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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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Form 10-K
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 1995
OR
( )TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period from to
Commission Registrant, State of Incorporation, I.R.S. Employer
File Number Address and Telephone Number Identification No.
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33-92776 Mobile Energy Services Company, L.L.C. 63-1148953
(An Alabama Limited Liability Company)
900 Ashwood Parkway, Suite 300
Atlanta, Georgia 30338
(770) 379-7781
33-92776 Mobile Energy Services Holdings, Inc. 58-2133689
(An Alabama Corporation)
900 Ashwood Parkway, Suite 450
Atlanta, Georgia 30338
(770) 379-7730
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Securities registered pursuant to Section 12(b) of the Act: None.
Securities registered pursuant to Section 12(g) of the Act: None.
Indicate by check mark whether the registrants (1) have filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrants were required to file such reports), and (2) have been subject to
such filing requirements for the past 90 days. Yes X No ___
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrants' knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. ( X )
Each of the registrants meets the conditions set forth in General
Instruction J(1)(a) and (b) of Form 10-K and is therefore filing this form with
reduced disclosure as permitted by such General Instruction J.
A description of the registrants' common stock follows:
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Description of Shares Outstanding
Registrant Common Stock at February 28, 1996
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Mobile Energy Services Company, L.L.C. Not applicable Not applicable
Mobile Energy Services Holdings, Inc. Par Value $1 Per Share 1,000
</TABLE>
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<TABLE>
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Table of Contents
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PART I PAGE
Item 1 Business-............................................................................................... I-1
General.............................................................................................. I-1
Power, Steam and Liquor Processing Sales............................................................. I-2
Operations........................................................................................... I-8
Sources and Availability of Raw Materials............................................................ I-9
Permitting and Regulatory Matters.................................................................... I-10
Environmental Considerations......................................................................... I-11
Outages.............................................................................................. I-13
Summary of Principal Project Contracts............................................................... I-15
Item 2 Properties.............................................................................................. I-57
Item 3 Legal Proceedings....................................................................................... I-62
Item 4 Submission of Matters to a Vote of Security Holders..................................................... I-62
PART II
Item 5 Common Equity Market.................................................................................... II-1
Item 6 Selected Financial Data................................................................................. II-1
Item 7 Management's Discussion and Analysis of Results of Operations
and Financial Condition.............................................................................. II-1
Background........................................................................................... II-1
Results of Operations................................................................................ II-1
Revenues............................................................................................. II-2
Expenses............................................................................................. II-2
Liquidity and Capital Resources...................................................................... II-2
Environmental Matters................................................................................ II-6
Funding of the Maintenance Reserve Account........................................................... II-7
Tax Matters.......................................................................................... II-7
Item 8 Financial Statements and Supplementary Data............................................................. II-9
Item 9 Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.................................................................. II-9
PART III
Item 10 Directors and Executive Officers of the Registrants..................................................... III-1
Item 11 Executive Compensation.................................................................................. III-1
Item 12 Security Ownership of Certain Beneficial Owners and Management.......................................... III-1
Item 13 Certain Relationships and Related Transactions.......................................................... III-1
PART IV
Item 14 Exhibits, Financial Statement Schedules, and Reports
on Form 8-K.......................................................................................... IV-1
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SELECTED DEFINITIONS
When used in this report, the following terms will have the
meanings indicated.
"Abandonment" means (i) the announcement by Mobile Energy of
its decision to suspend for more than thirty (30) days or abandon the operation
of the Energy Complex or (ii) the suspension for more than thirty (30) days (as
extended during the continuance of a Force Majeure Event), abandonment or
indefinite deferral of the operation of the Energy Complex.
"Actual Energy Complex Capacity" means the Actual Liquor
Processing Capacity, the Actual Steam Processing Capacity and the Actual Power
Processing Capacity.
"Actual Liquor Processing Capacity" means the actual
capability of the Energy Complex to deliver Liquor Processing Services at any
given time.
"Actual Power Processing Capacity" means the actual capability
of the Energy Complex to deliver Power Processing Services at any given time.
"Actual Steam Processing Capacity" means the actual capability
of the Energy Complex to provide Steam Processing Services at any given time.
"ADEM" means the Alabama Department of Environmental Management.
"Adverse Financial Effect" means the extent to which Mobile
Energy is adversely financially affected as the direct result of a Change Event,
measured as any Change in Net Costs, provided that an "Adverse Financial Effect"
shall in no event include or be calculated to include any amount which is
intended to provide Mobile Energy with any specified or benchmark rate of
return, debt coverage ratio or other similar ratio or amount which is based upon
an anticipated or expected economic benefit to be derived from, or the
anticipated or expected financial performance of, the operation of the Energy
Complex.
"Affiliate" of a specified Person means any other Person that
directly, or indirectly through one or more intermediaries, controls, is
controlled by or is under common control with the specified Person. As used in
this definition, "control", "controlled by" and "under common control with"
shall mean possession, directly or indirectly, or power to direct or cause the
direction of management or policies of such Person (whether through ownership of
securities or other partnership or ownership interests, by contract or
otherwise), provided that in any event, any Person which owns directly,
indirectly or beneficially ten percent (10%) or more of the securities having
voting power for the election of directors or other governing body of a
corporation or ten percent (10%) or more of the partnership interests or other
ownership interests of any other Person will be deemed to control such Person.
Notwithstanding the foregoing, no individual shall be deemed to be an Affiliate
of a Person solely by reason of his or her being a director, committee member,
officer or employee of such Person.
"Aggregate Power Processing Demand" means, collectively, the
Pulp Mill Power Processing Demand, the Tissue Mill Power Processing Demand and
the Paper Mill Power Processing Demand.
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"Aggregate Power Processing Requirement" means the aggregate
requirement of the Mills for Power Processing Services at any given time.
"Aggregate Steam Processing Demand" means, collectively, the
Pulp Mill Steam Processing Demand, the Tissue Mill Steam Processing Demand and
the Paper Mill Steam Processing Demand.
"Aggregate Steam Processing Requirement" means the aggregate
requirement of the Mills for Steam Processing Services at any given time.
"Alabama Power" means Alabama Power Company.
"Alabama PSC" means the Alabama Public Service Commission.
"Asset Lease Agreements" means the series of lease or sublease
and assignment agreements by which Scott conveyed to Mobile Energy (as the
assignee of Holdings) those part of the facilities, structures and equipment
comprising the Energy Complex to which title is held by the IDB and which are
leased by the IDB to Scott/Kimberly-Clark or are currently subject to
installment sale agreements between the IDB and Scott/Kimberly-Clark.
"Asset Purchase Agreement" means the Asset Purchase Agreement
dated as of December 12, 1994 between Scott and Mobile Energy (as the assignee
of Holdings).
"Back-Up Power" means power purchased by the Mill Owners from
Alabama Power that is treated by Alabama Power as back-up power under the 1986
Alabama Power Contract as such contract was applied and administered by Scott
and Alabama Power prior to the Acquisition Closing Date.
"Bankruptcy Code" means the Federal Bankruptcy Code of 1978, as amended.
"Bankruptcy Event" means, with respect to any person, (i) such
Person's general inability, or its admission of its inability, to pay its debts
as such debts become due, (ii) the application by such Person for or its consent
to the appointment of, or the taking of possession by, a receiver, custodian,
trustee or liquidator of itself or of all or a substantial part of its property,
(iii) the commencement by such Person of a voluntary case under the Bankruptcy
Code, (iv) the making by such Person of a general assignment for the benefit of
its creditors, (v) the filing of a petition by such Person seeking to take
advantage as a debtor of any other law relating to bankruptcy, insolvency,
reorganization, liquidation, dissolution, arrangement, winding-up or
readjustment of debts, (vi) the failure by such Person to controvert in a timely
and appropriate manner, or its acquiescence in writing to, any petition filed
against it in an involuntary case under the Bankruptcy Code, (vii) the taking of
any corporate or other action by such Person for the purpose of effecting any of
the foregoing, (viii) the commencement of a proceeding or case, without the
application or consent of such Person, in any court seeking (A) such Person's
reorganization, liquidation, dissolution, arrangement or winding-up, or the
composition or readjustment of its debts, (B) the appointment of a trustee,
receiver, custodian, liquidator, examiner or the like of such Person or all or
any substantial part of its property or (C) similar relief in respect of such
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Person under any law relating to bankruptcy, insolvency, reorganization,
winding-up or composition or adjustment of debts and such proceeding or case
shall continue undismissed, or an order, judgment or decree approving or
ordering any of the foregoing shall be entered and continue unstayed and in
effect for a period of 60 or more days, or (ix) an order for relief against such
Person shall be entered in an involuntary case under the Bankruptcy Code.
"Bond Transfer Instrument" means the agreement of the Scott
Subsidiary selling, assigning and transferring the 1994 Bonds to Mobile Energy.
"Change Event" means a Process Model Adjustment Event or a
Financial Adjustment Event, individually or collectively, as the context may
require.
"Change in Net Costs" means, as the direct result of a Change
Event, any capital expenditure incurred by Mobile Energy or any change in Mobile
Energy's costs required to operate and maintain the Energy Complex (which shall
be deemed to include any energy taxes payable due to a Financial Adjustment
Event pursuant to clause (A) of the definition thereof), net of any offsetting
financial benefit that will be recovered by Mobile Energy through (i) an
automatic adjustment (including any change through indices or escalators)
applicable to the Process Model, Processing Charges, Demand Charges or any other
charges payable by the Mill Owners under their respective Energy Services
Agreements, the Master Operating Agreement or any other Project Agreement, (ii)
reduced operating costs or other monetary benefit derived by Mobile Energy in
connection with such Change Event or (iii) insurance proceeds received in
connection with such Change Event.
"Clean Air Act" means the Clean Air Act Amendments of 1990.
"Collateral Agent" means the collateral agent for the Senior
Secured Parties under the Intercreditor Agreement, which is Bankers Trust
(Delaware).
"Confidentiality Agreement" means the Confidentiality Agreement dated
December 12, 1994 among Southern Electric, Mobile Energy, Scott/Kimberly-Clark,
and S.D. Warren.
"Consent to Assignment" means any one or more (as the context
may require) of the consents to assignment executed by certain of the parties to
certain of the Project Contracts in connection with the collateral assignment of
Mobile Energy's rights under those contracts to the Collateral Agent.
"Conversion Demand" means 42.7 million pounds of virgin dry
black liquor solids per week, as such amount may be revised from time to time
pursuant to the Master Operating Agreement.
"Conversion Demand Charge" means the Demand Charges for Liquor
Processing Services for a given period of time.
"Current Liquor Processing Nomination" means the maximum
amount of black liquor to be delivered to Mobile Energy pursuant to the Pulp
Mill Energy Services Agreement during any week.
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"Current Paper Mill Power Processing Nomination" means the
maximum amount of power processing required of Mobile Energy pursuant to the
Paper Mill Energy Services Agreement during any fifteen (15) minute period
during any day, which amount taken together with the Current Pulp Mill Power
Processing Nomination and the Current Tissue Mill Power Processing Nomination
shall not exceed the Aggregate Power Processing Demand, as revised from time to
time pursuant to the Master Operating Agreement.
"Current Paper Mill Steam Processing Nomination" means the
maximum amount of steam to be processed by Mobile Energy pursuant to the Paper
Mill Energy Services Agreement during any one (1) hour period during any day,
which amount taken together with the Current Pulp Mill Steam Processing
Nomination and the Current Tissue Mill Steam Processing Nomination shall not
exceed the Aggregate Steam Processing Demand, as such nomination may be revised
from time to time pursuant to the Master Operating Agreement.
"Current Power Processing Nomination" means, collectively, the
Current Pulp Mill Power Processing Nomination, the Current Tissue Mill Power
Processing Nomination, and the Current Paper Mill Power Processing Nomination.
"Current Pulp Mill Power Processing Nomination" means the
maximum amount of power processing required of Mobile Energy pursuant to the
Pulp Mill Energy Services Agreement during any fifteen (15) minute period during
any day, which amount taken together with the Current Paper Mill Power
Processing Nomination and the Current Tissue Mill Power Processing Nomination
shall not exceed the Aggregate Power Processing Demand, as revised from time to
time pursuant to the Master Operating Agreement.
"Current Pulp Mill Steam Processing Nomination" means the
maximum amount of steam to be processed by Mobile Energy pursuant to the Pulp
Mill Energy Services Agreement during any one (1) hour period during any day,
which amount taken together with the Current Paper Mill Steam Processing
Nomination and the Current Tissue Mill Steam Processing Nomination shall not
exceed the Aggregate Steam Processing Demand, as such nomination may be revised
from time to time pursuant to the Master Operating Agreement.
"Current Steam Processing Nomination" means, collectively, the
Current Pulp Mill Steam Processing Nomination, the Current Tissue Mill Steam
Processing Nomination and the Current Paper Mill Steam Processing Nomination.
"Current Tissue Mill Power Processing Nomination" means the
maximum amount of power processing required of Mobile Energy pursuant to the
Tissue Mill Energy Services Agreement during any fifteen (15) minute period
during any day, which amount taken together with the Current Paper Mill Power
Processing Nomination and the Current Pulp Mill Power Processing Nomination
shall not exceed the Aggregate Power Processing Demand, as such nomination may
be revised from time to time pursuant to the Master Operating Agreement.
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"Current Tissue Mill Steam Processing Nomination" means the
maximum amount of steam to be processed by Mobile Energy pursuant to the Tissue
Mill Energy Services Agreement during any one (1) hour period during any day,
which amount taken together with the Current Pulp Mill Steam Processing
Nomination and the Current Paper Mill Steam Processing Nomination shall not
exceed the Aggregate Steam Processing Demand, as such nomination may be revised
from time to time pursuant to the Master Operating Agreement.
"Environmental Guaranty" means a guaranty provided by Southern
of certain of Mobile Energy's obligations under the Mill Environmental Indemnity
Agreements.
"EPA" means the Environmental Protection Agency.
"FASB" means the Financial Accounting Standards Board.
"FERC" means the Federal Energy Regulatory Commission.
"Financing Documents" means all agreements, documents and
instruments evidencing and/or securing the Financing Liabilities.
"Financing Liabilities" means all indebtedness, liabilities
and obligations of Mobile Energy or Holdings (including, but not limited to,
principal, interest, fees, reimbursement obligations, penalties, indemnities and
legal expenses, whether due to acceleration or otherwise) to the Senior Secured
Parties (of whatsoever nature and howsoever evidenced) under or pursuant to the
Indenture, the First Mortgage Bonds and all other Indenture Securities, the IDB
Lease Agreement, the Tax-Exempt Indenture, the Working Capital Facility and any
evidence of indebtedness thereunder entered into, the Security Documents and the
Tax-Exempt Security Documents, to the extent arising on or prior to the maturity
of the Senior Securities, in each case, direct or indirect, primary or
secondary, fixed or contingent, now or hereafter arising out of or relating to
any such agreement.
"First Mortgage Bonds" means $255,210,000 principal amount of
8.665% First Mortgage Bonds due 2017 issued by Mobile Energy and unconditionally
guaranteed by Holdings.
"Governmental Approvals" means those authorizations, consents,
approvals, waivers, exemptions, variances, registrations, certifications,
permissions, permits, and licenses with any Governmental Authority required for
the ownership and operation of the Energy Complex and the performance of a
person's obligations under the Project Documents.
"Governmental Authority" means any federal, state, county,
municipal, foreign, international, regional or other governmental or regulatory
authority, agency, department, board, body, instrumentality, commission, arbiter
or court.
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"Governmental Rule" means any law, rule, regulation, ordinance, order,
code, permit, interpretation, judgment, decree, directive, guideline, policy or
similar decision of any governmental authority having the effect and force of
law.
"Holdings" means Mobile Energy Services Holdings, Inc.
"Indenture" means the Trust Indenture dated as of August 1,
1995 among Mobile Energy, Holdings, and First Union National Bank of Georgia, as
trustee.
"Indenture Securities" means the First Mortgage Bonds and any
additional Senior Debt issued by Mobile Energy pursuant to the Indenture in the
future.
"Intercreditor Agreement" means the Intercreditor and
Collateral Agency Agreement dated as of August 1, 1995 among Bankers Trust
(Delaware) as the collateral agent, Mobile Energy, Holdings, First Union
National Bank of Georgia as trustee under the Indenture, First Union National
Bank of Georgia as trustee under the Tax-Exempt Indenture, the IDB, and Banque
Paribas as the Working Capital Facility Provider.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended.
"Liquidated Damages" means Liquor Processing Liquidated
Damages, Steam Processing Liquidated Damages or Power Processing Liquidated
Damages, individually or collectively, as the context may require.
"Long Term Maintenance Power" means power purchased by the
Mill Owners from Alabama Power that is treated by Alabama Power as long term
maintenance power under the 1983 Alabama Power Contract as such contract was
applied and administered by Scott and Alabama Power prior to the Acquisition
Closing Date.
"Maintenance Expenditures" means all costs and expenses of
operating and maintaining the Energy Complex and, when Mobile Energy is
exercising the Mobile Energy Step-In Rights, the Pulp Mill Step-In Equipment,
other than (i) fuel costs and expenses, (ii) labor and employee expenses,
including fringe benefits and labor relations expense, (iii) payments for
insurance premiums and like insurance-related expenses, (iv) costs and expenses
of consumable items such as process or cleaning chemicals and lubricants, (v)
equipment rental, small tools and vehicle maintenance expenses, (vi) costs and
expenses associated with legal, accounting and other office and administrative
functions, (vii) permitting fees, (viii) costs and expenses of safety supplies,
office supplies and other office expenses, (ix) property taxes and payments made
in lieu of taxes, (x) computer maintenance expenses, (xi) any amounts payable
for services rendered under the Common Services Agreement, (xii) ash disposal
costs, (xiii) liquidated damages payable to the Mill Owners under the Master
Operating Agreement, (xiv) amounts payable to the Mill Owners for reimbursement
of costs incurred in connection with the exercise of Mill Owner Step-In Rights,
(xv) any amounts required to be rebated to the United States government pursuant
to Section 148 of the Internal Revenue Code in connection with any of the
Tax-Exempt Indenture Securities and (xvi) payments to the IDB, including
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payments required to be made by Mobile Energy with respect to the 1994 Bonds, in
each case to the extent the foregoing costs or expenses are not customarily
treated as capital expenditures.
"Maintenance Power" means Long Term Maintenance Power and Short Term
Maintenance Power, collectively.
"Mill Material Adverse Effect" means, with respect to any Mill
Owner, a material adverse effect on (i) the operation, maintenance or use of
such Mill Owner's Mill or such Mill Owner's portion of the Real Property, (ii)
the use by such Mill Owner or its representatives of any easement granted to
such Mill Owner by Mobile Energy pursuant to the Easement Deeds or (iii) the
ability of Mobile Energy or its Affiliates to observe and perform their
respective obligations under any of the Operative Documents.
"Mill Owner Consents to Assignment" means the Consents to
Assignment executed by the Mill Owners with respect to the principal Project
Contracts.
"Minimum Demand" means the Minimum Conversion Demand, the
Minimum Power Processing Demand and the Minimum Steam Processing Demand,
individually or collectively, as the context may require.
"Minimum Economic Demand" refers to the definitions of
"Minimum Economic Conversion Demand," "Minimum Economic Power Processing Demand"
and "Minimum Economic Steam Processing Demand."
"Minimum Economic Conversion Demand" means seventy-seven
percent (77%) of the Maximum Liquor Processing Capacity in effect at the
Acquisition Closing Date.
"Minimum Economic Power Processing Demand" means seventy-seven
percent (77%) of the Maximum Power Processing Capacity in effect at the
Acquisition Closing Date.
"Minimum Economic Steam Processing Demand" means seventy-seven
percent (77%) of the Maximum Steam Processing Capacity in effect at the
Acquisition Closing Date.
"Mobile Energy" means Mobile Energy Services Company, L.L.C.
"Mobile Energy Material Adverse Effect" means a material
adverse effect on (i) the facilities, structure and equipment comprising the
Energy Complex; (ii) the operation, maintenance or use of the Energy Complex or
the Leased Premises; (iii) the use by Mobile Energy or its representatives of
any easement granted for the benefit of Lots 7 and 9 pursuant to the Easement
Deeds; or (iv) the ability of Scott/Kimberly-Clark or any Mill Owner to observe
and perform its obligations under any of the Operative Documents.
"1986 Alabama Power Contract" means the Contract for Electric
Power dated as of April 14, 1986 between Scott/Kimberly-Clark and Alabama Power.
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"1983 Alabama Power Contract" means the Agreement dated as of
July 20, 1983 between Scott/Kimberly-Clark and Alabama Power.
"Nondisturbance Agreement" means the Estoppel and
Nondisturbance Agreement dated as of December 12, 1994 between the Scott
Subsidiary and Mobile Energy.
"NPDES" means the National Pollutant Discharge Elimination System.
"Operation and Maintenance Costs" means all costs and expenses
of operating and maintaining the Energy Complex and, when Mobile Energy is
exercising the Mobile Energy's Step-In Rights, the Pulp Mill Step-In Equipment,
including and together with, without limitation, Maintenance Expenditures and
any costs and expenses specified in clauses (i) through (xvi) of the definition
of Maintenance Expenditures (other than rent payments under the IDB Lease
Agreement and payments of principal, premium and interest on the 1994 Bonds).
"Operative Documents" means each of the Project Agreements,
the Asset Purchase Agreement and the bill of sale and assignment and assumption
agreement relating thereto, the Asset Lease Agreements, the Bond Transfer
Instrument, the Employee Transition Agreement and the guaranty of Southern of
Mobile Energy's obligations under the Lease Assignment and Assumption Agreement.
"Outage" means a Scheduled Outage, a Major Maintenance Outage
or an Unscheduled Outage, as the context may require.
"Paper Mill Energy Services Agreement" means the Paper Mill
Energy Services Agreement dated as of December 12, 1994 between S.D. Warren
Company, in its capacity as Paper Mill Owner, and Mobile Energy, as amended.
"Paper Mill Power Processing Demand" means 22,500 kilowatts,
as such amount may be adjusted from time to time pursuant to the Master
Operating Agreement.
"Paper Mill Steam Processing Demand" means 420 million british
thermal units per hour, as such amount may be adjusted from time to time
pursuant to the Master Operating Agreement.
"Permitted Energy Complex Outage" has the meaning given in the Master
Operating Agreement.
"Person" means any individual, sole proprietorship,
corporation, partnership, limited liability company, joint venture, trust,
unincorporated association, Governmental Authority or any other entity.
"Power Processing Demand" means the Pulp Mill Power Processing
Demand, the Paper Mill Power Processing Demand and the Tissue Mill Power
Processing Demand.
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"Process Water Plant" means the plant owned by the Pulp Mill
Owner which supplies water to the Energy Complex and the Mills.
"Project Agreements" means the Energy Services Agreements, the
Master Operating Agreement, the Direct Lease, the Supplementary Lease, the O&M
Agreement, the Confidentiality Agreement, the Common Services Agreement, the
Water Agreement, the Ash Agreement, the Pulp Supply Agreement, the
Scott/Kimberly-Clark Environmental Indemnity Agreement, the Mill Environmental
Indemnity Agreements, the Transition Agreement and the Easement Deeds, provided,
that each Project Agreement having a stated term (which may include a stated
renewal term) that has expired in full at the end of such stated term (or such
stated renewal term) and each Project Agreement not having a stated term that
has been fully performed in accordance with its terms (including, without
limitation, through the final payment of all amounts due or to become due
thereunder) shall cease to be a Project Agreement for all purposes with respect
to the Energy Services Agreements and the Master Operating Agreement.
"Project Contracts" means, collectively, the Energy Services
Agreements, the Master Operating Agreement, the Direct Lease, the Supplementary
Lease, the O&M Agreement, the Common Services Agreement, the Water Agreement,
the Ash Agreement, the Scott/Kimberly-Clark Environmental Indemnity Agreement,
the Mill Environmental Indemnity Agreements, the Transition Agreement, the
Employee Transition Agreement, the SCS Agreement, the Easement Deeds, the Asset
Purchase Agreement, the Coal Supply Agreement dated as of May 1, 1995 between
Mobile Energy and E.J. Hodder & Associates, the Lease Assignment and Assumption
Agreement, the Facilities Lease and Agreement and the related Sublease and
Assignment Agreement, the Installment Sale Agreements and the related Lease and
Assignment Agreements, the Recovery Boiler Lease and Agreement and the related
1994 Bond Agreement, the Nondisturbance Agreement, the Recognition Agreements,
the Mill Owner Maintenance Reserve Account Agreement, the Omnibus Deed, Bill of
Sale, General Assignment and Conveyance Agreement dated July 14, 1995 between
Holdings and Mobile Energy and any other contract entered into by Mobile Energy
or Holdings for the provision of fuel to the Energy Complex (in each case, as
the same may be amended, supplemented, modified, replaced or assigned in
accordance with the Indenture).
"Project Documents" means, collectively, the Financing Documents and
the Project Contracts.
"PUHCA" means the Public Utility Holding Company Act of 1935, as
amended.
"Pulp Mill Energy Services Agreement" means the Pulp Mill
Energy Services Agreement, dated as of December 12, 1994 between
Scott/Kimberly-Clark, in its capacity as Pulp Mill Owner, and Mobile Energy.
"Pulp Mill Power Processing Demand" means 32,000 kilowatts, as
such amount may be adjusted from time to time pursuant to the Master Operating
Agreement.
"Pulp Mill Steam Processing Demand" means 500 million british
thermal units per hour, as such amount may be adjusted from time to time
pursuant to the Master Operating Agreement.
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"PURPA" means the Public Utility Regulatory Policies Act of 1978, as
amended.
"Qualifying Facility" means a qualifying facility under PURPA.
"Recognition Agreements" means the Mixed-Use Bonds Recognition
Agreement and the Tax-Exempt Bonds Recognition Agreement.
"Scheduled Outage" means a scheduled Energy Complex Outage or
a Scheduled Mill Outage, as the context may require.
"Scott" means Scott Paper Company.
"SCS" means Southern Company Services, Inc.
"S.D. Warren " means S.D. Warren Company.
"SEC" means the Securities and Exchange Commission.
"Security Documents" means, collectively, (i) the Mortgage,
(ii) the Security Agreement, (iii) the Indenture, (iv) the Intercreditor
Agreement, (v) the Tax-Exempt Indenture, (vi) the IDB Lease Agreement, (vii) the
Consents to Assignment and (viii) each Uniform Commercial Code financing
statement in connection with the foregoing.
"Senior Debt" means all Senior Securities, together with
additional debt under any Working Capital Facility.
"Senior Secured Parties" shall mean collectively the trustee
under the Indenture (on behalf of holders of Indenture Securities), the trustee
under the Tax-Exempt Indenture (on behalf of holders of Tax-Exempt Indenture
Securities) and the Working Capital Facility Provider.
"Senior Securities" shall mean the Indenture Securities and
the Tax-Exempt Indenture Securities collectively.
"Services" means any one or more (as the context may require)
of Liquor Processing Services and the Shared Services.
"Shared Services" means Steam Processing Services, Power
Processing Services, process water, and compressed air.
"Short Term Maintenance Power" means the power purchased by
the Mill Owners from Alabama Power that is treated by Alabama Power as short
term maintenance power under the 1983 Alabama Power Contract as such contract
was applied and administered by Scott and Alabama Power prior to the Acquisition
Closing Date.
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"Shortfall Hour" means, for a Liquor Processing Shortfall
Event, a Steam Processing Shortfall Event or a Power Processing Shortfall Event,
the duration of such shortfall event rounded up to the next whole hour.
"Site" means the Real Property, the Mills, and the Energy Complex.
"Southern" means The Southern Company.
"Southern Electric" means Southern Electric International, Inc.
"Steam Processing Demand" means the Pulp Mill Steam Processing
Demand, the Tissue Mill Steam Processing Demand and the Paper Mill Steam
Processing Demand.
"Step-In Rights" means Mill Owner Step-In Rights or Mobile Energy
Step-In Rights, as the context may require.
"Supplemental Power" means power purchased by the Mill Owners
from Alabama Power that is treated by Alabama Power as supplemental power under
the 1986 Alabama Power Contract as such contract was applied and administered by
Scott and Alabama Power prior to the Acquisition Closing Date.
"Tax-Exempt Bonds" means $85,000,000 principal amount of 6.95%
Solid Waste Revenue Refunding Bonds (Mobile Energy Services Company, L.L.C.
Project) Series 1995 due 2020 issued by the IDB.
"Tax-Exempt Indenture Securities" means the Tax-Exempt Bonds
and any additional Senior Debt issued pursuant to the Tax-Exempt Indenture.
"Tax-Exempt Security Documents" means, collectively, (i) the
Mortgage, (ii) the Security Agreement, (iii) the Tax-Exempt Indenture, (iv) the
IDB Lease Agreement, (v) the Intercreditor Agreement, (vi) the Consents to
Assignment and (viii) each Uniform Commercial Code financing statement in
connection with the foregoing.
"Tissue Mill Energy Services Agreement" means the Tissue Mill
Energy Services Agreement dated as of December 12, 1994 between
Scott/Kimberly-Scott, in its capacity as Tissue Mill Owner, and Mobile Energy.
"Tissue Mill Power Processing Demand" means 39,500 kilowatts,
as such amount may be adjusted from time to time pursuant to the Master
Operating Agreement.
"Tissue Mill Steam Processing Demand" means 280 million
british thermal units per hour, as such amount may be adjusted from time to time
pursuant to the Master Operating Agreement.
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"Unit Trip" means any sudden and immediate removal from service or
sudden and immediate interruption of service not caused by the Mills of any
boiler, turbine-generator or high voltage distribution component such
that (I) in the case of the boiler, either fuel input shuts off, or super heater
steam flows stop, (ii) in the case of the turbine generator, either the
generator circuit breaker opens, or the main steam stop valve closes, or (iii)
in the case of the high voltage distribution system, the 13.8kv power supply to
the Mills is interrupted, provided that prior to the interruption of service of
any boiler, turbine generator or high voltage distribution component, the
applicable unit shall have been in service contributing to the Liquor Processing
Services, Steam Processing Services or Power Processing Services provided to the
Mills for not less than 12 hours.
"Uniform Commercial Code" means the Uniform Commercial Code of
the jurisdiction the law of which governs the document in which such term is
used.
"Unscheduled Mill Outage" means any Outage with respect to a
Mill which is not a Scheduled Mill Outage, other than any Outages caused by a
Force Majeure Event with respect to such Mill or its respective owner.
"Unscheduled Outage" means an Unscheduled Energy Complex
Outage or an Unscheduled Mill Outage, as the context may require.
"Waste Water Treatment Plant" means the treatment plant owned
by the Pulp Mill Owner and used to treat waste water from the Energy Complex and
the Mills.
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PART I
Item 1. BUSINESS
General
Holdings was incorporated in the State of Alabama on August 25, 1994 under the
name Mobile Energy Services Company, Inc. Its name was changed to Mobile Energy
Services Holdings, Inc. on May 17, 1995. Mobile Energy was formed as a limited
liability company in the state of Alabama on July 13, 1995. The mailing address
of the principal executive offices of Mobile Energy is 900 Ashwood Parkway,
Suite 300, Atlanta, Georgia 30338-4780, and its phone number is (770)379-7781.
The mailing address of the principal executive offices of Holdings is 900
Ashwood Parkway, Suite 450, Atlanta, Georgia 30338-4780, and its phone number is
(770)379-7730.
Mobile Energy and Holdings were formed to acquire, own and manage the
energy and black liquor recovery complex (the "Energy Complex") located at an
integrated pulp, paper and tissue manufacturing facility in Mobile, Alabama (the
"Mobile Facility"). Holdings acquired the Energy Complex (the "Acquisition") and
commenced operations on December 16, 1994 (the "Acquisition Closing Date").
Holdings transferred to Mobile Energy the Energy Complex, the Project Contracts
and related assets, permits and agreements on July 14, 1995. Mobile Energy's
sole business consists exclusively of the ownership and management of the Energy
Complex. Holdings, which owns 99% of the equity interests in Mobile Energy, does
not conduct any independent operations. Southern Electric owns the remaining
equity interest in Mobile Energy. Both Holdings and Southern Electric are wholly
owned subsidiaries of Southern.
The Mobile Facility is a physically integrated complex that produces tissue
and paper products from timber that is processed into bleached and unbleached
pulp. The Mobile Facility is comprised of the Energy Complex, a tissue mill (the
"Tissue Mill"), a pulp mill (the "Pulp Mill"), and a paper mill (the "Paper
Mill," and together with the Tissue Mill and the Pulp Mill, the "Mills"). The
Pulp Mill receives wood primarily in long form, both from truck and barge
deliveries. The "longwood" is cut into ten-foot lengths, cleaned, debarked and
chipped. Chips are then fed into digesters along with an appropriate amount of
white liquor (which is produced from green liquor). Steam is then added and the
chips are "cooked" in order to separate wood fiber (pulp) from lignin (the
binding agent in wood). Spent liquor (weak black liquor) and small debris is
then removed from the resultant pulp stock. The pulp is then bleached and fed to
paper machines as needed for the production of paper. The weak black liquor is
delivered to the Energy Complex for processing. The Energy Complex processes
almost 100% of the Pulp Mill's weak black liquor (which contains, among other
things, black liquor solids) into "green liquor" (a chemical solution that is
essential to the production of pulp because it is reused in the production of
white liquor by the Pulp Mill) (this processing, the "Liquor Processing
Services").
Approximately 85% of the fuel requirements of the Energy Complex currently
are satisfied with by-products generated by the operations of the Pulp Mill or
provided by the Pulp Mill. These by-products include weak black liquor, biomass
(waste wood) and sludge, each of which is provided to Mobile Energy by the Pulp
Mill. The Energy Complex processes various fuels and water provided by the
Mills, together with other fuel obtained by Mobile Energy, into steam (the
"Steam Processing Services") and electricity (the "Power Processing Services").
The Mills currently obtain all of their aggregate steam processing needs and 98%
of their aggregate power processing needs from the Energy Complex. The Pulp
Mill, in turn, disposes of substantially all of the by-products of the Energy
Complex's operations, including boiler ash, and provides process water and waste
water treatment services to the Energy Complex and each of the other Mills.
The Mobile Facility is one of the largest pulp, paper and tissue production
complexes in North America. At the time of the Acquisition, Scott owned the
Tissue and Pulp Mills. Subsequent to Holdings' acquisition of the Energy
Complex, Scott merged with a wholly owned subsidiary of Kimberly-Clark
Corporation ("Kimberly-Clark") (the resulting entity "Scott/Kimberly-Clark").
This merger was completed in December 1995. Prior to the merger, the Tissue Mill
was Scott's largest tissue mill in North America and produced approximately
one-third of all tissue products manufactured by Scott in the United States in
1994. The Tissue Mill consists of five paper machines with a capacity to
manufacture approximately 310,000 tons of tissue per year, as well as finishing
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operations and distribution operations. Prior to the merger, the Pulp Mill was
Scott's largest pulp mill in North America and generated almost 60% of all pulp
produced by Scott from virgin fiber in North America in 1994. The Tissue Mill
and the Paper Mill currently rely on the Pulp Mill for almost all of their
supply of pulp.
The Paper Mill is owned by S.D. Warren. At the time of the Acquisition,
Scott owned S.D. Warren. On December 21, 1994 Scott sold S.D. Warren to a
company indirectly owned by Sappi Limited, DLJ Merchant Banking Partners L.P.
and UBS Capital Corporation. S.D. Warren's obligations under the Project
Agreements were not affected by this sale. S.D. Warren produces uncoated
business, commercial offset printing (including heavyweight board and colored
offset products) and coated specialty and technical papers at the Paper Mill.
The Paper Mill produces all of S.D. Warren's uncoated free sheet paper and
certain coated specialty and technical papers. The Paper Mill consists of three
paper machines with a capacity to manufacture approximately 270,000 tons of
paper per year, as well as finishing operations and distribution operations.
Power, Steam and Liquor Processing Sales
Mobile Energy is a party to various long-term contracts, including (A) Energy
Services Agreements (including any amendments thereto, the "Energy Services
Agreements") with (1) Scott/Kimberly-Clark acting in its capacity as the owner
of the Tissue Mill (Scott/Kimberly-Clark in such capacity, together with
successors and permitted assigns, the "Tissue Mill Owner"), (2)
Scott/Kimberly-Clark acting in its capacity as the owner of the Pulp Mill
(Scott/Kimberly-Clark in such capacity, together with successors and permitted
assigns, the "Pulp Mill Owner"), and (3) S.D. Warren acting in its capacity as
the owner of the Paper Mill (S.D. Warren in such capacity, together with
successors and permitted assigns, the "Paper Mill Owner," and together with the
Tissue Mill Owner and the Pulp Mill Owner, the "Mill Owners") and (B) a Master
Operating Agreement (including any amendments thereto or restatements thereof,
the "Master Operating Agreement") with Scott/Kimberly-Clark, the Tissue Mill
Owner, the Pulp Mill Owner and the Paper Mill Owner. Pursuant to the Energy
Services Agreements, Mobile Energy provides Steam Processing Services and Power
Processing Services to the Mills and Liquor Processing Services to the Pulp
Mill.
The provision of Power Processing Services, Steam Processing Services and
Liquor Processing Services (collectively, the "Processing Services") by Mobile
Energy under the Energy Services Agreements is governed by the Master Operating
Agreement, which, among other things, coordinates operations at the Mobile
Facility. Subject to certain limited exceptions described herein, the Energy
Services Agreements and the Master Operating Agreement provide that Mobile
Energy will be the exclusive supplier of the Mills' requirements for the
Processing Services up to the stipulated capacity (such capacity, as further
defined in the Master Operating Agreement with respect to particular processing
services, the "Maximum Capacity") of the Energy Complex.
Pursuant to the Energy Services Agreements and the Master Operating
Agreement, Mobile Energy is obligated to dedicate to each Mill an agreed upon
portion of the Energy Complex's capacity to provide Processing Services (the
quantity of such capacity being referred to as a Mill's "Demand" for the
particular Processing Service). Concurrently with the Acquisition, the Mill
Owners selected initial Demand levels under the Energy Services Agreements that,
in the aggregate, equal the current Maximum Capacity of the Energy Complex to
provide such processing services.
Mobile Energy's revenues are comprised almost entirely of charges for
Processing Services provided to the Mills. To compensate Mobile Energy for
dedicating a portion of the Energy Complex's capacity to a Mill, each Mill Owner
is obligated to pay fixed capacity charges (the "Demand Charges") based upon
formulas set forth in the Master Operating Agreement to Mobile Energy based upon
the level of such Mill Owner's Demand for each Processing Service. The aggregate
Demand Charges payable by the Mills were designed generally to cover, among
other things, Mobile Energy's projected costs that are in the nature of fixed
costs (including the payment of debt service) assuming that certain operating
performance standards are satisfied. There can be no assurance, however, that
such operating performance standards will be satisfied or that the Demand
Charges will at all times cover Mobile Energy's costs that are in the nature of
fixed costs, including the payment of principal of and interest on its
outstanding indebtedness. Under the Energy Services Agreements, Demand Charges
are due and payable on a monthly basis regardless of whether a Mill actually
utilizes any or all of the processing services corresponding to its dedicated
demand. Demand Charges are subject to automatic reduction ("Demand Charge
Reductions") due to a shortfall in the provision of Processing Services by
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Mobile Energy that is not excused by the Project Agreements. In addition, such
an unexcused shortfall would require Mobile Energy to pay the Mill Owners
liquidated damages in an amount up to $10,000 per day (subject to escalation
from the Acquisition Closing Date) for each day on which there is such an
unexcused shortfall.
The Master Operating Agreement provides that (except as described below)
the sum of the three Mills' Demand Levels (and, therefore, the aggregate Demand
Charges payable by the Mills) for any Processing Service (the "Aggregate Demand"
for that Processing Service) is subject to reduction (and upon the satisfaction
of certain conditions) only in December 1999, and on each second anniversary
thereafter (each such date, a "Demand Anniversary Date," and the period from one
Demand Anniversary Date until the next succeeding Demand Anniversary Date, a
"Demand Period"). If, during any Demand Period, a Mill's peak usage of a
particular Processing Service is less than such Mill's then applicable Demand
level for such Processing Service (and, in certain circumstances, is less than a
specific usage level set forth in the Master Operating Agreement), then, on the
Demand Anniversary Date on which such Demand Period concludes, the Mill is
permitted to select a lower Demand level (and, hence, incur a lower Demand
Charge) for the ensuing Demand Period. Pursuant to the Master Operating
Agreement, such lower Demand level cannot be less than such Mill's peak usage
(as determined pursuant to the Master Operating Agreement) of the particular
Processing Service during the just concluded Demand Period.
Mobile Energy believes that since the Acquisition Closing Date, the Mills
have, from time to time, required and utilized, in the aggregate, Steam
Processing Services, and the Pulp Mill has required and utilized Liquor
Processing Services, in amounts such that the Aggregate Demand levels for Steam
Processing Services and Liquor Processing Services will not, pursuant to the
terms of the Master Operating Agreement, be permitted to be decreased at the
conclusion of the first Demand Period in December 1999. Therefore, pursuant to
the Master Operating Agreement, unless there is a Mill Closure (as hereinafter
defined) or certain casualty or force majeure events occur, Mobile Energy
believes that the aggregate Demand Charges payable by the Mill Owners for Steam
Processing Services and Liquor Processing Services are not subject to reduction
by the Mill Owners until at least the conclusion of the second Demand Period in
December 2001. In February 1996 Mobile Energy completed implementation of a new
metering system that will allow it to determine whether the Aggregate Demand
level with respect to Power Processing Services also will not, pursuant to the
terms of the Master Operating Agreement, be permitted to be decreased at the
conclusion of the first Demand Period in December 1999. In the period since that
metering system became fully operational, the Tissue Mill and the Paper Mill
have had peak demands for Power Processing Services that would prevent them from
decreasing their Demands for Power Processing Services at the conclusion of the
first Demand Period in December 1999, but the Pulp Mill has not. In any event,
pursuant to the Master Operating Agreement, unless there is a Mill Closure or
certain casualty or force majeure events occur, the aggregate Demand Charges
payable by the Mill Owners for Power Processing Services are not subject to
reduction by the Mill Owners until at least the end of the first Demand Period
in December 1999. However, there can be no assurance that a Mill Closure,
casualty or force majeure event will not occur, or that such aggregate Demand
Charges will remain in effect after December 1999 or 2001, as applicable.
Each Mill Owner has the right to terminate its Energy Services Agreement
(i) during the pendency of a Mobile Energy Event of Default (as hereinafter
defined) or (ii) if (a) the Mill Owner makes a public announcement that it will
close its Mill for a period of at least one year or that it will reduce
production of pulp, tissue or paper (as applicable) at its Mill (permanently or
for a period of at least two years ) to less than 10% of such Mill's 1994
production levels, or (b) there occurs a two-year period during which production
at such Mill is less than 10% of 1994 production levels (for any reason other
than a Force Majeure Event (as hereinafter defined)) (clauses (a) and (b) each
constituting a "Mill Closure"). If a Mill Owner terminates its Energy Services
Agreement due to a Mobile Energy Event of Default, such Mill Owner will stop
accruing Demand Charges and Processing Charges (as hereinafter defined) as of
the date of the termination. If a Mill Owner terminates its Energy Services
Agreement due to a Mill Closure, on the other hand, such Mill Owner is required
by the Master Operating Agreement to pay Demand Charges for a period equal to
the greater of (i) one year following the date upon which the Mill Owner gives
notice of termination to Mobile Energy or (ii) until the end of the then current
Demand Period. The first Demand Period ends in December 1999, and each
subsequent Demand Period ends on the second anniversary of the end of the
preceding Demand Period.
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Thus, a Mill Closure or the occurrence of certain casualty or force majeure
events at any time during the terms of the Energy Services Agreements would,
after the satisfaction of certain conditions and the expiration of the various
time periods set forth in the Master Operating Agreement, relieve the affected
Mill Owner from its obligations to pay Demand Charges and, therefore, could have
a materially adverse impact on Mobile Energy. For example, if a Mill Closure
occurs before December 1999, the aggregate Demand Charges payable by the Mill
Owners will be subject to reduction commencing as early as December 1999. In
addition, if certain casualty or force majeure events occur with respect to any
Mill or the Energy Complex before December 1999, the aggregate Demand Charges
payable by the Mill Owners may be subject to reduction prior to such date, in
accordance with the casualty and force majeure provisions of the Master
Operating Agreement and Energy Services Agreements.
Subject to certain restrictions set forth in the Master Operating
Agreement, the Mill Owners are entitled to reallocate Demand levels and,
correspondingly, Demand Charges, among the various Mills once each year.
However, such reallocations are not permitted to result in a decrease in the
Aggregate Demand levels or the aggregate Demand Charges then in effect.
As indicated above, concurrently with the acquisition of the Energy Complex
by Holdings, the Mill Owners selected initial Demand levels for each of the
Processing Services, which Demand levels currently remain in effect. The
following table sets forth the approximate percentage of Aggregate Demand by
Mill Owners for each of the Processing Services as of December 31, 1995:
Power Steam Liquor
Processing Processing Processing
Services Services Services
Pulp Mill Owner................... 34 42% 100%
Tissue Mill Owner................. 42 23 N/A
Paper mill Owner.................. 24 35 N/A
--- --- ----
100% 100% 100%
The foregoing allocations of Aggregate Demand are subject to reallocation among
the Mill Owners as early as December 1996 and at various times thereafter.
The Energy Services Agreements also require each Mill Owner to pay usage
charges (the "Processing Charges") based upon formulas set forth in the Master
Operating Agreement which vary from month to month in accordance with the amount
of Processing Services required by, and provided to, such Mill Owner and Mobile
Energy's efficiency with respect to fuel usage. The Processing Charges were
designed generally to cover the balance of Mobile Energy's costs that are not
projected to be covered by Demand Charges, including variable costs such as fuel
related expenses. There can be no assurance, however, that the Processing
Charges will at all times cover such costs, including variable costs such as
fuel related expenses.
Mobile Energy and the Mill Owners are currently developing a computer model
(the "Process Model") in accordance with certain principles set forth in the
Master Operating Agreement. Upon the completion of the development and testing
of the Process Model, the Process Model will be used to calculate the fuel cost
component of the Processing Charges. The Process Model will be designed to
compute, among other things, the quantity of coal that the Energy Complex should
be using at any time (given the amount of weak black liquor, biomass, sludge and
gas provided, and the amount of condensate returned, by the Mill Owners) in
order to satisfy certain efficiency and reliability standards, taking into
account applicable fuel mix, boiler availability, the Mills' aggregate
requirements for Processing Services and other specified operating parameters.
The Process Model also will be designed to determine the amount of gas that the
Energy Complex should be using at any time, in accordance with a specified
protocol for boiler dispatch. These standards are designed to circumscribe
Mobile Energy's efficiency risk within the parameters set forth in the Process
Model, so that, within such parameters, Mobile Energy should not be penalized
for permitted decreases in efficiency that result from operational modifications
necessary to perform scheduled maintenance or to satisfy the Mill Owners' needs
for Processing Services at any given time. The Process Model standards also are
designed to take into account degradation of equipment efficiencies as a result
of aging.
Mobile Energy will be permitted to charge the Mill Owners, as a component
of the Processing Charges, for only those quantities of coal as are calculated
by the Process Model to be efficient quantities and only those quantities of gas
as are determined by the Process Model to be in accordance with a specified
protocol for boiler dispatch incorporated therein. If the Energy Complex uses
more coal or gas than the quantities calculated or determined by the Process
Model (because, for example, Mobile Energy has been inefficient in its use of
gas, coal, black liquor, biomass or sludge or has inappropriately dispatched its
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equipment), the costs attributable to the excess quantities of coal or gas are
not permitted to be included in the Processing Charges and, as a result, will be
borne by Mobile Energy. By contrast, if the Energy Complex uses less coal or gas
than the quantities calculated or determined by the Process Model, Mobile Energy
can include in the Processing Charges the costs associated with the Process
Model quantities of coal and gas notwithstanding that such calculated or
determined quantities may exceed the actual quantities used by the Energy
Complex. Thus, Mobile Energy will be rewarded for operating the Energy Complex
more efficiently than the standards set forth in the Process Model and will bear
the risk of operating the Energy Complex less efficiently than those standards.
The Process Model has not yet been developed by Mobile Energy and the Mill
Owners. Once the Process Model is developed and implemented, there can be no
assurance that the Energy Complex will use fuel in accordance with the standards
set forth in the Process Model, or that Mobile Energy will operate the Energy
Complex more efficiently than the standards set forth in the Process Model.
Moreover, there can be no assurance that the Process Model will perform in
accordance with its design or the principles set forth in the Master Operating
Agreement. If the Process Model fails to calculate accurately the amount of coal
and gas the Energy Complex should be using in accordance with the standards
described above, Mobile Energy's ability to recover its costs for coal and gas
could be adversely affected.
Until the Process Model is developed and certain accuracy and reliability
tests are completed (the "Interim Period"), Mobile Energy is permitted to charge
the Mills for any and all quantities of coal used by the Energy Complex to
provide the Processing Services. In addition, Mobile Energy is, subject to
certain conditions described herein, permitted to charge the Mills for any and
all quantities of gas used by the Energy Complex to provide the Processing
Services during the Interim Period. Certain other modifications to the formulas
used to calculate the Processing Charges will also remain in effect during the
Interim Period, in order to facilitate the calculation of the processing charges
until the development and testing of the Process Model has been completed.
Pursuant to the Master Operating Agreement, the unit charge payable by the
Mill Owners for coal is contractually fixed and escalated in accordance with an
escalator based upon the market price for coal mined east of the Mississippi
River and sold to specified utilities across the United States. Thus, Mobile
Energy receives the benefit, and bears the burden, of any difference between
Mobile Energy's actual coal costs and the contractual coal charges. The unit
charge payable by the Mill Owners for gas is Mobile Energy's actual "all in" per
unit gas cost.
For the twelve-month period ended December 31, 1995, sales to the Pulp
Mill, Tissue Mill and Paper Mill (including both Demand Charges and Processing
Charges) were $42.6 million, $19.5 million, and $19.8 million respectively,
which accounted for 51.6%, 23.7% and 24.0%, respectively, of Mobile Energy's
operating revenues. Payments of Demand Charges and Processing Charges by the
Mill Owners under the Energy Services Agreements are expected to provide
virtually all of Mobile Energy's operating revenues and are therefore the
primary source of funds for the payment of debt service. There are no
significant alternative sources of funds available to Mobile Energy to make debt
service payments (other than certain reserve accounts). Accordingly, a
significant decrease in revenues payable under the Energy Services Agreements
that is not accompanied by a corresponding decrease in operating costs may have
a materially adverse impact on Mobile Energy's financial condition. If Demand
Charges and such other charges were at any time to be insufficient to cover
Mobile Energy's fixed costs (including payment of debt service), Mobile Energy
could be unable to pay principal of and interest on its outstanding indebtedness
or could be unable to pay its other fixed costs.
Subject to certain limited exceptions, the Energy Services Agreements and
the Master Operating Agreement require the Mill Owners to purchase their entire
requirements for Processing Services from Mobile Energy up to the Maximum
Capacity of the Energy Complex, but do not require that the Mill Owners purchase
any minimum level of Processing Services at any time. No assurance can be given
that the Mill Owners will continue to operate the Mills at historical operating
levels for all or any portion of the term of the Energy Services Agreements.
Also, seasonal and cyclical fluctuations in the pulp, tissue and paper industry
will affect the Mills' requirements for Processing Services. The markets for
certain of the Mills' products historically have been highly cyclical,
characterized by periods of supply and demand imbalance. Therefore, revenues
from Processing Charges may fluctuate considerably from month to month.
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Subject to the limitations discussed above with respect to adjustments of
Demand Charges, Mobile Energy's revenues from Demand Charges can be affected by
such cyclical fluctuations in the pulp, tissue and paper industry as well.
Revenues from Demand Charges with respect to Steam Processing Services and
Liquor Processing Services could substantially decline in January 2002, and
again on each second anniversary thereof (based on Mobile Energy's belief that
such Demand Charges would not be subject to reduction prior to such time, except
if there is a Mill Closure or if certain casualty or force majeure events
occur). Revenues from Demand Charges with respect to Power Processing Services
could substantially decline in January 2000, and again on each second
anniversary thereof, or, in each such case, earlier if Mobile Energy fails to
provide required levels of Processing Services or if a Mill Closure or certain
casualty or force majeure events occur.
Sales to each of the three Mills account for substantially all of Mobile
Energy's revenues. Accordingly, the loss of revenues from any one Mill, whether
due to decreased operations, a Mill Closure or otherwise, could have a material
adverse impact on Mobile Energy. Given that sales to the Pulp Mill account for
the greatest percentage of Mobile Energy's operating revenues, and because the
Pulp Mill supplies certain fuels, water and waste water treatment services and
boiler ash disposal services to the Energy Complex, a permanent, substantial
curtailment of production at or a closure of the Pulp Mill could have a far more
detrimental effect on Mobile Energy's revenues than similar occurrences with
respect to the Paper Mill or the Tissue Mill.
No assurance can be given that the Mill Owners will timely pay amounts due
to Mobile Energy or perform the services required under the Project Agreements
or that, regardless of whether or not the Mill Owners timely make such payments
and perform such services, Mobile Energy's revenues from Processing Charges and
Demand Charges will be sufficient to pay the operating and maintenance expenses
of the Energy Complex and the principal of and interest on Mobile Energy's
indebtedness.
The markets for certain of the Mills' products are highly cyclical,
characterized by periods of supply and demand imbalance, and have historically
experienced price fluctuations driven by changes in supply, end-user demand and
preferences (including as to use of recycled contents in finished goods) and the
availability and relative price of imported products. Certain sectors of the
paper industry have also been significantly affected by changes in general
economic conditions, levels of consumer confidence and income, the availability
of financing and interest rate levels. Some of the Mill Owners' competitors have
greater financial resources than the Mill Owners, and certain mills operated by
competitors may be lower cost producers than the Mills. Accordingly, there can
be no assurance that a Mill Closure will not occur, that the Mills will be
operated at current levels over the life of the Mobile Facility or that such
levels of operation will generate sufficient revenue to Mobile Energy to enable
it to pay principal of and interest on its outstanding indebtedness.
Since the sale of the Energy Complex by Scott to Holdings, S.D. Warren has
transferred some of its grade coated production (in which it is a market leader)
from the Paper Mill to another of its mills which is not serviced by the Energy
Complex. While S.D. Warren has indicated that the change in operations is
designed, in part, to convert capacity at the Paper Mill to the production of
coated specialty and technical paper, and while such change in operations has
increased the Paper Mill's usage of Steam Processing Services, there can be no
assurance that the altered product mix of the Paper Mill will not have a
materially adverse impact on the Paper Mill's requirement for Processing
Services, or that the Paper Mill will continue to be operated on an economic
basis.
Also, the Mill Owners have broad discretion to merge with or otherwise
combine with other companies and to otherwise transfer their interests in the
Mills, and there can be no assurance that the current Mill Owners will retain
their respective interests in the Mills. The consummation of any merger,
combination or other transfer, including the Scott merger with a subsidiary of
Kimberly-Clark, could result in a change in the mix or level of processing
services demanded by such Mill and/or a decrease in the creditworthiness of the
Mill Owner, any of which could have a material adverse effect on Mobile Energy.
Prior to the announcement in July 1995 of its intent to merge with
Kimberly-Clark, Scott had announced its intention to sell the Pulp Mill as part
of a general corporate initiative to focus on its tissue operations. Payments
from the Pulp Mill Owner accounted for approximately 51.6% of Mobile Energy's
operating revenues in 1995. There can be no assurance that Scott/Kimberly-Clark
will not seek to sell the Pulp Mill or that any successor to
Scott/Kimberly-Clark as the Pulp Mill Owner would be of equivalent credit
quality or industry expertise, would require the same level of Processing
Services as are currently or have been historically required by
Scott/Kimberly-Clark for its operation of the Pulp Mill or would continue to
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provide the services and products currently provided by Scott/Kimberly-Clark (as
the Pulp Mill Owner) pursuant to certain of the Project Contracts to the other
Mills or the Energy Complex.
The Tissue Mill and the Paper Mill currently rely upon the Pulp Mill for
almost all of their supply of pulp. Because both the Tissue Mill and the Pulp
Mill currently are owned by Scott/Kimberly-Clark, there is no contractual
arrangement between the Tissue Mill and the Pulp Mill for the supply of pulp. By
contrast, in connection with the sale of S.D. Warren in December 1994, Scott
entered into a long-term agreement (the "Pulp Supply Agreement") for the Pulp
Mill to supply the Paper Mill with its pulp requirements (subject to minimum and
maximum amounts) at prices that are generally based upon, though somewhat
discounted from, market prices. There can be no assurance that future owners of
the Pulp Mill and/or the Tissue Mill would enter into similar long-term pulp
supply arrangements or that any such pulp supply arrangements would be
economically beneficial to such parties.
Prior to the announcement of its intent to merge with Kimberly-Clark, Scott
had also announced its intention to sell in 1995 its Southeast timberland
operations (the "Southeast Timberland"), which controls over 500,000 acres of
woodlands in Alabama and Mississippi. The Pulp Mill currently relies upon the
Southeast Timberland for the supply of a significant portion of the Pulp Mill's
timber requirements and a significant portion of the biomass that the Pulp Mill
supplies to the Energy Complex. If the Southeast Timberland were to be sold, a
significant source of timber and biomass for the Pulp Mill may no longer be
available to the Pulp Mill on terms as advantageous to the Pulp Mill as at the
present time. Accordingly, the sale of the Southeast Timberland could have a
materially adverse impact on the Pulp Mill's (and therefore the Tissue Mill's
and Paper Mill's) business, in the level of Processing Services demanded by such
Mills and on the supply of biomass to the Energy Complex.
In connection with its proposed merger with Kimberly-Clark, Scott announced
that it had suspended its previously stated plans to sell its global pulp
operations (including the Pulp Mill) and its timberlands in the United States
and Canada (including the Southeast Timberland). However, subsequent to the
merger Kimberly-Clark has indicated that the combined entity will endeavor to
eliminate redundant overhead costs, reduce its workforce and sell certain assets
including some manufacturing facilities. Therefore, although any sale of the
Pulp Mill or the Southeast Timberland may be delayed or abandoned as a result of
the merger, there can be no assurances that the Pulp Mill or the Southeast
Timberland (or any other assets (including the Tissue Mill)) would not
eventually be sold by the combined entity.
The revenues received by Mobile Energy from the sale of Processing Services
to the Mills could also be adversely affected if one or more Mill Owners were to
go into bankruptcy. The Energy Services Agreements, the Master Operating
Agreement and certain of the other Project Contracts to which one or more Mill
Owners are party are "executory contracts" under the Bankruptcy Code because
performance is still due, to some extent, by both Mobile Energy and the Mill
Owners. Therefore, if a voluntary or involuntary petition with respect to a Mill
Owner were filed in a bankruptcy court, the Mill Owner (as debtor) could, with
the approval of the bankruptcy court, assume, assume and assign, or reject its
Energy Services Agreement, the Master Operating Agreement or any other of the
Project Contracts to which it is a party. No assurance can be given that a Mill
Owner in bankruptcy would be willing or able to assume any or all of the Project
Contracts to which it is a party, including its Energy Services Agreement.
Furthermore, no assurance can be given that Mobile Energy would be able to
replace any such Mill Owner with another customer willing to purchase power,
steam or liquor processing services on terms similar to those in an Energy
Services Agreement that is rejected by a Mill Owner in bankruptcy or on other
terms that are beneficial to Mobile Energy.
If, after the filing of a bankruptcy petition, a Mill Owner in bankruptcy
does not immediately assume or reject the Project Contracts to which it is a
party and Mobile Energy provides Processing Services to such Mill Owner pursuant
to the Project Contracts, Mobile Energy would be compensated for such
post-petition services at a rate equal to the "actual and necessary" value of
the benefit of those services to the bankruptcy estate. In addition, a
bankruptcy court could compel Mobile Energy to continue to provide Processing
Services to the Mill Owner in bankruptcy, provided that the Mill Owner pays
Mobile Energy an amount equal to the "actual and necessary" value of the benefit
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of the Processing Services to the bankruptcy estate. Furthermore, if Mobile
Energy were deemed to be a "utility" under Section 366 of the Bankruptcy Code,
Mobile Energy could be compelled by the bankruptcy court to provide Processing
Services to the Mill Owner for the remainder of the bankruptcy case even
following the Mill Owner's rejection of its Energy Services Agreement, in return
for payment based on the "actual and necessary" value of the benefit to the Mill
Owner in bankruptcy of such Processing Services. There can be no assurance that
a bankruptcy court would determine that the "actual and necessary" value of the
benefit of the Processing Services to a Mill Owner in bankruptcy (i.e., the
amount payable by the bankrupt Mill Owner) is equal to the sum of the Processing
Charges and Demand Charges otherwise payable under the Project Contracts. If a
bankruptcy court were to determine that the "actual and necessary" value of the
benefit of the Processing Services to the bankrupt Mill Owner is in fact less
than the sum of the Processing Charges and Demand Charges otherwise payable by
such Mill Owner, the financial condition of Mobile Energy could be adversely
affected.
Operations
The Energy Complex is operated by Southern Electric pursuant to an agreement
with Mobile Energy (the "O&M Agreement"). Southern Electric provides operation,
maintenance and administrative services to Mobile Energy and currently employs
all of the personnel who work at the Energy Complex. At December 31, 1995, there
were 24 salaried and 110 union employees working at the Energy Complex. Southern
Electric is compensated by Mobile Energy pursuant to the O&M Agreement on a cost
pass-through basis for the labor and other costs incurred by Southern Electric
in operating and maintaining the Energy Complex.
Mobile Energy, Scott/Kimberly-Clark and each of the Mill Owners are parties
to a common services agreement (including any amendments thereto, the "Common
Services Agreement") which, among other things, (i) provides for Mobile Energy
and the Mill Owners to share certain facilities owned by Scott/Kimberly-Clark at
the Mobile Facility (such as a cafeteria, an infirmary, a maintenance training
facility and certain roads) and (ii) requires the Tissue Mill Owner to provide
certain services (such as cafeteria services, medical services, maintenance
training services and parking lot maintenance) to Mobile Energy and each of the
other Mill Owners. In addition, each of the Mill Owners has granted Mobile
Energy non-exclusive easements over the portions of the Mobile Facility owned by
such Mill Owner (other than Lots 7 and 9 of the Real Property (as hereinafter
defined), which Mobile Energy leases from Scott/Kimberly-Clark), and Mobile
Energy has granted non-exclusive easements over Lots 7 and 9 to each of the Mill
Owners, in each case, among other things, for access to the common facilities
described above, for access to the portions of the Mobile Facility owned or
leased by the person to whom the easement was granted and for other purposes
required for or incidental to the performance of the grantee's obligations and
the exercise of its rights under the Project Agreements. These agreements,
together with the Master Operating Agreement, which, among other things,
provides for the coordination of operations at the Mobile Facility and the
management of the common services, establish the contractual framework that
enables the Mobile Facility to continue to operate as an integrated
manufacturing complex.
Mobile Energy, Scott/Kimberly-Clark and the Mill Owners are party to the
Master Operating Agreement which, among other things, provides for the
continuation after the Acquisition of a committee (the "Site Operating
Committee") previously utilized by Scott to coordinate and integrate the
operations of the Mills and the Energy Complex. The Site Operating Committee is
comprised of one representative from each of the Mills and the Energy Complex.
The Site Operating Committee meets once a week (or, if necessary, more
frequently) to address scheduled and unscheduled events that affect the
Processing Services and other flows among the Energy Complex and the Mills, the
operating systems, the common facilities and the safety and integrity of the
Mobile Facility. The Master Operating Agreement provides for the members of the
Site Operating Committee to work on a cooperative basis to promote the operation
and maintenance of the Energy Complex and each of the Mills in a manner that
will optimize, in accordance with the Project Agreements, the performance of the
Energy Complex and the Mills as an integrated facility. Pursuant to the Master
Operating Agreement, the Site Operating Committee, among other things, (i)
coordinates the delivery of Processing Services and other flows among the Energy
Complex and the Mills pursuant to the Project Agreements, (ii) coordinates
Scheduled Energy Complex Outages (as hereinafter defined), scheduled outages at
the Mills ("Scheduled Mill Outages") and Major Maintenance Outages (as
hereinafter defined), (iii) develops and modifies emergency operating and
shutdown procedures, (iv) endeavors to resolve disputes among the parties (in
accordance with the dispute resolution procedures set forth in the Master
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Operating Agreement) and (v) supervises and/or directs the performance of the
Essential Common Services (as hereinafter defined) in accordance with the Common
Services Agreement. Except for certain categories of decisions set forth in the
Master Operating Agreement, all resolutions of the Site Operating Committee are
required to be by unanimous decision of all members present in person or by
telephone at a Site Operating Committee meeting. The effective functioning of
the Site Operating Committee is important to the effective operation of the
Mobile Facility and to the rapid resolution of disagreements between Mobile
Energy and the Mill Owners. No assurance can be given that the Site Operating
Committee will effectively coordinate and integrate the operations of the Mills
and the Energy Complex, resolve disagreements between Mobile Energy and the Mill
Owners or otherwise function as designed or that the failure to do so would not
have a materially adverse impact on Mobile Energy.
Sources and Availability of Raw Materials
Approximately 85% of the fuel requirements of the Energy Complex are currently
satisfied with by-products generated by the operations of the Pulp Mill or
provided by the Pulp Mill. These by-products include black liquor, biomass
(waste wood), and sludge, each of which is provided to Mobile Energy by the Pulp
Mill Owner under the Pulp Mill Energy Services Agreement.
Although a failure by the Pulp Mill Owner to deliver solid waste or weak
black liquor to the Energy Complex by itself should not cause Mobile Energy to
default upon its obligations to the Mill Owners under the Project Agreements,
such failure could decrease operating cash flow to Mobile Energy to the extent
that (i) processing charges decline due to diminished Energy Complex output and
(ii) operations and maintenance costs fail to decline correspondingly. In
addition, such a reduction could lead to a downward adjustment of Demand Charges
in subsequent Demand Periods. No assurance can be given that the Pulp Mill will
continue to operate at historical levels (or at all) and continue to provide the
Energy Complex with historical levels of black liquor to process.
If the Pulp Mill does reduce or suspend its operations, it will have a
reduced (or no) need for any of the Processing Services and, in particular, will
reduce its requirements for (or cease to require) Liquor Processing Services
because it will be producing limited (or no) amounts of weak black liquor. Since
there is no other long-term customer for Liquor Processing Services currently
available to the Energy Complex and, therefore, no alternative source of supply
for weak black liquor, the failure by the Pulp Mill Owner to deliver weak black
liquor for processing could have a materially adverse impact on Mobile Energy's
ability to generate revenues due to a resulting decrease in Demand Charges in
future Demand Periods or to the extent that Processing Charges decline and
operations and maintenance costs fail to decline correspondingly. Also, because
the Energy Complex has no reliable long-term source of supply of weak black
liquor other than the Pulp Mill, and because the Pulp Mill has the most readily
available supply of biomass for the Energy Complex, the closure of the Pulp Mill
could deprive the Energy Complex of two significant fuels, and could thereby
impede, physically and economically, the Energy Complex's ability to provide the
Power Processing Services and Steam Processing Services to the Tissue Mill, the
Paper Mill or third parties.
The supplemental fuel needs of the Energy Complex are satisfied with coal,
presently procured by Mobile Energy pursuant to a short-term contract which will
expire on April 30, 1996 and which is subject to extension for successive
one-year terms, and natural gas, currently procured by the Tissue Mill Owner
from third parties. Both products are readily available on the open market from
a variety of suppliers. Accordingly, Mobile Energy anticipates no significant
problems in satisfying its future needs for coal and natural gas.
Pursuant to the Master Operating Agreement, the unit charge payable by the
Mill Owners for coal is contractually fixed and escalated in accordance with an
escalator based upon the market price for coal mined east of the Mississippi
River and sold to specified utilities across the United States. Thus, Mobile
Energy receives the benefit, and bears the burden, of any difference between
Mobile Energy's actual coal costs and the contractual coal charges. There can be
no assurance that Mobile Energy will be able to procure coal at prices equal to
or less than the contractual coal charges.
Additionally, the Energy Complex and each of the Mills are dependent upon
the Pulp Mill to provide, pursuant to a Water Procurement and Effluent Services
Agreement (including any amendments thereto, the "Water Agreement"), process
water and waste water treatment services, and the Energy Complex currently
relies on the Pulp Mill Owner to provide, pursuant to a Boiler Ash Disposal
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Agreement (including any amendments thereto, the "Ash Agreement"), ash disposal
services. If Mobile Energy does not receive any such products or services,
Mobile Energy is entitled by the Master Operating Agreement to reduce the amount
of Processing Services provided to the Mill Owners (without incurring any
reduction in the Demand Charges payable to Mobile Energy during the then current
Demand Period as a result). However, such a reduction could decrease Mobile
Energy's operating cash flow to the extent that (i) Processing Charges decline
due to diminished Energy Complex output and (ii) operations and maintenance
costs fail to decline correspondingly. In addition, such a reduction could lead
to a downward adjustment of Demand Charges in subsequent Demand Periods. No
assurance can be given that the Pulp Mill Owner can or will perform its
obligations under the Water Agreement, the Ash Agreement or any other Project
Contract.
If the Pulp Mill Owner fails to perform any of its obligations under the
Water Agreement (and if certain other conditions are satisfied), Mobile Energy
is granted the right under the Master Operating Agreement to assume operational
responsibility for the Pulp Mill's process water plant and waste water treatment
plant (the "Mobile Energy Step-In Rights"). In addition, Mobile Energy has a
license from the Pulp Mill Owner to utilize, at Mobile Energy's expense, certain
Pulp Mill equipment (including the two water plants) if the Pulp Mill Owner
terminates its Energy Services Agreement in connection with a Mill Closure with
respect to the Pulp Mill. However, no assurance can be given that the Mobile
Energy Step-In Rights are legally enforceable, that Mobile Energy would be able
successfully to exercise the Mobile Energy Step-In-Rights or that Mobile
Energy's use of the license would be economically beneficial to Mobile Energy.
Additionally, no assurance can be given that Mobile Energy has or could obtain
the Governmental Approvals necessary to exercise the Mobile Energy
Step-In-Rights.
Finally, because both the Tissue Mill and the Paper Mill currently rely
upon the Pulp Mill for almost all of their supply of pulp, and for all of their
supply of process water and waste water treatment services, the failure by the
Pulp Mill to provide any of these products or services could have a material
adverse effect on the operation of the Tissue Mill or the Paper Mill, thereby
reducing their requirements for processing services. Therefore, even if Mobile
Energy were able to obtain from other sources any products or services that the
Pulp Mill failed to supply to Mobile Energy, Mobile Energy's revenues could be
materially adversely affected to the extent that a reduction of operations at,
or the closure of, the Pulp Mill adversely affects operations at the other
Mills. Because both the Tissue Mill and the Pulp Mill currently are owned by
Scott/Kimberly-Clark, there is no contractual agreement between the Pulp Mill
and the Tissue Mill for the supply of pulp and no assurance can be given that
future owners of the Pulp Mill and/or the Tissue Mill would enter into pulp
supply agreements. Furthermore, no assurance can be given that the Pulp Mill
will continue to supply pulp, process water or waste water treatment services to
the other Mills, or that any such supply failure would not have a material
adverse effect on the Tissue Mill, the Paper Mill or Mobile Energy.
Permitting and Regulatory Matters
Both Holdings and Mobile Energy are subject to regulation as subsidiary
companies of a registered public utility holding company (Southern) by the SEC
under PUHCA. Under PUHCA, the SEC regulates certain activities undertaken by
Mobile Energy and Holdings, including securities sales, certain asset sales and
acquisitions, and sales, service, and construction contracts with affiliates,
among other matters. Mobile Energy believes that it is not subject to
regulation, including rate regulation, by the FERC because Mobile Energy does
not currently sell electricity at wholesale or transmit electricity in
interstate commerce. In addition, Mobile Energy believes that it is not subject
to regulation, including rate regulation, as a public utility by the Alabama PSC
because it does not offer Power Processing Services or Steam Processing Services
to the public generally. The Alabama PSC has not provided notice to Mobile
Energy of any intent to exercise regulatory authority over Mobile Energy.
As with any project comparable in size and nature to the Energy Complex,
Mobile Energy is required to comply with the provisions of numerous statutes and
regulations relating to the safety and health of employees and the public during
the operation of the Energy Complex, including: emergency response and
remediation or cleanup in connection with hazardous and toxic materials or other
substances associated with the Energy Complex; limits on noise emissions from
the Energy Complex; safety and health standards; practices and procedures
applicable to the operation of the Energy Complex; environmental protection
requirements (such as standards relating to the discharge of pollutants into the
air, water and land); and employment, hiring and anti-discrimination
requirements. Compliance with such requirements may impose significant
additional costs on Mobile Energy. Failure to comply with any such statutes or
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regulations could have material adverse effects on Mobile Energy, including
civil or criminal liability, imposition of clean-up liens and fines and
expenditures of funds to bring the Energy Complex into compliance. There can be
no assurance that Mobile Energy will at all times be in compliance with all
applicable statutes and regulations or that the steps to bring Mobile Energy
into compliance would not materially adversely affect Mobile Energy's financial
condition. Additionally, there can be no assurance that the Mills or the Mill
Owners at all times will be in compliance with applicable statutes and
regulations. Due to the integrated nature of the Mills and the Energy Complex,
such failure by the Mills or the Mill Owners to comply with applicable statutes
and regulations could have a materially adverse impact on Mobile Energy.
Mobile Energy also is obligated to comply with the provisions of the
numerous federal, state and local statutory and regulatory regimes specifically
applicable to its operations and to obtain and/or maintain numerous governmental
approvals pursuant to applicable laws. Mobile Energy, Holdings, Southern
Electric and Southern have obtained all material discretionary governmental
approvals required as of the date hereof in order to acquire and operate the
Energy Complex. Although not currently required, additional governmental
approvals, including without limitation, renewals, extensions, transfers,
assignments, reissuances or similar actions regarding governmental approvals,
may be required in the future due to a change in law or a change in Mobile
Energy's customers or for other reasons.
For example, if Mobile Energy were to sell electricity to a purchaser which
intended to resell the electricity, such as Alabama Power, Mobile Energy would
need the approval of the FERC, and there can be no assurance that Mobile Energy
could obtain such approval on acceptable terms, or at all. In addition, if
Mobile Energy were to sell electricity or steam to more than a limited number of
end users, Mobile Energy (and such sales) could be subject to rate and other
regulation by the Alabama PSC, which could materially adversely affect Mobile
Energy's revenues. No assurance can be given that Mobile Energy will be able to
obtain and/or maintain all required governmental approvals that it does not yet
have or that it may in the future require, or that Mobile Energy will be able to
obtain any necessary modifications to existing governmental approvals.
Delay in obtaining or failure to obtain and maintain in full force and
effect any such governmental approvals, or amendments thereto, or delay or
failure to satisfy any such conditions or other applicable requirements, could
prevent operation of the Energy Complex, sales to persons other than the Mill
Owners or delivery of fuel or ash disposal, or could result in additional costs
to Mobile Energy. Mobile Energy's business also could be materially adversely
affected as a result of statutory or regulatory changes or judicial or
administrative interpretations of existing laws that impose more comprehensive
or stringent requirements on the Energy Complex, the use or transportation of
fuel or the transportation or disposal of ash. For example, a statutory or
regulatory change, or a new judicial or administrative interpretation of
existing laws, could subject Mobile Energy and its sales of Power Processing
Services and Steam Processing Services to regulation by the Alabama PSC even if
Mobile Energy's business does not change significantly. Any such changes could
substantially increase the cost of Mobile Energy's operations or decrease Mobile
Energy's revenues and have a material adverse effect on the financial condition
of Mobile Energy.
Under Chapter 14 of Title 37 of the Code of Alabama (the "Alabama
Territorial Law"), which regulates service territories for electric suppliers,
Alabama Power is the primary electric supplier in the City of Mobile. Secondary
electric suppliers are prohibited from extending facilities to serve existing or
new premises within the city limits. The Mobile Facility lies within the city
limits. Mobile Energy believes that its acquisition of the Energy Complex and
provision of electric power to the existing Mobile Facility would not cause it
to be in violation of the Alabama Territorial Law. However, there can be no
assurance that the Alabama PSC would reach the same conclusion if presented with
the issue. If the Alabama Territorial Law were found to prohibit Mobile Energy
from providing Power Processing Services to the Mills, Mobile Energy's revenues
and its ability to pay the principal of and interest on its indebtedness could
be materially adversely affected.
Environmental Considerations
Pursuant to three separate environmental indemnity agreements between each of
the Mill Owners and Mobile Energy (collectively, including any amendments
thereto, the "Mill Environmental Indemnity Agreements"), each of the Mill owners
has agreed to indemnify Mobile Energy and Mobile Energy has agreed to indemnify
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each of the Mill Owners, and, in each such case, their respective affiliates,
directors, officers, agents, attorneys and employees from and against various
enumerated environmental-related claims ("Environmental Claims") brought
against, and various enumerated environmental-related expenses ("Environmental
Expenses") imposed upon, such indemnified parties in connection with (1)
breaches by the indemnifying party of any of its representations and warranties,
covenants or other obligations in the applicable Energy Service Agreement or the
Master Operating Agreement, or (2) any environmental-related conditions
("Environmental Conditions") that give rise to, or could give rise to,
Environmental Claims or other liabilities, or any violation of any environmental
law ("Environmental Noncompliance") located at or otherwise relating to the
Mills or the Energy Complex (as applicable) or associated facilities of the
indemnifying party, to the extent arising out of facts or circumstances that
occur or come into existence after December 12, 1994. Also, Scott/Kimberly-Clark
has agreed to indemnify, defend and hold harmless Mobile Energy, its affiliates,
and its and their respective officers, directors, agents, attorneys and
employees (the "Mobile Energy Indemnified Parties"), from and against any and
all Environmental Claims brought against, and any and all Environmental Expenses
imposed upon or incurred by any Mobile Energy Indemnified Party, in connection
with (1) breaches of any Scott/Kimberly-Clark representations and warranties, or
other provisions of the Asset Purchase Agreement, relating to or otherwise
concerning Environmental Conditions or Environmental Noncompliance with respect
to the Mills or Energy Complex, or (2) any (a) Environmental Conditions that
give rise to, or could give rise to, Environmental Claims or other liabilities
or (b) Environmental Noncompliance located at or otherwise relating to the Mills
or Energy Complex, or associated facilities, in each case, to the extent arising
out of any facts or circumstances existing as of or prior to December 12, 1994.
Either (i) Mobile Energy's performance of its obligations that may in the future
arise under the Mill Environmental Indemnity Agreements or (ii) the failure of
Scott/Kimberly-Clark or any Mill Owner to perform its obligations that may in
the future arise under its respective agreement could have a material adverse
effect on Mobile Energy's financial condition.
Mobile Energy is subject to comprehensive and dynamic federal, state and
local environmental laws and regulations, including those governing air
emissions, waste water discharges and hazardous and non-hazardous waste
disposal. For example, the EPA has proposed (1) certain effluent limitation
guidelines and standards for the control of waste water pollutants from pulp and
paper industry facilities and (2) a national emission standard for hazardous air
pollutants emitted from mills that chemically pulp wood fiber using kraft,
sulfite, soda, or semi-chemical methods (the "Cluster Rule"). The currently
proposed water effluent guidelines apply only to non-combustion sources within
mills, and the proposed emission standards are limited to the emission points in
the pulping and bleaching processes and in the associated process waste water
collection and treatment systems. The EPA, however, has indicated that it
expects to propose a revised version of the water effluent guidelines and
emissions standards in the spring of 1996. The EPA also has indicated that it
expects to propose an additional regulation applicable to pulp and paper
industry facilities, consisting of effluent guidelines and emission standards
for combustion sources, in the late summer of 1996 (the "Combustion Rule"). If
promulgated as proposed, the Cluster Rule (which would principally apply to the
Mills) probably will require significant capital expenditures by, and
significant modifications to, the Mills.
None of the Mills is contractually obligated to Mobile Energy to comply
with the Cluster Rule or any other environmental regulation. Thus, the Mills
could choose to close entirely rather than incur the costs imposed by the
Cluster Rule. If a Mill Closure occurs (whether as a result of the costs imposed
on the Mill Owners by the Cluster Rule or otherwise), and the applicable Mill
Owner decides to terminate its Energy Services Agreement, such Mill Owner is
required by the Master Operating Agreement to pay Demand Charges for a period
equal to the greater of (i) one year following the date on which the Mill Owner
gives notice of termination to Mobile Energy or (ii) until the end of the then
current Demand Period. The first Demand Period ends in December 1999 and each
subsequent Demand Period ends on the second anniversary of the end of the
preceding Demand Period. The failure by the Mills to spend the monies necessary
to comply with the Cluster Rule therefore could, indirectly, have a material
adverse impact on Mobile Energy's results of operations, to the extent that it
were to reduce the amount of processing services the Mills purchase from the
Energy Complex and the amount of charges (including Demand Charges) the Mills
pay to Mobile Energy. Because the Energy Complex is a combustion source, it is
unlikely that the currently proposed Cluster Rule will have a direct impact on
the Energy Complex.
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If promulgated in some form, the Combustion Rule, which has not yet been
officially proposed but which the EPA has indicated may be proposed in 1996, and
which would principally apply to the Energy Complex, could require significant
capital expenditures by Mobile Energy and equipment and operational
modifications to the Energy Complex. Because the Combustion Rule has not yet
been proposed, Mobile Energy cannot estimate the expense required to comply with
such a rule.
Accordingly, the Cluster Rule could have a materially adverse impact on the
economic status of the Mills and the amount of processing services they require,
and the Combustion Rule could have a materially adverse impact on Mobile Energy
directly, by requiring Mobile Energy to modify its equipment or operations in
order to comply with the Combustion Rule's provisions. Under the Master
Operating Agreement, Mobile Energy generally is permitted to charge the Mills
the reasonable cost of capital expenditures and operation and maintenance
expenses incurred by Mobile Energy as a result of the Cluster Rule or the
Combustion Rule. Nevertheless, there can be no assurance that a Mill Owner would
not abandon its Mill rather than incur the costs imposed by the Cluster Rule (or
any other environmental or non-environmental law or regulation) or would have
the ability to comply with its obligations under the Master Operating Agreement
associated with the Combustion Rule. Either such result could have a materially
adverse impact on Mobile Energy's financial condition.
As regulatory agencies have not yet promulgated final standards for some
existing programs, and as some proposed requirements (such as the Cluster Rule)
and suggested requirements (such as the Combustion Rule) have not yet been
enacted or adopted, Mobile Energy cannot at this time reasonably estimate its
costs of compliance with these additional programs and requirements (some of
which will not take effect for several years or may not be promulgated at all)
or the timing of any such costs.
Pursuant to the Ash Agreement, Scott/Kimberly-Clark has agreed to transport
and dispose of boiler ash that results from operation of the Energy Complex, and
Scott/Kimberly-Clark has elected to dispose of such boiler ash at the Lott Road
Landfill (as hereinafter defined). The ADEM permit for the landfill expired on
January 3, 1993. ADEM has authorized continued operation of the landfill under
the terms of the expired permit until a final decision has been made on permit
renewal. Permit renewal is under review, the required information has been
submitted, and the landfill can continue to operate until the review is
complete. No assurance can be given that the landfill will obtain the necessary
permits from ADEM to continue operations. Scott/Kimberly-Clark's obligation to
take and dispose of Energy Complex boiler ash, however, is not dependent upon
the continued availability of the Lott Road Landfill.
The landfill owner estimates that the Lott Road Landfill has a remaining
lifetime of approximately seven years. As noted above, however,
Scott/Kimberly-Clark's obligation to take and dispose of Energy Complex boiler
ash is not dependent upon the continued availability of the Lott Road Landfill.
Because the landfill is constructed in a sand pit without an engineered
liner, there is a risk that landfill leachate and storm water from the facility
may have percolated to groundwater. According to the landfill's operational
plan, however, most of the materials disposed of in the landfill are inert.
Nevertheless, the disposal of Energy Complex boiler ash in the landfill creates
a risk of participation in future remediation at the landfill, if any such
remediation is ever needed or required.
At present, Mobile Energy cannot estimate the amount by which its costs
would increase as a result of any of these events. However, any of these events
could have a material adverse impact on Mobile Energy.
Outages
In each contract year, Mobile Energy is entitled to (i) a specified number of
days of downtime for regularly recurring annual maintenance of each boiler and
turbine ("Scheduled Energy Complex Outages") and (ii) a specified amount of
shortfalls in the provision of Processing Services for unanticipated events that
affect the operation of the Energy Complex equipment ("Unscheduled Energy
Complex Outages") (each number of days and amount of shortfall, an "Outage
Allowance"). In addition, Mobile Energy is entitled to a specified number of
days of downtime for major maintenance activities with respect to each power
boiler and recovery boiler during the term of the Master Operating Agreement
("Major Maintenance Outages") (such number of days also an "Outage Allowance").
Major Maintenance Outages are designed to accommodate life cycle replacement and
refurbishment of equipment, and can generally be anticipated with sufficient
lead time to be added to the Outage Allowance for a particular contract year.
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However, Major Maintenance Outages were not allocated to particular contract
years as of the Acquisition Closing Date in order to give Mobile Energy the
flexibility to schedule such outages on an as-needed basis. As such, Major
Maintenance Outages will be scheduled by the Site Operating Committee for
particular contract years over the course of the term of the Master Operating
Agreement. If the outages experienced by the Energy Complex in a contract year
do not exceed the Outage Allowances applicable to that contract year (including
the allowances for Scheduled Energy Complex Outages, Unscheduled Energy Complex
Outages and, if scheduled for that contract year, Major Maintenance Outages),
Mobile Energy will not be deemed to be in default under the Energy Services
Agreements or the Master Operating Agreement, will not be liable for Liquidated
Damages (as hereinafter defined), and will not incur Demand Charge Reductions
(as hereinafter defined). By contrast, if the outages experienced by the Energy
Complex for a particular contract year do exceed the Outage Allowances
applicable to that contract year, Mobile Energy could, subject to the applicable
provisions of the Master Operating Agreement and Energy Services Agreements, be
deemed to be in default under such agreements, be liable for Liquidated Damages
and incur Demand Charge Reductions.
