clauses (a) through (e) above, together with all such other events and conditions, either of the Mobile Energy Parties or any other member of such controlled group shall incur or be reasonably likely to incur a liability that is material in relation to the financial position of such Mobile Energy Party. ARTICLE VI. REDEMPTION AND PREPAYMENT OF SECURITIES SECTION 6.1. Applicability of Article. Securities of any series that are subject to redemption or prepayment before their Stated Maturity (or, if the principal of the Securities of any series is payable in installments, the Stated Maturity of the final installment of the principal thereof) shall be redeemed or prepaid in accordance with their terms and (except as otherwise specified in the Series Supplemental Indenture creating such series) in accordance with this Article VI. SECTION 6.2. Election to Redeem or Prepay; Notice to Trustee. The election or requirement of the Company to redeem or prepay any Securities otherwise than through a Sinking Fund shall be evidenced by a Company Order. If the Company determines or is required to redeem or prepay any Securities, the Company shall, at least fifteen (15) days prior to the date upon which notice of redemption or prepayment is required to be given to the Holders pursuant to Section 6.4 hereof (unless a shorter notice period shall be satisfactory to the Trustee), deliver to the Trustee a Company Order specifying the date on which such redemption or prepayment shall occur (a "Redemption Date" or "Prepayment Date," as the case may be) and the series and principal amount of Securities to be redeemed or prepaid. In the case of any redemption or prepayment of Securities (a) prior to the expiration of any restriction on such redemption or prepayment provided in the terms of such Securities, the Series Supplemental 44 Indenture relating thereto or elsewhere in this Indenture or (b) pursuant to an election of the Company that is subject to a condition specified in the terms of such Securities or in the Series Supplemental Indenture relating thereto, the Company shall furnish the Trustee with an Officer's Certificate and Opinion of Counsel evidencing compliance with such restriction or condition. SECTION 6.3. Optional Redemption; Mandatory Redemption; Prepayment; Selection of Securities to Be Redeemed or Prepaid. (a) The Securities of any series shall be subject to redemption from time to time at the option of the Company only as provided in the Series Supplemental Indenture relating thereto. (b) Unless otherwise provided in a Series Supplemental Indenture, all Outstanding Securities shall be redeemed prior to maturity, as a whole, at a redemption price equal to the principal amount thereof, together with any interest on the principal amount of the Securities accrued to the Redemption Date, upon an Event of Loss or an Event of Eminent Domain if (i) the determination is made in accordance with Section 3.10(c) of the Intercreditor Agreement that neither the Energy Complex nor any portion thereof can be rebuilt, repaired, restored or replaced with a Replacement Facility (subject to the conditions specified in the Intercreditor Agreement) or that the Casualty Proceeds or the Eminent Domain Proceeds (as the case may be) in respect thereof, together with other monies that are available to the Company for such rebuilding, repair, restoration or replacement, are not sufficient to permit such rebuilding, repair, restoration or replacement or (ii) if (A) the monies on deposit in the Loss Proceeds Account, together with all other monies available to the Company, are sufficient to redeem all Senior Debt, (B) all or substantially all of the Energy Complex is destroyed or taken, (C) the Company elects not to rebuild, repair, restore or replace the Energy Complex and (D) the Company provides an Officer's Certificate to the Trustee and the Collateral Agent certifying that the Company is not otherwise required under the Master Operating Agreement or the Lease to rebuild, repair, restore or replace the Energy Complex, or to apply Loss Proceeds to the rebuilding, repairing, restoration or replacement or the Energy Complex (which certification shall be confirmed by an Opinion of Counsel to such effect). All Casualty Proceeds or Eminent Domain Proceeds (as the case may be) received by the Trustee from the Collateral Agent pursuant to Section 6.2(a) of the Intercreditor Agreement with respect to such Event of Loss or Event of Eminent Domain (as the case may be) shall be deposited into the Indenture Securities Redemption Subaccount and applied by the Trustee to the redemption of all Outstanding Securities pursuant to this Section 6.3(b). Any redemption pursuant to this Section 6.3(b) shall be made within ninety (90) days after the receipt by the Trustee of the Casualty Proceeds or Eminent Domain Proceeds (as the case may be) 45 from the Collateral Agent. (c) The Outstanding Securities shall be partially redeemed, ratably among all outstanding series and maturities, prior to maturity at a redemption price equal to the principal amount thereof, together with any interest on the principal amount of the Outstanding Securities accrued to the Redemption Date, upon completion of the rebuilding, repair, restoration or replacement of the Energy Complex following an Event of Loss or an Event of Eminent Domain where a determination is made that the Energy Complex or any portion thereof can be rebuilt, repaired, restored or replaced with a Replacement Facility and that the Company has sufficient monies available for such rebuilding, repair, restoration or replacement. The foregoing provisions of this Section 6.3(c) may be altered in a Series Supplemental Indenture, but such altered provisions shall not be effective while any Securities Outstanding as of the date of such Series Supplemental Indenture remain outstanding. The aggregate amount of Securities to be redeemed shall be equal to the amount made available to the Trustee for such purpose pursuant to Section 6.2(b) of the Intercreditor Agreement, which (subject to certain exceptions specified therein) shall be equal to the ratable share of the Securities (based upon the principal amount of then Outstanding Senior Securities plus, if the committed availability under the Working Capital Facility was reduced in connection with such Event of Loss or Event of Eminent Domain (as the case may be), the lesser of (i) the principal amount of Working Capital Loans payable as a result of such reduction and (ii) the principal amount of Working Capital Loans then outstanding thereunder) of the amount by which all of the Casualty Proceeds or Eminent Domain Proceeds (as the case may be) received in respect of such Event of Loss or Event of Eminent Domain exceeds the total cost of such rebuilding, repair, restoration or replacement. All Casualty Proceeds or Eminent Domain Proceeds so made available to the Trustee shall be deposited into the Indenture Securities Redemption Subaccount and applied by the Trustee to the redemption of such Securities pursuant to this Section 6(c); provided, however, that if the amount by which all of the Casualty Proceeds or Eminent Domain Proceeds (as the case may be) in respect of such Event of Loss or Event of Eminent Domain exceeds the total cost of such rebuilding, repair, restoration or replacement is less than $3,000,000, then the amount of such excess shall be transferred pursuant to the last sentence of Section 6.2(b) of the Intercreditor Agreement and, to the extent that any amounts are made available to the Trustee pursuant to clause (ii) of such last sentence, the Trustee shall deposit such amounts into the Indenture Securities Principal Subaccount to be applied to the payment or redemption of Securities at the earliest date permitted by the terms thereof. 46 Any redemption pursuant to this Section 6.3(c) shall be made within ninety (90) days after the receipt by the Trustee of such Casualty Proceeds or Eminent Domain Proceeds (other than such proceeds transferred to the Indenture Securities Redemption Subaccount) (as the case may be). (d) Except as otherwise specified herein or in the Series Supplemental Indenture relating to the Securities of a series, if less than all the Securities of such series are to be redeemed or prepaid pursuant to Section 6.3(a), the particular Securities of such series to be redeemed or prepaid shall be selected by the Trustee from the Outstanding Securities of such series not previously called for redemption or prepayment in whole, by such method (including by lot) as the Trustee shall deem fair and appropriate, which may provide for the solicitation of portions (equal to the minimum authorized denomination for Securities of that series or any integral multiple thereof) of the principal amount of Securities of such series of a denomination larger than the minimum authorized denomination for Securities of that series. (e) The Trustee shall promptly notify the Company in writing of the Securities selected for redemption or prepayment and, in the case of any Securities to be redeemed or prepaid in part, the principal amount thereof to be redeemed or prepaid. (f) For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption or prepayment of Securities shall relate, in the case of any Securities redeemed or prepaid or to be redeemed or prepaid only in part, to the portion of the principal amount of such Securities that has been or is to be redeemed or prepaid. SECTION 6.4. Notice of Redemption or Prepayment. Except as otherwise specified in the Series Supplemental Indenture relating to the Securities of a series to be redeemed or prepaid, notice of redemption or prepayment (including any Sinking Fund redemption pursuant to Article VII hereof) shall be given in the manner provided in Section 1.6 to the Holders of Securities of such series to be redeemed or prepaid at least thirty (30) days but not more than sixty (60) days prior to the Redemption Date or Prepayment Date (as the case may be). All notices of redemption or prepayment shall state: (a) the Redemption Date or Prepayment Date (as the case may be); (b) the premium payable on redemption or prepayment, if any; (c) if less than all the Outstanding Securities of any series are to be redeemed or prepaid in whole, (i) the 47 particular Securities of such series to be redeemed or prepaid in whole, (ii) the portion of the principal amount of each Security of such series to be redeemed or prepaid in part and (iii) that, on and after the Redemption Date or Prepayment Date (as the case may be), upon surrender of such Security, a new Security or Securities of such series in principal amount equal to the remaining unpaid principal amount thereof will be issued; (d) that on the Redemption Date or Prepayment Date (as the case may be), interest thereon will cease to accrue on and after such date; (e) the Place or Places of Payment where such Securities are to be surrendered for payment of the amount in respect of such redemption or prepayment; and (f) that such redemption is for a Sinking Fund, if such is the case. Notice of redemption of Securities to be redeemed at the election of the Company shall be given by the Company or, at the Company's request, by the Trustee in the name and at the expense of the Company. The Company shall provide the Trustee with a copy of the form of notice of redemption or prepayment of the Securities at the time the Company delivers to the Trustee the Company Order relating to such redemption or prepayment pursuant to Section 6.2 hereof. SECTION 6.5. Securities Payable on Redemption Date or Prepayment Date. Notice of redemption or prepayment (as the case may be) having been given as aforesaid, and the conditions, if any, set forth in such notice having been satisfied, the Securities or portions thereof so to be redeemed or prepaid shall, on the Redemption Date or Prepayment Date (as the case may be), become due and payable, and from and after such date such Securities or portions thereof shall cease to bear interest. Upon surrender of any such Security for redemption or prepayment in accordance with such notice, an amount in respect of such Security or portion thereof shall be paid as provided therein; provided, however, that any payment of interest on any Security the Stated Maturity of which payment is on or prior to the Redemption Date or Prepayment Date (as the case may be) shall be payable to the Holder of such Security, or one or more Predecessor Securities, registered as such at the close of business on the related Regular Record Date according to the terms of such Security and subject to the provisions of Section 2.10. If any Security called for redemption or prepayment shall not be so paid upon surrender thereof for redemption or repayment (as the case may be), the principal of and premium, if any, and interest on such Security shall, until paid, bear interest from the Redemption Date or the Prepayment Date (as the case may be) 48 at the rate prescribed in the Security. SECTION 6.6. Securities Redeemed or Prepaid in Part. Any Security that is to be redeemed or prepaid only in part shall be surrendered at a Place of Payment therefor (with, if the Company or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by, the Holder thereof or such Holder's attorney duly authorized in writing), and the Mobile Energy Parties shall execute, and the Trustee shall authenticate and make available for delivery to the Holder of such Security without service charge, a new Security or Securities of the same series, of any authorized denomination requested by such Holder and of like tenor and in aggregate principal amount equal to and in exchange for the remaining unpaid principal amount of the Security so surrendered. ARTICLE VII. SINKING FUNDS SECTION 7.1. Applicability of Article. The provisions of this Article VII shall be applicable to any sinking fund for the retirement of the Securities of any series except as otherwise specified in the Series Supplemental Indenture creating the Securities of such series. SECTION 7.2. Sinking Funds for Securities. Any Series Supplemental Indenture may provide for a sinking fund for the retirement of the Securities of the series created thereby (hereinafter called a "Sinking Fund") in accordance with which the Company will be required to redeem on the dates set forth therein (hereinafter called "Sinking Fund Redemption Dates") Securities of principal amounts set forth therein (hereinafter called "Sinking Fund Requirements"). Except as otherwise specified in the Series Supplemental Indenture relating to the Securities of a series, the particular Securities of such series, if any, to be redeemed through a Sinking Fund shall be selected in the manner provided in Section 6.3(d), and notice of such redemption shall be given in the manner provided in Section 6.4. ARTICLE VIII. EVENTS OF DEFAULT; REMEDIES SECTION 8.1. Events of Default. The term "Event of Default," whenever used herein, shall mean any of the following events (whatever the reason for such event and whether it shall 49 be voluntary or involuntary or come about or be affected by operation of law, or be pursuant to or in compliance with any applicable Law), and such event shall continue to be an Event of Default if and for so long as it shall not have been remedied: (a) either of the Mobile Energy Parties shall fail to pay any principal of or premium, if any, or interest on any Security when the same becomes due and payable, whether by scheduled maturity or required prepayment or by acceleration or otherwise, for fifteen (15) or more days; or (b) either of the Mobile Energy Parties shall fail to perform or observe any covenant or agreement contained in: (i) Section 5.4(e); (ii) Section 5.7(b) (insofar as such failure relates to matters specified in Section 5.8(b)(iv)); (iii) Section 5.8(b) (other than clause (v) thereof); (iv) Section 5.10; or (v) Section 5.19; or (c) either of the Mobile Energy Parties shall fail to perform or observe any covenant or agreement contained in: (i) Section 5.2; (ii) Section 5.4(a); (iii) Section 5.5; (iv) Section 5.7(a); (v) Section 5.7(b) (insofar as such failure would reasonably be expected to have a Material Adverse Effect or relates to matters specified in Section 5.8(b)(v)); (vi) Section 5.8; (vii) Section 5.13; (viii) Section 5.14; (ix) Section 5.15; (x) Section 5.16; (xi) Section 3(e), 3(f), 3(g), 3(h), 3(i) or 3(j) of the Security Agreement; or (xii) Section 8, 10, 13, 14 or 15 of the Mortgage; and, in the case of clauses (i) through (xii) above, such failure shall continue uncured for thirty (30) or more days after the Company has knowledge of such failure; or (d) either of the Mobile Energy Parties shall fail to perform or observe any covenant or agreement contained in: (i) Section 5.4(b); or (ii) Section 5.7(b) (insofar as such failure relates to matters specified in Section 5.8(b)(i) or 5.8(b)(iii)); and, in the case of clauses (i) and (ii) above, such failure continues for more than thirty (30) days after either of the Mobile Energy Parties has knowledge of such failure; provided, however, that if (and for so long as an Authorized Officer of either of the Mobile Energy Parties provides an Officer's Certificate certifying that) (A) such failure is capable of being remedied and either of the Mobile Energy Parties is diligently attempting to remedy such failure, (B) no other Event of Default has occurred and is continuing and (C) such failure would not have a Material Adverse Effect, then either of the Mobile Energy Parties may continue to effect such cure of the default for an additional sixty (60) days; or (e) either of the Mobile Energy Parties shall fail to 50 perform or observe any material covenant or agreement to be performed or observed by it under the provisions of this Indenture, the Security Agreement or the Mortgage (other than those referred to in Sections 8.1(a), (b), (c) and (d)) and such failure shall continue uncured for thirty (30) or more days after either of the Mobile Energy Parties has knowledge of such failure; provided, however, that if (and for so long as an Authorized Officer of either of the Mobile Energy Parties provides an Officer's Certificate certifying that) (i) such failure is capable of being remedied and either of the Mobile Energy Parties is diligently attempting to remedy such failure and (ii) no other Event of Default has occurred and is continuing, then either of the Mobile Energy Parties may continue to effect such cure of the default for an additional one hundred twenty (120) days; or (f) any representation or warranty made by either of the Mobile Energy Parties herein or in any other Financing Document or in any certificate, financial statement or other document furnished to the Trustee or the Collateral Agent hereunder or thereunder shall prove to have been false or misleading in any respect as of the time made, confirmed or furnished and the inaccuracy has resulted or would reasonably be expected to result in a Material Adverse Effect and (if capable of being cured) such misrepresentation shall continue uncured for thirty (30) or more days from the discovery thereof; provided, however, that if (and for so long as an Authorized Officer of either of the Mobile Energy Parties provides an Officer's Certificate certifying that) (i) such failure is capable of being remedied and either of the Mobile Energy Parties is diligently attempting to remedy such misrepresentation and (ii) no other Event of Default has occurred and is continuing, either of the Mobile Energy Parties may continue to effect such cure of the misrepresentation, and such misrepresentation shall not be deemed an Event of Default, for an additional sixty (60) days; provided further, however, that if (and for so long as) (A) an Authorized Officer of either of the Mobile Energy Parties provides an Officer's Certificate certifying that such misrepresentation will not have a Material Adverse Effect and (B) the Trustee consents thereto, then the either of the Mobile Energy Parties may continue to effect such cure of the misrepresentation beyond such additional sixty (60) days; or (g) either of the Mobile Energy Parties shall fail to perform any obligation in respect of any Debt in an amount exceeding $5,000,000 and acceleration shall be declared with respect to such Debt; or (h) with respect to any Project Contract to which the Company is a party: (i) such Project Contract is declared 51 unenforceable by a Governmental Authority; (ii) any other party thereto terminates such Project Contract prior to its stated expiration or denies it has an obligation and substantially ceases performance thereunder (other than, in either case, in connection with a Mill Closure with respect to the Tissue Mill or the Paper Mill, if the Company has provided the Revenue Sufficiency Certification to the Collateral Agent); or (iii) any other party thereto defaults in respect of its obligations under such Project Contract; and, in the case of any event described in clauses (i), (ii) and (iii) above (other than with respect to the Pulp Mill Energy Services Agreement), such event would result in a Material Adverse Effect; provided, however, that none of such events shall be an Event of Default hereunder if within one hundred eighty (180) days from the occurrence of such an event, the Company shall have provided an Officer's Certificate certifying, together with an Independent Engineer Confirmation, to the Trustee that (A) such Project Contract and (if such Project Contract is an Energy Service Agreement) the applicable Mill Owner's obligations under the Master Operating Agreement have been reinstated on identical terms pursuant to the provisions of the Master Operating Agreement, provided that if the obligor thereunder is different from the obligor prior to such reinstatement, such obligor is reasonably capable of performing its obligations under such Project Contract or (B) the Company has satisfied the Event of Default Alternative Agreement Requirements with respect to such Project Contract; or (i) (i) an Event of Default under any Working Capital Facility shall have occurred and be continuing and shall not have been waived by the Working Capital Facility Provider; (ii) an Event of Default under the Tax-Exempt Indenture shall have occurred and be continuing and shall not have been waived by the Tax-Exempt Trustee; or (iii) an Event of Default under any Security Document shall have occurred and be continuing and shall not have been waived; or (j) a final and non-appealable judgment or judgments for the payment of money in an aggregate amount in excess of $5,000,000 shall be rendered against either of the Mobile Energy Parties, and the same shall not be stayed or discharged within thirty (30) days from the date of entry thereof; or (k) at any time Southern shall fail to (i) continue to control, directly or indirectly, the management and operations of the Company (except if necessary to comply with applicable regulatory restrictions, including (if the Company elects, or the Members elect, to qualify the Energy Complex as a Qualifying Facility under PURPA) those imposed on Qualifying Facilities under PURPA and the rules 52 promulgated thereunder) or (ii) maintain ownership, directly or indirectly, of at least fifty percent (50%) of the ownership interests in the Company; or (l) at any time the Company shall fail to maintain Southern Electric or an Affiliate thereof as Operator, unless the Company provides a letter from any two Rating Agencies (then currently rating the Outstanding Securities) confirming that the rating of such Securities will not be adversely affected by such failure; or (m) any grant of a Lien contained in the Security Documents shall cease to be effective to grant a perfected Lien to the Collateral Agent, the Trustee or the Tax-Exempt Trustee (as the case may be) on the Collateral described therein with the priority purported to be created thereby; provided, however, that the Company shall have ten (10) days from actual knowledge or constructive knowledge thereof to cure any such cessation; or (n) a Bankruptcy Event in respect of either of the Mobile Energy Parties shall have occurred and be continuing; or (o) if any Southern Guaranty is in effect with respect to any Reserve Account Security Account, a Bankruptcy Event in respect of Southern shall have occurred and be continuing, unless a Reserve Account Letter of Credit or cash in the amount of the then Available Amount under such Southern Guaranty is provided within fifteen (15) days of such Bankruptcy Event; or (p) the failure by Southern to perform any of the "Guaranteed Obligations" under any Southern Guaranty and such failure shall continue for fifteen (15) or more days. SECTION 8.2. Enforcement of Remedies. If one or more Events of Default shall have occurred and be continuing, then: (a) in the case of an Event of Default described in Section 8.1(n) (an "Automatic Acceleration Default"), the entire principal amounts of the Securities Outstanding, all interest accrued and unpaid thereon, and all premium and other amounts payable under the Securities and this Indenture, if any, shall automatically become due and payable without presentment, demand, protest or notice of any kind, all of which are hereby waived; or (b) (i) in the case of an Event of Default described in Section 8.1(a), upon the direction of the Holders of not less than twenty-five percent (25%) in aggregate principal amount of the Outstanding Securities or (ii) in the case of 53 an Event of Default described in Sections 8.1(b) through (m), (o) or (p), upon the direction of the Holders of not less than 33 % in aggregate principal amount of the Outstanding Securities, the Trustee shall, by notice to the Company (with a copy to Mobile Energy), declare the entire principal amounts of the Securities Outstanding, all interest accrued and unpaid thereon, and all premium and other amounts payable under the Securities and this Indenture, if any, to be due and payable, whereupon the same shall become due and payable without presentment, demand, protest or further notice of any kind, all of which are hereby waived. If an Event of Default occurs and is continuing and is known to a Responsible Officer of the Trustee, the Trustee shall mail to each Holder a notice of the Event of Default within thirty (30) days after the occurrence thereof. Except in the case of an Event of Default in payment of principal of or interest on any Security, the Trustee may withhold the notice to the Holders if a committee of its Trust Officers in good faith determines that withholding the notice is in the interest of the Holders. In addition, if the Event of Default described in Section 8.1(a) above shall have occurred and be continuing, the Trustee may accelerate the maturity of the Securities as provided in clause (b) of Section 8.2 notwithstanding the absence of direction from the Holders if in the judgment of the Trustee such action is necessary to protect the interests of the Holders. At any time after the principal of the Securities shall have become due and payable upon an acceleration as provided herein, and before any judgment or decree for the payment of the money so due, or any portion thereof, shall be entered, such declaration and its consequences shall be deemed to be rescinded and annulled if: (a) there shall have been paid to or deposited with the Trustee a sum sufficient to pay (i) all overdue installments of interest on the Securities, (ii) the principal of and premium, if any, on any Securities that have become due otherwise than by such declaration of acceleration and interest thereon at the respective rates provided in the Securities for late payments of principal or premium, (iii) to the extent that payment of such interest is lawful, interest upon overdue installments of interest at the respective rates provided in the Securities for late payments of interest, and 54 (iv) all sums paid or advanced by the Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and (b) all Events of Default, other than the non-payment of the principal of the Securities that has become due solely by such acceleration, have been cured or waived as provided in Section 8.7. No such rescission and annulment shall affect any subsequent default or impair any right consequent thereon. SECTION 8.3. Specific Remedies. If any Event of Default shall have occurred and be continuing and an acceleration shall have occurred pursuant to Section 8.2, subject to the provisions of Sections 8.2, 8.5, 8.6 and 8.15, the Trustee, by such officer or agent as it may appoint, may deliver notice to the Collateral Agent in accordance with the Intercreditor Agreement requesting that the Collateral Agent sell, without recourse, for cash, or credit or for other property, for immediate or future delivery, and for such price or prices and on such terms as the Collateral Agent in its discretion may determine, the Shared Collateral as an entirety, or in such portions as the Holders of a majority in aggregate principal amount of the Securities then Outstanding shall request by an Act of Holders, or, in the absence of such request, as the Trustee in its discretion shall deem expedient in the interest of the Holders, at public or private sale. SECTION 8.4. Judicial Proceedings Instituted by Trustee. (a) Trustee May Bring Suit. If there shall exist an Event of Default, then the Trustee, in its own name, and as trustee of an express trust, subject to the provisions of Sections 2.14 and 8.2, shall be entitled and empowered to institute any suits, actions or proceedings at law, in equity or otherwise, for the collection of the sums so due and unpaid on the Securities, and may prosecute any such claim or proceeding to judgment or final decree, and may enforce any such judgment or final decree and collect the monies adjudged or decreed to be payable in any manner provided by law, whether before or after or during the pendency of any proceedings for the enforcement of the Lien of this Indenture, or of any of the Trustee's rights or the rights of the Holders under this Indenture, and such power of the Trustee shall not be affected by any sale hereunder or by the exercise of any other right, power or remedy for the enforcement of the provisions of this Indenture or for the foreclosure of the Lien hereof. (b) Trustee May Recover Unpaid Indebtedness after Sale of Collateral. Subject to Section 2.14, in the case of a sale of the Indenture Securities Collateral and of the application of the proceeds of such sale to the payment of the indebtedness secured 55 by this Indenture, the Trustee, in its own name, and as trustee of an express trust, shall be entitled and empowered, by any appropriate means, legal, equitable or otherwise, to enforce payment of, and to receive all amounts then remaining due and unpaid upon, all or any of the Securities, for the benefit of the Holders thereof, and upon any other portion of the indebtedness remaining unpaid, with interest at the rates specified in the respective Securities on the overdue principal of and premium, if any, and (to the extent that payment of such interest is legally enforceable) on the overdue installments of interest. (c) Recovery of Judgment Does Not Affect Lien of this Indenture or Other Rights. No recovery of any such judgment or final decree by the Trustee and no levy of any execution under any such judgment upon any of the Indenture Securities Collateral, or upon any other property, shall in any manner or to any extent affect the Lien of this Indenture upon any of the Indenture Securities Collateral, or any rights, powers or remedies of the Trustee, or any liens, rights, powers or remedies of the Holders, but all such liens, rights, powers or remedies shall continue unimpaired as before. (d) Trustee May File Proofs of Claim; Appointment of Trustee as Attorney-in-Fact in Judicial Proceedings. The Trustee in its own name, or as trustee of an express trust, or as attorney-in-fact for the Holders, or in any one or more of such capacities (irrespective of whether the principal of the Securities shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand for the payment of overdue principal, premium, if any, or interest), shall be entitled and empowered to file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee and of the Holders (whether such claims be based upon the provisions of the Securities or of this Indenture) allowed in any equity, receivership, insolvency, bankruptcy, liquidation, readjustment, reorganization or any other judicial proceedings relating to either of the Mobile Energy Parties or any obligor on the Securities (within the meaning of the Trust Indenture Act), the creditors of either of the Mobile Energy Parties or any such obligor, the Indenture Securities Collateral or any other property of either of the Mobile Energy Parties or any such obligor and any receiver, assignee, trustee, liquidator, sequestrator (or other similar official) in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due to it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel. The Trustee is hereby irrevocably appointed (and the successive respective Holders of the Securities, by taking and holding the same, shall be 56 conclusively deemed to have so appointed the Trustee) the true and lawful attorney-in-fact of the respective Holders, with authority to (i) make and file in the respective names of the Holders (subject to deduction from any such claims of the amounts of any claims filed by any of the Holders themselves), any claim, proof of claim or amendment thereof, debt, proof of debt or amendment thereof, petition or other document in any such proceedings and to receive payment of any amounts distributable on account thereof, (ii) execute any such other papers and documents and to do and perform any and all such acts and things for and on behalf of such Holders, as may be necessary or advisable in order to have the respective claims of the Trustee and of the Holders against either of the Mobile Energy Parties or any such obligor, the Indenture Securities Collateral or any other property of the Mobile Energy Parties or any such obligor allowed in any such proceeding and (iii) receive payment of or on account of such claims and debt; provided, however, that nothing contained in this Indenture shall be deemed to give to the Trustee any right to accept or consent to any plan or reorganization or otherwise by action of any character in any such proceeding to waive or change in any way any right of any Holder. Any monies collected by the Trustee under this Section 8.4 shall be applied as provided in Section 8.11. (e) Trustee Need Not have Possession of Securities. All proofs of claim, rights of action and rights to assert claims under this Indenture or under any of the Securities may be enforced by the Trustee without the possession of the Securities or the production thereof at any trial or other proceedings instituted by the Trustee. In any proceedings brought by the Trustee (and also any proceedings involving the interpretation of any provision of this Indenture to which the Trustee shall be a party) the Trustee shall be held to represent all the Holders of the Securities and it shall not be necessary to make any such Holders parties to such proceedings. (f) Suit to Be Brought for Ratable Benefit of Holders. Any suit, action or other proceeding at law, in equity or otherwise that shall be instituted by the Trustee under any of the provisions of this Indenture shall be for the equal, ratable and common benefit of all the Holders, subject to the provisions of this Indenture. (g) Trustee May Be Restored to Former Position and Rights in Certain Circumstances. In case the Trustee shall have instituted any proceeding to enforce any right, power or remedy under this Indenture by foreclosure, entry or otherwise, and such proceedings shall have been discontinued or abandoned for any reason or shall have been determined adversely to the Trustee, then and in every such case the Mobile Energy Parties and the Trustee shall be restored to their former positions and rights hereunder, and all rights, powers and remedies of the Trustee 57 shall continue as if no such proceedings had been taken. SECTION 8.5. Holders May Demand Enforcement of Rights by Trustee. If an Event of Default shall have occurred and shall be continuing, the Trustee shall, upon the written request of the Holders of a majority in aggregate principal amount of the Securities then Outstanding and upon the offering of indemnity as provided in Section 9.3(e), but subject in all cases to the provisions of Section 8.3, proceed to institute one or more suits, actions or proceedings at law, in equity or otherwise, or take any other appropriate remedy, to enforce payment of the principal of or premium, if any, or interest on the Securities, to foreclose the Lien of this Indenture or to deliver notice to the Collateral Agent in accordance with the Intercreditor Agreement requesting that the Collateral Agent foreclose the Lien of the other Security Documents or to sell the Shared Collateral under a judgment or decree of a court or courts of competent jurisdiction or under the power of sale herein granted, or take such other appropriate legal, equitable or other remedy, as the Trustee, being advised by counsel, shall deem most effectual to protect and enforce any of the rights or powers of the Trustee or the Holders, or, in case such Holders shall have requested a specific method of enforcement permitted hereunder, in the manner requested, provided that such action shall not be otherwise than in accordance with law and the provisions of this Indenture, and the Trustee, subject to such indemnity provisions, shall have the right to decline to follow any such request if the Trustee in good faith shall determine that the suit, proceeding or exercise of the remedy so requested would involve the Trustee in personal liability or expense. SECTION 8.6. Control by Holders. Subject to Section ( ) of the Intercreditor Agreement, the Holders of not less than a majority in aggregate principal amount of the Outstanding Securities shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee, provided that (a) such direction shall not be in conflict with any Law or with this Indenture, and (b) the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction. SECTION 8.7. Waiver of Past Events of Defaults. The Holders of not less than a majority in aggregate principal amount of the Outstanding Securities may on behalf of the Holders of all Securities waive any past Event of Default and its consequences, except that only the Holders of all Securities affected thereby may waive an Event of Default (a) in the payment of the principal of or premium, if any, or interest on, or other amounts due under, any Security then Outstanding or (b) in respect of a covenant or provision hereof that under Article XI cannot be modified or amended without the consent of the Holder of each 58 Security Outstanding affected. Upon any such waiver such Event of Default shall cease to exist and shall be deemed to have been cured for every purpose of this Indenture, but no such waiver shall extend to any subsequent or other Event of Default or impair any right consequent thereon. SECTION 8.8. Holder May Not Bring Suit Except Under Certain Conditions. A Holder shall not have the right to institute any suit, action or proceeding at law or in equity or otherwise for the foreclosure of the Lien of this Indenture, for the appointment of a receiver or for the enforcement of any other remedy under or upon this Indenture, unless: (a) such Holder previously shall have given written notice to the Trustee of a continuing Event of Default; (b) the Holders of at least twenty-five percent (25%) in aggregate principal amount of the Outstanding Securities shall have requested the Trustee in writing to institute such action, suit or proceeding and shall have offered to the Trustee indemnity as provided in Section 9.3(e); (c) the Trustee shall have refused or neglected to institute any such action, suit or proceeding for sixty (60) days after receipt of such notice, request and offer of indemnity; and (d) no direction inconsistent with such written request has been given to the Trustee during such sixty (60)-day period by the Holders of a majority in principal amount of Outstanding Securities. It is understood and intended that no one or more of the Holders shall have any right in any manner whatever hereunder or under the Securities to (i) surrender, impair, waive, affect, disturb or prejudice the Lien of the Security Documents on any property subject thereto or the rights of the Holders of any other Securities, (ii) obtain or seek to obtain priority or preference over any other such Holder or (iii) enforce any right under this Indenture, except in the manner herein provided and for the equal, ratable and common benefit of all the Holders subject to the provisions of this Indenture. SECTION 8.9. Undertaking to Pay Court Costs. All parties to this Indenture, and each Holder by such Holder's acceptance of a Security, shall be deemed to have agreed that any court may in its discretion require, in any suit, action or proceeding for the enforcement of any right or remedy under this Indenture, or in any suit, action or proceeding against the Trustee for any action taken or omitted by it as Trustee hereunder, the filing by any party litigant in such suit, action or proceeding of an undertaking to pay the costs of such suit, action or proceeding, 59 and that such court may, in its discretion, assess reasonable costs, including reasonable attorneys' fees, against any party litigant in such suit, action or proceeding, having due regard to the merits and good faith of the claims or defenses made by such party litigant; provided, however, that the provisions of this Section 8.9 regarding such agreement by the parties to this Indenture and each Holder shall not apply to (a) any suit, action or proceeding instituted by the Trustee, (b) any suit, action or proceeding instituted by any Holder or group of Holders holding in the aggregate more than ten percent (10%) in aggregate principal amount of the Outstanding Securities or (c) any suit, action or proceeding instituted by any Holder for the enforcement of the payment of the principal of or premium, if any, or interest on any of the Securities, on or after the respective due dates expressed therein. SECTION 8.10. Right of Holders to Receive Payment Not to Be Impaired. Anything in this Indenture or in the Intercreditor Agreement to the contrary notwithstanding, the right of any Holder to receive payment of the principal of and premium, if any, and interest on such Security, on or after the respective due dates expressed in such Security (or, in case of redemption, on the Redemption Date fixed for such Security), or to institute suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of such Holder. SECTION 8.11. Application of Monies Collected by Trustee. Any monies collected or to be applied by the Trustee pursuant to this Article VIII in respect of the Securities of a series, together with any other monies that may then be held by the Trustee under any of the provisions of this Indenture as security for the Securities of such series (other than as set forth in the Intercreditor Agreement and other than monies at the time required to be held for the payment of specific Securities of such series at their Stated Maturities or at a time fixed for the redemption thereof) shall be applied in the following order from time to time, on the date or dates fixed by the Trustee and, in the case of a distribution of such monies on account of principal, premium, if any, or interest, upon presentation of the Outstanding Securities of such series, and stamping thereon of payment, if only partially paid, and upon surrender thereof, if fully paid: FIRST: to the payment of all taxes, assessments or liens prior to the Lien of the Security Documents, except those subject to which any sale shall have been made, all reasonable costs and expenses of collection, including the reasonable costs and expenses of handling the Indenture Securities Collateral and of any sale thereof pursuant to the provisions of the Security Documents, and to the payment of all amounts due the Trustee or any predecessor Trustee 60 under Section 9.7; SECOND: in case the unpaid principal amount of the Outstanding Securities of such series or any of them shall not have become due, to the payment of any interest in default, in the order of the maturity of the payments thereof, with interest at the rates specified in the respective Securities of such series in respect of overdue payments (to the extent that payment of such interest shall be legally enforceable) on the payments of interest then overdue; THIRD: in case the unpaid principal amount of any of but not all the Outstanding Securities of such series shall have become due, first to the payment of accrued interest on all Outstanding Securities of such series in the order of the maturity of the payments thereof, with interest at the respective rates specified in the Securities of such series for overdue payments of principal, premium, if any, and (to the extent that payment of such interest shall be legally enforceable) interest then overdue, and next to the payment of the unpaid principal amount of all Securities then due; FOURTH: in case the unpaid principal amount of all the Outstanding Securities of such series shall have become due, to the payment of the whole amount then due and unpaid upon the Outstanding Securities of such series for principal, premium, if any, and interest, together with interest at the respective rates specified in the Securities of such series for overdue payments on principal, premium, if any, and (to the extent that payment of such interest shall be legally enforceable) interest then overdue; and FIFTH: in case the unpaid principal amount of all the Outstanding Securities of such series shall have become due, and all of the Outstanding Securities of such series shall have been fully paid, any surplus then remaining shall be paid to the Collateral Agent (to be applied pursuant to the terms and conditions of the Intercreditor Agreement), or to whomsoever may be lawfully entitled to receive the same, or as a court of competent jurisdiction may direct; provided, however, that all payments in respect of the Securities of a series to be made pursuant to clauses "SECOND" through "FOURTH" of this Section 8.11 shall be made ratably to the Holders of Securities of such series entitled thereto, without discrimination or preference, based upon the ratio of the unpaid principal amount of the Securities of such series in respect of which such payments are to be made held by each such Holder to the unpaid principal amount of all Securities of such series. SECTION 8.12. Securities Held by Certain Persons Not to 61 Share in Distribution. Any Securities known to a Responsible Officer of the Trustee to be owned or held by, or for the account or benefit of, either of the Mobile Energy Parties or an Affiliate thereof, shall not be entitled to share in any payment or distribution provided for in this Article VIII until all Securities held by other Persons have been indefeasibly paid in full. SECTION 8.13. Waiver of Appraisement, Valuation, Stay, Right to Marshalling. To the full extent it may lawfully do so, each of the Mobile Energy Parties, for itself and for any other Person who may claim through or under it, hereby: (a) agrees that neither it nor any such Person will set up, plead, claim or in any manner whatsoever take advantage of any appraisal, valuation, stay, extension or redemption laws, now or hereafter in force in any jurisdiction that may delay, prevent or otherwise hinder (i) the performance or enforcement or foreclosure of this Indenture, (ii) the sale of any of the Indenture Securities Collateral or (iii) the putting of the purchaser or purchasers thereof into possession of such Indenture Securities Collateral immediately after the sale thereof; (b) waives all benefit or advantage of any such laws; (c) consents and agrees that the Collateral may be sold by the Collateral Agent as an entirety or in parts; and (d) waives and releases all rights to have the Indenture Securities Collateral marshalled upon any foreclosure, sale or other enforcement of this Indenture. SECTION 8.14. Remedies Cumulative; Delay or Omission Not a Waiver. Each and every right, power and remedy herein specifically given to the Trustee shall be cumulative and shall be in addition to every other right, power and remedy herein specifically given or now or hereafter existing at law, in equity or by statute, and each and every right, power and remedy whether specifically herein given or otherwise existing may be exercised from time to time and as often and in such order as may be deemed expedient by the Trustee and the exercise or the beginning of the exercise of any right, power or remedy shall not be construed to be a waiver of the right to exercise at the same time or thereafter any other right, power or remedy, and no delay or omission by the Trustee in the exercise of any right, power or remedy or in the pursuance of any remedy shall impair any such right, power or remedy or be construed to be a waiver of any default on the part of either of the Mobile Energy Parties or to be an acquiescence therein. SECTION 8.15. Intercreditor Agreement. Simultaneously with 62 the execution and delivery of this Indenture, the Trustee shall enter into the Intercreditor Agreement on behalf of itself and all Holders of any of the Outstanding Securities and all future Holders of Securities. Notwithstanding any other provision of this Indenture to the contrary, all rights, powers and remedies available to the Holders of any of the Outstanding Securities, and all future Holders of any of the Securities or the Trustee, with respect to the Collateral, or otherwise pursuant to the Security Documents, shall be subject to the Intercreditor Agreement, including, in all cases, the ability to enforce any remedy other than remedies specified in Section 8.2 and Section 8.10 of this Indenture. To the extent that the Collateral Agent has been authorized to exercise any such right under the Intercreditor Agreement, any right given to the Trustee hereunder to exercise any remedy with respect to the Shared Collateral shall, during such time as the Intercreditor Agreement is in effect, be a right of the Trustee to direct the Collateral Agent to take such action to the extent set forth in the Intercreditor Agreement. ARTICLE IX. THE TRUSTEE SECTION 9.1. Certain Duties and Responsibilities. (a) Except during the continuance of an Event of Default: (i) the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and (ii) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; but in the case of any such certificates or opinions that by any provisions hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Indenture. (b) In case an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent man would exercise or use under the circumstances in the conduct of his own affairs. (c) No provision of this Indenture shall be construed to relieve the Trustee from liability for its own negligent action, 63 its own negligent failure to act or its own willful misconduct, except that: (i) this Section 9.1(c) shall not be construed to limit the effect of Section 9.1(a); (ii) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer of the Trustee, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts; (iii) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of not less than a majority in aggregate principal amount of the Outstanding Securities relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Indenture; and (iv) no provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. (d) Whether or not herein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section 9.1 and the requirements of the Trust Indenture Act. SECTION 9.2. Notice of Events of Defaults. In addition to its obligation to give notice to Holders as provided in Section 1.6, as promptly as practicable after, and in any event within thirty (30) days after, the occurrence of any Event of Default hereunder, the Trustee shall transmit by mail to all Holders, as their names and addresses appear in the Security Register, notice of such Event of Default hereunder known to the Trustee, unless such Event of Default shall have been cured or waived; provided, however, that, except in the case of an Event of Default in the payment of the principal of or premium, if any, or interest on any Security, or in the payment of any Sinking Fund Requirement, the Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee or a trust committee of directors or Responsible Officers of the Trustee in good faith determine that the withholding of such notice is in the interests of the Holders. 64 SECTION 9.3. Certain Rights of Trustee. Except as otherwise provided in Section 9.1 and Section 315 of the Trust Indenture Act: (a) the Trustee may rely and shall be protected in acting or refraining from acting in reliance upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture or other paper or document believed by it to be genuine and to have been signed or presented by the purported proper party or parties; (b) any request or direction of either of the Mobile Energy Parties mentioned herein shall be sufficiently evidenced by a Company Request or Company Order or a Mobile Energy Request or Mobile Energy Order (as the case may be), and any resolution of the Board of Directors of either of the Mobile Energy Parties may be sufficiently evidenced by a Board Resolution of such Mobile Energy Party; (c) whenever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officer's Certificate of either of the Mobile Energy Parties; (d) the Trustee may consult with counsel and the advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon; (e) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders pursuant to this Indenture, unless such Holders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities that might be incurred by it in compliance with such request or direction; (f) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of either of the Mobile 65 Energy Parties personally or by agent or attorney; (g) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder; and (h) the Trustee shall not be charged with knowledge of any Event of Default unless either (i) a Responsible Officer of the Trustee shall have actual knowledge of such Event of Default or (ii) written notice of such Event of Default shall have been given to the Trustee by either of the Mobile Energy Parties or by any Holder. SECTION 9.4. Not Responsible for Recitals or Issuance of Securities. The recitals contained herein and in the Securities, except the certificates of authentication, shall not be taken as the statements of the Trustee, and the Trustee assumes no responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of this Indenture, the Indenture Securities Collateral or the Securities, except that the Trustee hereby represents and warrants that this Indenture has been executed and delivered by one of its officers who is duly authorized to execute and deliver such document on its behalf. The Trustee shall not be accountable for the use or application by either of the Mobile Energy Parties of the Securities or the proceeds thereof. SECTION 9.5. May Hold Securities. The Trustee, any Paying Agent, Security Registrar or Authenticating Agent, or any Affiliate thereof, in its individual or any other capacity, may become the owner or pledgee of Securities and, subject to Sections 9.8 and 9.13, may otherwise deal with the Mobile Energy Parties with the same rights it would have if it were not Trustee, Paying Agent, Security Registrar, Authenticating Agent or such other agent. SECTION 9.6. Funds May Be Held by Trustee or Paying Agent. Any monies received by the Trustee or any Paying Agent shall, until used or applied as herein provided, be held in trust for the purposes for which they were received, but need not be segregated from other funds except to the extent required by law. Neither the Trustee nor the Paying Agent shall have any liability for interest upon any such monies. Amounts so received, at the written request and direction of the Company shall be invested by the Company in Permitted Investments. Such investments shall mature in such amounts and not later than such times as may be necessary to provide monies when needed to make payments from such monies as provided in the Indenture. 66 SECTION 9.7. Compensation, Reimbursement and Indemnification. Each of the Mobile Energy Parties agrees: (a) to pay, or cause to be paid, to each of the Trustee and any Authorized Agent from time to time reasonable compensation for all services rendered by it hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust); (b) to reimburse, or cause to be reimbursed, each of the Trustee and any Authorized Agent upon its request for all expenses, disbursements and advances incurred or made by it in accordance with any provision of this Indenture (including the reasonable compensation and the expenses and disbursements of its agents and counsel), except any such expense, disbursement or advance as may be attributable of its own negligence, willful misconduct or bad faith; and (c) to indemnify, or cause to be indemnified, each of the Trustee, any predecessor Trustee and any Authorized Agent for, and to hold it harmless against, any loss, liability or expense incurred without negligence, willful misconduct or bad faith on its part, arising out of or in connection with the acceptance or administration of this trust or the performance of its duties hereunder, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder. As security for the performance of the obligations of the Mobile Energy Parties under this Section 9.7, the Trustee shall have a Lien prior to the Securities upon all property and funds held or collected by the Trustee as such, except funds held in trust under Section 12.3. SECTION 9.8. Disqualification; Conflicting Interests. (a) If the Trustee has or shall acquire any conflicting interest, as defined in this Section 9.8, then, within ninety (90) days after ascertaining that it has such conflicting interest, and if the default (as such term is defined in the Trust Indenture Act) to which such conflicting interest relates has not been cured or duly waived or otherwise eliminated before the end of such ninety (90) day period, it shall either eliminate such conflicting interest or resign in the manner and with the effect hereinafter specified in this Article IX; provided, however, that except in the case of a default in the payment of the principal of, premium if any or interest on any Security, or in payment of any Sinking Fund redemption, the Trustee shall not be required to resign as provided by this Section 9.8 if the Trustee shall have sustained the burden of proving, on application to the SEC and after opportunity for hearing thereon, that 67 (i) the default under the Indenture may be cured or waived during a reasonable period and under the procedures described in such application, and (ii) a stay of the Trustee's duty to resign will not be inconsistent with the interests of the Holders of the Securities. The filing of such an application shall automatically stay the performance of the duty to resign until the SEC orders otherwise. (b) In the event that the Trustee shall fail to comply with the provisions of Section 9.8(a), the Trustee shall, within ten (10) days after the expiration of such ninety (90)-day period, transmit by mail to all Holders, as their names and addresses appear in the Security Register, notice of such failure. (c) For the purposes of this Section 9.8, the Trustee shall be deemed to have a conflicting interest if the Securities are in default (as such term is defined in the Trust Indenture Act) and: (i) the Trustee is trustee under another indenture under which any other securities, or certificates of interest or participation in any other securities, of any obligor on the Securities are outstanding or is trustee for more than one outstanding series of Securities, under a single indenture of any obligor, unless (A) the Securities are collateral trust notes under which the only collateral consists of securities issued under such other indenture, (B) such other indenture is a collateral trust indenture under which the only collateral consists of Securities issued under this Indenture or (C) such obligor has no substantial unmortgaged assets and is engaged primarily in the business of owning, or of owning and developing or operating, real estate, and the Indenture and such other indenture are secured by wholly separate and distinct parcels of real estate, provided that there shall be excluded from the operation of this paragraph other series under this Indenture, and any indenture or indentures under which other securities, or certificates of interest or participation in other securities, of such obligor are outstanding, if such obligor shall have sustained the burden of proving, on application to the SEC and after opportunity for hearing thereon, that trusteeship under this Indenture and such other indenture or indentures or under more than one outstanding series under a single indenture is not so likely to involve a material conflict of interest as to make it necessary in the public interest or for the protection of investors to disqualify the Trustee from acting as such under one of such indentures or with respect to such series; (ii) the Trustee or any of its directors or executive officers is an underwriter for an obligor upon the 68 Securities; (iii) the Trustee directly or indirectly controls or is directly or indirectly controlled by or is under direct or indirect common control with an underwriter for an obligor upon the Securities; (iv) the Trustee or any of its directors or executive officers is a director, officer, partner, employee, appointee or representative of any obligor upon the Securities, or of an underwriter (other than the Trustee itself) for such obligor who is currently engaged in the business of underwriting, except that (A) one individual may be a director or an executive officer, or both, of the Trustee and a director or an executive officer, or both, of an obligor on the Securities but may not be at the same time an executive officer of both the Trustee and such obligor; (B) if and so long as the number of directors of the Trustee in office is more than nine, one additional individual may be director or an executive officer, or both, of the Trustee and a director of an obligor on the Securities; and (C) the Trustee may be designated by an obligor on the Securities or by any underwriter for such obligor to act in the capacity of transfer agent, registrar, custodian, paying agent, fiscal agent, escrow agent, or depositary, or in any other similar capacity, or subject to the provisions of paragraph (i) of this Section 9.8(c), to act as trustee, whether under an indenture or otherwise; (v) ten percent (10%) or more of the voting securities of the Trustee is beneficially owned either by any obligor on the Securities or by any director, partner, or executive officer thereof, or twenty percent (20%) or more of such voting securities is beneficially owned, collectively, by any two or more of such persons; or ten percent (10%) or more of the voting securities of the Trustee is beneficially owned either by an underwriter for any obligor on the Securities or by any director, partner or executive officer thereof, or is beneficially owned collectively by any two or more such persons; (vi) the Trustee is the beneficial owner of, or holds as collateral security for an obligation which is in default (as hereinafter in this subsection defined), (A) five percent (5%) or more of the voting securities, or ten percent (10%) or more of any other class of security, of any obligor on the Securities not including the Securities issued under this Indenture and securities issued under any other indenture under which the Trustee is also trustee or (B) ten percent (10%) or more of any class of security of an underwriter for any obligor on the Securities; 69 (vii) the Trustee is the beneficial owner of, or holds as collateral security for an obligation which is in default (as hereinafter in this subsection defined), five percent (5%) or more of the voting securities of any person who, to the knowledge of the Trustee, owns 10% or more of the voting securities of, or controls directly or indirectly or is under direct or indirect common control with, any obligor on the Securities; (viii) the Trustee is the beneficial owner of, or holds collateral security for an obligation that is in default (as hereinafter in this subsection defined), ten percent (10%) or more of any class of security of any person who, to the knowledge of the Trustee, owns fifty percent (50%) or more of the voting securities of any obligor on the Securities; (ix) the Trustee owns, on the date of default (as such term is defined in the Trust Indenture Act) upon the Securities or any anniversary of such default while such default upon the Securities remains outstanding, in the capacity of executor, administrator, testamentary or inter vivos trustee, guardian, committee or conservator, or in any other similar capacity, an aggregate of twenty-five percent (25%) or more of the voting securities, or of any class of security, of any person, the beneficial ownership of a specified percentage of which would have constituted a conflicting interest under paragraphs (vi), (vii) or (viii) of this Section 9.8(c). As to any such securities of which the Trustee acquired ownership through becoming executor, administrator or testamentary trustee of an estate that included them, the provisions of the immediately preceding sentence shall not apply, for a period of not more than two (2) years from the date of such acquisition to the extent that such securities included in such estate do not exceed twenty-five percent (25%) of such voting securities or twenty-five percent (25%) of any such class of security. Promptly after the dates of any such default upon the Securities and annually in each succeeding year that the Securities remain in default, the Trustee shall make a check of its holdings of such securities in any of the above- mentioned capacities as of such dates. If any obligor upon the Securities fails to make payment in full of the principal of or the premium, if any, or interest on any of the Securities when and as the same becomes due and payable and such failure continues for thirty (30) days thereafter, the Trustee shall make a prompt check of its holdings of such securities in any of the above-mentioned capacities as of the date of the expiration of such thirty (30)-day period, and after such date, notwithstanding the foregoing provisions of this paragraph, all such securities so held by the Trustee, with sole or joint control over such securities 70 vested in it, shall be considered as though beneficially owned by the Trustee for the purposes of paragraphs (vi), (vii) and (viii) of this Section 9.8(c); or (x) except under the circumstances described in Section 9.13(b) (i), (iii), (iv), (v) or (vi), the Trustee shall be or shall become a creditor of the obligor. For the purposes of paragraph (i) of this Section 9.8(c), the term "series of securities" or "series" means a series, class or group of Securities issuable under the Indenture pursuant to whose terms Holders of one such series may vote to direct the Trustee, or otherwise take action pursuant to a vote of such Holders, separately from Holders of another such series, provided that "series of securities" or "series" shall not include any series of Securities issuable under the Indenture if all such series rank equally and are wholly unsecured. The specification of percentages in paragraphs (v) to (ix), inclusive, of this Section 9.8(c), shall not be construed as indicating that the ownership of such percentages of the securities of a person is or is not necessary or sufficient to constitute direct or indirect control for the purposes of paragraph (iii) or (vii) of this Section 9.8(c). For the purposes of paragraphs (vi), (vii), (viii) and (ix) of this Section 9.8(c) only, (A) the terms "security" and "securities" shall include only such securities as are generally known as corporate securities, but shall not include any note or other evidence of indebtedness issued to evidence an obligation to repay monies loaned to a person by one or more banks, trust companies or banking firms, or any certificate of interest or participation in any such note or evidence or indebtedness, (B) an obligation shall be deemed to be "in default" when a default in payment of principal shall have continued for thirty (30) days or more and shall not have been cured, and (C) the Trustee shall not be deemed to be the owner or holder of (1) any security that it holds as collateral security, as trustee or otherwise, for an obligation that is not in default as defined in clause (B) above or (2) any security which it holds as collateral security under this Indenture, irrespective of any default hereunder or (3) any security that it holds as agent for collection, or as custodian, escrow agent or depositary, or in any similar representative capacity. Except as provided in the next preceding paragraph, the word "security" or "securities" as used in this Indenture shall mean any note, stock, treasury stock, bond, debenture, evidence of indebtedness, certificate of interest or participation in any profit-sharing agreement, collateral-trust certificate, preorganization certificate or subscription, transferable share, investment contract, voting trust certificate, certificate of 71 deposit for security, fractional undivided interest in oil, gas or other mineral rights, any put, call, straddle, option or privilege on any security, certificate of deposit, or group or index of securities (including, any interest therein or based on the value thereon) or any put, call, straddle, option or privilege entered into on a national securities exchange relating to foreign currency, or, in general, any interest or instrument commonly known as a "security," or any certificate or interest or participation in, temporary or interim certificate for, receipt for, guarantee of, or warrant or right to subscribe to purchase, any of the foregoing. (d) For the purposes of this Section 9.8: (i) The term "underwriter" when used with reference to any obligor on the Securities, means every person who, within one year prior to the time as of which the determination is made, has purchased from such obligor with a view to, or has offered or sold for such obligor in connection with, the distribution of any security of such obligor outstanding at such time, or has participated or has had a direct or indirect participation in any such undertaking, or has participated or has had a participation in the direct or indirect underwriting of any such undertaking; but such term shall not include a person whose interest was limited to a commission from an underwriter or dealer not in excess of the usual and customary distributors' or sellers' commission. (ii) The term "director" means any director of a corporation, or any individual performing similar functions with respect to any organization whether incorporated or unincorporated. (iii) The term "person" means an individual, a corporation, a partnership, an association, a joint-stock company, a trust, an unincorporated organization, or a government or political subdivision thereof. As used in this paragraph, the term "trust" shall include only a trust where the interest or interests of the beneficiary or beneficiaries are evidenced by a security. (iv) The term "voting security" means any security presently entitling the owner or holder thereof to vote in the direction or management of the affairs of a person, or any security issued under or pursuant to any trust, agreement or arrangement whereby a trustee or trustees or agent or agents for the owner or holder of such security are presently entitled to vote in the direction or management of the affairs of a person. (v) The term "obligor" means any obligor upon the 72 Securities within the meaning of the Trust Indenture Act. (vi) The term "executive officer" means the president, every vice president, every trust officer, the cashier, the secretary and the treasurer of a corporation, and any individual customarily performing similar functions with respect to any organization whether incorporated or unincorporated, but shall not include the chairman of the board of directors. (e) The percentage of the voting securities and other securities specified in this Section 9.8 shall be calculated in accordance with the following provisions: (i) A specified percentage of the voting securities of the Trustee, any obligor or any other person referred to in this Section 9.8 (each of whom is referred to as a "person" in this paragraph) means such amount of the outstanding voting securities of such person as entitles the holder or holders thereof to cast such specified percentage of the aggregate votes that the holders of all the outstanding voting securities of such person are entitled to cast in the direction or management of the affairs of such person. (ii) A specified percentage of a class of securities of a person means such percentage of the aggregate amount of securities of the class outstanding. (iii) The term "amount," when used in regard to securities, means the principal amount if relating to evidences of indebtedness, the number of shares if relating to capital shares and the number of units if relating to any other kind of security. (iv) The term "outstanding" as used in this Section 9.8 means issued and not held by or for the account of the issuer. The following securities shall not be deemed outstanding within the meaning of this definition: (A) securities of an issuer held in a sinking fund relating to securities of the issuer of the same class; (B) securities of an issuer held in a sinking fund relating to another class of securities of the issuer, if the obligation evidenced by such other class of securities is not in default as to principal or interest or otherwise; (C) securities pledged by the issuer thereof as security for an obligation of the issuer not in default 73 as to principal or interest or otherwise; and (D) securities held in escrow if placed in escrow by the issuer thereof; provided, however, that any voting securities of an issuer shall be deemed outstanding if any person other than the issuer is entitled to exercise the voting rights thereof. (v) A security shall be deemed to be of the same class as another security if both securities confer upon the holder or holders substantially the same rights and privileges; provided, however, that in the case of secured evidences of indebtedness, all of which are issued under a single indenture, differences in the interest rates or maturity dates of various series thereof shall not be deemed sufficient to constitute such series different classes; provided further, however, that, in the case of unsecured evidences of indebtedness, differences in the interest rates or maturity dates thereof shall not be deemed sufficient to constitute them securities of different classes, whether or not they are issued under a single indenture. SECTION 9.9. Corporate Trustee Required; Eligibility. There shall at all times be a Trustee hereunder that shall be a bank or trust company that complies with the requirements of the Trust Indenture Act, organized and doing business under the laws of the United States of America or of any State thereof, authorized under such laws to exercise corporate trust powers, having (or whose obligations are unconditionally guaranteed by a corporation having) a combined capital and surplus of at least $500,000,000, which bank or trust company is subject to supervision or examination by Federal or state authority and does not provide credit or credit enhancement to either of the Mobile Energy Parties. If such bank or trust company publishes reports of condition at least annually, pursuant to law or to the requirements of the aforesaid supervising or examining authority, then for the purposes of this Section 9.9, the combined capital and surplus of such bank or trust company shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section 9.9, it shall resign immediately in the manner and with the effect hereinafter specified in this Article IX. SECTION 9.10. Resignation and Removal; Appointment of Successor. (a) No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article IX shall become effective until the acceptance of appointment by the successor Trustee as provided in Section 9.11. (b) The Trustee may resign at any time by giving written 74 notice thereof to the Mobile Energy Parties and to the Holders of Securities in the manner provided in Section 1.6. If an instrument of acceptance by a successor Trustee shall not have been delivered to the Mobile Energy Parties and the Trustee within thirty (30) days after the giving of such notice of resignation, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee, or any Holder who has been a bona fide holder of a Security for at least six (6) months may, subject to Section 8.9, on behalf of such Holder and all others similarly situated, petition any such court for the appointment of a successor Trustee. (c) The Trustee may be removed at any time by Act of the Holders of not less than a majority in principal amount of the Outstanding Securities, delivered to the Trustee and the Mobile Energy Parties. (d) If at any time: (i) the Trustee shall fail to comply with Section 9.8(a) after written request therefor by any Holder who has been a bona fide holder of a Security for at least six months, or (ii) the Trustee shall cease to be eligible under Section 9.9 and shall fail to resign after written request therefor by any such Holder or the Company, or (iii) the Trustee shall become incapable of acting or shall be adjudged a bankrupt or insolvent or a receiver of the Trustee or of its property shall be appointed or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, then, in any such case, (A) the Company may remove the Trustee by Board Resolution or (B) subject to Section 8.9, any Holder who has been a bona fide holder of a Security for at least six (6) months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. (e) If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee for any cause, the Company shall promptly appoint by Board Resolution a successor Trustee. If no successor Trustee shall have been so appointed by the Company, or by the Holders, and accepted appointment in the manner hereinafter provided, any Holder who has been a bona fide holder of a Security for at least six months may, subject to Section 8.9, on behalf of himself and 75 all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Trustee. (f) The Company shall give notice of each resignation and each removal of the Trustee and each appointment of a successor Trustee by mailing written notice of such event by first-class mail, postage prepaid, to the Holders of Securities as their names and addresses appear in the Security Register. Each notice shall include the name of the successor Trustee and the address of its Corporate Trust Office. If the Company fails to give such notice within ten (10) days after acceptance of appointment by the successor Trustee, the successor Trustee shall cause such notice to be given at the expense of the Company. SECTION 9.11. Acceptance of Appointment by Successor. Every successor Trustee appointed hereunder shall execute, acknowledge and deliver to the Mobile Energy Parties and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee but, on request of either of the Mobile Energy Parties or of the successor Trustee, such retiring Trustee shall, upon payment of its charges, execute and deliver an instrument prepared by either of the Mobile Energy Parties transferring to such successor Trustee all the rights, powers and trusts of the retiring Trustee, and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder, subject nevertheless to its Lien, if any, provided for in Section 9.7. Upon request of any such successor Trustee, the Mobile Energy Parties shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Trustee all such rights, powers and trusts. No successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be qualified and eligible under this Article IX. SECTION 9.12. Merger, Conversion, Consolidation or Succession to Business. Any Person into which the Trustee may be merged or converted or with which it may be consolidated, or any Person resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any Person succeeding to all or substantially all of the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, provided such successor Trustee shall be otherwise qualified and eligible under the Trust Indenture Act and under this Article IX, without the execution or filing of any paper or any further act on the part of any of the parties hereto. In case any Securities shall have been authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or 76 consolidation to such authenticating Trustee may adopt such authentication and deliver the Securities so authenticated with the same effect as if such successor Trustee had itself authenticated such Securities. SECTION 9.13. Preferential Collection of Claims Against any Obligor. (a) Subject to Section 9.13(b), if the Trustee shall be or shall become a creditor, directly or indirectly, secured or unsecured, of any obligor (as defined in Section 9.13(c)) on the Securities within three (3) months prior to a default (as defined in Section 9.13(c)) or subsequent to such a default, then, unless and until such default shall be cured, the Trustee shall set apart and hold in a special account for the benefit of the Trustee individually and the Holders of the Securities: (i) an amount equal to any and all reductions in the amount due and owing upon any claim as such creditor in respect of principal or interest, effected after the beginning of such three (3) month period and valid as against any obligor on the Securities and its other creditors, except any such reduction resulting from the receipt or disposition of any property described in paragraph (ii) of this Section 9.13(a), or from the exercise of any right of set-off that the Trustee could have exercised if a petition in bankruptcy had been filed by or against any such obligor upon the date of such default; and (ii) all property received by the Trustee in respect of any claim as such creditor, either as security therefor, or in satisfaction or composition thereof, or otherwise, after the beginning of such three (3) month period, or an amount equal to the proceeds of any such property, if disposed of, subject, however, to the rights, if any, of any obligor on the Securities and its other creditors in such property or such proceeds. Nothing herein contained, however, shall affect the right of the Trustee: (A) to retain for its own account (1) payments made on account of any such claim by any Person (other than an obligor on the Securities) who is liable thereon, (2) the proceeds of the bona fide sale of any such claim by the Trustee to a third person and (3) distributions made in cash, securities or other property in respect of claims filed against such obligor in bankruptcy or receivership or in proceedings for reorganization pursuant to the Bankruptcy Code or applicable state law; (B) to realize, for its own account, upon any property held by it as security for any such claim, if such property was so held prior to the beginning of such three (3) month period; 77 (C) to realize, for its own account, but only to the extent of the claim hereinafter mentioned, upon any property held by it as security for any such claim, if such claim was created after the beginning of such three (3) month period and such property was received as security therefor simultaneously with the creation thereof, and if the Trustee shall sustain the burden of proving that at the time such property was so received the Trustee had no reasonable cause to believe that a default (as defined in Section 9.13(c)) would occur within three (3) months; or (D) to receive payment on any claim referred to in paragraph (B) or (C) above, against the release of any property held as security for such claim as provided in paragraph (B) or (C) above (as the case may be), to the extent of the fair value of such property. For the purposes of paragraphs (B), (C) and (D) of the immediately preceding paragraph, property substituted after the beginning of such three (3) month period for property held as security at the time of such substitution shall, to the extent of the fair value of the property released, have the same status as the property released, and, to the extent that any claim referred to in any of such clauses is created in renewal of or in substitution for or for the purpose of repaying or refunding any pre-existing claim of the Trustee as such creditor, such claim shall have the same status as such pre-existing claim. If the Trustee shall be required to account, the funds and property held in such special account and the proceeds thereof shall be apportioned between the Trustee and the Holders in such manner that the Trustee and the Holders realize, as a result of payments from such special account and payments of dividends on claims filed against the obligor on the Securities in bankruptcy or receivership or in proceedings for reorganization pursuant to the Bankruptcy Code or applicable state law, the same percentage of their respective claims, figured before crediting to the claim of the Trustee anything on account of the receipt by it from such obligor of the funds and property in such special account and before crediting to the respective claims of the Trustee and the Holders dividends on claims filed against such obligor in bankruptcy or receivership or in proceedings for reorganization pursuant to the Bankruptcy Code or applicable state law, but after crediting thereon receipts on account of the indebtedness represented by their respective claims from all sources other than from such dividends and from the funds and property so held in such special account. As used in this paragraph, with respect to any claim, the term "dividends" shall include any distribution with respect to such claim, in bankruptcy or receivership or proceedings for reorganization pursuant to the Bankruptcy Code or applicable state law, whether such distribution is made in cash, securities or other property, but shall not include any such 78 distribution with respect to the secured portion, if any, of such claim. The court in which such bankruptcy, receivership or proceedings for reorganization is pending shall have jurisdiction (1) to apportion between the Trustee and the Holders in accordance with the provisions of this paragraph, the funds and property held in such special account and proceeds thereof, or (2) in lieu of such apportionment, in whole or in part, to give to the provisions of this paragraph due consideration in determining the fairness of the distributions to be made to the Trustee and the Holders with respect to their respective claims, in which event it shall not be necessary to liquidate or to appraise the value of any securities or other property held in such special account or as security for any such claim, or to make a specific allocation of such distributions as between the secured and unsecured portions of such claims, or otherwise to apply the provisions of this paragraph as a mathematical formula. Any Trustee that has resigned or been removed after the beginning of such three (3) month period shall be subject to the provisions of this subsection as though such resignation or removal had not occurred. If any Trustee has resigned or been removed prior to the beginning of such three (3) month period, it shall be subject to the provisions of this Section 9(a) if and only if the following conditions exist: (x) the receipt of property or reduction of claim, which would have given rise to the obligation to account if such Trustee had continued as Trustee, occurred after the beginning of such three (3) month period; and (y) such receipt of property or reduction of claim occurred within three (3) months after such resignation or removal. (b) There shall be excluded from the operation of Section 9.13(a) a creditor relationship arising from: (i) the ownership or acquisition of securities issued under any indenture, or any security or securities having a maturity of one (1) year or more at the time of acquisition by the Trustee; (ii) advances authorized by a receivership or bankruptcy court of competent jurisdiction, or by this Indenture, for the purpose of preserving the property that shall at any time be subject to the Lien of this Indenture or of discharging tax liens or other prior liens or encumbrances thereon, if notice of such advances and of the circumstances surrounding the making thereof is given to the Holders at the time and in the manner provided in this Indenture; (iii) disbursements made in the ordinary course of business in the capacity of trustee under an indenture, transfer agent, registrar, custodian, paying 79 agent, fiscal agent or depositary, or other similar capacity; (iv) an indebtedness created as a result of services rendered or premises rented; or an indebtedness created as a result of goods or securities sold in a cash transaction (as defined in Section 9.13(c)); (v) the ownership of stock or of other securities of a corporation organized under the provisions of Section 25(a) of the Federal Reserve Act that is directly or indirectly a creditor of an obligor upon the securities; or (vi) the acquisition, ownership, acceptance or negotiation of any drafts, bills of exchange, acceptances or obligations that fall within the classification of self-liquidating paper (as defined in Section 9.13(c)). (c) For the purposes of this Section 9.13 only: (i) The term "default" means any failure to make payment in full of the principal of or interest on any of the Securities when and as such principal or interest becomes due and payable; (ii) The term "cash transaction" means any transaction in which full payment for goods or securities sold is made within seven (7) days after delivery of the goods or securities in currency or in checks or other orders drawn upon banks or bankers and payable upon demand; (iii) The term "self-liquidating paper" means any draft, bill of exchange, acceptance or obligation that is made, drawn, negotiated or incurred by any obligor on the Securities for the purpose of financing the purchase, processing, manufacturing, shipment, storage or sale of goods, wares or merchandise and that is secured by documents evidencing title to, possession of or a lien upon, the goods, wares or merchandise or the receivables or proceeds arising from the sale of the goods, wares or merchandise previously constituting the security, provided the security is received by the Trustee simultaneously with the creation of the creditor relationship with such obligor arising from the making, drawing, negotiating or incurring of the draft, bill of exchange, acceptance or obligation; and (iv) The term "obligor" means any obligor upon the Securities within the meaning of the Trust Indenture Act. SECTION 9.14. Maintenance of Offices and Agencies. (a) There shall at all times be maintained in the Borough of 80 Manhattan, the City of New York, and in such other Places of Payment, if any, as shall be specified for the Securities of any series in the related Series Supplemental Indenture, an office or agency where Securities may be presented or surrendered for registration of transfer or exchange and for payment of principal, premium, if any, and interest, and where notices and demands to or upon the Trustee in respect of the Securities or this Indenture may be served. Such office or agency shall be initially at ( ). Written notice of the location of each of such other office or agency and of any change of location thereof shall be given by the Company to the Trustee and by the Trustee to the Holders in the manner specified in Section 1.6. In the event that no such office or agency shall be maintained or no such notice of location or of change of location shall be given, presentations, surrenders and demands may be made and notices may be served at the Corporate Trust Office. (b) There shall at all times be a Security Registrar and a Paying Agent (which may be the Trustee) appointed by the Company hereunder. In addition, at any time when any Securities remain Outstanding, the Trustee may appoint an Authenticating Agent or Agents with respect to the Securities of one or more series that shall be authorized to act on behalf of the Trustee to authenticate Securities of such series issued upon original issuance, exchange, registration of transfer or partial redemption thereof or pursuant to Section 2.9, and Securities so authenticated shall be entitled to the benefits of this Indenture and shall be valid and obligatory for all purposes as if authenticated by the Trustee hereunder (it being understood that wherever reference is made in this Indenture to the authentication and delivery of Securities by the Trustee or the Trustee's certificate of authentication, such reference shall be deemed to include authentication and delivery on behalf of the Trustee by an Authenticating Agent and a certificate of authentication executed on behalf of the Trustee by an Authenticating Agent). If an appointment of an Authenticating Agent with respect to the Securities of one or more series shall be made pursuant to this Section 9.14(b), the Securities of such series may have endorsed thereon, in addition to the Trustee's certificate of authentication, an alternate certificate of authentication in the following form: 81 This Security is one of the Securities referred to in the within-mentioned Indenture. FIRST UNION NATIONAL BANK OF GEORGIA, as Trustee By_____________________________ Authenticating Agent By_____________________________ Authorized Signatory Any Authorized Agent shall be a bank or trust company, shall be a Person organized and doing business under the laws of the United States or any state thereof, having a combined capital and surplus of at least $500,000,000, and shall be authorized under such laws to exercise corporate trust powers, subject to supervision by Federal or state authorities. If such Authorized Agent publishes reports of its condition at least annually, pursuant to law or to the requirements of the aforesaid supervising or examining authority, then for the purposes of this Section 9.14, the combined capital and surplus of such Authorized Agent shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time an Authorized Agent shall cease to be eligible in accordance with the provisions of this Section 9.14, such Authorized Agent shall resign immediately in the manner and with the effect specified in this Section 9.14. The Trustee at its office specified in the first paragraph of this Indenture, is hereby appointed as Paying Agent and Security Registrar hereunder. (c) Any Paying Agent (other than the Trustee) from time to time appointed hereunder shall execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the Trustee, subject to the provisions of this Section 9.14, that such Paying Agent will: (i) hold all sums held by it for the payment of principal of and premium, if any, and interest on the Securities in trust for the benefit of the Persons entitled thereto until such sums shall be paid to such Persons or otherwise disposed of as herein provided; (ii) give the Trustee within five (5) days thereafter notice of any default by any obligor upon the Securities in the making of any such payment of principal, 82 premium, if any, or interest; and (iii) at any time during the continuance of any such default, upon the written request of the Trustee, forthwith pay to the Trustee all sums so held in trust by such Paying Agent. Notwithstanding any other provision of this Indenture, any payment required to be made to or received or held by the Trustee may, to the extent authorized by written instructions of the Trustee, be made to or received or held by a Paying Agent in the Borough of Manhattan, the City of New York, for the account of the Trustee. (d) Any Person into which any Authorized Agent may be merged or converted or with which it may be consolidated, or any Person resulting from any merger, consolidation or conversion to which any Authorized Agent shall be a party, or any Person succeeding to the corporate trust business of any Authorized Agent, shall be the successor of such Authorized Agent hereunder, if such successor corporation is otherwise eligible under this Section 9.14, without the execution or filing of any paper or any further act on the part of the parties hereto or such Authorized Agent or such successor Person. (e) Any Authorized Agent may at any time resign by giving written notice of resignation to the Trustee and the Mobile Energy Parties. The Mobile Energy Parties may, and at the request of the Trustee shall, at any time, terminate the agency of any Authorized Agent by giving written notice of termination to such Authorized Agent and to the Trustee. Upon the resignation or termination of an Authorized Agent or in case at any time any such Authorized Agent shall cease to be eligible under this Section 9.14 (when, in either case, no other Authorized Agent performing the functions of such Authorized Agent shall have been appointed), the Company shall promptly appoint one or more qualified successor Authorized Agents approved by the Trustee to perform the functions of the Authorized Agent that has resigned or whose agency has been terminated or that shall have ceased to be eligible under this Section 9.14. The Company shall give written notice of any such appointment to all Holders as their names and addresses appear on the Security Register. SECTION 9.15. Co-Trustee or Separate Trustee. (a) If at any time or times it shall be necessary or prudent in order to conform to any law or any jurisdiction in which property shall be held subject to the Lien of this Indenture or the other Security Documents, or the Trustee shall be advised by counsel satisfactory to it that it is so necessary or prudent in the interest of the Holders, or the Holders of a majority in principal amount of Outstanding Securities shall in writing so 83 request, the Trustee and the Mobile Energy Parties shall execute and deliver all instruments and agreements necessary or proper to constitute another bank or trust company or one or more Persons approved by the Trustee either to act as co-trustee or co-trustees of all or any part of the Indenture Securities Collateral jointly with the Trustee originally named herein or any successor or successors, or to act as separate trustee or trustees of all or any such property. In the event the Mobile Energy Parties shall have not joined in the execution of such instruments and agreements within ten (10) days after the receipt of a written request from the Trustee so to do, or in case an Event of Default with respect to the Securities of a series shall have occurred and be continuing, the Trustee may act under the foregoing provisions of this Section 9.15 without the concurrence of either of the Mobile Energy Parties; and the Mobile Energy Parties hereby appoint the Trustee as agent and attorney to act under the foregoing provisions of this Section 9.15 in either of such contingencies. (b) Every additional trustee hereunder shall, to the extent permitted by law, be appointed and act, and such additional trustee and its successors shall act, subject to the following provisions and conditions, namely: (i) the Securities shall be authenticated and delivered, and all powers, duties, obligations and rights conferred upon the Trustee in respect of the custody, control and management of monies, papers or securities, shall be exercised, solely by the Trustee (or, in the case of authentication and delivery of Securities, by any Authenticating Agent); (ii) all rights, powers, duties and obligations conferred or imposed upon the Trustee or the additional trustee or trustees shall be conferred or imposed upon and exercised or performed by the Trustee or the Trustee and such additional trustee or trustees jointly, except to the extent that under any law of any jurisdiction in which any particular act or acts are to be performed, the Trustee shall be incompetent or unqualified to perform such act or acts, in which event such rights, powers, duties and obligations shall be exercised and performed by such additional trustee or trustees; (iii) no power given hereby to, or which it is provided hereby may be exercised by, any such additional trustee or trustees, shall be exercised hereunder by such additional trustee or trustees, except jointly with, or with the consent in writing of, the Trustee, anything herein contained to the contrary notwithstanding; (iv) no trustee hereunder shall be personally 84 liable by reason of any act or omission of any other trustee hereunder; and (v) the Mobile Energy Parties and the Trustee, at any time, by an instrument in writing, executed by them jointly, may remove any such additional trustee, and in that case, by an instrument in writing executed by them jointly, may appoint a successor or successors to such additional trustee or trustees (as the case may be), anything herein contained to the contrary notwithstanding. In the event that neither of the Mobile Energy Parties shall have joined in the execution of any such instrument within ten (10) days after the receipt of a written request from the Trustee to do so, the Trustee shall have the power to remove any such additional trustee and to appoint a successor additional trustee without the concurrence of the Mobile Energy Parties, each hereby appointing the Trustee its agent and attorney to act for it in such connection in such contingency. In the event that the Trustee alone shall have appointed an additional trustee or trustees or co-trustee or co-trustees as above provided, it may at any time, by an instrument in writing, remove any such additional trustee or co-trustee, the successor to any such trustee or co-trustee so removed to be appointed by the Mobile Energy Parties and the Trustee, or by the Trustee alone, as hereinbefore in this Section 9.15 provided. SECTION 9.16. Taxes. Any United States withholding taxes imposed with respect to payments made to a Holder of a Security shall be the sole responsibility of such Holder and therefore no Holder shall have the right to have any payment to it "grossed-up" for, or paid free of, any such withholding taxes. ARTICLE X. HOLDERS' LISTS AND REPORTS BY TRUSTEE AND MOBILE ENERGY PARTIES SECTION 10.1. Company to Furnish Trustee Names and Addresses of Holders. The Company will furnish or cause to be furnished to the Trustee semiannually, between April 1 and April 15 and between October 1 and October 15, in each year, and at such other times as the Trustee may request in writing, within thirty (30) days after receipt by the Company of any such request, a list, in such form as the Trustee may reasonably require, of the names and addresses of the Holders, in each case as of a date not more than fifteen (15) days prior to the time such list is furnished; provided, however, that so long as the Trustee is the sole Security Registrar or is otherwise furnished a copy of the Security Register, no such list need be furnished. 