Exhibit 10.53
Executed Copy
$255,210,000
MOBILE ENERGY SERVICES COMPANY, L.L.C.
8.665% First Mortgage Bonds due 2017
unconditionally guaranteed by
MOBILE ENERGY SERVICES HOLDINGS, INC.
Underwriting Agreement
August 15, 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
$255,210,000 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 August 1, 1995 (the "Indenture") among the Company, Mobile Energy
Services Holdings, Inc., an Alabama corporation ("Mobile Energy" and, together
with the Company, the "Mobile Energy Parties"), and First Union National Bank of
Georgia, a national banking association organized and existing under the laws of
the United States of America ("First Union"), as trustee (the "Trustee"). The
Company's obligations with respect to the Securities will be guaranteed by
Mobile Energy. Terms used but not otherwise defined herein shall have the
respective meanings assigned to them in the Indenture.
1. Each of the Mobile Energy Parties 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- 92776)
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
(other than the Application for Confidential Treatment of specified
provisions of certain Project Contracts filed as exhibits to such
registration statement); and no stop order suspending the effectiveness
of such registration statement has been issued and no proceeding for
that purpose has been initiated or, to the knowledge of either of the
Mobile Energy Parties after due inquiry, 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 and including all appendices
thereto, is hereinafter called the "Prospectus."
(b) No order preventing or suspending the use of any
Preliminary Prospectus has been issued by the Commission; 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 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 Trust Indenture Act and the rules and regulations of
the Commission thereunder.
(c) The Registration Statement does not and will not, as of
the applicable effective date of the Registration Statement and any
amendment thereto, contain an untrue statement of a material fact or
omit to state a material fact required to be
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stated therein or necessary to make the statements therein not
misleading; the Preliminary Prospectus, Subject to Completion, dated
July 20, 1995 (the "Circulated Preliminary Prospectus") 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; and the Prospectus does not and will not, as of the
applicable filing date of 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, 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 (i) made in reliance upon and in conformity
with information furnished in writing to the Mobile Energy Parties by
the Underwriters expressly for use therein or (ii) in Appendices B and
C to the Circulated Preliminary Prospectus or to the Prospectus.
(d) Neither of the Mobile Energy Parties 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 either of the Mobile Energy Parties 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 either of the
Mobile Energy Parties otherwise than as set forth or contemplated in
the Prospectus.
(e) Each of the Mobile Energy Parties has good and marketable
title in fee simple to all real property and good and marketable title
to all personal property described in the Prospectus as being 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
Mobile Energy Parties; any real property and buildings described in the
Prospectus as being held under lease by the Company are held by the
Company under valid and subsisting leases, enforceable against the
Company, with such exceptions as are not material and do not interfere
with the use made and proposed to be made of such property and
buildings by the Company; the easements, licenses and other rights
granted or to be granted to either of the Mobile Energy Parties
pursuant
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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 material services, materials or rights (including
rights of 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 only
material 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 requisite limited liability company power and
authority 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, or
as of the Time of Delivery (as defined in Section 4(a) hereof) will be,
a party 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 requisite corporate power and authority 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, or as of the Time of
Delivery will be, a party 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 Electric International,
Inc., a Delaware corporation ("Southern Electric"); each of Mobile
Energy and Southern Electric is, and as of the Time of Delivery will
be, wholly-owned by The Southern Company, a Delaware corporation
("Southern"); each of the Mobile Energy Parties has an authorized
capitalization as
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set forth in the Prospectus, and all of the outstanding equity
interests of each of the Mobile Energy Parties 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 each of the Mobile Energy
Parties will be free and clear of any security interest, mortgage,
pledge, lien, encumbrance, claim or adverse interest of any nature; and
neither of the Mobile Energy Parties has 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 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 either of the Mobile
Energy Parties is, or as of the Time of Delivery will be, a party.
(j) The Securities have been duly authorized and, when
authenticated by the Trustee in accordance with the Indenture and
purchased by the Underwriters pursuant to this Agreement, will have
been duly executed, issued and delivered and will constitute valid and
legally binding obligations of each of the Mobile Energy Parties
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 by each of the Mobile
Energy Parties and duly qualified under the Trust Indenture Act and,
when executed and delivered, will constitute a valid and legally
binding instrument, enforceable against each of the Mobile Energy
Parties in accordance with its terms, subject, as to enforceability, to
bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium and other similar laws of general applicability relating to
or affecting creditors' rights and remedies generally, to general
equity principles, whether enforcement is considered in a proceeding in
equity or law, to the discretion of the court before which any
proceeding therefor may be brought and to public policy that may limit
rights to indemnification; and the Securities and the Indenture will
conform in all material respects to the descriptions thereof in the
Prospectus.
(k) This Agreement has been duly authorized, executed and
delivered by each of the Mobile Energy Parties and constitutes a valid
and legally binding obligation of each of the Mobile Energy Parties,
enforceable against each of the Mobile Energy Parties in accordance
with its terms, subject, as to enforceability, to bankruptcy,
insolvency,
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reorganization, fraudulent conveyance, moratorium and other similar
laws of general applicability relating to or affecting creditors'
rights and remedies generally, to general equity principles, whether
enforcement is considered in a proceeding in equity or law, to the
discretion of the court before which any proceeding therefor may be
brought and to public policy or federal or state securities law that
may limit rights to indemnification.
(l) Each of the Financing Documents (other than the
Securities, the Indenture and this Agreement), which, if the form
thereof was filed as an exhibit to the Registration Statement, will be
substantially in such form, to which either of the Mobile Energy
Parties is, or as of the Time of Delivery will be, a party has been
duly authorized by such Mobile Energy Party and, when executed and
delivered by the parties thereto, will constitute a valid and legally
binding obligation of such Mobile Energy Party, enforceable against
such Mobile Energy Party in accordance with its terms, subject, as to
enforceability, to bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium and other similar laws of general applicability
relating to or affecting creditors' rights and remedies generally, to
general equity principles, whether enforcement is considered in a
proceeding in equity or law, to the discretion of the court before
which any proceeding therefor may be brought and to public policy that
may limit rights to indemnification; and the Financing Documents will
conform in all material respects to the descriptions thereof in the
Prospectus.
(m) Each of the Project Contracts to which either of the
Mobile Energy Parties is a party has been duly authorized, executed and
delivered by such Mobile Energy Party, and constitutes a valid and
legally binding obligation of such Mobile Energy Party, enforceable
against such Mobile Energy Party in accordance with its terms (other
than with respect to (i) liquidated damages, (ii) Step-In Rights (as
defined in the Master Operating Agreement), (iii) arbitration and (iv)
agreements to agree at future dates, as to which no representation or
warranty is made), subject, as to enforceability, to bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium and other
similar laws of general applicability relating to or affecting
creditors' rights and remedies generally, to general equity principles,
whether considered in a proceeding in equity or law, to the discretion
of the court before which any proceeding therefor may be brought and to
public policy that may limit rights to indemnification; the Project
Contracts conform in all material respects to the descriptions thereof
in the Prospectus; neither of the Mobile Energy Parties nor, to the
knowledge of either of the Mobile Energy Parties, any other party to
any Project Contract is in default (and, to the knowledge after due
inquiry of either of the Mobile Energy Parties, no event has occurred
that with lapse of time or notice or action by a
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third party would 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 material force majeure event has occurred and is
continuing under any Project Contract.