The Outage Allowance to which Mobile Energy is entitled for Liquor
Processing Services can be reduced under certain circumstances as a result of
unscheduled interruptions of electrical power to the Pulp Mill if (i) Mobile
Energy causes an unscheduled interruption of electrical power to the Pulp Mill
that curtails the Pulp Mill from delivering weak black liquor to the Energy
Complex in accordance with the Pulp Mill's current request for Liquor Processing
Services, (ii) Mobile Energy's Outage Allowance for Liquor Processing Services
is greater than zero at the time of the interruption of electrical power, and
(iii) the amount of Liquor Processing Services provided by Mobile Energy in the
week in which the interruption of electrical power occurs does not exceed the
lessor of (A) the average daily amount of Liquor Processing Services provided by
Mobile Energy during the 365 days immediately preceding that week multiplied by
seven, (B) the amount of Liquor Processing Services requested by the Pulp Mill
for that week, and (C) the Pulp Mill Owner's then current Demand for Liquor
Processing Services. The amount of the reduction will be equal to (a) the
average daily amount of Liquor Processing Services provided by Mobile Energy
during the 365 days immediately preceding that week divided by (b) 24 and then
multiplied by (c) the duration of the interruption of electrical power
(expressed in hours and rounded up to the nearest hour); provided that the
Outage Allowance for Liquor Processing Services shall not be reduced below zero.
The Mill Owners have the right to take an unlimited number of outages for
any duration, provided that the Mill Owners continue to pay Demand Charges and
any other amounts due under the Project Agreements during a Mill outage.
Each year, the Site Operating Committee is required to prepare a timetable
(the "Yearly Outages Schedule") for Scheduled Outages and, if applicable, Major
Maintenance Outages for the following contract year based upon schedules
proposed by Mobile Energy and each of the Mill Owners. To the maximum extent
practicable, the Site Operating Committee is required to coordinate the timing
of Scheduled Outages among the Energy Complex and the Mills so as to maximize
the availability of Services. At the request of Mobile Energy or any Mill Owner,
the Yearly Outages Schedule may be revised by the Site Operating Committee.
If Mobile Energy or any Mill Owner anticipates that its facility may
experience an Unscheduled Outage, or (if an outage is unanticipated) following
the occurrence of an Unscheduled Outage, the applicable party is obligated to
notify the other parties of the expected effect that the Unscheduled Outage will
have on its ability to provide Processing Services or Mill Products (as
applicable). In addition, any Mill Owner whose Mill experiences an Unscheduled
Outage is obligated to inform Mobile Energy and the other Mill Owners of the
expected effects that such Unscheduled Outage will have on the affected Mill's
Current Nomination (as hereinafter defined) and short-term future requirements
for any Processing Service, process water or compressed air. If a Mill suffers
an Unscheduled Outage, Mobile Energy may shut down any item of equipment or
machinery at the Energy Complex for maintenance or inspection as long as (i)
Mobile Energy's ability to satisfy the Mills' requirements for Processing
Services during the Mill's Unscheduled Outage is not thereby diminished and (ii)
such shutdown will not last longer than the duration of the Unscheduled Mill
Outage as communicated by the affected Mill. Such a shutdown by Mobile Energy is
not deemed an Outage for purposes of the Master Operating Agreement and,
therefore, does not affect Mobile Energy's usage of any Outage Allowance.
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Mobile Energy's actual utilization of Outage Allowances for 1995 was as
follows:
1995 Maximum
Category Allowance Utilization Unused Carryover
------- --------- ---------- ------ ---------
Steam
(MMBTU's) 25,000 9,752 15,248 10,776
Liquor
(MMLBs) 49 3 46 25
Electricity
(MWHs) 10,900 1,422 9,478 5,221
The Outage Allowances available to Mobile Energy in 1996 are as follows:
1996
------------------------
Category Carryover Total
- -------- --------- -----
Steam
(MMBTU's) 10,776 24,818
Liquor
(MMLBs) 25 50
Electricity
(MWHs) 5,221 14,732
SUMMARY OF PRINCIPAL CONTRACTS
The following summaries of selected provisions of the principal Project
Contracts are qualified in their entirety by reference to the full text of the
actual agreements, copies of which are filed as exhibits to this Form 10-K..
Energy Services Agreements
and Master Operating Agreement
Mobile Energy is party to a Pulp Mill Energy Services Agreement with the Pulp
Mill Owner, a Tissue Mill Energy Services Agreement with the Tissue Mill Owner,
a Paper Mill Energy Services Agreement with the Paper Mill Owner and a Master
Operating Agreement with each of Scott/Kimberly-Clark, the Pulp Mill Owner, the
Tissue Mill Owner and the Paper Mill Owner. These agreements set forth the
obligations of Mobile Energy, Scott/Kimberly-Clark and the Mill Owners to sell
and purchase Liquor Processing Services, Steam Processing Services and Power
Processing Services, to deliver or dispose of certain waste products or
by-products produced by the Energy Complex and the Pulp Mill, and to manage the
operations of the Energy Complex and the Mills. Mobile Energy entered into these
agreements with Scott/Kimberly-Clark and S.D. Warren acting in their capacities
as the various Mill Owners so as to facilitate the sale by Scott/Kimberly-Clark
of one or more of its Mills during the terms of the agreements by clearly
designating the rights and obligations associated with each of the Mills. See
"-Transfer and Assignment."
Term
The Energy Services Agreements and the Master Operating Agreement each have an
initial term of 25 years, which began on the Acquisition Closing Date. Mobile
Energy has the right to extend the terms of all of these agreements by five
years, but cannot exercise such right to extend with respect to less than all of
these agreements, unless any agreement not extended was earlier terminated in
accordance with its terms. In addition, the Mill Owners, acting collectively,
have an option to extend the terms of all of these agreements by five years. The
Mill Owners may not extend these agreements, except with the concurrence of
Mobile Energy, if less than all of the agreements are in effect at the end of
the initial 25-year term. If these agreements are so extended by either Mobile
Energy or the Mill Owners, the terms of certain other Project Contracts
(including the Water Agreement, the Common Services Agreement, the Ash Agreement
and the Mill Environmental Indemnity Agreements) will also be extended for five
years.
Processing Services
General Purchase and Supply Obligations
During the term of each of the Energy Services Agreements, Mobile Energy is
required to provide Steam Processing Services and Power Processing Services to
each of the Mill Owners, and Liquor Processing Services to the Pulp Mill Owner.
With regard to each Mill, Mobile Energy is obligated to dedicate the portion of
the Energy Complex's capacity to provide each Processing Service to that Mill
equal to that Mill's Demand for that Processing Service. Each Mill Owner is
obligated to purchase its entire requirements for Processing Services, up to the
Maximum Capacities, from Mobile Energy unless Mobile Energy fails to satisfy
such requirements due to capacity constraints or for any other reason. Mobile
Energy is obligated to supply the Mills' requirements for the Processing
Services, up to the Aggregate Demand for each Processing Service.
The Aggregate Demand levels are fixed by the Master Operating Agreement
until December 1999 and, thereafter, are reset periodically in accordance with
the Master Operating Agreement to reflect the Mills' actual aggregate usage of
Processing Services. Regardless of usage, the Aggregate Demand levels cannot
exceed the Maximum Capacity associated with each Processing Service. The Maximum
Capacities are stipulated, technological capacity constraints associated with
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the provision of Processing Services by the Energy Complex, and can be modified
to reflect the results of certain metering and testing activity, additions to or
modifications of the Energy Complex or the Mills, and Demand that has been
relinquished or forfeited by the Mill Owners in accordance with the Master
Operating Agreement.
Generally, although a Mill's Demand can be decreased only on specific dates
set forth in the Master Operating Agreement, a Mill's Demand can be increased at
any time (either voluntarily by the Mill Owner upon notice to Mobile Energy and
the other Mill Owners, or automatically due to a peak in usage by a Mill that
exceeds its then current Demand) if Aggregate Demand for a Processing Service is
less than the Energy Complex's Maximum Capacity for that Processing Service.
On the last day of the first five-contract year period (the "Initial Demand
Period") and on the last day of each subsequent Demand Period, any Mill Owner
whose peak usage of a particular Processing Service was below the low end of a
range established for such Mill under the Master Operating Agreement with
respect to such Processing Service (each such range a "Demand Band") has the
option to reset its Demand for such Processing Service to a level not less than
its peak usage during the Demand Period then ended. If a Mill's peak usage of a
Processing Service was within the applicable Demand Band, the Mill's Demand
cannot be reset to a lower level on the Demand Anniversary Date.
Mobile Energy believes that since the Acquisition Closing Date, the Mills
have, from time to time, required and utilized, in the aggregate, Steam
Processing Services, and the Pulp Mill has required and utilized Liquor
Processing Services, in amounts such that the Aggregate Demand levels for Steam
Processing Services and Liquor Processing Services will not, pursuant to the
terms of the Master Operating Agreement, be permitted to be decreased at the
conclusion of the first Demand Period in December 1999. Therefore, pursuant to
the Master Operating Agreement, unless there is a Mill Closure or certain
casualty or force majeure events occur, Mobile Energy believes that the
aggregate Demand Charges payable by the Mill Owners for Steam Processing
Services and Liquor Processing Services are not subject to reduction by the Mill
Owners until at least the conclusion of the second Demand Period in December
2001. In February 1996 Mobile Energy completed implementation of a new metering
system that will allow it to determine whether the Aggregate Demand level with
respect to Power Processing Services also will not, pursuant to the terms of the
Master Operating Agreement, be permitted to be decreased at the conclusion of
the first Demand Period in December 1999. In the period since that metering
system became fully operational, the Tissue Mill and the Paper Mill have had
peak demands for Power Processing Services that would prevent them from
decreasing their Demands for Power Processing Services at the conclusion of the
first Demand Period in December 1999, but the Pulp Mill has not. In any event,
pursuant to the Master Operating Agreement, unless there is a Mill Closure or
certain casualty or force majeure events occur, the aggregate Demand Charges
payable by the Mill Owners for Power Processing Services are not subject to
reduction by the Mill Owners until at least the end of the first Demand Period
in December 1999. However, there can be no assurance that a Mill Closure,
casualty or force majeure event will not occur, or that such aggregate Demand
Charges will remain in effect after December 1999 or 2001, as applicable.
By contrast, a Mill's Demand level will automatically be increased at any
time (whether or not on a Demand Anniversary Date) if the Mill's usage of a
Processing Service peaks above its Demand level for that Processing Service, as
long as the increase would not cause the Aggregate Demand for the Processing
Service to exceed the Maximum Capacity for the Processing Service. Because the
Aggregate Demands were set at their respective Maximum Capacities on the
Acquisition Closing Date, there will be no increases in the Aggregate Demand for
any Processing Service due to increased usage until there occurs a reduction in
Aggregate Demand or an increase in Maximum Capacity. A Mill desiring to increase
its Demand level for any Processing Service before the first reduction in
Aggregate Demand can do so only by agreeing to take a portion of another Mill's
Demand for that Processing Service in accordance with the Demand reallocation
provisions set forth in the Master Operating Agreement. The Master Operating
Agreement allows the Mills to reallocate the Aggregate Demand for Steam
Processing Services or Power Processing Services on the first day of each
contract year. Any such reallocation must reflect actual peak usage by the
reallocating Mills during the preceding contract year or sufficiently
demonstrated anticipated usage by the reallocating Mills during the upcoming
contract year. Furthermore, any such reallocation cannot cause the relevant
Aggregate Demand to exceed its respective Maximum Capacity and cannot decrease
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the relevant Aggregate Demand then in effect. The Mill Owners do not have the
right to compel Mobile Energy to increase the capacity of the Energy Complex if
the Mills' aggregate requirements increase above the capacity of the Energy
Complex; however, if the Mill Owners were to request, Mobile Energy would be
required in such circumstance to negotiate in good faith with the Mill Owners to
determine whether an expansion of the Energy Complex would be mutually
advantageous. If Mobile Energy does increase the capacity of the Energy Complex,
the Maximum Capacities for the Processing Services would increase only upon the
mutual agreement of Mobile Energy and the Mill Owners.
In addition to the automatic increases in Demand described above, each Mill
Owner may at any time, upon notice to Mobile Energy and the other Mill Owners,
voluntarily increase its Demand for a Processing Service up to the difference
between the Aggregate Demand then in effect for the relevant Processing Service
and the applicable Maximum Capacity. If such increase is not on a Demand
Anniversary Date (or, if on a Demand Anniversary Date, is in excess of the
Mill's peak Demand during the then just ended Demand Period), then Mobile Energy
shall have a reasonable amount of time (consistent with specified prudent plant
operating standards) in which to prepare the Energy Complex to provide the
higher level of Processing Services and the resetting Mill Owner will be
required to reimburse Mobile Energy for all costs incurred by Mobile Energy in
connection with such preparations.
Daily Supply Obligations
The Master Operating Agreement provides an operating structure for informing
Mobile Energy of each Mill's maximum requirements for the Processing Services
during specified intervals and determining Mobile Energy's supply obligations
during such specified intervals. Each morning, each of the Mill Owners is
required to inform Mobile Energy of the maximum amount of Steam Processing
Services it will require in any given hour during that day and the maximum
amount of Power Processing Services it will require in any given 15-minute
period during that day (each such amount, a "Current Nomination"). Taken
together, the sum of the Current Nominations of the three Mills for Steam
Processing Services and Power Processing Services cannot exceed the applicable
Aggregate Demand for such Processing Service. In addition, each Friday morning,
the Pulp Mill Owner is required to inform Mobile Energy of the amount of weak
black liquor that Mobile Energy will be required to accept the following week
(such amount also a "Current Nomination"). During any given 15-minute, hourly or
weekly interval, as applicable, Mobile Energy is obligated to provide the
applicable Processing Services to each Mill Owner in an amount not to exceed the
Mill Owner's Current Nomination of the applicable Processing Service.
If a Mill Owner's requirement for a Processing Service exceeds its Current
Nomination for that Processing Service during the course of a day, the Mill
Owner may request that Mobile Energy provide the Mill Owner with an increased
amount of the Processing Service (a "Requested Change"). Mobile Energy is
obligated to implement the Requested Change only if, and to the extent that, (i)
the Requested Change would not cause the Mill Owner's Current Nomination for
that Processing Service to exceed its Demand for that Processing Service and
(ii) the Requested Change would not cause the amount of that Processing Service
provided by Mobile Energy to exceed the applicable Aggregate Demand. If any or
all of a Requested Change is not implemented by Mobile Energy due to capacity
constraints, the Mill Owner seeking a Requested Change may obtain the right to
receive a portion of another Mill Owner's Current Nomination of such Processing
Service on such terms as such Mill Owners may mutually agree to. Upon joint
notification in writing to Mobile Energy by such Mill Owners, Mobile Energy is
required to implement the service change, unless it is not technologically
feasible to do so in light of prudent operating standards.
The Master Operating Agreement prohibits any Mill from using more than its
Current Nomination with respect to any Processing Service (unless it has
increased its Current Nomination in accordance with the procedures described in
the preceding paragraph). If Mobile Energy has provided the aggregate Current
Nomination for a Processing Service and a Mill takes more than its Current
Nomination of the Processing Service (such excess usage being the "Overuse
Amount"), Mobile Energy will not be liable to the other Mill Owners for failing
to provide their Current Nominations of that Processing Service to the extent of
the Overuse Amount.
If the Mills' aggregate requirement for any Processing Service is less than
the aggregate Current Nomination for that Processing Service during the course
of any day, Mobile Energy is obligated to follow (in accordance with prudent
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operating standards) all changes in the Mills' aggregate requirement for that
Processing Service as it increases or decreases from time to time (to the extent
that such changes in aggregate requirements are consistent with prudent
operating standards). As such, the Master Operating Agreement prevents Mobile
Energy from receiving Processing Charges for Processing Services provided to the
Mill Owners in excess of the Mill Owners' requirements.
Sales to Third Parties
The Energy Services Agreements permit Mobile Energy to sell to any person, on an
as-available, fully interruptible basis, any of the services or products that
the Energy Complex is capable of producing in excess of the Mills' requirements
for such services or products at any given time. Mobile Energy is required to
satisfy its obligations to provide Processing Services under the Energy Services
Agreements before making any Processing Services available to any other person.
Air Compressors
The air compressors and related facilities that service the compressed air needs
of the Mills and the Energy Complex are owned by Scott/Kimberly-Clark and
located on the property leased by Scott/Kimberly-Clark to Mobile Energy (the
"Air Compressors"). Pursuant to the Master Operating Agreement, Mobile Energy is
required to operate and maintain Scott/Kimberly-Clark's Air Compressors in good
working order in accordance with prudent operating standards; however, Mobile
Energy is not responsible for the replacement or refurbishment of the Air
Compressors unless the need for such replacement or refurbishment is a direct
result of Mobile Energy's failure to operate the Air Compressors in accordance
with prudent operating standards. The Mill Owners are obligated to reimburse
Mobile Energy for all costs Mobile Energy reasonably incurs in connection with
such operation and maintenance services.
Fuel and Other Mill Products
Of the five fuels used to operate the Energy Complex (weak black liquor,
biomass, sludge, gas and coal), three (weak black liquor, biomass and sludge)
are provided by the Pulp Mill Owner pursuant to the Pulp Mill Energy Services
Agreement, one (gas) is procured from third parties by the Tissue Mill Owner
pursuant to the Master Operating Agreement, and one (coal) is procured by Mobile
Energy pursuant to short-term coal contracts.
Weak black liquor is provided to Mobile Energy by the Pulp Mill Owner in
quantities consistent with the Current Liquor Processing Nomination in effect
from time to time. The processing of weak black liquor by the Energy Complex
requires certain other items (such as weak wash) that the Pulp Mill Owner is
obligated to provide, and produces certain by-products (such as soap) that the
Pulp Mill Owner is obligated to accept. Each such item provided or accepted by
the Pulp Mill Owner is provided or accepted at no charge to Mobile Energy.
The Pulp Mill Owner is obligated to provide solid waste (as such term is
defined in the Internal Revenue Code and the regulations promulgated thereunder,
generally consisting of biomass and sludge having certain characteristics, and
as more particularly defined in the Pulp Mill Energy Services Agreement, "Solid
Waste") to Mobile Energy in quantities not less than the an amount equal to the
minimum amount of Solid Waste required to be disposed of in the Number 7 Power
Boiler (as hereinafter defined) on an annual basis to maintain the tax-exempt
status of the Tax-Exempt Bonds ("Required Solid Waste Amount") and not greater
than approximately 132 short tons of Solid Waste per hour (as further defined in
the Master Operating Agreement, the "Maximum Solid Waste Capacity"). However,
the Pulp Mill Owner's failure to provide Mobile Energy the Required Solid Waste
Amount does not constitute an event of default under the Pulp Mill Energy
Services Agreement, and Mobile Energy's remedies against the Pulp Mill Owner in
such event are limited to those described in "-Mobile Energy's Supply
Obligations in the Event of a Mill Product Shortfall" below.
Mobile Energy is obligated to accept from the Pulp Mill Owner all Solid
Waste that is derived from the Pulp Mill's debarking operations. In addition,
Mobile Energy is required to accept from the Pulp Mill Owner all Solid Waste
that is derived from sources other than the debarking operations and that is
delivered in accordance with a delivery schedule periodically agreed upon by
Mobile Energy and the Pulp Mill Owner. Finally, Mobile Energy may request that
the Pulp Mill Owner obtain (as agent for Mobile Energy) additional quantities of
biomass ("Agency Biomass"). Mobile Energy reimburses the Pulp Mill Owner for its
cost of procuring Agency Biomass from third parties and these costs are then
incorporated into the three Mill Owners' Processing Charges.
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Mobile Energy has no obligation to obtain biomass from sources other than
the Pulp Mill Owner. However, if Mobile Energy chooses to obtain biomass from
sources other than the Pulp Mill Owner, Mobile Energy may charge the Mill Owners
an amount not to exceed the lower of (i) Mobile Energy's actual cost or (ii) the
lowest price of coal or gas then available to the Energy Complex, based upon the
"energy equivalent value" of such fuels.
Mobile Energy is dependent upon the Pulp Mill for the Energy Complex's
supply of weak black liquor and relies upon the Pulp Mill to provide almost all
of the Energy Complex's supply of Solid Waste fuel (consisting of biomass and
sludge). Although a failure by the Pulp Mill Owner to deliver Solid Waste or
weak black liquor to the Energy Complex should not cause Mobile Energy to
default upon its obligations to the Mill Owners under the Project Agreements,
such failure could decrease operating cash flow to Mobile Energy to the extent
that (i) Processing Charges decline due to diminished Energy Complex output and
(ii) operations and maintenance costs fail to decline correspondingly. In
addition, such a reduction could lead to a downward adjustment of Demand Charges
in subsequent Demand Periods. No assurance can be given that the Pulp Mill will
continue to operate at historical levels (or at all), that it will continue to
provide the Energy Complex with historical levels of black liquor to process, or
that the Pulp Mill Owner can or will perform its obligations under the Pulp Mill
Energy Services Agreement with respect to the delivery of the Required Solid
Waste Amount.
Gas is procured by the Tissue Mill Owner on behalf of Mobile Energy and each
of the Mill Owners. The Tissue Mill Owner is responsible for negotiating,
executing and administering all gas supply and transportation contracts, and has
final authority with respect to such matters, and Mobile Energy and the Mill
Owners are required to indemnify the Tissue Mill Owner against all claims
arising out of or related to the Tissue Mill Owners' negotiation, execution and
administration of gas supply and transportation contracts. Mobile Energy and the
other Mill Owners have the right to review all amendments, modifications or
extensions of any gas supply and transportation contracts in effect on the
Acquisition Closing Date, and any new gas supply and transportation contracts
entered into thereafter, prior to the Tissue Mill Owner's execution thereof. The
Tissue Mill Owner is obligated to use its best efforts to maintain gas
deliveries, based upon anticipated usage information provided by Mobile Energy
and the other Mill Owners. Mobile Energy is obligated to pay the Tissue Mill
Owner for Mobile Energy's pro rata share of gas at a rate equal to the weighted
average cost of all gas supply and transportation charges incurred by the Tissue
Mill Owner in any given month. As described below, these costs are then
incorporated into the Mill Owners' Processing Charges, taking into account the
applicable efficiency standards imposed by the Process Model upon the operation
of the Energy Complex.
Mobile Energy is required by the Master Operating Agreement to secure a
reliable source of delivered coal in such quantities as may be required to
provide the Processing Services given the availability of other fuel sources,
prudent operating standards, technical constraints and the fuel limitations
imposed upon the Number 7 Power Boiler by the solid waste disposal requirements
of the Internal Revenue Code. As described below, Mobile Energy's delivered coal
costs are incorporated into the Mill Owners' Processing Charges, taking into
account the applicable efficiency standards imposed by the Process Model upon
the operation of the Energy Complex. In incorporating Mobile Energy's coal costs
into the Processing Charges, the Master Operating Agreement assumes that Mobile
Energy acquires all coal at a specified fixed price that escalates in accordance
with an escalator based upon the market price for coal mined east of the
Mississippi River and sold to specified utilities across the United States.
Therefore, all delivered coal costs incurred by Mobile Energy in excess of this
"assumed" price will not be incorporated into the Processing Charges and will be
for Mobile Energy's account. As such, Mobile Energy bears price risk with
respect to coal purchases. Conversely, if Mobile Energy's coal costs are less
than the "assumed" amount, Mobile Energy is still permitted to charge the Mill
Owners for the "assumed" amount.
Mobile Energy's Supply Obligations in the Event of a Mill Product Shortfall
Under the Master Operating Agreement, Mobile Energy is entitled to reduce the
amount of Processing Services provided to the Mill Owners (in accordance with
the appropriate load shedding plan set forth in the Master Operating Agreement)
if (1) the Pulp Mill fails to provide Mobile Energy with enough black liquor to
run the Number 7 and Number 8 Recovery Boilers in accordance with prudent
operating standards, and Mobile Energy is using coal, gas and biomass in
accordance with prudent operating standards and the Process Model, (2) the Pulp
Mill fails to provide Mobile Energy with (a) enough Solid Waste to run the
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Number 6 and Number 7 Power Boilers in accordance with prudent operating
standards or (b) the Required Solid Waste Amount and, in each such case, Mobile
Energy is using coal and gas in accordance with prudent operating standards and
the Process Model or (3) Mobile Energy determines that the Pulp Mill Owner will
be unable to provide Mobile Energy with the Required Solid Waste Amount in any
calendar year, and Mobile Energy is using coal and gas in accordance with the
Process Model.
Furthermore, if a Mill fails to supply Mobile Energy with certain products
produced or procured by a Mill and provided to Mobile Energy under the Project
Agreements (including process water, waste water treatment service, boiler ash
service but excluding black liquor and biomass) (the "Mill Products") or fails
to take any of the stripped condensate, evaporator clean condensate, soap, hot
process water, stripper off gases or noncondensible gases (each a "Mobile Energy
Processing By-Product") that it is required to take, then (i) Mobile Energy is
permitted to reduce the level of Processing Services that it supplies to the
Mill Owners to a level consistent with the amount of Processing Services Mobile
Energy is able to provide given the reduced amounts supplied by or taken by that
Mill and (ii) Mobile Energy may (but is not obligated to) find another source to
supply the Mill Product in question, in which case the Mill Owner responsible
for the supply failure will be obligated to reimburse Mobile Energy for (x) the
difference between the replacement Mill Product and the cost of the Mill Product
(if any) otherwise due and payable by Mobile Energy and (y) all reasonable costs
and expenses incurred by Mobile Energy in obtaining the replacement Mill
Product.
Charges
The Energy Services Agreements and the Master Operating Agreement obligate each
Mill Owner to pay Mobile Energy a Demand Charge for each of the Processing
Services that such Mill Owner is entitled to receive under its Energy Services
Agreement and a Processing Charge for the Processing Services the Mill Owner
actually receives. All such charges are invoiced, and are required to be paid,
on a monthly basis.
The Demand Charges are based upon the Demand levels in effect from time to
time as determined pursuant to the procedures described above. See "-Processing
Services-General Purchase and Supply Obligations." For each monthly billing
period, a Mill Owner's then current Demand for a particular Processing Service
is multiplied by a fixed rate for that Processing Service (that escalates over
the term of the Energy Services Agreements according to a composite escalator
reflecting inflation-based indices for capital equipment, labor and intermediate
materials) (such fixed rate, the "Demand Rate"). The Pulp Mill's Demand Charges
are then adjusted to credit the Pulp Mill for certain Mill Products that the
Pulp Mill Owner provides to the Energy Complex. The Demand Charges may be
reduced in the event there is a shortfall in the provision of Processing
Services by Mobile Energy that is not excused by the Project Agreements. See
"-Liquidated Damages and Demand Charge Reductions."
The Processing Charges are based upon each Mill's actual monthly usage of
Processing Services. The Processing Charges were designed generally to cover the
balance of Mobile Energy's costs that are not projected to be covered by Demand
Charges, including variable costs such as fuel related expenses, and to credit
the appropriate Mills for certain energy value attributable to condensate flow
that is provided by the Mills to the Energy Complex. There can be no assurance,
however, that the Processing Charges will at all times cover such costs,
including variable costs such as fuel related expenses. The Pulp Mill's
Processing Charges are also adjusted to credit the Pulp Mill for certain biomass
and weak black liquor that the Pulp Mill Owner provides to the Energy Complex.
Costs incurred by the Pulp Mill in providing biomass and weak black liquor to
Mobile Energy are allocated among all the Mills through the Processing Charges.
After the expiration of the Interim Period, which lasts from the Acquisition
Closing Date until such time as the Process Model is developed and tested in
accordance with the Master Operating Agreement, the fuel cost component of the
Processing Charges will be based, in part, upon calculations generated by the
Process Model. The Process Model will be designed to, among other things, (i)
predict the amount of power that the Mill Owners should be obtaining from
Alabama Power, rather than from Mobile Energy, during Scheduled Energy Complex
Outages and Major Maintenance Outages and (ii) compute the quantity of coal that
the Energy Complex should be using at any time (given the amount of weak black
liquor, biomass, sludge and gas provided, and the amount of condensate returned,
by the Mill Owners) in order to satisfy certain efficiency and reliability
standards, taking into account applicable fuel mix, boiler availability, the
Mills' aggregate requirements for Processing Services and other specified
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operating parameters. The Process Model also will be designed to determine the
amount of gas that the Energy Complex should be using at any time, in accordance
with a specified protocol for boiler dispatch. These standards are designed to
circumscribe Mobile Energy's efficiency risk within the parameters set forth in
the Process Model, so that, within such parameters, Mobile Energy should not be
penalized for permitted decreases in efficiency that result from operational
modifications necessary to perform scheduled maintenance or to satisfy the Mill
Owners' needs for Processing Services at any given time. The Process Model
standards also are designed to take into account degradation of equipment
efficiencies as a result of aging. Mobile Energy will be permitted to charge the
Mill Owners, as a component of the Processing Charges, for only those quantities
of coal as are calculated by the Process Model to be efficient quantities and
only those quantities of gas as are determined by the Process Model to be in
accordance with a specified protocol for boiler dispatch incorporated therein.
If the Energy Complex uses more coal or gas than the quantities calculated or
determined by the Process Model (because, for example, Mobile Energy has been
inefficient in its use of gas, coal, black liquor, biomass or sludge or has
inappropriately dispatched its equipment), the costs attributable to the excess
quantities of coal or gas are not permitted to be included in the Processing
Charges and, as a result, will be borne by Mobile Energy. By contrast, if the
Energy Complex uses less coal or gas than the quantities calculated or
determined by the Process Model, Mobile Energy can include in the Processing
Charges the costs associated with the Process Model quantities of coal and gas
notwithstanding that such calculated or determined quantities may exceed the
actual quantities used by the Energy Complex. Thus, Mobile Energy will be
rewarded for operating the Energy Complex more efficiently than the standards
set forth in the Process Model and will bear the risk of operating the Energy
Complex less efficiently than those standards. The Process Model may be adjusted
under certain circumstances. See "-Process Model Adjustments."
During the Interim Period, Mobile Energy is allowed to charge the Mills for
any and all quantities of coal used by the Energy Complex to provide the
Processing Services. In addition, Mobile Energy is allowed to charge the Mills
for any and all quantities of gas used by the Energy Complex to provide the
Processing Services, unless (i) Mobile Energy uses (in any given month) more
than 110% of the amount of gas used during the same month in 1993 and (ii) such
excess use was not in accordance with prudent operating standards. Other
modifications to the formulas used to calculate the Processing Charges will also
remain in effect until the end of the Interim Period, in order to facilitate the
calculation of the Processing Charges until new meters are installed by Mobile
Energy. In addition, for the first twelve monthly billing periods following the
adoption of the Process Model, the Master Operating Agreement provides a range
of allowable charges for coal and gas, which range places upper and lower limits
on the Mill Owners' payment obligations with respect to coal and gas charges in
the event of a dispute between the parties during such time period.
Both during the Interim Period and thereafter, the unit charge payable by
the Mill Owners for coal used by the Energy Complex to provide the Processing
Services is contractually fixed and escalated in accordance with an escalator
based upon the market price for coal mined east of the Mississippi River and
sold to specified utilities across the United States. Thus, Mobile Energy
receives the benefit of, and bears the burden of, any difference between Mobile
Energy's actual coal costs and the contractual coal prices. The charge payable
by the Mill Owners for gas used by the Energy Complex to provide the Processing
Services is Mobile Energy's actual "all in" per unit gas cost, both during the
Interim Period and thereafter.
Process Model Adjustments
The Master Operating Agreement provides that Mobile Energy and the Mill Owners
may adjust the Process Model (a "Process Model Adjustment") if (i) for any
reason there occurs a modification of any Mill or a change in the method of
operation of any Mill and, in either such case, as a result thereof, the Process
Model no longer accurately predicts the fuel and/or supplemental power
requirements that would have been required using the operational dispatch logic,
operational concepts and unit efficiencies used prior to the Acquisition Closing
Date or (ii) the accuracy or operational reliability of the Process Model is
capable of being improved (clauses (i) and (ii) each a "Process Model Adjustment
Event"). No Process Model Adjustment is permitted to be made to benefit any
party whose breach of a material provision of any Project Contract caused the
Process Model Adjustment Event. In addition, no Demand Charge may be increased
as the result of a Process Model Adjustment and, generally, a Process Model
Adjustment is not permitted to have a retroactive effect.
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The Master Operating Agreement does not entitle Mobile Energy to adjust the
Process Model to take into account the declining efficiency of aging equipment.
Therefore, Mobile Energy bears the risk of maintaining the Energy Complex
equipment so that it performs in accordance with the efficiency standards set
forth in the Process Model.
Financial Adjustments
The Master Operating Agreement entitles Mobile Energy to request an increase in
the amounts payable to Mobile Energy (a "Financial Adjustment") if, subject to
certain conditions set forth in the Master Operating Agreement, (A) a federal
energy tax on fuels used in the generation of electricity or steam (and not
based upon the income of Mobile Energy) is imposed on Mobile Energy or the
Energy Complex at any time during the first seven years following the
Acquisition Closing Date in connection with the transactions contemplated by the
Master Operating Agreement or the Energy Services Agreements or (B) Mobile
Energy must incur capital or operational expenditures at the Energy Complex
because (i) of a modification of or change in operations at a Mill (which
modification or change occurred for any reason other than due to a breach by
Mobile Energy of its obligations under the Master Operating Agreement or any of
the Energy Services Agreements), (ii) any Mill Product becomes characterized as
a hazardous material for any reason other than a change in any law applicable or
permit applicable to the Energy Complex or the Mills (a "Change of Law") or an
action or omission by Mobile Energy or (iii) the Cluster Rule or Combustion Rule
(and certain related regulations) become effective (clauses (A) and (B)(i)
through (B)(iii) each a "Financial Adjustment Event").
The designation of a Mill Product as a hazardous material due to a change of
law will not excuse Mobile Energy from its obligations under the Project
Agreements to accept such Mill Product. Therefore, if a Mill Product is so
designated due to a change of law, Mobile Energy will bear the costs associated
with the proper handling and disposal of the hazardous Mill Product.
Mobile Energy will not be entitled to a Financial Adjustment unless (a) the
capital expenditures incurred by Mobile Energy as a result of all Adverse
Financial Effects of Financial Adjustment Events exceeds $500,000, as escalated
from the Acquisition Closing Date (the "Capital Change Threshold"), which amount
shall take into account only individual capital expenditures in excess of
$200,000, as escalated from the Acquisition Closing Date or (b) the operational
expenditures incurred by Mobile Energy as a result of all Adverse Financial
Effects of Financial Adjustment Events exceeds $100,000, as escalated from the
Acquisition Closing Date(the "Operational Change Threshold"), which amount shall
take into account only individual operational expenditures in excess of $25,000,
as escalated from the Acquisition Closing Date. Once these thresholds have been
met and a Financial Adjustment is made with respect to a Financial Adjustment
Event or group of Financial Adjustment Events, no additional Financial
Adjustments can be made until the aggregate dollar amount of Adverse Financial
Effects exceeds the applicable threshold.
The Mill Owner (or Mill Owners) responsible for a Financial Adjustment have
the right to satisfy such obligation by paying Mobile Energy, in each monthly
billing period, Mobile Energy's actual costs with respect to the Adverse
Financial Effects of the Financial Adjustment Event during such billing period.
In addition, such Mill Owner(s) have the right to satisfy their obligations by
paying Mobile Energy in accordance with any of the following payment options
which may be proposed by Mobile Energy: (i) within 30 days of the resolution of
any dispute regarding the Financial Adjustment, the present value of the full
amount of the Financial Adjustment; (ii) at the earlier of the end of the Demand
Period or the time at which all costs of the Adverse Financial Effect have
ceased to accrue, the full amount of the Adverse Financial Effect over such
period of time; (iii) in each monthly billing period, through an adjustment of
the Demand Charges due to Mobile Energy by such Mill Owner(s); or (iv) in
accordance with any combination of the payment options in this paragraph.
Site Operating Committee
As required by the Master Operating Agreement, Mobile Energy and the Mill Owners
have established the Site Operating Committee to coordinate and integrate the
operations of the Mills and the Energy Complex in a manner similar to that in
which Scott coordinated and integrated these operations prior to the
Acquisition. The Site Operating Committee is comprised of one representative
from each of the Mills and the Energy Complex. Each member of the Site Operating
Committee is required to have substantial practical experience in the day-to-day
operations of the facility that he or she represents and is required to have the
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authority to make binding decisions (with respect to matters delegated to the
Site Operating Committee pursuant to the Project Agreements) on behalf of the
party that he or she represents. The Site Operating Committee meets once a week
(or, if necessary, more frequently) to address scheduled and unscheduled events
that affect the Services, Mill Products and Mobile Energy Processing
By-Products, the operating systems, the Common Facilities (as hereinafter
defined) or the safety and integrity of the Site. The Master Operating Agreement
charges the Site Operating Committee to work on a cooperative basis to ensure
that the Energy Complex and each of the Mills are operated and maintained in a
manner that will optimize, in accordance with the Project Agreements, the
performance of the Energy Complex and the Mills as integrated facilities. The
Site Operating Committee, among other things, (i) coordinates the delivery of
Services, Mill Products and Mobile Energy Processing By-Products pursuant to the
Project Agreements, (ii) coordinates Scheduled Outages and Major Maintenance
Outages, (iii) develops and modifies emergency operating and shutdown
procedures, (iv) endeavors to resolve disputes among the parties (in accordance
with the dispute resolution procedures discussed below) and (v) supervises
and/or directs the performance of the Essential Common Services (as hereinafter
defined) in accordance with the Common Services Agreement.
Except as described below, all decisions of the Site Operating Committee are
required to be made by the unanimous agreement of all members present (in person
or by telephone), and are binding on each of the Mill Owners and Mobile Energy.
The senior management of the Mill Owners and Mobile Energy may, by unanimous
agreement, overrule any decision of the Site Operating Committee. Any such
determination to overrule a Site Operating Committee decision applies
prospectively only, and no party will be in breach or default of any of its
obligations or duties under the Project Agreements as a result of having taken
or omitted to take an action in compliance with, or in reliance on, such
decision prior to the date such decision is overruled. Mobile Energy is not
entitled to participate in any decision by the Site Operating Committee
concerning (i) the allocation among the Mill Owners of the Current Steam
Processing Nominations or the Current Power Processing Nominations, (ii) the
determination of any Mill Owner to elect (in accordance with the procedures set
forth in the Master Operating Agreement) a revised Steam Processing Demand,
Power Processing Demand or Conversion Demand, (iii) the granting of (or refusal
to grant to Mobile Energy) any additional hours of Scheduled Energy Complex
Outages or Major Maintenance Outages, (iv) any decision or dispute with respect
to the payment of any charge or other amount due from one Mill Owner to another
Mill Owner pursuant to any Project Contract, (v) the allocation of pulp between
the Tissue Mill and the Paper Mill or the existence of any breaches and
enforcement of remedies under the Pulp Supply Agreement between Pulp Mill Owner
and Paper Mill Owner, (vi) the allocation of charges payable by the Mill Owners
to Alabama Power for Back-Up Power, Maintenance Power and Supplemental Power
pursuant to the 1983 Alabama Power Contract and the 1986 Alabama Power Contract
(except that Mobile Energy will have the right to participate in all such
decisions if Mobile Energy is required to bear any of such charges) and (vii)
the allocation of Liquidated Damages among the Mill Owners. In addition, no
party to the Master Operating Agreement is entitled to participate in any
decision by the Site Operating Committee (or any committee appointed by it) that
(x) could not reasonably be expected to adversely affect in any material respect
such party's condition (financial or otherwise), properties, assets,
liabilities, permits or licenses, operations or prospects with respect to the
business or businesses conducted by such party at the Site, (y) would not
increase the amount of payments to be made by such party under any of the
Project Agreements and (z) would not impose or create obligations that would
make such party's performance under any of the Project Agreements more
burdensome. However, the applicable representatives of any non-voting party are
entitled to be present at all meetings at which such decisions are made.
Force Majeure
Each party is excused from failure to perform its obligations under the Project
Agreements if, and to the extent that, such failure is due to a Force Majeure
Event (as defined below), whether such Force Majeure Event is suffered directly
by such party's Mill or Energy Complex or otherwise causes an interruption of
operations at the Site. The affected party is obligated to provide prompt notice
to the other parties upon becoming aware of the Force Majeure Event, and is
obligated to make all reasonable efforts to remedy the Force Majeure Event, if
practicable, and to mitigate the adverse effects of the Force Majeure Event. The
suspension of any obligation due to a Force Majeure Event does not affect any
rights or obligations under the Project Agreements that accrued prior to such
suspension.
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"Force Majeure Events" include acts of God, acts of the public enemy, wars,
blockades, insurrections, riots, epidemics, landslides, lightning, earthquakes,
volcanoes, fires, storms, floods, disasters, civil disturbances, sabotage, the
binding order of any Governmental Authority that has been resisted in good faith
by all reasonable legal means, Changes of Law (except as provided in the
Financial Adjustment Events with respect to the Cluster Rule the Combustion Rule
and federal energy taxes or in the Mill Environmental Indemnity Agreements),
labor disputes (excluding strikes by and other labor disputes with respect to
(i) in the case of Mobile Energy, employees of Mobile Energy or Southern
Electric or (ii) in the case of a Mill Owner, employees of such Mill Owner) or
any other event or circumstance not within the control of such party that
prevents such party from performing its obligations under any Project Contract
(but not including governmental actions (including but not limited to any
binding order of any Governmental Authority) that such party could have
prevented by compliance with appropriate laws, regulations and standards). Force
Majeure Events expressly exclude (A) a party's financial inability to perform
and (B) any failure to perform, and the effects of such failure, that could have
been prevented, overcome or remedied by the exercise, by the party claiming
force majeure, of prudent plant operating standards. For purposes of the
definition of "Force Majeure Event," (x) if a Change of Law requires the
permanent closure of the Energy Complex or any Mill, such Change of Law shall
constitute a Force Majeure Event and (y) if a Change of Law does not require
such a permanent closure, only the period of time reasonably required to comply
with such Change of Law shall constitute a Force Majeure Event. As such, unless
a Change of Law requires the permanent closure of the Energy Complex, Mobile
Energy will not be excused of its performance obligations if Mobile Energy fails
to comply with the Change of Law within a reasonable amount of time.
If a Force Majeure Event were to cause the Actual Energy Complex Capacity to
fall below the Aggregate Demand (whether or not such Force Majeure Event has
also affected any of the Mills), then the provisions in the Master Operating
Agreement with respect to the payment by Mobile Energy of Liquidated Damages and
the incurrence by Mobile Energy of Demand Charge Reductions (as described below)
would not apply. Instead, each Mill Owner's obligation to pay Demand Charges
would be reduced to a level consistent with such Mill Owner's capability, if
any, to use all or a portion of the Actual Energy Complex Capacity available to
it following such Force Majeure Event. As a result, although Mobile Energy would
not be subject to the Liquidated Damages and Demand Charge Reduction provisions
of the Master Operating Agreement if a Force Majeure Event caused the Actual
Energy Complex Capacity to fall below the Aggregate Demand, the Demand Charges
payable by the Mill Owners would be reduced if the Mill Owners were unable to
use any portion of the available Energy Complex capacity. Thus, if a Mill were
unable to operate a paper machine because a Force Majeure Event rendered the
Energy Complex unable to provide the full amount of Steam Processing Services
required to operate the paper machine, the Mill Owner would not be required to
pay Demand Charges on that portion of Energy Complex capacity that the Energy
Complex was able to provide to that paper machine, but that the paper machine
was unable to use. Therefore, although the existence of a Force Majeure Event
would excuse Mobile Energy from performance, it could also diminish the Demand
Charges received by Mobile Energy.
In addition, if a Force Majeure Event were to affect only the Mills or the
Mill Owners, each affected Mill Owner would be required to continue to pay
Demand Charges (at a level consistent with its Demand for each applicable
Processing Service immediately prior to such Force Majeure Event) for six months
after the occurrence of the Force Majeure Event; thereafter, each affected Mill
Owner would be required to pay Demand Charges at a level consistent with such
Mill Owner's capability, if any, to use all or a portion of the Actual Energy
Complex Capacity available. Thus, if a Force Majeure Event were to render a
paper machine inoperable for more than six months, the affected Mill Owner would
not be required to pay Demand Charges with respect to the capacity that the
inoperable paper machine were unable to utilize after the six months had
expired. As such, Mobile Energy bears risk with respect to Force Majeure Events
that affect only the Mills or the Mill Owners.
If a Force Majeure Event, other than a Force Majeure Event resulting in a
Casualty (as hereinafter defined), renders the Energy Complex unable to produce
more than 20% of the then current maximum liquor processing capacity of the
Energy Complex (the "Maximum Liquor Processing Capacity") and seven percent of
the then current maximum steam processing capacity of the Energy Complex (the
"Maximum Steam Processing Capacity") and is not cured within three years of its
occurrence, then the Mill Owners will be permitted to terminate the Master
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Operating Agreement and the Energy Services Agreements pursuant to the
provisions of the Master Operating Agreement with respect to termination of
these agreements upon a Mill Closure. If (i) a Force Majeure Event causes
physical loss of or damage to the Mills so as to result in any Aggregate Demand
being set at a level which is less than the minimum Demand associated with a
Processing Service and (ii) such physical loss or damage is not capable of being
repaired or restored within four years of the occurrence of the Force Majeure
Event, then Mobile Energy will be permitted to terminate the Energy Services
Agreements following the first six months after such Force Majeure Event unless
the Mill Owners pay Mobile Energy in each monthly billing period the sum of
$834,000 (multiplied by a specified escalator) plus $3,333,400. "Minimum
Conversion Demand" is 20% of the then current Maximum Liquor Processing
Capacity; "Minimum Steam Processing Demand" is seven percent of the then current
Maximum Steam Processing Capacity; and "Minimum Power Processing Demand" is 30%
of the then current specified maximum power processing capacity of the Energy
Complex (the "Maximum Power Processing Capacity").
Outages
In each contract year, Mobile Energy is entitled to (i) a specified number of
days of Scheduled Energy Complex Outages and (ii) a specified amount of
Unscheduled Energy Complex Outages. In addition, Mobile Energy is entitled to a
specified number of days of Major Maintenance Outages. Major Maintenance Outages
are designed to accommodate life cycle replacement and refurbishment of
equipment, and can generally be anticipated with sufficient lead time to be
added to the Outage Allowance for a particular contract year. However, Major
Maintenance Outages were not allocated to particular contract years as of the
Acquisition Closing Date in order to give Mobile Energy the flexibility to
schedule such outages on an as-needed basis. As such, Major Maintenance Outages
will be scheduled by the Site Operating Committee for particular contract years
over the course of the term of the Master Operating Agreement. If the outages
experienced by the Energy Complex in a contract year do not exceed the Outage
Allowances applicable to that contract year (including the allowances for
Scheduled Outages, Unscheduled Outages and, if scheduled for that contract year,
Major Maintenance Outages), Mobile Energy will not be deemed to be in default
under the Energy Services Agreements or the Master Operating Agreement, will not
be liable for Liquidated Damages, and will not incur Demand Charge Reductions.
By contrast, if the outages experienced by the Energy Complex for a particular
contract year do exceed the Outage Allowances applicable to that contract year,
Mobile Energy could, subject to the applicable provisions of the Master
Operating Agreement and Energy Services Agreements, be deemed to be in default
under such agreements, be liable for Liquidated Damages and incur Demand Charge
Reductions. See "-Events of Default" and "-Liquidated Damages and Demand Charge
Reductions."
The Outage Allowance to which Mobile Energy is entitled for Liquor
Processing Services can be reduced under certain circumstances as a result of
unscheduled interruptions of electrical power to the Pulp Mill if (i) Mobile
Energy causes an unscheduled interruption of electrical power to the Pulp Mill
that curtails the Pulp Mill from delivering weak black liquor to the Energy
Complex in accordance with the Pulp Mill's current request for Liquor Processing
Services, (ii) Mobile Energy's Outage Allowance for Liquor Processing Services
is greater than zero at the time of the interruption of electrical power, and
(iii) the amount of Liquor Processing Services provided by MESC in the week in
which the interruption of electrical power occurs does not exceed the lessor of
(A) the average daily amount of Liquor Processing Services provided by Mobile
Energy during the 365 days immediately preceding that week multiplied by seven,
(B) the amount of Liquor Processing Services requested by the Pulp Mill for that
week, and (C) the Pulp Mill Owner's then current Demand for Liquor Processing
Services, then the Outage Allowance for Liquor Processing Services will be
reduced. The amount of the reduction will be equal to (a) the average daily
amount of Liquor Processing Services provided by Mobile Energy during the 365
days immediately preceding that week divided by (b) 24 and then multiplied by
(c) the duration of the interruption of electrical power (expressed in hours and
rounded up to the nearest hour); provided that the Outage Allowance for Liquor
Processing Services shall not be reduced below zero.
The Mill Owners have the right to take an unlimited number of outages for
any duration, provided that the Mill Owners continue to pay Demand Charges and
any other amounts due under the Project Agreements during a Mill outage.
Each year, the Site Operating Committee is required to prepare a timetable
(the Yearly Outages Schedule) for Scheduled Outages and, if applicable, Major
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Maintenance Outages for the following contract year based upon schedules
proposed by Mobile Energy and each of the Mill Owners. To the maximum extent
practicable, the Site Operating Committee is required to coordinate the timing
of Scheduled Outages among the Energy Complex and the Mills so as to maximize
the availability of Services. At the request of Mobile Energy or any Mill Owner,
the Yearly Outages Schedule may be revised by the Site Operating Committee.
If any part of the Outage Allowance for Scheduled Outages is not used by
Mobile Energy in the year to which the allowance is allotted by the Master
Operating Agreement, such unused portion is carried forward into subsequent
contract years until used by Mobile Energy (unless such carry forward would
cause the number of outage days being carried forward to exceed the maximum
amounts set forth in the Master Operating Agreement). Similarly, with respect to
equipment to which more than one Major Maintenance Outage is allotted by the
Master Operating Agreement, if Mobile Energy completes the inspection, repair or
maintenance it is to perform during a Major Maintenance Outage in less time than
allotted by the Master Operating Agreement, the unused time is carried forward
and may be used by Mobile Energy during a subsequent Major Maintenance Outage
for the applicable piece of equipment (provided that no such carry forward can
increase the maximum number of Major Maintenance Outages allowed for a
particular piece of equipment, as opposed to the duration of such outages).
Finally, unused portions of the Outage Allowances for Unscheduled Energy Complex
Outages for each contract year are carried forward to the next contract year,
subject to specified minimum and maximum quantities of permitted unscheduled
shortfalls of each Processing Service (measured in MMlb virgin dry black liquor
solids/year, MMBTU/year or MWh/year, as applicable) for each contract year.
Mobile Energy may (i) adjust the Outage Allowances for Scheduled Outages and
Major Maintenance Outages to reflect the annual or life cycle maintenance
required by any additional Energy Complex equipment acquired by Mobile Energy
after the Acquisition Closing Date due to a Change of Law or a Financial
Adjustment Event and (ii) with the approval of the Site Operating Committee
(which approval may not be unreasonably withheld), adjust the Outage Allowances
for Scheduled Outages and Major Maintenance Outages to reflect the annual or
life cycle maintenance required by any additional Energy Complex equipment
acquired by Mobile Energy after such date for any reason other than those
specified in clause (i). If Mobile Energy or any Mill Owner anticipates that its
facility may experience an Unscheduled Outage, or (if an outage is
unanticipated) following the occurrence of an Unscheduled Outage, the applicable
party is obligated to notify the other parties of the expected effect that the
Unscheduled Outage will have on its ability to provide Processing Services or
Mill Products (as applicable). In addition, any Mill Owner whose Mill
experiences an Unscheduled Outage is obligated to inform Mobile Energy and the
other Mill Owners of the expected effects that such Unscheduled Outage will have
on the affected Mill's Current Nomination and short-term future requirements for
any Processing Service, process water or compressed air. If a Mill suffers an
Unscheduled Outage, Mobile Energy may shut down any item of equipment or
machinery at the Energy Complex for maintenance or inspection as long as (i)
Mobile Energy's ability to satisfy the Mills' requirements for Processing
Services during the Mill's Unscheduled Outage is not thereby diminished and (ii)
such shutdown will not last longer than the duration of the Unscheduled Mill
Outage as communicated by the affected Mill. Such a shutdown by Mobile Energy is
not deemed an Outage for purposes of the Master Operating Agreement and,
therefore, does not affect Mobile Energy's usage of any Outage Allowance.
Liquidated Damages and Demand Charge Reductions
Subject to the following sentence, if Mobile Energy fails to provide any
Processing Service as specified in the Energy Services Agreements and the Master
Operating Agreement and any Mill Owner suffers damages as a result of such
failure, Mobile Energy will be liable to such Mill Owner for the Liquidated
Damages and Demand Charge Reductions set forth in the following paragraphs.
However, if the actual capacity of the Energy Complex to provide the Processing
Services is less than the Aggregate Demand at any time due to (i) an Energy
Complex Outage that does not exceed the applicable Outage Allowances, (ii) a
Force Majeure Event or (iii) a breach by Scott/Kimberly-Clark or any of the Mill
Owners of a material obligation under any Project Contract, then Mobile Energy
will not be liable to the Mill Owners for Liquidated Damages or any other form
of damages and will not incur any Demand Charge Reductions ("Excused
Performance").
If at any time (and unless there is Excused Performance) (1) Actual Liquor
Processing Capacity is less than Conversion Demand, (2) the Pulp Mill's
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requirement for Liquor Processing Services is at or below the Current Liquor
Processing Nomination and Mobile Energy cannot satisfy such requirement and (3)
Mobile Energy requests that the flow of weak black liquor to the Energy Complex
be curtailed by the Pulp Mill or the Pulp Mill is unable to deliver weak black
liquor to Mobile Energy due to an operational circumstance caused by Mobile
Energy (upon the satisfaction of the conditions set forth in clauses (1), (2)
and (3), a "Liquor Processing Shortfall Event"), then (x) Mobile Energy will be
obligated to pay the Pulp Mill Owner an amount equal to $10,000 (as escalated
from the Acquisition Closing Date in accordance with a formula based upon a
composite escalator comprised of inflation-based indices for capital equipment,
labor and intermediate materials) per Liquor Processing Shortfall Event (the
"Liquor Processing Liquidated Damages") and (y) the Conversion Demand Charge
will be reduced by an amount equal to (i) the Conversion Demand Charge for the
week in which the Liquor Processing Shortfall Event occurred multiplied by (ii)
the sum of the aggregate amount of all such curtailments for the week divided by
the then Current Liquor Processing Nomination (such amount the "Conversion
Demand Charge Reduction").
If at any time (and unless there is Excused Performance) (1) the Aggregate
Steam Processing Requirement does not exceed the Aggregate Demand for Steam
Processing Services, (2) the Actual Steam Processing Capacity is less than the
Aggregate Demand for Steam Processing Services, (3) the Actual Steam Processing
Capacity is less than the aggregate Current Steam Processing Nomination, (4) the
steam energy flow to a particular Mill is less than that Mill's requirement for
Steam Processing Services (the "Steam Processing Deficiency Amount") (and such
deficiency is not due to another Mill using Steam Processing Services in excess
of its Current Steam Processing Nomination) and (5) Mobile Energy has
implemented its steam load-shedding plan, causing a reduction in Steam
Processing Services provided to a Mill (upon the satisfaction of the conditions
set forth in clauses (1) through (5), a "Steam Processing Shortfall Event"),
then Mobile Energy will be obligated to pay the affected Mill Owner an amount
equal to $5,000 (as escalated from the Acquisition Closing Date in accordance
with a formula based upon a composite escalator comprised of inflation-based
indices for capital equipment, labor and intermediate materials) per Shortfall
Hour (the "Steam Processing Liquidated Damages") and (y) the affected Mill's
Demand Charges for Steam Processing Services will be reduced, for each Shortfall
Hour, by an amount equal to (i) the affected Mill's charges for Steam Processing
Demand for such Shortfall Hour multiplied by (ii) the applicable Steam
Processing Deficiency Amount divided by the then Current Steam Processing
Nomination for the affected Mill (the "Steam Processing Demand Charge
Reduction").
If at any time (and unless there is Excused Performance) (1) the Aggregate
Power Processing Requirement does not exceed the Aggregate Demand for Power
Processing Services, (2) the Actual Power Processing Capacity is less than the
Aggregate Demand for Power Processing Services, (3) the Actual Power Processing
Capacity (together with all power being supplied by Alabama Power) is less than
the Aggregate Power Processing Requirement, (4) Alabama Power is not providing
the Mills power pursuant to the terms and conditions of the 1983 Alabama Power
Contract and the 1986 Alabama Power Contract and (5) Mobile Energy has exceeded
its usage allowance of Back-Up Power (the "Back-Up Power Usage Allowance") (upon
the satisfaction of the conditions set forth in clauses (1) through (5), a
"Power Processing Shortfall Event"), then (x) Mobile Energy will be obligated to
pay the Mill Owners an amount equal to $5,000 (as escalated from the Acquisition
Closing Date in accordance with a formula based upon a composite escalator
comprised of inflation-based indices for capital equipment, labor and
intermediate materials) for each Shortfall Hour (the "Power Processing
Liquidated Damages") and (y) the charges for Power Processing Demand will, for
each Shortfall Hour, be reduced by an amount equal to (i) the charges for Power
Processing Demand for the Shortfall Hour multiplied by (ii) the difference
between the power flow to the Mills and the Mills' requirements for power
divided by the then Current Power Processing Nomination for the three Mills (the
"Power Processing Demand Charge Reduction").
If the total megawatt hours of Back-Up Power purchased by the Mill Owners
from Alabama Power in a contract year exceed the Back-Up Power Usage Allowance
for that contract year, then Mobile Energy will be obligated to pay each Mill
Owner such Mill Owner's proportionate share of the incremental cost of the
megawatt hours and megawatt demand for Back-Up Power purchased from Alabama
Power in excess of the megawatt hours in the Back-Up Power Usage Allowance (the
"Back-Up Power Liquidated Damages"). Furthermore, any monthly difference between
the allowance of Long Term Maintenance Power calculated by the Process Model and
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the actual amount of Long Term Maintenance Power purchased by the Mill Owners
from Alabama Power will be charged or credited, as appropriate, to Mobile Energy
on a monthly basis. Finally, any monthly difference between the amount that the
Process Model indicates should have been purchased from Alabama Power as
Supplemental Power and the actual amount of Supplemental Power purchased by the
Mill Owners also will be charged or credited, as appropriate, to Mobile Energy
on a monthly basis.
Notwithstanding that Liquidated Damages may accrue with respect to more than
one Processing Service or Mill Owner, in no event can the Liquidated Damages for
all of the Processing Services and all of the Mill Owners exceed (and in no
event will Mobile Energy be liable to pay to the Mill Owners collectively) more
than $10,000 a day (as escalated from the Acquisition Closing Date in accordance
with a formula based upon a composite escalator comprised of inflation-based
indices for capital equipment, labor and intermediate materials). However,
Demand Charge Reductions are not subject to any such limitations.
Insurance
Each of the Mill Owners and Mobile Energy is obligated to maintain (i) workers'
compensation insurance, including employer's liability insurance in the minimum
amount of $1,000,000 per occurrence and in the aggregate, (ii) comprehensive
general liability insurance with a $1,000,000 minimum limit per occurrence for
combined bodily injury and property damage with an aggregate of $2,000,000 (iii)
comprehensive automobile liability insurance with a $1,000,000 minimum limit per
occurrence for bodily injury and property damage and $2,000,000 minimum limit
per occurrence for combined bodily injury and property damage, (iv) aircraft and
watercraft liability insurance, each having a $25,000,000 minimum limit per
occurrence for property damage and bodily injury and (v) umbrella liability or
excess insurance with a $24,000,000 minimum limit per occurrence and a
$24,000,000 aggregate annual limit. In addition, Mobile Energy is required to
maintain (a) property damage insurance in a minimum aggregate amount of
$350,000,000 or Mobile Energy's outstanding obligations with respect to the
financing or refinancing of the Energy Complex, whichever is greater, (b) boiler
and machinery insurance in a minimum aggregate amount equal to the maximum
foreseeable loss and expediting expenses in the amount of $2,500,000 and (c)
business interruption and extra expense insurance covering as a minimum amount
all fixed expenses and debt service for a period of 12 months arising from
certain insured losses and (unless waived by the Site Operating Committee) is
required to cause its subcontractors to maintain workers' compensation
insurance, comprehensive general liability insurance and comprehensive
automobile liability insurance. Each policy required to be maintained by Mobile
Energy must name the Mill Owners as additional insureds and each policy required
to be maintained by a Mill Owner must name Mobile Energy as an additional
insured. If it is commercially unreasonable for Mobile Energy or any Mill Owner
to obtain any such insurance policy, Mobile Energy and the Mill Owners are
obligated by the Master Operating Agreement to devise, in good faith, an
equitable and mutually agreeable allocation of risk (that may include
self-insurance).
There can be no assurance that the insurance coverages required by the
Master Operating Agreement will be available to Mobile Energy in the future on
commercially reasonable terms or at commercially reasonable rates or that the
amounts for which Mobile Energy is insured or amounts that Mobile Energy
receives under such insurance coverage will cover all losses. In the event there
is a total or partial loss of the Energy Complex, there can be no assurance that
the insurance proceeds received by Mobile Energy in respect thereof will be
sufficient to satisfy all indebtedness of Mobile Energy.
Casualty
The following is a description of the provisions set forth in the Master
Operating Agreement with respect to the use of the proceeds of insurance
maintained by Mobile Energy (the "Mobile Energy Proceeds"). However, in the Mill
Owner Consents to Assignment, Scott/Kimberly-Clark and the Mill Owners have
agreed that Mobile Energy Proceeds will be disposed of pursuant to the terms of
the Mill Owner Consents to Assignment.
If any part of the Energy Complex were to suffer physical loss or
destruction (a "Casualty") and the cost of repairing the damage to the Energy
Complex caused by such Casualty does not exceed $7,500,000 (as escalated from
the Acquisition Closing Date, the "Mobile Energy Contribution Amount"), then
Mobile Energy is obligated to repair the damage, whether or not the Casualty (or
the circumstance that caused the Casualty) is covered by any insurance policy
required to be maintained by Mobile Energy.
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Generally, if the Energy Complex were to suffer a Casualty for which Mobile
Energy is required by the Master Operating Agreement to maintain insurance but
the Mills were not materially affected by a Casualty (other than the indirect
effects of the Casualty affecting the Energy Complex), and if the sum of the
Mobile Energy Proceeds and Mobile Energy Contribution Amount were sufficient to
restore the Energy Complex to the level specified by the Master Operating
Agreement, then Mobile Energy would be required to rebuild the Energy Complex so
that it can once again provide the level of Processing Services specified by the
Master Operating Agreement, as follows: (i) if the Energy Complex experienced
any Casualty other than a Total Casualty (as defined below) or any Casualty that
results in less than $7,500,000 in damages (a "Partial Casualty"), Mobile Energy
would be required to restore the Energy Complex to substantially its condition
immediately prior to the Partial Casualty; (ii) if the Energy Complex
experienced any Casualty that results in more than $150,000,000 in damages or
that cannot be repaired within 24 months of the Casualty (a "Total Casualty") on
or before December 16, 2011 and the Aggregate Demands for each of the Processing
Services immediately prior to the Total Casualty exceeded certain minimum levels
set forth in the Master Operating Agreement, Mobile Energy would also be
required to restore the Energy Complex to substantially its condition
immediately prior to the Total Casualty; and (iii) if the Energy Complex
experienced a Total Casualty after December 16, 2011 and the Aggregate Demands
for each of the Processing Services immediately prior to the Total Casualty
exceeded 50% of each of the Maximum Capacities in effect on the Acquisition
Closing Date, Mobile Energy would be required to restore the Energy Complex so
that it could produce the Aggregate Demands in effect immediately prior to the
Total Casualty.
Generally, if (i) the Energy Complex were to suffer any Casualty for which
Mobile Energy is required by the Master Operating Agreement to maintain
insurance, (ii) the Mills also were materially affected by a Casualty (other
than the indirect effects of the Casualty affecting the Energy Complex), (iii)
the sum of Mobile Energy Proceeds and Mobile Energy Contribution Amount were
sufficient to restore the Energy Complex, and (iv) the Demand for each of the
Processing Services were (or upon the completion of any restoration of the Mills
undertaken by the Mill Owners would be) greater than the Minimum Economic Demand
associated with such Processing Service and at least 50% of Reserved Demand (as
hereinafter defined) in effect immediately before the occurrence of such
Casualty (unless terminated by the applicable Mill Owner within sixty (60) days
of the occurrence of the Casualty) shall continue to be reserved, then Mobile
Energy would be required to restore the Energy Complex to a condition necessary
to produce the Aggregate Demands and Reserved Demand in effect immediately prior
to such Casualty. If Mobile Energy has no obligation under the Master Operating
Agreement to restore or rebuild the Energy Complex because (a) the amount of
Mobile Energy Proceeds plus Mobile Energy Contribution Amount is insufficient to
restore or rebuild the Energy Complex to the operating levels required above, or
(b) because the criteria set forth in clause (iv) of the preceding sentence have
not been satisfied, then Mobile Energy is required, upon the request of any Mill
Owner, to negotiate in good faith for a reasonable period of time (in any event
not to exceed 90 days), in order to, in the case of clause (a), develop an
acceptable arrangement under which Mobile Energy would use the available Mobile
Energy Proceeds to restore or rebuild the Energy Complex to an operating level
commensurate with the amount of Mobile Energy Proceeds available for such
restoration or rebuilding (without accounting for any Mobile Energy Contribution
Amount) or, in the case of clause (b), develop arrangements regarding the future
provision of Processing Services and other services at the Mobile Facility.
Mobile Energy has no obligation to the Mill Owners under this paragraph other
than to negotiate for a reasonable period of time (in any event not to exceed 90
days).
If Mobile Energy is required to, or otherwise decides to, restore the Energy
Complex following a Casualty, and the restoration work is structural in nature
or the cost thereof, as estimated by Mobile Energy, exceeds $5,000,000 (as
escalated from the Acquisition Closing Date), then the restoration work is
required to be in the charge of an architect or engineer selected by Mobile
Energy and reviewed by the Mill Owners (such review not to be unreasonably
delayed) and the Mill Owners must be given a reasonable period to review the
plans and specifications before the restoration work begins (such review not to
be unreasonably delayed).
If Mobile Energy is not required to restore the Energy Complex because the
sum of Mobile Energy Proceeds and Mobile Energy Contribution Amount is
insufficient for the required level of restoration, the Mill Owners (or any of
them) may compel Mobile Energy to restore the Energy Complex to such level by
paying all restoration costs that exceed the sum of Mobile Energy Proceeds and
Mobile Energy Contribution Amount. The Master Operating Agreement provides that
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no Mill Owner so contributing to the restoration of the Energy Complex will have
any claim on or ownership interest in the Energy Complex assets so restored, and
Mobile Energy will have no obligation to repay a contributing Mill Owner for any
costs incurred or payments made by such Mill Owner for the restoration of the
Energy Complex. If the Mill Owners fail to pay the difference between the
restoration costs and the sum of Mobile Energy Proceeds and Mobile Energy
Contribution Amount, the consequences set forth in the following paragraph will
apply.
If the applicable conditions set forth in the Master Operating Agreement are
not satisfied (i) Mobile Energy will have no obligation under the Master
Operating Agreement to restore the Energy Complex and (ii) the Energy Services
Agreements and related rights and obligations under the Master Operating
Agreement will terminate as of the date of the Casualty. In addition, Mobile
Energy Proceeds will be distributed as follows:
(a) first, Mobile Energy will receive that portion of Mobile Energy
Proceeds that is equal to the present value of the amount Mobile Energy
would have received as Demand Charges and Demand Reservation Charges (as
hereinafter defined) for the remainder of the term if the Conversion
Demand, Aggregate Steam Processing Demand, Aggregate Power Processing
Demand and Reserved Demand in effect immediately prior to such Casualty
remained in effect for the remainder of the term. If the Maximum Liquor
Processing Capacity, the Maximum Steam Processing Capacity and the Maximum
Power Processing Capacity (reduced by any Demand that had been relinquished
by any Mill Owner pursuant to the Master Operating Agreement ("Relinquished
Demand") prior to the date of the Casualty and any Demand that had been
forfeited by any Mill Owner pursuant to the Master Operating Agreement
("Forfeited Demand") and that had not yet been claimed by a Mill Owner
pursuant to the Master Operating Agreement) are greater than the Aggregate
Demands and Reserved Demand in effect immediately prior to the Casualty,
these adjusted Maximum Capacities will be substituted for the Aggregate
Demands and Reserved Demand for purposes of calculating the amounts to be
received by Mobile Energy. The present value will be calculated using a
discount rate that, during the first 15 contract years following the
Acquisition Closing Date, is 11%, and, during the remainder of the term, is
12%. The calculation of the amount Mobile Energy would have received as
Demand Charges and Demand Reservation Charges for the remainder of the term
will exclude any portion of the Demand Charges and Demand Reservation
Charges covering fixed operations and maintenance expenses and sustaining
capital expenses that Mobile Energy would not actually incur as a result of
the Casualty and the termination of the Master Operating Agreement and the
Energy Services Agreements pursuant to clause (ii) of the preceding
sentence;
(b) second, the Mill Owners will receive the lesser of (A) the
remaining Mobile Energy Proceeds or (B) that portion of Mobile Energy
Proceeds that is equal to the difference between (x) the Mill Owners' costs
of acquiring Processing Services from Mobile Energy pursuant to the Project
Agreements for the remainder of the term and (y) the Mill Owners' costs of
acquiring electricity, steam and green liquor from sources other than the
Energy Complex for the remainder of the term. For purposes of calculating
the costs referred to in clauses (x) and (y), the Master Operating
Agreement assumes that the Conversion Demand, Aggregate Steam Processing
Demand, Aggregate Power Processing Demand and Demand Reservation Charges
(as hereinafter defined) in effect immediately prior to the Casualty would
have remained in effect for the remainder of the term. The Master Operating
Agreement also provides that for purposes of calculating the costs referred
to in clauses (x) and (y), the Maximum Liquor Processing Capacity, the
Maximum Steam Processing Capacity and the Maximum Power Processing Capacity
(reduced by any Relinquished Demand that had been relinquished prior to the
date of the Casualty and any Forfeited Demand that had not yet been claimed
by a Mill Owner pursuant to the Master Operating Agreement) in effect
immediately prior to the Casualty will be substituted for the Aggregate
Demands and Demand Reservation Charges in effect immediately prior to the
Casualty if such adjusted Maximum Capacities are greater than the Aggregate
Demands and Demand Reservation Charges; and
(c) third, Mobile Energy will receive the remainder of Mobile Energy
Proceeds, if any.
As noted above, Mobile Energy and the Mill Owners have agreed that the
provisions with respect to insurance proceeds set forth in the Mill Owner
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Consents to Assignment will override the provisions described above to the
extent such provisions are inconsistent with one another.
There can be no guarantee that the amounts received by Mobile Energy from
insurers will be sufficient to satisfy Mobile Energy's outstanding indebtedness
in the event of a Casualty.
The Mill Owners have no obligation under the Master Operating Agreement to
restore any portion of any Mill affected by a Casualty. Except as provided in
the provisions concerning Force Majeure Events and the termination of an Energy
Services Agreement upon a Mill Closure, a Casualty with respect to a Mill
relieves a Mill Owner of its obligations to pay Demand Charges only if, and to
the extent that, the Energy Complex was also affected by such Casualty.
Events of Default
The following constitute events of default on the part of Mobile Energy under
the Energy Services Agreements and the Master Operating Agreement (each a
"Mobile Energy Event of Default"): (a) non-payment by Mobile Energy of any
payment due by Mobile Energy to the applicable Mill Owner under its Energy
Services Agreement or the Master Operating Agreement (if such non-payment
continues for 10 days after written notice of non-payment has been given to
Mobile Energy by the Mill Owner entitled to payment); (b) non-performance by
Mobile Energy of any covenant, obligation or agreement of Mobile Energy to the
applicable Mill Owner under its Energy Services Agreement or the Master
Operating Agreement (if such non-performance continues for 60 days (or if 60
days is insufficient, 180 days) after written notice of non-performance is given
to Mobile Energy by the Mill Owner entitled to performance); (c) certain
bankruptcy events with respect to Mobile Energy; (d) transfer of the Energy
Complex by Mobile Energy in contravention of the transfer restrictions imposed
by the Master Operating Agreement; (e) failure by Southern to comply in any
material respect with any covenant, obligation or agreement in the Environmental
Guaranty; and (f) failure by Mobile Energy or Southern to comply with their
respective obligations under the Mill Owner Maintenance Reserve Account
Agreement (as hereinafter defined) if such failure is not remedied within 10
days.
The following constitute events of default on the part of each Mill Owner
under such Mill Owner's Energy Services Agreement and the Master Operating
Agreement, and, subject to the satisfaction of any applicable conditions set
forth in such agreements, entitle Mobile Energy to exercise its remedies against
the defaulting Mill Owner (each a "Mill Owner Event of Default"): (a)
non-payment by a Mill Owner of any payment due by the Mill Owner to Mobile
Energy under its Energy Services Agreement or the Master Operating Agreement (if
such non-payment continues for 10 days after written notice of non-payment has
been given to the defaulting Mill Owner by Mobile Energy); (b) non-performance
by a Mill Owner of any covenant, obligation or agreement of the Mill Owner under
its Energy Services Agreement or the Master Operating Agreement (if such
non-performance continues for 60 days (or if 60 days is insufficient, 180 days)
after written notice of non-performance is given to the defaulting Mill Owner by
Mobile Energy); and (c) certain bankruptcy events with respect to the Mill
Owner. Finally, the following constitute events of default on the part of each
Mill Owner under the Master Operating Agreement and, subject to the satisfaction
of any applicable conditions set forth in the Master Operating Agreement,
entitle the other Mill Owners to exercise their remedies against the defaulting
Mill Owner (each an "Inter-Mill Event of Default"): (a) non-payment by a Mill
Owner of any payment due by the Mill Owner to another Mill Owner under any
Project Contract (if such non-payment continues for 10 days after written notice
of non-payment has been given to the defaulting Mill Owner by the Mill Owner
entitled to payment, or the cure period specified in the applicable Project
Contract has elapsed); and (b) non-performance by a Mill Owner of any covenant,
obligation or agreement of the Mill Owner under the Master Operating Agreement
(if such non-performance continues for 60 days (or if 60 days is insufficient,
180 days) after written notice of non-performance is given to the defaulting
Mill Owner by the Mill Owner entitled to performance).
Any non-defaulting Mill Owner may, within the applicable cure periods set
forth above and upon notice to the defaulting Mill Owner and Mobile Energy,
attempt to cure a default by another Mill Owner, unless such attempt to cure
will interfere with the defaulting Mill Owner's diligent attempt to cure. In
addition, any Mill Owner (or, if acting in concert, more than one Mill Owner)
may, upon notice to Mobile Energy, attempt to cure a default by Mobile Energy
under any one of a specified list of contracts to which Mobile Energy is a party
(which contracts do not include the Financing Documents or the Project
Contracts), unless such attempt to cure will interfere with Mobile Energy's
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diligent attempt to cure. A Mill Owner curing a default by Mobile Energy may
deduct the reasonable costs incurred by such Mill Owner in effecting the cure
from amounts owed by such Mill Owner to Mobile Energy under its Energy Services
Agreement and the Master Operating Agreement.
If Mobile Energy or any Mill Owner disputes the occurrence or existence of a
particular event of default or the availability of any particular remedy in
respect thereof, then the applicable parties are obligated to attempt to resolve
the dispute (in accordance with the dispute resolution procedures set forth in
the Master Operating Agreement) before the non-defaulting party may exercise any
of the remedies set forth below (other than Mill Owner Step-In Rights (as
hereinafter defined) or Mobile Energy Step-In Rights (as hereinafter defined),
which are subject to a separate, expedited dispute resolution mechanism).
Institution of such dispute resolution procedures suspends the running of the
cure periods until the final resolution of the dispute.
Remedies
General Remedies
Upon the occurrence and during the continuation of a Mobile Energy Event of
Default or a Mill Owner Event of Default, any Mill Owner (or Mobile Energy, as
applicable) is entitled to do any or all of the following: (a) terminate the
applicable Energy Services Agreement (and the rights and obligations under the
Master Operating Agreement that are related to such Energy Services Agreement)
(unless the event of default was a default with respect to the non-performance
of any covenant, obligation or agreement, and the non-performance did not have a
Mill Material Adverse Effect or a Mobile Energy Material Adverse Effect, as
applicable); (b) obtain specific performance; and (c) pursue all other remedies
available at law or in equity, subject to the arbitration provisions set forth
in the Master Operating Agreement. Upon the occurrence and during the
continuation of an Inter-Mill Event of Default, any non-defaulting Mill Owner
may do any or all of the following: (i) obtain specific performance; (ii) seek
any applicable remedy available to the non-defaulting Mill Owner under the other
Project Agreements; and (iii) pursue all other remedies available at law or in
equity, except that, without the prior written consent of Mobile Energy, no Mill
Owner can exercise any right to terminate the Master Operating Agreement due to
an Inter-Mill Event of Default.
If a Mill Owner terminates its Energy Services Agreement due to a Mobile
Energy Event of Default, such Mill Owner will stop accruing Demand Charges and
Processing Charges as of the date of the termination.
The exercise of remedies by Mobile Energy does not limit a defaulting Mill
Owner's obligation to pay (for the remainder of the initial term of its Energy
Services Agreement) any Demand Charges that accrue under the Energy Services
Agreement (to the extent that the Demand Charges constitute costs to and
expenses of and the return of capital to Mobile Energy, as opposed to lost
profits, loss of use of capital or revenue, or any other incidental, special or
consequential losses or damages). However, if a Mill Owner provided notice of a
Mill Closure before its event of default, such Mill Owner will not be obligated
to pay Demand Charges as described in the preceding sentence, but instead will
be obligated to pay the Demand Charges imposed by the Master Operating Agreement
in the event of a Mill Closure.
Mill Owner Step-In Rights
The Master Operating Agreement provides that upon the occurrence of an Energy
Complex Triggering Event (as hereinafter defined), and provided that
Scott/Kimberly-Clark and the Mill Owners are in compliance with all of their
material obligations to Mobile Energy under the Project Agreements, the Mill
Owners may, upon unanimous agreement of the Mill Owners, notify Mobile Energy
and Mobile Energy's lenders that are financing the Energy Complex or the
Acquisition (the "Lenders") in writing of their intention to assume operational
responsibility for the Energy Complex in place of, and as agent for, Mobile
Energy, in order to undertake to cure the Energy Complex Triggering Event and to
operate and maintain the Energy Complex in accordance with the Project
Agreements (the "Mill Owner Step-In Rights"). The Mill Owners may exercise the
Mill Owner Step-In Rights until the earlier to occur of the following events:
(1) such Energy Complex Triggering Event is so cured or has otherwise ceased to
exist; (2) Mobile Energy presents a cure plan (the "Mobile Energy Cure Plan")
that contains a reasonably expeditious and reasonably technically and
economically feasible means for curing the Energy Complex Triggering Event
within the time period specified therein; (3) any Mill Owner no longer supports
the exercise of the Mill Owner Step-In Rights (and gives 30 days notice of such
failure of support to Mobile Energy and the other Mill Owners); (4) subject to
the satisfaction of the conditions set forth in the Mill Owner Consents to
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Assignment with regard to foreclosure ,the Lenders have foreclosed upon the
Energy Complex and have designated another reasonably qualified and experienced
person to operate and maintain the Energy Complex (which person has submitted a
cure plan that satisfies the conditions described above to which Mobile Energy
Cure Plan is subject); and (5) subject to the satisfaction of the conditions set
forth in the Mill Owner Consents to Assignment, the Lenders have foreclosed upon
the Energy Complex without foreclosing upon the Project Agreements. While the
Mill Owners are exercising the Mill Owner Step-In Rights, Mobile Energy would
have neither the right nor the obligation to operate the Energy Complex (other
than the obligation to permit the Mill Owners to use the Energy Complex
employees in the operation of the Energy Complex). The Mill Owners may not,
however, exercise the Mill Owner Step-In Rights with respect to any Mobile
Energy Event of Default after any Mill Owner has begun to exercise any other
remedy with respect to such Mobile Energy Event of Default.
"Energy Complex Triggering Events" consist of any of the following
occurrences that are not the result of a Force Majeure Event, Permitted Energy
Complex Outage, or Mobile Energy receiving an insufficient amount of any Mill
Product: (i) a failure by Mobile Energy to provide the Processing Services
pursuant to the Energy Services Agreements which (a) has a Mill Material Adverse
Effect and (b) is a Mobile Energy Event of Default; (ii) the availability factor
for Steam Processing Services (as calculated pursuant to the Master Operating
Agreement) is less than 90% for any consecutive 10-day period during the term;
(iii) the availability factor for Steam Processing Services (as calculated
pursuant to the Master Operating Agreement) is less than 90% for any 10 days
within a 20-day period; (iv) an Unscheduled Outage of the entire Pulp Mill,
Paper Mill and Tissue Mill for any consecutive five-day period during the term
due to a shortfall in Processing Services; (v) an Unscheduled Outage of the
entire Pulp Mill, Paper Mill and Tissue Mill for any five-days within a 20-day
period during the term due to a shortfall in Processing Services; (vi) one (1)
paper machine or one (1) wet lap machine is out of service for any consecutive
15-day period due to a shortfall in a Processing Service; (vii) one paper
machine or one wet lap machine is out of service for any 15 days within a 30-day
period due to a shortfall in a Processing Service; (viii) the occurrence of four
or more Unit Trips during any 20-day period during the term; or (ix) an
Abandonment of the Energy Complex has occurred.
If Mobile Energy disputes the existence of an Energy Complex Triggering
Event or if the Mill Owners fail to accept a Mobile Energy Cure Plan, Mobile
Energy may submit the dispute to a technical expert pursuant to the dispute
resolution provisions of the Master Operating Agreement, who is required to
resolve the dispute in accordance with the expedited timetable set forth in the
Master Operating Agreement for the resolution of disputes regarding step-in
rights.
While exercising the Mill Owner Step-In Rights, the Mill Owners are
obligated to, in consultation with Mobile Energy, diligently pursue a cure of
the Energy Complex Triggering Event so as to enable Mobile Energy to resume
operation of the Energy Complex as soon as is practicable. The Mill Owners may
use funds in the Mill Owner Maintenance Reserve Account (as hereinafter defined)
established by Mobile Energy under the Master Operating Agreement in order to
cure the Energy Complex Triggering Event. However, the Mill Owners are not
required to incur out-of-pocket costs or to assume or guarantee any liabilities.
While exercising the Mill Owner Step-In Rights, the Mill Owners are obligated to
continue to pay Mobile Energy all Demand Charges, Processing Charges and other
charges due and payable to Mobile Energy under the Project Agreements (subject
to any rights of set-off or reduction including for Liquidated Damages or Demand
Charge Reductions). Mobile Energy will be required to distribute such revenues
(i) first, to the Mill Owners, as reimbursement for all reasonable expenses
actually incurred by the Mill Owners in exercising the Mill Owner Step-In Rights
and curing the Energy Complex Triggering Event (including, without limitation,
capital expenditures incurred in exercising the Mill Owner Step-In Rights and in
curing the Energy Complex Triggering Event, to the extent such capital
expenditures are reasonable and are either in accordance with past practice at
the Energy Complex or are consistent with the Energy Complex's annual operating
plan) and (ii) second, to Mobile Energy.
Exercise of the Mill Owner Step-In Rights suspends the running of any of the
cure periods (other than for the payment of money) for Mobile Energy Events of
Default and prevents the Mill Owners from exercising any termination rights and,
subject to the other terms of the Project Agreements, from suspending the
provision of any Mill Product.
No Mill Owner will have any liability to Mobile Energy in connection with
the exercise of the Mill Owner Step-In Rights, except for (i) direct damages
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arising out of such Mill Owner's failure to operate the Energy Complex in
accordance with specified prudent operating standards, taking into account the
circumstances giving rise to the Mill Owner Step-In Rights and (ii) direct
damages arising out of such Mill Owner's failure to make reasonable efforts to
otherwise operate the Energy Complex in accordance with the Project Agreements.
If an Energy Complex Triggering Event were to occur and if the Mill Owners
were to exercise the Mill Owner Step-In Rights and assume control of the Energy
Complex, Mobile Energy and Southern Electric would cease to control the
operation of the Energy Complex and the Energy Complex may be controlled by
Mobile Energy's customers. There can be no assurance that an Energy Complex
Triggering Event will not occur or that the Mill Owners would effectively
operate the Energy Complex in a manner sufficient to permit Mobile Energy to
continue to pay its fixed costs, including principal of and interest on debt.
Company Step-In Rights
The Master Operating Agreement provides Mobile Energy comparable step-in rights
(the "Mobile Energy Step-In Rights") with respect to the Process Water Plant,
the Waste Water Treatment Plant, the Air Compressors (if any of the Mill Owners
are operating the Air Compressors at the time of a Pulp Mill Triggering Event
(as hereinafter defined)) and the Pulp Mill's truck scales (each of such
facilities, the "Pulp Mill Step-In Equipment"). Such Mobile Energy Step-In
Rights are exercisable upon the occurrence of a Pulp Mill Triggering Event and
do not require the consent of the non-defaulting Mill Owners (though, during the
exercise of Mobile Energy Step-In Rights, Mobile Energy is obligated to consult
with the Tissue Mill Owner and the Paper Mill Owner as to the operation and
maintenance of the Process Water Plant and the Waste Water Treatment Plant).