85 SECTION 10.2. Preservation of Information; Communications to Holders. (a) The Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of Holders (i) contained in the most recent list furnished to the Trustee as provided in Section 10.1 and (ii) received by the Trustee in its capacity as Security Registrar, if so acting. The Trustee may destroy any list furnished to it upon receipt of a new list so furnished. (b) If three (3) or more Holders (hereinafter referred to as "applicants") apply in writing to the Trustee, and furnish to the Trustee reasonable proof that each such applicant has owned a Security for a period of at least six (6) months preceding the date of such application, and such application states that the applicants desire to communicate with other Holders with respect to their rights under this Indenture or under the Securities and is accompanied by a copy of the form of proxy or other communication that such applicants propose to transmit, then the Trustee shall, within five (5) Business Days after the receipt of such application, at its election, either: (i) afford such applicants access to the information preserved at the time by the Trustee in accordance with Section 10.2(a), or (ii) inform such applicants as to the approximate number of Holders of Securities whose names and addresses appear in the information preserved at the time by the Trustee in accordance with Section 10.2(a), and as to the approximate cost of mailing to such Holders the form of proxy or other communication, if any, specified in such application. If the Trustee shall elect not to afford such applicants access to such information, the Trustee shall, upon the written request of such applicants, mail to each Holder whose name and address appears in the information preserved at the time by the Trustee in accordance with Section 10.2(a), a copy of the form of proxy or other communication that is specified in such request, with reasonable promptness after a tender to the Trustee of the material to be mailed and of payment, or provision for the payment, of the reasonable expenses of mailing, unless within five (5) days after such tender, the Trustee shall mail to such applicants and file with the SEC, together with a copy of the material to be mailed, a written statement to the effect that, in the opinion of the Trustee, such mailing would be contrary to the best interests of the Holders or would be in violation of applicable law. Such written statement shall specify the basis of such opinion. If the SEC, after opportunity for a hearing upon the objections specified in the written statement so filed, shall enter an order refusing to sustain any of such objections or if, after the entry of an order sustaining one or more of such 86 objections, the SEC shall find, after notice and opportunity for hearing, that all the objections so sustained have been met and shall enter an order so declaring, the Trustee shall mail copies of such material to all such Holders with reasonable promptness after the entry of such order and the renewal of such tender; otherwise the Trustee shall be relieved of any obligation or duty to such applicants respecting their application. (c) Every Holder of Securities, by receiving and holding the same, agrees with the Mobile Energy Parties and the Trustee that none of the Mobile Energy Parties and the Trustee shall be held accountable by reason of the disclosure of any such information as to the names and addresses of the Holders in accordance with Section 10.2 (b), regardless of the source from which such information was derived, and that the Trustee shall not be held accountable by reason of mailing or filing with the SEC any material pursuant to a request made under Section 10.2(b). SECTION 10.3. Reports by Trustee. (a) Within sixty (60) days after January 1 in each year, commencing with January 1996, the Trustee shall transmit by mail to all Holders, as their names and addresses appear in the Security Register, a brief report dated as of such January 1 with respect to (but if no such event has occurred within such period, no report need be transmitted): (i) any change to its eligibility under Section 9.9 and its qualifications under Section 9.8; (ii) the creation of or any material change to a relationship specified in paragraphs (i) through (x) of Section 9.8(c). (iii) the character and amount of any advances (and if the Trustee elects so to state, the circumstances surrounding the making thereof) made by the Trustee (as such) that remain unpaid on the date of such report, and for the reimbursement of which it claims or may claim a lien or charge, prior to that of the Securities, on the trust estate or any property or funds held or collected by it as Trustee, except that the Trustee shall not be required (but may elect) to report such advances if such advances so remaining unpaid aggregate not more than one-half of one percent (1/2 of 1%) of the principal amount of the Securities Outstanding on the date of such report; (iv) the amount, interest rate and maturity date of all other indebtedness owing by an obligor on the Securities within the meaning of the Trust Indenture Act to the Trustee in its individual capacity, on the date of such report, with a brief description of any property held as collateral security therefor, except an indebtedness based 87 upon a creditor relationship arising in any manner described in Section 9.13(b)(ii), (iii), (iv) or (vi); (v) any change to the property and funds physically in the possession of the Trustee (as such) on the date of such report; (vi) any release, or release and substitution, of property subject to the Lien of this Indenture (and the consideration therefor, if any) that the Trustee has not previously reported; (vii) any additional issue of Securities that the Trustee has not previously reported; and (viii) any action taken by the Trustee in the performance of its duties hereunder that it has not previously reported and that in its opinion materially affects the Securities of any series, except action in respect of an Event of Default, notice of which has been or is to be withheld by the Trustee in accordance with Section 9.2. (b) The Trustee shall transmit by mail to all Holders, as their names and addresses appear in the Security Register, a brief report with respect to: (i) the release, or release and substitution, of property subject to the Lien of this Indenture (and the consideration therefor, if any) unless the fair value of such property is less than ten percent (10%) of the principal amount of Securities Outstanding at the time of such release, or such release and substitution, such report to be transmitted within ninety (90) days after such time; and (ii) the character and amount of any advances (and if the Trustee elects so to state the circumstances surrounding the making thereof) made by the Trustee (as such) since the date of the last report transmitted pursuant to Section 10.3(a) (or if no such report has yet been so transmitted, since the date of execution of this instrument) for the reimbursement of which it claims or may claim a lien or charge, prior to that of the Securities of any series, on property or funds held or collected by it as Trustee, and that it has not previously reported pursuant to this Section 9(b), except that the Trustee shall not be required (but may elect) to report such advances if such advances remaining unpaid at any time aggregate ten percent (10%) or less of the principal amount of Securities Outstanding at such time, such report to be transmitted within ninety (90) days after such time. 88 (c) A copy of each such report shall, at the time of such transmission to Holders, be filed by the Trustee with each stock exchange, if any, upon which the Securities are listed, and also with the SEC. Either of the Mobile Energy Parties will notify the Trustee when the Securities of any series are listed on any stock exchange. SECTION 10.4. Reports by Mobile Energy Parties. Each of the Mobile Energy Parties will: (a) file with the Trustee, within fifteen (15) days after it is required to file the same with the SEC, copies of the annual reports and of the information, documents and other reports (or copies of such portions of any of the foregoing as the SEC may from time to time by rules and regulations prescribe) that either of the Mobile Energy Parties may be required to file with the SEC pursuant to Section 13 or Section 15(d) of the Exchange Act; (b) file with the Trustee and the SEC, in accordance with rules and regulations prescribed from time to time by the SEC, such additional information, documents and reports with respect to compliance by the Mobile Energy Parties with the conditions and covenants of this Indenture, as may be required by such rules and regulations; (c) transmit by mail to all Holders, as their names and addresses appear in the Security Register, within thirty (30) days after the filing thereof with the Trustee, such summaries of any information, documents and reports required to be filed by the Mobile Energy Parties pursuant to Section 10.4 (a) and (b) as may be required by rules and regulations prescribed from time to time by the SEC. ARTICLE XI. SUPPLEMENTAL INDENTURES SECTION 11.1. Supplemental Indentures Without Consent of Holders. Without the consent of the Holders of any Securities, the Mobile Energy Parties, in each case when authorized by Board Resolutions, and the Trustee, at any time and from time to time, may enter into one or more indentures supplemental hereto in form satisfactory to the Trustee, for any of the following purposes: (a) to establish the form and terms of Securities of any series permitted by Sections 2.1 and 2.3 and to provide for the sale, authentication and delivery of additional Securities and refunding Securities and the disposition of the proceeds from the sale thereof, in the manner and to the extent authorized by this Indenture; or 89 (b) to grant to or confer upon the Holders or the Trustee for the benefit of the Holders any additional rights, remedies, powers or authorities or security that may lawfully be granted to or conferred upon the Holders or the Trustee; or (c) to evidence the succession of a new Trustee hereunder or a co-trustee or separate trustee pursuant to Section 9.15; or (d) to add to the covenants of either of the Mobile Energy Parties, for the benefit of the Holders, or to surrender any right or power herein conferred upon such Mobile Energy Party; or (e) to convey, transfer and assign to the Trustee, and to subject to the Lien of this Indenture, additional properties or assets, and to correct or amplify the description of any property at any time subject to the Lien of this Indenture or to assure, convey and confirm unto the Trustee any property subject or required to be subject to the Lien of this Indenture; or (f) to modify, eliminate or add to the provisions of this Indenture to such extent as shall be necessary to continue the qualification of this Indenture (including any supplemental indenture) under the Trust Indenture Act, or under any similar Federal statute hereafter enacted, or to permit the qualification of any Securities for sale under the securities laws of any of the States of the United States, and to add to this Indenture such other provisions as may be expressly permitted by the Trust Indenture Act, or under any similar Federal statute hereafter enacted, excluding, however, the provisions referred to in Section 316(a)(2) of the Trust Indenture Act as in effect at the date as of which this instrument was executed or any corresponding provision in any similar Federal statute hereafter enacted; or (g) to permit or facilitate the issuance of Securities in uncertificated form or to provide for the cessation thereof; or (h) to cure any ambiguity, inconsistency or formal defect or omission, or to make any other provisions with respect to matters or questions arising under this Indenture, provided such action shall not be inconsistent with this Indenture, shall not impair the security for the Securities and shall not adversely affect the interest of the Holders of any series; or (i) to secure or maintain the rating for any 90 Securities from any Rating Agency. SECTION 11.2. Supplemental Indenture with Consent of Holders. With the consent of the Holders of not less than a majority in aggregate principal amount of the Securities of all series then Outstanding, considered as one class, by Act of said Holders delivered to the Mobile Energy Parties and the Trustee, the Mobile Energy Parties, in each case, when authorized by Board Resolutions, may, and the Trustee, subject to Sections 11.3 and 11.4, shall, enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture; provided, however, that if there shall be Securities of more than one series Outstanding hereunder and if a proposed supplemental indenture shall directly affect the rights of the Holders of one or more, but less than all, of such series, then the consent only of the Holders of not less than a majority in aggregate principal amount of the Outstanding Securities of all series so directly affected, considered as one class, shall be required; provided further, however, that no such supplemental indenture shall, without the consent of the Holder of each Outstanding Security directly affected thereby: (a) change the Stated Maturity of any Security (or, if the principal thereof is payable in installments, the Stated Maturity of any such installment), or of any payment of interest thereon, or the dates or circumstances of payment of premium, if any, on any Security, or change the principal amount thereof or the interest thereon or any premium payable upon the redemption thereof, or change the place of payment where, or the coin or currency in which, any Security or the premium, if any, or the interest thereon is payable, or impair the right to institute suit for the enforcement of any such payment of principal or interest on or after the Stated Maturity thereof (or, in the case of redemption, on or after the Redemption Date) or such payment of premium, if any, on or after the date such premium becomes due and payable or change the dates or the amounts of payments to be made through the operation of the Sinking Fund in respect of such Securities, if any; or (b) permit the creation of any Lien prior to or pari passu with the Lien of the Security Documents with respect to any of the Indenture Securities Collateral, or terminate the Lien of the Security Documents on any Indenture Securities Collateral or deprive any Holder of the security afforded by the Lien of the Security Documents, except to the extent expressly permitted by this Indenture or any of the Security Documents; or (c) reduce the percentage in principal amount of the 91 Outstanding Securities, the consent of whose Holders is required for any such supplemental indenture, or the consent of whose Holders is required for any waiver (of compliance with certain provisions of this Indenture or certain defaults hereunder and their consequences) provided for in this Indenture, or reduce the requirements of Section 13.4 for quorum or voting; or (d) modify any of the provisions of Section 3.2 or Section 8.7 (except to increase the percentage of the principal amount of the Outstanding Securities required to waive past defaults) or of this Section 11.2 (except to provide that certain other provisions of this Indenture cannot be modified or waived without the consent of the Holder of each Security affected thereby). A supplemental indenture that changes or eliminates any covenant or other provision of this Indenture that has expressly been included solely for the benefit of one or more particular series of Securities, or that modifies the rights of the Holders of Securities of such series with respect to such covenant or other provision, shall be deemed not to affect the rights under this Indenture of the Holders of Securities of any other series. Upon receipt by the Trustee of Board Resolutions of the Mobile Energy Parties and such other documentation as the Trustee may reasonably require and upon the filing with the Trustee of evidence of the Act of such Holders, the Trustee shall join in the execution of such supplemental indenture or other instrument (as the case may be), subject to the provisions of Sections 11.3 and 11.4. It shall not be necessary for any Act of Holders under this Section 11.2 to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such Act shall approve the substance thereof. SECTION 11.3. Documents Affecting Immunity or Indemnity. If in the opinion of either of the Mobile Energy Parties or the Trustee any document required to be executed by it pursuant to the terms of Section 11.2 affects any interest, right, duty, immunity or indemnity in favor of the Mobile Energy Parties or the Trustee under this Indenture, either of the Mobile Energy Parties or the Trustee (as the case may be), may in its discretion decline to execute such document. SECTION 11.4. Execution of Supplemental Indentures. In executing, or accepting the additional trusts created by, any Series Supplemental Indenture or other supplemental indenture permitted by this Article XI or the modifications thereby of the trusts created by this Indenture, the Trustee shall be entitled to receive, and (subject to section 9.1) shall be fully protected 92 in relying upon, an Opinion of Counsel stating that the execution of such supplemental indenture is authorized or permitted by this Indenture. SECTION 11.5. Effect of Supplemental Indentures. Upon the execution of any supplemental indenture under this Article XI, this Indenture shall be modified in accordance therewith, and such supplemental indenture shall form a part of this Indenture for all purposes; and every Holder of Securities theretofore or thereafter authenticated and delivered hereunder shall be bound thereby. SECTION 11.6. Conformity with Trust Indenture Act. Every supplemental indenture executed pursuant to this Article XI shall conform to the requirements of the Trust Indenture Act as then in effect. SECTION 11.7. Reference in Securities to Supplemental Indentures. Securities authenticated and delivered after the execution of any supplemental indenture pursuant to this Article XI may, and shall if required by the Company, bear a notation in form approved by the Company and the Trustee as to any matter provided for in such supplemental indenture; and, in such case, suitable notation may be made upon Outstanding Securities after proper presentation and demand. If the Company shall so determine, new Securities so modified as to conform, in the opinion of the Company and the Trustee, to any such supplemental indenture may be prepared and executed by the Company and authenticated and delivered by the Trustee in exchange for Outstanding Securities. ARTICLE XII. SATISFACTION AND DISCHARGE SECTION 12.1. Satisfaction and Discharge of Securities. (a) Except as otherwise provided with respect to the Securities of any series in the Series Supplemental Indenture relating thereto, the Securities of such series shall, prior to the Stated Maturity thereof (or, if principal is payable in installments, the Stated Maturity of the final installment of principal thereof), on the ninety-first (91st) day after the date of the deposit referred to in paragraph (i) below, be deemed to have been paid for all purposes of this Indenture, and the entire indebtedness of the Mobile Energy Parties in respect thereof shall be deemed to have been satisfied and discharged, upon satisfaction of the following conditions: (i) the Company shall have irrevocably deposited with the Trustee, in trust, specifically pledged as security for and dedicated solely for the benefit of the Holders of 93 Securities of such series (A) monies in an amount that shall be sufficient, (B) U.S. Government Obligations, the payment of interest and principal on which when due, without any regard to reinvestment thereof, will provide monies that shall be sufficient or (C) any combination of clause (A) and (B) above that shall be sufficient, in each case, in the opinion of a firm of independent certified public accountants of recognized national standing expressed in a written certification thereof delivered to the Trustee, to pay when due the principal of and premium, if any, and interest due and to become due on the Securities of such series, whether at Stated Maturity or upon redemption, acceleration or otherwise; (ii) if any such deposit of monies or U.S. Government Obligations shall have been made prior to the Stated Maturity (or, if principal is payable in installments, the Stated Maturity of the final installment of principal) or Redemption Date or Prepayment Date of such Securities, the Company shall have delivered to the Trustee a Company Order stating that such monies shall be held by the Trustee, in trust, as provided in Section 12.3; (iii) if the Company has deposited or caused to be deposited monies or U.S. Government Obligations (or a combination thereof) to pay or discharge the principal of and premium, if any, and interest on the Outstanding Securities of such series to and including a Redemption Date on which all of the Outstanding Securities of such series are eligible for optional redemption and on which all of the Outstanding Securities of such series are to be redeemed, such Redemption Date shall be irrevocably designated by a Board Resolution of the Company delivered to the Trustee on or prior to the date of such deposit of such monies or U.S. Government Obligations, and such Board Resolution shall be accompanied by an irrevocable Company Request that the Trustee give notice of such redemption in the name and at the expense of the Company not less than thirty (30) nor more than sixty (60) days prior to such redemption in accordance with Section 6.4; (iv) the Mobile Energy Parties shall have delivered to the Trustee an Opinion of Counsel to the effect that (A) the trust resulting from such deposit does not constitute an investment company under the Investment Company Act of 1940 and (B) the Holders shall have a perfected security interest under applicable Law in the monies and U.S. Government Obligations so deposited; (v) no Event of Default or event that with notice, lapse of time or both would become an Event of Default (including by reason of such deposit) arising pursuant to 94 Section 8.1(a) or (n) with respect to the Securities of such series shall have occurred and be continuing on the date of deposit or during the period ending on the ninety-first (91st) day after such date; (vi) the Mobile Energy Parties shall have delivered to the Trustee an Opinion of Counsel to the effect that based upon (A) a change in the applicable Federal income tax law since the date of this Indenture (or a change in the official interpretation thereof) or (B) the receipt by the Company from, or the publishing by, the Internal Revenue Service of a ruling on which such counsel is relying for the opinion contemplated herein, the Holders of Securities of such series will not recognize income, gain or loss for Federal income tax purposes as a result of the deposit, defeasance and discharge pursuant to this Section 12.1(a) and will be subject to Federal income tax on the same amounts and in the same manner and at the same times as would have been the case if such deposit, defeasance and discharge had not occurred; and (vii) there shall have been delivered to the Trustee an Officer's Certificate of each of the Mobile Energy Parties and an Opinion of Counsel, each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of the Securities of such series have been complied with. Upon satisfaction of the aforesaid conditions with respect to the Securities of any series, the Trustee shall, upon receipt of a Company Request, acknowledge in writing that the Securities of such series are deemed to have been paid for all purposes of this Indenture and that the entire indebtedness of the Mobile Energy Parties in respect thereof is deemed to have been satisfied and discharged. In the event that Securities that shall be deemed to have been paid as provided in this Section 12.1(a) do not mature and are not to be redeemed within the sixty (60) day period commencing on the date of the deposit with the Trustee of monies, the Mobile Energy Parties shall, as promptly as practicable, give a notice, in the same manner as a notice of redemption with respect to such Securities, to the Holders of such Securities to the effect that such Securities are deemed to have been paid and the circumstances thereof. Notwithstanding the satisfaction and discharge of any Securities as aforesaid, (i) the rights of Holders of Securities of such series to receive, solely from the trust funds described in paragraph (i) of this Section 12.1(a), payment of the principal of and premium, if any, and interest on the Securities of such series on the Stated Maturity thereof (to and including 95 the Redemption Date, if any, designated pursuant to paragraph (iii) of this Section 12.1(a)) and (ii) the rights and obligations of the Mobile Energy Parties and the Trustee in respect of the Securities of such series under Sections 2.7, 2.8, 2.9, 2.10, 2.11, 2.12 and 2.15, Article VI (in the case of redemption as contemplated by paragraph (iii) of this Section 12.1(a), to the extent Article VI applies to the redemption to be made on such Redemption Date), Sections 9.3(e) and 9.7 and this Article XII shall survive. (b) If (i) each of the conditions set forth in paragraphs (i), (ii), (iii), (iv) and (v) of this Section 12.1(a) shall have been satisfied with respect to the Outstanding Securities of any series, but the conditions set forth in paragraphs (vi) and (vii) thereof are not satisfied and (ii) the Mobile Energy Parties shall have delivered to the Trustee (A) an opinion of counsel to the effect that the Holders of such series will not recognize income, gain or loss for Federal income tax purposes as a result of the deposit, defeasance and discharge pursuant to this Section 12.1(a) and will be subject to Federal income tax on the same amounts and in the same manner and at the same times as would have been the case if such deposit, defeasance and discharge had not occurred and (B) an Officer's Certificate of each of the Mobile Energy Parties and an Opinion of Counsel, each stating that all conditions precedent herein provided for relating to the defeasance of the Securities of such series pursuant to this Section 12.1(b) have been complied with, then: (A) with respect to the Securities of such series, the Mobile Energy Parties shall be released from their covenants and other obligations contained in Articles V (other than Section 5.3) and XIV and Section 2.15 of this Indenture and all their obligations under the other Security Documents, and may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in any such covenant or obligation whether directly or indirectly, by reason of any reference elsewhere herein to any other provision of this Indenture or any other document and any failure to comply with any such covenant shall not constitute an Event of Default with respect to the Securities of such series; (B) the occurrence of any event specified in any of paragraphs (b) through (m), (o) or (p) of Section 8.1 shall not constitute an Event of Default with respect to the Securities of such series; (C) the Securities of such series shall thereafter be deemed not to be "Outstanding" solely for purposes of determining whether or not the Holders of the requisite aggregate principal amount of Securities have concurred in any Act under this Indenture with respect to any covenant or 96 obligation from which the Mobile Energy Parties have been released pursuant to paragraph (A) above, or with respect to any event that shall have ceased to be an Event of Default with respect to Securities of such series pursuant to paragraph (B) above (or the consequences thereof); and (D) the Securities of such series shall cease to be secured by or to be entitled to any benefit under the Security Documents or any other Lien upon any Collateral, including any monies, security or other property held by the Trustee (other than monies and U.S. Obligations deposited with the Trustee pursuant to paragraph (i) of Section 12.1(a) in respect of Securities of such series and interest and other amounts earned and received thereon); provided, however, that the provisions of this Section 12.1(b) shall not be deemed to relieve the Company of its obligations with respect to the payment of the principal of and premium, if any, and interest on the Outstanding Securities of such series. In respect of the foregoing, it is understood and agreed that: (1) satisfaction by the Company of the conditions necessary to achieve the consequences specified in this Section 12.1(b) with respect to any series of Securities shall not be construed to preclude the Company from achieving the consequences specified in Section 12.1(a) with respect to such Securities at a later date upon satisfaction of the conditions set forth in Section 12.1(a); and (2) if at any time the only Outstanding Securities are Securities with respect to which the conditions described in this Section 12.1(b) have been satisfied, the Trustee shall, upon receipt of a Company Request, take the actions specified in the last paragraph of Section 12.2 notwithstanding the failure to satisfy and discharge the Indenture as provided in Section 12.2. (c) For purposes of this Section 12.1, if the Mobile Energy Parties, or either of them, shall incur any Debt and all or any portion of the proceeds thereof are concurrently applied to make a deposit pursuant to paragraph (i) of Section 12.1(a) in respect of any series of Securities (or to acquire U.S. Government Obligations that are concurrently so deposited), whether for purposes of Section 12.1(a) or 12.1(b), then any Event of Default that would arise as a result of such incurrence or as a result of any Lien granted to secure such Debt shall not constitute an Event of Default with respect to the Securities of such series; provided, however, that if, on or before the ninety-first (91st) day after the date of such deposit any of the applicable conditions under Section 12.1(a) or (b), as the case may be, required to be satisfied on such date or during the period ending on such date are not satisfied, then any such Event of Default 97 shall be deemed to have occurred at the time and to the extent such Event of Default would have occurred without regard to this Section 12.1(c). (d) Notwithstanding anything herein to the contrary, if, at any time after a Security would be deemed to have been paid for purposes of this Indenture, and, if such is the case, the Company's indebtedness in respect thereof would be deemed to have been satisfied and discharged, pursuant to this Section 12.1 (without regard to provisions of this paragraph), the Trustee or any Paying Agent, as the case may be, shall be required to return the monies or U.S. Government Obligations, or combination thereof, deposited with it to either of the Mobile Energy Parties or any Affiliate thereof or its representatives under any applicable Federal or state bankruptcy, insolvency or other similar Law such Security shall thereupon be deemed retroactively not to have been paid and any satisfaction and discharge of the Company's indebtedness in respect thereof shall retroactively be deemed not have been effected, and such Security shall be deemed to remain Outstanding. SECTION 12.2. Satisfaction and Discharge of Indenture. This Indenture and the Guaranty shall upon a Company Request and a Mobile Energy Request cease to be of further effect (except as hereinafter expressly provided), and the Trustee, at the expense of the Company, shall execute proper instruments prepared by the Company acknowledging satisfaction and discharge of this Indenture and the Guaranty, when: (a) either (i) all Securities theretofore authenticated and delivered (other than (A) Securities that have been destroyed, lost or stolen and that have been replaced or paid as provided in Section 2.9 and (B) Securities deemed to have been paid in accordance with Section 12.1) have been delivered to the Trustee for cancellation; or (ii) all Securities not theretofore delivered to the Trustee for cancellation shall be deemed to have been paid in accordance with Section 12.1; (b) all other sums due and payable hereunder have been paid; and (c) the Mobile Energy Parties have delivered to the Trustee an Officer's Certificate and an Opinion of Counsel, each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture have been complied with. Upon satisfaction of the aforesaid conditions, the Trustee 98 shall, upon receipt of a Company Request and Mobile Energy Request, acknowledge in writing the satisfaction and discharge of this Indenture and the Guaranty. Notwithstanding the satisfaction and discharge of this Indenture and the Guaranty as aforesaid, if at the time of such satisfaction and discharge any Securities are deemed to have been paid in accordance with Section 12.1, but have not actually been fully paid, then the rights and obligations of the Mobile Energy Parties and the Trustee in respect of such Securities shall survive to the extent provided in Section 12.1 until all such Securities have actually been repaid in full. Upon satisfaction and discharge of this Indenture and the Guaranty as provided in this Section 12.2, the Trustee shall assign, transfer and turn over to or upon the order of the Company, any and all monies, securities and other property then held by the Trustee for the benefit of the Holders other than monies and U.S. Government Obligations deposited with the Trustee pursuant to Section 12.1 and interest and other amounts earned or received thereon. SECTION 12.3. Application of Trust Money. The monies deposited with the Trustee pursuant to Section 12.1 and all monies received by the Trustee in respect of U.S. Government Obligations deposited with the Trustee pursuant to Section 12.1 shall not be withdrawn or used for any purpose other than, and shall be held in trust for, the payment of the principal of and premium, if any, and interest on the Securities or portions of principal amount thereof in respect of which such deposit was made. The Company shall pay and shall indemnify the Trustee against any tax, fee or other charge imposed on or assessed against U.S. Government Obligations deposited pursuant to Section 12.1 or the interest and principal received in respect of such obligations other than any such tax, fee or other charge payable by or on behalf of Holders. ARTICLE XIII. MEETINGS OF HOLDERS OF SECURITIES; ACTION WITHOUT MEETING SECTION 13.1. Purposes for Which Meetings May Be Called. A meeting of Holders of Securities of one or more, or all, series, may be called at any time and from time to time pursuant to this Article XIII to make, give or take any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be made, given or taken by Holders of such series. 99 SECTION 13.2. Call, Notice and Place of Meetings. (a) The Trustee may at any time call a meeting of Holders of one or more, or all, series of Securities for any purposes specified in Section 13.1, to be held at such time and at such place in the Borough of Manhattan, The City of New York, or at such other place, as the Trustee shall determine. Notice of every such meeting, setting forth the time and the place of such meeting and in general terms the action proposed to be taken at such meeting, shall be given, in the manner provided in Section 1.6, not less than twenty (20) nor more than sixty (60) days prior to the date fixed for the meeting. (b) If the Trustee shall have been requested to call a meeting of the Holders of Securities of one or more, or all, series, by the Company, by Mobile Energy or by the Holders of ten percent (10%) in aggregate principal amount of the Outstanding Securities of such series (or, in the case of a meeting of the Holders of the Securities of all series, ten percent (10%) in aggregate principal amount of the Outstanding Securities of all series, considered as one class), by written request setting forth in reasonable detail the action proposed to be taken at the meeting, and the Trustee shall not have made the first mailing of the notice of such meeting within twenty-one (21) days after receipt of such request or shall not thereafter proceed to cause the meeting to be held as provided herein, then the Mobile Energy Parties or such Holders (as the case may be) may determine the time and the place in the Borough of Manhattan, the City of New York, or in such other place as the Mobile Energy Parties or such Holders (as the case may be) shall determine, for such meeting and may call such meeting for such purposes by giving notice thereof as provided in Section 13.2(a). (c) Any meeting of Holders of Securities of one or more, or all, series shall be valid without notice if the Holders of all Outstanding Securities of such series are present in person or by proxy and the Trustee is present, or if notice is waived in writing before or after the meeting by the Holders of all Outstanding Securities of such series, or by such of them as are not present at the meeting in person or by proxy. SECTION 13.3. Persons Entitled to Vote at Meetings. To be entitled to vote at any meeting of Holders of Securities of one or more, or all, series, a Person shall be (a) a Holder of one or more Outstanding Securities of such series or (b) a Person appointed by an instrument in writing as proxy for a Holder or Holders of one or more Outstanding Securities of such series by such Holder or Holders. The only Persons who shall be entitled to attend any meeting shall be the Holders described above and any proxies of such Holders and their respective counsel, any representatives of the Trustee and its counsel and any representatives of the Mobile Energy Parties and their respective counsels. 100 SECTION 13.4. Quorum; Action. The Persons entitled to vote a majority in aggregate principal amount of the Outstanding Securities of the series with respect to which a meeting shall have been called as hereinbefore provided, considered as one class, shall constitute a quorum for a meeting of Holders of Securities of such series; provided, however, that if any action is to be taken at such meeting that this Indenture expressly provides may be taken by the Holders of a specified percentage that is less than a majority in principal amount of the Outstanding Securities of such series, considered as one class, the Persons entitled to vote such specified percentage in principal amount of the Outstanding Securities of such series, considered as one class, shall constitute a quorum. In the absence of a quorum, the meeting may be adjourned for a period of not less than ten (10) days as determined by the chairman of the meeting prior to the adjournment of such meeting. In the absence of a quorum at any such adjourned meeting, such adjourned meeting may be further adjourned for a period of not less than ten (10) days as determined by the chairman of the meeting prior to the adjournment of such adjourned meeting. Except as provided in Section 13.5(e), notice of the reconvening of any adjourned meeting shall be given as provided in Section 13.2(a), except that such notice need be given only once not less than five (5) days prior to the date on which the meeting is scheduled to be reconvened. Notice of the reconvening of an adjourned meeting shall state expressly the percentage, as provided above, of the principal amount of the Outstanding Securities of such series that shall constitute a quorum. Except as limited by Section 11.2, any resolution presented to a meeting or adjourned meeting duly reconvened at which a quorum is present as aforesaid may be adopted by the affirmative vote of the Holders of a majority in aggregate principal amount of the Outstanding Securities of the series with respect to which such meeting shall have been called, considered as one class; provided, however, that, except as so limited, any resolution with respect to any action that this Indenture expressly provides may be taken by the Holders of a specified percentage that is less than a majority in principal amount of the Outstanding Securities of such series, considered as one class, may be adopted at a meeting or an adjourned meeting duly reconvened and at which a quorum is present as aforesaid by the affirmative vote of the Holders of such specified percentage in principal amount of the Outstanding Securities of such series, considered as one class. Any resolution passed or decision taken at any meeting of Holders of Securities duly held in accordance with this Section 13.4 shall be binding on all the Holders of Securities of the series with respect to which such meeting shall have been held, whether or not present or represented at the meeting. 101 SECTION 13.5. Attendance at Meetings; Determination of Voting Rights; Conduct and Adjournment of Meetings. (a) Attendance at meetings of Holders of Securities may be in person or by proxy, and, to the extent permitted by law, any such proxy shall remain in effect and be binding upon any future Holder of the Securities with respect to which it was given, unless and until specifically revoked by the Holder or future Holder of such Securities before being voted. (b) Notwithstanding any other provision of this Indenture, the Trustee may make such reasonable regulations as it may deem advisable for any meeting of Holders of Securities in regard to proof of the holding of such Securities and of the appointment of proxies and in regard to the appointment and duties of inspectors of votes, the submission and examination of proxies, certificates and other evidence of the right to vote, and such other matters concerning the conduct of the meeting as it shall deem appropriate. Except as otherwise permitted or required by any such regulations, the holding of Securities shall be proved in the manner specified in Section 1.4 and the appointment of any proxy shall be proved in the manner specified in Section 1.4. Such regulations may provide that written instruments appointing proxies, regular on their face, may be presumed valid and genuine without the proof specified in Section 1.4 or other proof. (c) The Trustee shall, by an instrument in writing, appoint a temporary chairman of the meeting, unless the meeting shall have been called by either of the Mobile Energy Parties or by Holders of Securities as provided in Section 13.2(b), in which case such Mobile Energy Party or the Holders of Securities of the series calling the meeting (as the case may be) shall in like manner appoint a temporary chairman. A permanent chairman and a permanent secretary of the meeting shall be elected by vote of the Persons entitled to vote a majority in aggregate principal amount of the Outstanding Securities of all series represented at the meeting, considered as one class. (d) At any meeting each Holder of an Outstanding Security of any series or such Holder's proxy shall be entitled to one vote for each $1,000 original principal amount of Securities of such series held or represented by such Holder, and each Holder of any such Security or such Holder's proxy shall be entitled to divide the votes carried by such Security, casting some for and some against a particular action, as such Holder sees fit; provided, however, that no vote shall be cast or counted at any meeting in respect of any Security challenged as not Outstanding and ruled by the chairman of the meeting to be not Outstanding. The chairman of the meeting shall have no right to vote, except as a Holder of a Security or proxy. (e) Any meeting duly called pursuant to Section 13.2 at which a quorum is present may be adjourned from time to time by 102 Persons entitled to vote a majority in aggregate principal amount of the Outstanding Securities of all series represented at the meeting, considered as one class; and the meeting may be held as so adjourned without further notice. SECTION 13.6. Counting Votes and Recording Action of Meetings. The vote upon any resolution submitted to any meeting of Holders of Securities shall be by written ballots on which shall be subscribed the signatures of the Holders of Outstanding Securities or of their representatives by proxy and the principal amounts and serial numbers of the Outstanding Securities, of the series with respect to which the meeting shall have been called, held or represented by them. The permanent chairman of the meeting shall appoint two inspectors of votes who shall count all votes cast at the meeting for or against any resolution and who shall make and file with the secretary of the meeting their verified written reports in quadruplicate of all votes cast at the meeting. A record, at least in quadruplicate, of the proceedings of each meeting of Holders of Securities shall be prepared by the secretary of the meeting and there shall be attached to such record the original reports of the inspectors of votes on any vote by ballot taken thereat and affidavits by one or more persons having knowledge of the facts setting forth a copy of the notice of the meeting and showing that such notice was given as provided in Section 13.2 and, if applicable, Section 13.4. Each copy shall be signed and verified by the affidavits of the permanent chairman and secretary of the meeting and one such copy shall be delivered to each of the Mobile Energy Parties, and another to the Trustee to be preserved by the Trustee, the latter to have attached thereto the ballots voted at the meeting. Any record so signed and verified shall be conclusive evidence of the matters therein stated. SECTION 13.7. Action Without Meeting. In lieu of the vote of Holders of Securities at a meeting as hereinbefore contemplated in this Article XIII, any request, demand, authorization, direction, notice, consent, waiver or other action may be made, given or taken by Holders of Securities by written instruments as provided in Section 1.4. ARTICLE XIV. GUARANTY SECTION 14.1. Guaranty of Payment and Performance. Mobile Energy hereby (a) guarantees to the Trustee for its own benefit and the benefit of the Holders from time to time the due and punctual payment, observance and performance of all of the Guaranteed Obligations in accordance with their respective terms and when and as due (whether at maturity, by reason of 103 acceleration or otherwise), or deemed to be due pursuant to Section 14.2, and (b) agrees so to pay, observe or perform the same when so due, or deemed to be due, upon demand. SECTION 14.2. Continuance and Acceleration of Guaranteed Obligations upon Certain Events. If (a) any Event of Default described in Section 8.1(n) shall have occurred and be continuing, (b) any injunction, stay or the like that enjoins any acceleration, or demand for the payment, observance or performance, of any Guaranteed Obligations that would otherwise be required or permitted under the Security Documents shall become effective or (c) any Guaranteed Obligations shall be or be determined to be or become discharged, disallowed, invalid, illegal, void or otherwise unenforceable (whether by operation of any present or future law or by order of any Governmental Authority) against the Company then (i) such Guaranteed Obligations shall, for all purposes of this Indenture, be deemed (A) in the case of clause (c) above, to continue to be outstanding and in full force and effect notwithstanding the unenforceability thereof against the Company and (B) if such is not already the case, to have thereupon become immediately due and payable and to have commenced bearing interest at the rate equal to ( )% and (ii) the Trustee may, with respect to such Guaranteed Obligations, exercise all of the rights and remedies hereunder that would be available to it during an Event of Default. SECTION 14.3. Recovered Payments. The Guaranteed Obligations shall be deemed not to have been paid, observed or performed, and Mobile Energy's obligations under this Guaranty in respect thereof shall continue and not be discharged, to the extent that any payment, observance or performance thereof by the Company or any other guarantor, or out of the proceeds of any collateral, is recovered from or paid over by or for the account of the Trustee for any reason, including as a preference or fraudulent transfer or by virtue of any subordination (whether present or future or contractual or otherwise) of the Guaranteed Obligations, whether such recovery or payment over is effected by any judgment, decree or order of any Governmental Authority, by any plan of reorganization or by settlement or compromise by the Trustee (whether or not consented to by either of the Mobile Energy Parties or any other guarantor) of any claim for any such recovery or payment over. Mobile Energy hereby expressly waives the benefit of any applicable statute of limitations and agrees that it shall be liable hereunder with respect to any Guaranteed Obligation whenever such a recovery or payment over thereof occurs. SECTION 14.4. Evidence of Guaranteed Obligations. The records of the Trustee shall be conclusive evidence (absent manifest error) of the Guaranteed Obligations and of all payments, observances and performances in respect thereof. 104 SECTION 14.5. Binding Nature of Certain Adjudications. Mobile Energy shall be conclusively bound by the adjudication in any action or proceeding, legal or otherwise, involving any controversy arising under, in connection with, or in any way related to, any of the Guaranteed Obligations, and by a judgment, award or decree entered therein, if Mobile Energy shall have had the right, or shall have been given the opportunity, to participate in such action or proceeding and shall have been given notice of such action or proceeding in time to exercise such right or avail itself of such opportunity. SECTION 14.6. Nature of Mobile Energy's Obligations. Mobile Energy's obligations hereunder (a) are absolute and unconditional, (b) are unlimited in amount, (c) constitute a guaranty of payment and performance and not a guaranty of collection, (d) are as primary obligor and not as a surety only, (e) shall be a continuing guaranty of all present and future Guaranteed Obligations and all promissory notes and other documentation given in extension or renewal or substitution for any of the Guaranteed Obligations and (f) shall be irrevocable. SECTION 14.7. No Release of Mobile Energy. The Obligations of Mobile Energy under this Guaranty shall not be reduced, limited or terminated, nor shall Mobile Energy be discharged from any thereof, for any reason whatsoever (other than, subject to Sections 14.3 and 14.12, the payment, observance and performance of the Guaranteed Obligations), including (and whether or not the same shall have occurred or failed to occur once or more than once and whether or not the Guarantor shall have received notice thereof): (a) (i) any increase in the principal amount of, or interest rate applicable to, (ii) any extension of the time of payment, observance or performance of, (iii) any other amendment or modification of any of the other terms and provisions of, (iv) any release, composition or settlement (whether by way of acceptance of a plan of reorganization or otherwise) of (v) any subordination (whether present or future or contractual or otherwise) of or (vi) any discharge, disallowance, invalidity, illegality, voidness or other unenforceability of, in each case the Guaranteed Obligations; (b) (i) any failure to obtain, (ii) any release, composition or settlement of, (iii) any amendment or modification of any of the terms and provisions of, (iv) any subordination of or (v) any discharge, disallowance, invalidity, illegality, voidness or other unenforceability of, in each case any other guaranties of the Guaranteed Obligations; (c) (i) any failure to obtain or any release of, (ii) any failure to protect or preserve, (iii) any release, compromise, settlement or extension of the time of payment of any obligations constituting, (iv) any failure to perfect or maintain the perfection or priority of any Lien upon, (v) any subordination of any Lien upon or (vi) any discharge, disallowance, invalidity, illegality, voidness or other unenforceability of any Lien or intended Lien upon, in each case any collateral now or hereafter securing the 105 Guaranteed Obligations or any other guaranties thereof; (d) any termination of or change in any relationship between Mobile Energy and the Company, including any such termination or change resulting from a change in the ownership of Mobile Energy or the Company or from the cessation of any commercial relationship between Mobile Energy and the Company; (e) any exercise of, or any election not or failure to exercise, delay in the exercise of, waiver of, or forbearance or other indulgence with respect to, any right, remedy or power available to the Trustee, including (i) any election not or failure to exercise any right of setoff, recoupment or counterclaim, (ii) any election of remedies effected by the Trustee, including the foreclosure upon any real estate constituting collateral, whether or not such election affects the right to obtain a deficiency judgment and (iii) any election by the Trustee in any proceeding under the Bankruptcy Code of the application of Section 1111(b)(2) of such Code; and (f) any other act or failure to act or any other event or circumstance that (i) varies the risk of Mobile Energy under this Guaranty or (ii) but for the provisions hereof, would, as a matter of statute or rule of law or equity, operate to reduce, limit or terminate the obligations of Mobile Energy hereunder or discharge Mobile Energy from any thereof. SECTION 14.8. Certain Waivers. Mobile Energy waives (a) any requirement, and any right to require, that any right or power be exercised or any action be taken against the Company, any other guarantor or any collateral for the Guaranteed Obligations, (b) all defenses to, and all setoffs, counterclaims and claims of recoupment against, the Guaranteed Obligations that may at any time be available to the Company or any other guarantor, (c) (i) notice of acceptance of and intention to rely on this Guaranty, (ii) notice of the issuance of any Securities under this Indenture and of the incurrence or renewal of any other Guaranteed Obligations, (iii) notice of any of the matters referred to in Section 14.7 and (iv) all other notices that may be required by Law or otherwise to preserve any rights against Mobile Energy under this Guaranty, including any notice of default, demand, dishonor, presentment and protest, (d) diligence, (e) any defense based upon, arising out of or in any way related to (i) any claim that any sale or other disposition of any collateral for the Guaranteed Obligations was not conducted in a commercially reasonable fashion or that a public sale, should the Trustee or the Collateral Agent (as the case may be), have elected to so proceed, was, in and of itself, not a commercially reasonable method of sale, (ii) any claim that any election of remedies by the Trustee or the Collateral Agent (as the case may be) including the exercise by the Trustee or the Collateral Agent (as the case may be) of any rights against any collateral, impaired, reduced, released or otherwise extinguished any right that Mobile Energy might otherwise have had against the Company or any other guarantor or against any collateral, including any right of subrogation, exoneration, reimbursement or 106 contribution or right to obtain a deficiency judgment, (iii) any claim based upon, arising out of or in any way related to any of the matters referred to in Section 14.7 and (iv) any claim that this Guaranty should be strictly construed against the Trustee and (f) ALL OTHER DEFENSES UNDER APPLICABLE LAW THAT WOULD, BUT FOR THIS CLAUSE (f), BE AVAILABLE TO MOBILE ENERGY AS A DEFENSE AGAINST OR A REDUCTION OR LIMITATION OF ITS OBLIGATIONS HEREUNDER. SECTION 14.9. Independent Credit Evaluation. Mobile Energy has independently, and without reliance on any information supplied by the Trustee, taken, and will continue to take, whatever steps it deems necessary to evaluate the financial condition and affairs of the Company, and the Trustee shall have no duty to advise Mobile Energy of information at any time known to it regarding such financial condition or affairs. SECTION 14.10. Subordination of Rights Against Company, Other Guarantors and Collateral. All rights that Mobile Energy may at any time have against the Company, any other guarantor or any collateral for the Guaranteed Obligations (including rights of subrogation, exoneration, reimbursement and contribution and whether arising under Law or otherwise), and all obligations that the Company or any other guarantor may at any time have to Mobile Energy, Mobile Energy's obligations hereunder or any payment made are hereby expressly subordinated to the prior payment, observance and performance in full of the Guaranteed Obligations. Mobile Energy shall not enforce any of the rights, or attempt to obtain payment or performance of any of the obligations, subordinated pursuant to this Section 14.10 until the Guaranteed Obligations have been paid, observed and performed in full, except that such prohibition shall not apply to routine acts, such as the giving of notices and the filing of continuation statements, necessary to preserve any such rights. If any amount shall be paid to or recovered by Mobile Energy (whether directly or by way of setoff, recoupment or counterclaim) on account of any right or obligation subordinated pursuant to this Section 14.10, such amount shall be held in trust by Mobile Energy for the benefit of the Trustee, not commingled with any of Mobile Energy's other funds and forthwith paid over to the Trustee, in the exact form received, together with any necessary endorsements, to be applied and credited against, or held as security for, the Guaranteed Obligations and the obligations of Mobile Energy hereunder. SECTION 14.11. Payments by Mobile Energy. (a) All payments due to the Trustee hereunder shall be made to the Trustee at the Corporate Trust Office or at such other address the Trustee may designate by notice to Mobile Energy. A payment shall not be deemed to have been made on any day unless such payment has been received by the Trustee at the required place of payment, in lawful money of the United States of America in funds 107 immediately available to the Trustee. (b) All payments due the Trustee under this Guaranty, and all of the other terms, conditions, covenants and agreements to be observed and performed by Mobile Energy under this Guaranty, shall be made, observed or performed by Mobile Energy without any reduction or deduction whatsoever, including any reduction or deduction for any set-off, recoupment, counterclaim (whether, in any case, in respect of an obligation owed by the Trustee to Mobile Energy, the Company or any other guarantor and, in the case of a counterclaim, whether sounding in tort, contract or otherwise) or tax. (c) If any tax is required to be withheld or deducted from, or is otherwise payable by Mobile Energy in connection with, any payment due to the Trustee hereunder, Mobile Energy (i) shall, if required, withhold or deduct the amount of such tax from such payment and, in any case, pay such tax to the appropriate taxing authority in accordance with Law and (ii) shall pay to the Trustee (A) such additional amounts as may be necessary so that the net amount received by the Trustee with respect to such payment, after withholding or deducting all taxes required to be withheld or deducted, is equal to the full amount payable hereunder and (B) an amount equal to all taxes payable by the Trustee as a result of payments made by Mobile Energy (whether to a taxing authority or to the Trustee) pursuant to this Section 14.11(c). If any tax is withheld or deducted from, or is otherwise payable by Mobile Energy in connection with, any payment due to the Trustee under this Guaranty, Mobile Energy shall, within thirty (30) days after the date of such payment, furnish to the Trustee the original or a certified copy of a receipt for such tax from the applicable taxing authority. If any payment due to the Trustee hereunder is or is expected to be made without withholding or deducting therefrom, or otherwise paying in connection therewith, any tax payable to any taxing authority, Mobile Energy shall, within thirty (30) days after any request from the Trustee, furnish to the Trustee a certificate from such taxing authority, or an Opinion of Counsel acceptable to the Trustee, in either case stating that no tax payable to such taxing authority was or is, as the case may be, required to be withheld or deducted from, or otherwise paid by Mobile Energy in connection with, such payment. (d) Mobile Energy hereby authorizes the Trustee, if and to the extent any amount payable by Mobile Energy under this Guaranty is not otherwise paid when due, to charge such amount against any or all of the accounts of Mobile Energy with the Trustee or any of its Affiliates (whether maintained at a branch or office located within or without the United States), with Mobile Energy remaining liable for any deficiency. (e) Whenever any payment to the Trustee under this 108 Article XIV would otherwise be due (except by reason of acceleration) on a day that is not a Business Day, such payment shall instead be due on the next succeeding Business Day. If the date any payment hereunder is due is extended (whether by operation of this Indenture, Law or otherwise), such payment shall bear interest for such extended time at the rate of interest applicable hereunder. SECTION 14.12. Continuance of Guaranty; Survival. The obligations of Mobile Energy under this Article XIV shall continue in full force and effect until the payment, observance and performance in full of the Guaranteed Obligations. The rights and obligations of Mobile Energy and the Trustee shall survive the repayment in full of all principal of and premium, if any, and interest on, and all other amounts payable under, the Securities. SECTION 14.13. Assignments and Participations. Assignments. Mobile Energy may not assign any of its rights or obligations under this Guaranty without the prior written consent of the Trustee, and no assignment of any such obligation shall release Mobile Energy therefrom unless the Trustee shall have consented to such release in a writing specifically referring to the obligation from which Mobile Energy is to be released. SECTION 14.14. Benefit and Enforcement. This Guaranty is given for the benefit of the Trustee and, subject to the terms and conditions set forth herein, the Holders from time to time of the Securities, all of whom shall be entitled in the same manner as set forth herein to enforce performance and observance of this Guaranty. ARTICLE XV. NONRECOURSE LIABILITY OF MOBILE ENERGY PARTIES Satisfaction of the obligations of the Mobile Energy Parties under this Indenture for the payment of the principal of or premium, if any, or interest on any Securities, or any part thereof, or for any claim based thereon or otherwise in respect thereof or related thereto, shall be had solely from the assets of the Mobile Energy Parties. No recourse shall be had to (a) any assets or properties of the Members (other than Mobile Energy as provided in Article XIV hereof) or of the stockholders of Mobile Energy, other than their respective interests in the Collateral, (b) any Member (other than Mobile Energy as provided in Article XIV hereof) or (c) any Affiliate, incorporator, stockholder, partner, member, officer, director or employee of any Member (other than the Company and, in respect of any Southern Guaranty on deposit in any Reserve Account Security Account, Southern) or of the Company (other than Mobile Energy 109 and, in respect of any Southern Guaranty on deposit in any Reserve Account Security Account, Southern) and in the event of any non-performance by either of the Mobile Energy Parties of its obligation to pay the principal of or premium, if any, or interest on any Securities, or any part thereof, or for any claim based thereon or otherwise in respect thereof, no judgment for any deficiency upon the obligations of either of the Mobile Energy Parties under this Indenture, for the payment of the principal of or premium, if any, or interest on any Securities, or any part thereof, or for any claim based thereon or otherwise in respect thereof or related thereto, shall be obtainable by the Holders, the Trustee or the Collateral Agent against any Member (other than Mobile Energy as provided in Article XIV hereof) or any Affiliate, incorporator, stockholder, partner, member, officer, director or employee of any Member (other than the Company and, in respect of any Southern Guaranty on deposit in any Reserve Account Security Account, Southern) or of the Company (other than Mobile Energy as provided in Article XIV hereof and, in respect of any Southern Guaranty on deposit in any Reserve Account Security Account, Southern). Notwithstanding anything in this Article XV to the contrary, (i) nothing contained herein or in the Securities shall limit or otherwise prejudice in any way the right of the Trustee, the Collateral Agent or any Holder to proceed against any Person whomsoever (A) with respect to the enforcement of such Person's obligations under any Project Document (including the Guaranty and any Southern Guaranty to which such Person is a party) or limit or otherwise prejudice in any way the right of the Holders, the Trustee or the Collateral Agent to proceed against such Person with respect to the enforcement of such obligations or (B) to the extent necessary to realize the benefit of the Indenture Securities Collateral granted hereunder or under the Security Documents and (ii) any limitations of liability herein shall not apply if and to the extent that any Person commits fraud or wilful misrepresentations, including those contained in Officer's Certificates issued from time to time. 110 IN WITNESS WHEREOF, the parties have caused this Indenture to be duly executed by their respective officers thereunto duly authorized as of the day and year first above written. MOBILE ENERGY SERVICES COMPANY, L.L.C. By: Name: Title: MOBILE ENERGY SERVICES HOLDINGS, INC. By: Name: Title: FIRST UNION NATIONAL BANK OF GEORGIA, as Trustee By: Name: Title: 111 SCHEDULE 5.2 INSURANCE POLICIES General Conditions: (a) All policies shall waive the rights of subrogation against the Collateral Agent. (b) All property and liability policies shall name the Collateral Agent as an additional insured. (All policies protecting real and personal property or loss of income shall include a Lenders Loss Payable provision, equivalent to 438 BFU, for the benefit of the (Collateral Agent) (Trustee).) (c) All policies shall be endorsed to provide a minimum of thirty (30) days notice of cancellation, nonrenewal, or material change (restricting coverage) to the Collateral Agent and the Company. (d) Where commercially available, all policies shall stipulate by endorsement or equivalent policy language that the additional insured status of the Collateral Agent places no responsibility on the Collateral Agent for the payment of policy premiums, nor does the action or failure to take action by any other insured or additional insured invalidate coverages for the Collateral Agent under said policy. (e) A severability of interest clause or equivalent cross liability endorsement shall be included in each policy. (f) All policies shall be primary as respects coverage provided for the Energy Complex and the Site. (g) All policies shall be provided through insurance carriers rated A-IX or better by the Best's Insurance Guide (except for policies underwritten by Lloyd's of London, AEGIS and approved English companies) or other insurance companies reasonably acceptable to the Collateral Agent, in each case, which are authorized to do business in the State of Alabama. (h) All policies shall stipulate by endorsement or equivalent policy language that following a Trigger Event (as defined in the Intercreditor Agreement) and the exercise of remedies under the Security Documents, the Collateral Agent shall have the right to make all claims made under said policy. (i) All policies shall stipulate by endorsement or equivalent policy language that following a Trigger Event (as defined in the Intercreditor Agreement) and the exercise of remedies under the Security Documents, said policy can be assigned to the Collateral Agent. The following coverages shall be maintained in effect at all S(5.2)-1 times until all obligations of the Mobile Energy Parties pursuant to this Indenture, the Securities, the Guaranty and the other Security Documents have been fully discharged: Required Insurance: (a) Workers' Compensation Insurance. Workers' compensation insurance, as required by state and Federal laws (including United States Longshoremen and Harbor Workers and Maritime Liability (Jones Act) Insurance), including, employer's liability insurance for all employees of the Energy Complex in the minimum amount of $1,000,000 per occurrence and in the aggregate where applicable; provided; however, that the Company may satisfy such obligations, in whole or in part, through the self-insurance of the Operator against workers' compensation claims. (b) Comprehensive General Liability Insurance. Comprehensive general liability insurance against claims for personal injury (including bodily injury and death), and property damage. Such insurance shall provide coverage for products- completed operations, premises/operations, blanket contractual, explosion, collapse and underground coverage, broad form property damage and personal injury insurance coverage to protect the Collateral Agent against claims arising out of operations performed by the Company and its subcontractors, with a $1,000,000 minimum limit per occurrence for combined bodily injury and property damage and with an aggregate of $2,000,000. The general liability insurance shall, at a minimum, be provided under a 1986 ISO Commercial General Liability form of policy or equivalent policy and shall be written on an occurrence basis, or the AEGIS claim-first-made policy form. (c) Comprehensive Automobile Liability. Comprehensive automobile liability insurance against claims of personal injury (including bodily injury and death) and property damage, including loss of use thereof, covering all owned, leased, non- owned and hired vehicles used by the Company in the operation of the Energy Complex, with a $1,000,000 minimum limit per occurrence for bodily injury and property damage and a $2,000,000 minimum limit per occurrence for combined bodily injury and property damage. (d) Aircraft and Watercraft Liability. Aircraft Liability insurance (if applicable), including Passengers and Crew Liability, and Watercraft Liability insurance (if applicable), each having a $25,000,000 minimum limit per occurrence for property damage and bodily injury, covering all aircraft or watercraft that is owned, leased or chartered by the Company or any of its subcontractors. If the performance of any obligations by a subcontractor in connection with services performed at the Energy Complex requires the use of any aircraft or watercraft that is owned, leased or chartered by such subcontractor or any of its subcontractors, such subcontractor shall obtain Aircraft Liability and Watercraft Liability insurance with a $25,000,000 minimum limit per occurrence for property damage and bodily S(5.2)-2 injury. If a helicopter is used to lift materials or equipment, any Aircraft Liability insurance required hereunder shall not contain any exclusion of coverage for "slung-cargo." (e) Umbrella Liability or Excess Insurance. Excess Liability insurance on an "occurrence" basis, or the AEGIS claims-first-made policy form pursuant to an "Umbrella" policy covering claims in excess of and following the terms of the underlying insurance as set forth in (a), (b) and (c) with a $24,000,000 minimum limit per occurrence and a $24,000,000 annual aggregate limit; provided that, in the event that claims under such aggregate liability coverage would reduce the coverage to an amount less than or equal to $50,000,000, the Company shall provide prompt written notice thereof to the Collateral Agent and promptly after such claims are made, restore the coverage under such policy to the coverage amount maintained prior to the assertion of such claims. (f) Property Damage Insurance. Property Damage insurance on an "all risk" replacement cost basis including coverage against damage or loss caused by earth movement, flood and windstorm and providing (i) coverage for the Energy Complex in a minimum aggregate amount of the lesser of (A) the full replacement value of the Energy Complex and (B) the outstanding amount of Senior Debt of the Company (for which purpose there shall be included all steam, gas and electrical transmission lines along with related equipment for which the Company has an insurable interest) and (ii) Transit coverage, including Ocean marine coverage (if applicable), with sub-limits sufficient to insure the full replacement value of all property or equipment removed from the Energy Complex. (For the perils of flood, earth movement, increased cost of construction, debris removal and loss to undamaged property, a sub-limit not less than $100,000,000.) For purposes of this paragraph (f), "replacement cost," including any improvements and equipment and supplies, shall be without deduction for physical depreciation. All such policies may have deductibles of not greater than $1,000,000, except for earth movement, flood and windstorm, which will have the lowest deductible available on commercially reasonable terms in the insurance marketplace. Such insurance shall include and "Agreed Amount" Clause or Waiver of Co-Insurance and shall provide for increased cost of construction, debris removal, and loss to undamaged property as the result of enforcement of building laws or ordinances. (g) Boiler and Machinery Insurance. Boiler and Machinery insurance coverage to be written on a "comprehensive form" basis for all insurable objects including all production machinery, pressure vessels, electrical turbines and equipment, motors, air tanks, boilers, machinery, pressure piping or any other similar objects located on or adjacent to the Site in a minimum aggregate amount equal to the maximum foreseeable loss and expediting expenses in the amount of $2,500,000 (with losses to be adjusted on a replacement value) (subject to the limit set forth in paragraph (f) above). All such policies may have S(5.2)-3 deductibles of not greater than $1,000,000. (h) Business Interruption and Extra Expense Insurance. Business Interruption insurance covering as a minimum amount all fixed expenses and debt service for a period of twelve (12) months arising from any loss insured by (f) and (g). The maximum deductible shall be no greater than thirty (30) days. There shall be either an Agreed Amount Clause or Waiver of Coinsurance. (i) Subcontractor Insurance. The Company shall require each of its subcontractors (including the Operator) to obtain, from an insurance company meeting the qualifications set forth above, on or before the effective date of any agreement between the Company and such subcontractor with respect to the Energy Complex, each of the insurance coverages set forth in paragraphs (a), (b) and (c). Each subcontractor shall furnish the Collateral Agent and the Trustee a certificate of insurance verifying that the insurance to be provided as required hereunder has been secured. S(5.2)-4 EX-99 7 EXHIBIT B-4(C) Exhibit B-4(c) DRAFT 6/15/95 FIRST SUPPLEMENTAL INDENTURE dated as of ( ), 1995 to TRUST INDENTURE dated as of ( ), 1995 among MOBILE ENERGY SERVICES COMPANY, L.L.C., MOBILE ENERGY SERVICES HOLDINGS, INC. and FIRST UNION NATIONAL BANK OF GEORGIA, as Trustee Providing for the Issuance of $(260,000,000) of First Mortgage Bonds due ( ) and 2017 with the Interest Rates and Stated Maturities Set Forth Herein FIRST SUPPLEMENTAL INDENTURE, dated as of ( ), 1995, to the Trust Indenture, dated as of ( ), 1995 (the "Original Indenture"), among MOBILE ENERGY SERVICES COMPANY, L.L.C., an Alabama limited liability company (the "Company"), its principal office and mailing address being at ( ), MOBILE ENERGY SERVICES HOLDINGS, INC., an Alabama corporation ("Mobile Energy"), its principal office and mailing address being at ( ), and FIRST UNION NATIONAL BANK OF GEORGIA, as Trustee (the "Trustee"), its corporate trust office and mailing address being at ( ). WHEREAS, the Company, Mobile Energy and the Trustee have heretofore executed and delivered the Original Indenture to provide for the issuance from time to time of the Company's Securities (as defined in the Original Indenture) to be issued in one or more series; WHEREAS, Sections 2.1, 2.3 and 11.1 of the Original Indenture provide, among other things, that the Company, Mobile Energy and the Trustee may enter into indentures supplemental to the Original Indenture for, among other things, the purpose of establishing the designation, form, terms and provisions of Securities of any series as permitted by Sections 2.1, 2.3 and 11.1 of the Original Indenture; WHEREAS, the Company and Mobile Energy (i) desire the issuance of (two) (2) separate series of Securities to be designated as hereinafter provided and (ii) have requested the Trustee to enter into this First Supplemental Indenture for the purpose of establishing the designation, form, terms and provisions of the Securities of such series; WHEREAS, all action on the part of the Company and Mobile Energy necessary to authorize the issuance of the Securities of such series under the Original Indenture and this First Supplemental Indenture (the Original Indenture, as supplemented by this First Supplemental Indenture, being hereinafter called the "Indenture") has been duly taken; and WHEREAS, all acts and things necessary to make said Securities of such series, when executed by the Company and Mobile Energy and authenticated and delivered by the Trustee as provided in the Original Indenture, the legal, valid and binding obligations of the Company and Mobile Energy, and to constitute these presents a valid and binding supplemental indenture according to its terms, have been done and performed, and the execution of this First Supplemental Indenture and the creation and issuance under the Indenture of the Securities of such series have in all respects been duly authorized, and the Company and Mobile Energy, in the exercise of the legal right and power vested in them, execute this First Supplemental Indenture and propose to create, execute, issue and deliver the Securities of such series. NOW, THEREFORE, THIS FIRST SUPPLEMENTAL INDENTURE WITNESSETH, that, in order to establish the designation, form, terms and provisions of, and to authorize the authentication and delivery of, the Securities of such series, and in consideration of the acceptance of the Securities of such series by the holders thereof and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: ARTICLE I DEFINITIONS The following terms shall have the meanings specified unless the context otherwise requires. Such definitions shall be equally applicable to the singular and plural forms of the terms defined. Capitalized terms not otherwise defined herein shall have the meanings set forth in the Original Indenture. "Initial Securities" means, collectively, the Series A First Mortgage Bonds and the Series B First Mortgage Bonds. "Series A First Mortgage Bonds" has the meaning specified in Section 2.1 hereof. "Series B First Mortgage Bonds" has the meaning specified in Section 2.2 hereof. ARTICLE II THE TERMS OF THE SECURITIES SECTION 2.1. Terms of Series A First Mortgage Bonds. (a) There is hereby created a series of Securities designated "( )% First Mortgage Bonds Due ( ), Series A" in the aggregate principal amount of $( ) (the "Series A First Mortgage Bonds"). Upon delivery of a Company Order to the Trustee in accordance with the provisions of Section 2.4 of the Original Indenture, the Trustee shall authenticate and deliver the Series A First Mortgage Bonds. Such Company Order shall specify the amount of the Series A First Mortgage Bonds to be authenticated and the date on which such Securities are to be authenticated. (b) The Series A First Mortgage Bonds shall be substantially in the form of Schedule A hereto and shall have and be subject to such other terms as provided in the Indenture. SECTION 2.2. Terms of Series B First Mortgage Bonds. (a) There is hereby created a series of Securities designated "( )% First Mortgage Bonds Due ( ), Series B" in the aggregate principal amount of $( ) (the "Series B -2- First Mortgage Bonds"). Upon delivery of a Company Order to the Trustee in accordance with the provisions of Section 2.4 of the Original Indenture, the Trustee shall authenticate and deliver the Series B First Mortgage Bonds. Such Company Order shall specify the amount of the Series B First Mortgage Bonds to be authenticated and the date on which such Securities are to be authenticated. (b) The Series B First Mortgage Bonds shall be substantially in the form of Schedule B hereto and shall have and be subject to such other terms as provided in the Indenture. SECTION 2.3. Interest, Principal and Maturity Date. Each of the Initial Securities shall bear interest on the unpaid principal amount thereof from time to time Outstanding from the date thereof until such amount is paid in full at the rate of interest set forth in the forms thereof attached hereto. The principal amount of each of the Initial Securities shall be due and payable as set forth in the form thereof attached hereto. Payment of principal of and interest on each of the Initial Securities shall be made, if the Company so elects, by check mailed to the Holder at its registered address or otherwise as provided in Section 2.10 of the Original Indenture, except that the final payment of principal of any of the Initial Securities shall be made on the due date therefor to the accounts of the Holders thereof as such accounts shall appear in the Security Register, which shall be due and payable as set forth in the form thereof attached hereto. For so long as any series of the Initial Securities is issued in the form of one or more global Initial Securities, payment of principal of and interest on such Initial Securities shall be made in immediately available funds by wire transfer to the clearing corporation or clearing agency acting as depositary for such global Initial Securities, or a nominee of such clearing corporation or clearing agency. Any Holder of $1,000,000 or more in aggregate principal amount of Initial Securities of either series may, by delivery of a written notice to the Paying Agent, elect to have all such payments to such Holder made by wire transfer of immediately available funds to a designated account maintained in the United States (so long as the Paying Agent has received proper wire transfer instructions in writing by the Regular Record Date next preceding the date for such payment). Each of the Initial Securities shall mature on the date set forth in the forms thereof attached hereto. SECTION 2.4. Redemption. (a) Optional Redemption. The Securities are not subject to optional redemption. -3- (b) Mandatory Redemption. In accordance with the provisions of Section 6.3 of the Original Indenture, the Securities are subject to mandatory redemption under certain conditions, on the terms set forth in the Original Indenture. SECTION 2.5 Debt Service Reserve Account. (a) A Debt Service Reserve Account designated the "First Supplemental Indenture Debt Service Reserve Account" is hereby established and created with the Trustee for the benefit of the Holders of the Initial Securities. (b) The Debt Service Reserve Account Required Balance in respect of the First Supplemental Indenture Debt Service Reserve Account shall be an amount equal to $( ). The First Supplemental Indenture Debt Service Reserve Account shall be funded on the date of original issuance of the Initial Securities in an amount equal to such Debt Service Reserve Account Required Balance. ARTICLE III MISCELLANEOUS SECTION 3.1. Execution of Supplemental Indenture. This First Supplemental Indenture is executed and shall be construed as an indenture supplemental to the Original Indenture and, as provided in the Original Indenture, this First Supplemental Indenture forms a part thereof. SECTION 3.2. Concerning the Trustee. The Trustee shall not be responsible in any manner for or with respect to the validity or sufficiency of this First Supplemental Indenture, or the due execution hereof by the Company or Mobile Energy, or for or with respect to the recitals and statements contained herein, all of which recitals and statements are made solely by the Company and Mobile Energy. SECTION 3.3. Counterparts. This First Supplemental Indenture may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original; but all such counterparts shall together constitute but one and the same instrument. SECTION 3.4. GOVERNING LAW. THIS FIRST SUPPLEMENTAL INDENTURE AND EACH OF THE INITIAL SECURITIES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO -4- AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN THE STATE OF NEW YORK. -5- IN WITNESS WHEREOF, the parties have caused this First Supplemental Indenture to be duly executed by their respective officers thereunder duly authorized as of the date and year first above written. MOBILE ENERGY SERVICES COMPANY, L.L.C. By: Name: Title: MOBILE ENERGY SERVICES HOLDINGS, INC. By: Name: Title: FIRST UNION NATIONAL BANK OF GEORGIA, as Trustee By: Name: Title: -6- Schedule (A) (B) (FORM OF BOND) Unless this Security is presented by an authorized representative of The Depository Trust Company, a New York corporation ("DTC"), to the issuer hereof or its agent for registration of transfer, exchange or payment, and any Security of this series issued is registered in the name of Cede & Co. or such other name as requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein. MOBILE ENERGY SERVICES COMPANY, L.L.C. (__)% First Mortgage Bond Due (_____), Series (A) (B) unconditionally guaranteed by MOBILE ENERGY SERVICES HOLDINGS, INC. No. CUSIP No. Final Principal Principal Amount Payment Date Issuance Date Interest Rate MOBILE ENERGY SERVICES COMPANY, L.L.C., a limited liability company duly organized and in good standing under the laws of the State of Alabama (herein called the "Company," which term includes any permitted successor or assign under the Indenture referred to below), for value received, hereby promises to pay to (CEDE & CO.), or its registered assigns, the Principal Amount set forth above, such payment to be made in semi-annual installments on January 1 and July 1 of each year, commencing on (_____), and ending on the Final Principal Payment Date set forth above, each such installment to be in an amount equal to the Principal Amount set forth above multiplied by the percentage set forth opposite the date of such installment set forth under the caption "Principal Payment Date" on Annex A attached hereto (provided that the portion of the Principal Amount set forth above remaining unpaid on the Final Principal Payment Date set forth above, together with all interest accrued thereon, shall in any and all cases be due on the Final Principal Payment Date set forth above), and to pay interest on the unpaid portion of the Principal Amount set forth above at the Interest Rate set forth above from the most recent Interest Payment Date to which interest has been paid or duly provided for, or if no interest has been paid or duly provided for, from the Issuance Date set forth above, semi-annually on January 1 and July 1 in each year, commencing on January 1, 1996, until the Principal Amount set forth above is paid in full or payment therefor is duly provided for. Any payment of principal and, to the extent permitted by applicable Law, any payment of interest not punctually paid or duly provided for shall continue to bear interest at a rate equal to the Interest Rate set forth above plus two percent (2%). The principal and interest so payable on any payment date shall, as provided in the Indenture, be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered in the Security Register at the close of business on the Regular Record Date for such payment of principal or interest, which shall be the preceding December 15 and June 15, respectively, provided that interest payable on the Final Principal Payment Date set forth above shall be payable to the person to whom the principal hereof shall be payable. Any such principal or interest not so punctually paid or duly provided for shall forthwith cease to be payable to the person in whose name this Security (or one or more Predecessor Securities) was registered in the Security Register at the close of business on the Regular Record Date therefor, and may be paid to the Person in whose name this Security is registered at the close of business on a Special Record Date for the payment of such defaulted principal or interest to be fixed by the Trustee referred to below, notice of which shall be given to the Holder hereof to be mailed not less than ten (10) days prior to such Special Record Date, or may be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange (if any) on which this Security may be listed, and upon such notice as may be required by such exchange, all as more fully provided in the Indenture. All payments in respect of this Security shall be made in such coin or currency of the United States of America as at the time of payment is legal tender for payment of debts, in immediately available funds. Interest on this Security shall be computed on the basis of a 360-day year of twelve 30-day months and, for any period shorter than a full calendar month, on the basis of the actual number of days elapsed in such period. Principal of and interest on this Security payable on the Final Principal Payment Date set forth above shall be paid upon presentation and surrender of this Security at the office of the Paying Agent in the Borough of Manhattan, the City of New York. Payments of principal of and interest on this Security shall be made in immediately available funds by wire transfer for so long as this Security is issued in the form of a global security, or by check mailed on or prior to the date for such payment to the address of the Holder entitled thereto as such address appears on the Security Register; provided, however, that if this security is not held in global form, any Holder of $1,000,000 or more in aggregate principal amount of Securities of this series may, by delivery of a written request to the Paying Agent, elect to have all such payments to such Holder made by wire transfer of immediately available funds to a designated account maintained in the United States (so long as the Paying -[A][B]-2- Agent has received proper wire transfer instructions in writing by the Regular Record Date next preceding the date for such payment). The provisions of this Security are continued on the reverse hereof and such continued provisions shall for all purposes have the same effect as though fully set forth at this place. This Security shall not be entitled to any benefit under the Indenture, or be valid or become obligatory for any purpose, until FIRST UNION NATIONAL BANK OF GEORGIA, the Trustee under the Indenture, or its successor thereunder, shall have authenticated the form of certificate endorsed hereon. -[A][B]-3- IN WITNESS WHEREOF, Mobile Energy Services Company, L.L.C. has caused this Security to be signed in its name by its President or Vice President, by the signature or a facsimile thereof, attested by its Secretary by the signature or a facsimile thereof. Dated: MOBILE ENERGY SERVICES COMPANY, L.L.C. By: Title: Attest: By: Secretary TRUSTEE'S AUTHENTICATION CERTIFICATE This Security is one of the Securities referred to in the within-mentioned Indenture. FIRST NATIONAL BANK OF GEORGIA, as Trustee By Authorized Trust Officer -[A][B]-4- (REVERSE) MOBILE ENERGY SERVICES COMPANY, L.L.C. (__)% First Mortgage Bonds Due (_____), Series (A) (B) This Security is one of an authorized issue of Securities of the Company, known as its (__)% First Mortgage Bonds Due (_____), Series (A) (B), to be issued under a Trust Indenture, dated as of (_____), 1995 (the "Original Indenture"), among the Company, Mobile Energy Services Holdings, Inc., an Alabama Corporation ("Mobile Energy"), and First Union National Bank of Georgia, as trustee (the "Trustee"). The Original Indenture, as supplemented by the First Supplemental Indenture dated as of (_____), 1995 (the "First Supplemental Indenture"), and as the same may be amended, modified and further supplemented, is hereinafter referred to as the "Indenture." Capitalized terms used herein, but not otherwise defined herein, shall have the meanings assigned thereto in the Indenture. As provided in the Indenture, the aggregate principal amount of Securities that may be issued thereunder is unlimited. The Securities of this series are limited in principal amount as provided in the First Supplemental Indenture. All Securities shall be secured equally and ratably with one another (except as to any Debt Service Reserve Account or Sinking Fund established in accordance with the Indenture for the benefit of any particular series). Reference is hereby made to the Indenture for a description of the nature of the Securities and the respective rights of the Holders of Securities and of the Trustee, the Company and Mobile Energy in respect of the Securities and the terms upon which the Securities are to be authenticated and delivered. The principal of and interest on this Security are payable only from, and secured by, the Indenture Collateral, and all payments of principal and interest shall be made in accordance with the terms of the Indenture. The Securities, and the rights of the Holders in respect of the Shared Collateral, are subject to the terms of an Intercreditor and Collateral Agency Agreement, dated as of (_____), 1995 (the "Intercreditor Agreement"), among Bankers Trust Company, as collateral agent, the Trustee (on behalf of the Holders of the Securities), First Union National Bank of Georgia, as trustee under an Amended and Restated Indenture of Trust, dated as of (_____), 1995, with The Industrial Development Board of the City of Mobile, Alabama (on behalf of the holders of the securities issued thereunder), (_____), as the Working Capital Provider, such Industrial Development Board, the Company and Mobile Energy, to which reference is hereby made. As provided in Section 6.3(b) of the Indenture, all Outstanding Securities shall be subject to redemption in whole prior to the Final Principal Payment Date set forth on the face of this Security at a redemption price equal to one hundred percent (100%) of the principal amount thereof plus accrued interest thereon, if any, to the Redemption Date, if an Event of Loss or an Event of Eminent Domain shall occur and, subject to the terms of the Intercreditor Agreement, the Energy Complex is not rebuilt, repaired, restored or replaced. Pursuant to Section 6.3(c) of the Indenture, the Outstanding Securities shall be subject to partial redemption, ratably among all outstanding series and maturities, prior to the Final Principal Payment Date set forth on the face of this Security at a redemption price equal to one hundred percent (100%) of the principal amount thereof plus accrued interest thereon, if any, to the Redemption Date, if an Event of Loss or an Event of Eminent Domain shall occur, to the extent of any excess Casualty Proceeds or Eminent Domain Proceeds (as the case may be) and provided, subject to certain exceptions, that such loss Proceeds exceed $3,000,000, if the Energy Complex or a portion thereof is rebuilt, repaired, restored or replaced. The aggregate amount of Securities to be so redeemed will equal the amount made available to the Trustee for such purpose pursuant to the Intercreditor Agreement, which will equal the ratable share of the Securities of this series (based on the principal amount of Securities and Tax-Exempt Indenture Securities then outstanding plus, if the committed availability under the Working Capital Facility was reduced in connection with such Event of Loss or Event of Eminent Domain (as the case may be), the lesser of (i) the principal amount of Working Capital Loans payable as a result of such reduction and (ii) the principal amount of Working Capital Loans then outstanding) of the amount by which all of the Casualty Proceeds and Eminent Domain Proceeds (as the case may be) in respect of such Event of Loss or Event of Eminent Domain exceeds the total cost of rebuilding, repairing, restoring or replacing the Energy Complex. Securities of this series are not subject to optional redemption prior to the Final Principal Payment Date set forth on the face of this Security. Notice of any redemption of Securities will be given at least thirty (30) but not more than sixty (60) days prior to the Redemption Date. The Indenture contains provisions permitting the Holders of specified percentages in aggregate principal amount of the Securities at the time Outstanding, on behalf of the Holders of all the Securities, to waive compliance by the Company and Mobile Energy with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver or direction shall be conclusive and binding upon the Holder, and all future Holders, of this Security -[A][B]-2- and of any Security issued upon the transfer hereof whether or not citation of such consent or waiver is made upon this Security. As more fully described therein, the Indenture permits, with certain exceptions, the amendment thereof and the rights and obligations of the Company and Mobile Energy and the rights of the Holders of the Securities under the Indenture at any time by the Company and Mobile Energy with the consent of the Holders of not less than a majority in aggregate principal amount of the Securities at the time Outstanding and, in certain cases, without any consent or other action by Holders of the Securities. The principal hereof may be declared or may become due on the conditions, in the manner and at the time set forth in the Indenture, upon the occurrence and during the continuance of an Event of Default as provided in the Indenture. Except as otherwise described in the Security Documents, satisfaction of the obligations of the Company under this Security, for the payment of the principal of or interest on this Security, or any part hereof, or for any claim based thereon or otherwise in respect hereof or related hereto, shall be solely from the assets of the Company and Mobile Energy. The Securities of this series are issuable only as registered bonds without coupons in denominations of $100,000 and integral multiples of $5,000 in excess thereof. This Security is transferable as prescribed in the Indenture by the registered owner hereof, in person or by attorney duly authorized, at an office or agency of the Trustee, in the Borough of Manhattan, the City of New York, upon surrender and cancellation of this Security and thereupon a new registered Security or Securities of the same series for a like principal amount, in authorized denominations, will be issued to the transferee in exchange therefor, as provided in the Indenture. The Company and the Trustee shall deem and treat the person in whose name this Security is registered as the absolute owner for the purpose of receiving payment of or on account of the principal due hereof and interest due hereon and for all other purposes. Registered Securities of this series shall be exchangeable at said offices or agencies of the Trustee for registered Securities of other authorized denominations having the same aggregate principal amount, in the manner and upon the conditions prescribed in the Indenture. No service charge shall be required of any Holder in connection with any transfer or exchange, but the Security Registrar may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. Notwithstanding any provision of the Indenture, neither the Company nor the Trustee shall be required to register the transfer or exchange any Securities of this series during the period (i) beginning at the opening of business fifteen (15) days before the day of the mailing of a notice of redemption of Securities of this series under the Indenture and ending on the -[A][B]-3- close of business on the day of such mailing and (ii) beginning on the Regular Record Date for the Stated Maturity of principal of or interest on the Securities of this series and ending on the Stated Maturity of such payment, or to register the transfer or exchange any Securities of this series so selected for redemption in whole or in part, except the unredeemed portion of any Security of this series selected for redemption in part. The Holder hereof, by the acceptance of this Security, agrees that each payment received by it hereunder shall be applied in the manner set forth in Section 2.16 of the Indenture. This Security is a global security within the meaning of the Indenture and is registered in the name of a depositary or its nominee with respect to the Securities of this series. This Security is exchangeable for other Securities of this series registered in the name of a person other than such depositary or its nominee only if (i) the Company advises the Trustee in writing that such depositary is no longer willing or able to discharge properly its responsibilities as depositary with respect to the Securities of this series and is unable to locate a qualified successor, (ii) the Company, at its option elects to terminate the book-entry system through such depositary with respect to the Securities of this series and (iii) after the occurrence of an Event of Default, beneficial owners of the Securities of this series holding interests representing an aggregate principal amount of the Securities of this series of not less than a majority in principal of the Securities of this series represented by this global security advise the Trustee through such depositary in writing that the continuation of a book-entry through such depositary (or any successor thereto) with respect to the Securities of this series is no longer in such beneficial owners' best interest. THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN THE STATE OF NEW YORK. GUARANTY For value received, Mobile Energy hereby guarantees to the Holder of this Security upon which this Guaranty is endorsed and to the Trustee for its own benefit and the benefit of the Holders from time to time the due and punctual payment, observance and performance of all of the Guaranteed Obligations in accordance with their respective terms and when and as due (whether at maturity, by reason of acceleration or otherwise), or deemed to be due hereunder, and agrees so to pay, observe or perform the same when so due, or deemed to be due, upon demand. Mobile Energy's obligations above, (i) are absolute and unconditional, (ii) are unlimited in amount (except as provided in Article XIV of the Indenture), (iii) constitute a guaranty of payment and performance and not a guaranty of collection, (iv) are as primary obligor and not as a surety only, (v) shall -[A][B]-4- be a continuing guaranty of all present and future Guaranteed Obligations and all promissory notes and other documentation given in extension or renewal or substitution for any of the Guaranteed Obligations and (vi) shall be irrevocable. The obligations of Mobile Energy under this Guaranty shall continue in full force and effect until the payment, observance and performance in full of the Guaranteed Obligations. The rights and obligations of Mobile Energy and the Trustee shall survive the repayment in full of all principal of and interest on the Securities. This Guaranty is given for the benefit of the Trustee and, subject to the terms and conditions set forth herein, the Holders from time to time of the Securities of this series, all of whom shall be entitled in the same manner as set forth herein to enforce performance and observance of this Guaranty. Reference is made to Article XIV of the Indenture for further provisions with respect to this Guaranty. THIS GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN THE STATE OF NEW YORK. -[A][B]-5- IN WITNESS WHEREOF, Mobile Energy Services Holdings, Inc. has caused this Guaranty to be signed in its name by its President or Vice President, by the signature or a facsimile thereof, attested by its Secretary, by the signature or a facsimile thereof. Dated: MOBILE ENERGY SERVICES HOLDINGS, INC. (Seal) By: Title: Attest: By: Secretary -[A][B]-6- ABBREVIATIONS The following abbreviations when used in the inscription on the face of this instrument shall be construed as though they were written out in full according to applicable laws or regulations: TEN COM as tenants in common TEN ENT as tenants by the entireties JT TEN as joint tenants with right of survivorship and not as tenants in common UNIF GIFT MIN ACT___________________ (Cust)(Minor) under Uniform Gift to Minors Act _______________________________________ (State) Additional abbreviations may also be used though not in the above list _________________ FOR VALUE RECEIVED the undersigned hereby sell(s), assign(s) and transfer(s) unto Social Security Number or Other Identifying Number of Assignee (Please print or typewrite name and address, including zip code of Assignee) the written Security and all rights thereunder, hereby irrevocably constituting and appointing ________________________ attorney to transfer said Security on the books of the Company, with full power of substitution in the premises. Dated: NOTICE: The signature to this assignment must correspond with the name as written upon the first page of the within instrument in every particular, without alteration or enlargement or any change whatsoever. (To be included if principal payable in installments) Annex A Principal Percentage of Payment Date Principal Amount Payable EX-99 8 EXHIBIT B-4(D) Exhibit B-4(d) WSP&R 6/29/95 Appendix A DEFINED TERMS For purposes of any Financing Document (as defined herein), terms used in such Financing Document (including terms used herein) that are not otherwise defined therein shall have the following meanings, subject to any provisions contained in such Financing Document that affect the construction or interpretation of such terms. Except as otherwise expressly provided in any such Financing Document, if and to the extent that such Financing Document shall be amended, restated, supplemented or otherwise modified from time to time pursuant to the terms and provisions thereof, this Appendix A shall be, or be deemed to have been, amended, restated, supplemented or otherwise modified concurrently with the execution and delivery of such amendment, restatement, supplement or other modification in order to conform the terms herein and therein, mutatis mutandis, to the terms set forth in or required by such amendment, restatement, supplement or other modification. Except as otherwise expressly provided in any such Financing Document: (a) the terms used in such Financing Document have the meanings assigned to them in this Appendix A and include the plural as well as the singular; provided, however, that, in the case of the Indenture, all such terms that are defined in the Trust Indenture Act, either directly or by reference therein, have the meanings assigned to them therein; (b) (i) all accounting terms not otherwise defined in such Financing Document have the meanings assigned to them, (ii) all financial statements and all certificates and reports as to financial matters required to be delivered to the Collateral Agent, the Indenture Trustee or the Tax- Exempt Indenture Trustee, or any other Person (as the case may be), under such Financing Document shall be prepared and (iii) all calculations made for the purpose of determining compliance with such Financing Document shall (except as otherwise expressly provided herein) be made, in the case of clauses (i), (ii) and (iii) above, in accordance with, or by application of, GAAP applied on a basis consistent (except inconsistencies that are disclosed in writing to the Collateral Agent, the Indenture Trustee or the Tax-Exempt Indenture Trustee, or any other Person (as the case may be), and are in accordance with GAAP as certified by a firm of independent certified public accountants of recognized national standing) with that used in the preparation of the then most recent corresponding financial statements furnished under such Financing Document to the Collateral Agent, the Indenture Trustee or the Tax-Exempt Indenture Trustee, or any other Person (as the case may be); (c) all references in such Financing Document to any designated "Article," "Section," "Appendix," "Schedule," "Exhibit" and other subdivision are to the designated Article, Section, Appendix, Schedule, Exhibit and other subdivision, respectively, of such Financing Document; (d) all references in such Financing Document to (i) the words "herein," "hereof" and "hereunder" and other words of similar import refer to such Financing Document as a whole and not to any particular Article, Section or other subdivision and (ii) the term "this Agreement" or "this Indenture" means such Financing Document as a whole, including Appendices, Schedules and Exhibits thereto; (e) all references in such Financing Document to any Project Document or other Contract defined or referred to therein shall include such Contract (and, in the case of the Senior Securities or any other instrument, any other instrument issued in substitution therefor) as the terms thereof may have been or may be amended, supplemented, waived or otherwise modified, or as such Contract may have been replaced (including (i) in the case of an Energy Services Agreement or the Master Operating Agreement, any replacement Contract therefor then satisfying the Restricted Payment Alternative Agreement Requirements with respect thereto and (ii) in the case of any Project Contract, any replacement Contract therefor then satisfying the Event of Default Alternative Agreement Requirements with respect thereto), from time to time; (f) all references in such Financing Document to any Person (including any of its capacities) shall include the permitted successors and assigns of such Person (including in such capacity) in accordance with the terms of such Financing Document and the other Project Documents and, in the case of any Governmental Authority, any Person succeeding to its functions and capacities; (g) all references in such Financing Document to any Law shall include such Law or any successor Law as amended, supplemented or otherwise modified and in effect from time to time, and any other Law in substance substituted therefor; (h) any item or list of items set forth following the word "including," "include" or "includes" in such Financing Document is set forth only for the purpose of indicating that, regardless of whatever other items are in the category in which such item or items are "included," such item or items are in such category, and shall not be construed as -2- indicating that the items in the category in which such item or items are "included" are limited to such item or items similar to such items; (i) all references in such Financing Document to the Collateral Agent, the Trustee, the Tax-Exempt Trustee, the IDB or the Working Capital Facility Provider shall be deemed to refer to each such Person however designated in the Financing Documents so that (i) references to rights or duties of the Collateral Agent under such Financing Document shall be deemed to include the rights or duties of such Person as the "Secured Party" under the Security Agreement and as the "Mortgagee" under the Mortgage, (ii) references to rights or duties of the Trustee under such Financing Document shall be deemed to include the rights or duties of such Person as a "Senior Secured Party" under the Intercreditor Agreement, (iii) references to rights or duties of the Tax-Exempt Trustee under such Financing Document shall be deemed to include the rights or duties of such Person as a "Senior Secured Party" under the Intercreditor Agreement and (iv) references to rights or duties of the Working Capital Facility Provider under such Financing Document shall be deemed to include the rights or duties of such Person as a "Senior Secured Party" under the Intercreditor Agreement; provided, however, that, if such Financing Document is (A) the Security Agreement, references to rights or duties of the "Secured Party" thereunder shall be deemed to include the rights or duties of such Person as the Collateral Agent, (B) the Mortgage, references to rights or duties of the "Mortgagee" thereunder shall be deemed to include the rights or duties of such Person as the Collateral Agent and (C) the Working Capital Facility, references to rights or duties of the "Agent" thereunder shall be deemed to include the rights or duties of such Person as the Working Capital Facility Provider; (j) all terms defined in such Financing Document shall have the meanings therein ascribed to them when used in any certificate, opinion or other document delivered pursuant thereto and, in the case of the Indenture and the Tax-Exempt Indenture, in the Senior Securities; (k) all references in such Financing Document to the knowledge of any Person that is a corporation, limited liability company or partnership, or any other Person that is not an individual, with respect to any subject or event (including the occurrence or non-occurrence of any circumstance, the failure to perform or observe, or the satisfaction of, any covenant or agreement or the pending or threatened nature of any action) shall be deemed to mean that an Authorized Officer of such Person (, or any other responsible officer or employee of such Person who has significant understanding of and familiarity with such subject or event,) has actual knowledge or awareness of such -3- subject or event or when notice of such subject or event shall have been given, or deemed to have been given, to such Person in accordance with the provisions of such Financing Document; and (k) all references in such Financing