(n) The issue and sale of the Securities by Company, the issue
of the Guaranty by Mobile Energy, the execution, delivery and
performance by each of the Mobile Energy Parties of the Securities, the
Indenture, this Agreement and the other Financing Documents to which
either of the Mobile Energy Parties 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 either of the
Mobile Energy Parties is a party or by which either of the Mobile
Energy Parties is bound or to which any of the property or assets of
either of the Mobile Energy Parties is subject, nor will such action
result in any violation of the provisions of the Articles of
Organization of the Company or the Operating Agreement 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 either of the Mobile
Energy Parties or any of their properties; and no Governmental Approval
of any Governmental Authority having jurisdiction over either of the
Mobile Energy Parties 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
each of the Mobile Energy Parties of the Securities, the Indenture,
this Agreement and the other Financing Documents to which either of the
Mobile Energy Parties is, or as of the Time of Delivery will be, a
party, or the consummation by each of the Mobile Energy Parties 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 execution, delivery and performance by each of the
Mobile Energy Parties of the Project Contracts to which either of the
Mobile Energy Parties is, or as of the Time of Delivery will be, a
party and the consummation of the transactions contemplated thereby
will not conflict with or result in a breach or violation of any of the
material terms or provisions of, or constitute a default under, any
material
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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 is bound or to
which any of the property or assets of either of the Mobile Energy
Parties is subject, nor will such action result in any violation of the
provisions of the Articles of Organization of the Company or the
Operating Agreement or the Certificate of Incorporation or By-laws of
Mobile Energy or any material law or statute or any material order,
rule or regulation, judgment or decree of any Governmental Authority
having jurisdiction over either of the Mobile Energy Parties or any of
their properties; and no Governmental Approval (including any
Environmental Requirement) of any Governmental Authority having
jurisdiction over either of the Mobile Energy Parties or any of their
properties is required for the execution, delivery and performance by
each of the Mobile Energy Parties of the Project Contracts to which
either of the Mobile Energy Parties is, or as of the Time of Delivery
will be, a party, or the consummation by each of the Mobile Energy
Parties of the transactions contemplated thereby, except for such
Governmental Approvals as have been, or (in the ordinary course of
business without substantial delay in, or material impairment to, the
consummation by the Mobile Energy Parties of such transactions) will
be, obtained.
(p) The issue and sale of the Securities by the Company, the
issue of the Guaranty by Mobile Energy, the execution, delivery and
performance by each of the Mobile Energy Parties of the Securities, the
Indenture, this Agreement and the other Project Documents to which
either of the Mobile Energy Parties 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 Indenture Securities Collateral.
(q) When the Securities are authenticated by the Trustee in
accordance with the Indenture and purchased by the Underwriters
pursuant to this Agreement, (i) the Securities will rank pari passu
without any preference among themselves, (ii) the Liens granted under
the Security Documents will constitute valid Liens on the Indenture
Securities Collateral, (iii) the Liens on such of the Indenture
Securities Collateral (A) in which a Lien may be perfected by the
filing of a financing statement under the Uniform Commercial Code, upon
the filing of the necessary financing statements in all appropriate
jurisdictions, (B) possession of which is required to perfect the Lien
thereon, upon the possession by, in the case of the Shared Collateral,
the Collateral Agent and, in the case of the other Indenture Securities
Collateral, the Trustee and (C) in which a Lien may otherwise be
perfected under the Uniform Commercial Code, will be, in the case of
8
clauses (A), (B) (C) above, perfected and, subject to the priority of
payment of proceeds of Receivables and Fuel Inventory to the Working
Capital Facility Provider as provided in the Intercreditor Agreement
and except for Permitted Liens, superior and prior to the rights of all
other Persons now existing or hereafter arising, (iv) the Lien of the
Mortgage will constitute, except for exceptions that are set forth on
Schedule B--Section 2 of the Title Policy (to the extent that such
exceptions have not been released or subordinated prior to the Time of
Delivery), a valid first priority Lien of record on all of the
Mortgaged Property (as defined in the Mortgage) and (v) the
Underwriters will have good and marketable title to the Securities,
subject to no defenses by either of the Mobile Energy Parties (all of
which are hereby waived).
(r) The Company is not in violation of its Articles of
Organization or the Operating Agreement and Mobile Energy is not in
violation of its Certificate of Incorporation or Bylaws; and neither of
the Mobile Energy Parties is in default in the performance or
observance of any obligation, covenant or condition contained in any
indenture, mortgage, deed of trust, loan agreement, lease or other
agreement or instrument to which it is, or as of the Time of Delivery
will be, a party or by which it or any of its properties may be bound,
which default would reasonably be expected to have a material adverse
effect on either of the Mobile Energy Parties.
(s) The statements set forth in the Prospectus, insofar as
they purport to constitute summaries of the terms of the Securities,
the provisions of the Project Documents and Debt of the Company
referred to therein and the provisions of the laws and the other
regulatory and environmental matters referred to therein, are accurate
and fair.
(t) There are no legal or governmental proceedings pending to
which either of the Mobile Energy Parties is a party or to which any of
the properties of either of the Mobile Energy Parties is subject that
(i) if determined adversely to either of the Mobile Energy Parties
would individually or in the aggregate have a material adverse effect
on the business (financial or otherwise), properties or business
prospects of either of the Mobile Energy Parties or materially and
adversely affect the ability of either of the Mobile Energy Parties 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 either of the
Mobile Energy Parties is, or as of the Time of Delivery will be, a
party and, to the knowledge of either of the Mobile Energy Parties
after due inquiry, no such
9
proceedings are threatened or contemplated by any Governmental
Authority or threatened by others.
(u) The assumptions described by Stone & Webster Engineering
Corporation (the "Independent Engineer") as assumptions underlying the
financial projections of annual revenues and expenses of the Company
during the term of the Securities, including debt service coverage
ratios (the "Projections"), and contained in the report with respect to
certain technical, environmental and economic aspects of the Energy
Complex prepared by the Independent Engineer, which is included in the
Prospectus as Appendix B thereto (the "Independent Engineer's Report"),
are, in the opinion of each of the Mobile Energy Parties, reasonable;
the information provided by each of the Mobile Energy Parties to the
Independent Engineer as the basis for the Projections has been prepared
in good faith by the Mobile Energy Parties; neither of the Mobile
Energy Parties 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, taken
as a whole, and are not so set forth; the Projections have been
reviewed by, and accepted as having a reasonable basis and included in
the Prospectus in good faith by, each of the Mobile Energy Parties.
(v) Neither of the Mobile Energy Parties believes that the
assumptions described by Jaakko Poyry Consulting, Inc. (the "Paper
Consultant") as part of 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 the Paper Consultant, which is included in the Prospectus
as Appendix C thereto (the "Paper Consultant's Report"), are not
reasonable; the information provided by each of the Mobile Energy
Parties to the Paper Consultant in connection with the Mill Assessment
has been prepared in good faith by the Mobile Energy Parties; neither
of the Mobile Energy Parties 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
Mill Assessment, taken as a whole, and are not so set forth; the Mill
Assessment has been reviewed by, and accepted as having a reasonable
basis and included in the Prospectus in good faith by, each of the
Mobile Energy Parties.
(w) 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 each of the Mobile Energy Parties with a
reasonable basis and in good faith.
(x) Except as disclosed in the Prospectus, (i) each of
the Mobile Energy Parties, Southern and Southern Electric and,
to the knowledge of either of the Mobile Energy Parties,
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Southern Company Services, Inc., an Alabama corporation ("SCS"), 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 of the Mobile Energy Parties,
Southern, Southern Electric, SCS, Scott, S.D. Warren and such other
parties, a "Project Participant" and, collectively, the "Project
Participants") has complied and is complying in all material respects
with all applicable environmental laws pertaining to the Energy Complex
and the Site, (ii) there are no circumstances that would prevent or
interfere in any material respect with the abilities of (A) to the
knowledge of either of the Mobile Energy Parties after due inquiry, the
Mobile Energy Parties and Southern Electric to operate and maintain the
Energy Complex or (B) to the knowledge of either of the Mobile Energy
Parties, Scott and S.D. Warren to operate and maintain the Mills as
contemplated by the Project Documents in material compliance with all
applicable environmental laws, (iii) all material Governmental
Approvals required under applicable environmental laws to operate the
Energy Complex are identified in the Prospectus, (iv) there is no
governmental claim pending or, to the knowledge of either of the Mobile
Energy Parties after due inquiry, threatened against either of the
Mobile Energy Parties, Southern or Southern Electric or, to the
knowledge of either of the Mobile Energy Parties, pending or threatened
against 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 either of the Mobile
Energy Parties, (v) to the knowledge of either of the Mobile Energy
Parties after due inquiry, there is no environmental law proposed or
expected to be proposed that would be material to the business
(financial or otherwise), properties or business prospects of either of
the Mobile Energy Parties, (vi) to the knowledge of either of the
Mobile Energy Parties after due inquiry, the Site does not contain or
have deposited thereon any hazardous material in excess of permitted
levels, concentrations, standards or other limitations under applicable
environmental laws, (vii) to the knowledge of either of the Mobile
Energy Parties after due inquiry, 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 applicable environmental laws could
provide the basis to incur any material obligation, liability, loss,
claim, judgment, discharge, penalty, fee or other cost arising from (A)
the presence or release into the environment of any hazardous material
or (B) any violation of any applicable environmental law and (viii) to
the knowledge of either of the Mobile Energy Parties after due inquiry,
(A) no underground storage tanks are located on the Site, (B) there is
no asbestos contained in, forming part of or contaminating any part of
the Site, (C) no poly chlorinated biphenyls are used or stored at or
contaminate any part of the
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Site and (D) no nuclear material has been brought onto the Site that,
in the case of each of clause (A) through (D) above, would be material
to the business (financial or otherwise), properties or business
prospects of either of the Mobile Energy Parties; and, except as so
disclosed in the Prospectus, none of such environmental matters, either
individually or in the aggregate, has resulted in or will result in a
material adverse change in the business (financial or otherwise) of the
Mobile Energy Parties. For purposes hereof, the term "applicable
environmental laws" means those federal, state or local environmental
laws, ordinances and regulations duly adopted, promulgated, effective
and applicable to the Energy Complex as of the date hereof or the Time
of Delivery (as the case may be).