During the exercise of Mobile Energy Step-In Rights, the Pulp Mill Owner is
obligated to deliver all revenues from the Pulp Mill Step-In Equipment to Mobile
Energy, which will hold such revenues in trust for the benefit of the Pulp Mill
Owner and will distribute such revenues in accordance with the priorities set
forth in the Master Operating Agreement. Otherwise, Mobile Energy Step-In Rights
are substantially similar to the Mill Owner Step-In Rights. No assurance can be
given that Mobile Energy Step-In Rights are legally enforceable or that Mobile
Energy will be able successfully to exercise Mobile Energy Step-In Rights.
"Pulp Mill Triggering Events" consist of any of the following occurrences
that are not the result of a Force Majeure Event: (i) failure of the Pulp Mill
Owner to perform any of its obligations under the Water Agreement or to operate
the Pulp Mill Step-In Equipment in accordance with specified prudent operating
standards which, (a) has a Mobile Energy Material Adverse Effect and (b) is a
Mill Owner Event of Default by the Pulp Mill; and (ii) abandonment of the Pulp
Mill or a Mill Closure with respect to the Pulp Mill, except that neither clause
(i) nor clause (ii) shall constitute a Pulp Mill Triggering Event if (x) the
Mill Owners, or any of them, continue to pay Mobile Energy all Demand Charges
due to Mobile Energy by all of the Mill Owners despite any reduction of the
capacity of the Energy Complex to provide Processing Services to the Mills due
to the failure by the Pulp Mill Owner to perform any of its obligations under
any of the Project Agreements and (y) each of the Mill Owners waives any Mobile
Energy Event of Default caused by the failure of the Pulp Mill Owner to perform
any of its obligations under any of the Project Agreements.
Claiming Demand and Reserving Demand upon Termination due to an Event of Default
Following the termination of an Energy Services Agreement by Mobile Energy due
to a Mill Owner Event of Default, the non-terminated Mill Owners can claim as
Demand all or any part of the Demand or Reserved Demand (as hereinafter defined)
of the terminated Mill Owner. If none of the non-terminated Mill Owners claims
as Demand the terminated Mill Owner's Demand or Reserved Demand, then the
non-terminated Mill Owners can reserve such Demand (thus converting such Demand
into "Reserved Demand") or Reserved Demand by paying Mobile Energy an amount
equal to Mobile Energy's shutdown, mothballing and startup costs reasonably
incurred in order to reserve such Demand for such Mill Owner (a "Demand
Reservation Charge"). If the terminated Mill Owner's Demand or Reserved Demand
is not claimed or reserved by a non-terminated Mill Owner within the applicable
time periods set forth in the Master Operating Agreement, that Demand or
Reserved Demand will no longer be available to the Mill Owners, and Mobile
Energy will have the right to supply the Processing Service related to that
Demand or Reserved Demand to any other person. The reservation of Demand could
have a material adverse effect on Mobile Energy.
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Any Mill Owner which has purchased Reserved Demand from Mobile Energy may,
at any time, notify Mobile Energy that such Mill Owner wishes to convert such
Reserved Demand (or any portion thereof) (the "Converted Demand") into the
applicable Demand. Upon receiving such written notice, Mobile Energy is required
to provide such Mill Owner, within a reasonable time, with an estimate of the
costs, if any, Mobile Energy expects it will incur, and the time Mobile Energy
expects it will take, to increase the Aggregate Demand by an amount equal to the
Converted Demand. If the Mill Owner directs Mobile Energy to proceed, (x) Mobile
Energy will be required to promptly prepare the Energy Complex to provide
Processing Services at levels commensurate with both the then existing Demand
and the Converted Demand and (y) the Mill Owner will be required to pay Mobile
Energy all the costs Mobile Energy reasonably incurs in connection with the
foregoing preparations (which costs (i) are required to be determined assuming
Mobile Energy used prudent operating standards in shutting down, mothballing and
maintaining the equipment in question, (ii) may be audited by such Mill Owner
and (iii) are not permitted to be greater than the estimate provided to such
Mill Owner by Mobile Energy). Mobile Energy is required to notify the Mill
Owners when the preparations described in the preceding sentence are completed.
Upon such notification by Mobile Energy, such Converted Demand will be deemed to
constitute Demand and the applicable Mill Owner will be required to begin paying
Demand Charges which reflect the addition of the Converted Demand to Demand.
Mill Closure and Termination of Agreements by Mill Owners
Each Mill Owner has the right to terminate its Energy Services Agreement upon a
Mill Closure with respect to such Mill Owner's Mill. A terminating Mill Owner is
obligated to provide Mobile Energy and the other Mill Owners six months prior
written notice of its intention to terminate its Energy Services Agreement;
termination is deemed to occur upon the expiration of such six-month period. The
terminating Mill Owner is obligated to pay Mobile Energy such Mill's Demand
Charges (at the levels in effect immediately prior to the giving of notice) for
the greater of (i) six months from the date of termination or (ii) the remainder
of the then current Demand Period. All obligations incurred by the terminating
Mill Owner prior to the termination of its Energy Services Agreement (and all
obligations to pay Demand Charges pursuant to the preceding sentence) survive
the termination, and must be timely performed or paid by the terminating Mill
Owner. In addition, the terminating Mill Owner must give reasonable assistance
to Mobile Energy in Mobile Energy's endeavors to create new business
opportunities for the Energy Complex; however, the terminating Mill Owner will
have no liability or other monetary obligation to Mobile Energy if such business
opportunities are not available or are not created.
The Mill Owners have each granted Mobile Energy an irrevocable license to
use (in accordance with specified prudent operating standards) any asset of the
Tissue Mill or the Paper Mill and the Pulp Mill Step-In Equipment if, following
a Mill Closure, the closed Mill stops providing any Mill Product or Shared
Service to Mobile Energy. Mobile Energy's exercise of any of these licenses will
be at Mobile Energy's sole cost and expense. No assurance can be given that
Mobile Energy's use of any of these licenses will be economically beneficial to
Mobile Energy.
The Master Operating Agreement provides that, notwithstanding the
termination of a Mill Owner's Energy Services Agreement, if a closing Mill Owner
or any of its successors or assigns recommences operations on its Mill site that
require green liquor, steam or electricity, that person must (at least one year
prior to the recommencement of operations on the property) request that Mobile
Energy reinstate the applicable Energy Services Agreement on terms identical to
those contained therein (but without any extension of the term thereof due to
the Mill Closure). Upon receipt of such notice, Mobile Energy will have the
right, but not the obligation, to reinstate the applicable Energy Services
Agreement. If Mobile Energy exercises this right, the applicable Mill Owner is
required to pay all costs incurred by Mobile Energy to remobilize the Energy
Complex so that it may be operated in accordance with the Project Agreements.
The Master Operating Agreement provides that all of the obligations of the Mill
Owners described in this paragraph survive the termination of the Master
Operating Agreement and any applicable Energy Services Agreement.
Claiming Demand and Reserving Demand upon a Mill Closure
Following a Mill Closure, the closing Mill Owner can preserve its rights to all
or any portion of its Demand by either (i) not terminating its Energy Services
Agreement or (ii) notifying Mobile Energy on or prior to the Mill Closure that
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the closing Mill Owner will continue, for the period during which the Mill Owner
desires to preserve such rights, to pay Demand Charges with respect to the
Demand such Mill Owner desires to preserve.
If the closing Mill Owner does not preserve its rights to its Demand, any
other Mill Owner may claim all or any portion of the closing Mill Owner's Demand
by notifying Mobile Energy and the other Mill Owners at any time during the
period in which the closing Mill Owner is paying Demand Charges, provided,
however, that a Mill Owner may do so only if Mobile Energy has no additional
Demand available to provide to the Mill Owner (because Aggregate Demand for the
applicable Processing Service is equal to the Maximum Capacity for that
Processing Service). The closing Mill Owner would stop paying Demand Charges on
any portion of its Demand so claimed by another Mill Owner. If, however, the
closing Mill Owner does preserve its rights to its Demand, and if the Aggregate
Demand for the applicable Processing Service is equal to its Maximum Capacity,
the closing Mill Owner may allow another Mill Owner to "buy" any or all of its
Demand, on terms agreed upon by such Mill Owners. Thus, if a Mill Owner plans to
close its Mill only temporarily, such Mill Owner can give another Mill Owner the
right to (and the obligation to pay for) the closing Mill's Demand for a limited
time period, while retaining the closing Mill's right to once again have access
to its Demand when it recommences production. In any event, if Aggregate Demand
is less than Maximum Capacity, any Mill Owner that wants to increase its Demand
is obligated to obtain its additional Demand from Mobile Energy; the non-closing
Mill Owners cannot absorb the Demand of the closing Mill Owner if Aggregate
Demand is less than Maximum Capacity.
If neither the closing Mill Owner nor any other Mill Owner claims the
closing Mill Owner's Demand, the closing Mill Owner may reserve that Demand by
paying Mobile Energy a Demand Reservation Charge (equal to Mobile Energy's
shutdown, mothballing and startup costs reasonably incurred in order to reserve
such Demand for such Mill Owner). If the closing Mill Owner does not reserve its
Demand, any other Mill Owner may do so by paying Mobile Energy a Demand
Reservation Charge.
If the closing Mill Owner also maintained Reserved Demand prior to the Mill
Closure, the closing Mill Owner can claim such Reserved Demand as Demand by
first converting it to Demand (in accordance with the provisions set forth in
the Master Operating Agreement) and then claiming it as described above. If the
closing Mill Owner does not convert its Reserved Demand into Demand and claim it
as Demand, the closing Mill Owner may continue to reserve its Reserved Demand by
continuing to pay its Demand Reservation Charge.
However, if the closing Mill Owner stops paying its Demand Reservation
Charge (or otherwise terminates its Reserved Demand in accordance with the
Master Operating Agreement), then such Reserved Demand may be claimed by any
other Mill Owner as Demand. If no Mill Owner claims such Reserved Demand as
Demand, any such Mill Owner can assume the Reserved Demand by paying Mobile
Energy a Demand Reservation Charge.
Mobile Energy may use the Processing Services related to any Reserved Demand
or sell such Processing Services to another Mill Owner or to any other Person on
an as-available, fully interruptible basis.
Any Mill Owner which has purchased Reserved Demand from Mobile Energy may,
at any time, notify Mobile Energy that such Mill Owner wishes to convert such
Reserved Demand to Converted Demand. Upon receiving such written notice, Mobile
Energy is required to provide such Mill Owner, within a reasonable time, with an
estimate of the costs, if any, Mobile Energy expects it will incur, and the time
Mobile Energy expects it will take, to increase the Aggregate Demand by an
amount equal to the Converted Demand. If the Mill Owner directs Mobile Energy to
proceed, (x) Mobile Energy will be required to promptly prepare the Energy
Complex to provide Processing Services at levels commensurate with both the then
existing Demand and the Converted Demand and (y) the Mill Owner will be required
to pay Mobile Energy all the costs Mobile Energy reasonably incurs in connection
with the foregoing preparations (which costs (i) are required to be determined
assuming Mobile Energy used prudent operating standards in shutting down,
mothballing and maintaining the equipment in question, (ii) may be audited by
such Mill Owner and (iii) are not permitted to be greater than the estimate
provided to such Mill Owner by Mobile Energy). Mobile Energy is required to
notify the Mill Owners when the preparations described in the preceding sentence
are completed. Upon such notification by Mobile Energy, such Converted Demand
will be deemed to constitute Demand and the applicable Mill Owner will be
required to begin paying Demand Charges which reflect the addition of the
Converted Demand to Demand.
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The reservation of Demand could have a material adverse effect on Mobile
Energy.
Sale of Relinquished Demand to Third Parties
The Master Operating Agreement provides that if Demand is not claimed or
reserved by a Mill Owner following a Mill Closure or the termination of an
Energy Services Agreement by Mobile Energy due to a Mill Owner Event of Default,
the Demand of the closed Mill is deemed to be relinquished, and may be sold by
Mobile Energy to third parties. However, there can be no assurance that
alternative customers would be willing or able to enter into long- or short-term
energy service contracts with Mobile Energy following the termination of an
Energy Services Agreement due to a Mill Closure or a Mill Owner Event of
Default. The Energy Complex was designed to provide Processing Services to the
Mills and benefits from certain efficiencies derived from its relationship with
the Mills, including proximity and ready availability of certain fuel products.
Other customers requiring power, steam and/or liquor processing are not
anticipated to be readily available following the termination of an Energy
Services Agreement. In general, sales to other customers may require Mobile
Energy to significantly modify (i) the charges currently received by Mobile
Energy or (ii) the assets comprising the Energy Complex in order to effectuate
such sales or to obtain additional regulatory approvals that could be required
in order to enable Mobile Energy to provide the appropriate services. For
example, Mobile Energy does not have the necessary regulatory approvals to sell
electricity to Alabama Power or any other person that intends to resell the
electricity to third parties nor does it own or have contractual rights to use
transmission facilities necessary to provide electricity to parties other than
the Mills. To make wholesale sales (to Alabama Power, for instance), Mobile
Energy would have to obtain approval of the terms of such sales from FERC. In
addition, providing power or steam processing services to end users other than
the Mill Owners could subject Mobile Energy to regulation by, and could require
the approval of, the Alabama PSC. Any modifications of the Energy Complex or its
regulatory structure could increase Mobile Energy's projected capital and
operational expenditures. Furthermore, no assurance can be given that any
regulatory approvals that may be required for Mobile Energy to sell or transmit
to other customers would be granted. Overall, failure by Mobile Energy to find a
suitable long-term customer to replace one of the Mills after a Mill Closure or
termination of an Energy Services Agreement could have a material adverse effect
on Mobile Energy's financial condition.
Minimum Demand and Termination of Agreements by Mobile Energy
Mobile Energy has the right to terminate the Energy Services Agreements if (a)
Conversion Demand is less than Minimum Conversion Demand, (b) Aggregate Demand
for Steam Processing Services is less than Minimum Steam Processing Demand, (c)
Aggregate Demand for Power Processing Services is less than Minimum Power
Processing Demand, or (d) the Direct Lease (as hereinafter defined) or any
Easement Deed (as hereinafter defined) is terminated and, as a result, Mobile
Energy is unable to perform its obligations under the Energy Services Agreements
or the Master Operating Agreement. All obligations incurred by Mobile Energy
prior to the termination of the Energy Services Agreements survive the
termination, and must be timely performed or paid by Mobile Energy.
Unlike the Mill Owners, Mobile Energy does not automatically have the right
to terminate an Energy Services Agreement upon a Mill Closure. A Mill Closure
would give Mobile Energy the right to terminate an Energy Services Agreement
only if that Mill Closure caused any Demand to fall below the applicable Minimum
Demand. For example, if the Pulp Mill closed, thereby decreasing Conversion
Demand to a level less than the Minimum Conversion Demand, Mobile Energy would
have the right to terminate all of the Energy Services Agreements. However, if,
for example, the Paper Mill closed, thereby decreasing the Aggregate Demand for
Steam Processing Services or the Aggregate Demand for Power Processing Services,
but the demands for Steam Processing Services and the demands for Power
Processing Services of the Pulp Mill and the Tissue Mill were collectively
greater than the corresponding Minimum Demands, Mobile Energy would not have the
right to terminate any of the Energy Services Agreements.
Mobile Energy's right to terminate the Energy Services Agreements is not
tied to its ability to pay principal of and interest on its outstanding
indebtedness. Operating the Energy Complex at or above the Minimum Demand levels
will not necessarily generate sufficient revenues to enable Mobile Energy to pay
the principal of and interest on its outstanding indebtedness.
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Additions to and Modifications of the Energy Complex and the Mills
Mobile Energy may, upon 60 days notice to the Mill Owners, change or modify the
Energy Complex (A) at any time, if such changes or modifications, in Mobile
Energy's judgment based on prudent operating standards, enhance, or (i) do not
decrease the Maximum Capacity of the Energy Complex, except any such decrease
that is required by a Change of Law, (ii) do not result in a reduction in the
Energy Complex's capacity to burn Solid Waste, on an annual basis, below the
average amount of Solid Waste burned by Scott in the 12 month period prior to
the Acquisition Closing Date (unless and to the extent that Mobile Energy agrees
to pay all reasonable costs incurred by the Pulp Mill Owner in connection with
the disposal of all Solid Waste produced by the Pulp Mill that cannot be burned
because of such changes) or (iii) are not reasonably expected to have a Mill
Material Adverse Effect with respect to any Mill or (B) as a result of the
creation of Reserved Demand, Relinquished Demand or Forfeited Demand. Each Mill
Owner has the right to approve any changes to or modifications of the Energy
Complex that are not in accordance with the preceding sentence. Each Mill Owner
may, upon 60 days prior written notice to Mobile Energy, change or modify its
Mill if such changes or modifications, in the Mill Owner's reasonable judgment
based on prudent operating standards, will not materially and adversely affect
the ability of any of the Mill Owners to comply with the terms of the Project
Agreements, except as specifically provided therein. The Mill Owners will not be
entitled to a pricing adjustment or modification of any Project Agreement (other
than with respect to technical specifications) as a result of such changes or
modifications.
If the Mill's aggregate requirements for any of the Processing Services
exceed the capacity of the Energy Complex to provide such Processing Service
under the Energy Services Agreements, the Mill Owners may request that Mobile
Energy negotiate (which negotiation is required to be conducted in good faith by
each of the parties thereto) to determine whether an expansion of the Energy
Complex would be mutually advantageous. This obligation to negotiate does not
automatically entitle Mobile Energy to provide the Mill Owners with Processing
Services in excess of the applicable Maximum Capacity. If the Mill Owners and
Mobile Energy fail to agree to any such expansion of the Energy Complex within
60 days of receipt of such request, the Mill Owners will have the right to build
new facilities or to contract with another person in order to satisfy the
portion of their requirements for Processing Services which Mobile Energy is
unable to provide.
Transfer and Assignment
Each Mill Owner has the right to transfer its Mill (i) without the consent of
Mobile Energy (A) if such Mill Owner continues to be responsible for its
obligations under the Projects Agreements or (B) in connection with a merger,
consolidation or sale of substantially all of the Mill Owner's assets or the
sale, lease, or the transfer of 50% or more of the ownership of the Mill, if the
transferee or an affiliate thereof has substantial expertise in operating and
managing facilities similar to the Mill and there is reasonable basis to
conclude that the operations at the Mill will be conducted in accordance with
specified prudent operating standards or (ii) with the consent of Mobile Energy,
which may not be unreasonably withheld (each, a "Mill Permitted Transfer"). Any
person to whom a Mill is transferred in conjunction with a Mill Permitted
Transfer is required to become a party to various applicable Project Agreements
by assuming the obligations of the Mill Owner whose Mill has been transferred.
Any Mill Owner transferring its Mill would be released from its obligations
under the Project Agreements (except in the case of a Mill Permitted Transfer
pursuant to clause (A) above, in respect of which no such release would be
contemplated) only upon the assumption of such obligations by the person to whom
its Mill is transferred. The Pulp Mill Owner cannot transfer or otherwise
dispose of its interest in the Process Water Plant and the Waste Water Treatment
Plant, except as part of a Mill Permitted Transfer of all or substantially all
of the Pulp Mill, without the unanimous written consent of Mobile Energy and the
other Mill Owners.
Mobile Energy may (A) upon prior written notice to, but without the prior
consent of, the Mill Owners, (i) transfer all of the Energy Complex or permit to
be transferred any interest in Mobile Energy to a direct or indirect wholly
owned subsidiary of Southern, (ii) subject to certain conditions set forth in
the Master Operating Agreement, transfer portions of the Energy Complex or
permit to be transferred portions of Mobile Energy, so as to enable the Energy
Complex to be a Qualifying Facility under PURPA, (iii) assign, pledge, mortgage
or grant security interests in the Energy Complex and Mobile Energy's interests
in the Energy Complex, and permit to be pledged any ownership interest in Mobile
Energy, to a Lender (provided that the Lender executes a consent substantially
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in the form attached to the Master Operating Agreement) and (iv) transfer
portions (by way of undivided interests) of the Energy Complex or permit to be
transferred portions of Mobile Energy (which must in each case be less than 10%)
(so long as Southern directly or indirectly retains ownership of at least 50% of
Mobile Energy and Mobile Energy remains in control of the management of the
Energy Complex) and (B) transfer all or substantially all of the Energy Complex,
or permit to be transferred all or a portion of the ownership interest in Mobile
Energy, with the prior written consent of the Mill Owners, which consent may not
be unreasonably withheld (each such transfer, a "Mobile Energy Permitted
Transfer"). All transfers pursuant to clause (A) must be to persons who (x) are
not direct competitors of Scott/Kimberly-Clark or the Mill Owners (or Affiliates
of such competitors), (y) agree to be bound by the Confidentiality Agreement and
(z) by making such purchase, will not implicate or otherwise conflict with the
Alabama Territorial Law ("Qualified Purchasers"). If Southern Electric and/or
Holdings elected to sell any of its or their interests in Mobile Energy in order
to qualify the Energy Complex as a Qualifying Facility under PURPA, then,
pursuant to PURPA and the applicable regulations and restrictions thereunder,
Southern may be required to forego some or all of its indirect control of the
management and operations of Mobile Energy, and such control (or portion
thereof) so foregone by Southern could become vested in the person(s) or
entity(ies) acquiring such interests in Mobile Energy. As such, Southern may
cease to control the management and operations of Mobile Energy and Mobile
Energy may, in the future, be controlled and partially owned by a third party
that is not affiliated with Southern. There can be no assurance that any such
third party would control, or participate in the control of, the management and
operations of Mobile Energy as effectively as companies affiliated with
Southern.
The Master Operating Agreement provides that upon a Mill Permitted Transfer
or a Mobile Energy Permitted Transfer, the transferee must assume the
obligations of the transferor under the applicable Project Agreements. Upon the
assumption in writing by the transferee of the transferor's rights and
obligations under the Project Agreements (or the portion of the transferor's
rights and obligations corresponding to the portion of its Mill or Energy
Complex that it has assigned, sold or otherwise transferred), the transferor
will be released of its obligations under the Project Agreements, to the extent
assigned and assumed, arising on or after the date of assignment and assumption.
Dispute Resolution
All disputes arising under any of the Operative Documents will be referred
initially to the Site Operating Committee. If the Site Operating Committee is
unable to resolve the dispute within 15 days, the senior management of the
applicable parties will have 15 days to resolve the dispute. All disputes that
the parties to the dispute agree are essentially technical in nature ("Technical
Disputes") that cannot be resolved by the Site Operating Committee or senior
management will be referred to a technical expert, who will be selected by the
parties from a list appended to the Master Operating Agreement, and all other
disputes that cannot be resolved by the Site Operating Committee or senior
management will be resolved by an arbitrator in accordance with the Commercial
Arbitration Rules of the American Arbitration Association.
Mill Owner Maintenance Reserve Account
Pursuant to the Master Operating Agreement, Mobile Energy is required, to
provide for a "Mill Owner Maintenance Reserve Account" with a balance not to
exceed $2,000,000. Mobile Energy may use the funds in such account for the
payment of debt service or operations and maintenance costs and expenses, and
(as discussed above) the Mill Owners may use such funds if they are exercising
the Mill Owner Step-In Rights. The Mill Owner Maintenance Reserve Account cannot
be subject to any lien or encumbrance pursuant to the Financing Documents.
Scott/Kimberly-Clark and S.D. Warren have agreed that Mobile Energy may satisfy
all of its obligations under the Master Operating Agreement with respect to the
Mill Owner Maintenance Reserve Account by causing Southern to execute an
agreement in favor of Mobile Energy, Scott/Kimberly-Clark and the Mill Owners
(the "Mill Owner Maintenance Reserve Account Agreement") that would require
Southern to deposit up to $2,000,000 in the aggregate in the Mill Owner
Maintenance Reserve Account in the circumstances described in such agreement.
Operator
The Energy Services Agreements provide that Mobile Energy may at any time
replace Southern Electric as the operator of the Energy Complex with any person
who is a wholly owned, direct or indirect subsidiary of Southern (the "Southern
Electric Operator"). Mobile Energy may not replace Southern Electric with any
person other than a Southern Electric Operator without the prior written consent
of the Mill Owners, which consent is not permitted to be unreasonably withheld
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or delayed. The Energy Services Agreements provide that if the proposed
replacement operator is reasonably qualified and experienced in the operation of
facilities similar to the Energy Complex, there is to be a presumption that the
Mill Owners' consent to the proposed replacement operator should not be
withheld.
Miscellaneous Provisions
The Master Operating Agreement provides that Mobile Energy and the Mill Owners
will only be liable to the other parties for direct damages as a result of a
breach or default by such party under any Operative Document. In no event will
Mobile Energy or the Mill Owners be liable for claims of non-party customers,
cost of money, loss of profits, loss of use of capital or revenue or any other
incidental, special or consequential loss or damage, or for punitive or
exemplary damages. However, any party may be liable to any other party for third
party claims (other than the claims of non-party customers) against such other
party.
Each of the Mill Owners and Mobile Energy has agreed to indemnify the others
(and certain related parties) from losses incurred by an indemnified party due
to or resulting from (i) the breach by the applicable indemnifying party of any
of its covenants under any of the Project Agreements (in the absence of any
excuse therefor as set forth in the applicable Project Agreement) or (ii) the
negligence or willful misconduct of the applicable indemnifying party.
Until the Energy Services Agreements have been terminated, Mobile Energy may
not, without the prior written consent of the Mill Owners (which consent cannot
be unreasonably withheld), change or expand the nature of its business beyond
that which is contemplated by the Project Agreements.
The Energy Services Agreements and the Master Operating Agreement state that
they are governed by the laws of the State of New York.
Operations and Maintenance Agreement
Mobile Energy and Southern Electric are parties to the O&M Agreement pursuant to
which Southern Electric is obligated to assume responsibility for the operation
and maintenance of the Energy Complex and provide certain related administrative
and management services to Mobile Energy. On the Acquisition Closing Date,
Southern Electric hired approximately 119 employees of Scott who were previously
dedicated to the operations of the Energy Complex (the "Energy Complex
Employees"). The O&M Agreement requires Southern Electric to operate and
maintain the Energy Complex using the Energy Complex Employees and such
additional employees of Southern Electric or of third-party subcontractors as
may be required from time to time.
Term
The term of the O&M Agreement commenced on the Acquisition Closing Date and will
terminate on December 16, 2019, unless earlier terminated in accordance with its
terms. If the Energy Services Agreements are extended, Mobile Energy and
Southern Electric are obligated to endeavor to extend the term of the O&M
Agreement for a period equal to such extension period under the Energy Services
Agreements. See, however, "-Termination."
Termination
Either party may terminate the O&M Agreement upon 30 days written notice in the
event of a material breach of any material provision, unless the breach is cured
within 30 days of receipt of such notice; however, the defaulting party will
have up to an additional 90 days to cure such default if the defaulting party
diligently pursues a cure, the breach is not reasonably susceptible to
correction within 30 days, and the non-defaulting party is not, as a result of
the continuation of the breach, in breach of a material provision of any other
agreement. Either party may also terminate the agreement (i) following total
casualty of the Energy Complex, (ii) following a Force Majeure Event that
continues for more than 12 months, or (iii) for any other reason, with or
without cause, upon (in the case of termination by Southern Electric) 180 days
written notice or upon (in the case of termination by Mobile Energy) 30 days
written notice.
Obligations of Southern Electric
Southern Electric is responsible for operating and maintaining the Energy
Complex at Mobile Energy's expense in accordance with the requirements of the
Energy Services Agreements, the Master Operating Agreement, specified prudent
operating standards, operating manuals provided by Mobile Energy, all applicable
governmental requirements and the annual operating plan for the Energy Complex.
The operating and maintenance services include procuring all supplies, parts and
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equipment on behalf of Mobile Energy, performing all routine maintenance
activities in connection with outages of the Energy Complex, making capital
improvements, handling and disposing of wastes (to the extent not covered under
agreements between Mobile Energy and other parties), and coordinating operations
of the Energy Complex with Alabama Power and the Mill Owners with respect to the
scheduling of back-up and supplemental electric service and Scheduled Outages.
Southern Electric also is obligated to provide various administrative and
management services to Mobile Energy, including administration of all Project
Agreements to which Mobile Energy is a party (to the extent that they relate to
the operation and maintenance of the Energy Complex), collection of payments to
Mobile Energy under the Energy Services Agreements, administration of Mobile
Energy's bank accounts and payment of Mobile Energy's expenses from such
accounts, maintaining Mobile Energy's books and records, assisting Mobile Energy
in obtaining and renewing all required permits and licenses, preparation of
regulatory, financial and other reports required of Mobile Energy, and procuring
and maintaining on Mobile Energy's behalf the insurance coverages required under
the Project Agreements and Financing Documents. In addition, Southern Electric
has designated an employee to serve as Mobile Energy's representative on the
Site Operating Committee.
Obligations of Mobile Energy
Mobile Energy is responsible for providing, at its expense, all supplies, parts,
stores, inventories (including, without limitation, black liquor, biomass,
supplemental fuel, water, lubricants, and chemicals) necessary in connection
with the operation and maintenance of the Energy Complex. Mobile Energy also is
required to provide to Southern Electric and its subcontractors access to and
use of facilities, equipment, vehicles, office equipment, warehouses, and
employee amenities (parking, lavatories, dining facilities, etc.) necessary for
the operation and maintenance of the Energy Complex.
Compensation of Southern Electric; Annual Budget
The services to be performed by Southern Electric under the O&M Agreement are
provided on a full cost reimbursement basis in accordance with the rules of the
SEC under PUHCA. Mobile Energy is obligated to pay, or reimburse Southern
Electric for, all operation and maintenance costs incurred in connection with
Southern Electric's performance, including all labor costs, and all other
expenses that are included in the annual operating plan and budget (the
"Operating Plan and Budget") prepared by Southern Electric, as it may be amended
from time to time, costs and expenses of additional services that may be
requested by Mobile Energy, and legal and other costs incurred by Southern
Electric on Mobile Energy's behalf and at Mobile Energy's request in connection
with enforcing the Project Agreements and in complying with applicable laws.
Labor costs include the direct payroll costs associated with the Energy
Complex Employees, including wages, salaries, direct payroll overheads such as
pension and employee benefits, payroll taxes, bonuses, insurance, and holiday,
sick leave and vacation accruals; and the direct payroll costs of Southern
Electric's employees other than the Energy Complex Employees, as identified
through a work order system, including an allocable share of such employees'
direct payroll overhead costs, plus an allocable share of Southern Electric's
general and administrative expenses.
Southern Electric is obligated to prepare and submit for Mobile Energy's
approval at least 150 days prior to the start of each contract year a proposed
form of Operating Plan and Budget, which Mobile Energy is required to approve or
disapprove within 60 days after submission. The Operating Plan and Budget is
required to include, among other cost items, projected labor costs and other
costs of operation and routine and scheduled major maintenance of the Energy
Complex, projections of liquor, steam and electricity production, and fuel
consumption. If Mobile Energy objects to Southern Electric's proposed Operating
Plan and Budget, and such objections cannot be resolved through discussions,
then an interim operating budget will go into effect for the following contract
year which will be equal to the prior year's operating budget, except that the
labor cost, operating expense and maintenance expense categories of the prior
year's budget will be escalated in accordance with the U.S. Producers Price
Index, and any expenses incurred in connection with scheduled outages and major
maintenance will be reimbursed in full. Mobile Energy also is obligated to pay
or reimburse Southern Electric in full for all additional operating costs
attributable to force majeure events, the execution of new energy services
agreements or any amendment to the existing Energy Services Agreements, among
other events.
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Force Majeure
Force majeure events that excuse performance by either party to the O&M
Agreement include any circumstance beyond the reasonable control of a party,
including but not limited to acts of God, unusually severe weather conditions,
accident, fire, strikes, war, riots, actions of governmental authorities, and
change of law. As to Southern Electric, force majeure does not include any labor
dispute at the Energy Complex or involving the Energy Complex Employees. The
party claiming force majeure is required to take steps to mitigate or limit
damage to the other party.
Miscellaneous Provisions
Southern Electric is required to obtain automobile liability insurance,
comprehensive general liability insurance and umbrella liability insurance, each
of which must name Mobile Energy as the named insured, and workers' compensation
insurance. Mobile Energy is required to obtain and maintain workers'
compensation insurance, automobile liability insurance and all risk physical
damage/business interruption insurance.
Southern Electric's sole liability for non-conforming services shall be to
correct such non-conforming services. Neither Southern Electric nor Mobile
Energy shall be liable to the other party for any claim for any special,
incidental, or consequential loss or damage of any nature.
Mobile Energy is obligated to indemnify, save harmless and defend Southern
Electric and its officers, directors, employees, agents and affiliates from and
against all losses arising out of or related to the acts or omissions of Mobile
Energy or to the services to be performed by Southern Electric, but only to the
extent not caused by any indemnified party's gross negligence or willful
misconduct.
The O&M Agreement states that it is governed by the laws of the State of
Georgia.
SCS Agreement
Services
Mobile Energy and SCS are party to an agreement (including any amendments
thereto the "SCS Agreement"), pursuant to which SCS has agreed, as and to the
extent required by Mobile Energy, to keep itself and its personnel available and
competent to perform for Mobile Energy, or to advise and assist Mobile Energy
with respect to, (i) general administrative and advisory services, (ii) general
engineering, including system production and transmission studies, preparation
and analysis of electrical apparatus specifications, distribution studies and
standards, civil engineering and hydraulic studies, fuel supply studies and
operations analyses, (iii) design engineering, (iv) purchasing, including the
coordination of group purchasing, (v) accounting and statistical services,
including appearances before regulatory commissions, internal audits and
preparation and analyses of financial and operating reports, (vi) finance and
treasury services, including securities matters, banking matters and investment
of surplus funds, (vii) tax matters, including preparation of tax returns,
(viii) insurance and pension matters, (ix) corporate matters, including
maintenance of corporate records and arrangements for stockholders' meetings,
(x) rate analyses, (xi) construction and operating budgets and procedures, (xii)
business promotion and public relations, (xiii) employee relations, including
recruitment, placement, training, compensation, safety, labor relations and
health, welfare and employee benefits and (xiv) other matters with respect to
Mobile Energy's business and operations that Mobile Energy may request and SCS
may be able to perform.
Charges
The SCS Agreement provides that SCS will be reimbursed by Mobile Energy for the
costs SCS incurs in providing any of the foregoing services to Mobile Energy,
including (i) direct costs incurred by SCS in the performance of a particular
transaction for Mobile Energy and (ii) costs incurred by SCS that cannot be
allocated directly to one client or transaction, which costs shall be
distributed in a fair and equitable manner as set forth in SCS's cost allocation
procedures.
Term
The SCS Agreement became effective on July 14, 1995 and will remain in effect
until terminated by mutual agreement of the parties, except that SCS has the
right to terminate the SCS Agreement upon six months notice at any time
following the transfer of the Energy Complex.
Direct Lease
Mobile Energy and Scott/Kimberly-Clark are party to a lease (including any
amendments thereto, the "Direct Lease") covering land owned by
Scott/Kimberly-Clark located in Mobile County, Alabama on which Mobile Energy
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owns, uses, operates, repairs and maintains the Energy Complex and any additions
or modifications thereto.
Leased Premises
The Direct Lease covers two lots ("Lot 7" and "Lot 9") comprising approximately
6.9 acres (the "Leased Premises") within the property owned by
Scott/Kimberly-Clark (the "Real Property"). The Direct Lease is a ground lease
relating solely to the land comprising the Leased Premises. In connection with
obtaining financing through the Industrial Development Board of the City of
Mobile, Alabama (the "IDB") for certain components of the Energy Complex located
on Lot 9, Scott/Kimberly-Clark previously leased Lot 9 to the IDB pursuant to a
lease (the "Scott-IDB Lease") and the IDB subleased Lot 9 back to
Scott/Kimberly-Clark pursuant to a sublease (the "IDB-Scott Sublease").
Concurrently with the Acquisition, Scott assigned its rights and obligations
under the IDB-Scott Sublease arising after the Acquisition Closing Date to
Holdings, and Holdings subsequently assigned such rights and obligations to
Mobile Energy. As such, Mobile Energy currently is subleasing Lot 9 from the IDB
pursuant to the IDB-Scott Sublease. The Direct Lease and the IDB-Scott Sublease
exist and operate concurrently. If, and to the extent that, Mobile Energy's
obligations under the Direct Lease with respect to Lot 9 conflict or are
inconsistent with Mobile Energy's obligations under the IDB-Scott Sublease, then
the Direct Lease does not apply to Lot 9 with respect to such obligations.
Term
The term of the Direct Lease commenced on the Acquisition Closing Date, and will
expire at 11:59 p.m. on December 15, 2019. Provided that all of the Energy
Services Agreements are extended and renewed pursuant to such agreements, the
Direct Lease will be automatically extended and renewed for a single five year
term beginning on December 16, 2019 and expiring at 11:59 p.m. on December 15,
2024. Mobile Energy and Scott/Kimberly-Clark may, but are not required to,
otherwise agree to extend the term of the Direct Lease.
Rent
Base rent during the term of the Direct Lease is $1 per year. In addition,
Mobile Energy is required to pay all expenses related to or arising from the
Leased Premises or Mobile Energy's activities thereon, except as expressly
provided otherwise in the Direct Lease. Subject to the applicable provisions of
the Operative Documents, Mobile Energy is required to pay all utility charges
related to Mobile Energy's use of the Leased Premises and the expenses of
installation, maintenance, use and service connected with such utilities. Mobile
Energy is also required to pay all real estate taxes and assessments
("Impositions") related to the Direct Lease, the Leased Premises or the
improvements located thereon. Should Mobile Energy fail to pay any Imposition
when due and payable, and if such failure continues for 14 days after notice
from Scott/Kimberly-Clark, Scott/Kimberly-Clark may pay the Imposition and the
amount paid by Scott/Kimberly-Clark will be deemed additional rent payable by
Mobile Energy within five days of Scott/Kimberly-Clark notifying Mobile Energy
of Scott/Kimberly-Clark's payment of such Impositions. Mobile Energy will not be
responsible for taxes or imposts on Scott/Kimberly-Clark's income, including the
base rent, nor for Impositions attributable to periods prior to the commencement
or subsequent to the expiration or termination of the Direct Lease.
Purchase Options
Mobile Energy Options
Mobile Energy has an option to purchase the Leased Premises for a purchase price
of $10 at various times. One such option held by Mobile Energy (the "Transfer
Option") becomes effective if Scott/Kimberly-Clark elects, during the term of
the Direct Lease, to transfer its interest in the Leased Premises to a third
party other than another then Mill Owner. In such event, Scott/Kimberly-Clark is
obligated to first give Mobile Energy three months notice of the proposed
transfer. Mobile Energy will then have 45 days within which to exercise its
Transfer Option to purchase the Leased Premises from Scott/Kimberly-Clark. In
addition, Mobile Energy has an option to purchase the Leased Premises at the end
of the Lease term for a purchase price of $10 (the "End of Term Option"). The
End of Term Option is exercisable (a) if not all of the Energy Services
Agreements have been renewed and extended on or before September 16, 2014, by
notice from Mobile Energy to Scott/Kimberly-Clark delivered between June 16,
2014 and October 16, 2014 (the "Earlier Option Exercise Period"); (b) if all of
the Energy Services Agreements timely have been renewed and extended, by notice
from Mobile Energy to Scott/Kimberly-Clark delivered between June 15, 2019 and
October 15, 2019 (the "Later Option Exercise Period"); or (c) if the Direct
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Lease is terminated prior to the expiration of the Earlier Option Exercise
Period or the Later Option Exercise Period, as applicable, and Mobile Energy
shall not have exercised its End of Term Option, by notice from Mobile Energy to
Scott/Kimberly-Clark delivered within 30 days after the date on which the Direct
Lease shall have terminated.
If Mobile Energy timely and properly exercises any of its options to
purchase the Leased Premises, and provided that, in the case of Mobile Energy's
exercise of its End of Term Option, Scott/Kimberly-Clark does not void such
exercise by exercising and consummating Scott/Kimberly-Clark's purchase option
(described below), then Scott/Kimberly-Clark is obligated to sell the Leased
Premises to Mobile Energy for $10. The closing of the purchase, in the case of
Mobile Energy's exercise of its Transfer Option, would occur on or before the
date on which Scott/Kimberly-Clark's proposed transfer to the third party closes
or would have closed. The closing of the purchase, in the case of Mobile
Energy's exercise of its End of Term Option, would occur on the last day of the
Direct Lease term unless the term shall have terminated prior to Mobile Energy's
exercise of its End of Term Option, in which event the closing would occur
within 30 days of such exercise of the End of Term Option.
Scott/Kimberly-Clark Option
As described below, Scott/Kimberly-Clark has an option to repurchase the Energy
Complex from Mobile Energy at the end of the term of the Direct Lease (the
"Repurchase Option"), which may occur at different points in time.
Scott/Kimberly-Clark may give Mobile Energy notice of its intention to exercise
the Repurchase Option: (a) if the Direct Lease is not automatically renewed and
extended, between July 16, 2014 and November 16, 2014 (the "Earlier Repurchase
Option Period"); (b) if the Direct Lease is automatically renewed and extended,
between July 15, 2019 and November 15, 2019 (the "Later Repurchase Option
Period"); or (c) if the Direct Lease is terminated prior to the expiration of
the Earlier Repurchase Option Period or the Later Repurchase Option Period, as
applicable, and Scott/Kimberly-Clark shall not have exercised its Repurchase
Option, within 30 days after the date on which the Direct Lease shall have
terminated. If Scott/Kimberly-Clark were to exercise the Repurchase Option, it
would not have the right or obligation to assume any debt of Mobile Energy;
however, pursuant to the Consents to Assignment relating to the Direct Lease and
the Supplementary Lease (as hereinafter defined), Scott/Kimberly-Clark has
agreed that the Senior Secured Parties have no obligation to release the lien of
the Financing Documents until all obligations secured thereby have been repaid
in full.
If Scott/Kimberly-Clark shall timely deliver its repurchase notice to Mobile
Energy, then (a) if Mobile Energy previously shall have exercised its End of
Term Option, such exercise shall be void and of no further force and effect,
unless Scott/Kimberly-Clark fails timely to pay the purchase price for the
Energy Complex, and (b) (i) by June 15, 2019, if the Direct Lease shall expire
by its terms on December 15, 2019, or (ii) by June 15, 2024, if the Direct Lease
shall expire by its terms on December 15, 2024, or (iii) otherwise, within 10
days of Mobile Energy's receipt of Scott/Kimberly-Clark's repurchase notice,
Scott/Kimberly-Clark and Mobile Energy will jointly select an independent real
estate appraiser to determine the fair market value of the Energy Complex. If
Scott/Kimberly-Clark and Mobile Energy fail timely to select an appraiser, an
appraiser will be appointed pursuant to the arbitration provisions of the Master
Operating Agreement.
The appraiser, within 30 days of its selection or appointment, must give
written notice to Mobile Energy and to Scott/Kimberly-Clark of the appraiser's
determination of the price that a ready and willing buyer would pay, as of the
date of the appraiser's selection or appointment, for property comparable to the
Energy Complex if the Energy Complex were offered for sale on the open market,
taking into account the location of the Energy Complex at the Leased Premises
and the purposes for which the Energy Complex may be used, including, without
limitation, in conjunction with the Project Agreements and the services and fees
provided and obtained thereunder, to the extent that Project Agreements actually
or effectively (with respect to documents under which Mobile Energy provides
services to Scott/Kimberly-Clark which Scott/Kimberly-Clark could, subsequent to
the repurchase, supply to itself) would continue in effect subsequent to the
repurchase. The appraiser's determination of the fair market value of the Energy
Complex will be the purchase price to be paid by Scott/Kimberly-Clark to Mobile
Energy, provided that (a) if the Direct Lease terminates on December 15, 2019,
the determined value cannot exceed $69,080,000 or be less than $50,240,000, and
(b) if the Direct Lease terminates between December 15, 2019 and December 15,
2024, the determined value cannot exceed $30,000,000 or be less than
$22,000,000.
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Scott/Kimberly-Clark is obligated to pay the purchase price for the Energy
Complex to Mobile Energy by wire transfer on or before the date that is the
later of the last day of the Direct Lease term and 5 days after the appraiser
delivers its determination of the fair market value for the Energy Complex. If
Scott/Kimberly-Clark fails timely to pay the purchase price, and if Mobile
Energy previously exercised its End of Term Option, then Mobile Energy's
exercise of its End of Term Option again becomes effective and Mobile Energy may
purchase the Leased Premises from Scott/Kimberly-Clark for $10.
Early Termination of Direct Lease
The Direct Lease may be terminated (1) by either party as a result of the
occurrence of an event of default by the other party under the Direct Lease (a
"Lease Event of Default"), (2) automatically as a result of the total and
permanent taking of the Leased Premises in Condemnation (as hereinafter
defined), (3) by Mobile Energy as the result of a partial taking of the Leased
Premises in Condemnation that has a Mobile Energy Material Adverse Effect, or
(4) by the mutual agreement of Mobile Energy and Scott/Kimberly-Clark, and not
by any other cause or for any other reason whatsoever.
Default
The following acts or omissions by either party constitute Lease Events of
Default: (i) failure to pay any sum required to be paid under the Direct Lease,
which failure continues for 10 days after written notice has been delivered to
the nonpaying party (a "Monetary Default"); and (ii) failure to comply in any
material respect with any material term, provision or covenant of the Direct
Lease, other than the payment of sums due under the Direct Lease, which failure
continues for 30 days after written notice has been delivered to the
nonperforming party, or, if such failure cannot reasonably be cured within 30
days, if the nonperforming party shall not have begun to cure the failure within
such 30-day period or shall not thereafter proceed with all reasonable due
diligence and good faith to cure such failure within a reasonable longer period
necessary to cure such failure (a "Non-Monetary Default"); provided that if a
Non-Monetary Default on the part of Mobile Energy occurs through no act or
omission of Mobile Energy and such Non-Monetary Default is not reasonably
curable, so long as such Non-Monetary Default does not have a Mill Material
Adverse Effect with respect to Scott/Kimberly-Clark, such Non-Monetary Default
shall not be deemed a Lease Event of Default.
Upon the occurrence and during the continuation of any Lease Event of
Default, the non-defaulting party may: (a) terminate the Direct Lease, (b)
enforce its rights under the Direct Lease without reentering or resuming
possession of the Leased Premises and without terminating the Direct Lease, (c)
perform any obligation or make any payment required to cure the Lease Event of
Default after at least 10 days' notice (except in case of emergency when action
is required to protect lives or property) to the defaulting party of the
nondefaulting party's intent to pursue this remedy if the defaulting party does
not cure the Lease Event of Default within such time period, and (d) exercise
any other rights it has at law or in equity.
In addition to the foregoing, subject to the rights of the Leasehold
Mortgagee(s) (as hereinafter defined) under the Direct Lease or pursuant to the
Estoppel and Consent attached as Exhibit D to the Direct Lease (the "Estoppel
and Consent"), either party may terminate the Direct Lease, effective
immediately, if a bankruptcy event occurs with respect to the other party.
Condemnation
If the Leased Premises are totally and permanently taken by (i) the exercise of
any governmental power, whether by legal proceedings or otherwise, by any public
or quasi public authority, or private corporation or individual having the power
of condemnation or (ii) the voluntary sale or transfer by Scott/Kimberly-Clark
or Mobile Energy to any condemnor, either under threat of condemnation or while
legal proceedings for condemnation are pending ("Condemnation"), the Direct
Lease will terminate on the effective date of the Condemnation (the "Date of
Taking"). If a portion of the Leased Premises is taken by Condemnation and such
partial Condemnation has a Mobile Energy Material Adverse Effect, Mobile Energy
may elect to terminate the Direct Lease upon 30 days notice to
Scott/Kimberly-Clark delivered to Scott/Kimberly-Clark not more than 30 days
after the Date of Taking, which termination will be effective on the later of
(i) the Date of Taking and (ii) 30 days after delivery of such termination
notice to Scott/Kimberly-Clark. In either case, if the Direct Lease terminates,
Mobile Energy will be entitled to receive that portion of any award attributable
to the value of the Energy Complex and its interest in the Direct Lease and the
Leasehold Premises ("Leasehold Interest"), each to the extent taken; and
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Scott/Kimberly-Clark will be entitled to receive that part of any award
attributable to the value of the Leased Premises, exclusive of the Leasehold
Interest, to the extent taken.
If a portion of the Leased Premises are taken by Condemnation and such
partial Condemnation does not have a Mobile Energy Material Adverse Effect, or
if Mobile Energy does not elect to terminate the Direct Lease despite such
Condemnation having a Mobile Energy Material Adverse Effect, the Direct Lease
will remain in effect, and Mobile Energy, at its cost, is obligated to restore
the Energy Complex as necessary, provided that Mobile Energy will not be
required to expend an amount exceeding the amount of the entire award paid in
compensation for such taking (all of which award will be paid to Mobile Energy).
If all or any portion of the Leased Premises are taken by any public
authority for a period of six months or less, such taking will not constitute a
Condemnation, and during such temporary taking, all of the provisions of the
Direct Lease will remain in full force and effect.
Assignment and Subletting
Mobile Energy, without the consent of Scott/Kimberly-Clark, may encumber its
Leasehold Interest, or any portion thereof, with one or more mortgages (each, a
"Leasehold Mortgage") for the benefit of lenders providing financing to Mobile
Energy (each such lender, a "Leasehold Mortgagee"). Scott/Kimberly-Clark has
agreed to permit Mobile Energy to mortgage the Leasehold Interest pursuant to
the Financing Documents, and Scott/Kimberly-Clark has entered into the Estoppel
and Consent with the Collateral Agent under the Financing Documents. Mobile
Energy also may transfer its Leasehold Interest, or a portion thereof, in
connection with a Mobile Energy Permitted Transfer. Otherwise, Mobile Energy may
not (i) sublet, assign, pledge or otherwise transfer the Leased Premises without
the prior written consent of Scott/Kimberly-Clark, which consent cannot be
unreasonably withheld or (ii) assign or transfer a portion of its Leasehold
Interest.
Scott/Kimberly-Clark, in conjunction with any Mill Permitted Transfer, may
assign, sell or otherwise transfer all or a corresponding portion of its
interests in the Direct Lease and/or the Leased Premises without the prior
written consent of Mobile Energy. Otherwise, Scott/Kimberly-Clark may assign,
sell or otherwise transfer all or a portion of its interests in the Direct Lease
and/or the Leased Premises with the prior written consent of Mobile Energy,
which consent cannot be unreasonably withheld or delayed.
If either party effects a permitted assignment or other transfer of its
interests under the Direct Lease (other than a transfer for security purposes
unless and until such security is foreclosed upon), the permitted assignee or
transferee shall expressly assume, in documentation reasonably satisfactory to
the non-transferring party, all existing and future obligations of the
transferring party under the Direct Lease with respect to the transferred
interests, and the transferring party will be relieved of all further liability
under the Direct Lease with respect to the transferred interests from and after
the date of the transfer.
Leasehold Mortgages
The Direct Lease provides that no Leasehold Mortgagee will be deemed to be an
assignee or transferee or mortgagee in possession of the Leasehold Interest
unless, and only for so long as, the Leasehold Mortgagee has obtained possession
of the Leased Premises as a mortgagee or has acquired the Leasehold Interest by
foreclosure or a deed or assignment in lieu thereof ("Control of the Premises").
No Leasehold Mortgagee or purchaser at a foreclosure sale held pursuant to a
Leasehold Mortgage will be liable under the Direct Lease unless and until it
becomes, and only for so long as it remains, the owner of the Leasehold
Interest.
If any existing or prospective Leasehold Mortgagee requires any modification
to the Direct Lease, which modification does not materially adversely affect any
of Scott/Kimberly-Clark's rights or obligations thereunder, or confirmation of
the rights of Leasehold Mortgagees under the Direct Lease, at Mobile Energy's
request, Scott/Kimberly-Clark is obligated to execute and deliver to Mobile
Energy written instruments in recordable form effecting such modifications or
confirming such rights.
The Direct Lease provides that upon a Leasehold Mortgagee providing
Scott/Kimberly-Clark with written notice of such Leasehold Mortgagee's name and
address, then as to such Leasehold Mortgagee:
(i) No cancellation, termination, surrender or modification of the
Direct Lease will bind the Leasehold Mortgagee or affect the lien of its
Leasehold Mortgage without the prior written consent of the Leasehold
Mortgagee;
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(ii) No notice to Mobile Energy will be effective or will trigger any
Lease Event of Default unless and until a copy of such notice has been
given to the Leasehold Mortgagee;
(iii) The Leasehold Mortgagee may perform any obligation of Mobile
Energy under the Direct Lease and remedy any default, which performance
Scott/Kimberly-Clark is obligated to accept as if performed by Mobile
Energy;
(iv) Upon the occurrence of a Lease Event of Default on the part of
Mobile Energy, Scott/Kimberly-Clark is obligated to give the Leasehold
Mortgagee additional written notice of the Lease Event of Default and
additional time to cure such Lease Event of Default (including time to
obtain Control of the Premises if necessary to commence or complete such
cure) ("Mortgagee's Cure Rights"), and if the Lease Event of Default is
properly cured (or the time for Leasehold Mortgagee to exercise
Mortgagee's Cure Rights has not expired), the Direct Lease will continue
in effect as if no default occurred and Scott/Kimberly-Clark may not
exercise any of its rights or remedies under the Direct Lease by reason
of such Lease Event of Default;
(v) If a Leasehold Mortgagee (or its nominee or a purchaser at a
foreclosure sale) acquires Control of the Premises and cures all Monetary
Defaults and diligently proceeds to exercise Mortgagee's Cure Rights,
Scott/Kimberly-Clark is obligated to recognize the Leasehold Mortgagee
(or its nominee or assignee or the purchaser) as the lessee under the
Direct Lease; and
(vi) If the Direct Lease terminates for any reason prior to the
stated expiration date, Scott/Kimberly-Clark is obligated to give notice
to the Leasehold Mortgagee of such termination within 30 days of the
termination, and the Leasehold Mortgagee (or its nominee) may enter into
a new lease of the Leased Premises for the remainder of the term of the
Lease on the same terms and conditions as the Direct Lease.
If there is more than one Leasehold Mortgagee, the Leasehold Mortgagee most
senior in lien (as shown on a then-current title report or commitment by a
reputable company licensed to do business in Alabama) desiring to exercise
Mortgagee's Cure Rights will have the right to do so.
The ability of the Collateral Agent to foreclose upon the Direct Lease and
the Energy Complex without foreclosing upon the other Project Contracts is
limited by the provisions of the Consents to Assignment.
Superiority of the Direct Lease
The Direct Lease provides that any fee mortgage granted by Scott/Kimberly-Clark
encumbering all or any portion of the Leased Premises will be required to
expressly state that it is subject and subordinate to the Direct Lease and to
any and all Leasehold Mortgages. At the request of Mobile Energy or any
Leasehold Mortgagee, Scott/Kimberly-Clark will be required to cause each fee
mortgagee to acknowledge in writing that the Direct Lease and Mobile Energy's
and the Leasehold Mortgagees' right of quiet enjoyment under the Direct Lease
are superior to and not to be disturbed by such fee mortgagee.
Liens
The Direct Lease provides that Scott/Kimberly-Clark is not permitted to commit
or omit to do any act that would cause a lien to arise with respect to the
Energy Complex, other than certain permitted liens, nor to amend any of the
"Permitted Encumbrances" listed on Exhibit C to the Direct Lease without the
consent of Mobile Energy if such amendment would affect the Leased Premises or
Mobile Energy's ability to use and operate the Energy Complex.
Scott/Kimberly-Clark is obligated to discharge or bond against any such lien
that is not permitted within 30 days of notice of the filing of such lien unless
Scott/Kimberly-Clark is contesting such lien in good faith and such contest does
not place Mobile Energy's ownership, lease or use, as applicable, of the Energy
Complex, or any portion thereof, in imminent danger of sale, forfeiture or loss.
The Direct Lease provides that Mobile Energy will keep the Leased Premises
and any interest therein free of all liens other than liens arising under the
Financing Documents and other specified permitted liens. Mobile Energy is
obligated to discharge or bond against any such lien that is not permitted
within 30 days of notice of the filing of such lien unless Mobile Energy is
contesting such lien in good faith and such contest does not place
Scott/Kimberly-Clark's ownership of the Pulp Mill, the Tissue Mill or the Real
Property, or any portion thereof, in imminent danger of sale, forfeiture or
loss.
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If a party (the "Responsible Party") discovers a lien required to be
discharged by it, it is required to promptly to give notice of such lien to the
other party. If the Responsible Party does not timely discharge the lien
(including proper contest of such lien, if applicable), the other party may
procure the discharge of the lien by payment, deposit of the amount in dispute
in court or bonding. The Responsible Party is required to pay to the other party
any amount so paid or deposited by the other party and all related costs and
expenses, including reasonable attorneys' fees, incurred in procuring the
discharge, together with interest from the date of payment or deposit, within 15
days of demand.
Force Majeure
Neither party will be considered in default under the Direct Lease as a result
of any Force Majeure Event, so long as the party claiming a Force Majeure Event
(i) gives reasonably detailed notice to the other party promptly after becoming
aware of the Force Majeure Event and keeps the other party informed of any
changes in such circumstances, including when the Force Majeure Event ends, (ii)
makes all reasonable efforts to remedy the circumstances constituting the Force
Majeure Event and mitigate the adverse effects thereof, and (iii) promptly
resumes its performance following the end or remedy of the Force Majeure Event.
Dispute Resolution
All disputes between Scott/Kimberly-Clark and Mobile Energy that arise out of,
under or in connection with the Direct Lease are required to be resolved in
accordance with the dispute resolution procedures set forth in the Master
Operating Agreement.
Surrender
Unless Mobile Energy has exercised its option to purchase the Leased Premises
and Scott/Kimberly-Clark has not nullified such exercise by timely opting to
repurchase and consummating the repurchase of the Energy Complex from Mobile
Energy, upon termination or expiration of the Direct Lease, Mobile Energy will
surrender the Leased Premises to Scott/Kimberly-Clark, "as-is," "where-is" and
lien-free except for such liens to which Scott/Kimberly-Clark has expressly
consented to remain in effect on or after such termination. Mobile Energy will
take reasonable steps to vest title to the Energy Complex in
Scott/Kimberly-Clark. If Scott/Kimberly-Clark has not repurchased the Energy
Complex, within the six months following the later of (i) the termination of the
Direct Lease and (ii) the last day on which Scott/Kimberly-Clark could have
delivered its repurchase notice to Mobile Energy, Mobile Energy may dismantle
and remove the Energy Complex from the Leased Premises. Any portion of the
Energy Complex not timely removed from the Leased Premises will be deemed
surrendered to Scott/Kimberly-Clark.
Indemnification
Indemnification provisions in the Direct Lease are substantially similar to
those in the Energy Services Agreements.
Supplementary Lease
Mobile Energy and Scott/Kimberly-Clark are party to a lease (including any
amendments thereto, the "Supplementary Lease") covering land owned by
Scott/Kimberly-Clark located at the Mobile Facility, on which Mobile Energy will
own, erect, construct, use, operate, repair and maintain a black liquor tank and
Mobile Energy's maintenance facility (collectively, the "Supplementary
Facility") and any additions or modifications thereto. The Supplementary Lease
is identical to the Direct Lease except in the following respects:
Site
The Supplementary Lease covers two portions of one lot ("Lot 11") of the Real
Property comprising approximately 3.86 acres (the "Supplementary Leased
Premises"). The Supplementary Lease is a ground lease relating solely to the
land comprising the Supplementary Leased Premises; Mobile Energy holds title to
the Supplementary Facility located on the Supplementary Leased Premises.
Term
If Mobile Energy timely exercises and consummates either its Transfer Option or
its End of Term Option to purchase the Leased Premises under and pursuant to the
Direct Lease, the term of the Supplementary Lease will automatically be renewed
for an additional period of 25 years.
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Rent
If the Supplementary Leased Premises are not assessed separately but instead
assessed as part of a larger tract of land (because the Supplementary Leased
Premises comprise only a portion of Lot 11), Scott/Kimberly-Clark and Mobile
Energy will be required to apportion any Impositions resulting from such
assessment, Mobile Energy shall pay its proportionate share of the Impositions
to Scott/Kimberly-Clark, and Scott/Kimberly-Clark shall promptly deliver to
Mobile Energy proof of Scott/Kimberly-Clark's timely payment of the entire
amount of such Impositions to the applicable taxing authorities.
Purchase Option
Neither party has any purchase options under the Supplementary Lease.
Early Termination of Lease
As additional grounds for termination, the Supplementary Lease may be terminated
upon Scott/Kimberly-Clark's timely exercise and consummation of its Repurchase
Option pursuant to the Direct Lease.
Default
If a bankruptcy event shall occur with respect to Mobile Energy and in the event
that Mobile Energy timely exercises and consummates its End of Term Option
pursuant to the Direct Lease, then (i) if prior to the consummation of Mobile
Energy's End of Term Option, Scott/Kimberly-Clark exercised its right to
terminate the Supplementary Lease because of the bankruptcy event, then the
Supplementary Lease will be reinstated immediately and will continue in full
force and effect as if it had never been terminated, and (ii) after such
consummation of Mobile Energy's End of Term Option, in no event will the
occurrence and continuation of such bankruptcy event be deemed a Lease Event of
Default or give rise to the right that Scott/Kimberly-Clark otherwise would have
to terminate the Supplementary Lease because of such bankruptcy event.
Surrender
Mobile Energy has no dismantling rights under the Supplementary Lease.
Easement Deeds
Mobile Energy, Scott/Kimberly-Clark and S.D. Warren are party to bilateral
easement deeds (the "Easement Deeds"), pursuant to which Scott/Kimberly-Clark
has granted Mobile Energy easements with respect to the Tissue Mill and the Pulp
Mill, S.D. Warren has granted Mobile Energy easements with respect to the Paper
Mill, and Mobile Energy has granted easements to Scott/Kimberly-Clark and S.D.
Warren with respect to the Energy Complex. Mobile Energy and
Scott/Kimberly-Clark are party to an easement deed (the "Supplementary Easement
Deed") pursuant to which Scott/Kimberly-Clark has granted Mobile Energy
non-exclusive easements benefiting the Supplementary Leased Premises. The
easements are non-exclusive blanket easements over the lots owned or controlled
by each Mill Owner or Mobile Energy, as applicable, which are intended to give
the grantee sufficient access, use and encroachment rights to operate its Mill
or the Energy Complex, as applicable, and to utilize the Common Facilities (as
hereinafter defined).
Easement Deeds to Mobile Energy
The term of the Easement Deeds ends upon the termination of the Direct Lease;
provided that if Mobile Energy purchases the Leased Premises from
Scott/Kimberly-Clark pursuant to the Direct Lease, the Easement Deeds.
In addition, each of the Mill Owners has granted Mobile Energy a
non-exclusive temporary easement (the "Interim Easements") for access to the
warehousing, receiving, storeroom and capital spares buildings and facilities
(including the use of capital spare parts, Dedicated Consumables (as hereinafter
defined) and common spare parts in accordance with the provisions of the
Transition Agreement (as hereinafter defined)), and the central drawing files.
The term of the Interim Easements ends on the earlier of April 16, 1996, and the
date on which the maintenance facility to be constructed by Mobile Energy is
substantially completed.
Each grantee is obligated to use its easements so as not to (a) interfere
unreasonably with the grantor's use, occupancy or enjoyment of its portion of
the Mobile Facility and (b) cause unnecessary foreseeable injury to persons or
damage to adjacent property. If a grantee undertakes any maintenance, repair or
replacement work within any easement area, upon completion, the grantee is
obligated to restore the affected area to its former condition.
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The grantors are not permitted to interfere with the easements or with the
location of a grantee's equipment, systems or facilities, the Common Facilities,
or other equipment and facilities used by the grantee located on the grantor's
portion of the Mobile Facility; provided that a grantor may relocate, at its own
expense, any of the foregoing located on the grantor's portion of the Mobile
Facility if (a) the grantor gives the grantee and the Site Operating Committee
30 days' advance written notice of the proposed relocation, (b) the grantee
gives the grantor written approval of the proposed relocation, which approval
the grantee may not unreasonably withhold, and (c) the grantor conducts
post-construction tests of the relocated equipment, system or facility as
reasonably required by the grantee.
Common Services Agreement
The Common Services Agreement provides for the sharing by Mobile Energy,
Scott/Kimberly-Clark, and the Paper Mill Owner of security services, major
maintenance and capital improvements to the Air Compressors, computerized data
concerning the Energy Complex and the Mills ("Data Sharing") and maintenance of
common roads (the "Essential Common Services") and medical services, the
training of new maintenance personnel ("Maintenance Training Services"),
maintenance of certain parking lots, and certain food service to employees (the
"Optional Common Services" and collectively with the Essential Common Services,
the "Common Services"), including, in each case, the cost thereof. The term of
the Common Services Agreement as to any party to it began on the Acquisition
Closing Date and will end on the date of the termination of the Master Operating
Agreement with respect to that party, unless otherwise agreed by the parties.
Performance of Common Services
Scott/Kimberly-Clark, in its capacity as either the Tissue Mill Owner or the
Pulp Mill Owner (as applicable), is required to perform the Essential Common
Services (other than Data Sharing, which is the obligation of all parties), in a
manner consistent with prudent operating standards and subject to the direction
of the Site Operating Committee.
Scott/Kimberly-Clark, in its capacity as the Tissue Mill Owner or the Pulp
Mill Owner, is required to provide the Optional Common Services to the other
parties in substantially the same manner and according to the same standards as
Scott/Kimberly-Clark provides for its own use and benefit from time to time.
Scott/Kimberly-Clark may alter in its reasonable discretion the particulars of
any Optional Common Service, provided that any change in the costs of such
Optional Common Service will be accounted for in accordance with the Common
Services Agreement.
Outsourcing
Scott/Kimberly-Clark, after providing 30 days written notice to the other
parties (or such lesser notice as is reasonable under the circumstances), may
outsource any Optional Common Service to responsible third parties that, in the
good faith and reasonable judgment of Scott/Kimberly-Clark, are experienced and
competent to provide such services. With the concurrence of the Site Operating
Committee, Scott/Kimberly-Clark may outsource any of the Essential Common
Services not already outsourced as of the date of the Common Services Agreement
to experienced, competent and responsible third parties.
Unless the parties agree otherwise, the fees payable under the Common
Services Agreement will be adjusted in accordance with the terms thereof to
account for the costs of any outsourced Common Service. To the extent permitted
under the applicable outsourcing contract, the Site Operating Committee may
adjust the fee payable to the provider of an outsourced Essential Common
Service. At Scott/Kimberly-Clark's election and if required by applicable law
and approved by the Site Operating Committee and appropriate under the
circumstances, the third party providing an outsourced Common Service may do so
by contracting directly with the parties requiring that Common Service.
The limitations of liability set forth in the Common Services Agreement
apply to Scott/Kimberly-Clark's decision to outsource any Common Service.
However, the terms of any contract with a third-party provider of Common
Services shall control as to that third party's required standard of
performance, provided that Scott/Kimberly-Clark shall use good faith efforts to
cause each third-party provider of Essential Common Services to achieve a level
of service substantially equivalent to the specified prudent operating standard.
Termination of Particular Common Services
The Paper Mill Owner, Mobile Energy, or any new owner of the Pulp Mill may, upon
30 days written notice to the other parties, begin providing or procuring for
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itself any Optional Common Service, including any outsourced Optional Common
Service. The party providing its own service shall no longer be liable to
Scott/Kimberly-Clark for the costs of the corresponding Optional Common Service
and the fees payable under the Common Services Agreement will be adjusted in
accordance with the terms thereof. Furthermore, Scott/Kimberly-Clark will not be
required to provide Maintenance Training Services past January 1, 2000.
Facilities; Easements
All right, title and interest to the cafeteria, the compressed air facility, the
maintenance training facility, certain medical facilities and certain common
road and parking lots (the "Common Facilities") is vested solely in
Scott/Kimberly-Clark except as otherwise set forth in the Easement Deeds.
Scott/Kimberly-Clark expressly disclaims any warranty of title to or condition
of the Common Facilities. All rights of ingress, egress and access necessary for
the parties to perform their obligations under the Common Services Agreement are
set forth in the Easement Deeds.
Payments
Within ten days after the last day of each month, Scott/Kimberly-Clark is
required to deliver an invoice to each of the other parties setting forth each
party's Common Services fees for the immediately preceding month as set forth in
Schedule A to the Common Services Agreement. Each party is required to pay to
Scott/Kimberly-Clark the amount due within 15 days of receipt of the invoice. In
the case of any outsourced Common Service where the parties are not billed
separately, Scott/Kimberly-Clark is required to forward the third-party invoice
at least 10 business days before it is due (or as soon as possible) and the
other parties are required to reimburse Scott/Kimberly-Clark for their share in
accordance with the percentage allocation set forth in the second column of
Schedule A to the Common Services Agreement at least two business days before
payment is due to the third party. Overdue charges assessed by a third-party
provider shall be paid by the party whose late payment caused such charges.
The Common Services fees and the allocations thereof set forth in Schedule A
to the Common Services Agreement are required to be adjusted immediately to
account for Scott/Kimberly-Clark outsourcing any Common Service and a party's
termination of a Common Service as to itself. The parties also are required to
review the Common Services fees and allocations at the beginning of each year to
account for changes in the cost of complying with any law affecting the
providing of a Common Service, changes to the nature of a Common Service, and
reasonably anticipated changes, based on experience or expected developments, in
Scott/Kimberly-Clark's cost of providing any Common Service.
Future Transfer of the Pulp Mill and/or the Tissue Mill
Until such time as Scott/Kimberly-Clark may choose to sell or otherwise transfer
the Pulp Mill, the Common Services fee allocated to the Pulp Mill pursuant to
Schedule A to the Common Services Agreement will be for the account of
Scott/Kimberly-Clark. Following such transfer, the new owner of the Pulp Mill
will become a party to the Common Services Agreement and will assume the rights
and obligations of Scott/Kimberly-Clark in its capacity as the Pulp Mill Owner.
The Common Services Agreement provides that if Scott/Kimberly-Clark chooses
to sell or otherwise transfer the Tissue Mill, the new owner of the Tissue Mill
will be required to assume all rights and obligations of Scott/Kimberly-Clark in
its capacity as the Tissue Mill Owner under the Common Services Agreement.
Standard of Service
Except as set forth in certain sections of the Common Services Agreement, none
of the parties makes any warranty or covenant with respect to the level or
extent of services performed by such party or by any third party engaged by such
party under the Common Services Agreement.
Miscellaneous Provisions
Each party to the Common Services Agreement has agreed to indemnify, defend and
hold harmless each other party from and against any losses incurred by an
indemnified party due to or resulting from (i) the indemnified party's
performance of any action or service to be performed for the indemnifying party
pursuant to the Common Services Agreement in the absence of any gross negligence
or willful misconduct on the part of the indemnified party, (ii) the gross
negligence or willful misconduct of the indemnifying party or (iii) the breach
by an indemnifying party of any of its representations or warranties contained
in the Common Service Agreement.
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The Common Services Agreement provides that no party will be liable for any
incidental, special or consequential damages or for punitive or exemplary
damages, provided that the foregoing limitation shall not limit any party's
obligation to indemnify the other parties for any losses occasioned by third
party claims against the indemnified party.
The provisions of the Master Operating Agreement apply with respect to the
determination of, response to and obligations arising out of any Force Majeure
Event.
Each party may assign or transfer its rights and obligations under the
Common Services Agreement only in accordance with the Master Operating
Agreement's assignment provisions. Upon the transfer or sale of one of the Mills
or the Energy Complex, the assignment by the transferring party of its rights
and obligations under the Common Services Agreement corresponding to the portion
of the transferring party's interest in the Mill or Energy Complex being
transferred and the written assumption of such rights and obligations by the
transferee releases the transferring party from all obligations so assigned and
assumed.
The Common Services Agreement states that it is governed by the laws of the
State of New York.
Transition Agreement
Mobile Energy and Scott/Kimberly-Clark are party to a Transition Agreement
(including any amendments thereto, the "Transition Agreement") which requires
Scott/Kimberly-Clark to provide certain services to the Energy Complex after the
Acquisition Closing Date in the same manner in which Scott provided such
services to the Energy Complex before the Acquisition Closing Date.
Spare Parts Services
In conjunction with the Acquisition, Scott sold to Mobile Energy certain spare
parts used in connection with the Energy Complex ("Dedicated Consumables") for
approximately $2,400,000. During a period which will expire at the earlier of
the time when Mobile Energy begins to operate its own warehouse for the Energy
Complex or April 16, 1996, (the "Pre-Warehouse Period") Scott/Kimberly-Clark
will store and manage the Dedicated Consumables for the benefit of Mobile
Energy. Mobile Energy may also reorder Dedicated Consumables and cause
Scott/Kimberly-Clark to store and manage such reordered Dedicated Consumables.
Scott/Kimberly-Clark is obligated to deliver any Dedicated Consumable stored in
the warehouse to Mobile Energy at Mobile Energy's direction, provided that
Scott/Kimberly-Clark will not incur any liability (other than for gross
negligence or willful misconduct) to Mobile Energy for failure to deliver a
requested Dedicated Consumable if it is not in fact in the inventory regardless
of whether it is on an inventory list. To ensure the accuracy of any inventory
list, Mobile Energy is entitled, from time to time, to inspect the inventory
against the inventory list maintained by Scott/Kimberly-Clark. Mobile Energy
shall pay a five percent handling fee on each delivered Dedicated Consumable. At
the end of the Pre-Warehouse Period, Scott/Kimberly-Clark shall deliver to
Mobile Energy all Dedicated Consumables remaining in its warehouse.
In addition, Scott/Kimberly-Clark may, at Mobile Energy's request, sell to
Mobile Energy any common spare part in Scott/Kimberly-Clark's warehouse at a
price equal to Scott/Kimberly-Clark's invoice cost plus taxes, freight and an
18% handling fee.
Other Services
Other services covered by the Transition Agreement include software services,
PBX services and telephone services, each of which is provided by
Scott/Kimberly-Clark to Mobile Energy for some period following the Acquisition
Closing Date at the prices provided in the Transition Agreement. In addition,
the Transition Agreement permits Mobile Energy to use certain maintenance
facilities and two-way radio station facilities for some time period following
the Acquisition at the prices provided in the Transition Agreement.
Miscellaneous Provisions
Mobile Energy is required to pay any invoice received from Scott/Kimberly-Clark
under the Transition Agreement within fifteen days of receipt. However, for any
service provided to Mobile Energy under the Transition Agreement for which
Scott/Kimberly-Clark receives an invoice from a third party on behalf of Mobile
Energy, Scott/Kimberly-Clark is required to forward the invoice to Mobile Energy
at least 10 business days before it is due, and Mobile Energy is obligated to
pay Scott/Kimberly-Clark the amount Mobile Energy owes at least two business
days before it is due.
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Neither Scott/Kimberly-Clark nor Mobile Energy makes any representations or
warranties by virtue of the Transition Agreement or with respect to the goods
and services to be provided under the Transition Agreement.
Upon written notice to Mobile Energy, Scott/Kimberly-Clark may, in
connection with the sale or transfer of a Mill, assign any of its rights, duties
or obligations under the Transition Agreement to the Tissue Mill Owner or the
Pulp Mill Owner, as appropriate, provided, however, that such assignee is
capable of providing the service so assigned in the same manner as
Scott/Kimberly-Clark has provided such service. Upon such assignment,
Scott/Kimberly-Clark shall thereafter be released of any obligation with respect
to the service so assigned for events occurring after the assignment.
Each of Scott/Kimberly-Clark and Mobile Energy has agreed to indemnify and
hold harmless the other party from all damages incurred by either indemnified
party arising from any acts of negligence or willful misconduct by such
indemnifying party with respect to the indemnifying party's performance of its
obligations under the Transition Agreement. However, Scott/Kimberly-Clark will
have no liability arising from any third party's performance of or failure to
perform any services under the Transition Agreement. Finally, the Transition
Agreement provides that neither party will be liable for any indirect, special
or consequential damages arising under the Transition Agreement or from the
performance of or the failure to perform any service under the Transition
Agreement.
The Transition Agreement states that it is governed by the laws of the State
of New York.
Water Procurement and Effluent Services Agreement
Mobile Energy and the Mill Owners are party to the Water Agreement which, among
other things, defines and allocates among the Mill Owners and Mobile Energy
certain rights and obligations relating to water usage and procurement and the
provision of water treatment-related utilities and services, including waste
water treatment services. The term of the Water Agreement commenced on the
Acquisition Closing Date and will terminate with respect to each party when such
party is no longer a party to the Master Operating Agreement.
Pursuant to the Water Agreement, Mobile Energy has appointed the Pulp Mill
Owner as its agent for purposes of (1) procurement and treatment of process
water and (2) procurement and supply of potable water, sanitary sewer service
and water for fire protection. The Pulp Mill Owner has also agreed to accept
waste water effluent from each of the Mills and the Energy Complex, so long as
the effluent meets certain specifications, caps and prohibitions set forth in
the Water Agreement, the State Indirect Discharge Permits ("SID Permits"), as
applicable, and in any other applicable Governmental Rule, and which is
discharged in accordance with those certain Rules Governing Discharge to the
Waste Water Treatment Plant (the "Rules Governing Discharge"). The Pulp Mill
Owner will treat such effluent in its Waste Water Treatment Plant for discharge
in accordance with the terms of its NPDES permit.
If reasonably possible and consistent with its NPDES permit and other
requirements of law, the Pulp Mill Owner is required to accept and treat
effluent from any of the Mills or the Energy Complex which does not comply with
applicable specifications. In the event of a noncomplying discharge, however,
the Pulp Mill Owner may undertake one or more of the following actions: (1)
prohibit the discharge after reasonable notice and opportunity to cure; (2)
impose additional reasonable discharge conditions; (3) require reasonably
necessary pretreatment; (4) require reasonably necessary control over the
quality, quantities and rates of discharges to the Waste Water Treatment Plant;
or (5) require payment by the noncomplying discharger of the Pulp Mill Owner's
reasonable additional costs associated with the noncomplying discharge.
The Pulp Mill Owner may modify the discharge specifications or prohibitions
set forth in the Water Agreement and the Rules Governing Discharge as reasonably
required to maintain compliance with its NPDES permit or other Governmental Rule
or as reasonably required by the capability of its Waste Water Treatment Plant.
The Pulp Mill Owner is required to provide each of the other Mill Owners and
Mobile Energy a monthly invoice for the services provided during the preceding
month. The current pro-rata shares of the parties for purposes of the Water
Agreement are as follows:
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Pulp Mill................................. 44.4%
Tissue Mill............................... 24.4%
Paper Mill................................ 21.8%
Energy Complex............................ 9.4%
Pro-rata shares are based upon, and may be adjusted annually by the Pulp
Mill Owner in accordance with changes in, percentage of total site process water
usage by the Mill Owners and actual effluent discharges by Mobile Energy.
Each party to the Water Agreement has agreed to indemnify each other for
damages (excluding consequential damages) to the extent that they result from
such party's acts or omissions in connection with the Water Agreement or the
services used or provided thereunder.
Boiler Ash Disposal Agreement
Mobile Energy and the Pulp Mill Owner are party to the Ash Agreement, which,
among other things, provides for the collection and disposal of boiler ash
produced as a waste product by the operation of the Energy Complex ("Boiler
Ash").
Term
The term of the Ash Agreement commenced on the Acquisition Closing Date and,
except as provided below, will terminate when either the Pulp Mill Owner or
Mobile Energy is no longer party to the Master Operating Agreement. The term of
the Ash Agreement will automatically extend to coincide with any extension(s) of
the Master Operating Agreement to which both the Pulp Mill Owner and Mobile
Energy are parties. Mobile Energy may terminate the Ash Agreement upon 30 days
prior written notice, if Mobile Energy reasonably believes that continuation of
the services provided for under the Ash Agreement would make Mobile Energy
liable for Environmental Claims or Environmental Expenses, and Mobile Energy may
terminate the Ash Agreement for any other reason upon 180 days prior written
notice.
Boiler Ash Service
The Pulp Mill Owner is required to provide the Energy Complex with services
consisting of (1) the removal of Boiler Ash from the Energy Complex, (2)
transportation or arrangement for the transportation of Boiler Ash, and (3)
disposal of or arrangement for the disposal of Boiler Ash (collectively, "Boiler
Ash Service"). The Pulp Mill Owner is required to (i) transport and dispose, or
arrange for the transportation and disposal, of Boiler Ash in the same manner
and at the same disposal facility that the Pulp Mill Owner uses for the solid
waste streams resulting from the operation of the Pulp Mill or (ii) give or sell
Boiler Ash for use as a soil amendment aid, an additive for concrete or for
another beneficial re-use, and, in either case, to take into account all
applicable Governmental Rules.
As reflected in the Ash Agreement, the Pulp Mill Owner has chosen and
intends, for approximately the first five years of the term of the Ash
Agreement, to dispose of Boiler Ash in the Jackson Lott Road landfill (the "Lott
Road Landfill") and thereafter at another facility or facilities of the Pulp
Mill Owner's choice. The Pulp Mill Owner is required to notify and consult with
Mobile Energy prior to using any facility other than the Lott Road landfill for
the disposal of Boiler Ash. The Pulp Mill Owner's obligations under the Ash
Agreement, however, are not conditioned on the availability of the Lott Road
Landfill.
Boiler Ash From Approved Fuels
Except as provided below, the Pulp Mill Owner is required to provide Mobile
Energy with Boiler Ash Service only with respect to Boiler Ash resulting from
the use of Approved Fuels (as defined below). Such fuels are defined by
agreement of the parties to be (i) natural gas; (ii) wood waste (biomass); (iii)
Pulp Mill sludge; (iv) coal with average sulfur content not to exceed 1.1%; (v)
black liquor; and (vi) fuel oil with a sulfur content not to exceed 1.1% (such
fuels constituting "Approved Fuels"). The Pulp Mill Owner is not obligated to
provide Boiler Ash Service with respect to Boiler Ash resulting from use of an
Approved Fuel, if as a result of a Change of Law, such Boiler Ash is deemed
hazardous waste under federal or state law ("Hazardous Waste"), in which case,
Mobile Energy shall be responsible for arranging for removal, transport and
disposal of such Boiler Ash. However, the Pulp Mill Owner is obligated to
continue to provide Boiler Ash Service to Mobile Energy if the Boiler Ash is
deemed to be a Hazardous Waste as a result of the Energy Complex's use of a Mill
Product. There can be no assurance that changes in existing laws or regulations
on Hazardous Waste will not occur in the future, or that other changes in
existing laws or regulations that also could have a material adverse effect on
Mobile Energy will not occur in the future.
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Boiler Ash From Other Than Approved Fuels
Except as provided above, Mobile Energy is prohibited from using any fuel in the
operation of the Energy Complex that results in Boiler Ash that is deemed a
Hazardous Waste, or that fails to satisfy the Alabama Department of Agriculture
and Industry's requirements for bioash to be licensed as a soil amendment aid.
Mobile Energy is to obtain the Pulp Mill Owner's permission prior to using any
fuel other than an Approved Fuel in the operation of the Energy Complex, which
permission may not to be unreasonably withheld.
Service Charge, Billing and Recoupment
If the Pulp Mill Owner disposes of Boiler Ash at a facility owned and operated
by a third party, the Pulp Mill Owner will charge Mobile Energy for Boiler Ash
Service by computing the percentage by volume or weight, in accordance with the
disposal facility's basis for determining charges, that Boiler Ash constitutes
of the total volume or weight, as the case may be, of waste disposed of by the
Pulp Mill Owner and by charging Mobile Energy for that percentage of the Pulp
Mill Owner's total cost of removing, transporting, and disposing of Pulp Mill
waste and Boiler Ash. If the Pulp Mill Owner disposes of Boiler Ash at a
facility owned or operated by itself or an Affiliate, the Pulp Mill Owner will
charge Mobile Energy for Boiler Ash Service by computing the percentage by
volume or weight, as the case may be, that Boiler Ash constitutes of the total
volume or weight, whichever is less, of waste disposed of by the Pulp Mill Owner
and by charging Mobile Energy for that percentage of the Pulp Mill Owner's total
cost of removing, transporting, and disposing of Pulp Mill waste and Boiler Ash.
Mobile Energy may recoup the amount it is charged for Boiler Ash Service under
the Ash Agreement by allocating its charges among the Pulp Mill Owner, the Paper
Mill Owner, and the Tissue Mill Owner pursuant to the terms of the Master
Operating Agreement.
Indemnification and Limitation of Liability
Mobile Energy and the Pulp Mill Owner have agreed to indemnify, defend and hold
harmless each other against all penalties, losses, claims and damages resulting,
in whole or in part, from such party's acts or omissions in connection with the
Ash Agreement or the services used or provided thereunder. Mobile Energy is not
obligated to indemnify the Pulp Mill Owner in the case of Boiler Ash that is
deemed a Hazardous Waste as a result of the use by the Energy Complex of a Mill
Product. Additionally, the Ash Agreement obligates the parties to consult and
cooperate with each other regarding notice of, response to and defense of any
claim that may result in a claim for indemnification under the Ash Agreement.
If the Pulp Mill fails to provide Mobile Energy with Boiler Ash Service
required by the Ash Agreement, Mobile Energy will be entitled solely to
indemnification and to compensation for the reasonable actual costs incurred by
Mobile Energy to secure such service from another source, unless such failure is
excused pursuant to the terms of the Ash Agreement. Notwithstanding the
foregoing, if the Pulp Mill Owner fails to provide Boiler Ash Service, Mobile
Energy's rights and obligations under the Energy Services Agreements and the
Master Operating Agreement will be governed by the provisions of the Master
Operating Agreement described above under "-Energy Services Agreements and
Master Operating Agreement-Mobile Energy's Supply Obligations in the Event of a
Mill Product Shortfall."
Under the Ash Agreement, Mobile Energy and the Pulp Mill Owner are liable
only for direct damages and penalties, and not for claims of non-party
customers, cost of money, loss of profits, loss of use of capital or revenue or
any other incidental, special or consequential loss or damage of any nature.