Document to the Project Contracts shall be deemed to exclude any Project Contract (and the Consent to Assignment (if any) with respect thereto) (i) after the date on which such Project Contract (A) may have been terminated in accordance with Section 5.10 of the Indenture or Section ( ) of the Tax- Exempt Indenture, (B) shall have reached its stated termination date (if any) or (C) (other than in the case of the Energy Services Agreements and the Master Operating Agreement in connection with a Mill Closure) shall have been fully and finally performed by all parties thereto and (ii) after the date of any disposition of the Company's rights and obligations under such Project Contract in accordance with Section 5.8 of the Indenture or Section ( ) of the Tax-Exempt Indenture, except, in the case of clauses (i) and (ii) above, if and to the extent that any provisions of such Project Contract so excluded provide that the rights and obligations of any Person that is a party to such Contract shall survive the termination thereof. "Accounts" means, collectively, the Intercreditor Agreement Accounts, the Indenture Accounts and the Tax-Exempt Indenture Accounts. "Act" has the meaning specified, (a) in the case of any Holder of Indenture Securities, in Section 1.4 of the Indenture and (b) in the case of any Holder of Tax-Exempt Indenture Securities, in Section ( ) of the Tax-Exempt Indenture. "Affiliate" means, with respect to any Person, any other Person directly or indirectly controlling or controlled by, or under direct or indirect common control with, such Person. For purposes of this definition, the term "control" (including the correlative meanings of the terms "controlled by" and "under common control with"), as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management policies of such Person, whether through the ownership of securities or partnership or other ownership interests or by contract or otherwise. Notwithstanding the foregoing, Southern, Mobile Energy, Southern Electric, the Operator and each Person owning, directly or indirectly, five percent (5%) or more of the membership interests in the Company shall be deemed to be an Affiliate of the Company. "Affiliate Subordinated Debt" means any unsecured, subordinated loan or loans to the Company from any of its Affiliates pursuant to a Subordinated Loan Agreement, fully subordinated as to payment and exercise of remedies and payable only from monies otherwise distributable by the Company from the -4- Distribution Account in accordance with the Intercreditor Agreement. "Aggregate Demand" has the meaning specified in the Master Operating Agreement. "Alabama Act" means Ala. Code section 11-54-80 to section 11-54-101. "Annual Budget" means the operating plan and budget for the Energy Complex developed by the Company for operation of the Energy Complex for any Fiscal Year, as the same may be amended, restated, supplemented or otherwise modified from time to time and as more particularly described in Section 5.12 of the Indenture or Section 4.12 of the IDB Lease Agreement (as the case may be). "Articles of Organization" means the Articles of Organization of the Company dated ( ), 1995. "Authenticating Agent" means any Person acting as Authenticating Agent pursuant to, in the case of the Indenture, Section 9.14(b) thereof and, in the case of the Tax-Exempt Indenture, Section ( ) thereof. "Authorized Agent" means any Paying Agent, Authenticating Agent or Security Registrar or other agent appointed by the Indenture Trustee or the Tax-Exempt Indenture Trustee (as the case may be) or the Company or the IDB (as the case may be) in accordance with the Indenture or the Tax-Exempt Indenture (as the case may be) to perform any function that such Indenture authorizes such agent to perform. "Authorized Officer" means (a) in the case of a corporation (including Mobile Energy) or limited liability company (including the Company), the chief executive officer, the president, the chief financial officer, a vice president, the treasurer or an assistant treasurer of such corporation or limited liability company and (b) in the case of any general or limited partnership, any Person authorized by the managing general partner (or such other Person that is responsible for the management of such partnership) to take the applicable action on behalf of such partnership or any officer (with a title specified in clause (a) above) of such partnership's managing general partner (or such other Person that is responsible for the management of such managing general partner). "Authorized Representative" means, in respect of any Person, the individual or individuals authorized to act on behalf of such Person by the board of directors, manager, management committee, board of control or any other governing body of such Person as designated from time to time in a certificate of such Person, which shall include or attach thereto specimen signatures, -5- delivered to the Collateral Agent upon which the Collateral Agent may conclusively rely. "Authorized Trust Officer" means any officer of the Indenture Trustee or the Tax-Exempt Indenture Trustee (as the case may be) or any other individual who shall be duly authorized by appropriate corporate action on the part of either such Trustee to authenticate Senior Securities. "Automatic Acceleration Default" has the meaning specified, (a) in the case of the Indenture, in Section 8.2(a) thereof and (b) in the case of the Tax-Exempt Indenture, in Section ( ) thereof. "Available Amount" means, at any time, (a) in the case of any Reserve Account Letter of Credit, the undrawn stated amount of such Reserve Account Letter of Credit at such time and (b) in the case of any Southern Guaranty, an amount equal to the "Available Amount" set forth therein (as such amount may be increased or decreased in accordance with such Southern Guaranty). "Bankruptcy Code" means the Federal Bankruptcy Code of 1978. "Bankruptcy Event" means, in respect of any Person, (a) such Person's general inability, or its admission of its inability, to pay its debts as such debts become due, (b) the application by such Person for or its consent to the appointment of, or the taking of possession by, a receiver, custodian, trustee or liquidator of itself or of all or a substantial part of its property, (c) the commencement by such Person of a voluntary case under the Bankruptcy Code, (d) the making by such Person of a general assignment for the benefit of its creditors, (e) the filing of a petition by such Person seeking to take advantage as a debtor of any other law relating to bankruptcy, insolvency, reorganization, liquidation, dissolution, arrangement, winding-up or readjustment of debts, (f) the failure by such Person to controvert in a timely and appropriate manner, or its acquiescence in writing to, any petition filed against it in an involuntary case under the Bankruptcy Code, (g) the taking of any corporate or other action by such Person for the purpose of effecting any of the foregoing, (h) the commencement of a proceeding or case, without the application or consent of such Person, in any court seeking (A) such Person's reorganization, liquidation, dissolution, arrangement or winding-up, or the composition or readjustment of its debts, (B) the appointment of a trustee, receiver, custodian, liquidator, examiner or the like of such Person or all or any substantial part of its property or (C) similar relief in respect of such Person under any law relating to bankruptcy, insolvency, reorganization, winding-up or composition or adjustment of debt and such proceeding or case shall continue undismissed, or an order, judgment or decree approving or ordering any of the foregoing shall be entered and continue unstayed and (except in the case of Section 5.19(a)(ii) -6- of the Indenture and Section 4.19(a)(ii) of the IDB Lease Agreement) in effect for a period of sixty (60) or more days or (i) an order for relief against such Person shall be entered in any involuntary case under the Bankruptcy Code. "Board of Directors" means (a) when used with respect to the Company, either the board of directors of the Manager of the Company or any committee of such board duly authorized to act for it hereunder and (b) when used with respect to Mobile Energy, either the board of directors of Mobile Energy or any committee of such board duly authorized to act for it hereunder. "Board Resolution" means (a) when used with respect to the Company, a copy of a resolution certified by an Authorized Officer of the Company or the secretary or assistant secretary of the Company as having been adopted by the Manager of the Company and to be in full force and effect on the date of such certification and (b) when used with respect to Mobile Energy, means a copy of a resolution certified by an Authorized Officer or the secretary or assistant secretary of Mobile Energy as having been adopted by the Board of Directors of Mobile Energy and to be in full force and effect on the date of such certification. "Bond Counsel" means Balch & Bingham or other nationally recognized counsel experienced in matters of municipal law and the tax-exempt status of obligations under the Code. "Business Day" means any day other than a Saturday or Sunday or other day on which banks in New York, New York or Atlanta, Georgia are authorized or required to be closed. "Capital Budget" means the capital plan and budget developed by the Company with respect to the capital improvements to the Energy Complex specified in the Master Operating Agreement and certain other planned capital expenditures thereto. "Capital Budget Subaccount" means the subaccount of the Completion Account so designated established and created under Section 2.2(c) of the Intercreditor Agreement. "Casualty Proceeds" means all insurance proceeds (including title insurance proceeds) and other amounts actually received on account of an Event of Loss, other than proceeds of third-party liability insurance (to the extent paid directly from an insurer or insurers to a third-party). "Closing Date" means the date on which the First Mortgage Bonds and the Tax-Exempt Bonds are originally issued. "Coal Supplier" means E.J. Hodder & Associates, Inc., a Tennessee corporation. -7- "Coal Supply Agreement" means the Coal Supply Agreement dated as of May 1, 1995 between the Coal Supplier and the Company. "Code" means the Internal Revenue Code of 1986 and the rules and regulations promulgated thereunder. "Collateral" means, collectively, all of the collateral mortgaged, pledged or assigned to the Collateral Agent, the Indenture Trustee and the Tax-Exempt Indenture Trustee by the Company and the IDB (as the case may be), in each case pursuant to the granting and assigning clauses of the applicable Financing Documents. "Collateral Agent" means Bankers Trust Company or any other Person appointed as a substitute or replacement Collateral Agent under the Intercreditor Agreement. "Collateral Agent Claims" means all obligations of the Senior Secured Parties and the Mobile Energy Parties, now or hereafter existing, to pay fees, costs and expenses to the Collateral Agent pursuant to Section 7.3(f) and Article VIII of the Intercreditor Agreement. "Combined Exposure" means, at any time, the sum of (a) the aggregate principal amount of all Senior Securities Outstanding and (b) the aggregate principal amount of all outstanding Working Capital Loans made, and undrawn commitments to lend, under the Working Capital Facility. "Common Services Agreement" means the Common Services Agreement dated as of December 12, 1994 among the Company (as assignee of Mobile Energy), the Pulp Mill Owner, the Tissue Mill Owner and the Paper Mill Owner. "Company" means Mobile Energy Services Company, L.L.C., an Alabama limited liability company. "Company Request" and "Company Order" mean, respectively, a written request or order signed in the name of the Company by an Authorized Officer of the Company and delivered to the Indenture Trustee or the Tax-Exempt Indenture Trustee (as the case may be). "Company Step-In Rights" has the meaning specified for "MESC Step-In Rights" in the Master Operating Agreement. "Completion Account" means the Account so designated established and created under Section 2.2(a) of the Intercreditor Agreement. "Consents to Assignment" means, collectively, (a) the Consents to Assignment of Scott with respect to the Project Contracts to which it is a party, (b) the Consent to Assignment of the Pulp Mill Owner with respect to the Project Contracts to -8- which it is a party, (c) the Consent to Assignment of the Tissue Mill Owner with respect to the Project Contracts to which it is a party, (d) the Consent to Assignment of the Paper Mill Owner with respect to the Project Contracts to which it is a party, (e) the Consent to Assignment of Southern Electric with respect to the Project Contracts to which it is a party, (f) the Consent to Assignment of SCS with respect to the SCS Agreement, (g) the Consent to Assignment of Coal Supplier with respect to the Coal Supply Agreement, (h) the Consent to Assignment of TRT with respect to the Nondisturbance Agreement and (i) the Consent to Assignment of the IDB with respect to the Project Contracts to which it is a party. "Contract" means any (a) any agreement (whether executory or non-executory and whether a Person entitled to rights thereunder is so entitled directly or as a third-party beneficiary), including an indenture, lease or license, (b) any deed or other instrument of conveyance, (c) any certificate of incorporation, articles of organization or charter and (d) any by-law. "Corporate Trust Office" means the designated corporate trust office of the Indenture Trustee or the Tax-Exempt Indenture Trustee (as the case may be) at which at any particular time corporate trust business of such Trustee shall be administered, which as of the Closing Date is, in the case of the Indenture Trustee, ( ) and, in the case of the Tax-Exempt Indenture Trustee, is ( ), or in either case such other office as may be designated by such Trustee to the Mobile Energy Parties. "Credit Standard Event" means (a) with respect to any Reserve Account Letter of Credit on deposit in any Reserve Account Security Account, the unsecured long-term Debt of the provider of such Reserve Account Letter of Credit shall not be rated "A" or higher by S&P, "A" or higher by Fitch and "A2" or higher by Moody's and (b) with respect to any Southern Guaranty on deposit in any Reserve Account Security Account, (i) the Collateral Agent or the Trustee shall have been provided with an Officer's Certificate of Southern certifying as to the determination that the Southern Credit Standard has not been satisfied or (ii) Southern shall have failed, or the Company shall have failed to cause Southern, to provide to the Collateral Agent or the Trustee, on or prior to the date that is forty-five (45) days after the end of each fiscal quarter of Southern, an Officer's Certificate of Southern certifying as to the determination that the Southern Credit Standard has been satisfied. "Current Fiscal Quarter" has the meaning specified in the definition of Maintenance Reserve Account Required Deposit. "Debt" means, in respect of any Person, (a) indebtedness for borrowed money or the deferred purchase price of property or services (excluding obligations under agreements for the purchase price of goods and services in the normal course of business -9- which are not more than ninety (90) days past due), (b) obligations as lessee under leases that shall have been or should be, in accordance with GAAP, recorded as capital leases, (c) obligations (whether matured or contingent) with respect to any letters of credit issued for the account of such Person, (d) obligations under direct or indirect guaranties or other similar contingent liabilities in respect of, and obligations (contingent or otherwise) to purchase or otherwise acquire, or otherwise assure a creditor against loss in respect of, indebtedness or obligations of others of the kinds referred to in clause (a), (b) or (c) above and (e) all Debt of another Person secured by a lien on any property owned by the first Person (whether or not such Debt has been assumed by such first Person). "Debt Service Event" means (a) with respect to any Reserve Account Letter of Credit on deposit in any Reserve Account Security Account, the Collateral Agent, the Trustee or the Tax- Exempt Trustee (as the case may be) shall be authorized to draw upon such Reserve Account Letter of Credit pursuant to (i) if such Reserve Account Security Account is the Maintenance Reserve Account, clause second of Section 3.5(b) of the Intercreditor Agreement, (ii) if such Reserve Account Security Account is the Distribution Account, clause second of Section 3.8(b) of the Intercreditor Agreement, (iii) if such Reserve Account Security Account is a Debt Service Reserve Account, clause second of Section 4.5 of the Indenture and (iv) if such Reserve Account Security Account is a Tax-Exempt Debt Service Reserve Account, clause second of Section ( ) of the Tax-Exempt Indenture and (b) with respect to any Southern Guaranty on deposit in any Reserve Account Security Account, the Collateral Agent or the Trustee (as the case may be) shall be authorized to call upon such Southern Guaranty pursuant to (i) if such Reserve Account Security Account is the Maintenance Reserve Account, clause third of Section 3.5(b) of the Intercreditor Agreement, (ii) if such Reserve Account Security Account is the Distribution Account, clause third of Section 3.8(b) of the Intercreditor Agreement and (iii) if such Reserve Account Security Account is a Debt Service Reserve Account, clause third of Section 4.5 of the Indenture. "Debt Service Reserve Account" means the Account so designated (if any) established and created under any Series Supplemental Indenture to the Indenture for the benefit of Holders of Indenture Securities established thereunder. "Debt Service Reserve Account Required Balance" means, in respect of any Debt Service Reserve Account, the amount so designated in the Series Supplemental Indenture to the Indenture establishing such Debt Service Reserve Account. "Default Event" means (a) with respect to any Reserve Account Letter of Credit on deposit in any Reserve Account Security Account, (i) the provider of such Reserve Account Letter of Credit shall default in its payment obligations thereunder or (ii) the provider of such Reserve Account Letter of Credit shall -10- become insolvent and (b) with respect to any Southern Guaranty, (i) Southern shall fail to perform any of the "Guaranteed Obligations" thereunder or (ii) Southern shall become insolvent. "Designated Southern Subsidiaries" means, for purposes of the satisfaction of the Southern Credit Standard, all of the Eligible Southern Subsidiaries other than, as designated by the Company to be excluded for such purposes, any one or all (including any combination) of the Eligible Southern Subsidiaries, provided that the aggregate net worth of such Eligible Southern Subsidiaries so excluded is equal to or less than ten percent (10%) of the aggregate net worth of all of the Eligible Southern Subsidiaries. For such purposes, "net worth" means (a) par value of common stock plus (b) paid-in capital plus (c) premium on preferred stock plus (d) retained earnings minus (e) accrued and unpaid dividends on, or other amounts due and payable in respect of, capital stock, in each case, of each of such Eligible Southern Subsidiaries. "Determination of Taxability" means a final determination by the Internal Revenue Service or a court of competent jurisdiction in a proceeding in which the Company has been afforded an opportunity to participate, or a determination by the Company based on an opinion of Bond Counsel, that as a result of any event the interest payable on any Tax-Exempt Indenture Security (in respect of which, at the time of original issuance, the Tax- Exempt Indenture Trustee received an opinion of Bond Counsel to the effect that interest payable on such Tax-Exempt Indenture Security was not includable for Federal income tax purposes in the gross income of any owner of such Tax-Exempt Indenture Security (other than an owner who is a "substantial user" of the Energy Complex or a "related person" within the meaning of Section 147(a) of the Code)) is includable for Federal income tax purposes in the gross income of any owner of such Tax-Exempt Indenture Security (other than any owner who is a "substantial user" of the Energy Complex or a "related person" within the meaning of Section 147(a) of the Code). No such determination shall be considered final unless the Company has been given written notice and, if it so desires, has been given the opportunity to contest the same, either directly or in the name of any owner of a Tax-Exempt Indenture Security and until the conclusion of any appellate review, if sought. Interest on Tax- Exempt Indenture Securities shall not be deemed includable for Federal income tax purposes merely by reason of such interest being treated as a tax preference item for purposes of a Federal alternative minimum tax, loss of or reduction in a related deduction or other indirect adverse tax consequences. "Distribution Account" means the Account so designated established and created under Section 2.2(a) of the Intercreditor Agreement. "Distribution Date" means the Business Day immediately following each Interest Payment Date. -11- "Easement Deeds" means, collectively, (a) the Easement Deed, dated as of December 12, 1994 between the Company (as assignee of Mobile Energy) and the Pulp Mill Owner granting the Company certain easements, (b) the Easement Deed dated as of December 12, 1994 between the Company (as assignee of Mobile Energy) and the Pulp Mill Owner granting the Pulp Mill Owner certain easements, (c) the Easement Deed dated as of December 12, 1994 between the Company (as assignee of Mobile Energy) and the Tissue Mill Owner granting the Company certain easements, (d) the Easement Deed dated as of December 12, 1994 between the Company (as assignee of Mobile Energy) and the Tissue Mill Owner granting the Tissue Mill Owner certain easements, (e) the Easement Deed dated as of December 12, 1994 between the Company (as assignee of Mobile Energy) and the Paper Mill Owner granting the Company certain easements and (f) the Easement Deed dated as of December 12, 1994 between the Company (as assignee of Mobile Energy) and the Paper Mill Owner granting the Paper Mill Owner certain easements. "Easements" means, collectively, all easements, licenses, franchises, rights-of-way and spur track agreements to which the Company is now or hereafter a party or beneficiary affecting construction on, or the use or operation of, or constituting a part of, the Site (including the Easement Deeds). "Eligible Southern Subsidiaries" means, at any time, each of Alabama Power Company, an Alabama corporation, Georgia Power Company, a Georgia corporation, Gulf Power Company, a Maine corporation, Mississippi Power Company, a Mississippi corporation, and Savannah Electric and Power Company, a (Georgia) corporation, provided that a majority of the voting securities of such Person is owned, directly or indirectly, by Southern at such time. "Eminent Domain Proceeds" means all amounts and proceeds actually received in respect of any Event of Eminent Domain. "Energy Complex" has the meaning specified in the Asset Purchase Agreement dated as of December 12, 1994 between Scott, as seller, and the Company (as assignee of Mobile Energy), as buyer, together with additions thereto and replacements thereof. "Energy Services Agreements" means, collectively, the Pulp Mill Energy Services Agreement, the Tissue Mill Energy Services Agreement and the Paper Mill Energy Services Agreement. "Environmental Bonds" means, collectively, (a) (i) the IDB's Environmental Improvement Revenue Bonds (Scott Paper Company Project), Series A of 1973, (ii) the IDB's Environmental Improvement Revenue Bonds (Scott Paper Company Project), Series A of 1976 and (iii) the IDB's Environmental Improvement Revenue Bonds (Scott Paper Company Project), Series A of 1980, in the case of clauses (i), (ii) and (iii) above, issued under and secured by a Trust Indenture dated as of April 1, 1973 between the IDB and (AmSouth Bank of Alabama), as trustee, as -12- supplemented by a First Supplemental Indenture thereto dated as of September 1, 1976 and a Second Supplemental Indenture thereto dated as of October 1, 1980 and (b) the IDB's Industrial Revenue Bonds (Scott Paper Company Project), Series B of 1976 issued under and secured by a Trust Indenture dated as of September 1, 1976 between the IDB and (AmSouth Bank of Alabama), as trustee . "Environmental Requirement" means any Governmental Approvals in effect from time to time relating to the protection of the environment or otherwise addressing environmental issues or environmental requirements of or by any Governmental Authority, or otherwise relating to noise or to the manufacture, processing, distribution, use, treatment, storage, disposal, transport, emission, discharge, release or handling of Hazardous Material, including the Comprehensive Environmental Response Compensation, and Liability Act of 1980 (42 U.S.C. section 9601 et seq.), the Hazardous Materials Transportation Act (49 U.S.C. section 1801 et seq.), the Resource Conservation and Recovery Act (42 U.S.C. section 6901 et seq.), the Toxic Substance Control Act (15 U.S.C. section 2601 et seq.), the Clean Air Act (42 U.S.C. section 7401 et seq.), the Clean Water Act (33 U.S.C. section 1251 et seq.), the Emergency Planning and Community Right to Know Act (42 U.S.C. section 1101 et seq.), the Federal Insecticide, Fungicide and Rodenticide Act (7 U.S.C. section 136 et seq.), the Oil Pollution Act of 1990 (33 U.S.C. section 2761), the Occupational Health and Safety Act (29 U.S.C. section 641 et seq.), the Pollution Prevention Act (42 U.S.C. section 1201 et seq.), the Safe Drinking Water Act (42 U.S.C. section 300f et seq.), Preservation Development, Etc. of Coastal Areas (Ala. Code section 9-7-1 et seq.), the Alabama Environmental Management Act (Ala. Code section 22-22A-1 et seq.), the Alabama Water Pollution Control Act (Ala. Code section 22-22A-1 et seq.), the Alabama Safe Drinking Water Act (Ala. Code section 22-23-30 et seq.), Water Well Standards (Ala. Code section 22-24-1 et seq.), Water Wastewater Systems and Treatment Plants (Ala. Code section 22-25- 1 et seq.), Sewage Collection, Treatment, and Disposal Facilities (Ala. Code section 22-26-1 et seq.), Solid Wastes Disposal Act (Ala. Code section 22-27-1 et seq.), the Alabama Air Pollution Control Act of 1971 (Ala. Code section 22-28-1 et seq.), the Hazardous Wastes Management and Minimization Act (Ala. Code section 22-30-1 et seq.), the Alabama Hazardous Substance Cleanup Fund (Ala. Code section 22-30A-1 et seq.), the Water Pollution Control Authority (Ala. Code section 22-34-1 et seq.), the Alabama Underground and Aboveground and Storage Tank Trust Fund Act (Ala. Code section 22-34-1 (22-35-1 in the S-1) et seq.), the Alabama Underground Storage Tank and Wellhead Protection Act of 1988 (Ala. Code section 22-36-1 et seq.) and the Alabama Lead Ban Act of 1988 (Ala. Code section 22-37-1 et seq.) and, in each case, any regulations promulgated thereunder. "ERISA" means the Employee Retirement Income Security Act of 1974. -13- "ESA Blockage Event" means, with respect to any Mill Owner, its respective Energy Services Agreement and its Mill, that: (a) such Energy Services Agreement or the Master Operating Agreement has been declared unenforceable by a Governmental Authority having jurisdiction, unless the Company has delivered to the Indenture Trustee or the Tax- Exempt Indenture Trustee (as the case may be) and the Collateral Agent an Officer's Certificate, together with an Independent Engineer Confirmation, certifying that either (i) such Energy Services Agreement and the Master Operating Agreement have been reinstated on identical and enforceable terms by the Company and such Mill Owner, (ii) such declaration of enforceability has been overruled, reversed or rescinded by such Governmental Authority or by another Governmental Authority having final jurisdiction or greater jurisdiction than such first Governmental Authority or (iii) the Company has satisfied the Restricted Payment Alternative Agreement Requirements with respect to such Energy Services Agreement or the Master Operating Agreement (as the case may be); (b) such Mill Owner has either (i) terminated, or delivered written notice pursuant to the Master Operating Agreement of its intention to terminate (which notice has not been rescinded), its rights and obligations under such Energy Services Agreement or the Master Operating Agreement in connection with a Mill Closure with respect to such Mill or (ii) denied that it has any obligations and substantially ceased performance under such Energy Services Agreement or the Master Operating Agreement, unless, in either case, the Company has delivered to the Indenture Trustee or the Tax- Exempt Indenture Trustee (as the case may be) and the Collateral Agent an Officer's Certificate, together with an Independent Engineer Confirmation, certifying that either (A) such Energy Services Agreement or the Master Operating Agreement (as the case may be) has been reinstated on identical and enforceable terms by the Company and such Mill Owner or, provided that another Person is reasonably capable of performing such Mill Owner's obligations under such Energy Services Agreement or the Master Operating Agreement (as the case may be), by the Company and such other Person or (B) the Company has satisfied the Restricted Payment Alternative Agreement Requirements with respect to such Energy Services Agreement or the Master Operating Agreement (as the case may be); (c) a default has occurred and is continuing in respect of such Mill Owner's obligations under such Energy Services Agreement or the Master Operating Agreement, unless, if such Energy Services Agreement or the Master Operating Agreement with respect to such Mill Owner has been terminated as a result of such default, the Company has delivered to the Indenture Trustee or the Tax-Exempt -14- Indenture Trustee (as the case may be) and the Collateral Agent an Officer's Certificate, together with an Independent Engineer Confirmation, certifying that the Company has satisfied the Restricted Payment Alternative Agreement Requirements with respect to such Energy Services Agreement or the Master Operating Agreement (as the case may be); (d) based upon the knowledge of either of the Mobile Energy Parties, it is reasonably likely that, on or prior to the next Distribution Date, either (i) there will be a Mill Closure with respect to such Mill or (ii) such Mill Owner will deliver written notice pursuant to the Master Operating Agreement of such Mill Owner's intention to terminate its rights and obligations under such Energy Services Agreement or the Master Operating Agreement, unless, in either case, if such Energy Services Agreement or the Master Operating Agreement with respect to such Mill Owner has been terminated as a result of such Mill Closure, the Company has delivered to the Indenture Trustee or the Tax-Exempt Indenture Trustee (as the case may be) and the Collateral Agent an Officer's Certificate, together with an Independent Engineer Confirmation, certifying that the Company has satisfied the Restricted Payment Alternative Agreement Requirements with respect to such Energy Services Agreement or the Master Operating Agreement (as the case may be); or (e) a Bankruptcy Event has occurred and is continuing in respect of such Mill Owner, unless (i) the obligations of such Mill Owner under such Energy Services Agreement and the Master Operating Agreement have been expressly assumed with the approval of a court of competent jurisdiction or (ii) if such Energy Services Agreement or the Master Operating Agreement with respect to such Mill Owner has been rejected or otherwise terminated, the Company has delivered to the Indenture Trustee or the Tax-Exempt Indenture Trustee (as the case may be) and the Collateral Agent an Officer's Certificate, together with an Independent Engineer Confirmation, certifying that the Company has satisfied the Restricted Payment Alternative Agreement Requirement with respect to such Energy Services Agreement or the Master Operating Agreement (as the case may be). "Event of Default" means, so long as there are any Financing Commitments or any Financing Liabilities outstanding, an "Event of Default" under the Indenture, an "Event of Default" under the Tax-Exempt Indenture or an "Event of Default" under the Working Capital Facility. "Event of Default Alternative Agreement Requirements" means, with respect to any Project Contract, another Contract entered into by the Company with one or more Persons in substitution for or replacement of any such Project Contract, with respect to some or all of the Processing Services or other services formerly provided by the Company thereunder, provided that such -15- alternative Contract (a) contains substantially equivalent terms and conditions or, if such terms and conditions are no longer available on a commercially reasonable basis, the terms and conditions then available on a commercially reasonable basis, (b) would, after giving effect to such alternative Contract and based on projections prepared by the Company on a reasonable basis, maintain a minimum annual projected Senior Debt Service Coverage Ratio through the final maturity date of the Outstanding Indenture Securities or the Outstanding Tax-Exempt Securities (as the case may be) equal to or greater than the lesser of (i) the minimum annual projected Senior Debt Service Coverage Ratio that would have been in effect had performance under such Project Contract continued and (ii) 1.2 to 1.0 and (c) is reasonably capable of being performed by the parties thereto. Notwithstanding the foregoing, such alternative Contract need not satisfy the conditions described in clauses (a) and (b) above, provided that (A) the Company delivers to the Indenture Trustee or the Tax-Exempt Indenture Trustee (as the case may be) an Officer's Certificate, together with an Independent Engineer Confirmation, certifying that the Company has satisfied the Restricted Payment Alternative Agreement Requirements (other than the conditions set forth in subclauses (C) and (D) of clause (b)(ii) of the definition of Restricted Payment Alternative Agreement Requirements with respect to such alternative Contract) and (B) after giving effect to such alternative Contract and based on projections prepared by the Company on a reasonable basis, the projected average annual Senior Debt Service Coverage Ratio through the final maturity date of the Outstanding Indenture Securities or the Tax-Exempt Securities (as the case may be) is projected to be at least 1.2 to 1.0. "Event of Eminent Domain" means any compulsory transfer or taking, or transfer under threat of compulsory transfer or taking, of a material part of the Energy Complex by any Governmental Authority or any Person acting with the authority thereof for more than six (6) months, unless such transfer or taking is the subject of a Good Faith Contest. "Event of Loss" means any physical loss or destruction of, or destruction to, the Energy Complex, or any other event that causes all or a material part of the Energy Complex to be rendered unfit for normal use for any reason whatsoever, including through failure of title. "Excess Funding Subaccount" means the subaccount of the Maintenance Reserve Account so designated established and created under Section 2.2(b) of the Intercreditor Agreement. "Exchange Act" means the Securities Exchange Act of 1934. "Financing Commitment" means any commitment pursuant to the Financing Documents to provide credit to the Company. -16- "Financing Documents" means all Contracts evidencing or securing the Financing Liabilities. "Financing Liabilities" means all indebtedness, liabilities and obligations of the Mobile Energy Parties (including principal, interest, fees, reimbursement obligations, penalties, indemnities and legal expenses, whether due to acceleration or otherwise) owing to the Senior Secured Parties (of whatsoever nature and however evidenced) under or pursuant to the Indenture (including the Guaranty), the Senior Securities, the IDB Lease Agreement, the Tax-Exempt Indenture, the Working Capital Facility and any evidence of indebtedness thereunder entered into, the other Security Documents, to the extent arising on or prior to the maturity of the Securities and the Tax-Exempt Indenture Securities, in each case, direct or indirect, primary or secondary, fixed or contingent, now or hereafter arising out of or relating to any such Contract. "Financing Statements" means Uniform Commercial Code financing statements filed in connection with the other Security Documents. "First Mortgage Bonds" means the Indenture Securities issued on the Closing Date under the first Series Supplemental Indenture to the Indenture. "Fiscal Quarter" means the period of time beginning at 12:01 a.m. on the first day of each calendar quarter and ending at midnight on the last day of such calendar quarter. "Fiscal Year" means the period of time beginning at 12:01 a.m. on January 1 of each year and ending at midnight on December 31 of such year. "Fitch" means Fitch Investors Service, Inc., a New York corporation. "Fuel Inventory Proceeds" means the proceeds from the sale of the fuel inventory of the Energy Complex. "GAAP" means generally accepted accounting principles in the United States of America as in effect from time to time. "GDPIPD" means the Gross Domestic Product Implicit Price Deflator as published in the United States Department of Commerce, Bureau of Analysis publication entitled "Survey of Current Business." If the Gross Domestic Product Implicit Price Deflator ceases to exist or is no longer available, the Company, with the approval of the Independent Engineer, shall designate a substitute index that is reasonably similar to the Gross Domestic Product Implicit Price Deflator. "GDPIPD Factor" means, with respect to each Fiscal Year, the GDPIPD most recently published during or prior to such Fiscal -17- Year divided by the GDPIPD published with respect to December 1994. "Good Faith Contest" means the contest of an item if (a) such item is diligently contested in good faith by appropriate proceedings and adequate reserves or bonding are established in accordance with GAAP with respect to such item and (b) the failure to pay or comply with such item during the period of such contest would not result in a Material Adverse Effect. "Governmental Approvals" means those authorizations, consents, approvals, waivers, exemptions, variances, registrations, certifications, permissions, permits and licenses with any Governmental Authority required for the ownership and operation of the Energy Complex and the performance of a Person's obligations under the Project Documents. "Governmental Authority" means any Federal, state, city, county, municipal, foreign, international, regional or other governmental or regulatory authority, agency, department, board, body, instrumentality, commission, arbiter or court. "Guaranteed Obligations" means all indebtedness, liabilities, obligations, covenants and duties of, and all terms and conditions to be observed by, the Company (including in its capacity as a "debtor in possession" under the Bankruptcy Code) due or owing, or purporting to be due or owing, to, or in favor or for the benefit of, the Indenture Trustee or the Tax-Exempt Indenture Trustee (as the case may be) (in each case for its own benefit and the benefit of the Holders from time to time) under the Security Documents, in each case (a) whether due or owing, or purporting to be due or owing, to, or in favor or for the benefit of, the Indenture Trustee or the Tax-Exempt Indenture Trustee (as the case may be) (in each case for its own benefit and the benefit of the Holders from time to time) or any other Person that becomes the Indenture Trustee or the Tax-Exempt Indenture Trustee (as the case may be) by reason of any succession or assignment at any time thereafter and (b) whether or not an allowable claim against the Company under the Bankruptcy Code, or otherwise enforceable against the Company, and including, in any event, interest accruing after the filing by or against the Company of a petition under the Bankruptcy Code. "Guaranty" means the unconditional guaranty by Mobile Energy of the Guaranteed Obligations included in Article XIV of the Indenture and Article VIII of the IDB Lease Agreement. "Hazardous Materials" means hazardous wastes, hazardous substances, hazardous constituents, air contaminants or toxic substances, whether solids, liquids or gases, including substances defined or otherwise regulated as "hazardous materials," "regulated substances," "hazardous wastes," "hazardous substances," "toxic substances," "pollutants," "contaminants," "carcinogens," "hazardous air pollutants," -18- "criteria pollutants," "reproductive toxins," "radioactive materials," "toxic chemicals," or other similar designations in, or otherwise subject to regulation under, any Environmental Requirement, including petroleum hydrocarbons, asbestos-containing materials, urea formaldehyde foam insulation, polychlorinated biphenyls and radionuclides. "Holder" means a Person in whose name an Indenture Security or a Tax-Exempt Indenture Security (as the case may be) is registered in the register providing for the registration, including upon transfer or exchange, thereof pursuant to the Indenture or the Tax-Exempt Indenture (as the case may be). "IDB" means The Industrial Development Board of the City of Mobile, Alabama. "IDB Lease Agreement" means the Amended and Restated Lease and Agreement dated as of ( ), 1995 among the IDB and the Mobile Energy Parties. "IDB Order" and "IDB Request" mean, respectively, a written request or order signed in the name of the IDB by an Authorized Officer of the IDB and delivered to the Tax-Exempt Indenture Trustee. "Income Tax Deficiency" means (a) with respect to the second Distribution Date during any Fiscal Year, an amount equal to the excess, if any, of (i) an amount equal to the sum of (A) the combined Federal and State of Alabama quarterly estimated income tax payments that would have been required to be paid by all Members during such Fiscal Year prior to such Distribution Date and (B) one-half of the amounts estimated to be required to be paid for County and City of Mobile, Alabama income taxes in respect of such Fiscal Year, if any, all calculated, solely for this purpose, as if such Members collectively were a single "stand-alone" domestic Alabama corporation for purposes of Federal, state and local taxes that would not (1) be a member of a consolidated, affiliated, combined, unitary or other tax group, (2) be a party to any tax sharing arrangements with any other Person and (3) have income, loss or credits (including loss and credit carryovers) available to it that would not be attributable to any ownership interest in the Company over (ii) the amount of distributions, if any, from the Distribution Account and the Subordinated Fee Account made on the first Distribution Date during such Fiscal Year in excess of the amount of distributions, if any, that would have been permitted by clause (b) below with respect to such Distribution Date and (b) with respect to the first Distribution Date during any Fiscal Year, an amount equal to the excess, if any, of (i) an amount equal to the estimate, as of such Distribution Date, of the combined Federal, State of Alabama, and County and City of Mobile, Alabama income taxes that relate to the immediately preceding Fiscal Year of all Members, all calculated solely for this purpose, as if such Members collectively were a single "stand-alone" domestic Alabama -19- corporation for purposes of Federal, state and local taxes that would not (A) be a member of a consolidated, affiliated, combined, unitary or other tax group, (B) be a party to any tax sharing arrangements with any other Person and (C) have income, loss or credits (including loss and credit carryovers) available to it that would not be attributable to any ownership interest in the Company over (ii) the amount of distributions, if any, from the Distribution Account and the Subordinated Fee Account made on the second Distribution Date of such prior Fiscal Year. "Indenture" means the Trust Indenture dated as of ( ), 1995 among the Mobile Energy Parties and the Indenture Trustee. "Indenture Accounts" means, with respect to the Indenture Securities of any series, the Indenture Securities Account and each Debt Service Reserve Account (if any) established for the benefit of Holders of the Indenture Securities of such series. "Indenture Securities" means all Outstanding Debt issued pursuant to the Indenture. "Indenture Securities Account" means the Account so designated established and created under Section 4.1 of the Indenture. "Indenture Securities Collateral" means, collectively, the Indenture Accounts, including any and all monies contained therein or hereafter delivered to the Indenture Trustee for deposit therein and the right to receive monies thereunder, and the Shared Collateral. "Indenture Securities Interest Subaccount" means the subaccount of the Indenture Securities Account so designated established and created under Section 4.1 of the Indenture. "Indenture Securities Principal Subaccount" means the subaccount of the Indenture Securities Account so designated established and created under Section 4.1 of the Indenture. "Indenture Securities Redemption Subaccount" means the subaccount of the Indenture Securities Account so designated established and created under Section 4.1 of the Indenture. "Indenture Trustee" means First Union National Bank of Georgia, a national banking association organized and existing under the laws of ( ). "Independent Engineer" means Stone & Webster Engineering Corporation or another nationally recognized consulting or engineering firm appointed Independent Engineer pursuant to the terms of the Intercreditor Agreement. "Independent Engineer Agreement" means the Independent Engineer Agreement dated as of ( ), 1995 among the Mobile -20- Energy Parties, the Senior Secured Parties, the Collateral Agent and the Independent Engineer or any other similar Contract among such Persons. "Independent Engineer Confirmation" means a certificate signed by an authorized representative of the Independent Engineer confirming the reasonableness of statements and projections contained in certain Officer's Certificates delivered to the Indenture Trustee or the Tax-Exempt Indenture Trustee (as the case may be) or the Collateral Agent under the Financing Documents, which confirmation may not be unreasonably withheld, conditioned or delayed. "Independent Insurance Advisor" means Sedgwick James or another nationally recognized insurance advisory firm appointed as insurance advisor under the Indenture and the Tax-Exempt Indenture by the Collateral Agent. "Intercreditor Agreement" means the Intercreditor and Collateral Agency Agreement dated as of ( ), 1995 among the Senior Secured Parties, the Collateral Agent, the IDB and the Mobile Energy Parties. "Intercreditor Agreement Accounts" means, collectively, the Completion Account, the Revenue Account, the Mill Owner Reimbursement Account, the Working Capital Facility Account, the Operating Account, the Maintenance Reserve Account, the Loss Proceeds Account, the Subordinated Debt Account, the Subordinated Fee Account and the Distribution Account. "Intercreditor Parties" means, collectively, the Senior Secured Parties, the IDB, the Mobile Energy Parties, any Subordinated Debt Provider and any other Person party to the Intercreditor Agreement (other than the Collateral Agent). "Interest Payment Date" means each January 1 and July 1 of each year, commencing January 1, 1996. "Investment Grade" means a rating in one of the four highest categories (without regard to subcategories within such rating categories) by a Rating Agency. "Law" means any constitution, treaty, statute, code, ordinance, regulation, order, decree, writ or judicial or arbitral decision. "Lease Documents" means, collectively, the IDB Lease Agreement, the Tax-Exempt Indenture and (to the extent relating to, or securing, the Tax-Exempt Indenture Securities), the other Financing Documents.. "Leased Land" means the land underlying the components of the Tax-Exempt Project marked on Exhibit A to the IDB Lease Agreement. -21- "Lien" means any lien, claim, security interest, mortgage, trust arrangement, judgment, pledge, option, charge, easement, encumbrance, title retention, conditional sales agreement, encroachment, right-of-way, building or use restriction, preferential right or any other security agreement, arrangement or similar right in favor of any Person, whether voluntarily incurred or arising by operation of law, and includes any agreement to give any of the foregoing in the future, and any contingent sale or other title retention agreement or lease in the nature thereof. ("Limited Liability Company Agreement" means the Limited Liability Company Agreement among the Members dated as of ( ), 1995 providing for the formation of the Company.) "Loss Proceeds" means, as applicable, Casualty Proceeds or Eminent Domain Proceeds. "Loss Proceeds Account" means the Account so designated established and created under Section 2.2(a) of the Intercreditor Agreement. "Maintenance Expenditures" means all costs and expenses of operating and maintaining the Energy Complex and, when the Company is exercising the Company Step-In Rights, the Pulp Mill Step-In Equipment, other than (a) fuel costs and expenses, (b) labor and employee expenses, including fringe benefits and labor relations expense, (c) payments for insurance premiums and like insurance related expenses required or otherwise maintained under any Project Document, (d) costs and expenses of consumable items such as process or cleaning chemicals and lubricants, (e) equipment rental, small tools and vehicle maintenance expenses, (f) costs and expenses associated with legal, accounting and other office and administrative functions, (g) permitting fees, (h) costs and expenses of safety supplies, office supplies and other office expenses, (i) property taxes and payments made in lieu of taxes, (j) computer maintenance expenses, (k) any amounts payable for services rendered under the Common Services Agreement, (l) ash disposal costs, (m) liquidated damages payable to the Mill Owners under the Master Operating Agreement, (n) amounts payable to the Mill Owners in connection with the exercise of Mill Owner Step-In Rights, (o) any amounts required to be rebated to the United States government pursuant to Section 148 of the Code (to the extent not already provided for in the Tax-Exempt Indenture) and (p) payments required to be made by the Company with respect to the 1994 Bonds, in the case of clauses (a) through (p) above, to the extent the foregoing costs or expenses are not customarily treated as capital expenditures. "Maintenance Plan" means the maintenance plan and budget for the Energy Complex, as the same may be amended, restated, supplemented or otherwise modified from time to time and as more particularly described in Section 5.12 of the Indenture or Section 4.12 of the IDB Lease Agreement (as the case may be). -22- "Maintenance Plan Funding Subaccount" means the subaccount of the Maintenance Reserve Account so designated established and created under Section 2.2(b) of the Intercreditor Agreement. "Maintenance Reserve Account" means the Account so designated established and created under Section 2.2(a) of the Intercreditor Agreement. "Maintenance Reserve Account Balance" means, with respect to the Current Fiscal Quarter, the sum of (a) the monies on deposit in the Maintenance Reserve Account, (b) amounts available to be drawn or called upon under any Reserve Account Security deposited in the Maintenance Reserve Account and (c) the monies on deposit in, or otherwise credited to (by means of a guaranty, capital infusion agreement or otherwise), the Mill Owner Maintenance Reserve Account, in the case of clauses (a), (b) and (c) above, at the beginning of the Current Fiscal Quarter. "Maintenance Reserve Account Required Deposit" means, with respect to any Fiscal Quarter during any Fiscal Year (the "Current Fiscal Quarter"), one or more deposits into the Maintenance Reserve Account on Monthly Transfer Dates occurring during the Current Fiscal Quarter in an aggregate amount equal to the excess of the sum of paragraphs (a), (b) and (c) below over the Maintenance Reserve Account Balance with respect to the Current Fiscal Quarter: (a) the amount of Maintenance Reserve Account Required Deposits with respect to each Fiscal Quarter preceding the Current Fiscal Quarter that were required to be deposited into the Maintenance Reserve Account during each such Fiscal Quarter but were not, and have not been since, so deposited; (b) the aggregate amount of any withdrawals from the Maintenance Reserve Account and the Mill Owner Maintenance Reserve Account during each Fiscal Quarter preceding the Current Fiscal Quarter that were in excess of the aggregate projected Maintenance Expenditures for each such Fiscal Quarter (as specified in the Maintenance Plan) but were not, and have not been since, redeposited in the Maintenance Reserve Account; and (c) the greatest of: (i) if the Current Fiscal Quarter is the first Fiscal Quarter of such Fiscal Year, the amount obtained by dividing the aggregate of the projected Maintenance Expenditures for the Current Fiscal Quarter and the immediately succeeding sixteen (16) Fiscal Quarters (in each case as specified in the Maintenance Plan) by sixteen (16); (ii) if the Current Fiscal Quarter is the first or second Fiscal Quarter of such Fiscal Year, the amount -23- obtained by dividing the aggregate of the projected Maintenance Expenditures for the Current Fiscal Quarter and the immediately succeeding fifteen (15) Fiscal Quarters (in each case as specified in the Maintenance Plan) by fifteen (15); (iii) if the Current Fiscal Quarter is the first, second or third Fiscal Quarter of such Fiscal Year, the amount obtained by dividing the aggregate of the projected Maintenance Expenditures for the Current Fiscal Quarter and the immediately succeeding fourteen (14) Fiscal Quarters (in each case as specified in the Maintenance Plan) by fourteen (14); and (iv) if the Current Fiscal Quarter is the first, second, third or fourth Fiscal Quarter of such Fiscal Year, the greatest of the amount obtained by dividing the aggregate of the projected Maintenance Expenditures for any period consisting of the Current Fiscal Quarter and any number of consecutive Fiscal Quarters from one (1) to thirteen (13) immediately succeeding the Current Fiscal Quarter (in each case as specified in the Maintenance Plan) by such number of consecutive Fiscal Quarters. "Manager" means Mobile Energy and any Person appointed as an additional, substitute or replacement manager of the Company pursuant to the terms of the Articles of Organization. "Master Operating Agreement" means the Master Operating Agreement dated as of December 12, 1994 among the Company (as assignee of Mobile Energy), Scott, the Pulp Mill Owner, the Tissue Mill Owner and the Paper Mill Owner. "Material Adverse Effect" means (a) a change in the financial condition of either of the Mobile Energy Parties or the Energy Complex that would reasonably be expected to materially and adversely affect the ability of either of the Mobile Energy Parties to pay principal of and interest on the Senior Debt as and when required or (b) any event or occurrence of whatever nature that would materially and adversely affect (i) the ability of either of the Mobile Energy Parties to perform its obligations under the Project Documents or (ii) the Lien of the Security Documents. "Member" means any Person owning a membership interest in the Company. "Mill Closure" means (a) a public announcement by a Mill Owner that it will close its respective Mill for a period of at least one (1) year or that it will reduce production of pulp, paper or tissue (as applicable) at such Mill (permanently or for a period of at least two (2) years) to less than ten percent (10%) of 1994 production levels or (b) the occurrence of a two -24- (2) year period during which, for any reason other than the occurrence of a Force Majeure Event (as defined in the Master Operating Agreement), such Mill Owner's production of pulp, paper or tissue (as applicable) at such Mill is less than ten percent (10%) of 1994 production levels. "Mill Owner Maintenance Reserve Account" means the account so designated established and created pursuant to the Master Operating Agreement for the sole benefit of the Mill Owners. "Mill Owner Reimbursement Account" means the Account so designated established and created under Section 2.2(a) of the Intercreditor Agreement. "Mill Owner Step-In Rights" has the meaning specified in the Master Operating Agreement. "Mill Owners" means, collectively, the Pulp Mill Owner, the Tissue Mill Owner and the Paper Mill Owner. "Mills" means, collectively, the Pulp Mill, the Tissue Mill and the Paper Mill. "Mixed-Use Bonds" means, collectively, the IDB's Industrial Development Revenue Bonds (Scott Paper Company Project), Series A and the IDB's Industrial Development Revenue Bonds (Scott Paper Company Project), Series B, in each case issued under and secured by a Trust Indenture dated as of December 1, 1984 between the IDB and (AmSouth Bank of Alabama), as trustee, as supplemented by a First Supplemental Indenture thereto dated as of June 1, 1985. "Mobile Energy" means Mobile Energy Services Holdings, Inc., an Alabama corporation. "Mobile Energy Parties" means, collectively, the Company and Mobile Energy. "Mobile Energy Request" or "Mobile Energy Order" means, respectively, a written request or order signed in the name of Mobile Energy by an Authorized Officer of Mobile Energy and delivered to the Indenture Trustee or the Tax-Exempt Indenture Trustee (as the case may be). "Mobile Facility" means the integrated pulp, paper and tissue manufacturing facility located on a 730-acre site along the Mobile River and the Chickasaw Creek in Mobile, Alabama, comprised of the Mills and the Energy Complex. "Monthly Transfer Date" means the last Business Day of each month of each Fiscal Year, commencing with the first such day occurring after the Closing Date. "Moody's" means Moody's Investor Service, Inc., a Delaware corporation. -25- "Mortgage" means the Leasehold Mortgage, Assignment of Leases, Rents, Issues and Profits and Security Agreement and Fixture Filing dated as of ( ), 1995 between the Company and the Collateral Agent. "1983 Bonds" means the IDB's Exempt Facilities Revenue Bonds (Scott Paper Company Project), 1983 Series B, issued under and secured by a Trust Indenture dated as of December 1, 1983 between the IDB and BankAmerica Trust Company of New York, as trustee. "1984 Bonds" means the IDB's (Industrial Development Revenue Bonds (Scott Paper Recovery Boiler Project) 1984 Series A,) issued under and secured by the 1984 Indenture. "1984 Indenture" means the Trust Indenture dated as of December 1, 1984 between the IDB and Chemical Bank, as trustee. "Non-Affiliate Subordinated Debt" means any unsecured loan or loans from any Person that is not an Affiliate of the Company pursuant to a Subordinated Loan Agreement, the amounts necessary for repayment of which have been included in the Annual Budget approved by the Collateral Agent and the Independent Engineer. "Nondisturbance Agreement" means the Estoppel and Nondisturbance Agreement dated as of December 12, 1994 between TRT and the Company (as assignee of Mobile Energy). "Officer's Certificate" means a certificate that has been signed by an Authorized Officer of either of the Mobile Energy Parties or of Southern (as the case may be). "O&M Agreement" means the Facility Operations and Maintenance Agreement dated as of December 12, 1994 between the Company (as assignee of Mobile Energy) and the Operator. "Operating Account" means the Account so designated established and created under Section 2.2(a) of the Intercreditor Agreement. ("Operating Agreement" means the Operating Agreement of the Company dated ( ), 1995 among the Members.) "Operation and Maintenance Costs" means all costs and expenses of operating and maintaining the Energy Complex and, when the Company is exercising the Company Step-In Rights, the Pulp Mill Step-In Equipment, including (a) Subordinated Fees, (b) Maintenance Expenditures and (c) payments required to be made by the Company with respect to the 1994 Bonds. "Operator" means Southern Electric, in its capacity as operator under the O&M Agreement. "Opinion of Counsel" means a written opinion of counsel for any Person either expressly referred to herein or otherwise -26- satisfactory to the Indenture Trustee or the Tax-Exempt Indenture Trustee (as the case may be) (which may include counsel for either of the Mobile Energy Parties, whether or not such counsel is an employee of either or both of them). "Optional Modifications" means all modifications to the Energy Complex that are not Required Modifications. "Optional Modifications Subaccount" means the subaccount of the Completion Account so designated established and created under Section 2.2(c) of the Intercreditor Agreement. "Outstanding" means, when used with respect to Senior Securities, as of the date of determination, all Senior Securities theretofore authenticated and delivered under the Indenture or the Tax-Exempt Indenture (as the case may be), except: (a) Senior Securities theretofore canceled by the Indenture Trustee or the Tax-Exempt Indenture Trustee (as the case may be) or delivered to either such Trustee for cancellation; (b) Senior Securities or portions thereof deemed to have been paid within the meaning of, in the case of the Indenture, Section 12.1 thereof and, in the case of the Tax- Exempt Indenture, Section ( ) thereof; and (c) Senior Securities that have been exchanged for other Senior Securities or Senior Securities in lieu of which other Senior Securities have been authenticated and delivered pursuant to the Indenture or the Tax-Exempt Indenture (as the case may be) unless held by a Holder in whose hands such Senior Securities constitute valid obligations of the Company; provided, however, that in determining whether the Holders of the requisite principal amount of Senior Securities Outstanding have given any request, demand, authorization, direction, notice, consent or waiver hereunder or whether or not a quorum is present at a meeting of Holders of Senior Securities, Senior Securities owned by either of the Mobile Energy Parties (or any Affiliate thereof) shall be disregarded and deemed not to be Outstanding, except that, in determining whether or not the Indenture Trustee or the Tax-Exempt Indenture Trustee (as the case may be) shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver or upon any such determination as to presence of a quorum, only Senior Securities that a Responsible Officer of the Indenture Trustee or the Tax-Exempt Indenture Trustee (as the case may be) knows to be so owned shall be so disregarded. Senior Securities so owned that have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Indenture Trustee or the Tax-Exempt Indenture Trustee (as the -27- case may be) such pledgee's right so to act with respect to such Senior Securities and that such pledgee is not a Mobile Energy Party (or any Affiliate thereof). "Paper Mill" means the paper mill located at the Mobile Facility, which as of the Closing Date is owned by S.D. Warren. "Paper Mill Energy Services Agreement" means the Paper Mill Energy Services Agreement dated as of December 12, 1994 between the Paper Mill Owner and the Company (as assignee of Mobile Energy). "Paper Mill Owner" means S.D. Warren, in its capacity as owner of the Paper Mill. "Paying Agent" means any Person acting as Paying Agent pursuant to, in the case of the Indenture, Section 9.14(a) thereof and, in the case of the Tax-Exempt Indenture, Section ( ) thereof. "Permitted Indebtedness" means, (a) in the case of the Company, collectively, (i) the First Mortgage Bonds, (ii) Debt incurred under a Working Capital Facility in an aggregate principal amount not to exceed $15,000,000 (multiplied by the Working Capital Escalation Factor in effect at any given time), provided (and the Working Capital Facility shall contain provisions to such effect) that (A) no more than $5,000,000 (multiplied by the Working Capital Escalation Factor in effect at any given time) of such Debt may be scheduled to mature during any thirty (30)-day period, (B) Working Capital Loans advanced thereunder shall mature no later than ninety (90) days from the date such Working Capital Loans were first advanced, (C) the Company shall be required to repay all amounts advanced thereunder so that no amounts are outstanding once during each Fiscal Year (other than the Fiscal Year ending December 31, 1995) for a period of five (5) consecutive days and (D) the Working Capital Facility Provider thereunder shall become a party to the Intercreditor Agreement, (iii) the Tax-Exempt Bonds, (iv) reimbursement obligations in respect of letters of credit (if any) and other financial obligations arising under the Project Contracts, (v) purchase money obligations incurred to finance discrete items of equipment not comprising an integral part of the Energy Complex that extend only to the equipment being financed and that do not in the aggregate have annual debt service or lease obligations exceeding $2,000,000 (multiplied by the GDPIPD Factor in effect at any given time), (vi) trade accounts payable (other than for borrowed money) arising, and accrued expenses incurred, in the ordinary course of business so long as such trade accounts payable are payable within ninety (90) days of the date the respective goods are delivered or the respective services are rendered, (vii) obligations in respect of surety bonds or similar instruments in an aggregate amount not exceeding $10,000,000 (multiplied by the GDPIPD Factor in effect at any given time) at any one time outstanding, (viii) Affiliate -28- Subordinated Debt, (ix) Replacement Debt permitted to be issued pursuant to the terms of the Indenture or the Tax-Exempt Indenture (as the case may be), (x) Debt permitted to be issued pursuant to the terms of the Indenture or the Tax-Exempt Indenture (as the case may be) for Required Modifications and Optional Modifications, (xi) Non-Affiliate Subordinated Debt in an aggregate principal amount not to exceed $75,000,000 (multiplied by the GDPIPD Factor in effect at any given time) permitted to be issued pursuant to the terms of the Indenture or the Tax-Exempt Indenture (as the case may be), (xii) Refunding Debt permitted to be issued pursuant to the terms of the Indenture or the Tax-Exempt Indenture (as the case may be) and (xiii) the Company's obligations in respect of the 1994 Bonds, the Mixed-Use Bonds and the Environmental Bonds and (b) in the case of Mobile Energy, the Guaranty. "Permitted Investments" means investments in securities that are (a) direct obligations of the United States of America or of any agency thereof; (b) obligations fully guaranteed by the United States of America or any agency thereof; (c) time deposits (which may be represented by certificates of deposit) issued by commercial banks organized under the laws of the United States of America or of any political subdivision thereof or under the laws of Canada, Japan, Switzerland or any country that is a member of the European Union having a combined capital and surplus of at least $500,000,000 and having long-term unsecured Debt having a rating at least equal to (i) the highest rating assigned to the Outstanding Indenture Securities or the Tax-Exempt Securities (as the case may be) by at least two of the Rating Agencies or (ii) "B" by Thompson Bankwatch, Inc. (in either case provided that such investments shall not be comprised of more than $30,000,000 in principal amount at any given time from any one such bank); (d) open market commercial paper of any corporation incorporated or doing business under the laws of the United States of America or of any political subdivision thereof then rated at least A- 1/P-1 (or an equivalent thereof) by at least two of the Rating Agencies (provided that such investments shall not be comprised of more than $30,000,000 in principal amount at any given time from any one such corporation); (e) obligations issued or guaranteed by, and any other obligations the interest on which is excluded from income for Federal income tax purposes issued by, any state of the United States of America or the District of Columbia or the Commonwealth of Puerto Rico or any political subdivision, agency, authority or instrumentality thereof, which issuer or guarantor has (i) a short-term Debt rating which is (on the date of acquisition thereof) A-1/P-1 (or an equivalent thereof) or better and (ii) a long-term Debt rating that is (on the date of acquisition thereof) "A" or better, in each case by at least two of the Rating Agencies (provided that such investments shall not be comprised of more than $30,000,000 in principal amount at any given time from any one such issuer or guarantor); (f) guaranteed investment contracts of any financial institution organized under the laws of the United States of America or any state thereof or under the laws of Canada, Japan, -29- Switzerland or any country that is a member of the European Union, which financial institution has assets of at least $5 billion in the aggregate and has a long term Debt rating that is (on the date of acquisition thereof) "A" or better by at least two of the Rating Agencies (provided that such investments shall not be comprised of more than $30,000,000 in principal amount at any given time from any one such institution); (g) investment contracts of any financial institution either (i) (A) fully secured by direct obligations of the United States, (B) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States or (C) securities or receipts evidencing ownership interests in obligations or specified portions thereof described in clause (A) or (B) above, in each case guaranteed as a full faith and credit obligation of the United States, having a market value at least equal to 102% of the amount deposited thereunder and possession of which obligation is held under arrangements satisfactory to the Indenture Trustee or the Tax-Exempt Indenture Trustee (as the case may be) or (ii) with long-term Debt ratings of "A" or higher and short-term ratings in one of the highest two major categories by any of the Rating Agencies; and (h) a contract or investment agreement with a provider or guarantor (i) which provider or guarantor is rated at least "A" or equivalent by each of the Rating Agencies (provided that if a guarantor is party to the rating, the guaranty is unconditional and is confirmed in writing prior to any assignment by the provider to another subsidiary of such guarantor), (ii) providing that monies invested shall be payable to the Indenture Trustee or the Tax-Exempt Indenture Trustee (as the case may be) (except to the extent the monies invested constitute Shared Collateral, which shall be payable to the Collateral Agent) without condition (other than notice) and without breakage fee or other penalty, upon not more than two (2) Business Days' notice for application when and as required or permitted under the Indenture, the Intercreditor Agreement or the Tax-Exempt Indenture (as applicable), (iii) stating that such contract or agreement is unconditional, expressly disclaiming any right of setoff and providing for immediate termination in the event of insolvency of the provider and termination upon demand of the Indenture Trustee or the Tax-Exempt Indenture Trustee (as the case may be) (except to the extent the monies invested constitute Shared Collateral, which shall provide for termination upon demand of the Collateral Agent) (which demand shall only be made at the direction of the Company) after any payment or other covenant default by the provider and (iv) the terms and provisions of which are in form and substance satisfactory to the Indenture Trustee or the Tax-Exempt Indenture Trustee (as the case may be). "Permitted Liens" means, collectively, (a) Liens specifically created, required or permitted by the Indenture or the Tax-Exempt Indenture, (b) Liens securing obligations under the Indenture and the Tax-Exempt Indenture, (c) Liens in favor of the Working Capital Facility Provider, which with respect to the Shared Collateral shall be of equal priority with the Liens -30- securing the Senior Securities, except that the Working Capital Facility Provider will have priority over the other Senior Secured Parties, upon a Wind-Up Event, on Receivables and on Fuel Inventory Proceeds, (d) Liens for taxes that are either not yet due, are due but payable without penalty or are subject to a Good Faith Contest, (e) any exceptions to title that are contained in the title insurance policy delivered to the Collateral Agent on the Closing Date, (f) such minor defects, easements, rights of way, restrictions, irregularities, encumbrances and clouds on title and statutory liens that do not materially impair the property affected thereby and that do not individually or in the aggregate materially impair the value of the security interests granted under the Financing Documents, (g) the easements and other rights in favor of third- parties contained in the Project Contracts as of the Closing Date, (h) deposits or pledges to secure statutory obligations or appeals, release of attachments, stays of execution or injunction, performance of bids, tenders, contracts (other than for the repayment of borrowed money) or leases, or for purposes of like general nature in the ordinary course of business, (i) Liens in connection with worker's compensation, unemployment insurance or other social security or pension obligations, (j) legal or equitable encumbrances deemed to exist by reason of the existence of any litigation or other legal proceeding if the same are subject to a Good Faith Contest (excluding any attachment prior to judgment, judgment lien or attachment in aid of execution on a judgment), (k) mechanic's, workmen's, materialmen's, construction or other like Liens arising in the ordinary course of business or incident to the construction or improvement of any property in respect of obligations that are not yet due or that are subject to a Good Faith Contest, (l) Liens securing purchase money obligations that constitute Permitted Indebtedness and (m) Liens in favor of the Mill Owners on the Mill Owner Maintenance Reserve Account, including monies on deposit therein or otherwise credited thereto (by means of a guaranty, capital infusion agreement or otherwise), to the extent arising under the Master Operating Agreement or such guaranty or capital infusion arrangement. "Person" means any individual, sole proprietorship, corporation, partnership, limited liability company, joint venture, trust, unincorporated association, institution, Governmental Authority or any other entity. "Place of Payment" means, when used with respect to the Senior Securities of any series, the office or agency maintained pursuant to, in the case of the Indenture, Section 9.14(a) thereof and, in the case of the Tax-Exempt Indenture, Section ( ) thereof and, in either case, such other place or places, if any, where the principal of and premium, if any, and interest on the Senior Securities of such series are payable as specified in the Series Supplemental Indenture to the Indenture or the Tax- Exempt Indenture (as the case may be) establishing the Senior Securities of such series. -31- "Predecessor Securities" means, with respect to any particular Senior Security, every previous Senior Security evidencing all or a portion of the same Debt as that evidenced by such particular Senior Security. For purposes of this definition, any Senior Security authenticated and delivered under, in the case of any Indenture Security, Section 2.9 of the Indenture and, in the case of any Tax-Exempt Indenture Security, Section ( ) of the Tax-Exempt Indenture in lieu of a lost, destroyed or stolen Senior Security shall be deemed to evidence the same Debt as such lost, destroyed or stolen Senior Security. "Prepayment Date" has the meaning specified, (a) in the case of the Indenture, in Section 6.2 thereof and (b) in the case of the Tax-Exempt Indenture, in Section ( ) thereof. "Principal Payment Date" means in respect of the Senior Securities, any January 1 or July 1 on which principal payments are due to Holders. "Processing Services" has the meaning specified in the Master Operating Agreement. "Project Contracts" means, collectively, (a) the Energy Services Agreements, (b) the Master Operating Agreement, (c) the Lease Agreement dated as of December 12, 1994 between Scott, as lessor, and the Company (as assignee of Mobile Energy), as lessee, (d) the Supplementary Lease Agreement dated as of December 12, 1994 between Scott, as lessor, and the Company (as assignee of Mobile Energy), as lessee, (e) the O&M Agreement, (f) the Common Services Agreement, (g) the Water Procurement and Effluent Service Agreement dated as of December 12, 1994 among the Company (as assignee of Mobile Energy), the Pulp Mill Owner, the Paper Mill Owner and the Tissue Mill Owner, (h) the Boiler Ash Disposal Agreement dated as of December 12, 1994 between the Pulp Mill Owner and the Company (as assignee of Mobile Energy), (i) the Pulp Mill Environmental Indemnity Agreement dated as of December 12, 1994 between the Company (as assignee of Mobile Energy) and the Pulp Mill Owner, (j) the Paper Mill Environmental Indemnity Agreement dated as of December 12, 1994 between the Company (as assignee of Mobile Energy) and the Paper Mill Owner, (k) the Tissue Mill Environmental Indemnity Agreement dated as of December 12, 1994 between the Company (as assignee of Mobile Energy) and the Tissue Mill Owner, (l) the Scott Environmental Indemnity Agreement dated as of December 12, 1994 between Scott and the Company (as assignee of Mobile Energy), (m) the Transition Agreement dated as of December 12, 1994 between Scott and the Company (as assignee of Mobile Energy), (n) the SCS Agreement, (o) the Easement Deeds, (p) the Asset Purchase Agreement dated as of December 12, 1994 between Scott, as seller, and the Company (as assignee of Mobile Energy), as buyer, (q) the Coal Supply Agreement, (r) any other Contract entered into by either of the Mobile Energy Parties for the provision of fuel to the Energy Complex, (s) the Facilities Lease Agreement dated as of December 1, 1984 between Scott and the IDB, (t) the Lease and -32- Assignment Agreement dated as of December 12, 1994 between Scott and the Company (as assignee of Mobile Energy), (u) the IDB Lease Agreement, (v) the Lease Assignment and Assumption Agreement dated as of December 12, 1994 between Scott and the Company (as assignee of Mobile Energy), (w) the Construction, Financing and Installment Sale Agreement dated as of April 1, 1973 between the IDB and Scott, (x) the Lease and Assignment Agreement dated as of December 12, 1994 between Scott and the Company (as assignee of Mobile Energy), (y) the Facilities Lease and Agreement dated as of December 1, 1984 between the IDB and Scott, (z) the Sublease and Assignment Agreement dated as of December 12, 1994 between Scott and the Company (as assignee of Mobile Energy), (aa) the Construction, Financing and Installment Sale Agreement dated as of September 1, 1976 between the IDB and Scott, (bb) the Lease and Assignment Agreement dated as of December 12, 1994 between Scott and the Company (as assignee of Mobile Energy), (cc) the Recovery Boiler Facilities Lease and Agreement dated as of December 1, 1994 between the IDB and Scott, (dd) the Lease Assignment and Assumption Agreement dated as of December 12, 1994 between Scott and the Company (as assignee of Mobile Energy), (ee) the Nondisturbance Agreement and (ff) the Recognition Agreements. "Project Costs" means costs and expenses (other than financing costs and expenses) paid, incurred or to be incurred by the Company after the Closing Date to complete the capital improvements to the Energy Complex specified in the Master Operating Agreement in accordance with the Capital Budget and certain other planned expenditures relating to the Energy Complex. "Project Documents" means, collectively, the Project Contracts and the Financing Documents. "Project Participant" means each Person that is party to a Project Document. "Prudent Plant Operating Standards" has the meaning specified in the Master Operating Agreement. "Pulp Mill" means the pulp mill (including a process water plant and waste water treatment plant) located at the Mobile Facility, which as of the Closing Date is owned by Scott. "Pulp Mill Energy Services Agreement" means the Pulp Mill Energy Services Agreement dated as of December 12, 1994 between the Pulp Mill Owner and the Company (as assignee of Mobile Energy). "Pulp Mill Owner" means Scott, in its capacity as owner of the Pulp Mill. "Pulp Mill Step-In Equipment" has the meaning specified in the Master Operating Agreement. -33- "PURPA" means the Public Utility Regulatory Policies Act of 1978. "Qualified Engineer" means an independent engineer listed on Schedule 1, as such Schedule may be amended from time to time in accordance with Section 11.3 of the Intercreditor Agreement. "Qualifying Facility" means a "Qualifying Cogeneration Facility" as specified in section 3(18)(B) of the Federal Power Act or a qualifying small power production facility within the meaning of section 201 of PURPA. "Rating Agencies" means, collectively, S&P, Fitch and Moody's, together with any other nationally recognized credit agency of similar standing if any such Person is not then currently rating the proposed subject of such rating. "Receivables" means all of the Company's rights to payment for goods sold or leased or services performed by the Company, including rights evidenced by an account, note, contract, security, instrument, chattel paper, or other evidence of indebtedness. "Recognition Agreements" means, collectively, (a) the Recognition, Cooperation and Consent Agreement relating to the Mixed-Use Bonds dated as of ( ), 1995 among the Company, the IDB, AmSouth Bank of Alabama, TRT and the Collateral Agent and (b) the Recognition, Cooperation and Consent Agreement relating to the Tax-Exempt Bonds dated as of ( ), 1995 among the Company, the IDB and the Collateral Agent. "Redemption Date" has the meaning specified, (a) in the case of the Indenture, in Section 6.2 thereof and (b) in the case of the Tax-Exempt Indenture, in Section ( ) thereof. "Refunding Debt" means Debt, the proceeds of which are used to refund outstanding Senior Debt. "Regular Record Date" means, for the Stated Maturity of any Senior Security of a series, or for the Stated Maturity of any installment of principal thereof or payment of interest thereon, the 15th day of the month (whether or not a Business Day) prior to the next succeeding Stated Maturity, or any other date specified for such purpose in the form of Senior Security of such series attached to the Series Supplemental Indenture to the Indenture or the Tax-Exempt Indenture (as the case may be) relating to the Senior Securities of such series. "Replacement Debt" means Senior Securities, the proceeds of which are used to refinance all or a portion of the outstanding Tax-Exempt Indenture Securities (whether by effecting a gross-up of, or by the issuance of Senior Securities to replace, affected Tax-Exempt Indenture Securities) upon the occurrence of a Determination of Taxability. -34- "Replacement Facility" means a facility with materially different performance capabilities from the Energy Complex that can be built to provide services to some or all of the Mills following the occurrence of an Event of Loss or an Event of Eminent Domain. "Required Deposit" means, at the time of any Required Deposit Event with respect to any Reserve Account Security Account, an amount equal to the aggregate Available Amount under all Reserve Account Security on deposit in such Reserve Account Security Account at such time; provided, however, that if such Required Deposit Event results from the occurrence of a Debt Service Event, such amount shall be equal to the aggregate amount (after giving effect to monies then on deposit in such Reserve Account Security Account) due and owing at such time in respect of principal of and premium, if any, and interest on any Senior Securities pursuant to, if such Reserve Account Security Account is (a) the Maintenance Reserve Account, Section 3.5(b) of the Intercreditor Agreement, (b) the Distribution Account, Section 3.8(b) of the Intercreditor Agreement, (c) a Debt Service Reserve Account, Section 4.5 of the Indenture and (d) a Tax-Exempt Debt Service Reserve Account, Section ( ) of the Tax-Exempt Indenture. "Required Deposit Event" means (a) in the case of any Reserve Account Letter of Credit on deposit in any Reserve Account Security Account, (i) the occurrence of any Debt Service Event with respect to such Reserve Account Letter of Credit, (ii) the date that is fifteen (15) days prior to the occurrence of any Termination Event with respect to such Reserve Account Letter of Credit, unless such Reserve Account Letter of Credit has been replaced with other Reserve Account Security (other than, if such Reserve Account Security Account is a Tax-Exempt Debt Service Reserve Account, a Southern Guaranty) prior to such date, (iii) the occurrence of a Credit Standard Event or Default Event with respect to such Reserve Account Letter of Credit and the continuance thereof for five (5) days, unless such Reserve Account Letter of Credit has been replaced with other Reserve Account Security (other than, if such Reserve Account Security Account is a Tax-Exempt Debt Service Reserve Account, a Southern Guaranty) prior to such date or (iv) the date on which a Trigger Event Notice has been delivered and (b) in the case of any Southern Guaranty on deposit in any Reserve Account Security Account, (i) the occurrence of any Debt Service Event with respect to such Southern Guaranty, (ii) the date that is fifteen (15) days prior to the occurrence of any Termination Event with respect to such Southern Guaranty, (iii) the occurrence of a Credit Standard Event with respect to such Southern Guaranty and the continuance thereof for fifteen (15) days, unless such Southern Guaranty has been replaced with other Reserve Account Security prior to such date, (iv) the occurrence of a Default Event and the continuance thereof for five (5) days, unless such Southern Guaranty has been replaced with other Reserve Account -35- Security prior to such date or (v) the date on which a Trigger Event Notice has been delivered. "Required Modifications" means those modifications reasonably necessary for the Energy Complex to remain in compliance with all material Governmental Approvals and maintain, at a minimum, the Maximum Capacity (as defined in the Master Operating Agreement) levels as in effect on the Closing Date. "Required Modifications Subaccount" means the subaccount of the Completion Account so designated established and created under Section 2.2(c) of the Intercreditor Agreement. "Required Senior Creditors" means Senior Secured Parties holding or otherwise representing 33 % of the Combined Exposure. "Reserve Account Letter of Credit" means a letter of credit issued by a commercial bank whose long-term unsecured Debt is rated at least "A" by S&P, "A" by Fitch and "A2" by Moody's. "Reserve Account Security" means either, or any combination of, (a) one or more Southern Guaranties or (b) one or more Reserve Account Letters of Credit. "Reserve Account Security Accounts" means, collectively, each Debt Service Reserve Account (if any), each Tax-Exempt Debt Service Reserve Account (if any), the Maintenance Reserve Account and the Distribution Account. "Responsible Officer" means, when used with respect to the Collateral Agent, the Indenture Trustee or the Tax-Exempt Trustee, any officer in the corporate trust and agency group of such Person or any other officer of such Person to whom a matter is referred because of such other officer's knowledge of and familiarity with the particular subject. "Restricted Payment Alternative Agreement Requirements" means, with respect to any Project Contract, another Contract entered into by the Company with one or more other Persons in substitution for or replacement of any such Project Contract that has been declared unenforceable or rejected or otherwise terminated, with respect to some or all of the Processing Services or other services formerly provided by the Company thereunder, provided that either (a) the Company has delivered to the Collateral Agent a letter from any two of the Rating Agencies (then currently rating the Indenture Securities or the Tax-Exempt Indenture Securities) confirming that, after giving effect to such alternative Contract, the ratings of the Outstanding Indenture Securities or the Outstanding Tax-Exempt Indenture Securities (as the case may be) are Investment Grade or (b) the Company (i) has provided to the Collateral Agent the Revenue Sufficiency Certification and (ii) has delivered to the Collateral Agent an Officer's Certificate, together with an Independent Engineer Confirmation, certifying that (A) the term -36- of such alternative agreement extends through the earlier of (1) the final maturity of the Outstanding Indenture Securities or the Outstanding Tax-Exempt Indenture Securities (as the case may be) and (2) the term of such Project Contract, (B) such alternative agreement contains termination provisions no less favorable to the Company than those contained in such Project Contract, (C) such alternative agreement has been in full force and effect for at least thirty-six (36) months, (D) the average Senior Debt Service Coverage Ratio for the four immediately preceding semi- annual payment periods was equal to at least 1.25 to 1.0 and, based on projections prepared by the Company on a reasonable basis, the projected average annual Senior Debt Service Coverage Ratio through the final maturity date of the Outstanding Indenture Securities or the Outstanding Tax-Exempt Indenture Securities (as the case may be) is projected to be at least 1.25 to 1.0 and (E) such alternative agreement is reasonably capable of being performed by the parties thereto. "Restricted Payments" means, collectively, (a) payments from the Subordinated Fee Account or any other payment in respect of Subordinated Fees, (b) distributions (from the Distribution Account or otherwise), including a return of capital contributions and dividends, paid to, or at the direction or for the benefit of, any Affiliate of the Company, but excluding distributions of cash from any Account to the extent such cash has been replaced with Reserve Account Security in accordance with the terms of the Financing Documents, (c) the payment of principal of or premium, if any, or interest on any Affiliate Subordinated Debt, (d) the repurchase by the Company of any interest of any Member, or (e) the making of any loans or other advances from the Company to any Affiliate of the Company, but excluding advances of cash to the extent such cash (i) has been replaced with Reserve Account Security in accordance with the terms of the Financing Documents or (ii) constitutes a payment required under the O&M Agreement or the SCS Agreement. "Revenue Account" means the Account so designated established and created under Section 2.2(a) of the Intercreditor Agreement. "Revenue Sufficiency Certification" means an Officer's Certificate of the Company, together with an Independent Engineer Confirmation, to the effect that, based upon projections prepared by the Company in accordance with Section 1.15 of the Indenture or Section ( ) of the Tax-Exempt Indenture, the Project Contracts then in effect generate sufficient Revenues to enable the Company to pay its debts and other obligations (including Operation and Maintenance Costs) when they become due through the final maturity of the Outstanding Indenture Securities or the Tax-Exempt Indenture Securities (as the case may be). "Revenues" means (without duplication), for any period, the revenues received by the Company for use of the services and facilities of the Energy Complex including (a) amounts received -37- by the Company under the Project Contracts, (b) interest and other income earned and credited on monies deposited in the Accounts (to the extent not retained in such Accounts), (c) the proceeds of the sale of any part of the Energy Complex, provided that such sale is not prohibited by the Financing Documents, (d) the proceeds of any business interruption insurance and other payments received for interruption of operations (excluding any proceeds of any liability or physical damage insurance) and (e) all other monies that have been deposited into the Revenue Account as required or permitted by the terms of the Financing Documents. Notwithstanding the foregoing, "Revenues" do not include (i) capital contributions, (ii) the proceeds of any Debt, Eminent Domain Proceeds or Casualty Proceeds, (iii) amounts received by the Company in connection with the exercise of Company Step-In Rights (to the extent in excess of the Company's expenses incurred in connection therewith (including the cure or the attempted cure of the related Pulp Mill Triggering Event (as defined in the Master Operating Agreement)) and (iv) amounts received by the Company with respect to the 1994 Bonds. "S&P" means Standard & Poor's Ratings Group, a New York corporation. "Scott" meansScott Paper Company, aPennsylvania corporation. "SCS" means Southern Company Services, Inc., an Alabama corporation. "SCS Agreement" means the Agreement dated as of December 12, 1994 between SCS and the Company (as assignee of Mobile Energy). "S.D. Warren" means S.D. Warren Company, a Pennsylvania corporation. "SEC" means the Securities and Exchange Commission of the United States of America. "Secured Obligations" means, collectively, the Financing Liabilities, the Trustee Claims and the Collateral Agent Claims. "Securities Act" means the Securities Act of 1933. "Security Agreement" means the Assignment and Security Agreement dated as of ( ), 1995 between the Company and the Collateral Agent. "Security Documents" means, collectively, (a) the Mortgage, (b) the Security Agreement, (c) the Indenture, (d) the Intercreditor Agreement, (e) the Tax-Exempt Indenture, (f) the IDB Lease Agreement, (g) the Consents to Assignment and (h) each Financing Statement. -38- "Security Interest" means the Liens created, or purported to be created, on Shared Collateral pursuant to any Security Document. "Security Register" has the meaning specified in Section 2.8 of the Indenture or Section ( ) of the Tax-Exempt Indenture (as the case may be). "Security Registrar" means any Person acting as Security Registrar hereunder pursuant to Section 9.14 of the Indenture or Section ( ) of the Tax-Exempt Indenture (as the case may be). "Senior Creditor Certificate" means a certificate of a Senior Secured Party, signed by an Authorized Representative of such Senior Secured Party, (a) setting forth the principal amount of the Financing Liabilities owed to such Senior Secured Party as of the date of such certificate and the outstanding unutilized Financing Commitments of such Senior Secured Party as of the date of such certificate, (b) setting forth a contact person for such Senior Secured Party, including phone and facsimile numbers for such person, (c) directing the Collateral Agent to take a specified action and (d) stating specifically the action the Collateral Agent is directed to take and the Security Document and the provision thereof pursuant to which the Collateral Agent is being directed to act. "Senior Debt" means, collectively, the Outstanding Senior Securities and the outstanding Working Capital Loans. "Senior Debt Service Coverage Ratio" means, for any period and without duplication, the ratio of (a) (i) the sum of (A) all Revenues for such period and (B) the amount of interest and other income earned and credited on monies deposited in the Accounts (to the extent retained in such Accounts) for such period minus (ii) the sum of (A) Operation and Maintenance Costs for such period (except for such costs paid with monies on deposit in the Maintenance Reserve Account and payments made by the Company with respect to the 1994 Bonds) and (B) the amount deposited in the Maintenance Reserve Account for such period (but for purposes of calculating any projected Senior Debt Service Coverage Ratio, not less than the Maintenance Reserve Account Required Deposit for such period) to (b) the sum of (i) all amounts payable by the Company during such period in respect of principal of and premium, if any, and interest on the Outstanding Securities, (ii) all amounts payable by the Company during such period in respect of rent under the IDB Lease Agreement, (iii) all amounts payable by the Company during such period in respect of payment obligations under the Working Capital Facility (other than repayment of principal), (iv) all amounts payable by the Company during such period as fees and other expenses (including any interest thereon) to any fiduciary acting in such capacity under the Security Documents and (v) the aggregate amount of overdue payments in respect of clauses (b)(i) through (iv) above from -39- previous periods, in each case determined on a cash basis in accordance with GAAP. "Senior Debt Service Requirement" means, for any period, the sum of (a) all amounts payable by the Company during such period in respect of principal of and premium, if any, and interest on the Outstanding Securities, (b) all amounts payable by the Company during such period in respect of rent under the IDB Lease Agreement, (c) all amounts payable by the Company during such period in respect of payment obligations under the Working Capital Facility (other than repayment of principal), (d) all amounts payable by the Company during such period as fees and other expenses (including any interest thereon) to any fiduciary acting in such capacity under the Security Documents and (e) the aggregate amount of overdue payments in respect of the foregoing from previous periods, in each case determined on a cash basis in accordance with GAAP. "Senior Debt Termination Date" means the date on which all Financing Liabilities, other than contingent liabilities and obligations that are unasserted at such date, have been paid and satisfied in full and all Financing Commitments have been terminated. "Senior Secured Parties" means, collectively, (a) the Indenture Trustee (on behalf of itself and the Holders of the Indenture Securities), (b) the Tax-Exempt Indenture Trustee (on behalf of itself and the Holders of the Tax-Exempt Indenture Securities) and (c) the Working Capital Facility Provider. "Senior Securities" means, collectively, the Securities and the Tax-Exempt Indenture Securities. "Series Supplemental Indenture" means an indenture supplemental to the Indenture or the Tax-Exempt Indenture entered into by the Mobile Energy Parties or the IDB (as the case may be) and the Indenture Trustee or the Tax-Exempt Indenture Trustee (as the case may be) for the purpose of establishing, in accordance with such Indenture, the title, form and terms of the Senior Securities of any series. "Shared Collateral" means all Collateral other than (a) the Indenture Accounts and (b) the Tax-Exempt Indenture Accounts (including, in the case of clauses (a) and (b) above, any and all monies contained therein or hereafter delivered to the Indenture Trustee or the Tax-Exempt Indenture Trustee (as the case may be) for deposit therein and, in each case, all monies received and the right to receive monies thereunder). "Sinking Fund" has the meaning specified in Section 7.2 of the Indenture or Section ( ) of the Tax-Exempt Indenture (as the case may be). -40- "Sinking Fund Redemption Dates" has the meaning specified in Section 7.2 of the Indenture or Section ( ) of the Tax-Exempt Indenture (as the case may be). "Sinking Fund Requirements" has the meaning specified in Section 7.2 of the Indenture or Section ( ) of the Tax-Exempt Indenture (as the case may be). "Site" means the real property on which the Energy Complex is situated, as more fully described in the Mortgage. "Southern" means The Southern Company, a Delaware corporation. "Southern Credit Standard" means, at any time, (a) Southern's outstanding senior long-term Debt is then rated at least, and not rated less than, "A" by either S&P or Moody's (unless such senior long-term Debt is not then rated by either S&P or Moody's, in which case each Designated Southern Subsidiary has outstanding senior long-term Debt that is then rated at least, and not rated less than, BBB by S&P or Baa2 by Moody's) and (b) the sum of (i) cash and cash equivalents (including marketable securities) of Southern and the Designated Southern Subsidiaries, (ii) amounts available from committed credit facilities of Southern and the Designated Southern Subsidiaries and (iii) amounts available from commercial paper authorized to be issued by Southern and rated not less than A-1/P-1 by S&P or Moody's (in each case as of the end of Southern's most recently completed fiscal quarter and provided that such cash and cash equivalents and other amounts are available, without restriction, for distribution to the Collateral Agent, the Indenture Trustee or the Tax-Exempt Indenture Trustee (as the case may be), upon fifteen (15) days' notice) is equal to at least the aggregate amount of Southern Guaranties then outstanding multiplied by four. "Southern Electric" means Southern Electric International, Inc., a Delaware corporation. "Southern Guaranty" means one or more unconditional, absolute and irrevocable guaranties from Southern to be delivered to (a) the Collateral Agent for deposit into the Maintenance Reserve Account or the Distribution Account pursuant to and in accordance with Section 3.15(a) of, and in substantially the form attached as Exhibit C to, the Intercreditor Agreement or (b) the Indenture Trustee for deposit into each Debt Service Reserve Account (if any) pursuant to and in accordance with Section 4.6(a) of, and in substantially the form attached as Exhibit A to, the Indenture, provided that, in the case of clause (a) and (b) above, the Southern Credit Standard is satisfied at the time of such delivery and deposit. -41- "Southern Master Tax Sharing Agreement" means the Income Tax Allocation Agreement dated as of December 29, 1981 among Southern and its corporate subsidiaries. "Special Record Date" means, with respect to the payment of any defaulted principal or interest, a date fixed by the Indenture Trustee or the Tax-Exempt Indenture Trustee (as the case may be) pursuant to, in the case of the Indenture Trustee, Section 2.10 of the Indenture and, in the case of the Tax-Exempt Indenture Trustee, Section ( ) of the Tax-Exempt Indenture. "Stated Maturity" means, when used with respect to any Senior Security or any installment of principal thereof or payment of interest thereon, the date specified in such Senior Security as the fixed date on which such Senior Security or such installment of principal or payment of interest is due and payable. "Subordinated Debt" means, collectively, Affiliate Subordinated Debt and Non-Affiliate Subordinated Debt. "Subordinated Debt Account" means the Account so designated established and created under Section 2.2(a) of the Intercreditor Agreement. "Subordinated Debt Provider" means any Person providing Subordinated Debt pursuant to a Subordinated Loan Agreement. "Subordinated Fee" means a fee in exchange for the provisions of goods or services to either of the Mobile Energy Parties, the payment of which is fully subordinated to the Senior Debt as to payment and exercise of remedies and that is payable only to the extent it would otherwise be distributable if on deposit in the Distribution Account. "Subordinated Fee Account" means the Account so designated established and created under Section 2.2(a) of the Intercreditor Agreement. "Subordinated Loan Agreement" means a binding agreement with a Subordinated Debt Provider providing unsecured debt financing for the benefit of the Energy Complex for application toward the payment of Operation and Maintenance Costs and on terms and conditions that shall satisfy the requirements of the Financing Documents. "Tax-Exempt Bonds" means the Tax-Exempt Indenture Securities issued on the Closing Date under the Tax-Exempt Indenture. "Tax-Exempt Debt Service Reserve Account" means the Account so designated established and created under the Tax-Exempt Indenture or any Series Supplemental Indenture to the Tax-Exempt Indenture for the benefit of Holders of the Tax-Exempt Indenture Securities established thereunder. -42- "Tax-Exempt Debt Service Reserve Account Required Balance" means, in respect of any Tax-Exempt Debt Service Reserve Account, the amount so designated in the Series Supplemental Indenture to the Tax-Exempt Indenture establishing such Tax-Exempt Debt Service Reserve Account. "Tax-Exempt Indenture" means the Amended and Restated Trust Indenture dated as of ( ), 1995 between the IDB and the Tax- Exempt Indenture Trustee. "Tax-Exempt Indenture Accounts" means, with respect to the Tax-Exempt Indenture Securities of any series, the Tax-Exempt Indenture Securities Account and each Tax-Exempt Debt Service Reserve Account (if any) established for the benefit of Holders of the Tax-Exempt Indenture Securities of such series. "Tax-Exempt Indenture Securities" means all Outstanding Debt issued pursuant to the Tax-Exempt Indenture. "Tax-Exempt Indenture Securities Account" means the Account so designated established and created under Section ( ) of the Tax-Exempt Indenture. "Tax-Exempt Indenture Securities Collateral" means, collectively, the Tax-Exempt Indenture Accounts, including any and all monies contained therein or hereafter delivered to the Tax-Exempt Indenture Trustee for deposit therein and the right to receive monies thereunder, and the Shared Collateral. "Tax-Exempt Indenture Securities Interest Subaccount" means the subaccount of the Tax-Exempt Indenture Securities Account so designated established and created under Section ( ) of the Tax- Exempt Indenture. "Tax-Exempt Indenture Securities Principal Subaccount" means the subaccount of the Tax-Exempt Indenture Securities Account so designated established and created under Section ( ) of the Tax- Exempt Indenture. "Tax-Exempt Indenture Securities Redemption Subaccount" means the subaccount of the Tax-Exempt Indenture Securities Account so designated established and created under Section ( ) of the Tax-Exempt Indenture. "Tax-Exempt Indenture Trustee" means First Union National Bank of Georgia, a national banking association organized and existing under the laws of ( ). "Tax-Exempt Project" means those portions of the Energy Complex financed with the proceeds of the Tax-Exempt Bonds, as described generally in Exhibit A to the IDB Lease Agreement. "Termination Event" means, with respect to any Reserve Account Security, such Reserve Account Security shall have -43- terminated or expired (other than any termination thereof pursuant to the last sentence of Section 3.8(c) of the Intercreditor Agreement). "Third Party Engineer" means the independent engineering firm chosen from the list of engineers maintained as Schedule 1 to the Intercreditor Agreement and appointed Third Party Engineer pursuant to Section 11.2 of the Intercreditor Agreement. "Third Party Engineer Dispute Resolution" means the dispute resolution process involving a Third Party Engineer pursuant to Section 11.2 of the Intercreditor Agreement. "Tissue Mill" means the tissue mill located at the Mobile Facility, which as of the Closing Date is owned by Scott. "Tissue Mill Energy Services Agreement" means the Tissue Mill Energy Services Agreement dated as of December 12, 1994 between the Tissue Mill Owner and the Company (as assignee of Mobile Energy). "Tissue Mill Owner" means Scott, in its capacity as owner of the Tissue Mill. "Total Debt Service Coverage Ratio" means, for any period and without duplication, the ratio of (a) (i) the sum of (A) all Revenues for such period and (B) the amount of interest and other income earned and credited on monies deposited in the Accounts (to the extent retained in such Accounts) for such period minus (ii) the sum of (A) Operations and Maintenance Costs for such period (except for such costs paid with monies on deposit in the Maintenance Reserve Account and payments made by the Company with respect to the 1994 Bonds) and (B) the amount deposited into the Maintenance Reserve Account for such period (but for purposes of calculating any projected Total Debt Service Coverage Ratio, not less than the Maintenance Reserve Account Required Deposit for such period) to (b) the sum of (i) all amounts payable by the Company during such period in respect of principal of and premium, if any, and interest on the Outstanding Indenture Securities, (ii) all amounts payable by the Company during such period in respect of rent under the IDB Lease Agreement, (iii) all amounts payable by the Company during such period in respect of payment obligations under the Working Capital Facility (other than repayments of principal), (iv) all amounts payable by the Company as fees and other expenses (including any interest thereon) to any fiduciary acting in such capacity under the Security Documents, (v) all amounts payable by the Company during such period in respect of principal of and premium, if any, and interest on the outstanding Subordinated Debt, (vi) all amounts payable by the Company during such period as fees and other expenses (including any interest thereon) to any Subordinated Debt Provider and (vii) the aggregate amount of overdue payments in respect of clauses (b)(i) through (vi) above from previous -44- periods, in each case determined on a cash basis in accordance with GAAP. "Trigger Event" means (a) an Event of Default under the Indenture and an acceleration of the indebtedness issued thereunder, (b) an Event of Default under the Tax-Exempt Indenture and an acceleration of the indebtedness issued thereunder, (c) an Event of Default under the Working Capital Facility and an acceleration of the indebtedness issued thereunder or (d) a Bankruptcy Event in respect of either of the Mobile Energy Parties and the expiration of the shortest applicable grace period with respect thereto. "Trigger Event Notice" means a written notice delivered by the Collateral Agent to the Indenture Trustee or the Tax-Exempt Indenture Trustee specifying that (a) a Trigger Event has occurred and (b) either (i) the written request of the Required Senior Creditors specified in Section 5.1(a) of the Intercreditor Agreement has been delivered to the Collateral Agent and has not been rescinded or (ii) such Trigger Event was caused by a Bankruptcy Event in respect of either of the Mobile Energy Parties. "TRT" means Three Rivers Timber Company, a Washington corporation. "Trust Indenture Act" means the Trust Indenture Act of 1939, as amended, as in force at the date as of which the Indenture was executed, except as provided in Section 11.6 thereof; provided, however, that if the Trust Indenture Act of 1939 is amended after such date, "Trust Indenture Act" means, to the extent required by such amendment, the Trust Indenture Act of 1939, as so amended. "Trustee Claims" means all obligations of the Mobile Energy Parties, now or hereafter existing, to pay fees, costs, expenses or other amounts to (a) the Indenture Trustee under the Indenture or (b) the Tax-Exempt Indenture Trustee under the Tax-Exempt Indenture. "Uniform Commercial Code" means the Uniform Commercial Code of the jurisdiction the law of which governs the Contract in which such term is used. "U.S. Government Obligations" means non-callable direct obligations of or obligations as to which the payment of principal of and interest is unconditionally guaranteed by the United States of America. "Wind-Up Event" means, at any time following a Trigger Event, the application of monies on deposit in any of the Intercreditor Agreement Accounts, or of proceeds from any sale, disposition or other realization of any Shared Collateral (other than the Intercreditor Agreement Accounts), in either case as a result of the exercise of remedies by the Collateral Agent under -45- Article V of the Intercreditor Agreement, to the payment of amounts owing in respect of any Senior Debt. "Working Capital Escalation Factor" means, with respect to any Fiscal Year, an amount (expressed as a percentage and calculated in June of such Fiscal Year) equal to (a) the amount obtained by dividing (i) the GDPIPD most recently published during such Fiscal Year by (ii) the GDPIPD published during the prior Fiscal Year on the date that most closely corresponds to the date of such GDPIPD most recently published, (b) minus, if the amount obtained in clause (a) above is 1.015 or greater, 0.015 and (c) plus, if the amount obtained in clause (a) above is 0.985 or lower, 0.015; provided, however, that if such percentage is calculated for a Fiscal Year after 1996, such percentage shall also be multiplied by the Working Capital Escalation Factor with respect to the immediately preceding Fiscal Year. "Working Capital Facility" means the Revolving Credit Agreement dated as of ( ), 1995 between the Company and the Working Capital Facility Provider or any other Contract between the Company and a Working Capital Facility Provider pursuant to which funds for the working capital requirements of the Company are provided. "Working Capital Facility Account" means the Account so designated established and created under Section 2.2(a) of the Intercreditor Agreement. "Working Capital Facility Provider" means Banque Paribas or any other Person providing funds for the working capital requirements of the Company pursuant to a Working Capital Facility. "Working Capital Loan" means a Loan (as defined in the Working Capital Facility) advanced by the Working Capital Facility Provider pursuant to the Working Capital Facility. -46- EX-99 9 EXHIBIT B-5(A) Exhibit B-5(a) DRAFT 6/9/95 LEASEHOLD MORTGAGE, ASSIGNMENT OF LEASES, RENTS, ISSUES AND PROFITS and SECURITY AGREEMENT AND FIXTURE FILING between MOBILE ENERGY SERVICES COMPANY, L.L.C. as Mortgagor and BANKERS TRUST COMPANY as Mortgagee Dated as of ( ), 1995 Location: County of Mobile State of Alabama TABLE OF CONTENTS Page CERTAIN DEFINITIONS........................................ 