(y) Neither of the Mobile Energy Parties is, or at the Time of
Delivery 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").
(z) Neither First Union, in its capacity as the Trustee and
the Tax-Exempt Indenture Trustee, or Bankers Trust (Delaware), a
Delaware banking corporation ("Bankers Trust"), in its capacity as the
Collateral Agent, nor any holder of the Securities will be as of the
Time of Delivery (under applicable law as in effect as of the Time of
Delivery and solely as a result of the ownership, maintenance and
operation of the Energy Complex by the Mobile Energy Parties as
described in the Prospectus, the purchase and ownership of the
Securities or any other transaction contemplated by the Financing
Documents (other than the exercise of remedies thereunder)) 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
of the Mobile Energy Parties is, or at the Time of Delivery 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
either of the Mobile Energy Parties is, or at the Time of Delivery will
be, 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").
(aa) 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
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due and payable, except to the extent there is a Good Faith Contest
thereof by the Mobile Energy Parties.
(bb) 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 (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 any such event
or condition set forth in clauses (i) through (v) above, together with
all such other events or conditions, either of the Mobile Energy
Parties has incurred or is reasonably likely to incur, or any other
member of such controlled group has incurred or is reasonably likely to
incur a liability for which such Mobile Energy Party would be subject
to, a liability that is material in relation to the financial position
of such Mobile Energy Party.
(cc) 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.
(dd) Neither the Mobile Energy Parties nor their respective
affiliates does business with the government of Cuba within the meaning
of Section 517.075, Florida Statutes.
(ee) Arthur Andersen LLP, who have certified certain
consolidated financial statements of Mobile Energy, are independent
public accountants with respect to the Mobile Energy Parties 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 99.125% of the principal amount thereof, 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
13
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,
at the option of the Company, certified official bank check or checks, payable
to the order of the Company in federal (same day) funds, or wire transfer of
federal (same day) funds to an account designated by the Company, 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
10:00 a.m., New York City time, on August 24, 1995 or such other time and date
as the Underwriters and the Mobile Energy Parties 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 generally
authorized or obligated by law or executive order to close.
5. Each of the Mobile Energy Parties 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
14
reasonably disapproved by Goldman, Sachs & Co., on behalf of 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 United States
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
neither of the Mobile Energy Parties shall 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 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
15
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 Mobile Energy
Parties (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 Mobile Energy Parties, 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 either of the Mobile Energy Parties (other than
obligations in respect of 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 three years from the effective date of
the Registration Statement, to (i) furnish to the Underwriters copies
of all reports or other communications (financial or other) furnished
generally to securityholders (in their capacities as such and not in
their capacities as directors, officers or managers (as the case may
be) of either of the Mobile Energy Parties) of either of the Mobile
Energy Parties and (ii) deliver to the Underwriters 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 either of the Mobile
Energy Parties 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.
(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."
16
(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, each of the Mobile Energy Parties
covenant and agree with the several Underwriters that, as between the
Underwriters and the Mobile Energy Parties, the Mobile Energy Parties will pay
or cause to be paid, and will hold the Underwriters harmless against, the
following: (a) the fees, disbursements and expenses of counsel and accountants
for each of the Mobile Energy Parties 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; (b)
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; (c) 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; (d) any fees charged by securities rating
services for rating the Securities; (e) 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; (f) the cost of preparing the Securities;
(g) the fees, disbursements and expenses of each of the Trustee, the Tax-Exempt
Indenture Trustee and the Collateral Agent and any agents thereof (or any agent
of either of the Mobile Energy Parties appointed under the Financing Documents)
and the fees and disbursements of their respective counsel; (h) the fees,
disbursements and expenses of counsel for the Underwriters and all other
expenses incurred by the Underwriters in connection with the offering of the
Securities, including, without limitation, advertising, marketing and other
out-of-pocket expenses; (i) 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); (j) 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 (k) all other costs and
expenses incident to the performance of the obligations of either
17
of the Mobile Energy Parties hereunder that are not otherwise specifically
provided for in this Section 6.
7. The obligations of the Underwriters hereunder shall be subject to
the condition that all representations and warranties and other statements of
each of the Mobile Energy Parties herein are, at and as of the Time of Delivery,
true and correct, to the condition that each of the Mobile Energy Parties 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) Each of Balch & Bingham, Latham & Watkins and Troutman
Sanders LLP (as the case may be), counsel for the Mobile Energy
Parties, shall have furnished to the Underwriters their written opinion
or opinions, dated the Time of Delivery, substantially to the effect,
together with such changes as to legal matters as may be acceptable to
counsel for the Underwriters, that:
(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 requisite limited
liability company power and authority 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 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 requisite
18
corporate power and authority 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 and to consummate the transactions contemplated hereby
and thereby, including the issuance of the Guaranty as
provided in the Indenture;
(iii) under the laws of each other jurisdiction in
which either of the Mobile Energy Parties, to the knowledge of
such counsel, owns or leases properties or conducts any
business so as to require qualification as a foreign
corporation for the transaction of business, each such Mobile
Energy Party has been, based solely upon certificates of
public officials, duly qualified as a foreign corporation and
is in good standing 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 Mobile Energy Parties has an authorized
capitalization as set forth in the Prospectus; all of the
outstanding equity interests of each of the Mobile Energy
Parties have been duly authorized and validly issued, are
fully paid and non-assessable and are not subject to any
preemptive or similar rights; to the knowledge of such
counsel, the outstanding equity interests of each of the
Mobile Energy Parties are free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or
adverse interest of any nature; and, to the knowledge of such
counsel, neither of the Mobile Energy Parties has 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 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 knowledge of such counsel based solely
upon a review of the public docket records of the state and
federal courts located in New York County, New York and Mobile
County, Alabama, the state courts located in DeKalb County,
Georgia and the federal courts located in Fulton County,
Georgia, and other than as set forth in the Prospectus, there
are no legal or governmental proceedings pending or threatened
to which either of the Mobile Energy Parties is a party, or of
which any property of either of the Mobile Energy Parties is
the subject, that (A) could reasonably be expected to have a
material adverse effect on either of the Mobile Energy
19
Parties or any of their respective properties or materially
and adversely affect the ownership, use, possession, operation
or maintenance of the Energy Complex or 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 either of the Mobile Energy Parties is a party;
(vi) this Agreement has been duly authorized,
executed and delivered by each of the Mobile Energy
Parties;
(vii) the Securities have been duly authorized,
executed and delivered by the Company and (with respect to the
Guaranty) Mobile Energy and, when issued and authenticated by
the Trustee in accordance with the Indenture and purchased by
the Underwriters pursuant to this Agreement, will be valid and
binding obligations of the Mobile Energy Parties, enforceable
against such Mobile Energy Party in accordance with their
terms, and are entitled to the benefits provided by the
Indenture;
(viii) the Indenture has been duly authorized, executed
and delivered by each of the Mobile Energy Parties and is the
valid and binding agreement of such Mobile Energy Party,
enforceable against such Mobile Energy Party in accordance
with its terms; and the Indenture has been duly qualified
under the Trust Indenture Act;