Mobile Energy and the Pulp Mill Owner have agreed that, notwithstanding any
other provision of the Ash Agreement, any claim for indemnification by either
Mobile Energy or the Pulp Mill Owner with respect to any Environmental Claims or
Environmental Expenses arising out of any Environmental Noncompliance or
Environmental Condition will be governed by the provisions of the Pulp Mill
Environmental Indemnity Agreement.
All disputes arising under this Agreement are required to be handled in
accordance with the procedures for dispute resolution provided in the Master
Operating Agreement.
The Ash Agreement states that it is governed by the laws of the State of New
York, except that federal law, Alabama law or the law of any other applicable
state, as applicable, is stated to govern as to compliance with permits and
other Governmental Rules.
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Mill Environmental Indemnity Agreements
Mobile Energy is a party to agreements with each of the Pulp Mill Owner
(including any amendments thereto, the "Pulp Mill Environmental Indemnity
Agreement"), the Tissue Mill Owner (including any amendments thereto, the
"Tissue Mill Environmental Indemnity Agreement") and the Paper Mill Owner
(including any amendments thereto, the "Paper Mill Environmental Indemnity
Agreement"), pursuant to which Mobile Energy and the applicable Mill Owner are
required to indemnify each other for certain specified environmental claims
relating to certain environmental conditions, if and when any such claims arise.
Environmental Covenants
Mobile Energy has agreed not to cause, or suffer the existence of, any
Environmental Conditions or Environmental Noncompliances at the Energy Complex
that could reasonably be expected to lead to any material Environmental Claim or
Environmental Expense asserted against, or incurred by, a Mill Owner or its
Affiliates. Similarly, each Mill Owner has agreed not to cause, or suffer the
existence of, any Environmental Conditions or Environmental Noncompliances at
its Mill that could reasonably be expected to lead to any material Environmental
Claim or Environmental Expense asserted against, or incurred by, Mobile Energy
or its Affiliates.
Environmental Indemnification by Mill Owners and Mobile Energy
Each Mill Owner is required to indemnify, defend and hold harmless Mobile
Energy, its Affiliates, and its and their respective officers, directors,
agents, attorneys and employees from and against any and all Environmental
Claims brought against, and any and all Environmental Expenses imposed upon or
reasonably incurred by, such indemnified party, in connection with (1) breaches
by such Mill Owner of any representations and warranties, covenants or other
obligations in its Energy Services Agreement or the Master Operating Agreement,
or (2) any Environmental Conditions that give rise to, or could give rise to,
Environmental Claims or other liabilities, or Environmental Noncompliances
located at or otherwise relating to its Mill or associated facilities, to the
extent arising out of facts or circumstances that occur or come into existence
after December 12, 1994 (including without limitation (in the case of the Pulp
Mill Owner) any Environmental Condition or Environmental Noncompliance
associated with the present or future use of the two underground fuel-oil
storage tanks owned by Scott/Kimberly-Clark and located on Lot 7). If any Mill
Owner sells its Mill, such Mill Owner will retain all of its obligations and
liabilities under its Mill Environmental Indemnity Agreement arising out of any
facts or circumstances existing as of or prior to the date of any such sale
(whether known at the time of any such sale or thereafter discovered as having
existed as of the date thereof), and the party to whom such Mill Owner sells its
Mill will be required to assume all obligations and liabilities of such Mill
Owner arising out of facts or circumstances that occur or come into existence
after the date of any such sale.
Mobile Energy is required to indemnify, defend and hold harmless each Mill
Owner, its Affiliates, and its and their respective officers, directors, agents,
attorneys and employees from and against any and all Environmental Claims
brought against, and any and all Environmental Expenses imposed upon or
reasonably incurred by, any of such indemnified parties, in connection with (1)
breaches by Mobile Energy of any representations and warranties, covenants or
other obligations of Mobile Energy in any Energy Services Agreement or the
Master Operating Agreement, or (2) any Environmental Conditions that give rise
to, or could give rise to, Environmental Claims or other liabilities, or
Environmental Noncompliances located at or otherwise relating to the Energy
Complex, to the extent arising out of facts or circumstances that occur or come
into existence after December 12, 1994. If any Mill Owner sells its Mill, such
Mill Owner will retain all rights of such Mill Owner arising out of any facts or
circumstances existing as of or prior to the date of any such sale (whether
known at the time of any such sale or thereafter discovered as having existed as
of the date thereof), and the party to whom the Mill Owner sells its Mill will,
upon the assumption of the relevant Mill Environmental Indemnity Agreement by
such party, assume all rights of such Mill Owner arising out of facts or
circumstances that occur or come into existence after the date of any such sale.
If any Environmental Claims or Environmental Expenses arise, directly or
indirectly, in whole or in part, out of the joint or concurrent negligence of a
Mill Owner and Mobile Energy, or their respective Affiliates, officers,
directors, agents, attorneys or employees, each party's liability therefor will
be limited to such party's proportionate degree of fault. The Mill Environmental
Indemnity Agreements provide that Mobile Energy and each of the Mill Owners will
only be liable for direct damages, not for claims of non-party customers, cost
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of money, loss of profits, loss of use of capital or revenue or any other
incidental, special or consequential loss or damage of any nature, or for
punitive or exemplary damages.
Scott/Kimberly-Clark Environmental Indemnity Agreement
Mobile Energy and Scott/Kimberly-Clark are party to an environmental indemnity
agreement (including any amendments thereto, the "Scott/Kimberly-Clark
Environmental Indemnity Agreement"), pursuant to which Scott/Kimberly-Clark is
required to indemnify Mobile Energy for certain specified Environmental Claims
relating to certain Environmental Conditions, if and when any such claims arise.
Environmental Indemnification by Scott/Kimberly-Clark
Scott/Kimberly-Clark is required to indemnify, defend and hold harmless Mobile
Energy Indemnified Parties from and against any and all Environmental Claims
brought against, and any and all Environmental Expenses imposed upon or incurred
by, such Mobile Energy Indemnified Parties, in connection with (1) breaches of
any Scott/Kimberly-Clark representations and warranties, or other provisions of
the Asset Purchase Agreement, relating to or otherwise concerning Environmental
Conditions or Environmental Noncompliances relating to the Mills or Energy
Complex, or (2) any (a) Environmental Conditions that give rise to, or could
give rise to, Environmental Claims or other liabilities or (b) Environmental
Noncompliances (each with respect to applicable Governmental Rules in effect as
of December 12, 1994) located at or otherwise relating to the Mills or the
Energy Complex, or associated facilities, to the extent arising out of any facts
or circumstances existing as of or prior to December 12, 1994.
Scott/Kimberly-Clark is liable only for direct damages, not for claims of
non-party customers, cost of money, loss of profits, loss of use of capital or
revenue or any other incidental, special or consequential loss or damage.
Employee Transition Agreement
All of the personnel who work at the Energy Complex are currently employed by
Southern Electric. Most of these employees worked for Scott at the Energy
Complex prior to the Acquisition. Pursuant to an agreement (the "Employee
Transition Agreement") entered into by Southern Electric, Mobile Energy and
Scott concurrently with the Acquisition, Southern Electric agreed to recognize
United Paperworkers International Union Local 423 and 1421 (the "UPIU") and
International Brotherhood of Electrical Workers Local 2129 (the "IBEW") as the
authorized collective bargaining agents for certain hourly Energy Complex
workers and agreed to continue in substantial and material part the terms and
conditions set forth in the collective bargaining agreements in effect between
Scott and each of the UPIU and the IBEW immediately prior to the Acquisition.
Item 2. PROPERTIES
The Energy Complex is located at the Mobile facility on property leased by
Scott/Kimberly-Clark to Mobile Energy in accordance with the terms of the Direct
Lease and the Supplementary Lease. The Energy Complex is comprised of three
power boilers (commonly referred to as the "Number 5 Power Boiler," the Number 6
Power Boiler," and the "Number 7 Power Boiler"), two recovery boilers (commonly
referred to as the "Number 7 Recovery Boiler" and the "Number 8 Recovery
Boiler"), three turbine generators, two black liquor evaporator sets, and
associated feedwater systems, air emissions controls, and other auxiliary
systems. These facilities are located in two separate power houses, known as the
north power house and the south power house, on approximately 11 acres leased
from Scott/Kimberly-Clark at the Mobile Facility. All of the liquor processing,
substantially all of the power processing and most of the steam processing
conducted at the Mobile Facility occur at the north power house. The major
components of the north power house were constructed in 1984 and 1985, and an
addition to the north power house facilities was completed in 1994. The major
components of the south power house were constructed between 1960 and 1963. The
combined facilities currently are designed to produce approximately 111 MW
(gross) of electricity and approximately 2,100,000 lbs/hr of steam. In addition,
the Energy Complex currently is designed to process up to approximately
6,350,000 lbs/day of virgin dry black liquor solids.
Although a majority of the components of the Energy Complex have an
operating history ranging from 10 to 30 years, certain components (including a
recovery boiler and an evaporator train that were completed in early 1994) have
a limited operating history. Moreover, although most of the personnel currently
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employed by Southern Electric to operate the Energy Complex were employed by
Scott to operate the Energy Complex prior to the acquisition, the Energy Complex
has been owned by Mobile Energy or its affiliates and has been operated as an
independent business, and Southern Electric has employed the Energy Complex
personnel and has dealt with the unions that represent many of such personnel,
only since December 1994. In general, as with any sophisticated energy and
recovery plant, operation of the Energy Complex involves many risks, including,
among other things, the risk of equipment breakdown, failure or explosion. For
example, recovery boilers such as those used at the Energy Complex may explode
under certain circumstances, such as if the smelt at the bottom of the boilers
comes into contact with water. The possibility also exists that the Energy
Complex will perform below expected levels of output or efficiency, or that
labor disputes or other events such as fires, hurricanes, floods, droughts,
changes in law or acts of eminent domain will disrupt or disable Mobile Energy's
operations. The occurrence of any such events could significantly increase the
expenses of operating the Energy Complex, and have a material adverse effect on
the financial condition of Mobile Energy. While Mobile Energy will maintain
insurance to protect against certain of these operating risks, the proceeds of
such insurance may not be sufficient to cover the Energy Complex's lost revenues
or increased expenses.
Mortgage
Mobile Energy and the IDB, as mortgagors, have entered into a Leasehold
Mortgage, Assignment of Leases, Rents, Issues and Profits and Security Agreement
and Fixture Filing dated as of August 1, 1995 (including any amendments thereto,
the "Mortgage") and have granted to the Collateral Agent, as mortgagee, for the
benefit of the Senior Secured Parties mortgages and security interests in all
real property interests (including fee interests, easement interests and
leasehold interests, if any) of Mobile Energy to the Energy Complex and the
Easement Deeds and all fixtures, equipment and improvements thereon and personal
property now owned or hereafter acquired.
Pursuant to the terms of the Mortgage, if any event of default under the
Intercreditor Agreement (a "Trigger Event") has occurred and is continuing and,
except in the case of any such Trigger Event that shall have resulted from a
Bankruptcy Event in respect of Mobile Energy or Holdings, the Collateral Agent
shall have received from the requisite senior creditors the notice required by
the Intercreditor Agreement, then, to the maximum extent permitted by law, the
Collateral Agent may exercise any right, power or remedy permitted to it under
the Mortgage and under certain other security documents or by law, and, without
limiting the generality of the foregoing, the Collateral Agent may, personally
or by its agents, to the maximum extent permitted by law, do any or all of the
following:
(a) without assuming liability for the performance of any of Mobile
Energy's obligations, enter and take possession of the mortgaged property or
any part thereof, exclude Mobile Energy and all persons claiming under Mobile
Energy whose claims are junior to the Mortgage wholly or partly therefrom,
and use, operate, manage and control the same either in the name of Mobile
Energy or otherwise as the Collateral Agent shall deem best, and upon such
entry, from time to time at the expense of Mobile Energy, make all such
repairs, replacements, alterations, additions or improvements to the
mortgaged property or any part thereof as the Collateral Agent may deem
proper and, whether or not the Collateral Agent has so entered and taken
possession of the mortgaged property or any part thereof, collect and receive
all the rents and apply the same, to the extent permitted by law, to the
payment of all expenses that the Collateral Agent may be authorized to make
under the Mortgage, the remainder to be applied to the payment of the
obligations secured by the Mortgage until the same shall have been repaid in
full; if the Collateral Agent demands or attempts to take possession of the
mortgaged property or any portion thereof in the proper exercise of any
rights hereunder, Mobile Energy shall promptly turn over and deliver complete
possession thereof to the Collateral Agent;
(b) with or without entry:
(i) subject to applicable law, sell all or any part of the mortgaged
property for cash at an auction or foreclosure sale held at such place or
places and time and upon such notice and, otherwise in such manner as may
be required by law, or in the absence of any such requirement, as the
Collateral Agent (acting in accordance with an opinion of counsel upon
which the Collateral Agent may conclusively rely) may deem appropriate, and
from time to time adjourn any such sale by announcement at the time and
place specified for such sale or for such adjourned sale without further
notice, except as may be required by law;
(ii) proceed to protect and enforce its rights under the Mortgage, by
suit for specific performance of any covenant contained in the Mortgage or
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in certain other security documents or in aid of the execution of any power
granted in the Mortgage or in the other security documents, or for the
foreclosure of the Mortgage (as a mortgage or otherwise) and the sale for
cash of the mortgaged property under the judgment or decree of a court of
competent jurisdiction, or for the enforcement of any other right as the
Collateral Agent (acting in accordance with an opinion of counsel upon
which the Collateral Agent may conclusively rely) shall deem most effectual
for such purpose; provided, however, that in the event of a sale, by
foreclosure or otherwise, of less than all of the mortgaged property, the
Mortgage shall continue as a lien on, and security interest in, the
remaining portion of the mortgaged property, and the Collateral Agent shall
not be obligated to sell upon credit unless the Collateral Agent shall have
expressly consented in writing to a sale upon credit; or
(iii) exercise any or all of the remedies available to a secured party
under the Uniform Commercial Code; and
(c) if a Trigger Event shall have occurred and be continuing and, except in
the case of any such Trigger Event that shall have resulted from a Bankruptcy
Event in respect of Mobile Energy or Holdings, the Collateral Agent shall
have received notice from the requisite senior creditors under the
Intercreditor Agreement, and the Collateral Agent shall have declared the
obligations secured by the Mortgage to be immediately due and payable, or
upon the actual or threatened waste to any part of the mortgaged property,
the Collateral Agent, to the maximum extent permitted by law, shall be
entitled to the appointment of a receiver of the mortgaged property, without
notice or demand, and without regard to the adequacy of the security for the
obligations secured by the Mortgage or the solvency of Mobile Energy.
Notwithstanding the foregoing, if a Trigger Event shall have occurred and be
continuing, and the Collateral Agent shall have received notice from the
requisite senior creditors under the Intercreditor Agreement and in the event
of threatened waste to any part of the mortgaged property (but not actual
waste), the Collateral Agent shall provide notice to Mobile Energy of its
intent to appoint a receiver and shall permit Mobile Energy a reasonable
period of time to eliminate such threatened waste prior to the appointment of
said receiver.
Proceeds from the exercise of remedies will be applied in accordance with
the Intercreditor Agreement.
Security Agreement
Mobile Energy has entered into the Security Agreement dated as of August 1, 1995
(including any amendments thereto the "Security Agreement") with the Collateral
Agent for the benefit of the Senior Secured Parties providing for the granting
of a security interest in all of Mobile Energy's personal property interests
including, but not limited to, all contract rights, all equipment, receivables,
insurance proceeds (other than those paid under third-party liability
insurance), eminent domain proceeds, rights pursuant to any governmental
approval (to the extent permitted by applicable law), patents and trademarks,
and certain accounts. The Security Agreement does not provide for the granting
of a security interest in Mobile Energy's rights under the Mill Owner
Maintenance Reserve Account and monies on deposit therein.
Pursuant to the terms of the Security Agreement, the Collateral Agent may,
upon the occurrence of a Trigger Event and satisfaction of certain conditions
contained in the Intercreditor Agreement, take possession of all of the
foregoing capital, which also secures the Working Capital Facility.
Proceeds from the exercise of remedies will be applied in accordance with
the Intercreditor Agreement.
The Tax-Exempt Bonds
In December 1983, the IDB issued tax-exempt bonds (the "1983 Tax-Exempt Bonds")
to finance the construction of the Number 7 Power Boiler and certain auxiliary
systems, which are "solid waste disposal facilities" as such term is defined in
the Internal Revenue Code and the regulations promulgated thereunder (the "Solid
Waste Disposal Facilities"). In December 1984, the IDB issued tax-exempt bonds
(the "1984 Tax-Exempt Bonds") to refund the 1983 Tax-Exempt Bonds. The Solid
Waste Disposal Facilities are located on the land on which the north power house
is situated, which is owned by Scott/Kimberly-Clark and leased by
Scott/Kimberly-Clark to the IDB pursuant to the Scott-IDB lease and leased back
to Scott/Kimberly-Clark pursuant to the IDB-Scott Sublease. The IDB held, and
continues to hold, title to the Solid Waste Disposal Facilities. In December
1984, the IDB leased the Solid Waste Disposal Facilities to Scott pursuant to
the IDB-Scott Sublease (so named because the lease of the Solid Waste Disposal
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Facilities to Scott was made pursuant to the same agreement by which the real
property on which the north power house is situated was subleased by the IDB to
Scott). Pursuant to a Lease Assignment and Assumption Agreement dated as of
December 12, 1994 between Scott and Holdings (the "Lease Assignment and
Assumption Agreement"), Scott assigned to Holdings all of Scott's right, title
and interest in and to the IDB-Scott Sublease and the Solid Waste Disposal
Facilities, and Holdings assumed all of Scott's obligations arising after the
Acquisition Closing Date under the IDB-Scott Sublease (although Scott remained
liable to the IDB under the IDB-Scott Sublease). Holdings subsequently assigned
to Mobile Energy all of Holdings' rights and obligations under the IDB-Scott
Sublease.
In August 1995, the Tax-Exempt Bonds were issued by the IDB under an
Amended and Restated Trust Indenture dated as of August 1, 1995 (the "Tax-Exempt
Indenture") between the IDB and First Union National Bank of Georgia, as trustee
(the "Tax-Exempt Trustee"). The proceeds of the offering of the Tax-Exempt Bonds
were used to refund the 1984 Tax-Exempt Bonds.
Concurrently with the issuance of the Tax-Exempt Bonds, the IDB released
Scott from liability under the IDB-Scott Sublease and the IDB and Mobile Energy
entered into an Amended and Restated Lease and Agreement with respect to the
Solid Waste Disposal Facilities (the "IDB Lease Agreement"). The IDB Lease
Agreement grants Mobile Energy the right to purchase the Solid Waste Disposal
Facilities for $10 upon the expiration thereof. Mobile Energy's obligations
under the IDB Lease Agreement are unconditionally guaranteed by Holdings (the
"IDB Lease Agreement Guaranty").
Also in August 1995, Mobile Energy, the IDB, the Tax-Exempt Trustee and the
Collateral Agent entered into the Recognition, Cooperation and Consent Agreement
dated as of August 1, 1995 (the "Tax-Exempt Bonds Recognition Agreement")
pursuant to which the IDB will, among other things, (i) consent to the
assignment and grant of a security interest by Mobile Energy pursuant to certain
security documents in all of Mobile Energy's rights in the Energy Complex and
the IDB Lease Agreement, (ii) in the event of a filing of a bankruptcy petition
by or against Scott/Kimberly-Clark under Chapter 7 or 11 of the Bankruptcy Code,
and the election by Scott/Kimberly-Clark to reject the Scott-IDB Lease, upon the
written request of Mobile Energy and at Mobile Energy's expense, exercise its
rights under Section 365(h) of the Bankruptcy Code to retain its rights under
the Scott-IDB Lease (including, without limitation, rights relating to the
amount of timing of payment of rent and other amounts payable by it thereunder
and any right of use, possession, quiet enjoyment, subletting, assignment or
hypothecation) that are in or appurtenant to the real property covered thereby
for the balance of the term of the Scott-IDB Lease and for any renewal or
extension thereof to the extent that such rights are enforceable under
applicable non-bankruptcy law, and (iii) if, for any reason (other than
following Mobile Energy's payment in full of the Tax-Exempt Bonds and the
exercise by Mobile Energy of its purchase option under the IDB Lease Agreement),
the IDB fails or is otherwise unable to continue to have the right to sublease
Lot 9 to Mobile Energy pursuant to the IDB Lease Agreement (whether by
bankruptcy court order that Section 365(h) of the Bankruptcy Code is not
applicable or otherwise), or upon any termination of the IDB Lease Agreement,
upon the written request of Mobile Energy and at Mobile Energy's expense, lease
the Solid Waste Disposal Facilities to Mobile Energy directly pursuant to a
separate lease (with Mobile Energy agreeing to make the same rental payments to
the IDB as Mobile Energy would have otherwise been obligated to make under the
IDB Lease Agreement).
The Mixed-Use Bonds
In December 1984, the IDB issued a total of $172,000,000 in aggregate principle
amount of taxable Industrial Development Revenue Bonds due December 1, 2019 (the
"Mixed-Use Bonds") to finance the acquisition of certain facilities at the
Energy Complex (the "Energy Complex Equipment") and at the Pulp Mill. The IDB
holds title to the financed facilities (including the Energy Complex Equipment)
and leases them to Scott/Kimberly-Clark pursuant to a Facilities Lease and
Agreement dated as of December 1, 1984 (as amended, the "Facilities Lease and
Agreement"). The Energy Complex Equipment is located on the land on which the
north power house is situated. The term of the Facilities Lease and Agreement is
coextensive with the term of the Mixed-Use Bonds. Scott/Kimberly-Clark's rent
payment obligations under the Facilities Lease and Agreement are calculated to
pay all principal and interest on the Mixed-Use Bonds. Scott/Kimberly-Clark has
an option to purchase the Energy Complex Equipment at the end of the lease term
for $10. The Mixed-Use Bonds are secured by a security interest in all of the
IDB's right, title and interest in and to the Facilities Lease and Agreement and
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all revenues accruing to the IDB thereunder. The Mixed-Use Bonds finance
facilities that are not entitled to tax-exempt treatment under the Internal
Revenue Code. However, the financing of these facilities (as well as the
facilities purchased with the Environmental Bonds and the 1994 Bonds (each as
defined below)) by the IDB were structured in order to entitle such facilities
to exemption from sales and property taxation. The Mixed-Use Bonds are held by
Three Rivers Timber Company, a wholly owned subsidiary of Scott/Kimberly-Clark
(the "Scott Subsidiary").
Pursuant to a Sublease and Assignment Agreement dated as of December 12,
1994 (the "Sublease and Assignment Agreement"), Scott, in return for a lump-sum
payment by Holdings to Scott on the Acquisition Closing Date, (i) subleased to
Holdings the Energy Complex Equipment and (ii) assigned to Holdings its right to
purchase the Energy Complex Equipment from the IDB at the expiration of the
Facilities Lease and Agreement. Scott and Holdings also agreed to indemnify each
other for certain losses that may be incurred in connection with the Mixed-Use
Bonds, the Energy Complex Equipment or the Sublease and Assignment Agreement.
The Scott Subsidiary, the holder of the Mixed-Use Bonds, has delivered to
Holdings an agreement (the "Estoppel and Nondisturbance Agreement") pursuant to
which, among other things, the Scott Subsidiary has agreed (i) to look solely to
rent paid by Scott/Kimberly-Clark under the Facilities Lease and Agreement for
payments due in respect of the Mixed-Use Bonds and not to seek to recover any
such amounts from Holdings or any successor as sublessee or owner of the Energy
Complex Equipment, (ii) at no time to seek to take possession of, impose a lien
on, or interfere with the use or possession of the Energy Complex Equipment and
(iii) not to sell the Mixed-Use Bonds without Holdings' prior written consent.
Holdings assigned to Mobile Energy all of Holdings' rights to sublease and to
purchase the Energy Complex Equipment and all of its rights under the Estoppel
and Nondisturbance Agreement.
In order to secure Mobile Energy's right to acquire the Energy Complex
Equipment upon the expiration of the Facilities Lease and Agreement,
Scott/Kimberly-Clark has granted to Mobile Energy a security interest in all of
Scott/Kimberly-Clark's right, title and interest in the Energy Complex Equipment
and in the Facilities Lease and Agreement as it relates to the Energy Complex
Equipment. In addition, in August 1995 Mobile Energy, the IDB, AmSouth Bank of
Alabama, the Collateral Agent and the Scott Subsidiary entered into the
Recognition, Cooperation and Consent Agreement (the "Mixed-Use Bonds Recognition
Agreement")pursuant to which the IDB has agreed (with the consent of the Scott
Subsidiary and the trustee under the indenture for the Mixed-Use Bonds) that in
the event that the Facilities Lease and Agreement is rejected by
Scott/Kimberly-Clark or otherwise terminated for any reason it will either (i)
lease the Energy Complex Equipment directly to Mobile Energy for nominal
consideration pursuant to a new facilities lease and agreement for a term equal
to the term of the Facilities Lease and Agreement (with an option of Mobile
Energy to purchase the Energy Complex Equipment at the end of the lease term for
$10) or (ii) sell the Energy Complex Equipment to Mobile Energy for nominal
consideration.
The Environmental Bonds
Between 1973 and 1980, the IDB issued four series of 30-year bonds having an
aggregate principal amount of $24,000,000 (the "Environmental Bonds") to finance
the purchase of certain pollution control equipment at the Energy Complex (the
"Energy Complex Pollution Control Equipment") and the Mills. Approximately
$21,385,000 in principal amount of the Environmental Bonds are still
outstanding. Title to the pollution control equipment is held by the IDB but the
equipment is subject to sale to Scott/Kimberly-Clark pursuant to two
Construction, Financing and Installment Sale Agreements (as supplemented, the
"Installment Sale Agreements"). The Installment Sale Agreements give
Scott/Kimberly-Clark sole use and exclusive possession of the pollution control
equipment and provide that Scott/Kimberly-Clark is purchasing the equipment
through fixed installment payments that, in sum, equal the principal and
interest due on the applicable Environmental Bonds. When the applicable bonds
have been fully redeemed, the IDB is to transfer to Scott/Kimberly-Clark title
to the applicable equipment. The bonds of each series are secured by the money
payable by Scott/Kimberly-Clark to the IDB under the corresponding Installment
Sale Agreement.
A substantial portion of the Energy Complex Pollution Control Equipment
financed with the Environmental Bonds is no longer in operation.
Pursuant to two separate Lease and Assignment Agreements, each dated as of
December 12, 1994 (collectively, the "Lease and Assignment Agreements"), Scott,
in return for a lump-sum payment, (i) leased to Holdings the Energy Complex
Pollution Control Equipment and (ii) assigned to Holdings its right and interest
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in and to the Energy Complex Pollution Control Equipment arising under the
Installment Sale Agreements, including its right to receive instruments of
conveyance from the IDB pursuant to the Installment Sale Agreements, and
Holdings assumed certain obligations of Scott under the Installment Sale
Agreements. Scott and Holdings also agreed to indemnify each other for certain
losses that may be incurred in connection with the Environmental Bonds, the
Energy Complex Pollution Control Equipment and the Lease and Assignment
Agreements. Holdings subsequently assigned to Mobile Energy all of Holdings'
rights and obligations under the Lease and Assignment Agreements.
In order to secure Mobile Energy's rights to become the owner of the Energy
Complex Pollution Control Equipment at the end of the terms of the respective
Installment Sale Agreements, Scott/Kimberly-Clark has granted to Mobile Energy a
security interest in all of Scott/Kimberly-Clark's rights in the Energy Complex
Pollution Control Equipment and in the Installment Sale Agreements as it relates
to the Energy Complex Pollution Control Equipment.
The 1994 Bonds
The construction of the Number 8 Recovery Boiler and related facilities (the
"Number 8 Recovery Boiler Facilities), which began operation in 1994, was
financed by Scott and the IDB through the issuance of $117,000,000 principal
amount of Industrial Development Revenue Bonds (Scott Paper Recovery Boiler
Project) 1994 Series A (the "1994 Bonds") due December 1, 2014. The structure of
the 1994 Bonds transaction is similar to that for the Mixed-Use Bonds. The IDB
holds title to the Number 8 Recovery Boiler Facilities and, prior to the
Acquisition, leased it to Scott pursuant to a Recovery Boiler Lease and
Agreement dated as of December 1, 1994 (the "Recovery Boiler Lease and
Agreement"). The 1994 Bonds were purchased by the Scott Subsidiary. The Recovery
Boiler Lease and Agreement gives Scott/Kimberly-Clark the right to purchase the
Number 8 Recovery Boiler Facilities at the expiration of the lease term for $10
(or earlier upon the payment of $10 plus an amount equal to all principal,
premium, if any, and interest payable or to be payable with respect to all
outstanding 1994 Bonds).
Pursuant to a Lease Assignment and Assumption Agreement, dated as of
December 12, 1994, between Scott and Holdings (the "1994 Bond Agreement"), Scott
assigned to Holdings, with the consent of the Scott Subsidiary, all of its
right, title and interest in the Recovery Boiler Lease and Agreement and the
Number 8 Recovery Boiler Facilities (including the right to purchase the Number
8 Recovery Boiler Facilities as provided in the Recovery Boiler Lease and
Agreement). In connection with the assignment of the Recovery Boiler Lease and
Agreement to Holdings, Scott caused the Scott Subsidiary to transfer the 1994
Bonds to Holdings pursuant to the Bond Transfer Instrument. Holdings
subsequently assigned the 1994 Bonds and all of its rights under the 1994 Bond
Agreement to Mobile Energy. Therefore, Mobile Energy is currently the holder of
the 1994 Bonds and the de facto obligor thereunder (by virtue of its obligation
to make payments under the Recovery Boiler Lease and Agreement to cover debt
service obligations on the 1994 Bonds). The 1994 Bonds have been pledged to the
Collateral Agent pursuant to the Security Agreement. The Collateral Agent is the
trustee with respect to the 1994 Bonds. Pursuant to the Intercreditor Agreement,
the Collateral Agent is authorized to make payments under the Lease and
Agreement by debiting certain Intercreditor Agreement accounts. Payments made to
Mobile Energy as the holder of the 1994 Bonds will be made immediately following
payments by Mobile Energy under the Lease and Agreement. The Intercreditor
Agreement provides that when Mobile Energy receives such payments on the 1994
Bonds, such monies will be credited to the account or accounts that were debited
by the Collateral Agent (to the extent of any such debit) in order to pay Mobile
Energy's obligations under the Lease and Agreement.
Item 3. LEGAL PROCEEDINGS
Other than legal proceedings involving the application by Mobile Energy and
Holdings for various governmental approvals required to operate and finance the
Energy Complex, neither Mobile Energy nor Holdings is currently a party to any
material legal proceeding.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Omitted pursuant to General Instruction J.
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PART II
Item 5. COMMON EQUITY MARKET
There is no established public trading market for Holdings' common stock, all of
which is owned by Southern. There also is no established public trading market
for Mobile Energy's members' equity, all of which is held by Holdings and
Southern Electric.
Item 6. SELECTED FINANCIAL DATA
Omitted pursuant to General Instruction J.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Background
Mobile Energy and Holdings were formed to acquire, own and manage the Energy
Complex at the Mobile Facility. Holdings acquired the Energy Complex and
commenced operations on December 16, 1994. Holdings transferred all its
interests in the Energy Complex to Mobile Energy on July 14, 1995. Mobile
Energy's sole business consists exclusively of the ownership and management of
the Energy Complex. Holdings, which owns 99% of the equity interests in Mobile
Energy, does not conduct any independent operations.
Southern Electric owns the remaining equity interest in Mobile Energy.
The Mobile Facility is a physically integrated complex that produces tissue
and paper products from timber that is processed into bleached and unbleached
pulp by the Pulp Mill. The Pulp, Paper and Tissue Mills currently obtain all of
their aggregate steam processing needs and 98 percent of their aggregate power
processing needs from the Energy Complex. In addition, the Energy Complex
processes weak black liquor delivered by the Pulp Mill Owner into green liquor,
a necessary component of the pulp making process. The conversion of weak black
liquor into green liquor involves a combustion process which provides heat that
is further used to generate steam used for Steam Processing Services. Mobile
Energy's revenues are comprised almost entirely of Demand Charges and Processing
Charges for services provided to the Mills.
Demand Charges represent compensation to Mobile Energy for dedicating a
portion of the Energy Complex's capacity to the Mills. Demand Charges are
designed generally to cover, among other things, costs that are in the nature of
fixed costs, including debt service. Processing Charges are paid by each Mill
Owner to Mobile Energy based on formulary usage charges which vary from month to
month, based on the amount of Processing Services required by, and provided to,
each Mill Owner, and on Mobile Energy's efficiency with respect to fuel usage.
Processing Charges are designed generally to cover the balance of Mobile
Energy's costs that are not projected to be covered by Demand Charges, including
fuel expenses.
Results of Operations
Because the Energy Complex was not operated as an independent business prior to
its acquisition by Holdings, Holdings did not purchase a business from Scott
but, rather, purchased assets. Since the Acquisition, Holdings and subsequently
Mobile Energy have operated such assets as an independent business. The business
with respect to the Energy Complex commenced on December 16, 1994 when Holdings
began operations. Accordingly, financial statements are not provided with
respect to the period prior to December 16, 1994 and this discussion will not
include financial comparisons of current and prior year periods. Additionally,
as a consequence of the relatively short time period Holdings and Mobile Energy
have operated the Energy Complex, discussion and analysis of their results of
operations is necessarily limited in scope, and may not be indicative of their
future results of operations and financial condition. Thus, the financial
information contained herein is not necessarily representative of the future
results of operations and financial condition of Mobile Energy or Holdings.
The relationship between Holdings and Mobile Energy is a parent-subsidiary
relationship. Holdings' material assets are comprised solely of its ownership
interest in Mobile Energy and its rights in respect of a tax sharing agreement
(the "Southern Master Tax Sharing Agreement"), which apportions consolidated
income tax among Southern and its corporate subsidiaries, including Holdings.
Accordingly, the consolidated financial statements of Holdings reflect the
assets, liabilities, and operating results of Mobile Energy. Furthermore,
although Mobile Energy did not exist prior to July 13, 1995, the following
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discussion of its results of operations assumes that, for purposes of
presentation, Mobile Energy was in existence and operating the Energy Complex as
of the beginning of calendar year 1995.
Revenues
Operating revenues for 1995 were $82.5 million, including Demand Charges of
$58.3 million and Processing Charges of $23.6 million. The level of Processing
Charges for this period reflects utilization of the Energy Complex near capacity
levels. Demand Charges and Processing Charges for 1995, in thousands of dollars
and expressed as a percent of total revenues, were as follows:
Dollars Percent
------- -------
(in thousands)
Demand Charges:
Pulp Mill $38,074 46.2%
Tissue Mill 9,980 12.1
Paper Mill 10,244 12.4
------- -----
58,298 70.7
Processing Charges:
Pulp Mill 4,486 5.4
Tissue Mill 9,538 11.6
Paper Mill 9,563 11.6
------- -----
23,587 28.6
Other revenues 612 .7
------- -----
Total revenues $82,497 100.0%
======= =====
The Mills' peak usage of Processing Services from December 16, 1994 through
December 31, 1995 were as follows:
1995 Peak Contractual
Mill Processing Services Demand Demand
---- ------------------- --------- -----------
Pulp Liquor Conversion
MMLBs/week 38.9 42.7
Steam
MMBTUs/hr 602.2 500.0
Electricity not
MW/hr available 32.0
Tissue Steam
MMBTUs/hr 239.3 280.0
Electricity not
MW/hr available 39.5
Paper Steam
MMBTUs/hr 506.2 420.0
Electricity not
MW/hr available 22.5
Prior to the installation of certain electrical waters, which was completed
in February 1996, Mobile Energy could not precisely determine the peak Demands
of each Mill for Power Processing Services.
Expenses
Total operating expenses for 1995 aggregated $44.0 million. Operating expenses
are comprised of operations and maintenance expenses, fuel, and depreciation and
amortization and aggregated $26.1 million, $6.3 million and $11.6, respectively
for 1995.
Interest expense for 1995 was $18.5 million. Interest expense reflects the
issuance of $255.2 million First Mortgage Bonds in August 1995 bearing a coupon
interest rate of 8.665%, interest on $85 million Tax-Exempt Bonds issued in
August 1995 bearing a coupon rate of 6.95%, and the amortization of swap
breakage costs relative to interest rate hedging agreements entered into in
connection with the Acquisition. These interest rate hedging agreements are
discussed further in Note 6 to Mobile Energy's financial statements and Note 7
to Holdings' financial statements herein.
Mobile Energy's net income for 1995 was $21.0 million. Holdings' net income
for this same period was $12.8 million after deducting minority interest of $0.2
million and income taxes of $8.0 million. Income taxes were provided for based
on a combined 38.25% state and federal rate applied to pre-tax income of $21.0
million.
Liquidity and Capital Resources
As of December 31, 1995, Holdings had $41,118,000 in cash and cash equivalents
and total debt of $354,285,000. This level of liquidity (as applied to Mobile
Energy) will be affected by Mobile Energy's operating performance, capital
expenditures and dividend policies.
Mobile Energy's working capital needs generally relate to Operation and
Maintenance Costs and debt service. In accordance with the Intercreditor
Agreement, Mobile Energy will reserve funds for certain operation and
maintenance activities in a separate account (the " Maintenance Reserve
Account") before such operation and maintenance activities are performed for
Mobile Energy.
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Operation and Maintenance Costs are budgeted at $28,200,000 and $29,600,000
for 1996 and 1997, respectively. In addition, in 1996, Mobile Energy expects to
spend approximately $1,000,000 to construct or install certain facilities and
equipment (some of which Mobile Energy is required to construct or install
pursuant to the Master Operating Agreement) and to purchase inventory. As of
December 31, 1995 Mobile Energy had spent approximately $11,900,000 on such
construction, installations, and purchases.
Furthermore, in 1995, Mobile Energy spent approximately $32,300,000 to pay
certain termination costs related to interest rate hedging agreements to which
Mobile Energy was a party that were entered into in connection with the
Acquisition. The interest rate hedging agreements were not entered into in
respect of existing indebtedness of Holdings or of Mobile Energy. Rather, the
interest rate hedging agreements were entered into in anticipation of the
issuance of the First Mortgage Bonds and Tax Exempt Bonds issued in August 1995
in order to enable Holdings, following the Acquisition, to structure its
financing around a targeted aggregate annual debt service (including principal
and interest), while resulting in approximately the same amount of aggregate net
proceeds available to Mobile Energy (inclusive of amounts payable to Mobile
Energy, and net of amounts payable by Mobile Energy, in connection with the
termination of such interest rate hedging agreements). In "terminating" the
interest rate hedging agreements, Mobile Energy assigned it rights and
obligations under the agreements to a bank on a non-recourse basis.
The interest rate hedging agreements served to reduce the potential impact
of interest rate fluctuations between the date of the Acquisition and the date
on which the interest rates on the First Mortgage Bonds and the Tax-Exempt Bonds
were fixed (the "Pricing Date"), because both the settlement amount required to
terminate Mobile Energy's rights and obligations under the interest rate hedging
agreements and Mobile Energy's debt service obligations with respect to the
First Mortgage Bonds and the Tax-Exempt Bonds were determined simultaneously
upon the pricing of such financings, and reflected interest rates then in effect
in the applicable markets. Because market interest rates decreased between the
Acquisition Closing Date and the Pricing Date (causing the interest rate hedging
agreements to be "out of the money"), Mobile Energy paid the assignee of the
agreements a settlement amount. However, as Mobile Energy's interest expense
component of debt service was reduced by the decline in interest rates, thereby
offsetting the higher principal component of debt service that was incurred as a
result of additional debt raised to fund the settlement amount, Mobile Energy's
aggregate debt service obligations were maintained at approximately the level
projected at the time of Acquisition.
Mobile Energy has no plans to enter into other agreements to fix or
otherwise manage interest rate risk in the near future. The indebtedness
evidenced by the First Mortgage Bonds and the Tax-Exempt Bonds bears fixed rate
interest, and the indebtedness represented by borrowings under a revolving
credit facility providing for working capital loans to Mobile Energy (the
"Working Capital Facility"), which is limited to $15,000,000, bears interest at
variable rates. Subject to Mobile Energy's right to incur additional
indebtedness, the indebtedness represented by the First Mortgage Bonds, the
Tax-Exempt Bonds and the Working Capital Facility currently represent Mobile
Energy's only material long-term indebtedness.
Mobile Energy's projected accrued obligations for required payments of
principal and interest on long-term debt for calendar years 1996 and 1997 are
$34,693,000 and $34,710,000, respectively.
Mobile Energy's principal sources of working capital are cash flow from
operations, borrowings under the Working Capital Facility, balances in the
Maintenance Reserve Account and drawings under a Southern guaranty in respect of
the Maintenance Reserve Account and/or under any revolving credit facility
maintained by Southern to provide liquidity with respect to such Southern
guaranty. Since December 31, 1995, Mobile Energy has drawn an aggregate of
$5,750,000 under such a revolving credit facility maintained by Southern with
Banque Paribas.
In order to provide for Mobile Energy's working capital needs, in August
1995 Mobile Energy entered into the Working Capital Facility with Banque Paribas
(the "Working Capital Facility Provider") providing working capital loans to
Mobile Energy. The Working Capital Facility provides for a maximum available
amount of $15,000,000 and may be drawn on by Mobile Energy from time to time.
Borrowings under the Working Capital Facility generally will be used by Mobile
Energy to pay for operation and maintenance costs incurred by Mobile Energy.
Each working capital loan is due and payable no later than 90 days from the date
II-3
<PAGE>
such working capital loan was advanced to Mobile Energy, and no more than
$5,000,000 (to be adjusted in proportion to any adjustments to the maximum
available amount under the Working Capital Facility) of working capital loans
may be scheduled to mature during any calendar month. Mobile Energy is required
to repay each working capital loan on its due date and may upon notice to the
Working Capital Facility Provider, repay or prepay any working capital loan on
any business day without premium or penalty, other than certain funding breakage
costs in respect of working capital loans bearing interest at the LIBOR Rate (as
defined in the Working Capital Facility). Mobile Energy is permitted to
re-borrow all amounts repaid or prepaid. Mobile Energy is required to repay all
working capital loans such that no amounts are outstanding under the Working
Capital Facility one time each year (other than 1995) for a period of five
consecutive days. Subject to earlier termination under certain circumstances and
subject to extension thereof by the Working Capital Facility Provider, the
Working Capital Facility will expire on December 31, 2001.
Amounts payable under the Working Capital Facility are secured ratably with
all other senior debt of Mobile Energy (subject to the priority of the lien of
the Working Capital Facility Provider on receivables and fuel inventory). The
Working Capital Facility Provider is entitled to the repayment of principal,
interest, fees and other amounts scheduled to be due under the Working Capital
Facility prior to the payment of operation and maintenance costs (other than
certain operation and maintenance costs payable to the Mill Owners in connection
with the exercise of certain remedies the Mill Owners have under the Project
Agreements) and (together with, upon the occurrence and continuation of certain
bankruptcy events in respect of Mobile Energy or Holdings, all amounts due upon
the acceleration thereof) prior to any amounts payable in respect of other
senior debt, including the First Mortgage Bonds and any amounts payable under
the lease entered into in connection with the Tax-Exempt Bonds. Upon the
distribution of certain monies or proceeds of pledged collateral following
certain events of default or bankruptcy events, the Working Capital Facility
Provider is entitled to payment in full in priority to all other holders of
senior debt out of (i) Mobile Energy's receivables and (ii) the proceeds of the
sale of the Energy Complex's fuel inventory.
Upon its establishment in August 1995 at the time of the issuance of the
First Mortgage Bonds and the Tax Exempt Bonds, the Maintenance Reserve Account
was credited in an amount equal to $11,000,000. In lieu of funding the
Maintenance Reserve Account with cash at that time, Mobile Energy provided
instead a guaranty from Southern in an amount equal to $11,000,000. Monies in
the Maintenance Reserve Account are applied to the payment of Maintenance
Expenditures.
The Intercreditor Agreement requires Mobile Energy to make deposits into
the Maintenance Reserve Account periodically sufficient to cover projected
future Maintenance Expenditures, any shortfalls in the amounts of prior deposits
required to be made into the account by Mobile Energy, and any withdrawals in
excess of the projected Maintenance Expenditures. Mobile Energy may also make
additional, discretionary deposits into the Maintenance Reserve Account. In lieu
of funding the Maintenance Reserve Account with cash, or in replacement of
monies required to be on deposit therein, Mobile Energy may from time to time
deliver "Reserve Account Security," which is either, or any combination of, (i)
a guaranty from Southern provided Southern satisfies certain credit standards
set out in the Intercreditor Agreement, or (ii) one or more letters of credit
issued by a commercial bank or banks whose long-term unsecured debt is rated at
least "A" by Standard & Poors' Ratings Group, "A" by Fitch Investors Service,
L.P. and "A2" by Moody's Investors Service, Inc.
Mobile Energy has established a separate account, the Mill Owner
Maintenance Reserve Account, pursuant to the Master Operating Agreement and the
Mill Owner Maintenance Reserve Account Agreement for the benefit of Mobile
Energy and, while the Mill Owners are exercising the Mill Owner Step-In Rights,
the Mill Owners. The Mill Owner Maintenance Reserve Account is currently funded
in an amount equal to $2,000,000. In lieu of funding the Mill Owner Maintenance
Reserve Account with cash, Mobile Energy provided capital infusion arrangements
executed by Southern in favor of Mobile Energy and the Mill Owners in an amount
equal to $2,000,000 in the aggregate. The Mill Owner Maintenance Reserve Account
and monies on deposit therein, or otherwise credited thereto, do not secure
Mobile Energy's senior indebtedness. Nevertheless, given that the Master
Operating Agreement and the Mill Owner Maintenance Reserve Account Agreement
permit funds on deposit in the Mill Owner Maintenance Reserve Account to be
used, under certain limited circumstances, for, among other things, operations
II-4
<PAGE>
and maintenance expenses, amounts on deposit therein, or otherwise credited
thereto, will be credited against Mobile Energy's funding obligation in respect
of the Maintenance Reserve Account.
Cash flow from operations is expected to consist almost exclusively of
payments of Demand Charges and Processing Charges by the Mill Owners for
Processing Services. Accordingly, the loss of revenues from any one Mill,
whether due to a Mill Closure or otherwise, could have a material adverse impact
on Mobile Energy's financial condition.
The Energy Services Agreements and the Master Operating Agreement require
the Mill Owners to pay Demand Charges and Processing Charges. The Demand Charges
were designed generally to cover, among other things, Mobile Energy's projected
costs that are in the nature of fixed costs (including the payment of debt
service), assuming that certain operating performance standards are satisfied.
The Processing Charges were designed generally to cover the balance of Mobile
Energy's costs that are not projected to be covered by Demand Charges, including
variable costs such as fuel related expenses.
Under the Energy Services Agreements, the Demand Charges in effect at any
given time are due and payable on a monthly basis regardless of whether a Mill
Owner actually utilizes any or all of the Processing Services corresponding to
its dedicated Demand and are subject to automatic reduction due to a shortfall
in the provision of Processing Services by Mobile Energy that is not excused by
the Master Operating Agreement. The Processing Charges vary from month to month
in accordance with the amount of Processing Services required by, and provided
to, the Mill Owners and Mobile Energy's efficiency with regard to fuel usage. In
1995, 70.7% of Mobile Energy's total operating revenues were attributable to
Demand Charges with almost all of the remainder attributable to Processing
Charges.
The Demand Charges and the Processing Charges, collectively, were designed
so as to result in Mobile Energy having net income. There can be no assurance,
however, that (i) the assumptions with respect to operating performance
standards that underlay the design of the Demand Charges and the Processing
Charges will at all times be satisfied, (ii) the Demand Charges will at all
times cover Mobile Energy's costs that are in the nature of fixed costs,
including debt service payments, (iii) the Processing Charges will at all times
cover the costs that are not covered by Demand Charges, including variable costs
such as fuel related expenses, or (iv) the payment of Demand Charges and
Processing Charges will at all times result in Mobile Energy having net income.
Payments of Demand Charges and Processing Charges by the Mill Owners under
the Energy Services Agreements are expected to provide virtually all of Mobile
Energy's operating revenues and are therefore the primary source of funds for
the payment of debt service. There are no significant alternative sources of
funds available to Mobile Energy to make such debt service payments (other than
a debt service reserve account established for the benefit of the holders of the
First Mortgage Bonds (the "Debt Service Reserve Account"), a debt service
reserve account established for the benefit of the holders of the Tax Exempt
Bonds (the "Tax-Exempt Debt Service Reserve Account") and, under certain
circumstances, certain other accounts). The Debt Service Reserve Account is
funded in an amount equal to $21,936,000 (the "Debt Service Reserve Account
Required Balance"). Mobile Energy may, in whole or in part, replace monies on
deposit in, or fund amounts required to be deposited in, the Debt Service
Reserve Account with Reserve Account Security. Currently Mobile Energy has
funded the Debt Service Reserve Account with Reserve Account Security (in the
form of a guaranty from Southern) in an amount equal to the Debt Service Reserve
Account Required Balance. Currently, the Tax-Exempt Debt Service Reserve Account
is funded with Reserve Account Security (in the form of a letter of credit) in
an amount equal to $5,908,000.
If Demand Charges and Processing Charges were at any time to be
insufficient to cover Mobile Energy's fixed costs (including payment of debt
service) Mobile Energy could be unable to make its required debt service
payments (particularly if funds then available in the Debt Service Reserve
Account, the Tax Exempt Debt Service Reserve Account or the other accounts were
also insufficient to cover such payments) or could be unable to pay its other
fixed costs.
The implementation of the Process Model will modify the manner in which the
Processing Charges currently are calculated. Once the Process Model is
implemented, Mobile Energy will be permitted to charge the Mill Owners, as a
component of the Processing Charges, for only those quantities of coal as are
II-5
<PAGE>
calculated by the Process Model to be efficient quantities and only those
quantities of gas as are determined by the Process Model to be in accordance
with a specified protocol for boiler dispatch incorporated in the Process Model.
If the Energy Complex uses more coal or gas than the quantities calculated or
determined by the Process Model (because, for example, Mobile Energy has been
inefficient in its use of gas, coal, black liquor, biomass, or sludge or has
inappropriately dispatched its equipment), the costs attributable to the excess
quantities of coal or gas will not be permitted to be included in the Processing
Charges and, as a result, will be borne by Mobile Energy. By contrast, if the
Energy Complex uses less coal or gas than the quantities calculated or
determined by the Process Model, Mobile Energy will be permitted to include in
the Processing Charges the costs associated with the Process Model quantities of
coal and gas, notwithstanding that such calculated or determined quantities may
exceed the actual quantities used by the Energy Complex. Thus, Mobile Energy
will be rewarded for operating the Energy Complex more efficiently than the
standards set forth in the Process Model and will bear the risk of operating the
Energy Complex less efficiently than those standards. Mobile Energy believes
that it generally will be able to operate the Energy Complex as efficiently as
the standards set forth in the Process Model. Accordingly, Mobile Energy
believes that the implementation of the Process Model alone will not cause its
future results of operations to differ materially from its historical results of
operations. Nevertheless, there can be no assurance that the Energy Complex will
use fuel in accordance with the standards set forth in the Process Model, that
Mobile Energy will operate the Energy Complex as or more efficiently than the
standards set forth in the Process Model or that the Process Model will perform
in accordance with its design or the principles set forth in the Master
Operating Agreement.
Mobile Energy believes that its cash flow from operations, together with
its other available sources of liquidity will be adequate to make all required
payments of principal of and interest on its debt, to permit anticipated capital
expenditures and to fund working capital and other cash requirements for the
foreseeable future.
Environmental Matters
Mobile Energy is subject to comprehensive and dynamic federal, state and local
environmental laws and regulations, including those governing air emissions,
waste water discharges and hazardous and non-hazardous waste disposal. Mobile
Energy recognizes that both it and the Mills may incur capital and operating
costs in the future to comply with currently existing laws and regulations, new
regulatory requirements and possible new statutory requirements.
One proposed regulatory requirement is the Cluster Rule, which has been
proposed, but has not yet been promulgated, by the EPA. The EPA has indicated
that it expects to propose a revised version of the water effluent guidelines
and emissions standards contained in the Cluster Rule in the spring of 1996.
None of the Mills is contractually obligated to Mobile Energy to comply with the
Cluster Rule or any other environmental regulation. Thus, the Mills could choose
to close entirely rather than incur the costs imposed by the Cluster Rule. As
such, the failure by the Mills to spend the monies necessary to comply with the
Cluster Rule could, indirectly, have a material adverse impact on Mobile
Energy's results of operations, to the extent that it were to reduce the amount
of Processing Services the Mills purchase from the Energy Complex.
Another such regulation is the Combustion Rule, which has not yet been
officially proposed but which the EPA has indicated may be proposed in the late
summer of 1996. If promulgated in some form, the Combustion Rule (which would
principally apply to the Energy Complex) could require significant capital
expenditures by Mobile Energy and equipment and operational modifications to the
Energy Complex. Because the Combustion Rule has not yet been proposed, Mobile
Energy cannot estimate the expense required to comply with such a rule. Under
the Master Operating Agreement, Mobile Energy generally is permitted to charge
the Mills the reasonable cost of capital expenditures or operation and
maintenance expenses incurred by Mobile Energy as a result of the Combustion
Rule or the Cluster Rule. Nevertheless, there can be no assurance that the Mill
Owners will comply with their obligations under the Master Operating Agreement
with respect to the Combustion Rule or the Cluster Rule. As such, the
promulgation of the Cluster Rule or the Combustion Rule, together with the
failure by the Mill Owners to comply with such obligations under the Master
Operating Agreements, could have a material adverse effect on the financial
condition of Mobile Energy.
II-6
<PAGE>
As regulatory agencies have not yet promulgated final standards for some
existing programs, and as some proposed requirements (such as the Cluster Rule)
and suggested requirements (such as the Combustion Rule) have not yet been
enacted or adopted, Mobile Energy cannot at this time reasonably estimate its
costs of compliance with these additional programs and requirements (some of
which will not take effect for several years or may not be promulgated at all)
or the timing of any such costs. Nevertheless, assuming that the current
environmental regime (exclusive of any proposed or suggested statutes, rules or
regulations) remains in effect, Mobile Energy is not aware of any environmental
conditions at the Energy Complex that would reasonably be expected to have a
material adverse effect on the financial condition of Mobile Energy.
Finally, in the event that the Lott Road Landfill or any other landfill at
which Mobile Energy's boiler ash is disposed requires remediation in the future,
Mobile Energy may be required to participate. At present, Mobile Energy cannot
estimate the amount by which its costs would increase as a result thereof.
However, a requirement to participate in landfill remediation could have a
material adverse impact on Mobile Energy.
Funding of the Maintenance Reserve Account
The Intercreditor Agreement requires Mobile Energy to make certain deposits into
the Maintenance Reserve Account, and permits Mobile Energy to make additional,
discretionary deposits into the Maintenance Reserve Account. The amount of such
required and discretionary deposits in any given fiscal year may be greater than
the maintenance expenses actually incurred by Mobile Energy in such fiscal year.
For purposes of calculating debt service coverage ratios under Mobile Energy's
Financing Documents, deposits into the Maintenance Reserve Account and the Mill
Owner Maintenance Reserve Account are deemed to be operating expenses in the
fiscal year such deposits are made, rather than in the fiscal year funds are
withdrawn from the Maintenance Reserve Account or the Mill Owner Maintenance
Reserve Account to pay maintenance expenses. The effect of deeming such deposits
to be operating expenses in the fiscal year the deposits are made (together with
the funding provisions set forth in the Intercreditor Agreement that may cause
or permit such deposits to be higher than actual maintenance expenses in any
given fiscal year) is to levelize debt service coverage ratios over the term of
the First Mortgage Bonds and the Tax-Exempt Bonds.
Tax Matters
Mobile Energy is required to comply with the provisions of federal, state and
local tax laws. Future legislative, judicial or administrative changes to or
interpretations of existing tax laws may occur that could result in Mobile
Energy becoming subject to certain taxes to which it is not currently subject.
Such changes could have a material adverse effect on the financial condition of
Mobile Energy.
The Alabama Department of Revenue has requested information from Mobile
Energy in order to determine if Mobile Energy's property, including its
intangible property, is subject to central assessment of ad valorem taxes by the
Alabama Department of Revenue under Chapter 40-21 of the Code of Alabama (which
applies to certain companies in the nature of public utilities, including
companies operating a plant or business for the production, distribution, or
sale of electricity, electric light, electric power, or steam heat) rather than
being subject to local assessment of ad valorem taxes by the County of Mobile.
Central assessment of ad valorem taxes under Chapter 40-21 of the Code of
Alabama could materially increase the ad valorem taxes owed by Mobile Energy due
to differences in assessment ratios and the types of property subject to
taxation.
Mobile Energy has responded to the Department of Revenue that Mobile Energy
is not a company in the nature of a public utility subject to central assessment
of ad valorem taxes by the Alabama Department of Revenue under Chapter 40-21 of
the Code of Alabama. Under Alabama law, property owned by the IDB and used by a
private user pursuant to a lease or other agreement entered into prior to May
1992 (or entitled to be used by a private user at some future time pursuant to
an inducement entered into or adopted prior to May 1992) is not subject to ad
valorem taxes. The Energy Complex equipment refinanced with the Tax-Exempt
Bonds, the 1994 Bonds, the Mixed-Use Bonds and the Environmental Bonds is all
owned by the IDB and was constructed and leased to a private user prior to May
1992 or, in the case of the equipment financed with the 1994 Bonds, pursuant to
an inducement agreement entered into prior to May 1992. Accordingly, Mobile
II-7
<PAGE>
Energy has also responded to the Alabama Department of Revenue that such
equipment is not subject to ad valorem taxes (and that no such taxes have ever
been paid with respect to such equipment)
In addition, Mobile Energy has received no notice or other determination
from the Alabama Department of Revenue finding that such equipment actually is
(or will be) subject to ad valorem taxes or that Mobile Energy's property is
subject to central assessment of ad valorem taxes by the Alabama Department of
Revenue. There can be no assurance, however, that the Alabama Department of
Revenue will not challenge Mobile Energy's position with respect to central
assessment of ad valorem taxes, that Mobile Energy will at all times be
considered to be in compliance with all applicable tax statutes and regulations
or, if Mobile Energy's property were subject to central assessment of ad valorem
taxes by the Alabama Department of Revenue or if such equipment were subject to
ad valorem taxes, that any action required to bring Mobile Energy into
compliance with applicable tax statutes and regulations would not materially
adversely affect Mobile Energy's financial condition.
II-8
<PAGE>
<TABLE>
<CAPTION>
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO 1995 FINANCIAL STATEMENTS
<S> <C>
Mobile Energy Services Company, L.L.C. Page
Report of Independent Public Accountants II-12
Statements of Income for the Year Ended December 31, 1995 and the
Period from Inception (December 16, 1994) to December 31, 1994 II-13
Statements of Changes in Members' Equity for the Year Ended December 31,
1995 and the Period from Inception (December 16, 1994) to
December 31, 1994 II-14
Statements of Cash Flows for the Year Ended December 31, 1995 and
the Period from Inception (December 16, 1994) to December 31, 1994 II-15
Balance Sheets at December 31, 1995 and 1994 II-16
Notes to Financial Statements II-18
Mobile Energy Services Holdings, Inc. and Subsidiary
Report of Independent Public Accountants II-25
Consolidated Statements of Income for the Year Ended December 31, 1995
and the Period from Inception (December 16, 1994) to December 31, 1994 II-26
Consolidated Statements of Changes in Stockholder's Equity for the
Year Ended December 31, 1995 and the Period from Inception
(December 16, 1994) to December 31, 1994 II-27
Consolidated Statements of Cash Flows for the Year Ended December 31, 1995
and the Period from Inception (December 16, 1994) to December 31, 1994 II-28
Consolidated Balance Sheets at December 31, 1995 and 1994 II-29
Notes to Financial Statements II-31
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
</TABLE>
II-9
<PAGE>
MOBILE ENERGY SERVICES COMPANY, L.L.C.
FINANCIAL SECTION
II-10
<PAGE>
Mobile Energy Services Company, L.L.C.
Financial Statements as of December 31, 1995 and 1994
Together With
Auditors' Report
II-11
<PAGE>
ARTHUR ANDERSEN LLP
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Mobile Energy Services Company, L.L.C.:
We have audited the accompanying balance sheets of MOBILE ENERGY SERVICES
COMPANY, L.L.C. (an Alabama limited liability company) as of December 31, 1995
and 1994 and the related statements of income, changes in Members' equity, and
cash flows for the year ended December 31, 1995 and the period from inception
(December 16, 1994) to December 31, 1994. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Mobile Energy Services Company,
L.L.C. as of December 31, 1995 and 1994 and the results of its operations and
its cash flows for the year ended December 31, 1995 and the period from
inception (December 16, 1994) to December 31, 1994 in conformity with generally
accepted accounting principles.
/s/ Arthur Andersen LLP
Atlanta, Georgia
February 21, 1996
II-12
<PAGE>
MOBILE ENERGY SERVICES COMPANY, L.L.C.
STATEMENTS OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1995 AND FOR THE PERIOD FROM
INCEPTION (DECEMBER 16, 1994) TO DECEMBER 31, 1994
(In Thousands)
1995 1994
-------- ------
OPERATING REVENUES:
Demand charges $ 58,298 $2,603
Processing sales 23,587 1,151
Other 612 42
-------- ------
Total operating revenues 82,497 3,796
-------- ------
OPERATING EXPENSES:
Operations and maintenance 26,094 919
Fuel 6,303 26
Depreciation and amortization 11,608 468
-------- ------
Total operating expenses 44,005 1,413
-------- ------
OPERATING INCOME 38,492 2,383
INTEREST EXPENSE (18,501) (215)
OTHER INCOME 1,012 4
-------- ------
NET INCOME $ 21,003 $2,172
======== ======
The accompanying notes are an integral part of these statements.
II-13
<PAGE>
MOBILE ENERGY SERVICES COMPANY, L.L.C.
STATEMENT OF CHANGES IN MEMBERS' EQUITY
FOR THE YEAR ENDED DECEMBER 31, 1995 AND FOR THE PERIOD FROM
INCEPTION (DECEMBER 16, 1994) TO DECEMBER 31, 1994
(In Thousands)
BALANCE, prior to inception $ 0
Equity infusion by the Members 76,405
--------
BALANCE, December 16, 1994 76,405
Net income 2,172
Capital contributions 1,173
--------
BALANCE, December 31, 1994 79,750
Net income 21,003
Capital contributions 3,077
Distributions to Members (37,058)
--------
BALANCE, December 31, 1995 $ 66,772
========
The accompanying notes are an integral part of this statement.
II-14
<PAGE>
MOBILE ENERGY SERVICES COMPANY, L.L.C.
STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1995 AND FOR THE PERIOD FROM
INCEPTION (DECEMBER 16, 1994) TO DECEMBER 31, 1994
(In Thousands)
<TABLE>
<CAPTION>
<S> <C> <C>
1995 1994
--------- -------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 21,003 $ 2,172
--------- --------
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization 11,608 468
Changes in certain operating assets and liabilities:
Increase in trade accounts receivable (9,568) (3,796)
Increase (decrease) in payables to associated companies (5,238) 4,677
Increase in accrued interest 9,570 319
Other, net 852 224
--------- --------
Total adjustments 7,224 1,892
--------- --------
Net cash provided by operating activities 28,227 4,064
--------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant, and equipment (3,288) (4,064)
Construction work in progress (7,810) 0
-------- -------
Net cash used in investing activities (11,098) (4,064)
-------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from the issuance of long-term debt 294,590 0
Proceeds from working capital facility (Note 5) 14,075 0
Equity contributions 3,077 1,173
Redemption of long-term debt (85,000) 0
Redemption of note payable to associated company (190,000) 0
Payment of member distributions (14,054) 0
-------- -------
Net cash provided by financing activities 22,688 1,173
-------- -------
INCREASE IN CASH AND CASH EQUIVALENTS 39,817 1,173
CASH EQUIVALENTS AT BEGINNING OF PERIOD 1,173 0
-------- -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 40,990 $ 1,173
======== =======
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 8,493 $ 0
======== =======
</TABLE>
The accompanying notes are an integral part of these statements.
II-15
<PAGE>
MOBILE ENERGY SERVICES COMPANY, L.L.C.
BALANCE SHEETS
DECEMBER 31, 1995 AND 1994
(In Thousands)
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS 1995 1994
---------------------- --------- ---------
CURRENT ASSETS:
Cash and cash equivalents $ 40,990 $ 1,173
Trade accounts receivable 13,798 4,230
Receivables from associated companies 0 1,403
Materials and supplies 2,518 2,116
Prepaid expenses 1,107 1,102
Other 525 134
-------- --------
Total current assets 58,938 10,158
-------- --------
PROPERTY, PLANT, AND EQUIPMENT 361,076 357,789
Less accumulated depreciation (11,795) (468)
Construction work in process 7,810 0
-------- --------
Property, plant, and equipment, net 357,091 357,321
-------- --------
DEFERRED LOAN COSTS, net of accumulated amortization of $285 and $0
at December 31, 1995 and 1994, respectively
14,862 1,822
-------- --------
Total assets $430,891 $369,301
======== ========
</TABLE>
The accompanying notes are an integral part of these balance sheets.
II-16
<PAGE>
MOBILE ENERGY SERVICES COMPANY, L.L.C.
BALANCE SHEETS
DECEMBER 31, 1995 AND 1994
(In Thousands)
<TABLE>
<CAPTION>
<S> <C> <C>
LIABILITIES AND MEMBERS' EQUITY 1995 1994
---------------------------------------- ---------- ----------
CURRENT LIABILITIES:
Trade accounts payable $ 783 $ 2,275
Accounts payable--associated company 5,985 11,223
Distribution payable 23,004 0
Note payable 14,075 0
Note payable--associated company 0 190,000
Current portion--long-term debt 5,895 0
Accrued interest 9,889 319
Other 2,022 734
-------- -------
Total current liabilities 61,653 204,551
-------- -------
LONG-TERM DEBT (Note 5) 302,466 85,000
COMMITMENTS AND CONTINGENCIES (Notes 3 and 7)
MEMBERS' EQUITY 66,772 79,750
-------- -------
Total liabilities and Members' equity $430,891 $369,301
======== ========
</TABLE>
The accompanying notes are an integral part of these balance sheets.
II-17
<PAGE>
MOBILE ENERGY SERVICES COMPANY, L.L.C.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND 1994
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
General
Mobile Energy Services Company, L.L.C. ("Mobile Energy") was organized on
July 13, 1995. An equity interest of 99% in Mobile Energy was acquired by
Mobile Energy Services Holdings, Inc. ("Holdings"), a wholly owned
subsidiary of The Southern Company ("Southern"), and 1% of the equity
interest in Mobile Energy was acquired by Southern Electric International,
Inc. ("SEI"), a wholly owned subsidiary of Southern (together, the
"Members"). Mobile Energy was created to own and operate an energy and
chemical recovery complex located in Mobile, Alabama (the "Energy
Complex"), purchased by Holdings on December 16, 1994 (the "Acquisition")
from Scott Paper Company ("Scott Paper"). During 1995, Scott Paper merged
with a subsidiary of Kimberly-Clark ("Scott/Kimberly-Clark"). Most of the
Energy Complex's fuel needs are met from waste and by-products generated
by a pulp mill (the "Pulp Mill"), a paper mill (the "Paper Mill"), and a
tissue mill (the "Tissue Mill", and together with the Pulp Mill and the
Paper Mill, the "Mills") located in Mobile, Alabama.
Concurrent with the Acquisition, Holdings entered into various long-term
contracts with Scott Paper in its capacity as the owner of the Pulp Mill
and the Tissue Mill and with S.D. Warren Company ("S.D. Warren"), a wholly
owned subsidiary of Scott Paper, in its capacity as the owner of the Paper
Mill (Note 3). Ownership of S.D. Warren was subsequently transferred to an
entity unaffiliated with Scott Paper. Pursuant to the contracts, the
Energy Complex provides substantially all of the power, steam, and liquor
processing services required by the Mills.
Effective July 14, 1995, Holdings contributed all of its assets (other
than an agreement for the provision of administrative and other services
with Southern Company Services, Inc.), liabilities, and operations (the
"Transfer"), including the Energy Complex, to Mobile Energy in the form of
a tax-free contribution. The Transfer has been accounted for in a manner
similar to a pooling of interests, and accordingly, the financial
statements for prior periods include the accounts of Holdings prior to the
Transfer.
Accounting Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenue and expense
during the reporting period. Actual results could differ from those
estimates.
Presentation
Certain prior period amounts presented in the financial statements have
been reclassified to conform to the current period presentation.
II-18
<PAGE>
Property, Plant, and Equipment
Property, plant, and equipment are recorded at cost, as adjusted (Note 2).
Depreciation is provided using the straight-line method over the estimated
economic lives of the related assets (ranging from 5 to 35 years). Upon
the retirement or sale of assets, the costs of such assets and the related
accumulated depreciation are removed from the balance sheet and the gain
or loss, if any, is included in income.
At December 31, 1995 and 1994, property, plant, and equipment consisted of
the following (in thousands):
1995 1994
--------- --------
Buildings $ 16,491 $ 16,443
Machinery and equipment 344,585 341,346
-------- --------
$361,076 $357,789
======== ========
Cash and Cash Equivalents
Cash equivalents consist primarily of highly liquid investments with
original maturities of three months or less and are carried at cost, which
approximates fair value.
Fair Value of Financial Instruments
The carrying values of financial assets and liabilities, as defined in
Statement of Financial Accounting Standards ("SFAS") No. 107, "Disclosures
About Fair Value of Financial Instruments," in the accompanying balance
sheets approximate fair value.
Deferred Loan Costs
Loan costs represent amounts incurred for professional services and other
related costs for the offering of bonds discussed in Note 5. These costs
will be amortized using the straight-line method over the life of the
related bonds.
Income Taxes
As a limited liability company, Mobile Energy is not subject to federal
and state income taxes. The taxable income or loss of Mobile Energy is
included in the income tax returns of its Members. Accordingly, no
provision for income taxes has been reflected in the accompanying
financial statements.
Derivatives
Mobile Energy was a party to two interest rate swap options ("Swap
Options") and two interest rate swaps ("Swaps") to manage exposure to
fluctuations in interest rates by trading variable rate obligations for
fixed rate obligations. In all cases, the Swaps related to specific
portions of Mobile Energy's anticipated debt commitments and were of
notional amounts and maturities that were consistent with such
commitments.
The Swap Options and Swaps were treated as hedges for the anticipated
debt. Accordingly, the gains and losses on the Swap Options and Swaps were
deferred and are being amortized to interest expense over the period of
the related debt. Premiums paid for the Swap Options and Swaps were
deferred and are being amortized over the life of the related debt (Note
6).
II-19
<PAGE>
2. PURCHASE OF PROPERTY, PLANT, AND EQUIPMENT
On December 16, 1994, Mobile Energy purchased certain property, plant, and
equipment located near Mobile, Alabama, from Scott Paper for approximately
$264,000,000 cash and assumed various liabilities of Scott Paper totaling
approximately $85,000,000. The excess of the fair value of assets acquired
over the purchase price paid was allocated among the assets purchased in
accordance with Accounting Principles Board Opinion No. 16. The total cash
purchase price of approximately $263,597,000 was allocated as follows (in
thousands):
Utility plant $353,724
Long-term obligations (85,000)
Current liabilities (5,127)
--------
$263,597
Prior to December 31, 1994, a purchase price adjustment of approximately
$2,428,000 related to the assumption of certain accrued pension and other
retirement benefits was recorded as an adjustment to the fair value of the
purchased assets.
3. COMMITMENTS AND CONTINGENCIES
Mobile Energy is contractually obligated under three energy service
agreements (the "Agreements") to provide power processing services and
steam processing services to the Mills and liquor processing services to
the pulp mill for a period of 25 years beginning December 16, 1994. Under
the terms of the Agreements, the mill owners are obligated to pay monthly
fixed demand charges for dedicated capacity of the Energy Complex and also
variable charges for actual amounts purchased.
In connection with the Acquisition, Mobile Energy entered into
noncancelable land leases (the "Leases") with Scott/Kimberly-Clark. Rent
expense under the Leases approximates $1 per year from 1995 through 2019.
Also contained in the Leases is a right to purchase the land from
Scott/Kimberly-Clark at the end of the lease term for $10. However,
retention of the property is not under the control of Mobile Energy due to
Scott/Kimberly-Clark's superseding option to repurchase the Energy Complex
from Mobile Energy at the end of the lease term at fair market value.
Accordingly, Mobile Energy's repurchase option is not reasonably assured
and therefore is not considered a bargain purchase option under SFAS No.
13, "Accounting for Leases."
4. RELATED-PARTY TRANSACTIONS
Under the terms of an agreement between SEI and Mobile Energy, SEI
provides all operations and maintenance services for the Energy Complex.
Such services are billed to Mobile Energy at SEI's direct cost plus an
overhead cost allocation and totaled approximately $40,854,000 and
$862,000 for the year ended December 31, 1995 and for the period from
inception (December 16, 1994) to December 31, 1994, respectively. In
addition, SEI billed Mobile Energy approximately $3,506,000 during 1995 in
connection with acquisition, financing, and other administrative costs
paid on Mobile Energy's behalf.
Mobile Energy's bridge loan payable to Southern in the amount of
$190,000,000 at December 31, 1994 represented Southern's temporary
financing of the Acquisition. The note was repaid in connection with
Mobile Energy's issuance of first mortgage bonds (Note 5) and accrued
interest at a variable rate, determined monthly based on Southern's
incremental cost of short-term debt outstanding. In the event that
Southern did not have debt outstanding to the extent of the note, Mobile
Energy was only charged interest on its pro rata amount of all of
Southern's outstanding intercompany debt. As of December 31, 1994,
Southern had approximately $190,000,000 outstanding related to Mobile
II-20
<PAGE>
Energy at an interest rate of 6.36%. Mobile Energy's note receivable from
Southern in the amount of $1,403,497 at December 31, 1994 related to
Southern's initial capitalization of Mobile Energy; this amount was
received in connection with Mobile Energy's repayment of the bridge loan
from Southern discussed above.
As of December 31, 1995, accounts payable--associated company represents
amounts payable to SEI for operations and maintenance services provided on
behalf of Mobile Energy. As of December 31, 1994, accounts payable -
associated company represents amounts payable to SEI as follows: (1)
$1,822,000 premium paid for interest rate swap option (Note 7), (2)
$3,428,135 of accrued pension and other retirement benefits attributable
to SEI employees dedicated to perform under the operations and maintenance
agreement between SEI and Mobile Energy, (3) $5,360,769 of
acquisition-related costs, and (4) $612,245 for unpaid operation and
maintenance services due for the period from inception (December 16, 1994)
to December 31, 1994.
5. LONG-TERM DEBT
Details of long-term debt in thousands are as follows at December 31, 1995
and 1994:
<TABLE>
<CAPTION>
<S> <C> <C>
1995 1994
-------- --------
8.665% first mortgage bonds, due serially on a semi-annual basis through
2017; secured by the Energy Complex; net of unamortized discount of
$23.231 million at December 31, 1995 $231,979 $ 0
Obligations incurred in connection with the sale by public authorities
of tax-exempt industrial revenue bonds (Series 1995), 6.95%, due
serially on an annual basis beginning January 1, 2017 and ending January
1, 2020; secured by the Energy Complex; net of unamortized discount of
$8.618 million at December 31, 1995 76,382 0
Obligations incurred in connection with the sale by public authorities of
tax-exempt remarketable industrial revenue bonds (Series 1984 A through
E) variable interest rates; due 2019; secured by the Energy Complex 0 85,000
Less current portion 5,895 0
-------- -------
Long-term debt $302,466 $85,000
======== =======
</TABLE>
On August 15, 1995, Mobile Energy issued $255,210,000 of first mortgage
bonds, the proceeds from which were used primarily to repay Southern the
$190,000,000 bridge loan (Note 4) and to terminate the Swaps (Note 6). The
loss on termination of the related swap of $23.6 million has been treated
as discount on the related debt. This discount and the rate of interest
represent an effective interest rate, compounded monthly, of 10.037%. Also
on August 15, 1995, Mobile Energy joined with public authorities and
issued $85,000,000 of tax-exempt bonds, the proceeds of which were used to
refund the Series 1984 bonds described above. The loss on termination of
the related Swap of $8.7 million has been treated as discount on the
related debt. This discount and the rate of interest represent an
effective interest rate, compounded monthly, of 7.893%.
In connection with the Series 1984 bonds, Mobile Energy incurred various
remarketing fees of .125% on the outstanding bonds' principal. Any
II-21
<PAGE>
remarketing of the bonds was funded through five letter-of-credit
agreements with banks which were terminated upon the redemption of the
Series 1984 bonds in August, 1995. Aggregate maximum borrowings under the
letter-of-credit agreements were $86,700,000. Commitment fees of .625% per
annum were charged to Mobile Energy based on the unused portion of these
agreements.
On August 24, 1995, Mobile Energy entered into a revolving credit
agreement expiring December 31, 2001 with Banque Paribas which allows
Mobile Energy to draw up to $15,000,000 at an interest rate of LIBOR plus
1% ($4,675,000 at 6.9375%, $4,700,000 at 6.875%, and $4,700,000 at 6.8125%
on December 31, 1995). Mobile Energy is required to have no borrowings for
a period of five consecutive business days during each year; therefore,
the borrowings of $14,075,000 at December 31, 1995 are classified as
current in the accompanying balance sheets. In addition, Southern entered
into a separate working capital facility aggregating to $16,908,000 with
Banque Paribas expiring December 31, 2001 at an interest rate of LIBOR
plus .35% under which Mobile Energy may draw funds but for which it has no
liability to Banque Paribas. There were no borrowings under this facility
during 1995. Commitment fees ranging from .1% to .375% per annum were
charged to Mobile Energy based on the unused portion of these agreements.
At December 31, 1995, the annual scheduled maturities of long-term debt
during the next five years were as follows (in thousands):
1996 $5,895
1997 7,350
1998 7,885
1999 8,340
2000 8,840
6. DERIVATIVE FINANCIAL INSTRUMENTS
In anticipation of potential interest rate risks associated with the
Acquisition, SEI purchased the Swap Options (Note 1) during October 1994.
The Swap Options were subsequently transferred to Mobile Energy. On
December 19, 1994, the Swap Options were sold and Mobile Energy
concurrently entered into the Swaps with a bank. The purpose of the Swaps
was to reduce the potential impact of interest rate fluctuations between
December 19, 1994 and the date the rates on Mobile Energy's outstanding
industrial revenue bonds and the anticipated offering of first mortgage
bonds were fixed (Note 5). As of December 31, 1994, the notional amounts,
fair market values, and maturity dates of the Swaps were as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Notional Fair Market Maturity
Amount Value Date
---------- ------------ ---------
Swap 1--industrial revenue bonds $ 85,000,000 $ 150,632 January 1, 2019
Swap 2--first mortgage bonds 224,000,000 (619,397) November 1, 2016
------------ ----------
$309,000,000 $(468,765)
============ ==========
</TABLE>
As of December 31, 1995 and 1994, the Swap Options premium of
approximately $1,822,000 is included in deferred loan costs. The fair
value of the Swaps was estimated using pricing models, which determined
the present value of the difference between the contracted swap rates and
market interest rates over the remaining life of the Swaps. The fair value
of the Swaps represent the amounts the bank would have received or paid to
terminate the Swaps at the reporting date.
Mobile Energy terminated the Swaps on August 15, 1995, incurring a loss on
termination of approximately $32,300,000. Such termination costs are
accounted for as a discount on the related debt (Note 5) and are being
amortized to interest expense using the effective interest rate method
over the period of the related debt. Such amortization totaled
approximately $446,000 for the year ended December 31, 1995.
II-22
<PAGE>
7. SIGNIFICANT CUSTOMERS, SUPPLIERS, AND CONCENTRATION OF CREDIT RISK
Mobile Energy derived approximately 80% and 82% of its revenues during the
year ended December 31, 1995 and during the period from inception
(December 16, 1994) to December 31, 1994, respectively, from
Scott/Kimberly-Clark. The remainder of Mobile Energy's revenues were
derived from S.D. Warren . Receivables outstanding from sales to
Scott/Kimberly-Clark and S.D. Warren were approximately $10,531,000 and
$3,263,000, respectively, at December 31, 1995 and were approximately
$3,120,000 and $676,000, respectively, at December 31, 1994. In addition,
as indicated in Note 1, the majority of the Energy Complex's fuel needs
are met by the Mills. These concentrations expose Mobile Energy's
operations to the risk of severe impact in the near term should any of the
Mills cease operations.
Substantially all of SEI's employees at the Energy Complex (Note 4) are
subject to collective bargaining agreements, none of which expire during
1996.
II-23
<PAGE>
MOBILE ENERGY SERVICES HOLDINGS, INC. AND SUBSIDIARY
FINANCIAL SECTION
II-24
<PAGE>
Mobile Energy Services Holdings, Inc.
and Subsidiary
Consolidated Financial Statements
as of December 31, 1995 and 1994
Together With
Auditors' Report
II-25
<PAGE>
ARTHUR ANDERSEN LLP
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of
Mobile Energy Services Holdings, Inc.:
We have audited the accompanying consolidated balance sheets of MOBILE ENERGY
SERVICES HOLDINGS, INC. (an Alabama corporation and a wholly owned subsidiary of
The Southern Company) AND SUBSIDIARY as of December 31, 1995 and 1994 and the
related consolidated statements of income, changes in stockholder's equity, and
cash flows for the year ended December 31, 1995 and for the period from
inception (December 16, 1994) to December 31, 1994. These financial statements
are the responsibility of Holdings' management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Mobile Energy Services
Holdings, Inc. and subsidiary as of December 31, 1995 and 1994 and the results
of their operations and their cash flows for the year ended December 31, 1995
and for the period from inception (December 16, 1994) to December 31, 1994 in
conformity with generally accepted accounting principles.
/s/ Arthur Andersen LLP
Atlanta, Georgia
February 21, 1996
II-26
<PAGE>
MOBILE ENERGY SERVICES HOLDINGS, INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1995 AND FOR THE PERIOD FROM
INCEPTION (DECEMBER 16, 1994) TO DECEMBER 31, 1994
(In Thousands)
1995 1994
---------- --------
OPERATING REVENUES:
Demand charges $ 58,298 $2,603
Processing sales 23,587 1,151
Other 612 42
-------- ------
Total operating revenues 82,497 3,796
-------- -------
OPERATING EXPENSES:
Operations and maintenance 26,094 919
Fuel 6,303 26
Depreciation and amortization 11,608 468
-------- ------
Total operating expenses 44,005 1,413
-------- ------
OPERATING INCOME 38,492 2,383
INTEREST EXPENSE (18,501) (215)
OTHER INCOME 1,076 4
MINORITY INTEREST (210) (48)
-------- ------
INCOME BEFORE INCOME TAXES 20,857 2,124
PROVISION FOR INCOME TAXES 8,058 831
-------- ------
NET INCOME $ 12,799 $1,293
======== ======
The accompanying notes are an integral part of these consolidated statements.
II-27
<PAGE>
MOBILE ENERGY SERVICES HOLDINGS, INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY
FOR THE YEAR ENDED DECEMBER 31, 1995 AND FOR THE PERIOD FROM
INCEPTION (DECEMBER 16, 1994) TO DECEMBER 31, 1994
(In Thousands)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Common Paid-In Retained
Stock Capital Earnings Total
------ ------- -------- -------
BALANCE, prior to inception $ 0 $ 0 $ 0 $ 0
Sale of common stock at inception 1 74,249 0 74,250
------ -------- ------- --------
BALANCE, December 16, 1994 1 74,249 0 74,250
Net income 0 0 1,293 1,293
------ -------- ------- -------
BALANCE, December 31, 1994 1 74,249 1,293 75,543
Net income 0 0 12,799 12,799
Dividends 0 0 (14,694) (14,694)
Capital repayments 0 (32,882) 0 (32,882)
------ -------- ------- -------
BALANCE, December 31, 1995 $ 1 $ 41,367 $ (602) $ 40,766
====== ======== ======= ========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
II-28
<PAGE>
<TABLE>
<CAPTION>
MOBILE ENERGY SERVICES HOLDINGS, INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1995 AND FOR THE PERIOD FROM
INCEPTION (DECEMBER 16, 1994) TO DECEMBER 31, 1994
(In Thousands)
<S> <C> <C>
1995 1994
--------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 12,799 $ 1,293
--------- -------
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 11,608 468
Deferred income taxes 18,880 3,173
Minority interest 210 48
Changes in certain operating assets and liabilities:
Increase in accounts receivable (8,165) (3,796)
Increase in materials and supplies (402) 0
Increase in prepaids and other current assets (765) (1,275)
Increase (decrease) in accounts payable (6,709) 4,677
Increase in current income tax payable 3,943 0
Increase in accrued interest 9,570 0
Increase in other current liabilities 869 649
Other, net 111 0
--------- -------
Total adjustments 29,150 3,944
--------- -------
Net cash provided by operating activities 41,949 5,237
--------- ------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant, and equipment (3,287) (4,064)
Construction work in progress (7,810) 0
--------- -------
Net cash used in investing activities (11,097) (4,064)
--------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from the issuance of long-term debt 294,590 0
Proceeds from working capital facility (Note 5) 14,075 0
Redemption of long-term debt (85,000) 0
Redemption of note payable to associated company (190,000) 0
Payment of dividends (14,694) 0
Return of capital (9,878) 0
--------- -------
Net cash provided by financing activities 9,093 0
--------- -------
INCREASE IN CASH AND CASH EQUIVALENTS 39,945 1,173
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 1,173 0
--------- -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 41,118 $ 1,173
========= =======
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid (received) during the period for:
Interest $ 8,412 $ 0
========= =======
Income benefits (Note 6) $ (13,005) $(2,578)
========= =======
The accompanying notes are an integral part of these consolidated statements.