3 GRANTING CLAUSE............................................ 3 REPRESENTATIONS, WARRANTIES AND COVENANTS OF MORTGAGOR.... 7 1. Rights and Obligations.......................... 7 2. Payments........................................ 8 3. Compliance With Law............................. 8 4. Warranty of Title............................... 8 5. No Actions or Proceedings....................... 8 6. After-Acquired Property......................... 9 7. Maintenance and Modification of Collateral by Mortgagor....................................... 9 8. Liens........................................... 9 9. Taxes and Governmental and Utility Charges...... 9 10. Condemnation................................... 10 11. Leases and Rents............................... 10 12. Concerning the Conveyance Leases................ 11 13. Transfer or Encumbrance of the Collateral....... 13 14. Advances........................................ 13 15. Indemnification; Waiver of Offset............... 14 16. Security Agreement.............................. 15 17. Performance of Other Agreements................. 16 MORTGAGE EVENTS OF DEFAULT/REMEDIES....................... 20 18. Mortgage Events of Default...................... 20 19. Mortgagee's Right to Cure Defaults.............. 20 20. Non-Waiver...................................... 20 21. Remedies........................................ 21 22. Mortgagor as Tenant Holding Over................ 25 23. Leases.......................................... 26 MISCELLANEOUS............................................. 26 24. Filing of Mortgage, etc......................... 26 25. Usury Laws...................................... 26 26. Option To Release Certain Real Estate........... 26 27. Release of Collateral........................... 27 28. Severability.................................... 27 29. Notices......................................... 28 30. Amendments, Changes and Modifications........... 28 31. Fixture Financing Statement..................... 28 32. Invalidity of Certain Provisions................ 28 33. No Merger....................................... 28 34. Matters in Bankruptcy........................... 29 35. Environmental Matters........................... 29 -i- 36. Estoppel Affidavits............................. 29 37. Assignment...................................... 29 38. Entire Agreement................................ 29 39. Action Affecting the Collateral................. 30 40. Actions by Mortgagee to Preserve the Collateral. 30 41. Remedies Not Exclusive.......................... 30 42. Relationship.................................... 31 43. Time of the Essence............................. 31 44. Severance of Counterclaims...................... 31 45. Notice Limiting Advances........................ 31 46. Governing Law................................... 31 47. Shared Draftsmanship............................ 31 48. No Third Party Beneficiary...................... 32 49. Security Only................................... 32 50. Release by Mortgagee............................ 32 51. Further Assurances.............................. 32 52. Conflict with Intercreditor Agreement........... 32 53. Effect of Termination of Intercreditor Agreement 32 Exhibit "A" - "The Leased Premises" Exhibit "B" - "The Conveyance Leases" Exhibit "C" - "The Easements" Exhibit "D" - "Definitions" -ii- This Leasehold Mortgage, Assignment of Leases, Rents, Issues and Profits and Security Agreement and Fixture Filing (this "Mortgage"), made as of the ( ) day of ( ), 1995, by and between MOBILE ENERGY SERVICES COMPANY, L.L.C., an Alabama limited liability company, having its usual place of business at 900 Ashwood Parkway, Atlanta, Georgia 30338 (together with its permitted successors and assigns, hereinafter called "Mortgagor"), and BANKERS TRUST COMPANY, a New York banking corporation, having its usual place of business at Four Albany Street, New York, New York 10006, not individually, but solely in its capacity as Collateral Agent pursuant to the Intercreditor Agreement (as hereinafter in Exhibit "D" attached hereto and made a part hereof) (together with its permitted successors and assigns, hereinafter called "Collateral Agent" or "Mortgagee"). W I T N E S S E T H : WHEREAS, Mortgagor holds interests in certain real property described in Exhibit "A" attached hereto and made a part hereof (collectively, the "Leased Premises") and in certain facilities constructed on the Leased Premises (collectively, the "Facilities"), under and pursuant to the documents described in Exhibit "B" attached hereto and made a part hereof (collectively, the "Conveyance Leases"); and WHEREAS, Mortgagor further holds interests in certain premises (collectively, the "Easement Premises"), under and pursuant to the documents described in Exhibit "C" attached hereto and made a part hereof (collectively, the "Easements"); and WHEREAS, the Facilities are and will be constructed upon the Leased Premises and the Easement Premises (the Leased Premises, the Easement Premises and the Easements collectively, the "Site"); and WHEREAS, Mortgagor will issue certain bonds in connection with the Site and the Facilities (the "First Mortgage Bonds"); and WHEREAS, the First Mortgage Bonds are to be issued pursuant to that certain Trust Indenture, dated as of ( ), 1995 (as such Trust Indenture may be amended, restated, supplemented, waived or otherwise modified from time to time, the "Indenture"), by and among Mortgagor, MOBILE ENERGY SERVICES HOLDINGS, INC., an Alabama corporation (together with its permitted successors and assigns, "Mobile Energy"), and FIRST UNION NATIONAL BANK OF GEORGIA, as trustee (together with its permitted successors and assigns, the "Trustee"); and WHEREAS, the proceeds of the First Mortgage Bonds will be used to, among other things, (a) repay to THE SOUTHERN COMPANY, a Delaware corporation ("Southern"), a bridge loan in the principal amount of $190,000,000 and return to Southern approximately $4,500,000 of paid in capital; (b) repay to SOUTHERN ELECTRIC INTERNATIONAL, INC., a Delaware corporation ("Southern Electric"), approximately $10,500,000, representing amounts advanced by Southern Electric to pay certain costs associated with the acquisition of the Site and the Facilities and certain capital expenditures required under the Project Contracts (as defined in Exhibit "D" attached hereto and made a part hereof); (c) finance the balance of capital expenditures required under the Project Contracts and certain other planned capital expenditures aggregating approximately $12,700,000; (d) pay certain development and start-up costs aggregating approximately $1,300,000; (e) pay certain financing costs aggregating approximately $2,000,000; and (f) pay approximately $31,000,000 to terminate certain interest rate hedging agreements entered into in connection with the acquisition of the Site and the Facilities; and WHEREAS, concurrently with the issuance of the First Mortgage Bonds, the Industrial Development Board of the City of Mobile, Alabama (the "IDB") will issue one or more series of tax- exempt bonds (the "Tax-Exempt Bonds") pursuant to that certain Amended and Restated Indenture of Trust, dated as of ( ), 1995 (as such Amended and Restated Indenture of Trust may be amended, restated, supplemented, waived or otherwise modified from time to time, the "Tax-Exempt Indenture"), by and between the IDB and FIRST UNION NATIONAL BANK OF GEORGIA, as trustee (together with its permitted successors and assigns, the "Tax- Exempt Trustee"); payments on the Tax-Exempt Bonds shall be made from, and secured by, payments made by the Company pursuant to that certain Amended and Restated Lease Agreement, dated as of ( ), 1995 (as such Amended and Restated Lease Agreement may be amended, restated, supplemented, waived or otherwise modified from time to time, the "IDB Lease Agreement") by and between the IDB and the Company; and WHEREAS, ( ) (together with its permitted successors and assigns or any other Person (as defined in Exhibit "D" attached hereto and made a part hereof) providing funds for the working capital needs of Mortgagor in accordance with the Indenture and the Tax-Exempt Indenture, the "Working Capital Provider") will provide up to $15,000,000 (as such amount may be escalated by an amount equal to the excess, if any, of GDPIPD (as defined in Exhibit "D" attached hereto and made a part hereof) over 1-1/2%) of funds for the working capital needs of Mortgagee pursuant to that certain Revolving Credit Agreement, dated as of ( ), 1995 (as such Revolving Credit Agreement may be amended, restated, supplemented, waived or otherwise modified from time to time or any other Contract (as defined in Exhibit "D" attached hereto and made a part hereof) pursuant to which funds for the working capital needs of Mortgagee are provided in accordance with the Indenture and the Tax-Exempt Indenture, the "Working Capital Facility"), by and between Mortgagor and the Working Capital Provider; and -2- WHEREAS, as security for Mortgagor's obligations under the Indenture in connection with the issuance of the First Mortgage Bonds, the Trustee has required Mortgagor to grant to Mortgagee a first priority lien on and security interest in the Collateral (as hereinafter defined); and WHEREAS, as security for Mortgagor's obligations under the IDB Lease Agreement in connection with the issuance of the Tax-Exempt Bonds, the Tax-Exempt Trustee has required Mortgagor to grant to Mortgagee a first priority security interest in the Collateral; and WHEREAS, as security for Mortgagor's obligations under the Working Capital Facility, the Working Capital Provider has required Mortgagor to grant to Mortgagee a first priority security interest in the Collateral; and WHEREAS, pursuant to that certain Intercreditor and Collateral Agency Agreement, dated as of ( ), 1995 (as such Intercreditor and Collateral Agency Agreement may be amended, restated, supplemented, waived or otherwise modified from time to time, the "Intercreditor Agreement"), by and among the Trustee (on behalf of the holders from time to time of the First Mortgage Bonds), the Tax-Exempt Trustee (on behalf of the holders from time to time of the Tax-Exempt Bonds), the Working Capital Provider (together with their respective permitted successors and assigns, collectively, the "Senior Secured Parties"), Collateral Agent, the IDB, Mortgagee and Mobile Energy, the Senior Secured Parties have required Mortgagor to grant to Mortgagee a first priority lien on and security interest in the Collateral; and WHEREAS, this Mortgage is intended to ratably secure each of the Secured Obligations (as hereinafter defined) pari passu. NOW, THEREFORE, in consideration of the premises set forth above, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, and FOR THE PURPOSE OF SECURING the payment and performance of the Secured Obligations, which Secured Obligations may increase, decrease and increase again, from time to time, Mortgagor and Mortgagee hereby agree as follows: CERTAIN DEFINITIONS Except as otherwise expressly provided herein, capitalized terms used in this Mortgage and its Exhibits shall have the meanings set forth in Exhibit "D" attached hereto and by this reference incorporated herein. GRANTING CLAUSE -3- In order to secure the payment of all sums, amounts and expenses incurred hereunder and under the Financing Documents by Mortgagee according to the terms hereof, together with interest thereon, and to secure the payment of such additional advances as may be made by the Senior Secured Parties in accordance with the Financing Documents, at their option, to Mortgagor, for any purpose, provided that all those advances are to be made within such lesser period of time as may be provided by Law as a prerequisite for the sufficiency of actual notice or record notice of the optional additional advances as against the rights of creditors or subsequent purchasers for valuable consideration, and to secure all other obligations under the Financing Documents (all of the aforesaid are hereinafter referred to collectively as the "Secured Obligations"), Mortgagor hereby irrevocably grants, bargains, sells, remises, releases, conveys, warrants, assigns, transfers, mortgages, pledges, delivers, grants a security interest, sets over and confirms unto Mortgagee, with warranties of title as set forth in Section 4 hereof, subject to the terms and conditions hereinafter set forth, all right, title and interest of Mortgagor, whether now held, owned or hereafter acquired in and to all property, estate, rights and interests of Mortgagor (except as to property, estate, rights and interests expressly excluded herefrom) (all such property, estate, rights and interests not expressly excluded herefrom being hereinbefore and hereinafter collectively referred to as the "Collateral"). Collateral shall include, without limitation: (a) all of the leasehold estate, right, title and interest of Mortgagor in the Leased Premises, said leasehold estate having been created by the Conveyance Leases; (b) all of the estate, right, title and interest of Mortgagor under and pursuant to, and all modifications, extensions and renewals of, the Easements and the rights created thereunder; (c) all of the estate, right, title and interest of Mortgagor under and pursuant to, and all modifications, extensions and renewals of, each of the Conveyance Leases, including without limitation, (i) all monies and claims for monies due and to become due thereunder and (ii) all rights of Mortgagor to exercise any remedy, election or option or to make any decision or determination or to give any notice, consent, waiver or approval under or in respect of any of the Conveyance Leases; (d) all of the estate, right, title and interest of Mortgagor in the buildings, improvements and fixtures now or hereafter located on the Site (hereinafter referred to as the "Improvements"); (e) all of the estate, right, title, interest, claim or demand of any nature whatsoever of Mortgagor, either in Law or -4- in equity, in possession or expectancy, in and to the Collateral and in all replacements, substitutes, renewals, betterments and extensions of, and all additions and appurtenances to, any of the Collateral, or any part thereof, and all conversions of the security constituted thereby, which, immediately upon such conversion, and in each case without further mortgage, conveyance, assignment or other act by Mortgagor, shall become subject to the lien of this Mortgage as fully and completely, and with the same effect, as though now owned by Mortgagor and specifically described herein; (f) all of the estate, right, title and interest of Mortgagor in the easements, rights-of-way, gores of land, streets, ways, alleys, passages, sewer rights, waters, water courses, water rights and powers, and all estates, rights, titles, interests, privileges, liberties, tenements, hereditaments, revocable consents, options, appendages and appurtenances of any nature whatsoever, in any way belonging, relating or pertaining to the Collateral (including, without limitation, any and all development rights, air rights, water rights, minerals, mineral rights or similar or comparable rights of any nature whatsoever now or hereafter appurtenant to the Leased Premises or now or hereafter transferred to the Leased Premises, together with all rights of Mortgagor to renew, extend, supplement, amend, cancel or terminate the same , and Mortgagor's estate, right, title and interest in all land lying in the bed of any street, road or avenue, opened or proposed, in front of or adjoining the Site to the center line thereof (which rights to renew, extend, supplement, amend, cancel or terminate shall be subject to the approval required under the Intercreditor Agreement); (g) all machinery, apparatus, equipment, fittings, fixtures and other property of every kind and nature whatsoever owned by Mortgagor, or in which Mortgagor has or shall have an interest, now or hereafter located upon the Site and/or the Improvements or appurtenances thereto, and usable in connection with the present or future operation and occupancy of the Site and/or the Improvements and/or the Facilities and all equipment, materials, supplies, apparatus and other items now or hereafter attached to, installed in or used (temporarily or permanently) on or in connection with the present or future operation and occupancy of the Site and/or the Improvements and/or the Facilities, of any nature whatsoever, owned by Mortgagor, or in which Mortgagor has or shall have an interest, now or hereafter located upon the Site and/or the Improvements and/or the Facilities and all renewals, replacements and substitutions thereof and additions thereto owned by Mortgagor or in which Mortgagor has or shall have an interest, including but not limited to any and all partitions, ducts, shafts, pipes, radiators, conduits, wiring, floor coverings, awnings, motors, engines, boilers, stokers, pumps, dynamos, transformers, turbines, generators, fans, blowers, vents, switchboards, elevators, mail or coal conveyors, escalators, compressors, -5- furnaces, cleaning equipment, call and sprinkler systems, fire extinguishing apparatus, water and other tanks, heating, ventilating, plumbing, laundry, incinerating, air conditioning and air cooling systems and water, gas, telephone, telecommunications, telemetry and electric equipment (hereinafter collectively referred to as the "Equipment"), and the right, title and interest of Mortgagor in and to any of the Equipment that may be subject to any security agreements (as defined in the Uniform Commercial Code as in effect in the State of Alabama (the "UCC")), superior in lien to the lien of this Mortgage; (h) all of the estate, right, title, interest, claim or demand of any nature whatsoever of Mortgagor, in Law or in equity, in and to all awards or payments, including interest thereon, and the right to receive the same, which may be made with respect to the Collateral, from the exercise of the right of eminent domain, condemnation or otherwise (including any transfer made in lieu of the exercise of said right), changes of grade of street or for any other injury to or decrease in the value of the Collateral now or hereafter located thereon, whether direct or consequential, which said awards and payments are hereby assigned, and Mortgagee is hereby authorized to collect and receive the proceeds thereof (which shall be applied according to the provisions of the Intercreditor Agreement) and to give proper receipts and acquittances therefor; (i) all of the estate, right, title, interest, claim or demand of any nature whatsoever of Mortgagor, in Law or in equity, in and to all refunds or rebates of taxes or charges in lieu of taxes, now or hereafter assessed or levied against the Collateral (which shall be applied according to the provisions of the Intercreditor Agreement); (j) all of the estate, right, title, claim, demand and interest of Mortgagor in and to all leases (including oil, gas and other mineral leases), lettings, occupancy agreements, subleases, franchises, licenses, concessions, permits, contracts and other agreements affecting the use or occupancy of the Collateral, or any part thereof, now or hereafter entered into and any renewals or extensions thereof (hereinafter referred to collectively as the "Leases") and all right, title and interest of Mortgagor thereunder, including, without limitation, the right to receive the rents, issues and profits of the Collateral (subject to the terms and conditions hereinafter set forth), including, without limitation, the proceeds of all steam, electricity, hydrocarbons, green liquor or other minerals produced from the Collateral and all delay rentals and bonuses from any steam, electricity, and any oil, gas or other mineral lease (hereinafter referred to collectively as the "Rents"); (k) all of the estate, right, title, interest, claim or demand of any nature whatsoever of Mortgagor, in Law or in equity, in and to all "accounts," "inventory", "equipment" and "general intangibles" (as such quoted terms are defined in the -6- UCC) and all contract rights in connection therewith, now or hereafter owned by Mortgagor, or in which Mortgagor now has or hereafter shall have any right, title or interest, now or hereafter located upon, arising in connection with or concerning the Collateral; (l) all of the estate, right, title, interest, claim or demand of any nature whatsoever of Mortgagor, in Law or in equity, in and to the Intercreditor Agreement Accounts, together with any right to payment for goods sold or leased or for services rendered in connection with the Intercreditor Agreement Accounts, whether or not it has been earned by performance; (m) all of the estate, right, title, interest, claim or demand of any nature whatsoever of Mortgagor, in Law or in equity, in and to all proceeds of and any unearned premiums on any insurance policies covering the Collateral and title thereto, including, without limitation, the right to receive the proceeds of any insurance, judgments, or settlements made in lieu thereof, for damage to or impairment of title to the Collateral (which shall be applied according to the provisions of the Intercreditor Agreement); (n) to the extent permitted by Law, the nonexclusive right, in the name and on behalf of Mortgagor, to appear in and defend any action or proceeding brought with respect to the estate, right, title or interest of Mortgagor in and to the Collateral and to commence any action or proceeding to protect the estate, right, title or interest of Mortgagee in and to the Collateral (subject, however, to the provisions of this Mortgage hereinafter set forth and the provisions of the Intercreditor Agreement); (o) all of Mortgagor's right, title and interest in and to all plans and specifications prepared for construction of the Facilities, Improvements or other development of the Collateral (including all amendments, modifications, supplements, general conditions and addenda thereof or thereto) and all studies, data and drawings (including without limitation architectural, engineering, mechanical and electrical drawings) related thereto, and all contracts and agreements of Mortgagor relating to the aforesaid plans and specifications or to the aforesaid studies, data and drawings or to the construction of the Facilities and Improvements on the Collateral; (p) all of Mortgagor's right, title and interest in and to all contracts with property managers, surveyors, real estate advisors and consultants, real estate brokers and other like agents and professionals that relate to any part of the Collateral, including without limitation, any of the Improvements constructed or to be constructed on the Collateral, and all maps, reports, surveys, and studies of or relating to any of the Collateral, now or hereafter owned by Mortgagor or in which Mortgagor has or hereafter shall have an interest and now or -7- hereafter in the possession of Mortgagor or any such agent or professional; (q) to the extent permitted by Law, all of Mortgagor's right, title and interest in and to all present and future Governmental Approvals; provided, however, that any of the Governmental Approvals that by their terms or by operation of Law would become void, voidable, terminable or revocable or would constitute a breach or default thereunder if pledged or assigned hereunder or if a security interest therein were granted hereunder are expressly excepted and excluded from the lien and terms of this Mortgage to the extent necessary to avoid such voidness, voidability, terminability, revocability, breach or default; (r) all of Mortgagor's right, title and interest in and to all warranties, indemnities and guarantees of contractors, subcontractors, materialmen, vendors and suppliers relating to the Improvements and the Facilities; (s) all right, title and interest of Mortgagor in and under the "Security Agreement Collateral" described in the Security Agreement; (t) to the extent permitted by Law, all of Mortgagor's rights to file for record a notice limiting the maximum principal amount that may be secured by this Mortgage and all of Mortgagor's rights under applicable Law to reject any of the Financing Documents in the event of bankruptcy; (u) to the extent permitted by Law, all of Mortgagor's rights and remedies at any time arising under or pursuant to Section 365(h) of the United States Bankruptcy Code, including, without limitation, ail of Mortgagor's rights to remain in possession of all or any part of the Collateral; and (v) all of the estate, right, title, interest, claim or demand of any nature whatsoever of Mortgagor, in Law or in equity, in and to all products and proceeds of any of the Collateral herein described. TO HAVE AND TO HOLD the above granted and described Collateral unto the Mortgagee and its successors and assigns, on behalf of the Senior Secured Parties and their successors and assigns, forever, to secure the Secured Obligations, subject to the terms and conditions hereinafter set forth. SUBJECT only to Permitted Liens. PROVIDED, HOWEVER, that the Collateral shall not include the Indenture Securities Collateral and the Tax-Exempt Indenture Securities Collateral (as such terms are defined in the Indenture) other than, in each case, the Shared Collateral. -8- PROVIDED FURTHER, HOWEVER, that if the Secured Obligations are paid in full in accordance with the Financing Documents, then this Mortgage shall cease, terminate and be void in accordance with Section 50 of this Mortgage. REPRESENTATIONS, WARRANTIES AND COVENANTS OF MORTGAGOR 1. Rights and Obligations. This Mortgage shall not be construed to be a consent by Mortgagee to any contract, lease, license, permit or governmental action or to impose any obligation with respect to the same. 2. Payments. Mortgagor shall pay all sums, including interest, secured hereby when due, as provided for in the Financing Documents and in this Mortgage, and any renewal, extension or modification of any thereof. 3. Compliance With Law. Mortgagor shall comply with all applicable Law and Governmental Approvals. 4. Warranty of Title. (a) Mortgagor is the sole owner and holder of the entire tenant's interest under the Conveyance Leases, free and clear of any Liens and encumbrances except for Permitted Liens. (b) Mortgagor has full right, power and authority to mortgage its right, title and interest in and under the Conveyance Leases to Mortgagee pursuant hereto, and each of the Ground Lessors has granted its express consent to this Mortgage. (c) Each of the Conveyance Leases is in full force and effect and Mortgagor has not waived any of its rights thereunder. (d) Neither Mortgagor nor either of the Ground Lessors is in default with respect to any of the terms of any of the Conveyance Leases and Mortgagor knows of no acts or occurrences constituting a default thereunder. (e) Mortgagor knows of no adverse claim to the title and/or possession of Mortgagor and/or either of the Ground Lessors with respect to any part of the Site, except for Permitted Liens. (f) Mortgagor has received no notice from either of the Ground Lessors terminating any of the Conveyance Leases or demanding performance or compliance with any of the terms, covenants or conditions thereof. (g) No fire or casualty has affected the Site and Mortgagor knows of no proposed condemnation or eminent domain proceeding or settlement in lieu thereof that may affect the Site. -9- (h) (i) Mortgagor is now, and after giving effect to this Mortgage, will be, in a solvent condition, (ii) the execution and delivery of this Mortgage by Mortgagor does not constitute a "fraudulent conveyance" within the meaning of Title 11 of the United States Code as now constituted or under any other applicable Law and (iii) no bankruptcy or insolvency proceedings are pending or contemplated by or, to the best of Mortgagor's knowledge, threatened against Mortgagor. 5. No Actions or Proceedings. There are no actions, suits or proceedings pending or, to the best knowledge of Mortgagor, threatened against or affecting Mortgagor, the Facilities, the Site or the Collateral, or that involve the validity or enforceability of this Mortgage or the priority of the lien hereof, at Law or in equity, or before or by any Governmental Authority. 6. After-Acquired Property. Unless expressly excluded hereby, all property at any time acquired by Mortgagor shall, immediately upon the acquisition thereof by Mortgagor and without any further act, become and be subject to the lien of this Mortgage as Collateral, as fully and completely as though now owned by Mortgagor, and specifically described in the granting clauses hereof. 7. Maintenance and Modification of Collateral by Mortgagor. (a) Mortgagor agrees that at no time will Mortgagor permit waste to be committed upon the Collateral and Mortgagor will operate and maintain the Collateral or cause the Collateral to be operated and maintained pursuant to Section 5.6 of the Indenture. Mortgagor agrees that it shall not modify, nor cause to be modified, the Collateral, or any part thereof, except as expressly permitted by the Indenture. (b) Any property for which a substitution or replacement is made as permitted by the Financing Documents may be disposed of by Mortgagor in any manner and in the sole discretion of Mortgagor free and clear of the lien of this Mortgage. 8. Liens. Mortgagor will not permit any mechanic's, materialmen's or other Lien or encumbrance, other than Permitted Liens, to be established or remain against the Collateral. 9. Taxes and Governmental and Utility Charges. (a) Mortgagor will pay or cause to be paid, before the date when interest (provided that "interest" shall not include discounts for early payment under the Law of the State of Alabama (the "State")) and penalties become due thereon, all taxes and governmental and utility charges of any kind whatsoever that may at any time be lawfully assessed or levied against or with respect to the Collateral or any part thereof (other than taxes or charges that are the subject of a Good Faith Contest), -10- including, without limiting the generality of the foregoing, (i) all ad valorem taxes levied against the Collateral and any other taxes levied upon the Collateral that, if not paid, will become a Lien on the receipts from the Collateral or against the Collateral or any interest therein or the revenues derived therefrom; (ii) all utility and other charges incurred in the operation, maintenance, use, occupancy and upkeep of the Collateral that, if not paid, will become a Lien on the receipts from the Collateral or a Lien against the Collateral or any interest therein or the revenues derived therefrom; and (iii) all assessments and charges lawfully made by any Governmental Authority for public improvements that may be secured by a Lien on the Collateral, provided that, with respect to special assessments or other governmental charges that may lawfully be paid in installments over a period of years, Mortgagor shall be obligated to pay only such installments when and as they are required to be paid. (b) In the event of the passage after the date of this Mortgage of any Law of the State or in any other state in which the Collateral is located, changing in any way the Laws now in force for the taxation of mortgages, deeds of trust or debts secured thereby, for state or local purposes, or the manner of the operation of any such taxes so as to adversely affect the interest of Mortgagee, then and in such event, Mortgagor shall bear and pay the full amount of such taxes; provided, however, that if for any reason payment by Mortgagor of any such new or additional taxes would be unlawful or if the payment thereof would constitute usury or render the loan or indebtedness secured hereby wholly or partially usurious under any of the terms or provisions of this Mortgage, or otherwise, Mortgagee may, at its option, either (i) exercise its remedies under Section 21 hereof as soon as the failure to pay such taxes results in a Mortgage Event of Default (as hereinafter defined) or (ii) waive, as directed by the Required Senior Creditors in Senior Creditor Certificates, any such Mortgage Event of Default and any payment received from Mortgagor to the extent of such unlawful or usurious amount and Mortgagor shall concurrently therewith pay the remaining lawful and non-usurious portion or balance of said taxes. 10. Condemnation. Notwithstanding any taking by any public or other body given the power of eminent domain through eminent domain, condemnation or otherwise, Mortgagor shall continue to pay the Secured Obligations at the time and in the manner provided for their payment in the Financing Documents, and the Secured Obligations shall not be reduced until, and only to the extent that, any award of payment therefor shall have been actually received and applied by Mortgagee in accordance with the Intercreditor Agreement to the discharge of the Secured Obligations. Mortgagor shall file and prosecute its claim or claims for any award or payment in a Good Faith Contest and shall cause the same to be collected and paid over to Mortgagee for application as set forth above. Mortgagor hereby irrevocably -11- authorizes and empowers Mortgagee in the name of Mortgagor or otherwise to collect and receive any such award or payment and to file and prosecute such claim or claims if (a) Mortgagor fails to do so within a reasonable time prior to the expiration of the period allowed therefor by applicable Law or (b) a Mortgage Event of Default hereunder has occurred and is continuing. Although it is hereby expressly agreed that the same shall not be necessary in any event, Mortgagor shall, upon demand of Mortgagee upon advice of counsel, make, execute and deliver any and all assignments and other instruments sufficient for the purpose of assigning any such award or payment to Mortgagee free and clear of any encumbrances of any kind or nature whatsoever. 11. Leases and Rents. (a) Except as provided in the Indenture, Mortgagor shall not lease or sublease, as lessor, all or any portion of the Leased Premises. (b) Mortgagor hereby assigns to Mortgagee, as security for the payment and performance of the Secured Obligations, all of Mortgagor's right, title and interest in and to the Leases and the Rents. Subject to the terms of this paragraph 11(b), Mortgagee waives the right to enter the Leased Premises for purposes of collecting the Rents and grants Mortgagor the right to collect the Rents. Mortgagor shall hold the Rents, or an amount sufficient to discharge all sums currently due on the Secured Obligations, in trust for use in payment of the Secured Obligations. The right of Mortgagor to collect the Rents may be revoked by Mortgagee upon the occurrence and during the continuation of any Mortgage Event of Default by Mortgagor herein by giving written notice of such revocation to Mortgagor. Following such notice, Mortgagee may collect, retain and apply the Rents during the continuation of such Mortgage Event of Default toward payment of the Secured Obligations according to the Financing Documents and in such order, priority and proportions, or to the operation, maintenance and repair of the Leased Premises, as Mortgagee shall deem proper irrespective of whether Mortgagee shall have commenced a foreclosure of this Mortgage or shall have applied or arranged for the appointment of a receiver. Except to the extent permitted or authorized by the Financing Documents, Mortgagor shall not, without the consent of Mortgagee, which consent shall not be unreasonably withheld, make, or suffer to be made, any Leases or modify or cancel any Leases or accept prepayments of installments of the Rents for a period of more than one month in advance or further assign the whole or any part of the Rents. Mortgagor shall (i) fulfill or perform each and every provision of the Leases on the part of Mortgagor to be fulfilled or performed, (ii) promptly send copies of all notices of default that Mortgagor shall send or receive under the Leases to Mortgagee, and (iii) enforce, short of termination of the Leases, the performance or observance of the provisions thereof by the other parties thereto. (c) Mortgagor agrees that it will not further pledge or assign its interest in any of the Leases, or further assign -12- the Rents, so long as any of the Secured Obligations remain unpaid except as otherwise permitted by the Financing Documents. (d) Nothing contained in this Section 11 shall be construed as imposing on Mortgagee any of the obligations of the parties under the Leases. (d) The assignment of the Leases and Rents in this Section 12 is intended to be an absolute assignment from Mortgagor to Mortgagee and not merely a passing of a security interest. 12. Concerning the Conveyance Leases. Notwithstanding anything contained herein to the contrary, and in addition to any rights, privileges and remedies granted to Mortgagee elsewhere in this Mortgage, Mortgagee shall have, and Mortgagor hereby grants to Mortgagee, any and all rights, privileges and remedies of leasehold mortgagees provided for in each of the Conveyance Leases (including without limitation, Mortgagor's renewal rights, if any) without the necessity of particularly specifying any or all of such rights, privileges and remedies that are or could be granted to leasehold mortgagees pursuant to any of the Ground Leases. Mortgagor hereby represents, warrants, covenants and agrees that: (a) This Mortgage is lawfully executed and delivered in conformity with each of the Conveyance Leases. (b) Mortgagor shall promptly pay or cause to be paid, when due and payable, the net rent, additional rents, taxes and all other sums and charges mentioned in and made payable by Mortgagor under each of the Conveyance Leases. (c) Mortgagor shall promptly perform and observe, or cause to be performed and observed, all of the terms, covenants and conditions required to be performed and observed by Mortgagor under each of the Conveyance Leases, within the periods provided therein, and will do all things necessary to preserve and to keep unimpaired its rights under each of the Conveyance Leases. Notwithstanding the foregoing, a failure by Mortgagor to comply with the provisions of this Section 12(c) shall not be deemed to be an Mortgage Event of Default unless and until an "Event of Default" has occurred under any of the Conveyance Leases, which has not been waived or cured. (d) Mortgagor shall promptly notify Mortgagee in writing of any default by Mortgagor in the performance or observance of any of the terms, covenants, or conditions on the part of Mortgagor to be performed or observed under any of the Conveyance Lease. -13- (e) Mortgagor shall (i) promptly notify Mortgagee in writing of the receipt by Mortgagor of any notice of termination of any of the Conveyance Leases or any notice noting or claiming any default by Mortgagor under any of the Conveyance Leases; (ii) promptly deliver to Mortgagee a copy of each such notice; and (iii) promptly deliver to Mortgagee a copy of any material notice sent to either of the Ground Lessors, including, without limitation, any notice of election or the exercise of any rights of renewal under said instrument. (f) Mortgagor shall not, without the prior written consent of Mortgagee, terminate, modify or surrender any of the Conveyance Leases or suffer or permit any termination, modification or surrender thereof. (g) Mortgagor shall, within ten (10) days after written demand from Mortgagee, use its best efforts to obtain from each of the Ground Lessors and deliver to Mortgagee a certificate stating that such instrument is in full force and effect, is unmodified, that no notice of termination thereon has been served, stating the date to which the rent has been paid and stating whether or not there are any defaults thereunder and specifying the nature of such defaults, if any. (h) Mortgagor shall furnish to Mortgagee, within five (5) days after demand therefor, proof of payment of all items that are required to be paid by Mortgagor pursuant to each of the Conveyance Leases. (i) Mortgagor shall not consent to any waiver, modification or cancellation of any provision of any of the Conveyance Leases nor to the subordination of any of the Conveyance Leases to any other interest or instrument whatsoever, including, without limitation, any Lien (other than Permitted Liens) on the fee estate of the Ground Lessors under any of the Conveyance Leases without obtaining the prior written consent of Mortgagee thereto. (j) Mortgagor does hereby irrevocably appoint and constitute Mortgagee as its true and lawful attorney-in-fact in its name, place and stead to perform and comply with all obligations of Mortgagor under all of the Conveyance Leases without relying on any grace period provided therein, to do and take, without the obligation to do so, any action Mortgagee deems necessary or desirable to prevent or cure any default by Mortgagor under each of the Conveyance Leases, including, without limitation, any act, deed, matter or thing whatsoever that Mortgagor may do in order to cure a default under any of the Conveyance Leases, to enter in and upon the Leased Premises or any part thereof to such extent and as often as Mortgagee, in its sole discretion, deems necessary or desirable in order to prevent or cure any default by Mortgagor under any of the Conveyance Leases or to perform or complete any obligation of Mortgagor pursuant thereto. Mortgagor shall, within five (5) days after -14- written request is made therefor by Mortgagee, execute and deliver to Mortgagee or to any Person that Mortgagee shall designate, such further instruments, agreements, powers, deeds, conveyances or the like as may be necessary to complete or perfect the interest, rights or powers of Mortgagee pursuant to this Section 12 or as may be reasonably required by Mortgagee. Mortgagor hereby ratifies all that Mortgagee shall do or cause to be done as Mortgagor's attorney-in-fact consistent with the foregoing. Mortgagor also authorizes Mortgagee, upon the occurrence and during the continuance of a Mortgage Event of Default, to communicate in its own name with any party to any Project Document at any time, with regard to any matter relating to such Project Document. (k) Until and unless Mortgagee shall elect otherwise by written notice to Mortgagor and either of the Ground Lessors, Mortgagee shall be the "Leasehold Mortgagee" for all purposes of each of the Conveyance Leases. Mortgagor shall deliver all necessary notices, and take all such other actions, as may be necessary from time to time, in order to designate Mortgagee as the "Leasehold Mortgagee" under each of the Conveyance Leases. (l) If Mortgagor acquires the estate of the landlord under any of the Conveyance Leases (i) there shall be no merger between such acquired estate and the estate of Mortgagor under any of the Conveyance Leases unless all Persons (including Mortgagee) having an interest in any of the Conveyance Leases shall consent thereto in writing and (ii) the lien of this Mortgage shall, ipso facto, without the necessity of any further conveyance, simultaneously with such acquisition, be spread to cover such acquired estate and as so spread shall, be prior to the Lien of any mortgage placed on the acquired estate subsequent to the date of this Mortgage. (m) The generality of the provisions of this Section 12 relating to the Conveyance Leases shall not be limited by other provisions of this Mortgage setting forth particular obligations of Mortgagor that are also required of Mortgagor as the lessee under any of the Conveyance Leases. (n) If any of the Conveyance Leases shall be terminated prior to the natural expiration of its term due to default by Mortgagor, and if, pursuant to any provision of any of the Conveyance Leases, Mortgagee or its designee shall acquire from the applicable Ground Lessor a new lease of any part of the Site, Mortgagor shall have no right, title or interest in or to such new lease or the leasehold estate created thereby, or renewal privileges therein contained. (o) Mortgagor shall at all times cause Mortgagor's estate, rights, title and interest in, to and under the Leased Premises to be subject to no interests, Liens, charges or encumbrances other than the interest of the Ground Lessors under the applicable Conveyance Leases and any of the Permitted Liens. -15- Mortgagor shall defend Mortgagor's estate, rights, title and interest in, to and under the Leased Premises and the interest in, to and under the Leased Premises and the priority thereof, and the priority and validity of the Lien hereof, against the claims of all Persons except as aforesaid. 13. Transfer or Encumbrance of the Collateral. Except to the extent permitted by the Financing Documents, no part of the Collateral shall in any manner be further encumbered, sold, transferred, leased, subleased, assigned or conveyed, or permitted or suffered to be further encumbered, sold, transferred, assigned or conveyed. 14. Advances. If Mortgagor fails to pay or cause to be paid, subject to any right hereunder to contest, any claim, Lien or encumbrance (other than Permitted Liens), or, prior to delinquency, any tax or assessment, or, when due, any insurance premium, or to keep the Collateral in repair, or shall commit or permit waste, or if there shall be commenced any action or proceeding affecting the Collateral or any part thereof or the title thereto, or the interest of Mortgagee therein, including, but not limited to, condemnation or eminent domain proceedings, bankruptcy or reorganization proceedings or any proceeding regarding an Environmental Requirement, then Mortgagee or any Senior Secured Party (upon written notice to Mortgagee and each other Senior Secured Party), at its option, may, but shall not be required to, pay said claim, Lien, encumbrance, tax, assessment or premium, with right of subrogation thereunder, following a Mortgage Event of Default and during the continuation thereof, or at such earlier time as permitted by any consent to the assignment of a Project Contract to Mortgagee, may make such repairs and take such steps as it deems advisable to prevent or cure such waste, and may appear in any such action or proceeding and retain counsel therein, and take such action therein as Mortgagee or such Senior Secured Party deems advisable, and for any of said purposes Mortgagee or such Senior Secured Party may advance such sums of money, including all costs, reasonable attorneys' fees and other items of expense as it deems necessary. Mortgagor shall pay or cause to be paid, upon demand, to Mortgagee or such Senior Secured Party, as the case may be, all sums of money so advanced, together with interest on each such advance at an interest rate per annum equal to the yield on the First Mortgage Bonds plus three percent (3%), and the repayment of such advances shall be secured hereby and by the other Security Documents. In making any payment or securing any performance relating to any obligation of Mortgagor under this Mortgage, Mortgagee, so long as it acts in good faith, shall be the sole judge of the legality, validity and amount of any Lien or encumbrance and of all other matters necessary to be determined in satisfaction thereof. No such action of Mortgagee shall be considered a waiver of any right accruing to it hereunder. Mortgagee shall not be held accountable for any delay in making any such payment, which delay may result in any additional interest, costs, charges or expenses. -16- 15. Indemnification; Waiver of Offset. (a) If Mortgagee is made a party defendant to any litigation, proceeding, action, suit, claim, demand or judgment of any nature or form, by or on behalf of any person, concerning this Mortgage or the Leased Premises or any part thereof, including, but not limited to, any eminent domain, condemnation or other proceeding, any proceeding, action, suit, claim, demand or judgment arising in any manner from an Environmental Requirement concerning the Leased Premises, and any contest, action or proceeding pursuant to Sections 39, 40 and 41 hereof, then Mortgagor shall indemnify, defend and hold Mortgagee harmless from any and all liability, loss or expense by reason of said litigation, proceeding, action, suit, claim, demand or judgment (including any appeals therefrom), including reasonable attorneys' fees and expenses incurred by Mortgagee in any such litigation, proceeding, action, suit, claim, demand or judgment (including any appeals therefrom), but excluding liability for gross negligence or willful misconduct by Mortgagee other than gross negligence or willful misconduct imputed to Mortgagee solely by reason of its interest in the Leased Premises, whether or not any such litigation, proceeding, action, suit, claim or demand is prosecuted to judgment. If Mortgagee commences an action against Mortgagor to enforce any of the terms hereof, or for the recovery of any sum secured hereby, or if Mortgagor breaches any term of this Mortgage, Mortgagor shall pay to Mortgagee reasonable attorneys' fees and disbursements (including any of the same incurred on appeal), and the right to such reasonable attorneys' fees and expenses shall be deemed to have accrued on the commencement of such action and shall be enforceable whether or not such action is prosecuted to judgment. (b) Mortgagor waives any and all right to claim or recover against Mortgagee, and its directors, officers, employees and representatives, for loss of or damage to Mortgagor, the Collateral or any part thereof, Mortgagor's property or the property of others under Mortgagor's control, from any cause to the extent insured against or required to be insured against by the provisions of the Financing Documents. 16. Security Agreement. This Mortgage constitutes both a real property mortgage and a "security agreement," within the meaning of the UCC, and the Collateral includes both real and personal property and all other rights and interests, whether tangible or intangible in nature, of Mortgagor in the Collateral. Information relative to the security interest created hereby may be obtained by application to the Mortgagee at the address provided in the introductory clause. Mortgagor, by executing and delivering this Mortgage, has granted as security for the Secured Obligations a lien on and security interest in such of the Collateral as is governed by the UCC in favor of Mortgagee. If a Trigger Event shall have occurred and be continuing and Mortgagee shall have received Senior Creditor Certificates with respect thereto as specified in Section 5.1(a) of the Intercreditor -17- Agreement, Mortgagee, in addition to any other rights and remedies that it may have, shall have and may exercise immediately and without demand, any and all rights and remedies granted to Mortgagee upon default under the UCC, including, without limiting the generality of the foregoing, the right to take possession of such of the Collateral as is governed by the UCC or any part thereof and such other rights specified in Section 21(a)(ii)(C) hereof, and to take such other measures as Mortgagee may deem necessary for the care, protection and preservation thereof. Upon request or demand of Mortgagee, Mortgagor shall at its expense assemble such of the Collateral as is governed by the UCC and make it available to Mortgagee on demand and shall reimburse Mortgagee for any and all expense, including legal expenses and reasonable attorneys' fees, incurred or paid by Mortgagee in protecting its interest in such of the Collateral as is governed by the UCC and in enforcing the rights granted hereunder with respect to such of the Collateral as is governed by the UCC. Any notice of sale, disposition or other intended action by Mortgagee with respect to such of the Collateral as is governed by the UCC sent to Mortgagor in accordance with the provisions of this Mortgage at least ten (10) days prior to such action shall constitute reasonable notice to Mortgagor. Any method of sale or disposition or other intended action in accordance with the UCC shall conclusively be deemed to be commercially reasonable within the meaning of the UCC unless objected to in writing by Mortgagor within ten (10) days after receipt by Mortgagor of such notice. The proceeds of any sale or disposition of such of the Collateral as is governed by the UCC, or any part thereof, shall be applied by Mortgagee to the payment of the Secured Obligations in such order, priority and proportions as set forth in Article VI of the Intercreditor Agreement. Notwithstanding anything contained in this Section 16 to the contrary, with respect to any Collateral that is also defined as "Security Agreement Collateral" under the Security Agreement, Mortgagee hereby reserves, and Mortgagee shall be entitled to exercise, each of its rights, powers and remedies under the Security Agreement with respect to such Collateral. At the request of Mortgagee upon advice of counsel, Mortgagor will execute one or more Financing Statements and renewals and amendments thereof pursuant to the UCC of any jurisdiction deemed applicable by Mortgagee in form satisfactory to Mortgagee, and Mortgagor will pay the cost of filing the same in all public offices wherever filing is deemed by Mortgagee to be necessary or desirable. Mortgagor covenants to execute and deliver to Mortgagee, upon demand, such additional assurances, writings and other instruments as may be reasonably required by Mortgagee to effect the purpose hereof or to perfect the interest of Mortgagee in any security hereby given including a copy of the annual -18- perfection opinion it delivers to the Trustee and a reliance letter addressed to it in connection therewith. Mortgagor hereby appoints (such appointment being coupled with an interest), until the Secured Obligations are paid in full, Mortgagee as attorney-in-fact for Mortgagor to execute in the name of Mortgagor any financing statements or other comparable documents reasonably deemed by Mortgagee to be necessary or desirable to perfect or protect or continue the lien and security interest hereby granted. Mortgagor hereby ratifies all that Mortgagee shall do or cause to be done as Mortgagor's attorney-in-fact consistent with the foregoing. 17. Performance of Other Agreements. (a) Mortgagor shall (i) pay all rents, fees, additional rents and other sums required to be paid by Mortgagor, as grantee, under and pursuant to the provisions of the Easements, (ii) diligently perform and observe all of the terms, covenants and conditions of the Easements on the part of Mortgagor, as grantee, to be performed and observed, unless such performance or observance shall be waived, excused or otherwise not required by the grantor under the Easements, to the end that all things shall be done that are necessary to keep unimpaired the rights of Mortgagor, as grantee, under the Easements and (iii) promptly notify Mortgagee of the giving of any notice by the grantor under any of the Easements to Mortgagor of any default by Mortgagor, as grantee, in the performance or observance of any of the terms, covenants or conditions of any of the Easements on the part of Mortgagor, as grantee, to be performed or observed and deliver to Mortgagee a true copy of each such notice. Mortgagor shall not, except to the extent permitted or authorized by the Financing Documents, surrender any of the Easements or terminate or cancel any of the Easements or take any action to modify, change, supplement, alter or amend any of the Easements, in any respect, either orally or in writing, and Mortgagor hereby assigns to Mortgagee, as further security for the payment of the obligations evidenced by the Financing Documents and for the performance and observance of the terms, covenants and conditions of this Mortgage, all of the rights, privileges and prerogatives of Mortgagor, as grantee, to surrender any of the Easements or to terminate, cancel, modify, change, supplement, alter or amend any of the Easements, and any such surrender of any of the Easements or termination, cancellation, modification, change, supplement, alteration or amendment of any of the Easements without the prior consent of Mortgagee, as directed by Required Senior Creditors in Senior Creditor Certificates, and such other Persons as shall be required by any Financing Document shall be void and of no force and effect. If Mortgagor shall default in the performance or observance of any term, covenant or condition of any of the Easements on the part of Mortgagor, as grantee, to be performed or observed, and such default continues beyond applicable grace periods, then, without limiting the generality of the other -19- provisions of this Mortgage, and without waiving or releasing Mortgagor from any of its obligations hereunder, Mortgagee shall have the right, but shall be under no obligation, to pay any sums and to perform any act or take any action as may be reasonably necessary (or, if a Trigger Event shall have occurred and be continuing and, except in the case of any such Trigger Event that shall have resulted from a Bankruptcy Event in respect of Mortgagor or Mobile Energy, Mortgagee shall have received Senior Creditor Certificates with respect thereto as specified in Section 5.1(a) of the Intercreditor Agreement, pay any sums and perform any act or take any action) to cause all of the terms, covenants and conditions of the Easements on the part of Mortgagor, as grantee, to be performed or observed to be promptly performed or observed on behalf of Mortgagor to the end that the rights of Mortgagor in, to and under the Easements shall be kept unimpaired and free from any default. If Mortgagee shall make any payment or perform any act or take action in accordance with the preceding sentence, Mortgagee will notify Mortgagor of the making of any such payment, the performance of any such act or the taking of any such action. In any such event, Mortgagee and any person designated by Mortgagee shall have, and are hereby granted, the right to enter upon the Collateral or any part thereof at any time and from time to time for the purpose of taking or performing any such action. If any grantor under any of the Easements shall deliver to Mortgagee a copy of any notice of default sent by said grantor to Mortgagor, such notice shall constitute full protection to Mortgagee for any action taken or omitted to be taken by Mortgagee, in good faith, consistent with the foregoing, in reliance thereon. Mortgagor shall, from time to time, use reasonable efforts to obtain from the grantors under the Easements such certificates of estoppel with respect to compliance by Mortgagor with the terms of the Easements as may be requested by Mortgagee. Mortgagor shall exercise each individual option, if any, to extend or renew the term of the Easements in conformance with such option upon demand by Mortgagee made at any time, and, until the Secured Obligations are paid in full, Mortgagor hereby expressly authorizes and appoints Mortgagee its attorney-in-fact to exercise, either jointly or individually, any such option in the name of and upon behalf of Mortgagor if Mortgagor fails to do so within a reasonable time prior to the expiration thereof, which power of attorney shall be irrevocable and shall be deemed to be coupled with an interest. (b) Mortgagor shall not, without Mortgagee's prior consent, as directed by Required Senior Creditors in Senior Creditor Certificates, elect to treat any of the Easements as terminated under Subsection 365(h)(1) or any other provision of the Bankruptcy Code, after rejection or disaffirmance of any such Easements by the grantor thereunder or by any trustee of such party, and any such election made without such consent shall be void and ineffective. (c) Subject to Mortgagor's right to seek and retain certain offsets as permitted hereunder, Mortgagor hereby assigns, -20- transfers and sets over to Mortgagee as security all of Mortgagor's claims and rights to the payment of damages that may hereafter arise as a result of any rejection or disaffirmance of any of the Easements by the grantor thereof or by any trustee of such party, pursuant to the Bankruptcy Code. Mortgagee shall have and is hereby granted the right to proceed, in its own name or in the name of Mortgagor in respect of any claim, suit, action or proceeding relating to the rejection or disaffirmance of any Easements (including, without limitation, the right to file and prosecute, to the exclusion of Mortgagor, any proofs of claim, complaints, motions, applications, notices and other documents) in any case in respect of such grantor under the Bankruptcy Code, if (i) Mortgagor fails to do so within a reasonable time prior to the expiration of the period allowed therefor by applicable Law, except in the case of any such Trigger Event that shall have resulted from a Bankruptcy Event in respect of Mortgagor or Mobile Energy, or (ii) a Trigger Event shall have occurred and be continuing and, except in the case of any such Trigger Event that shall have resulted from a Bankruptcy Event in respect of Mortgagor or Mobile Energy, Mortgagee shall have received Senior Creditor Certificates with respect thereto as specified in Section 5.1(a) of the Intercreditor Agreement. This assignment constitutes a present, irrevocable, non-exclusive and unconditional assignment of the foregoing claims, rights and remedies, and shall continue in effect until the Secured Obligations shall have been satisfied and discharged in full. Any amounts received by Mortgagee as damages arising out of any such rejection of any Easements shall be applied in accordance with the provisions of Article VI of the Intercreditor Agreement. (d) In the event that, pursuant to Section 365(h)(2) or any other provision of the Bankruptcy Code, Mortgagor seeks to offset against the rent or other sums payable under any of the Easements the amount of any damages caused by the nonperformance by the grantor thereunder of such grantor's obligations under any of the Easements after rejection or disaffirmance thereof under the Bankruptcy Code, Mortgagor shall, prior to effecting such offset, notify Mortgagee in writing of Mortgagor's intent to do so, setting forth the amounts proposed to be so offset and the basis therefor. Mortgagee shall, as directed by Required Senior Creditors in Senior Creditor Certificates, have the right to object in writing (stating the reasons therefor) to all or any part of such offset, and, in the event of such objection, Mortgagor shall not effect any offset of the amounts so objected to by Mortgagee. If Mortgagee shall have failed to object as aforesaid within twenty (20) days after such notice, Mortgagee's consent will be deemed to have been given and Mortgagor may proceed to effect such offset in the amounts set forth in such notice. If, in the best business judgment of the Mortgagor, such offset is justified and Mortgagee has received the aforesaid notices and has not objected but its time to do so has not expired, then Mortgagor shall have the right to make such offset and Mortgagor shall set aside the offset amount as a reserve to be paid only if Mortgagee objects within the aforesaid time. -21- Mortgagor shall indemnify and hold Mortgagee and each of its officers, directors, employees and agents harmless from and against any and all claims, demands, actions, suits, proceedings, damages, losses, costs and expenses of every nature whatsoever (including, without limitation, reasonable legal fees and disbursements) arising from or relating to any such offset by Mortgagor. (e) Mortgagor shall, promptly after obtaining knowledge thereof, use all reasonable efforts to give prompt oral notice to Mortgagee of any actual or contemplated filing by or against any grantor of any Easement of a petition under the Bankruptcy Code, and give prompt written notice thereof to Mortgagee of such actual or contemplated filing. The aforesaid written notice shall set forth any information reasonably available to Mortgagor concerning the date or anticipated date of such filing, the court in which such petition was filed or is expected to be filed, and the relief sought or reasonably expected to be sought therein. Mortgagor shall, promptly after receipt thereof, deliver to Mortgagee any and all notices, summonses, , applications and other documents received by Mortgagor in connection with any such petition and any proceedings related thereto. (f) Subject to the second sentence of this paragraph (f), in the event that any action, proceeding, motion or notice shall be commenced or filed in respect of any grantor under any Easement or any part thereof, in connection with any case under the Bankruptcy Code, Mortgagee shall have, and is hereby granted, the option, to the exclusion of Mortgagor, exercisable upon notice from Mortgagee to Mortgagor, to conduct and control any such litigation with counsel of Mortgagee's choice. Mortgagee may proceed, in its own name or in the name of Mortgagor, in connection with any such litigation, if (i) Mortgagor fails to do so within a reasonable time prior to the expiration of the period allowed therefor by applicable Law and Mortgagee, if so directed to proceed by Required Senior Creditors in Senior Creditor Certificates, or (ii) a Trigger Event shall have occurred and be continuing and Mortgagee shall have received the Senior Creditor Certificates with respect thereto as specified in Section 5.1(a) of the Intercreditor Agreement, and Mortgagor agrees to execute any and all powers, authorizations, consents and other documents required by Mortgagee in connection therewith. Mortgagor shall, upon demand, pay to Mortgagee all costs and expenses (including without limitation, reasonable legal fees and disbursements) paid or incurred by Mortgagee in connection with the prosecution or conduct of any such proceedings, and, to the extent permitted by law, such costs and expenses shall be deemed expenses incurred in upholding the lien of this Mortgage and added to the Secured Obligations. Mortgagor shall not, without the prior consent of Mortgagee (which consent of Mortgagee shall not be unreasonably withheld), commence any action, suit, proceeding or case, or file any application or make any motion, in respect of any of the Easements in any such case under the Bankruptcy Code. -22- (g) In the event that a petition under the Bankruptcy Code shall be filed by or against Mortgagor, and Mortgagor, or anyone claiming through or under Mortgagor or a trustee in bankruptcy shall have the right to reject any of the Easements pursuant to Section 365(a) or any other provision of the Bankruptcy Code or a successor statute, Mortgagor shall give Mortgagee at least ten (10) days' prior written notice of the date on which application shall be made to the court for authority to reject any such Easement; provided, however, that if a trustee in bankruptcy shall have a right to reject any Easement in less than ten (10) days, then Mortgagor shall give such notice to Mortgagee immediately upon Mortgagor's obtaining knowledge of such application. Mortgagee shall have the right, but not the obligation (subject to the rights of a trustee in bankruptcy), to exercise such right, as directed by Required Senior Creditors in Senior Creditor Certificates, and Mortgagor hereby assigns such right to Mortgagee. If at any time any grantor under any Easements, or anyone holding by, through or under the grantor under any Easements or a trustee in bankruptcy, shall elect to reject such Easements pursuant to Section 365(a) or any other provision of the Bankruptcy Code, or a successor statute, thereby giving to Mortgagor the right to elect to treat such Easements as terminated pursuant to Section 365(h)(1) or any other provision of the Bankruptcy Code, or a successor statute, Mortgagee shall have the right to exercise such right if (i) Mortgagor fails to do so within a reasonable time prior to the expiration of the period allowed therefor by applicable Law and Mortgagee is so directed to proceed by Required Senior Creditors in Senior Creditor Certificates, or (ii) a Trigger Event shall have occurred and be continuing and, except in the case of any such Trigger Event that shall have resulted from a Bankruptcy Event in respect of Mortgagor or Mobile Energy, Mortgagee shall have received Senior Creditor Certificates in respect thereof as specified in Section 5.1(a) of the Intercreditor Agreement, and Mortgagor hereby assigns said right to Mortgagee on a non-exclusive basis. If either of the assignments provided for in this paragraph (g) is held to be enforceable, then Mortgagor, anyone claiming by, through or under Mortgagor or a trustee in bankruptcy, shall not exercise rights purportedly assigned to Mortgagor without the prior consent of Mortgagee, and if Mortgagee shall give such consent, the Mortgagor, anyone claiming by, through or under Mortgagor or a trustee in bankruptcy shall promptly exercise either of such rights. (h) To the extent permitted by applicable law, Mortgagor hereby assigns, transfers and sets over to Mortgagee the right, as directed by Required Senior Creditors in Senior Creditor Certificates, on a non-exclusive basis, to apply to the Bankruptcy Court under Section 365(d)(4) or any other provision of the Bankruptcy Code for an order extending the period during which any Easements may be rejected or assumed after the entry of any order for relief under Chapter 7 or Chapter 11 of the Bankruptcy Code in respect thereof. -23- MORTGAGE EVENTS OF DEFAULT/REMEDIES 18. Mortgage Events of Default. Any of the following events shall be deemed a "Mortgage Event of Default" under this Mortgage: (a) a Trigger Event under the Intercreditor Agreement occurs and is continuing; (in lieu of the following Mortgage Events of Default, the next draft of the Indenture will incorporate them as appropriate). (b) the failure by Mortgagor to perform or observe any covenant (other than a payment covenant) set forth in Sections 8, 10, 13, 14 and 15 hereof, and such failure continues for more than thirty (30) days after Mortgagor has actual knowledge of such failure; (c) the failure by Mortgagor to perform or observe any other covenant or agreement to be performed or observed by it hereunder (including a payment covenant or agreement) for more than thirty (30) days after Mortgagor receives written notice of such failure from Mortgagee; provided, however, that if (i) such failure cannot reasonably be remedied within such thirty-day period, (ii) such failure is susceptible of being remedied, (iii) Mortgagor has commenced to remedy such failure within such thirty-day period, (iv) Mortgagor is diligently and expeditiously remedying such failure and (v) Mortgagor certifies to Mortgagee that no other Mortgage Event of Default has occurred and is continuing, then such thirty-day period shall be extended to such date, not to exceed a total of ninety (90) days from the date of receipt of such written notice, as shall be necessary for Mortgagor diligently to remedy such failure. 19. Mortgagee's Right to Cure Defaults. If a Trigger Event shall have occurred and be continuing and, except in the case of any such Trigger Event that shall have resulted from a Bankruptcy Event in respect of Mortgagor or Mobile Energy, Mortgagee shall have received Senior Creditor Certificates with respect thereto as specified in Section 5.1(a) of the Intercreditor Agreement, Mortgagee or any Senior Secured Party (upon notice to Mortgagee and each other Senior Secured Party) may remedy the same in accordance with the applicable provisions hereof and of the Intercreditor Agreement and for such purpose shall have the right to enter upon the Collateral or any portion thereof without thereby becoming liable to Mortgagor or any person in possession thereof holding under Mortgagor. 20. Non-Waiver. The failure of Mortgagee to insist upon strict performance of any term of this Mortgage shall not be deemed to be a waiver of any term of this Mortgage. Mortgagor shall not be relieved of Mortgagor's obligation to pay or perform the Secured Obligations at the time and in the manner provided in -24- the Financing Documents by reason of (i) the failure to comply with any request of Mortgagor to take any action to foreclose this Mortgage or otherwise enforce any of the provisions hereof or of the Financing Documents or any other mortgage, deed of trust, security agreement, instrument or document evidencing, securing or guaranteeing payment of the Secured Obligations or any portion thereof, (ii) the release, regardless of consideration, of the whole or any part of the Collateral or any other security for the Secured Obligations or (iii) any agreement or stipulation between Mortgagee and any subsequent owner or owners of the Collateral or other Person extending the time of payment or otherwise modifying or supplementing the terms of this Mortgage, any other Financing Document or any other mortgage, deed of trust, security agreement, instrument or document evidencing, securing or guaranteeing payment or performance of the Secured Obligations or any portion thereof, without first having obtained the consent of Mortgagor (but without prejudice to the rights of Mortgagor under the Financing Documents), and in the latter event, Mortgagor shall continue to be obligated to pay the Secured Obligations at the time and in the manner provided in the Financing Documents and this Mortgage, as so extended, modified and/or supplemented, unless expressly released and discharged from such obligation by Mortgagee in accordance with the directions given pursuant to the Intercreditor Agreement. Regardless of consideration, and without the necessity for any notice to or consent by the holder of any subordinate Lien or other interest in the Collateral, Mortgagee may, in accordance with the directions given pursuant to the Intercreditor Agreement, release any Person at any time liable for the payment of the Secured Obligations or any portion thereof or all or any part of the security held for the Secured Obligations and may extend the time of payment or otherwise modify the terms of the Financing Documents, without in any manner impairing or affecting this Mortgage or the lien thereof or the priority of this Mortgage as so extended and modified, as security for the Secured Obligations over any such subordinate Lien or interest. Mortgagee may resort for the payment of the Secured Obligations to any other security held by Mortgagee in such order and manner as Mortgagee may, in accordance with the directions given pursuant to the Intercreditor Agreement, elect. Mortgagee may take action to recover the Secured Obligations, or any portion thereof, or to enforce any covenant hereof in each case in accordance with the terms hereof and of the Intercreditor Agreement, without prejudice to the right of Mortgagee thereafter to foreclose this Mortgage. Mortgagee shall not be limited exclusively to the rights and remedies herein stated but shall be entitled to every additional right and remedy now or hereafter afforded by Law or equity, subject to the terms of the Intercreditor Agreement with respect to the exercise thereof. The rights of Mortgagee under this Mortgage shall be separate, distinct and cumulative, and none shall be given effect to the exclusion of the others. No act of Mortgagee shall be construed as an election to proceed under any one provision herein to the exclusion of any other provision. -25- 21. Remedies. (a) Subject to the limitations set forth in Section ( ) and the Intercreditor Agreement, if any Trigger Event has occurred and be continuing and, except in the case of any such Trigger Event that shall have resulted from a Bankruptcy Event in respect of Mortgagor or Mobile Energy, Mortgagee shall have received Senior Creditor Certificates with respect thereto as specified in Section 5.1(a) of the Intercreditor Agreement, then, to the maximum extent permitted by Law, Mortgagee may exercise any right, power or remedy permitted to it hereunder, under any other Security Documents or by Law, and, without limiting the generality of the foregoing, Mortgagee may, personally or by its agents, to the maximum extent permitted by Law, do any or all of the following: (i) without assuming liability for the performance of any of Mortgagor's obligations hereunder or under the Project Contracts, enter and take possession of the Collateral or any part thereof, exclude Mortgagor and all persons claiming under Mortgagor whose claims are junior to this Mortgage, wholly or partly therefrom, and use, operate, manage and control the same either in the name of Mortgagor or otherwise as Mortgagee shall deem best, and upon such entry, from time to time at the expense of Mortgagor and the Collateral, make all such repairs, replacements, alterations, additions or improvements to the Collateral or any part thereof and, whether or not Mortgagee has so entered and taken possession of the Collateral or any part thereof, collect and receive all the Rents and apply the same, to the extent permitted by Law, to the payment of all expenses that Mortgagee may be authorized to make under this Mortgage, the remainder to be applied to the payment of the Secured Obligations until the same shall have been repaid in full; if Mortgagee demands or attempts to take possession of the Collateral or any portion thereof in the proper exercise of any rights hereunder, Mortgagor shall promptly turn over and deliver complete possession thereof to Mortgagee; and (ii) with or without entry: (A) subject to applicable Law, sell all or any part of the Collateral for cash at an auction or foreclosure sale held at such place or places and time and upon such notice and otherwise in such manner as may be required by Law, or in the absence of any such requirement, as Mortgagee may deem appropriate (and in taking such action, Mortgagee may act in accordance with an opinion of counsel, upon which Mortgagee may conclusively rely), and from time to time adjourn any such sale by announcement at the time and place specified for such sale or for such adjourned sale without further notice, except as may be required by Law; (B) proceed to protect and enforce its rights under this Mortgage, by suit for specific performance of any covenant contained herein or in any other Security Document or in aid of the execution of any power granted herein or in any other -26- Security Document, or for the foreclosure of this Mortgage (as a mortgage or otherwise) and the sale for cash of the Collateral under the judgment or decree of a court of competent jurisdiction, or for the enforcement of any other right as Mortgagee shall deem most effectual for such purpose (and in taking such action, Mortgagee may act in accordance with an opinion of counsel, upon which Mortgagee may conclusively rely); provided, however, that in the event of a sale, by foreclosure or otherwise, of less than all of the Collateral, this Mortgage shall continue as a lien on and security interest in the remaining portion of the Collateral, and Mortgagee shall not be obligated to sell upon credit unless Mortgagee shall have expressly consented in writing to a sale upon credit; or (C) exercise any or all of the remedies available to a secured party under the UCC, including, without limitation: (1) either personally or by means of a court appointed receiver, without notice to or demand upon Mortgagor take possession of all or any portion of the Collateral as shall be covered by the UCC and exclude therefrom Mortgagor and all persons claiming under Mortgagor, and thereafter hold, store, use, operate, manage, maintain and control, make repairs, replacements, alterations, additions and improvements to, and exercise all rights and powers of Mortgagor in respect of, any portion of the Collateral as shall be covered by the UCC; if Mortgagee demands or attempts to take possession of any portion of the Collateral, as shall be covered by the UCC in the proper exercise of any rights hereunder, Mortgagor shall promptly turn over and deliver complete possession thereof to Mortgagee; (2) without notice to or demand upon Mortgagor, make such payments and do such acts as Mortgagee (and in taking such action, Mortgagee may act in accordance with an opinion of counsel, upon which Mortgagee may conclusively rely) may deem necessary to protect its lien on and security interest in any portion of the Collateral as shall be covered by the UCC, including, without limitation, paying, purchasing, contesting or compromising any encumbrance that is prior to or superior to the lien and security interest granted hereunder, and in exercising any such powers or authority paying all expenses incurred in connection therewith; (3) require Mortgagor to assemble the Collateral as shall be covered by the UCC, or any portion thereof, at a place designated by Mortgagee and reasonably convenient to Mortgagor and Mortgagee, and promptly to deliver the portions of the Collateral as may be covered by the UCC to Mortgagee, or an agent or representative designated by it; Mortgagee, and its agents and representatives, shall have the right to enter upon the Site and property of Mortgagor to exercise Mortgagee's rights hereunder; -27- (4) sell, lease or otherwise dispose of such portions of the Collateral as may be covered by the UCC, with or without having such portions of the Collateral as may be covered by the UCC at the place of sale, and upon such terms and in such manner as Mortgagee may determine (and Mortgagee may be a purchaser at any such sale); and (5) unless the Collateral is perishable or threatens to decline speedily in value or is of a type customarily sold on a recognized market, Mortgagee shall give Mortgagor at least ten (10) days' prior notice of the time and place of any sale or other intended disposition, Mortgagor agreeing that such ten (10) day notice period is sufficient to constitute a commercially reasonable sale of the Collateral. (b) If a Trigger Event shall have occurred and be continuing and, except in the case of any such Trigger Event that shall have resulted from a Bankruptcy Event in respect of Mortgagor or Mobile Energy, Mortgagee shall have received Senior Creditor Certificates with respect thereto as specified in Section 5.1(a) of the Intercreditor Agreement, and the Secured Obligations shall have been declared to be immediately due and payable, or upon the actual or threatened waste to any part of the Collateral, Mortgagee, to the maximum extent permitted by Law, shall be entitled to the appointment of a receiver of the Collateral, without notice or demand, and without regard to the adequacy of the security for the Secured Obligations or the solvency of Mortgagor. Notwithstanding the foregoing, in the event of threatened waste to any part of the Collateral (but not actual waste), upon the occurrence and during the continuance of a Trigger Event and, except in the case of any such Trigger Event that shall have resulted from a Bankruptcy Event in respect of Mortgagor or Mobile Energy, after receipt by Mortgagee of the Senior Creditor Certificates with respect thereto as specified in Section 5.1(a) of the Intercreditor Agreement, Mortgagee shall provide notice to Mortgagor of its intent to appoint a receiver and shall permit Mortgagor a reasonable period of time to eliminate such threatened waste prior to the appointment of said receiver. Mortgagor hereby irrevocably consents to the appointment of a receiver pursuant to this paragraph (b) and, except as otherwise hereinbefore specifically provided or as required by Law, waives notice of any application therefor. Any such receiver or receivers shall have all the usual powers and duties of receivers in like or similar cases and all the powers and duties of a mortgagee in case of entry and shall continue as such and exercise all such powers until the date of confirmation of sale of the Collateral, unless such receivership is sooner terminated. Specifically, Mortgagee or any receiver shall be entitled to take possession of the Collateral from the owners, tenants and/or occupants of the whole or any part thereof and to collect and receive the Rents and the value of the use and occupation of the Collateral, or any part thereof, from the then owner, tenants and/or occupants thereof for the benefit of Mortgagee. -28- (c) In any sale under any provisions of this Mortgage upon the occurrence and during the continuation of a Trigger Event and, except in the case of any such Trigger Event that shall have resulted from a Bankruptcy Event in respect of Mortgagor or Mobile Energy, after receipt by Mortgagee of Senior Creditor Certificates with respect thereto as specified in Section 5.1(a) of the Intercreditor Agreement, or pursuant to any judgment or decree of court thereafter granted, the Collateral, to the maximum extent permitted by Law, may be sold in one or more parcels or as an entirety and in such order as Mortgagee may elect, without regard to the right of Mortgagor or any person claiming under Mortgagor to the marshalling of assets. The purchaser at any such sale shall take title to the Collateral or the part thereof so sold free and discharged of the estate of Mortgagor therein, the purchaser being hereby discharged from all liability to see to the application of the purchase money. Any person, including Mortgagee and any Senior Secured Parties, may purchase at any such sale. The purchaser of the Collateral or any successor shall succeed to all rights of Mortgagor, including any rights to proceeds of insurance and in and to all policies or certificates of insurance assigned and delivered to Mortgagee pursuant to this Mortgage and the Financing Documents. Upon the completion of any such sale by virtue of this paragraph (c), Mortgagee shall, to the extent permitted by applicable Law, execute and deliver to such purchaser an appropriate instrument that shall effectively transfer all of Mortgagor's estate, right, title, interest, property, claim and demand in and to the Collateral or portion thereof so sold. Upon the occurrence and during the continuance of a Trigger Event and, except in the case of any such Trigger Event that shall have resulted from a Bankruptcy Event in respect of Mortgagor or Mobile Energy, after receipt by Mortgagee of Senior Creditor Certificates with respect thereto as specified in Section 5.1(a) of the Intercreditor Agreement, Mortgagee is hereby irrevocably appointed the attorney-in-fact of Mortgagor in its name and stead to make all appropriate transfers and deliveries of the Collateral or any portions thereof so sold and, for that purpose, Mortgagee may execute all appropriate instruments of transfer, and may substitute one or more persons with like power. Mortgagor hereby ratifies all that said attorneys or such substitute or substitutes shall lawfully do or cause to be done as Mortgagor's attorney-in-fact consistent with the foregoing. Nevertheless, Mortgagor shall ratify and confirm, or cause to be ratified and confirmed, any such sale or sales by executing and delivering, or by causing to be executed and delivered, to Mortgagee or to such purchaser or purchasers all such instruments as may be advisable (in accordance with an opinion of counsel, upon which Mortgagee may conclusively rely) for such purpose, and as may be designated in such request. Mortgagor also authorizes said attorneys or such substitute or substitutes, upon the occurrence and during the continuance of a Trigger Event and, except in the case of any such Trigger Event that shall have resulted from a Bankruptcy Event in respect of Mortgagor or Mobile Energy, after Mortgagee shall have received Senior Creditor Certificates with respect -29- thereto as specified in Section 5.1(a) of the Intercreditor Agreement, to communicate in its own name with any party to any Project Contracts at any time, with regard to any matter relating to such Project Contracts. Any sale or sales made under or by virtue of this Mortgage, whether under the power of sale hereunder, or by virtue of judicial process or a judgment or decree of purchase and sale, to the extent not prohibited by Law, shall operate to divest all the estate, right, title, interest, property, claim and demand whatsoever, whether at Law or in equity, of Mortgagor in, to and under the Collateral, or any portions thereof so sold, and shall be a perpetual bar both at Law and in equity against Mortgagor and against any and all persons claiming or who may claim to have any rights with respect to the sale, or any part thereof, by, through or under Mortgagor. The powers and agency herein granted are coupled with an interest and are irrevocable. Upon a sale of the Collateral, in whole or in part, under and by virtue of the provisions of this Mortgage, every purchaser shall have immediate and peaceable possession of the Collateral to the extent sold; and if Mortgagor shall remain in possession after the effective date of such sale, such possession shall be as a tenancy at sufferance only, giving unto the purchaser all remedies by way of summary possession or otherwise under applicable Law for recovery of possession. (d) All rights of action under this Mortgage or the other Security Documents may, to the extent permitted by applicable Law, be enforced by Mortgagee without the possession or production thereof at any trial or other proceeding relative thereto. (e) Mortgagee shall have the right, from time to time, to bring an appropriate action to recover any sums required to be paid by Mortgagor under the terms of this Mortgage, as they become due, without regard to whether or not the Secured Obligations secured by this Mortgage shall be due, and without prejudice to the right of Mortgagee thereafter to bring an action of foreclosure, or any other action, for any default by Mortgagor existing at the time the earlier action was commenced. (f) Mortgagee may exercise any and all rights granted to "Leasehold Mortgagee" under any of the Conveyance Leases. (g) Mortgagee may consult, at Mortgagor's expense, with counsel (who may or may not be counsel to Mortgagor), and the opinion of such counsel shall be full and complete authorization and protection, and Mortgagee shall be entitled to conclusively rely on such opinion of counsel, in respect of any action taken or not taken or suffered by Mortgagee under this Mortgage. The proceeds (the "Proceeds") of any foreclosure, collection, recovery, receipt, appropriation, realization or sale pursuant to this Section 21 shall be applied by Mortgagee in accordance with Article VI of the Intercreditor Agreement. -30- 22. Mortgagor as Tenant Holding Over. In the event of any foreclosure sale by Mortgagee, Mortgagor shall be deemed a tenant holding over and shall forthwith deliver possession to the purchaser or purchasers at such sale or be summarily dispossessed according to provisions of Law applicable to tenants holding over. 23. Leases. Mortgagee is authorized (but not obligated) to subordinate this Mortgage to any Leases and to foreclose this Mortgage subject to the rights of any tenants of the Collateral, provided that the failure to so subordinate or to make any such tenants parties to any such foreclosure proceedings and to foreclose their rights will not be, nor be asserted to be by Mortgagor, a defense to any proceedings instituted by Mortgagee to collect the Secured Obligations. MISCELLANEOUS 24. Filing of Mortgage, etc. Mortgagor forthwith, upon the execution and delivery of this Mortgage and thereafter, from time to time, will cause this Mortgage and any security instrument creating a Lien or evidencing or perfecting the Lien hereof upon the Collateral and each instrument of further assurance to be filed, registered or recorded in such manner and in such places as may be required by any present or future Law in order to publish notice of and fully to protect, preserve and perfect the Lien hereof upon, and the interest of Mortgagee in the Collateral. Mortgagor will pay all filing, registration or recording fees, and all expenses incurred by Mortgagee incident to the preparation, execution and acknowledgment of this Mortgage, any mortgage or deed of trust supplemental hereto, any security instrument with respect to the Collateral and any instrument of further assurance, and all Federal, State, County, City and municipal taxes, duties, imposts, assessments and charges arising out of or in connection with the execution and delivery of this Mortgage, any mortgage or deed of trust supplemental hereto, any security instrument with respect to the Collateral or any financing statement, continuation statement or other instrument of further assurance, including without limitation all documentary stamp taxes and intangible personal property taxes, if any. Mortgagor shall hold harmless and indemnify Mortgagee, its successors and assigns, against any liability, damages, legal expenses, interest and penalties, and intervening Liens, incurred by reason of the imposition of any tax on the making and recording of this Mortgage. 25. Usury Laws. This Mortgage and the other Financing Documents are subject to the express condition that at no time shall Mortgagor be obligated or required to pay interest on the principal balance due under the Secured Obligations at a rate that could subject the holders of the Secured Obligations to either civil or criminal liability as a result of being in excess of the maximum interest rate that Mortgagor is permitted by Law to contract or agree to pay. If by the terms of this Mortgage or -31- any other Financing Document, Mortgagor is at any time required or obligated to pay interest on the principal balance due under any Financing Document at a rate in excess of such maximum rate, the rate of interest under the Financing Document shall be deemed to be immediately reduced to such maximum rate and the interest payments in excess of such maximum rate shall be applied toward reduction of principal. 26. Option To Release Certain Real Estate. Notwithstanding any other provisions of this Mortgage, Mortgagee hereby agrees, at any time and from time to time, provided Mortgagor is not in default under any of the provisions of this Mortgage, and that no Mortgage Event of Default then exists (of which a Responsible Officer of Mortgagee has actual knowledge), to release from this Mortgage any part of the Site with respect to which fee title is to be conveyed to a railroad, public utility or public body in order that railroad service, utility services or roads may be provided for the Collateral, upon receipt of: (a) Copies of the instrument of release, in recordable form; (b) A certificate of Mortgagor (i) stating that Mortgagor is not in default under any of the provisions of this Mortgage and that no Mortgage Event of Default then exists, (ii) giving an adequate legal description of that portion of the Site to be released, (iii) stating the purpose for which the release is desired and (iv) requesting such release; (c) If applicable, a copy of the instrument conveying the portion of the Site to be released; (d) Any instrument or instruments required by the terms of such release; (e) A certificate of the Independent Engineer stating that, in its opinion, (i) the release of the portion of the Site so proposed to be released is necessary or desirable in order to obtain railroad service, utility services or roads to benefit the Collateral, (ii) the release so proposed to be made will not impair the use or usefulness of the Collateral as a facility for the purposes for which it was designed and will not materially impair the means of ingress there into and egress therefrom and (iii) the release so proposed to be made is not reasonably expected to result in a Material Adverse Effect or materially increase the likelihood of the future occurrence of a Material Adverse Effect; and (f) an opinion of counsel that the release is permitted by the Financing Documents, all necessary consents, if any, have been obtained and all conditions precedent to such release have been satisfied; provided, however, that if the portion of the Site to be released has transportation or utility -32- facilities located upon it, Mortgagor shall retain an easement to use such facilities to the extent necessary for the efficient operation of the Collateral. Mortgagee agrees that upon receipt of the items required in this Section 26, it will promptly execute and deliver to Mortgagor the proposed release prepared by Mortgagor covering the portion of the Site to be released. In the event of any such release, Mortgagor shall not be entitled to any postponement, abatement or diminution of amounts payable on account of the indebtedness secured hereby. Mortgagor shall pay all costs (including without limitation reasonable legal fees, transfer taxes, and recording fees) relating to such release. 27. Release of Collateral. (a) Mortgagor shall not sell, lease (as lessor), transfer or dispose of any of the Collateral except in accordance with the Financing Documents. (b) Upon the request of Mortgagor, subject to compliance with the Financing Documents, Mortgagee shall, at Mortgagor's sole cost and expense, deliver and cause to be delivered to Mortgagor such instruments prepared by Mortgagor as are reasonably necessary to confirm the release of removed items of the Equipment from the lien of this Mortgage and cancel any security interest with respect thereto, provided that such request complies with the Financing Documents. Mortgagor shall pay all costs (including without limitation reasonable legal fees, transfer taxes, and recording fees) relating to such release. 28. Severability. In the event that any one or more of the provisions contained in this Mortgage shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision of this Mortgage, but this Mortgage shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein or therein. 29. Notices. All notices, certificates or other communications hereunder shall be sufficiently given and shall be deemed given three (3) Business Days after mailing by registered mail, postage prepaid, addressed as follows: if to Mortgagor, to _________________________________________________________________ with a copy to _______________________________________________________________ _______________________________________________________________; if to Mortgagee, to Bankers Trust Company, Four Albany Street, New York, New York 10006, with a copy to _________________________________________________________________ _____________. Any party hereto may, by written notice given hereunder, designate any additional or different addresses to which -33- subsequent notices, certificates or other communications shall be sent. 30. Amendments, Changes and Modifications. This Mortgage may not be effectively amended, restated, changed or otherwise modified, or terminated, except as permitted under the other Financing Documents. Mortgagor shall join in any such amendment, change, modified or termination if required for such agreement to be effective under applicable Law. No waiver of any term, covenant or provision of this Mortgage shall be effective unless given in writing by Mortgagee, and if so given by Mortgagee, shall be effective only in the specific instance in which given. 31. Fixture Financing Statement. This Mortgage shall be recorded in the Office of the Judge of Probate, Mobile County, Alabama and, from the date of its recording, this Mortgage shall be effective as a fixture financing statement filed with respect to all property constituting part of the Collateral that is or is to become fixtures. 32. Invalidity of Certain Provisions. If the lien of this Mortgage is invalid or unenforceable as to any part of the Collateral, the unsecured or partially secured portion of the Secured Obligations shall be completely paid prior to the payment of the remaining and secured or partially secured portion of the Secured Obligations and all payments made on the Secured Obligations, whether voluntary or under foreclosure or other enforcement action or procedure, shall be considered to have been first paid on and applied to the full payment of that portion of the Secured Obligations that is not secured or fully secured by the lien of this Mortgage. 33. No Merger. If both the lessor's and lessee's estates under any lease or any portion thereof that constitutes a part of the Collateral shall, at any time, become vested in one owner, this Mortgage and the lien created hereby shall not be destroyed or terminated by application of the doctrine of merger and in such event Mortgagee shall continue to have and enjoy all of the rights and privileges of Mortgagee as to the separate estates. In addition, upon the foreclosure of the lien of this Mortgage on the Collateral pursuant to the provisions hereof, any leases or subleases then existing and created by Mortgagor shall not be destroyed or terminated by application of the Law of merger or as a matter of Law or as a result of such foreclosure unless Mortgagee or any purchaser at any such foreclosure sale shall so elect. No act by or on behalf of Mortgagee or any such purchaser shall constitute a termination of any lease or sublease unless Mortgagee or such purchaser shall give written notice thereof to such tenant or subtenant. 34. Matters in Bankruptcy. To the extent permitted by applicable laws, Mortgagor hereby assigns to Mortgagee (a) its right under Section 365 of the United States Bankruptcy Code and -34- other applicable Laws to elect to assume or reject any or all of the Conveyance Leases in the event of the bankruptcy or insolvency of Mortgagor and to elect to remain in possession under each of the Conveyance Leases in the event of the bankruptcy of the lessor thereunder; and (b) its claims and rights to the payment of the damages arising from a rejection, if any, of any of the Conveyance Leases under Section 365 of the United States Bankruptcy Code or other applicable Laws, it being agreed, however, that provided no Mortgage Event of Default shall have occurred, Mortgagee shall not make any decisions that affect any of the Conveyance Leases in the event of the bankruptcy of the lessor thereunder, without Mortgagor's prior consent. 35. Environmental Matters. (a) Mortgagor shall comply, and shall use its best efforts to cause all other Persons occupying or conducting operations on the Site or at the Facilities to comply, in all material respects with all Environmental Requirements pursuant to Section 5.7 of the Indenture. (b) Mortgagor shall indemnify and hold Mortgagee harmless from and against any and all damages, penalties, fines, claims, Liens, suits, liabilities, costs (including cleanup costs) judgments and expenses (including attorneys', consultants' or experts' fees and expenses) of every kind and nature suffered by or asserted against Mortgagee as a direct or indirect result of (i) any warrant or representation made by Mortgagor regarding compliance with Environmental Requirements being false or untrue in any respect or (ii) Mortgagor, any of the Facilities, the Site or any other Person occupying or conducting operations on the Site or at the Facilities, that fail to comply with any Environmental Requirement, including, without limitation, any Environmental Requirement relating to the elimination or removal of Hazardous Materials. (c) Mortgagor's obligations to Mortgagee under this Section 35 shall not be limited to any extent by the term of the First Mortgage Bonds, the Tax Exempt Bonds or the other Financing Documents, and shall continue, survive, and remain in full force and effect notwithstanding payment in full and satisfaction of the Mortgage or any other Loan Document or foreclosure under this Mortgage or delivery of a deed-in-lieu of foreclosure. 