(ix) each of the Financing Documents (other than the
Securities, this Agreement and the Indenture) to which either
of the Mobile Energy Parties is a party has been duly
authorized, executed and delivered by such Mobile Energy Party
and (assuming due authorization, execution and delivery by the
other parties thereto) is the valid and binding obligation of
such Mobile Energy Party, enforceable against such Mobile
Energy Party in accordance with its terms;
(x) each of the Project Contracts to which either of
the Mobile Energy Parties is a party has been duly authorized,
executed and delivered by such Mobile Energy Party and is the
valid and binding obligation of such Mobile Energy Party,
enforceable against such Mobile Energy Party in accordance
with its terms;
(xi) the issue and sale of the Securities by the
Company, the issue of the Guaranty by Mobile Energy and the
execution and delivery by each of the Mobile Energy Parties of
the Securities, the Indenture, this Agreement and the other
Financing Documents and the Project Contracts to which either
of the Mobile Energy Parties
20
is a party and the performance of the obligations of the
Mobile Energy Parties thereunder (including the grant by the
Company of the Liens upon the Collateral pursuant to the
Security Documents), do not and will not (A) violate any
federal, New York, Alabama or Georgia statute, rule or
regulation applicable to either of the Mobile Energy Parties
or any of their respective properties (including, without
limitation, Regulation U or X of the Board of Governors of the
Federal Reserve System), (B) violate the provisions of the
Articles of Organization of the Company or the Operating
Agreement or the Certificate of Incorporation or By-laws of
Mobile Energy, (C) result in the breach or violation of or a
default under any of the Project Documents filed as an exhibit
to the Registration Statement, (D) to the knowledge of such
counsel, require any Governmental Approval of any Governmental
Authority having jurisdiction over either of the Mobile Energy
Parties or any of their respective properties, except for (1)
such Governmental Approvals as may be required under state
securities or blue sky laws in connection with the purchase
and distribution of the Securities by the Underwriters (as to
which such counsel need express no opinion) and (2) the
registration of the Securities and the Guaranty under the Act,
the qualification of the Indenture under the Trust Indenture
Act, the approval of the Commission under the PUHCA and such
other Governmental Approvals that shall have been obtained on
or prior to the Time of Delivery or, in the case of the
Project Contracts, are expected to be obtained on or prior to
the date any such other Governmental Approval is required in
the ordinary course of business without undue burden or delay
or (E) result in the imposition of any Liens (other than
Permitted Liens) on any of the Indenture Securities
Collateral;
(xii) neither First Union, in its capacity as the
Trustee and the Tax-Exempt Indenture Trustee, or Bankers
Trust, in its capacity as the Collateral Agent, nor any Holder
of the Securities will be as of the Time of Delivery (under
applicable law as in effect as of the Time of Delivery and
solely as a result of the ownership, maintenance and operation
of the Energy Complex by the Mobile Energy Parties as
described in the Prospectus, the purchase and ownership of the
Securities or any other transaction contemplated by the
Financing Documents (other than the exercise of remedies
thereunder)) subject to regulation under the FPA or by the
State of Alabama Public Service Commission; neither of the
Mobile Energy Parties is subject to rate regulation under
federal law or the laws of the State of Alabama; and none of
the execution, delivery and performance by each of the Mobile
Energy Parties of all the provisions of the Project Documents
to which such
21
Mobile Energy Party is a party will violate the Alabama
Territorial Law;
(xiii) an Alabama state court or federal court sitting
in the State of Alabama will recognize and give effect to the
governing law provisions of any Financing Document that
provides for the application of the law of a jurisdiction
other than the State of Alabama if such provision is
reasonable, if the parties and transaction bear a reasonable
relationship to the state whose law is being applied and if
there are no Alabama public policy reasons not to enforce such
provision.
(xiv) the provisions of the Security Agreement are
effective to create valid security interests in favor of the
Collateral Agent, for the ratable benefit of the Senior
Secured Parties (subject to the priority of payment of
proceeds of Receivables and Fuel Inventory to the Working
Capital Facility Provider as provided in the Intercreditor
Agreement), in the Shared Collateral; the provisions of the
Indenture are effective to create valid security interests in
favor of the Trustee, for the ratable benefit of the Holders
of the Securities, in the Indenture Securities Collateral
other than the Shared Collateral; and the Liens of the
Security Agreement and the Indenture on such of the Indenture
Securities Collateral in which a Lien may be perfected by the
filing of a financing statement under the Uniform Commercial
Code, upon the filing of the necessary financing statements in
all appropriate jurisdictions, will be perfected.
(xv) the Security Documents to be recorded with the
appropriate filing offices in the State of Alabama and the
county of Mobile, Alabama and in the State of Georgia and the
county of DeKalb, Georgia are in appropriate form for filing
under the laws of the States of Alabama and Georgia, as
applicable; the Mortgage, upon such recording, will constitute
a valid mortgage Lien on all of the Mortgaged Property that
can be mortgaged under the laws of the State of Alabama; the
foreclosure of the Mortgage will not in any manner restrict,
affect or impair the liability of either of the Mobile Energy
Parties with respect to any of the Senior Debt or the rights
and remedies of the Senior Secured Parties with respect to the
foreclosure or enforcement of any other security interests or
liens securing such Senior Debt (to the extent any of such
Senior Debt remains unpaid after application of the proceeds
of such foreclosure of the Mortgage); and, other than fees
specified in such opinion, no taxes or recording or filing
fees will be incurred by either of the Mobile Energy Parties,
the Trustee or the Collateral Agent as a result of the
execution, recordation or
22
filing in such offices of any of the Security Documents,
including any Financing Statements;
(xvi) 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;
(xvii) neither of the Mobile Energy Parties is an
"investment company" or an entity "controlled" by an
"investment company," as such terms are defined in the
Investment Company Act;
(xviii) each of the Mobile Energy Parties is a
"subsidiary company" of a "holding company," as such
terms are defined in the PUHCA;
(xix) the statements set forth under (A) "Summary--The
Company," "--The Offering," "--Additional Financing
Arrangements," "--Intercreditor Arrangements" and --Flow of
Funds," (B) "Business--Status of Governmental Approvals,"
"--The Cluster Rule and the Combustion Rule," "--Environmental
Conditions," "--Environmental Indemnification" and "--Legal
Proceedings," (C) "Summary of Principal Project Contracts,"
(D) "Role of the Independent Engineer," (E) "Description of
the First Mortgage Bonds," (F) "Description of Principal
Financing Documents" and (G) "Description of Other Debt and
Certain Lease Arrangements" in the Prospectus, insofar as such
statements constitute summaries of the terms of the
Securities, legal matters, documents or proceedings, are
accurate in all material respects; and
(xx) the Registration Statement and the Prospectus and
any further amendments and supplements thereto made by either
of the Mobile Energy Parties prior to the Time of Delivery
(other than the financial statements and related schedules and
other financial data included therein and any statistical data
included in the Independent Engineer's Report or otherwise
attributable to the Independent Engineer and in the Paper
Consultant's Report or otherwise attributable to the Paper
Consultant, as to which such counsel need express no opinion)
comply as to form in all material respects with the
requirements of the Act and the Trust Indenture Act and the
rules and regulations of the Commission thereunder; although
they do not pass upon, or assume any responsibility for, the
accuracy, completeness or fairness of the statements contained
in the Registration Statement or the Prospectus or any such
amendment or supplement, except for those referred to in the
opinion in paragraph (xix) of this Section 7(c) (relying as to
materiality to a large extent upon the statements of officers
and other representatives of the Mobile Energy Parties),
nothing has come to such counsel's attention
23
that causes such counsel to believe that (other than with
respect to the financial statements and related schedules and
other financial data included therein and any statistical data
included in the Independent Engineer's Report or otherwise
attributable to the Independent Engineer and in the Paper
Consultant's Report or otherwise attributable to the Paper
Consultant, as to which such counsel need express no belief)
the Registration Statement or any further amendment thereto
made by either of the Mobile Energy Parties prior to the Time
of Delivery, at the time it became effective, 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 the
Prospectus or any further amendment or supplement thereto made
by either of the Mobile Energy Parties prior to the Time of
Delivery, as of its date and the Time of Delivery, contained
or contains any untrue statement of a material fact or omitted
or omits to state a material fact necessary in order to make
the statements made, 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 (other than any
amendment thereto filed solely to remove from registration any
of securities registered thereunder that remain unsold at the
termination of the offering of the Securities) 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.