</TABLE>
II-29
<PAGE>
MOBILE ENERGY SERVICES HOLDINGS, INC.
AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1995 AND 1994
(In Thousands)
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS 1995 1994
------------------------------- -------- --------
CURRENT ASSETS:
Cash and cash equivalents $ 41,118 $ 1,173
Customer receivables 13,798 4,230
Receivables from associated companies 0 1,403
Materials and supplies 2,518 2,116
Prepaid expenses 1,107 1,102
Other 526 134
-------- --------
Total current assets 59,067 10,158
-------- --------
PROPERTY, PLANT, AND EQUIPMENT 361,076 357,789
Less accumulated depreciation (11,795) (468)
Construction work in process 7,810 0
-------- --------
Property, plant, and equipment, net 357,091 357,321
-------- --------
DEFERRED LOAN COSTS
(net of accumulated amortization of $285 and $0 at
December 31, 1995 and December 31, 1994, respectively) 14,862 1,822
-------- --------
Total assets $431,020 $369,301
======== ========
The accompanying notes are an integral part of these consolidated balance sheets.
</TABLE>
II-30
<PAGE>
MOBILE ENERGY SERVICES HOLDINGS, INC.
AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1995 AND 1994
(In Thousands)
<TABLE>
<CAPTION>
<S> <C> <C>
LIABILITIES AND STOCKHOLDER'S EQUITY 1995 1994
- ------------------------------------------------ ---------- ---------
CURRENT LIABILITIES:
Trade accounts payable $ 783 $ 2,275
Accounts payable--associated company 6,007 11,223
Capital repayments and dividends payable 23,004 0
Note payable 14,075 0
Note payable--associated company 0 190,000
Current portion - long-term debt 5,895 0
Current income tax payable 3,335 0
Accrued interest 9,889 319
Other 2,038 1,169
-------- --------
Total current liabilities 65,026 204,986
-------- --------
DEFERRED INCOME TAXES (Note 6) 22,094 2,974
-------- --------
LONG-TERM DEBT 302,466 85,000
-------- --------
MINORITY INTEREST 668 798
-------- --------
COMMITMENTS AND CONTINGENCIES (Notes 3 and 8)
STOCKHOLDER'S EQUITY:
Common stock, $1 par value; 1,000 shares authorized and
outstanding 1 1
Paid-in capital 41,367 74,249
Retained earnings (deficit) (602) 1,293
-------- --------
Total stockholder's equity 40,766 75,543
-------- --------
Total liabilities and stockholder's equity $431,020 $369,301
======== ========
The accompanying notes are an integral part of these consolidated balance sheets.
</TABLE>
II-31
<PAGE>
MOBILE ENERGY SERVICES HOLDINGS, INC.
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND 1994
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
General
Mobile Energy Services Holdings, Inc. ("Holdings"), a wholly owned
subsidiary of The Southern Company ("Southern"), was incorporated on
August 25, 1994 as Mobile Energy Services Company, Inc. and subsequently
changed its name to Mobile Energy Services Holdings, Inc. Holdings was
created to purchase an energy and chemical recovery complex located in
Mobile, Alabama (the "Energy Complex"), from Scott Paper Company ("Scott
Paper"). This transaction occurred on December 16, 1994 (the
"Acquisition"). Most of the Energy Complex's fuel needs are met from waste
and by-products generated by a pulp mill (the "Pulp Mill"), located in
Mobile, Alabama that is part of an integrated pulp, paper, and tissue
manufacturing facility that also includes a paper mill (the "Paper Mill")
and a tissue mill (the "Tissue Mill," and together with the Pulp Mill and
the Paper Mill, the "Mills").
Concurrent with the Acquisition, Holdings entered into various long-term
contracts with Scott Paper in its capacity as the owner of the pulp mill
and the tissue mill and with S.D. Warren Company ("S.D. Warren "), a
wholly owned subsidiary of Scott Paper, in its capacity as the owner of
the paper mill (Note 3). Ownership of S.D. Warren was subsequently
transferred to an entity unaffiliated with Scott Paper. During 1995 Scott
Paper merged with a subsidiary of Kimberly-Clark ("Scott/Kimberly-Clark").
Pursuant to the contracts, the Energy Complex provides substantially all
of the power, steam, and liquor processing services required by the Mills.
Effective July 14, 1995, Holdings contributed all of its assets (other
than an agreement for the provision of administrative and other services
with Southern Company Services, Inc., a wholly owned subsidiary of
Southern), liabilities, and operations (the "Transfer"), including the
Energy Complex, to Mobile Energy Services Company, L.L.C. ("Mobile
Energy") in the form of a tax-free exchange. The Transfer has been
accounted for in a manner similar to a pooling of interests, and
accordingly, the financial statements for prior periods include the
accounts of Holdings prior to the Transfer. Of the equity interest in
Mobile Energy, 99% was acquired by Holdings and 1% was acquired by
Southern Electric International, Inc. ("SEI"), a wholly owned subsidiary
of Southern.
Accounting Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenue and expense
during the reporting period. Actual results could differ from those
estimates.
Presentation
The consolidated financial statements include the accounts of Holdings and
its majority-owned subsidiary, Mobile Energy. All significant intercompany
accounts and transactions have been eliminated. Certain prior period
amounts presented in the financial statements have been reclassified to
conform to the current period presentation.
II-32
<PAGE>
Property, Plant, and Equipment
Property, plant, and equipment are recorded at cost, as adjusted (Note 2).
Depreciation is provided using the straight-line method over the estimated
economic lives of the related assets (ranging from 5 to 35 years). Upon
the retirement or sale of assets, the costs of such assets and the related
accumulated depreciation are removed from the balance sheet and the gain
or loss, if any, is included into income.
At December 31, 1995 and 1994, property, plant, and equipment consisted of
the following (in thousands):
1995 1994
---------- ----------
Buildings $ 16,491 $ 16,443
Machinery and equipment 344,585 341,346
-------- --------
$361,076 $357,789
======== ========
Cash and Cash Equivalents
Cash equivalents consist primarily of highly liquid investments with
original maturities of three months or less and are carried at cost, which
approximates fair value.
Fair Value of Financial Instruments
The carrying values of financial assets and liabilities, as defined in
Statement of Financial Accounting Standards ("SFAS") No. 107, "Disclosures
About Fair Value of Financial Instruments," in the accompanying balance
sheets approximate fair value.
Deferred Loan Costs
Loan costs represent amounts incurred for professional services and other
related costs for the offering of bonds discussed in Note 5. These costs
will be amortized using the straight-line method over the life of the
related bonds.
Income Taxes
Holdings provides deferred income taxes for all significant income tax
temporary differences in accordance with SFAS No. 109, "Accounting for
Income Taxes." SFAS No. 109 requires, among other things, the use of an
asset and liability method for the recognition of deferred tax liabilities
and assets.
Derivatives
Mobile Energy was a party to two interest rate swap options ("Swap
Options") and two interest rate swaps ("Swaps") to manage exposure to
fluctuations in interest rates by trading variable rate obligations for
fixed rate obligations. In all cases, the Swap Options and Swaps related
to specific portions of Mobile Energy's anticipated debt commitments and
were of notional amounts and maturities that are consistent with such
commitments.
The Swap Options and Swaps were treated as hedges for the anticipated
debt. Accordingly, the gains and losses on the Swap Options and Swaps were
deferred and are being amortized to interest expense over the period of
the related debt. Premiums paid for the Swap Options and Swaps were
deferred and are being amortized over the life of the related debt (Note
7).
II-33
<PAGE>
2. PURCHASE OF PROPERTY, PLANT, AND EQUIPMENT
On December 16, 1994, Mobile Energy purchased certain property, plant, and
equipment located near Mobile, Alabama, from Scott Paper for approximately
$264,000,000 cash and assumed various liabilities of Scott Paper totaling
approximately $85,000,000. The excess of the fair value of assets acquired
over the purchase price paid was allocated among the assets purchased in
accordance with Accounting Principles Board Opinion No. 16. The total cash
purchase price of approximately $263,597,000 was allocated as follows (in
thousands):
Utility plant $353,724
Long-term obligations (85,000)
Current liabilities (5,127)
--------
$263,597
========
Prior to December 31, 1994, a purchase price adjustment of approximately
$2,428,000 related to the assumption of certain accrued pension and other
retirement benefits was recorded as an adjustment to the fair value of the
purchased assets.
3. COMMITMENTS AND CONTINGENCIES
Mobile Energy is contractually obligated under three energy service
agreements (the "Agreements") to provide power processing services and
steam processing services to the Mills and liquor processing services to
the pulp mill for a period of 25 years beginning December 16, 1994. Under
the terms of the Agreements, the mill owners are obligated to pay monthly
fixed demand charges for dedicated capacity of the Energy Complex and also
variable charges for actual amounts purchased.
In connection with the Acquisition, Mobile Energy entered into
noncancelable land leases (the "Leases") with Scott/Kimberly-Clark. Rent
expense under the Leases approximates $1 per year from 1995 through 2019.
Also contained in the Leases is a right to purchase the land from
Scott/Kimberly-Clark at the end of the lease term for $10. However,
retention of the property is not under the control of Mobile Energy due to
Scott/Kimberly-Clark's superseding option to repurchase the Energy Complex
from Mobile Energy at the end of the lease term at fair market value.
Accordingly, Mobile Energy's repurchase option is not reasonably assured
and therefore is not considered a bargain purchase option under SFAS No.
13, "Accounting for Leases."
4. RELATED-PARTY TRANSACTIONS
Under the terms of an agreement between SEI and Mobile Energy, SEI
provides all operations and maintenance services for the Energy Complex.
Such services are billed to Mobile Energy at SEI's direct cost plus an
overhead cost allocation and totaled approximately $40,854,000 for the
year ended December 31, 1995 and approximately $862,000 for the period
from inception (December 16, 1994) to December 31, 1994. In addition, SEI
billed Mobile Energy $3,506,000 during 1995 in connection with
acquisition, financing, and other administrative costs paid on Mobile
Energy's behalf.
Mobile Energy's bridge loan payable to Southern in the amount of
$190,000,000 at December 31, 1994 represented Southern's temporary
financing of the Acquisition. The note was repaid in connection with
Mobile Energy's issuance of first mortgage bonds (Note 5) and accrued
interest at a variable rate, determined monthly based on Southern's
incremental cost of short-term debt outstanding. In the event that
Southern did not have debt outstanding to the extent of the note, Mobile
Energy was only charged interest on its pro rata amount of all of
Southern's outstanding intercompany debt. As of December 31, 1994,
Southern had approximately $190,000,000 outstanding related to Mobile
Energy at an interest rate of 6.36%. Mobile Energy's note receivable from
Southern in the amount of $1,403,497 at December 31, 1994 related to
II-34
<PAGE>
Southern's initial capitalization of Mobile Energy; this amount was
received in connection with Mobile Energy's repayment of the bridge loan
from Southern discussed above.
As of December 31, 1995, accounts payable--associated company represents
amounts payable to SEI for operations and maintenance services provided on
behalf of Mobile Energy. As of December 31, 1994, accounts payable -
associated company represents amounts payable to SEI as follows: (1)
$1,822,000 premium paid for interest rate swap option (Note 7), (2)
$3,428,135 of accrued pension and other retirement benefits attributable
to SEI employees dedicated to perform under the operations and maintenance
agreement between SEI and Mobile Energy, (3) of acquisition-related costs,
and (4) $612,245 for unpaid operation and maintenance services due for the
period from inception (December 16, 1994) to December 31, 1994.
5. LONG-TERM DEBT
Details of long-term debt in thousands are as follows at December 31, 1995
and 1994:
<TABLE>
<CAPTION>
<S> <C> <C>
1995 1994
------------ ----------
8.665% first mortgage bonds, due serially on a semi-annual basis
through 2017; secured by the Energy Complex; net of unamortized
discount of $23.231 million at December 31, 1995 $231,979 $ 0
Obligations incurred in connection with the sale by public authorities of
tax-exempt industrial revenue bonds (Series 1995), 6.95%, due serially on
an annual basis beginning January 1, 2017 and ending January 1, 2020;
secured by the Energy Complex; net of unamortized discount of $8.618
million at December 31, 1995 76,382 0
Obligations incurred in connection with the sale by public authorities of
tax-exempt remarketable industrial revenue bonds (Series 1984 A through
E); variable interest rates ; due 2019; secured by the Energy Complex 0 85,000
Less current portion 5,895 0
-------- -------
Long-term debt $302,466 $85,000
======== =======
</TABLE>
On August 15, 1995, Mobile Energy issued $255,210,000 of first mortgage
bonds, the proceeds from which were used primarily to repay Southern the
$190,000,000 bridge loan (Note 4) and to terminate the Swaps (Note 7). The
loss on termination of the related Swap of $23.6 million has been treated
as discount on the related debt. This discount and the rate of interest
represent an effective interest rate, compounded monthly, of 10.037%. Also
on August 15, 1995, Mobile Energy joined with public authorities and
issued $85,000,000 of tax-exempt bonds, the proceeds of which were used to
refund the Series 1984 bonds described above. The loss on termination of
the related Swap of $8.6 million has been treated as discount on the
related debt. This discount and the rate of interest represent an
effective interest rate, compounded monthly, of 7.893%.
On August 24, 1995, Mobile Energy entered into a revolving credit
agreement with Banque Paribas which allows Mobile Energy to draw up to
$15,000,000 at an interest rate of LIBOR plus 1% ($4,675,000 at 6.9375%,
$4,700,000 at 6.875%, and $4,700,000 at 6.8125% on December 31, 1995).
Mobile Energy is required to have no borrowings for a period of five
consecutive business days during each year; therefore, the borrowings of
$14,075,000 at December 31, 1995 are classified as current in the
II-35
<PAGE>
accompanying balance sheets. In addition, Southern entered into a separate
working capital facility aggregating to $16,908,000 with Banque Paribas
expiring December 31, 1995 at a rate of LIBOR plus .35% under which Mobile
Energy may draw funds but for which it has no liability to Banque Paribas.
There were no borrowings under this facility during 1995. Commitment fees
ranging from .1% to .375% per annum were charged to Mobile Energy based on
the unused portion of these agreements.
In connection with the Series 1984 bonds, Mobile Energy incurred various
remarketing fees of .125% on the outstanding bonds' principal. Any
remarketing of the bonds was funded through five letter-of-credit
agreements with banks which were terminated upon the redemption of the
Series 1984 bonds in August 1995. Aggregate maximum borrowings under the
letter-of-credit agreements were $86,700,000. Commitment fees of .625% per
annum were charged to Mobile Energy based on the unused portion of these
agreements.
At December 31, 1995, the annual scheduled maturities of long-term debt
during the next five years were as follows (in thousands):
1996 $5,895
1997 7,350
1998 7,885
1999 8,340
2000 8,840
6. INCOME TAXES
Details of the income tax provision for the years ended December 31, 1995
and 1994 are set forth below (in thousands):
1995 1994
----------- ---------
Current benefit:
Federal $(10,038) $2,143)
State 0 0
------- ------
(10,038) (2,143)
Deferred provision:
Federal 16,820 2,903
State 1,276 71
------- ------
18,096 2,974
------- ------
Total income tax provision $ 8,058 $ 831
======= ======
The effective income tax rate of 38.25% differs from the statutory federal
tax rate due to the impact of state taxes, net of the related federal
benefit.
The tax effects of temporary differences between the amounts of assets and
liabilities in the financial statements and their respective tax bases,
which give rise to deferred tax assets and liabilities, are as follows (in
thousands):
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
1995 1994
----------------------------- ---------------------------
Deferred Deferred Deferred Deferred
Tax Tax Tax Tax
Assets Liabilities Assets Liabilities
------ ----------- ------ -----------
Accelerated depreciation $ 0 $12,961 $ 0 $2,974
Investment basis differences 0 8,262 0 0
Other 436 1,307 0 0
--- ------- ---- -------
Total 436 22,530 0 2,974
Less current portion 0 0 0 0
---- ------- ---- ------
Total noncurrent $436 $22,530 $ 0 $2,974
</TABLE>
II-36
<PAGE>
Holdings and the other corporate subsidiaries of Southern file a
consolidated federal tax return. Under a joint consolidated income tax
agreement, each company's current and deferred taxes due are computed on a
stand-alone basis. Payments are made between the subsidiaries of Southern
when tax benefits generated by one subsidiary are utilized by another
subsidiary. Under this agreement, Holdings received tax refunds of
approximately $13,005,000 and $2,578,000 during the year ended December
31, 1995 and during the period from inception (December 16, 1994) to
December 31, 1994, respectively.
7. DERIVATIVE FINANCIAL INSTRUMENTS
In anticipation of potential interest rate risks associated with the
Acquisition, SEI purchased the Swap Options (Note 1) during October 1994.
The Swap Options were subsequently transferred to Mobile Energy. On
December 19, 1994, the Swap Options were sold and Mobile Energy
concurrently entered into the Swaps with a bank. The purpose of the Swaps
was to reduce the potential impact of interest rate fluctuations between
December 19, 1994 and the date the rates on Mobile Energy's outstanding
industrial revenue bonds and the offering of first mortgage bonds were
fixed (Note 5). As of December 31, 1994, the notional amounts, fair market
values, and maturity dates of the Swaps were as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Notional Fair Market Maturity
Amount Value Date
--------------- ------------ --------------
Swap 1--industrial revenue bonds $ 85,000,000 $ 150,632 January 1, 2019
Swap 2--first mortgage bonds 224,000,000 (619,397) November 1, 2016
------------ ---------
$309,000,000 $(468,765)
============ =========
</TABLE>
As of December 31, 1995 and 1994, the Swap Options premium of $1,822,000
is included in deferred loan costs. The fair value of the Swaps was
estimated using pricing models, which determined the present value of the
difference between the contracted swap rates and market interest rates
over the remaining life of the Swaps and represent the amounts the bank
would receive or pay to terminate the Swaps at the reporting date.
Mobile Energy terminated the Swaps on August 15, 1995, incurring a loss on
termination of approximately $32,300,000. Such termination costs are
accounted for as a discount on the related debt (Note 5)and are being
amortized to interest expense using the effective interest rate method
over the period of the related debt. Such amortization totaled
approximately $446,000 for the year ended December 31, 1995.
8. SIGNIFICANT CUSTOMERS, SUPPLIERS, AND CONCENTRATION OF CREDIT RISK
Mobile Energy derived approximately 80% and 82% of its revenues during the
year ended December 31, 1995 and during the period from inception
(December 16, 1994) to December 31, 1994, respectively, from
Scott/Kimberly-Clark. The remainder of Mobile Energy's revenues were
derived from S.D. Warren. Receivables outstanding from sales to
Scott/Kimberly-Clark and S.D. Warren were approximately $10,531,000 and
$3,263,000, respectively, at December 31, 1995 and were approximately
$3,120,000 and $676,000, respectively, at December 31, 1994. In addition,
as indicated in Note 1, the majority of the Energy Complex's fuel needs
are met by the Mills. These concentrations expose Mobile Energy's
operations to the risk of severe impact in the near term should any of the
Mills cease operations.
Substantially all of SEI's employees at the Energy Complex (Note 4) are
subject to collective bargaining agreements, none of which expire during
1996.
II-37
<PAGE>
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANTS
Omitted pursuant to General Instruction J.
Item 11. EXECUTIVE COMPENSATION
Omitted pursuant to General Instruction J.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Omitted pursuant to General Instruction J.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Omitted pursuant to General Instruction J.
III-1
<PAGE>
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) The following documents are filed as a part of this report on this Form
10-K:
(1) Financial Statements:
Reports of Independent Public Accountants on the financial
statements for Holdings and Mobile Energy are listed under Item
8 herein.
The financial statements filed as a part of this report for
Holdings and Mobile Energy are listed under Item 8 herein.
(2) Financial Statement Schedules:
None
(3) Exhibits:
Exhibits for Holdings and Mobile Energy are listed in the
Exhibit Index beginning on page IV-3.
(b) Reports on Form 8-K:
Neither of the registrants has filed any reports on Form 8-K during the
last quarter of the fiscal year ended December 31, 1995.
IV-1
<PAGE>
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized. The signature of the
undersigned company shall be deemed to relate only to matters having reference
to such company and any subsidiaries thereof.
MOBILE ENERGY SERVICES COMPANY, L.L.C.
By: /s/ Thomas G. Boren
Thomas G. Boren, President and Chief
Executive Officer
Date: March 29, 1996
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated. The signature of each of the
undersigned shall be deemed to relate only to matters having reference to the
above-named company and any subsidiaries thereof.
/s/ Thomas G. Boren
Thomas G. Boren
President and Chief Executive Officer
(Principal Executive Officer)
/s/ Raymond D. Hill
Raymond D. Hill
Vice President and Chief Financial Officer
(Principal Financial Officer)
Members:
Mobile Energy Services Holdings, Inc.
/s/ Thomas G. Boren
By: Thomas G. Boren
President and Chief Executive Officer
Southern Electric International, Inc.
/s/Thomas G. Boren
By: Thomas G. Boren
President and Chief Executive Officer
Date: March 29, 1996
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized. The signature of the
undersigned company shall be deemed to relate only to matters having reference
to such company and any subsidiaries thereof.
MOBILE ENERGY SERVICES HOLDINGS, INC.
By: /s/ Thomas G. Boren
Thomas G. Boren, President and Chief Executive Officer
Date: March 29, 1996
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated. The signature of each of the
undersigned shall be deemed to relate only to matters having reference to the
above-named company and any subsidiaries thereof.
/s/ Thomas G. Boren
Thomas G. Boren
President and Chief Executive Officer and Director
(Principal Executive Officer)
/s/ Raymond D. Hill
Raymond D. Hill
Vice President and Chief Financial Officer and Director
(Principal Financial Officer)
Directors:
/s/ K. E. Adams
K .E. Adams
/s/ J. B. Jones
J. B. Jones
/s/ S. M. Fuller
S. M. Fuller
J. B. Madden
Date: March 29, 1996
IV-2
<PAGE>
EXHIBIT 21. SUBSIDIARIES OF THE REGISTRANTS
Mobile Energy Services L.L.C., organized under the laws of Alabama, is the only
subsidiary of Mobile Energy Services Holdings, Inc. Mobile Energy Services
L.L.C. has no subsidiaries.
Exhibit Index
The following exhibits indicated by an asterisk preceding the exhibit
number are filed herewith. The balance of the exhibits have heretofore been
filed with the SEC, respectively, as the exhibits and in the file numbers
indicated and are incorporated herein by reference.
(3) Articles of Incorporation and By-Laws
3.1 - Articles of Organization of Mobile Energy. (Designated in
Registration No. 33-92776 as Exhibit 3.1.)
3.2 - Operating Agreement of Mobile Energy. (Designated in Registration
No. 33-92776 as Exhibit 3.2.)
3.3 - Amended and Restated Articles of Incorporation of Holdings.
(Designated in Registration No. 33-92776 as Exhibit 3.3.1)
3.4 - By-Laws of Holdings. (Designated in Registration No.33-92776 as
Exhibit 3.4.)
(4) Instruments Describing Rights of Security Holders, Including Indentures
*4.1 - Trust Indenture dated as of August 1, 1995 among First Union
National Bank of Georgia, Mobile Energy and Holdings.
*4.2 - First Supplemental Indenture dated as of August 1, 1995 among
First Union National Bank of Georgia, Mobile Energy and Holdings.
*4.3 - Intercreditor and Collateral Agency Agreement dated
as of August 1, 1995 among Bankers Trust (Delaware),
First Union National Bank of Georgia, Banque Paribas,
The Industrial Development Board of the City of Mobile,
Alabama, Mobile Energy and Holdings.
*4.4 - Amended and Restated Trust Indenture dated as of
August 1, 1995 between First Union National Bank of
Georgia and The Industrial Development Board of the City
of Mobile, Alabama.
*4.5 - Amended and Restated Lease and Agreement dated as of
August 1, 1995 among the Industrial Development Board of
the City of Mobile, Alabama, Mobile Energy and Holdings.
*4.6 - Revolving Credit Agreement dated as of August 1, 1995 among Mobile
Energy, Holdings, and Banque Paribas.
IV-3
<PAGE>
*4.7 - Leasehold Mortgage, Assignment of Leases, Rents,
Issues and Profits and Security Agreement and Fixture
Filing dated as of August 1, 1995 by Mobile Energy and
the Industrial Development Board of the City of Mobile,
Alabama in favor of Bankers Trust (Delaware).
*4.8 - First Amendment to Leasehold Mortgage, Assignment of
Leases, Rents, Issues and Profits and Security Agreement
and Fixture Filing dated as of December 9, 1995 among
Mobile Energy, the Industrial Development Board of the
City of Mobile, Alabama and Bankers Trust (Delaware).
*4.9 - Assignment and Security Agreement dated as of August
1, 1995 among Mobile Energy, the Industrial Development
Board of the City of Mobile, Alabama and Bankers Trust
(Delaware).
(10) Material Contracts
10.1 - Pulp Mill Energy Services Agreement dated as of December 12, 1994
and first amendment thereto, between Scott Paper and Mobile Energy
(as assignee of Holdings). (Designated in Registration No.
33-92776 as Exhibits 10.1 and 10.2.)
10.2 - Paper Mill Energy Services Agreement dated as of December 12, 1994
and first amendment thereto, between S.D. Warren and Mobile Energy
(as assignee of Holdings). (Designated in Registration No.
33-92776 as Exhibits 10.3 and 10.4.)
10.3 - Tissue Mill Energy Services Agreement dated as of December 12,
1994 and first amendment thereto, Scott Paper and Mobile Energy
(as assignee of Holdings). (Designated in Registration No.
33-92776 as Exhibit 10.5 and 10.6.)
10.4 - Amended and Restated Master Operating Agreement dated as of
July 13, 1994 among Scott Paper, S.D. Warren and Mobile Energy
(as assignee of Holdings). (Designated in Registration No.
33-92776 as Exhibit 10.7.)
10.5 - Asset Purchase Agreement between Scott Paper and Mobile Energy
(as assignee of Holdings). (Designated in Registration No.
33-92776 as Exhibit 10.8.)
10.6 - Common Services Agreement dated as of December 12, 1994 and first
amendment thereto, among Scott Paper, S.D. Warren and Mobile
Energy (as assignee of Holdings). (Designated in Registration
No. 33-92776 as Exhibits 10.9 and 10.10.)
10.7 - Transition Agreement dated as of December 12, 1994 and first and
second amendment thereto, between Scott Paper and Mobile Energy
(as assignee of Holdings). (Designated in Registration No.
33-92776 as Exhibits 10.11, 10.11.1 and 10.11.2.)
10.8 - Lease Agreement dated as of December 12, 1994 and first amendment
thereto, between Scott Paper and Mobile Energy (as assignee of
Holdings). (Designated in Registration No. 33-92776 as Exhibits
10.12 and 10.13.)
IV-4
<PAGE>
10.9 - Supplementary Lease Agreement dated as of December 12, 1994 and
first amendment thereto, between Scott Paper and Mobile Energy
(as assignee of Holdings). (Designated in Registration No.
33-92776 as Exhibit 10.14 and 10.15)
*10.10 - Second Amendment to Supplementary Lease Agreement dated as of
August 1, 1995 between Scott Paper and Mobile Energy.
*10.11 - Third Amendment to Supplementary Lease Agreement dated as of
December 8, 1995 between Scott Paper and Mobile Energy.
10.12 - Easement Deeds dated as of December 12, 1994 between Scott Paper
and Mobile Energy (as assignee of Holdings). (Designated in
Registration No. 33-92776 as Exhibits 10.16 and 10.18.)
10.13 - Easement Deeds dated as of December 12, 1994 between Mobile
Energy (as assignee of Holdings) and Scott Paper. (Designated in
Registration No. 33-92776 as Exhibits 10.17 and 10.19.)
10.14 - Easement Deed dated as of December 12, 1994 between Mobile Energy
(as assignee of Holdings) and S.D. Warren. (Designated in
Registration No. 33-92776 as Exhibit 10.20.)
10.15 - Easement Deed dated as of December 12, 1994 between S.D. Warren
and Mobile Energy (as assignee of Holdings). (Designated in
Registration No. 33-92776 as Exhibit 10.21.)
*10.16 - Easement Deed dated as of December 8, 1995 between Scott Paper
and Mobile Energy.
10.17 - Employee Transition Agreement dated as of December 12, 1994 and
first amendment thereto, among Scott Paper, Mobile Energy (as
assignee of Holdings) and SEI. (Designated in Registration No.
33-92776 as Exhibits 10.22 and 10.22.1.)
10.18 - Water Procurement and Effluent Service Agreement dated as of
December 12, 1994 and first amendment thereto, among Scott Paper,
S.D. Warren and Mobile Energy (as assignee of Holdings).
(Designated in Registration No. 33-92776 as Exhibits 10.23 and
10.24.)
10.19 - Boiler Ash Disposal Agreement dated as of December 12, 1994 and
first amendment thereto between Scott Paper and Mobile Energy
(as assignee of Holdings). (Designated in Registration No.
33-92776 as Exhibits 10.25 and 10.26.)
10.20 - Paper Mill Environmental Indemnity Agreement dated as of December
12, 1994 and first amendment thereto, between S.D. Warren and
Mobile Energy (as assignee of Holdings). (Designated in
Registration No. 33-92776 as Exhibits 10.27 and 10.28.)
10.21 - Pulp Mill Environmental Indemnity Agreement dated as of December
12, 1994 and first amendment thereto, between Scott Paper and
Mobile Energy (as assignee of Holdings). (Designated in
Registration No. 33-92776 as Exhibits 10.29 and 10.30.)
IV-5
<PAGE>
10.22 - Tissue Mill Environmental Indemnity Agreement dated as of December
12, 1994 and first amendment thereto, between Scott Paper and
Mobile Energy (as assignee of Holdings). (Designated in
Registration No. 33-92776 as Exhibits 10.31 and 10.32.)
10.23 - Scott Environmental Indemnity Agreement dated as of December 12,
1994 and first amendment thereto, between Scott Paper and Mobile
Energy (as assignee of Holdings). (Designated in Registration No.
33-92776 as Exhibits 10.33 and 10.34.)
10.24 - Facility Operations and Maintenance Agreement dated as of December
12, 1994 between SEI and Mobile Energy (as assignee of Holdings).
(Designated in Registration No. 33-92776 as Exhibit 10.35.)
10.25 - Independent Engineer Agreement between Stone & Webster and Mobile
Energy. (Designated in Registration No. 33-92776 as Exhibit 10.38.)
10.26 - 1984 Tax-Exempt Lease and Agreement and amendments thereto.
(Designated in Registration No. 33-92776 as Exhibit 10.39.)
10.27 - 1984 Tax-Exempt Lease Assignment and Assumption Agreement.
(Designated in Registration No. 33-92776 as Exhibit 10.40.)
10.28 - 1973 Installment Sale Agreement and amendments thereto.
(Designated in Registration No. 33-92776 as Exhibit 10.41.)
10.29 - 1973 Tax-Exempt Lease and Assignment Agreement. (Designated in
Registration No. 33-92776 as Exhibit 10.42.)
10.30 - 1984-1985 Taxable Sublease Agreement and amendments thereto.
(Designated in Registration No. 33-92776 as Exhibit 10.43.)
10.31 - 1984-1985 Taxable Sublease and Assignment Agreement. (Designated
in Registration No. 33-92776 as Exhibit 10.44.)
10.32 - 1976 Installment Sale Agreement and amendments thereto.
(Designated in Registration No. 33-92776 as Exhibit 10.45.)
10.33 - 1976 Tax-Exempt Lease and Assignment Agreement. (Designated in
Registration No. 33-92776 as Exhibit 10.46.)
10.34 - 1994 Recovery Boiler Bonds Lease Agreement. (Designated in
Registration No. 33-92776 as Exhibit 10.47.)
10.35 - 1994 Recovery Boiler Bonds Lease Assignment and Assumption
Agreement. (Designated in Registration No. 33-92776 as Exhibit
10.48.)
10.36 - Estoppel and Nondisturbance Agreement, dated as of December 12,
1994, delivered by Three Rivers Timber Company. (Designated in
Registration No. 33-92776 as Exhibit 10.49.)
IV-6
<PAGE>
10.37 - Omnibus Deed, Bill of Sale, General Assignment and Conveyance
Agreement between Holdings and Mobile Energy. (Designated in
Registration No. 33-92776 as Exhibit 10.50.)
10.38 - Recognition, Cooperation and Consent Agreement among The
Industrial Development Board of the City of Mobile, Alabama,
Mobile Energy, Bankers Trust (Delaware), AmSouth Bank of Alabama
and Three Rivers Timber Company. (Designated in Registration No.
33-92776 as Exhibit 10.51.)
10.39 - Recognition, Cooperation Consent Agreement among The Industrial
Development Board of the City of Mobile, Alabama, Mobile Energy,
Bankers Trust (Delaware) and First Union National Bank of Georgia.
(Designated in Registration No. 33-92776 as Exhibit 10.52.)
10.40 - Mill Owner Maintenance Reserve Account Agreement among Scott
Paper, S.D. Warren , Southern and Mobile Energy. (Designated in
Registration No. 33-92776 as Exhibit 10.53.)
10.41 - SCS Agreement dated as of July 14, 1995 between SCS and Mobile
Energy. (Designated in Registration No. 33-92776 as Exhibit 10.54.)
*10.42 - Consent and Agreement dated as of August 1, 1995
among Scott Paper, Mobile Energy and Bankers Trust
(Delaware) (re: the Amended and Restated Master
Operating Agreement dated as of July 13, 1995 and
certain other agreements).
*10.43 - Consent and Agreement dated as of August 1, 1995
among Scott Paper, Mobile Energy and Bankers Trust
(Delaware) (re: the Asset Purchase Agreement dated as of
December 12, 1994 and certain other agreements).
*10.44 - Consent and Agreement dated as of August 1, 1995 among S.D. Warren,
Mobile Energy and Bankers Trust (Delaware).
*10.45 - Consent and Agreement dated as of August 1, 1995 among the Pulp
Mill Owner, Mobile Energy and Bankers Trust (Delaware).
*10.46 - Consent and Agreement dated as of August 1, 1995 among the Tissue
Mill Owner, Mobile Energy and Bankers Trust (Delaware).
*10.47 - Consent and Agreement dated as of August 1, 1995 among E.J. Hodder
& Associates, Inc., Mobile Energy and Bankers Trust (Delaware).
*10.48 - Consent and Agreement dated as of August 1, 1995 among Ahlstrom
Recovery, Inc., Mobile Energy and Bankers Trust (Delaware).
*10.49 - Consent to Assignment dated as of August 1, 1995 among Southern
Electric, Mobile Energy and Bankers Trust (Delaware).
*10.50 - Consent to Assignment dated as of August 1, 1995 among Southern
Company Services, Inc., Mobile Energy and Bankers Trust (Delaware).
IV-7
<PAGE>
*10.51 - Estoppel, Consent and Recognition Agreement among Scott Paper,
Mobile Energy and Bankers Trust (Delaware) (re: Lease Agreement
dated as of December 12, 1994).
*10.52 - Estoppel, Consent and Recognition Agreement, among Scott Paper,
Mobile Energy and Bankers Trust (Delaware) (re: Supplementary
Lease Agreement dated as of December 12, 1994).
*10.53 - Underwriting Agreement dated as of August 15, 1995 between Mobile
Energy and Goldman, Sachs & Co., Bear, Stearns & Co., Inc. and
Lehman Brothers Inc.
(21) Subsidiaries of Registrant - Contained herein at page IV-3.
*21. - Subsidiaries of Registrant.
(27) Financial Data Schedules
*27. - Financial Data Schedules.
IV-8
Exhibit 4.1
- ------------------------------------------------------------------------------
TRUST INDENTURE
dated as of August 1, 1995
among
MOBILE ENERGY SERVICES COMPANY, L.L.C.,
MOBILE ENERGY SERVICES HOLDINGS, INC.
and
FIRST UNION NATIONAL BANK OF GEORGIA, as Trustee
Providing for the Issuance from Time to Time of
Securities in One or More Series
- -------------------------------------------------------------------------------
<PAGE>
CROSS-REFERENCE TABLE*/
TIA Section Indenture Section
310(a)(1) 9.9
(a)(2) 9.9
(a)(3) N.A.
(a)(4) N.A.
(a)(5) 9.8
(b) 9.8
(c) N.A.
311(a) 9.13
(b) 9.13
(c) N.A.
312(a) 10.1;10.2
(b) 10.2
(c) 10.2
313(a) 10.3
(b)(1) 10.3
(b)(2) 10.3
(c) 10.3
(d) 10.3
314(a) 5.3; 10.4
(b) N.A.
(c)(1) 1.2
(c)(2) 1.2
(c)(3) N.A.
(d) 1.7
(e) 1.2
(f) N.A.
315(a) 9.1(a)
(b) 9.2
(c) 9.1(b)
(d) 9.1(c)
(e) 8.9
316(a)(1)(A) 8.6
(a)(1)(B) 8.7
(a)(2) N.A.
(a) 1.1
(b) 8.10
316(c) N.A.
317(a)(1) 8.4
(a)(2) 8.4
(b) 9.14
318(a) 1.7
N.A. means not applicable.
- -------------------
*/ Note: This Cross-Reference Table shall not, for any purpose, be deemed
to be a part of the Indenture.
<PAGE>
TRUST INDENTURE, dated as of August 1, 1995, among MOBILE ENERGY
SERVICES COMPANY, L.L.C., an Alabama limited liability company (the "Company"),
its principal office and mailing address being at 900 Ashwood Parkway, Suite
300, Atlanta, Georgia 30338, MOBILE ENERGY SERVICES HOLDINGS, INC., an Alabama
corporation ("Mobile Energy"), its principal office and mailing address being at
900 Ashwood Parkway, Suite 450, Atlanta, Georgia 30338, and FIRST UNION NATIONAL
BANK OF GEORGIA, as trustee (the "Trustee"), its corporate trust office and
mailing address being at 999 Peachtree Street, N.E., Atlanta, Georgia 30309.
W I T N E S S E T H :
WHEREAS, the Company has duly authorized the creation of an
issue of bonds, debentures, promissory notes or other evidences of
indebtedness to be issued in one (1) or more series (the "Securities")
up to such principal amount or amounts as may from time to time be
authorized in accordance with the terms of this Indenture; the Company
has duly authorized the execution, delivery and performance by it of
this Indenture to secure the Securities and to provide for the
authentication and delivery thereof by the Trustee;
WHEREAS, the Company wishes to secure the payment of the
principal of and premium, if any, and interest on all the Securities
authenticated and delivered hereunder by the Trustee and issued
hereunder by the Company and the covenants therein and herein contained
and to mortgage, pledge and assign substantially all of its assets,
including certain of the proceeds of the sale of the Securities;
WHEREAS, Mobile Energy will benefit from the sale of the
Securities of the Company and the use of the net proceeds therefrom as
contemplated herein and has duly authorized the execution, delivery and
performance by it of this Indenture;
WHEREAS, Mobile Energy wishes to provide its guaranty to
secure the Guaranteed Obligations (as defined below), including the
payment of the principal of and premium, if any, and interest on all
the Securities authenticated and delivered hereunder and issued by the
Company and the covenants therein and herein contained; and
WHEREAS, all acts necessary to make this Indenture a valid
instrument for the security of the Securities, in accordance with its
and their terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH, that, for and in
consideration of the premises and of the purchase of the Securities by the
Holders (as defined below) thereof, and in order to secure the payment of the
principal of and premium, if any, and interest on all Securities from time to
time outstanding and the performance of the covenants therein and herein
contained and to declare the terms and conditions on which such Securities are
secured, the Company hereby grants, bargains, mortgages, sells, releases,
conveys, assigns, transfers, pledges, sets over and confirms to the Trustee, and
grants to the Trustee a security interest in, (a) all right, title and interest
of the Company in and to the Indenture Accounts (as defined below), including
any and all monies contained therein or hereafter delivered to the Trustee for
deposit therein and, in each case, all monies received and the right to receive
monies thereunder, and (b) all right, title and interest of the Company in and
to all monies and securities from time to time held under the terms of this
Indenture, and in any and all other property of every type and nature from time
to time hereafter by delivery or by writing of any kind given, granted, pledged
and assigned as and for additional security hereunder, by the Company or by
anyone on its behalf or with its written consent, to the Trustee, which is
hereby authorized to receive any and all such property at any and all times and
to hold and apply the same subject to the terms hereof;
<PAGE>
TO HAVE AND TO HOLD all the same with all privileges and appurtenances
hereby given, granted, pledged and assigned, or agreed or intended so to be,
unto the Trustee and its successors in said trust and to it and its assigns
forever;
IN TRUST, NEVERTHELESS, for the equal and proportionate benefit and
security of the Holders from time to time of all Outstanding (as defined below)
Securities without any priority of any such Security over any other such
Security;
PROVIDED, HOWEVER, that the right, title and interest of the Company in
and to any Debt Service Reserve Account (as defined below), including any and
all monies contained therein or hereafter delivered to the Trustee for deposit
therein and, in each case, all monies received and the right to receive monies
thereunder, shall be held in trust solely for the equal and proportionate
benefit and security of the Holders from time to time of the Outstanding
Securities for the benefit of whom such Debt Service Reserve Account was
established; and
PROVIDED FURTHER, HOWEVER, that if, after the right, title and interest
of the Trustee in and to the Indenture Accounts shall have ceased, terminated
and become void in accordance with Article XII, and the principal of and
premium, if any, and interest on the Securities shall have been paid to the
Holders thereof, then and in that case this Indenture and the estate and rights
hereby granted shall cease, terminate and be void, and the Trustee shall cancel
and discharge this Indenture and execute and deliver to the Company such
instruments as the Company shall require to evidence the discharge hereof;
otherwise this Indenture shall be and remain in full force and effect; and
THE PARTIES HEREBY COVENANT AND AGREE AS FOLLOWS:
ARTICLE I.
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 1.1. Definitions; Construction. (a) For all purposes of this
Indenture, except as otherwise expressly provided in this Indenture or unless
the context otherwise requires, all terms used herein shall have the meanings
set forth in Appendix A to the Intercreditor and Collateral Agency Agreement
dated as of August 1, 1995 among the Trustee, First Union National Bank of
Georgia, as the Tax-Exempt Indenture Trustee referred to therein, Banque
Paribas, as the Working Capital Facility Provider referred to therein, The
Industrial Development Board of the City of Mobile, Alabama, the Company, Mobile
Energy and Bankers Trust (Delaware), as the Collateral Agent referred to
therein.
SECTION 1.2. Compliance Certificates and Opinions. Except as otherwise
expressly provided by this Indenture, upon any application or request by either
of the Mobile Energy Parties to the Trustee to take any action under any
provision of this Indenture, the Trustee shall be entitled to receive, upon its
request, an Officer's Certificate of such Mobile Energy Party stating that all
conditions precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with and an Opinion of Counsel stating that
in the opinion of such counsel all such conditions precedent, if any, have been
complied with, except that in the case of any such application or request as to
which the furnishing of documents is specifically required by any provision of
this Indenture relating to such particular application or request, no additional
certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
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<PAGE>
(a) a statement that each individual signing such
certificate or opinion has read such covenant or condition and the
definitions herein relating thereto;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(c) a statement that, in the opinion of each such individual,
such individual has made such examination or investigation as is
necessary to enable him to express an informed opinion as to whether or
not such covenant or condition has been complied with;
(d) a statement as to whether or not, in the opinion of
each such individual, such condition or covenant has been complied
with; and
(e) in the case of an Officer's Certificate, a statement
as to whether or not any Event of Default under this Indenture has
occurred and Is continuing.
SECTION 1.3. Form of Documents Delivered to Trustee. In any case where
several matters are required to be certified by, or covered by an opinion of,
any specified Person, it is not necessary that all such matters be certified by,
or covered by the opinion of, only one (1) such Person, or that they be so
certified or covered by only one (1) document, but one (1) such Person may
certify or give an opinion with respect to some matters and one (1) or more
other such Persons as to other matters, and any such Person may certify or give
an opinion as to such matters in one (1) or several documents.
Any certificate or opinion of an officer of the Company or of Mobile
Energy may be based, insofar as it relates to legal matters, upon an Opinion of
Counsel or a certificate of counsel unless such officer knows or has reason to
believe that such Opinion of Counsel or certificate with respect to the matters
upon which such officer's certificate or opinion is based are erroneous. Any
such Opinion of Counsel or certificate may be based, insofar as it relates to
factual matters, upon a certificate or opinion of, or representations by, an
Authorized Officer of either of the Mobile Energy Parties stating that the
information with respect to such factual matters is in the possession of such
Mobile Energy Party, unless such counsel knows that the certificate or opinion
or representations with respect to such matters are erroneous.
Any Opinion of Counsel stated to be based on the opinion of other
counsel shall be accompanied by a copy of such other opinion.
Where any Person is required to make, give or execute two (2) or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one (1) instrument.
SECTION 1.4. Acts of Holders. (a) Any request, demand, authorization,
direction, notice, consent, waiver or other action provided by this Indenture to
be given or taken by Holders may be embodied in and evidenced by one (1) or more
instruments of substantially similar tenor signed by such Holders in person or
by an agent duly appointed in writing or, alternatively, may be embodied in and
evidenced by the record of Holders of Securities voting in favor thereof, either
in person or by proxies duly appointed in writing, at any meeting of Holders of
Securities duly called and held in accordance with the provisions of Article
XIII, or a combination of such instruments and any such record. Except as herein
otherwise expressly provided, such action shall become effective when such
instrument or instruments or record, or both are delivered to the Trustee and,
when it is specifically required herein, to either of the Mobile Energy Parties.
Such instrument or instruments and any such record (and the action embodied
3
<PAGE>
therein and evidenced thereby) are herein sometimes referred to as the "Act" of
the Holders signing such instrument or instruments and so voting at any such
meeting. Proof of execution of any such instrument or of a writing appointing
any such agent shall be sufficient for any purpose of this Indenture and
(subject to Section 9.1) conclusive in favor of the Trustee and the Mobile
Energy Parties, if made in the manner provided in this Section 1.4. The record
of any meeting of Holders of Securities shall be proved in the manner provided
in Section 13.6.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the certificate of any notary public or
other officer of any jurisdiction authorized to take acknowledgments of deeds or
administer oaths that the Person executing such instrument acknowledged to such
officer the execution thereof, or by an affidavit of a witness to such execution
sworn to before any such notary or other such officer, and where such execution
is by an officer of a corporation or association or a member of a partnership or
limited liability company, on behalf of such corporation, association,
partnership or limited liability company, such certificate or affidavit shall
also constitute sufficient proof of such Person's authority. The fact and date
of the execution of any such instrument or writing, or the authority of the
Person executing the same, may also be proved in any other manner that the
Trustee deems sufficient.
(c) The principal amount and serial numbers of Securities held by any
Person, and the date or dates of holding the same, shall be proven by the
Security Register and the Trustee shall not be affected by notice to the
contrary.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Security shall bind every future
Holder of the same Security, the Holder of every Security issued upon the
transfer thereof or in exchange therefor or in lieu thereof, whether or not
notation of such action is made upon such Security.
(e) Until such time as written instruments shall have been delivered
with respect to the requisite percentage of principal amount of Securities for
the action contemplated by such instruments, any such instrument executed and
delivered by or on behalf of a Holder of Securities may be revoked with respect
to any or all of such Securities by written notice by such Holder or any
subsequent Holder, proven in the manner in which such instrument was proven.
(f) Securities of any series authenticated and delivered after any Act
of Holders may, and shall if required by the Trustee, bear a notation in form
approved by the Trustee as to any action taken by such Act of Holders. If the
Company shall so determine, new Securities of any series so modified as to
conform, in the opinion of the Trustee and the Company, to such action may be
prepared and executed by the Company and authenticated and delivered by the
Trustee in exchange for Outstanding Securities of such series.
(g) The Company may, in the circumstances permitted by the Trust
Indenture Act, fix any day as the record date for the purpose of determining the
Holders entitled to give or take any request, demand, authorization, direction,
notice, consent, waiver or other action, or to vote on any action, authorized or
permitted to be given or taken by Holders. If not set by the Company prior to
the first solicitation of a Holder made by any Person in respect of any such
action, or, in the case of any such vote, prior to such vote, the record date
for any such action or vote shall be the thirtieth (30th) day (or, if later, the
date of the most recent list of Holders required to be provided pursuant to
Section 10.1) prior to such first solicitation or vote, as the case may be. With
regard to any record date, only the Holders on such date (or their duly
designated proxies) shall be entitled to give or take, or vote on, the relevant
action.
4
<PAGE>
SECTION 1.5. Notices, etc. to Trustee and Mobile Energy Parties. Any
request, demand, authorization, direction, notice, consent, waiver or Act of
Holders or other document provided or permitted by this Indenture to be made
upon, given or furnished to, or filed with,
(a) the Trustee by any Holder, by either of the Mobile Energy
Parties or by an Authorized Agent shall be sufficient for every purpose
hereunder if made, given, furnished or filed in writing to the Trustee
at its Corporate Trust Office, or
(b) the Company by the Trustee, by any Holder, by Mobile
Energy or by an Authorized Agent shall be sufficient for every purpose
hereunder if in writing and mailed, first-class postage prepaid, to the
Company addressed to it at the address of its principal office
specified in the first paragraph of this Indenture, together with a
copy to it at P.O. Box 2747, 200 Bay Bridge Road, Mobile, Alabama
36652, or at any other address previously furnished in writing to the
Trustee, each Holder and Mobile Energy by the Company for such purpose,
or
(c) Mobile Energy by the Trustee, by any Holder, by the
Company or by an Authorized Agent shall be sufficient for every purpose
hereunder if in writing and mailed, first-class postage prepaid, to
Mobile Energy addressed to it at the address of its principal office
specified in the first paragraph of this Indenture, or at any other
address previously furnished in writing to the Trustee, each Holder and
the Company by Mobile Energy for such purpose.
SECTION 1.6. Notices to Holders; Waiver. Where this Indenture provides
for notice to Holders of any event, such notice shall be sufficiently given
(unless otherwise herein expressly provided) if in writing and mailed,
first-class postage prepaid, to each Holder, at its address as it appears in the
Security Register, not later than the latest date, and not earlier than the
earliest date, prescribed for the giving of such notice. Where this Indenture
provides for notice in any manner, such notice may be waived in writing by the
Person entitled to receive such notice, either before or after the event, and
such waiver shall be the equivalent of such notice. Waivers of notice by Holders
shall be filed with the Trustee, but such filing shall not be a condition
precedent to the validity of any action taken in reliance upon such waiver. In
any case where notice to Holders is given by mail, neither the failure to mail
such notice, nor any defect in any notice so mailed, to any particular Holder
shall affect the sufficiency of such notice with respect to other Holders, and
any notice that is mailed in the manner herein provided shall be conclusively
presumed to have been duly given.
SECTION 1.7. Conflict with Trust Indenture Act. If any provision hereof
limits, qualifies or conflicts with another provision hereof that is required to
be included in this Indenture by any of the provisions of the Trust Indenture
Act, such required provision shall control.
SECTION 1.8. Effect of Headings and Table of Contents. The Article and
Section headings herein and the Table of Contents are for convenience only and
shall not affect the construction hereof.
SECTION 1.9. Successors and Assigns. All covenants, agreements,
representations and warranties in this Indenture by the Trustee and the Mobile
Energy Parties shall bind and, to the extent permitted hereby, shall inure to
the benefit of and be enforceable by their respective successors and assigns,
whether so expressed or not.
SECTION 1.10. Severability Clause. In case any provision in this
Indenture or in the Securities shall be invalid, illegal or unenforceable, the
5
<PAGE>
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
SECTION 1.11. Benefits of Indenture. Nothing in this Indenture or in
the Securities, expressed or implied, shall give to any Person, other than the
parties hereto and their successors hereunder and the Holders of Securities, any
benefit or any legal or equitable right, remedy or claim under this Indenture.
SECTION 1.12. Governing Law. THIS INDENTURE SHALL, PURSUANT TO SECTION
5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW, BE GOVERNED BY THE LAW OF THE
STATE OF NEW YORK, WITHOUT REFERENCE TO THE CHOICE OF LAW PROVISIONS THEREOF
(OTHER THAN SUCH SECTION 5-1401), EXCEPT THAT SUCH LAW SHALL NOT APPLY WITH
RESPECT TO ANY COLLATERAL WHERE, AND TO THE EXTENT THAT, IT IS NECESSARY TO
APPLY THE LAWS OF ANOTHER JURISDICTION TO PERFECT LIENS IN SUCH COLLATERAL
RELATING TO DEBT ISSUED HEREUNDER.
SECTION 1.13. Legal Holidays. In any case where any Redemption Date or
Prepayment Date or the date of any Stated Maturity of any Security or of any
installment of principal thereof or payment of interest thereon shall not be a
Business Day, then (notwithstanding any other provision of this Indenture or
such Security) payment of interest or principal, or premium, if any, need not be
made on such date, but may be made on the next succeeding Business Day with the
same force and effect as if made on such Redemption Date or Prepayment Date or
the date of such Stated Maturity and, except as provided in the Series
Supplemental Indenture establishing the terms of such Security, if such payment
is timely made, no interest shall accrue for the period from and after such
Redemption Date or Prepayment Date or the date of such Stated Maturity (as the
case may be) to the date of such payment.
SECTION 1.14. Execution in Counterparts. This Indenture may be executed
in any number of counterparts, each of which when so executed shall be deemed to
be an original, but all such counterparts shall together constitute but one (1)
and the same instrument.
SECTION 1.15. Projections. All projections contemplated herein
(including projections prepared in connection with the determination of any
Revenue Sufficiency Certification, Senior Debt Service Coverage Ratio, Senior
Debt Service Requirement or Total Debt Service Coverage Ratio for a period that
includes, or consists entirely of, future periods) shall be prepared by the
Company in good faith based upon assumptions reasonably believed by the Company
to be consistent with the Project Documents and the historical operating results
of the Energy Complex as adjusted by reasonable assumptions as to future
operating results; provided, however, that all projections prepared by the
Company in connection with the determination of Senior Debt Service Coverage
Ratios pursuant to Section 5.19(b) shall assume that (a) the Company shall
receive no revenues under the Tissue Mill Energy Services Agreement upon the
occurrence and during the continuation of an ESA Blockage Event with respect to
the Tissue Mill Owner, the Tissue Mill Energy Services Agreement or the Tissue
Mill and (b) the Company shall receive no revenues under the Paper Mill Energy
Services Agreement upon the occurrence and during the continuation of an ESA
Blockage Event with respect to the Paper Mill Owner, the Paper Mill Energy
Services Agreement or the Paper Mill.
ARTICLE II.
THE SECURITIES
SECTION 2.1. Form of Security to be Established by Series Supplemental
Indenture. The Securities of each series shall be substantially in the form (not
inconsistent with this Indenture, including Section 2.5 hereof) established in
the Series Supplemental Indenture relating to the Securities of such series.
6
<PAGE>
SECTION 2.2. Form of Trustee's Authentication. The Trustee's
certificate of authentication on all Securities shall be in substantially the
following form:
This Security is one of the Securities referred to in
the within-mentioned Indenture.
FIRST UNION NATIONAL BANK
OF GEORGIA, as Trustee
By________________________
Authorized Trust Officer
SECTION 2.3. Amount Unlimited; Issuable in Series; Limitations on
Issuance. The aggregate principal amount of Securities that may be authenticated
and delivered under this Indenture is unlimited. The provisions of this Section
2.3 shall not be deemed in any way to supersede the restrictions contained in
Sections 5.16 and 5.17.
The Securities may be issued in one (1) or more series. There shall be
established in one (1) or more Series Supplemental Indentures, prior to the
issuance of Securities of any series:
(a) the title of the Securities of such series (which shall
distinguish the Securities of such series from all other Securities)
and the form or forms of Securities of such series;
(b) any limit upon the aggregate principal amount of the
Securities of such series that may be authenticated and delivered under
this Indenture (except for Securities authenticated and delivered upon
registration of transfer of, or in exchange for, or in lieu of, other
Securities of such series pursuant to Section 2.7, 2.8, 2.9, 6.6 or
11.7 and except for Securities that, pursuant to Section 2.4, are
deemed never to have been authenticated and delivered hereunder);
(c) the date or dates on which the principal of the Securities
of such series is payable, the amounts of principal payable on such
date or dates and the Regular Record Dates for the determination of
Holders to whom principal is payable; and the date or dates on or as of
which the Securities of such series shall be dated, if other than as
provided in Section 2.13;
(d) the rate or rates at which the Securities of such series
shall bear interest, or the method by which such rate or rates shall be
determined, the date or dates from which such interest shall accrue,
the Regular Record Dates for the determination of Holders to whom
interest is payable and the basis of computation of interest, if other
than as provided in Section 2.13(b);
(e) if other than as provided in Section 9.14(a), the place or
places where (i) the principal of and premium, if any, and interest on
Securities of such series shall be payable, (ii) Securities of such
series may be surrendered for registration of transfer or exchange and
(iii) notices and demands to or upon the Trustee in respect of the
Securities of such series and this Indenture may be served;
(f) the price or prices at, the period or periods within, and
the terms and conditions upon, which Securities of such series may be
redeemed, in whole or in part, at the option of the Company;
(g) the obligation, if any, of the Company to redeem, purchase
or repay Securities of such series pursuant to any sinking fund or
analogous
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<PAGE>
provisions or at the option of a Holder thereof and the price or prices
at which, the period or periods within which and the terms and
conditions upon which Securities of such series shall be redeemed,
purchased or repaid, in whole or in part, pursuant to such obligations;
(h) if other than denominations of $100,000 and integral
multiples of $5,000 in excess thereof, the denominations in which
Securities of such series shall be issuable;
(i) if the Securities are to be issued in whole or in part in
the form of one (1) or more global securities registered in the name of
a clearing corporation or clearing agency registered under the Exchange
Act, as depositary for such Securities, or a nominee of such clearing
corporation or clearing agency, (i) the name of such depositary and any
such nominee, (ii) any limitations on the rights of beneficial holders
thereof to transfer or exchange the same or to obtain the registration
of transfer thereof, (iii) any limitations on the rights of beneficial
holders thereof to obtain certificates therefor in definitive form and
(iv) any and all other matters incidental to such Securities;
(j) any other terms of such series (which terms shall not be
inconsistent with the provisions of this Indenture); and
(k) any trustees, authenticating or paying agents, warrant
agents, transfer agents or registrars with respect to the Securities of
such series.
SECTION 2.4. Authentication and Delivery of Securities. Subject to
Section 2.3, at any time and from time to time after the execution and delivery
of this Indenture, the Company may deliver Securities of any series executed by
the Mobile Energy Parties to the Trustee for authentication, together with a
Company Order for the authentication and delivery of such Securities, and the
Trustee shall thereupon authenticate and make available for delivery such
Securities in accordance with such Company Order, without any further action by
the Company. No Security shall be secured by or entitled to any benefit under
this Indenture or be valid or obligatory for any purpose unless there appears on
such Security a certificate of authentication, in the form provided for herein,
executed by the Trustee by the manual signature of any Authorized Trust Officer,
and such certificate upon any Security shall be conclusive evidence, and the
only evidence, that such Security has been duly authenticated and delivered
hereunder. In authenticating such Securities and accepting the additional
responsibilities under this Indenture in relation to such Securities, the
Trustee shall be entitled to receive, and (subject to Section 9.1) shall be
fully protected in relying upon:
(a) an executed Series Supplemental Indenture with respect to
the Securities of such series;
(b) an Officer's Certificate of the Company certifying (i) as
to resolutions of the Manager or Managers of the Company by or pursuant
to which the terms of the Securities of such series were established,
(ii) that all conditions precedent under this Indenture to the
Trustee's authentication and delivery of such Securities have been
complied with and (iii) as to the incumbency of the persons named in
such Officer's Certificate;
(c) an Officer's Certificate of Mobile Energy to the effect
set forth in clause (b) above;
(d) an Opinion of Counsel to the effect that (i) the form or
forms and the terms of such Securities have been established by a
Series Supplemental Indenture as permitted by Sections 2.1 and 2.3 in
accordance
8
<PAGE>
with the provisions of this Indenture, (ii) the Securities of such
series, when authenticated and made available for delivery by the
Trustee and issued by the Company and guaranteed by Mobile Energy in
the manner and subject to any conditions specified in such Opinion of
Counsel, will constitute legal, valid and binding obligations of each
of the Mobile Energy Parties, enforceable against such Mobile Energy
Party in accordance with their terms, except as such enforceability (A)
may be limited by applicable bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium and other similar laws relating to or
affecting the enforcement of creditors' rights and remedies generally
and (B) is subject to general principles of equity (regardless of
whether considered in a proceeding in equity or at law) and the
discretion of the court before which proceedings may be brought and
(iii) all laws of the State of Alabama and New York and the
requirements of this Indenture, in each case in respect of the
execution and delivery by the Mobile Energy Parties of such Securities,
have been complied with; and
(e) such other documents and evidence with respect to the Mobile
Energy Parties as the Trustee may reasonably request.
Prior to the authentication and delivery of a series of Securities, the
Trustee shall also receive such other funds, accounts, documents, certificates,
instruments or opinions as may be required by the related Series Supplemental
Indenture.
Notwithstanding the foregoing, if any Security shall have been
authenticated and delivered hereunder but never issued and sold by the Company,
and the Company shall deliver such Security to the Trustee for cancellation as
provided in Section 2.12 together with a written statement (which need not
comply with Section 1.2 and need not be accompanied by an Opinion of Counsel)
stating that such Security has never been issued and sold by the Company, for
all purposes of this Indenture such Security shall be deemed never to have been
authenticated and delivered hereunder and shall never have been or be entitled
to the benefits hereof.
SECTION 2.5. Form and Denominations. The Securities of each series
shall be in registered form and may have such letters, numbers or other marks of
identification and such legends or endorsements printed, lithographed, engraved,
typewritten or photocopied thereon, as may be required to comply with any
applicable law and the rules of any securities exchange (if any) upon which the
Securities are to be listed or of any clearing corporation or clearing agency
that is a Holder of such Securities in accordance with Section 2.3(i) or to
conform to any usage in respect thereof, or as may, consistently herewith, be
prescribed by the Manager or Managers of the Company or by the officers
executing such Securities, such determination by said officers to be evidenced
by their signing the Securities.
The definitive Securities shall be printed, lithographed, engraved,
typewritten, photocopied or produced by any combination of these methods or may
be produced in any other manner permitted by the rules of any securities
exchange upon which the Securities of such series are to be listed (if any) or
of any clearing corporation or clearing agency that is a Holder of such
Securities in accordance with Section 2.3(i), all as determined by the officers
executing such Securities, as evidenced by their execution of such Securities.
All Securities of any one (1) series shall be substantially identical
except as to denomination and except as may otherwise be provided herein or in
the Series Supplemental Indenture setting forth the terms of the Securities of
such series.
All Securities in whole or in part in the form of one (1) or more
global securities in accordance with Section 2.3(i) shall comply with the
requirements
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of the clearing corporation or clearing agency with whom the registered form of
such Security will be deposited.
SECTION 2.6. Execution of Securities. The Securities shall be executed
on behalf of the Company by its president or any of its vice presidents and its
secretary or assistant secretary and on behalf of Mobile Energy by its president
or any of its vice presidents and its secretary or assistant secretary. The
signature of any such officers on the Securities may be manual or facsimile.
Securities bearing the manual or facsimile signatures of individuals
who were at the time such signatures were affixed the proper officers of either
of the Mobile Energy Parties shall bind such Mobile Energy Party notwithstanding
that such individuals or any of them have ceased to hold such offices prior to
the authentication and delivery of such Securities or did not hold such offices
at the date of such Securities.
SECTION 2.7. Temporary Securities. Pending the preparation of
definitive Securities of any series, the Mobile Energy Parties may execute, and
upon receipt of a Company Order the Trustee shall authenticate and make
available for delivery, temporary Securities of such series that are printed,
lithographed, typewritten, photocopied or otherwise produced, in any
denomination, substantially of the tenor of the definitive Securities in lieu of
which they are issued and with such appropriate insertions, omissions,
substitutions and other variations as the officers executing such Securities may
determine, as evidenced by their execution of such Securities.
If temporary Securities of any series are issued, the Company will
cause definitive Securities of such series to be prepared without unreasonable
delay. After the preparation of definitive Securities of such series, the
temporary Securities of such series shall be exchangeable for definitive
Securities of such series upon surrender of the temporary Securities of such
series at the Corporate Trust Office or at the Place of Payment, without charge
to the Holder. Upon surrender for cancellation of any one (1) or more temporary
Securities of any series, the Mobile Energy Parties shall execute and the
Trustee shall authenticate and make available for delivery, in exchange
therefor, definitive Securities of such series of authorized denominations and
of like tenor and aggregate principal amount. Until so exchanged such temporary
Securities of any series shall in all respects be entitled to the same benefits
under this Indenture as definitive Securities of such series.
SECTION 2.8. Registration, Transfer and Exchange. The Company shall
cause to be kept a register that, subject to such reasonable regulations as the
Company may prescribe, shall provide for the registration of Securities and for
the registration of transfers and exchanges of Securities. This register and, if
there shall be more than one (1) Security Registrar, the combined registers
maintained by all such Security Registrars, are herein sometimes referred to as
the "Security Register." The Trustee is hereby appointed as the initial
"Security Registrar" for the purpose of registering Securities.
If a Person other than the Trustee is appointed by the Company as
Security Registrar, the Company will give the Trustee prompt notice of the
appointment of the Security Registrar, and the Trustee shall have the right to
inspect the Security Register at all reasonable times and to obtain copies
thereof, and the Trustee shall have the right to rely upon an Officer's
Certificate executed on behalf of the Security Registrar as to the names and
addresses of the Holders of the Securities and the principal amounts and numbers
of such Securities.
At the option of any Holder, Securities of any series may be exchanged
for other Securities of the same series to be registered in the name of such
Holder, of authorized denominations and of like tenor, maturity and aggregate
principal amount, upon surrender of the Securities to be exchanged at any office
or agency maintained for such purpose pursuant to Section 9.14(a). Whenever any
Securities
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are so surrendered for exchange, the Mobile Energy Parties shall execute, and
the Trustee shall authenticate and make available for delivery, the Securities
that the Holder making the exchange is entitled to receive.
All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of each of the Mobile Energy Parties,
evidencing the same debt, and entitled to the same security and benefits under
this Indenture, as the Securities surrendered upon such registration of transfer
or exchange.
Every Security presented or surrendered for registration of transfer or
exchange shall be duly endorsed, or be accompanied by a written instrument of
transfer in form satisfactory to the Company and the Security Registrar or any
transfer agent, duly executed by the Holder thereof or such Holder's attorney
duly authorized in writing.
No service charge shall be required of any Holders participating in any
transfer or exchange of Securities in respect of such transfer or exchange, but
the Security Registrar may require payment of a sum sufficient to cover any tax
or other governmental charge that may be imposed in connection with any transfer
or exchange of Securities, other than exchanges pursuant to Section 2.7, 6.6 or
11.7 not involving any transfer.
The Security Registrar shall not be required (a) to issue, register the
transfer of or exchange any Security of any series during a period (i) beginning
at the opening of business fifteen (15) days before the day of the mailing of a
notice of redemption of Securities of such series selected for redemption under
Section 6.2 or 7.2 and ending at the close of business on the day of such
mailing and (ii) beginning on the Regular Record Date for the Stated Maturity of
any installment of principal of or payment of interest on the Securities of such
series and ending on the Stated Maturity of such installment of principal or
payment of interest or (b) to issue, register the transfer of or exchange any
Security selected pursuant to clause (i) above for redemption in whole or in
part, except the unredeemed portion of any Security selected for redemption in
part.
Notwithstanding anything herein to the contrary, any transfer of the
Securities of any series may be subject to restrictions, if any, set forth in
the Series Supplemental Indenture relating to such series.
SECTION 2.9. Mutilated, Destroyed, Lost and Stolen Securities. If (a)
any mutilated Security is surrendered to the Trustee or either of the Mobile
Energy Parties, or the Company, the Security Registrar and the Trustee receive
evidence to their satisfaction of the destruction, loss or theft of any
Security, and (b) there is delivered to the Company, the Security Registrar
and the Trustee evidence to their satisfaction of the ownership and
authenticity thereof, and such security or indemnity as may be required by
them to save each of them harmless, the Company shall execute and upon the
Company's request the Trustee shall authenticate and make available for
delivery, in exchange for or in lieu of any such mutilated, destroyed, lost
or stolen Security, a new Security of the same series and of like tenor and
principal amount, bearing a number not then outstanding.
Notwithstanding the foregoing, in case any such mutilated, destroyed,
lost or stolen Security has become or is about to become due and payable, the
Company, upon satisfaction of the conditions set forth in clauses (a) and (b) of
the immediately preceding paragraph, may, instead of issuing a new Security, pay
such Security.
Upon the issuance of any new Security under this Section 2.9, the
Company may require the payment of a sum sufficient to cover any tax or other
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governmental charge that may be imposed in relation thereto and any other
expenses connected therewith.
Every new Security issued pursuant to this Section 2.9 in lieu of any
destroyed, lost or stolen Security shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all the security and benefits of this Indenture equally and
proportionately with any and all other Securities duly issued hereunder (except
as otherwise specifically provided in this Indenture and in the other Security
Documents).
The provisions of this Section 2.9 are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Securities.
SECTION 2.10. Payment of Principal and Interest; Principal and Interest
Rights Preserved. Principal of or interest on any Security that is payable, and
is punctually paid or duly provided for, at any Stated Maturity shall be paid to
the Person in whose name that Security (or one (1) or more Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such principal or interest. Payment of principal of and interest on the
Securities of any series shall be made at the Corporate Trust Office or at the
Place of Payment (or, if (i) and for so long as any Outstanding Securities are
not issued in the form of one or more global securities registered in the name
of a clearing corporation or clearing agency registered under the Exchange Act,
as depositary for such Securities, or a nominee of such clearing corporation or
clearing agency and (ii) such office is not in the Borough of Manhattan, the
City of New York, at either such office or an office to be maintained in such
Borough), or by check or in another manner or manners if so provided in the
Series Supplemental Indenture creating the Securities of such series.
Any principal of or interest on any Security of any series that is
payable, but is not punctually paid or duly provided for, at any Stated Maturity
of an installment of principal or payment of interest shall forthwith cease to
be payable to the Holder on the relevant Regular Record Date by virtue of having
been such Holder to the extent that such defaulted principal or interest may be
paid by the Company, at its election in each case, as provided in paragraph (a)
or paragraph (b) below:
(a) The Company may elect to make payment of all or any
portion of such defaulted principal or interest to the Persons in whose
names the Securities of such series (or their respective Predecessor
Securities) in respect of which principal or interest is in default are
registered at the close of business on a Special Record Date for the
payment of such defaulted principal or interest, which shall be fixed
in the following manner. The Company shall notify the Trustee and the
Paying Agent in writing of the amount of defaulted principal or
interest proposed to be paid on each Security of such series and the
date of the proposed payment, and concurrently there shall be deposited
with the Trustee or the Paying Agent an amount of money equal to the
aggregate amount proposed to be paid in respect of such defaulted
principal or interest or there shall be made arrangements satisfactory
to the Trustee or the Paying Agent for such deposit prior to the date
of the proposed payment, such money when deposited to be held in trust
for the benefit of the Persons entitled to such defaulted principal or
interest as provided in this paragraph. Thereupon, the Trustee shall
fix a Special Record Date for the payment of such defaulted principal
or interest (together with other amounts payable with respect to such
defaulted principal or interest) that shall not be more than fifteen
(15) nor less than ten (10) days prior to the date of the proposed
payment and not less than ten (10) days after the receipt by the
Trustee of the notice of the proposed payment. The Trustee shall
promptly notify the Company and the Security Registrar of such Special
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Record Date and, in the name and at the expense of the Company, shall
cause notice of the proposed payment of such defaulted principal or
interest and the Special Record Date therefor to be mailed, first class
postage prepaid, to each Holder of a Security of such series at such
Holder's address as it appears in the Security Register, not less than
ten (10) days prior to such Special Record Date. Notice of the proposed
payment of such defaulted principal or interest and the Special Record
Date therefor having been mailed as aforesaid, such defaulted principal
or interest shall be paid to the Persons in whose names the Securities
of such series (or their respective Predecessor Securities) are
registered on such Special Record Date.
(b) The Company may make, or cause to be made, payment of any
defaulted principal or interest (together with other amounts payable
with respect to such defaulted interest) in any other lawful manner not
inconsistent with the requirements of any securities exchange (if any)
on which the Securities in respect of which principal or interest is in
default may be listed, and upon such notice as may be required by such
exchange, if, after notice given by the Company to the Trustee of the
proposed payment pursuant to this paragraph, such payment shall be
deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section 2.10, each Security
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Security shall carry the rights to interest accrued
and unpaid, and to accrue, that were carried by such other Security, and each
such Security shall bear interest from whatever date shall be necessary so that
neither gain nor loss in interest shall result from such registration of
transfer, exchange or replacement.
SECTION 2.11. Persons Deemed Owners. Prior to due presentment of a
Security for registration of transfer, the Person in whose name any Security is
registered shall be deemed to be the owner of such Security for the purpose of
receiving payment of principal of and premium, if any, and (subject to Section
2.10) interest on such Security and (subject to Section 5.3) for all other
purposes whatsoever, whether or not such Security be overdue, regardless of any
notice to anyone to the contrary.
SECTION 2.12. Cancellation. All Securities surrendered for payment,
redemption, credit against any Sinking Fund payment or registration of transfer
or exchange shall, if surrendered to any Person other than the Trustee, be
delivered to the Trustee for cancellation. The Company may at any time deliver
to the Trustee for cancellation any Securities previously authenticated and
delivered hereunder that the Company may have acquired in any manner whatsoever,
and all Securities so delivered shall be promptly canceled by the Trustee. No
Securities shall be authenticated in lieu of or in exchange for any Securities
canceled as provided in this Section 2.12, except as expressly permitted by this
Indenture. All canceled Securities held by the Trustee shall be destroyed and
certification of their destruction delivered to the Company unless, by Company
Request, the Company otherwise directs.
SECTION 2.13. Dating of Securities; Computation of Interest. (a)
Except as otherwise provided in the Series Supplemental Indenture relating to
the Securities of a series, each Security of such series shall be dated the date
of its authentication.
(b) Except as otherwise provided in the Series Supplemental Indenture
relating to the Securities of a series, interest on the Securities of such
series shall be computed on the basis of a 360-day year consisting of twelve
30-day months and, for any period shorter than a full calendar month, on the
basis of the actual number of days elapsed in such period.
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SECTION 2.14. Source of Payments Limited; Rights and Liabilities of the
Mobile Energy Parties. Except as otherwise specifically provided in this
Indenture and in the Guaranty, all payments of principal and premium, if any,
and interest to be made in respect of the Securities and this Indenture shall be
made only from, the Indenture Securities Collateral, the payments therefrom and
the income and proceeds received by the Trustee or the Collateral Agent and
allocable to the Trustee therefrom pursuant to the Security Documents. Each
Holder, by its acceptance of a Security, agrees that (a) it will look solely to
the Indenture Securities Collateral, the payments therefrom and the income and
proceeds received by the Trustee or the Collateral Agent and allocable to the
Trustee therefrom to the extent available for distribution to such Holder as
herein provided or provided in the Security Documents and the Guaranty and (b)
recourse shall be limited in accordance with Article XV.
SECTION 2.15. Parity of Securities. (a) Except as otherwise
specifically provided in this Indenture and the other Security Documents, all
Securities of a series issued and Outstanding hereunder rank on a parity with
each other Security of the same series and with all Securities of each other
series and each Security of a series shall be secured equally and ratably by
this Indenture and the Security Documents with each other Security of the same
series and with all Securities of each other series, without preference,
priority or distinction of any one (1) thereof over any other by reason of
difference in time of issuance or otherwise, and each Security of a series shall
be entitled to the same benefits and security in this Indenture and the Security
Documents as each other Security of the same series and with all Securities of
each other series.
(b) Notwithstanding anything herein to the contrary, the right, title
and interest of the Company in and to any Debt Service Reserve Account,
including all monies contained therein or hereafter delivered to the Trustee for
deposit therein and, in each case, all monies received and the right to receive
monies thereunder, shall be held in a separate account in trust solely for the
equal and proportionate benefit and security of the Holders from time to time of
the Outstanding Securities for the benefit of whom such Debt Service Reserve
Account was established.
SECTION 2.16. Allocation of Principal and Interest. Each payment of
principal of and premium, if any, and interest on each Security shall be
applied, first, to the payment of accrued but unpaid interest on such Security
(as well as any interest on overdue principal or, to the extent permitted by
applicable Law, overdue interest) to the date of such payment, second, to the
payment of the principal amount of and premium, if any, on such Security then
due (including any overdue installment of principal) thereunder and, third, the
balance, if any, to the payment of the principal amount of and premium, if any,
on such Security remaining unpaid.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
Each of the Mobile Energy Parties represents and warrants, as of the
Closing Date, to the Trustee as follows:
SECTION 3.1. Organization, Power and Status of Mobile Energy Parties.
The Company (a) is a limited liability company duly formed, validly existing and
in good standing under the laws of the State of Alabama and (b) is duly
authorized to do business and is in good standing in each jurisdiction where the
character of its properties or the nature of its activities makes such
qualification necessary. Mobile Energy (i) is a corporation duly formed, validly
existing and in good standing under the laws of the State of Alabama and (ii) is
duly authorized to do business and is in good standing in each jurisdiction
where the character of its properties or the nature of its activities makes such
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qualification necessary. Each of the Mobile Energy Parties has all requisite
limited liability company or corporate (as the case may be) power and authority
to own and operate the property it purports to own and to carry on its business
as now being conducted and as proposed to be conducted in respect of the Energy
Complex.
SECTION 3.2. Authorization; Enforceability; Execution and Delivery. (a)
Each of the Mobile Energy Parties has all necessary limited liability company or
corporate (as the case may be) power and authority to execute, deliver and
perform its obligations under this Indenture, the Securities and each other
Project Document to which it is a party.
(b) All action on the part of each of the Mobile Energy Parties that is
required for the authorization, execution, delivery and performance of this
Indenture, the Securities and each other Project Document to which such Mobile
Energy Party is a party has been duly and effectively taken, except (in the case
of the Project Contracts) such actions the failure to take would not reasonably
be expected to have a Material Adverse Effect; and the execution, delivery and
performance by each of the Mobile Energy Parties of this Indenture, the
Securities and each such other Project Document does not require the approval or
consent of any holder or trustee of any Debt or other obligations of such Mobile
Energy Party that has not been obtained.
(c) This Indenture and each other Project Document to which either of
the Mobile Energy Parties is a party has been duly executed and delivered by
such Mobile Energy Party. Each of this Indenture, the Securities and each other
Project Document to which either of the Mobile Energy Parties is a party
constitutes a legal, valid and binding obligation of such Mobile Energy Party,
enforceable against it in accordance with the terms thereof (other than with
respect to step-in rights or arbitration provisions or to agreements to agree at
future dates, as to which no representation or warranty is made), except as such
enforceability (i) may be limited by applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium and similar laws relating to
or affecting the enforcement of creditors' rights and remedies generally and
(ii) is subject to general principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at law) and the
discretion of the court before which any proceeding therefor may be brought and
to public policy or Federal or state laws that may limit rights to
indemnification.
SECTION 3.3. No Conflicts; Laws and Contracts; No Default. (a) Neither
the execution and delivery of this Indenture, the Securities and each other
Project Document to which either of the Mobile Energy Parties is a party nor the
consummation of any of the transactions contemplated hereby or thereby nor
performance of or compliance with the terms and conditions hereof or thereof (i)
contravenes any Governmental Approvals or any provision of Law applicable to
either of the Mobile Energy Parties or to any of the Collateral, (ii) conflicts
or is inconsistent with or constitutes a default under or results in the
violation of the provisions of the Articles of Organization of the Company or
the Operating Agreement or the articles of incorporation or by-laws of Mobile
Energy or, unless such conflict, inconsistency, default or violation would not
reasonably be expected to have a Material Adverse Effect, of any other Project
Document or any indenture, mortgage, deed of trust, sale/leaseback agreement,
loan agreement or other similar financing agreement or instrument or other
agreement or instrument to which either of the Mobile Energy Parties is a party
or by which either of the Mobile Energy Parties or any of its property or assets
is bound or to which either may be subject or (iii) results in the creation or
imposition of any Liens (other than Permitted Liens) on any of the property or
assets of either of the Mobile Energy Parties, or results in the acceleration of
any obligation of either of the Mobile Energy Parties, that would reasonably be
expected to have a Material Adverse Effect.
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(b) Each of the Mobile Energy Parties and the Energy Complex is in
compliance with all Laws applicable to the Mobile Energy Parties or the Energy
Complex (as the case may be), unless such non-compliance would not reasonably be
expected to have a Material Adverse Effect.
(c) Neither of the Mobile Energy Parties nor (to the knowledge of the
Mobile Energy Parties) any other party to a Project Document is in material
default in the performance of any term, covenant or obligation under any Project
Document; no event has occurred that with lapse of time, notice or both could
result in a default under a Project Document by either of the Mobile Energy
Parties or (to the knowledge of the Mobile Energy Parties) any other party
thereto that would reasonably be expected to have a Material Adverse Effect; no
material force majeure event has occurred and is continuing under any Project
Document; and (to the knowledge of the Mobile Energy Parties) each Project
Document is in full force and effect.
SECTION 3.4. Governmental Approvals. All material Governmental
Approvals that are required to be obtained as of the date hereof by or on behalf
of either of the Mobile Energy Parties in connection with (a) the capital
improvements contemplated by the Capital Budget, and operation and maintenance
of the Energy Complex (including the provision of Processing Services pursuant
to the Energy Services Agreements and the Master Operating Agreement) and (b)
the issuance of the Securities and the Guaranty and the execution, delivery and
performance by the Mobile Energy Parties of the Project Documents to which they
are parties are in effect on the date hereof. Each of the material Governmental
Approvals required to be obtained as of the date hereof by either of the Mobile
Energy Parties has been duly obtained, was (to the knowledge of the Mobile
Energy Parties) validly issued and is in full force and effect. The Mobile
Energy Parties are in compliance with all material Governmental Approvals
required to be obtained as of the Closing Date unless such noncompliance would
not reasonably be expected to result in a Material Adverse Effect. Neither of
the Mobile Energy Parties has any reason to believe that it will be unable to
obtain the Governmental Approvals that are not required to be obtained prior to
the Closing Date in the ordinary course of business, without substantial
expense, and at such time or times as may be necessary to avoid any delay in, or
material impairment to, the consummation and performance of the transactions as
contemplated by this Indenture and the other Project Documents.
SECTION 3.5. Litigation. There are no claims, actions, suits,
investigations or proceedings at law or in equity by or before any arbitrator or
any Governmental Authority now pending or (to the knowledge of the Mobile Energy
Parties) threatened against either of the Mobile Energy Parties or (to the
knowledge of the Mobile Energy Parties) now pending or threatened against any
Affiliate thereof, or any property or other assets or rights of either of the
Mobile Energy Parties or any Affiliate thereof with respect to this Indenture,
any other Project Document or the Energy Complex, that would reasonably be
expected to result in a Material Adverse Effect.
SECTION 3.6. Utility Regulation. Neither the Trustee or the Collateral
Agent nor any Holder will be as of the Closing Date (under applicable Law as of
the date hereof and solely as a result of the ownership, operation and
maintenance of the Energy Complex by either of the Mobile Energy Parties, the
purchase and ownership of the Securities or any other transaction contemplated
by the Financing Documents) subject to regulation under the Federal Power Act of
1920 or by the State of Alabama Public Service Commission or otherwise be
subject to rate regulation under Federal, state or local Law; neither of the
Mobile Energy Parties is, nor as of the Closing Date will be, subject to rate
regulation under Federal, state or local Law; and none of the execution,
delivery or performance by each of the Mobile Energy Parties of all the
provisions of the Project Documents as in effect on the Closing Date to which
such Mobile Energy Party is a party will violate Chapter 14 of Title 37 of the
Code of Alabama
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(1975): Service Territories for Electric Suppliers as in effect on the Closing
Date.
SECTION 3.7. Collateral. (a) The Company has, or has valid and
enforceable rights to acquire, good, valid title or valid leasehold rights in
and to all of the Collateral purported to be covered by the Security Documents
to which it is a party and is the owner and holder of a valid and subsisting
leasehold estate to the interests in the Site and the tangible personal property
forming a part of the Collateral purported to be covered by the Security
Documents to which it is a party, subject only to Permitted Liens, and is
lawfully possessed of, or has valid and enforceable rights to acquire, a valid
and subsisting grant for a term in and of the Easements, subject only to
Permitted Liens.
(b) With respect to the personal property forming a part of the
Collateral, all filings, recordings, registrations and other actions have been
made, obtained and taken in all relevant jurisdictions that are necessary to
create and perfect the Liens in all right, title, estate and interest of the
Company in the Collateral covered thereby subject to no Liens other than
Permitted Liens.
(c) The Mobile Energy Parties have obtained and hold in full force and
effect, or have the right to obtain (or are in the process of obtaining and
expect to obtain in the ordinary course of business), all patents, trademarks,
copyrights and other such rights or adequate licenses therein, free from
restrictions that could reasonably be expected to result in a Material Adverse
Effect, that are necessary for the ownership, construction, operation and
maintenance of the Energy Complex.
SECTION 3.8. Taxes. Each of the Mobile Energy Parties has filed, or
caused to be filed, all tax and information returns that are required to have
been filed by it in any jurisdiction and has paid (prior to their delinquency
dates) all taxes shown to be due and payable on such returns and all other taxes
and assessments payable by it, to the extent the same have become due and
payable, except to the extent there is a Good Faith Contest thereof by either of
the Mobile Energy Parties.
SECTION 3.9. Environmental Matters. (a) To the knowledge of the Mobile
Energy Parties, neither the Site nor the Energy Complex has been contaminated
with Hazardous Materials that requires remediation under any applicable
Environmental Requirement, except where such remediation would not have a
Material Adverse Effect.