36. Estoppel Affidavits. Mortgagor, within ten (10) days after written request from Mortgagee, shall furnish a written statement, setting forth the unpaid principal of, and interest on, the Secured Obligations and confirming that no offsets or defenses exist against payments owing to Mortgagee, including principal or interest. 37. Assignment. Mortgagee may assign this Mortgage to any successor Collateral Agent under and in accordance with the Intercreditor Agreement. -35- 38. Entire Agreement. Mortgagor acknowledges that the Financing Documents set forth the entire agreement and understanding of Mortgagor and Mortgagee with respect to the matters set forth therein, and no oral or other agreements, understanding, representations or warranties exist with respect to those matters other than those set forth in the Financing Documents. 39. Action Affecting the Collateral. (a) Mortgagor agrees to appear in and contest any action or proceeding purporting to adversely affect the security hereof or the rights or powers of Mortgagee and to pay all costs and expenses of Mortgagee, including costs of evidence of title and reasonable attorneys' fees and expenses, in any such action or proceeding in which Mortgagee may appear. (b) Mortgagee shall have the right to appear in and defend any action or proceeding brought with respect to the Collateral and to bring any action or proceeding, in the name and on behalf of Mortgagor or Mortgagee, that Mortgagee determines to be necessary or reasonably advisable to protect its interest in the Collateral if (i) Mortgagor fails to defend or bring such action or proceeding, as appropriate, in a prompt and diligent manner, or thereafter fails to proceed with diligence in the defense or prosecution of the same or (ii) a Trigger Event shall have occurred and be continuing and, except in the case of any such Trigger Event that shall have resulted from a Bankruptcy Event in respect of Mortgagor or Mobile Energy, Mortgagee shall have received Senior Creditor Certificates with respect thereto as specified in Section ( ) of the Intercreditor Agreement. 40. Actions by Mortgagee to Preserve the Collateral. Except as hereinbefore expressly provided, upon the occurrence and during the continuance of a Trigger Event and, except in the case of any such Trigger Event that shall have resulted from a Bankruptcy Event in respect of Mortgagor or Mobile Energy, after receipt by Mortgagee of Senior Creditor Certificates with respect thereto as specified in Section ( ) of the Intercreditor Agreement, Mortgagee or any Senior Secured Party (upon notice to Mortgagee and each other Senior Secured Party), without obligation so to do and without notice to or demand upon Mortgagor and without releasing Mortgagor from any obligation, may make any payment or do any act as and in the manner provided in the Financing Documents in such manner and to such extent as Mortgagee or such Senior Secured Party may deem necessary to protect the security hereof. In connection therewith (without limiting any general powers of Mortgagee or such Senior Secured Party), each of Mortgagee and such Senior Secured Party shall have and is hereby given the right, but not the obligation, (i) to the fullest extent permitted in Law and in accordance with the Intercreditor Agreement and the other Project Documents, to make additions, alterations, repairs and improvements to the Collateral that it may consider necessary to keep the Collateral in good condition and repair and (ii) in exercising such powers, -36- to pay necessary expenses, including engagement of counsel or other necessary or desirable consultants. Mortgagor shall, immediately upon demand therefor by Mortgagee or such Senior Secured Party, pay all costs and expenses incurred by Mortgagee or such Senior Secured Party in connection with the exercise by Mortgagee or such Senior Secured Party of the foregoing rights, including without limitation, costs of evidence of title, court costs, appraisals, surveys and reasonable attorneys' fees and expenses. 41. Remedies Not Exclusive. Mortgagee shall be entitled to enforce payment and performance of any indebtedness or obligations secured hereby and to exercise all rights and powers granted under this Mortgage or under any other Security Document or any other agreement or any Laws now or hereafter in force, notwithstanding some or all of the indebtedness and obligations secured hereby may now or hereafter be otherwise secured, whether by mortgage, deed of trust, pledge, Lien, assignment or otherwise. Neither the acceptance of this Mortgage nor its enforcement, whether by court action or pursuant to the power of sale or other powers herein contained, shall prejudice or in any manner affect Mortgagee's right to realize upon or enforce any other security now or hereafter held by Mortgagee, it being agreed that Mortgagee shall be entitled to enforce this Mortgage and any other security now or hereafter held by Mortgagee in such order and manner as it may in its absolute discretion determine. No remedy herein conferred upon or reserved is intended to be exclusive of any other remedy herein or by Law provided or permitted, but each shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at Law or in equity or by statute. Every right, power or remedy given by any of the Security Documents to Mortgagee may be exercised, concurrently or independently, from time to time and as often as may be deemed expedient by Mortgagee. 42. Relationship. Nothing herein is intended to create, or shall in any event or under any circumstance be construed as creating, a partnership, joint venture, tenancy-in- common, joint tenancy or other relationship of any nature whatsoever between Mortgagee and Mortgagor other than as lender and borrower. 43. Time of the Essence. TIME IS OF THE ESSENCE WITH RESPECT TO EACH AND EVERY COVENANT, AGREEMENT AND OBLIGATION OF MORTGAGOR UNDER THIS MORTGAGE AND THE OTHER FINANCING DOCUMENTS. 44. Severance of Counterclaims. In the event of foreclosure of this Mortgage, any and all counterclaims filed by Mortgagor against Mortgagee, to the extent permitted by Law, shall be severed by the court having jurisdiction over the foreclosure action, for all purposes from the basic foreclosure action, on an ex parte basis and without notice to Mortgagor. -37- Mortgagor, by its execution and delivery hereof, hereby expressly consents and agrees to such severance. 45. Notice Limiting Advances. Mortgagor hereby waives the right to limit the maximum principal amount that may be secured by this Mortgage and in accordance with the Indenture and agrees that all sums advanced under and pursuant to this Mortgage and any Financing Document shall be secured hereby. The filing or attempted filing of any notice limiting, or purporting to limit, the maximum principal amount that may be secured by this Mortgage shall be a Mortgage Event of Default. 46. Governing Law. THIS MORTGAGE IS GOVERNED BY AND SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF ALABAMA. 47. Shared Draftsmanship. If there shall be any ambiguity in the terms of this Mortgage, the doctrine of construction that holds that the language of the document shall be construed against its drafter shall not apply as all parties have shared in the drafting of this Mortgage. 48. No Third Party Beneficiary. This Mortgage and the other Security Documents are for the sole benefit of Mortgagor, Mortgagee, and all Senior Secured Parties, and are not for the benefit of any third party, and no third party shall gain any subrogation rights against Mortgagor or in, to or with respect to any portion of the Collateral by reason of this Mortgage or the provisions hereof. 49. Security Only. This Mortgage is granted for security purposes only. Accordingly, except as otherwise permitted by the Security Documents or as otherwise specifically provided in this Mortgage, Mortgagee shall not enforce Mortgagor's rights with respect to the Collateral until such time as a Trigger Event shall have occurred and be continuing and, except in the case of any such Trigger Event that shall have resulted from a Bankruptcy Event in respect of Mortgagor or Mobile Energy, Mortgagee shall have received Senior Creditor Certificates with respect thereto as specified in Section 5.1(a) of the Intercreditor Agreement. 50. Release by Mortgagee. Upon the payment, performance and satisfaction in full of the Secured Obligations, as set forth above in the granting clause of this Mortgage, Mortgagee shall at Mortgagor's request and expense, promptly release the lien of this Mortgage or reconvey the Collateral to Mortgagor or the person or persons entitled thereto by an appropriate instrument duly acknowledged and in proper form for recording. 51. Further Assurances. Mortgagor shall, at its sole cost and without expense to Mortgagee, on demand, do, execute, acknowledge and deliver all and every such further acts, deeds, -38- conveyances, mortgages, assignments, notices of assignment, transfers and assurances as Mortgagee shall, from time to time, reasonably require for better assuring, conveying, assigning, transferring and confirming unto Mortgagee the property and rights hereby mortgaged or assigned or intended now or hereafter so to be, or that Mortgagor may be or may hereafter become bound to convey, mortgage or assign to Mortgagee, or for carrying out the intention or facilitating the performance of the terms of this Mortgage, or for filing, registering or recording this Mortgage. 52. Conflict with Intercreditor Agreement. Notwithstanding anything to the contrary contained herein or in any of the other Financing Documents, all rights, duties, obligations and indemnities of the Mortgagee hereunder (including the standard of care pursuant to which it acts) shall be governed by the provisions of the Intercreditor Agreement, including but not limited to the exercise of any and all remedies hereunder. In the event of a conflict between this Agreement and the Intercreditor Agreement, the provisions of the Intercreditor Agreement shall control. 53. Effect of Termination of Intercreditor Agreement. Notwithstanding anything to the contrary contained herein, if the Intercreditor Agreement shall be terminated while this Mortgage remains in effect, each reference in this Mortgage to a Trigger Event shall be deemed to be a reference to a Mortgage Event of Default and no Senior Creditor Certificates under the Intercreditor Agreement shall be required to be received by Mortgagee prior to its exercise of remedies hereunder and the term "Mortgage Event of Default" shall be deemed to include any payment default with respect to the Secured Obligations. IN WITNESS WHEREOF, the parties hereby have caused this Agreement to be duly executed as or the date first written above. MORTGAGOR: MOBILE ENERGY SERVICES COMPANY, L.L.C., an Alabama limited liability company By:___________________________ Name:______________________ Title:_____________________ MORTGAGEE: BANKERS TRUST COMPANY, a New York banking corporation -39- By:___________________________ Name:______________________ Title:_____________________ STATE OF ___________ ) ) ss. COUNTY OF __________ ) The foregoing instrument was acknowledged before me this ____ day of _______ 1995, by _____________________, of MOBILE ENERGY SERVICES COMPANY, L.L.C., an Alabama limited liability company, on behalf of the company. The above-named individual ( ) is personally known to me or ( ) has produced the following identification ______________________ which is current or has been issued within the past five years and bears a serial or other identifying number and did (did not) take an oath. ___________________________________ Print Name:________________________ NOTARY PUBLIC-STATE OF ____________ Commission Number:_________________ My commission expires:_____________ (Notarial Seal) STATE OF ___________ ) ) ss. COUNTY OF __________ ) The foregoing instrument was acknowledged before me this ____ day of _______ 1995, by _____________________, of BANKERS TRUST COMPANY, a New York banking corporation, on behalf of the corporation. The above-named individual ( ) is personally known to me or ( ) has produced the following identification ______________________ which is current or has been issued within the past five years and bears a serial or other identifying number and did (did not) take an oath. ___________________________________ Print Name:________________________ NOTARY PUBLIC-STATE OF ____________ Commission Number:_________________ My commission expires:_____________ (Notarial Seal) -40- EXHIBIT "A" THE LEASED PREMISES (To be supplied by the title company) -1- EXHIBIT "B" THE CONVEYANCE LEASES (To be confirmed with the title company) ALL OF THE FOLLOWING DOCUMENTS HAVE BEEN CONVEYED BY MOBILE ENERGY SERVICES COMPANY, INC. (FORMERLY KNOWN AS TO MOBILE ENERGY SERVICES HOLDINGS, INC.) TO MOBILE ENERGY SERVICES COMPANY, L.C.C. BY VIRTUE OF THAT CERTAIN OMNIBUS DEED, BILL OF SALE, GENERAL ASSIGNMENT AND CONVEYANCE, OF EVEN DATE HEREWITH: a) That certain Construction, Financing and Installment Sale Agreement between THE INDUSTRIAL DEVELOPMENT BOARD OF THE CITY OF MOBILE, ALABAMA and SCOTT PAPER COMPANY, dated as of April 1, 1973, recorded in the Office of the Judge of Probate, Mobile County, Alabama in Real Property Book ____ at Page ____, as amended by a First Supplemental Construction, Financing and Installment Sale Agreement, dated as of September 1, 1976, recorded in the Office of the Judge of Probate, Mobile County, Alabama in Real Property Book 1625 at Page 496, and a Second Supplemental Financing and Installment Sale Agreement, dated as of October 1, 1980, recorded in the Office of the Judge of Probate, Mobile County, Alabama in Real Property Book 2159 at Page 199, as partially assigned to MOBILE ENERGY SERVICES COMPANY, INC. by that certain Lease and Assignment Agreement, dated as of December 12, 1994. b) That certain Construction, Financing and Installment Sale Agreement between THE INDUSTRIAL DEVELOPMENT BOARD OF THE CITY OF MOBILE, ALABAMA and SCOTT PAPER COMPANY, dated as of September 1, 1976, recorded in the Office of the Judge of Probate, Mobile County, Alabama in Real Property Book 1625 at Page 541, as partially assigned to MOBILE ENERGY SERVICES COMPANY, INC. by that certain Lease and Assignment Agreement, dated as of December 12, 1994. c) That certain Woodyard Facilities Lease and Agreement between THE INDUSTRIAL DEVELOPMENT BOARD OF THE CITY OF MOBILE, ALABAMA and SCOTT PAPER COMPANY, dated as of December 1, 1983. d) That certain Utilities Land Sublease between SCOTT PAPER COMPANY and THE INDUSTRIAL DEVELOPMENT BOARD OF THE CITY OF MOBILE, ALABAMA, dated as of December 1, 1983, recorded in the Office of the Judge of Probate, Mobile County, Alabama in Real Property Book 2557 at Page 176, as amended by that certain Amendment No. 1 to Utilities Land Sublease, dated as of December 1, 1984, and by that certain Amendment No. 2 to Utilities Land Sublease, dated as of November 8, 1994. -1- e) That certain Woodyard Land Sublease No. 2 between THE INDUSTRIAL DEVELOPMENT BOARD OF THE CITY OF MOBILE, ALABAMA and SCOTT PAPER COMPANY, dated as of December 1, 1984. f) That certain Land Lease between THE INDUSTRIAL DEVELOPMENT BOARD OF THE CITY OF MOBILE, ALABAMA and SCOTT PAPER COMPANY, dated as of December 1, 1984. g) That certain Facilities Lease and Agreement between THE INDUSTRIAL DEVELOPMENT BOARD OF THE CITY OF MOBILE, ALABAMA and SCOTT PAPER COMPANY, dated as of December 1, 1984, as amended by that certain First Supplemental Facilities Lease and Agreement, dated as of June 1, 1985, recorded in the Office of the Judge of Probate, Mobile County, Alabama in Real Property Book 2770, Page 2770, at Page 240, and that certain Second Supplemental Facilities Lease and Agreement, dated as of November 8, 1994, as assigned by that certain Sublease and Assignment Agreement, dated as of December 12, 1994. h) That certain Lease and Agreement between THE INDUSTRIAL DEVELOPMENT BOARD OF THE CITY OF MOBILE, ALABAMA and SCOTT PAPER COMPANY, dated as of December 1, 1984, recorded in the Office of the Judge of Probate, Mobile County, Alabama in Real Property Book 2702 at Page 436, as amended by that certain Amendment No. 1 to Lease and Agreement, dated as of November 8, 1994, and by Amendment No. 2 to Lease and Agreement, dated as of December 9, 1994, as assigned by that certain Lease Assignment and Assumption Agreement between SCOTT PAPER COMPANY and MOBILE ENERGY SERVICES COMPANY, INC., dated as of December 12, 1994. i) That certain Recovery Boiler Facilities Lease and Agreement between THE INDUSTRIAL DEVELOPMENT BOARD OF THE CITY OF MOBILE, ALABAMA and SCOTT PAPER COMPANY, dated as of December 1, 1984, recorded in the Office of the Judge of Probate, Mobile County, Alabama in Real Property Book ____ at Page ____, as assigned to MOBILE ENERGY SERVICES COMPANY, INC. by that certain Lease Assignment and Assumption Agreement, dated as of December 12, 1994. j) That certain Land Lease between SCOTT PAPER COMPANY and THE INDUSTRIAL DEVELOPMENT BOARD OF THE CITY OF MOBILE, ALABAMA dated as of December 1, 1994, recorded in the Office of the Judge of Probate, Mobile County, Alabama in Real Property Book ____ at Page ____. k) That certain Lease and Assignment Agreement between SCOTT PAPER COMPANY and MOBILE ENERGY SERVICES COMPANY, INC., dated as of December 12, 1994. l) That certain Lease Agreement between SCOTT PAPER COMPANY and MOBILE ENERGY SERVICES COMPANY, INC., dated as of December 12, 1994, a Memorandum of Lease of which has been recorded -2- in the Office of the Judge of Probate, Mobile County, Alabama in Real Property Book 4222 at Page 1240. m) That certain Lease and Assignment Agreement between SCOTT PAPER COMPANY and MOBILE ENERGY SERVICES COMPANY, INC., dated as of December 12, 1994. n) That certain Supplementary Lease Agreement between SCOTT PAPER COMPANY and MOBILE ENERGY SERVICES COMPANY, INC., dated as of December 12, 1994, a Memorandum of Lease of which has been recorded in the Office of the Judge of Probate, Mobile County, Alabama in Real Property Book 4222 at Page 1248, as amended by that certain letter agreement, dated as of December 15, 1994. -3- EXHIBIT "C" THE EASEMENTS (To be confirmed with the title company) 1. That certain Easement Deed between S.D. WARREN COMPANY and MOBILE ENERGY SERVICES COMPANY, INC., dated as of December 12, 1994, recorded in the Office of the Judge of Probate, Mobile County, Alabama in Real Property Book ____ at Page ____, as assigned to Mortgagee by that certain Omnibus Deed, Bill of Sale, General Assignment and Conveyance, of even date herewith, and to be recorded in the Office of the Judge of Probate, Mobile County, Alabama. 2. That certain Easement Deed between SCOTT PAPER COMPANY and MOBILE ENERGY SERVICES COMPANY, INC., dated as of December 12, 1994, recorded in the Office of the Judge of Probate, Mobile County, Alabama in Real Property Book ____ at Page ____, as assigned to Mortgagee by that certain Omnibus Deed, Bill of Sale, General Assignment and Conveyance, of even date herewith, and to be recorded in the Office of the Judge of Probate, Mobile County, Alabama. 3. That certain Easement Deed between SCOTT PAPER COMPANY and MOBILE ENERGY SERVICES COMPANY, INC., dated as of December 12, 1994, recorded in the Office of the Judge of Probate, Mobile County, Alabama in Real Property Book ____ at Page ____, as assigned to Mortgagee by that certain Omnibus Deed, Bill of Sale, General Assignment and Conveyance, of even date herewith, and to be recorded in the Office of the Judge of Probate, Mobile County, Alabama. -1- EXHIBIT "D" DEFINITIONS Capitalized terms used but not defined in this Mortgage shall have the following meanings: (To be supplied from the Trust Indenture) -2- EX-99 10 EXHIBIT B-5(B) Exhibit B-5(b) DRAFT 6/21/95 ASSIGNMENT AND SECURITY AGREEMENT between MOBILE ENERGY SERVICES COMPANY, L.L.C., as Debtor, and BANKERS TRUST COMPANY, as the Secured Party Dated as of (_____), 1995 TABLE OF CONTENTS Page 1. Definitions and other Provisions of Interpretation . . . -1- 2. Creation of Security Interest . . . . . . . . . . . . . . -1- 3. Representations, Warranties and Covenants . . . . . . . . -4- 4. Default . . . . . . . . . . . . . . . . . . . . . . . . . -6- 5. Rights and Remedies Upon Security Agreement Event of Default . . . . . . . . . . . . . . . . . . . . . . . . -6- 6. Assignment of Governmental Approvals . . . . . . . . . . -8- 7. Security Interest Absolute . . . . . . . . . . . . . . . -8- 8. Attorney-in-Fact . . . . . . . . . . . . . . . . . . . . -9- 9. Secured Party and Senior Secured Parties May Perform . -10- 10. Debtor Remains Liable . . . . . . . . . . . . . . . . -10- 11. Indemnification; Subrogation; Waiver of Offset . . . . -10- 12. Reasonable Care . . . . . . . . . . . . . . . . . . . -11- 13. Waivers of Rights Inhibiting Enforcement . . . . . . . -11- 14. No Duty on Secured Party's Part . . . . . . . . . . . -12- 15. Notices . . . . . . . . . . . . . . . . . . . . . . . -12- 16. Other Remedies . . . . . . . . . . . . . . . . . . . . -12- 17. Waiver . . . . . . . . . . . . . . . . . . . . . . . . -12- 18. Time of Essence . . . . . . . . . . . . . . . . . . . -12- 19. Successors and Assigns . . . . . . . . . . . . . . . . -12- 20. Headings . . . . . . . . . . . . . . . . . . . . . . . -12- 21. Governing Law . . . . . . . . . . . . . . . . . . . . -12- 22. Amendments, Changes and Modifications . . . . . . . . -13- i 23. Assignment . . . . . . . . . . . . . . . . . . . . . . -13- 24. Severability . . . . . . . . . . . . . . . . . . . . . -13- 25. Secured Party Not Liable . . . . . . . . . . . . . . . -13- 26. No Recourse . . . . . . . . . . . . . . . . . . . . . -13- 27. Counterparts . . . . . . . . . . . . . . . . . . . . . -13- 28. Continuing Assignment, Pledge and Security Interest . -14- 29. Security Only . . . . . . . . . . . . . . . . . . . . -14- 30. Payments Set Aside . . . . . . . . . . . . . . . . . . -14- 31. Further Assurances . . . . . . . . . . . . . . . . . . -14- 32. Shared Drafting . . . . . . . . . . . . . . . . . . . -14- 33. Conflict with Intercreditor Agreement; Conflict with Disbursement Agreement . . . . . . . . . . . . . . . . -14- 34. Effect of Termination of Intercreditor Agreement . . . -15- ii This ASSIGNMENT AND SECURITY AGREEMENT (this "Security Agreement"), dated as of ( ), 1995, between MOBILE ENERGY SERVICES COMPANY, L.L.C., an Alabama limited liability company ("Debtor"), and BANKERS TRUST COMPANY, a New York corporation, as Collateral Agent under the Intercreditor Agreement referred to below (the "Secured Party"). W I T N E S S E T H : WHEREAS, in consideration of (i) the execution and delivery by the Secured Party and the Senior Secured Parties (as defined below) of the Financing Documents (as defined below) to which they are parties, (ii) the Senior Secured Parties making available to Debtor the Financing Commitments (as defined below) and advancing the Financing Liabilities (as defined below) and (iii) the Secured Party providing certain services under this Agreement, the Mortgage (as defined below), the Intercreditor Agreement and any other Financing Documents to which the Secured Party is a party, the Secured Party requires Debtor to grant the security interest contemplated by this Agreement to the Secured Party to secure the Secured Obligations (as defined below); and WHEREAS, this Agreement is intended as security for the Secured Obligations. NOW, THEREFORE, in consideration of the premises set forth above and the mutual covenants contained herein, in order to induce each Senior Secured Party to issue or make available the Secured Obligations pursuant to the terms and provisions of the Financing Documents to which each such Senior Secured Party is a party and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and FOR THE PURPOSE OF SECURING the payment and performance of the Secured Obligations, which Secured Obligations may increase, decrease and increase again, from time to time, the parties hereto hereby agree as follows: 1. Definitions and other Provisions of Interpretation. For all purposes of this Agreement, except as otherwise expressly provided in this Agreement or unless the context otherwise requires, all terms used herein shall have the meanings set forth in Appendix A. 2. Creation of Security Interest. (a) As security for the full payment, observance and performance when due (whether at stated maturity, by acceleration or otherwise) of any and all of the Secured Obligations now existing or hereafter arising, Debtor hereby mortgages, pledges and collaterally assigns to the Secured Party, and grants to and in favor of the Secured Party a continuing lien upon, and a continuing security interest in, all estate, right, title and interest (whatever it may be) of Debtor in, to and under the following (whether now existing or hereafter acquired, whether or not the same is now contemplated, anticipated or foreseeable, whether or not the same is subject to Article 8 or 9 of the Uniform Commercial Code or constitutes Collateral by reason of one or more than one of the following paragraphs and wherever the same may be located) (collectively, the "Collateral"): (i) all Project Contracts and any other Contract, commitment or understanding heretofore or hereafter executed by (or on behalf of) Debtor in connection with the Energy Complex, the Site or any of the Project Documents (the "Assigned Agreements"), including (A) all rights of Debtor to receive monies due and to become due, and all monies actually received by Debtor, under or pursuant to the Assigned Agreements, (B) all rights of Debtor to receive proceeds of any performance or payment bond, insurance, indemnity, warranty or guaranty with respect to the Assigned Agreements, (C) all claims of Debtor for damages arising out of or for breach of or default under the Assigned Agreements and (D) all rights of Debtor to take any action to terminate, amend, supplement, modify or waive performance of the Assigned Agreements, to perform thereunder and to compel performance and otherwise exercise all remedies thereunder; provided, however, that unless a Trigger Event shall have occurred and be continuing and, except in the case of any Trigger Event that shall have resulted from a Bankruptcy Event in respect of either of the Mobile Energy Parties, the Secured Party shall have received the Senior Creditor Certificates specified in Section 5.1(a) of the Intercreditor Agreement, Debtor may exercise all of the foregoing rights in any lawful manner not inconsistent with this Agreement, the Mortgage or any of the other Security Documents; (ii) all automobiles, trucks, boats and other rolling stock or moveable personal property ("Rolling Stock"), including Rolling Stock for which the title thereto is evidenced by a certificate of title issued by the United States or a state that permits or requires a lien thereon to be evidenced upon such certificate, in which Debtor now or at any time in the future may have an interest. In connection therewith, Debtor shall notify the Secured Party before acquiring any such Rolling Stock, and provide the Secured Party with (A) all lien entry forms and similar documents, duly completed, executed and acknowledged, (B) the certificates of title to such Rolling Stock and (C) such other information or documents, in each case, to the extent required or reasonably desirable in order to enable the Secured Party to perfect the lien granted hereunder on such Rolling Stock. Upon execution of such lien entry forms and other documents by the Secured Party, Debtor shall, at its sole cost and expense, cause such lien entry forms and other documents to be presented to the appropriate authorities in order to perfect the lien granted hereunder on such Rolling Stock for the benefit of the Secured Party; (iii) to the extent permitted by Law, all Governmental Approvals relating to the Energy Complex; provided, however, -2- that any of such Governmental Approvals that by their terms or by operation of Law would become void, voidable, terminable or revocable or would constitute a breach or default thereunder if pledged or assigned hereunder or if a security interest therein were granted hereunder are expressly excepted and excluded from the lien and terms of this Agreement to the extent necessary to avoid such voidness, voidability, terminability or revocability; (iv) all Equipment (as such term is defined in the Mortgage); (v) all accounts (as defined in the Uniform Commercial Code), together with any right to payment for goods sold or leased or for services rendered in connection with such accounts, whether or not such right to payment has been earned by performance, and all agreements, rights, interests, inventory (including fuel supplies), goods, chattel paper, documents, instruments, general intangibles, fixtures, trade fixtures, consumer goods, money and other assets owned by Debtor on the date hereof or hereafter arising or acquired, including the 1994 Bonds, the Improvements (as such term is defined in the Mortgage), and designs, plans and specifications relating to the Site and the facilities owned by Debtor on the date hereof or hereafter acquired, if applicable, all offsets or allowances under the Clean Air Act Amendments of 1990 and any implementing state Laws in respect thereof and any right, title or interest of Debtor under any indemnity, warranty or guaranty in respect of the Site and the Energy Complex or of any of the foregoing and any rents, revenues, incomes and profits in respect of the Site and the Energy Complex; (vi) all proceeds of and any unearned premiums on any insurance policies covering the Collateral, including the right to receive the proceeds of any insurance, judgments or settlements made in lieu thereof for damage to the Collateral; (vii) (A) the Intercreditor Agreement Accounts, all sums of money, from any source whatsoever, now or hereafter transferred to and comprising the Intercreditor Agreement Accounts or delivered to the Secured Party for deposit therein, including all credit balances therein, any and all cash and investments at any time on deposit in the Intercreditor Agreement Accounts and any and all interest and dividends or other income derived from such monies and investments, and (B) all statements, certificates, passbooks and instruments representing the Intercreditor Agreement Accounts and all other property from time to time received, receivable or otherwise distributed in respect of or in exchange for the Intercreditor Agreement Accounts; and (viii) to the extent not included in the foregoing, all proceeds, products and accessions of and to any and all of -3- the foregoing, including "proceeds" (within the meaning of the Uniform Commercial Code) and whatever is received upon any collection, exchange, sale or other disposition of any of the Collateral, and any property into which any of the Collateral is converted, whether cash or noncash proceeds, and any and all other amounts paid or payable under or in connection with any of the Collateral. Notwithstanding the foregoing, the Security Interest granted hereby in favor of the Secured Party shall be released without condition as to monies deposited into any Indenture Account or Tax-Exempt Indenture Account upon the deposit of such monies therein, and the Collateral shall not include, and no Security Interest is granted hereby in, any right, title or interest of Debtor in any Indenture Account or Tax-Exempt Indenture Account, all sums of money, from any source whatsoever, now or hereafter transferred to or deposited into any Indenture Account or Tax- Exempt Indenture Account or delivered to the Indenture Trustee or the Tax-Exempt Indenture Trustee for deposit therein, including all credit balances therein, any and all cash and investments at any time on deposit in any Indenture Account or any Tax-Exempt Indenture Account, and any and all interest, dividends and other income derived from such monies and investments and all certificates, passbooks and instruments representing any Indenture Account or Tax-Exempt Indenture Account and all other property from time to time received, receivable or otherwise distributed in respect of or in exchange for any Indenture Account or Tax-Exempt Indenture Account. It is the intention of the parties that the foregoing description of the Collateral shall be sufficient, together with the description of the Collateral set forth in the Mortgage, to enable the Secured Party to take possession of, or foreclose upon, all of the right, title and interest of Debtor in and to the Shared Collateral, including the Site and the Energy Complex and any and all real property and personal property, tangible and intangible, used or useable in connection therewith, and to enable the Secured Party or its designee to, in accordance with the terms hereof and of the Mortgage, operate, sell or otherwise dispose of the entire interest of Debtor in and to the Shared Collateral, including the Site and the Energy Complex or any part thereof, upon the occurrence and during the continuance of a Trigger Event and, except in the case of any such Trigger Event that shall have resulted from a Bankruptcy Event in respect of either of the Mobile Energy Parties, after receipt by the Secured Party of the Senior Creditor Certificates specified in Section 5.1(a) of the Intercreditor Agreement; provided, however, that all of the Collateral is hereby assigned to the Secured Party solely as security, and the Secured Party shall have no duty, liability or obligation whatsoever to Debtor with respect to any of the Collateral, unless the Secured Party so elects in writing consistent with its rights under this Agreement. (b) This Agreement secures, in accordance with the provisions hereof, the Secured Obligations. -4- 3. Representations, Warranties and Covenants. Debtor hereby represents, warrants and covenants as follows: (a) The Security Interest granted and created pursuant to this Agreement is a legal and valid security interest in the Collateral now owned by Debtor or hereafter acquired. (b) The Security Interest granted and created pursuant to this Agreement (i) with respect to such of the Collateral in which a security interest may be perfected by the filing of a Financing Statement under the Uniform Commercial Code will, upon the filing of the necessary Financing Statements in all appropriate jurisdictions, create a perfected first priority security interest in such Collateral now owned by Debtor or hereafter acquired, prior and superior to all other Liens (other than Permitted Liens), and (ii) with respect to all of the other Collateral to which the Uniform Commercial Code is applicable (the "Possession Collateral") will, upon the Secured Party's taking possession of the Possession Collateral, create a perfected first priority security interest in the Possession Collateral now owned by Debtor or hereafter acquired, prior and superior to all other Liens (other than Permitted Liens). (c) Debtor is the legal and beneficial owner of the Collateral now owned by it, and will be the legal and beneficial owner of the interest in the Collateral hereafter acquired by it, free and clear of all Liens (other than Permitted Liens). (d) No authorization, approval or other action by, and no notice to or filing with, any Governmental Authority, any regulatory body or any other Person is required of Debtor with respect to the execution, delivery and performance of, or the grant of the Security Interest pursuant to, this Agreement (other than the filing of the Financing Statements referred to in Section 3(b)). (e) Debtor shall notify the Secured Party promptly in writing of any claim against the Collateral adverse to the interest of the Secured Party hereunder. (f) Debtor agrees that from time to time upon the request of the Secured Party, Debtor will, at its sole cost and expense, promptly execute and deliver all further instruments and documents, and take all further action, that may be necessary or advisable, or that the Secured Party may request, in order to perfect, maintain, preserve and protect the Security Interest granted or purported to be granted hereby in the Collateral, maintain, preserve and protect the Collateral, or to enable the Secured Party to exercise and enforce its rights and remedies hereunder with respect to the Collateral. Without limiting the generality of the foregoing, Debtor will (i) if any Collateral shall be evidenced by a promissory note or other instrument, deliver -5- and pledge to the Secured Party hereunder such note or instrument duly endorsed and accompanied by duly executed instruments of transfer or assignment, all in form and substance satisfactory to the Secured Party, and (ii) execute and file such financing or continuation statements, or amendments thereto and assignments thereof, and such other instruments, endorsements or notices, as may be necessary, or as the Secured Party may request, in order to perfect, maintain, preserve and protect the Security Interest granted or purported to be granted hereby. Debtor hereby authorizes the Secured Party to file one or more financing or continuation statements, and amendments thereto and assignments thereof, relating to all or any part of the Collateral without the signature of Debtor where permitted by Law. (g) Debtor shall keep and maintain, at its sole cost and expense, satisfactory and complete records of the Collateral. Debtor shall furnish to the Secured Party from time to time statements and schedules further identifying and describing the Collateral and such other reports in connection with the Collateral (including such file search reports from such Uniform Commercial Code and other filing and recording offices and such opinions of counsel relating to the Collateral and the attachment and perfection of the Security Interest) as the Secured Party may request. (h) Debtor shall not create, incur or permit to exist, and shall defend the Collateral against and take such other action as is necessary to remove, any Lien or claim on or to the Collateral, other than Permitted Liens, and will defend the right, title and interest of the Secured Party in and to any of the Collateral against the claims and demands of all Persons whomsoever. Except with respect to Permitted Liens, Debtor shall not file or suffer to be on file, or authorize or permit to be filed or to be on file, in any jurisdiction, any financing statement or like instrument with respect to the Collateral in which the Secured Party is not named as the sole secured party. (i) Debtor shall notify the Secured Party promptly if any tangible items of Collateral, or any items that are to become Collateral, are to be stored for any length of time (other than temporary storage incident to transportation to the Site) in any location other than the Site. The notice shall specify, in such detail as is required by the Secured Party, (i) the items that are to be stored, (ii) the location at which such items are to be stored and the name and address of the owner and operator of the storage facility, (iii) the length of time that such items are to be stored at such location and (iv) the name of the Person who is the owner of such items. To the extent necessary, Debtor shall execute additional security agreements, financing statements and other related documents, covering the items that are to be stored, so as to perfect a first priority -6- security interest therein in favor of the Secured Party. If for any reason a first priority security interest cannot be perfected in the items stored or to be stored, Debtor shall promptly transport such items to the Site. Upon instructions from the Secured Party, Debtor shall obtain such additional insurance on the Collateral stored at any location other than the Site as the Secured Party, based on the advice of the Independent Insurance Advisor, reasonably deems necessary, consistent with the requirements of the Financing Documents, to protect the Secured Party's interests. (j) In the event that Debtor shall receive directly from any party to the Assigned Agreements any payments thereunder, Debtor shall receive such payments in constructive trust for the benefit of the Secured Party, shall segregate such payments from other funds of Debtor and shall forthwith transmit and deliver such payments to the Secured Party in the same form as so received (with any necessary endorsements). 4. Default. Any of the following events shall be deemed an "Security Agreement Event of Default" under this Agreement: (a) a "Trigger Event" occurs and is continuing under the Intercreditor Agreement; (in lieu of the following Security Agreement Events of Default, the Indenture will incorporate them as appropriate) (b) the failure by Debtor to perform or observe any covenant set forth in Section 3(e), 3(f), 3(h) or 3(j), and such failure continues for more than thirty (30) days after Debtor has knowledge of such failure; (c) the failure by Debtor to perform or observe any covenant set forth in Sections 3(g) and 3(i), and such failure continues for more than thirty (30) days after Debtor has received written notice of such failure from the Secured Party or any Senior Secured Party; or (d) the failure by Debtor to perform or observe any other covenant or agreement to be performed or observed by it hereunder (including a payment covenant or agreement) for more than thirty (30) days after either of the Mobile Energy Parties has knowledge of such failure; provided, however, that if (and for so long as an Authorized Officer of Debtor provides an Officer's Certificate certifying that) (i) such failure is susceptible of being remedied, and either of the Mobile Energy Parties is diligently attempting to remedy such failure, and (ii) no other Security Agreement Event of Default has occurred and is continuing, then Debtor may continue to effect such cure of the default for an additional one hundred twenty (120) days. -7- 5. Rights and Remedies Upon Security Agreement Event of Default. (a) Upon the occurrence and during the continuance of a Trigger Event and, except in the case of any such Trigger Event that shall have resulted from a Bankruptcy Event in respect of either of the Mobile Energy Parties, after the Secured Party shall have received the Senior Creditor Certificates required in Section 5.1(a) of the Intercreditor Agreement, the Secured Party may, in accordance with its obligations under the Intercreditor Agreement, do one or more of the following: (i) notwithstanding anything in the Financing Documents to the contrary, take all cash held by the Secured Party (including any resulting from the liquidation of investments) as Collateral, including all cash proceeds received or receivable by the Secured Party in respect of the Collateral, and use such cash for such purposes in accordance with its obligations under the Intercreditor Agreement, and in the interest of the Energy Complex and/or apply the same in whole or in part, in satisfaction of all or any part of the Secured Obligations (whether or not due and payable) in the manner specified in Section 5(b); (ii) upon notice to Debtor, which notice need not be in writing (but which notice shall promptly be confirmed in writing), make such payments and do such acts in accordance with its obligations under the Intercreditor Agreement, to protect, maintain, preserve, perfect or continue the perfection of the Security Interest in the Collateral and to maintain, preserve and protect the Collateral, including paying, purchasing, contesting or compromising any Lien that is, or purports to be, prior to or superior to the Security Interest granted hereunder, and commencing, appearing or otherwise participating in or controlling any action or proceeding purporting to affect the Security Interest in or ownership of the Collateral; (iii) foreclose this Agreement as herein provided or in any manner permitted by Law and exercise any and all of the rights and remedies conferred upon the Secured Party by the Security Documents either concurrently or in such order as the Secured Party may determine without affecting the rights or remedies to which the Secured Party may be entitled under the Security Documents; (iv) require Debtor to, and Debtor hereby agrees that it will, at its expense and upon request of the Secured Party forthwith, assemble all or part of the Collateral as directed by the Secured Party and make it available to the Secured Party at a place to be designated by the Secured Party that is reasonably convenient to both parties; (v) without notice or demand or legal process, enter upon any premises of Debtor and take possession of the Collateral; -8- (vi) without notice, except as specified below, sell the Collateral or any part thereof in one or more parcels at public or private sale, at any of the Secured Party's offices or elsewhere, at such time or times, for cash, on credit or for future delivery, and at such price or prices and upon such other terms as the Secured Party may deem commercially reasonable. Debtor agrees that, to the extent notice of sale shall be required by Law, at least ten (10) days' notice to Debtor of the time and the place of any public sale or the time after which any private sale is to be made shall constitute reasonable notification. At any sale of the Collateral, if permitted by Law, the Secured Party or any Senior Secured Party may bid (which bid may be, in whole or in part, in the form of cancellation of indebtedness) for the purchase of the Collateral or any portion thereof for the account of the Secured Party or such Senior Secured Party. The Secured Party shall not be obligated to make any sale of Collateral regardless of notice of sale having been given. The Secured Party may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned. Debtor authorizes the Secured Party, at any time and from time to time, to execute, in connection with a sale of the Collateral pursuant to the provisions of this Agreement, any endorsements, assignments or other instruments of conveyance or transfer with respect to the Collateral; and (vii) exercise with respect to the Collateral, in addition to other rights and remedies provided for herein or otherwise available to it, all the rights and remedies of a secured party after default under the Uniform Commercial Code. (b) The proceeds of any sale or realization of the Collateral shall be applied in accordance with Section 6.1 of the Intercreditor Agreement. (c) The Secured Party may consult, at Debtor's expense, with counsel (who may or may not be counsel to Debtor), and the opinion of such counsel shall be full and complete authorization and protection, and the Secured Party shall be entitled to conclusively rely on the opinion of such counsel, in respect of any action taken or not taken or suffered by the Secured Party under this Agreement. 6. Assignment of Governmental Approvals. Upon the occurrence and during the continuance of a Trigger Event and, except in the case of any such Trigger Event that shall have resulted from a Bankruptcy Event in respect of either of the Mobile Energy Parties, after receipt by the Secured Party of the Senior Creditor Certificates specified in Section 5.1(a) of the Intercreditor Agreement, Debtor agrees to use its best efforts to have renewed or extended in the name of the Secured Party (or -9- other Person operating the Energy Complex) or otherwise to obtain for the Secured Party (or such other Person) the benefits of all of the Governmental Approvals to the extent that such Governmental Approvals and other rights shall not be assignable or transferable. 7. Security Interest Absolute. All rights of the Secured Party hereunder, the Security Interest and all obligations of Debtor hereunder, shall be absolute and unconditional irrespective of: (a) any lack of validity or enforceability of any of the Project Documents, any of the Collateral (including the Assigned Agreements) or any other agreement or instrument relating thereto; (b) any change in the time, manner or place of payment of, or in any other term of, all or any of the Secured Obligations, or any other amendment or waiver of or any consent to any departure from any of the Project Documents or any of the Collateral (including the Assigned Agreements); (c) any exchange, release or non-perfection of any Collateral or any other collateral, or any release or amendment or waiver of or consent to or departure from any guaranty, for all or any of the Secured Obligations; or (d) to the fullest extent permitted by Law, any other circumstance that might otherwise constitute a defense available to, or a discharge of, Debtor or any third party pledgor. 8. Attorney-in-Fact. Debtor, until payment in full of the Secured Obligations, irrevocably constitutes and appoints the Secured Party, and any other Person that the Secured Party may designate, to act, upon the occurrence and during the continuance of a Trigger Event and, except in the case of any such Trigger Event that shall have resulted from a Bankruptcy Event in respect of either of the Mobile Energy Parties, after receipt by the Secured Party of the Senior Creditor Certificates specified in Section 5.1(a) of the Intercreditor Agreement, as Debtor's attorney-in-fact (which appointment as attorney-in-fact shall be coupled with an interest and be irrevocable), with full authority in the place and stead of Debtor and in the name of Debtor or otherwise, from time to time in the Secured Party's discretion, to take any action and to execute any and all documents and instruments that the Secured Party may deem necessary or advisable to accomplish the purposes of this Agreement, including: (a) to receive, endorse and collect all instruments made payable to Debtor representing any dividends, interest payments or other distributions constituting Collateral or any part thereof and to give full discharge for the same and -10- to file any claim or to take any other action or proceeding in any court of Law or equity or otherwise deemed appropriate by the Secured Party for the purpose of collecting any and all of such dividends, payments or other distributions; (b) to pay or discharge taxes and Liens levied or placed on the Collateral; and (c) (i) to direct any party liable for any payment under or with respect to any of the Collateral to make payment of any and all monies due or to become due thereunder or with respect thereto directly to the Secured Party or as the Secured Party shall direct, (ii) to ask or demand for, to collect and to receive payment of and receipt for any and all monies, claims and other amounts due or to become due at any time in respect of or arising out of any Collateral, (iii) to commence and prosecute any suits, actions or proceedings at Law or in equity in any court of competent jurisdiction to collect the Collateral or any part thereof and to enforce any other right in respect of any Collateral, (iv) to defend any suit, action or proceeding brought against Debtor with respect to any Collateral, (v) to settle, compromise or adjust any suit, action or proceeding described in clauses (iii) and (iv) above and, in connection therewith, to give such discharges or releases as the Secured Party may deem appropriate and (vi) generally, to sell, transfer, pledge and make any agreement with respect to or otherwise deal with any of the Collateral as fully and completely as though the Secured Party were the absolute owner thereof for all purposes and to do, at the Secured Party's option and at Debtor's sole cost and expense, at any time, or from time to time, all acts and things that the Secured Party deems necessary to protect, maintain, preserve or realize upon the Collateral and the Security Interest granted herein and to effect the intent of this Agreement, all as fully and effectively as Debtor might do. Debtor hereby ratifies all that the Secured Party shall do or cause to be done as Debtor's attorney-in-fact consistent with the foregoing. Debtor also authorizes the Secured Party, upon the occurrence and during the continuance of a Trigger Event and, except in the case of any such Trigger Event that shall have resulted from a Bankruptcy Event in respect of either of the Mobile Energy Parties, after receipt by the Secured Party of the Senior Creditor Certificates specified in Section 5.1(a) of the Intercreditor Agreement, to communicate in its own name with any party to any Project Document at any time, with regard to any matter relating to such Project Document. 9. Secured Party and Senior Secured Parties May Perform. The Secured Party or any Senior Secured Party (upon notice to the Secured Party and each other Senior Secured Party), without releasing Debtor from any obligation, covenant or condition -11- hereof, itself may (but shall not be obligated to) make any payment or perform, or cause the performance of, any such obligation, covenant, condition or agreement or any other action in such manner and to such extent as the Secured Party may deem necessary to protect, perfect, maintain, preserve or continue the perfection of the Security Interest in the Collateral or to protect, maintain or preserve the Collateral. Any costs or expenses incurred by the Secured Party or any Senior Secured Party in connection with the foregoing, including reasonable attorneys' fees and expenses, shall constitute a part of the Secured Obligations, shall bear interest at a rate per annum equal to the then highest yield on any of the Outstanding Senior Debt plus two percent (2%) and shall be payable upon demand by the Secured Party or such Senior Secured Party, as the case may be. 10. Debtor Remains Liable. Anything herein to the contrary notwithstanding, Debtor shall remain liable under the Assigned Agreements and any other Contracts included in the Collateral to the extent set forth therein to perform all of its duties and obligations thereunder to the same extent as if this Agreement had not been executed. The exercise by the Secured Party of any of the rights or remedies hereunder shall not release Debtor from any of its duties or obligations under the Assigned Agreements or any other Contracts included in the Collateral, except to the extent Debtor is expressly released therefrom by the Secured Party in writing. The Secured Party shall not have any obligation or liability under the Assigned Agreements or any other Contracts included in the Collateral by reason of this Agreement, nor shall the Secured Party be obligated to perform any of the obligations or duties of Debtor thereunder or to take any action to collect or enforce any claim for payment assigned hereunder, except to the extent the Secured Party expressly assumes such obligations or duties in writing consistent with its rights under this Agreement. 11. Indemnification; Subrogation; Waiver of Offset. (a) Debtor shall indemnify the Secured Party from and against any and all claims, losses and liabilities growing out of or resulting from this Agreement or the Collateral or any part thereof (including enforcement of this Agreement, but excluding any such claims, losses or liabilities resulting from the Secured Party's gross negligence or willful misconduct). (b) Debtor waives any and all right to claim or recover against the Secured Party, and its directors, officers, employees, agents and representatives, for loss of or damage to Debtor, the Collateral, Debtor's property or the property of others under Debtor's control from any cause to the extent insured against or required to be insured against by the provisions of the Financing Documents, except for such loss or damage to the extent due to gross negligence or willful misconduct of the Secured Party or its directors, officers, employees or representatives. -12- 12. Reasonable Care. The Secured Party shall exercise the same degree of care hereunder as it exercises or would exercise in connection with similar transactions for its own account. The Secured Party shall be deemed to have exercised reasonable care in the custody and preservation of the Collateral in its possession if the Collateral is accorded treatment substantially equal to that which the Secured Party accords or would accord collateral held by the Secured Party in similar transactions for its own account; provided, however, that in respect of any Collateral constituting "instruments" or "chattel paper" (within the meaning of the Uniform Commercial Code), the Secured Party shall have no duty to preserve any rights therein against prior parties. Without limiting the generality of the foregoing and except as otherwise provided by applicable Law, the Secured Party shall not be required to marshall any collateral, including the Collateral subject to the Security Interest created hereby, or to resort to any item of Collateral in any particular order; and all of the Secured Party's rights hereunder and in respect of such Collateral shall be cumulative and in addition to all other rights, however existing or arising. To the extent that it lawfully may, Debtor hereby agrees that it will not invoke any Law relating to the marshaling of collateral that might cause delay in or impede the enforcement of the Secured Party's rights under this Agreement, the Mortgage or under any other instrument evidencing any of the Secured Obligations or under which any of the Secured Obligations is outstanding or by which any of the Secured Obligations is secured or guaranteed. 13. Waivers of Rights Inhibiting Enforcement. Debtor waives (a) any claim that, as to any part of the Collateral, a public sale, if Debtor elects so to proceed, is, in and of itself, not a commercially reasonable method of sale for such Collateral, (b) the right to assert in any action or proceeding between it and the Secured Party any offsets or counterclaims that it may have, (c) except as otherwise provided in any of the Security Documents, TO THE EXTENT PERMITTED BY APPLICABLE LAW, NOTICE OR JUDICIAL HEARING IN CONNECTION WITH THE SECURED PARTY'S TAKING POSSESSION OR DISPOSITION OF ANY OF THE COLLATERAL, INCLUDING ANY AND ALL PRIOR NOTICE AND HEARING FOR ANY PREJUDGMENT REMEDY OR REMEDIES AND ANY SUCH RIGHT THAT DEBTOR WOULD OTHERWISE HAVE UNDER THE CONSTITUTION OR ANY STATUTE OF THE UNITED STATES OR OF ANY STATE, AND ALL OTHER REQUIREMENTS AS TO THE TIME, PLACE AND TERMS OF SALE OR OTHER REQUIREMENTS WITH RESPECT TO THE ENFORCEMENT OF THE SECURED PARTY'S RIGHTS HEREUNDER, (d) all rights of redemption, appraisement, valuation, stay and extension or moratorium, (e) to the extent permitted by Law, the benefits of all Laws referred to in Section 12 and (f) all other rights the exercise of which would, directly or indirectly, prevent, delay or inhibit the enforcement of any of the rights or remedies under the Security Documents or the absolute sale of the Collateral, now or hereafter in force under any applicable Law, and Debtor, for itself and all who may claim under it, insofar as it or they now or hereafter lawfully may, -13- hereby waives the benefit of all such Laws and rights. 14. No Duty on Secured Party's Part. The powers conferred on the Secured Party hereunder are solely to protect the Secured Party's interests in the Collateral and shall not impose any duty upon it to exercise any such powers. The Secured Party shall be accountable only for amounts that it receives as a result of the exercise of such powers, and neither it nor any of its officers, directors, employees or agents shall be responsible to Debtor for any act or failure to act hereunder, except for its own gross negligence or willful misconduct. 15. Notices. All notices, demands, requests and other communications required or permitted hereunder shall be in writing and shall be given and deemed to have been given in accordance with Section 12.4 of the Intercreditor Agreement. 16. Other Remedies. The remedies herein provided are cumulative and not exclusive of any remedies provided by Law. The Secured Party shall have all of the rights and remedies granted under the Security Documents and available at Law or in equity, and these same rights and remedies may be pursued separately, successively or concurrently against Debtor or any collateral under the Security Documents, at the sole discretion of the Secured Party. The application of the Collateral to satisfy the Secured Obligations pursuant to the terms hereof shall not operate to release Debtor from its Secured Obligations until payment in full of any deficiency has been made in cash. 17. Waiver. By exercising or failing to exercise any of its rights, options or elections hereunder (without also expressly waiving the same in writing), the Secured Party shall not be deemed to have waived any breach or default on the part of Debtor or to have released Debtor from any of its obligations secured hereby. No failure on the part of the Secured Party to exercise, and no delay in exercising (without also expressly waiving the same in writing), any right, power or privilege shall preclude any other or further exercise thereof, or the exercise of any other right, power or privilege. 18. Time of Essence. TIME IS OF THE ESSENCE WITH RESPECT TO EACH AND EVERY COVENANT, AGREEMENT AND OBLIGATION UNDER THIS AGREEMENT. 19. Successors and Assigns. All covenants, agreements, representations and warranties in this Agreement by the parties hereto shall bind and, to the extent permitted hereby, shall inure to the benefit of and be enforceable by their respective successors and assigns, whether so expressed or not. 20. Headings. The captions, headings and table of contents used in this Agreement are for convenience only and shall not affect the construction hereof. 21. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, -14- AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, EXCEPT THAT SUCH LAWS SHALL NOT APPLY WITH RESPECT TO ANY COLLATERAL WHERE, AND TO THE EXTENT THAT, IT IS NECESSARY TO APPLY THE LAWS OF ANOTHER JURISDICTION TO PERFECT LIENS RELATING TO DEBT ISSUED UNDER THE FINANCING DOCUMENTS. 22. Amendments, Changes and Modifications. This Agreement may not be effectively amended or terminated except as permitted by the Intercreditor Agreement. 23. Assignment. The Secured Party may assign this Agreement to any successor Secured Party under and in accordance with the Intercreditor Agreement. 24. Severability. Any provision of this Agreement that is prohibited, unenforceable or not authorized in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition, unenforceability or non-authorization, without invalidating the remaining provisions hereof or affecting the validity, enforceability or legality of such provision in any other jurisdiction. 25. Secured Party Not Liable. Neither this Agreement nor any action on the part of the Secured Party (other than an express written assumption) shall constitute an assumption by the Secured Party of any of the obligations of Debtor related to any of the Collateral, and Debtor shall continue to be liable for all such obligations whether incurred before or after a Security Agreement Event of Default. 26. No Recourse. Satisfaction of the obligations of Debtor under this Agreement shall be had solely from the assets of the Mobile Energy Parties. No recourse shall be had to (a) any assets or properties of the Members (other than Mobile Energy as provided in Article XIV of the Indenture) or of the stockholders of Mobile Energy, other than their respective interests in the Collateral, (b) any Member (other than Mobile Energy as provided in Article XIV of the Indenture) or (c) any Affiliate, incorporator, stockholder, partner, member, officer, director or employee of any Member (other than the Company and, in respect of any Southern Guaranty on deposit in any Reserve Account Security Account, Southern) or of the Company (other than Mobile Energy and, in respect of any Southern Guaranty on deposit in any Reserve Account Security Account, Southern). Notwithstanding anything in this Section 26 to the contrary, (i) nothing contained in this Agreement shall limit or otherwise prejudice in any way the right of the Secured Party and the Senior Secured Parties to proceed against any Person whomsoever (A) with respect to the enforcement of such Person's obligations under any Project Document (including the Guaranty and any Southern Guaranty to which such Person is a party) or limit or otherwise prejudice in any way the right of the Secured Party, the Senior Secured Parties or the Holders of any Senior Securities to proceed against such Person with respect to the enforcement of such obligations or (B) to the extent necessary to realize the benefit -15- of the Collateral granted under the Security Documents and (ii) any limitations of liability herein shall not apply if and to the extent that any Person commits fraud or willful misrepresentations, including those contained in Officer's Certificates issued from time to time. 27. Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument. 28. Continuing Assignment, Pledge and Security Interest. This Agreement shall create a continuing assignment, pledge and security interest in the Collateral and shall remain in full force and effect for the benefit of the Secured Party until the satisfaction in full of the Secured Obligations. Except as set fourth in Section 30, upon the payment in full of the Secured Obligations and all other amounts owing to the Secured Party under the Financing Documents, the Security Interest granted hereby shall terminate and all rights to the Collateral shall revert to Debtor. In connection with such termination, the Secured Party shall execute such instruments of release prepared by Debtor as Debtor shall reasonably request at Debtor's sole cost and expense. 29. Security Only. This Agreement is granted for security purposes only. Accordingly, except as otherwise permitted by any of the Security Documents, the Secured Party shall not enforce its rights with respect to the Collateral until such time as (a) a Trigger Event shall have occurred and be continuing and (b) except in the case of any such Trigger Event that shall have resulted from a Bankruptcy Event in respect of either of the Mobile Energy Parties, the Secured Party shall have received the Senior Creditor Certificates specified in Section 5.1(a) of the Intercreditor Agreement. 30. Payments Set Aside. To the extent that Debtor or any other Person on behalf of Debtor makes a payment or payments to the Secured Party, or the Secured Party enforces its security interests or exercises its rights of setoff, and such payment or payments or the proceeds of such enforcement or setoff or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside and/or required to be repaid to a trustee, receiver or any other party under any bankruptcy Law, state or Federal Law, common Law or equitable cause, then, to the extent of such recovery, the Secured Obligations, or any part thereof originally intended to be satisfied, and this Agreement and all Liens, rights and remedies therefor, shall be revived and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred. 31. Further Assurances. Debtor shall, at its sole cost and without expense to the Secured Party, do, execute, acknowledge and deliver all and every further acts, deeds, conveyances, -16- mortgages, assignments, notices of assignment, transfers and assurances as the Secured Party shall, from time to time, reasonably require for better assuring, conveying, assigning, transferring and confirming unto the Secured Party the property hereby conveyed, mortgaged or assigned or intended now or hereafter so to be, or that Debtor may be or hereafter become bound to convey, mortgage or assign to the Secured Party, or for carrying our the intention or facilitating the performance of the terms of this Agreement, or for filing, registering or recording this Agreement. 32. Shared Drafting. If there shall be any ambiguity in the terms of this Agreement, the doctrine of construction that holds that the language of the document shall be construed against its drafter shall not apply as all parties have shared in the drafting of this Agreement. 33. Conflict with Intercreditor Agreement; Conflict with Disbursement Agreement. Notwithstanding anything to the contrary contained herein or in any of the other Financing Documents, all rights, duties, obligations and indemnities of the Secured Party hereunder (including the standard of care pursuant to which it acts) shall be governed by the provisions of the Intercreditor Agreement, including the exercise of any and all remedies hereunder. In the event of a conflict between this Agreement and the Intercreditor Agreement, the provisions of the Intercreditor Agreement shall control. 34. Effect of Termination of Intercreditor Agreement. Notwithstanding anything to the contrary contained herein, if the Intercreditor Agreement shall be terminated while this Agreement remains in effect, each reference in this Agreement to a Trigger Event shall be deemed to be a reference to an Event of Default and no Senior Creditor Certificates under the Intercreditor Agreement shall be required to be received by the Secured Party prior to its exercise of remedies hereunder and the term "Security Agreement Event of Default" shall be deemed to include any Event of Default. -17- IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first written above. MOBILE ENERGY SERVICES COMPANY, L.L.C., an Alabama limited liability company By: Name: Title: BANKERS TRUST COMPANY, a New York banking corporation, as Collateral Agent under the Intercreditor Agreement By: Name: Title: -18- EX-99 11 EXHIBIT B-5(C) Exhibit B-5(c) DRAFT 6/29/95 INTERCREDITOR AND COLLATERAL AGENCY AGREEMENT Dated as of ( ), 1995 by and among FIRST UNION NATIONAL BANK OF GEORGIA, as Trustee under the Trust Indenture dated as of ( ), 1995 (on behalf of the Holders of the Indenture Securities), FIRST UNION NATIONAL BANK OF GEORGIA, as Trustee under the Amended and Restated Indenture of Trust dated as of ( ), 1995 (on behalf of the Holders of the Tax-Exempt Indenture Securities), ( ), as the Working Capital Facility Provider, THE INDUSTRIAL DEVELOPMENT BOARD OF THE CITY OF MOBILE, ALABAMA, MOBILE ENERGY SERVICES COMPANY, L.L.C., MOBILE ENERGY SERVICES HOLDINGS, INC. and BANKERS TRUST COMPANY, as Collateral Agent TABLE OF CONTENTS Page ARTICLE I DEFINITIONS AND OTHER PROVISIONS OF INTERPRETATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2- ARTICLE II APPOINTMENT OF COLLATERAL AGENT; ESTABLISHMENT OF ACCOUNTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2- SECTION 2.1 Appointment of Collateral Agent . . . . . . . . -2- SECTION 2.2 Establishment of Intercreditor Agreement Accounts . . . . . . . . . . . . . . . . . . . -3- ARTICLE III COLLECTION AND APPLICATION OF REVENUES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -3- SECTION 3.1 Collection and Application of Revenues . . . . . -3- SECTION 3.2 Operating Account . . . . . . . . . . . . . . . -3- SECTION 3.3 Mill Owner Reimbursement Account . . . . . . . . -4- SECTION 3.4 Working Capital Facility Account . . . . . . . . -4- SECTION 3.5 Maintenance Reserve Account . . . . . . . . . . -4- SECTION 3.6 Subordinated Debt Account . . . . . . . . . . . -5- SECTION 3.7 Subordinated Fee Account . . . . . . . . . . . . -5- SECTION 3.8 Distribution Account. . . . . . . . . . . . . . -6- SECTION 3.9 Completion Account . . . . . . . . . . . . . . . -7- SECTION 3.10 Loss Proceeds Account . . . . . . . . . . . . . -8- SECTION 3.11 Revenue Account . . . . . . . . . . . . . . . -11- SECTION 3.12 Investment of Monies in the Intercreditor Agreement Accounts . . . . . . . . . . . . . -14- SECTION 3.13 Monies to Be Held in Trust . . . . . . . . . -15- SECTION 3.14 Dominion and Control . . . . . . . . . . . . -15- SECTION 3.15 Reserve Account Security . . . . . . . . . . -15- SECTION 3.16 Mill Owner Maintenance Reserve Account . . . -16- ARTICLE IV PRIORITIES; SUBORDINATION . . . . . . . . . . . . . . . . . -17- SECTION 4.1 Priority of Security Interests . . . . . . . -17- SECTION 4.2 Subordination . . . . . . . . . . . . . . . . -17- ARTICLE V EXERCISE OF RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -19- SECTION 5.1 Exercise of Rights Under Security Documents . -19- ARTICLE VI DIVISION OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -22- SECTION 6.1 Division of Proceeds . . . . . . . . . . . . . -22- SECTION 6.2 Application of Loss Proceeds . . . . . . . . . -23- ARTICLE VII RIGHTS OF SENIOR SECURED PARTIES; RIGHTS AND DUTIES OF COLLATERAL AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -25- SECTION 7.1 Rights of Senior Secured Parties . . . . . . . -25- SECTION 7.2 Duties of Collateral Agent. . . . . . . . . -25- SECTION 7.3 Rights of Collateral Agent . . . . . . . . . . -26- SECTION 7.4 Lack of Reliance on the Collateral Agent . . . -28- ARTICLE VIII INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -29- ii ARTICLE IX ELIGIBILITY OF COLLATERAL AGENT; REMOVAL AND REPLACEMENT OF COLLATERAL AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -30- SECTION 9.1 Corporate Collateral Agent Required; Eligibility . . . . . . . . . . . . . . . . -30- SECTION 9.2 Registration, Removal and Replacement . . . . -30- ARTICLE X REPRESENTATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -31- ARTICLE XI INDEPENDENT ENGINEER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -33- SECTION 11.1 Removal of Independent Engineer; Payment of Independent Engineer . . . . . . . . . . . . -33- SECTION 11.2 Third Party Engineer Dispute Resolution . . . -34- SECTION 11.3 Qualified Engineers . . . . . . . . . . . . . -34- ARTICLE XII MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -35- SECTION 12.1 Agreement for Benefit of Parties Hereto . . . -35- SECTION 12.2 No Warranties . . . . . . . . . . . . . . . . -35- SECTION 12.3 Severability . . . . . . . . . . . . . . . . -35- SECTION 12.4 Notices . . . . . . . . . . . . . . . . . . . -35- SECTION 12.5 Successors and Assigns . . . . . . . . . . . -36- SECTION 12.6 Counterparts . . . . . . . . . . . . . . . . -37- SECTION 12.7 GOVERNING LAW . . . . . . . . . . . . . . . . -37- SECTION 12.8 No Impairments of Other Rights . . . . . . . -37- SECTION 12.9 Amendment; Waiver . . . . . . . . . . . . . . -37- SECTION 12.10 Headings . . . . . . . . . . . . . . . . . . -37- SECTION 12.11 Termination . . . . . . . . . . . . . . . . -37- iii SECTION 12.12 Entire Agreement . . . . . . . . . . . . . . -37- SECTION 12.13 Limitation on Liability of Mobile Energy Parties . . . . . . . . . . . . . . . . . . -37- SECTION 12.14 Submission to Jurisdiction . . . . . . . . . -38- SCHEDULES Schedule 1 - Third Party Engineers EXHIBITS Exhibit A - Form of Requisition or Disbursement from Loss Proceeds Account Exhibit B - Form of Monthly Transfer Date Certificate Exhibit D - Form of Consent to Assignment . . . . . . . . . . -6- iv INTERCREDITOR AND COLLATERAL AGENCY AGREEMENT, dated as of ( ), 1995, by and among FIRST UNION NATIONAL BANK OF GEORGIA, a national banking association, as trustee under the Indenture referred to below (on behalf of the holders of the Indenture Securities referred to below) (the "Indenture Trustee"), FIRST UNION NATIONAL BANK OF GEORGIA, a national banking association, as trustee under the Tax-Exempt Indenture referred to below (on behalf of the holders of the Tax-Exempt Indenture Securities referred to below) (the "Tax-Exempt Indenture Trustee"), Banque Paribas, a ( ), as the Working Capital Facility Provider referred to below, THE INDUSTRIAL DEVELOPMENT BOARD OF THE CITY OF MOBILE, ALABAMA, an Alabama public corporation (the "IDB"), MOBILE ENERGY SERVICES COMPANY, L.L.C., an Alabama limited liability company (the "Company"), MOBILE ENERGY SERVICES HOLDINGS, INC., an Alabama corporation ("Mobile Energy"), and BANKERS TRUST COMPANY, a New York banking corporation, as collateral agent hereunder for the Senior Secured Parties referred to below (the "Collateral Agent"). WHEREAS, the Company owns and operates an energy and black liquor recovery complex located at an integrated pulp, paper and tissue manufacturing facility in Mobile, Alabama (such complex, as more particularly defined in the Master Operating Agreement (as defined herein) and including additions thereto and replacements thereof, the "Energy Complex"); WHEREAS, 99% of the outstanding ownership interests of the Company are owned by Mobile Energy; WHEREAS, the Company intends to finance the acquisition, construction and equipping of the Energy Complex through, among other things, the issue and sale by the Company of the Indenture Securities, the proceeds of which, net of underwriting commissions, shall be received by the Company, and, in consideration for such proceeds, the Indenture Securities shall be secured by substantially all of the assets of the Company; WHEREAS, the Company has duly authorized the creation and issuance of the Indenture Securities pursuant to the Indenture; WHEREAS, in connection with the financing of certain portions of the Energy Complex, the IDB has duly authorized the creation and issuance of the Tax-Exempt Bonds pursuant to the Tax-Exempt Indenture, the proceeds of which shall be used to refund certain existing tax-exempt securities relating to the Energy Complex; WHEREAS, the Company intends to finance certain of its working capital requirements arising in connection with the operation of the Energy Complex pursuant to the Working Capital Facility (as defined herein); WHEREAS, the Company may, from time to time after the date of this Agreement, finance certain improvements and other modifications to the Energy Complex with the proceeds of Subordinated Debt (as defined herein); WHEREAS, all obligations of the Company and Mobile Energy under this Agreement, the Working Capital Facility, the Indenture, the Tax-Exempt Indenture and the other Financing Documents (as defined herein) will be secured as set forth in the Security Documents (as defined herein); and WHEREAS, the parties hereto desire to enter into this Agreement to set forth their mutual understanding with respect to (a) the exercise of certain rights, remedies and options by the respective parties hereto under the Financing Documents, (b) the priority of their respective security interests created by the Security Documents and (c) the appointment of the Collateral Agent. NOW, THEREFORE, for and in consideration of the premises and of the covenants herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, covenant and agree as follows: ARTICLE I DEFINITIONS AND OTHER PROVISIONS OF INTERPRETATION For all purposes of this Agreement, except as otherwise expressly provided in this Agreement or unless the context otherwise requires, all terms used herein shall have the meanings set forth in Appendix A. ARTICLE II APPOINTMENT OF COLLATERAL AGENT; ESTABLISHMENT OF ACCOUNTS SECTION 2.1 Appointment of Collateral Agent. The Senior Secured Parties hereby designate and appoint Bankers Trust Company to act as Collateral Agent hereunder and under the other Security Documents, and each of the Senior Secured Parties hereby authorizes Bankers Trust Company to enter into the Mortgage, the Security Agreement and any other Security Documents to which Bankers Trust Company is a party on behalf of the Senior Secured Parties, to take such actions on its behalf under the provisions of this Agreement and such other Security Documents and to exercise such powers and perform such duties as are expressly delegated to the Collateral Agent by the terms of this Agreement and the other Security Documents, together with such other powers as are reasonably incidental thereto. Bankers Trust Company 2 hereby accepts such appointment as Collateral Agent hereunder and agrees to administer the Intercreditor Agreement Accounts and to receive, deposit and disburse all Revenues and other amounts delivered to it pursuant to the terms of this Agreement. The Mobile Energy Parties, the IDB and each Subordinated Debt Provider hereby consent to such appointment. The Collateral Agent shall hold and safeguard the Intercreditor Agreement Accounts (and the Revenues, cash, payments, investments, insurance proceeds, securities and other amounts on deposit therein from time to time) in accordance with the terms hereof. SECTION 2.2 Establishment of Intercreditor Agreement Accounts. (a) The following Accounts are hereby established and created with the Collateral Agent: (i) "Mill Owner Reimbursement Account"; (ii) "Working Capital Facility Account"; (iii) "Revenue Account"; (iv) "Operating Account"; (v) "Maintenance Reserve Account"; (vi) "Subordinated Debt Account"; (vii) "Subordinated Fee Account"; (viii) "Distribution Account"; (ix) "Completion Account"; and (x) "Loss Proceeds Account." (b) The following subaccounts of the Maintenance Reserve Account are hereby established and created with the Collateral Agent: (i) "Maintenance Plan Funding Subaccount"; and (ii) "Excess Funding Subaccount." (c) The following subaccounts of the Completion Account are hereby established and created with the Collateral Agent: (i) "Capital Budget Subaccount"; (ii) "Optional Modifications Subaccount"; and (iii) "Required Modifications Subaccount." ARTICLE III COLLECTION AND APPLICATION OF REVENUES SECTION 3.1 Collection and Application of Revenues. The Company will arrange for the direct payment to the Collateral Agent of all Revenues and, to the extent any such Revenues are at any time received by either of the Mobile Energy Parties, the Mobile Energy Parties will hold such Revenues in trust for the Collateral Agent on behalf of the Senior Secured Parties and, unless otherwise expressly provided for in any other Financing Document, will transfer such Revenues to the Collateral Agent for deposit into the Revenue Account, in each case as soon as reasonably practical but no later than three (3) Business Days after receipt thereof (duly endorsed, if necessary, to the Collateral Agent). Without limiting the generality of the foregoing, the Company shall cause the Mill Owners to pay directly to the Collateral Agent for deposit into the Revenue Account all amounts payable by the Mill Owners to the Company under the Energy Services Agreements, the Master Operating Agreement or any other Project Contract other than amounts to be paid to the Company by the Mill Owners in connection with the exercise by the Company of the Company Step-In Rights. 3 SECTION 3.2 Operating Account. (a) The Operating Account shall be funded by monies transferred from the Revenue Account as and when specified in Section 3.11(a)(iii). Amounts in the Operating Account shall be applied to the payment of Operation and Maintenance Costs other than Subordinated Fees and Maintenance Expenditures; provided, however, that amounts in the Operating Account may be applied to pay Maintenance Expenditures if, and solely to the extent that, the amount of monies, together with the Available Amount under any Reserve Account Security, then on deposit in the Distribution Account, the Subordinated Fee Account, the Subordinated Debt Account and the Maintenance Reserve Account are insufficient therefor. (b) The Collateral Agent shall withdraw monies from the Operating Account upon receipt of an Officer's Certificate of the Company specifying (i) the amount to be disbursed from the Operating Account, (ii) that such amounts have been, or within the immediately succeeding thirty-one (31) days are expected to be, used for Operation and Maintenance Costs incurred or to be incurred in accordance with Prudent Plant Operating Standards or as otherwise authorized by this Section 3.2. The aggregate monies withdrawn from the Operating Account in any Fiscal Year shall not, unless the Officer's Certificate of the Company requesting such withdrawal is accompanied by an Independent Engineer Confirmation, exceed one-hundred ten percent (110%) of the aggregate amount of Operation and Maintenance Costs (other than Maintenance Expenditures) set forth in the Annual Budget for such Fiscal Year (as such Annual Budget may have been amended at any such time in accordance with the provisions of the Indenture and the Tax-Exempt Indenture). SECTION 3.3 Mill Owner Reimbursement Account. The Mill Owner Reimbursement Account shall be funded by monies transferred from the Revenue Account as and when specified in Section 3.11(a)(i). The Collateral Agent shall apply the amounts in the Mill Owner Reimbursement Account to the payment of amounts due to the Mill Owners in connection with the exercise of Mill Owner Step-In Rights (except as otherwise provided in the Consents to Assignment to which the Mill Owners are parties). SECTION 3.4 Working Capital Facility Account. The Working Capital Facility Account shall be funded by monies transferred from the Revenue Account as and when specified in Section 3.11(a)(ii). The Collateral Agent shall apply the amounts in the Working Capital Facility Account to the payment of principal of and interest on, and other amounts due with respect to, any Working Capital Loans. SECTION 3.5 Maintenance Reserve Account. (a) The Maintenance Reserve Account shall be funded by monies transferred from the Revenue Account as and when specified in Section 3.11(a)(vii). The Collateral Agent shall deposit all such monies into the Maintenance Plan Funding Subaccount; provided, however, to the extent such monies are in excess of the Maintenance Reserve Account Required Deposit at any time, such excess shall 4 be deposited into the Excess Funding Subaccount. Subject to Section 3.5(b), amounts in the Maintenance Reserve Account shall be applied to the payment of Maintenance Expenditures first from the Excess Funding Subaccount, to the extent available, and then from the Maintenance Plan Funding Subaccount. (b) Monies on deposit in the Maintenance Reserve Account (including then Available Amounts under any Reserve Account Security on deposit therein) shall first be transferred by the Collateral Agent to the Indenture Trustee for deposit into the Indenture Securities Account and to the Tax-Exempt Indenture Trustee for deposit into the Tax-Exempt Indenture Securities Account, ratably, whenever, and to the extent that, monies on deposit in the Indenture Securities Account, the Tax-Exempt Indenture Securities Account, the Revenue Account, each applicable Debt Service Reserve Account (if any), each applicable Tax-Exempt Debt Service Reserve Account (if any), the Distribution Account, the Subordinated Fee Account and the Subordinated Debt Account (including, in the case of any Debt Service Reserve Account, any Tax-Exempt Debt Service Reserve Account and the Distribution Account, then Available Amounts under any Reserve Account Security on deposit therein) are insufficient to make payments when due on the Senior Securities. Any such transfers shall be made by the Collateral Agent in the following order of priority: first, transfer monies then on deposit in the Maintenance Reserve Account; second, draw upon any Reserve Account Letter of Credit on deposit in the Maintenance Reserve Account pursuant to Section 3.15(d) in an amount up to the Available Amount thereunder and transfer the monies in respect thereof; and third, call upon any Southern Guaranty on deposit in the Maintenance Reserve Account pursuant to Section 3.15(d) in an amount up to the Available Amount thereunder and transfer the monies in respect thereof, in each case, directly to the Indenture Trustee or the Tax-Exempt Indenture Trustee (as the case may be) for payment (to the extent necessary) of such amounts due and owing in respect of such Senior Securities. SECTION 3.6 Subordinated Debt Account. (a) The Subordinated Debt Account shall be funded by monies transferred from the Revenue Account as and when specified in Section 3.11(a)(ix). Subject to Section 3.6(b), the Collateral Agent shall apply the amounts in the Subordinated Debt Account to the payment of principal of and interest on, and other amounts due with respect to, Non-Affiliate Subordinated Debt. (b) Monies on deposit in the Subordinated Debt Account shall be first transferred by the Collateral Agent to the Indenture Trustee for deposit into the Indenture Securities Account and to the Tax-Exempt Indenture Trustee for deposit into the Tax-Exempt Indenture Securities Account, ratably, whenever, and to the extent that, the monies on deposit in the Indenture Securities Account, the Tax-Exempt Indenture Securities Account, each applicable Debt Service Reserve Account (if any), each applicable Tax-Exempt Debt Service Reserve Account (if any), the Distribution Account and the Subordinated Fee Account (including, 5 in the case of any Debt Service Reserve Account, any Tax-Exempt Debt Service Reserve Account and the Distribution Account, then Available Amounts under any Reserve Account Security on deposit therein) are insufficient to make payments when due on the Senior Securities; provided, however, that, if an Event of Default shall have occurred and then be continuing, the Collateral Agent shall so transfer any amounts on deposit in the Subordinated Debt Account to pay any deficiencies in the Indenture Securities Account and the Tax-Exempt Indenture Securities Account before so transferring any monies (including any then Available Amounts under any Reserve Account Security) on deposit in any Debt Service Reserve Account or any Tax-Exempt Debt Service Reserve Account for such purpose. SECTION 3.7 Subordinated Fee Account. (a) The Subordinated Fee Account shall be funded by monies transferred from the Revenue Account as and when specified in Section 3.11(a)(x). Subject to Section 3.7(b), and provided that the Company has delivered to the Collateral Agent an Officer's Certificate of the Company certifying that the requirements of Section 5.19 of the Indenture and Section 4.19 of the IDB Lease Agreement are satisfied, the Collateral Agent shall apply monies in the Subordinated Fee Account to the payment of Subordinated Fees. (b) Monies on deposit in the Subordinated Fee Account shall first be transferred by the Collateral Agent to the Indenture Trustee for deposit into the Indenture Securities Account and to the Tax-Exempt Indenture Trustee for deposit into the Tax-Exempt Indenture Securities Account, ratably, whenever, and to the extent that, the monies on deposit in the Indenture Securities Account, the Tax-Exempt Indenture Securities Account, each applicable Debt Service Reserve Account (if any), each applicable Tax-Exempt Debt Service Reserve Account (if any) and the Distribution Account (including, in the case of any Debt Service Reserve Account, any Tax-Exempt Debt Service Reserve Account and the Distribution Account, then Available Amounts under any Reserve Account Security on deposit therein) are insufficient to make payments when due on the Senior Securities; provided, however, that if an Event of Default shall have occurred and be continuing, the Collateral Agent shall so transfer any amounts on deposit in the Subordinated Fee Account to pay any deficiencies in the Indenture Securities Account and the Tax-Exempt Indenture Securities Account before so transferring any monies (including any then Available Amounts under any Reserve Account Security) on deposit in any Debt Service Reserve Account or any Tax-Exempt Debt Service Reserve Account for such purposes. SECTION 3.8 Distribution Account. (a) The Distribution Account shall be funded from monies transferred from the Revenue Account as and when specified in Section 3.11(xi). Subject to Section 3.8(b) and provided that the Company has delivered to the Collateral Agent an Officer's Certificate certifying that the requirements of Section 5.19 of the Indenture and Section 4.19 of the IDB Lease Agreement are satisfied, the Collateral Agent 6 shall, on each Distribution Date, transfer all monies in the Distribution Account as follows: first, to each Subordinated Debt Provider of any Affiliate Subordinated Debt, as certified by the Company, an amount equal to all interest (including overdue interest) and principal due and payable such Affiliate Subordinated Debt, and second, the balance to the account or accounts specified in writing by the Company. (b) Monies on deposit in the Distribution Account (including then Available Amounts under any Reserve Account Security on deposit therein) shall first be transferred by the Collateral Agent to the Indenture Trustee for deposit into the Indenture Securities Account and to the Tax-Exempt Indenture Trustee for deposit into the Tax-Exempt Indenture Securities Account, ratably, whenever, and to the extent that, the monies on deposit in the Indenture Securities Account, the Tax-Exempt Indenture Securities Account, each applicable Debt Service Reserve Account (if any) and each applicable Tax-Exempt Debt Service Reserve Account (if any) (including, in the case of any Debt Service Reserve Account and any Tax-Exempt Debt Service Reserve Account, then Available Amounts under any Reserve Account Security on deposit therein) are insufficient to make payments when due on the Senior Securities; provided, however, that if an Event of Default shall have occurred and be continuing, the Collateral Agent shall so transfer any amounts on deposit in the Distribution Account to pay any deficiencies in the Indenture Securities Account and the Tax-Exempt Indenture Securities Account before so transferring any monies (including any then Available Amounts under any Reserve Account Security) on deposit in any Debt Service Reserve Account or any Tax-Exempt Debt Service Reserve Account for such purposes. Any such transfers shall be made by the Collateral Agent in the following order of priority: first, transfer monies then on deposit in the Distribution Account; second, draw upon any Reserve Account Letter of Credit on deposit in the Distribution Account pursuant to Section 3.15(d) in an amount up to the Available Amount thereunder and transfer the monies in respect thereof; and third, call upon any Southern Guaranty on deposit in the Distribution Account pursuant to Section 3.15(d) in an amount up to the Available Amount thereunder and transfer the monies in respect thereof, in each case, directly to the Indenture Trustee or the Tax-Exempt Indenture Trustee (as the case may be) for payment (to the extent necessary) of such amounts due and owing in respect of such Senior Securities. (c) Notwithstanding Section 3.8(a), if (i) at any time, the amount of monies on deposit in (without giving effect to amounts then available to be drawn or called upon under any Reserve Account Security on deposit in) the Distribution Account exceeds the lesser of (A) the amount of Senior Debt and (B) $34,000,000 or (ii) on a Distribution Date, the Company shall have provided an Officer's Certificate (together with an Independent Engineer Certification) certifying to the Collateral Agent that (A) the average Senior Debt Service Coverage Ratio for the two semi-annual payment periods immediately preceding such 7 Distribution Date was equal to at least 1.2 to 1.0, (B) based upon projections prepared by the Company in accordance with Section 1.15 of the Indenture and Section 1.12 of the IDB Lease Agreement, the average Senior Debt Service Coverage Ratio for the current semi-annual payment period and the immediately succeeding semi-annual payment period is projected to be at least 1.2 to 1.0 and (C) the requirements of Section 5.19 of the Indenture and Section 4.19 of the IDB Lease Agreement have not been satisfied on such Distribution Date and each of the five (5) Distribution Dates immediately preceding such Distribution Date, then, in the case of clauses (i) and (ii) above, in replacement of monies on deposit in the Distribution Account, the Company may deliver to the Collateral Agent at such time Reserve Account Security having an Available Amount thereunder equal to the amount of such monies so replaced; provided, however, that, in the case of clause (i) above, the amount of monies so replaced shall not be greater than the amount of the excess described in such clause (i). Any such Reserve Account Security shall terminate on the first Distribution Date following the delivery to the Collateral Agent of such Reserve Account Security on which the requirements of Section 5.19 of the Indenture and Section 4.19 of the IDB Lease Agreement have been satisfied. SECTION 3.9 Completion Account. (a) On the Closing Date, the Capital Budget Subaccount shall be funded in an amount equal to $( ). Such monies shall be applied to the payment, or reimbursement to the extent the same have been paid or satisfied by the Company, of Project Costs in accordance with the Capital Budget. (b) The Company shall deposit the proceeds of any Debt authorized by Section 5.17 of the Indenture and Section 4.17 of the IDB Lease Agreement for (i) Optional Modifications into the Optional Modifications Subaccount and (ii) Required Modifications into the Required Modifications Subaccount. Such monies shall be applied to the payment, or reimbursement to the extent the same have been paid or satisfied by the Company, of costs incurred in connection with Optional Modifications or Required Modifications (as the case may be) in accordance with a budget prepared by the Company and approved by the Independent Engineer and delivered to the Collateral Agent. Such budget shall identify all costs reasonably anticipated to be incurred in connection with the Optional Modifications or the Required Modifications (as the case may be) and shall include a progress payment schedule for the projected requisitions to be made from the Optional Modifications Subaccount with respect to such Optional Modifications or the Required Modifications Subaccount with respect to such Required Modifications (as the case may be). (c) The Collateral Agent shall transfer monies from the applicable subaccount of the Completion Account upon receipt of an Officer's Certificate of the Company (together with an Independent Engineer's Confirmation as to clauses (i) through (iv) below) specifying (i) the amount to be disbursed from such subaccount (including reasonable supporting documentation, if 8 available), (ii) that such amounts have been, or within the immediately succeeding forty-five (45) days are expected to be, used for (A) in the case of Section 3.9(a), Project Costs, which do not exceed the aggregate amount of the Capital Budget, less any amounts that previously have been transferred pursuant to this clause (ii) and (B) in the case of Section 3.9(b), costs incurred in connection with Optional Modifications or Required Modifications (as the case may be), (iii) the item for which payment is requested has not been the basis for a prior requisition from any Account that has been paid or with respect to which a request for payment is still pending, (iv) the Person or Persons to whom such monies shall be transferred (including appropriate account information) and (v) no Event of Default under the Indenture, the Tax-Exempt Indenture or the Working Capital Facility has occurred and is continuing. The Company shall provide the Collateral Agent with written notice when full payment of the Project Costs or costs incurred in connection with Optional Modifications or Required Modifications (as the case may be) for which monies were held in the applicable subaccount of the Completion Account has occurred, whereupon the Collateral Agent shall, within seven (7) days of receipt of such notice, transfer any monies remaining in such subaccount to the Revenue Account. SECTION 3.10 Loss Proceeds Account. (a) All Loss Proceeds shall be deposited into the Loss Proceeds Account and, subject to the provisions of this Section 3.10, applied to the payment, or reimbursement to the extent the same have been paid or satisfied by the Company, of the costs of (i) rebuilding, repairing and restoring the Energy Complex or any part thereof that has been affected by an Event of Loss or Event of Eminent Domain or (ii) building a Replacement Facility. (b) The Collateral Agent is hereby authorized to disburse from the Loss Proceeds Account the amount required to be paid for the rebuild, repair or restoration of the Energy Complex or any part thereof, or the building of a Replacement Facility, as specified in Section 3.10(a). The Collateral Agent is hereby authorized and directed to issue its checks or transfer funds electronically for each disbursement from the Loss Proceeds Account, upon receipt of a requisition in substantially the form of Exhibit A, submitted to the Collateral Agent, signed by an Authorized Officer of the Company, together with an Independent Engineer Confirmation; provided, however, that such Independent Engineer Confirmation shall not be required if such requisition includes a certification that the amount requested pursuant to such requisition, together with the amounts requested pursuant to all other such requisitions made or reasonably expected to be made (i) during the same Fiscal Year in which such requisition is so submitted to the Collateral Agent, does not exceed $5,000,000 in the aggregate or (ii) in respect of any Event of Loss or Event of Eminent Domain, does not exceed $7,500,000 in the aggregate. The Collateral Agent shall be entitled to rely on all certifications and statements in such requisitions. The Collateral Agent shall keep and maintain adequate records 9 pertaining to the Loss Proceeds Account and all disbursements therefrom and shall file an accounting thereof with the Company, the Independent Engineer and the Mill Owners within three (3) months following the end of each Fiscal Year. (c) If an Event of Loss or an Event of Eminent Domain shall occur, as soon as reasonably practicable but no later than the date of receipt of Loss Proceeds with respect thereto, the Company shall make a reasonable good faith determination as to whether or not (i) (A) the Energy Complex or any portion thereof can be rebuilt, repaired or restored to permit operation of the Energy Complex at substantially the same level of performance as the Energy Complex was capable of being operated immediately prior to such Event of Loss or Event of Eminent Domain (and whether or not such rebuilding, repair or restoration would be required by Section 10.7(b)(ii) of the Master Operating Agreement) or (B) a Replacement Facility can be built to provide services to some or all of the Mills (and whether or not such Replacement Facility would be required by Section 10.7(b)(ii) of the Master Operating Agreement), for which (based upon projections of the Company prepared in accordance with Section 1.15 of the Indenture and Section 1.12 of the IDB Lease Agreement) the minimum Senior Debt Service Coverage Ratio for each Fiscal Year commencing with such Replacement Facility's anticipated commercial operation date through the Fiscal Year in which the last maturity of Senior Debt is scheduled to mature is projected to equal or exceed the minimum Senior Debt Service Coverage Ratio projected for the Energy Complex for each such Fiscal Year based upon the circumstances existing immediately prior to such Event of Loss or Event of Eminent Domain and (ii) such Loss Proceeds, together with any other amounts that are available to the Company for such rebuilding, repair, restoration or replacement, are sufficient to permit such rebuilding, repair or restoration of the Energy Complex or a portion thereof, or such building of a Replacement Facility (such determination of sufficiency in each instance in this Section 3.10 to take into account, among other things, funds required to pay principal of and interest on the Senior Debt becoming due during such period in which commercial operation of the Energy Complex is interrupted as a result of such Event of Loss or Event of Eminent Domain). The determination of the Company pursuant to this Section 3.10(c) shall be evidenced by an Officer's Certificate of the Company filed with the Collateral Agent, which (in the event the Company determines that the Energy Complex or a portion thereof can be rebuilt, repaired, restored or replaced subject to the conditions hereof and that such Loss Proceeds, together with other amounts available to the Company for such rebuilding, repair, restoration or replacement, are sufficient) shall also set forth a reasonable good faith estimate by the Company of the total cost of such rebuilding, repair, restoration or replacement. The Company shall also deliver to the Collateral Agent, at the time it delivers such Officer's Certificate, an Independent Engineer Confirmation, dated the date of such Officer's Certificate, stating that, based upon reasonable investigation and review of the determinations made by the 10 Company, the Independent Engineer believes that the determinations and the estimate of the total cost set forth in such Officer's Certificate are reasonable. (d) (i) If a determination relating to an Event of Loss or Event of Eminent Domain is made pursuant to Section 3.10(c) that (A) neither the Energy Complex nor any portion thereof can be rebuilt, repaired, restored or replaced, subject to the conditions contained therein, or (B) the Loss Proceeds with respect thereto, together with any other amounts that are available to the Company for such rebuilding, repair, restoration or replacement, are not sufficient to permit such rebuilding, repair, restoration or replacement, then all of such Loss Proceeds shall be distributed in accordance with Section 6.2(a). Any such Loss Proceeds that are distributed to the Senior Secured Parties shall, pursuant to Section 6.2(a), be applied to the redemption of all Senior Debt in accordance with the terms of the Financing Documents. (ii) Subject to paragraph (iv) of this Section 3.10(d), if a determination relating to an Event of Loss or Event of Eminent Domain is made pursuant to Section 3.10(c)(i)(A) that (A) the Energy Complex can be completely rebuilt, repaired or restored to permit operation on a commercially feasible basis as described therein and (B) the Loss Proceeds with respect thereto, together with any other amounts that are available to the Company for such rebuilding, repair or restoration, are sufficient to permit such rebuilding, repair or restoration, then all of such Loss Proceeds shall remain on deposit in, and such other amounts as are available to the Company and necessary for such rebuilding, repair or restoration shall be deposited in, the Loss Proceeds Account and shall be applied in accordance with Section 3.10(b). Upon completion of any such complete rebuilding, repair or restoration of the Energy Complex, the amount, if any, by which all of such Loss Proceeds received with respect to such Event of Loss or Event of Eminent Domain exceeds the total cost of such rebuilding, repair or restoration shall be distributed in accordance with Section 6.2(b). (Any amounts remaining in the Loss Proceeds Account following such distribution shall be deposited in the Revenue Account.) (iii) Subject to paragraph (iv) of this Section 3.10(d), if a determination relating to an Event of Loss or Event of Eminent Domain is made pursuant to Section 3.10(c)(i)(A) or 3.10(c)(i)(B) that (A) a portion of the Energy Complex can be rebuilt, repaired or restored to permit operation on a commercially feasible basis as described therein or a Replacement Facility can be built, subject to the conditions contained therein, and (B) the Loss Proceeds with respect thereto, together with any other amounts that are available to the Company and necessary for such rebuilding, repair, restoration or replacement, are sufficient to permit such rebuilding, repair, restoration or replacement, then all of such Loss Proceeds shall remain on deposit in, and any other amounts that are available to the Company for such rebuilding, repair, restoration or replacement shall be deposited 11 in, the Loss Proceeds Account and shall be applied in accordance with Section 3.10(b). Upon completion of any such rebuilding, repair, restoration or replacement of the Energy Complex, the amount, if any, by which all of such Loss Proceeds received with respect to such Event of Loss or Event of Eminent Domain exceeds the total cost of such rebuilding, repair, restoration or replacement shall be distributed in accordance with Section 6.2(b). (Any amounts remaining in the Loss Proceeds Account following such distribution shall be deposited in the Revenue Account.) (iv) Notwithstanding paragraphs (ii) and (iii) of this Section 3.10(d), at the election of the Company, all of the Loss Proceeds with respect to an Event of Loss or Event of Eminent Domain, together with all other amounts available to the Company, shall be distributed in accordance with Section 6.2(a), provided that, at the time of such election, the Company files with the Collateral Agent an Officer's Certificate certifying (together with an Independent Engineer Confirmation) that (A) the monies on deposit in the Loss Proceeds Account, together with all other amounts available to the Company, are sufficient to redeem all Senior Debt, (B) all or substantially all of the Energy Complex (including the Site) has suffered loss or been destroyed or otherwise rendered unfit for normal use in connection with such Event of Loss or all or substantially all of the Energy Complex (including the Site) has been the subject of a compulsory transfer or taking, or transfer under threat of compulsory transfer or taking, in connection with such Event of Eminent Domain and (C) the Company is not otherwise required under the Master Operating Agreement or the Lease, as applicable, to rebuild, repair, restore or replace the Energy Complex, or to apply Loss Proceeds to the rebuilding, repairing, restoration or replacement of the Energy Complex. Such Officer's Certificate shall include a written opinion of counsel satisfactory to the Collateral Agent (which may include counsel for either of the Mobile Energy Parties, whether or not such counsel is an employee thereof) to the effect set forth in clause (C) above; provided, however, that if any Dispute (as defined in the Master Operating Agreement) has arisen between the Mill Owners and the Company with respect to the compliance of such election with the applicable provisions of the Master Operating Agreement and the Lease, as applicable, the Company shall also deliver to the Collateral Agent satisfactory evidence of the conclusive resolution of such Dispute pursuant to the dispute resolution provisions of the Master Operating Agreement. Any such Loss Proceeds that are distributed to the Senior Secured Parties shall, pursuant to Section 6.2(a), be applied to the redemption of all Senior Debt in accordance with the terms of the Financing Documents. (e) Notwithstanding any other provision of this Section 3.10, (i) if the Loss Proceeds Account does not contain an amount equal to the estimate of the total cost of rebuilding, repair, restoration or replacement set forth in the Officer's Certificate filed with the Collateral Agent pursuant to Section 3.10(c), and 12 such amounts have not otherwise been committed by the applicable insurers or condemning authority in a manner satisfactory to the Collateral Agent, by the tenth (10th) Business Day following the determination contemplated by Section 3.10(d)(ii) or 3.10(d)(iii), then the Company shall be deemed to have made the determination contemplated by Section 3.10(d)(i) and (ii) if the Company receives Loss Proceeds from an Event of Loss or Event of Eminent Domain and the cost to rebuild, repair, restore or replace the Energy Complex does not, based upon a reasonable and good faith determination of the Company, exceed in the aggregate $7,500,000, then the Company shall not be required to comply with the provisions of Section 3.10(c) or 3.10(d) and such Loss Proceeds, together with any other amounts that are available to the Company, shall be deposited into the Loss Proceeds Account and applied in accordance with Section 3.10(b). SECTION 3.11 Revenue Account. (a) Prior to a Wind-Up Event, monies on deposit in the Revenue Account, upon receipt by the Collateral Agent of an Officer's Certificate of the Company (substantially in the form of Exhibit B) certifying the amount of such monies to be withdrawn and the application thereof (including appropriate payment instructions in respect thereof), will be withdrawn on each Monthly Transfer Date to make the following transfers or deposits to the following Persons or into the following Accounts and in the following order of priority (but only to the extent such monies are then on deposit in the Revenue Account): (i) for deposit into the Mill Owner Reimbursement Account, an amount equal to the amount that is or will be reimbursable to the Mill Owners prior to the immediately succeeding Monthly Transfer Date in connection with the exercise of Mill Owner Step-In Rights (except as otherwise provided in the Consents to Assignment to which the Mill Owners are parties); (ii) for deposit into the Working Capital Facility Account, an amount that is equal to amounts that were scheduled to be due and payable, but remain unpaid, or are scheduled to become due and payable for principal of and interest on, and fees and other charges relating to, the Working Capital Facility prior to the immediately succeeding Monthly Transfer Date; (iii) for deposit into the Operating Account, an amount sufficient to cause the aggregate amount therein to be equal to the amount of Operation and Maintenance Costs that are estimated by the Company to be due and payable prior to the immediately succeeding Monthly Transfer Date, other than Subordinated Fees and Maintenance Expenditures (unless and to the extent that, in the case of Maintenance Expenditures, the monies, together with the then Available Amounts under any Reserve Account Security, on deposit in the Maintenance Reserve Account, the Subordinated Debt Account, the Subordinated Fee Account and the Distribution Account are 13 insufficient therefor); (iv) to each of the Collateral Agent, the Indenture Trustee and the Tax-Exempt Trustee, an amount that is equal to the amount due and payable immediately prior to such Monthly Transfer Date to each of such Persons in their capacities as the Collateral Agent under this Agreement, the Indenture Trustee under the Indenture and the Tax-Exempt Trustee under the Tax-Exempt Indenture, respectively; provided, however, that if monies on deposit in the Revenue Account are insufficient on such Monthly Transfer Date to make the transfers specified in this Section 3.11(a)(iv), distribution of monies will be made ratably to each specified Person based upon the respective amounts owing to each such Person; (v) to: (i) the Working Capital Facility Provider, an amount that is equal to, after giving effect to any payment to the Working Capital Facility Provider in accordance with Section 3.11(a)(ii), all amounts due and payable (whether as a result of acceleration or otherwise) immediately prior to such Monthly Transfer Date for principal of and interest on, and fees or other charges with respect to, the Working Capital Facility; (ii) the Indenture Trustee, for deposit into (A) the Indenture Securities Interest Subaccount, an amount that, after giving effect to monies on deposit therein immediately prior to such Monthly Transfer Date and together with a uniform amount to be deposited therein on each succeeding Monthly Transfer Date prior to the immediately succeeding Interest Payment Date, is equal to the amount of interest thereon becoming due on such Interest Payment Date and (B) the Indenture Securities Principal Subaccount, an amount equal to one-sixth (1/6th) of the amount of principal thereof becoming due on the Indenture Securities on each Principal Payment Date occurring within the six (6) months immediately succeeding the month in which such Monthly Transfer Date occurs; and (iii) the Tax-Exempt Trustee, for deposit into (A) the Tax-Exempt Indenture Securities Interest Subaccount, an amount that, after giving effect to monies on deposit therein immediately prior to such Monthly Transfer Date and together with a uniform amount to be deposited therein on each succeeding Monthly Transfer Date prior to the immediately succeeding Tax-Exempt Interest Payment Date, is equal to the amount of interest thereon becoming due on such Tax-Exempt Interest Payment Date and (B) the Tax-Exempt Indenture Securities Principal Subaccount, an amount equal to one-twelfth of the amount of principal thereof becoming due on the Tax-Exempt Indenture Securities on each Tax-Exempt Principal Payment Date occurring within the twelve (12) months immediately succeeding the month in which such Monthly Transfer Date occurs; provided, however, that if monies in the Revenue Account are insufficient on such Monthly Transfer Date to make the transfers specified in this Section 3.11(a)(v), distribution of monies shall be made ratably to each 14 specified Person based upon the respective amounts owing to each such Person; (vi) to: (i) the Indenture Trustee, for deposit into the Indenture Securities Redemption Subaccount, an amount that, after giving effect to monies on deposit therein immediately prior to such Monthly Transfer Date and together with a uniform amount to be deposited therein on each succeeding Monthly Transfer Date prior to each succeeding Redemption Date or Prepayment Date for, or upon acceleration of, the Indenture Securities, is equal to the amount of principal thereof and premium, if any, and interest thereon becoming due on each such Redemption Date or Prepayment Date or upon such acceleration (as the case may be); and (ii) the Tax-Exempt Trustee, for deposit into the Tax-Exempt Indenture Securities Redemption Subaccount, an amount that, after giving effect to monies on deposit therein immediately prior to such Monthly Transfer Date and together with a uniform amount to be deposited therein on each succeeding Monthly Transfer Date prior to each succeeding Redemption Date or Prepayment Date for, or upon acceleration of, the Tax-Exempt Indenture Securities, is equal to the amount of principal thereof and premium, if any, and interest thereon becoming due on each such Prepayment Date or Redemption Date or upon such acceleration (as the case may be); provided, however, that if monies in the Revenue Account are insufficient on such Monthly Transfer Date to make the transfers specified in this Section 3.11(a)(vi), distribution of monies shall be made ratably to each specified Person based upon the respective amounts owing to each such Person; (vii) for deposit into the Maintenance Reserve Account, such amount as the Company may elect, but in no event less than the Maintenance Reserve Account Required Deposit with respect to the Fiscal Quarter in which such Monthly Transfer Date occurs; (viii) to: (i) the Indenture Trustee, for deposit into each Debt Service Reserve Account (if any), an amount sufficient to cause the aggregate amount of monies, together with the then Available Amount under any Reserve Account Security, on deposit in such Debt Service Reserve Account, to equal the Debt Service Reserve Account Required Balance immediately prior to such Monthly Transfer Date; and (ii) the Tax-Exempt Trustee, for deposit into each Tax-Exempt Debt Service Reserve Account (if any), an amount sufficient to cause the aggregate amount of monies, together with the then Available Amount under any Reserve Account Letter of Credit, on deposit in such Tax-Exempt Debt Service Reserve Account, to equal the Tax-Exempt Debt Service Reserve Account Required Balance immediately prior to such Monthly Transfer Date; provided, however, that if monies in the Revenue Account are insufficient on such Monthly Transfer Date to make the transfers specified in this Section 15 3.11(a)(viii), distribution of monies will be made ratably to each specified Person based upon the respective amounts owing to each such Person; (ix) for deposit into the Subordinated Debt Account: (i) an amount that, after giving effect to monies on deposit therein immediately prior to such Monthly Transfer Date and a uniform amount to be deposited therein on each succeeding Monthly Transfer Date prior to the immediately succeeding interest payment date for any Non-Affiliate Subordinated Debt, is not less than the amount of interest on such Non-Affiliate Subordinated Debt becoming due on such interest payment date; and (ii) an amount equal to a fraction (determined by dividing the number of dates during the Fiscal Year in which such Monthly Transfer Date occurs on which principal of any Non-Affiliate Subordinated Debt is scheduled to become due by twelve (12)) of the amount of principal becoming due in respect of such Non-Affiliate Subordinated Debt on each such payment date occurring within a number of months (which number of months shall be equal to the number of dates used for purposes of the determination set forth in the first parenthetical clause of this clause (ii)) immediately succeeding such Monthly Transfer Date; (x) for deposit into the Subordinated Fee Account, an amount that, after giving effect to monies on deposit therein immediately prior to such Monthly Transfer Date and a uniform amount to be deposited therein on each succeeding Monthly Transfer Date prior to the immediately succeeding Distribution Date, will be equal to the amount of Operation and Maintenance Expenses constituting Subordinated Fees that will be due and payable or are estimated to be due and payable as of such Distribution Date; and (xi) to the Distribution Account. (b) Prior to a Wind-Up Event, after any Monthly Transfer Date and prior to the immediately succeeding Monthly Transfer Date, monies on deposit in the Revenue Account shall be transferred by the Collateral Agent to the Indenture Trustee for deposit into the Indenture Securities Account and to the Tax- Exempt Indenture Trustee for deposit into the Tax-Exempt Indenture Securities Account, ratably, whenever, and to the extent that, monies on deposit in the Indenture Securities Account, the Tax-Exempt Indenture Securities Account, each applicable Debt Service Reserve Account (if any), each applicable Tax-Exempt Debt Service Reserve Account (if any), the Distribution Account, the Subordinated Fee Account and the Subordinated Debt Account (including, in the case of any Debt Service Reserve Account, any Tax-Exempt Debt Service Reserve Account and the Distribution Account, then Available Amounts under any Reserve Account Security on deposit therein) are insufficient to make payments when due on the Senior Securities. 