For purposes of this Section 7(c), "Financing Documents" means
the Securities, this Agreement, the Security Documents (to the extent
relating to or securing the Securities), the Working Capital Facility
and any Note thereunder (as defined therein) and the Continuing
Disclosure Agreement. In rendering such opinion or opinions, counsel
for the Mobile Energy Parties may (A) rely as to matters of fact, to
the extent deemed proper, on certificates of responsible officers of
the Mobile Energy Parties and the Trustee and of public officials, (B)
with respect to paragraphs (vii) through (x) of this Section 7(c),
subject the enforceability of the matters set forth therein to
bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium and other similar laws of general applicability relating to
or affecting creditors' rights and remedies generally, to general
equitable principles, whether enforcement is considered in a proceeding
in equity or law, and to the discretion of the court before which any
proceeding therefor may be brought, (C) with respect to paragraph (x)
of this Section 7(c), exclude from the enforceability of the matters
set forth therein provisions relating to liquidated damages, Step-In
Rights, arbitration
24
and agreements to agree at future dates, (D) include such further
exceptions, qualifications, limitations and assumptions with respect to
the matters set forth therein as may be acceptable to counsel for the
Underwriters, (E) rely upon the opinion of any other counsel as to
matters involving the application of laws other than the laws of the
States of Alabama, Georgia and New York, provided that such other
counsel and its opinion must be satisfactory to the Underwriters and
that such opinion must be addressed and delivered to the Underwriters
at or prior to the Time of Delivery, (F) with respect to paragraph
(xvi) of this Section 7(c), provide a reasoned analysis as the basis
for the matters set forth therein and (G) with respect to paragraph
(xx) of this Section 7(c), state that the statements set forth therein
are based upon such counsel's participation in conferences with
officers and other representatives of, and other counsel for, the
Mobile Energy Parties, representatives of the independent public
accountants for the Mobile Energy Parties and representatives of and
counsel for the Underwriters and 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. Such
opinion or opinions shall be rendered to the Underwriters at the
request of each of the Mobile Energy Parties and shall so state
therein. Any legal opinion delivered on or prior to the Time of
Delivery to any party other than the Underwriters by counsel for the
Mobile Energy Parties in connection with the satisfaction of conditions
to any of the other Financing Documents shall be accompanied by a
letter from such counsel stating that the Underwriters may rely upon
such opinion as if it were also addressed to them.
(d) Troutman Sanders LLP, 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, substantially to the
effect, together with such changes as to legal matters as may be
acceptable to counsel for the Underwriters, that:
(i) Southern has been duly incorporated and is
validly existing as a corporation in good standing under the
laws of the State of Delaware, with power and authority
(corporate and other) to own its properties and conduct its
business, to execute, deliver and perform its obligations
under each of the Southern Guaranties provided at the Time of
Delivery and the Mill Owner Maintenance Reserve Account
Agreement (the "Southern Credit Support Documents") and to
consummate the transactions contemplated thereby;
25
(ii) each of such Southern Guaranties has been duly
authorized, executed and delivered by Southern and (assuming
due authorization, execution and delivery by each other party
thereto) is the valid and binding obligation of Southern,
enforceable against Southern in accordance with its terms,
subject, as to enforceability, to bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium and other
similar laws of general applicability relating to or affecting
creditors' rights and remedies generally as such laws would
apply in the event of the bankruptcy, insolvency or
reorganization of, or other similar occurrence with respect
to, Southern, to general equity principles, whether considered
in a proceeding in equity or law, and to the discretion of the
court before which any proceeding therefor may be brought;
(iii) the Mill Owner Maintenance Reserve Account
Agreement has been duly authorized, executed and delivered by
Southern and (assuming due authorization, execution and
delivery by each other party thereto) is the valid and binding
obligation of Southern, enforceable against Southern in
accordance with its terms, subject, as to enforceability, to
bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium and other similar laws of general applicability
relating to or affecting creditors' rights and remedies
generally, to general equity principles, whether considered in
a proceeding in equity or law, and to the discretion of the
court before which any proceeding therefor may be brought;
(iv) the execution, delivery and performance by
Southern of each of the Southern Credit Support Documents 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 Southern is bound or to which any of the
property or assets of Southern 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 properties; and no consent, approval,
authorization, order, registration or qualification with any
such Governmental Authority is required for the consummation
by Southern of the transactions contemplated by any of the
Southern Credit Support Documents, except for such consents,
approvals, authorizations, orders,
26
registrations and qualifications that have been obtained;
and
(v) to the knowledge of such counsel, except as
otherwise disclosed in Southern's Annual Report on Form 10-K
for the year ended December 31, 1994 and in Southern's
Quarterly Report on Form 10-Q for each of the quarterly
periods ended March 31, 1995 and June 30, 1995, 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 Credit Support Documents, or any part thereof, or
the transactions contemplated by any of the Southern Credit
Support Documents or (B) questions the validity,
enforceability or performance of any Project Document to which
it is party.
In rendering such opinion or opinions, counsel for Southern
may (A) rely as to matters of fact, to the extent deemed proper, on
certificates of responsible officers of Southern and its subsidiaries
and of public officials and (B) rely upon the opinion of any other
counsel as to matters involving the application of laws other than the
laws of the States of Alabama, Georgia and New York, provided that such
other counsel and its opinion must be satisfactory to the Underwriters
and that such opinion must 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 each
of the Mobile Energy Parties and shall so state therein. Any legal
opinion delivered on or prior to the Time of Delivery to any party
other than the Underwriters by counsel for Southern in connection with
the satisfaction of conditions to any of the other Financing Documents
to the extent relating to, or securing, the Securities shall be
accompanied by a letter from such counsel stating that the Underwriters
may rely upon such opinion as if it were also addressed to them.
(e) Counsel for each of Southern Electric, SCS, the IDB, Scott
and S.D. Warren (each, a "Consenting Party"), which shall be acceptable
to the Underwriters, shall have furnished to the Underwriters their
written opinion or opinions, dated the Time of Delivery, substantially
to the effect, together with such changes as to legal matters as may be
acceptable to counsel for the Underwriters, that:
(i) such Consenting Party has been duly formed and is
validly existing and in good standing under the laws
27
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
Consenting Party is a party and such Consenting Party's
Consent to Assignment has been duly authorized, executed and
delivered by such Consenting Party and constitutes a valid and
binding obligation of such Consenting Party, enforceable
against such Consenting Party in accordance with its terms,
subject, as to enforceability, to bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium and other
similar laws of general applicability relating to or affecting
creditors' rights and remedies generally, to general equity
principles, whether considered in a proceeding in equity or
law, to the discretion of the court before which any
proceeding therefor may be brought and to public policy that
may limit rights to indemnification and except that, with
respect to such opinions of counsel for each of the Mill
Owners, no opinion need be given as to the enforceability of
provisions of the Project Contracts relating to (A) liquidated
damages, (B) Step-In Rights, (C) arbitration and (D)
agreements to agree at future dates; and
(iii) the execution, delivery and performance by such
Consenting Party 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 in any material
respect and will not in any material respect 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 material agreement or instrument to which such
Consenting Party is bound or to which any of the property or
assets of the Consenting Party is subject, nor did or will
such action result in any violation of the provisions of the
organizational documents of such Consenting Party; and no
consent, approval, authorization, order, registration or
qualification of any Governmental Authority is required for
the consummation by such Consenting Party of the transactions
contemplated by the Project Contracts to which it is a party
and its Consent to Assignment.