(b) The Company, the Energy Complex and the Site are in compliance with
all applicable Environmental Requirements affecting the Site and the Energy
Complex, except where noncompliance would not reasonably be expected to have a
Material Adverse Effect; and (to the knowledge of the Mobile Energy Parties)
there are no environmental conditions that could reasonably be expected to
materially interfere with the commercial operation of the Energy Complex.
SECTION 3.10. Business; Mobile Energy Assets. (a) Neither of the Mobile
Energy Parties has engaged in any business or activity other than in connection
with the acquisition, development, ownership, operation and financing of the
Energy Complex as contemplated by the Project Documents to which such Mobile
Energy Party is a party (or, in the case of Mobile Energy, the ownership of the
Company).
(b) Mobile Energy's sole material non-cash assets consist of its
ownership interest in the Company and its rights in respect of the Southern
Master Tax Sharing Agreement.
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SECTION 3.11. Employee Benefit Plans. Neither of the Mobile Energy
Parties, nor any other Person who is a member of a controlled group of
corporations or a group of trades or businesses under common control with the
Mobile Energy Parties (within the meaning of Section 414 of the Code), has (a)
failed to fulfill its obligations under or to comply in any material respect
with the requirements of ERISA or the Code with respect to any employee benefit
plans, (b) sought a waiver of the minimum funding standard of Section 412 of the
Code, (c) failed to make any contribution or payment to or in respect of any
employee benefit plan required to be made by law or by the terms of such plan,
(d) made any amendment to any employee benefit plan that has resulted or should
result in the imposition of a lien or the posting of a bond or other security
under ERISA or the Code or (e) incurred any liability under Title IV of ERISA
other than a liability to the Pension Benefit Guaranty Corporation for premiums
under Section 4007 of ERISA, if such event or condition set forth in clauses (a)
through (e) above, together with all such other events or conditions, causes
either of the Mobile Energy Parties to incur or be reasonably likely to incur,
or any other member of such controlled group to incur any 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.
ARTICLE IV.
INDENTURE ACCOUNTS
SECTION 4.1. Establishment of Indenture Securities Account. An account
designated the "Indenture Securities Account" is hereby established and created
with the Trustee. The following subaccounts of the Indenture Securities Account
are hereby established and created with the Trustee: (a) "Indenture Securities
Interest Subaccount"; (b) "Indenture Securities Principal Subaccount"; and (c)
"Indenture Securities Redemption Subaccount."
SECTION 4.2. Payments into Indenture Securities Account. The Indenture
Securities Account shall be funded with (a) monies transferred by the Collateral
Agent from the Revenue Account pursuant to Section 3.11(e)(ii) of the
Intercreditor Agreement, (b) monies transferred by the Collateral Agent from the
Maintenance Reserve Account pursuant to Section 3.5(c) of the Intercreditor
Agreement, (c) monies transferred by the Collateral Agent from the Distribution
Account pursuant to Section 3.8(b) of the Intercreditor Agreement, (d) monies
transferred by the Collateral Agent from the Subordinated Fee Account pursuant
to Section 3.7(b) of the Intercreditor Agreement, (e) monies transferred by the
Collateral Agent from the Subordinated Debt Account pursuant to Section 3.6(b)
of the Intercreditor Agreement, (f) Loss Proceeds transferred by the Collateral
Agent from the Loss Proceeds Account pursuant to Section 3.10 of the
Intercreditor Agreement and (g) monies on deposit in the Mill Owner Maintenance
Reserve Account used pursuant to the proviso contained in Section 5.22. The
Trustee shall deposit all monies received by it for (i) payment of interest on
the Securities at Stated Maturity into the Indenture Securities Interest
Subaccount, (ii) payment of principal of the Securities at Stated Maturity into
the Indenture Securities Principal Subaccount and (iii) redemption of Securities
other than at Stated Maturity into the Indenture Securities Redemption
Subaccount, in each case as specified in the Officer's Certificate of the
Company delivered pursuant to Section 3.11 of the Intercreditor Agreement (which
the Company shall deliver to the Trustee) and in each case for disbursement in
accordance with Section 4.3.
SECTION 4.3. Application of Funds in Indenture Securities Account. (a)
The Trustee is hereby authorized and directed to disburse from (i) the Indenture
Securities Interest Subaccount, the amount required to pay interest on
Securities when due (whether on an Interest Payment Date or at any other Stated
Maturity, but not on any Redemption Date or Prepayment Date), (ii) the Indenture
Securities Principal Subaccount, the amount required to pay principal of the
Securities when
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due (whether on a Principal Payment Date or at any other Stated Maturity, but
not on any Redemption Date or Prepayment Date) and (iii) the Indenture
Securities Redemption Subaccount, the amount required to pay principal of and
premium, if any, and interest on the Securities when due otherwise than at
Stated Maturity (whether upon acceleration or on any Redemption Date or
Prepayment Date); provided, however, that if there are insufficient monies in
(A) the Indenture Securities Interest Subaccount to pay the interest then due on
the Securities, then the Trustee shall, in the following order of priority:
first, transfer monies on deposit in the Indenture Securities Redemption
Subaccount and, second, transfer monies on deposit in the Indenture Securities
Principal Subaccount to the Indenture Securities Interest Subaccount to be
applied to make such payment, (B) the Indenture Securities Principal Subaccount
to pay the principal then due on the Securities, then the Trustee shall transfer
monies on deposit in the Indenture Securities Redemption Subaccount to the
Indenture Securities Principal Subaccount to be applied to make such payment and
(C) the Indenture Securities Redemption Subaccount to pay the principal of and
premium, if any, and interest on the Securities then due upon acceleration or on
any Redemption Date or Prepayment Date, then the Trustee shall transfer monies
on deposit in the Indenture Securities Principal Subaccount and the Indenture
Securities Interest Subaccount (but only, in each case, to the extent such
monies are in excess of the amount necessary for the payment of principal of and
interest on the Securities not being redeemed or prepaid) to be applied to make
such payment.
SECTION 4.4. Payments into Debt Service Reserve Accounts. Subject to
Section 4.6, each Debt Service Reserve Account (if any) shall be funded (a) with
monies to be deposited therein on the date of original issuance of any
Securities for whose benefit any such Debt Service Reserve Account was
established and created, in accordance with the Series Supplemental Indenture
establishing such Securities, and (b) with monies to be transferred thereto by
the Collateral Agent pursuant to Section 3.11(g)(i) of the Intercreditor
Agreement, in the case of clauses (a) and (b) above, to the extent necessary so
that the amount of monies, together with the Available Amount under any Reserve
Account Security, then on deposit in such Debt Service Reserve Account shall be
equal to the Debt Service Reserve Account Required Balance in respect of such
Debt Service Reserve Account.
SECTION 4.5. Application of Funds in Debt Service Reserve Accounts. If,
following the application of monies on deposit in the Indenture Securities
Account in accordance with Section 4.3, amounts are due and owing in respect of
principal of or premium, if any, or interest on any Securities for whose benefit
a Debt Service Reserve Account was established and created, in accordance with
the Series Supplemental Indenture establishing such Securities, the Trustee
shall, in the following order of priority: first, apply monies then on deposit
in such Debt Service Reserve Account; second, draw upon any Reserve Account
Letter of Credit on deposit in such Debt Service Reserve Account pursuant to
Section 4.6(d) in an amount up to the Available Amount thereunder and apply the
monies in respect thereof; and third, call upon any Southern Guaranty on deposit
in such Debt Service Reserve Account pursuant to Section 4.6(d) in an amount up
to the Available Amount thereunder and apply the monies in respect thereof, in
each case, directly to the payment (to the extent necessary) of such amounts due
and owing in respect of such Securities; provided, however, that, prior to a
Trigger Event, if an Event of Default has occurred and is then continuing, the
Trustee shall provide notice thereof to the Collateral Agent, and the Collateral
Agent shall (to the extent necessary), in the following order of priority,
transfer monies on deposit in the Distribution Account, the Subordinated Fee
Account and the Subordinated Debt Account (including then Available Amounts
under any Reserve Account Security on deposit therein) in accordance with and
subject to Sections 3.8, 3.7 and 3.6, respectively, of the Intercreditor
Agreement, to the Trustee for application to the payment of such amounts due and
payable in respect of such Securities, prior to the application of monies
pursuant to clauses first, second and third above.
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SECTION 4.6. Reserve Account Security. (a) Subject to Section 4.6(c),
the Company shall not be required at any time to deposit any monies into any
Debt Service Reserve Account, and the Company shall be entitled from time to
time to withdraw monies on deposit in such Debt Service Reserve Account,
provided that and for so long as Reserve Account Security having an Available
Amount thereunder equal to the amount of such monies otherwise required to be
and not so deposited or the amount of such monies so withdrawn (as the case may
be) shall have been delivered to the Trustee, at or prior to such time, for
deposit into such Debt Service Reserve Account. At the time of any such deposit,
the Trustee shall be entitled to receive, and (subject to Section 9.1) shall be
fully protected in relying upon, an Opinion of Counsel to the effect that such
Reserve Account Security (i) is permitted by this Section 4.6 and has been
delivered in accordance with the provisions hereof, (ii) has been duly
authorized, executed and delivered by the provider thereof and (iii) constitutes
a legal, valid and binding obligation of such provider, enforceable against such
provider in accordance with its terms, except as such enforceability (A) may be
limited by applicable bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium and other similar laws relating to or affecting the
enforcement of creditors' rights and remedies generally as such laws would apply
in the event of a bankruptcy, insolvency or reorganization of, or other similar
occurrence with respect to, such provider and (B) is subject to general
principles of equity (regardless of whether considered in a proceeding in equity
or at law) or other customary qualifications and limitations. The Company may
from time to time, at its discretion, replace or reduce the Available Amount (in
whole or in part) under any Reserve Account Security on deposit in any Debt
Service Reserve Account with other Reserve Account Security having an Available
Amount thereunder, or with monies in an amount, equal to the Available Amount so
replaced or reduced.
(b) Each Reserve Account Security on deposit in any Debt Service
Reserve Account shall provide that not less than forty-five (45) days prior to
the occurrence of a Termination Event with respect to such Reserve Account
Security, the provider thereof shall deliver written notice to the Trustee and
the Company of such occurrence. The Company shall provide notice to the Trustee
of the occurrence of any Credit Standard Event or Default Event within three (3)
Business Days of its actual or constructive knowledge of the event giving rise
to such occurrence.
(c) If (in lieu of any monies required to be deposited into, or in
replacement of monies or other Reserve Account Security on deposit in, any Debt
Service Reserve Account) any Reserve Account Security is on deposit in such Debt
Service Reserve Account pursuant to Section 4.6(a), then, immediately upon the
occurrence of a Required Deposit Event with respect to such Reserve Account
Security, the Company agrees to deposit into such Debt Service Reserve Account
an amount of monies equal to the Required Deposit with respect to such Required
Deposit Event.
(d) If the Company fails to make any Required Deposit pursuant to
Section 4.6(c) as and when due, then the Trustee shall, and is hereby authorized
and directed to, draw or call upon such Reserve Account Security in an amount
equal to the amount of such Required Deposit that the Company so failed to
deposit; provided, however, that, if a Required Deposit Event occurs at a time
when more than one (1) Reserve Account Letter of Credit or Southern Guaranty is
on deposit in such Debt Service Reserve Account, the Trustee may elect, subject
to Section 4.5, the order in which the Trustee shall draw upon such Reserve
Account Letters of Credit or call upon such Southern Guaranties (as the case may
be). Any amounts drawn or called upon by the Trustee under any Reserve Account
Security on deposit in any Debt Serve Reserve Account shall be deposited into
such Debt Service Reserve Account. The Company's obligations under Section
4.6(c) shall be satisfied to the extent of any such deposit.
SECTION 4.7. Investment of Monies in the Indenture Accounts. (a)
Amounts deposited in the Indenture Accounts, at the written request and
direction
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of the Company, shall be invested by the Trustee in Permitted Investments. Such
Permitted Investments shall mature in such amounts and not later than such times
as may be necessary to provide monies when needed to make payments from such
monies as provided in this Indenture. Net interest or gain received from such
Permitted Investments shall remain in the respective subaccounts of the
Indenture Securities Account and in each Debt Service Reserve Account (if any)
pending application as provided in this Indenture, provided that (i) to the
extent that monies on deposit in any Debt Service Reserve Account (together with
then Available Amounts under any Reserve Account Security deposited therein)
exceed the Debt Service Reserve Account Required Balance therefor, such monies
shall be transferred to the Collateral Agent for deposit into the Revenue
Account and (ii) net interest on monies deposited into the Indenture Securities
Account Principal Subaccount shall be transferred to the Indenture Securities
Account Interest Subaccount immediately prior to each Monthly Transfer Date. In
the event monies are required for payment of any amounts to be paid by the
Trustee pursuant to Article VI in respect of any series of Securities and for
any payment of the principal of or premium, if any, or interest on any series of
Securities, the Trustee shall, at the written request and direction of the
Company, sell such Permitted Investments as required to restore to cash such
amounts as are needed for any such payments. Absent written instructions from
the Company, the Trustee shall invest the amounts held in the Indenture
Securities Account and each Debt Service Reserve Account (if any) in Permitted
Investments described in clause (a) of the definition thereof. All such
Permitted Investments shall be made in the name of the Trustee (it being
understood and agreed that the Trustee shall not be responsible for losses in
respect thereof) and shall be made in such manner as to preserve the Lien of
this Indenture thereon. The Trustee shall maintain records reflecting the
interest of each Indenture Account in such Permitted Investments.
(b) In computing the amount in any Indenture Account (or any other
separate account or fund created under the provisions of, and for any purpose
provided in, this Indenture), each Permitted Investment on deposit therein shall
be valued at the fair value thereof, including accrued interest thereon. On the
Business Day immediately preceding each Monthly Transfer Date and the date of
any withdrawal of monies on deposit in any Indenture Account, the Trustee shall
so value each Permitted Investment on deposit in such Indenture Account and,
promptly thereafter, shall notify the Company, the Collateral Agent and the
Independent Engineer as to the amount of any deficiency or surplus in such
Indenture Account as of such date based upon such valuation.
(c) In addition to the records referenced above, the Trustee shall keep
and retain or cause to be kept and retained, until at least six (6) years after
the discharge and retirement of the Securities, whether at maturity, redemption
or acceleration, the following records with respect to Permitted Investments:
(i) purchase price, (ii) type of investment, (iii) accrued interest paid, (iv)
interest rate (if applicable), (v) principal amount, (vi) maturity date, (vii)
interest payment date (if applicable), (viii) date of liquidation and (ix)
receipt upon liquidation. If any investment is retained following the date the
last Security is retired, the records required to be kept by the Trustee shall
include the fair value of such investment on the date the last Security is
retired. Amounts shall be segregated wherever held in order to maintain the
foregoing records.
SECTION 4.8. Monies to be Held in Trust. All monies required to be
deposited with or paid to the Trustee for the account of any Indenture Account
under any provision of this Indenture and all investments made therewith, and
all investments made therewith, and all monies withdrawn from any Indenture
Account and held by the Trustee or any Paying Agent, shall be held by the
Trustee or the Paying Agent in trust, and while so held shall be held in trust
for the Holders of the Securities.
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SECTION 4.9. Dominion and Control. The Company hereby transfers,
assigns and sets over all of its right, title and interest in and to all amounts
deposited or held in any Indenture Account and grants the Trustee (acting on
behalf of the Holders of the Securities) sole dominion and control over such
amounts. Neither of the Mobile Energy Parties shall have the right to withdraw
monies from any Indenture Account hereunder.
ARTICLE V.
COVENANTS
Each of the Mobile Energy Parties hereby covenants and agrees that so
long as this Indenture is in effect and any Securities remain Outstanding:
SECTION 5.1. Payment of Principal, Premium, if any, and Interest;
Mobile Energy as Guarantor. (a) The Company shall duly and punctually pay, or
cause to be paid, the principal of and premium, if any, and interest on, and all
other amounts payable in respect of, the Securities of each series in accordance
with their terms and the terms of this Indenture and of the related Series
Supplemental Indenture.
(b) Subject to Article XIV, Mobile Energy agrees to act as
guarantor on the Securities, and agrees that the Trustee on behalf of the
Holders of the Securities may enforce payment of the principal of and premium,
if any, and interest on, and all other amounts payable in respect of, the
Securities against Mobile Energy to the same extent as the Trustee may against
the Company.
SECTION 5.2. Maintenance of Insurance. The Company shall maintain or
cause to be maintained on its behalf the required insurance policies in
accordance with Schedule 5.2. All property and liability insurance policies
shall name the Collateral Agent as an additional insured and the Collateral
Agent as loss payee. If at any time any of the required insurance (other than
lenders' policy title insurance) shall no longer be available on commercially
reasonable terms and premiums, the Company shall procure substitute insurance
coverage that is the most equivalent to the required coverage and that is
available on commercially reasonable terms and premiums.
SECTION 5.3. Reporting Requirements. The Mobile Energy Parties shall
furnish to the Trustee, and to any Holder of a Security or an owner of a
beneficial interest therein requesting the same in writing (whether or not
either of the Mobile Energy Parties is then required to file with the SEC
pursuant to Section 13 or 15(d) of the Exchange Act):
(a) As soon as practicable and in any event within sixty (60)
days after the end of the first, second and third Fiscal Quarters of
each Fiscal Year of the Company (commencing with the Fiscal Quarter
ending September 30, 1995) or, in the case of any such request made
after such sixty (60) day period, promptly thereafter, an unaudited
balance sheet of the Company as of the last day of such Fiscal Quarter
and the related statements of income, cash flows and members' equity of
the Company and (in the case of such second and third Fiscal Quarters)
for the applicable portions of the Fiscal Year ending with the last day
of such Fiscal Quarter, setting forth (except in the case of any such
Fiscal Quarter ending prior to March 31, 1996) in each case in
comparative form corresponding unaudited figures from the preceding
Fiscal Year, all in accordance with GAAP, and accompanied by a written
statement of an Authorized Officer of the Company to the effect that
such financial statements fairly represent the Company's financial
condition and results of operations at and as of their date in
accordance with GAAP.
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(b) As soon as practicable and in any event within one hundred
twenty (120) days after the end of each Fiscal Year of the Company
(commencing with the Fiscal Year ending December 31, 1995) or, in the
case of any such request made after such period, promptly thereafter,
(i) a balance sheet of the Company as of the end of such Fiscal Year
and the related statements of income, cash flow and members' equity of
the Company during such Fiscal Year setting forth (except in the case
of the Fiscal Year ending December 31, 1995) in each case in
comparative form corresponding figures from the preceding Fiscal Year,
all in accordance with GAAP, accompanied by an audit report thereon of
a firm of independent public accountants of recognized national
standing, which opinion shall state that such financial statements
fairly represent the Company's financial condition and results of
operations at and as of their date in accordance with GAAP, (ii) a
certification of such accountants stating that, in the course of making
the examinations necessary for their opinion, they obtained no
knowledge, except as specifically stated, of any event or condition
that constitutes (or that, upon notice or lapse of time or both, would
constitute) an Event of Default, (iii) management's discussion and
analysis of financial condition and results of operations prepared in
accordance with Item 303 of Regulation S-K under the Securities Act and
(iv) such other matters as determined by the Mobile Energy Parties.
(c) With each annual or quarterly financial statement
furnished pursuant to Section 5.3(a) or 5.3(b), an Officer's
Certificate of Mobile Energy or the Company (as applicable) certifying
as to (i) the aggregate amount of all Restricted Payments made by the
Company and (ii) the entering into by the Company of any additional
Project Documents or of any amendments, replacements or modifications
of, or any notices of termination received by either of the Mobile
Energy Parties with respect to, any of the Project Documents (together
with copies of any such additional Project Documents or amendments,
replacements, modifications or notices attached to such Officer's
Certificate), in the case of clauses (i) and (ii) above, during the
period covered by such financial statement.
(d) Not less often than annually, a brief certificate
(complying with the provisions of Section 314(a)(4) of the Trust
Indenture Act) from the principal executive officer, principal
financial officer or principal accounting officer of each of the Mobile
Energy Parties as to such officer's knowledge of such Mobile Energy
Party's compliance with all conditions and covenants under this
Indenture (or, if either of the Mobile Energy Parties is not so in
compliance, a description of any such non-compliance). For purposes of
this paragraph, such compliance shall be determined without regard to
any period of grace or requirement of notice provided under this
Indenture.
(e) Each of the following items:
(i) promptly after any Authorized Officer of either
of the Mobile Energy Parties learns or shall become aware of
the occurrence thereof, written notice of the occurrence of
any event or condition that constitutes (or that, upon notice
or lapse of time or both, would constitute) an Event of
Default, specifically stating that such event or condition has
occurred and describing it and the action being or proposed to
be taken with respect thereto;
(ii) written notice of the occurrence of any Event of
Eminent Domain or any Event of Loss and an Officer's
Certificate of the Company setting forth the details thereof
and the action being or proposed to be taken with respect
thereto;
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(iii) written notice of the occurrence of any event
giving rise, or reasonably expected to give rise, to a claim
under any insurance policy maintained in respect of the Energy
Complex in an amount greater than $5,000,000;
(iv) promptly after any Authorized Officer of either
of the Mobile Energy Parties learns or shall become aware of
the occurrence thereof, written notice of the occurrence of
any event or condition that constitutes a material violation
by either of the Mobile Energy Parties of any Environmental
Requirement; and
(v) any other information required to be furnished by
the Mobile Energy Parties to the Tax-Exempt Trustee pursuant
to the Tax- Exempt Security Documents.
(f) If the Company has deposited a Southern Guaranty into, and
for so long as such Southern Guaranty remains on deposit in, any
Reserve Account Security Account pursuant to the terms of this
Indenture or the Intercreditor Agreement, the Company shall cause
Southern to provide to the Trustee or the Collateral Agent (as the case
may be) no later than forty-five (45) days after the end of each fiscal
quarter of Southern, an Officer's Certificate of Southern certifying as
to the determination of whether or not the Southern Credit Standard has
been satisfied as of the end of such fiscal quarter.
SECTION 5.4. Maintenance of Existence and Governmental Approvals; Rate
Regulation. (a) Each of the Mobile Energy Parties shall at all times preserve
and maintain in full force and effect (i) its existence and form as a limited
liability company or corporation (as the case may be) and its good standing
under the laws of its state of organization or incorporation (as the case may
be) and (ii) its qualification to do business in each jurisdiction in which the
character of the properties owned or leased by it or in which the transaction of
its business as conducted or proposed to be conducted makes such qualification
necessary.
(b) Each of the Mobile Energy Parties shall obtain and maintain in full
force and effect all Governmental Approvals (including maintaining compliance
with Environmental Requirements) except where the failure to obtain and maintain
in full force and effect such Governmental Approvals or the noncompliance with
such Environmental Requirements would not have a Material Adverse Effect.
(c) Each of the Mobile Energy Parties shall preserve and maintain good
and marketable title to its properties and assets (subject to no liens other
than Permitted Liens).
(d) Each of the Mobile Energy Parties shall pay all taxes and other
governmental charges except where such taxes or charges are being contested in a
Good Faith Contest and where the failure to pay such taxes or charges does not
affect the enforceability of the Project Documents.
(e) If (i) either of the Mobile Energy Parties shall be subject to
regulation as to rates with respect to the provision of Processing Services or
(ii) the revenues or other amounts received or receivable by the Company under
the Project Contracts for the use of Processing Services or other services and
facilities of the Energy Complex shall be subject to regulation, in either case
by any Governmental Authority having jurisdiction over either of the Mobile
Energy Parties under Federal, state or local law, then the Mobile Energy Parties
shall (A) prior to the issuance by such Governmental Authority of any order with
respect to such regulation (whether or not final or subject to review on
appeal), contest such regulation in a Good Faith Contest and (B) within fifteen
(15) days following (1) the issuance by such Governmental Authority of a binding
order (which shall be final and not be subject to review on appeal) to the
effect that
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either of the Mobile Energy Parties, or such revenues or other amounts, shall be
subject to such regulation and (2) any amendment or other modification (adverse
in any respect) of the provisions of such final and non-appealable order by, or
the issuance of another binding order (which shall be final and not be subject
to review on appeal and shall not constitute an amendment or other modification
to an existing order) of, or the taking of other action relating to either such
final and non-appealable order that would reasonably be expected to have a
Material Adverse Effect by, such Governmental Authority (or another Governmental
Authority having jurisdiction over either of the Mobile Energy Parties under
Federal, state or local law) affecting such regulation, provide a Revenue
Sufficiency Certification (based upon and after giving effect to such
regulation) to the Trustee.
SECTION 5.5. Nature of Business. Neither of the Mobile Energy Parties
shall engage in any business other than the ownership, financing, operation,
maintenance and improvement of the Energy Complex as contemplated by the Project
Documents. If Mobile Energy acquires more than nominal assets (excluding (a) its
ownership of member interests in the Company, (b) its rights under the Southern
Master Tax Sharing Agreement and (c) any Contract providing for administrative
services), Mobile Energy shall immediately grant a first priority security
interest therein to the Collateral Agent on behalf of the Senior Secured Parties
on the same conditions as set forth in the Mortgage and the other Security
Documents.
SECTION 5.6. Operation and Maintenance. The Company shall, and shall
cause the Operator to, use, maintain and operate the Energy Complex and the Site
in compliance with Prudent Plant Operating Standards and the material provisions
of all relevant Project Documents, except where noncompliance would not have a
Material Adverse Effect.
SECTION 5.7. Compliance with Law and Organizational Documents. (a) Each
of the Mobile Energy Parties shall comply with, and the Company shall ensure
that the Energy Complex is maintained and operated in compliance with, and shall
make such alterations to the Energy Complex and the Site as may be required for
compliance with, all applicable Governmental Approvals and all material
applicable Laws, except where noncompliance would not have a Material Adverse
Effect.
(b) Each of the Mobile Energy Parties shall comply with all material
provisions of the Articles of Organization or its articles of incorporation (as
the case may be).
SECTION 5.8. Prohibition on Fundamental Changes and Disposition of
Assets. (a) Neither of the Mobile Energy Parties shall enter into any
transaction of merger or consolidation, change its form of organization or
liquidate or dissolve itself (or suffer any liquidation or dissolution). Neither
of the Mobile Energy Parties shall purchase or otherwise acquire all or
substantially all of the assets of any other Person.
(b) Neither of the Mobile Energy Parties shall amend, modify or
otherwise change the Articles of Organization or its articles of incorporation
(as the case may be) in any manner that would reasonably be expected to have a
Material Adverse Effect or that alters or supersedes any of the provisions of
such organizational documents concerning (i) nature of business, (ii) the
requirement of an independent director (with respect to Mobile Energy), (iii)
the Manager of the Company, (iv) unanimous votes for certain matters, (v)
commingling of funds and (vi) maintaining separateness and observing corporate
or other entity formalities.
(c) Except as contemplated by the Financing Documents, neither of the
Mobile Energy Parties shall sell, lease (as lessor) or otherwise transfer (as
transferor) any property or assets material to the operation of the Energy
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Complex except in the ordinary course of business to the extent that such
property is worn out or is no longer useful or necessary in connection with the
operation of the Energy Complex; provided, however, that to the extent the
aggregate fair market value of all sales, leases and other transfers (other than
any such transfers from Mobile Energy to the Company) in any Fiscal Year exceeds
$2,000,000 (multiplied by the GDPIPD Factor in effect at the time of such sale,
lease or transfer), neither of the Mobile Energy Parties shall be permitted to
sell, lease or otherwise transfer any of such property or assets during the
remainder of such Fiscal Year unless the Company delivers an Officer's
Certificate to the Trustee and the Collateral Agent (together with an
Independent Engineer Confirmation) to the effect that such property is or such
assets are worn out or no longer useful or necessary in connection with the
operation of the Energy Complex; provided further, however, that notwithstanding
anything in this Section 5.8 to the contrary, subject only to Section 8.1(k),
Mobile Energy shall be permitted to transfer its ownership interests in the
Company.
SECTION 5.9. Transactions with Affiliates. Neither of the Mobile Energy
Parties shall enter into or permit the Operator to enter into any Contract
related to the Energy Complex with any of its Affiliates, other than (a) the
Project Documents entered into as of the Closing Date and, in the case of Mobile
Energy, the Southern Master Tax Sharing Agreement, (b) transactions in the
ordinary course of business on fair and reasonable terms no less favorable to
either of the Mobile Energy Parties or to the Operator (as the case may be) than
either of the Mobile Energy Parties or the Operator (as the case may be) would
obtain in an arm's length transaction with a Person that is not an Affiliate
thereof (it being understood that transactions involving the provision of goods
or services to either of the Mobile Energy Parties or the Operator in exchange
for reimbursement of costs and expenses (including reasonably allocated overhead
expenses) shall be deemed to be in compliance with this Section 5.9), (c)
transactions or Contracts involving Affiliate Subordinated Debt and (d)
transactions or Contracts involving the provision of goods or services to either
of the Mobile Energy Parties in exchange for Subordinated Fees.
SECTION 5.10. Amendments to Project Documents. (a) The Company shall
not terminate, amend, replace or otherwise modify (other than any such
amendments or modifications that are immaterial or any such replacement entered
into in satisfaction of the Event of Default Alternative Agreement Requirements)
any of the Project Contracts to which it is a party (other than any such Project
Contracts that are immaterial), unless the Company delivers to the Trustee an
Officer's Certificate, together with an Independent Engineer Confirmation,
certifying that (i) such termination, amendment, replacement, modification or
addition would not reasonably be expected to have a Material Adverse Effect or
(ii) such termination, amendment, replacement, modification or addition is
reasonably required to comply with Law or any Governmental Approval and would
not have a Material Adverse Effect in light of the consequences of not
terminating, amending, replacing, modifying or adding such Project Contract.
Promptly upon the execution of any replacement or additional Project Contract,
the Company shall take all actions necessary to grant the Collateral Agent (A)
an assignment of the Company's rights under such Project Contract (including
causing each Project Participant (other than the Mobile Energy Parties) party
thereto to execute and deliver to the Collateral Agent a Consent to Assignment
having terms no less favorable to the Collateral Agent and the Holders than (1)
in the case of a replacement Project Contract, the Consent to Assignment
delivered to the Collateral Agent in respect of the Project Contract being
replaced and (2) in the case of an additional Project Contract, the form of
Consent to Assignment attached as Exhibit D to the Intercreditor Agreement) and
(B) a Lien on all property interests acquired by the Company in connection
therewith (perfected to the extent such Lien can be perfected by filing a
mortgage or fixture filing under local law or a financing statement under the
Uniform Commercial Code, provided that no such assignment or Lien shall be
required with respect to equipment financed with purchase money obligations
permitted under this Indenture if prohibited by the terms of such purchase money
obligations).
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(b) Without the consent of the Holders of a majority in aggregate
principal amount of the Outstanding Securities, the Mobile Energy Parties shall
not terminate, amend, replace or otherwise modify any of the Financing Documents
to which neither the Collateral Agent nor the Trustee is a party (other than the
Working Capital Facility) unless the Company delivers to the Trustee an
Officer's Certificate, together with an Independent Engineer Confirmation,
certifying that such termination, amendment, replacement or modification would
not reasonably be expected to reduce the likelihood of payment on the
Outstanding Securities or otherwise materially and adversely affect the Holders
of the Outstanding Securities.
SECTION 5.11. Performance Under Project Contracts. The Company shall
perform all covenants, undertakings, stipulations and provisions contained in
each Project Contract to which neither the Trustee nor the Collateral Agent is a
party, except to the extent that the failure to so perform would not reasonably
be expected to have a Material Adverse Effect.
SECTION 5.12. Annual Budget. The Company shall submit to the
Independent Engineer, in draft form and detailed by month, an operating plan and
budget with respect to the Energy Complex (a) on or prior to the Closing Date
covering the period from the Closing Date through the end of the Fiscal Year in
which the Closing Date occurs and (b) sixty (60) days prior to the commencement
of each Fiscal Year commencing after the Closing Date covering such Fiscal Year
(each such budget, an "Annual Budget"). Each Annual Budget shall specify the
estimated project revenues, the estimated rates and revenues for each category
of Processing Services, all Operation and Maintenance Costs and a maintenance
plan covering all projected Maintenance Expenditures required during a period of
seventeen (17) Fiscal Quarters commencing with the first Fiscal Quarter covered
by such Annual Budget (the "Maintenance Plan"). Each Annual Budget shall also
include, solely for informational purposes and based upon projections prepared
by the Company in accordance with Section 1.15, the projected Senior Debt
Service Coverage Ratio for the Fiscal Year then ending and the immediately
succeeding Fiscal Year. The Independent Engineer shall provide its comments, if
any, to the Company within thirty (30) days of its receipt of the proposed
Annual Budget and the Company shall incorporate the Independent Engineer's
reasonable suggestions into a final Annual Budget, which shall then be provided
to the Collateral Agent. If, after reasonable efforts, the Company and the
Independent Engineer cannot agree on a final Annual Budget, the Company may
invoke the Third Party Engineer Dispute Resolution as set forth in Section 11.2
of the Intercreditor Agreement. If a final Annual Budget for a given Fiscal Year
is not established by the process described above by the end of the prior Fiscal
Year, the Annual Budget for such Fiscal Year shall, until a final Annual Budget
is so established, be deemed to consist of the previous year's Annual Budget,
escalated at the GDPIPD for the previous Fiscal Year; provided, however, that
with respect to any Fiscal Year that a final Annual Budget has not been
established, the Company may, with the Independent Engineer's reasonable
approval, amend the prior Fiscal Year's Annual Budget to make reasonable and
adequate provision for scheduled Maintenance Expenditures. The Company shall
operate and maintain the Energy Complex, or cause the Energy Complex to be
operated and maintained, in accordance with such final Annual Budget as approved
by the Independent Engineer, other than deviations resulting from dispatch and
other operating requirements, provided that any deviations that would reasonably
be expected to result in a Material Adverse Effect shall be approved by the
Independent Engineer as being reasonably necessary to comply with Project
Contracts or for operation of the Energy Complex in compliance with Prudent
Plant Operating Standards; provided further, however, that withdrawals of monies
from the Operating Account (other than for any such monies (i) rebated to the
United States government pursuant to Section 148 of the Code, (ii) applied to
Maintenance Expenditures, (iii) applied to the payment of IDB Claims or (iv)
applied to (or deemed to be applied to) the payment of the 1994 Bonds pursuant
to Section 3.16 of the Intercreditor Agreement) and from the Mill Owner
Maintenance Reserve Account (other than for any such monies deposited into the
Working Capital Facility Account, the Indenture Securities Account or
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the Tax-Exempt Indenture Securities Account) in any Fiscal Year, together with
the amount of any Working Capital Facility O&M Loans during such Fiscal Year,
not in excess of one hundred ten percent (110%) of the aggregate amount of
Operation and Maintenance Costs (other than Maintenance Expenditures) set forth
in the Annual Budget for such Fiscal Year shall be deemed not to reasonably be
expected to have a Material Adverse Effect. Each Annual Budget and the
Maintenance Plan may be amended, restated, supplemented or otherwise modified
from time to time, at the request of the Company with the approval of the
Independent Engineer.
SECTION 5.13. Insurance Reports. Not later than thirty (30) days prior
to the expiration of any insurance required to be maintained by the Company
pursuant to the Project Documents, the Company shall submit to the Trustee an
Officer's Certificate certifying that such insurance (a) has been renewed or
replaced and will continue in full force and effect and all premiums for such
renewal or replacement term have been fully paid, together with evidence of such
renewal or replacement, or (b) will not be required to be maintained pursuant to
the Project Documents following its expiration. Within thirty (30) days after
the end of each Fiscal Year, the Company shall submit to the Trustee an
Officer's Certificate (accompanied by a certificate signed by the Independent
Insurance Advisor) (i) listing all insurance being carried by, or on behalf of,
the Company pursuant to the Project Documents and (ii) certifying that all
insurance required to be maintained by the Company pursuant to the Project
Documents is in full force and effect and all premiums therefor have been fully
paid.
SECTION 5.14. Liens. Neither of the Mobile Energy Parties shall create
or suffer to exist or permit any Lien upon or with respect to any of its
properties other than Permitted Liens.
SECTION 5.15. Investments. Neither of the Mobile Energy Parties shall
make any investment other than Permitted Investments.
SECTION 5.16. Indebtedness. Neither of the Mobile Energy Parties shall
create or incur or suffer to exist any Debt or lease obligations of such Mobile
Energy Party other than Permitted Indebtedness.
SECTION 5.17. Debt for Modifications; Replacement Debt; Refunding Debt.
The Company may incur Permitted Indebtedness to be used for Required
Modifications, Optional Modifications, Replacement Debt and Refunding Debt
provided that:
(a) The Company shall not issue Senior Debt for Required
Modifications or Optional Modifications unless (i) such Senior Debt is
issued under the Indenture or the Tax-Exempt Indenture, (ii) the
Company delivers to the Trustee an Officer's Certificate (together with
an Independent Engineer Confirmation) certifying that (A) based upon
projections prepared by the Company in accordance with Section 1.15,
the average of the annual Senior Debt Service Coverage Ratios after
giving effect to the proposed issuance of such Senior Debt through the
final maturity date of the Outstanding Securities is projected to be
equal to or greater than the lesser of (1) the then projected average
of the annual Senior Debt Service Coverage Ratios without giving effect
to such proposed issuance through the final maturity date of the
Outstanding Securities and (2) 1.25 to 1.0 in the case of Required
Modifications and 1.5 to 1.0 in the case of Optional Modifications, (B)
in the case of Optional Modifications, based upon projections prepared
by the Company in accordance with Section 1.15, the minimum annual
Senior Debt Service Coverage Ratio after giving effect to such proposed
issuance in each Fiscal Year through the final maturity date of the
Outstanding Securities is projected to be equal to or greater than the
lesser of (1) the then projected minimum annual Senior Debt Service
Coverage Ratio without giving effect to such proposed issuance in each
Fiscal Year through the final maturity date of the Outstanding
Securities and (2) 1.35 to 1.0 and (C)
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(1) there will be no fundamental change in the use of the Energy
Complex as a result of such proposed issuance, (2) the proceeds of such
proposed issuance, together with proceeds of additional equity funds
provided by the Company or of Subordinated Debt, will be sufficient for
the proposed purpose of such proposed issuance and (3) in the case of
Optional Modifications, the proposed purpose of such proposed issuance
will not impair the operations or reliability of the Energy Complex,
(iii) the assets to be financed with such proposed issuance (and, to
the extent a Lien can be granted therein under applicable Law, all
tangible and intangible rights related to the construction, operation
or ownership of such assets) will be subject to the Lien of the
Security Documents and (iv) in the case of Optional Modifications, the
Company provides to the Trustee a letter from two (2) of the Rating
Agencies (then currently rating the Outstanding Securities) confirming
that the issuance of such Senior Debt and the obligations to be
undertaken by the Company in connection with the facilities to be
constructed with the proceeds of such proposed issuance will not,
solely as a result thereof, result in any downgrading of the rating on
the Outstanding Securities.
(b) The Company shall not issue Senior Debt for Replacement
Debt or Refunding Debt unless (i) such Senior Debt is issued under the
Indenture or the Tax-Exempt Indenture, (ii) (A) monies in an amount
sufficient to effect payment of the principal of and premium, if any,
and interest on the Senior Debt to be redeemed are held in trust or (B)
U.S. Government Obligations in an amount sufficient and having such
terms and qualifications so as to defease the Senior Debt to be
redeemed in accordance with the Indenture or the Tax-Exempt Indenture
(as the case may be) are held in trust, (iii) in the case of
Replacement Debt, the Company provides an Officer's Certificate to the
Trustee stating that (A) based upon projections prepared by the Company
in accordance with Section 1.15, the average of the annual Senior Debt
Coverage Ratios after giving effect to such proposed issuance and the
repayment or defeasance of any Tax- Exempt Indenture Securities
occasioned thereby through the final maturity date of the Outstanding
Securities is projected to be equal to or greater than the lesser of
(1) the then projected average of the annual Senior Debt Service
Coverage Ratios without giving effect to such proposed issuance through
the final maturity date of the Outstanding Securities and (2) 1.25 to
1.0 and (iv) in the case of Refunding Debt, the Company delivers to the
Trustee an Officer's Certificate (together with an Independent Engineer
Confirmation) certifying that, based upon projections prepared by the
Company in accordance with Section 1.15, (A) the projected Senior Debt
Service Requirement after giving effect to such proposed issuance will
not exceed the projected Senior Debt Service Requirement without giving
effect to such proposed issuance, in each case through the final
maturity date of the Outstanding Securities, by more than ten percent
(10%) for any Fiscal Year through the final maturity of the Outstanding
Securities and (B) either (1) the projected average of the annual
Senior Debt Service Requirements after giving effect to such proposed
issuance will not exceed the projected average of the annual Senior
Debt Service Requirements without giving effect to such proposed
issuance, in each case through the final maturity date of the
Outstanding Securities, or (2) the minimum annual Senior Debt Service
Coverage Ratio after giving effect to such proposed issuance in each
Fiscal Year through the final maturity date of the Outstanding
Securities is projected to be equal to or greater than 1.35 to 1.0 and
the average of the annual Senior Debt Service Coverage Ratios after
giving effect to such proposed issuance through the final maturity date
of the Outstanding Securities is projected to be equal to or greater
than 1.5 to 1.0.
(c) The Company shall not issue Subordinated Debt for Required
Modifications unless (i) the Company delivers to the Trustee an
Officer's Certificate (together with an Independent Engineer
Confirmation)
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certifying that, based upon projections prepared by the Company in
accordance with Section 1.15, the average of the annual Total Debt
Service Coverage Ratios after giving effect to the proposed issuance of
such Subordinated Debt through the final maturity of the Outstanding
Securities is projected to be equal to or greater than (A) 1.15 to 1.0
or (B) 1.0 to 1.0, unless, in the case of this clause (B), the Trustee
receives notice objecting to such proposed issuance from the Collateral
Agent pursuant to Section 7.2(d) of the Intercreditor Agreement no
later than eighty-five (85) days after the notice from the Company to
the Senior Secured Parties described in Section 5.17(d) and (ii) the
assets to be financed with such proposed issuance (and, to the extent a
Lien can be granted therein under applicable Law, all tangible and
intangible rights related to the construction, operation or ownership
of such assets) will be subject to the Lien of the Security Documents;
provided, however, that if the Company proposes to issue Subordinated
Debt for Required Modifications other than as described in clause
(i)(B) above, and such average of the annual Total Debt Service
Coverage Ratios after giving effect to such proposed issuance is
projected to be less than 1.25 to 1.0, such proposed Subordinated Debt
shall not be issued unless the Company provides proceeds of additional
equity funds or of Affiliate Subordinated Debt such that the ratio of
such additional equity (including the Affiliate Subordinated Debt) to
total funds used for such Required Modifications is equal to or greater
than the ratio of the Company's equity to total capitalization on the
Closing Date.
(d) Upon notice from the Company to the Senior Secured Parties
(i) stating that the Company proposes to issue Subordinated Debt for
Required Modifications and that the average of the annual Total Debt
Service Coverage Ratios after giving effect to such proposed issuance
through the final maturity of the Outstanding Securities is projected
to be equal to or greater than 1.0 to 1.0 (but less than 1.15 to 1.0),
(ii) setting forth a description of such Required Modifications and
(iii) directing the Trustee to give notice to the Holders of such
proposed issuance, the Trustee shall, within fifteen (15) days of such
notice from the Company, give notice to all of the Holders, in the
manner provided in Section 1.6, specifying that, unless a majority in
principal amount of the Combined Exposure gives notice to the Senior
Secured Parties objecting to such proposed issuance within the period
expiring on the date that is seventy-five (75) days after such notice
from the Company, the Company may issue such Subordinated Debt. Upon
the objection of the Holders of not less than a majority in aggregate
principal amount of the Outstanding Securities on or prior to the
expiration of such period, the Trustee shall promptly (but in no event
later than five (5) days after such notice to the Trustee objecting to
such issuance) furnish to the Collateral Agent a Senior Creditor
Certificate directing the Collateral Agent, subject to receipt by the
Collateral Agent of Senior Creditor Certificates from Senior Secured
Parties holding or otherwise representing a majority in principal
amount of the Combined Exposure, to deliver to the Trustee the notice
pursuant to Section 7.2(d) of the Intercreditor Agreement objecting to
such proposed issuance.
(e) The Company shall not issue Subordinated Debt for Optional
Modifications unless (i) the Company delivers to the Trustee an
Officer's Certificate (together with an Independent Engineer
Confirmation) certifying that such proposed Optional Modifications (A)
are not reasonably likely to result in a Material Adverse Effect, (B)
are technically feasible and (C) are not reasonably expected to
materially and adversely affect the operation or reliability of the
Energy Complex, (ii) the assets to be financed with such proposed
issuance (and, to the extent a Lien can be granted therein under
applicable Law, all tangible and intangible rights related to the
construction, operation or ownership of such assets) will be subject to
the Lien of the Security Documents and
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(iii) the Company provides to the Trustee a letter from two (2) Rating
Agencies (then currently rating the Outstanding Securities) confirming
that such proposed issuance and the obligations to be undertaken by the
Company in connection with the facilities to be constructed with the
proceeds thereof will not, solely as a result thereof, result in any
downgrading on the Outstanding Securities.
SECTION 5.18. Application of Proceeds from Sale of Securities. (a)
Promptly upon receipt by the Company of the proceeds from the sale of the First
Mortgage Bonds, the Company shall (i) apply $190,000,000 to repay to Southern a
bridge loan in the principal amount of $190,000,000 and distribute to the
Company's owners $10,523,620, which, in turn, will be dividended to Southern,
(ii) repay to Southern Electric $200,000 representing certain costs incurred by
Southern Electric associated with the offering of the First Mortgage Bonds and
the Tax-Exempt Bonds, (iii) transfer $9,000,000 to the Collateral Agent for
deposit into the Capital Budget Subaccount to finance Project Costs in
accordance with the Capital Budget, (iv) apply $1,405,979 to pay outstanding
attorneys' fees associated with the acquisition of the Energy Complex from
Scott, (v) apply $9,552,623 to pay certain financing costs incurred in
connection with the transactions contemplated by the Financing Documents,
including certain financing costs incurred in connection with the offering of
the First Mortgage Bonds and the Tax-Exempt Bonds, and (vi) apply $32,294,690 to
pay breakage costs in connection with the termination of the interest hedging
arrangements entered into in connection with the acquisition of the Energy
Complex from Scott.
(b) Promptly upon receipt by the Company of the proceeds from any sale
of Senior Securities (other than the First Mortgage Bonds) of any series (net of
any underwriting commission) for purposes of (i) financing Optional
Modifications or Required Modifications, the Company shall deposit all such
proceeds into the Optional Modifications Subaccount or the Required
Modifications Subaccount (as the case may be) for application in accordance with
the Intercreditor Agreement or (ii) Replacement Debt or Refunding Debt (as the
case may be), the Company shall apply such proceeds for such purposes.
SECTION 5.19. Restricted Payments. (a) The Company shall not make any
Restricted Payments unless, in the case of any Restricted Payment proposed to be
made on a Distribution Date, the Company delivers an Officer's Certificate to
the Collateral Agent certifying that as of such Distribution Date (i) no Event
of Default has occurred and is continuing, and no breach of this Section 5.19
then exists (whether or not such breach is a matured Event of Default), (ii) the
Company is not insolvent and would not be rendered insolvent by the making of
such proposed Restricted Payment and no Bankruptcy Event has occurred and is
continuing in respect of either of the Mobile Energy Parties, (iii) no ESA
Blockage Event with respect to the Pulp Mill Owner or its Energy Services
Agreement or its Mill has occurred and is continuing, (iv) the provisions of the
Indenture, the Intercreditor Agreement and the Tax-Exempt Indenture relating to
the funding of the Accounts established thereunder have been complied with as of
such Distribution Date, and amounts on deposit in the Debt Service Reserve
Account are equal to the Debt Service Reserve Account Required Balance, amounts
on deposit in the Tax-Exempt Debt Service Reserve Account are equal to the Tax-
Exempt Debt Service Reserve Account Required Balance and amounts on deposit in
each of the other Accounts are equal to the then required balances (including,
in the case of the Maintenance Reserve Account, the Maintenance Reserve Account
Required Deposit with respect to the most recently completed Fiscal Quarter has
been made), (v) no Mill Owner is then exercising Mill Owner Step-In Rights and
(vi) neither of the Mobile Energy Parties shall be subject to regulation as to
rates with respect to the provision of Processing Services, nor shall the
revenues or other amounts received or receivable by the Company under the
Project Contracts for the use of Processing Services or other services and
facilities of the Energy Complex be subject to regulation, in either case by any
Governmental Authority having jurisdiction over either of the Mobile Energy
Parties under Federal, state or local law, unless the Company has provided a
Revenue
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Sufficiency Certification (based upon and after giving effect to such
regulation) to the Trustee upon the earlier of (A) the issuance of a binding
order (which shall be final and not subject to review on appeal) of such
Governmental Authority to the effect that either of the Mobile Energy Parties,
or such revenues or other amounts, shall be subject to such regulation and (B)
the application of regulation as to the rates, or revenues or other amounts,
received or receivable by the Company under the Project Contracts, including the
imposition of any order or other action by a Governmental Authority to the
effect that such revenues and other amounts received or receivable by the
Company shall be subject to refund.
(b) The Company shall not make any Restricted Payments permitted
pursuant to Section 5.19(a) on any Distribution Date unless the Company provides
an Officer's Certificate to the Collateral Agent certifying that as of such
Distribution Date (i) the Senior Debt Service Coverage Ratio for the period
consisting of the two (2) semi-annual payment periods immediately preceding such
Distribution Date was equal to at least 1.25 to 1 and (ii) based upon
projections prepared by the Company in accordance with Section 1.15 (which
projections shall, at the request of the Collateral Agent be reviewed by the
Independent Engineer if the Senior Debt Service Coverage Ratio referred to below
is less than 1.30 to 1), the Senior Debt Service Coverage Ratio for the period
consisting of the current semi-annual payment period and the next succeeding
semi-annual payment period is projected to be at least 1.25 to 1; provided,
however, that notwithstanding the requirements of this Section 5.19(b), the
Company shall be permitted to make Restricted Payments solely to fund an Income
Tax Deficiency if the Company provides an Officer's Certificate to the
Collateral Agent stating that (A) the Senior Debt Service Coverage Ratio for the
period consisting of the two (2) semi-annual payment periods immediately prior
to the Distribution Date was equal to at least 1.10 to 1 and (B) based upon
projections prepared by the Company in accordance with Section 1.15, the Senior
Debt Service Coverage Ratio for the period consisting of the current semi-annual
payment period and the next succeeding semi-annual payment period is projected
to be at least 1.10 to 1; provided further, however, that the historical tests
set forth in clause (i) of this Section 5.19(b) and in clause (A) of the
immediately preceding proviso (1) are not required to be satisfied on the first
Distribution Date following the Closing Date and (2) are required to be
satisfied only for the semi-annual payment period immediately preceding such
Distribution Date on the second Distribution Date following the Closing Date.
SECTION 5.20. Casualty Proceeds; Eminent Domain Proceeds. The Company
shall cause all Casualty Proceeds and Eminent Domain Proceeds to be deposited
into the Loss Proceeds Account and applied in accordance with the provisions of
this Indenture and the Intercreditor Agreement.
SECTION 5.21. Benefit Plan Liabilities. Neither of the Mobile Energy
Parties shall, nor shall they permit any Person who is a member of a controlled
group of corporations, or a group of trades or businesses under common control
with the Company (within the meaning of Section 414 of the Code) to, (a) fail to
fulfill its obligations under or to comply in any material respect with the
requirements of ERISA or the Code with respect to any employee benefit plans,
(b) seek a waiver of the minimum funding standard of Section 412 of the Code,
(c) fail to make any contribution or payment to or in respect of any employee
benefit plan required to be made by Law or by the terms of such plan, (d) make
any amendment to any employee benefit plan that has resulted or should result in
the imposition of a lien or the posting of a bond or other security under ERISA
or the Code or (e) incur any liability under Title IV of ERISA other than a
liability to the Pension Benefit Guaranty Corporation for premiums under Section
4007 of ERISA, if as a result of any such event or condition set forth in
clauses (a) through (e) above, together with all such other events and
conditions, either of the Mobile Energy Parties shall incur or be reasonably
likely to incur, or any other member of such controlled group shall incur or be
reasonably likely to incur any liability for which such Mobile Energy Party
would be subject to, a
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liability that is material in relation to the financial position of such Mobile
Energy Party
SECTION 5.22. Mill Owner Maintenance Reserve Account. The Company
hereby agrees that monies on deposit in, or otherwise credited to (in accordance
with the Mill Owner Maintenance Reserve Account Agreement) the Mill Owner
Maintenance Reserve Account shall be used solely for Operation and Maintenance
Costs or by the Mills as permitted by the Mill Owner Maintenance Reserve Account
Agreement; provided, however, that, prior to a Trigger Event, such monies shall
be used, as contemplated by the Mill Owner Maintenance Reserve Account
Agreement, for payment to the Trustee for deposit into the Indenture Securities
Account and to the Tax-Exempt Indenture Trustee for deposit into the Tax-Exempt
Indenture Securities Account and to the Collateral Agent for deposit into the
Working Capital Facility Account, ratably based upon the respective amounts
owing to each such Account, on the Monthly Transfer Date immediately preceding
each Interest Payment Date or Principal Payment Date therefor, whenever, and to
the extent that, the amount of monies on deposit (after giving effect to any
monies to be deposited from the Revenue Account into any Account on such Monthly
Transfer Date) in the Working Capital Account, the Indenture Securities Account,
the Tax- Exempt Indenture Securities Account, the Maintenance Reserve Account,
each applicable Debt Service Reserve Account (if any), each applicable
Tax-Exempt Debt Service Reserve Account (if any), the Distribution Account, the
Subordinated Fee Account and the Subordinated Debt Account (including, in the
case of the Maintenance Plan Funding Subaccount and the Distribution Account,
the then Available Amount under any Reserve Account Security on deposit therein)
are insufficient to make payments when due on the Senior Debt.
ARTICLE VI.
REDEMPTION AND PREPAYMENT OF SECURITIES
SECTION 6.1. Applicability of Article. Securities of any series that
are subject to redemption or prepayment before their Stated Maturity (or, if the
principal of the Securities of any series is payable in installments, the Stated
Maturity of the final installment of the principal thereof) shall be redeemed or
prepaid in accordance with their terms and (except as otherwise specified in the
Series Supplemental Indenture creating such series) in accordance with this
Article VI.
SECTION 6.2. Election to Redeem or Prepay; Notice to Trustee. The
election or requirement of the Company to redeem or prepay any Securities
otherwise than through a Sinking Fund shall be evidenced by a Company Order. If
the Company determines or is required to redeem or prepay any Securities, the
Company shall, at least fifteen (15) days prior to the date upon which notice of
redemption or prepayment is required to be given to the Holders pursuant to
Section 6.4 hereof (unless a shorter notice period shall be satisfactory to the
Trustee), deliver to the Trustee a Company Order specifying the date on which
such redemption or prepayment shall occur (a "Redemption Date" or "Prepayment
Date," as the case may be) and the series and principal amount of Securities to
be redeemed or prepaid. In the case of any redemption or prepayment of
Securities (a) prior to the expiration of any restriction on such redemption or
prepayment provided in the terms of such Securities, the Series Supplemental
Indenture relating thereto or elsewhere in this Indenture or (b) pursuant to an
election of the Company that is subject to a condition specified in the terms of
such Securities or in the Series Supplemental Indenture relating thereto, the
Company shall furnish the Trustee with an Officer's Certificate and Opinion of
Counsel evidencing compliance with such restriction or condition.
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SECTION 6.3. Optional Redemption; Extraordinary Redemption; Prepayment;
Selection of Securities to Be Redeemed or Prepaid. (a) The Securities of any
series shall be subject to redemption from time to time at the option of the
Company only as provided in the Series Supplemental Indenture relating thereto.
(b) Unless otherwise provided in a Series Supplemental Indenture, all
Outstanding Securities shall be redeemed prior to maturity, as a whole, at a
redemption price equal to the principal amount thereof, together with any
interest on the principal amount of the Securities accrued to the Redemption
Date, upon an Event of Loss or an Event of Eminent Domain if (i) the
determination is made in accordance with Section 3.10(c) of the Intercreditor
Agreement that neither the Energy Complex nor any portion thereof can be
rebuilt, repaired, restored or replaced with a Replacement Facility (subject to
the conditions specified in the Intercreditor Agreement) or that the Loss
Proceeds with respect thereto, together with Additional Available Proceeds, are
not sufficient to permit such rebuilding, repair, restoration or replacement or
(ii) if (A) the monies on deposit in the Loss Proceeds Account, including all
Additional Available Proceeds, are sufficient to redeem all Senior Debt, (B) all
or substantially all of the Energy Complex is destroyed or taken, (C) the
Company elects not to rebuild, repair, restore or replace the Energy Complex and
(D) the Company provides an Officer's Certificate to the Trustee and the
Collateral Agent certifying that the Company is not otherwise required under the
Master Operating Agreement or the Lease to rebuild, repair, restore or replace
the Energy Complex, or to apply Loss Proceeds to the rebuilding, repairing,
restoration or replacement or the Energy Complex (which certification shall be
confirmed by an Opinion of Counsel to such effect). All Loss Proceeds received
by the Trustee from the Collateral Agent pursuant to Section 6.2(a) of the
Intercreditor Agreement with respect to such Event of Loss or Event of Eminent
Domain (as the case may be) shall be deposited into the Indenture Securities
Redemption Subaccount and applied by the Trustee to the redemption of all
Outstanding Securities pursuant to this Section 6.3(b).
Any redemption pursuant to this Section 6.3(b) shall be made within
ninety (90) days after the receipt by the Trustee of the Excess Loss Proceeds
from the Collateral Agent.
(c) The Outstanding Securities shall be partially redeemed, ratably
among, and by lot within, all outstanding series and maturities, prior to
maturity at a redemption price equal to the principal amount thereof, together
with any interest on the principal amount of the Outstanding Securities accrued
to the Redemption Date, upon completion of the rebuilding, repair, restoration
or replacement of the Energy Complex following an Event of Loss or an Event of
Eminent Domain where a determination is made that the Energy Complex or any
portion thereof can be rebuilt, repaired, restored or replaced with a
Replacement Facility and that the Company has sufficient monies available for
such rebuilding, repair, restoration or replacement. The foregoing provisions of
this Section 6.3(c) may be altered in a Series Supplemental Indenture, but such
altered provisions shall not be effective while any Securities Outstanding as of
the date of such Series Supplemental Indenture remain Outstanding.
The aggregate amount of Securities to be redeemed shall be equal to the
Indenture Distribution Amount transferred to the Trustee for such purpose
pursuant to Section 6.2(b)(ii) of the Intercreditor Agreement. All Excess Loss
Proceeds so transferred to the Trustee shall be deposited into the Indenture
Securities Redemption Subaccount and applied by the Trustee to the redemption of
such Securities pursuant to this Section 6.3(c); provided, however, that, to the
extent that any of such Excess Loss Proceeds is transferred to the Trustee
pursuant to clause (B) of the last sentence of Section 6.2(b) of the
Intercreditor Agreement, the Trustee shall deposit such Excess Loss Proceeds
into the Indenture Securities Principal Subaccount to be applied to the payment
or redemption of Securities at the earliest date permitted by the terms thereof.
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Any redemption pursuant to this Section 6.3(c) shall be made within
ninety (90) days after the receipt by the Trustee of such Excess Loss Proceeds
(other than any such Excess Loss Proceeds transferred to the Indenture
Securities Principal Subaccount).
(d) Except as otherwise specified herein or in the Series Supplemental
Indenture relating to the Securities of a series, if less than all the
Securities of such series are to be redeemed or prepaid pursuant to Section
6.3(a), the particular Securities of such series to be redeemed or prepaid shall
be selected by the Trustee from the Outstanding Securities of such series not
previously called for redemption or prepayment in whole, by such method
(including by lot) as the Trustee shall deem fair and appropriate.
(e) The Trustee shall promptly notify the Company in writing of the
Securities selected for redemption or prepayment and, in the case of any
Securities to be redeemed or prepaid in part, the principal amount thereof to be
redeemed or prepaid.
(f) For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption or prepayment of Securities
shall relate, in the case of any Securities redeemed or prepaid or to be
redeemed or prepaid only in part, to the portion of the principal amount of such
Securities that has been or is to be redeemed or prepaid.
SECTION 6.4. Notice of Redemption or Prepayment. Except as otherwise
specified in the Series Supplemental Indenture relating to the Securities of a
series to be redeemed or prepaid, notice of redemption or prepayment (including
any Sinking Fund redemption pursuant to Article VII hereof) shall be given in
the manner provided in Section 1.6 to the Holders of Securities of such series
to be redeemed or prepaid at least thirty (30) days but not more than sixty (60)
days prior to the Redemption Date or Prepayment Date (as the case may be). All
notices of redemption or prepayment shall state:
(a) The Redemption Date or Prepayment Date (as the case may be);
(b) the premium payable on redemption or prepayment, if any;
(c) if less than all the Outstanding Securities of any series
are to be redeemed or prepaid in whole, (i) the particular Securities
of such series to be redeemed or prepaid in whole, (ii) the portion of
the principal amount of each Security of such series to be redeemed or
prepaid in part and (iii) that, on and after the Redemption Date or
Prepayment Date (as the case may be), upon surrender of such Security,
a new Security or Securities of such series in principal amount equal
to the remaining unpaid principal amount thereof will be issued;
(d) that on the Redemption Date or Prepayment Date (as the
case may be), interest on the Securities of such series to be redeemed
or prepaid will cease to accrue on and after such date;
(e) the Place or Places of Payment where such Securities are to be
surrendered for payment of the amount in respect of such redemption or
prepayment; and
(f) that such redemption is for a Sinking Fund, if such is the
case.
Notice of redemption of Securities to be redeemed at the election of
the Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company. The Company shall provide
the Trustee with a copy of the form of notice of redemption or prepayment of the
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Securities at the time the Company delivers to the Trustee the Company Order
relating to such redemption or prepayment pursuant to Section 6.2 hereof.
SECTION 6.5. Securities Payable on Redemption Date or Prepayment Date.
Notice of redemption or prepayment (as the case may be) having been given as
aforesaid, and the conditions, if any, set forth in such notice having been
satisfied, the Securities or portions thereof so to be redeemed or prepaid
shall, on the Redemption Date or Prepayment Date (as the case may be), become
due and payable, and from and after such date such Securities or portions
thereof shall cease to bear interest. Upon surrender of any such Security for
redemption or prepayment in accordance with such notice, an amount in respect of
such Security or portion thereof shall be paid as provided therein; provided,
however, that any payment of interest on any Security the Stated Maturity of
which payment is on or prior to the Redemption Date or Prepayment Date (as the
case may be) shall be payable to the Holder of such Security, or one (1) or more
Predecessor Securities, registered as such at the close of business on the
related Regular Record Date according to the terms of such Security and subject
to the provisions of Section 2.10. If any Security called for redemption or
prepayment shall not be so paid upon surrender thereof for redemption or
repayment (as the case may be), the principal of and premium, if any, and
interest on such Security shall, until paid, bear interest from the Redemption
Date or the Prepayment Date (as the case may be) at the rate prescribed in the
Security.
SECTION 6.6. Securities Redeemed or Prepaid in Part. Any Security that
is to be redeemed or prepaid only in part shall be surrendered at a Place of
Payment therefor (with, if the Company or the Trustee so requires, due
endorsement by, or a written instrument of transfer in form satisfactory to the
Company and the Trustee duly executed by, the Holder thereof or such Holder's
attorney duly authorized in writing), and the Mobile Energy Parties shall
execute, and the Trustee shall authenticate and make available for delivery to
the Holder of such Security without service charge, a new Security or Securities
of the same series, of any authorized denomination requested by such Holder and
of like tenor and in aggregate principal amount equal to and in exchange for the
remaining unpaid principal amount of the Security so surrendered.
ARTICLE VII.
SINKING FUNDS
SECTION 7.1. Applicability of Article. The provisions of this Article
VII shall be applicable to any sinking fund for the retirement of the Securities
of any series except as otherwise specified in the Series Supplemental Indenture
creating the Securities of such series.
SECTION 7.2. Sinking Funds for Securities. Any Series Supplemental
Indenture may provide for a sinking fund for the retirement of the Securities of
the series created thereby (hereinafter called a "Sinking Fund") in accordance
with which the Company will be required to redeem on the dates set forth therein
(hereinafter called "Sinking Fund Redemption Dates") Securities of principal
amounts set forth therein (hereinafter called "Sinking Fund Requirements").
Except as otherwise specified in the Series Supplemental Indenture
relating to the Securities of a series, the particular Securities of such
series, if any, to be redeemed through a Sinking Fund shall be selected in the
manner provided in Section 6.3(d), and notice of such redemption shall be given
in the manner provided in Section 6.4.
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ARTICLE VIII.
EVENTS OF DEFAULT; REMEDIES
SECTION 8.1. Events of Default. The term "Event of Default," whenever
used herein, shall mean any of the following events (whatever the reason for
such event and whether it shall be voluntary or involuntary or come about or be
affected by operation of law, or be pursuant to or in compliance with any
applicable Law), and such event shall continue to be an Event of Default if and
for so long as it shall not have been remedied:
(a) either of the Mobile Energy Parties shall fail to pay any
principal of or premium, if any, or interest on any Security when the
same becomes due and payable, whether by scheduled maturity or required
prepayment or by acceleration or otherwise, for fifteen (15) or more
days; or
(b) either of the Mobile Energy Parties shall fail to perform
or observe any covenant or agreement contained in: (i) Section 5.4(e);
(ii) Section 5.7(b) (insofar as such failure relates to matters
specified in Section 5.8(b)(iv)); (iii) Section 5.8(b) (other than
clause (v) thereof); (iv) Section 5.10; or (v) Section 5.19; or
(c) either of the Mobile Energy Parties shall fail to perform
or observe any covenant or agreement contained in: (i) Section 5.2;
(ii) Section 5.4(a); (iii) Section 5.5; (iv) Section 5.7(a); (v)
Section 5.7(b) (insofar as such failure would reasonably be expected to
have a Material Adverse Effect or relates to matters specified in
Section 5.8(b)(v)); (vi) Section 5.8(a), 5.8(b)(v) or 5.8(c); (vii)
Section 5.13; (viii) Section 5.14; (ix) Section 5.15; (x) Section 5.16;
(xi) Section 3(e), 3(f), 3(g), 3(h), 3(i) or 3(j) of the Security
Agreement; or (xii) Section 8, 10, 13, 14 or 15 of the Mortgage; and,
in the case of clauses (i) through (xii) above, such failure shall
continue uncured for thirty (30) or more days after either of the
Mobile Energy Parties has knowledge of such failure; or
(d) either of the Mobile Energy Parties shall fail to perform
or observe any covenant or agreement contained in: (i) Section 5.4(b);
or (ii) Section 5.7(b) (insofar as such failure relates to matters
specified in Section 5.8(b)(i) or 5.8(b)(iii)); and, in the case of
clauses (i) and (ii) above, such failure continues for more than thirty
(30) days after either of the Mobile Energy Parties has knowledge of
such failure; provided, however, that if (and for so long as an
Authorized Officer of either of the Mobile Energy Parties provides an
Officer's Certificate certifying that) (A) such failure is capable of
being remedied and either of the Mobile Energy Parties is diligently
attempting to remedy such failure, (B) no other Event of Default has
occurred and is continuing and (C) such failure would not have a
Material Adverse Effect, then either of the Mobile Energy Parties may
continue to effect such cure of the default for an additional sixty
(60) days; or
(e) either of the Mobile Energy Parties shall fail to perform
or observe any material covenant or agreement to be performed or
observed by it under the provisions of this Indenture, the Security
Agreement or the Mortgage (other than those referred to in Sections
8.1(a), (b), (c) and (d)) and such failure shall continue uncured for
thirty (30) or more days after either of the Mobile Energy Parties has
knowledge of such failure; provided, however, that if (and for so long
as an Authorized Officer of either of the Mobile Energy Parties
provides an Officer's Certificate certifying that) (i) such failure is
capable of being remedied and either of the Mobile Energy Parties is
diligently attempting to remedy such failure and (ii) no other Event of
Default has occurred and is continuing,
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then either of the Mobile Energy Parties may continue to effect such
cure of the default for an additional one hundred twenty (120) days; or
(f) any representation or warranty made by either of the
Mobile Energy Parties herein or in any other Financing Document or in
any certificate, financial statement or other document furnished to the
Trustee or the Collateral Agent hereunder or thereunder shall prove to
have been false or misleading in any respect as of the time made,
confirmed or furnished and the inaccuracy has resulted or would
reasonably be expected to result in a Material Adverse Effect and (if
capable of being cured) such misrepresentation shall continue uncured
for thirty (30) or more days after either of the Mobile Energy Parties
has knowledge thereof; provided, however, that if (and for so long as
an Authorized Officer of either of the Mobile Energy Parties provides
an Officer's Certificate certifying that) (i) such failure is capable
of being remedied and either of the Mobile Energy Parties is diligently
attempting to remedy such misrepresentation and (ii) no other Event of
Default has occurred and is continuing, either of the Mobile Energy
Parties may continue to effect such cure of the misrepresentation, and
such misrepresentation shall not be deemed an Event of Default, for an
additional sixty (60) days; provided further, however, that if (and for
so long as) (A) an Authorized Officer of either of the Mobile Energy
Parties provides an Officer's Certificate certifying that such
misrepresentation will not have a Material Adverse Effect and (B) the
Trustee consents thereto, then either of the Mobile Energy Parties may
continue to effect such cure of the misrepresentation beyond such
additional sixty (60) days; or
(g) either of the Mobile Energy Parties shall fail to perform
any obligation in respect of any Debt in an amount exceeding $5,000,000
and acceleration shall be declared with respect to such Debt; or
(h) with respect to any Project Contract to which the Company
is a party: (i) such Project Contract is declared unenforceable by a
Governmental Authority; (ii) any other party thereto terminates such
Project Contract prior to its stated expiration or denies it has an
obligation and substantially ceases performance thereunder (other than,
in either case, in connection with a Mill Closure with respect to the
Tissue Mill or the Paper Mill, if the Company has provided the Revenue
Sufficiency Certification to the Collateral Agent); or (iii) any other
party thereto defaults in respect of its obligations under such Project
Contract; and, in the case of any event described in clauses (i), (ii)
and (iii) above (other than with respect to the Pulp Mill Energy
Services Agreement), such event would result in a Material Adverse
Effect; provided, however, that none of such events shall be an Event
of Default hereunder if within one hundred eighty (180) days from the
occurrence of such an event, the Company shall have provided an
Officer's Certificate certifying, together with an Independent Engineer
Confirmation, to the Trustee that (A) such Project Contract and (if
such Project Contract is an Energy Service Agreement) the applicable
Mill Owner's obligations under the Master Operating Agreement have been
reinstated on identical terms pursuant to the provisions of the Master
Operating Agreement, provided that if the obligor thereunder is
different from the obligor prior to such reinstatement, such obligor is
reasonably capable of performing its obligations under such Project
Contract or (B) the Company has satisfied the Event of Default
Alternative Agreement Requirements with respect to such Project
Contract; or
(i) (i) an Event of Default under any Working Capital Facility
shall have occurred and be continuing and shall not have been waived by
the Working Capital Facility Provider; (ii) an Event of Default under
the Tax-Exempt Indenture shall have occurred and be continuing and
shall not have been waived by the Tax-Exempt Trustee; or (iii) an Event
of Default
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under any Security Document shall have occurred and be continuing and
shall not have been waived; or
(j) a final and non-appealable judgment or judgments for the
payment of money in an aggregate amount in excess of $5,000,000 shall
be rendered against either of the Mobile Energy Parties, and the same
shall not be stayed or discharged within thirty (30) days from the date
of entry thereof; or
(k) at any time Southern shall fail to (i) continue to
control, directly or indirectly, the management and operations of the
Company (except if necessary to comply with applicable regulatory
restrictions, including (if the Company elects, or the Members elect,
to qualify the Energy Complex as a Qualifying Facility under PURPA)
those imposed on Qualifying Facilities under PURPA and the rules
promulgated thereunder) or (ii) maintain ownership, directly or
indirectly, of at least fifty percent (50%) of the ownership interests
in the Company; or
(l) at any time the Company shall fail to maintain Southern
Electric or an Affiliate thereof as Operator, unless the Company
provides a letter from any two (2) Rating Agencies (then currently
rating the Outstanding Securities) confirming that the rating of such
Securities will not be adversely affected by such failure; or
(m) any grant of a Lien contained in the Security Documents
shall cease to be effective to grant a perfected Lien to the Collateral
Agent, the Trustee or the Tax-Exempt Trustee (as the case may be) on
the Collateral described therein with the priority purported to be
created thereby; provided, however, that the Company shall have ten
(10) days from actual knowledge or constructive knowledge thereof to
cure any such cessation; or
(n) a Bankruptcy Event in respect of either of the Mobile
Energy Parties shall have occurred and be continuing; or
(o) if any Southern Guaranty is in effect with respect to any
Reserve Account Security Account, a Bankruptcy Event in respect of
Southern shall have occurred and be continuing, unless a Reserve
Account Letter of Credit or cash in the amount of the then Available
Amount under such Southern Guaranty is provided within fifteen (15)
days of such Bankruptcy Event; or
(p) the failure by Southern to perform any of the "Guaranteed
Obligations" under any Southern Guaranty and such failure shall
continue for fifteen (15) or more days.
SECTION 8.2. Enforcement of Remedies. (a) If one (1) or more Events
of Default shall have occurred and be continuing, then:
(i) in the case of an Event of Default described in Section
8.1(n) (an "Automatic Acceleration Default"), the entire principal
amounts of the Securities Outstanding, all interest accrued and unpaid
thereon, and all premium and other amounts payable under the Securities
and this Indenture, if any, shall automatically become due and payable
without presentment, demand, protest or notice of any kind, all of
which are hereby waived; or
(ii) (A) in the case of an Event of Default described in
Section 8.1(a), upon the direction of the Holders of not less than
twenty-five percent (25%) in aggregate principal amount of the
Outstanding Securities or (B) in the case of an Event of Default
described in Sections 8.1(b) through (m), (o) or (p), upon the
direction of the Holders of not less than thirty-three and one-third
percent (331/3%) in aggregate principal
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amount of the Outstanding Securities, the Trustee shall, by notice to
the Company (with a copy to Mobile Energy), declare the entire
principal amounts of the Securities Outstanding, all interest accrued
and unpaid thereon, and all premium and other amounts payable under the
Securities and this Indenture, if any, to be due and payable, whereupon
the same shall become due and payable without presentment, demand,
protest or further notice of any kind, all of which are, to the extent
permitted by law, hereby waived.
(b) If an Event of Default occurs and is continuing and is known to a
Responsible Officer of the Trustee, the Trustee shall mail to each Holder a
notice of such Event of Default within thirty (30) days after the occurrence
thereof. Except in the case of an Event of Default in payment of principal of or
interest on any Security, the Trustee may withhold the notice to the Holders if
and for as long as a committee of its Responsible Officers in good faith
determines that withholding the notice is in the interest of the Holders. In
addition, if the Event of Default described in Section 8.1(a) shall have
occurred and be continuing, the Trustee may accelerate the maturity of the
Securities as provided in Section 8.2(a)(ii) notwithstanding the absence of
direction from the Holders if in the judgment of the Trustee such action is
necessary to protect the interests of the Holders.
(c) At any time after the principal of the Securities shall have become
due and payable upon an acceleration as provided herein, and before any judgment
or decree for the payment of the money so due, or any portion thereof, shall be
entered, such declaration and its consequences shall be deemed to be rescinded
and annulled if:
(i) there shall have been paid to or deposited with the Trustee a
sum sufficient to pay
(A) all overdue installments of interest on the Securities,
(B) the principal of and premium, if any, on any Securities
that have become due otherwise than by such declaration
of acceleration and interest thereon at the respective
rates provided in the Securities for late payments of
principal or premium,
(C) to the extent that payment of such interest is lawful,
interest upon overdue installments of interest at the
respective rates provided in the Securities for late
payments of interest, and
(D) all sums paid or advanced by the Trustee hereunder and
the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel,
and
(ii) all Events of Default, other than the non-payment of the
principal of the Securities that has become due solely by such
acceleration, have been cured or waived as provided in Section 8.7.
No such rescission and annulment shall affect any subsequent default or impair
any right consequent thereon.
SECTION 8.3. Specific Remedies. If any Event of Default shall have
occurred and be continuing and an acceleration shall have occurred pursuant to
Section 8.2, subject to the provisions of Sections 8.2, 8.5, 8.6 and 8.15, the
Trustee, by such officer or agent as it may appoint, may deliver notice to the
Collateral Agent in accordance with the Intercreditor Agreement requesting that
the Collateral Agent sell, without recourse, for cash, or credit or for other
property, for immediate or future delivery, and for such price or prices and on
such terms as the Collateral Agent in its discretion may determine, the Shared
Collateral as an entirety, or in such portions as the Holders of a majority in
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aggregate principal amount of the Securities then Outstanding shall request by
an Act of Holders, or, in the absence of such request, as the Trustee in its
discretion shall deem expedient in the interest of the Holders, at public or
private sale.
SECTION 8.4. Judicial Proceedings Instituted by Trustee. (a) Trustee
May Bring Suit. If there shall exist an Event of Default, then the Trustee, in
its own name, and as trustee of an express trust, subject to the provisions of
Sections 2.14 and 8.2, shall be entitled and empowered to institute any suits,
actions or proceedings at law, in equity or otherwise, for the collection of the
sums so due and unpaid on the Securities, and may prosecute any such claim or
proceeding to judgment or final decree, and may enforce any such judgment or
final decree and collect the monies adjudged or decreed to be payable in any
manner provided by law, whether before or after or during the pendency of any
proceedings for the enforcement of the Lien of this Indenture, or of any of the
Trustee's rights or the rights of the Holders under this Indenture, and such
power of the Trustee shall not be affected by any sale hereunder or by the
exercise of any other right, power or remedy for the enforcement of the
provisions of this Indenture or for the foreclosure of the Lien hereof.
(b) Trustee May Recover Unpaid Indebtedness after Sale of Collateral.
Subject to Section 2.14, in the case of a sale of the Indenture Securities
Collateral and of the application of the proceeds of such sale to the payment of
the indebtedness secured by this Indenture, the Trustee, in its own name, and as
trustee of an express trust, shall be entitled and empowered, by any appropriate
means, legal, equitable or otherwise, to enforce payment of, and to receive all
amounts then remaining due and unpaid upon, all or any of the Securities, for
the benefit of the Holders thereof, and upon any other portion of such
indebtedness remaining unpaid, with interest at the rates specified in the
respective Securities on the overdue principal of and premium, if any, and (to
the extent that payment of such interest is legally enforceable) on the overdue
installments of interest.
(c) Recovery of Judgment Does Not Affect Lien of this Indenture or
Other Rights. No recovery of any such judgment or final decree by the Trustee
and no levy of any execution under any such judgment upon any of the Indenture
Securities Collateral, or upon any other property, shall in any manner or to any
extent affect the Lien of this Indenture upon any of the Indenture Securities
Collateral, or any rights, powers or remedies of the Trustee, or any liens,
rights, powers or remedies of the Holders, but all such liens, rights, powers or
remedies shall continue unimpaired as before.
(d) Trustee May File Proofs of Claim; Appointment of Trustee as
Attorney-in-Fact in Judicial Proceedings. The Trustee in its own name, or as
trustee of an express trust, or as attorney-in-fact for the Holders, or in any
one (1) or more of such capacities (irrespective of whether the principal of the
Securities shall then be due and payable as therein expressed or by declaration
or otherwise and irrespective of whether the Trustee shall have made any demand
for the payment of overdue principal, premium, if any, or interest), shall be
entitled and empowered to file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee and of the Holders (whether such claims be based upon the provisions of
the Securities or of this Indenture) allowed in any equity, receivership,
insolvency, bankruptcy, liquidation, readjustment, reorganization or any other
judicial proceedings relating to either of the Mobile Energy Parties or any
obligor on the Securities (within the meaning of the Trust Indenture Act), the
creditors of either of the Mobile Energy Parties or any such obligor, the
Indenture Securities Collateral or any other property of either of the Mobile
Energy Parties or any such obligor and any receiver, assignee, trustee,
liquidator, sequestrator (or other similar official) in any such judicial
proceeding is hereby authorized by each Holder to make such payments to the
Trustee and, in the event that the Trustee shall consent to the making of such
payments directly to the Holders, to
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pay to the Trustee any amount due to it for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel. The
Trustee is hereby irrevocably appointed (and the successive respective Holders
of the Securities, by taking and holding the same, shall be conclusively deemed
to have so appointed the Trustee) the true and lawful attorney-in-fact of the
respective Holders, with authority to (i) make and file in the respective names
of the Holders (subject to deduction from any such claims of the amounts of any
claims filed by any of the Holders themselves) any claim, proof of claim or
amendment thereof, debt, proof of debt or amendment thereof, petition or other
document in any such proceedings and to receive payment of any amounts
distributable on account thereof, (ii) execute any such other papers and
documents and to do and perform any and all such acts and things for and on
behalf of such Holders, as may be necessary or advisable in order to have the
respective claims of the Trustee and of the Holders against either of the Mobile
Energy Parties or any such obligor, the Indenture Securities Collateral or any
other property of the Mobile Energy Parties or any such obligor allowed in any
such proceeding and (iii) receive payment of or on account of such claims and
debt; provided, however, that nothing contained in this Indenture shall be
deemed to give to the Trustee any right to accept or consent to any plan of
reorganization or otherwise by action of any character in any such proceeding to
waive or change in any way any right of any Holder. Any monies collected by the
Trustee under this Section 8.4 shall be applied as provided in Section 8.11.
(e) Trustee Need Not have Possession of Securities. All proofs of
claim, rights of action and rights to assert claims under this Indenture or
under any of the Securities may be enforced by the Trustee without the
possession of the Securities or the production thereof at any trial or other
proceedings instituted by the Trustee. In any proceedings brought by the Trustee
(and also any proceedings involving the interpretation of any provision of this
Indenture to which the Trustee shall be a party) the Trustee shall be held to
represent all the Holders of the Securities and it shall not be necessary to
make any such Holders parties to such proceedings.
(f) Suit to Be Brought for Ratable Benefit of Holders. Any suit, action
or other proceeding at law, in equity or otherwise that shall be instituted by
the Trustee under any of the provisions of this Indenture shall be for the
equal, ratable and common benefit of all the Holders, subject to the provisions
of this Indenture.
(g) Trustee May Be Restored to Former Position and Rights in Certain
Circumstances. In case the Trustee shall have instituted any proceeding to
enforce any right, power or remedy under this Indenture by foreclosure, entry or
otherwise, and such proceedings shall have been discontinued or abandoned for
any reason or shall have been determined adversely to the Trustee, then and in
every such case the Mobile Energy Parties and the Trustee shall be restored to
their former positions and rights hereunder, and all rights, powers and remedies
of the Trustee shall continue as if no such proceedings had been taken.
SECTION 8.5. Holders May Demand Enforcement of Rights by Trustee. If
an Event of Default shall have occurred and shall be continuing, the Trustee
shall, upon the written request of the Holders of a majority in aggregate
principal amount of the Securities then Outstanding and upon the offering of
indemnity as provided in Section 9.3(e), but subject in all cases to the
provisions of Section 8.3, proceed to institute one (1) or more suits, actions
or proceedings at law, in equity or otherwise, or take any other appropriate
remedy, to enforce payment of the principal of or premium, if any, or interest
on the Securities, to foreclose the Lien of this Indenture or to deliver notice
to the Collateral Agent in accordance with the Intercreditor Agreement
requesting that the Collateral Agent foreclose the Lien of the other Security
Documents or to sell the Shared Collateral under a judgment or decree of a
court or courts of competent jurisdiction or under the power of sale herein
granted, or take such other appropriate legal, equitable or other remedy, as
the Trustee, being advised
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by counsel, shall deem most effectual to protect and enforce any of the rights
or powers of the Trustee or the Holders, or, in case such Holders shall have
requested a specific method of enforcement permitted hereunder, in the manner
requested, provided that such action shall not be otherwise than in accordance
with law and the provisions of this Indenture, and the Trustee, subject to such
indemnity provisions, shall have the right to decline to follow any such request
if the Trustee in good faith shall determine that the suit, proceeding or
exercise of the remedy so requested would involve the Trustee in personal
liability or expense.
SECTION 8.6. Control by Holders. Subject to the Intercreditor
Agreement, the Holders of not less than a majority in aggregate principal amount
of the Outstanding Securities shall have the right to direct the time, method
and place of conducting any proceeding for any remedy available to the Trustee
or exercising any trust or power conferred on the Trustee, provided that (a)
such direction shall not be in conflict with any Law or with this Indenture and
(b) the Trustee may take any other action deemed proper by the Trustee that is
not inconsistent with such direction.
SECTION 8.7. Waiver of Past Events of Defaults. The Holders of not less
than a majority in aggregate principal amount of the Outstanding Securities may
on behalf of the Holders of all Securities waive any past Event of Default and
its consequences, except that only the Holders of all Securities affected
thereby may waive an Event of Default (a) in the payment of the principal of or
premium, if any, or interest on, or other amounts due under, any Security then
Outstanding or (b) in respect of a covenant or provision hereof that under
Article XI cannot be modified or amended without the consent of the Holder of
each Security Outstanding affected. Upon any such waiver such Event of Default
shall cease to exist and shall be deemed to have been cured for every purpose of
this Indenture, but no such waiver shall extend to any subsequent or other Event
of Default or impair any right consequent thereon.
SECTION 8.8. Holder May Not Bring Suit Except Under Certain Conditions.