16 SECTION 3.12 Investment of Monies in the Intercreditor Agreement Accounts. (a) Amounts deposited in the Intercreditor Agreement Accounts, at the written request and direction of the Company, shall be invested by the Collateral Agent in Permitted Investments. Such investments shall mature in such amounts and not later than such times as may be necessary to provide monies when needed to make payments with such monies as provided in this Agreement. Net interest or gain received from such investments shall remain in each Intercreditor Agreement Account pending application as provided in this Agreement. Absent written instructions from the Company, the Collateral Agent shall invest the amounts held in the Intercreditor Agreement Accounts in Permitted Investments described in clause (a) of the definition of Permitted Investments. (b) On the Business Day immediately preceding each Monthly Transfer Date, and immediately following any withdrawal of monies on deposit in each Intercreditor Agreement Account, the Collateral Agent shall "mark-to-market" each Permitted Investment on deposit in each Intercreditor Agreement Account (including accrued interest) and, promptly thereafter, shall notify the Company, the Senior Secured Parties and the Independent Engineer as to the amount of any deficiency or surplus in such Intercreditor Agreement Account as of such date based upon such revaluation. (c) In computing the amount in any Intercreditor Agreement Account (or any other separate account or fund created under the provisions of, and for any purpose provided in, this Agreement), obligations purchased as an investment of monies therein shall be valued at the market value of, including accrued interest on, such obligations. Amounts deposited in any Intercreditor Agreement Account may be combined with amounts deposited in other Intercreditor Accounts for purposes of making any Permitted Investment, provided that such Intercreditor Agreement Account shall maintain an undivided interest in any such combined Permitted Investment based upon its pro rata share of the amount contributed by such Intercreditor Agreement Account at the time of the making of such combined Permitted Investment. SECTION 3.13 Monies to Be Held in Trust. All monies required to be deposited with or paid to the Collateral Agent for the account of any Intercreditor Agreement Account under any provision of this Agreement and all investments made therewith, and all monies of this Agreement and all investments made therewith, and all monies withdrawn from any Intercreditor Agreement Account and held by the Collateral Agent, shall be held by the Collateral Agent in trust and, while so held, for and on behalf of the Senior Secured Parties. SECTION 3.14 Dominion and Control. Each of the Mobile Energy Parties hereby transfers, assigns and sets over all of its right, title and interest in and to all amounts deposited or held in any Intercreditor Agreement Account and grants to the Collateral Agent sole dominion and control over such amounts. 17 Neither of the Mobile Energy Parties shall have the right to withdraw monies from any Intercreditor Agreement Account hereunder, except to the extent such monies are disbursed by the Collateral Agent pursuant to the terms of this Agreement. SECTION 3.15 Reserve Account Security. (a) Subject to Section 3.15(c), the Company shall not be required at any time to deposit any monies in the Maintenance Reserve Account, and the Company shall be entitled from time to time to withdraw monies on deposit in the Maintenance Reserve Account or the Distribution Account, provided that and for so long as Reserve Account Security having an Available Amount thereunder equal to the amount of such monies otherwise required to be and not so deposited or the amount of such monies so withdrawn (as the case may be) shall have been delivered to the Collateral Agent, at or prior to such time, for deposit into the Maintenance Reserve Account or the Distribution Account (as the case may be). At the time of any such deposit, the Collateral Agent shall be entitled to receive, and (subject to Section 7.2) shall be fully protected in relying upon, an Opinion of Counsel to the effect that (i) such Reserve Account Security is permitted by this Section 3.15 and has been delivered in accordance with the provisions hereof, (ii) such Reserve Account Security has been duly authorized, executed and delivered by the provider thereof and constitutes a legal, valid and binding obligation of such provider, enforceable against such provider in accordance with its terms, except as such enforceability (A) may be limited by applicable bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium and other similar laws relating to or affecting the enforcement of creditors' rights and remedies generally as such laws would apply in the event of a bankruptcy, insolvency or reorganization of, or other similar occurrence with respect to, such provider and (B) is subject to general principles of equity (regardless of whether considered in a proceeding in equity or at law) or other customary qualifications and limitations and (iii) payments under such Reserve Account Security would not constitute avoidable preferences under Section 547 of the Bankruptcy Code or similar state laws by or against the provider thereof (or any other account party thereunder). The Company may from time to time, at its discretion, replace or reduce the Available Amount (in whole or in part) under any Reserve Account Security on deposit in the Maintenance Reserve Account or the Distribution Account (as the case may be) with other Reserve Account Security having an Available Amount thereunder, or with monies in an amount, equal to the Available Amount so replaced or reduced. (b) Each Reserve Account Security on deposit in the Maintenance Reserve Account or the Distribution Account shall provide that not less than forty-five (45) days prior to the occurrence of a Termination Event with respect to such Reserve Account Security, the provider thereof shall deliver written notice to the Collateral Agent and the Company of such occurrence. The Company shall provide notice to the Collateral Agent of the occurrence of any Credit Standard Event or Default Event within three (3) Business Days of its actual or 18 constructive knowledge of the event giving rise to such occurrence. (c) If (in lieu of any monies required to be deposited into, or in replacement of monies or other Reserve Account Security on deposit in, the Maintenance Reserve Account or the Distribution Account) any Reserve Account Security is on deposit in the Maintenance Reserve Account or the Distribution Account pursuant to Section 3.15(a), then, immediately upon the occurrence of a Required Deposit Event with respect to such Reserve Account Security, the Company agrees to deposit into the Maintenance Reserve Account or the Distribution Account (as the case may be) an amount of monies equal to the Required Deposit with respect to such Required Deposit Event. (d) If the Company fails to make any Required Deposit pursuant to Section 3.15(c) as and when due, then the Collateral Agent shall, and is hereby authorized to, draw or call upon such Reserve Account Security in an amount equal to the amount of such Required Deposit that the Company so failed to deposit; provided, however, that, if a Required Deposit Event occurs at a time when more than one Reserve Account Letter of Credit or Southern Guaranty is on deposit in the Maintenance Reserve Account or the Distribution Account, the Collateral Agent may elect, in its sole discretion but subject to, in the case of the Maintenance Reserve Account, Section 3.5(b) and, in the case of the Distribution Account, Section 3.8(b), the order in which the Collateral Agent shall draw upon such Reserve Account Letters of Credit or call upon such Southern Guaranties (as the case may be). Any amounts drawn or called upon by the Collateral Agent under any such Reserve Account Security shall be deposited into the Reserve Account Security Account in which such Reserve Account Security was deposited. The Company's obligations under Section 3.15(c) shall be satisfied to the extent of any such deposit. SECTION 3.16 Mill Owner Maintenance Reserve Account. The Company hereby agrees that monies on deposit in, or otherwise credited to (by means of a guaranty, capital infusion agreement or otherwise), the Mill Owner Maintenance Reserve Account shall be used for payment to the Indenture Trustee for deposit into the Indenture Securities Account and to the Tax-Exempt Indenture Trustee for deposit into the Tax-Exempt Indenture Securities Account whenever the amount of monies on deposit in the Indenture Securities Account, the Tax-Exempt Indenture Securities Account, the Revenue Account, the Maintenance Reserve Account, each applicable Debt Service Reserve Account (if any), each applicable Tax-Exempt Debt Service Reserve Account (if any), the Distribution Account, the Subordinated Fee Account and the Subordinated Debt Account (including, in the case of the Maintenance Reserve Account and the Distribution Account, the then Available Amount under any Reserve Account Security on deposit therein) are insufficient to make payments when due on the Senior Securities. 19 ARTICLE IV PRIORITIES; SUBORDINATION SECTION 4.1 Priority of Security Interests. (a) Each Senior Secured Party agrees that, as among the Senior Secured Parties and subject to the priorities set forth in and the other provisions of Article VI, the Security Interest of each Senior Secured Party in any Shared Collateral ranks and will rank equally in priority with the Security Interest of the other Senior Secured Parties in the same Shared Collateral. (b) The priorities specified in this Agreement are applicable irrespective of any statement in any other Security Document or in any other Contract to the contrary, the time or order or method of attachment or perfection of Liens or the time or order of filing of Financing Statements or the giving or failure to give notice of the acquisition or expected acquisition of purchase money or other security interests and, to the extent not provided for in this Agreement, the rights and priorities of the Senior Secured Parties shall be determined in accordance with applicable Law. (c) The Mobile Energy Parties hereby covenant and agree, as a condition to entering into any Financing Document or Subordinated Loan Agreement with a Senior Secured Party or Subordinated Debt Provider (as the case may be), to cause each Person holding Senior Debt or Subordinated Debt to become a party to this Agreement by executing an amendment to this Agreement and becoming a Senior Secured Party or a Subordinated Debt Provider (as the case may be) hereunder, and each of the Intercreditor Parties hereby covenants and agrees to cooperate in respect thereof. SECTION 4.2 Subordination. (a) The Mobile Energy Parties and each Subordinated Debt Provider hereby agree for the benefit of the Senior Secured Parties that all Subordinated Debt shall be junior and subordinate, to the extent and in the manner set forth hereinafter, in right of payment to the prior indefeasible payment or satisfaction in full of all Secured Obligations. In furtherance thereof, each Subordinated Debt Provider shall be subject to the following: (i) A Subordinated Debt Provider shall not ask, demand, sue for, take or receive from the Company, directly or indirectly, in cash or other property or by set-off or in any other manner (including from or by way of the Collateral or any guaranty of payment or performance), payment of all or any Subordinated Debt unless and until the Senior Debt Termination Date shall have occurred; provided, however, that nothing in this Section 4.2(a)(i) shall be deemed to prohibit any Subordinated Debt Provider from receiving payments in accordance with Section 3.11. (ii) Until the Senior Debt Termination Date, a 20 Subordinated Debt Provider shall not (A) accelerate Subordinated Debt for any reason (other than as a result of a Bankruptcy Event in respect of either of the Mobile Energy Parties), (B) exercise any rights or enforce any remedies or assert any claim with respect to the Collateral or any assets of either of the Mobile Energy Parties or sell any of the Collateral, (C) seek to foreclose Liens that may be granted to it pursuant to the terms of the Contracts granting such Liens to such Subordinated Debt Provider or (D) take any action, directly or indirectly, or institute any proceedings, directly or indirectly, with respect to the foregoing; provided, however, that if any principal, interest or other amount required to be paid to such Subordinated Debt Provider by the Company is not paid when due, such Subordinated Debt Provider may charge interest at the overdue rate specified in the applicable Subordinated Loan Agreement. (iii) Upon any distribution of all or any of the assets of either of the Mobile Energy Parties to its creditors upon the dissolution, winding up, liquidation, arrangement, reorganization or composition of such Mobile Energy Party, whether in any bankruptcy, insolvency, arrangement, reorganization, receivership or similar proceedings or upon a general assignment for the benefit of creditors or any other marshalling of the assets and liabilities of such Mobile Energy Party or otherwise, any payment or distribution of any kind (whether in cash, property or securities) that otherwise would be payable or deliverable upon or with respect to Subordinated Debt shall be paid or delivered directly to the Collateral Agent, if such payment is of cash, for application to and, if such payment is of non-cash property or securities, as Collateral for, in either case, the payment or prepayment of the Financing Liabilities until the Financing Liabilities have been paid or otherwise satisfied in full and the Collateral Agent shall have received notice of such satisfaction, termination or expiration. (iv) Each of the Senior Secured Parties hereby authorizes and directs the Collateral Agent on its behalf to demand specific performance of the terms of subordination set forth in this Section 4.2(a), whether or not the Mobile Energy Parties shall have complied with any of the provisions hereof applicable to them, at any time when a Subordinated Debt Provider shall have failed to comply with any of such provisions applicable to such Subordinated Debt Provider. Each Subordinated Debt Provider hereby irrevocably waives any defense based upon the adequacy of a remedy at law that might be asserted as a bar to such remedy of specific performance. (v) Until the Senior Debt Termination Date, a Subordinated Debt Provider shall not commence or join with any creditor other than the Collateral Agent in commencing 21 any proceeding referred to in paragraph (iii) of this Section 4.2(a) for the payment of any amounts that otherwise would be payable or deliverable upon or with respect to Subordinated Debt. (vi) Subject to the termination of the Financing Commitments and the indefeasible payment or satisfaction in full of all of the Financing Liabilities, the Subordinated Debt Providers shall be subrogated to the rights of the Senior Secured Parties to receive payments or distributions of assets of the Mobile Energy Parties made on the Financing Liabilities until the Subordinated Debt shall have been satisfied in full. The foregoing provisions of this Section 4.2(a) regarding subordination are for the benefit of the Senior Secured Parties and shall be enforceable by them directly against the Subordinated Debt Providers, and no Senior Secured Party shall be prejudiced in its right to enforce subordination of any Subordinated Debt by any act or failure to act by either of the Mobile Energy Parties or anyone in custody of its assets or property. The Mobile Energy Parties shall not make any payment to the Subordinated Debt Providers, and the Subordinated Debt Providers shall not retain any payment from the Mobile Energy Parties, in contravention of this Section 4.2(a). (b) Each of the parties hereto hereby acknowledges and agrees that all amounts due and payable to the IDB (including payments on the 1994 Bonds, but excluding rent payments under the IDB Lease Agreement) shall be treated as Operation and Maintenance Costs and shall in no way be affected by or subject to the terms of this Agreement. ARTICLE V EXERCISE OF RIGHTS SECTION 5.1 Exercise of Rights Under Security Documents. So long as any Secured Obligations remain outstanding, the following provisions shall apply: (a) If a Trigger Event shall have occurred and be continuing, upon the written request of the Required Senior Creditors contained in Senior Creditor Certificates, the Collateral Agent, on behalf of the Indenture Trustee, the Tax-Exempt Indenture Trustee and the Working Capital Facility Provider, as applicable, shall be permitted and is hereby authorized to take any and all actions and to exercise any and all rights, remedies and options that it may have under this Agreement, the other Financing Documents and applicable Law; provided, however, that if the underlying event that caused such Trigger Event is a Bankruptcy Event in respect of either of the Mobile Energy Parties, no written request of the Required Senior Creditors 22 shall be required in order to permit and authorize the Collateral Agent following such Trigger Event to take any and all actions and to exercise any and all rights, remedies and options that it may have under this Agreement, the other Financing Documents or applicable Law; provided further, however, that the Collateral Agent shall not amend, modify or supplement (or agree to consent to any such amendment, modification or supplement), directly or indirectly or in the name of either of the Mobile Energy Parties, any Project Contract if such amendment, modification or supplement shall adversely affect any Senior Secured Party in any material respect unless the Collateral Agent shall have obtained the prior written consent of such Senior Secured Party to such amendment, modification or supplement. The Collateral Agent shall provide each Senior Secured Party with at least thirty (30) days prior written notice of all proposed amendments, modifications or supplements to the Project Contracts. Nothing contained herein shall be construed as restricting the right of any Senior Secured Party to cause the acceleration, in accordance with the applicable Financing Document, of the Senior Debt held by such Senior Secured Party. (b) The Senior Secured Parties hereby agree to give each other and the Collateral Agent written notice of the occurrence of any Event of Default or Trigger Event as soon as practicable after the occurrence thereof; provided, however, that the failure to provide such notice shall not limit or impair the rights of the Senior Secured Parties hereunder or under any other Financing Document or result in any liability to the Senior Secured Party failing to do so. (c) Each Intercreditor Party and the Collateral Agent hereby acknowledge and agree that (i) all Indenture Securities Collateral held by the Indenture Trustee in accordance with Article IV of the Indenture is held for the benefit of the Holders of the Indenture Securities, (ii) the Indenture Trustee shall hold such Indenture Securities Collateral solely for the benefit of the Holders of the Indenture Securities and (iii) such Indenture Securities Collateral shall not be subject to the Lien granted by the Security Agreement or the Mortgage. The Indenture Trustee hereby acknowledges and agrees that it shall make all payments to the Collateral Agent required to be made by it pursuant to the Indenture in accordance with the terms and conditions of the Indenture. (d) Each Intercreditor Party and the Collateral Agent hereby acknowledge and agree that (i) all Tax-Exempt Indenture Securities Collateral held by the Tax-Exempt Indenture Trustee in accordance with Article ( ) of the Tax-Exempt Indenture is held for the benefit of the Holders of the Tax-Exempt Indenture Securities, (ii) the Tax-Exempt Indenture Trustee shall hold such Tax-Exempt Indenture Securities Collateral solely for the benefit of the Holders 23 of the Tax-Exempt Indenture Securities and (iii) such Tax- Exempt Indenture Securities Collateral shall not be subject to the Lien granted by the Security Agreement or the Mortgage. The Tax-Exempt Indenture Trustee hereby acknowledges and agrees that it shall make all payments to the Collateral Agent required to be made by it pursuant to the Tax-Exempt Indenture in accordance with the terms and conditions of the Tax-Exempt Indenture. (e) Each Intercreditor Party hereby acknowledges and agrees that the Collateral Agent shall administer the Shared Collateral in the manner contemplated by this Agreement and the other Security Documents and the Collateral Agent shall exercise, as directed by the Required Senior Creditors in Senior Creditor Certificates in accordance with Section 5.1(a), such rights and remedies with respect to the Shared Collateral (including the curing of defaults under the Project Contracts) as are granted to it under the Security Documents, this Agreement and applicable Law. No Intercreditor Party and no class or classes of Intercreditor Parties shall have any right (i) to direct the Collateral Agent to take any action in respect of the Shared Collateral other than in accordance with Section 5.1(a) or (ii) to take any action with respect to the Shared Collateral (A) independently of the Collateral Agent or (B) other than to direct the Collateral Agent in writing to take action in accordance with Section 5.1(a) hereof; provided, however, that nothing in this Section 5.1(e) shall be deemed to limit the ability of any Senior Secured Party to take any action in accordance with Section 5.1(i). (f) From time to time during the continuation of a Trigger Event, the Collateral Agent shall, as instructed in Senior Creditor Certificates of the Required Senior Creditors in accordance with Section 5.1(a), render an accounting of the current balance of each Intercreditor Agreement Account or other amounts or monies administered by the Collateral Agent under this Agreement. (g) Each of the Mobile Energy Parties covenants and agrees that it shall not take any action that would prohibit or impair the ability of the Collateral Agent from participating in any objection to any foreclosure or similar proceeding instituted by a junior lienor against either Mobile Energy Party; provided, however, that nothing in this Section 5.1(g) shall, or shall be deemed to, affect the relationship among the Senior Secured Parties or the relationship among the Senior Secured Parties, the other Intercreditor Parties and the Collateral Agent, nor shall anything in this Section 5.1(g) affect any representation, warranty, covenant or agreement of any Senior Secured Party under or in this Agreement. (h) Each Senior Secured Party hereby agrees that, upon the request of the Collateral Agent, it shall give notice to 24 the Collateral Agent and the Company of (i) all the outstanding Financing Liabilities owed to such Senior Secured Party as of the date of such request, (ii) the unutilized outstanding Financing Commitments of such Senior Secured Party as of the date of such request and (iii) any other information that the Collateral Agent may reasonably request. The Company agrees that, upon the request of the Collateral Agent, the Company shall send to the Collateral Agent an Officer's Certificate of the Company certifying as to the matters described in clauses (i) and (ii) of the preceding sentence. (i) Notwithstanding the foregoing provisions of this Article V, each Senior Secured Party individually shall be authorized to cure any default of the Company under any Project Contract in accordance with the Consent to Assignment executed in connection with such Project Contract; provided, however, that monies advanced in connection with such cure shall not constitute Senior Debt unless such monies would otherwise satisfy the requirements for the issuance of Senior Debt. (j) Upon the commencement of the exercise of remedies the Collateral Agent shall act promptly and in good faith and take such actions as it reasonably believes to be necessary to achieve the maximum value for all Shared Collateral, including Receivables and Fuel Inventory Proceeds. (k) The Intercreditor Parties hereby agree that if, at any time during the term of this Agreement, any Intercreditor Party receives any payment or distribution of assets of the Mobile Energy Parties of any kind or character, whether monies or cash proceeds resulting from liquidation of the Shared Collateral (other than in accordance with this Agreement), such Intercreditor Party shall hold such payment in trust for the benefit of the Senior Secured Parties and shall immediately remit such payment or distribution to the Collateral Agent, and the Collateral Agent shall deposit such monies or proceeds in the Revenue Account for application or distribution, as the case may be, in accordance with the terms of this Agreement. ARTICLE VI DIVISION OF PROCEEDS SECTION 6.1 Division of Proceeds. (a) Upon and following a Wind-Up Event, the proceeds of any sale, disposition or other realization or collection by the Collateral Agent or by any Senior Secured Party upon the Shared Collateral (or any portion thereof) pursuant to the Security Documents shall be distributed in the following order of priorities: 25 First, to the Collateral Agent and to the Indenture Trustee and the Tax-Exempt Indenture Trustee, ratably, from proceeds of the Shared Collateral (other than Receivables and Fuel Inventory Proceeds), to the extent available, and then from Receivables and Fuel Inventory Proceeds, an amount equal to the amounts due in respect of the Collateral Agent Claims and the Trustee Claims, respectively, due and payable as of the date of such distribution, provided that, prior to any such distribution to the Indenture Trustee or the Tax- Exempt Indenture Trustee, the Collateral Agent shall have received a certificate signed by a Responsible Officer of the Indenture Trustee and the Tax-Exempt Indenture Trustee (as the case may be), in form and substance reasonably satisfactory to the Collateral Agent, setting forth the amount so payable to the Indenture Trustee and the Tax- Exempt Indenture Trustee (as the case may be) as of the date of such distribution; Second, to the Working Capital Facility Provider from the Receivables and Fuel Inventory Proceeds, an amount equal to the unpaid amount of all Financing Liabilities owed by the Company under the Working Capital Facility, provided that prior to any such distribution the Collateral Agent shall have received a certificate executed by an Authorized Representative of the Working Capital Facility Provider, in form and substance reasonably satisfactory to the Collateral Agent, setting forth the amount so payable to the Working Capital Facility Provider as of the date of such distribution; Third, to the Senior Secured Parties (including the Working Capital Facility Provider to the extent that all amounts owed to it under the Working Capital Facility have not been repaid pursuant to paragraph Second of this Section 6.1(a)), ratably, an amount equal to the unpaid amount of all Financing Liabilities owed to the Senior Secured Parties, provided that prior to any such distribution the Collateral Agent shall have received a certificate executed by an Authorized Representative of each such Senior Secured Party, in form and substance reasonably satisfactory to the Collateral Agent, setting forth the amount so payable to such Senior Secured Party as of the date of such distribution; Fourth, to the Subordinated Debt Providers, ratably, an amount equal to the unpaid obligations owed to such Subordinated Debt Providers by the Mobile Energy Parties under any Subordinated Loan Agreement, provided that prior to any such distribution the Collateral Agent shall have received a certificate executed by an Authorized Representative of each such Subordinated Debt Provider, in form and substance reasonably satisfactory to the Collateral Agent, setting forth the amount so payable to such Subordinated Debt Provider as of the date of such distribution; and 26 Fifth, to the Mobile Energy Parties or their successors or assigns or to whomever may be lawfully entitled to receive the same or as a court of competent jurisdiction may direct, any surplus then remaining from such proceeds, it being understood that each of the Mobile Energy Parties shall remain liable to the extent of any deficiency between the amount of the proceeds of the Collateral and the aggregate of the sums referred to in paragraphs First through Fourth of this Section 6.1(a). (b) As used in this Section 6.1, "proceeds" of Shared Collateral shall mean cash, securities and other property realized in respect of, and distributions in kind of, Shared Collateral, including any thereof received under any reorganization, liquidation or adjustment of Debt of the Mobile Energy Parties or any issuer of or obligor on any of the Shared Collateral. (c) The Collateral Agent shall, upon receipt of indemnity satisfactory to it, use reasonable efforts to join in any foreclosure or similar proceeding instituted by a junior lienor with respect to the Shared Collateral. The Collateral Agent shall hold all proceeds of the Collateral received by it in connection with such proceeding instituted by a junior lienor and not consolidated with any action by the Collateral Agent on behalf of the Senior Secured Parties pending application of such proceeds by the Collateral Agent in accordance with the written instructions of the Required Senior Creditors. SECTION 6.2 Application of Loss Proceeds. (a) All Loss Proceeds to be distributed by the Collateral Agent pursuant to Section 3.10(d)(i) or 3.10(d)(iv) shall be distributed within five (5) Business Days of the receipt by the Collateral Agent of the appropriate notice thereunder in the following order of priorities: First, to the Collateral Agent and to the Indenture Trustee and the Tax-Exempt Indenture Trustee, ratably, an amount equal to the amounts due in respect of the Collateral Agent Claims and the Trustee Claims, respectively, due and payable as of the date of such distribution, provided that, prior to any such distribution to the Indenture Trustee or the Tax-Exempt Indenture Trustee, the Collateral Agent shall have received a certificate signed by a Responsible Officer of the Indenture Trustee or the Tax-Exempt Indenture Trustee (as the case may be), in form and substance reasonably satisfactory to the Collateral Agent, setting forth the amount so payable to the Indenture Trustee and the Tax- Exempt Indenture Trustee (as the case may be) as of the date of such distribution; and provided further that such amounts shall be payable from proceeds of the Shared Collateral other than Loss Proceeds relating solely to Receivables and Fuel Inventory Proceeds, to the extent available, prior to the application of Loss Proceeds relating solely to Receivables or Fuel Inventory Proceeds for such purpose; 27 Second, to the Working Capital Facility Provider, from Loss Proceeds relating solely to Fuel Inventory Proceeds, an amount equal to the unpaid Financing Liabilities owed under the Working Capital Facility, provided that prior to any such distribution the Collateral Agent shall have received a certificate executed by a Responsible Officer of the Working Capital Facility Provider, in form and substance reasonably satisfactory to the Collateral Agent, setting forth the amount so payable to the Working Capital Facility Provider as of the date of such distribution; Third, to the Senior Secured Parties, ratably, an amount equal to the unpaid amount of all Financing Liabilities owed to the Senior Secured Parties, provided that prior to any such distribution the Collateral Agent shall have received a certificate executed by a Responsible Officer of each such Senior Secured Party, in form and substance reasonably satisfactory to the Collateral Agent, setting forth the amount so payable to such Senior Secured Party as of the date of such distribution; Fourth, to the Mill Owners, in an amount specified pursuant to Section 10.7 of the Master Operating Agreement or Article XIV of the Lease, as applicable, provided that prior to any such distributions the Collateral Agent shall have received a certificate executed by a Responsible Officer of each of the Mill Owners and the Company, in form and substance reasonably satisfactory to the Collateral Agent, setting forth the amount so payable to each such Mill Owner as of the date of such distribution; Fifth, to the Subordinated Debt Providers, ratably, an amount equal to the unpaid amounts owed to such Subordinated Debt Providers by the Mobile Energy Parties under any Subordinated Loan Agreement, provided that prior to any such distribution the Collateral Agent shall have received a certificate executed by a Responsible Officer of each such Subordinated Debt Provider in form and substance reasonably satisfactory to the Collateral Agent setting forth the amount payable to such Subordinated Debt Provider pursuant to this clause as of the date of such distribution; and Sixth, to the Mobile Energy Parties or their successors or assigns or to whomever may be lawfully entitled to receive the same or as a court of competent jurisdiction may direct, any surplus then remaining from such proceeds. (b) Subject to the following sentence, within five (5) Business Days of the completion of the rebuilding, repairing, restoration or replacement of the Energy Complex contemplated by Section 3.10(d)(ii) or 3.10(d)(iii), all Loss Proceeds that were not used for such rebuilding, repairing, restoration or replacement shall be distributed by the Collateral Agent ratably (based upon the amount allocable to the specified Person given the aggregate of the amounts indicated by clauses (i), (ii) and 28 (iii) below, as set forth in an Officer's Certificate of the Company delivered to the Collateral Agent), and in each case to be applied to the redemption of Senior Debt in accordance with the terms of the Indenture, the Tax-Exempt Indenture and the Working Capital Facility (as the case may be), to (i) the Indenture Trustee in respect of the Outstanding Indenture Securities, (ii) the Tax-Exempt Indenture Trustee in respect of the Outstanding Tax-Exempt Indenture Securities and (iii) if the Working Capital Commitment was reduced in connection with the applicable Event of Loss or Event of Eminent Domain, the Working Capital Facility Provider in respect of the lesser of (A) the principal amount of Working Capital Loans payable as a result of such reduction and (B) the principal amount of outstanding amount of Working Capital Loans. Notwithstanding the foregoing, if the Loss Proceeds that were not used for such rebuilding, repair, restoration or replacement are less than $3,000,000, then, upon the receipt of an Officer's Certificate of the Company directing the Collateral Agent to transfer such excess Loss Proceeds as set forth in clause (1) or (2) below, and subject to any conditions set forth in such clauses, the Collateral Agent shall transfer such excess Loss Proceeds (1) to the Revenue Account, provided that, if there are Outstanding Tax-Exempt Indenture Securities, the Tax-Exempt Indenture Trustee and the Collateral Agent shall receive an opinion of Bond Counsel to the effect that such transfer and the following application will not adversely effect the exclusion of interest on such Tax-Exempt Securities from gross income for Federal income tax purposes or (2) to the Indenture Securities Account and the Tax-Exempt Indenture Securities Account, ratably, to be applied to the payment or redemption of Securities and Tax-Exempt Indenture Securities, respectively, at the earliest date permissible under the terms thereof. (c) Each Senior Secured Party agrees that the proceeds of any sale, disposition or other realization with respect to Collateral held by it for the benefit of holders of some but not all of the Senior Secured Parties shall be applied to the payment of obligations owed to such Senior Secured Parties for as long as the specific Collateral is held. ARTICLE VII RIGHTS OF SENIOR SECURED PARTIES; RIGHTS AND DUTIES OF COLLATERAL AGENT SECTION 7.1 Rights of Senior Secured Parties. As between the Senior Secured Parties and the Subordinated Debt Providers, the Senior Secured Parties and the Collateral Agent (upon receipt of Senior Creditor Certificates from the Required Senior Creditors) may, at any time and from time to time, without any consent of or notice to any Subordinated Debt Providers and in each case in accordance with the Financing Documents: (a) amend in any manner any Financing Document in accordance with the terms thereof; (b) sell, exchange, release, not perfect and otherwise 29 deal with any property at any time pledged, assigned or mortgaged to secure the Financing Liabilities in accordance with the Financing Documents; (c) release anyone liable in any manner under or in respect of the Financing Liabilities; (d) exercise or refrain from exercising any rights against the Mobile Energy Parties and others; and (e) apply any sums from time to time received to payment or satisfaction of the Financing Liabilities, except as otherwise provided in Article VI. SECTION 7.2 Duties of Collateral Agent. (a) The Collateral Agent will give notice to the Senior Secured Parties of any action taken, or notices received, by the Collateral Agent hereunder or under any other Financing Document; notice of action taken shall be given prior to the taking of such action by the Collateral Agent unless the Collateral Agent determines that to do so would be detrimental to the interests of the Senior Secured Parties, in which event such notice shall be given promptly after the taking of such action. (b) The Senior Secured Parties agree that all liens on and security interests in the Shared Collateral securing the Secured Obligations shall be held in the name of the Collateral Agent and administered by and through the Collateral Agent, in accordance with this Agreement, the other Financing Documents and applicable Law. If, as of the date hereof, or at any time in the future, any Senior Secured Party at any time holds a lien on or security interest in any Shared Collateral in its own name, it agrees to assign it, without warranty or recourse, to the Collateral Agent (to be held by the Collateral Agent as the collateral agent for the Senior Secured Parties). The Collateral Agent shall hold its liens on and security interests in the Shared Collateral for the benefit of the Senior Secured Parties as provided herein and in the other Financing Documents. (c) Notwithstanding anything to the contrary in this Agreement or any other Financing Document, the Collateral Agent shall not be required to exercise any rights or remedies under this Agreement, any of the other Financing Documents or applicable Law or give any consent under this Agreement or any of the other Financing Documents or enter into any Contract amending, modifying, supplementing or waiving any provision of any this Agreement or any other Financing Document unless it shall have been directed to do so in Senior Creditor Certificates of the Required Senior Creditors. (d) Upon receipt of a written direction contained in Senior Creditor Certificates representing a majority in principal amount of the Combined Exposure, the Collateral Agent shall deliver the written notice specified in Section 5.17(c) of the Indenture to the Indenture Trustee and in Section 4.17(c) of the IDB Lease Agreement to the Tax-Exempt Indenture Trustee. SECTION 7.3 Rights of Collateral Agent. (a) The Collateral Agent may execute any of its duties under this Agreement, any other Financing Documents or applicable Law by or 30 through agents or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. (b) Neither the Collateral Agent nor any of its officers, directors, employees, agents, attorneys-in-fact or affiliates shall be (i) liable for any action lawfully taken or omitted to be taken by it under or in connection with this Agreement or any other Financing Documents (except for its negligence or willful misconduct) or (ii) responsible in any manner to any of the Senior Secured Parties for any recitals, statements, representations or warranties made in this Agreement or any other Financing Documents or in any certificate, report, statement or other document referred to or provided for in, or received by the Collateral Agent under or in connection with, this Agreement or any other Financing Documents or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Financing Documents or for any failure of the Mobile Energy Parties or any other Person to perform their obligations hereunder or thereunder. (c) The Collateral Agent shall be entitled to rely, and shall be fully protected in relying, upon any note, writing, resolution, request, direction, certificate, notice, consent, affidavit, letter, cablegram, telegram, telecopy, telex or teletype message, statement, order or other document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons or upon an opinion of legal counsel (including counsel to the Mobile Energy Parties), independent accountants or other experts selected by the Collateral Agent. In connection with any request or direction of the Required Senior Creditors, the Collateral Agent shall act in accordance with directions contained in, shall be entitled to rely and shall be fully protected in relying on any Senior Creditor Certificate delivered by a Senior Secured Party; provided, however, that in the event the Collateral Agent receives conflicting directions contained in Senior Creditor Certificates from more than one of the Senior Secured Parties, the Collateral Agent shall act in accordance with directions contained in Senior Creditor Certificates representing the greatest percentage in principal amount of the Combined Exposure. The Collateral Agent shall be fully justified in failing or refusing to take any action under this Agreement or any other applicable Financing Document (i) if such action would, in the opinion of the Collateral Agent (which may be based upon the opinion of legal counsel), be contrary to law or the terms of this Agreement or such other applicable Financing Document, (ii) if such action is not specifically provided for in this Agreement or such other Financing Documents or it shall not have received any such advice or concurrence of the Required Senior Creditors as it deems appropriate, (iii) if, in connection with the taking of any such action hereunder or under such Financing Documents that would constitute an exercise of remedies hereunder or under such Financing Documents, it shall not first be indemnified to its satisfaction by the Senior Secured Parties (other than the 31 Indenture Trustee and the Tax-Exempt Indenture Trustee in their individual capacities) against any and all risk of nonpayment, liability and expense that may be incurred by it by reason of taking or continuing to take any such action or (iv) if, notwithstanding anything to the contrary contained in Section 7.3(e), in connection with the taking of any such action that would constitute a payment due under any Project Contract, it shall not first have received from the Senior Secured Parties funds equal to the amount payable. The Collateral Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement or any other Financing Document in accordance with a request contained in Senior Creditor Certificates representing the Required Senior Creditors, and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Intercreditor Parties. (d) If, with respect to a proposed action to be taken by it, the Collateral Agent shall determine in good faith that the provisions of this Agreement or any other Financing Document relating to the functions or responsibilities or discretionary powers of the Collateral Agent are or may be ambiguous or inconsistent, the Collateral Agent shall notify the Senior Secured Parties, identifying the proposed action, and may decline either to perform such function or responsibility or to take the action requested unless it has received the written confirmation of the Required Senior Creditors executed by their Authorized Representatives that the Required Senior Creditors concur in the circumstances that the action proposed to be taken by the Collateral Agent is consistent with the terms of this Agreement or such other Financing Document or is otherwise appropriate. The Collateral Agent shall be fully protected in acting or refraining from acting upon the confirmation of the Required Senior Creditors in this respect, and such confirmation shall be binding upon the Collateral Agent and the other Intercreditor Parties. (e) The Collateral Agent shall not be deemed to have actual, constructive, direct or indirect knowledge or notice of the occurrence of any default or Event of Default unless and until a Responsible Officer of the Collateral Agent has received a written notice or a certificate from an Authorized Representative of an Intercreditor Party stating that a default or an Event of Default has occurred. The Collateral Agent shall have no obligation whatsoever either prior to or after receiving such notice or certificate to inquire whether or not a default or an Event of Default has in fact occurred and shall be entitled to rely conclusively, and shall be fully protected in so relying, on any notice or certificate so furnished to it. No provision of this Agreement or any other Financing Document shall require the Collateral Agent to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or under any other Financing Document or the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability, including an 32 advance of monies necessary to take the action requested, is not reasonably assured to it; in addition, in respect of any potential environmental liability or the taking of title to any real property, the Collateral Agent may decline to act unless it receives indemnity satisfactory to it in its sole discretion, including an advance of monies necessary to take the action requested. In the event that the Collateral Agent receives such a notice of the occurrence of any Event of Default, the Collateral Agent shall give notice thereof to the Senior Secured Parties. The Senior Secured Parties shall provide evidence of satisfactory indemnity to the Collateral Agent for any action directed by the Required Senior Creditors including an advance of monies necessary to take the action requested. The Collateral Agent shall take such action with respect to such Event of Default as so requested pursuant to Section 5.1(a), subject, however, to the third sentence of this Section 7.3(e). (f) The Mobile Energy Parties will pay upon demand to the Collateral Agent the amount of any and all reasonable fees and out-of-pocket expenses, including the reasonable fees and expenses of its counsel (and any one local counsel) and of any of its experts and agents, that the Collateral Agent may incur in connection with (i) the administration of this Agreement and the other Financing Documents, (ii) the custody or preservation of, or the sale of, collection from, or other realization upon, any of the Collateral, (iii) the exercise or enforcement (whether through negotiations, legal proceedings or otherwise) of any of the rights of the Collateral Agent or the Senior Secured Parties hereunder or under the other Financing Documents or (iv) the failure by the Mobile Energy Parties to perform or observe any of the provisions hereof or of any of the other Security Documents. The provision of this Section 7.3(f) shall survive the expiration or earlier termination of this Agreement. (g) Each of (i) the Mobile Energy Parties hereby agrees to deliver to the Collateral Agent, concurrently with the delivery thereof to any Senior Secured Party, and (ii) the Senior Secured Parties hereby agrees to deliver to the Collateral Agent, concurrently with the delivery thereof to either of the Mobile Energy Parties, all notices, requested documents and other instruments delivered by such Person to such Senior Secured Party or the Mobile Energy Parties (as the case may be) under or pursuant to the Financing Documents. SECTION 7.4 Lack of Reliance on the Collateral Agent. Each of the Senior Secured Parties expressly acknowledges that neither the Collateral Agent nor any of its officers, directors, employees, agents or attorneys-in-fact has made any representations or warranties to it and that no act by the Collateral Agent hereafter taken, including any review of the Energy Complex or of the affairs of the Mobile Energy Parties, shall be deemed to constitute any representation or warranty by the Collateral Agent to any Senior Secured Party. Each Senior Secured Party (other than the Indenture Trustee and the Tax- Exempt Indenture Trustee) represents to the Collateral Agent that 33 it has, independently and without reliance upon the Collateral Agent or any other Senior Secured Party, and based upon such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, operations, property, financial and other condition and creditworthiness of the Energy Complex and the Mobile Energy Parties. Each Senior Secured Party (other than the Indenture Trustee and the Tax- Exempt Indenture Trustee) also represents that it will, independently and without reliance upon the Collateral Agent or any other Senior Secured Party, and based upon such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement, and to make such investigation as it deems necessary to inform itself as to the business, operations, property, financial and other condition and creditworthiness of the Energy Complex and the Mobile Energy Parties. Except for notices, reports and other documents expressly required to be furnished to the Senior Secured Parties by the Collateral Agent hereunder, the Collateral Agent shall not have any duty or responsibility to provide any Senior Secured Party with any credit or other information concerning the business, operations, property, financial and other condition or creditworthiness of the Energy Complex and the Mobile Energy Parties that may come into the possession of the Collateral Agent or any of its officers, directors, employees, agents or attorneys-in-fact. ARTICLE VIII INDEMNIFICATION The Senior Secured Parties severally agree to indemnify the Collateral Agent in its capacity as such and in its individual capacity (to the extent not reimbursed by the Mobile Energy Parties and without limiting the obligation of the Mobile Energy Parties to do so), ratably according to the aggregate amounts of their respective Secured Obligations on the date the activities giving rise to the Collateral Agent's demand for indemnification occurred, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind whatsoever that may at any time be imposed on, incurred by or asserted against the Collateral Agent in its capacity as such and in its individual capacity in any way relating to or arising out of this Agreement or the other Financing Documents or the performance of its duties as Collateral Agent hereunder or thereunder or any action taken or omitted by the Collateral Agent in its capacity as such under or in connection with any of the foregoing (including any claim that the Collateral Agent is the owner or operator of the Energy Complex and liable as such pursuant to any Environmental Requirement), provided that the Senior Secured Parties shall not be liable for the payment of any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements to the extent that any of 34 the foregoing result from the Collateral Agent's negligence or willful misconduct. The agreements in this Article VIII shall survive the payment or satisfaction in full of the Secured Obligations or any other termination of this Agreement. Each of the Mobile Energy Parties agrees, jointly and severally, to indemnify the Collateral Agent and each Senior Secured Party from and against any and all claims, losses and liabilities relating to or arising out of (i) this Agreement or any other Financing Documents (including enforcement of such Financing Documents, but excluding any such claims, losses or liabilities resulting from the Collateral Agent's or such Senior Secured Party's negligence or willful misconduct) or (ii) any refund or adjustment of any amount paid or payable to the Collateral Agent or any Senior Secured Party under or in respect of any Project Contract or any other Shared Collateral, or any interest thereon, that may be ordered or otherwise required by any Person. ARTICLE IX ELIGIBILITY OF COLLATERAL AGENT; REMOVAL AND REPLACEMENT OF COLLATERAL AGENT SECTION 9.1 Corporate Collateral Agent Required; Eligibility. There shall at all times be a Collateral Agent hereunder that shall be a bank or trust company organized and doing business under the laws of the United States of America or of any State thereof, authorized under such laws to exercise corporate trust powers, having (or whose obligations are unconditionally guaranteed by a corporation having) a combined capital and surplus of at least $500,000,000, which bank or trust company is subject to supervision or examination by Federal or state authority and does not provide credit or credit enhancement to either of the Mobile Energy Parties. If such bank or trust company publishes reports of condition at least annually, pursuant to Law or to the requirements of the aforesaid supervising or examining authority, then for the purposes of this Section 9.1, the combined capital and surplus of such bank or trust company shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Collateral Agent shall cease to be eligible in accordance with the provisions of this Article, it shall resign immediately in the manner and with the effect hereinafter specified in this Section 9.1. SECTION 9.2 Registration, Removal and Replacement. The Collateral Agent may resign as Collateral Agent upon thirty (30) days' written notice to the Senior Secured Parties and may be removed at any time with or without cause by the Required Senior Creditors, with any such resignation or removal to become effective only upon the appointment of a successor Collateral Agent under this Section 9.2. If the Collateral Agent shall 35 resign or be removed as Collateral Agent, then the Required Senior Creditors shall (and if no such successor shall have been appointed within thirty (30) days of the Collateral Agent's resignation or removal, the Collateral Agent may) appoint a successor agent for the Senior Secured Parties, whereupon such successor agent shall succeed to the rights, powers and duties of the "Collateral Agent," and the term "Collateral Agent" shall mean such successor agent effective upon its appointment, and the former Collateral Agent's rights, powers and duties as Collateral Agent shall be terminated, without any other or further act or deed on the part of such former Collateral Agent (except that the resigning Collateral Agent shall deliver all Collateral then in its possession to the successor Collateral Agent) or any of the Intercreditor Parties. The indemnity given any retiring Collateral Agent pursuant to Article VIII and any further indemnity granted under Section 6.1(c), 7.3(c) or 7.3(e) shall survive any resignation or removal hereunder. After any retiring Collateral Agent's resignation or removal hereunder as Collateral Agent, the provisions of this Agreement shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Collateral Agent. In the event that a successor Collateral Agent is not appointed within the time period specified in this Section 9.2 following a resignation or removal of the Collateral Agent, the Collateral Agent or any Senior Secured Party may petition a court of competent jurisdiction for the appointment of a successor Collateral Agent. ARTICLE X REPRESENTATIONS (a) Representations of Mobile Energy Parties. Each of the Mobile Energy Parties represents and warrants, as to itself and not to the other, to the Collateral Agent as follows: (i) The Company is (A) a limited liability company duly formed, validly existing and in good standing under the laws of the State of Alabama and (B) duly authorized to do business and is in good standing in each jurisdiction where the character of its properties or the nature of its activities makes such qualification necessary. Mobile Energy is (A) a corporation duly formed, validly existing and in good standing under the laws of the State of Alabama and (B) duly authorized to do business and is in good standing in each jurisdiction where the character of its properties or the nature of its activities makes such qualification necessary. Each of the Mobile Energy Parties has all requisite limited liability company or corporate (as the case may be) power and authority to own and operate the property it purports to own and to carry on its business as now being conducted and as proposed to be conducted in respect of the Energy Complex. (ii) Each of the Mobile Energy Parties has all 36 necessary limited liability company or corporate (as the case may be) power and authority to execute, deliver and perform its obligations under this Agreement. (iii) All action on the part of the Mobile Energy Parties that is required for the authorization, execution, delivery and performance of this Agreement has been duly and effectively taken. The execution, delivery and performance of this Agreement by the Mobile Energy Parties does not require the approval or consent of any member or shareholder, or holder or trustee of any Debt or other obligations, of either of the Mobile Energy Parties that has not been obtained. (iv) This Agreement has been duly executed and delivered by each of the Mobile Energy Parties and constitutes a legal, valid and binding obligation of such Mobile Energy Party, enforceable against it in accordance with the terms thereof, except as such enforceability (i) may be limited by applicable bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium and similar laws relating to or affecting the enforcement of creditors' rights and remedies generally and (ii) is subject to general principles of equity (regardless of whether enforceability is considered in a proceeding in equity or at law) and the discretion of the court before which any proceeding therefor may be brought and to public policy or Federal or state laws that might limit rights to indemnification. (v) Neither the execution, delivery and performance of this Agreement by the Mobile Energy Parties nor the consummation of any of the transactions contemplated hereby by the Mobile Energy Parties nor performance of or compliance with the terms and conditions hereof or thereof by the Mobile Energy Parties (A) contravenes any Governmental Approvals or any provision of Law applicable to either of the Mobile Energy Parties or any of the Collateral, (B) conflicts with or constitutes a default under or results in the violation of the provisions of the Articles of Organization or (Operating Agreement) of the Company or certificate of incorporation or by-laws of Mobile Energy or, unless such conflict, default or violation would not reasonably be expect to have a Material Adverse Effect, of any other Project Documents or any indenture, mortgage, deed of trust, sale/leaseback agreement, loan agreement or other similar financing agreement or instrument or other agreement or instrument to which either of the Mobile Energy Parties is a party or by which such Mobile Energy Party or any of its property or assets is bound or to which either may be subject or (C) results in the creation or imposition of any Liens (other than Permitted Liens) on any of the property or assets of either of the Mobile Energy Parties, or results in the acceleration of any obligation of either of the Mobile Energy Parties, that would reasonably be 37 expected to have a Material Adverse Effect. (vi) There are no claims, actions, suits, investigations or proceedings at law or in equity by or before any arbitrator or any Governmental Authority now pending or (to the knowledge of the Mobile Energy Parties) threatened against either of the Mobile Energy Parties or any Affiliate thereof, or any property or other assets or rights of either of the Mobile Energy Parties or any Affiliate thereof with respect to this Agreement, any other Project Document or the Energy Complex, that would reasonably be expected to result in a Material Adverse Effect. (b) Representations of Senior Secured Parties. Each of the Indenture Trustee, the Tax-Exempt Indenture Trustee and the Working Capital Facility Provider, represents and warrants as to itself and not the others, to the Collateral Agent as follows: (i) It is duly formed, validly existing and in good standing under the laws of the jurisdiction of its organization and is duly qualified to do business and is in good standing in each jurisdiction where the character of its properties or the nature of its activities makes such qualification necessary, except where the failure to effect such qualification would not have a material adverse effect upon its ability to perform its obligations under this Agreement and the other Financing Documents to which it is a party. It has all necessary power and authority (corporate or otherwise) to execute, deliver and perform under this Agreement and such other Financing Documents. (ii) All action on its part that is required for the authorization, execution, delivery and performance of this Agreement and the other Financing Documents to which it is a party has been duly and effectively taken. The execution, delivery and performance of this Agreement and the other Financing Documents to which it is a party do not require the approval or consent of any shareholder or the holder or trustee of any Debt or other obligations that has not been obtained. (iii) This Agreement and each of the other Financing Documents to which it is a party have been duly executed and delivered by each such Senior Secured Party and constitute the legal, valid and binding obligation of each such Senior Secured Party, enforceable against it in accordance with the terms thereof, except as such enforceability (A) may be limited by applicable bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting the enforcement of creditors' rights and remedies generally and (B) is subject to general principles of equity (regardless of whether enforceability is considered in a proceeding in equity or at law). 38 (iv) Neither the execution, delivery and performance of this Agreement and the other Financing Documents to which it is a party nor the consummation of any of the transactions contemplated hereby or thereby or performance of or compliance with the terms and conditions hereof or thereof (A) contravenes any Governmental Approvals or any provision of Law applicable to such Senior Secured Party or any of the Collateral or (B) constitutes a default under or results in the violation of the provisions in the charter, certificate of incorporation or by-laws of such Senior Secured Party or of any indenture, loan or credit agreement or any other agreement, lease, instrument or document to which such Senior Secured Party is a party or by which it or its properties may be bound. (v) There are no actions, suits or proceedings at law or in equity or by or before any Governmental Authority now pending or, to the best of such Senior Secured Party's knowledge, threatened that could reasonably be expected to have a material and adverse effect on the performance by such Senior Secured Party of its obligations hereunder or under the other Financing Documents to which it is a party or that questions the validity, binding effect or enforceability hereof or of such other Financing Documents, any action to be taken pursuant hereto or thereto or any transactions contemplated hereby or thereby. ARTICLE XI INDEPENDENT ENGINEER SECTION 11.1 Removal of Independent Engineer; Payment of Independent Engineer. (a) The Collateral Agent shall remove the Independent Engineer (i) if at any time the Independent Engineer becomes incapable of acting or is, or is reasonably likely to be, adjudged bankrupt or insolvent or a receiver is appointed for, or any public officer shall take charge or control of, the Independent Engineer or its property or its affairs for the purpose of rehabilitation, conservation or liquidation, (ii) upon receipt of Senior Creditor Certificates representing 33-1/3% of the aggregate principal amount of Outstanding Senior Securities or (iii) upon the reasonable request of the Company if (A) the Independent Engineer has failed to carry out its obligations under the Financing Documents or (B) during the last month of a Fiscal Year the Company demonstrates to the reasonable satisfaction of the Collateral Agent that a Qualified Engineer has agreed to perform, for costs and fees in an amount equal to or less than ninety-five percent (95%) of the amount of costs and fees charged by the then Independent Engineer, the services specified in and contemplated by the Financing Documents on substantially identical non-price terms as those contained in the Independent Engineer Agreement relating to the engagement of the then current Independent Engineer. Any such removal of the Independent Engineer shall become effective only upon the 39 appointment of a successor Independent Engineer under Section 11.1(b). (b) If the Independent Engineer shall be removed or shall resign, then the Company shall appoint a successor Independent Engineer from the list of Qualified Engineers attached as Schedule 1, such successor to be, (i) in the case of a removal of the Independent Engineer pursuant to Section 11.1(a)(iii)(B), the Qualified Engineer referred to in such Section 11.1(a)(iii)(B) and (ii) in any other case, one (1) of two (2) Qualified Engineers designated by the Collateral Agent. (c) The Company shall pay for all services performed by the Independent Engineer and its reasonable costs and expenses related thereto. SECTION 11.2 Third Party Engineer Dispute Resolution. If the Company and the Independent Engineer are in dispute in respect of a notice, plan, report, certificate or budget and they are unable to resolve the dispute within seven (7) days of the Independent Engineer expressing its disagreement with such notice, plan, report, certificate or budget, a Qualified Engineer (the "Third Party Engineer") shall be designated to consider and decide the issues raised by such dispute. The Company shall designate the Third Party Engineer not later than the third (3rd) day following the expiration of the seven (7) day period described above and such designation shall become effective in three (3) days, unless the Collateral Agent gives notice of its disagreement with such selection within such three (3) day period, in which case the Company shall designate a different Qualified Engineer as the Third Party Engineer. Within three (3) days of the effectiveness of a designation of a Third Party Engineer, each of the Company and the Independent Engineer shall submit to the Third Party Engineer a notice setting forth in detail such Person's position in respect of the issues in dispute. Such notice shall include supporting documentation, if appropriate. The Third Party Engineer shall complete all proceedings and issue its decision with regard to the issues in dispute as promptly as reasonably possible, but in any event within ten (10) days of the date on which it is designated as Third Party Engineer hereunder unless the Third Party Engineer reasonably determines that additional time is required in order to give adequate consideration to the issues raised. In such case, the Third Party Engineer shall state in writing its reasons for believing that additional time is needed and shall specify the additional period required, which such period shall not exceed ten (10) days without the Company's agreement. If the Third Party Engineer determines that the concerns set forth in the Independent Engineer's notice are valid, the Third Party Engineer shall so state and shall state the corrective actions to be taken by the Company, if any. In such case, the Company shall promptly take such actions. The Company shall thereafter bear all costs that may arise from actions taken pursuant to the Third Party Engineer's decision. If the Third Party Engineer determines that the concerns set forth in the Independent 40 Engineer's notice are not valid, the Third Party Engineer shall so state and shall state the appropriate actions to be taken by the Company, if any. In such case, the Company shall take such actions and for purposes of this Agreement and the other Financing Documents, the Independent Engineer shall be deemed to have approved, confirmed, concurred in or consented to the notice, plan, report, certificate or budget in dispute. The decision of the Third Party Engineer shall be final and non- appealable. The Company shall bear all reasonable costs incurred by the Third Party Engineer in connection with this dispute resolution mechanism. SECTION 11.3 Qualified Engineers. Each successor Independent Engineer and each Third Party Engineer shall be selected from the list of Qualified Engineers set forth in Schedule 1. At any time either the Company or the Collateral Agent may (and, upon receipt of Senior Creditor Certificates representing 33-1/3% of the aggregate principal amount of Outstanding Senior Securities, the Collateral Agent shall) remove a Qualified Engineer from the list by obtaining the other Person's consent to such removal (which consent shall not be unreasonably withheld or delayed). However, neither the Company nor the Collateral Agent may remove a name or names from the list if such removal would leave the list without at least three (3) names, unless, concurrently therewith, the Company and the Collateral Agent reasonably agree to the addition of one (1) or more names to such list. During January of each year, each of the Company and the Collateral Agent shall review the current list of Qualified Engineers and give notice to the other of any proposed additions and deletions to the list. Any such proposed addition or deletion shall become effective upon obtaining the other party's consent (which may not be unreasonably withheld), provided that in no event may a deletion be effective if such deletion would leave the list without at least three (3) names, unless, concurrently therewith, the Company and the Collateral Agent reasonably agree to the addition of one (1) or more names to such list. By mutual agreement between the Company and the Collateral Agent a new name or names may be added to the list of Qualified Engineers at any time. ARTICLE XII MISCELLANEOUS SECTION 12.1 Agreement for Benefit of Parties Hereto. Nothing in this Agreement, express or implied, is intended or shall be construed to confer upon, or to give to, any Person other than the parties hereto and Persons for whom the parties hereto are acting as agents or representatives and their respective successors and assigns, any right, remedy or claim under or by reason of this Agreement or any covenant, condition or stipulation hereof, and the covenants, stipulations and agreements contained in this Agreement are and shall be for the sole and exclusive benefit of the parties hereto and their 41 respective successors and assigns and Persons for whom the parties hereto are acting as agents or representatives. SECTION 12.2 No Warranties. Except as otherwise expressly provided herein, the Senior Secured Parties have not made to each other nor do they hereby or otherwise make to each other any warranties, express or implied, nor do they assume any liability to each other with respect to the enforceability, validity, value or collectability of the Collateral (or any portion thereof). No Senior Secured Party shall be liable to any other Intercreditor Party for any action or failure to act or any error of judgment, negligence, or mistake, or oversight whatsoever on the part of any Intercreditor Party or any Intercreditor Party's agents, officers, employees or attorneys with respect to any transaction relating to any of the Contracts evidencing or entered into with respect to any of the Secured Obligations or any security therefor. SECTION 12.3 Severability. In case any provision in this Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby. SECTION 12.4 Notices. All notices, demands, certificates or other communications hereunder shall be in writing and shall be deemed sufficiently given or served for all purposes when delivered personally, when sent by certified or registered mail, postage prepaid, return receipt requested or by private courier service, or, if followed and confirmed by mail or courier service notice, when telecopied, in each case, with the proper address as indicated below. Each party hereto may, by written notice given to the other parties hereto, designate any other address or addresses to which notices, certificates or other communications to them shall be sent as contemplated by this Agreement. Notices shall be deemed to have been given if and when received by an officer, manager or supervisor in the department of the addressee specified for attention (unless such addressee refuses to accept delivery, in which case they shall be deemed to have been given when first presented to such addressee for acceptance). Until otherwise so provided by the respective parties hereto, all notices, certificates and communications to each of them shall be addressed as follows: Indenture Trustee: First Union National Bank of Georgia (Address) Attention: Tax-Exempt Indenture Trustee: First Union National Bank of Georgia (Address) Attention: Working Capital Facility 42 Provider: Banque Paribas (Address) Attention: IDB: The Industrial Development Board of The City of Mobile, Alabama (Address) Attention: Company: Mobile Energy Services Company, L.L.C. (Address) Attention: Mobile Energy: Mobile Energy Services Holdings, Inc. (Address) Attention: Collateral Agent: Bankers Trust Company Four Albany Street New York, New York 10006 Attention: Corporate Trust and Agency Group SECTION 12.5 Successors and Assigns. All covenants, agreements, representations and warranties in this Agreement by the parties hereto shall bind and, to the extent permitted hereby, shall inure to the benefit of and be enforceable by their respective successors and assigns, whether so expressed or not. SECTION 12.6 Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument. SECTION 12.7 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED ENTIRELY WITHIN THE STATE OF NEW YORK, EXCEPT THAT SUCH LAWS SHALL NOT APPLY WITH RESPECT TO ANY COLLATERAL WHERE, AND TO THE EXTENT THAT, IT IS NECESSARY TO APPLY THE LAWS OF ANOTHER JURISDICTION TO PERFECT LIENS RELATING TO DEBT ISSUED UNDER THE FINANCING DOCUMENTS. SECTION 12.8 No Impairments of Other Rights. Nothing in this Agreement is intended or shall be construed to impair, diminish or otherwise adversely affect any other rights the Senior Secured Parties may have or may obtain against the Mobile Energy Parties, including the rights referred to in Section 8.10 of the Indenture and Section ( ) of the Tax-Exempt Indenture. SECTION 12.9 Amendment; Waiver. No amendment, modification or supplement of this Agreement shall be effective unless such amendment, modification or supplement was effected in accordance 43 with Section 7.2(c) of this Agreement. Any approval of an amendment to, or any waiver of any provision of, this Agreement shall be effective only in the specific instance and for the specific purpose for which such approval or waiver is given. No delay on the part of any Senior Secured Party in the exercise of any right, power or remedy shall operate as a waiver thereof, nor shall any single or partial waiver by any such Senior Secured Party of any right, power or remedy preclude any further exercise thereof, or the exercise of any other right, power or remedy. SECTION 12.10 Headings. The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof. SECTION 12.11 Termination. This Agreement shall remain in full force and effect until payment in full of all the Financing Liabilities and termination of the Financing Commitments. Following the Senior Debt Termination Date, this Agreement shall continue in full force and effect among the Mobile Energy Parties, the Subordinated Debt Providers and the Collateral Agent, and the Subordinated Debt Providers shall then have all powers, duties and obligations granted hereunder to the Senior Secured Parties as if they were Senior Secured Parties hereunder. SECTION 12.12 Entire Agreement. This Agreement, including the documents referred to herein, embodies the entire agreement and understanding of the parties hereto and supersedes all prior agreements and understandings of the parties hereto relating to the subject matter herein contained. SECTION 12.13 Limitation on Liability of Mobile Energy Parties. Satisfaction of the obligations of the Mobile Energy Parties under this Agreement shall be had solely from the assets of the Mobile Energy Parties. No recourse shall be had to (a) any assets or properties of the Members (other than Mobile Energy as provided in Article XIV of the Indenture) or of the stockholders of Mobile Energy, other than their respective interests in the Collateral, (b) any Member (other than Mobile Energy as provided in Article XIV of the Indenture) or (c) any Affiliate, incorporator, stockholder, partner, member, officer, director or employee of any Member (other than the Company and, in respect of any Southern Guaranty on deposit in any Reserve Account Security Account, Southern) or of the Company (other than Mobile Energy and, in respect of any Southern Guaranty on deposit in any Reserve Account Security Account, Southern). Notwithstanding anything in this Section 12.13 to the contrary, (i) nothing contained in this Agreement shall limit or otherwise prejudice in any way the right of the Collateral Agent and the Senior Secured Parties to proceed against any Person whomsoever (A) with respect to the enforcement of such Person's obligations under any Project Document (including the Guaranty and any Southern Guaranty to which such Person is a party) or limit or otherwise prejudice in any way the right of the Collateral Agent, the Senior Secured Parties, the Holders of Indenture Securities or the Holders of Tax-Exempt Indenture Securities to proceed 44 against such Person with respect to the enforcement of such obligations or (B) to the extent necessary to realize the benefit of the Collateral granted under the Security Documents and (ii) any limitations of liability herein shall not apply if and to the extent that any Person commits fraud or wilful misrepresentations, including those contained in Officer's Certificates issued from time to time. SECTION 12.14 Submission to Jurisdiction. The parties hereto hereby submit to the nonexclusive jurisdiction of the United States District Court for the Southern District of New York and of any New York State Court sitting in New York City for the purposes of all legal proceedings arising out of or relating to this Agreement or the other Financing Documents of any of the transactions contemplated herein or therein. The parties hereto hereby irrevocably waive, to the fullest extent permitted by law, any objection that they may now or hereafter have to the laying of the venue of any such proceeding brought in such a court and any claim that any such proceeding brought in such a court has been brought in an inconvenient forum. 45 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective officers thereunto duly authorized, as of the day and year first above written. FIRST UNION NATIONAL BANK OF GEORGIA, as Trustee (on behalf of the Holders of the Indenture Securities) By: Name: Title: FIRST UNION NATIONAL BANK OF GEORGIA, as Tax-Exempt Indenture Trustee (on behalf of the Holders of the Tax-Exempt Indenture Securities) By: Name: Title: BANQUE PARIBAS, as Working Capital Facility Provider By: Name: Title: By: Name: Title: THE INDUSTRIAL DEVELOPMENT BOARD OF THE CITY OF MOBILE, ALABAMA By: Name: Title: 46 MOBILE ENERGY SERVICES COMPANY, L.L.C. By: Name: Title: MOBILE ENERGY SERVICES HOLDINGS, INC. By: Name: Title: BANKERS TRUST COMPANY, as Collateral Agent By: Name: Title: 47 Schedule 1 Qualified Engineers Exhibit A Requisition No. _______ Date:__________________ Form of Requisition or Disbursement from Loss Proceeds Account Bankers Trust Company, as Collateral Agent Four Albany Street New York, New York 10006 Ladies and Gentlemen: Reference is hereby made to that certain Intercreditor and Collateral Agency Agreement, dated as of _____, 1995, by and among First Union National Bank of Georgia, as Trustee, First Union National Bank of Georgia, as Tax-Exempt Indenture Trustee, Banque Paribas, as Working Capital Facility Provider, the Industrial Development Board of the City of Mobile, Alabama, Mobile Energy Services Company, L.L.C. (the "Company"), Mobile Energy Services Holdings, Inc. and Bankers Trust Company, as Collateral Agent (as such agreement may be amended, modified or supplemented from time to time, the "Intercreditor Agreement"). Terms used herein and not otherwise defined herein shall have the meanings assigned to them in the Intercreditor Agreement. The Company hereby requests, pursuant to Section 3.10(b) of the Intercreditor Agreement, that the Collateral Agent make a disbursement from the Loss Proceeds Account in the aggregate amount of $_____ (the "Requested Disbursement"). The date that the Requested Disbursement is to be made is _____. Cash disbursement instructions for the Requested Disbursement are set forth in Annex 1 hereto. All monies released from the Loss Proceeds Account pursuant to this Requisition shall be secured by the Financing Documents, including, without limitation, the Mortgage. The undersigned, an Authorized Officer of the Company, hereby certifies in connection with this Requisition that (i) the proceeds of the Requested Disbursement will be used solely for the payment (or reimbursement, to the extent the same have been paid or satisfied by the Company) of the costs of rebuild, repair and restoration of the Energy Complex or the portion thereof that has been affected by an Event of Loss or an Event of Eminent Domain, or the building of a Replacement Facility as a result thereof, (ii) undisbursed funds in the Loss Proceeds Account are reasonably expected to be sufficient to complete the rebuild, repair, restoration or replacement of the Energy Complex (such determination of sufficiency to take into account, without limitation, funds required to pay principal of and interest on the Senior Debt becoming due during such period in which commercial operation of the Energy Complex is interrupted as a result of such Event of Loss or Event of Eminent Domain), (iii) no payment default with respect to scheduled debt service under the Senior Debt has occurred and is continuing and (iv) work performed to date has been satisfactorily performed in a good and workmanlike manner and according to the rebuild, repair, restoration or replacement plans. The Requested Disbursement, together with all other such requisitions made or reasonably expected to be made (i) during the current Fiscal Year, total $_____ in the aggregate and (ii) in respect of such Event of Loss or Event of Eminent Domain, total $_____ in the aggregate, and the approval of the Independent Engineer hereto (is) (is not)1/ required. The Company hereby certifies that all conditions precedent to the Requested Disbursement as set forth in the Intercreditor Agreement have been satisfied. MOBILE ENERGY SERVICES COMPANY, L.L.C. By:____________________________________ Name:__________________________________ Title:_________________________________ Date:__________________________________ Approved this ___ day of __________________, ____.1/ STONE & WEBSTER ENGINEERING CORPORATION By:_______________________________________ 1/ Not required if aggregate amount of disbursements requested or reasonably expected to be requested (i) in any one Fiscal Year does not exceed $5,000,000 or (ii) in respect of any Event of Loss or Event of Eminent Domain does not exceed $7,500,000. 2 Name:_____________________________________ Title:____________________________________ 3 Exhibit B Date: ___________ Form of Monthly Transfer Date Certificate Bankers Trust Company, as Collateral Agent Four Albany Street New York, New York 10006 Ladies and Gentlemen: Reference is hereby made to that certain Intercreditor and Collateral Agency Agreement, dated as of ( ), 1995, by and among First Union National Bank of Georgia, as Indenture Trustee, First Union National Bank of Georgia, as Tax-Exempt Indenture Trustee, Banque Paribas, as Working Capital Facility Provider, The Industrial Development Board of the City of Mobile, Alabama, Mobile Energy Services Company, L.L.C., Mobile Energy Services Holdings, Inc. and Bankers Trust Company, as Collateral Agent (as the same may be amended, supplemented, waived or otherwise modified from time to time, the "Intercreditor Agreement"). Terms used herein and not otherwise defined herein shall have the meanings assigned to them in the Intercreditor Agreement. The Company hereby certifies, pursuant to Section 3.11 of the Intercreditor Agreement, that the following monies are to be transferred or deposited by the Collateral Agent from the Revenue Account, in the following order of priority, on ___________ (the "Current Monthly Transfer Date"): 1. $_____, for deposit into the Mill Owner Reimbursement Account, as the amount currently reimbursable to the Mill Owners prior to the immediately succeeding Monthly Transfer Date in connection with the exercise of Mill Owner Step-In Rights; 2. $_____, for deposit into the Working Capital Facility Account, as the amount scheduled to be due and payable for principal of, and interest on, and fees and other charges relating to, the Working Capital Facility prior to the immediately succeeding Monthly Transfer Date; 3. $_____, for deposit into the Operating Account, as the amount sufficient to cause the aggregate amount therein to be equal to the amount of Operation and Maintenance Costs estimated by the Company to be due and payable prior to the immediately succeeding Monthly Transfer Date, other than Subordinated Fees and Maintenance Expenditures (unless and to the extent that, in the case of Maintenance Expenditures, the monies, together with the then Available Amounts under and Reserve Account Security on deposit in the Maintenance Reserve Account, the Subordinated Debt Account, the Subordinated Fee Account and the Distribution Account, are insufficient therefor; 4. $__________, to the Indenture Trustee, as the amount due and payable to the Indenture Trustee as fees, costs and expenses owed to the Indenture Trustee under the Indenture prior to the immediately succeeding Monthly Transfer Date; 5. $__________, to the Tax-Exempt Trustee, as the amount due and payable to the Tax-Exempt Trustee as fees, costs and expenses owed to the Tax-Exempt Trustee under the Tax-Exempt Indenture prior to the immediately succeeding Monthly Transfer Date; 6. $__________, to the Collateral Agent, as the amount due and payable to the Collateral Agent as fees, costs and expenses owed to the Collateral Agent under the Intercreditor Agreement prior to the immediately succeeding Monthly Transfer Date; 7. $__________, to the Indenture Trustee for deposit into the Indenture Securities Account, as the amount equal to the sum of (i) an amount that, after giving effect to monies on deposit in the Indenture Securities Interest Subaccount immediately prior to such Monthly Transfer Date and together with a uniform amount to be deposited therein on each succeeding Monthly Transfer Date prior to the immediately succeeding Interest Payment Date, is equal to the amount of interest thereon becoming due on such Interest Payment Date and (ii) 1/6th of the amount of principal thereof becoming due on the Indenture Securities on each Principal Payment Date occurring within the six months immediately succeeding the month in which such Monthly Transfer Date occurs; 8. $__________, to the Tax-Exempt Trustee for deposit into the Tax-Exempt Indenture Securities Account, as the amount equal to the sum of (i) an amount that, after giving effect to monies on deposit in the Tax-Exempt Indenture Securities Interest Subaccount immediately prior to such Monthly Transfer Date and together with a uniform amount to be deposited therein on each succeeding Monthly Transfer Date prior to the immediately succeeding Interest Payment Date, is equal to the amount of interest thereon becoming due on such Interest Payment Date and (ii) 1/12th of the amount of principal thereon becoming due on the Tax-Exempt Indenture Securities on each Principal Payment Date occurring within the 12 months immediately succeeding the month in which such Monthly Transfer Date occurs; 9. $__________, to the Working Capital Facility Provider, as the amount that, after taking into account any transfer pursuant to paragraph 2 above, is equal to all amounts due and payable immediately prior to such Monthly Transfer Date for principal of and interest on, and fees and other changes with respect to, the Working Capital Facility; 2 10. $__________, for deposit into the Maintenance Reserve Account, as the amount elected by the Company (but not less than the Maintenance Reserve Account Required Deposit with respect to the Fiscal Quarter in which the current Monthly Transfer Date occurs); 11. $___________, to the Indenture Trustee for deposit into the Indenture Securities Redemption Subaccount, an amount that, after giving effect to monies on deposit therein immediately prior to such Monthly Transfer Date and together with a uniform amount to be deposited therein on each succeeding Monthly Transfer Date prior to each succeeding Redemption Date or Prepayment Date for, or acceleration of, the Indenture Securities, is equal to the amount of principal thereof and premium, if any, and interest thereon becoming due on each Redemption Date or Prepayment Date or upon such acceleration (as the case may be); 12. $___________, to the Tax-Exempt Indenture Trustee for deposit into the Tax-Exempt Indenture Securities Redemption Subaccount, an amount that, after giving effect to monies on deposit therein immediately prior to such Monthly Transfer Date and together with a uniform amount to be deposited therein on each succeeding Monthly Transfer Date prior to each succeeding Redemption Date or Prepayment Date for, or acceleration of, the Tax-Exempt Indenture Securities, is equal to the amount of principal thereof and premium, if any, and interest thereon becoming due on each Redemption Date or Prepayment Date or upon such acceleration (as the case may be); 13. $__________, to the Indenture Trustee for deposit into each Debt Service Reserve Account, as the amount sufficient to cause the aggregate amount of monies, together with the then Available Amount under any Reserve Account Security on deposit therein, to equal the Debt Service Reserve Account Required Balance immediately prior to such Monthly Transfer Date; 14. $__________, to the Tax-Exempt Trustee for deposit into each Tax-Exempt Debt Service Reserve Account, as the amount sufficient to cause the aggregate amount of monies, together with the then Available Amount under any Reserve Account Letter of Credit on deposit therein, to equal the Tax-Exempt Debt Service Reserve Account Required Balance immediately prior to such Monthly Transfer Date; 15. $__________, for deposit into the Subordinated Debt Account, as the sum of (i) an amount that, after giving effect to monies on deposit therein immediately prior to such Monthly Transfer Date and a uniform amount to be deposited therein on each succeeding Monthly Transfer Date prior to the immediately succeeding interest payment date for any Non- Affiliate Subordinated Debt, is not less than the amount of interest on such Non-Affiliate Subordinated Debt becoming due on such interest payment date and (ii) an amount equal to the fraction specified in Section 3.11(a)(ix)(ii) of the 3 Intercreditor Agreement of the amount of principal becoming due in respect of Non-Affiliate Subordinated Debt on each payment date occurring within the number of months specified in Section 3.11(a)(ix)(ii) of the Intercreditor Agreement; 16. $__________, for deposit into the Subordinated Fee Account, as the amount that, after giving effect to monies on deposit therein and a uniform amount to be deposited therein on each succeeding Monthly Transfer Date prior to the immediately succeeding Distribution Date, is equal to the amount of Operation and Maintenance Expenditures constituting Subordinated Fees due and payable as of such Distribution Date; and 17. $__________, for deposit into the Distribution Account. MOBILE ENERGY SERVICES COMPANY, L.L.C. By: Name: Title: Dated: 4 EX-99 12 EXHIBIT B-8 Exhibit B-8 WSP&R 7/5/95 REVOLVING CREDIT AGREEMENT among MOBILE ENERGY SERVICES COMPANY, L.L.C. MOBILE ENERGY SERVICES HOLDINGS, INC. and THE LENDERS NAMED HEREIN and BANQUE PARIBAS, as Agent dated as of ( ), 1995 TABLE OF CONTENTS Page ARTICLE I DEFINITIONS AND OTHER PROVISIONS OF INTERPRETATION . . 1 ARTICLE II COMMITMENTS AND LOANS SECTION 2.1. The Facility . . . . . . . . . . . . . . . . . . 5 SECTION 2.2. Making Loans . . . . . . . . . . . . . . . . . . 6 SECTION 2.3. Interest . . . . . . . . . . . . . . . . . . . . 7 SECTION 2.4. Repayment . . . . . . . . . . . . . . . . . . . 7 SECTION 2.5. Prepayments . . . . . . . . . . . . . . . . . . 8 SECTION 2.6. Fees . . . . . . . . . . . . . . . . . . . . . . 8 SECTION 2.7. Security . . . . . . . . . . . . . . . . . . . . 8 SECTION 2.8. Payments . . . . . . . . . . . . . . . . . . . . 8 SECTION 2.9. Computation of Interest and Fees . . . . . . . . 9 SECTION 2.10. Payments on Non-Business Days . . . . . . . 9 SECTION 2.11. Sharing of Payments, Etc. . . . . . . . . . 9 SECTION 2.12. Evidence of Debt . . . . . . . . . . . . . 9 SECTION 2.13. Increased Costs . . . . . . . . . . . . . . 9 SECTION 2.14. Capital Adequacy . . . . . . . . . . . . 10 SECTION 2.15. Taxes . . . . . . . . . . . . . . . . . . 10 SECTION 2.16. Change of Law . . . . . . . . . . . . . . 12 SECTION 2.17. Non-Availability . . . . . . . . . . . . 13 SECTION 2.18. Substitution of Lenders . . . . . . . . . 13 ARTICLE III CONDITIONS PRECEDENT SECTION 3.1. Conditions Precedent to Initial Borrowing . . 14 SECTION 3.2. Conditions Precedent to Each Borrowing . . . . 15 ARTICLE IV REPRESENTATIONS AND WARRANTIES . . . . . . 15 ARTICLE V COVENANTS . . . . . . . . . . . . 16 ARTICLE VI DEFAULTS AND REMEDIES . . . . . . . . . 16 ARTICLE VII THE AGENT SECTION 7.1. Authorization and Action . . . . . . . . . . . 19 SECTION 7.2. Agent's Reliance, Etc. . . . . . . . . . . . . 19 SECTION 7.3. Initial Lender and Affiliates . . . . . . . . 19 SECTION 7.4. Lender Credit Decision . . . . . . . . . . . . 20 SECTION 7.5. Indemnification . . . . . . . . . . . . . . . 20 SECTION 7.6. Successor Agent . . . . . . . . . . . . . . . 20 ARTICLE I. GUARANTY SECTION 8.1. Guaranty of Payment and Performance . . . . . 21 SECTION 8.2. Continuance and Acceleration of Guaranteed Obligations upon Certain Events . . . . . . . 21 SECTION 8.3. Recovered Payments . . . . . . . . . . . . . . 21 SECTION 8.4. Evidence of Guaranteed Obligations . . . . . . 