For purposes of this Section 7(e) with respect to such
opinions of counsel for each of the Mill Owners, "Project Contracts"
shall mean the Master Operating Agreement, the Energy Services
Agreements, the Water Agreement, the Boiler Ash Disposal Agreement, the
Environmental Indemnity
28
Agreements, the Lease and the Supplementary Lease. In rendering such
opinion or opinions, counsel for such Consenting Party may (A) rely as
to matters of fact, to the extent deemed proper, on certificates of
responsible officers of such Consenting Party and of public officials
and (B) rely upon the opinion of any other counsel, provided that such
other counsel and its opinion must be satisfactory to the Underwriters
and that such opinion must 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 each
of the Mobile Energy Parties and shall so state therein. Any legal
opinion delivered to any party other than the Underwriters by counsel
for such Consenting Party in connection with the satisfaction of the
conditions precedent to the effectiveness of any of the other Financing
Documents to the extent relating to, or securing, the Securities shall
be accompanied by a letter from such counsel stating that the
Underwriters may rely upon such opinion as if it were also addressed to
them.
(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, substantially to the
effect, together with such changes as to legal matters as may be
acceptable to counsel for the Underwriters, that:
(i) First Union has been duly formed and is validly
existing as a national banking association, 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 Indenture Trustee, as the case may be, and
constitutes a valid and binding obligation of First Union, in
such capacity, enforceable against First Union in accordance
with its terms, subject, as to enforceability, to bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium
and other similar laws of general applicability relating to or
affecting creditors' rights and remedies generally, to general
equity principles, whether considered in a proceeding in
equity or law, and to the discretion of the court before which
any proceeding therefor may be brought;
(iii) the execution, delivery and performance by
First Union, in its capacity as the Trustee and the Tax-
Exempt Indenture Trustee, as the case may be, of the
29
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, to the knowledge of such counsel, any order, rule or
regulation, judgment or decree of any Governmental Authority
having jurisdiction over First Union; and, to the knowledge of
such counsel, 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
Indenture Trustee, respectively, thereunder and by the
Intercreditor Agreement to be accepted by the Trustee and the
Tax-Exempt Indenture Trustee thereunder.
In rendering such opinion or opinions, counsel for First Union
may (A) rely as to matters of fact, to the extent deemed proper, on
certificates of responsible officers of First Union and of public
officials and (B) rely upon the opinion of any other counsel, provided
that such other counsel and its opinion must be satisfactory to the
Underwriters and that such opinion must 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 each
of the Mobile Energy Parties 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, substantially
to the effect, together with such changes as to legal matters as may be
acceptable to counsel for the Underwriters, that:
(i) Bankers Trust 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; and Bankers Trust is duly authorized and empowered to
exercise trust powers under the laws of the States of Alabama,
Delaware and New York;
(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
30
binding obligation of Bankers Trust, in such capacity,
enforceable against Bankers Trust in accordance with its
terms, subject, as to enforceability, to bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium
and other similar laws of general applicability relating to or
affecting creditors' rights and remedies generally, to general
equity principles, whether considered in a proceeding in
equity or law, and to the discretion of the court before which
any proceeding therefor may be brought; and
(iii) no consent, approval, authorization, order,
registration or qualification of any Governmental Authority of
the State of Alabama, Delaware or New York 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 (other than, under the laws of the State of
Alabama, the exercise of certain remedies thereunder, but
including the foreclosure of the Liens of the Mortgage and the
Security Agreement).
In rendering such opinion or opinions, counsel for Bankers
Trust may (A) rely as to matters of fact, to the extent deemed proper,
on certificates of responsible officers of Bankers Trust and of public
officials and (B) rely upon the opinion of any other counsel, provided
that such other counsel and its opinion must be satisfactory to the
Underwriters and that such opinion must 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 each
of the Mobile Energy Parties and shall so state therein.
(h) French counsel for Banque Paribas (the "Bank"), which
shall be acceptable to the Underwriters, shall have furnished to the
Underwriters their written opinion or opinions, dated the Time of
Delivery, substantially to the effect, together with such changes as to
legal matters as may be acceptable to counsel for the Underwriters,
that:
(i) the Bank is a banking corporation duly
organized and 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;
(ii) the Tax-Exempt Debt Service Reserve Account
Letter of Credit deposited in the Tax-Exempt Debt Service
Reserve Account at or prior to the Time of Delivery (the
"Letter of Credit") has been duly authorized, executed and
delivered by the Bank and constitutes, under the laws
31
of France, a valid and binding obligation of the Bank, ranking
pari passu with the Bank's other deposit obligations and
unsecured debt except for the obligations given preference
under applicable law, enforceable against the Bank in
accordance with its terms, subject, as to enforceability, to
bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium and other similar laws of general applicability
relating to or affecting creditors' rights and remedies
generally as such laws would apply in the event of the
bankruptcy, insolvency or reorganization of, or other similar
occurrence with respect to, the Bank, to general equity
principles, whether considered in a proceeding in equity or
law, and to the discretion of the court before which any
proceeding therefor may be brought;
(iii) each of the Financing Documents (other than the
Letter of Credit) to which the Bank is a party has been duly
authorized by the Bank and constitutes, under the laws of
France, a valid and binding obligation of the Bank, ranking
pari passu with the Bank's other deposit obligations and
unsecured debt except for the obligations given preference
under applicable law, enforceable against the Bank in
accordance with its terms, subject, as to enforceability, to
bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium and other similar laws of general applicability
relating to or affecting creditors' rights and remedies
generally, to general equity principles, whether considered in
a proceeding in equity or law, and to the discretion of the
court before which any proceeding therefor may be brought;
(iv) the execution, delivery and performance by the
Bank, acting through the New York Branch, of the Financing
Documents to which it is a party and the consummation of the
transactions contemplated thereby do not result in any
violation of the provisions of the organizational documents of
the Bank or any law or statute of France or any rule or
regulation of any Governmental Authority of France having
jurisdiction over the Bank or, to the knowledge of such
counsel, any order, judgment or decree of any court of France
or any such Governmental Authority; and no consent, approval,
authorization, order, registration or qualification of any
such Governmental Authority is required for the consummation
by the Bank of the transactions contemplated by the Financing
Documents to which it is a party;
(v) a final and conclusive judgment obtained in the
United States, which is not subject to appeal and is
enforceable in the United States, with respect to payment
obligations of the Bank under the Financing Documents to which
it is a party, would be enforced upon request by
32
the competent courts of France without a review of the merits,
provided that the applicable requirements of the French Code
of Civil Procedure are satisfied, including, in particular,
that service of complaints filed with courts of competent
jurisdiction in the United States was properly effected on the
Bank, that fundamental procedural rights of the parties are
observed and that such final and conclusive judgment of a
court of competent jurisdiction of the United States is not
contrary to public order or good morals in France (provided
that such counsel shall not have any reason to believe that
the transactions contemplated by such Financing Documents are
contrary to public order or good morals in France);
(vi) in the event that the Bank fails to honor its
obligations under any of the Financing Documents to which it
is a party, other than as a result of compliance with then
applicable laws, regulations, directives or orders of
appropriate Governmental Authorities of the United States,
upon proper demand to the New York Branch in compliance with
the requirements of such Financing Documents, the Bank would
have a direct and general obligation to make payments in
accordance with such Financing Documents;
(vii) the choice of law provisions of the Financing
Documents to which the Bank is a party are valid under the
laws of France and a court in France would uphold such choice
of law in a suit brought in a court of competent jurisdiction
in France;
(viii) the Bank is subject to commercial law in
France and is generally subject to suit and neither it nor any
of its property or revenues enjoys any right of immunity from
any judicial proceeding in France; and
(ix) there is no fee, tax or duty or similar impost
of the government of France or any Governmental Authority
thereof on account of which any amount is required to be
withheld or deducted from payments to be made by the Bank
under the Financing Documents to which it is a party.
In rendering such opinion or opinions, such counsel for the
Bank may rely as to matters of fact, to the extent deemed proper, on
certificates of responsible officers of the Bank and of public
officials. Such opinion or opinions shall be rendered to the
Underwriters at the request of each of the Mobile Energy Parties and
shall so state therein.