A Holder shall not have the right to institute any suit, action or proceeding at
law or in equity or otherwise for the foreclosure of the Lien of this Indenture,
for the appointment of a receiver or for the enforcement of any other remedy
under or upon this Indenture, unless:
(a) such Holder previously shall have given written notice
to the Trustee of a continuing Event of Default;
(b) the Holders of at least twenty-five percent (25%) in
aggregate principal amount of the Outstanding
Securities shall have requested the Trustee in writing
to institute such action, suit or proceeding and shall
have offered to the Trustee indemnity as provided in
Section 9.3(e);
(c) the Trustee shall have refused or neglected to
institute any such action, suit or proceeding for sixty
(60) days after receipt of such notice, request and
offer of indemnity; and
(d) no direction inconsistent with such written request has
been given to the Trustee during such sixty (60)-day
period by the Holders of a majority in principal amount
of Outstanding Securities.
It is understood and intended that no one (1) or more of the Holders
shall have any right in any manner whatever hereunder or under the Securities to
(i) surrender, impair, waive, affect, disturb or prejudice the Lien of the
Security Documents on any property subject thereto or the rights of the Holders
of any other Securities, (ii) obtain or seek to obtain priority or preference
over any other such Holder or (iii) enforce any right under this Indenture,
except in the manner herein provided and for the equal, ratable and common
benefit of all the Holders subject to the provisions of this Indenture.
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SECTION 8.9. Undertaking to Pay Court Costs. All parties to this
Indenture, and each Holder by such Holder's acceptance of a Security, shall be
deemed to have agreed that any court may in its discretion require, in any suit,
action or proceeding for the enforcement of any right or remedy under this
Indenture, or in any suit, action or proceeding against the Trustee for any
action taken or omitted by it as Trustee hereunder, the filing by any party
litigant in such suit, action or proceeding of an undertaking to pay the costs
of such suit, action or proceeding, and that such court may, in its discretion,
assess reasonable costs, including reasonable attorneys' fees, against any party
litigant in such suit, action or proceeding, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; provided,
however, that the provisions of this Section 8.9 regarding such agreement by the
parties to this Indenture and each Holder shall not apply to (a) any suit,
action or proceeding instituted by the Trustee, (b) any suit, action or
proceeding instituted by any Holder or group of Holders holding in the aggregate
more than ten percent (10%) in aggregate principal amount of the Outstanding
Securities or (c) any suit, action or proceeding instituted by any Holder for
the enforcement of the payment of the principal of or premium, if any, or
interest on any of the Securities, on or after the respective due dates
expressed therein.
SECTION 8.10. Right of Holders to Receive Payment Not to Be Impaired.
Anything in this Indenture or in the Intercreditor Agreement to the contrary
notwithstanding, the right of any Holder to receive payment of the principal of
and premium, if any, and interest on such Security, on or after the respective
due dates expressed in such Security (or, in case of redemption, on the
Redemption Date fixed for such Security), or to institute suit for the
enforcement of any such payment on or after such respective dates, shall not be
impaired or affected without the consent of such Holder.
SECTION 8.11. Application of Monies Collected by Trustee. Any monies
collected or to be applied by the Trustee pursuant to this Article VIII in
respect of the Securities of a series, together with any other monies that may
then be held by the Trustee under any of the provisions of this Indenture as
security for the Securities of such series (other than as set forth in the
Intercreditor Agreement and other than monies at the time required to be held
for the payment of specific Securities of such series at their Stated Maturities
or at a time fixed for the redemption thereof) shall be applied in the following
order from time to time, on the date or dates fixed by the Trustee and, in the
case of a distribution of such monies on account of principal, premium, if any,
or interest, upon presentation of the Outstanding Securities of such series, and
stamping thereon of payment, if only partially paid, and upon surrender thereof,
if fully paid:
FIRST: to the payment of all taxes, assessments or liens prior
to the Lien of the Security Documents, except those subject to which
any sale shall have been made, all reasonable costs and expenses of
collection, including the reasonable costs and expenses of handling the
Indenture Securities Collateral (other than the Shared Collateral) and
of any sale thereof pursuant to the provisions of the Security
Documents, and to the payment of all amounts due the Trustee or any
predecessor Trustee under Section 9.7;
SECOND: in case the unpaid principal amount of the Outstanding
Securities of such series or any of them shall not have become due, to
the payment of any interest in default, in the order of the maturity of
the payments thereof, with interest at the rates specified in the
respective Securities of such series in respect of overdue payments (to
the extent that payment of such interest shall be legally enforceable)
on the payments of interest then overdue;
THIRD: in case the unpaid principal amount of any of but not
all the Outstanding Securities of such series shall have become due,
first to
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the payment of accrued interest on all Outstanding Securities of such
series in the order of the maturity of the payments thereof, with
interest at the respective rates specified in the Securities of such
series for overdue payments of principal, premium, if any, and (to the
extent that payment of such interest shall be legally enforceable)
interest then overdue, and next to the payment of the unpaid principal
amount of all Securities then due;
FOURTH: in case the unpaid principal amount of all the
Outstanding Securities of such series shall have become due, to the
payment of the whole amount then due and unpaid upon the Outstanding
Securities of such series for principal, premium, if any, and interest,
together with interest at the respective rates specified in the
Securities of such series for overdue payments on principal, premium,
if any, and (to the extent that payment of such interest shall be
legally enforceable) interest then overdue; and
FIFTH: in case the unpaid principal amount of all the
Outstanding Securities of such series shall have become due, and all of
the Outstanding Securities of such series shall have been fully paid,
any surplus then remaining shall be paid to the Collateral Agent (to be
applied pursuant to the terms and conditions of the Intercreditor
Agreement), or to whomsoever may be lawfully entitled to receive the
same, or as a court of competent jurisdiction may direct;
provided, however, that all payments in respect of the Securities of a series to
be made pursuant to clauses "SECOND" through "FOURTH" of this Section 8.11 shall
be made ratably to the Holders of Securities of such series entitled thereto,
without discrimination or preference, based upon the ratio of the unpaid
principal amount of the Securities of such series in respect of which such
payments are to be made held by each such Holder to the unpaid principal amount
of all Securities of such series.
SECTION 8.12. Securities Held by Certain Persons Not to Share in
Distribution. Any Securities known to a Responsible Officer of the Trustee to be
owned or held by, or for the account or benefit of, either of the Mobile Energy
Parties or an Affiliate thereof, shall not be entitled to share in any payment
or distribution provided for in this Article VIII until all Securities held by
other Persons have been indefeasibly paid in full.
SECTION 8.13. Waiver of Appraisement, Valuation, Stay, Right to
Marshalling. To the full extent it may lawfully do so, each of the Mobile Energy
Parties, for itself and for any other Person who may claim through or under it,
hereby:
(a) agrees that neither it nor any such Person will set up,
plead, claim or in any manner whatsoever take advantage
of any appraisal, valuation, stay, extension or
redemption Laws, now or hereafter in force in any
jurisdiction that may delay, prevent or otherwise
hinder (i) the performance or enforcement or
foreclosure of this Indenture and the other Security
Documents, (ii) the sale of any of the Indenture
Securities Collateral or (iii) the putting of the
purchaser or purchasers thereof into possession of such
Indenture Securities Collateral immediately after the
sale thereof;
(b) waives all benefit or advantage of any such laws;
(c) consents and agrees that the Collateral may be sold by
the Collateral Agent as an entirety or in parts; and
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(d) waives and releases all rights to have the Indenture
Securities Collateral marshalled upon any foreclosure,
sale or other enforcement of this Indenture.
SECTION 8.14. Remedies Cumulative; Delay or Omission Not a Waiver. To the
extent permitted by law, each and every right, power and remedy herein
specifically given to the Trustee shall be cumulative and shall be in addition
to every other right, power and remedy herein specifically given or now or
hereafter existing at law, in equity or by statute, and each and every right,
power and remedy whether specifically herein given or otherwise existing may be
exercised from time to time and as often and in such order as may be deemed
expedient by the Trustee and the exercise or the beginning of the exercise of
any right, power or remedy shall not be construed to be a waiver of the right to
exercise at the same time or thereafter any other right, power or remedy, and no
delay or omission by the Trustee in the exercise of any right, power or remedy
or in the pursuance of any remedy shall impair any such right, power or remedy
or be construed to be a waiver of any default on the part of either of the
Mobile Energy Parties or to be an acquiescence therein.
SECTION 8.15. Intercreditor Agreement. Simultaneously with the
execution and delivery of this Indenture, the Trustee shall enter into the
Intercreditor Agreement on behalf of itself and all Holders of any of the
Outstanding Securities and all future Holders of Securities. Notwithstanding any
other provision of this Indenture to the contrary, all rights, powers and
remedies available to the Holders of any of the Outstanding Securities, and all
future Holders of any of the Securities or the Trustee, with respect to the
Shared Collateral, or otherwise pursuant to the Security Documents, shall be
subject to the Intercreditor Agreement, including, in all cases, the ability to
enforce any remedy other than remedies specified in Section 8.2 and Section 8.10
of this Indenture. To the extent that the Collateral Agent has been authorized
to exercise any such rights, powers and remedies under the Intercreditor
Agreement, any right given to the Trustee hereunder to exercise any remedy with
respect to the Shared Collateral shall, during such time as the Intercreditor
Agreement is in effect, be a right of the Trustee to direct the Collateral Agent
to take such action to the extent set forth in the Intercreditor Agreement.
ARTICLE IX.
THE TRUSTEE
SECTION 9.1. Certain Duties and Responsibilities. (a) Except during
the continuance of an Event of Default:
(i) the Trustee undertakes to perform such duties and
only such duties as are specifically set forth in this Indenture, and
no implied covenants or obligations shall be read into this Indenture
against the Trustee; and
(ii) in the absence of bad faith on its part, the
Trustee may conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Indenture; but in the case of any such certificates or opinions
that by any provisions hereof are specifically required to be furnished
to the Trustee, the Trustee shall be under a duty to examine the same
to determine whether or not they conform to the requirements of this
Indenture.
(b) In case an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in their exercise, as a
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prudent man would exercise or use under the circumstances in the conduct of his
own affairs.
(c) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct, except that:
(i) this Section 9.1(c) shall not be construed to limit the
effect of Section 9.1(a);
(ii) the Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of
the Trustee, unless it shall be proved that the Trustee
was negligent in ascertaining the pertinent facts;
(iii)the Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith
in accordance with the direction of the Holders of not
less than a majority in aggregate principal amount of
the Outstanding Securities relating to the time, method
and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or
power conferred upon the Trustee, under this Indenture;
and
(iv) no provision of this Indenture shall require the
Trustee to expend or risk its own funds or otherwise
incur any financial liability in the performance of any
of its duties hereunder, or in the exercise of any of
its rights or powers, if it shall have reasonable
grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is
not reasonably assured to it.
(d) Whether or not herein expressly so provided, every provision of
this Indenture relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this
Section 9.1 and the requirements of the Trust Indenture Act.
SECTION 9.2. Notice of Events of Defaults. In addition to its
obligation to give notice to Holders as provided in Section 1.6, as promptly as
practicable after, and in any event within thirty (30) days after, the
occurrence of any Event of Default hereunder, the Trustee shall transmit by mail
to all Holders, as their names and addresses appear in the Security Register,
notice of such Event of Default hereunder known to the Trustee, unless such
Event of Default shall have been cured or waived; provided, however, that,
except in the case of an Event of Default in the payment of the principal of or
premium, if any, or interest on any Security, or in the payment of any Sinking
Fund Requirement, the Trustee shall be protected in withholding such notice if
and so long as a committee of its Responsible Officers in good faith determines
that withholding the notice is in the interest of the Holders.
SECTION 9.3. Certain Rights of Trustee. Except as otherwise provided
in Section 9.1 and Section 315 of the Trust Indenture Act:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting in reliance upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture or other paper or document believed by
it to be genuine and to have been signed or presented by the purported
proper party or parties;
(b) any request or direction of either of the Mobile Energy
Parties mentioned herein shall be sufficiently evidenced by a Company
Request or Company Order or a Mobile Energy Request or Mobile Energy
Order (as the case may be), and any resolution of the Board of
Directors of
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either of the Mobile Energy Parties may be sufficiently evidenced by a
Board Resolution of such Mobile Energy Party;
(c) whenever in the administration of this Indenture the
Trustee shall deem it desirable that a matter be proved or established
prior to taking, suffering or omitting any action hereunder, the
Trustee (unless other evidence be herein specifically prescribed) may,
in the absence of bad faith on its part, rely upon an Officer's
Certificate of either of the Mobile Energy Parties;
(d) the Trustee may consult with counsel and the advice of
such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered
or omitted by it hereunder in good faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request
or direction of any of the Holders pursuant to this Indenture, unless
such Holders shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities that might be
incurred by it in compliance with such request or direction;
(f) the Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture or other paper or document, but the
Trustee, in its discretion, may make such further inquiry or
investigation into such facts or matters as it may see fit, and, if the
Trustee shall determine to make such further inquiry or investigation,
it shall be entitled to examine the books, records and premises of
either of the Mobile Energy Parties personally or by agent or attorney;
(g) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents or attorneys and the Trustee shall not be responsible
for any misconduct or negligence on the part of any agent or attorney
appointed with due care by it hereunder; and
(h) the Trustee shall not be charged with knowledge of any
Event of Default unless either (i) a Responsible Officer of the Trustee
shall have actual knowledge of such Event of Default or (ii) written
notice of such Event of Default shall have been given to the Trustee by
either of the Mobile Energy Parties or by any Holder.
SECTION 9.4. Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Securities, except the certificates of
authentication, shall not be taken as the statements of the Trustee, and the
Trustee assumes no responsibility for their correctness. The Trustee makes no
representations as to the validity or sufficiency of this Indenture, the
Indenture Securities Collateral or the Securities, except that the Trustee
hereby represents and warrants that this Indenture has been executed and
delivered by one (1) of its officers who is duly authorized to execute and
deliver such document on its behalf. The Trustee shall not be accountable for
the use or application by either of the Mobile Energy Parties of the Securities
or the proceeds thereof.
SECTION 9.5. May Hold Securities. The Trustee, any Paying Agent,
Security Registrar or Authenticating Agent, or any Affiliate thereof, in its
individual or any other capacity, may become the owner or pledgee of Securities
and, subject to Sections 9.8 and 9.13, may otherwise deal with the Mobile Energy
Parties with the same rights it would have if it were not Trustee, Paying Agent,
Security Registrar, Authenticating Agent or such other agent.
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SECTION 9.6. Funds May Be Held by Trustee or Paying Agent. Any monies
received by the Trustee or any Paying Agent shall, until used or applied as
herein provided, be held in trust for the purposes for which they were received,
but need not be segregated from other funds except to the extent required by
law. Neither the Trustee nor the Paying Agent shall have any liability for
interest upon any such monies. Amounts so received, at the written request and
direction of the Company shall be invested by the Trustee in Permitted
Investments. Such investments shall mature in such amounts and not later than
such times as may be necessary to provide monies when needed to make payments
from such monies as provided in the Indenture.
SECTION 9.7. Compensation, Reimbursement and Indemnification. Each of
the Mobile Energy Parties agrees:
(a) to pay, or cause to be paid, to each of the Trustee and
any Authorized Agent from time to time reasonable compensation for all
services rendered by it hereunder (which compensation shall not be
limited by any provision of law in regard to the compensation of a
trustee of an express trust);
(b) to reimburse, or cause to be reimbursed, each of the
Trustee and any Authorized Agent upon its request for all expenses,
disbursements and advances incurred or made by it in accordance with
any provision of this Indenture (including the reasonable compensation
and the expenses and disbursements of its agents and counsel), except
any such expense, disbursement or advance as may be attributable of its
own negligence, willful misconduct or bad faith; and
(c) to indemnify, or cause to be indemnified, each of the
Trustee, any predecessor Trustee and any Authorized Agent for, and to
hold it harmless against, any loss, liability or expense incurred
without negligence, willful misconduct or bad faith on its part,
arising out of or in connection with the acceptance or administration
of this trust or the performance of its duties hereunder, including the
costs and expenses of defending itself against any claim or liability
in connection with the exercise or performance of any of its powers or
duties hereunder.
As security for the performance of the obligations of the Mobile Energy
Parties under this Section 9.7, the Trustee shall have a Lien prior to the
Securities upon all property and funds held or collected by the Trustee as such,
except funds held in trust under Section 12.3.
SECTION 9.8. Disqualification; Conflicting Interests. (a) If the
Trustee has or shall acquire any conflicting interest, as defined in this
Section 9.8, then, within ninety (90) days after ascertaining that it has such
conflicting interest, and if the default (as such term is defined in the Trust
Indenture Act) to which such conflicting interest relates has not been cured or
duly waived or otherwise eliminated before the end of such ninety (90) day
period, it shall either eliminate such conflicting interest or resign in the
manner and with the effect hereinafter specified in this Article IX; provided,
however, that except in the case of a default in the payment of the principal
of, premium if any or interest on any Security, or in payment of any Sinking
Fund redemption, the Trustee shall not be required to resign as provided by this
Section 9.8 if the Trustee shall have sustained the burden of proving, on
application to the SEC and after opportunity for hearing thereon, that
(i) the default under the Indenture may be cured or waived
during a reasonable period and under the procedures
described in such application, and
(ii) a stay of the Trustee's duty to resign will not be
inconsistent with the interests of the Holders of the
Securities. The
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filing of such an application shall automatically stay the performance
of the duty to resign until the SEC orders otherwise.
(b) In the event that the Trustee shall fail to comply with the
provisions of Section 9.8(a), the Trustee shall, within ten (10) days after the
expiration of such ninety (90)-day period, transmit by mail to all Holders, as
their names and addresses appear in the Security Register, notice of such
failure.
(c) For the purposes of this Section 9.8, the Trustee shall be deemed
to have a conflicting interest if the Securities are in default (as such term is
defined in the Trust Indenture Act) and:
(i) the Trustee is trustee under another indenture
under which any other securities, or certificates of interest or
participation in any other securities, of any obligor on the Securities
are outstanding or is trustee for more than one (1) outstanding series
of Securities, under a single indenture of any obligor, unless (A) the
Securities are collateral trust notes under which the only collateral
consists of securities issued under such other indenture, (B) such
other indenture is a collateral trust indenture under which the only
collateral consists of Securities issued under this Indenture or (C)
such obligor has no substantial unmortgaged assets and is engaged
primarily in the business of owning, or of owning and developing or
operating, real estate, and the Indenture and such other indenture are
secured by wholly separate and distinct parcels of real estate,
provided that there shall be excluded from the operation of this
paragraph other series under this Indenture, and any indenture or
indentures under which other securities, or certificates of interest or
participation in other securities, of such obligor are outstanding, if
such obligor shall have sustained the burden of proving, on application
to the SEC and after opportunity for hearing thereon, that trusteeship
under this Indenture and such other indenture or indentures or under
more than one (1) outstanding series under a single indenture is not so
likely to involve a material conflict of interest as to make it
necessary in the public interest or for the protection of investors to
disqualify the Trustee from acting as such under one (1) of such
indentures or with respect to such series;
(ii) the Trustee or any of its directors or
executive officers is an underwriter for an obligor upon the
Securities;
(iii) the Trustee directly or indirectly controls or
is directly or indirectly controlled by or is under direct or indirect
common control with an underwriter for an obligor upon the Securities;
(iv) the Trustee or any of its directors or executive
officers is a director, officer, partner, employee, appointee or
representative of any obligor upon the Securities, or of an underwriter
(other than the Trustee itself) for such obligor who is currently
engaged in the business of underwriting, except that (A) one (1)
individual may be a director or an executive officer, or both, of the
Trustee and a director or an executive officer, or both, of an obligor
on the Securities but may not be at the same time an executive officer
of both the Trustee and such obligor; (B) if and so long as the number
of directors of the Trustee in office is more than nine, one (1)
additional individual may be director or an executive officer, or both,
of the Trustee and a director of an obligor on the Securities; and (C)
the Trustee may be designated by an obligor on the Securities or by any
underwriter for such obligor to act in the capacity of transfer agent,
registrar, custodian, paying agent, fiscal agent, escrow agent, or
depositary, or in any other similar capacity, or subject to the
provisions of paragraph (i) of this Section 9.8(c), to act as trustee,
whether under an indenture or otherwise;
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(v) ten percent (10%) or more of the voting
securities of the Trustee is beneficially owned either by any obligor
on the Securities or by any director, partner, or executive officer
thereof, or twenty percent (20%) or more of such voting securities is
beneficially owned, collectively, by any two (2) or more of such
persons; or ten percent (10%) or more of the voting securities of the
Trustee is beneficially owned either by an underwriter for any obligor
on the Securities or by any director, partner or executive officer
thereof, or is beneficially owned collectively by any two (2) or more
such persons;
(vi) the Trustee is the beneficial owner of, or holds
as collateral security for an obligation which is in default (as
hereinafter in this subsection defined), (A) five percent (5%) or more
of the voting securities, or ten percent (10%) or more of any other
class of security, of any obligor on the Securities not including the
Securities issued under this Indenture and securities issued under any
other indenture under which the Trustee is also trustee or (B) ten
percent (10%) or more of any class of security of an underwriter for
any obligor on the Securities;
(vii) the Trustee is the beneficial owner of, or
holds as collateral security for an obligation which is in default (as
hereinafter in this subsection defined), five percent (5%) or more of
the voting securities of any person who, to the knowledge of the
Trustee, owns ten percent (10%) or more of the voting securities of, or
controls directly or indirectly or is under direct or indirect common
control with, any obligor on the Securities;
(viii) the Trustee is the beneficial owner of, or
holds collateral security for an obligation that is in default (as
hereinafter in this subsection defined), ten percent (10%) or more of
any class of security of any person who, to the knowledge of the
Trustee, owns fifty percent (50%) or more of the voting securities of
any obligor on the Securities;
(ix) the Trustee owns, on the date of default (as
such term is defined in the Trust Indenture Act) upon the Securities or
any anniversary of such default while such default upon the Securities
remains outstanding, in the capacity of executor, administrator,
testamentary or inter vivos trustee, guardian, committee or
conservator, or in any other similar capacity, an aggregate of
twenty-five percent (25%) or more of the voting securities, or of any
class of security, of any person, the beneficial ownership of a
specified percentage of which would have constituted a conflicting
interest under paragraphs (vi), (vii) or (viii) of this Section 9.8(c).
As to any such securities of which the Trustee acquired ownership
through becoming executor, administrator or testamentary trustee of an
estate that included them, the provisions of the immediately preceding
sentence shall not apply, for a period of not more than two (2) years
from the date of such acquisition to the extent that such securities
included in such estate do not exceed twenty-five percent (25%) of such
voting securities or twenty-five percent (25%) of any such class of
security. Promptly after the dates of any such default upon the
Securities and annually in each succeeding year that the Securities
remain in default, the Trustee shall make a check of its holdings of
such securities in any of the above-mentioned capacities as of such
dates. If any obligor upon the Securities fails to make payment in full
of the principal of or the premium, if any, or interest on any of the
Securities when and as the same becomes due and payable and such
failure continues for thirty (30) days thereafter, the Trustee shall
make a prompt check of its holdings of such securities in any of the
above-mentioned capacities as of the date of the expiration of such
thirty (30)-day period, and after such date, notwithstanding the
foregoing provisions of
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this paragraph, all such securities so held by the Trustee, with sole
or joint control over such securities vested in it, shall be considered
as though beneficially owned by the Trustee for the purposes of
paragraphs (vi), (vii) and (viii) of this Section 9.8(c); or
(x) except under the circumstances described in
Section 9.13(b) (i), (iii), (iv), (v) or (vi), the Trustee shall be or
shall become a creditor of the obligor.
For the purposes of paragraph (i) of this Section 9.8(c), the term
"series of securities" or "series" means a series, class or group of Securities
issuable under the Indenture pursuant to whose terms Holders of one (1) such
series may vote to direct the Trustee, or otherwise take action pursuant to a
vote of such Holders, separately from Holders of another such series, provided
that "series of securities" or "series" shall not include any series of
Securities issuable under the Indenture if all such series rank equally and are
wholly unsecured.
The specification of percentages in paragraphs (v) to (ix), inclusive,
of this Section 9.8(c), shall not be construed as indicating that the ownership
of such percentages of the securities of a person is or is not necessary or
sufficient to constitute direct or indirect control for the purposes of
paragraph (iii) or (vii) of this Section 9.8(c).
For the purposes of paragraphs (vi), (vii), (viii) and (ix) of this
Section 9.8(c) only, (A) the terms "security" and "securities" shall include
only such securities as are generally known as corporate securities, but shall
not include any note or other evidence of indebtedness issued to evidence an
obligation to repay monies loaned to a person by one (1) or more banks, trust
companies or banking firms, or any certificate of interest or participation in
any such note or evidence or indebtedness, (B) an obligation shall be deemed to
be "in default" when a default in payment of principal shall have continued for
thirty (30) days or more and shall not have been cured, and (C) the Trustee
shall not be deemed to be the owner or holder of (1) any security that it holds
as collateral security, as trustee or otherwise, for an obligation that is not
in default as defined in clause (B) above or (2) any security which it holds as
collateral security under this Indenture, irrespective of any default hereunder
or (3) any security that it holds as agent for collection, or as custodian,
escrow agent or depositary, or in any similar representative capacity.
Except as provided in the next preceding paragraph, the word "security"
or "securities" as used in this Indenture shall mean any note, stock, treasury
stock, bond, debenture, evidence of indebtedness, certificate of interest or
participation in any profit-sharing agreement, collateral-trust certificate,
preorganization certificate or subscription, transferable share, investment
contract, voting trust certificate, certificate of deposit for security,
fractional undivided interest in oil, gas or other mineral rights, any put,
call, straddle, option or privilege on any security, certificate of deposit, or
group or index of securities (including, any interest therein or based on the
value thereon) or any put, call, straddle, option or privilege entered into on a
national securities exchange relating to foreign currency, or, in general, any
interest or instrument commonly known as a "security," or any certificate or
interest or participation in, temporary or interim certificate for, receipt for,
guarantee of, or warrant or right to subscribe to purchase, any of the
foregoing.
(d) For the purposes of this Section 9.8:
(i) The term "underwriter" when used with reference
to any obligor on the Securities, means every person who, within one
(1) year prior to the time as of which the determination is made, has
purchased from such obligor with a view to, or has offered or sold for
such obligor in connection with, the distribution of any security of
such obligor outstanding at such time, or has participated or has had a
direct or
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indirect participation in any such undertaking, or has participated or
has had a participation in the direct or indirect underwriting of any
such undertaking; but such term shall not include a person whose
interest was limited to a commission from an underwriter or dealer not
in excess of the usual and customary distributors' or sellers'
commission.
(ii) The term "director" means any director of a
corporation, or any individual performing similar functions with
respect to any organization whether incorporated or unincorporated.
(iii) The term "person" means an individual, a
corporation, a partnership, an association, a joint-stock company, a
trust, an unincorporated organization, or a government or political
subdivision thereof. As used in this paragraph, the term "trust" shall
include only a trust where the interest or interests of the beneficiary
or beneficiaries are evidenced by a security.
(iv) The term "voting security" means any security
presently entitling the owner or holder thereof to vote in the
direction or management of the affairs of a person, or any security
issued under or pursuant to any trust, agreement or arrangement whereby
a trustee or trustees or agent or agents for the owner or holder of
such security are presently entitled to vote in the direction or
management of the affairs of a person.
(v) The term "obligor" means any obligor upon the
Securities within the meaning of the Trust Indenture Act.
(vi) The term "executive officer" means the
president, every vice president, every trust officer, the cashier, the
secretary and the treasurer of a corporation, and any individual
customarily performing similar functions with respect to any
organization whether incorporated or unincorporated, but shall not
include the chairman of the board of directors.
(e) The percentage of the voting securities and other securities
specified in this Section 9.8 shall be calculated in accordance with the
following provisions:
(i) A specified percentage of the voting securities
of the Trustee, any obligor or any other person referred to in this
Section 9.8 (each of whom is referred to as a "person" in this
paragraph) means such amount of the outstanding voting securities of
such person as entitles the holder or holders thereof to cast such
specified percentage of the aggregate votes that the holders of all the
outstanding voting securities of such person are entitled to cast in
the direction or management of the affairs of such person.
(ii) A specified percentage of a class of securities
of a person means such percentage of the aggregate amount of securities
of the class outstanding.
(iii) The term "amount," when used in regard to
securities, means the principal amount if relating to evidences of
indebtedness, the number of shares if relating to capital shares and
the number of units if relating to any other kind of security.
(iv) The term "outstanding" as used in this Section
9.8 means issued and not held by or for the account of the issuer. The
following securities shall not be deemed outstanding within the meaning
of this definition:
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(A) securities of an issuer held in a sinking fund relating
to securities of the issuer of the same class;
(B) securities of an issuer held in a sinking fund relating
to another class of securities of the issuer, if the
obligation evidenced by such other class of securities
is not in default as to principal or interest or
otherwise;
(C) securities pledged by the issuer thereof as security
for an obligation of the issuer not in default as to
principal or interest or otherwise; and
(D) securities held in escrow if placed in escrow by the
issuer thereof;
provided, however, that any voting securities of an issuer shall be deemed
outstanding if any person other than the issuer is entitled to exercise the
voting rights thereof.
(v) A security shall be deemed to be of the same
class as another security if both securities confer upon the holder or
holders substantially the same rights and privileges; provided,
however, that in the case of secured evidences of indebtedness, all of
which are issued under a single indenture, differences in the interest
rates or maturity dates of various series thereof shall not be deemed
sufficient to constitute such series different classes; provided
further, however, that, in the case of unsecured evidences of
indebtedness, differences in the interest rates or maturity dates
thereof shall not be deemed sufficient to constitute them securities of
different classes, whether or not they are issued under a single
indenture.
SECTION 9.9. Corporate Trustee Required; Eligibility. There shall at
all times be a Trustee hereunder that shall be a bank or trust company that
complies with the requirements of the Trust Indenture Act, organized and doing
business under the laws of the United States of America or of any State thereof,
authorized under such laws to exercise corporate trust powers, having (or whose
obligations are unconditionally guaranteed by a corporation having) a combined
capital and surplus of at least $500,000,000, which bank or trust company is
subject to supervision or examination by Federal or state authority and does not
provide credit or credit enhancement to either of the Mobile Energy Parties. If
such bank or trust company publishes reports of condition at least annually,
pursuant to law or to the requirements of the aforesaid supervising or examining
authority, then for the purposes of this Section 9.9, the combined capital and
surplus of such bank or trust company shall be deemed to be its combined capital
and surplus as set forth in its most recent report of condition so published. If
at any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section 9.9, it shall resign immediately in the manner and
with the effect hereinafter specified in this Article IX.
SECTION 9.10. Resignation and Removal; Appointment of Successor. (a) No
resignation or removal of the Trustee and no appointment of a successor Trustee
pursuant to this Article IX shall become effective until the acceptance of
appointment by the successor Trustee as provided in Section 9.11.
(b) The Trustee may resign at any time by giving written notice thereof
to the Mobile Energy Parties and to the Holders of Securities in the manner
provided in Section 1.6. If an instrument of acceptance by a successor Trustee
shall not have been delivered to the Mobile Energy Parties and the Trustee
within thirty (30) days after the giving of such notice of resignation, the
resigning Trustee may petition any court of competent jurisdiction for the
appointment of a successor Trustee, or any Holder who has been a bona fide
holder of a Security for at least six (6) months may, subject to Section 8.9, on
behalf of such Holder
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and all others similarly situated, petition any such court for the appointment
of a successor Trustee.
(c) The Trustee may be removed at any time by Act of the Holders of not
less than a majority in principal amount of the Outstanding Securities,
delivered to the Trustee and the Mobile Energy Parties.
(d) If at any time:
(i) the Trustee shall fail to comply with Section
9.8(a) after written request therefor by any Holder who has been a bona
fide holder of a Security for at least six months, or
(ii) the Trustee shall cease to be eligible under
Section 9.9 and shall fail to resign after written request therefor by
any such Holder or the Company, or
(iii) the Trustee shall become incapable of acting or
shall be adjudged a bankrupt or insolvent or a receiver of the Trustee
or of its property shall be appointed or any public officer shall take
charge or control of the Trustee or of its property or affairs for the
purpose of rehabilitation, conservation or liquidation,
then, in any such case, (A) the Company may remove the Trustee by Board
Resolution or (B) subject to Section 8.9, any Holder who has been a bona fide
holder of a Security for at least six (6) months may, on behalf of himself and
all others similarly situated, petition any court of competent jurisdiction for
the removal of the Trustee and the appointment of a successor Trustee.
(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause, the
Company shall promptly appoint by Board Resolution a successor Trustee. If no
successor Trustee shall have been so appointed by the Company, or by the
Holders, and accepted appointment in the manner hereinafter provided, any Holder
who has been a bona fide holder of a Security for at least six months may,
subject to Section 8.9, on behalf of himself and all others similarly situated,
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
(f) The Company shall give notice of each resignation and each removal
of the Trustee and each appointment of a successor Trustee by mailing written
notice of such event by first-class mail, postage prepaid, to the Holders of
Securities as their names and addresses appear in the Security Register. Each
notice shall include the name of the successor Trustee and the address of its
Corporate Trust Office. If the Company fails to give such notice within ten (10)
days after acceptance of appointment by the successor Trustee, the successor
Trustee shall cause such notice to be given at the expense of the Company.
SECTION 9.11. Acceptance of Appointment by Successor. Every successor
Trustee appointed hereunder shall execute, acknowledge and deliver to the Mobile
Energy Parties and to the retiring Trustee an instrument accepting such
appointment, and thereupon the resignation or removal of the retiring Trustee
shall become effective and such successor Trustee, without any further act, deed
or conveyance, shall become vested with all the rights, powers, trusts and
duties of the retiring Trustee but, on request of either of the Mobile Energy
Parties or of the successor Trustee, such retiring Trustee shall, upon payment
of its charges, execute and deliver an instrument prepared by either of the
Mobile Energy Parties transferring to such successor Trustee all the rights,
powers and trusts of the retiring Trustee, and shall duly assign, transfer and
deliver to such successor Trustee all property and money held by such retiring
Trustee hereunder, subject nevertheless to its Lien, if any, provided for in
Section 9.7. Upon request of any such successor Trustee, the Mobile Energy
Parties shall
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execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Trustee all such rights, powers and trusts.
No successor Trustee shall accept its appointment unless at the time of
such acceptance such successor Trustee shall be qualified and eligible under
this Article IX.
SECTION 9.12. Merger, Conversion, Consolidation or Succession to
Business. Any Person into which the Trustee may be merged or converted or with
which it may be consolidated, or any Person resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any Person
succeeding to all or substantially all of the corporate trust business of the
Trustee, shall be the successor of the Trustee hereunder, provided such
successor Trustee shall be otherwise qualified and eligible under the Trust
Indenture Act and under this Article IX, without the execution or filing of any
paper or any further act on the part of any of the parties hereto. In case any
Securities shall have been authenticated, but not delivered, by the Trustee then
in office, any successor by merger, conversion or consolidation to such
authenticating Trustee may adopt such authentication and deliver the Securities
so authenticated with the same effect as if such successor Trustee had itself
authenticated such Securities.
SECTION 9.13. Preferential Collection of Claims Against any Obligor.
(a) Subject to Section 9.13(b), if the Trustee shall be or shall become a
creditor, directly or indirectly, secured or unsecured, of any obligor (as
defined in Section 9.13(c)) on the Securities within three (3) months prior to a
default (as defined in Section 9.13(c)) or subsequent to such a default, then,
unless and until such default shall be cured, the Trustee shall set apart and
hold in a special account for the benefit of the Trustee individually and the
Holders of the Securities:
(i) an amount equal to any and all reductions in the
amount due and owing upon any claim as such creditor in respect of
principal or interest, effected after the beginning of such three (3)
month period and valid as against any obligor on the Securities and its
other creditors, except any such reduction resulting from the receipt
or disposition of any property described in paragraph (ii) of this
Section 9.13(a), or from the exercise of any right of set-off that the
Trustee could have exercised if a petition in bankruptcy had been filed
by or against any such obligor upon the date of such default; and
(ii) all property received by the Trustee in respect
of any claim as such creditor, either as security therefor, or in
satisfaction or composition thereof, or otherwise, after the beginning
of such three (3) month period, or an amount equal to the proceeds of
any such property, if disposed of, subject, however, to the rights, if
any, of any obligor on the Securities and its other creditors in such
property or such proceeds.
Nothing herein contained, however, shall affect the right of the
Trustee:
(A) to retain for its own account (1) payments made on account of any
such claim by any Person (other than an obligor on the Securities) who is liable
thereon, (2) the proceeds of the bona fide sale of any such claim by the Trustee
to a third person and (3) distributions made in cash, securities or other
property in respect of claims filed against such obligor in bankruptcy or
receivership or in proceedings for reorganization pursuant to the Bankruptcy
Code or applicable state law;
(B) to realize, for its own account, upon any property held by it as
security for any such claim, if such property was so held prior to the beginning
of such three (3) month period;
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(C) to realize, for its own account, but only to the extent of the
claim hereinafter mentioned, upon any property held by it as security for any
such claim, if such claim was created after the beginning of such three (3)
month period and such property was received as security therefor simultaneously
with the creation thereof, and if the Trustee shall sustain the burden of
proving that at the time such property was so received the Trustee had no
reasonable cause to believe that a default (as defined in Section 9.13(c)) would
occur within three (3) months; or
(D) to receive payment on any claim referred to in paragraph (B) or (C)
above, against the release of any property held as security for such claim as
provided in paragraph (B) or (C) above (as the case may be), to the extent of
the fair value of such property.
For the purposes of paragraphs (B), (C) and (D) of the immediately
preceding paragraph, property substituted after the beginning of such three (3)
month period for property held as security at the time of such substitution
shall, to the extent of the fair value of the property released, have the same
status as the property released, and, to the extent that any claim referred to
in any of such clauses is created in renewal of or in substitution for or for
the purpose of repaying or refunding any pre-existing claim of the Trustee as
such creditor, such claim shall have the same status as such pre-existing claim.
If the Trustee shall be required to account, the funds and property
held in such special account and the proceeds thereof shall be apportioned
between the Trustee and the Holders in such manner that the Trustee and the
Holders realize, as a result of payments from such special account and payments
of dividends on claims filed against the obligor on the Securities in bankruptcy
or receivership or in proceedings for reorganization pursuant to the Bankruptcy
Code or applicable state law, the same percentage of their respective claims,
figured before crediting to the claim of the Trustee anything on account of the
receipt by it from such obligor of the funds and property in such special
account and before crediting to the respective claims of the Trustee and the
Holders dividends on claims filed against such obligor in bankruptcy or
receivership or in proceedings for reorganization pursuant to the Bankruptcy
Code or applicable state law, but after crediting thereon receipts on account of
the indebtedness represented by their respective claims from all sources other
than from such dividends and from the funds and property so held in such special
account. As used in this paragraph, with respect to any claim, the term
"dividends" shall include any distribution with respect to such claim, in
bankruptcy or receivership or proceedings for reorganization pursuant to the
Bankruptcy Code or applicable state law, whether such distribution is made in
cash, securities or other property, but shall not include any such distribution
with respect to the secured portion, if any, of such claim. The court in which
such bankruptcy, receivership or proceedings for reorganization is pending shall
have jurisdiction (1) to apportion between the Trustee and the Holders in
accordance with the provisions of this paragraph, the funds and property held in
such special account and proceeds thereof, or (2) in lieu of such apportionment,
in whole or in part, to give to the provisions of this paragraph due
consideration in determining the fairness of the distributions to be made to the
Trustee and the Holders with respect to their respective claims, in which event
it shall not be necessary to liquidate or to appraise the value of any
securities or other property held in such special account or as security for any
such claim, or to make a specific allocation of such distributions as between
the secured and unsecured portions of such claims, or otherwise to apply the
provisions of this paragraph as a mathematical formula.
Any Trustee that has resigned or been removed after the beginning of
such three (3) month period shall be subject to the provisions of this
subsection as though such resignation or removal had not occurred. If any
Trustee has resigned or been removed prior to the beginning of such three (3)
month period, it shall be subject to the provisions of this Section 9(a) if and
only if the following
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conditions exist: (x) the receipt of property or reduction of claim, which would
have given rise to the obligation to account if such Trustee had continued as
Trustee, occurred after the beginning of such three (3) month period; and (y)
such receipt of property or reduction of claim occurred within three (3) months
after such resignation or removal.
(b) There shall be excluded from the operation of Section
9.13(a) a creditor relationship arising from:
(i) the ownership or acquisition of securities issued
under any indenture, or any security or securities having a maturity of
one (1) year or more at the time of acquisition by the Trustee;
(ii) advances authorized by a receivership or
bankruptcy court of competent jurisdiction, or by this Indenture, for
the purpose of preserving the property that shall at any time be
subject to the Lien of this Indenture or of discharging tax liens or
other prior liens or encumbrances thereon, if notice of such advances
and of the circumstances surrounding the making thereof is given to the
Holders at the time and in the manner provided in this Indenture;
(iii) disbursements made in the ordinary course of
business in the capacity of trustee under an indenture, transfer agent,
registrar, custodian, paying agent, fiscal agent or depositary, or
other similar capacity;
(iv) an indebtedness created as a result of services
rendered or premises rented; or an indebtedness created as a result of
goods or securities sold in a cash transaction (as defined in Section
9.13(c));
(v) the ownership of stock or of other securities of
a corporation organized under the provisions of Section 25(a) of the
Federal Reserve Act that is directly or indirectly a creditor of an
obligor upon the securities; or
(vi) the acquisition, ownership, acceptance or
negotiation of any drafts, bills of exchange, acceptances or
obligations that fall within the classification of self-liquidating
paper (as defined in Section 9.13(c)).
(c) For the purposes of this Section 9.13 only:
(i) The term "default" means any failure to make
payment in full of the principal of or interest on any of the
Securities when and as such principal or interest becomes due and
payable;
(ii) The term "cash transaction" means any
transaction in which full payment for goods or securities sold is made
within seven (7) days after delivery of the goods or securities in
currency or in checks or other orders drawn upon banks or bankers and
payable upon demand;
(iii) The term "self-liquidating paper" means any
draft, bill of exchange, acceptance or obligation that is made, drawn,
negotiated or incurred by any obligor on the Securities for the purpose
of financing the purchase, processing, manufacturing, shipment, storage
or sale of goods, wares or merchandise and that is secured by documents
evidencing title to, possession of or a lien upon, the goods, wares or
merchandise or the receivables or proceeds arising from the sale of the
goods, wares or merchandise previously constituting the security,
provided the security is received by the Trustee simultaneously with
the creation of the creditor
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relationship with such obligor arising from the making, drawing,
negotiating or incurring of the draft, bill of exchange, acceptance or
obligation; and
(iv) The term "obligor" means any obligor upon the
Securities within the meaning of the Trust Indenture Act.
SECTION 9.14. Maintenance of Offices and Agencies. (a) There shall at
all times be maintained an office or agency where Securities may be presented or
surrendered for registration of transfer or exchange and for payment of
principal, premium, if any, and interest, and where notices and demands to or
upon the Trustee in respect of the Securities or this Indenture may be served
(i) in the Borough of Manhattan, the City of New York, if, and for so long as,
any Outstanding Securities are not issued in the form of one or more global
Securities registered in the name of a clearing corporation or clearing agency
registered under the Exchange Act, as depositary for such Securities, or a
nominee of such clearing corporation or clearing agency and (ii) in such Place
of Payment (which may be the office or agency maintained pursuant to 9.14(a)(i),
if any), and such additional Places of Payment, if any, as shall be specified
for the Securities of any series in the related Series Supplemental Indenture.
Except as otherwise provided in the related Series Supplemental Indenture, such
office or agency shall be initially at the office of the Trustee specified in
the first paragraph of this Indenture. Written notice of the location of each of
such other office or agency and of any change of location thereof shall be given
by the Company to the Trustee and by the Trustee to the Holders in the manner
specified in Section 1.6. In the event that no such office or agency shall be
maintained or no such notice of location or of change of location shall be
given, presentations, surrenders and demands may be made and notices may be
served at the Corporate Trust Office.
(b) There shall at all times be a Security Registrar and a Paying Agent
(which may be the Trustee) appointed by the Company hereunder. In addition, at
any time when any Securities remain Outstanding, the Trustee may appoint an
Authenticating Agent or Agents with respect to the Securities of one (1) or more
series that shall be authorized to act on behalf of the Trustee to authenticate
Securities of such series issued upon original issuance, exchange, registration
of transfer or partial redemption thereof or pursuant to Section 2.7 or 2.9, and
Securities so authenticated shall be entitled to the benefits of this Indenture
and shall be valid and obligatory for all purposes as if authenticated by the
Trustee hereunder (it being understood that wherever reference is made in this
Indenture to the authentication and delivery of Securities by the Trustee or the
Trustee's certificate of authentication, such reference shall be deemed to
include authentication and delivery on behalf of the Trustee by an
Authenticating Agent and a certificate of authentication executed on behalf of
the Trustee by an Authenticating Agent). If an appointment of an Authenticating
Agent with respect to the Securities of one (1) or more series shall be made
pursuant to this Section 9.14(b), the Securities of such series may have
endorsed thereon, in addition to the Trustee's certificate of authentication, an
alternate certificate of authentication in the following form:
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This Security is one of the Securities referred to in the
within-mentioned Indenture.
FIRST UNION NATIONAL BANK OF GEORGIA,
as Trustee
By_____________________________
Authenticating Agent
By_____________________________
Authorized Signatory
Any Authorized Agent shall be a bank or trust company, shall be a Person
organized and doing business under the laws of the United States or any state
thereof, having a combined capital and surplus of at least $500,000,000, and
shall be authorized under such laws to exercise corporate trust powers, subject
to supervision by Federal or state authorities. If such Authorized Agent
publishes reports of its condition at least annually, pursuant to law or to the
requirements of the aforesaid supervising or examining authority, then for the
purposes of this Section 9.14, the combined capital and surplus of such
Authorized Agent shall be deemed to be its combined capital and surplus as set
forth in its most recent report of condition so published. If at any time an
Authorized Agent shall cease to be eligible in accordance with the provisions of
this Section 9.14, such Authorized Agent shall resign immediately in the manner
and with the effect specified in this Section 9.14. The Trustee at its office
specified in the first paragraph of this Indenture, is hereby appointed as
Paying Agent and Security Registrar hereunder.
(c) Any Paying Agent (other than the Trustee) from time to time
appointed hereunder shall execute and deliver to the Trustee an instrument in
which such Paying Agent shall agree with the Trustee, subject to the provisions
of this Section 9.14, that such Paying Agent will:
(i) hold all sums held by it for the payment of
principal of and premium, if any, and interest on the Securities in
trust for the benefit of the Persons entitled thereto until such sums
shall be paid to such Persons or otherwise disposed of as herein
provided;
(ii) give the Trustee within five (5) days thereafter
notice of any default by any obligor upon the Securities in the making
of any such payment of principal, premium, if any, or interest; and
(iii) at any time during the continuance of any such
default, upon the written request of the Trustee, forthwith pay to the
Trustee all sums so held in trust by such Paying Agent.
Notwithstanding any other provision of this Indenture, any payment required to
be made to or received or held by the Trustee may, to the extent authorized by
written instructions of the Trustee, be made to or received or held by a Paying
Agent in the Borough of Manhattan, the City of New York, for the account of the
Trustee.
(d) Any Person into which any Authorized Agent may be merged or
converted or with which it may be consolidated, or any Person resulting from any
merger, consolidation or conversion to which any Authorized Agent shall be a
party, or any Person succeeding to the corporate trust business of any
Authorized Agent, shall be the successor of such Authorized Agent hereunder, if
such successor
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corporation is otherwise eligible under this Section 9.14, without the execution
or filing of any paper or any further act on the part of the parties hereto or
such Authorized Agent or such successor Person.
(e) Any Authorized Agent may at any time resign by giving written
notice of resignation to the Trustee and the Mobile Energy Parties. The Mobile
Energy Parties may, and at the request of the Trustee shall, at any time,
terminate the agency of any Authorized Agent by giving written notice of
termination to such Authorized Agent and to the Trustee. Upon the resignation or
termination of an Authorized Agent or in case at any time any such Authorized
Agent shall cease to be eligible under this Section 9.14 (when, in either case,
no other Authorized Agent performing the functions of such Authorized Agent
shall have been appointed), the Company shall promptly appoint one (1) or more
qualified successor Authorized Agents approved by the Trustee to perform the
functions of the Authorized Agent that has resigned or whose agency has been
terminated or that shall have ceased to be eligible under this Section 9.14. The
Company shall give written notice of any such appointment to all Holders as
their names and addresses appear on the Security Register.
SECTION 9.15. Co-Trustee or Separate Trustee. (a) If at any time or
times it shall be necessary, prudent or desirable in order to conform to any law
of any jurisdiction in which property shall be held subject to the Lien of this
Indenture or the other Security Documents, or the Trustee shall be advised by
counsel satisfactory to it that it is so necessary or prudent in the interest of
the Holders, or the Holders of a majority in principal amount of Outstanding
Securities shall in writing so request, the Trustee and the Mobile Energy
Parties shall execute and deliver all instruments and agreements necessary or
proper to constitute another bank or trust company or one (1) or more Persons
approved by the Trustee either to act as co-trustee or co-trustees of all or any
part of the Indenture Securities Collateral (other than the Shared Collateral)
jointly with the Trustee originally named herein or any successor or successors,
or to act as separate trustee or trustees of all or any such property. In the
event the Mobile Energy Parties shall have not joined in the execution of such
instruments and agreements within ten (10) days after the receipt of a written
request from the Trustee so to do, or in case an Event of Default with respect
to the Securities of a series shall have occurred and be continuing, the Trustee
may act under the foregoing provisions of this Section 9.15 without the
concurrence of either of the Mobile Energy Parties; and the Mobile Energy
Parties hereby appoint the Trustee as agent and attorney to act under the
foregoing provisions of this Section 9.15 in either of such contingencies.
(b) Every additional trustee hereunder shall, to the extent permitted
by law, be appointed and act, and such additional trustee and its successors
shall act, subject to the following provisions and conditions, namely:
(i) the Securities shall be authenticated and
delivered, and all powers, duties, obligations and rights conferred
upon the Trustee in respect of the custody, control and management of
monies, papers or securities, shall be exercised, solely by the Trustee
(or, in the case of authentication and delivery of Securities, by any
Authenticating Agent);
(ii) all rights, powers, duties and obligations
conferred or imposed upon the Trustee or the additional trustee or
trustees shall be conferred or imposed upon and exercised or performed
by the Trustee or the Trustee and such additional trustee or trustees
jointly, except to the extent that under any law of any jurisdiction in
which any particular act or acts are to be performed, the Trustee shall
be incompetent or unqualified to perform such act or acts, in which
event such rights, powers, duties and obligations shall be exercised
and performed by such additional trustee or trustees;
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(iii) no power given hereby to, or which it is
provided hereby may be exercised by, any such additional trustee or
trustees, shall be exercised hereunder by such additional trustee or
trustees, except jointly with, or with the consent in writing of, the
Trustee, anything herein contained to the contrary notwithstanding;
(iv) no trustee hereunder shall be personally
liable by reason of any act or omission of any other trustee hereunder;
and
(v) the Mobile Energy Parties and the Trustee, at any
time, by an instrument in writing, executed by them jointly, may remove
any such additional trustee, and in that case, by an instrument in
writing executed by them jointly, may appoint a successor or successors
to such additional trustee or trustees (as the case may be), anything
herein contained to the contrary notwithstanding. In the event that
neither of the Mobile Energy Parties shall have joined in the execution
of any such instrument within ten (10) days after the receipt of a
written request from the Trustee to do so, the Trustee shall have the
power to remove any such additional trustee and to appoint a successor
additional trustee without the concurrence of the Mobile Energy
Parties, each hereby appointing the Trustee its agent and attorney to
act for it in such connection in such contingency. In the event that
the Trustee alone shall have appointed an additional trustee or
trustees or co-trustee or co-trustees as above provided, it may at any
time, by an instrument in writing, remove any such additional trustee
or co-trustee, the successor to any such trustee or co-trustee so
removed to be appointed by the Mobile Energy Parties and the Trustee,
or by the Trustee alone, as hereinbefore in this Section 9.15 provided.
SECTION 9.16. Taxes. Any United States withholding taxes imposed with
respect to payments made to a Holder of a Security shall be the sole
responsibility of such Holder and therefore no Holder shall have the right to
have any payment to it "grossed-up" for, or paid free of, any such withholding
taxes.
ARTICLE X.
HOLDERS' LISTS AND REPORTS BY
TRUSTEE AND MOBILE ENERGY PARTIES
SECTION 10.1. Company to Furnish Trustee Names and Addresses of
Holders. The Company will furnish or cause to be furnished to the Trustee
semiannually, between April 1 and April 15 and between October 1 and October 15,
in each year, and at such other times as the Trustee may request in writing,
within thirty (30) days after receipt by the Company of any such request, a
list, in such form as the Trustee may reasonably require, of the names and
addresses of the Holders, in each case as of a date not more than fifteen (15)
days prior to the time such list is furnished; provided, however, that so long
as the Trustee is the sole Security Registrar or is otherwise furnished a copy
of the Security Register, no such list need be furnished.
SECTION 10.2. Preservation of Information; Communications to Holders.
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders (i) contained in the most recent
list furnished to the Trustee as provided in Section 10.1 and (ii) received by
the Trustee in its capacity as Security Registrar, if so acting. The Trustee may
destroy any list furnished to it upon receipt of a new list so furnished.
(b) If three (3) or more Holders (hereinafter referred to as
"applicants") apply in writing to the Trustee, and furnish to the Trustee
reasonable proof that each such applicant has owned a Security for a period of
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at least six (6) months preceding the date of such application, and such
application states that the applicants desire to communicate with other Holders
with respect to their rights under this Indenture or under the Securities and is
accompanied by a copy of the form of proxy or other communication that such
applicants propose to transmit, then the Trustee shall, within five (5) Business
Days after the receipt of such application, at its election, either:
(i) afford such applicants access to the information
preserved at the time by the Trustee in accordance with
Section 10.2(a), or
(ii) inform such applicants as to the approximate number of
Holders of Securities whose names and addresses appear
in the information preserved at the time by the Trustee
in accordance with Section 10.2(a), and as to the
approximate cost of mailing to such Holders the form of
proxy or other communication, if any, specified in such
application.
If the Trustee shall elect not to afford such applicants access to such
information, the Trustee shall, upon the written request of such applicants,
mail to each Holder whose name and address appears in the information preserved
at the time by the Trustee in accordance with Section 10.2(a), a copy of the
form of proxy or other communication that is specified in such request, with
reasonable promptness after a tender to the Trustee of the material to be mailed
and of payment, or provision for the payment, of the reasonable expenses of
mailing, unless within five (5) days after such tender, the Trustee shall mail
to such applicants and file with the SEC, together with a copy of the material
to be mailed, a written statement to the effect that, in the opinion of the
Trustee, such mailing would be contrary to the best interests of the Holders or
would be in violation of applicable law. Such written statement shall specify
the basis of such opinion. If the SEC, after opportunity for a hearing upon the
objections specified in the written statement so filed, shall enter an order
refusing to sustain any of such objections or if, after the entry of an order
sustaining one (1) or more of such objections, the SEC shall find, after notice
and opportunity for hearing, that all the objections so sustained have been met
and shall enter an order so declaring, the Trustee shall mail copies of such
material to all such Holders with reasonable promptness after the entry of such
order and the renewal of such tender; otherwise the Trustee shall be relieved of
any obligation or duty to such applicants respecting their application.
(c) Every Holder of Securities, by receiving and holding the same,
agrees with the Mobile Energy Parties and the Trustee that none of the Mobile
Energy Parties and the Trustee shall be held accountable by reason of the
disclosure of any such information as to the names and addresses of the Holders
in accordance with Section 10.2 (b), regardless of the source from which such
information was derived, and that the Trustee shall not be held accountable by
reason of mailing or filing with the SEC any material pursuant to a request made
under Section 10.2(b).
SECTION 10.3. Reports by Trustee. (a) Within sixty (60) days after May
1 in each year, commencing with May 1, 1996, the Trustee shall transmit by mail
to all Holders, as their names and addresses appear in the Security Register, a
brief report dated as of such May 1 with respect to (but if no such event has
occurred within the one (1) year period ending such May 1, no report need be
transmitted):
(i) any change to its eligibility under Section
9.9 and its qualifications under Section 9.8;
(ii) the creation of or any material change to a
relationship specified in paragraphs (i) through (x) of Section 9.8(c).
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(iii) the character and amount of any advances (and
if the Trustee elects so to state, the circumstances surrounding the
making thereof) made by the Trustee (as such) that remain unpaid on the
date of such report, and for the reimbursement of which it claims or
may claim a lien or charge, prior to that of the Securities, on the
trust estate or any property or funds held or collected by it as
Trustee, except that the Trustee shall not be required (but may elect)
to report such advances if such advances so remaining unpaid aggregate
not more than one-half of one percent (1/2 of 1%) of the principal
amount of the Securities Outstanding on the date of such report;
(iv) the amount, interest rate and maturity date of
all other indebtedness owing by an obligor on the Securities within the
meaning of the Trust Indenture Act to the Trustee in its individual
capacity, on the date of such report, with a brief description of any
property held as collateral security therefor, except an indebtedness
based upon a creditor relationship arising in any manner described in
Section 9.13(b)(ii), (iii), (iv) or (vi);
(v) any change to the property and funds
physically in the possession of the Trustee (as such) on the date of
such report;
(vi) any release, or release and substitution, of
property subject to the Lien of this Indenture (and the consideration
therefor, if any) that the Trustee has not previously reported;
(vii)any additional issue of Securities that the
Trustee has not previously reported; and
(viii) any action taken by the Trustee in the
performance of its duties hereunder that it has not previously reported
and that in its opinion materially affects the Securities of any
series, except action in respect of an Event of Default, notice of
which has been or is to be withheld by the Trustee in accordance with
Section 9.2.
(b) The Trustee shall transmit by mail to all Holders, as their names
and addresses appear in the Security Register, a brief report with respect to:
(i) the release, or release and substitution, of
property subject to the Lien of this Indenture (and the consideration
therefor, if any) unless the fair value of such property is less than
ten percent (10%) of the principal amount of Securities Outstanding at
the time of such release, or such release and substitution, such report
to be transmitted within ninety (90) days after such release or release
and substitution; and
(ii) the character and amount of any advances (and if
the Trustee elects so to state the circumstances surrounding the making
thereof) made by the Trustee (as such) since the date of the last
report transmitted pursuant to Section 10.3(a) (or if no such report
has yet been so transmitted, since the date of execution of this
instrument) for the reimbursement of which it claims or may claim a
lien or charge, prior to that of the Securities of any series, on
property or funds held or collected by it as Trustee, and that it has
not previously reported pursuant to this Section 9(b), except that the
Trustee shall not be required (but may elect) to report such advances
if such advances remaining unpaid at any time aggregate ten percent
(10%) or less of the principal amount of Securities Outstanding at such
time, such report to be transmitted within ninety (90) days after such
advance.
(c) A copy of each such report shall, at the time of such transmission
to Holders, be filed by the Trustee with each stock exchange, if any, upon which
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the Securities are listed, and also with the SEC. Either of the Mobile Energy
Parties will notify the Trustee when the Securities of any series are listed on
any stock exchange.
SECTION 10.4. Reports by Mobile Energy Parties. Each of the Mobile
Energy Parties will:
(a) file with the Trustee, within fifteen (15) days after it
is required to file the same with the SEC, copies of the annual reports
and of the information, documents and other reports (or copies of such
portions of any of the foregoing as the SEC may from time to time by
rules and regulations prescribe) that either of the Mobile Energy
Parties may be required to file with the SEC pursuant to Section 13 or
Section 15(d) of the Exchange Act;
(b) file with the Trustee and the SEC, in accordance with
rules and regulations prescribed from time to time by the SEC, such
additional information, documents and reports with respect to
compliance by the Mobile Energy Parties with the conditions and
covenants of this Indenture, as may be required by such rules and
regulations;
(c) transmit by mail to all Holders, as their names and
addresses appear in the Security Register, within thirty (30) days
after the filing thereof with the Trustee, such summaries of any
information, documents and reports required to be filed by the Mobile
Energy Parties pursuant to Section 10.4 (a) and (b) as may be required
by rules and regulations prescribed from time to time by the SEC.
ARTICLE XI.
SUPPLEMENTAL INDENTURES
SECTION 11.1. Supplemental Indentures Without Consent of Holders.
Without the consent of the Holders of any Securities, the Mobile Energy Parties,
in each case when authorized by Board Resolutions, and the Trustee, at any time
and from time to time, may enter into one (1) or more indentures supplemental
hereto in form satisfactory to the Trustee, for any of the following purposes:
(a) to establish the form and terms of Securities of any
series permitted by Sections 2.1 and 2.3 and to provide for the sale,
authentication and delivery of additional Securities and refunding
Securities and the disposition of the proceeds from the sale thereof,
in the manner and to the extent authorized by this Indenture; or
(b) to grant to or confer upon the Holders or the Trustee for
the benefit of the Holders any additional rights, remedies, powers or
authorities or security that may lawfully be granted to or conferred
upon the Holders or the Trustee; or
(c) to evidence the succession of a new Trustee hereunder
or a co-trustee or separate trustee pursuant to Section 9.15; or
(d) to add to the covenants of either of the Mobile Energy
Parties, for the benefit of the Holders, or to surrender any right or
power herein conferred upon such Mobile Energy Party; or
(e) to convey, transfer and assign to the Trustee, and to
subject to the Lien of this Indenture, additional properties or assets,
and to correct or amplify the description of any property at any time
subject to the Lien of this Indenture or to assure, convey and confirm
unto the
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Trustee any property subject or required to be subject to the Lien of
this Indenture; or
(f) to modify, eliminate or add to the provisions of this
Indenture to such extent as shall be necessary to continue the
qualification of this Indenture (including any supplemental indenture)
under the Trust Indenture Act, or under any similar Federal statute
hereafter enacted, or to permit the qualification of any Securities for
sale under the securities laws of any of the States of the United
States, and to add to this Indenture such other provisions as may be
expressly permitted by the Trust Indenture Act, or under any similar
Federal statute hereafter enacted, excluding, however, the provisions
referred to in Section 316(a)(2) of the Trust Indenture Act as in
effect at the date as of which this instrument was executed or any
corresponding provision in any similar Federal statute hereafter
enacted; or
(g) to permit or facilitate the issuance of Securities in
uncertificated form or to provide for the cessation thereof; or
(h) to cure any ambiguity, inconsistency or formal defect or
omission, or to make any other provisions with respect to matters or
questions arising under this Indenture, provided such action shall not
be inconsistent with this Indenture, shall not impair the security for
the Securities and shall not adversely affect the interest of the
Holders of any series; or
(i) to secure or maintain the rating for any Securities from
any Rating Agency.
SECTION 11.2. Supplemental Indenture with Consent of Holders. With the
consent of the Holders of not less than a majority in aggregate principal amount
of the Securities of all series then Outstanding, considered as one (1) class,
by Act of said Holders delivered to the Mobile Energy Parties and the Trustee,
the Mobile Energy Parties, in each case, when authorized by Board Resolutions,
may, and the Trustee, subject to Sections 11.3 and 11.4, shall, enter into an
indenture or indentures supplemental hereto for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Indenture; provided, however, that if there shall be Securities of more
than one (1) series Outstanding hereunder and if a proposed supplemental
indenture shall directly affect the rights of the Holders of one (1) or more,
but less than all, of such series, then the consent only of the Holders of not
less than a majority in aggregate principal amount of the Outstanding Securities
of all series so directly affected, considered as one (1) class, shall be
required; provided further, however, that no such supplemental indenture shall,
without the consent of the Holder of each Outstanding Security directly affected
thereby:
(a) change the Stated Maturity of any Security (or, if the
principal thereof is payable in installments, the Stated Maturity of
any such installment), or of any payment of interest thereon, or the
dates or circumstances of payment of premium, if any, on any Security,
or change the principal amount thereof or the interest thereon or any
premium payable upon the redemption thereof, or change the place of
payment where, or the coin or currency in which, any Security or the
premium, if any, or the interest thereon is payable, or impair the
right to institute suit for the enforcement of any such payment of
principal or interest on or after the Stated Maturity thereof (or, in
the case of redemption, on or after the Redemption Date) or such
payment of premium, if any, on or after the date such premium becomes
due and payable or change the dates or the amounts of payments to be
made through the operation of the Sinking Fund in respect of such
Securities, if any; or
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(b) permit the creation of any Lien prior to or pari passu
with the Lien of the Security Documents with respect to any of the
Indenture Securities Collateral, or terminate the Lien of the Security
Documents on any Indenture Securities Collateral or deprive any Holder
of the security afforded by the Lien of the Security Documents, except
to the extent expressly permitted by this Indenture or any of the
Security Documents; or
(c) reduce the percentage in principal amount of the
Outstanding Securities, the consent of whose Holders is required for
any such supplemental indenture, or the consent of whose Holders is
required for any waiver (of compliance with certain provisions of this
Indenture or certain defaults hereunder and their consequences)
provided for in this Indenture, or reduce the requirements of Section
13.4 for quorum or voting; or
(d) modify any of the provisions of Section 3.2 or Section 8.7
(except to increase the percentage of the principal amount of the
Outstanding Securities required to waive past defaults) or of this
Section 11.2 (except to provide that certain other provisions of this
Indenture cannot be modified or waived without the consent of the
Holder of each Security affected thereby).
A supplemental indenture that changes or eliminates any covenant or
other provision of this Indenture that has expressly been included solely for
the benefit of one (1) or more particular series of Securities, or that modifies
the rights of the Holders of Securities of such series with respect to such
covenant or other provision, shall be deemed not to affect the rights under this
Indenture of the Holders of Securities of any other series.
Upon receipt by the Trustee of Board Resolutions of the Mobile Energy
Parties and such other documentation as the Trustee may reasonably require and
upon the filing with the Trustee of evidence of the Act of such Holders, the
Trustee shall join in the execution of such supplemental indenture or other
instrument (as the case may be), subject to the provisions of Sections 11.3 and
11.4.
It shall not be necessary for any Act of Holders under this Section
11.2 to approve the particular form of any proposed supplemental indenture, but
it shall be sufficient if such Act shall approve the substance thereof.
SECTION 11.3. Documents Affecting Immunity or Indemnity. If in the
opinion of either of the Mobile Energy Parties or the Trustee any document
required to be executed by it pursuant to the terms of Section 11.2 affects any
interest, right, duty, immunity or indemnity in favor of the Mobile Energy
Parties or the Trustee under this Indenture, either of the Mobile Energy Parties
or the Trustee (as the case may be), may in its discretion decline to execute
such document.
SECTION 11.4. Execution of Supplemental Indentures. In executing, or
accepting the additional trusts created by, any Series Supplemental Indenture or
other supplemental indenture permitted by this Article XI or the modifications
thereby of the trusts created by this Indenture, the Trustee shall be entitled
to receive, and (subject to section 9.1) shall be fully protected in relying
upon, an Opinion of Counsel stating that the execution of such supplemental
indenture is authorized or permitted by this Indenture.
SECTION 11.5. Effect of Supplemental Indentures. Upon the execution of
any supplemental indenture under this Article XI, this Indenture shall be
modified in accordance therewith, and such supplemental indenture shall form a
part of this Indenture for all purposes; and every Holder of Securities
theretofore or thereafter authenticated and delivered hereunder shall be bound
thereby.
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SECTION 11.6. Conformity with Trust Indenture Act. Every supplemental
indenture executed pursuant to this Article XI shall conform to the requirements
of the Trust Indenture Act as then in effect.
SECTION 11.7. Reference in Securities to Supplemental Indentures.
Securities authenticated and delivered after the execution of any supplemental
indenture pursuant to this Article XI may, and if required by the Company shall,
bear a notation in form approved by the Company and the Trustee as to any matter
provided for in such supplemental indenture; and, in such case, suitable
notation may be made upon Outstanding Securities after proper presentation and
demand. If the Company shall so determine, new Securities so modified as to
conform, in the opinion of the Company and the Trustee, to any such supplemental
indenture may be prepared and executed by the Company and authenticated and
delivered by the Trustee in exchange for Outstanding Securities.
ARTICLE XII.
SATISFACTION AND DISCHARGE
SECTION 12.1. Satisfaction and Discharge of Securities. (a) Except as
otherwise provided with respect to the Securities of any series in the Series
Supplemental Indenture relating thereto, the Securities of such series shall,
prior to the Stated Maturity thereof (or, if principal is payable in
installments, the Stated Maturity of the final installment of principal
thereof), on the ninety-first (91st) day after the date of the deposit referred
to in paragraph (i) below, be deemed to have been paid for all purposes of this
Indenture, and the entire indebtedness of the Mobile Energy Parties in respect
thereof shall be deemed to have been satisfied and discharged, upon satisfaction
of the following conditions:
(i) the Company shall have irrevocably deposited with the
Trustee, in trust, specifically pledged as security for and dedicated
solely for the benefit of the Holders of Securities of such series (A)
monies in an amount that shall be sufficient, (B) U.S. Government
Obligations, the payment of interest and principal on which when due,
without any regard to reinvestment thereof, will provide monies that
shall be sufficient or (C) any combination of clause (A) and (B) above
that shall be sufficient, in each case, in the opinion of a firm of
independent certified public accountants of recognized national
standing expressed in a written certification thereof delivered to the
Trustee, to pay when due the principal of and premium, if any, and
interest due and to become due on the Securities of such series,
whether at Stated Maturity or upon redemption, acceleration or
otherwise;
(ii) if any such deposit of monies or U.S. Government
Obligations shall have been made prior to the Stated Maturity (or, if
principal is payable in installments, the Stated Maturity of the final
installment of principal) or Redemption Date or Prepayment Date of such
Securities, the Company shall have delivered to the Trustee a Company
Order stating that such monies shall be held by the Trustee, in trust,
as provided in Section 12.3;
(iii) if the Company has deposited or caused to be deposited
monies or U.S. Government Obligations (or a combination thereof) to pay
or discharge the principal of and premium, if any, and interest on the
Outstanding Securities of such series to and including a Redemption
Date on which all of the Outstanding Securities of such series are
eligible for optional redemption and on which all of the Outstanding
Securities of such series are to be redeemed, such Redemption Date
shall be irrevocably designated by a Board Resolution of the Company
delivered to the Trustee on or prior to the date of such deposit of
such monies or U.S. Government
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Obligations, and such Board Resolution shall be accompanied by an
irrevocable Company Request that the Trustee give notice of such
redemption in the name and at the expense of the Company not less than
thirty (30) nor more than sixty (60) days prior to such redemption in
accordance with Section 6.4;
(iv) the Mobile Energy Parties shall have delivered to the
Trustee an Opinion of Counsel to the effect that (A) the trust
resulting from such deposit does not constitute an investment company
under the Investment Company Act of 1940 and (B) the Holders shall have
a perfected security interest under applicable Law in the monies and
U.S. Government Obligations so deposited;
(v) no Event of Default, or event that with notice, lapse of
time or both would become an Event of Default (including by reason of
such deposit), in any case arising pursuant to Section 8.1(a) or (n)
with respect to the Securities of such series shall have occurred and
be continuing on the date of deposit or during the period ending on the
ninety-first (91st) day after such date;
(vi) the Mobile Energy Parties shall have delivered to the
Trustee an Opinion of Counsel to the effect that based upon (A) a
change in the applicable Federal income tax law since the date of this
Indenture (or a change in the official interpretation thereof) or (B)
the receipt by the Company from, or the publishing by, the Internal
Revenue Service of a ruling on which such counsel is relying for the
opinion contemplated herein, the Holders of Securities of such series
will not recognize income, gain or loss for Federal income tax purposes
as a result of the deposit, defeasance and discharge pursuant to this
Section 12.1(a) and will be subject to Federal income tax on the same
amounts and in the same manner and at the same times as would have been
the case if such deposit, defeasance and discharge had not occurred;
and
(vii) there shall have been delivered to the Trustee an
Officer's Certificate of each of the Mobile Energy Parties and an
Opinion of Counsel, each stating that all conditions precedent herein
provided for relating to the satisfaction and discharge of the
Securities of such series have been complied with;
provided, however, that if each of the conditions set forth in this Section
12.1(a) shall have been satisfied with respect to the Outstanding Securities of
any series, but the ninety-one (91) day period referenced above shall not have
elapsed, the Securities of such series shall nevertheless be deemed to have been
paid for all purposes of this Indenture on the date of the deposit referred to
in paragraph (i) above if the Company shall have delivered, or caused to be
delivered, to the Trustee an opinion of qualified nationally recognized
bankruptcy counsel acceptable to the Trustee to the effect that the use by the
Trustee of such monies in accordance with this Indenture would not constitute an
avoidable preference or be subject to the provisions of Sections 544 and 547,
would not be recoverable under Section 550 and would not be subject to the
provisions of Section 362(a), in each case of the Bankruptcy Code or similar
laws of the United States of America or the State of Alabama, if a Bankruptcy
Event in respect of the Person making such deposit were to occur.
Upon satisfaction of the aforesaid conditions with respect to the Securities of
any series, the Trustee shall, upon receipt of a Company Request, acknowledge in
writing that the Securities of such series are deemed to have been paid for all
purposes of this Indenture and that the entire indebtedness of the Mobile Energy
Parties in respect thereof is deemed to have been satisfied and discharged.
In the event that Securities that shall be deemed to have been paid as
provided in this Section 12.1(a) do not mature and are not to be redeemed within
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the sixty (60) day period commencing on the date of the deposit with the Trustee
of monies, the Mobile Energy Parties shall, as promptly as practicable, give a
notice, in the same manner as a notice of redemption with respect to such
Securities, to the Holders of such Securities to the effect that such Securities
are deemed to have been paid and the circumstances thereof.
Notwithstanding the satisfaction and discharge of any Securities as
aforesaid, (i) the rights of Holders of Securities of such series to receive,
solely from the trust funds described in paragraph (i) of this Section 12.1(a),
payment of the principal of and premium, if any, and interest on the Securities
of such series on the Stated Maturity thereof (to and including the Redemption
Date, if any, designated pursuant to paragraph (iii) of this Section 12.1(a))
and (ii) the rights and obligations of the Holders of the Securities of such
series, the Mobile Energy Parties and the Trustee in respect of the Securities
of such series under Sections 2.7, 2.8, 2.9, 2.10, 2.11, 2.12 and 2.15, Article
VI (in the case of redemption as contemplated by paragraph (iii) of this Section
12.1(a), to the extent Article VI applies to the redemption to be made on such
Redemption Date), Sections 9.3(e) and 9.7 and this Article XII shall survive.
(b) If (i) each of the conditions set forth in paragraphs (i), (ii),
(iii), (iv) and (v) of Section 12.1(a) shall have been satisfied with respect to
the Outstanding Securities of any series, but the conditions set forth in
paragraphs (vi) and (vii) thereof are not satisfied and (ii) the Mobile Energy
Parties shall have delivered to the Trustee (A) an Opinion of Counsel to the
effect that the Holders of such series will not recognize income, gain or loss
for Federal income tax purposes as a result of the deposit, defeasance and
discharge pursuant to this Section 12.1(b) and will be subject to Federal income
tax on the same amounts and in the same manner and at the same times as would
have been the case if such deposit, defeasance and discharge had not occurred
and (B) an Officer's Certificate of each of the Mobile Energy Parties and an
Opinion of Counsel, each stating that all conditions precedent herein provided
for relating to the defeasance of the Securities of such series pursuant to this
Section 12.1(b) have been complied with, then:
(A) with respect to the Securities of such series, the Mobile
Energy Parties shall be released from their covenants and other
obligations contained in Articles V (other than Section 5.3) and XIV
and Section 2.15 of this Indenture and all their obligations under the
other Security Documents, and may omit to comply with and shall have no
liability in respect of any term, condition or limitation set forth in
any such covenant or obligation whether directly or indirectly, by
reason of any reference elsewhere herein to any other provision of this
Indenture or any other document and any failure to comply with any such
covenant shall not constitute an Event of Default with respect to the
Securities of such series;
(B) the occurrence of any event specified in any of paragraphs
(b) through (m), (o) or (p) of Section 8.1 shall not constitute an
Event of Default with respect to the Securities of such series;
(C) the Securities of such series shall thereafter be deemed
not to be "Outstanding" solely for purposes of determining whether or
not the Holders of the requisite aggregate principal amount of
Securities have concurred in any Act under this Indenture with respect
to any covenant or obligation from which the Mobile Energy Parties have
been released pursuant to paragraph (A) above, or with respect to any
event that shall have ceased to be an Event of Default with respect to
Securities of such series pursuant to paragraph (B) above (or the
consequences thereof); and
(D) the Securities of such series shall cease to be secured by
or to be entitled to any benefit under the Security Documents or any
other Lien upon any Collateral, including any monies, security or other
property
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held by the Trustee (other than monies and U.S. Obligations deposited
with the Trustee pursuant to paragraph (i) of Section 12.1(a) in
respect of Securities of such series and interest and other amounts
earned and received thereon);
provided, however, that the provisions of this Section 12.1(b) shall not be
deemed to relieve the Company of its obligations with respect to the payment of
the principal of and premium, if any, and interest on the Outstanding Securities
of such series. In respect of the foregoing, it is understood and agreed that:
(1) satisfaction by the Company of the conditions necessary to
achieve the consequences specified in this Section 12.1(b) with respect
to any series of Securities shall not be construed to preclude the
Company from achieving the consequences specified in Section 12.1(a)
with respect to such Securities at a later date upon satisfaction of
the conditions set forth in Section 12.1(a); and
(2) if at any time the only Outstanding Securities are
Securities with respect to which the conditions described in this
Section 12.1(b) have been satisfied, the Trustee shall, upon receipt of
a Company Request, take the actions specified in the last paragraph of
Section 12.2 notwithstanding the failure to satisfy and discharge the
Indenture as provided in Section 12.2.
(c) For purposes of this Section 12.1, if the Mobile Energy Parties, or
either of them, shall incur any Debt and all or any portion of the proceeds
thereof are concurrently applied to make a deposit pursuant to paragraph (i) of
Section 12.1(a) in respect of any series of Securities (or to acquire U.S.
Government Obligations that are concurrently so deposited), whether for purposes
of Section 12.1(a) or 12.1(b), then any Event of Default that would arise as a
result of such incurrence or as a result of any Lien granted to secure such Debt
shall not constitute an Event of Default with respect to the Securities of such
series; provided, however, that if, on or before the ninety-first (91st) day
after the date of such deposit any of the applicable conditions under Section
12.1(a) or (b), as the case may be, required to be satisfied on such date or
during the period ending on such date are not satisfied, then any such Event of
Default shall be deemed to have occurred at the time and to the extent such
Event of Default would have occurred without regard to this Section 12.1(c).
(d) Notwithstanding anything herein to the contrary, if, at any time
after a Security would be deemed to have been paid for purposes of this
Indenture, and, if such is the case, the Company's indebtedness in respect
thereof would be deemed to have been satisfied and discharged, pursuant to this
Section 12.1 (without regard to provisions of this paragraph), the Trustee or
any Paying Agent, as the case may be, shall be required to return the monies or
U.S. Government Obligations, or combination thereof, deposited with it to either
of the Mobile Energy Parties or any Affiliate thereof or its representatives
under any applicable Federal or state bankruptcy, insolvency or other similar
Law such Security shall thereupon be deemed retroactively not to have been paid
and any satisfaction and discharge of the Company's indebtedness in respect
thereof shall retroactively be deemed not have been effected, and such Security
shall be deemed to remain Outstanding.
SECTION 12.2. Satisfaction and Discharge of Indenture. This Indenture
and the Guaranty shall upon a Company Request and a Mobile Energy Request cease
to be of further effect (except as hereinafter expressly provided), and the
Trustee, at the expense of the Company, shall execute proper instruments
prepared by the Company acknowledging satisfaction and discharge of this
Indenture and the Guaranty, when:
(a) either
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(i) all Securities theretofore authenticated and
delivered (other than (A) Securities that have been destroyed, lost or
stolen and that have been replaced or paid as provided in Section 2.9
and (B) Securities deemed to have been paid in accordance with Section
12.1) have been delivered to the Trustee for cancellation; or
(ii) all Securities not theretofore delivered to the
Trustee for cancellation shall be deemed to have been paid in
accordance with Section 12.1;
(b) all other sums due and payable hereunder have been paid;
and
(c) the Mobile Energy Parties have delivered to the Trustee an
Officer's Certificate and an Opinion of Counsel, each stating that all
conditions precedent herein provided for relating to the satisfaction
and discharge of this Indenture have been complied with.
Upon satisfaction of the aforesaid conditions, the Trustee shall, upon
receipt of a Company Request and Mobile Energy Request, acknowledge in writing
the satisfaction and discharge of this Indenture and the Guaranty.
Notwithstanding the satisfaction and discharge of this Indenture and
the Guaranty as aforesaid, if at the time of such satisfaction and discharge any
Securities are deemed to have been paid in accordance with Section 12.1, but
have not actually been fully paid, then the rights and obligations of the Mobile
Energy Parties and the Trustee in respect of such Securities shall survive to
the extent provided in Section 12.1 until all such Securities have actually been
repaid in full.
Upon satisfaction and discharge of this Indenture and the Guaranty as
provided in this Section 12.2, the Trustee shall assign, transfer and turn over
to or upon the order of the Company, any and all monies, securities and other
property then held by the Trustee for the benefit of the Holders other than
monies and U.S. Government Obligations deposited with the Trustee pursuant to
Section 12.1 and interest and other amounts earned or received thereon.
SECTION 12.3. Application of Trust Money. The monies deposited with the
Trustee pursuant to Section 12.1 and all monies received by the Trustee in
respect of U.S. Government Obligations deposited with the Trustee pursuant to
Section 12.1 shall not be withdrawn or used for any purpose other than, and
shall be held in trust for, the payment of the principal of and premium, if any,
and interest on the Securities or portions of principal amount thereof in
respect of which such deposit was made. The Company shall pay and shall
indemnify the Trustee against any tax, fee or other charge imposed on or
assessed against U.S. Government Obligations deposited pursuant to Section 12.1
or the interest and principal received in respect of such obligations other than
any such tax, fee or other charge payable by or on behalf of Holders.
ARTICLE XIII.
MEETINGS OF HOLDERS OF SECURITIES;
ACTION WITHOUT MEETING
SECTION 13.1. Purposes for Which Meetings May Be Called. A meeting of
Holders of Securities of one (1) or more, or all, series, may be called at any
time and from time to time pursuant to this Article XIII to make, give or take
any request, demand, authorization, direction, notice, consent, waiver or other
action provided by this Indenture to be made, given or taken by Holders of such
series.
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SECTION 13.2. Call, Notice and Place of Meetings. (a) The Trustee may
at any time call a meeting of Holders of one (1) or more, or all, series of
Securities for any purposes specified in Section 13.1, to be held at such time
and at such place in the Borough of Manhattan, The City of New York, or at such
other place, as the Trustee shall determine. Notice of every such meeting,
setting forth the time and the place of such meeting and in general terms the
action proposed to be taken at such meeting, shall be given, in the manner
provided in Section 1.6, not less than twenty (20) nor more than sixty (60) days
prior to the date fixed for the meeting.
(b) If the Trustee shall have been requested to call a meeting of the
Holders of Securities of one (1) or more, or all, series, by the Company, by
Mobile Energy or by the Holders of ten percent (10%) in aggregate principal
amount of the Outstanding Securities of such series (or, in the case of a
meeting of the Holders of the Securities of all series, ten percent (10%) in
aggregate principal amount of the Outstanding Securities of all series,
considered as one (1) class), by written request setting forth in reasonable
detail the action proposed to be taken at the meeting, and the Trustee shall not
have made the first mailing of the notice of such meeting within twenty-one (21)
days after receipt of such request or shall not thereafter proceed to cause the
meeting to be held as provided herein, then the Mobile Energy Parties or such
Holders (as the case may be) may determine the time and the place in the Borough
of Manhattan, the City of New York, or in such other place as the Mobile Energy
Parties or such Holders (as the case may be) shall determine, for such meeting
and may call such meeting for such purposes by giving notice thereof as provided
in Section 13.2(a).
(c) Any meeting of Holders of Securities of one (1) or more, or all,
series shall be valid without notice if the Holders of all Outstanding
Securities of such series are present in person or by proxy and the Trustee is
present, or if notice is waived in writing before or after the meeting by the
Holders of all Outstanding Securities of such series, or by such of them as are
not present at the meeting in person or by proxy.
SECTION 13.3. Persons Entitled to Vote at Meetings. To be entitled to
vote at any meeting of Holders of Securities of one (1) or more, or all, series,
a Person shall be (a) a Holder of one (1) or more Outstanding Securities of such
series or (b) a Person appointed by an instrument in writing as proxy for a
Holder or Holders of one (1) or more Outstanding Securities of such series by
such Holder or Holders. The only Persons who shall be entitled to attend any
meeting shall be the Holders described above and any proxies of such Holders and
their respective counsel, any representatives of the Trustee and its counsel and
any representatives of the Mobile Energy Parties and their respective counsels.
SECTION 13.4. Quorum; Action. The Persons entitled to vote a majority
in aggregate principal amount of the Outstanding Securities of the series with
respect to which a meeting shall have been called as hereinbefore provided,
considered as one (1) class, shall constitute a quorum for a meeting of Holders
of Securities of such series; provided, however, that if any action is to be
taken at such meeting that this Indenture expressly provides may be taken by the
Holders of a specified percentage that is less than a majority in principal
amount of the Outstanding Securities of such series, considered as one (1)
class, the Persons entitled to vote such specified percentage in principal
amount of the Outstanding Securities of such series, considered as one (1)
class, shall constitute a quorum. In the absence of a quorum, the meeting may be
adjourned for a period of not less than ten (10) days as determined by the
chairman of the meeting prior to the adjournment of such meeting. In the absence
of a quorum at any such adjourned meeting, such adjourned meeting may be further
adjourned for a period of not less than ten (10) days as determined by the
chairman of the meeting prior to the adjournment of such adjourned meeting.