21 SECTION 8.5. Binding Nature of Certain Adjudications . . . 22 SECTION 8.6. Nature of Mobile Energy's Obligations . . . . 22 SECTION 8.7. No Release of Mobile Energy . . . . . . . . . 22 SECTION 8.8. Certain Waivers . . . . . . . . . . . . . . . 23 SECTION 8.9. Independent Credit Evaluation . . . . . . . . 23 SECTION 8.10. Subordination of Rights Against Company, Other Guarantors and Collateral. . . . . . . . 23 SECTION 8.11. Payments by Mobile Energy. . . . . . . . . . . 24 SECTION 8.12. Continuance of Guaranty; Survival . . . . 25 SECTION 8.13. Assignments and Participations . . . . . 25 SECTION 8.14. Benefit and Enforcement . . . . . . . . . 25 ARTICLE IX MISCELLANEOUS SECTION 9.1. Amendments, Etc. . . . . . . . . . . . . . . . 25 SECTION 9.2. Notices, Etc. . . . . . . . . . . . . . . . . 26 SECTION 9.3. No Waiver; Remedies . . . . . . . . . . . . . 26 SECTION 9.4. Costs and Expenses . . . . . . . . . . . . . . 26 SECTION 9.5. Application of Monies . . . . . . . . . . . . 26 SECTION 9.6. Severability . . . . . . . . . . . . . . . . . 27 SECTION 9.7. Non-recourse Liability . . . . . . . . . . . . 27 SECTION 9.8. Binding Effect . . . . . . . . . . . . . . . . 27 SECTION 9.9. Assignments and Participations . . . . . . . . 27 SECTION 9.10. Indemnification . . . . . . . . . . . . . 28 SECTION 9.11. Governing Law . . . . . . . . . . . . . . 29 SECTION 9.12. Headings . . . . . . . . . . . . . . . . 29 SECTION 9.13. Execution in Counterparts . . . . . . . . 29 SECTION 9.14. Third Party Beneficiaries . . . . . . . . 30 SECTION 9.15. Waiver of Jury Trial . . . . . . . . . . 30 Exhibit A - Revolving Promissory Note Exhibit B - Notice of Borrowing Exhibit C - Commitment Transfer Supplement Revolving Credit Agreement, dated as of ( ), 1995, among MOBILE ENERGY SERVICES COMPANY, L.L.C., an Alabama limited liability company (the "Company"), MOBILE ENERGY SERVICES HOLDINGS, INC., an Alabama corporation ("Mobile Energy"), BANQUE PARIBAS (in its individual capacity, the "Initial Lender"), each other lender that becomes a party hereto pursuant to Section 8.9 (together with the Initial Lender, collectively, the "Lenders") and BANQUE PARIBAS, as agent (in such capacity, the "Agent") for the Lenders. W I T N E S S E T H WHEREAS, the Company owns and operates the Energy Complex (as defined herein) and is financing the acquisition, construction and equipping of the Energy Complex through, among other things, the issue and sale by the Company of the First Mortgage Bonds (as defined herein); WHEREAS, in connection with the financing of certain portions of the Energy Complex, the IDB (as defined herein) will issue the Tax-Exempt Bonds (as defined herein); WHEREAS, the Company may, from time to time after the date of this Agreement, issue additional Indenture Securities (as defined herein), or cause the IDB to issue additional Tax-Exempt Indenture Securities (as defined herein), for the purposes described in the Financing Documents (as defined herein); WHEREAS, the Company intends to finance certain of its working capital requirements arising in connection with the operation of the Energy Complex pursuant to, and the Company has requested that the Lenders make available to the Company, and the Lenders are willing to make available to the Company, a revolving credit facility of up to the maximum aggregate principal amount of $15,000,000, upon the terms and conditions hereinafter set forth. ARTICLE I DEFINITIONS AND OTHER PROVISIONS OF INTERPRETATION (a) For the purposes of this Agreement, except as expressly provided in this Agreement or unless the context otherwise requires, all terms used herein shall have the meanings set forth in Appendix A. (b) The following terms are used in this Agreement with the following respective meanings: "Adjusted Base Rate" means the higher of (i) the Federal Funds Rate plus one-half of one percent (0.50%) and (ii) the Reference Rate. "Adjusted Base Rate Loan" means any Loan the interest on which is, or is to be, as the context may require, computed on the basis of the Adjusted Base Rate. "Borrowing" means a borrowing by the Company consisting of Loans made on the same day by the Lenders. "Closing Date" means the date on which the conditions precedent set forth in Article III have been fulfilled. "Commitment" means, with respect to each Lender, (i) the amount set forth opposite such Lender's name on the signature pages hereof or (ii) if such Lender has entered into one or more Commitment Transfer Supplements, the amount set forth for such Lender in the register maintained by the Agent, as the same may be ratably reduced from time to time pursuant to Section 2.1(c). "Commitment Transfer Supplement" means such document substantially in the form of Exhibit C. "Credit Documents" means this Agreement and each Note. "Default" means an event that with the giving of any required notice or the lapse of any required period of time would constitute an Event of Default. "Eurodollar Business Day" means any Business Day on which dealings in United States dollar deposits are carried on by the Reference Banks in the London interbank market and on which commercial banks in London are generally open for domestic and foreign exchange business (including dealings in United States dollar deposits). "Event of Default" has the meaning specified in Article VI. "Excluded Taxes" has the meaning specified in Section 2.15(a). "Expiration Date" means the earlier of (i) the Scheduled Expiration Date, (ii) the date on which the Commitments are fully canceled pursuant to Section 2.1(c) and (iii) the occurrence of an Event of Default and the Agent's termination (or any automatic termination) of the obligation of each Lender to make Loans hereunder, in accordance with the provisions of Article VI. "Extension Request" has the meaning specified in Section 2.1(b). "Federal Funds Rate" means, for any day, the rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published for such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York or, if such rate is not so published for any day that is a Business Day, the -2- average of the quotations for such day on such transactions received by the Agent from three Federal funds brokers of recognized standing selected by it. "Indemnified Party" has the meaning specified in Section 9.10. "Interest Period" means with respect to any LIBOR Rate Loan, the period commencing on the date of the making of such Loan and ending on and including the day preceding the same day in the first, second or third calendar month thereafter, as selected by the Company and specified in the related Notice of Borrowing; provided, however, that (i) any Interest Period that would otherwise end on a day that is not a Eurodollar Business Day shall be extended to the next succeeding Eurodollar Business Day, unless such Eurodollar Business Day falls in a different calendar month, in which case such Interest Period shall end on the next preceding Eurodollar Business Day, and (ii) any Interest Period that begins on the last Eurodollar Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month in which such Interest Period ends) shall end on the last Eurodollar Business Day of a calendar month. "LIBOR Rate" means, with respect to any Interest Period, a rate per annum (rounded upwards, if necessary, to the nearest 1/16th of one percent (0.0625%)) determined by the Agent to be equal to (i) (A) the arithmetic mean of the rate at which deposits in United States dollars (in the approximate amount of the Loan to which such Interest Period applies) are offered to the Reference Banks in the London interbank market at approximately 11:00 a.m. (London time), two Eurodollar Business Days prior to the first day of such Interest Period, divided by (B) 100% minus the Reserve Requirement for such Interest Period, plus (ii) one percent (1.0000%). If any Reference Bank does not timely furnish such information for determination of any LIBOR Rate, the Agent shall determine such LIBOR Rate on the basis of information timely furnished by the remaining Reference Banks. "LIBOR Rate Loan" means any Loan the interest on which is, or is to be, as the context may require, computed on the basis of the LIBOR Rate. "Loan" means a loan by a Lender to the Company pursuant to Section 2.1(a). "Loan Repayment Date" means, in respect of each Loan, the Business Day specified as such on the Notice of Borrowing relating thereto; provided, however, that (i) such date shall not be later than the Scheduled Expiration Date, (ii) such date shall not exceed 90 days from the date such Loan is advanced to the Company pursuant to the terms of this Agreement, (iii) in the case of LIBOR Rate Loans, such date shall correspond to the last day of the Interest Period specified in the related Notice of Borrowing and (iv) no more than $5,000,000 principal amount of Loans may be scheduled to mature within any 30-day period. -3- "Note" has the meaning specified in Section 2.12(a). "Notice of Borrowing" means a Notice of Borrowing properly completed and executed by an Authorized Officer of the Company substantially in the form of Exhibit B. "Obligations" means all of the obligations of the Mobile Energy Parties to the Lenders and the Agent under the Credit Documents, whether for principal, interest, fees, expenses, indemnification or otherwise. "Participant" has the meaning specified in Section 9.9(b). "Purchasing Lender" has the meaning specified in Section 9.9(a). "Reference Banks" means each of ( ), ( ) and ( ). "Reference Rate" means the variable rate of interest per annum officially announced or published by Citibank, N.A. in New York, New York from time to time as its "prime" or "reference" rate for United States dollar loans in the United States, it being understood that the Reference Rate is not necessarily the lowest or best rate actually charged to any customer of Citibank, N.A. and that Citibank, N.A. may make various commercial or other loans at rates of interest having no relationship to such rate. For purposes of this Agreement, each change in the Reference Rate shall be effective as of the opening of business on the date announced as the effective date of the change in such "prime" or "reference" rate. "Regulation D" means Regulation D of the Board of Governors of the Federal Reserve System. "Regulatory Change" means, subsequent to the date of this Agreement, any adoption or change in United States (including Federal, state or municipal) or foreign law or regulations or the adoption or change or making of any application, interpretation, directive, request or guideline of or under any United States (including Federal, state or municipal) or foreign law or regulations by any Governmental Authority. "Required Lenders" means, at any time, Lenders (one of which shall be the Agent) holding Notes evidencing at least 66 % of the aggregate unpaid principal amount of the Loans or, if no Loans are then outstanding, having at least 66 % of the Total Commitment; provided, however, that, if and so long as there are only two Lenders, "Required Lenders" shall mean both of such Lenders. "Reserve Requirement" means the rate (expressed as a percentage) at which reserves (including any marginal, supplemental or emergency reserves) are required to be maintained under Regulation D by member banks of the Federal Reserve System -4- in New York City, as it applies to the Agent, against "Eurocurrency liabilities," as such term is used in Regulation D. The LIBOR Rate shall be adjusted automatically on and as of the effective date of any change in the Reserve Requirement. "Scheduled Expiration Date" means December 31, 2001, unless extended pursuant to Section 2.1(b), in which case such extended date. "Taxes" means any and all present or future income, stamp, transfer, turnover and other taxes, levies, imposts, duties, charges, fees, deductions or withholdings now or hereafter imposed, levied, collected, withheld or assessed by any Governmental Authority, and any and all interest, penalties, claims or other liabilities arising under or relating thereto. "Total Commitment" means $15,000,000, which is the aggregate amount of the Commitments, as such amount may be reduced from time to time pursuant to Section 2.1(c). ARTICLE II COMMITMENTS AND LOANS SECTION 2.1. The Facility. (a) Subject to the terms and conditions of this Agreement, each Lender severally agrees to make Loans to the Company from time to time on any Business Day during the period from the Closing Date to the Expiration Date in an aggregate unpaid principal amount not to exceed at any time such Lender's Commitment. Each Borrowing shall consist of Loans bearing interest at the same rate made on the same day by Lenders ratably according to their respective Commitments. Each Borrowing consisting of Adjusted Base Rate Loans shall be in an amount equal to $50,000 or an integral multiple of $10,000 in excess thereof (or the amount of the unused Total Commitment) and each Borrowing consisting of LIBOR Rate Loans shall be in an amount equal to $200,000 or an integral multiple of $25,000 in excess thereof (or the amount of the unused Total Commitment). There shall not be Loans representing more than five Borrowings outstanding on any date. (b) Subject to the terms and conditions of this Section 2.1(b), the Scheduled Expiration Date may be extended by an additional year from time to time at the written request of the Company (an "Extension Request"). Each Extension Request shall be delivered to the Agent not more than fifteen (15) months and not less than twelve (12) months prior to the Scheduled Expiration Date. If the Agent receives an Extension Request, it will give prompt notice thereof to each Lender, and each Lender shall have the right to approve or reject, in its sole and absolute discretion, such Extension Request by giving the Agent written notice of its decision within (sixty (60)) days following its receipt of the Agent's notice thereof. If the Lenders unanimously approve such Extension Request, the Agent shall so -5- notify the Company within ninety (90) days following its receipt of such Extension Request and the Scheduled Expiration Date shall, effective from the date of such notice, be the date one year subsequent to the prior Scheduled Expiration Date. If for any reason the Agent does not respond to such Extension Request within ninety (90) days following its receipt thereof, such Extension Request shall be deemed to have been rejected. (c) The Company shall have the right, upon at least five (5) Business Days' notice to the Agent, to terminate in whole, or from time to time reduce in part, the unused portion of the Total Commitment, provided that each partial reduction of the unused portion of the Total Commitment shall be in an amount equal to $( ) or an integral multiple of $( ) in excess thereof. Upon receipt of any such notice, the Agent shall promptly notify each Lender of the contents thereof and the amount to which such Lender's Commitment is to be ratably reduced. SECTION 2.2. Making Loans. (a) Borrower shall deliver to the Agent a Notice of Borrowing not later than 11:00 a.m., New York time, (i) at least one (1) Business Days prior to the date of the proposed Borrowing in the case of a Borrowing consisting of Adjusted Base Rate Loans and (ii) at least three (3) Eurodollar Business Days prior to the date of the proposed Borrowing in the case of a Borrowing consisting of LIBOR Rate Loans, and, in each case, the Agent shall give each Lender prompt notice thereof by telecopier. Each Lender shall, before 11:00 a.m., New York time, on the date of such Borrowing, make available to the Agent at its address set forth in Section 9.2, in immediately available funds, such Lender's ratable portion of such Borrowing. After the Agent's receipt of such funds and upon fulfillment of the applicable conditions set forth in Article III, the Agent will make such funds available to the Company by transferring such funds to the Collateral Agent for deposit into the Revenue Account. (b) Each Notice of Borrowing shall be irrevocable and binding on the Company. (c) Unless the Agent receives notice from a Lender prior to the date of any Borrowing that such Lender will not make available to the Agent such Lender's ratable portion of such Borrowing, the Agent may assume that such Lender has made such portion available to the Agent on the date of such Borrowing in accordance with Section 2.2(a), and the Agent may, in reliance upon such assumption, make available to the Company on such date a corresponding amount on behalf of such Lender. If and to the extent that such Lender has not made such ratable portion available to the Agent, and Agent has made such amount available to the Company, the Agent shall first make written demand upon such Lender for payment and shall be entitled to recover such corresponding amount on demand from such Lender. If such Lender does not pay such corresponding amount forthwith upon the Agent's demand therefor, the Agent shall promptly notify the Company and the Company shall immediately repay such corresponding amount to -6- the Agent; provided, however, that if the Company repays such corresponding amount to the Agent and such Lender subsequently makes available to the Agent its ratable portion of such Borrowing, the Agent shall promptly make the proceeds thereof available to the Company. The Agent shall also be entitled to recover from such Lender or the Company, as the case may be, interest on such corresponding amount in respect of each day from the date such corresponding amount was made available by the Agent to the Company to the date such corresponding amount is recovered by the Agent at the following interest rates: (i) with respect to interest from the Company, at the applicable interest rate for the type of Loan selected by the Company with respect to such amount; and (ii) with respect to interest from such Lender, at the Federal Funds Rate until and including the second Business Day after demand is made and thereafter at the Adjusted Base Rate. If such Lender pays to the Agent such corresponding amount, such amount so paid shall constitute such Lender's Loan as part of such Borrowing for purposes of this Agreement. (d) The obligations of the Lenders to make Loans to the Company pursuant to this Agreement are several and not joint or joint and several, and the failure of any Lender to make the Loan to be made by it as part of any Borrowing shall not relieve any other Lender of its obligation, if any, hereunder to make its Loan on the date of such Borrowing, but no Lender shall be responsible for the failure of any other Lender to make the Loan to be made by such other Lender on the date of any Borrowing. SECTION 2.3. Interest. (a) Unless an Event of Default is continuing, each Loan shall bear interest at the rates set forth below, and the Company shall pay interest on the unpaid principal amount of each Loan made by each Lender from the date of such Loan until the principal amount thereof has been repaid in full, at the times and at the rates per annum set forth below: (i) Adjusted Base Rate Loans shall bear interest at a rate per annum equal at all times to the Adjusted Base Rate in effect from time to time, payable (A) on the related Loan Repayment Date, (B) on the date of any prepayment of such Loan pursuant to Section 2.5 and (C) on the Expiration Date; (ii) LIBOR Rate Loans shall bear interest at a rate per annum equal at all times during the Interest Period for such Loan equal at all times to LIBOR Rate for such Interest Period, payable on (A) the last day of such Interest Period, (B) the date of any prepayment of such Loan pursuant to Section 2.5 and (C) the Expiration Date. (b) On and after the date of the occurrence of any Event of Default caused by the failure to make a monetary payment hereunder, so long as such Event of Default is continuing, to the extent permitted by applicable Law the Loans shall bear interest at a rate per annum equal at all times to the Adjusted Base Rate in effect from time to time plus ( )%, payable on demand. -7- SECTION 2.4. Repayment. The Company shall repay each Loan on the earlier of (i) the applicable Loan Repayment Date and (ii) the Expiration Date. Notwithstanding anything to the contrary contained in this Agreement, the Company shall repay Loans so that, or otherwise ensure that, no Loans are outstanding for a period of five (5) consecutive days during each Fiscal Year subsequent to 1995. SECTION 2.5. Prepayments. (a) Subject to the provisions of Section 2.5(b), the Company may, at any time and from time to time on any Business Day, prepay without premium or penalty the outstanding principal amount of the Loans making up one or more Borrowings in whole or ratably in part, together with accrued interest to the date of such prepayment on the principal amount prepaid. The Company shall give the Agent irrevocable prior written notice of any such prepayment not later than 11:00 a.m., New York time, at least one (1) Business Day prior to the date of any such prepayment, such notice stating the proposed date and specifying the Borrowing or Borrowings and aggregate principal amount of the Loans to be prepaid. (b) The Company agrees to indemnify each Lender and hold each Lender harmless from any direct loss (and excluding any indirect, consequential or incidental loss or damage), cost or out-of-pocket expense that such Lender incurs as a result of a prepayment of any LIBOR Rate Loan on a date that is not the last day of the Interest Period applicable thereto. SECTION 2.6. Fees. The Company shall pay the following nonrefundable fees to the Agent for the respective accounts of the Lenders: (a) on the Closing Date, a closing fee equal to one percent (1.00%) of the Total Commitment and (b) on the first Business Day of March, June, September and December of each year, commencing September 1995, and on the Expiration Date, a commitment fee on the daily unused amount of the Total Commitment at a rate equal to three-eighths of one percent (0.375%) per annum, payable in arrears during the period from the Closing Date to the Expiration Date. SECTION 2.7. Security. The Obligations shall be secured as provided in the Security Documents, and the rights and remedies of the Lenders contained therein shall be exercised as provided in the Intercreditor Agreement. SECTION 2.8. Payments. (a) The Company shall make each payment hereunder and under the Notes not later than 10:00 a.m., New York time, on the day when due in United States dollars to the Agent at its address set forth in Section 9.2, in immediately available funds. The Agent will promptly thereafter cause to be distributed like funds relating to the payment of principal, interest or fees ratably (other than amounts payable pursuant to Sections 9.4) to the Lenders and like funds relating to the payment of any other amount payable to any Lender to such Lender, in each case to be applied in accordance with the terms of this Agreement. -8- (b) Unless the Agent receives notice from the Company before the date on which any payment is due to the Lenders hereunder that the Company will not make such payment in full, the Agent may assume that the Company has made such payment in full to the Agent on such date, and the Agent may, in reliance upon such assumption, cause to be distributed to each Lender on such due date an amount equal to the amount then due to such Lender. If and to the extent that the Company has not so made such payment in full to the Agent, each Lender shall repay to the Agent forthwith on demand such amount distributed to such Lender, together with interest thereon for each day from the date such amount is distributed to such Lender until the date on which such Lender repays such amount to the Agent, at the Federal Funds Rate until (and including) the third (3rd) Business Day after demand is made and thereafter at the Adjusted Base Rate. (c) All payments due by the Company to the Agent or any of the Lenders under the Credit Documents will be made without setoff, counterclaim or other deduction (except for any deduction with respect to Excluded Taxes). SECTION 2.9. Computation of Interest and Fees. Interest on LIBOR Rate Loans shall be computed on the basis of a year of 360 days and paid for the actual number of days elapsed. Interest on Adjusted Base Rate Loans and all fees shall be computed on the basis of a year of 365 or 366 days, as applicable, and paid for the actual number of days elapsed. Interest on Adjusted Base Rate Loans and fees for any period shall be calculated from and including the first day thereof to but excluding the last day thereof. Interest on LIBOR Rate Loans for any Interest Period shall be calculated from and including the first day thereof to and including the last day thereof. Each determination by the Agent of an interest rate hereunder shall be conclusive (absent manifest error). SECTION 2.10. Payments on Non-Business Days. Whenever any payment hereunder or under any Note is stated to be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of payment of interest or fees (as the case may be). If no due date is specified for the payment of any amount payable by the Company hereunder, such amount shall be due and payable not later than ten (10) Business Days after receipt by the Company of written demand from the Agent for payment thereof. SECTION 2.11. Sharing of Payments, Etc. If any Lender obtains any payment (whether voluntary, involuntary, through the exercise of any right of setoff, or otherwise) on account of its Commitment or the Loans made by it (other than pursuant to Section 9.4) in excess of its ratable share of payments on account of the Commitments or the Loans obtained by all of the Lenders, then such Lender shall be deemed to have received such payment as agent for, and on behalf of, all the Lenders and shall immediately advise the Agent of the receipt of such funds and -9- promptly transmit the amount thereof to the Agent for prompt distribution among the Lenders as provided for in this Agreement and such funds transmitted to the Agent shall be credited as a payment by the Company under this Agreement; provided, however, that such Lender so transmitting funds to the Agent shall not be deemed to have received, and the Company shall be deemed not to have made to such Lender (to the extent funds are transmitted to the Agent), any payment transmitted to the Agent by such Lender pursuant to this Section 2.11. SECTION 2.12. Evidence of Debt. (a) The indebtedness of the Company resulting from all Loans made by each Lender from time to time shall be evidenced by an appropriately completed and executed Revolving Promissory Note substantially in the form of Exhibit A (each a "Note"), delivered by the Company to each Lender. (b) The books and accounts of the Agent shall be conclusive evidence (absent manifest error) of the amounts of all Loans, fees, interest and other amounts advanced, due, outstanding, payable or paid pursuant to this Agreement or any Note. SECTION 2.13. Increased Costs. If, after the date hereof, any introduction of or change in any Law or in the interpretation thereof by any Governmental Authority charged with the administration thereof either (a) imposes, modifies or makes applicable any reserve, special deposit or similar requirement against assets held by, or deposits in or for the account of, any Lender or (b) imposes on any Lender any other condition regarding this Agreement, such Lender or the making of Loans hereunder, and the result of any event referred to in clause (a) or (b) above is to increase the cost to such Lender of making Loans hereunder (other than any increase that is reflected in the Reserve Requirement), reduce the amount of any payment receivable by such Lender hereunder or reduce the rate of return on any Lender's capital as a consequence of its obligations hereunder below that which such Lender would have achieved but for such circumstance, then, in each such case, upon demand by such Lender, the Company shall pay to such Lender, from time to time as specified thereby, additional amounts sufficient to compensate such Lender for such increased costs, reduction in payments receivable or reduction in rate of return. A certificate as to the amount of such increased cost, submitted to the Company by any Lender through the Agent, shall be conclusive (absent manifest error). SECTION 2.14. Capital Adequacy. If any Lender reasonably determines that compliance with any Law affects or would affect the amount of capital required or expected to be maintained by such Lender or any corporation controlling such Lender and that the amount of such capital is increased by or based upon the existence of such Lender's Commitment or the making of Loans hereunder, then, upon demand by such Lender, the Company shall pay to such Lender, from time to time as specified thereby, additional amounts sufficient to compensate such Lender in light of such circumstances, to the extent that such Lender reasonably -10- determines such increase in capital to be allocable to the existence of such Lender's Commitment or the making of Loans hereunder. A certificate as to such amounts submitted to the Company by any Lender through the Agent shall be conclusive (absent manifest error). SECTION 2.15. Taxes. (a) Payments by the Company to each of the Lenders under this Agreement and the Notes will be made free and clear of and without deduction for Taxes, other than Taxes based on the net income of such Lender (including franchise taxes imposed in lieu of net income taxes) imposed by (i) the United States federal government, (ii) the jurisdiction where such Lender is organized or has its principal office or (iii) the jurisdiction of the branch of such Lender maintaining any Loan or the branch of the Agent through which it renders its services as Agent ("Excluded Taxes"). If the Company is required by Law to deduct Taxes (other than Excluded Taxes) from such a payment, then the sum payable under the instrument to which the payment relates will be increased so that there is no diminution in the amount any Lender actually receives on account of such deduction. (b) The Company hereby indemnifies and holds harmless each Lender from and against, and agrees to reimburse each Lender on an after-tax basis (computed taking into account any deductions or other benefits available for income tax purposes in any jurisdiction in which such Lender is a taxpayer), on demand for any and all Taxes paid or incurred by such Lender in connection with the transactions contemplated by this Agreement; provided, however, that the foregoing indemnity does not cover Excluded Taxes. Reimbursement on an "after-tax basis" means on a basis so that such Lender is made whole after taking into account income taxes that such Lender will owe on such indemnity or reimbursement payment in any jurisdiction and any related tax benefits. Nothing in this Section 2.15(b) shall interfere with the right of any Lender to arrange its tax affairs in whatever manner it sees fit and, in particular, no Lender is under any obligation to claim a deduction or other benefit relating to these transactions ahead of any other claim, relief, credit, deduction or other benefit to which it is entitled. The applicable Lender shall promptly give written notice to the Company (but in no event later than sixty (60) days) after such Lender has actual knowledge of the imposition of any Taxes subject to indemnification hereunder; provided, however, that failure to give such notice within such sixty (60) day period will not relieve the Company of the obligation to indemnify such Lender in accordance with the terms hereof, except to the extent of interest that would have been avoided had the notice been given prior to the end of such sixty (60) day period. (c) (i) The Company will provide evidence that all Taxes imposed on payments under this Agreement, any Loan or the Notes have been fully paid to the appropriate authorities by delivering official receipts, notarized copies or confirmations of payment thereof to the Agent within thirty (30) days after payment. The Company will compensate any Lender that has to pay any Taxes -11- because the Company failed to timely furnish such evidence; provided, however, that prior to paying such Taxes, such Lender shall have notified the Company of its intent to make such payment. (ii) If the Company so requests, promptly in writing after receipt of any notice under this Section 2.15, such Lender will subject such Taxes to a Good Faith Contest (at the Company's expense), keep the Company fully informed about the progress of such Good Faith Contest, consult in good faith with the Company's counsel regarding conduct of such Good Faith Contest and not compromise or otherwise settle such Good Faith Contest without the Company's consent (which shall not be unreasonably withheld or delayed); provided, however, that such Lender may in its sole discretion select the forum for such Good Faith Contest and determine whether such Good Faith Contest will be by resisting payment of such Taxes or by paying such Taxes and seeking a refund; provided further, however, that such Lender will be under no obligation to subject such Taxes to a Good Faith Contest unless (A) if such Lender requests, the Company has provided such Lender an opinion of independent tax counsel selected by the Company and reasonably acceptable to such Lender to the effect that there is a reasonable basis for such Good Faith Contest, (B) the amount in controversy with respect to such Taxes is at least $( ), (C) such Lender has received satisfactory indemnification and security for any liability, loss, cost or expense arising out of such Good Faith Contest (including all reasonable legal and accounting fees and expenses, penalties, interest and additions to tax), (D) if requested by such Lender, the Company has admitted in writing its duty to indemnify such Lender for such Taxes if such Good Faith Contest is lost (but such admission shall not preclude the Company from raising a defense to liability if a court of competent jurisdiction has rendered a decision articulating the cause of such Taxes, and the cause is not one for which the Company is responsible under this Section 2.15) and (E) if such Good Faith Contest is conducted in a manner that requires paying all or part of such Taxes in advance, the Company has paid the amount required. (iii) If the Company so requests within ten (10) days of notice to the Company of the imposition of any Taxes (other than Excluded Taxes) on payments to any of the Lenders of a type not generally imposed on United States or foreign lenders making loans of the types contemplated hereunder, such Lenders shall (consistent with legal and regulatory restrictions) comply with Section 2.18. (d) Each Lender shall, prior to the Closing Date (or, if a Lender has become a party hereto pursuant to Section 9.9, the date upon which such Lender becomes a party hereto), deliver to the Agent and the Company (i) either (A) a letter stating that it is incorporated under the laws of the United States of America or a state thereof or (B) if it is not so incorporated, two duly completed copies of United States Internal Revenue Service Form 1001 or 4224 or successor applicable form, as the case may be, -12- certifying in each case that such Lender is entitled to receive payments under this Agreement without deduction or withholding of any United States federal income taxes and (ii) an Internal Revenue Service Form W-8 or W-9 or successor applicable form, as the case may be, to establish an exemption from United States backup withholding tax. If any Lender delivers to the Company and the Agent a Form 1001 or 4224 and a Form W-8 or W-9 pursuant to the immediately preceding sentence, it shall deliver to the Company and the Agent two further copies of such Form 1001 or 4224, and such Form W-8 and W-9, or successor applicable forms, or other manner of certification, as the case may be, on or before the date that any such form expires or becomes obsolete or after the occurrence of any event requiring a change in the most recent form previously delivered by it to the Company, and such extensions or renewals thereof as may reasonably be requested by the Company, unless an event (including any change in treaty, law or regulation) has occurred prior to the date on which any such delivery would otherwise be required that renders any such forms inapplicable or that would prevent such Lender from duly completing and delivering any such form with respect to it and such Lender advises the Company that it is not capable of, in the case of a Form 1001 or 4224, receiving payments without any deduction or withholding of United States federal income tax or, in the case of a Form W-8 or W-9, establishing an exemption from United States backup withholding tax. The provisions of this Section 2.15(d) shall apply to any successor holder of a Note. (e) Notwithstanding anything to the contrary contained in this Section 2.15, if (i)(A) any Lender has previously delivered to the Company and the Agent a Form 4224 or successor applicable form and (B) by virtue of any action taken or not taken voluntarily by such Lender, such Lender is not lawfully entitled to deliver a subsequent Form 4224 or applicable successor form solely as a result of such Lender's failure to be engaged in the active conduct of a trade or business in the United States or a determination that all amounts to be paid to such Lender hereunder are not effectively connected to such trade or business or (ii) any Lender fails to provide any form required under Section 2.15(d) at a time when such Lender is qualified to provide such form, the Company shall be under no obligation to compensate or indemnify such Lender under this Section 2.15 or otherwise with respect to any Tax required to be paid or withheld under United States federal income tax law that would not have been required to be paid or withheld had such Lender so delivered such Form 4224, applicable successor form or other form. (f) Notwithstanding anything to the contrary contained in this Section 2.15, the Company shall not be required to indemnify or reimburse any Lender who has failed to make available to the Agent its ratable portion of any Borrowing on the date required pursuant to this Agreement, after the Agent has made written demand upon such Lender for such payment, for any additional documentary stamp taxes or intangibles taxes incurred by such Lender solely as a result of such failure. -13- SECTION 2.16. Change of Law. (a) If on or after the date of this Agreement any Regulatory Change, or compliance by any Lender with any Regulatory Change, makes it unlawful or impossible for any Lender to make, maintain or continue its interest in any LIBOR Rate Loan, then such Lender shall promptly give notice together with evidence thereof to the Company and the Agent and the obligation of such Lender to make or maintain LIBOR Rate Loans shall be immediately suspended and if such Lender shall determine that it may not lawfully continue to maintain and fund such Loans, all outstanding LIBOR Rate Loans made by such Lender shall automatically and immediately be converted to Adjusted Base Rate Loans with the Loan Repayment Date as such LIBOR Rate Loans. (b) Before giving notice to the Company and the Agent pursuant to this Section 2.16, a Lender shall (consistent with legal and regulatory restrictions) designate a different lending office for the Loans (or Commitments) if such designation will avoid the requirement of giving such notice and will not, in the sole opinion of such Lender, be otherwise disadvantageous to such Lender. If the Company so requests within ten (10) days of receipt of the notice referred to above (which notice is based on circumstances not generally applicable to United States or foreign lenders making loans of the types contemplated hereunder), such Lender shall (consistent with legal and regulatory restrictions) comply with Section 2.18 hereof. SECTION 2.17. Non-Availability. (a) If at any time United States dollar deposits in the principal amount of any Lender's obligation to fund LIBOR Rate Loans are not available to such Lender in the London interbank market for the Interest Period specified in any Notice of Borrowing, such Lender shall so notify the Agent, which shall so notify the Company, and the obligation of such affected Lender to make LIBOR Rate Loans shall be immediately suspended. (b) If at any time the LIBOR Rate does not adequately and fairly reflect, in the reasonable judgment of any Lender, the cost for such Lender of advancing or maintaining any LIBOR Rate Loan during any Interest Period, then such Lender shall notify the Agent, which shall so notify the Company, and the obligation of such affected Lender to make LIBOR Rate Loans shall be immediately suspended. (c) If the Company so requests after the suspension of a Lender's obligation to make LIBOR Rate Loans under this Section 2.17 for at least thirty (30) consecutive days on at least two separate occasions based on circumstances not generally applicable to United States or foreign lenders making loans of the types contemplated hereunder, such Lender shall (consistent with legal and regulatory restrictions) comply with Section 2.18. SECTION 2.18. Substitution of Lenders. If (a) a Lender is required to comply with this Section 2.18 after a request from the Company pursuant to Section 2.15, 2.16 or 2.17 or (b) the -14- Company requests that the provisions of this Section 2.18 apply to a Lender within ten (10) days after it receives a notice from the Agent that (i) such Lender has failed to make available to the Agent its portion of any Borrowing on the date required to be made available to the Agent pursuant to this Agreement after the Agent has made written demand upon such Lender for such payment, (ii) such Lender has provided the Agent with notice that such Lender shall not make available to the Agent such portion of any Borrowing required to be made available to the Agent pursuant to this Agreement or (iii) such Lender has failed to reimburse the Agent pursuant to the terms of this Agreement, such Lender shall promptly consummate an assignment of all of such Lender's Commitment, Loans, Notes and other rights and obligations hereunder relative to the Commitment of such Lender to a replacement Lender (which may be, but is not required to be, one of the other Lenders) designated by the Company, in accordance with the provisions of Section 9.9(a), in exchange for an amount in United States dollars equal to the sum of (A) the outstanding principal amount of all such Loans, together with all interest accrued thereon, and (B) all other amounts owing to such Lender hereunder, payable in immediately available funds. ARTICLE III CONDITIONS PRECEDENT SECTION 3.1. Conditions Precedent to Initial Borrowing. The obligation of each Lender to make a Loan on the occasion of the initial Borrowing is subject to the following conditions precedent: (a) the Agent shall have received the following, each dated on or before the Closing Date, in form and substance satisfactory to the Agent and in the number of originals reasonably required by the Agent: (i) this Agreement and the Notes, duly executed by the Company; (ii) the Security Documents (other than the Indenture and the Tax-Exempt Indenture), duly executed by the parties thereto; (iii) the Indenture and the Tax-Exempt Indenture, duly executed by the parties thereto and certified as to completeness and authenticity by an Authorized Officer of each of the Mobile Energy Parties; and (iv) written opinions of counsel to the Company, as to such matters as the Agent may reasonably request; (b) all Contracts referred to in Section 3.1(a)(i), (ii) and (iii) remain in full force and effect; -15- (c) the Company shall have paid all accrued fees and expenses of the Agent and the Lenders as provided in Section 9.4, to the extent one or more statements for such fees and expenses have been presented for payment; (d) the conditions precedent contained in the Underwriting Agreement dated ( ), 1995 among the Mobile Energy Parties, Goldman Sachs & Co., Bear, Stearns & Co. and Lehman Brothers Inc. shall have been satisfied (without waiver, unless approved by the Agent); and (e) the conditions precedent contained in that certain Bond Purchase Agreement dated ( ), 1995 between Goldman Sachs & Co. and the IDB shall have been satisfied (without waiver, unless approved by the Agent). SECTION 3.2. Conditions Precedent to Each Borrowing. The obligation of each Lender to make a Loan on the occasion of each Borrowing, including the initial Borrowing, is subject to the satisfaction of the following further conditions precedent: (a) the Agent shall have received a Notice of Borrowing with respect to such Loan; and (b) the following statements shall be true (and the acceptance by the Company of the proceeds of such Borrowing shall constitute a representation and warranty by the Company that on the date of such Borrowing such statements are true): (i) the representations and warranties of the Mobile Energy Parties and each Affiliate thereof incorporated by reference into this Agreement or contained in any Security Document are true in all material respects on and as of the date of such Borrowing, before and after giving effect to such Borrowing and to the application of the proceeds therefrom, as though made on and as of such date; and (ii) no event has occurred and is continuing, or would result from such Borrowing or from the application of the proceeds thereof, that constitutes a Default. ARTICLE IV REPRESENTATIONS AND WARRANTIES Each of the Mobile Energy Parties hereby makes, for the benefit of the Agent and the Lenders, all of the representations and warranties of the Mobile Energy Parties made in the Indenture and the Tax-Exempt Indenture, in the form of such representations and warranties (including all schedules referred to therein) as they exist on the date of this Agreement and as they may hereafter be amended from time to time, but only to the extent -16- that the incorporation of any such amendments into this Agreement has been consented to in accordance with the provisions of Section 8.1. Such representations and warranties (including all schedules referred to therein) are hereby, mutatis mutandis, incorporated herein by reference (with appropriate substitutions, including the following: (i) the terms "Indenture," "Trustee" and "Holder," as they appear in Article III of the Indenture, shall be replaced by the terms "Agreement," "Agent" and "Lender," respectively, (ii) the terms "Tax-Exempt Indenture Trustee" and "Holder," as they appear in Section 3.1 of the IDB Lease Agreement, shall be replaced by the terms "Agent" and "Lender," respectively, and (ii) the phrases "the purchase and ownership of the Securities" and "the purchase and ownership of the Tax-Exempt Indenture Securities," as they appear in Section 3.6(a) of the Indenture and Section 3.1(j) of the IDB Lease Agreement, respectively, shall be replaced by the phrase "the making of Loans") as if set forth at length in this Agreement. ARTICLE V COVENANTS So long as any Commitment is in effect or any Obligation remains unpaid, unless compliance has been waived in writing by the Required Lenders: (a) all of the covenants of the Company and Mobile Energy contained in Article V of the Indenture and Article IV of the IDB Lease Agreement, together with any schedules referred to therein (in the form of such covenants and schedules as they exist as of the date of this Agreement and as they may hereafter be amended from time to time, but only to the extent that the incorporation of any such amendments into this Agreement has been consented to in accordance with the provisions of Section 8.1), are hereby, mutatis mutandis, incorporated herein by reference (with appropriate substitutions, including the following: (i) the term "Indenture," as it appears in Article V of the Indenture, shall be replaced by the term "Agreement"; (ii) the terms "Trustee" and "Tax-Exempt Indenture Trustee," as they appear in Article V of the Indenture (other than Sections 5.10(b) and 5.17) and Article IV (other than Sections 4.10(b) and 4.17) of the IDB Lease Agreement, respectively, shall be replaced by the word "Agent"; (iii) the phrase "the principal of and premium, if any, and interest on, and all other amounts payable in respect of, the Securities of each series in accordance with their terms and the terms of this Indenture and of the related Series Supplemental Indenture" and "the rental payments specified in Article II," as they appear in Section 5.1 of the Indenture and Section 4.1 of the IDB Lease Agreement, respectively, shall be replaced by the phrase "all of the Obligations in accordance with the terms of this Agreement"; and (iv) the phrases "Holder of a Security or an owner of a beneficial interest therein -17- requesting the same in writing" and "Holder of a Tax-Exempt Indenture Security or an owner of a beneficial interest therein requesting the same in writing," as they appear in Section 5.3 of the Indenture and Section 4.3 of the IDB Lease Agreement, respectively, shall be replaced by the term "Lender") as if set forth at length in this Agreement, and the Company will observe and perform all of such incorporated covenants; (b) the Company will not terminate, amend, replace or otherwise modify any provision of any Security Documents or any Subordinated Loan Agreement if such termination, amendment, replacement or other modification would, in the reasonable opinion of the Required Lenders, be expected to have a Material Adverse Effect on the rights and benefits of the Lenders or the Agent under the Credit Documents; and (c) the Company will use the proceeds of the Loans only to pay Operation and Maintenance Costs and to pay principal, interest, fees and other amounts payable hereunder. ARTICLE VI DEFAULTS AND REMEDIES If any one of the following events (each an "Event of Default") shall occur and be continuing: (a) any amount due under any Credit Document shall not be paid in full within 15 days after its due date; or (b) the Company shall fail to perform or observe any covenant or agreement contained in Section 5.1(b) or 5.1(c) of this Agreement; or (c) either of the Mobile Energy Parties shall fail to perform or observe any covenant or agreement contained in (i) Section 5.4(e), 5.7(b) (insofar as such failure relates to matters specified in Section 5.8(b)(iv)), 5.8(b) (other than clause (v) thereof), 5.10 or 5.19 of the Indenture or (ii) Section 4.4(e), 4.7(b) (insofar as such failure relates to matters specified in Section 4.8(b)(iv)), 4.8(b) (other than clause (v) thereof), 4.10 or 4.19 of the Tax-Exempt Indenture, in the case of clause (i) and (ii) above, as such covenants and agreements are incorporated in Section 5.1(a) hereof by reference; or (d) either of the Mobile Energy Parties shall fail to perform or observe any covenant or agreement contained in (i) Section 5.2, 5.4(a), 5.7(a), 5.8, 5.14 or 5.16 of the Indenture or (ii) Section 4.2, 4.4(a), 4.7(a), 4.8, 4.14 or 4.16 of the Tax-Exempt Indenture, in the case of clause (i) and (ii) above, such failure shall continue uncured for -18- thirty (30) or more days after either of the Mobile Energy Parties has knowledge thereof and as such covenants and agreements are incorporated in Section 5.1(a) hereof by reference; or (e) an Event of Default under the Indenture shall have occurred and be continuing and shall not have been waived by the Indenture Trustee until the earlier of (i) the expiration of thirty (30) days after such occurrence and (ii) an acceleration of the Indenture Securities; or (f) an Event of Default under the Tax-Exempt Indenture shall have occurred and be continuing until the earlier of (i) the expiration of thirty (30) days and (ii) an acceleration of the Tax-Exempt Indenture Securities; then, and in any such event, the Agent shall at the request, or may with the consent, of the Required Lenders, by notice to the Company, (i) declare the obligation of each Lender to make Loans to be terminated, whereupon the same shall forthwith terminate and (ii) declare the Obligations to be forthwith due and payable, whereupon the Obligations shall become and be forthwith due and payable, without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived by the Company; provided, however, that upon the occurrence of an Event of Default specified in paragraph (e) or (f) above that arises from an Event of Default under the Indenture described in Section 8.1(n) thereof or arises from an Event of Default under the Tax- Exempt Indenture described in Section 8.1(b) that arises from an Event of Default under the IDB Lease Agreement described in Section 7.1(n) thereof, automatically and without any notice to the Company, (A) the obligation of each Lender to make Loans shall be terminated and (B) the Obligations shall be forthwith due and payable, without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived by the Company. ARTICLE VII THE AGENT SECTION 7.1. Authorization and Action. Each Lender hereby appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such powers under this Agreement as are delegated to the Agent by the terms hereof, together with such powers as are reasonably incidental thereto. As to any matters not expressly provided for by the Credit Documents (including enforcement of and collection under any Credit Document or Security Document), the Agent shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of the Required Lenders, and such instructions shall be binding upon all Lenders and all holders of Notes; provided, -19- however, that the Agent shall not be required to take any action that exposes the Agent to personal liability or that is contrary to any Credit Document or Security Document or applicable law. In performing its function and duties hereunder, Agent shall act solely as the agent of the Lenders and does not assume and shall not be deemed to have assumed any obligation towards or relationship of agency or trust with or for the Company or any other party to any Project Document. SECTION 7.2. Agent's Reliance, Etc. Neither the Agent nor any of its directors, officers, agents or employees shall be liable for any action taken or omitted to be taken by it or them under or in connection with any Credit Document or Security Document, except for its or their own gross negligence or willful misconduct. Without limiting the generality of the foregoing, the Agent (a) may treat any Lender that has signed a Commitment Transfer Supplement as the holder of the applicable portion of the Obligations; (b) may consult with legal counsel, independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants or experts; (c) makes no warranty or representation to any Lender and shall not be responsible to any Lender for any statements, warranties or representations made in or in connection with any Credit Document or Security Document; (d) shall not have any duty to ascertain or to inquire as to the performance or observance of any of the terms, covenants or conditions of any Credit Document or Security Document on the part of the Company or any Affiliate thereof or to inspect the property (including the books and records) of the Company or any Affiliate thereof; (e) shall not be responsible to any Lender for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of any Credit Document or Security Document or any other instrument or document furnished pursuant hereto or thereto; and (f) shall incur no liability under or in respect of any Credit Document or Security Document by acting upon any notice, consent, certificate or other instrument or writing (which may be by telecopier or otherwise) believed by it to be genuine and signed or sent by the proper party or parties. SECTION 7.3. Initial Lender and Affiliates. With respect to its Commitment, the Loans made by it and the Note issued to it, the Initial Lender shall have the same rights and powers under this Agreement as any other Lender and may exercise the same as though it were not the Agent; and the term "Lender" or "Lenders" shall, unless otherwise expressly indicated, include the Initial Lender in its individual capacity. The Initial Lender and its Affiliates may accept deposits from, lend money to, act as trustee under indentures of, and generally engage in any kind of business with, the Company, any Affiliate thereof and any Person that may do business with or own securities of the Company or any Affiliate thereof, all as if the Initial Lender were not the Agent and without any duty to account therefor to the Lenders. -20- SECTION 7.4. Lender Credit Decision. Each Lender acknowledges that it has, independently and without reliance on the Agent or any other Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance on the Agent or any other Lender and based on such documents and information as it deems appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement. SECTION 7.5. Indemnification. The Lenders severally agree to indemnify the Agent (to the extent not promptly reimbursed by the Company and without limiting the obligation of the Company to do so), ratably according to their respective Commitments (or, if the Commitments have been fully canceled pursuant to Section 2.1(c), the respective Commitments that were in effect immediately prior to such cancellation), from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses and disbursements of any kind or nature whatsoever that may at any time (including at any time following the payment of any Obligations or termination of this Agreement) be imposed on, incurred by or asserted against the Agent in any way relating to or arising out of any Credit Document or Security Document or any action taken or omitted by the Agent under any Credit Document or Security Document; provided, however, that no Lender shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from the Agent's gross negligence or willful misconduct. Without limiting the foregoing, each Lender agrees to reimburse the Agent promptly upon demand for its ratable share of any costs and expenses payable by the Company under Section 8.4, to the extent that the Agent is not reimbursed for such costs and expenses by the Company. SECTION 7.6. Successor Agent. The Agent may resign at any time by giving thirty (30) days prior written notice thereof to the Lenders and the Company. Upon any such resignation, the Required Lenders shall have the right to appoint a successor Agent with the consent of the Company, which consent shall not be unreasonably withheld or delayed. If no successor Agent has been so appointed by the Required Lenders and accepted such appointment within thirty (30) days after the retiring Agent's giving of notice of resignation, then the retiring Agent may, on behalf of the Lenders, appoint a successor Agent with the consent of the Company, which shall not be unreasonably withheld or delayed, which successor Agent shall be a commercial bank organized under the laws of the United States of America or of any state thereof and having a combined capital and surplus of at least $500,000,000. Upon the acceptance of any appointment as Agent hereunder by a successor Agent, such successor Agent shall thereupon succeed to and become vested with all of the rights, powers, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and -21- obligations under the Credit Documents and the other Project Agreements. After any retiring Agent's resignation as Agent, the provisions of this Article VII shall inure to its benefit as to any actions taken or omitted to be taken by it while it was acting as the Agent. ARTICLE VIII GUARANTY SECTION 8.1. Guaranty of Payment and Performance. Mobile Energy hereby (a) guarantees to the Agent and each Lender from time to time the due and punctual payment, observance and performance of all of the Guaranteed Obligations in accordance with their respective terms and when and as due (whether at a Loan Repayment Date, by reason of acceleration or otherwise), or deemed to be due pursuant to Section 8.2, and (b) agrees so to pay, observe or perform the same when so due, or deemed to be due, upon demand. SECTION 8.2. Continuance and Acceleration of Guaranteed Obligations upon Certain Events. If (a) any Event of Default specified in paragraph (e) or (f) of Article VI that arises from an Event of Default under the Indenture described in Section 8.1(n) thereof or arises from an Event of Default under the Tax- Exempt Indenture described in Section 8.1(b) that arises from an Event of Default under the IDB Lease Agreement described in Section 7.1(n) thereof shall have occurred and be continuing, (b) any injunction, stay or the like that enjoins any acceleration, or demand for the payment, observance or performance, of any Guaranteed Obligations that would otherwise be required or permitted under the Security Documents shall become effective or (c) any Guaranteed Obligations shall be or be determined to be or become discharged, disallowed, invalid, illegal, void or otherwise unenforceable (whether by operation of any present or future law or by order of any Governmental Authority) against the Company then (i) such Guaranteed Obligations shall, for all purposes of this Agreement, be deemed (A) in the case of clause (c) above, to continue to be outstanding and in full force and effect notwithstanding the unenforceability thereof against the Company and (B) if such is not already the case, to have thereupon become immediately due and payable and to have commenced bearing interest at the rate equal to ( )% and (ii) the Agent and each Lender may, with respect to such Guaranteed Obligations, exercise all of the rights and remedies hereunder that would be available to it during an Event of Default. SECTION 8.3. Recovered Payments. The Guaranteed Obligations shall be deemed not to have been paid, observed or performed, and Mobile Energy's obligations under this Guaranty in respect thereof shall continue and not be discharged, to the extent that any payment, observance or performance thereof by the Company or any other guarantor, or out of the proceeds of any collateral, is recovered from or paid over by or for the account -22- of the Agent or and Lender for any reason, including as a preference or fraudulent transfer or by virtue of any subordination (whether present or future or contractual or otherwise) of the Guaranteed Obligations, whether such recovery or payment over is effected by any judgment, decree or order of any Governmental Authority, by any plan of reorganization or by settlement or compromise by the Agent or any Lender (whether or not consented to by either of the Mobile Energy Parties or any other guarantor) of any claim for any such recovery or payment over. Mobile Energy hereby expressly waives the benefit of any applicable statute of limitations and agrees that it shall be liable hereunder with respect to any Guaranteed Obligation whenever such a recovery or payment over thereof occurs. SECTION 8.4. Evidence of Guaranteed Obligations. The records of the Agent shall be conclusive evidence (absent manifest error) of the Guaranteed Obligations and of all payments, observances and performances in respect thereof. SECTION 8.5. Binding Nature of Certain Adjudications. Mobile Energy shall be conclusively bound by the adjudication in any action or proceeding, legal or otherwise, involving any controversy arising under, in connection with, or in any way related to, any of the Guaranteed Obligations, and by a judgment, award or decree entered therein, if Mobile Energy shall have had the right, or shall have been given the opportunity, to participate in such action or proceeding and shall have been given notice of such action or proceeding in time to exercise such right or avail itself of such opportunity. SECTION 8.6. Nature of Mobile Energy's Obligations. Mobile Energy's obligations hereunder (a) are absolute and unconditional, (b) are unlimited in amount, (c) constitute a guaranty of payment and performance and not a guaranty of collection, (d) are as primary obligor and not as a surety only, (e) shall be a continuing guaranty of all present and future Guaranteed Obligations and all promissory notes and other documentation given in extension or renewal or substitution for any of the Guaranteed Obligations and (f) shall be irrevocable. SECTION 8.7. No Release of Mobile Energy. The obligations of Mobile Energy under this Guaranty shall not be reduced, limited or terminated, nor shall Mobile Energy be discharged from any thereof, for any reason whatsoever (other than, subject to Sections 8.3 and 8.12, the payment, observance and performance of the Guaranteed Obligations), including (and whether or not the same shall have occurred or failed to occur once or more than once and whether or not the Guarantor shall have received notice thereof): (a) (i) any increase in the principal amount of, or interest rate applicable to, (ii) any extension of the time of payment, observance or performance of, (iii) any other amendment or modification of any of the other terms and provisions of, (iv) any release, composition or settlement (whether by way of acceptance of a plan of reorganization or otherwise) of (v) any subordination (whether present or future or contractual or -23- otherwise) of or (vi) any discharge, disallowance, invalidity, illegality, voidness or other unenforceability of, in each case the Guaranteed Obligations; (b) (i) any failure to obtain, (ii) any release, composition or settlement of, (iii) any amendment or modification of any of the terms and provisions of, (iv) any subordination of or (v) any discharge, disallowance, invalidity, illegality, voidness or other unenforceability of, in each case any other guaranties of the Guaranteed Obligations; (c) (i) any failure to obtain or any release of, (ii) any failure to protect or preserve, (iii) any release, compromise, settlement or extension of the time of payment of any obligations constituting, (iv) any failure to perfect or maintain the perfection or priority of any Lien upon, (v) any subordination of any Lien upon or (vi) any discharge, disallowance, invalidity, illegality, voidness or other unenforceability of any Lien or intended Lien upon, in each case any collateral now or hereafter securing the Guaranteed Obligations or any other guaranties thereof; (d) any termination of or change in any relationship between Mobile Energy and the Company, including any such termination or change resulting from a change in the ownership of Mobile Energy or the Company or from the cessation of any commercial relationship between Mobile Energy and the Company; (e) any exercise of, or any election not or failure to exercise, delay in the exercise of, waiver of, or forbearance or other indulgence with respect to, any right, remedy or power available to the Agent or any Lender, including (i) any election not or failure to exercise any right of setoff, recoupment or counterclaim, (ii) any election of remedies effected by the Agent or any Lender, including the foreclosure upon any real estate constituting collateral, whether or not such election affects the right to obtain a deficiency judgment and (iii) any election by the Agent or any Lender in any proceeding under the Bankruptcy Code of the application of Section 1111(b)(2) of the Bankruptcy Code; and (f) any other act or failure to act or any other event or circumstance that (i) varies the risk of Mobile Energy under this Guaranty or (ii) but for the provisions hereof, would, as a matter of statute or rule of law or equity, operate to reduce, limit or terminate the obligations of Mobile Energy hereunder or discharge Mobile Energy from any thereof. SECTION 8.8. Certain Waivers. Mobile Energy waives (a) any requirement, and any right to require, that any right or power be exercised or any action be taken against the Company, any other guarantor or any collateral for the Guaranteed Obligations, (b) all defenses to, and all setoffs, counterclaims and claims of recoupment against, the Guaranteed Obligations that may at any time be available to the Company or any other guarantor, (c) (i) notice of acceptance of and intention to rely on this Guaranty, (ii) notice of any Loans hereunder and of the incurrence or renewal of any other Guaranteed Obligations, (iii) notice of any of the matters referred to in Section 8.7 and (iv) all other notices that may be required by Law or otherwise to preserve any rights against Mobile Energy under this Guaranty, including any notice of default, demand, dishonor, presentment and protest, (d) diligence, (e) any defense based upon, arising -24- out of or in any way related to (i) any claim that any sale or other disposition of any collateral for the Guaranteed Obligations was not conducted in a commercially reasonable fashion or that a public sale, should the Agent, any Lender or the Collateral Agent (as the case may be), have elected to so proceed, was, in and of itself, not a commercially reasonable method of sale, (ii) any claim that any election of remedies by the Agent, any Lender or the Collateral Agent (as the case may be) including the exercise by the Agent, any Lender or the Collateral Agent (as the case may be) of any rights against any collateral, impaired, reduced, released or otherwise extinguished any right that Mobile Energy might otherwise have had against the Company or any other guarantor or against any collateral, including any right of subrogation, exoneration, reimbursement or contribution or right to obtain a deficiency judgment, (iii) any claim based upon, arising out of or in any way related to any of the matters referred to in Section 8.7 and (iv) any claim that this Guaranty should be strictly construed against the Agent, or any Lender and (f) ALL OTHER DEFENSES UNDER APPLICABLE LAW THAT WOULD, BUT FOR THIS CLAUSE (f), BE AVAILABLE TO MOBILE ENERGY AS A DEFENSE AGAINST OR A REDUCTION OR LIMITATION OF ITS OBLIGATIONS HEREUNDER. SECTION 8.9. Independent Credit Evaluation. Mobile Energy has independently, and without reliance on any information supplied by the Agent or any Lender, taken, and will continue to take, whatever steps it deems necessary to evaluate the financial condition and affairs of the Company, and the Agent or any Lender, shall have no duty to advise Mobile Energy of information at any time known to it regarding such financial condition or affairs. SECTION 8.10. Subordination of Rights Against Company, Other Guarantors and Collateral. All rights that Mobile Energy may at any time have against the Company, any other guarantor or any collateral for the Guaranteed Obligations (including rights of subrogation, exoneration, reimbursement and contribution and whether arising under Law or otherwise), and all obligations that the Company or any other guarantor may at any time have to Mobile Energy, Mobile Energy's obligations hereunder or any payment made are hereby expressly subordinated to the prior payment, observance and performance in full of the Guaranteed Obligations. Mobile Energy shall not enforce any of the rights, or attempt to obtain payment or performance of any of the obligations, subordinated pursuant to this Section 8.10 until the Guaranteed Obligations have been paid, observed and performed in full, except that such prohibition shall not apply to routine acts, such as the giving of notices and the filing of continuation statements, necessary to preserve any such rights. If any amount shall be paid to or recovered by Mobile Energy (whether directly or by way of setoff, recoupment or counterclaim) on account of any right or obligation subordinated pursuant to this Section 8.10, such amount shall be held in trust by Mobile Energy for the benefit of the Agent and the Lenders, not commingled with any of Mobile Energy's other funds and forthwith paid over to the Agent, -25- in the exact form received, together with any necessary endorsements, to be applied and credited against, or held as security for, the Guaranteed Obligations and the obligations of Mobile Energy hereunder. SECTION 8.11. Payments by Mobile Energy. (a) All payments due to the Agent or any Lender hereunder shall be made to the Agent or such Lender at the address indicated in Section 9.2. A payment shall not be deemed to have been made on any day unless such payment has been received by the Agent or the Lender (as the case may be) at the required place of payment, in lawful money of the United States of America in funds immediately available to the Agent or such Lender (as the case may be). (b) All payments due the Agent or any Lender under this Guaranty, and all of the other terms, conditions, covenants and agreements to be observed and performed by Mobile Energy under this Guaranty, shall be made, observed or performed by Mobile Energy without any reduction or deduction whatsoever, including any reduction or deduction for any set-off, recoupment, counterclaim (whether, in any case, in respect of an obligation owed by the Agent or any Lender to Mobile Energy, the Company or any other guarantor and, in the case of a counterclaim, whether sounding in tort, contract or otherwise) or tax. (c) If any tax is required to be withheld or deducted from, or is otherwise payable by Mobile Energy in connection with, any payment due to the Agent or any Lender hereunder, Mobile Energy (i) shall, if required, withhold or deduct the amount of such tax from such payment and, in any case, pay such tax to the appropriate taxing authority in accordance with Law and (ii) shall pay to the Agent or any Lender (A) such additional amounts as may be necessary so that the net amount received by the Agent or any Lender with respect to such payment, after withholding or deducting all taxes required to be withheld or deducted, is equal to the full amount payable hereunder and (B) an amount equal to all taxes payable by the IDB and the Agent or any Lender as a result of payments made by Mobile Energy (whether to a taxing authority or to the Agent or any Lender) pursuant to this Section 8.11(c). If any tax is withheld or deducted from, or is otherwise payable by Mobile Energy in connection with, any payment due to the Agent or any Lender under this Guaranty, Mobile Energy shall, within thirty (30) days after the date of such payment, furnish to the Agent or any Lender (as the case may be) the original or a certified copy of a receipt for such tax from the applicable taxing authority. If any payment due to the Agent or any Lender hereunder is or is expected to be made without withholding or deducting therefrom, or otherwise paying in connection therewith, any tax payable to any taxing authority, Mobile Energy shall, within thirty (30) days after any request from the Agent or any Lender, furnish to the Agent or any Lender (as the case may be) a certificate from such taxing authority, or an Opinion of Counsel acceptable to the Agent or any Lender (as the case may be), in either case stating that no tax payable to such taxing authority was or is, as the case may be, required to -26- be withheld or deducted from, or otherwise paid by Mobile Energy in connection with, such payment. (d) Mobile Energy hereby authorizes the Agent and each Lender, if and to the extent any amount payable by Mobile Energy under this Guaranty is not otherwise paid when due, to charge such amount against any or all of the accounts of Mobile Energy with the Agent or such Lender or any of its Affiliates (whether maintained at a branch or office located within or without the United States), with Mobile Energy remaining liable for any deficiency. (e) Whenever any payment to the Agent or any Lender under this Article VIII would otherwise be due (except by reason of acceleration) on a day that is not a Business Day, such payment shall instead be due on the next succeeding Business Day. If the date any payment hereunder is due is extended (whether by operation of this Agreement, Law or otherwise), such payment shall bear interest for such extended time at the rate of interest applicable hereunder. SECTION 8.12. Continuance of Guaranty; Survival. The obligations of Mobile Energy under this Article VIII shall continue in full force and effect until the payment, observance and performance in full of the Guaranteed Obligations. The rights and obligations of Mobile Energy, the Agent and each Lender shall survive the repayment in full of all principal of and premium, if any, and interest on, and all other amounts payable hereunder. SECTION 8.13. Assignments and Participations; Assignments. Mobile Energy may not assign any of its rights or obligations under this Guaranty without the prior written consent of the Tax- Exempt Indenture Trustee, and no assignment of any such obligation shall release Mobile Energy therefrom unless the Tax- Exempt Indenture Trustee shall have consented to such release in a writing specifically referring to the obligation from which Mobile Energy is to be released. SECTION 8.14. Benefit and Enforcement. This Guaranty is given for the benefit of the Agent and each Lender, each of whom shall be entitled in the same manner as set forth herein to enforce performance and observance of this Guaranty. ARTICLE IX MISCELLANEOUS SECTION 9.1. Amendments, Etc. No amendment or waiver of any provision of this Agreement or any Note, or consent to any departure by either of the Mobile Energy Parties therefrom, shall be effective unless in writing and signed or consented to (in writing) by the Required Lenders (and, in the case of amendments, the Mobile Energy Parties), and then such waiver or consent shall -27- be effective only in the specific instance and for the specific purpose for which given; provided, however, that no amendment, waiver or consent shall, unless in writing and signed or consented to (in writing) by all of the Lenders, do any of the following: (a) waive any of the conditions specified in Article III; (b) increase the Commitments of the Lenders or subject the Lenders to any additional obligations; (c) reduce the principal of, or interest on, the Loans or any fees or other amounts payable hereunder; (d) postpone any date fixed for (i) payment of principal of, or interest on, the Loans or (ii) payment of fees or other amounts payable hereunder; (e) change the percentage of the Commitments or of the Loans outstanding, or the number of Lenders, required for the Lenders or any of them to take any action hereunder; or (f) amend this Section 8.1. SECTION 9.2. Notices, Etc. All notices and other communications provided for hereunder shall be in writing (including by telecopier) and shall be mailed, telecopied or delivered, if to the Company, to it at ( ), telephone ( ), telecopier ( ), Attention: ( ); if to any Lender other than the Initial Lender, to it at the address or telecopier number set forth below its name in the Commitment Transfer Supplement by which it became a party hereto; if to the Agent or Initial Lender, to it at ( ), telephone ( ), telecopier ( ), Attention: ( ); or, as to each party, to it at such other address or telecopier number as designated by such party in a written notice to the other parties. All such notices and communications shall be deemed received, (a) if personally delivered, upon delivery, (b) if sent by first class mail, on the third Business Day following deposit into the mails and (c) if sent by telecopier, upon acknowledgment of receipt thereof by the recipient, except that notices and communications to the Agent pursuant to Article II or VII shall not be effective until received by the Agent. SECTION 9.3. No Waiver; Remedies. No failure on the part of any Lender or the Agent to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof, and no single or partial exercise of any such right shall preclude any other or further exercise thereof or the exercise of any other right. The remedies provided herein are cumulative and not exclusive of any remedies provided by law. SECTION 9.4. Costs and Expenses. Whether or not any Loans are made hereunder, the Company shall pay to the Agent on demand (a) all reasonable costs and expenses of the Agent and the Lenders in connection with the preparation, execution, delivery, administration, modification and amendment of this Agreement, the Notes and the other documents to be delivered hereunder, including the reasonable fees and out-of-pocket expenses of counsel for the Agent and the Lenders with respect thereto and with respect to advising the Agent and the Lenders as to their rights and responsibilities, or the perfection, protection or reservation of rights or interests, under this Agreement, the Notes, the Security Documents and the other documents to be -28- delivered hereunder and (b) all reasonable costs and expenses of the Agent and the Lenders (including the reasonable fees and out- of-pocket expenses of counsel for the Agent and the Lenders) in connection with the enforcement (whether through negotiations, legal proceedings or otherwise) of this Agreement, the Notes, the Security Documents and the other documents to be delivered hereunder, whether in any action, suit or litigation, any bankruptcy, insolvency or similar proceeding or otherwise. In addition, the Company shall pay any and all stamp and other taxes and fees payable or determined to be payable in connection with the execution, delivery, filing and recording of any of the aforementioned documents, and the Company agrees to indemnify and hold the Agent and the Lenders harmless from and against any and all liabilities with respect to or resulting from any delay in paying or omission to pay any of the foregoing. SECTION 9.5. Application of Monies. If any sum paid or recovered in respect of the Obligations is less than the amount then due, the Agent may apply that sum to principal, interest, fees or any other amount due under this Agreement in such proportions and order and generally in such manner as the Agent shall determine. SECTION 9.6. Severability. Any provision of this Agreement that is prohibited, unenforceable or not authorized in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition, unenforceability or nonauthorization without invalidating the remaining provisions of this Agreement or affecting the validity, enforceability or authorization of such provision in any other jurisdiction. SECTION 9.7. Non-recourse Liability. Satisfaction of the Obligations shall be had solely from the Collateral. No recourse shall be had to (a) any assets or properties of any Members (other than Mobile Energy as provided in Article VIII) or of the stockholders of Mobile Energy, other than their respective interests in the Collateral, (b) any Member (other than Mobile Energy as provided in Article VIII) or (c) any Affiliate, incorporator, stockholder, partner, member, officer, director or employee of any Member (other than the Company and, in respect of any Southern Guaranty on deposit in the Maintenance Reserve Account or the Distribution Account, Southern) and, in the event of non-performance by either of the Mobile Energy Parties of any of the Obligations, no judgment for any deficiency upon the Obligations shall be obtainable by the Lenders or the Agent against any Member (other than Mobile Energy as provided in Article VIII) or any Affiliate, incorporator, stockholder, partner, member, officer, director or employee of any Member (other than the Company and, in respect of any Southern Guaranty on deposit in the Maintenance Reserve Account or the Distribution Account, Southern) or of the Company (other than Mobile Energy as provided in Article VIII and, in respect of any Southern Guaranty on deposit in the Maintenance Reserve Account or the Distribution Account, Southern). -29- SECTION 9.8. Binding Effect. This Agreement shall be binding upon and inure to the benefit of the Company, the Agent, the Lenders and their respective successors and permitted assigns, except that the Company shall not have the right to assign any of its rights and obligations hereunder without the prior written consent of all of the Lenders. SECTION 9.9. Assignments and Participations. (a) Any Lender may at any time (with the prior written consent of the Company, such consent not to be unreasonably withheld or delayed, the prior written consent of the Agent, such consent not to be unreasonably withheld or delayed, and the prior written consent of the Initial Lender) sell to one or more banks or other entities (a "Purchasing Lender") all or any part of its rights and obligations under the Credit Documents (which, except in the case of an assignment to a Person that, immediately before such assignment, was a Lender, shall be equal to at least $( ) or an integral multiple of $( ) in excess thereof) pursuant to a Commitment Transfer Supplement, executed by such Purchasing Lender, such transferor Lender, the Agent and the Initial Lender (and, in the case of a Purchasing Lender that is not then a Lender or an Affiliate thereof, by the Company). Upon (i) the execution of such Commitment Transfer Supplement and (ii) delivery of a copy thereof to the Company and payment of the amount of the purchase price for its participation to such transferor Lender, such Purchasing Lender shall for all purposes be a Lender party to this Agreement and shall have all the rights and obligations of a Lender under this Agreement, to the same extent as if it were an original party hereto with the Commitment as set forth in such Commitment Transfer Supplement, which shall be deemed to amend this Agreement to the extent, and only to the extent, necessary to reflect the addition of such Purchasing Lender and the resulting adjustment of Commitments arising from the purchase by such Purchasing Lender of all or a portion of the rights and obligations of such transferor Lender under the Credit Documents. Upon the consummation of any transfer pursuant to this Section 9.9, the transferor Lender, the Agent and the Company shall make appropriate arrangements so that, if required, a replacement Note is issued to such transferor Lender and a new Note or, as appropriate, a replacement Note, is issued to such Purchasing Lender, in each case, in principal amounts reflecting their Commitment. (b) Any Lender may, from time to time, sell or offer to sell participating interests in any Loans owing to such Lender, any Note held by such Lender, any Commitment of such Lender or any other interests and obligations of such Lender hereunder, to one or more banks or other entities (each, a "Participant"), on such terms and conditions as may be determined by the selling Lender, without the consent of the Company. The selling Lender shall notify the Company of the identity of each Participant within 30 days following such participation; provided, however, that failure to give such notice within such 30 day period will not affect the validity or effectiveness of such participation. The grant of such participation shall not relieve any such Lender -30- of its obligations, or impair the rights of any such Lender, hereunder. In the event of any such sale by a Lender of a participating interest to a Participant, such Lender shall remain solely responsible for the performance of such Lender's obligations under this Agreement, such Lender shall remain the holder of any such Note for all purposes under this Agreement, and the Company, the Agent and the Initial Lender will continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement and such Lender shall retain the sole right and responsibility to exercise the rights of such Lender, and enforce the obligations of the Company, including the right to approve any amendment, modification, supplement or waiver of any provision of any Credit Document and the right to take action under Article VI hereof and such Lender shall not grant any such Participant any voting rights or veto power over any such action by such Lender under this Agreement (provided that such Lender may agree not to consent to any modification, amendment or waiver of this Agreement, without the consent of the Participant, that would alter the principal of or interest on the Loans, postpone the date fixed for any payment of principal of or interest thereon, release any Collateral or extend the Scheduled Expiration Date). No Participant shall have any rights under this Agreement to receive payment of principal, interest or any other amount except through a Lender and as provided in this Section 9.9. The Company agrees that, upon the occurrence and during the continuance of any Event of Default, each Participant shall have the right of set-off in respect of its participating interest in amounts owing under this Agreement and any Notes as set forth in Section 2.19 to the same extent as if the amount of its participating interest was owing directly to it as a Lender under this Agreement or any Note. The Company also agrees that each Participant shall be entitled to the benefits of Sections 2.5(b), 2.13, 2.14, 2.15 and 2.16 with respect to its participation granted hereunder, provided that no Participant shall be entitled to receive any greater amount pursuant to such Sections than the Lender transferring such participation would have been entitled to receive in respect of the amount of the participation transferred to such Participant had no such transfer occurred. (c) Any Lender may, in connection with any assignment or participation or proposed assignment or participation pursuant to this Section 9.9, disclose to the Purchasing Lender or Participant or proposed Purchasing Lender or Participant any information relating to the Company furnished to such Lender by or on behalf of the Company. SECTION 9.10. Indemnification. Each of the Mobile Energy Parties agrees to indemnify and hold harmless the Agent and each Lender and each of their respective officers, directors, employees, agents and Affiliates (each, an "Indemnified Party") from and against any and all claims, damages, losses, liabilities, costs and expenses whatsoever that an Indemnified Party may incur (or that may be claimed against an Indemnified Party by any Person) arising out of or relating to (a) the -31- execution, delivery or performance of the Credit Documents; (b) the issuance, sale or delivery of the Securities or the Notes; (c) the use of the proceeds of the Securities or any Loan; (d) any reasonable action taken by any Indemnified Party in protecting and enforcing the rights and remedies of the Agent or the Lenders under the Credit Documents or the Security Documents; or (e) any failure of the Company to comply with any Environmental Requirement; provided, however, that the Mobile Energy Parties shall not be required to indemnify any Indemnified Party for any claims, damages, losses, liabilities, costs or expenses to the extent caused by such Indemnified Party's willful misconduct or gross negligence. The Mobile Energy Parties, upon demand by any Indemnified Party at any time, shall also reimburse such party for any reasonable legal or other expenses incurred in connection with investigating or defending against any of the foregoing. If any action, suit or proceeding arising from any of the foregoing is brought against any Indemnified Party, such Indemnified Party shall promptly notify the Mobile Energy Parties in writing, enclosing a copy of all papers served, but the omission so to notify the Mobile Energy Parties of any such action shall not relieve it of any obligation to indemnify such Indemnified Party; provided, however, that the Mobile Energy Parties shall not be liable for any settlement of any such action effected without the either of the Mobile Energy Party's prior written consent. If any such action shall be brought against any Indemnified Party and it shall notify either of the Mobile Energy Parties of the commencement thereof, either of the Mobile Energy Parties shall be entitled to participate in and, to the extent that it shall wish, to assume the defense thereof with counsel reasonably satisfactory to such Indemnified Party, and after notice from such Mobile Energy Party to such Indemnified Party of such Mobile Energy Party's election so to assume the defense thereof, the Mobile Energy Parties shall not be liable to such Indemnified Party for any subsequent legal or other expenses attributable to such defense, except as provided below, other than reasonable costs of investigation subsequently incurred by such Indemnified Party in connection with the defense thereof. The Indemnified Party shall have the right to employ its own counsel in any such action where either of the Mobile Energy Parties has assumed the defense, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party unless (i) the employment of counsel by such Indemnified Party has been authorized by either of the Mobile Energy Parties, (ii) the Indemnified Party shall have reasonably concluded that there may be a conflict of interest between either of the Mobile Energy Parties and the Indemnified Party in the conduct of the defense of such action (in which case the Mobile Energy Parties shall not have the right to direct the defense of such action on behalf of the Indemnified Party) or (iii) the Mobile Energy Parties shall not in fact have employed counsel reasonably satisfactory to the Indemnified Party to assume the defense of such action. SECTION 9.11. Governing Law. THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO THE CONFLICT-OF-LAW -32- PRINCIPLES THEREOF. SECTION 9.12. Headings. The section and subsection headings used herein have been inserted for convenience of reference only and do not constitute matters to be considered in interpreting this Agreement. SECTION 9.13. Execution in Counterparts. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. SECTION 9.14. Third Party Beneficiaries. Nothing contained in this Agreement or in the Notes, express or implied, shall give to any Person, other than the parties hereto and their successors and permitted assigns, any benefits or any legal or equitable right, remedy or claim under this Agreement or the Notes. SECTION 9.15. Waiver of Jury Trial. THE MOBILE ENERGY PARTIES, THE AGENT AND THE LENDERS HEREBY IRREVOCABLY WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO ANY OF THE CREDIT DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY. -33- IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective officers thereunto duly authorized, as of the day and year first above written. MOBILE ENERGY SERVICES COMPANY, L.L.C. By: ____________________________________ Name: Title: MOBILE ENERGY SERVICES HOLDINGS, INC. By: ____________________________________ Name: Title: Commitment $15,000,000.00 BANQUE PARIBAS, as Agent and as a Lender By: ____________________________________ Name: Title: By: ____________________________________ Name: Title: -34- EXHIBIT A REVOLVING PROMISSORY NOTE $(15,000,000.00) New York, New York ________ __, 1995 FOR VALUE RECEIVED, the undersigned, MOBILE ENERGY SERVICES COMPANY, L.L.C., an Alabama limited liability company (the "Company"), hereby unconditionally promises to pay to the order of BANQUE PARIBAS (the "Lender") the lesser of (i) the principal sum of fifteen million dollars ($15,000,000.00) and (ii) the aggregate unpaid principal amount of the Loans made by the Lender to the Company under the Credit Agreement referred to below, on the dates and in the amounts specified therein. The Company further promises to pay interest on the daily unpaid principal amount hereof from time to time outstanding on the dates and at the rates specified in the Credit Agreement. This Note is hereby expressly limited so that in no contingency or event, whether by reason of acceleration of the maturity of any indebtedness evidenced hereby or otherwise, shall the interest contracted for or charged or received by the Lender exceed the maximum amount permissible under applicable law. If, from any circumstance whatsoever, interest would otherwise be payable to the Lender in excess of the maximum lawful amount, the interest payable to the Lender shall be reduced to the maximum amount permitted under applicable law, and the amount of interest for any subsequent period, to the extent less than that permitted by applicable law, shall to that extent be increased by the amount of such reduction. Each holder hereof is authorized to endorse on the schedule attached hereto, or on a continuation thereof, the date each such interest payment is due and the amount of each such interest payment determined in accordance with the Credit Agreement. All such notations shall constitute conclusive evidence (absent manifest error) of the accuracy of the information so recorded and be enforceable against the Company with the same force and effect as if such amounts were each set forth in a separate note executed by the Company. All payments due hereunder shall be made without setoff, counterclaim or deduction of any nature to Banque Paribas, as Agent, at ( ), in lawful money of the United States of America and in immediately available funds, or at such other place and in such other manner as may be specified by the Agent pursuant to the Credit Agreement. Each holder hereof is authorized to endorse on the schedule attached hereto, or on a continuation thereof, the date and amount of each Loan made to the Company and each payment or prepayment of principal thereof, provided that the failure of such holder to make, or any error in making, any such recordation or endorsement shall not affect the obligations of the Company hereunder or under the Credit Agreement. All such notations shall constitute conclusive evidence (absent manifest error) of the accuracy of the information so recorded and be enforceable against the Company with the same force and effect as if such amounts were each set forth in a separate note executed by the Company. This Note is the "Note" of the Company to the Lender referred to in, evidences each Loan made by the Lender to the Company under, is subject to the provisions of, and entitles its holder to the benefits of, the Revolving Credit Agreement dated as of ( ), 1995 (the "Credit Agreement") among the Mobile Energy Parties, the Lender and the other lender parties thereto, and Banque Paribas, as agent for the Lender and such other lenders, as the same may be amended, supplemented or otherwise modified from time to time and to which reference is hereby made for a more complete statement of the terms and conditions under which each Loan evidenced hereby is to be made and repaid. Capitalized terms in this Note that are not specifically defined herein shall have the meanings ascribed to them in the Credit Agreement. The Credit Agreement provides for, among other things, the acceleration of the maturity of the unpaid principal amount hereof upon the occurrence of certain stated events and for voluntary prepayments in certain circumstances and upon certain terms and conditions. The obligations of the Company under the Credit Agreement and this Note are secured as provided under, and the holder hereof is entitled to the benefit of, the Security Documents. In addition to any and all costs, fees and expenses for which the Company is liable under the Credit Agreement, the Company promises to pay all costs and expenses, including reasonable attorneys' fees and disbursements, incurred in the collection and enforcement hereof or any appeal of any judgment rendered hereon. The Company hereby expressly waives diligence, presentment, protest, demand, dishonor, nonpayment and notice of every kind to the fullest extent permitted by applicable law. No failure or delay by any holder of this Note to exercise any right or remedy under this Note or any other document or instrument entered into pursuant to the Credit Agreement shall operate or be construed as a waiver or modification hereof or thereof. This Note shall be binding upon the successors and permitted assigns of the Company and shall inure to the Lender and its successors, endorsees and permitted assigns. If any term or provision of this Note shall be held invalid, illegal or unenforceable, the validity of all other terms and provisions hereof shall in no way be affected thereby. Recourse under this Note is limited in accordance with Section 9.7 of the Credit Agreement, and the provisions of Section 9.7 of the Credit Agreement are incorporated herein by reference. THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO THE CONFLICT-OF-LAW PRINCIPLES THEREOF. Borrower hereby expressly and irrevocably agrees and consents that any suit, action or proceeding arising out of or related to this Note may be instituted in any state or federal court (at Lender's option) sitting in the County of New York, State of New York, and, by the execution and delivery of this Note, Borrower expressly waives any objection that it may have now or hereafter to the venue or to the jurisdiction of any such suit, action or proceeding, and irrevocably submits generally and unconditionally to the jurisdiction of any such court in any such suit, action or proceeding. All excise tax due on this Note has been paid by the Company and proper stamps affixed to the Mortgage securing this Note. MOBILE ENERGY SERVICES COMPANY, L.L.C. By: _______________________________ Name: Title: GUARANTY For value received, Mobile Energy hereby guarantees to the Lender from time to time the due and punctual payment, observance and performance of all of the Guaranteed Obligations in accordance with their respective terms and when and as due (whether at maturity, by reason of acceleration or otherwise), or deemed to be due hereunder, and agrees so to pay, observe or perform the same when so due, or deemed to be due, upon demand. Mobile Energy's obligations above, (i) are absolute and unconditional, (ii) are unlimited in amount (except as provided in Article VIII of the Credit Agreement, (iii) constitute a guaranty of payment and performance and not a guaranty of collection, (iv) are as primary obligor and not as a surety only, (v) shall be a continuing guaranty of all present and future Guaranteed Obligations and all promissory notes and other documentation given in extension or renewal or substitution for any of the Guaranteed Obligations and (vi) shall be irrevocable. The obligations of Mobile Energy under this Guaranty shall continue in full force and effect until the payment, observance and performance in full of the Guaranteed Obligations. The rights and obligations of Mobile Energy and the Lenders shall survive the repayment in full amounts borrowed under the Credit Agreement. Reference is made to Article VIII of the Credit Agreement for further provisions with respect to this Guaranty. THIS GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO THE CONFLICT-OF-LAW PRINCIPLES THEREOF. MOBILE ENERGY SERVICES COMPANY, L.L.C. By: _______________________________ Name: Title: SCHEDULE Total Amount of Date Amount Principal Principal Principal Unpaid Interest of Amount of Date Amount Paid Principal Payment Interest Loans Notation Made of Loan or Prepaid Balance is Due Due Outstanding Made by EXHIBIT B NOTICE OF BORROWING (Mobile Energy Services Company, L.L.C. Letterhead) (Date - at least one Business Day (or three Eurodollar Business Days for LIBOR Rate Loans) prior to proposed date of Borrowing) Attention: Ladies and Gentlemen: Pursuant to the Revolving Credit Agreement, dated as of ( ), 1995 among Mobile Energy Services Company, L.L.C. (the "Company"), Mobile Energy Services Holdings, Inc., the financial institutions named therein (the "Lenders") and Banque Paribas, as agent for the Lenders (as the same may be amended, modified or supplemented from time to time, the "Credit Facility") (capitalized terms used herein, unless otherwise noted, shall have the meanings ascribed to them in the Credit Facility). The Company hereby requests that the Agent make available to the Company on (_________, ____), the following amount: Funds required by the Company to pay for Operation and Maintenance Costs $______________ This Borrowing shall consist of (choose Adjusted Base Rate Loans or LIBOR Rate Loans - if LIBOR Rate Loans, specify Interest Period of one, two or three months) with a Loan Repayment Date of (Date - not later than the Scheduled Expiration Date; not later than 90 days from date of Borrowing; no more than $5,000,000 may be scheduled for repayment within any 30-day period; if LIBOR Rate Loans, must correspond with last day of specified Interest Period). Attached hereto are invoices or other evidence of amounts due evidencing the uses contemplated for the requested Borrowing. We request that the funds representing the requested Borrowing be deposited in the following account: (Account Number/Bank) In connection with this request for a Borrowing, the Company further certifies that the proceeds of the Borrowing being requested herein are to be applied for the uses permitted by the Credit Facility. The Company hereby certifies that, as of the date of this request for a Borrowing, the Company is in compliance, subject to the satisfaction or waiver by the Agent, with all conditions precedent set forth in Section (in the case of the initial Borrowing, 3.1 and) 3.2 of the Credit Facility. MOBILE ENERGY SERVICES COMPANY, L.L.C. By: _______________________________ Name: Title: EXHIBIT C Form of Commitment Transfer Supplement COMMITMENT TRANSFER SUPPLEMENT, dated as of the date set forth in Item 1 of Schedule I hereto, among each Transferor Lender set forth in Item 2 of Schedule I hereto (each, a "Transferor Lender"), each Purchasing Lender set forth in Item 3 of Schedule I hereto (each, a "Purchasing Lender") and Banque Paribas, as the Initial Lender and as Agent under the Credit Agreement described below. W I T N E S S E T H: WHEREAS, this Commitment Transfer Supplement is being executed and delivered in accordance with Section 8.9 of the Revolving Credit Agreement dated as of ( ), 1995 among (i) Mobile Energy Services Company, L.L.C., an Alabama limited liability company (the "Company"), (ii) Mobile Energy Services Holdings, Inc., an Alabama corporation, (iii) Banque Paribas, in its individual capacity as initial lender (the "Initial Lender"), and the other Lenders named therein (collectively, the "Lenders") and (iv) Banque Paribas, as agent for the Lenders (the "Agent") (terms defined therein being used herein as therein defined); and WHEREAS, each Purchasing Lender desires to purchase and assume from its respective Transferor Lender certain rights, obligations and commitments under the Credit Agreement and, if it is not already a Lender party to the Credit Agreement, desires to become a Lender party to the Credit Agreement; and WHEREAS, each Transferor Lender desires to sell and assign to its respective Purchasing Lender, certain rights, obligations and commitments under the Credit Agreement. NOW, THEREFORE, the parties hereto hereby agree as follows: 1. Upon receipt by Agent of ( ) (( )) fully executed originals of this Commitment Transfer Supplement, to each of which is attached a fully completed Schedule I, Schedule II and Schedule III, and each of which has been executed by each Transferor Lender, each Purchasing Lender and any other Person required by the Credit Agreement to execute this Commitment Transfer Supplement, Agent will transmit to Borrower, each C-1 Transferor Lender and each Purchasing Lender a Transfer Effective Notice, substantially in the form of Schedule IV hereto (a "Transfer Effective Notice"). Such Transfer Effective Notice shall set forth, among other things, the date on which the transfer effected by this Commitment Transfer Supplement shall become effective (the "Transfer Effective Date"), which date shall be the date hereof. From and after the Transfer Effective Date each Purchasing Lender shall be a Lender party to the Credit Agreement for all purposes thereof. 2. Each Purchasing Lender shall pay to each of its respective Transferor Lenders an amount in United States dollars equal to the purchase price, as agreed between such Transferor Lender and each such Purchasing Lender and set forth on Schedule II hereto (the "Purchase Price"), for the portion being purchased (such Purchasing Lender's "Purchased Percentage") by such Purchasing Lender of the outstanding Loans and other amounts owing to the respective Transferor Lender under the Credit Agreement and the Notes (the "Outstanding Obligations"). Each Purchasing Lender shall pay the appropriate Purchase Price to its respective Transferor Lender(s), in immediately available funds, at or before 12:00 noon, local time of the appropriate Transferor Lender, on the Transfer Effective Date. Effective upon the Transfer Effective Date, each Transferor Lender hereby irrevocably sells, assigns and transfers to each of its respective Purchasing Lenders, without recourse, representation or warranty other than as set forth in Section 8, and each such Purchasing Lender hereby irrevocably purchases, takes and assumes from its respective Transferor Lender(s), such Purchasing Lender's Purchased Percentage of the Commitment, presently outstanding Loans and other amounts owing to each such Transferor Lender under the Credit Agreement and the Notes. 