(i) Simpson Thacher & Bartlett, counsel for the New York
Branch of the Bank (the "New York Branch"), shall have furnished to the
Underwriters their written opinion or opinions, dated the Time of
Delivery, substantially to the
33
effect, together with such changes as to legal matters as may be
acceptable to counsel for the Underwriters, that:
(i) the New York Branch is licensed by the
Superintendent of Banks of the State of New York and qualified
to do business as a New York branch of the Bank in accordance
with the provisions of Article V of the Banking Law of the
State of New York; the New York Branch has the power and
authority under such Article V to execute, deliver and perform
its obligations under the Financing Documents to which it is a
party;
(ii) the Letter of Credit has been duly authorized,
executed and delivered by the Bank and constitutes a valid and
binding obligation of the Bank, enforceable against the Bank
in accordance with its terms, subject, as to enforceability,
to bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium and other similar laws of general
applicability relating to or affecting creditors' rights and
remedies generally as such laws would apply in the event of
the bankruptcy, insolvency or reorganization of, or other
similar occurrence with respect to, the Bank, to general
equity principles, whether considered in a proceeding in
equity or law, to the discretion of the court before which any
proceeding therefor may be brought and to possible judicial
application of foreign laws or foreign governmental or
judicial action affecting creditors' rights;
(iii) each of the Financing Documents (other than the
Letter of Credit) to which the New York Bank is a party has
been duly authorized, executed and delivered by the Bank and
constitutes a valid and binding obligation of the Bank,
enforceable against the Bank in accordance with its terms,
subject, as to enforceability, to bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium and other
similar laws of general applicability relating to or affecting
creditors' rights and remedies generally, to general equity
principles, whether considered in a proceeding in equity or
law, to the discretion of the court before which any
proceeding therefor may be brought and to possible judicial
application of foreign laws or foreign governmental or
judicial action affecting creditors' rights; and
(iv) the execution, delivery and performance by the
Bank of the Financing Documents to which it is a party do not
require any consent, approval, authorization, order,
registration or qualification of any Governmental Authority of
the State of New York or of the United States and do not
violate any laws of the State of New York or of the United
States.
34
In rendering such opinion or opinions, such counsel for the
Bank may rely as to matters of fact, to the extent deemed proper, on
certificates of responsible officers of the Bank and of public
officials. Such opinion or opinions shall be rendered to the
Underwriters at the request of each of the Mobile Energy Parties and
shall so state therein.
(j) 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 LLP, independent
public accountants for the Mobile Energy Parties, substantially in the
form attached hereto as Exhibit A.
(k) (i) Neither of the Mobile Energy Parties nor 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 either of the
Mobile Energy Parties 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 either of the Mobile Energy Parties, 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.
(l) 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; or (ii) a general moratorium on
commercial banking activities declared by federal authorities or
authorities of the State of Alabama, Georgia or New York; or (iii) 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 (iii) 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.
35
(m) Each of the Mobile Energy Parties shall have furnished, or
caused to be furnished, to the Underwriters a certificate of such
Mobile Energy Party, dated the Time of Delivery and in form and
substance satisfactory to the Underwriters, as to the accuracy of the
representations and warranties of such Mobile Energy Party herein at
and as of the Time of Delivery, as to the performance by such Mobile
Energy Party of all of its obligations hereunder to be performed at or
prior to the Time of Delivery 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.
(n) 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.
(o) On or prior to the Time of Delivery, the Mobile Energy
Parties 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.
(p) On or prior to the Time of Delivery, (i) the monies to be
deposited into the Intercreditor Agreement Accounts and the Indenture
Accounts shall been delivered to the Trustee and the Collateral Agent
in accordance with the Intercreditor Agreement and the Indenture and
all other Indenture Securities Collateral existing as of the Time of
Delivery possession of which is required to perfect a Lien thereon
shall have been delivered to, in the case of the Shared Collateral, the
Collateral Agent and, in the case of all other Indenture Securities
Collateral, the Trustee, (ii) 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,
36
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, (iii)
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
Indenture Securities Collateral and (iv) 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.
(q) 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, (ii) a
written report of Sedgwick James (the "Independent Insurance
Consultant") describing the insurance obtained by the Mobile Energy
Parties 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 (the "Independent Insurance Consultant's Report") and (iii) a
certificate of 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 (A) the
Independent Insurance Consultant's Report was prepared in accordance
with generally accepted insurance and consulting services practices,
(B) 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 (C) attached to such
certificate is a complete and executed copy of the Independent
Insurance Consultant's Report.
(r) 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
fair and reasonable and made in good faith based upon information
provided by the Mobile Energy Parties that the Independent Engineer
believes is true and correct in all
37
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 description of the Independent Engineer's Report
contained under "Summary--The Independent Engineer's Report" in the
Prospectus 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, including its review of the
Environmental Consultant's Reports, that causes it to believe that the
Independent Engineer's Report or 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 Independent Engineer or the Environmental 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 (vi) attached to such certificate is a complete and executed copy
of the Independent Engineer's Report.
(s) 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 contained in the Independent Engineer's Report are
reasonable; (v) the description of the Paper Consultant's Report
contained under "Summary--The Paper Consultant's Report" 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 Paper Consultant in relation to the preparation of the Paper
Consultant's Report that causes it to
38
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.
(t) 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 Reports") 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 were true and correct in all
material respects as of the respective dates of the Environmental
Consultant's Reports; (iii) the assumptions attributed to the
Environmental Consultant's Reports contained in the Independent
Engineer's Report are reasonable; (iv) the descriptions of the
Environmental Consultant's Reports contained under "Summary--The
Independent Engineer's Report" and "Business--Environmental
Conditions--Environmental Reports" and in the Independent Engineer's
Report under "The Project--Site" and "Permits" in the Prospectus
conform to, and constitute a fair and accurate summary of, the material
provisions thereof; and (v) attached to such certificate are complete
and executed copies of the Environmental Consultant's Reports.
(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 were true and correct in all material respects as of the date of
the Engineering Consultant's Report; (iii) the description of the
Engineering Consultant's Report contained under "Summary--The
Independent Engineer's Report" in the Prospectus conforms to, and
constitutes a fair and accurate summary of, the material provisions
thereof; and (iv) attached to such certificate is
39
a complete and executed copy of the Engineering Consultant's
Report.
(v) Each of the Mobile Energy Parties shall have entered into
each of the Project Documents and the Consents to Assignment to which
it is a party, 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.
(w) The Tax-Exempt Bonds shall have been issued; and the
conditions precedent to the effectiveness of the Working Capital
Facility, as specified in Article III 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.
(x) The Underwriters shall have received evidence of the
appointment of the Independent Engineer, and the acceptance by the
Independent Engineer of such appointment, pursuant to the Intercreditor
Agreement.
(y) The Underwriters shall have received evidence that there
are in effect ratings on the Securities of "BBB-" by Standard & Poor's
Ratings Group, "BBB-" by Fitch Investors Service, L.P. and "Baa3" by
Moody's 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.
(z) Goldman, Sachs & Co. shall have received its fee for
financial advisory services rendered in respect of the
offering of the Bonds and the First Mortgage Bonds in
accordance with Section 6(b)(xii)(B) of the Bond Purchase
Agreement dated August 17, 1995 between Goldman, Sachs & Co.
and The Industrial Development Board of the City of Mobile,
Alabama.
(aa) The Underwriters shall have received such additional
legal opinions, certificates, instruments and other documents as the
Underwriters may reasonably request.
If any of the conditions specified in this Section 7 shall not have
been fulfilled when and as required by this Agreement, then this Agreement may
be terminated by the Underwriters by notice to the Company at or prior to the
Time of Delivery, without liability on the part of any Underwriter or either of
the Mobile Energy Parties, except for the expenses to be borne by the Mobile
Energy Parties as provided in Section 6 hereof and the indemnity agreements in
Section 8 hereof. If, at the Time of Delivery, such conditions shall not have
been fulfilled, and the Company shall not have issued and sold to the
Underwriters, and the Underwriters
40
shall not have purchased from the Company, the Securities in accordance with
Section 2, then this Agreement shall, unless the Time of Delivery shall be
extended as contemplated by Section 4(a), terminate without liability on the
part of any Underwriter or either of the Mobile Energy Parties, except for the
expenses to be borne by the Mobile Energy Parties as provided in Section 6
hereof and the indemnity agreements in Section 8 hereof.
8. (a) Each of the Mobile Energy Parties, 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 (i)
neither of the Mobile Energy Parties shall be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission made in any Preliminary Prospectus, the Registration Statement or the
Prospectus or any such amendment or supplement in reliance upon and in
conformity with written information furnished to the Mobile Energy Parties by
any Underwriter through Goldman, Sachs & Co. expressly for use therein or (ii)
the right of any of the Underwriters to be indemnified and held harmless under
this Section 8 with respect to the Circulated Preliminary Prospectus shall not
inure to the benefit of any Underwriter from whom the person asserting any such
loss, claim, damage or liability purchased Securities (or any person who
controls such Underwriter within the meaning of the Act) if (A) the Prospectus
(as then amended or supplemented if either of the Mobile Energy Parties shall
have furnished any amendments or supplements thereto) was not sent or given by
or on behalf of such Underwriter to such person (if required by law so to have
been delivered) at or prior to the written confirmation of the sale of
Securities to such person and (B) the Prospectus (as so amended or supplemented)
would have cured the defect giving rise to such loss, claim, damage or
liability, provided that the application of this clause (ii) shall be
conditioned upon proof, sustained by the Mobile Energy Parties, that the
Prospectus (as so amended or supplemented) was not so sent or given by or on
behalf of such Underwriter. Notwithstanding anything to the contrary contained
in this Agreement, the satisfaction of any obligation of Mobile Energy under
this Section 8 shall be non-recourse to any monies or other assets of Mobile
Energy acquired through or on account of its interests in the Southern Master
Tax Sharing Agreement, so long as,
41
and to the extent that, such assets are not commingled with any of Mobile
Energy's other monies or assets or with any monies or assets of the Company.
(b) Each Underwriter will indemnify and hold harmless each of
the Mobile Energy Parties against any losses, claims, damages or liabilities to
which such Mobile Energy Party 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, 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 Mobile Energy
Parties by such Underwriter through Goldman, Sachs & Co. expressly for use
therein, and will reimburse the Mobile Energy Parties for any legal or other
expenses reasonably incurred by the Mobile Energy Parties 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 such indemnifying
party in writing of the commencement thereof, but the omission so to notify such
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 any indemnifying party of the commencement thereof, such 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 reasonably satisfactory to such indemnified
party. Upon the assumption by such indemnifying party of the defense of any such
action, such indemnified party shall have the right to participate in such
action and to retain its own counsel, but such indemnifying party shall not be
liable for any legal expenses of other counsel subsequently incurred by such
indemnified party in connection with the defense thereof unless (i) such
indemnifying party has agreed to pay such fees and expenses, (ii) such
indemnifying party shall have failed to employ counsel reasonably satisfactory
to such indemnified party in a timely manner or (iii) such indemnified party
shall have been advised by counsel that there are actual or potential
conflicting interests between such indemnified party and any other party
represented by counsel that is proposed by such indemnifying party to represent
42
such indemnified party, including any such conflicting interests arising from
situations in which there are one or more legal defenses available to such
indemnified party that are different from or additional to those available to
such indemnifying party. No indemnifying party shall, without the written
consent of the indemnified party hereunder, 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 such 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 such indemnified party from
all liability arising out of such action or claim and (ii) does not include a
statement as to or an admission of fault, culpability or a failure to act, by or
on behalf of such indemnified party. No indemnifying party shall be liable for
any settlement or compromise of any action effected without its written consent,
unless the indemnified party hereunder shall have requested such indemnifying
party to reimburse it for any legal expenses of counsel or any other expenses in
connection with the defense thereof in accordance with this Section 8(c), in
which case such indemnifying party agrees that it shall be liable for any such
settlement or compromise effected more than 30 days after its receipt of such
request if such indemnifying party shall not have reimbursed such indemnified
party in accordance with such request prior to the date of such settlement or
compromise.
(d) The obligations of each of the Mobile Energy Parties under
this Section 8 shall be in addition to any liability that either of the Mobile
Energy Parties 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 either of the Mobile Energy Parties (including any
person who, with his or her consent, is named in the Registration Statement as
about to become a director of either of the Mobile Energy Parties) and to each
person, if any, who controls either of the Mobile Energy Parties 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 twenty-four 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
twenty-four hours within which to, but shall not be required 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
43
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 Underwriters that it has so arranged for the purchase of such
Securities, then such non-defaulting Underwriters or the Company shall have the
right to postpone the Time of Delivery, for a period of not more than five 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 to be purchased hereunder, then the Company shall
have the right to require 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 hereunder) 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 to be purchased hereunder, 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 a defaulting Underwriter or Underwriters,
then this Agreement shall thereupon terminate, without liability on the part of
any such non-defaulting Underwriter or either of the Mobile Energy Parties,
except for the expenses to be borne by the Mobile Energy Parties 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 each of the Mobile Energy
Parties and the several Underwriters, as set forth in this
Agreement or made by or on behalf of them, respectively, pursuant
44
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, either of the
Mobile Energy Parties, or any officer or director or controlling person of
either of the Mobile Energy Parties, and shall survive delivery of and payment
for the Securities.
11. If this Agreement shall be terminated (whether pursuant to Section
7 or 9 hereof or for any other reason), neither of the Mobile Energy Parties
shall then be under any liability (including on account of loss of anticipated
profits) 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 Mobile Energy Parties shall be delivered or sent by
mail, telex or facsimile transmission to the address of the Company set forth in
the Registration Statement, Attention: President; provided, however, that any
notice to an Underwriter pursuant to Section 8(c) hereof shall be delivered or
sent by mail, telex or facsimile transmission to such Underwriter at its
address, 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 Mobile Energy Parties and, to the extent
provided in Sections 8 and 10 hereof, the officers and directors of either of
the Mobile Energy Parties and each person who controls either of the Mobile
Energy Parties 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.
45
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 Mobile Energy Parties.
Very truly yours,
Mobile Energy Services Company, L.L.C.
By: /s/
Name: Raymond D. Hill
Title: Vice President & CFO
Mobile Energy Services Holdings, Inc.
By: /s/
Name: Raymond D. Hill
Title: Vice President & CFO
Accepted as of the date hereof:
Goldman, Sachs & Co.
Bear, Stearns & Co. Inc.
Lehman Brothers Inc.
By: /s/
(Goldman, Sachs & Co.)
SCHEDULE I
Principal Amount
of Securities to be
Underwriters to be Purchased
Goldman, Sachs & Co. $191,410,000
Bear, Stearns & Co. Inc. 51,040,000
Lehman Brothers Inc. 12,760,000
Total $255,210,000
Exhibit A
Pursuant to Section 7(i) of the Underwriting Agreement, Arthur Andersen
LLP, independent public accountants for the Company and for Mobile Energy and
its subsidiary, shall furnish letters to the Underwriters, as well as to the
Manager of the Company and the Board of Directors of Mobile Energy, to the
effect that:
(i) they are independent certified public accountants with
respect to the Company and 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 or pro forma financial information other than the
Projections and the Mill Assessment) 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 the Mobile Energy Parties 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 the Mobile Energy
Parties 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 causes them to believe that the unaudited
condensed consolidated financial statements do not comply as to form in
all material respects with the applicable
A-1
accounting requirements of the Act and the related published
rules and regulations;
(iv) the unaudited selected financial information with respect
to the consolidated results of operations and financial position of the
Company and Mobile Energy and its subsidiary for the three (3)-month
period ended March 31, 1995 and for the period from inception to
December 31, 1994 and 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 the Company and Mobile Energy and its
subsidiary, inspection of the minute books of the Company and Mobile
Energy and its subsidiary since the date of the latest audited
financial statements included in the Prospectus, inquiries of officials
of the Mobile Energy Parties 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
A-2
items were not determined on a basis substantially consistent
with the basis for the corresponding amounts 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
the Company or 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
A-3
Underwriters, except in each case for decreases or 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
the Company and 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 the Company and Mobile Energy and its subsidiary
and have found them to be in agreement.
A-4