3. Each Transferor Lender has made arrangements with its respective Purchasing Lender(s) with respect to (a) the portion, if any, to be paid, and the date or dates for payment, by such Transferor Lender to its respective Purchasing Lender(s) of any fees heretofore received by such Transferor Lender pursuant to the Credit Agreement prior to the Transfer Effective Date that apply to periods subsequent to the Transfer Effective Date and (b) the portion, if any, to be paid, and the date or dates for payment, by each such Purchasing Lender to its respective Transferor Lender(s) of fees or interest received by each such Purchasing Lender pursuant to the Credit Agreement from and after the Transfer Effective Date that apply to periods prior to the Transfer Effective Date. 4. All payments of principal that would otherwise be payable, and all interest, fees and other amounts that would otherwise accrue, from and after the Transfer Effective Date to or for the account of any Transferor Lender pursuant to the Credit Agreement and the Notes shall instead be payable and accrue to or for the account of, the Transferor Lender(s) and the Purchasing Lender(s) in accordance with their respective C-2 interests as reflected in this Commitment Transfer Supplement. 5. On or prior to the Transfer Effective Date, each Transferor Lender will deliver to the Agent its Note. On or prior to the Transfer Effective Date, the Company will deliver to the Agent a new Note for each Purchasing Lender and each Transferor Lender (if applicable), in each case in principal amounts reflecting, in accordance with the Credit Agreement, their respective "Revised Commitment Percentage" or "New Commitment Percentage," as the case may be, and as set forth in Schedule III hereto, of the Commitment (as adjusted pursuant to this Commitment Transfer Supplement). Promptly after the Transfer Effective Date, the Agent will send to each Transferor Lender (if applicable) and Purchasing Lender its new Note with the superseded Note of each Transferor Lender attached to the new Note (or if there is more than one new Note, the superseded Note attached to one of such new Notes and copies thereof attached to all other new Notes). 6. Concurrently with the execution and delivery hereof, the Transferor Lenders will provide to each Purchasing Lender (if it is not already a Lender party to the Credit Agreement) copies of all documents delivered to the Transferor Lenders evidencing satisfaction of the conditions precedent set forth in the Credit Agreement. 7. Each of the parties to this Commitment Transfer Supplement agrees that at any time and from time to time upon the written request of any other party, it will execute and deliver such further documents and do such further acts and things as such other party may reasonably request in order to effect the purposes of this Commitment Transfer Supplement. 8. By executing and delivering this Commitment Transfer Supplement, each Transferor Lender and each Purchasing Lender confirms to and agrees with each other, the Agent, the Initial Lender and the Lenders as follows: (a) other than the representation and warranty that it is the legal and beneficial owner of the interest being assigned hereby, free and clear of any adverse claim, each such Transferor Lender makes no representation or warranty and assumes no responsibility with respect to (i) any statements, warranties or representations made in or in connection with the Credit Agreement or (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Credit Agreement, the Notes or any other instrument or document furnished pursuant thereto, (b) each such Transferor Lender makes no representation or warranty and assumes no responsibility with respect to the financial condition of Borrower or the performance or observance by Borrower of any of its obligations under the Credit Agreement, the Notes or any other instrument or document furnished pursuant thereto, (c) each such Purchasing Lender confirms that it has received a copy of the Credit Agreement, together with copies of such other documents and information as it has deemed appropriate to make C-3 its own credit analysis and decision to enter into this Commitment Transfer Supplement, (d) each such Purchasing Lender will, independently and without reliance upon Agent, its respective Transferor Lender(s) or any other Lender or the Initial Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Agreement, (e) each such Purchasing Lender appoints and authorizes Agent to take such action as agent on its behalf and to exercise such powers under the Credit Agreement as are delegated to the Agent by the terms thereof together with such powers as are reasonably incidental thereto and (f) each such Purchasing Lender agrees that it will perform in accordance with their terms all of the obligations that by the terms of the Credit Agreement are required to be performed by it as a Lender. 9. Schedule III hereto sets forth for each Transferor Lender and each Purchasing Lender the revised Commitment and Commitment Percentage of each Transferor Lender and each Purchasing Lender, as well as certain administrative information with respect to each Purchasing Lender. 10. Notwithstanding anything to the contrary contained in this Commitment Transfer Supplement, if the long-term debt rating of any Purchasing Lender shall, at any time, be less than a rating of BBB or the equivalent thereof by S&P or BAA or the equivalent thereof by Moody's, then the Initial Lender may, in its sole and absolute discretion, purchase all or any part (as determined by the Initial Lender) of such Purchasing Lender's participating interest hereunder (the "Purchased Interests") by providing such Purchasing Lender with at least two Business Days' prior notice of such purchase and making a payment to such Purchasing Lender equal to all outstanding amounts owing to it under to the Credit Agreement in respect of the Purchased Interests on the date of such purchase as set forth in such notice. Upon any such purchase of the Purchased Interests, such Purchasing Lender shall no longer have any rights or obligations as a Purchasing Lender hereunder or as a Lender under the Credit Agreement or under any other instruments or documents furnished pursuant thereto with respect to the Purchased Interests. The Initial Lender may, in its sole and absolute discretion, retain for its own account and/or sell its interest in all or any portion of the Purchased Interests. 11. THIS COMMITMENT TRANSFER SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO THE CONFLICT-OF-LAW PRINCIPLES THEREOF. 12. This Commitment Transfer Supplement may be executed in one or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same document. C-4 13. Execution of this Commitment Transfer Supplement by the Agent and the Company as set forth below shall constitute any consent of such Person required pursuant to Section 8.9 of the Credit Agreement. IN WITNESS WHEREOF, the parties hereto have caused this Commitment Transfer Supplement to be executed by their respective duly authorized officers on Schedule I hereto as of the date set forth in Item 1 of Schedule I hereto. C-5 SCHEDULE I TO COMMITMENT TRANSFER SUPPLEMENT COMPLETION OF INFORMATION AND SIGNATURES FOR COMMITMENT TRANSFER SUPPLEMENT Re: Revolving Credit Agreement dated as of ( ), 1995 with Mobile Energy Services Company, L.L.C. as Borrower. Item 1 Date of Commitment (Insert date of Transfer Supplement: Commitment Transfer Supplement) Item 2 Transferor Lenders: (Insert names of Transferor Lenders) Item 3 Purchasing Lenders: (Insert names of Purchasing Lenders) Item 4 Signatures of Parties to Commitment Transfer Supplement: ______________________,as a Transferor Lender By: ________________________ Name: Title: ______________________,as a Purchasing Lender By: ________________________ Name: Title: C-6 SCHEDULE I (Continued) BANQUE PARIBAS, as the Initial Lender and Agent By: Name: Title: By: Name: Title: CONSENTED TO AND ACKNOWLEDGED: MOBILE ENERGY SERVICES COMPANY, L.L.C. By: Name: Title: MOBILE ENERGY SERVICES COMPANY, L.L.C. By: Name: Title: ACCEPTED FOR RECORDATION IN REGISTER: BANQUE PARIBAS, as Agent By: Name: Title: By: Name: Title: C-7 SCHEDULE II TO COMMITMENT TRANSFER SUPPLEMENT PURCHASE PRICES Names of (Insert name of (Insert name of (Insert name of Transferor Lenders Purchasing Lender) Purchasing Lender) Purchasing Lender) (Insert name of $(Insert Purchase $(Insert Purchase $(Insert Purchase Transferor Lender) Price) Price) Price) C-8 SCHEDULE III TO COMMITMENT TRANSFER SUPPLEMENT COMMITMENT AMOUNTS, AND PROPORTIONATE SHARES Names of Transferor Revised Commitment Lenders Revised Commitment Percentage ( ) $ % ( ) $ % Names of Purchasing Lenders New Commitment Commitment Percentage ( ) $ % C-9 SCHEDULE III (Continued) (NAME PURCHASING LENDER) Address for Notices: Attention: Telex: Answerback: Telephone: Telecopier: Clearing Account: (Insert Acct. #) C-10 SCHEDULE IV TO COMMITMENT TRANSFER SUPPLEMENT TRANSFER EFFECTIVE NOTICE _______________, ____ Transferor Lenders: ( ) Purchasing Lenders: ( ) Borrower: Mobile Energy Services Company, L.L.C. The undersigned, as Agent under the Revolving Credit Agreement, dated as of ( ), 1995, among (i) Mobile Energy Services Company, L.L.C., an Alabama limited liability company (the "Company"), (ii) Banque Paribas, as initial lender, and the other Lenders named therein (collectively, the "Lenders"), and (iii) Banque Paribas, as agent for the Lenders (the "Agent") acknowledge receipt of ( ) (( )) copies of the Commitment Transfer Supplement as described in Annex I hereto, each fully executed. Terms defined in such Commitment Transfer Supplement are used herein as therein defined. 1. Pursuant to such Commitment Transfer Supplement, you are advised that the Transfer Effective Date will be the date hereof. 2. Pursuant to such Commitment Transfer Supplement, each Transferor Lender is required to deliver to Agent on or before the Transfer Effective Date its Note. 3. Pursuant to such Commitment Transfer Supplement, the Company is required to deliver to the Agent on or before the Transfer Effective Date the following Notes: (Describe each new Note for Transferor Lender (if applicable) and Purchasing Lender as to principal amount and payee.) SCHEDULE IV (Continued) C-11 4. Pursuant to such Commitment Transfer Supplement, each Purchasing Lender is required to pay its Purchase Price, in immediately available funds, to the appropriate Transferor Lender at or before 12:00 noon, local time of the appropriate Transferor Lender, on the Transfer Effective Date. Very truly yours, BANQUE PARIBAS, as Agent By: Name: Title: By: Name: Title: C-12 ANNEX I INFORMATION IDENTIFYING COMMITMENT TRANSFER SUPPLEMENT Re: Revolving Credit Agreement, dated as of ( ), 1995, with Mobile Energy Services Company, L.L.C., as Borrower Item I Date of Commitment Transfer Supplement: _____________, ____ Item 2 Transferor Lenders: ( ) Item 3 Purchasing Lenders: ( ) C-13 EX-99 13 EXHIBIT B-9 Exhibit B-9 LOAN AND REIMBURSEMENT AGREEMENT between THE SOUTHERN COMPANY, as Borrower and BANQUE PARIBAS, NEW YORK BRANCH, as Bank Dated as of [____________], 1995 TABLE OF CONTENTS Page SECTION 1. DEFINITIONS . . . . . . . . . . . . . . . . . . . 2 Section 1.2 Other Defined Terms . . . . . . . . . . . . 12 SECTION 2. THE CREDIT FACILITIES AND THE COMMITMENTS . . . . 12 Section 2.1 The Credit Facilities . . . . . . . . . . . 12 Section 2.2 Commitments; Reductions of Commitments . . 12 SECTION 3. THE BANK LOAN FACILITY . . . . . . . . . . . . . . 13 Section 3.1 Bank Loans . . . . . . . . . . . . . . . . 13 Section 3.3 Bank Loan Notes . . . . . . . . . . . . . . 14 Section 3.4 Repayment of Bank Loans . . . . . . . . . . 14 Section 3.5 Conversion and Continuation Options . . . . 14 Section 3.6 Interest on Bank Loans . . . . . . . . . . 15 Section 3.7 Computation of Interest on Bank Loans . . . 16 Section 3.8 Inability to Determine Interest Rate on Eurodollar Loan . . . . . . . . . . . . . . 16 Section 3.9 Illegality . . . . . . . . . . . . . . . . 17 Section 3.10 Requirements of Law . . . . . . . . . . . 17 Section 3.11 Substitution or Removal of the Bank . . . 19 Section 3.12 Bank's Representation . . . . . . . . . . 20 SECTION 4. THE LETTER OF CREDIT FACILITY . . . . . . . . . . 20 Section 4.1 Letter of Credit . . . . . . . . . . . . . 20 Section 4.2 Notice of Payments under the Letter of Credit. . . . . . . . . . . . . . . . . . . 20 Section 4.3 Borrower's Obligations in Respect of Letter of Credit. . . . . . . . . . . . . . 20 Section 4.4 Reduction of Letter of Credit . . . . . . . 21 SECTION 5. GENERAL PROVISIONS APPLICABLE TO BANK LOAN FACILITY AND LETTER OF CREDIT FACILITY . . . . . . . . . 22 Section 5.1 Fees . . . . . . . . . . . . . . . . . . . 22 Section 5.2 Required Prepayments of Bank L/C Loans . . 22 Section 5.3 Optional Prepayments of Loans . . . . . . . 22 Section 5.4 Taxes . . . . . . . . . . . . . . . . . . . 23 Section 5.5 Certain Indemnities . . . . . . . . . . . . 24 Section 5.6 Additional Letter of Credit Provisions . . 25 SECTION 6. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . 26 Section 6.1 Organization . . . . . . . . . . . . . . . 26 Section 6.2 Authorization; Enforceable Obligations . . 27 Section 6.3 No Legal Bar . . . . . . . . . . . . . . . 27 Section 6.4 Governmental Approvals . . . . . . . . . . 27 Section 6.5 No Proceeding or Litigation . . . . . . . . 27 Section 6.6 ERISA . . . . . . . . . . . . . . . . . . . 28 Section 6.7 No Default . . . . . . . . . . . . . . . . 28 Section 6.8 Financial Statements . . . . . . . . . . . 28 i Section 6.9 Federal Regulations . . . . . . . . . . . . 28 SECTION 7. CONDITIONS PRECEDENT . . . . . . . . . . . . . . . 28 Section 7.1 Conditions to Effectiveness of Commitments. 29 Section 7.2 Conditions to Each Bank Loan . . . . . . . 30 SECTION 8. AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . 30 Section 8.1 Payment of Taxes . . . . . . . . . . . . . 30 Section 8.2 Insurance . . . . . . . . . . . . . . . . . 30 Section 8.3 Maintain Corporate Existence . . . . . . . 31 Section 8.4 Compliance with Applicable Law . . . . . . 31 Section 8.5 Notice of Defaults . . . . . . . . . . . . 31 Section 8.6 Ownership of Certain Subsidiaries . . . . . 31 Section 8.7 Incurrence of Debt . . . . . . . . . . . . 31 Section 8.8 Agreement to Secure Ratably . . . . . . . . 31 Section 8.9 Financial Statements . . . . . . . . . . . 33 SECTION 9. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . 33 Section 9.1 Events of Default . . . . . . . . . . . . . 33 Section 9.2 Rights and Remedies Following an Event of Default . . . . . . . . . . . . . . . . . . 35 SECTION 10. MISCELLANEOUS . . . . . . . . . . . . . . . . . 36 ii Exhibits: A Form of Note B-1 Form of Notice of Borrowing B-2 Form of Notice of Conversion C Form of Letter of Credit D Form of Opinion of Troutman Sanders E Form of Interest Rate Election Notice iii LOAN AND REIMBURSEMENT AGREEMENT, dated as of [_________], 1995, between THE SOUTHERN COMPANY, a Delaware corporation (the "Borrower") and BANQUE PARIBAS, NEW YORK BRANCH (the "Bank"). W I T N E S S E T H : WHEREAS, Borrower owns all of the issued and outstanding common stock of each of Mobile Energy Services Holdings, Inc. ("Mobile Energy") and Southern Electric International, Inc., which in turn hold 99% and 1%, respectively, of the outstanding ownership interests of Mobile Energy Services Company, L.L.C., an Alabama limited liability company (the "Company"); WHEREAS, the Company owns and operates an energy and black liquor recovery complex located at an integrated pulp, paper and tissue manufacturing facility in Mobile, Alabama (the "Energy Complex"); WHEREAS, the Company is financing the acquisition, construction, and equipping of the Energy Complex through the issue and sale of the Indenture Securities (as hereafter defined) and the execution and delivery of agreements relating to the issue and sale of the Tax-Exempt Indenture Securities (as hereafter defined) (collectively, the "Senior Securities"); WHEREAS, concurrently with the execution and delivery of this Agreement, the Company, Mobile Energy, First Union National Bank of Georgia (as Indenture Trustee on behalf of the holders of the Indenture Securities and as Tax-Exempt Indenture Trustee on behalf of the holders of the Tax-Exempt Indenture Securities), Banque Paribas, New York Branch (as Working Capital Facility Provider), The Industrial Development Board of the City of Mobile, Alabama (the "IDB"), and Bankers Trust Company (as Collateral Agent) have entered into an Intercreditor and Collateral Agency Agreement (the "Intercreditor Agreement"); WHEREAS, pursuant to Section 2.2(a) of the Intercreditor Agreement, the Company and Mobile Energy have established and created with the Collateral Agent various accounts, including a Maintenance Reserve Account (as hereafter defined) into which certain monies shall be deposited and transferred by the Collateral Agent to the Indenture Trustee and the Tax-Exempt Indenture Trustee; WHEREAS, concurrently with the execution and delivery of this Agreement, the Company, pursuant to Section 3.15(a) of the Intercreditor Agreement, is depositing the Southern Guaranty Agreement (as hereafter defined) into the Maintenance Reserve Account as Reserve Account Security (as defined under the Intercreditor Agreement) for amounts required to be deposited in the Maintenance Reserve Account; 1 WHEREAS, pursuant to Section 4.4(a) of the Tax-Exempt Indenture, a Tax-Exempt Debt Service Reserve Account (as hereafter defined) has been established for the benefit of the holders of the Tax-Exempt Indenture Securities; WHEREAS, concurrently with the execution and delivery of this Agreement, the Company, in accordance with Section 4.7(a) of the Tax-Exempt Indenture, is delivering the Letter of Credit (as hereafter defined) to the Tax-Exempt Indenture Trustee as Reserve Account Security (as defined under the Tax-Exempt Indenture) for amounts required to be deposited in the Tax-Exempt Debt Service Reserve Account; and WHEREAS, subject to the terms and conditions set forth herein, the Bank is willing to provide the Letter of Credit and to provide revolving credit facilities to Borrower to enable Borrower to fund its obligations under the Southern Guaranty Agreement and to borrow amounts disbursed by the Bank under the Letter of Credit to fund L/C Reimbursement Obligations (as hereafter defined). NOW, THEREFORE, in consideration of the premises, and of the mutual covenants, agreements herein contained and other good and valuable consideration, receipt of which is hereby acknowledged, the parties hereto hereby agree as follows: SECTION 1. DEFINITIONS Section 1.1 Defined Terms. Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to them in Annex A. "Adjusted Funded Debt": with respect to the Borrower, shall mean without duplication: (1)its liabilities for borrowed money, other than Current Debt; (2)liabilities, other than Current Debt, secured by any lien existing on property owned by the Borrower (whether or not such liabilities have been assumed); (3)the present value of all payments due under any lease or under any other arrangement for retention of title (discounted at the implicit rate if known or 8% per annum otherwise) if such lease or other arrangement is in substance (a) a financing lease (including any lease under which (i) the lessee has or will have an option to purchase the property subject thereto at a nominal amount or an amount less than a reasonable estimate of the fair market value of such property at the date of such purchase, (ii) 2 the lessor has filed a financing statement, or (iii) the term of the lease approximates or exceeds the expected useful life of the property subject thereto), (b) an arrangement for the retention of title for security purposes, or (c) an installment purchase; and (4)any other obligations (other than deferred taxes) which are required by generally accepted accounting principles to be shown as liabilities on its balance sheet and which are payable or remain unpaid more than one year from the creation thereof. The "Adjusted Funded Debt" of the Borrower shall mean all obligations described in the foregoing clauses in respect of which the Borrower is liable as obligor, guarantor or otherwise. "Agreement": this Loan and Reimbursement Agreement, as amended, supplemented or otherwise modified and in effect from time to time. "Bank": Banque Paribas, New York Branch or any successor or assign. "Bank Default Rate": (a) with respect to any amount due under a Bank Loan, the applicable Base Rate or Eurodollar Rate, plus 2%; and (b) with respect to any other amount payable by the Borrower, the Base Rate, plus 2% "Bank L/C Loan": a Bank Loan made in accordance with Section 4.3 hereof to fund an L/C Reimbursement Obligation. "Bank M/R Loan": a Bank Loan made in accordance with Section 3.2 hereof to fund a deposit to the Maintenance Reserve Account [required under the terms of the Southern Guaranty Agreement]. "Bank Loans": collectively, Bank L/C Loans and Bank M/R Loans. "Bank Transfer Supplement": as defined in Section 10.7(b) hereof. "Bankruptcy Code": Title 11, United States Code, as amended from time to time. "Base Rate": for any day, a rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to the greater of (a) the Federal Funds Effective Rate as in effect at such time plus 0.5%, and (b) the per annum rate of interest from time to time publicly announced by Citibank, N.A. at its principal office in the United States as its base lending rate for domestic (United States) commercial loans (which rate may not 3 be the lowest rate of interest charged by Citibank, N.A. in connection with extensions of credit to its other customers). For purposes hereof, 'Federal Funds Effective Rate' means, with respect to each day, the rate per annum (rounded upward, if necessary, to the nearest 1/100th of 1%) equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day; provided that (i) if such day is not a Business Day, the Federal Funds Effective Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (ii) if no such rate is so published on such next succeeding Business Day, the Federal Funds Effective Rate for such day shall be the average rate quoted to the Bank on such day on such transactions as the Bank may reasonably determine. If for any reason the Bank shall have determined (which determination shall be conclusive absent manifest error) that it is unable to ascertain the Federal Funds Effective Rate for any reason, the Base Rate shall be determined without regard to clause (a) of the first sentence of this definition until the circumstances giving rise to such inability no longer exist. Any change in the Base Rate due to a change in the rate referred to in clause (b) of the first sentence of this definition or in the Federal Funds Effective Rate shall be effective as of the opening of business on the date of such change in the rate referred to in such clause (b) or the Federal Funds Effective Rate, respectively. "Base Rate Loans": Bank Loans the rate of interest applicable to which is based on the Base Rate. "Borrower": The Southern Company, a Delaware corporation. "Borrower Representative": any officer or member of the Company designated as such by Borrower who shall be duly authorized to execute and deliver Notes, Notices of Borrowing, Notices of Conversion, Interest Rate Election Notices, and all other notices, communications or other documents required of Borrower hereunder. "Borrowing Date": any Business Day on which the Borrower requests a Bank M/R Loan or a Bank L/C Loan pursuant to Section 3.2 or Section 4.3, as applicable. "Business Day": a day other than a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to close and (with respect to Eurodollar Loans only) on which deposits in foreign currencies and exchange between banks may be carried on in London, England. 4 "Capitalization": with respect to the Borrower, shall mean the sum of (a) the aggregate of the capital stock (but excluding treasury stock and capital stock subscribed and unissued) and other equity accounts (including retained earnings and paid-in capital) of the Borrower as the same appears on its balance sheet prepared in accordance with generally accepted accounting principles as of the date of determination, and (b) the amount of Adjusted Funded Debt of the Borrower as of the same date. "Closing Date": means the date on which the First Mortgage Bonds and the Tax-Exempt Bonds are originally issued. "Code": the Internal Revenue Code of 1986, as amended from time to time. "Commitment Period": the period commencing on and including the Closing Date to and including the Commitment Termination Date. "Commitment Termination Date": the seventh anniversary of the Closing Date, or such later date as to which the Bank and Borrower agree to extend the Commitment Termination Date in accordance with Section 2.2. "Commonly Controlled Entity": an entity, whether or not incorporated, which is under common control with the Borrower within the meaning of Section 4001 of ERISA or is part of a group which includes the Borrower and which is treated as a single employer under Section 414 of the Code. "Company": Mobile Energy Services Company, L.L.C., an Alabama limited liability company. "Current Debt": with respect to the Borrower, shall mean all liabilities for borrowed money and all liabilities secured by any lien existing on property owned by the Borrower whether or not such liabilities have been assumed, which, in either case are payable on demand or within one year from the creation thereof, except: (1)any such liabilities which are renewable or extendible at the option of the debtor to a date more than one year from the date of creation thereof, and (2)any such liabilities which, although payable within one year, constitute payments required to be made on account of principal of indebtedness expressed to mature more than one year from the date of creation thereof. "Default": any of the events specified in Section 9.1 hereof, whether or not any requirement for the giving of notice, 5 the lapse of time, or both, or any other condition set forth in said Section 9.1, has been satisfied. "Dollar and $": dollars in lawful currency of the United States of America. "ERISA": the Employee Retirement Income security Act of 1974, as amended from time to time. "Eurocurrency Reserve Requirements": for any day as applied to a Eurodollar Loan, the aggregate (without duplication) of the rates (expressed as a decimal fraction) of reserve requirements in effect on such day (including, without limitation, basic, supplemental, marginal and emergency reserves under any regulations of the Board of Governors of the Federal Reserve System or other Government Authority having jurisdiction with respect thereto) dealing with reserve requirements prescribed for eurocurrency funding (currently referred to as "Eurocurrency Liabilities" in Regulation D of such Board) maintained by a member bank of such System. "Eurodollar Base Rate": with respect to each day during each Eurodollar Loan Interest Period pertaining to a Eurodollar Loan, the rate per annum equal to the rate at which the Bank is offered Dollar deposits at or about 11:00 A.M., London time, two Business Days prior to the beginning of such Eurodollar Loan Interest Period in the London interbank eurodollar market for delivery on the first day of such Eurodollar Loan Interest Period, for the number of days comprised therein and in an amount comparable to the amount of the Eurodollar Loan to be outstanding during such Eurodollar Loan Interest Period. "Eurodollar Loan Interest Period": with respect to any Eurodollar Loan: (a)initially, the period commencing on the borrowing or conversion date, as the case may be, with respect to such Eurodollar Loan and ending one, two, three or six months (or, if available to the Bank, nine months, twelve months or longer) thereafter, as selected by the Borrower in its Notice of Borrowing or Notice of Conversion, as the case may be, given with respect thereto; and (b)thereafter, each period commencing on the last day of the next preceding Eurodollar Loan Interest Period applicable to such Eurodollar Loan and ending one, two, three or six months (or, if available to the Bank, nine months, twelve months or longer) thereafter, as selected by the Borrower by irrevocable notice to the Bank not less than three (3) Business Days prior to the last day of the then current Eurodollar Loan Interest Period with respect thereto; provided that the foregoing provisions 6 relating to Eurodollar Loan Interest Periods are subject to the following: (1) if any Eurodollar Loan Interest Period would otherwise end on a day that is not a Business Day, such Eurodollar Loan Interest Period shall be extended to the next succeeding Business Day unless the result of such extension would be to carry such Eurodollar Loan Interest Period into another calendar month, in which event such Eurodollar Loan Interest Period shall end on the immediately preceding Business Day; (2) any Eurodollar Loan Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Eurodollar Loan Interest Period) shall end on the last Business Day of a calendar month; (3) the Borrower shall select Eurodollar Loan Interest Periods so as not to require a payment or prepayment of any Eurodollar Loan; and (4) the Borrower shall not select a Eurodollar Loan Interest Period that ends after the Commitment Period. "Eurodollar Loans": Bank Loans the rate of interest applicable to which is based upon the Eurodollar Rate. "Eurodollar Rate": with respect to each day during each Eurodollar Loan Interest Period pertaining to a Eurodollar Loan, a rate per annum determined for such day in accordance with the following formula (rounded upward, if necessary, to the nearest 1/100th of 1%): Eurodollar Base Rate 1 - Eurocurrency Reserve Requirements "Event of Default": any of the events specified in Section 9 hereof, provided that any requirement for the giving of notice, the lapse of time, or both, or any other condition, has been satisfied. "Facilities": the Bank Loan Facility and the Letter of Credit Facility. "Federal Funds Effective Rate": as defined in the definition of Base Rate. "First Mortgage Bonds": the Indenture Securities issued on the Closing Date under the first Series Supplemental Indenture to the Indenture. 7 "GAAP": generally accepted accounting principles in the United States of America in effect from time to time. "Government Authority": any nation or government, any state or other political subdivision thereof, and any entity exercising legislative, judicial, regulatory or administrative functions of or pertaining to government. "Governmental Approvals": authorizations, consents, approvals, waivers, exemptions, variances, franchises, to the permissions, permits and licenses of, and filings and declarations with, any Government Authority. "IDB": The Industrial Development Board of the City of Mobile, Alabama. "Indenture": the Trust Indenture dated as of [ ], 1995, among the Company, Mobile Energy and the Indenture Trustee. "Indenture Securities": the First Mortgage Bonds and any supplemental series of First Mortgage Bonds issued pursuant to the Indenture. "Indenture Trustee": First Union National Bank of Georgia, as Trustee under the Trust Indenture. "Insolvency": with respect to any Multiemployer Plan, the condition that such Plan is insolvent within the meaning of Section 4245 of ERISA. "Interest Rate Election Notice": a written notice by the Borrower delivered in connection with a borrowing of Bank Loans, substantially in the form of Exhibit E to this Agreement. "L/C Available Amount": at any time, the undrawn stated amount of the Letter of Credit, as provided in Section 4.1(a) hereof. "L/C Disbursement Date": the date on which any L/C Disbursement is made. "L/C Reimbursement Date": each date upon which any L/C Reimbursement Obligation arises and the payment thereof is not financed with the proceeds of a Bank L/C Loan in accordance with Section 4.3 hereof. "L/C Reimbursement Obligations": as defined in Section 4.3 hereof. "L/C Reimbursement Payments": payments and prepayments of L/C Disbursements in accordance with Section 4.3 hereof. 8 "L/C Disbursement": any disbursements to the Tax-Exempt Indenture Trustee pursuant to the Letter of Credit. "Letter of Credit": the irrevocable direct pay letter of credit issued by the Bank in favor of the Tax-Exempt Indenture Trustee on the Closing Date pursuant to Section 4 hereof, substantially in the Form of Exhibit C hereto (with such changes therein as shall be agreed to by the Bank), as amended, supplemented, or otherwise modified from time to time in accordance with its terms. "Loan Documents": this Agreement, the Notes, and the Letter of Credit. "Loan Interest Payment Date": (a) as to any Base Rate Loan, the last day of [March, June, September and December] of each year, commencing with the first such day to occur after the Closing Date, and the date on which such Loan Base Rate is paid or converted into a Eurodollar Loan, (b) as to any Eurodollar Loan having a Eurodollar Loan Interest Period of three months or less, the last day of such Eurodollar Loan Interest Period, and (c) as to any Eurodollar Loan having a Eurodollar Loan Interest Period longer than three months, each day which is three months or a whole multiple thereof, after the first day of such Eurodollar Loan Interest Period, and the last day of such Eurodollar Loan Interest Period. "Maintenance Reserve Account": means the account so designated, established and created under Section 2.2(a) of the Intercreditor Agreement. "Material Adverse Change": an adverse change which significantly increases the risk that a Note, L/C Reimbursement Obligation, or other obligation of Borrower hereunder will not be repaid when due; provided, however, that the Bank agrees that the inability of one or more of Borrower's operating subsidiaries to issue first mortgage bonds or preferred stock or an unsuccessful or failed remarketing, auction or similar procedure by any of such operating subsidiaries with respect to any security subject to such procedure shall not, in and of itself, constitute a Material Adverse Change. "Mobile Energy": Mobile Energy Services Holdings, Inc., an Alabama corporation. "Monthly Transfer Date": means the last Business Day of each month of each fiscal year, commencing with the first such day occurring after the Closing Date. "Multiemployer Plan": a Plan which is a multiemployer plan as defined in Section 4001(a)(3) of ERISA. 9 "Notice of Borrowing": a written notice by the Borrower delivered in connection with a borrowing of Bank Loans, substantially in the form of Exhibit B-1 to this Agreement. "Notice of Conversion": a written notice by the Borrower delivered in connection with a conversion of Base Rate Loans to Eurodollar Loans, or Eurodollar Loans to Base Rate Loans, substantially in the form of Exhibit B-2 to this Agreement. "Notes": collectively, the Base Rate Notes and the Eurodollar Notes. "PBGC": the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA. "Person": an individual, partnership, corporation, business trust, joint stock company, trust, unincorporated association, joint venture, Government Authority or other entity of whatever nature. "Plan": at a particular time, any employee benefit plan which is covered by ERISA and in respect of which the Borrower or a Commonly Controlled Entity is (or, if such plan were terminated at such time, would under Section 4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of ERISA. "PUHCA": the Public Utility Holding Company Act of 1935, as amended. "Purchasing Banks": as defined in Section [10.7] hereof. "Qualified Financial Institution": (a) Any bank satisfactory to the Bank that has capital, surplus and undivided profits of at least $500,000,000 and that is either organized under the laws of the United States or any state thereof or has a branch office or agency located in the United States, and (b) any other bank or financial institution approved by the Bank and the Borrower (which approval will not be unreasonably withheld). "Register": as defined in Section 10.7 hereof. "Reorganization": with respect to any Multiemployer Plan, the condition that such Plan is in reorganization within the meaning of Section 4241 of ERISA. "Reportable Event": any of the events set forth in Section 4043(b) of ERISA, other than those events as to which the thirty day notice period is waived under subsections .13, .14, .16, .18, .19 or .20 of PBGC Reg. section 2615. "Requirements of Law": as to any Person, the Certificate of Incorporation and By-Laws or the operating agreement or other 10 organizational or governing documents of such Person, and any law, treaty, rule or regulation or determination of an arbitrator or a court or other Government Authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject. "Responsible Officer": the president, vice president, treasurer or assistant treasurer of the Borrower. "Significant Subsidiary": with respect to the Borrower, shall mean any corporation of which the Borrower owns a majority of the capital stock having voting powers, and which represents more than 25% of Borrower's assets on a consolidated basis. "Single Employer Plan": any Plan which is covered by Title IV of ERISA, but which is not a Multiemployer Plan. "Southern Guaranty Agreement": the Southern Guaranty Agreement, dated as of [ ], 1995, between the Borrower (as "Guarantor") and the Collateral Agent (as "Guaranteed Party"). "Tax-Exempt Bonds": the Tax-Exempt Indenture Securities issued on the Closing Date under the first Series Supplemental Indenture to the Tax-Exempt Indenture. "Tax-Exempt Debt Service Reserve Account": means the account so designated, established and created under any Series Supplemental Indenture to the Tax-Exempt Indenture for the benefit of holders of the Tax-Exempt Indenture Securities established thereunder. "Tax-Exempt Debt Service Reserve Account Required Balance": means, in respect of any Tax-Exempt Debt Service Reserve Account, the amount so designated in the Series Supplemental Indenture to the Tax-Exempt Indenture establishing such Tax-Exempt Debt Service Reserve Account. "Tax-Exempt Indenture": means the Amended and Restated Indenture of Trust dated as of [ ], 1995 between the IDB and the Tax-Exempt Indenture Trustee. "Tax-Exempt Indenture Securities": the Tax-Exempt Bonds and any supplemental Series of Tax-Exempt Bonds issued pursuant to the Tax-Exempt Indenture. "Tax-Exempt Indenture Trustee": means First Union National Bank of Georgia, a national banking association organized and existing under the laws of [ ]. "Taxes": as defined in Section 5.4(a) 11 "Uniform Customs": the Uniform Customs and Practice for Documentary Credits (1994 Revision), International Chamber of Commerce Brochure No. 500, as the same may be amended from time to time. Section 1.2 Other Defined Terms. Any term defined by reference to an agreement, instrument or document shall have the meaning so assigned to it whether or not such document is in effect. SECTION 2. THE CREDIT FACILITIES AND THE COMMITMENTS Section 2.1 The Credit Facilities. The Credit Facilities provided by the Bank to the Borrower under this Agreement shall consist of (a) the Bank Loan Facility and (b) the Letter of Credit Facility. Section 2.2 Commitments; Reductions of Commitments. (a) Bank Loan Commitments. The Bank hereby agrees, subject to the terms and conditions of this Agreement, to make loans (collectively, 'Bank Loans') to the Borrower from time to time during the Commitment Period in an aggregate principal amount at any time outstanding not to exceed eleven million dollars ($11,000,000), in the case of Bank M/R Loans, and six million five hundred thousand dollars ($6,500,000), in the case of Bank L/C Loans, as provided in Section 3 hereof. (b) Letter of Credit Commitment. The Bank hereby agrees, subject to the terms and conditions of this Agreement, to issue the Letter of Credit in favor of the Tax-Exempt Indenture Trustee for the account of the Borrower, as provided in Section 4 hereof. (c) Commitment Period; Extensions. Unless earlier terminated, in whole or in part, in accordance with Sections 2.2(d) or 9.2 of this Agreement, the Commitment Period shall terminate on the Commitment Termination Date. If Borrower wishes to extend the Commitment Period for an additional period of up to seven (7) years, it shall give the Bank written notice to such effect not more than fifteen (15) nor less than twelve (12) months prior to the then scheduled Commitment Termination Date. The Borrower may request an extension of the Commitment Period for either or both the Bank Loan Commitment or the Letter of Credit Commitment, and may request different extension periods for each of the Commitment Periods applicable thereto. The Bank shall notify Borrower in writing within ninety (90) days of the date of receipt of the Borrower's request for extension whether it will agree to an extension of the Commitment Period. (d) Reduction of Commitments. The Borrower (or the Company on behalf of the Borrower) may, without penalty, upon at least five 12 (5) Business Days prior written notice to the Bank, reduce the commitment of the Bank to make Bank M/R Loans; provided that (i) each partial reduction in the commitment of the Bank to make Bank M/R Loans shall be in an amount not less than $[__], and (ii) the aggregate principal amount of Bank M/R Loans then outstanding shall not exceed the commitment of the Bank to make Bank M/R Loans, as so reduced. The commitment of the Bank to make Bank L/C Loans shall be reduced automatically in the amount and in the same manner as any corresponding reduction in the Bank's commitment under the Letter of Credit, as provided in Section 4.4 hereof. SECTION 3. THE BANK LOAN FACILITY Section 3.1 Bank Loans. Subject to the terms and conditions of this Agreement, including without limitation the satisfaction of the conditions set forth in Section 7, the Bank agrees to make Bank Loans which, at the option of Borrower, shall be made as either (a) Bank M/R Loans, or (b) Bank L/C Loans. The aggregate principal amount of Bank M/R Loans and Bank L/C Loans outstanding at any time shall not exceed the Bank M/R Loan Commitment and Bank L/C Loan Commitment, respectively, as set forth in Section 2 hereof. Subject to Section 3.2, the Bank Loans from time to time may be either (x) Eurodollar Loans, (y) Base Rate Loans, or (z) a combination of the two. Section 3.2 Procedure for Bank Loan Borrowings (a) Each borrowing of Bank Loans shall be on a Borrowing Date; provided that the Borrower shall deliver to the Bank a Notice of Borrowing substantially in the form of Exhibit B-1 (which notice, to be effective on the requested Borrowing Date, must be received by the Bank (i) at least one (1) Business Day prior to the requested Borrowing Date, if the Borrower is requesting a Base Rate Loan or (ii) at least three (3) Business Days prior to the requested Borrowing Date if such borrowing is for a Eurodollar Loan; provided further that the Borrower shall also deliver to the Bank an Interest Rate Election Notice substantially in the form of Exhibit E (which must be received by the Bank (i) prior to 12:00 Noon, New York City time, three (3) Business Days prior to the requested Borrowing Date, if all or any part of such Bank Loans initially are to be Eurodollar Loans, or (ii) prior to 12:00 Noon, New York City time, one (1) Business Day prior to the requested Borrowing Date, if all of such Bank Loans initially are to be Base Rate Loans). Each Notice of Borrowing shall specify (x) the amount to be borrowed, (y) the applicable Borrowing Date, and (z) whether the amount to be borrowed is to be advanced to the Collateral Agent for the deposit to the Maintenance Reserve Account or is intended to evidence an L/C Reimbursement Obligation. Each Interest Rate Election Notice shall specify (A) whether the Bank Loans to be borrowed are to be Eurodollar Loans 13 or Base Rate Loans or a combination thereof, and (B) if such Bank Loans are to be entirely or partly Eurodollar Loans, the amount of such Eurodollar Loan and the duration of the initial Eurodollar Loan Interest Period therefor. Each Bank Loan shall be in an amount equal to $50,000 or a whole multiple of $10,000 in excess thereof in the case of any Base Rate Loan, and in an amount equal to $200,000 or a whole multiple of $25,000 in excess thereof in the case of any Eurodollar Loan. The Borrower may have up to five (5) Bank M/R Loans outstanding at any one time. (b) Each advance of funds under a Bank M/R Loan shall be made directly to the Collateral Agent for deposit into the Maintenance Reserve Account. Section 3.3 Bank Loan Notes. Each Bank Loan shall be evidenced by a promissory note of the Borrower, substantially in the form of Exhibit A with appropriate insertions as to date and principal amount (a 'Note'), payable to the order of the Bank. Each Note shall (i) be executed by a Borrower Representative, (ii) be dated the Borrowing Date, (iii) be payable as provided in Section 3.4, (iv) bear interest for the period from the date thereof until paid in full on the unpaid principal amount thereof from time to time outstanding at the applicable interest rate per annum provided in, and payable as specified in Section 3.6 and (v) be entitled to the benefits of this Agreement. The Bank is hereby authorized to record, on the schedules annexed to and constituting part of each Note or on other appropriate records of the Bank, the date and amount of each Bank Loan, the date and amount of each payment or prepayment of principal of such Bank Loan and, in the case of a Eurodollar Loan, the duration of each Eurodollar Loan Interest Period with respect thereto, and any such recordation shall constitute prima facie evidence of the accuracy of the information so recorded; provided that the failure to make any such recordation shall not affect the obligations of the Borrower hereunder or under any Bank Note. Section 3.4 Repayment of Bank Loans. Unless earlier prepaid pursuant to Section 5.2 or 5.3 hereof, the Borrower shall repay in full the then aggregate outstanding principal amount of the Bank Loans on the Commitment Termination Date. Section 3.5 Conversion and Continuation Options. (a) The Borrower may elect from time to time to convert Eurodollar Loans to Base Rate Loans by delivering to the Bank a Notice of Conversion in the form of Exhibit B-2 hereto (which notice, to be effective, must be received by the Bank prior to 12:00 Noon, New York City time, three (3) Business Days prior to the requested conversion date), provided that any such conversion of a Eurodollar Loan may only be made on the last day of a Eurodollar Loan Interest Period. The Borrower may elect from time to time to convert Base Rate Loans to Eurodollar Loans by delivering to the Bank a Notice of Conversion (which notice, to be effective, 14 must be received by the Bank prior to 12:00 Noon, New York City time, three (3) Business Days prior to the requested conversion date). Any such Notice of Conversion to Eurodollar Loans shall specify the duration of the initial Eurodollar Loan Interest Period or Periods therefor. All or any part of outstanding Eurodollar Loans and Base Rate Loans may be converted as provided herein, provided that (i) no Base Rate Loan may be converted to a Eurodollar Loan when any Default or Event of Default has occurred and is continuing and the Bank has determined that the Eurodollar Loan Interest Period requested is not appropriate in light of such Default or Event of Default and (ii) no such conversion may be made if it would not be permitted under the provisions of Section 3.8 or 3.9 hereof. (b) Eurodollar Loans may be continued as such upon the expiration of the then current Eurodollar Loan Interest Period with respect thereto by the Borrower giving notice to the Bank in accordance with the definition of 'Eurodollar Loan Interest Period,' hereof, of the duration of the next Eurodollar Loan Interest Period to be applicable to such Loans; provided that no Eurodollar Loan will be continued as such (A) when any Default or Event of Default has occurred and is continuing and the Bank has determined that the Eurodollar Loan Interest Period requested by the Borrower is not appropriate in light of such Default or Event of Default or (B) if such continuation would not be permitted under the provisions of Section 3.8 or 3.9 hereof; and provided, further, that if the Borrower shall fail to give any required notice as described above in this paragraph or if such continuation is not permitted pursuant to the preceding proviso such Eurodollar Loans shall be automatically converted to Base Rate Loans on the last day of such then expiring Eurodollar Loan Interest Period. Section 3.6 Interest on Bank Loans. (a) Each Eurodollar Loan shall bear interest for each day (including the first day but excluding the last day) during each Eurodollar Loan Interest Period with respect thereto at a rate per annum equal to the Eurodollar Rate determined for such day plus .35%. (b) Each Base Rate Loan shall bear interest at a rate per annum equal to the Base Rate. (c) If all or a portion of the principal amount of any Bank Loan or any interest payable thereon shall not be paid when due (whether at the stated maturity, by acceleration or otherwise), such overdue amount shall bear interest at the Bank Default Rate from the date of such non-payment until such amount is paid in full (after as well as before judgment). In addition (but without duplication of any amounts payable pursuant to the preceding sentence), if any Event of Default shall occur, the outstanding principal amount of all Bank Loans shall bear interest at the Bank Default Rate from the date on which such 15 Event of Default occurred until the date on which no Event of Default shall be continuing. (d) Interest shall be payable in arrears on each Loan Interest Payment Date; provided that interest accruing pursuant to paragraph (c) of this Section shall be payable on demand. Section 3.7 Computation of Interest on Bank Loans. (a) Interest on Base Rate Loans shall be calculated on the basis of a 365- (or 366-, as the case may be) day year for the actual number of days elapsed. Interest on Eurodollar Loans shall be calculated on the basis of a 360-day year for the actual number of days elapsed. The Bank shall as soon as practicable notify the Borrower of each determination of a Eurodollar Rate. Any change in the interest rate on a Bank Loan resulting from a change in the Base Rate or the Eurocurrency Reserve Requirements shall become effective as of the opening of business on the day on which such change in the Base Rate is announced or such change in the Eurocurrency Reserve Requirements becomes effective, as the case may be. The Bank shall as soon as practicable notify the Borrower of the effective date and the amount of each such change in interest rate. (b) Each determination of an interest rate on the Bank Loans by the Bank pursuant to any provision of this Agreement shall be conclusive and binding on the Borrower in the absence of manifest error. The Bank shall, at the request of the Borrower, deliver to the Borrower a statement showing the quotations used by the Bank in determining any interest rate pursuant to Section 3.6 hereof. Section 3.8 Inability to Determine Interest Rate on Eurodollar Loan. In the event that, prior to the first day of any Eurodollar Loan Interest Period, (a) deposits in Dollars (in the applicable amount) are not being offered to the Bank in the interbank Eurodollar market for such Eurodollar Loan Interest Period, or the Bank otherwise determines (which determination shall be binding and conclusive on the Borrower) that by reason of circumstances affecting the interbank Eurodollar market adequate and reasonable means do not exist for ascertaining the applicable Eurodollar Rate; or (b) the Bank determines that the Eurodollar Rate will not adequately and fairly reflect the cost to the Bank of making or maintaining a Eurodollar Loan during such Eurodollar Loan Interest Period, the Bank shall give telex, telecopy or telephonic notice thereof (stating the reason therefor) to the Borrower as soon as practicable. If such notice is given (i) any Eurodollar Loans requested to be made on the first day of such Eurodollar Loan Interest Period shall be made as Base Rate Loans, (ii) any Base Rate Loans that were to have been converted on the first day of such Eurodollar Loan Interest Period to Eurodollar Loans shall be converted to or continued as Base Rate Loans and (iii) any outstanding Eurodollar Loans shall 16 be converted, on the first day of such Eurodollar Loan Interest Period, to Base Rate Loans. Section 3.9 Illegality. Notwithstanding any other provision of this Agreement, if any change in any Requirement of Law (other than any change to any organizational or governing document of any Bank) or in the interpretation or application thereof by any authority charged with the interpretation or administration thereof or by any court of competent jurisdiction shall make it unlawful for the Bank to make or maintain Eurodollar Loans as contemplated by this Agreement, the Bank shall give telex, telecopy or telephonic notice thereof to the Borrower (specifying the reason for such illegality) as soon as practicable and (a) the commitment of the Bank hereunder to make Eurodollar Loans, continue Eurodollar Loans as such, and convert Base Rate Loans to Eurodollar Loans shall forthwith be suspended until such time as Bank may again lawfully make and maintain Eurodollar Loans, and (b) any Eurodollar Loans then outstanding shall be converted automatically to Base Rate Loans on the respective last days of the then current Eurodollar Loan Interest Periods with respect to Eurodollar Loans or within such earlier period (determined by the Bank in its sole judgment) as required by law. If, as a result of such change in a Requirement of Law or in the interpretation or application thereof, any such conversion of a Eurodollar Loan occurs on a day which is not the last day of the then current Eurodollar Loan Interest Period with respect thereto, the Borrower shall pay to such Bank such amounts, if any, as may be required pursuant to Section 5.5(a) with respect to such conversion. Section 3.10 Requirements of Law. (a) In the event that any Requirement of Law or any change therein or in the interpretation or application thereof or compliance by the Bank with any request or directive (whether or not having the force of law) from any central bank or other Government Authority: (i) does or shall subject the Bank to any tax (except to the extent such tax is the subject of the agreements set forth in Section 5.4) of any kind whatsoever with respect to this Agreement, any Eurodollar Note or any Eurodollar payments made by it, or change the basis of taxation of payments to the Bank of principal, fees, interest or any other amount payable hereunder (except for changes in the rate of tax on the overall net income of the Bank); (ii) does or shall impose, modify or hold applicable any reserve, special deposit, compulsory loan or similar requirement against assets held by, or deposits or other liabilities in or for the account of, advances or loans by, or other credit extended by, or any other acquisition of funds by, any office of the Bank which are not otherwise included in the determination of the Eurodollar Rate; or 17 (iii) does or shall impose on the Bank any other condition; and the result of any of the foregoing is to increase the cost to the Bank, by any amount which the Bank deems to be material, of making, renewing or maintaining advances or extensions of credit or to reduce any amount receivable hereunder, in each case in respect of its Eurodollar Loans made to the Borrower hereunder, then, in any such case, the Borrower shall promptly pay the Bank, within ten (10) Business Days after demand by the Bank in accordance with paragraph (c) of this Section, any additional amounts necessary to compensate the Bank for such additional costs or reduced amount receivable. (b) In the event that the Bank shall have determined that the adoption after the date hereof of any law, rule, guideline or regulation regarding capital adequacy, or any change after the date hereof in any existing or future law, rule, guideline or regulation regarding capital adequacy or in the interpretation or application thereof, or compliance by Bank or any corporation controlling the Bank with any request or directive made or adopted after the date hereof regarding capital adequacy (whether or not having the force of law) from any central bank or Government Authority, does or shall have the effect of reducing the rate of return on the Bank's or such corporation's capital as a consequence of its obligations hereunder to a level below that which the Bank or such corporation could have achieved but for such adoption, change or compliance (taking into consideration the Bank's or such corporation's policies with respect to capital adequacy) by an amount deemed by the Bank to be material, then from time to time, within ten (10) Business Days after submission by the Bank to the Borrower of a written request therefor in accordance with paragraph (c) of this Section, the Borrower shall pay to the Bank such additional amount or amounts as will compensate the Bank for such reduction. (c) If the Bank intends to make a claim pursuant to paragraph (a) or (b) of this Section, it shall deliver to the Borrower as soon as practicable after becoming aware of the circumstances giving or which shall give rise to such claim, notice of the Bank's intention to make a claim, specifying the event by which it is or shall be entitled to make such claim and setting out in reasonable detail the expected basis and computation of such claim; provided that no claim shall be made by the Bank, and the Borrower shall not be required to indemnify the Bank, with respect to any cost, increased cost or other liability or reduction described in paragraph (a) or (b) of this Section which is incurred by the Bank and which is payable, or which is applicable to any period, more than ninety (90) days prior to the date the Borrower is first notified by the Bank pursuant to the foregoing provisions of this paragraph (c) that the Bank is incurring such costs, other liability or reduction, as the case may be. 18 (d) A certificate as to any additional amounts payable to the Bank pursuant to this Section 3.10, submitted by the Bank to the Borrower and showing in reasonable detail that such amounts were computed in accordance with this Section 3.10, shall be conclusive in the absence of manifest error. The provisions of this Section 3.10 shall survive the termination of this Agreement and the payment of the Bank Loans and all other amounts payable to the Bank hereunder. (e) The Bank agrees that, as promptly as practicable after it becomes aware that additional amounts are or will be due to such Bank under this Section 3.10, it will, to the extent not inconsistent with the Bank's internal policies, make, fund or maintain the Bank Loans through another lending office of the Bank if as a result thereof such amounts will not be required to be paid and if, as determined by the Bank in it its sole discretion, the making, funding or maintaining of such Bank Loans through such other lending office (i) would be permitted by applicable Requirements of Law and (ii) would not adversely affect the Bank Loans or the Bank. The Borrower hereby agrees to pay all reasonable expenses incurred by the Bank in utilizing another lending office of the Bank as provided in this paragraph. Section 3.11 Substitution or Removal of the Bank. In the event the Bank notifies the Borrower pursuant to Section 3.10 that it may no longer make or maintain Eurodollar Loans, or demands payment of additional amounts pursuant to Section 3.10 or 5.4, the Borrower, at its expense, at any time within 180 days after such demand, so long as no Default or Event of Default shall have occurred and be continuing, may require the Bank to sell in accordance with the provisions of Section [____], at par plus accrued interest, without recourse or warranty and pursuant to a Bank Transfer Supplement, its rights and obligations hereunder (including its Commitment and the Bank Loans at the time owing to it and the Notes held by it) to a Qualified Financial Institution specified by the Borrower that is willing to purchase such rights and obligations on the terms hereof and is reasonably acceptable to the Bank; provided that (i) such assignment shall not conflict with or violate any Requirement of Law applicable to or binding on the Bank, (ii) the Borrower shall have paid to the Bank all amounts (other than interest) accrued and owing hereunder to it (including, without limitation, amounts owing pursuant to Sections 3.10 and 5.4 and (iii) the assignee Bank shall have executed and delivered a Bank Transfer Supplement. Notwithstanding anything set forth above in this Section 3.11 to the contrary, the Borrower shall not be entitled to require an assignment under this Section 3.11 if prior to any such requirement by the Borrower, the Bank shall have changed its lending office so as to eliminate the continued incurrence of the costs in respect of which such payment was demanded. 19 Section 3.12 Bank's Representation. The Bank represents that the Banks Loans to be made by it hereunder are being made in the ordinary course of its banking business not with a view to or for sale in connection with any distribution thereof within the meaning of the Securities Act of 1933, as amended or for resale in any transaction which would be in violation of any applicable securities laws; provided that the sale, transfer or other disposition by the Bank of the Bank Loans and the Notes shall at all times be within the Bank's control. SECTION 4. THE LETTER OF CREDIT FACILITY Section 4.1 Letter of Credit. (a) The Letter of Credit shall be substantially in the form of Exhibit C hereto (with such changes therein as shall be approved by the Bank), shall be stated to expire on the Commitment Termination Date and shall be in the stated amount of $6,500,000 (the 'L/C Available Amount'). At the time of any L/C Disbursement with respect to the Letter of Credit, the L/C Available Amount shall be reduced by the amount of such L/C Disbursement. Following any L/C Disbursement, the L/C Available Amount shall be increased in an amount, not to exceed the amount of such L/C Disbursement, equal to monies on deposit in the Tax-Exempt Debt Service Reserve that are withdrawn by the Company in accordance with Section 4.7(a) of the Tax- Exempt Indenture. (b) Upon any extension of the Commitment Period pursuant to Section 2.2(c) hereof, the Bank shall issue and deliver a new Letter of Credit in exchange for the initial Letter of Credit to reflect the extension of the Commitment Termination Date. The terms of such new Letter of Credit shall be identical to those of the Letter of Credit for which it is being exchanged, except that (i) such new Letter of Credit shall be dated as of the date of issuance and shall be in an amount equal to the undrawn amount of the replaced Letter of Credit, (ii) the expiration date for such replacement Letter of Credit shall be such Commitment Termination Date as so extended and (iii) such replacement Letter of Credit may contain such other changes as the Bank, the Borrower and the Tax-Exempt Indenture Trustee in whose favor such Letter of Credit is to be issued shall mutually agree upon. Section 4.2 Notice of Payments under the Letter of Credit. The Bank shall give the Borrower prompt cable or tested telex notice of each demand for an L/C Disbursement received by the Bank, specifying (i) the amount of such L/C Disbursement, and (ii) the date such L/C Disbursement is to be made. Section 4.3 Borrower's Obligations in Respect of Letter of Credit. (a) Each L/C Disbursement shall be reimbursed by the Borrower on the date of such disbursement (such reimbursement payment herein referred to as an 'L/C Reimbursement Payment'). 20 The Borrower may request the Bank to finance the Borrower's obligation to make an L/C Reimbursement Payment through the making of a Bank L/C Loan pursuant to Section 3.1. If the Borrower fails to make such request in accordance with the applicable provisions of Section 3.1 or to satisfy the terms and conditions of this Agreement for such Loan (including those under Section 7.2), the Borrower shall, on the applicable L/C Disbursement Date, make an L/C Reimbursement Payment to the Bank. If an L/C Reimbursement Payment shall not be made on the applicable L/C Disbursement Date, the amount of the L/C Reimbursement Payment shall bear interest from the date on which such payment was due until paid in full at the Bank Default Rate applicable to Base Rate Loans, such interest being payable on demand of the Bank. (b) The Borrower's obligation to make L/C Reimbursement Payments and payments of interest in respect thereof under this Section 4.3 (such obligations being herein collectively referred to as the 'L/C Reimbursement Obligations') shall be absolute, unconditional and irrevocable, and shall be observed strictly in accordance with the terms of this Agreement under all circumstances whatsoever including, without limitation, the following circumstances: (i) any lack of legality, validity, enforceability or regularity of the Letter of Credit, this Agreement, any other Loan Document; (ii) any amendment or waiver of or any consent to or departure from all or any of the Loan Documents; (iii) the existence of any claim, set-off, defense, counterclaim or other right which the Borrower may have at any time against the Tax-Exempt Indenture Trustee, the Bank, or any other Person, whether in connection with this Agreement, the Letter of Credit, the Loan Documents, or any unrelated transaction; (iv) any statement or any other document presented under the Letter of Credit proving to be forged, fraudulent or invalid in any respect or any statement therein being untrue or inaccurate in any respect whatsoever; (v) payment by the Bank under any Letter of Credit against presentation of a sight draft or certificate which does not comply strictly with the terms of the Letter of Credit; and (vi) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing; provided that the Borrower shall not be obligated to reimburse the Bank for any L/C Disbursement made as a result of the Bank's gross negligence or willful misconduct. Section 4.4 Reduction of Letter of Credit. The Tax- Exempt Indenture Trustee may, at the request of the Borrower (or by the Company on behalf of the Borrower), without penalty, upon at least five (5) Business Days prior written notice to the Bank, reduce the stated amount of the Letter of Credit in connection with an optional prepayment or redemption and cancellation of the Tax-Exempt Indenture Securities; provided that (i) each partial reduction of the stated amount of the Letter of Credit shall be in an amount not less than [$________], and (ii) the stated 21 amount as so reduced shall not be less than the Tax-Exempt Debt Service Reserve Account Required Balance. SECTION 5. GENERAL PROVISIONS APPLICABLE TO BANK LOAN FACILITY AND LETTER OF CREDIT FACILITY. Section 5.1 Fees. (a) Commitment Fees. The Borrower agrees to pay to the Bank, for each day during the term hereof, a commitment fee computed at the rate of 0.10% per annum on the unutilized portion of the Bank M/R Loan Commitment in effect on such day, and 0.35% per annum on the unutilized portion of the Letter of Credit Commitment in effect on such day. Commitment fees payable pursuant to this Section 5.1(a) shall be payable quarterly in arrears on the last day of each March, June, September and December, commencing on the first of such dates to occur after the Closing Date, and on the Commitment Termination Date , and shall be calculated on the basis of a 365- (or 366-, as the case may be) day year for the actual number of days elapsed. (b) Facility Fees; Closing Fees. The Borrower agrees to pay to the Bank on the Closing Date, a facility fee equal to the sum of 0.35% of the Bank M/R Loan Commitment and 0.35% of the Letter of Credit Commitment. Section 5.2 Required Prepayments of Bank L/C Loans. Each Bank L/C Loan shall be prepaid [in full] on the [ ] Monthly Transfer Date following the date of such Bank L/C Loan. Section 5.3 Optional Prepayments of Loans. (a) The Borrower may, on any Business Day and from time to time, prepay the Bank Loans, in whole or in part, upon at least one (1) Business Day prior irrevocable notice (each such notice, an 'Optional Prepayment Notice') to the Bank; provided that, at such time and after giving effect thereto, no Default or Event of Default shall have occurred and be continuing; (b) Each prepayment of Bank Loans pursuant to this Section 5.3 shall be applied to the prepayment of Bank M/R Loans and/or Bank L/C Loans, as directed by Borrower, and shall be made without premium or penalty, except for any amounts due pursuant to Section 5.5(a). (c) Partial prepayments of Bank Loans made pursuant to this Section 5.3 shall at the option of the Borrower be applied to the installments of principal of the Bank Loans either in the inverse order of their scheduled maturities or ratably to each of their scheduled maturities. Partial prepayments pursuant to this Section 5.3 shall be in an aggregate principal amount of $100,000 or a whole multiple in excess thereof. Amounts of Bank Loans 22 prepaid prior to the Commitment Termination Date pursuant to this Section 5.3 may be reborrowed. Section 5.4 Taxes. (a) All payments made by the Borrower under this Agreement shall be made free and clear of, and without reduction or withholding for or on account of, any present or future income, stamp or other taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now or hereafter imposed, levied, collected, withheld or assessed by any Government Authority excluding, in the case of the Bank, net income and franchise taxes imposed on the Bank by the jurisdiction under the laws of which the Bank is organized or any political subdivision or taxing authority thereof or therein, or by any jurisdiction in which such Bank's lending office is located or any political subdivision or taxing authority thereof or therein (all such non-excluded taxes, levies, imposts, deductions, charges or withholdings being hereinafter called 'Taxes'). If any Taxes are required to be withheld from any amounts payable to the Bank hereunder or under the Notes, the amounts so payable to the Bank shall be increased to the extent necessary to yield to the Bank (after payment of all Taxes) interest or any such other amounts payable hereunder at the rates or in the amounts specified in this Agreement and the Notes. Whenever any Taxes are payable by the Borrower, as promptly as possible thereafter, the Borrower shall send to the Bank a certified copy of an original official receipt received by the Borrower showing payment thereof. If the Borrower fails to pay any Taxes when due to the appropriate taxing authority or fails to remit to the Bank the required receipts or other required documentary evidence, the Borrower shall indemnify the Bank for any incremental taxes, interest or penalties that may become payable by the Bank as a result of such failure. (b) The Bank agrees that it will deliver to the Borrower (i) two duly completed copies of United States Internal Revenue Service Form 1001 or 4224 or successor applicable form, as the case may be, certifying in each case that the Bank such Lender is entitled to receive payments under this Agreement and the relevant Notes payable to it without deduction or withholding of any United States federal income taxes, and (ii) an Internal Revenue Service Form W-8 or W-9 or successor applicable form, as the case may be, to establish an exemption from United States backup withholding tax. The Bank further undertakes to deliver to the Borrower two further copies of Form 1001 or 4224 and Form W-8 or W-9, or successor applicable forms, or other manner of certification, as the case may be, on or before the date that any such form expires or becomes obsolete or after the occurrence of any event requiring a change in the most recent form previously delivered by it to the Borrower, and such extensions or renewals thereof as may reasonably be requested by the Borrower, certifying in the case of a Form 1001 or 4224 that the Bank is entitled to receive payments under this Agreement and the 23 relevant Notes without deduction or withholding of any United States federal income taxes, unless in any such cases an event (including without limitation any change in treaty, law or regulation) has occurred prior to the date on which any such delivery would otherwise be required which renders any such form inapplicable or which would prevent the Bank from duly completing and delivering any such form with respect to it and the Bank advises the Borrower that it is not capable of receiving payments without deduction or withholding of United States federal income tax, or in the case of a Form W-8 or W-9, without an exemption from United States backup withholding tax. (c) The Bank agrees that, as promptly as practicable after the Borrower shall have notified it that Taxes are or have been required to be withheld from any amounts payable hereunder or under the Notes, or the Bank otherwise becomes aware that any such Taxes will be required to be withheld from future payments, it will , to the extent not inconsistent with the Bank's internal policies, make, fund or maintain its Bank Loans through another lending office of the Bank if as a result thereof Taxes would not be required to be so withheld and if, as determined by the Bank in its sole discretion, the making, funding or maintaining of such Loans through such other lending office (i) would be permitted by applicable Requirements of Law and (ii) would not adversely affect its Loans or the Bank. The Borrower hereby agrees to pay all reasonable expenses incurred by the Bank in utilizing another lending office of the Bank as provided in this paragraph. (d) The agreements in this Section 5.4 shall survive the termination of this Agreement and the Letter of Credit and the payment of the Notes and the other amounts payable hereunder. Section 5.5 Certain Indemnities. (a) Funding Indemnities. The Borrower agrees to indemnify Bank and to hold the Bank harmless from any loss or expense which Bank may sustain or incur as a consequence of (a) default by the Borrower in making a borrowing of, conversion into or continuation of Eurodollar Loans after the Borrower has given a notice requesting the same in accordance with the provisions of this Agreement, (b) default by the Borrower in making any prepayment after the Borrower has given a notice thereof in accordance with the provisions of this Agreement or (c) the making of a prepayment of Eurodollar Loans on a day which is not the last day of a Loan Interest Period with respect thereto (including, without limitation, as the result of acceleration of such Bank Loans pursuant to Section 9.2. If the Bank shall demand indemnification for any loss or expense sustained or incurred by it pursuant to this Section 5.5(a), it shall, at the time of such demand, deliver to the Borrower a certificate documenting in reasonable detail any such loss or 24 expense. Each determination by the Bank of the amounts owing to it pursuant to this Section 5.5(a) shall be conclusive and binding on the Borrower and the Bank in the absence of manifest error. (b) Survival. The provisions of this Section 5.5 shall survive the termination of this Agreement and the Letter of Credit and the payment of the Loans and all other amounts payable hereunder. Section 5.6 Additional Letter of Credit Provisions. (a) The Borrower agrees that neither the Bank nor any of its officers or directors shall be liable or responsible for: (i) the validity, sufficiency or genuineness of documents presented to the Bank under the Letter of Credit, or of any endorsements) thereon, even if such documents should in fact prove to be in any or all respects invalid, insufficient, fraudulent or forged or any statement therein prove to be untrue or inaccurate in any respect whatsoever; (ii) payment by the Bank against presentation of documents which do not comply strictly with the terms of the Letter of Credit, including failure of any documents to bear any reference or adequate reference to the Letter of Credit; or (iii) any other circumstances whatsoever in making or failing to make payment under the Letter of Credit, except that the Borrower shall have a claim against the Bank, and the Bank shall be liable to the Borrower, to the extent, but only to the extent, of any direct (as opposed to consequential) damages suffered by the Borrower which the Borrower proves were caused by the Bank's willful failure to pay under Letter of Credit after the presentation to it of a certificate for payment strictly complying with the terms and conditions of Letter of Credit (unless the Bank in good faith believed itself to be prohibited by law or legal authority from making such payment). In furtherance and not in limitation of the foregoing, the Bank may accept documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary. (b) Without limiting the effect of Section 4.3(b), or 5.6(a), the Borrower and the Bank that: (i) the Bank is authorized to make payments under the Letter of Credit upon the presentation of the documents provided for therein and without regard to whether the Borrower has failed to fulfill any of its obligations with respect to any Loan Document or any other default has occurred thereunder or hereunder; (ii) the Bank is authorized to take such action on its behalf under the provisions of this Agreement and to exercise such powers and perform such duties as are specifically delegated 25 to or required of the Bank by the terms hereof, together with such powers as are reasonably incidental thereto; (iii) the Bank shall be entitled to rely upon any certificate, notice, demand or other communication (whether by cable, telegram, telex or other written communication) believed by it to be genuine and to have been signed or sent by the proper Person or Persons (and no such reliance or failure shall place the Bank under any liability to the Borrower or limit or otherwise affect the Borrower's obligations under this Agreement); (iv) any action, inaction or omission on the part of the Bank under or in connection with the Letter of Credit or the related instruments or documents, if in good faith and in conformity with such laws, regulations and customs as the Bank may reasonably deem to be applicable (including without limitation the laws of the State of New York and the Uniform Customs), shall be binding upon the Borrower (and shall not place the Bank under any liability to the Borrower or limit or otherwise affect the Borrower's obligations under this Agreement); and (v) notwithstanding any change or modification, with or without the consent of the Borrower, in any instruments or documents called for in the Letter of Credit, including waiver of noncompliance of any such instruments or documents with the terms of the Letter of Credit, this Agreement shall be binding on the Borrower with regard to the Letter of Credit and to any action taken by the Bank relative thereto. (c) The Letter of Credit shall be subject to the Uniform Customs and, to the extent not inconsistent therewith, the laws of the State of New York. (d) Notwithstanding anything to the contrary in Section 3 or 4, the Bank shall not at any time be obligated to issue the Letter of Credit hereunder if such issuance would conflict with, or cause the Bank to exceed any limits imposed by, any applicable Requirement of Law. SECTION 6. REPRESENTATIONS AND WARRANTIES The Borrower hereby represents and warrants to the Bank as follows: Section 6.1 Organization. The Borrower is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, and each Significant Subsidiary of the Borrower is a corporation duly organized, validly existing 26 and in good standing under the laws of its respective state of incorporation. Section 6.2 Authorization; Enforceable Obligations. The Borrower has taken all necessary corporate action to authorize its execution, delivery and performance of this Agreement and, on the Closing Date, the Borrower will have taken all necessary corporate action to authorize it to obtain the Bank Loans and Letter or Credit provided for in this Agreement. This Agreement is, and each Note when executed and delivered and L/C Reimbursement Obligation when incurred by the Borrower will be, the valid and binding obligation of the Borrower enforceable in accordance with its terms, except as such enforcement may be limited by any bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting the enforcement of creditors' rights generally or general principles of equity. Section 6.3 No Legal Bar. Neither the execution or delivery of this Agreement nor the consummation of the transactions herein contemplated will violate any provisions of any applicable law or conflict with, result in a breach of, or constitute a default under, the Borrower's Certificate of Incorporation or By-laws or any indenture or other agreement or instrument, or any legal restriction that the Borrower is a party to or bound by. Section 6.4 Governmental Approvals. No approval or consent of, or other filing with or notice to, any Government Authority is legally required for the execution, delivery and performance by the Borrower of this Agreement or the consummation of the transactions herein contemplated except for an order or orders of the Securities and Exchange Commission under PUHCA, which order or orders will have been obtained, prior to (and will be in effect on) the Closing Date. Section 6.5 No Proceeding or Litigation. Other than in the ordinary course of business (including, without limitation, actions, suits or proceedings involving rates or licenses or permits for the construction or operation of generating or transmission facilities), there are no actions, suits or proceedings pending or to the Borrower's knowledge threatened against or directly involving the Borrower or its properties before any court, arbitrator or governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, except (i) actions, suits or proceedings which will not effect a Material Adverse Change in the Borrower's financial condition or operations and (ii) as disclosed in or contemplated by the Borrower's Annual Report on Form 10-K for the year ended December 31, 1994, or its Quarterly Reports on Form 10-Q for the quarters ended March 31, 1995 and June 30, 1995 (the "Exchange Act Documents") (or such subsequent prospectus, official statement or filing under the Securities Exchange Act of 1934 as 27 in any such case the Bank shall approve in writing for this purpose). Section 6.6 ERISA. To the best knowledge of the Borrower, no Reportable Event (as defined in Title IV of ERISA) has occurred and is continuing with respect to any Plan of the Borrower; the Borrower has not incurred any material accumulated funding deficiency within the meaning of ERISA and the Borrower has not incurred any material liability to the PBGC established under ERISA (or any successor thereto) in connection with any Plan of the Borrower. Section 6.7 No Default. No Event of Default (as defined below), or event which with the passage of time or giving of notice, or both, would constitute an Event of Default, has occurred and is continuing. Section 6.8 Financial Statements. The Borrower has furnished to the Bank its consolidated balance sheet as of December 31, 1994, and related statements of income and cash flows for the twelve months then ended, in each case certified by Arthur Andersen & Co., independent certified public accountants; such financial statements fairly present the Borrower's financial position as of December 31, 1994, and the results of its operations for the twelve months then ended, in conformity with generally accepted accounting principles consistently applied during such period (except as stated therein); there has been no Material Adverse Change in the financial condition or operations of the Borrower and its subsidiaries (taken as a whole) since December 31, 1994, except as reflected in or contemplated by the Exchange Act Documents (or such subsequent prospectus, official statement or filing under the Securities Exchange Act of 1934 as in any such case the Bank shall approve in writing for this purpose), it being understood and agreed that this exception is not intended to cover statements in the Exchange Act Documents or subsequent prospectus, official statement or filing that are stated therein to be applicable to the electric utility industry generally unless they describe specific problems or types of problems which, at the date hereof, are affecting the Borrower's financial condition or operations or its prospects. Section 6.9 Federal Regulations. The Borrower is not engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulation U of the Board of Governors of the Federal Reserve System), and no proceeds of any Borrowing are to be used to purchase or carry any margin stock or to extend credit to others for such purpose. SECTION 7. CONDITIONS PRECEDENT 28 Section 7.1 Conditions to Effectiveness of Commitments. The Commitments of the Bank shall not become effective, and the Facilities shall not be available for utilization, until the date on which all of the following conditions precedent shall have been satisfied: (a) Agreement. The Bank shall have received this Agreement, duly executed and delivered by the Borrower. (b) Legal opinions. The Bank shall have received the following legal opinions, each dated the Closing Date: (i) the opinion of Troutman Sanders, counsel to the Borrower, substantially in the form of Exhibit D; (ii) the favorable opinion of Simpson Thacher Bartlett, special New York counsel to the Bank, as to such matters relating to the transactions contemplated by this Agreement as the Bank may reasonably request. (c) Evidence of Authorization. The Bank shall have received: (i) copies, certified on the Closing Date, of all corporate action of the Borrower authorizing the execution, delivery and performance by the Borrower of this Agreement and consummation of each of the transactions contemplated hereby; (ii) certificates, dated the Closing Date, as to the incumbency and signature of each individual signing any Loan Document on behalf of the Borrower; (iii) certified copies of the Certificate of Incorporation and By-laws of Borrower; and (iv) evidence of the existence and good standing of the Borrower in the State of Delaware and of the Borrower's authorization to do business and good standing in [____________ _________________________________________________]; (d) Financial Statements. The Bank shall have received a copy of the most recent audited financial statements of Borrower and no Material Adverse Change shall have occurred in the business, operations or financial condition of any of Borrower referred to in the preceding sentence since the date of such financial statements. (e) Fees. All fees payable by the Borrower on or prior to the Closing Date pursuant to Section 5 hereof, shall have been paid. 29 Section 7.2 Conditions to Each Bank Loan. The obligation of the Bank to make any Bank Loan requested to be made by it on any Borrowing Date is subject to the satisfaction, immediately prior to or concurrently with the making of such Bank Loan, of the following conditions precedent: (a) No Default. No Default or Event of Default shall have occurred and be continuing on such Borrowing Date, or shall occur after giving effect to the Loans to be made on such date. (b) Representations and Warranties. Each of the representations and warranties of the Borrower in this Agreement shall be true and correct in all material respects on and as of such Borrowing Date as if made on and as of such date, except for the representations and warranties set forth in Section 6.8, which shall be true and correct on and as of the Closing Date. (c) No Material Adverse Change. On or prior to such Borrowing Date, there shall not have occurred a Material Adverse Change. (d) Extension of Credit Request. The Bank shall have received, on or before the time required for its receipt pursuant to Section 3.2, a Notice of Borrowing with respect to such Bank Loan. (e) Interest Rate Election Notice. The Bank shall have received, on or before the time required for its receipt pursuant to Section 3.2, an Interest Rate Election Notice with respect to such Bank Loan. SECTION 8. AFFIRMATIVE COVENANTS So long as the Commitments remain in effect, the Letter of Credit remains outstanding and until payment in full of the Bank Loans and L/C Reimbursement Obligations hereunder, the Borrower hereby agrees that: Section 8.1 Payment of Taxes. Borrower will pay and discharge all taxes, assessments and governmental charges or levies imposed upon the Borrower or upon its income or profits, or upon any properties belonging to the Borrower, prior to the date on which penalties attach thereto, and all lawful claims which, if unpaid, might become a lien or charge upon any properties of the Borrower, provided it shall not be required to pay any such tax, assessment, charge, levy or claim which is being contested in good faith and by proper proceedings. Section 8.2 Insurance. Borrower will maintain insurance of types and in amounts customarily maintained by similar companies. 30 Section 8.3 Maintain Corporate Existence. Borrower will preserve and maintain its corporate existence in the State of Delaware, and qualify and remain qualified as a foreign corporation in each jurisdiction in which such qualification is necessary or desirable in view of its business and operations or the ownership of its properties. Section 8.4 Compliance with Applicable Law. Borrower will comply with the requirements of all applicable laws, non-compliance with which would effect a Material Adverse Change in its financial condition or operations except applicable laws being contested in good faith. Section 8.5 Notice of Defaults. Borrower will provide the Bank with prompt notice in writing of any Event of Default or any event which with the passage of time or giving of notice, or both, would constitute an Event of Default. Section 8.6 Ownership of Certain Subsidiaries. Borrower will not sell or otherwise dispose of any shares of the common stock (or any options or warrants to purchase common stock or other securities exchangeable for or convertible into common stock) of Alabama Power Company, Georgia Power Company, Gulf Power Company, Mississippi Power Company, Savannah Electric and Power Company or Southern Company Services, Inc., or cause or permit any of such common stock to be subject to a lien without making or causing to be made provision whereby the Notes issued hereunder will be secured equally and ratably with all other obligations secured thereby. Section 8.7 Incurrence of Debt. Borrower will not incur or in any manner become liable in respect of any Adjusted Funded Debt unless, after giving effect thereto and to any concurrent transactions, the aggregate principal amount of its Adjusted Funded Debt outstanding will not exceed 40% of its Capitalization. Section 8.8 Agreement to Secure Ratably. Without making or causing to be made provision whereby the Notes issued hereunder will be secured equally and ratably with all other obligations secured by the affected property, Borrower will not cause or permit any of its property, whether now owned or hereafter acquired, to be subject to a lien except: (a) liens securing taxes, assessments or governmental charges or levies or the claims or demands of materialmen, mechanics, carriers, warehousemen, landlords and other like persons, provided the payment thereof is not at the time required by Section 8.2 above; (b) liens incurred or deposits made in the ordinary course of business (i) in connection with workers' 31 compensation, unemployment insurance, social security and other like laws, or (ii) to secure the performance of letters of credit, bids, tenders, sales contracts, leases, statutory obligations, surety, appeal and performance bonds and other similar obligations not incurred in connection with the borrowing of money, the obtaining of advances or the payment of the deferred purchase price of property; (c) attachment, judgment and other similar liens arising in connection with court proceedings, provided the execution or other enforcement of such liens is effectively stayed and the claims secured thereby are being actively contested in good faith and by appropriate proceedings; (d) reservations, exceptions, encroachments, easements, rights of way, covenants, conditions, restrictions, leases and other similar title exceptions or encumbrances affecting real property, provided they do not in the aggregate materially detract from the value of said properties or materially interfere with their use in the ordinary conduct of its business; (e) liens on its property existing at the date of this Agreement; (f) liens on real property to secure indebtedness for money borrowed by it; (g) any lien existing on any property prior to its acquisition thereof and not created in contemplation of such acquisition; (h) liens on property hereafter acquired relating to financing the acquisition (by purchase, lease or otherwise) of such property; (i) any extension, renewal or replacement (or successive extensions, renewals or replacements) in whole or in part of any lien referred to in the foregoing clauses (e), (f), (g) and (h); provided, however, that the principal amount of any and all other obligations and indebtedness secured thereby shall not exceed the principal amount thereof so secured at the time of such extension, renewal or replacement, and that such extension, renewal or replacement shall be limited to all or a part of the property which secured the lien so extended, renewed or replaced (plus improvements on such property); and (j)) liens on its property, in addition to those otherwise permitted by clauses (a) through (i) above, securing, directly or indirectly, indebtedness which does not exceed in the aggregate $25,000,000 at any one time outstanding. 32 Section 8.9 Financial Statements. The Borrower will furnish or cause to be furnished to the Bank: (a) within 120 days after the end of each of its fiscal years, its consolidated balance sheet and related consolidated statements of income and cash flows, as well as its corporate balance sheet and related corporate statement of income, in each case certified by independent certified public accountants of nationally recognized standing, showing its financial position at the close of such year and the results of its operations and cash flows for such year; (b) within 55 days after the end of each of the first three quarters in each of its fiscal years, its unaudited condensed consolidated balance sheet and related condensed consolidated statements of income and cash flows, as well as its condensed corporate balance sheet and related condensed corporate statement of income, such balance sheets to be as of the end of such quarter and such statements of income and cash flows to be for the period from the beginning of the fiscal year to the end of such quarter, in each case (with respect to the consolidated financial statements) in the forms included in its Quarterly Report on Form 10-Q for such quarter filed with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended, and subject to audit and year-end adjustments; (c) at the same time that it furnishes or causes to be furnished to the Bank the financial statements specified in paragraphs (a) and (b) above, a certificate, signed by the chief financial officer of the Borrower, stating that such officer has no knowledge of any Event of Default or any event which, with notice or lapse of time, or both, would constitute an Event of Default (or, if such an Event of Default has occurred and is continuing, a statement as to the nature thereof and the steps taken or proposed to be taken to remedy the same); (d) promptly upon the filing thereof, copies of each prospectus filed by the Borrower with the Securities and Exchange Commission pursuant to Rule 424 under the Securities Act of 1933, as amended; and (e) such other information respecting the Borrower's business, properties or its condition or operations, financial or otherwise, as the Bank may from time to time reasonably request. SECTION 9. EVENTS OF DEFAULT Section 9.1 Events of Default. The Bank shall have the rights and remedies specified in Section 9.2 if any of the following events shall occur and be continuing (whatever the 33 reason for such event and whether it shall be voluntary or involuntary, or come about or be effected by operation of law, or otherwise): (a) The Borrower (or, in the case of an event described in (vii) below, either the Borrower or any Significant Subsidiary of the Borrower) shall: (i) fail to pay when due any principal of a Note; (ii) fail to pay when due any interest on a Note, any L/C Reimbursement Obligation (unless financed by Borrower with a Bank L/C Loan), or any of the fees payable under Section 5.1 of this Agreement, and the same shall remain unpaid for five (5) Business Days; (iii) default in the observance or performance of the covenants set forth in Section 8 of this Agreement; (iv) default in the performance of any other agreement or covenant contained in this Agreement or any Note (other than a covenant or agreement a default in the performance of which is elsewhere in this Section 9.1(a) specifically dealt with) and such default shall continue for a period of thirty (30) days after the Bank has given the Borrower written notice thereof; (v) default in the payment when due or within any applicable period of grace of any Adjusted Funded Debt or Current Debt of the Borrower (other than Adjusted Funded Debt or Current Debt incurred under the Notes and under agreements or instruments involving in the aggregate less than $500,000); (vi) default under the provisions of any instrument evidencing Adjusted Funded Debt or Current Debt of the Borrower (other than Adjusted Funded Debt or Current Debt incurred under the Notes and under agreements or instruments involving in the aggregate less than $500,000), or of any agreement relating to any such Adjusted Funded Debt or Current Debt the effect of which default is to permit any party or parties to any such instrument or agreement to cause such Adjusted Funded Debt or Current Debt to become due prior to its stated maturity; or (vii) (A) apply for or consent to the appointment of a receiver, trustee, liquidator or the like of the Borrower or any Significant Subsidiary of the Borrower, or of all or a substantial part of its or any such Significant Subsidiary's property, (B) be unable, or admit in writing inability, to pay debts generally as they mature, (C) make a general assignment for the benefit of creditors, (D) be adjudicated a bankrupt or insolvent, or (E) file a voluntary petition in bankruptcy or a 34 petition or answer seeking reorganization or an arrangement with creditors or to take advantage of any insolvency law or an answer admitting the material allegations of a petition filed against it or any such Significant Subsidiary in any bankruptcy, reorganization or insolvency proceeding, or corporate action shall be taken by it or any such Significant Subsidiary for the purpose of effecting any of the foregoing. (b) Any representation made or deemed made by the Borrower under this Agreement or in any other document furnished at any time by the Borrower under or in connection with this Agreement shall prove incorrect in any material respect when made or deemed made, and either (i) such incorrectness has resulted in a Material Adverse Change or (ii) such incorrectness could reasonably be expected to result in a Material Adverse Change and the facts or circumstances which caused such representation or warranty to be materially incorrect are not corrected within thirty (30) days after the Borrower shall have received written notice thereof from the Bank. (c) An order, judgment or decree shall be entered, without the application, approval or consent of the Borrower or any Significant Subsidiary of the Borrower, or an involuntary proceeding shall be commenced or an involuntary petition shall be filed, by or in any court or governmental agency of competent jurisdiction, approving or filing a petition seeking the Borrower's or Significant Subsidiary's reorganization, or appointing or seeking the appointment of a receiver, trustee, liquidator, or the like of it or any such Significant Subsidiary, or of all or a substantial part of its or any such Significant Subsidiary's assets, and such order, judgment, decree or filing shall continue unstayed and in effect for any period of sixty (60) consecutive days. Section 9.2 Rights and Remedies Following an Event of Default. If any Event of Default shall occur and be continuing, then: (a) If such Event of Default is an Event of Default specified in clause (A), (C), (D) or (E) of Section 9.1(a)(vii) or Section 9.1(c), automatically (A) the Commitments immediately shall terminate, (B) the Bank Loans, the Notes and all unpaid L/C Reimbursement Obligations, all interest accrued and unpaid thereon, and all other amounts owing by the Borrower hereunder and under the Notes immediately shall become due and payable, without presentment, demand, protest, or notice of any kind, all of which are hereby expressly waived by the Borrower; and (b) If such Event of Default is an Event of Default other than as specified in clause (A), (C), (D) or (E) of Section 9.1(a)(vii) or Section 9.1(c), then the Bank may, by 35 notice to the Borrower, declare the Commitments of the Bank terminated and declare the entire unpaid principal amount of the Bank Loans, all unpaid L/C Reimbursement Obligations, all interest accrued and unpaid thereon, and all other amounts owing by the Borrower hereunder to the Bank and under the Notes to be forthwith due and payable, whereupon the Commitments of the Bank shall terminate and such unpaid principal amount of the Bank Loans and Notes, all unpaid L/C Reimbursement Obligations, all interest accrued and unpaid thereon, and all such other amounts shall become and be forthwith due and payable, without presentment, demand, protest, or notice of any kind, all of which are hereby expressly waived by the Borrower; and/or (B) demand that the Borrower immediately pay to the [Tax-Exempt Indenture Trustee??] an amount equal to the full amount that can then be drawn under the Letter of Credit, whereupon the Borrower shall immediately make such payment to the [Tax-Exempt Indenture Trustee??], which shall hold such payment as collateral security for the obligations of the Company under Section [____] of the Tax-Exempt Trust Indenture; provided that no such action taken by the Bank shall have the effect of terminating, reducing or altering in any respect the terms of the Letter of Credit outstanding at the time. At any time after the principal of and accrued interest on the Notes or unpaid L/C Reimbursement Obligations are declared due and payable, the Bank, by written notice to the Borrower, may rescind and annul any such declaration and its consequences with respect to the Notes or unpaid L/C Reimbursement Obligations if (x) the Borrower has paid all overdue interest on such Notes or L/C Reimbursement Obligations, the principal of any such Notes which have become due otherwise than by reason of such declaration, and interest on such overdue principal and (to the extent permitted by applicable law) overdue interest, at the Bank Default Rate, (y) all Events of Default, other than nonpayment of amounts which have become due solely by reason of such declaration, and all conditions and events which constitute Defaults or Events of Default have been cured or waived, and (z) no judgment or decree has been entered for the payment of any monies due pursuant to such Notes or L/C Reimbursement Obligations or this Agreement. No such rescission and annulment referred to in the proviso in the preceding sentence shall extend to or affect any subsequent Default or Event of Default or impair any right consequent thereon. SECTION 10. MISCELLANEOUS (Conform Section 10 to Working Capital Facility) 36 IN WITNESS WHEREOF, the parties hereto have caused this Loan and Reimbursement Agreement to be duly executed and delivered in New York, New York, by their proper and duly authorized officers as of the day and year first above written. THE SOUTHERN COMPANY, as Borrower By:__________________________ Name: Title: BANQUE PARIBAS, NEW YORK BRANCH, as Bank By:_____________________________ Name: Title: 37 EX-99 14 EXHIBIT F-1 TROUTMAN SANDERS NATIONSBANK PLAZA 600 PEACHTREE STREET, SUITE 5200 ATLANTA, GA 30308 404-885-3000 Exhibit F-1 July 6, 1995 Securities and Exchange Commission Washington, D.C. 20549 Re: The Southern Company - Post-Effective Amendment to Form U-1 Application (File No. 70-8505) Ladies and Gentlemen: We are familiar with the statement on Form U-1 referred to above, as amended, and are furnishing this opinion with respect to the transactions proposed therein, which include, among other proposals, (i) the acquisition by Mobile Energy Services Holdings, Inc. (formerly Mobile Energy Services Company, Inc.) ("Mobile Energy") and Southern Electric International, Inc. ("Southern Electric"), subsidiaries of The Southern Company, a Delaware corporation ("Southern"), of the ownership interests of Mobile Energy Services Company, L.L.C., an Alabama limited liability company ("Project Company"); (ii) the transfer and assignment by Mobile Energy to Project Company of all of its right, title and interest to the energy and resource recovery complex ("Energy Complex") located in Mobile, Alabama, and, in connection therewith, the assumption by Project Company of all material liabilities of Mobile Energy, including without limitation Mobile Energy's obligations under an outstanding note evidencing borrowings from Southern in the principal amount of $190 million and Mobile Energy's obligations in respect of $85 million principal amount of outstanding industrial revenue development bonds (the "Tax-Exempt Bonds") issued by The Industrial Development Board of the City of Mobile, Alabama (the "Board"); (iii) the issue and sale by Project Company of certain First Mortgage Bonds, as described therein, and the guaranty thereof by Mobile Energy; (iv) the entering into of agreements by Project Company, Mobile Energy, and the Board with respect to the issuance of a new series of Tax-Exempt Bonds for the purpose of redeeming the outstanding Tax-Exempt Bonds; (v) the issuance of notes ("Working Capital Notes") by Project Company evidencing borrowings from Banque Paribas under a revolving credit agreement, and Mobile Energy's guaranty thereof; and (vi) Southern's agreement to provide guaranties and other forms of credit support on behalf of Mobile Energy and/or Project Company in an aggregate amount at any time outstanding not to exceed $55 million. We are of the opinion that Southern, Southern Electric and Mobile Energy are each a validly organized and duly existing Securities and Exchange Commission July 6, 1995 Page 2 corporation under the laws of the State of its incorporation and that, upon the issuance of your order or orders herein, and in the event that the proposed transactions are consummated in accordance with such statement on Form U-1 and your order or orders: (a) all state laws applicable to the proposed transactions will have been complied with; (b) upon formation of Project Company in accordance with resolutions duly adopted by the boards of directors of Mobile Energy and Southern Electric, Mobile Energy and Southern Electric, as the initial members thereof, will be entitled to the rights and privileges appertaining thereto set forth in the Articles of Organization of Project Company defining such rights and privileges; (c) the First Mortgage Bonds, agreements relating to the issuance of the Tax-Exempt Bonds by the Board, and the Working Capital Notes will be valid and binding obligations of Project Company and of Mobile Energy, as guarantor, in accordance with the terms thereof; (d) the guaranties and other forms of credit support to be provided by Southern in respect of certain reserves required to be maintained under the instruments pursuant to which the First Mortgage Bonds and Tax-Exempt Bonds will be issued are in each case legal, valid and binding obligations of Southern; and (e) the consummation of the transactions described above and of the other transactions described in the Post- Effective Amendment to the Application or Declaration in the above-referenced proceeding will not violate the legal rights of the holders of any securities issued by Southern, Mobile Energy, Project Company or any associate company thereof. We hereby consent to the use of this opinion in connection with the filing of such statement on Form U-1. Very truly yours, /s/Troutman Sanders Troutman Sanders -----END PRIVACY-ENHANCED MESSAGE-----