Except as provided in Section 13.5(e), notice of the reconvening of any
adjourned meeting shall be given as provided in Section 13.2(a), except that
such notice need be given only
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once not less than five (5) days prior to the date on which the meeting is
scheduled to be reconvened. Notice of the reconvening of an adjourned meeting
shall state expressly the percentage, as provided above, of the principal amount
of the Outstanding Securities of such series that shall constitute a quorum.
Except as limited by Section 11.2, any resolution presented to a
meeting or adjourned meeting duly reconvened at which a quorum is present as
aforesaid may be adopted by the affirmative vote of the Holders of a majority in
aggregate principal amount of the Outstanding Securities of the series with
respect to which such meeting shall have been called, considered as one (1)
class; provided, however, that, except as so limited, any resolution with
respect to any action that this Indenture expressly provides may be taken by the
Holders of a specified percentage that is less than a majority in principal
amount of the Outstanding Securities of such series, considered as one (1)
class, may be adopted at a meeting or an adjourned meeting duly reconvened and
at which a quorum is present as aforesaid by the affirmative vote of the Holders
of such specified percentage in principal amount of the Outstanding Securities
of such series, considered as one (1) class.
Any resolution passed or decision taken at any meeting of Holders of
Securities duly held in accordance with this Section 13.4 shall be binding on
all the Holders of Securities of the series with respect to which such meeting
shall have been held, whether or not present or represented at the meeting.
SECTION 13.5. Attendance at Meetings; Determination of Voting Rights;
Conduct and Adjournment of Meetings. (a) Attendance at meetings of Holders of
Securities may be in person or by proxy, and, to the extent permitted by law,
any such proxy shall remain in effect and be binding upon any future Holder of
the Securities with respect to which it was given, unless and until specifically
revoked by the Holder or future Holder of such Securities before being voted.
(b) Notwithstanding any other provision of this Indenture, the Trustee
may make such reasonable regulations as it may deem advisable for any meeting of
Holders of Securities in regard to proof of the holding of such Securities and
of the appointment of proxies and in regard to the appointment and duties of
inspectors of votes, the submission and examination of proxies, certificates and
other evidence of the right to vote, and such other matters concerning the
conduct of the meeting as it shall deem appropriate. Except as otherwise
permitted or required by any such regulations, the holding of Securities shall
be proved in the manner specified in Section 1.4 and the appointment of any
proxy shall be proved in the manner specified in Section 1.4. Such regulations
may provide that written instruments appointing proxies, regular on their face,
may be presumed valid and genuine without the proof specified in Section 1.4 or
other proof.
(c) The Trustee shall, by an instrument in writing, appoint a temporary
chairman of the meeting, unless the meeting shall have been called by either of
the Mobile Energy Parties or by Holders of Securities as provided in Section
13.2(b), in which case such Mobile Energy Party or the Holders of Securities of
the series calling the meeting (as the case may be) shall in like manner appoint
a temporary chairman. A permanent chairman and a permanent secretary of the
meeting shall be elected by vote of the Persons entitled to vote a majority in
aggregate principal amount of the Outstanding Securities of all series
represented at the meeting, considered as one (1) class.
(d) At any meeting each Holder of an Outstanding Security of any series
or such Holder's proxy shall be entitled to one (1) vote for each $1,000
original principal amount of Securities of such series held or represented by
such Holder, and each Holder of any such Security or such Holder's proxy shall
be entitled to divide the votes carried by such Security, casting some for and
some against a particular action, as such Holder sees fit; provided, however,
that no vote shall be cast or counted at any meeting in respect of any Security
challenged as not
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Outstanding and ruled by the chairman of the meeting to be not Outstanding. The
chairman of the meeting shall have no right to vote, except as a Holder of a
Security or proxy.
(e) Any meeting duly called pursuant to Section 13.2 at which a quorum
is present may be adjourned from time to time by Persons entitled to vote a
majority in aggregate principal amount of the Outstanding Securities of all
series represented at the meeting, considered as one (1) class; and the meeting
may be held as so adjourned without further notice.
SECTION 13.6. Counting Votes and Recording Action of Meetings. The vote
upon any resolution submitted to any meeting of Holders of Securities shall be
by written ballots on which shall be subscribed the signatures of the Holders of
Outstanding Securities or of their representatives by proxy and the principal
amounts and serial numbers of the Outstanding Securities, of the series with
respect to which the meeting shall have been called, held or represented by
them. The permanent chairman of the meeting shall appoint two (2) inspectors of
votes who shall count all votes cast at the meeting for or against any
resolution and who shall make and file with the secretary of the meeting their
verified written reports in quadruplicate of all votes cast at the meeting. A
record, at least in quadruplicate, of the proceedings of each meeting of Holders
of Securities shall be prepared by the secretary of the meeting and there shall
be attached to such record the original reports of the inspectors of votes on
any vote by ballot taken thereat and affidavits by one (1) or more persons
having knowledge of the facts setting forth a copy of the notice of the meeting
and showing that such notice was given as provided in Section 13.2 and, if
applicable, Section 13.4. Each copy shall be signed and verified by the
affidavits of the permanent chairman and secretary of the meeting and one (1)
such copy shall be delivered to each of the Mobile Energy Parties, and another
to the Trustee to be preserved by the Trustee, the latter to have attached
thereto the ballots voted at the meeting. Any record so signed and verified
shall be conclusive evidence of the matters therein stated.
SECTION 13.7. Action Without Meeting. In lieu of the vote of Holders of
Securities at a meeting as hereinbefore contemplated in this Article XIII, any
request, demand, authorization, direction, notice, consent, waiver or other
action may be made, given or taken by Holders of Securities by written
instruments as provided in Section 1.4.
ARTICLE XIV.
GUARANTY
SECTION 14.1. Guaranty of Payment and Performance. Mobile Energy hereby
(a) guarantees to the Trustee for its own benefit and the benefit of the Holders
from time to time the due and punctual payment, observance and performance of
all of the Guaranteed Obligations in accordance with their respective terms and
when and as due (whether at maturity, by reason of acceleration or otherwise),
or deemed to be due pursuant to Section 14.2, and (b) agrees so to pay, observe
or perform the same when so due, or deemed to be due, upon demand.
SECTION 14.2. Continuance and Acceleration of Guaranteed Obligations
upon Certain Events. If (a) any Event of Default described in Section 8.1(n)
shall have occurred and be continuing, (b) any injunction, stay or the like that
enjoins any acceleration, or demand for the payment, observance or performance,
of any Guaranteed Obligations that would otherwise be required or permitted
under the Security Documents shall become effective or (c) any Guaranteed
Obligations shall be or be determined to be or become discharged, disallowed,
invalid, illegal, void or otherwise unenforceable (whether by operation of any
present or future law or by order of any Governmental Authority) against the
Company then
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(i) such Guaranteed Obligations shall, for all purposes of this Indenture, be
deemed (A) in the case of clause (c) above, to continue to be outstanding and in
full force and effect notwithstanding the unenforceability thereof against the
Company, and (B) if such is not already the case, to have thereupon become
immediately due and payable and to have commenced bearing interest at the rate
equal to the then highest yield on any of the Outstanding Securities plus two
percent (2%) and (ii) the Trustee may, with respect to such Guaranteed
Obligations, exercise all of the rights and remedies hereunder that would be
available to it during an Event of Default.
SECTION 14.3. Recovered Payments. The Guaranteed Obligations shall be
deemed not to have been paid, observed or performed, and Mobile Energy's
obligations under this Guaranty in respect thereof shall continue and not be
discharged, to the extent that any payment, observance or performance thereof by
the Company or any other guarantor, or out of the proceeds of any collateral, is
recovered from or paid over by or for the account of the Trustee for any reason,
including as a preference or fraudulent transfer or by virtue of any
subordination (whether present or future or contractual or otherwise) of the
Guaranteed Obligations, whether such recovery or payment over is effected by any
judgment, decree or order of any Governmental Authority, by any plan of
reorganization or by settlement or compromise by the Trustee (whether or not
consented to by either of the Mobile Energy Parties or any other guarantor) of
any claim for any such recovery or payment over. Mobile Energy hereby expressly
waives the benefit of any applicable statute of limitations and agrees that it
shall be liable hereunder with respect to any Guaranteed Obligation whenever
such a recovery or payment over thereof occurs.
SECTION 14.4. Evidence of Guaranteed Obligations. The records of the
Trustee shall be conclusive evidence (absent manifest error) of the Guaranteed
Obligations and of all payments, observances and performances in respect
thereof.
SECTION 14.5. Binding Nature of Certain Adjudications. Mobile Energy
shall be conclusively bound by the adjudication in any action or proceeding,
legal or otherwise, involving any controversy arising under, in connection with,
or in any way related to, any of the Guaranteed Obligations, and by a judgment,
award or decree entered therein, if Mobile Energy shall have had the right, or
shall have been given the opportunity, to participate in such action or
proceeding and shall have been given notice of such action or proceeding in time
to exercise such right or avail itself of such opportunity.
SECTION 14.6. Nature of Mobile Energy's Obligations. Mobile Energy's
obligations hereunder (a) are absolute and unconditional, (b) are unlimited in
amount, (c) constitute a guaranty of payment and performance and not a guaranty
of collection, (d) are as primary obligor and not as a surety only, (e) shall be
a continuing guaranty of all present and future Guaranteed Obligations and all
promissory notes and other documentation given in extension or renewal or
substitution for any of the Guaranteed Obligations and (f) shall be irrevocable.
SECTION 14.7. No Release of Mobile Energy. The obligations of Mobile
Energy under this Guaranty shall not be reduced, limited or terminated, nor
shall Mobile Energy be discharged from any thereof, for any reason whatsoever
(other than, subject to Sections 14.3 and 14.12, the payment, observance and
performance of the Guaranteed Obligations), including (and whether or not the
same shall have occurred or failed to occur once or more than once and whether
or not Mobile Energy shall have received notice thereof): (a) (i) any increase
in the principal amount of, or interest rate applicable to, (ii) any extension
of the time of payment, observance or performance of, (iii) any other amendment
or modification of any of the other terms and provisions of, (iv) any release,
composition or settlement (whether by way of acceptance of a plan of
reorganization or otherwise) of, (v) any subordination (whether present or
future or contractual or otherwise) of or (vi) any discharge, disallowance,
invalidity, illegality, voidness or other unenforceability of, in each case the
Guaranteed
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Obligations; (b) (i) any failure to obtain any release, composition or
settlement of, (ii) any amendment or modification of any of the terms and
provisions of, (iii) any subordination of or (iv) any discharge, disallowance,
invalidity, illegality, voidness or other unenforceability of, in each case any
guaranties of the Guaranteed Obligations; (c) (i) any failure to obtain any
release of, (ii) any failure to protect or preserve, (iii) any release,
compromise, settlement or extension of the time of payment of any obligations
constituting, (iv) any failure to perfect or maintain the perfection or priority
of any Lien upon, (v) any subordination of any Lien upon or (vi) any discharge,
disallowance, invalidity, illegality, voidness or other unenforceability of any
Lien or intended Lien upon, in each case any collateral now or hereafter
securing the Guaranteed Obligations or any other guaranties thereof; (d) any
termination of or change in any relationship between Mobile Energy and the
Company, including any such termination or change resulting from a change in the
ownership of Mobile Energy or the Company or from the cessation of any
commercial relationship between Mobile Energy and the Company; (e) any exercise
of, or any election not or failure to exercise, delay in the exercise of, waiver
of, or forbearance or other indulgence with respect to, any right, remedy or
power available to the Trustee, including (i) any election not or failure to
exercise any right of set off, recoupment or counterclaim, (ii) any election of
remedies effected by the Trustee, including the foreclosure upon any real estate
constituting collateral, whether or not such election affects the right to
obtain a deficiency judgment and (iii) any election by the Trustee in any
proceeding under the Bankruptcy Code of the application of Section 1111(b)(2) of
such Code; and (f) any other act or failure to act or any other event or
circumstance that (i) varies the risk of Mobile Energy under this Guaranty or
(ii) but for the provisions hereof, would, as a matter of statute or rule of law
or equity, operate to reduce, limit or terminate the obligations of Mobile
Energy hereunder or discharge Mobile Energy from any thereof.
SECTION 14.8. Certain Waivers. Mobile Energy waives (a) any
requirement, and any right to require, that any right or power be exercised or
any action be taken against the Company, any other guarantor or any collateral
for the Guaranteed Obligations or any guaranty thereof, (b) all defenses to, and
all set offs, counterclaims and claims of recoupment against, the Guaranteed
Obligations that may at any time be available to the Company or any guarantor,
(c) (i) notice of acceptance of and intention to rely on this Guaranty, (ii)
notice of the issuance of any Securities under this Indenture and of the
incurrence or renewal of any other Guaranteed Obligations, (iii) notice of any
of the matters referred to in Section 14.7 and (iv) all other notices that may
be required by Law or otherwise to preserve any rights against Mobile Energy
under this Guaranty, including any notice of default, demand, dishonor,
presentment and protest, (d) diligence, (e) any defense based upon, arising out
of or in any way related to (i) any claim that any sale or other disposition of
any collateral for the Guaranteed Obligations or any guaranty thereof was not
conducted in a commercially reasonable fashion or that a public sale, should the
Trustee or the Collateral Agent (as the case may be), have elected to so
proceed, was, in and of itself, not a commercially reasonable method of sale,
(ii) any claim that any election of remedies by the Trustee or the Collateral
Agent (as the case may be), including the exercise by the Trustee or the
Collateral Agent (as the case may be) of any rights against any collateral,
impaired, reduced, released or otherwise extinguished any right that Mobile
Energy might otherwise have had against the Company or any other guarantor or
against any collateral, including any right of subrogation, exoneration,
reimbursement or contribution or right to obtain a deficiency judgment, (iii)
any claim based upon, arising out of or in any way related to any of the matters
referred to in Section 14.7 and (iv) any claim that this Guaranty should be
strictly construed against the Trustee and (f) ALL OTHER DEFENSES UNDER
APPLICABLE LAW THAT WOULD, BUT FOR THIS CLAUSE (f), BE AVAILABLE TO MOBILE
ENERGY AS A DEFENSE AGAINST OR A REDUCTION OR LIMITATION OF ITS OBLIGATIONS
HEREUNDER.
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SECTION 14.9. Independent Credit Evaluation. Mobile Energy has
independently, and without reliance on any information supplied by the Trustee,
taken, and will continue to take, whatever steps it deems necessary to evaluate
the financial condition and affairs of the Company, and the Trustee shall have
no duty to advise Mobile Energy of information at any time known to it regarding
such financial condition or affairs.
SECTION 14.10. Subordination of Rights Against Company, Other
Guarantors and Collateral. All rights that Mobile Energy may at any time have
against the Company, any other guarantor or any collateral for the Guaranteed
Obligations or any guaranty thereof (including rights of subrogation,
exoneration, reimbursement and contribution and whether arising under Law or
otherwise), and all obligations that the Company or any other guarantor may at
any time have to Mobile Energy, Mobile Energy's obligations hereunder or any
payment made are hereby expressly subordinated to the prior payment, observance
and performance in full of the Guaranteed Obligations and any other such
guaranty. Mobile Energy shall not enforce any of the rights, or attempt to
obtain payment or performance of any of the obligations, subordinated pursuant
to this Section 14.10 until the Guaranteed Obligations have been paid, observed
and performed in full, except that such prohibition shall not apply to routine
acts, such as the giving of notices and the filing of continuation statements,
necessary to preserve any such rights. If any amount shall be paid to or
recovered by Mobile Energy (whether directly or by way of set off, recoupment or
counterclaim) on account of any right or obligation subordinated pursuant to
this Section 14.10, such amount shall be held in trust by Mobile Energy for the
benefit of the Trustee, not commingled with any of Mobile Energy's other funds
and forthwith paid over to the Trustee, in the exact form received, together
with any necessary endorsements, to be applied and credited against, or held as
security for, the Guaranteed Obligations and the obligations of Mobile Energy
hereunder. Notwithstanding the foregoing, nothing herein shall restrict or
otherwise limit the ability of Mobile Energy to receive monies distributed to it
by the Collateral Agent pursuant to Section 3.11 of the Intercreditor Agreement,
which monies need not be held in trust by Mobile Energy.
SECTION 14.11. Payments by Mobile Energy. (a) All payments due to the
Trustee hereunder shall be made to the Trustee at the Corporate Trust Office or
at such other address the Trustee may designate by notice to Mobile Energy. A
payment shall not be deemed to have been made on any day unless such payment has
been received by the Trustee at the required place of payment, in lawful money
of the United States of America in funds immediately available to the Trustee.
(b) All payments due the Trustee under this Guaranty, and all
of the other terms, conditions, covenants and agreements to be observed and
performed by Mobile Energy under this Guaranty, shall be made, observed or
performed by Mobile Energy without any reduction or deduction whatsoever,
including any reduction or deduction for any set-off, recoupment, counterclaim
(whether, in any case, in respect of an obligation owed by the Trustee to Mobile
Energy, the Company or any other guarantor and, in the case of a counterclaim,
whether sounding in tort, contract or otherwise) or tax.
(c) Mobile Energy hereby authorizes the Trustee, if and to the
extent any amount payable by Mobile Energy under this Guaranty is not otherwise
paid when due, to charge such amount against any or all of the accounts of
Mobile Energy with the Trustee or any of its Affiliates (whether maintained at a
branch or office located within or without the United States), with Mobile
Energy remaining liable for any deficiency.
(d) Whenever any payment to the Trustee under this Article XIV
would otherwise be due (except by reason of acceleration) on a day that is not a
Business Day, such payment shall instead be due on the next succeeding Business
Day. If the date any payment hereunder is due is extended (whether by operation
of this Indenture, Law or otherwise), such payment shall bear interest for such
extended time at the rate of interest applicable hereunder.
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SECTION 14.12. Continuance of Guaranty; Survival. The obligations of
Mobile Energy and the rights of the Trustee under this Article XIV shall
continue in full force and effect until the payment, observance and performance
in full of the Guaranteed Obligations.
SECTION 14.13. Assignments and Participations. Assignments. Mobile
Energy may not assign any of its rights or obligations under this Guaranty
without the prior written consent of the Trustee, and no assignment of any such
obligation shall release Mobile Energy therefrom unless the Trustee shall have
consented to such release in a writing specifically referring to the obligation
from which Mobile Energy is to be released.
SECTION 14.14. Benefit and Enforcement. This Guaranty is given for the
benefit of the Trustee and, subject to the terms and conditions set forth
herein, the Holders from time to time of the Securities, all of whom shall be
entitled in the same manner as set forth herein to enforce performance and
observance of this Guaranty.
ARTICLE XV.
LIMITED RECOURSE
Satisfaction of the obligations of the Mobile Energy Parties (including
pursuant to the Guaranty) under this Indenture for the payment of the principal
of or premium, if any, or interest on any Securities, or any part thereof, or
for any claim based thereon or otherwise in respect thereof or related thereto,
shall be had solely from the assets of the Mobile Energy Parties. No recourse
shall be had to (a) any assets or properties of the Members (other than Mobile
Energy as provided in Article XIV) or of the stockholders of Mobile Energy,
other than their respective interests in the Indenture Securities Collateral, if
any, (b) any Member (other than Mobile Energy as provided in Article XIV) or (c)
any Affiliate, incorporator, stockholder, partner, member, officer, director or
employee of any Member or of the Company (other than the Mobile Energy Parties
and, in respect of any Southern Guaranty on deposit in any Reserve Account
Security Account, Southern) and in the event of any non-performance by either of
the Mobile Energy Parties of its obligation to pay the principal of or premium,
if any, or interest on any Securities, or any part thereof, or for any claim
based thereon or otherwise in respect thereof, no judgment for any deficiency
upon the obligations of either of the Mobile Energy Parties under this
Indenture, for the payment of the principal of or premium, if any, or interest
on any Securities, or any part thereof, or for any claim based thereon or
otherwise in respect thereof or related thereto, shall be obtainable by the
Holders, the Trustee or the Collateral Agent against any Member (other than
Mobile Energy as provided in Article XIV) or any Affiliate, incorporator,
stockholder, partner, member, officer, director or employee of any Member or of
the Company (other than the Mobile Energy Parties and, in respect of any
Southern Guaranty on deposit in any Reserve Account Security Account, Southern).
Notwithstanding anything in this Article XV to the contrary, (i) satisfaction of
the Guaranteed Obligations 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 to the extent such assets are not commingled with
any of Mobile Energy's other assets or any monies or assets of the Company, (ii)
nothing contained herein or in the Securities shall limit or otherwise prejudice
in any way the right of the Trustee, the Collateral Agent or any Holder to
proceed against any Person whomsoever (A) with respect to the enforcement of
such Person's obligations under any Project Document (including the Guaranty and
any Southern Guaranty) to which such Person is a party or to proceed against
such Person with respect to the enforcement of such obligations or (B) to the
extent necessary to realize upon the Indenture Securities Collateral granted
hereunder or under the Security Documents and (iii) any limitations of liability
herein shall not apply to any Person if and to the extent that such Person
commits fraud
79
<PAGE>
or wilful misrepresentations, including those contained in Officer's
Certificates issued from time to time.
80
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Indenture to be duly
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
MOBILE ENERGY SERVICES
COMPANY, L.L.C.
By:
Name: Christopher J. Kysar
Title:...Vice President
MOBILE ENERGY SERVICES
HOLDINGS, INC.
By:
Name: Christopher J. Kysar
Title:...Vice President
FIRST UNION NATIONAL BANK
OF GEORGIA, as Trustee
By:
Name: Doug Miher
Title:...Assistant Vice President
[Indenture]
<PAGE>
Schedule 5.2
INSURANCE POLICIES
General Conditions:
(a) All policies shall waive the rights of subrogation against the
Collateral Agent.
(b) All property and liability policies shall name the Collateral Agent
as an additional insured. All policies protecting real and personal property or
loss of income shall include a Lenders Loss Payable provision for the benefit of
the Collateral Agent.
(c) All policies shall be endorsed to provide a minimum of thirty (30)
days notice of cancellation, nonrenewal, or material change (restricting
coverage) (ten (10) days in the case of cancellation for non-payment of
premiums) to the Collateral Agent and the Company.
(d) Where commercially available, all policies shall stipulate by
endorsement or equivalent policy language that the additional insured status of
the Collateral Agent places no responsibility on the Collateral Agent for the
payment of policy premiums, nor does the action or failure to take action by any
other insured or additional insured invalidate coverages for the Collateral
Agent under said policy.
(e) A severability of interest clause or equivalent cross liability
endorsement shall be included in each policy.
(f) All policies shall be primary as respects coverage provided for the
Energy Complex and the Site.
(g) All policies shall be provided through insurance carriers rated
A-IX or better by the Best's Insurance Guide (except for policies underwritten
by Lloyd's of London, AEGIS and approved English companies) or other insurance
companies reasonably acceptable to the Collateral Agent, in each case, which are
authorized to do business in the State of Alabama.
(h) All policies shall stipulate by endorsement or equivalent policy
language that following a Wind-Up Event, the Collateral Agent shall have the
right to make all claims made under said policy.
(i) All policies (other than liability policies) shall stipulate by
endorsement or equivalent policy language that following a Wind-Up Event, said
policy can be assigned to the Collateral Agent.
The following coverages shall be maintained in effect at all times
until all obligations of the Mobile Energy Parties pursuant to this Indenture,
the Securities, the Working Capital Facility, the Guaranty and the other
Security Documents have been fully discharged:
Required Insurance:
(a) Workers' Compensation Insurance. Workers' compensation insurance,
as required by state and Federal laws (including United States Longshoremen and
Harbor Workers and Maritime Liability (Jones Act) Insurance), including
employer's liability insurance for all employees of the Energy Complex in the
minimum amount of $1,000,000 per occurrence and in the aggregate where
applicable; provided; however, that the Company may satisfy such obligations, in
whole or in part, through the self-insurance of the Operator against workers'
compensation claims.
(b) Comprehensive General Liability Insurance. Comprehensive general
liability insurance against claims for personal injury (including bodily injury
and death), and property damage. Such insurance shall provide coverage for
Schedule 5.2-1
<PAGE>
products-completed operations, premises/operations, blanket contractual,
explosion, collapse and underground coverage, broad form property damage and
personal injury insurance coverage to protect the Collateral Agent against
claims arising out of operations performed by the Company and its
subcontractors, with a $1,000,000 minimum limit per occurrence for combined
bodily injury and property damage and with an aggregate of $2,000,000. The
general liability insurance shall, at a minimum, be provided under a 1986 ISO
Commercial General Liability form of policy or equivalent policy and shall be
written on an occurrence basis, or the AEGIS claim-first-made policy form.
(c) Comprehensive Automobile Liability. Comprehensive automobile
liability insurance against claims of personal injury (including bodily injury
and death) and property damage, including loss of use thereof, covering all
owned, leased, non-owned and hired vehicles used by the Company in the operation
of the Energy Complex, with a $1,000,000 minimum limit per occurrence for bodily
injury and property damage and a $2,000,000 minimum limit per occurrence for
combined bodily injury and property damage.
(d) Aircraft and Watercraft Liability. Aircraft Liability insurance (if
applicable), including Passengers and Crew Liability, and Watercraft Liability
insurance (if applicable), each having a $25,000,000 minimum limit per
occurrence for property damage and bodily injury, covering all aircraft or
watercraft that is owned, leased or chartered by the Company or any of its
subcontractors. If the performance of any obligations by a subcontractor in
connection with services performed at the Energy Complex requires the use of any
aircraft or watercraft that is owned, leased or chartered by such subcontractor
or any of its subcontractors, such subcontractor shall obtain Aircraft Liability
and Watercraft Liability insurance with a $25,000,000 minimum limit per
occurrence for property damage and bodily injury. If a helicopter is used to
lift materials or equipment, any Aircraft Liability insurance required hereunder
shall not contain any exclusion of coverage for "slung-cargo."
(e) Umbrella Liability or Excess Insurance. Excess Liability insurance
on an "occurrence" basis, or the AEGIS claims-first-made policy form pursuant to
an "Umbrella" policy covering claims in excess of and following the terms of the
underlying insurance as set forth in (a), (b) and (c) with a $24,000,000 minimum
limit per occurrence and a $24,000,000 annual aggregate limit; provided that, in
the event that claims under such aggregate liability coverage would reduce the
coverage to an amount less than or equal to $50,000,000, the Company shall
provide prompt written notice thereof to the Collateral Agent and promptly after
such claims are made, restore the coverage under such policy to the coverage
amount maintained prior to the assertion of such claims.
(f) Property Damage Insurance. Property Damage insurance on an
"all risk" replacement cost basis including coverage against damage or loss
caused by earth movement, flood and windstorm and providing (i) coverage for the
Energy Complex in a minimum aggregate amount of the lesser of (A) the full
replacement value of the Energy Complex and (B) the outstanding amount of Senior
Debt (including the unutilized Working Capital Facility Commitment) of the
Company (for which purpose there shall be included all steam, gas and electrical
transmission lines along with related equipment for which the Company has an
insurable interest) and (ii) Transit coverage, including Ocean marine coverage
(if applicable), with sub-limits sufficient to insure the full replacement value
of all property or equipment removed from the Energy Complex, provided that, for
the perils of flood, earth movement, increased cost of construction, debris
removal and loss to undamaged property, any sub-limit shall be not less than
$100,000,000. For purposes of this paragraph (f), "replacement cost," including
any improvements and equipment and supplies, shall be without deduction for
physical depreciation. All such policies may have deductibles of not greater
than $1,000,000, except for earth movement, flood and windstorm, which will have
the lowest deductible available on commercially reasonable terms in the
insurance marketplace. Such insurance shall include and "Agreed Amount" Clause
or Waiver of Co-Insurance and shall provide for increased cost of construction,
debris removal, and loss to undamaged property as the result of enforcement of
building laws or ordinances.
Schedule 5.2-2
<PAGE>
(g) Boiler and Machinery Insurance. Boiler and Machinery
insurance coverage to be written on a "comprehensive form" basis for all
insurable objects including all production machinery, pressure vessels,
electrical turbines and equipment, motors, air tanks, boilers, machinery,
pressure piping or any other similar objects located on or adjacent to the Site
in a minimum aggregate amount equal to the maximum foreseeable loss and
expediting expenses in the amount of $2,500,000 (with losses to be adjusted on a
replacement value) (subject to the limit set forth in paragraph (f) above). All
such policies may have deductibles of not greater than $1,000,000.
(h) Business Interruption and Extra Expense Insurance.
Business Interruption insurance covering as a minimum amount all fixed expenses
and debt service for a period of twelve (12) months arising from any loss
insured by (f) and (g). The maximum deductible shall be no greater than thirty
(30) days. There shall be either an Agreed Amount Clause or Waiver of
Coinsurance.
(i) Subcontractor Insurance. To the extent required by the
Master Operating Agreement or any Energy Services Agreement, the Company shall
require each of its subcontractors expected to perform work with a value in
excess of $5,000,000 (including the Operator) to obtain, from an insurance
company meeting the qualifications set forth above, on or before the effective
date of any agreement between the Company and such subcontractor with respect to
the Energy Complex, each of the insurance coverages set forth in paragraphs (a),
(b) and (c). Each subcontractor shall furnish to the Company, and the Company
shall furnish to the Collateral Agent, the Trustee and the Working Capital
Facility Provider, a certificate of insurance verifying that the insurance to be
provided as required hereunder has been secured.
Schedule 5.2-3
<PAGE>
Exhibit A
FORM OF DEBT SERVICE RESERVE ACCOUNT
SOUTHERN GUARANTY AGREEMENT
Dated as of [_____]
In consideration of the execution and delivery by First Union National
Bank of Georgia, as trustee under the Indenture referred to below for the
holders of the Indenture Securities referred to therein, of the Trust Indenture
dated as of August 1, 1995 among Mobile Energy Services Company, L.L.C., an
Alabama limited liability company (the "Company"), Mobile Energy Services
Holdings, Inc., an Alabama corporation ("Mobile Energy"), and First Union
National Bank of Georgia, as such trustee (the "Guaranteed Party") (such Trust
Indenture, as it may be amended, restated, supplemented, waived or otherwise
modified, hereinafter the "Indenture") and of the rights of the Company under
Section 4.6(a) thereof, and acknowledging that such execution and delivery and
such rights of the Company constitute indirect benefit to the Guarantor at least
equal to the Available Amount (as defined herein), The Southern Company, a
Delaware corporation (the "Guarantor"), hereby agrees with the Guaranteed Party
as follows (with terms not defined herein having the meanings ascribed to them
in the Indenture):
15.1. Guaranty. The Guarantor hereby (a) guarantees to the Guaranteed
Party the due and punctual payment, observance and performance of all
indebtedness, liabilities, obligations, covenants and duties of, and all terms
and conditions to be observed by, the Company due or owing under Section 4.6(c)
of the Indenture, in each case (i) whether due or owing to, or in favor or for
the benefit of, the Guaranteed Party for its own benefit and the benefit of the
Holders from time to time and any other Person that becomes the Guaranteed Party
by reason of any succession or assignment at any time thereafter and (ii)
whether or not an allowable claim against the Company under the Bankruptcy Code,
or otherwise enforceable against the Company, and including, in any event,
interest accruing as provided in clause (D) below after the filing by or against
the Company of a petition under the Bankruptcy Code (collectively, the
"Guaranteed Obligations"), in accordance with their respective terms and when
and as due, without regard to any counterclaim, set-off, deduction or defense of
any kind that the Company may have or assert and (b) agrees so to pay, observe
or perform the same when so due, or deemed to be due, upon demand; provided,
however, that the amount of the payment obligations of the Guarantor in respect
of the Guaranteed Obligations hereunder shall not at any time exceed the
Available Amount. For purposes of this Agreement, "Available Amount" means (A)
$[_____] minus (B) the aggregate amount of any monies (including interest) paid
in respect of each call honored by the Guarantor under this Agreement minus (C)
the amount of any other Reserve Account Security or any monies not then
constituting Revenues deposited into the Debt Service Reserve Account in which
this Agreement is deposited to the extent that, in the case of such Reserve
Account Security, monies are not withdrawn from such Debt Service Reserve
Account on account of the deposit of such Reserve Account Security plus (D) the
amount of any interest from (and including) the Business Day following the date
of any written demand on the Guarantor for payment of any of the Guaranteed
Obligations to (but excluding) the date of such payment at the rate of interest
equal to the then highest yield on any of the Outstanding Indenture Securities
plus two percent (2%) (provided that no such interest shall be payable with
respect to any amounts paid on the Business Day following the date of any such
written demand)[; provided, however, that in no event shall the Available Amount
exceed [_____] plus interest as provided in clause (D) above]. Upon the written
request of the Guarantor, the Guaranteed Party shall provide the Guarantor with
a statement of the Available Amount and a calculation thereof. Upon the written
request of the Guaranteed Party, the Guarantor shall confirm such statement and
calculation.
15.2. Guaranty Absolute. (a) The Guarantor guarantees that the
Guaranteed Obligations will be paid and performed strictly in accordance with
the
Exhibit A-1
<PAGE>
terms of the Indenture, regardless of any law or regulation now or hereafter in
effect in any jurisdiction affecting any of such terms or the rights of the
Guaranteed Party with respect thereto. The obligations of the Guarantor under
this Agreement are independent of the Guaranteed Obligations, and a separate
action or actions may be brought and prosecuted against the Guarantor to enforce
this Agreement, irrespective of whether or not any action is brought against the
Company or whether or not the Company is joined in any such action or actions.
The obligations of the Guarantor under this Agreement shall be irrevocable,
absolute and unconditional, shall constitute a guaranty of payment and
performance and not a guaranty of collection, shall be as primary obligor and
not as surety only and shall be irrevocable, in each case irrespective of: (i)
any change in the time, manner or place of payment of, or in any other term of,
all or any of the Guaranteed Obligations, or any other amendment or waiver of,
or any consent to departure from, the Indenture, or any discharge, disallowance,
invalidity, voidness or other unenforceability of the Guaranteed Obligations;
(ii) the existence of any claim, set-off, defense or other right that the
Company or the Guarantor may have at any time against the Guaranteed Party,
whether in connection with this Agreement, the Indenture or any unrelated
transaction; (iii) any change, restructuring or termination of the corporate
structure or existence of the Company or the partial or total substitution of
any other Person in the place of the Company under the Indenture whether by
assignment, foreclosure or otherwise; or (iv) any other circumstance that might
otherwise constitute a defense available to, or a discharge of, the Company or a
guarantor. This Agreement shall continue to be effective or be reinstated, as
the case may be, if at any time any payment of any of the Guaranteed Obligations
is rescinded or must otherwise be returned by the Guaranteed Party upon the
insolvency, bankruptcy or reorganization of the Company or the Guarantor or
otherwise, all as though such payment had not been made.
(b) This Agreement shall not confer upon the Guaranteed Party or any
other Person any right of payment or enforcement with respect to the Company
under the Indenture that is in any manner broader or more expansive than such
Person's rights of payment and enforcement, if any, with respect to the Company
under the Indenture.
15.3. Waiver. The Guarantor hereby waives promptness, diligence,
presentment, demand of payment, notice of acceptance, notice of the incurrence
or renewal of any of the Guaranteed Obligations and any other notice with
respect to any of the Guaranteed Obligations and this Agreement and any
requirement that the Guaranteed Party exhaust any right or take any action
against the Company or any other Person or entity.
15.4. Subrogation. Notwithstanding any payment or payments made by the
Guarantor hereunder, the Guarantor hereby irrevocably waives any and all rights
of subrogation to the rights of the Guaranteed Party against the Company and any
and all rights of reimbursement, assignment, indemnification or implied contract
or any similar rights against the Company or against any endorser or other
guarantor of all or any part of the Guaranteed Obligations until such time as
the Guaranteed Obligations guaranteed hereby have been paid, performed and
observed in full. If, notwithstanding the foregoing, any amount shall be paid to
the Guarantor on account of such subrogation rights at any time when all of such
Guaranteed Obligations shall not have been paid in full, such amount shall be
held by the Guarantor in trust for the Guaranteed Party, segregated from other
funds of the Guarantor, and shall, forthwith upon receipt by the Guarantor, be
turned over to the Guaranteed Party in the exact form received by the Guarantor,
to be applied against such Guaranteed Obligations, whether matured or unmatured,
in such order as the Guaranteed Party may determine.
15.5.Representations and Warranties.The Guarantor hereby represents and
warrants as follows:
(a) The Guarantor is a corporation duly organized, validly
existing and in good standing under the laws of the state of its
incorporation.
(b) The execution and delivery by the Guarantor of this
Agreement, and the performance by the Guarantor of its obligations
hereunder (i) are
Exhibit A-2
<PAGE>
within the Guarantor's corporate powers, (ii) have been duly authorized
by all necessary corporate action, (iii) do not contravene its articles
of incorporation or bylaws or any law or regulation applicable to or
binding on the Guarantor or any of its properties and (iv) do not
require the consent or approval of any Person that has not already been
obtained.
(c) This Agreement constitutes the legal, valid and binding
obligation of the Guarantor enforceable against the Guarantor in
accordance with its terms, except to the extent that the enforceability
thereof may be limited by applicable bankruptcy, insolvency,
moratorium, reorganization or other similar laws affecting creditors'
rights generally and by general principles of equity (regardless of
whether enforcement is sought in a proceeding in equity or at law).
15.6. Continuing Guaranty; Assignment. This Agreement is a continuing
guaranty and shall (a) apply to all Guaranteed Obligations whenever arising
pursuant to the terms herein, (b) be binding upon the Guarantor and its
successors and permitted assigns and (c) inure to the benefit of, and be
enforceable by, the Guaranteed Party and its successors and permitted assigns.
The Guarantor may not assign its obligations under this Agreement without the
prior written consent of the Guaranteed Party, which consent may be withheld in
the Guaranteed Party's sole discretion. The Guaranteed Party may not assign its
rights under this Agreement without the prior written consent of the Guarantor,
which consent may be withheld in the Guarantor's sole discretion.
15.7. Notices; Transfer of Funds. (a) The Guarantor shall provide the
Guaranteed Party, no later than forty-five (45) days after the end of each
fiscal quarter of the Guarantor, an Officer's Certificate of the Guarantor
certifying as to the determination of whether or not the Southern Credit
Standard has been satisfied as of the end of such fiscal quarter.
(b) All notices, requests, demands and other communications that are
required or may be given under this Agreement shall be in writing and shall be
deemed to have been duly given when received, if personally delivered; when
transmitted, if transmitted by telecopy, electronic or digital transmission
method, subject to the sender's facsimile machine receiving the correct
answerback of the addressee and confirmation of uninterrupted transmission by a
transmission report or the recipient confirming by telephone to sender that such
recipient has received the facsimile message and subject to a copy being sent
the same day for next day delivery by a reputable overnight delivery service;
the day after it is sent, if sent for next day delivery to a domestic address by
a reputable overnight delivery service; and upon receipt, if sent by certified
or registered mail, return receipt requested. In each case notice shall be sent
(i) if to the Guaranteed Party, to its address set forth in Section 12.4 of the
Indenture and (ii) if to the Guarantor, to:
The Southern Company
64 Perimeter Center East
Atlanta, Georgia 30364
Attention: Secretary
Telecopy: 404-668-3559
with a copy of any demand for payment or notice of breach or
default to:
Troutman Sanders
600 Peachtree Street, N.E.
Suite 5200
Atlanta, Georgia 30308-2216
Attention: John T.W. Mercer, Esq.
Telecopy: 404-885-3525
or to such other place and with such other copies as the Guaranteed Party or the
Guarantor may designate as to itself by written notice to the other pursuant to
this Section 7(b).
Exhibit A-3
<PAGE>
(c) Payments to be made to the Guaranteed Party hereunder shall be made
by wire transfer of funds to the Guaranteed Party, c/o Bankers Trust Company,
for deposit into the Debt Service Reserve Account in which this Agreement is
deposited established and created under the Indenture (ABA No.: 053000219;
Account No. 3076231393), at Bankers Trust Company, Four Albany Street, New York,
New York 10006 or such other account as the Guaranteed Party may designate by
notice hereunder.
15.8. Delay and Waiver. No failure on the part of the Guaranteed Party
to exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other
right.
15.9. Entire Agreement; Amendments. This Agreement and any agreement,
document or instrument attached hereto or referred to herein integrate all the
terms and conditions mentioned herein or incidental hereto and supersede all
oral negotiations and prior writings with respect to the subject matter hereof.
In the event of any conflict between the terms, conditions and provisions of
this Agreement and any such agreement, document or instrument, the terms,
conditions and provisions of this Agreement shall prevail. This Agreement may
only be amended or modified by an instrument in writing signed by each of the
Guarantor and the Guaranteed Party.
15.10. Headings. The headings of the various Sections of this Agreement
are for convenience of reference only and shall not modify, define or limit any
of the terms or provisions hereof.
15.11. Governing Law; Consent to Jurisdiction. (a) The rights and
duties of the Guaranteed Party and the Guarantor under this Agreement shall,
pursuant to Section 5-1401 of the New York General Obligations Law, be governed
by the law of the State of New York, without reference to the choice of law
provisions of New York law thereof (other than such Section 5-1401).
(b) Each party hereto irrevocably and unconditionally (i) agrees that
any suit, action or other legal proceeding arising out of this Agreement may be
brought in the United States District Court for the Southern District of New
York or, if such court does not have jurisdiction or will not accept
jurisdiction, in any court of general jurisdiction in New York, New York; (ii)
consents to the jurisdiction of any such court in any such suit, action or
proceeding; and (iii) waives any objection that such party may have to the
laying of venue of any such suit, action or proceeding in any such court.
15.12. WAIVER OF JURY TRIAL. EACH OF THE GUARANTOR AND THE GUARANTEED
PARTY HEREBY IRREVOCABLY WAIVES ALL RIGHT OF TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT
OR ANY MATTER ARISING HEREUNDER.
15.13. Severability. Any provision of this Agreement that shall be
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions thereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
15.14. No Recourse to Affiliates. Any obligations created herein shall
be the sole obligations of the Guarantor, unless and to the extent that such
obligations are assigned or delegated by the Guarantor pursuant to Section 6.
The Guaranteed Party shall not have recourse to any subsidiary, partner, joint
venturer, affiliate, director or officer of the Guarantor (or of any Person to
whom the Guarantor's obligations hereunder are assigned or delegated pursuant to
Section 6) for the performance of such obligations unless the obligations are
assumed in writing by the Person against whom recourse is sought.
15.15. Termination. Subject to the last sentence of Section 2(a), this
Agreement shall immediately terminate and be of no further force and effect upon
Exhibit A-4
<PAGE>
the earlier to occur of (a) the reduction of the Available Amount to zero in
accordance with Section 1 (including the deposit of other Reserve Account
Security or any monies not then constituting Revenues into the Debt Service
Reserve Account in which this Agreement is deposited in an amount equal to the
then Available Amount, to the extent that, in the case of such Reserve Account
Security, monies are not withdrawn from such Debt Service Reserve Account on
account of the deposit of such Reserve Account Security) or (b) the payment,
observance and performance of the Guaranteed Obligations guaranteed hereby. Upon
such termination, the Guaranteed Party shall deliver to the Guarantor written
evidence in form and substance reasonably satisfactory to the Guarantor of such
termination and of the release of the Guarantor from all of its obligations
hereunder.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
Exhibit A-5
<PAGE>
IN WITNESS WHEREOF, the Guarantor and the Guaranteed Party have caused
this Agreement to be duly executed by their duly authorized officers, all as of
the date hereof.
THE SOUTHERN COMPANY
By:
Name:
Title:
FIRST UNION NATIONAL BANK OF
GEORGIA, as Indenture Trustee
By:
Name:
Title:
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I.
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 1.1. Definitions; Construction.................................... 2
SECTION 1.2. Compliance Certificates and Opinions......................... 3
SECTION 1.3. Form of Documents Delivered to Trustee....................... 3
SECTION 1.4. Acts of Holders.............................................. 4
SECTION 1.5. Notices, etc. to Trustee and Mobile Energy Parties........... 5
SECTION 1.6. Notices to Holders; Waiver................................... 6
SECTION 1.7. Conflict with Trust Indenture Act............................ 6
SECTION 1.8. Effect of Headings and Table of Contents..................... 6
SECTION 1.9. Successors and Assigns....................................... 7
SECTION 1.10. Severability Clause.......................................... 7
SECTION 1.11. Benefits of Indenture........................................ 7
SECTION 1.12. Governing Law................................................ 7
SECTION 1.13. Legal Holidays............................................... 7
SECTION 1.14. Execution in Counterparts.................................... 7
SECTION 1.15. Projections.................................................. 7
ARTICLE II.
THE SECURITIES
SECTION 2.1. Form of Security to be Established by Series Supplemental
Indenture.................................................... 8
SECTION 2.2. Form of Trustee's Authentication............................. 8
SECTION 2.3. Amount Unlimited; Issuable in Series; Limitations on
Issuance..................................................... 8
SECTION 2.4. Authentication and Delivery of Securities.................... 10
SECTION 2.5. Form and Denominations....................................... 11
SECTION 2.6. Execution of Securities...................................... 12
SECTION 2.7. Temporary Securities......................................... 12
SECTION 2.8. Registration, Transfer and Exchange.......................... 12
SECTION 2.9. Mutilated, Destroyed, Lost and Stolen Securities............. 14
SECTION 2.10. Payment of Principal and Interest; Principal and Interest
Rights Preserved............................................. 14
SECTION 2.11. Persons Deemed Owners........................................ 16
SECTION 2.12. Cancellation................................................. 16
SECTION 2.13. Dating of Securities; Computation of Interest................ 16
SECTION 2.14. Source of Payments Limited; Rights and Liabilities of the
Mobile Energy Parties........................................ 16
SECTION 2.15. Parity of Securities......................................... 17
SECTION 2.16. Allocation of Principal and Interest......................... 17
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
SECTION 3.1. Organization, Power and Status of Mobile Energy Parties...... 18
SECTION 3.2. Authorization; Enforceability; Execution and Delivery........ 18
SECTION 3.3. No Conflicts; Laws and Contracts; No Default................. 18
i
<PAGE>
SECTION 3.4. Governmental Approvals....................................... 19
SECTION 3.5. Litigation................................................... 20
SECTION 3.6. Utility Regulation........................................... 20
SECTION 3.7. Collateral................................................... 20
SECTION 3.8. Taxes........................................................ 21
SECTION 3.9. Environmental Matters........................................ 21
SECTION 3.10. Business; Mobile Energy Assets............................... 21
SECTION 3.11. Employee Benefit Plans....................................... 21
ARTICLE IV.
INDENTURE ACCOUNTS
SECTION 4.1. Establishment of Indenture Securities Account................ 22
SECTION 4.2. Payments into Indenture Securities Account................... 22
SECTION 4.3. Application of Funds in Indenture Securities Account......... 22
SECTION 4.4. Payments into Debt Service Reserve Accounts.................. 23
SECTION 4.5. Application of Funds in Debt Service Reserve Accounts........ 23
SECTION 4.6. Reserve Account Security..................................... 24
SECTION 4.7. Investment of Monies in the Indenture Accounts............... 25
SECTION 4.8. Monies to be Held in Trust................................... 26
SECTION 4.9. Dominion and Control......................................... 26
ARTICLE V.
COVENANTS
SECTION 5.1. Payment of Principal, Premium, if any, and Interest; Mobile
Energy as Guarantor.......................................... 26
SECTION 5.2. Maintenance of Insurance..................................... 27
SECTION 5.3. Reporting Requirements....................................... 27
SECTION 5.4. Maintenance of Existence and Governmental Approvals; Rate
Regulation................................................. 29
SECTION 5.5. Nature of Business........................................... 30
SECTION 5.6. Operation and Maintenance.................................... 30
SECTION 5.7. Compliance with Law and Organizational Documents............. 30
SECTION 5.8. Prohibition on Fundamental Changes and Disposition of
Assets....................................................... 31
SECTION 5.9. Transactions with Affiliates................................. 31
SECTION 5.10. Amendments to Project Documents.............................. 32
SECTION 5.11. Performance Under Project Contracts.......................... 32
SECTION 5.12. Annual Budget................................................ 33
SECTION 5.13. Insurance Reports............................................ 34
SECTION 5.14. Liens........................................................ 34
SECTION 5.15. Investments.................................................. 34
SECTION 5.16. Indebtedness................................................. 34
SECTION 5.17. Debt for Modifications; Replacement Debt; Refunding Debt..... 34
SECTION 5.18. Application of Proceeds from Sale of Securities.............. 37
SECTION 5.19. Restricted Payments.......................................... 38
SECTION 5.20. Casualty Proceeds; Eminent Domain Proceeds................... 39
SECTION 5.21. Benefit Plan Liabilities..................................... 39
SECTION 5.22. Mill Owner Maintenance Reserve Account....................... 39
ARTICLE VI.
REDEMPTION AND PREPAYMENT OF SECURITIES
SECTION 6.1. Applicability of Article..................................... 40
SECTION 6.2. Election to Redeem or Prepay; Notice to Trustee.............. 40
SECTION 6.3. Optional Redemption; Extraordinary Redemption; Prepayment;
Selection of Securities to Be Redeemed or Prepaid............ 41
ii
<PAGE>
SECTION 6.4. Notice of Redemption or Prepayment........................... 42
SECTION 6.5. Securities Payable on Redemption Date or Prepayment Date..... 43
SECTION 6.6. Securities Redeemed or Prepaid in Part....................... 43
ARTICLE VII.
SINKING FUNDS
SECTION 7.1. Applicability of Article..................................... 44
SECTION 7.2. Sinking Funds for Securities................................. 44
ARTICLE VIII.
EVENTS OF DEFAULT; REMEDIES
SECTION 8.1. Events of Default............................................ 44
SECTION 8.2. Enforcement of Remedies...................................... 48
SECTION 8.3. Specific Remedies............................................ 49
SECTION 8.4. Judicial Proceedings Instituted by Trustee................... 49
SECTION 8.5. Holders May Demand Enforcement of Rights by Trustee.......... 51
SECTION 8.6. Control by Holders........................................... 52
SECTION 8.7. Waiver of Past Events of Defaults............................ 52
SECTION 8.8. Holder May Not Bring Suit Except Under Certain Conditions.... 52
SECTION 8.9. Undertaking to Pay Court Costs............................... 53
SECTION 8.10. Right of Holders to Receive Payment Not to Be Impaired....... 53
SECTION 8.11. Application of Monies Collected by Trustee................... 53
SECTION 8.12. Securities Held by Certain Persons Not to Share in
Distribution................................................. 55
SECTION 8.13. Waiver of Appraisement, Valuation, Stay, Right to
Marshalling.................................................. 55
SECTION 8.14. Remedies Cumulative; Delay or Omission Not a Waiver.......... 55
SECTION 8.15. Intercreditor Agreement...................................... 56
ARTICLE IX.
THE TRUSTEE
SECTION 9.1. Certain Duties and Responsibilities.......................... 56
SECTION 9.2. Notice of Events of Defaults................................. 57
SECTION 9.3. Certain Rights of Trustee.................................... 57
SECTION 9.4. Not Responsible for Recitals or Issuance of Securities....... 59
SECTION 9.5. May Hold Securities.......................................... 59
SECTION 9.6. Funds May Be Held by Trustee or Paying Agent................. 59
SECTION 9.7. Compensation, Reimbursement and Indemnification.............. 59
SECTION 9.8. Disqualification; Conflicting Interests...................... 60
SECTION 9.9. Corporate Trustee Required; Eligibility...................... 65
SECTION 9.10. Resignation and Removal; Appointment of Successor............ 66
SECTION 9.11. Acceptance of Appointment by Successor....................... 67
SECTION 9.12. Merger, Conversion, Consolidation or Succession to Business.. 67
SECTION 9.13. Preferential Collection of Claims Against any Obligor........ 68
SECTION 9.14. Maintenance of Offices and Agencies.......................... 71
SECTION 9.15. Co-Trustee or Separate Trustee............................... 73
SECTION 9.16. Taxes........................................................ 75
ARTICLE X.
HOLDERS' LISTS AND REPORTS BY
TRUSTEE AND MOBILE ENERGY PARTIES
SECTION 10.1. Company to Furnish Trustee Names and Addresses of Holders.... 75
SECTION 10.2. Preservation of Information; Communications to Holders....... 75
SECTION 10.3. Reports by Trustee........................................... 76
iii
<PAGE>
SECTION 10.4. Reports by Mobile Energy Parties............................. 78
ARTICLE XI.
SUPPLEMENTAL INDENTURES
SECTION 11.1. Supplemental Indentures Without Consent of Holders........... 79
SECTION 11.2. Supplemental Indenture with Consent of Holders............... 80
SECTION 11.3. Documents Affecting Immunity or Indemnity.................... 81
SECTION 11.4. Execution of Supplemental Indentures......................... 81
SECTION 11.5. Effect of Supplemental Indentures............................ 82
SECTION 11.6. Conformity with Trust Indenture Act.......................... 82
SECTION 11.7. Reference in Securities to Supplemental Indentures........... 82
ARTICLE XII.
SATISFACTION AND DISCHARGE
SECTION 12.1. Satisfaction and Discharge of Securities..................... 82
SECTION 12.2. Satisfaction and Discharge of Indenture...................... 87
SECTION 12.3. Application of Trust Money................................... 87
ARTICLE XIII.
MEETINGS OF HOLDERS OF SECURITIES;
ACTION WITHOUT MEETING
SECTION 13.1. Purposes for Which Meetings May Be Called.................... 88
SECTION 13.2. Call, Notice and Place of Meetings........................... 88
SECTION 13.3. Persons Entitled to Vote at Meetings......................... 89
SECTION 13.4. Quorum; Action............................................... 89
SECTION 13.5. Attendance at Meetings; Determination of Voting Rights;
Conduct and Adjournment of Meetings.......................... 90
SECTION 13.6. Counting Votes and Recording Action of Meetings.............. 91
SECTION 13.7. Action Without Meeting....................................... 91
ARTICLE XIV.
GUARANTY
SECTION 14.1. Guaranty of Payment and Performance.......................... 91
SECTION 14.2. Continuance and Acceleration of Guaranteed Obligations upon
Certain Events............................................... 92
SECTION 14.3. Recovered Payments........................................... 92
SECTION 14.4. Evidence of Guaranteed Obligations........................... 92
SECTION 14.5. Binding Nature of Certain Adjudications...................... 92
SECTION 14.6. Nature of Mobile Energy's Obligations........................ 93
SECTION 14.7. No Release of Mobile Energy.................................. 93
SECTION 14.8. Certain Waivers.............................................. 94
SECTION 14.9. Independent Credit Evaluation................................ 94
SECTION 14.10.Subordination of Rights Against Company, Other Guarantors and
Collateral................................................... 94
SECTION 14.11.Payments by Mobile Energy.................................... 95
SECTION 14.12.Continuance of Guaranty; Survival............................ 95
SECTION 14.13.Assignments and Participations............................... 96
SECTION 14.14.Benefit and Enforcement...................................... 96
iv
<PAGE>
ARTICLE XV.
LIMITED RECOURSE
SCHEDULE 5.2 - Insurance Policies
EXHIBIT A - Form of Debt Service Reserve Account Southern Guaranty
Agreement
v
Exhibit 4.2
- --------------------------------------------------------------------------
FIRST SUPPLEMENTAL INDENTURE
dated as of August 1, 1995
to
TRUST INDENTURE
dated as of August 1, 1995
among
MOBILE ENERGY SERVICES COMPANY, L.L.C.,
MOBILE ENERGY SERVICES HOLDINGS, INC.
and
FIRST UNION NATIONAL BANK OF GEORGIA, as Trustee
Providing for the Issuance of $255,210,000 of
First Mortgage Bonds with the
Interest Rate and Stated Maturities Set Forth Herein
- --------------------------------------------------------------------------
<PAGE>
FIRST SUPPLEMENTAL INDENTURE, dated as of August 1, 1995, to the Trust
Indenture, dated as of August 1, 1995 (the "Original Indenture"), among MOBILE
ENERGY SERVICES COMPANY, L.L.C., an Alabama limited liability company (the
"Company"), its principal office and mailing address being at 900 Ashwood
Parkway, Suite 300, Atlanta, Georgia 30338, MOBILE ENERGY SERVICES HOLDINGS,
INC., an Alabama corporation ("Mobile Energy"), its principal office and mailing
address being at 900 Ashwood Parkway, Suite 450, Atlanta, Georgia 30338, and
FIRST UNION NATIONAL BANK OF GEORGIA, as Trustee (the "Trustee"), its corporate
trust office and mailing address being at 999 Peachtree Street, N.E., 11th
Floor, Atlanta, Georgia 30309.
WHEREAS, the Company, Mobile Energy and the Trustee have
heretofore executed and delivered the Original Indenture to provide for
the issuance from time to time of the Company's Securities (as defined
in the Original Indenture) to be issued in one or more series;
WHEREAS, Sections 2.1, 2.3 and 11.1 of the Original Indenture
provide, among other things, that the Company, Mobile Energy and the
Trustee may enter into indentures supplemental to the Original
Indenture for, among other things, the purpose of establishing the
designation, form, terms and provisions of Securities of any series as
permitted by Sections 2.1, 2.3 and 11.1 of the Original Indenture;
WHEREAS, the Company and Mobile Energy (i) desire the issuance
of a series of Securities to be designated as hereinafter provided and
(ii) have requested the Trustee to enter into this First Supplemental
Indenture for the purpose of establishing the designation, form, terms
and provisions of the Securities of such series;
WHEREAS, all action on the part of the Company and Mobile
Energy necessary to authorize the issuance of the Securities of such
series under the Original Indenture and this First Supplemental
Indenture (the Original Indenture, as supplemented by this First
Supplemental Indenture, being hereinafter called the "Indenture") has
been duly taken; and
WHEREAS, all acts and things necessary to make the Securities
of such series, when executed by the Company and Mobile Energy and
authenticated and delivered by the Trustee as provided in the Original
Indenture, the legal, valid and binding obligations of the Company and
Mobile Energy, and to constitute these presents a valid and binding
supplemental indenture according to its terms, have been done and
performed, and the execution of this First Supplemental Indenture and
the creation and issuance under the Indenture of the Securities of such
series have in all respects been duly authorized, and the Company and
Mobile Energy, in the exercise of the legal right and power vested in
them, execute this First Supplemental Indenture and propose to create,
execute, issue and deliver the Securities of such series.
NOW, THEREFORE, THIS FIRST SUPPLEMENTAL INDENTURE WITNESSETH, that, in
order to establish the designation, form, terms and provisions of, and to
authorize the authentication and delivery of, the Securities of such series, and
in consideration of the acceptance of the Securities of such series by the
holders thereof and of other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I
DEFINITIONS
Capitalized terms not otherwise defined herein shall have the meanings
set forth in the Original Indenture.
<PAGE>
ARTICLE II
THE TERMS OF THE SECURITIES
SECTION 2.1. Terms of First Mortgage Bonds.
(a) There is hereby created a series of Securities designated "8.665%
First Mortgage Bonds Due 2017" in the aggregate principal amount of
$255,210,000. Upon delivery of a Company Order to the Trustee in accordance with
the provisions of Section 2.4 of the Original Indenture, the Trustee shall
authenticate and deliver the First Mortgage Bonds. Such Company Order shall
specify the amount of the First Mortgage Bonds to be authenticated and the date
on which such Securities are to be authenticated.
(b) The First Mortgage Bonds shall be substantially in the form of
Schedule A hereto and shall have and be subject to such other terms as provided
in the Indenture.
SECTION 2.2. Interest, Principal and Maturity Date.
The First Mortgage Bonds shall bear interest on the unpaid principal
amount thereof from time to time Outstanding from the date thereof until such
amount is paid in full at the rate of interest set forth in the form thereof
attached hereto. The principal amount of the First Mortgage Bonds shall be due
and payable as set forth in the form thereof attached hereto.
Payment of principal of and interest on the First Mortgage Bonds shall
be made, if the Company so elects, by check mailed to the Holder at its
registered address or otherwise as provided in Section 2.10 of the Original
Indenture, except that the final payment of principal of the First Mortgage
Bonds shall be made on the due date therefor to the accounts of the Holders
thereof as such accounts shall appear in the Security Register, which shall be
due and payable as set forth in the form thereof attached hereto. For so long as
the First Mortgage Bonds are issued in the form of one or more global First
Mortgage Bonds, payment of principal of and interest on the First Mortgage Bonds
shall be made in immediately available funds by wire transfer to the clearing
corporation or clearing agency acting as depositary for such global First
Mortgage Bonds, or a nominee of such clearing corporation or clearing agency.
Any Holder of $1,000,000 or more in aggregate principal amount of First Mortgage
Bonds may, by delivery of a written notice to the Paying Agent, elect to have
all such payments to such Holder made by wire transfer of immediately available
funds to a designated account maintained in the United States (so long as the
Paying Agent has received proper wire transfer instructions in writing by the
Regular Record Date next preceding the date for such payment).
The First Mortgage Bonds shall mature on the date set forth in the form
thereof attached hereto.
SECTION 2.3. Redemption.
(a) Optional Redemption. The Securities are not subject to optional
redemption.
(b) Mandatory Redemption. In accordance with the provisions of Section
6.3 of the Original Indenture, the Securities are subject to extraordinary
redemption under certain conditions, on the terms set forth in the Original
Indenture.
SECTION 2.4 Debt Service Reserve Account.
(a) A Debt Service Reserve Account designated the "First Supplemental
Indenture Debt Service Reserve Account" is hereby established and created with
the Trustee for the benefit of the Holders of the First Mortgage Bonds.
2
<PAGE>
(b) The Debt Service Reserve Account Required Balance in respect of the
First Supplemental Indenture Debt Service Reserve Account shall be an amount
equal to $21,936,000. The First Supplemental Indenture Debt Service Reserve
Account shall be funded on the date of original issuance of the First Mortgage
Bonds in an amount equal to such Debt Service Reserve Account Required Balance.
ARTICLE III
MISCELLANEOUS
SECTION 3.1. Execution of Supplemental Indenture.
This First Supplemental Indenture is executed and shall be construed as
an indenture supplemental to the Original Indenture and, as provided in the
Original Indenture, this First Supplemental Indenture forms a part thereof.
SECTION 3.2. Concerning the Trustee.
The Trustee shall not be responsible in any manner for or with respect
to the validity or sufficiency of this First Supplemental Indenture, or the due
execution hereof by the Company or Mobile Energy, or for or with respect to the
recitals and statements contained herein, all of which recitals and statements
are made solely by the Company and Mobile Energy.
SECTION 3.3. Counterparts.
This First Supplemental Indenture may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original;
but all such counterparts shall together constitute but one and the same
instrument.
SECTION 3.4. GOVERNING LAW.
THIS FIRST SUPPLEMENTAL INDENTURE AND THE FIRST MORTGAGE BONDS SHALL,
PURSUANT TO SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW, BE GOVERNED
BY THE LAW OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO THE CHOICE OF LAW
PROVISIONS THEREOF (OTHER THAN SUCH SECTION 5-1401).
SECTION 3.5. Limited Recourse.
Satisfaction of the obligations of the Company and Mobile Energy
(including pursuant to the Guaranty) under the Indenture for the payment of the
principal of or premium, if any, or interest on any Securities, or any part
thereof, or for any claim based thereon or otherwise in respect thereof or
related thereto, shall be had solely from the assets of the Company or (except
to the extent provided in the Guaranty) Mobile Energy. No recourse shall be had
to (a) any assets or properties of the Members (other than Mobile Energy as
provided in the Guaranty) or of the stockholders of Mobile Energy, other than
their respective interests in the Collateral, if any, (b) any Member (other than
Mobile Energy as provided in the Guaranty) or (c) any Affiliate, incorporator,
stockholder, partner, member, officer, director or employee of any Member or of
the Company (other than the Mobile Energies Parties and, in respect of any
Southern Guaranty on deposit in any Reserve Account Security Account, Southern)
and in the event of any non-performance by either of the Company or Mobile
Energy of its obligation to pay the principal of or premium, if any, or interest
on any Securities, or any part thereof, or for any claim based thereon or
otherwise in respect thereof, no judgment for any deficiency upon the
obligations of either of the Company or Mobile Energy under the Indenture, for
the payment of the principal of or premium, if any, or interest on any
Securities, or any part thereof, or for any claim based thereon or otherwise in
respect thereof or related thereto, shall be obtainable by the Holders, the
Trustee or the Collateral Agent against any Member (other than Mobile Energy as
provided in the Guaranty) or any
3
<PAGE>
Affiliate, incorporator, stockholder, partner, member, officer, director or
employee of any Member or of the Company (other than the Mobile Energy Parties
and, in respect of any Southern Guaranty on deposit in any Reserve Account
Security Account, Southern) or of the Company (other than Mobile Energy as
provided in Article XIV and, in respect of any Southern Guaranty on deposit in
any Reserve Account Security Account, Southern). Notwithstanding anything in
this Section 3.5 to the contrary, (i) satisfaction of the Guaranteed Obligations
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 to the extent such assets are not commingled with any of Mobile
Energy's other assets or any monies or assets of the Company, (ii) nothing
contained herein or in the Securities shall limit or otherwise prejudice in any
way the right of the Trustee, the Collateral Agent or any Holder to proceed
against any Person whomsoever (A) with respect to the enforcement of such
Person's obligations under any Project Document (including the Guaranty and any
Southern Guaranty) to which such Person is a party or limit or otherwise
prejudice in any way the right of the Holders, the Trustee or the Collateral
Agent to proceed against such Person with respect to the enforcement of such
obligations or (B) to the extent necessary to realize upon the Indenture
Securities Collateral granted hereunder or under the Security Documents and
(iii) any limitations of liability herein shall not apply to any Person if and
to the extent that such Person commits fraud or willful misrepresentations,
including those contained in Officer's Certificates issued from time to time.
4
<PAGE>
IN WITNESS WHEREOF, the parties have caused this First Supplemental
Indenture to be duly executed by their respective officers thereunder duly
authorized as of the date and year first above written.
MOBILE ENERGY SERVICES COMPANY,
L.L.C.
By: /s/
Name: Christopher J. Kysar
Title: Vice President
MOBILE ENERGY SERVICES HOLDINGS,
INC.
By: /s/
Name: Christopher J. Kysar
Title: Vice President
FIRST UNION NATIONAL BANK OF
GEORGIA, as Trustee
By: /s/
Name: Doug Milner
Title: Assistant Vice President
<PAGE>
Schedule A
[FORM OF BOND]
[Unless this Security is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the issuer hereof
or its agent for registration of transfer, exchange or payment, and any Security
of this series issued is registered in the name of Cede & Co. or such other name
as requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.]
MOBILE ENERGY SERVICES COMPANY, L.L.C.
8.665% First Mortgage Bond Due 2017
unconditionally guaranteed by
MOBILE ENERGY SERVICES HOLDINGS, INC.
No. R- CUSIP No. 607358AA6
Final Principal
Principal Amount Payment Date Issuance Date Interest Rate
$255,210,000 January 1, 2017 August 24, 1995 8.665%
MOBILE ENERGY SERVICES COMPANY, L.L.C., a limited liability company
duly organized and in good standing under the laws of the State of Alabama
(herein called the "Company," which term includes any permitted successor or
assign under the Indenture referred to below), for value received, hereby
promises to pay to [CEDE & CO.], or its registered assigns, the Principal Amount
set forth above, such payment to be made in semi-annual installments on January
1 and July 1 of each year, commencing on January 1, 1996, and ending on the
Final Principal Payment Date set forth above (subject to any right of
redemption), each such installment to be in an amount equal to the Principal
Amount set forth above multiplied by the percentage set forth opposite the date
of such installment set forth under the caption "Principal Payment Date" on
Annex A attached hereto (provided that the portion of the Principal Amount set
forth above remaining unpaid on the Final Principal Payment Date set forth
above, together with all interest accrued thereon, shall in any and all cases be
due on the Final Principal Payment Date set forth above), and to pay interest on
the unpaid portion of the Principal Amount set forth above at the Interest Rate
set forth above from the most recent Interest Payment Date to which interest has
been paid or duly provided for, or if no interest has been paid or duly provided
for, from the Issuance Date set forth above, semi-annually on January 1 and July
1 in each year, commencing on January 1, 1996, until the Principal Amount set
forth above is paid in full or payment therefor is duly provided for. Any
payment of principal and, to the extent permitted by applicable Law, any payment
of interest not punctually paid or duly provided for shall continue to bear
interest at a rate equal to the Interest Rate set forth above plus two percent
(2%). The principal and interest so payable on any payment date shall, as
provided in the Indenture, be paid to the Person in whose name this Security (or
one or more Predecessor Securities) is registered in the Security Register at
the close of business on the Regular Record Date for such payment of principal
or interest, which shall be the preceding December 15 and June 15, respectively,
provided that interest payable on the Final Principal Payment Date set forth
above shall be payable to the person to whom the principal hereof shall be
payable. Any such principal or interest
Schedule A-1
<PAGE>
not so punctually paid or duly provided for shall forthwith cease to be payable
to the person in whose name this Security (or one or more Predecessor
Securities) was registered in the Security Register at the close of business on
the Regular Record Date therefor, and may be paid to the Person in whose name
this Security is registered at the close of business on a Special Record Date
for the payment of such defaulted principal or interest to be fixed by the
Trustee referred to below, notice of which shall be given to the Holder hereof
to be mailed not less than ten (10) days prior to such Special Record Date, or
may be paid at any time in any other lawful manner not inconsistent with the
requirements of any securities exchange (if any) on which this Security may be
listed, and upon such notice as may be required by such exchange, all as more
fully provided in the Indenture. All payments in respect of this Security shall
be made in such coin or currency of the United States of America as at the time
of payment is legal tender for payment of debts, in immediately available funds.
Interest on this Security shall be computed on the basis of a 360-day year of
twelve 30-day months and, for any period shorter than a full calendar month, on
the basis of the actual number of days elapsed in such period.
Principal of and interest on this Security payable on the Final
Principal Payment Date set forth above shall be paid upon presentation and
surrender of this Security at the office of the Paying Agent. Payments of
principal of and interest on this Security shall be made, so long as this
Security is issued in the form of a global security, in immediately available
funds by wire transfer or, if this Security is not held in the form of a global
Security, by check mailed on or prior to the date for such payment to the
address of the Holder entitled thereto as such address appears on the Security
Register; provided, however, that if this security is not held in the form of a
global Security, any Holder of $1,000,000 or more in aggregate principal amount
of Securities of this series may, by delivery of a written request to the Paying
Agent, elect to have all such payments to such Holder made by wire transfer of
immediately available funds to a designated account maintained in the United
States (so long as the Paying Agent has received proper wire transfer
instructions in writing by the Regular Record Date next preceding the date for
such payment).
The provisions of this Security are continued on the reverse hereof and
such continued provisions shall for all purposes have the same effect as though
fully set forth at this place.
This Security shall not be entitled to any benefit under the Indenture,
or be valid or become obligatory for any purpose, until FIRST UNION NATIONAL
BANK OF GEORGIA, the Trustee under the Indenture, or its successor thereunder or
an Authenticating Agent on behalf thereof, shall have authenticated the form of
certificate endorsed hereon or an alternative certificate of authentication
provided for in the Indenture.
Schedule A-2
<PAGE>
IN WITNESS WHEREOF, Mobile Energy Services Company, L.L.C. has caused
this Security to be signed in its name by its President or Vice President, by
the signature or a facsimile thereof, attested by its Assistant Secretary by the
signature or a facsimile thereof.
Dated:
MOBILE ENERGY SERVICES COMPANY, L.L.C.
By:
Title:
Attest:
By:
Assistant Secretary
TRUSTEE'S AUTHENTICATION CERTIFICATE
This Security is one of the Securities referred to in the
within-mentioned Indenture.
FIRST UNION NATIONAL BANK OF GEORGIA,
as Trustee
By
Authorized Trust Officer
Schedule A-3
<PAGE>
[REVERSE]
MOBILE ENERGY SERVICES COMPANY, L.L.C.
8.665% First Mortgage Bonds Due 2017
This Security is one of an authorized issue of Securities of the
Company, known as its 8.665% First Mortgage Bonds Due 2017, to be issued under a
Trust Indenture, dated as of August 1, 1995 (the "Original Indenture"), among
the Company, Mobile Energy Services Holdings, Inc., an Alabama corporation
("Mobile Energy"), and First Union National Bank of Georgia, as trustee (the
"Trustee"). The Original Indenture, as supplemented by the First Supplemental
Indenture dated as of August 1, 1995 (the "First Supplemental Indenture"), and
as the same may be amended, modified and further supplemented, is hereinafter
referred to as the "Indenture." Capitalized terms used herein, but not otherwise
defined herein, shall have the meanings assigned thereto in the Indenture.
As provided in the Indenture, the aggregate principal amount of
Securities that may be issued thereunder is unlimited. The Securities of this
series are limited in principal amount as provided in the First Supplemental
Indenture.
All Securities shall be secured equally and ratably with one another
(except as to any Debt Service Reserve Account or Sinking Fund established in
accordance with the Indenture for the benefit of any particular series).
Reference is hereby made to the Indenture for a description of the nature of the
Securities and the respective rights of the Holders of Securities and of the
Trustee, the Company and Mobile Energy in respect of the Securities and the
terms upon which the Securities are to be authenticated and delivered. The terms
of the Securities include those stated in the Indenture and those made part of
the Indenture by reference to the Trust Indenture Act.
The principal of and interest on this Security are payable only from,
and secured by, the Indenture Securities Collateral, and all payments of
principal and interest shall be made in accordance with the terms of the
Indenture.
The Securities, and the rights of the Holders in respect of the Shared
Collateral, are subject to the terms of an Intercreditor and Collateral Agency
Agreement, dated as of August 1, 1995 (the "Intercreditor Agreement"), among
Bankers Trust (Delaware), as collateral agent, the Trustee (on behalf of the
Holders of the Securities), First Union National Bank of Georgia, as trustee (on
behalf of the holders of the securities issued under an Amended and Restated
Trust Indenture, dated as of August 1, 1995, with The Industrial Development
Board of the City of Mobile, Alabama), Banque Paribas, as the Working Capital
Provider, such Industrial Development Board, the Company and Mobile Energy, to
which reference is hereby made.
As provided in Section 6.3(b) of the Indenture, all Outstanding
Securities shall be subject to redemption in whole prior to the Final Principal
Payment Date set forth on the face of this Security at a redemption price equal
to one hundred percent (100%) of the principal amount thereof plus accrued
interest thereon, if any, to the Redemption Date, if an Event of Loss or an
Event of Eminent Domain shall occur and, subject to the terms of the
Intercreditor Agreement, the Energy Complex is not rebuilt, repaired, restored
or replaced.
Pursuant to Section 6.3(c) of the Indenture, the Outstanding Securities
shall be subject to partial redemption, ratably among, and by lot within, all
outstanding series and maturities, prior to the Final Principal Payment Date set
forth on the face of this Security at a redemption price equal to one hundred
percent (100%) of the principal amount thereof plus accrued interest
Schedule A-4
<PAGE>
thereon, if any, to the Redemption Date, if (i) an Event of Loss or an Event of
Eminent Domain shall occur, to the extent of any Excess Loss Proceeds and
provided, subject to certain exceptions, that such Excess Loss Proceeds exceed
$3,000,000, and (ii) the Energy Complex or a portion thereof is rebuilt,
repaired, restored or replaced. The aggregate amount of Securities to be so
redeemed will equal, subject to certain exceptions, the amount made available to
the Trustee for such purpose pursuant to the Intercreditor Agreement, which will
equal the ratable share of the Securities of this series (based upon the
principal amount of Securities and Tax-Exempt Indenture Securities then
Outstanding and the Working Capital Facility Commitment under the Working
Capital Facility, as further described in the Intercreditor Agreement) of the
amount by which all of the Loss Proceeds in respect of such Event of Loss or
Event of Eminent Domain exceeds the total cost of rebuilding, repairing,
restoring or replacing the Energy Complex.
Securities of this series are not subject to optional redemption prior
to the Final Principal Payment Date set forth on the face of this Security.
Notice of any redemption of Securities will be given at least thirty
(30) but not more than sixty (60) days prior to the Redemption Date.
The Indenture contains provisions permitting the Holders of specified
percentages in aggregate principal amount of the Securities at the time
Outstanding, on behalf of the Holders of all the Securities, to waive compliance
by the Company and Mobile Energy with certain provisions of the Indenture and
certain past defaults under the Indenture and their consequences. Any such
consent or waiver or direction shall be conclusive and binding upon the Holder,
and all future Holders, of this Security and of any Security issued upon the
transfer hereof whether or not citation of such consent or waiver is made upon
this Security.
As more fully described therein, the Indenture permits, with certain
exceptions, the amendment thereof and the rights and obligations of the Company
and Mobile Energy and the rights of the Holders of the Securities under the
Indenture at any time by the Company and Mobile Energy with the consent of the
Holders of not less than a majority in aggregate principal amount of the
Securities at the time Outstanding and, in certain cases, without any consent or
other action by Holders of the Securities.
The principal hereof may be declared or may become due on the
conditions, in the manner and at the time set forth in the Indenture, upon the
occurrence and during the continuance of an Event of Default as provided in the
Indenture.
The Securities of this series are issuable only as registered bonds
without coupons in denominations having an original face amount of $100,000 and
integral multiples of $5,000 in excess thereof. This Security is transferable as
prescribed in the Indenture by the registered owner hereof, in person or by
attorney duly authorized, at an office or agency of the Trustee, upon surrender
and cancellation of this Security and thereupon a new registered Security or
Securities of the same series for a like principal amount, in authorized
denominations, will be issued to the transferee in exchange therefor, as
provided in the Indenture. The Company and the Trustee shall deem and treat the
Person in whose name this Security is registered as the absolute owner for the
purpose of receiving payment of or on account of the principal due hereof and
interest due hereon and for all other purposes. Registered Securities of this
series shall be exchangeable at such offices or agencies of the Trustee for
registered Securities of other authorized denominations having the same
aggregate principal amount, in the manner and upon the conditions prescribed in
the Indenture. No service charge shall be required of any Holder in connection
with any transfer or exchange, but the Security Registrar may require payment of
a sum sufficient to cover any tax or other governmental charge payable in
connection therewith. Notwithstanding any provision of the Indenture, neither
the Company nor the Trustee shall be required to register the transfer of or
exchange of any Securities of this
Schedule A-5
<PAGE>
series during the period (i) beginning at the opening of business fifteen (15)
days before the day of the mailing of a notice of redemption of Securities of
this series under the Indenture and ending on the close of business on the day
of such mailing and (ii) beginning on the Regular Record Date for the Stated
Maturity of principal of or interest on the Securities of this series and ending
on the Stated Maturity of such payment, or to register the transfer or exchange
any Securities of this series so selected for redemption in whole or in part,
except the unredeemed portion of any Security of this series selected for
redemption in part. The Holder hereof, by the acceptance of this Security,
agrees that each payment received by it hereunder shall be applied in the manner
set forth in Section 2.16 of the Indenture.
This Security is a global security within the meaning of the Indenture
and is registered in the name of a depositary or its nominee with respect to the
Securities of this series. This Security is exchangeable for other Securities of
this series registered in the name of a Person other than such depositary or its
nominee only if (i) the Company advises the Trustee in writing that such
depositary is no longer willing or able to discharge properly its
responsibilities as depositary with respect to the Securities of this series and
is unable to locate a qualified successor, (ii) the Company, at its option
elects to terminate the book-entry system through such depositary with respect
to the Securities of this series and (iii) after the occurrence of an Event of
Default, beneficial owners of the Securities of this series holding interests
representing an aggregate principal amount of the Securities of this series of
not less than a majority in principal amount of the Securities of this series
represented by this global security advise the Trustee through such depositary
in writing that the continuation of a book-entry system through such depositary
(or any successor thereto) with respect to the Securities of this series is no
longer in such beneficial owners' best interest.
THIS SECURITY SHALL, PURSUANT TO SECTION 5-1401 OF THE NEW YORK GENERAL
OBLIGATIONS LAW, BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK, WITHOUT
REFERENCE TO THE CHOICE OF LAW PROVISIONS THEREOF (OTHER THAN SUCH SECTION 5-
1401).
Satisfaction of the obligations of the Company and Mobile Energy
(including pursuant to the Guaranty) under this Security for the payment of the
principal of or interest on any Securities, or any part thereof, or for any
claim based thereon or otherwise in respect thereof or related thereto, shall be
had solely from the assets of the Company or (except to the extent provided in
the Guaranty) Mobile Energy. No recourse shall be had to (a) any assets or
properties of the Members (other than Mobile Energy as provided in the Guaranty)
or of the stockholders of Mobile Energy, other than their respective interests
in the Indenture Securities Collateral, if any, (b) any Member (other than
Mobile Energy as provided in the Guaranty) or (c) any Affiliate, incorporator,
stockholder, partner, member, officer, director or employee of any Member or of
the Company (other than Mobile Energy and, in respect of any Southern Guaranty
on deposit in any Reserve Account Security Account, Southern) and in the event
of any non-performance by either of the Company or Mobile Energy of its
obligation to pay the principal of or interest on any Securities, or any part
thereof, or for any claim based thereon or otherwise in respect thereof, no
judgment for any deficiency upon the obligations of either of the Company or
Mobile Energy under this Security, for the payment of the principal of or
interest on any Securities, or any part thereof, or for any claim based thereon
or otherwise in respect thereof or related thereto, shall be obtainable by the
Holders, the Trustee or the Collateral Agent against any Member (other than
Mobile Energy as provided in the Guaranty), or any Affiliate, incorporator,
stockholder, partner, member, officer, director or employee of any Member or of
the Company (other than the Mobile Energy Parties and, in respect of any
Southern Guaranty on deposit in any Reserve Account Security Account, Southern).
Notwithstanding anything in this Security to the contrary, (i) satisfaction of
the Guaranteed Obligations 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
Schedule A-6
<PAGE>
Agreement to the extent such assets are not commingled with any of Mobile
Energy's other assets or any monies or assets of the Company, (ii) nothing
contained herein or in the Securities shall limit or otherwise prejudice in any
way the right of the Trustee, the Collateral Agent or any Holder to proceed
against any Person whomsoever (A) with respect to the enforcement of such
Person's obligations under any Project Document (including the Guaranty and any
Southern Guaranty) to which such person is a party or limit or otherwise
prejudice in any way the right of the Holders, the Trustee or the Collateral
Agent to proceed against such Person with respect to the enforcement of such
obligations or (B) to the extent necessary to realize upon the Indenture
Securities Collateral granted hereunder or under the Security Documents and
(iii) any limitations of liability herein shall not apply to any Person if and
to the extent that such Person commits fraud or willful misrepresentations,
including those contained in Officer's Certificates issued from time to time.
Schedule A-7
<PAGE>
GUARANTY
For value received, Mobile Energy hereby guarantees to the Holder of
this Security upon which this Guaranty is endorsed and to the Trustee for its
own benefit and the benefit of the Holders from time to time the due and
punctual payment, observance and performance of all of the Guaranteed
Obligations in accordance with their respective terms and when and as due
(whether at maturity, by reason of acceleration or otherwise), or deemed to be
due hereunder, and agrees so to pay, observe or perform the same when so due, or
deemed to be due, upon demand.
Mobile Energy's obligations above (i) are absolute and unconditional,
(ii) are unlimited in amount (except as provided in Article XIV of the
Indenture), (iii) constitute a guaranty of payment and performance and not a
guaranty of collection, (iv) are as primary obligor and not as a surety only,
(v) shall be a continuing guaranty of all present and future Guaranteed
Obligations and all promissory notes and other documentation given in extension
or renewal or substitution for any of the Guaranteed Obligations and (vi) shall
be irrevocable.
The obligations of Mobile Energy under this Guaranty shall continue in
full force and effect until the payment, observance and performance in full of
the Guaranteed Obligations. The rights and obligations of Mobile Energy and the
Trustee shall survive the repayment in full of all principal of and interest on
the Securities.
This Guaranty is given for the benefit of the Trustee and, subject to
the terms and conditions set forth herein, the Holders from time to time of the
Securities of this series, all of whom shall be entitled in the same manner as
set forth herein to enforce performance and observance of this Guaranty.
Reference is made to Article XIV of the Indenture for further
provisions with respect to this Guaranty.
THIS GUARANTY SHALL, PURSUANT TO SECTION 5-1401 OF THE NEW YORK GENERAL
OBLIGATIONS LAW, BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK, WITHOUT
REFERENCE TO THE CHOICE OF LAW PROVISIONS THEREOF (OTHER THAN SUCH SECTION 5-
1401).
Schedule A-8
<PAGE>
IN WITNESS WHEREOF, Mobile Energy Services Holdings, Inc. has caused
this Guaranty to be signed in its name by its President or Vice President, by
the signature or a facsimile thereof, attested by its Secretary, by the
signature or a facsimile thereof.
Dated:
MOBILE ENERGY SERVICES
HOLDINGS, INC.
By:
Title:
Attest:
By:
Schedule A-9
<PAGE>
ABBREVIATIONS
The following abbreviations when used in the inscription on the face of
this instrument shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM -- as tenants in common
TEN ENT -- as tenants by the entireties
JT TEN -- as joint tenants with right of
survivorship and not as tenants in
common
UNIF GIFT MIN ACT___________________
(Cust) (Minor)
under Uniform Gift to Minors Act
---------------------------------------
(State)
Additional abbreviations may also be used though
not in the above list
-----------------
Schedule A-10
<PAGE>
FOR VALUE RECEIVED the undersigned hereby sell(s), assign(s) and
transfer(s) unto
Social Security Number or Other
Identifying Number of Assignee
(Please print or typewrite name and address,
including zip code of Assignee)
the written Security and all rights thereunder, hereby irrevocably constituting
and appointing ________________________ attorney to transfer such Security on
the books of the Company, with full power of substitution in the premises.
Dated:
NOTICE: The signature to this assignment must correspond with the name
as written upon the first page of the within instrument in
every particular, without alteration or enlargement or any
change whatsoever.
Schedule A-11
<PAGE>
Annex A
Principal Payment Percentage of Principal
Date Amount Payable
January 1, 1996 0.93256533835%
July 1, 1996 1.37729712785%
January 1, 1997 1.37729712785%
July 1, 1997 1.50268406410%
January 1, 1998 1.50268406410%
July 1, 1998 1.58692841189%
January 1, 1999 1.58692841189%
July 1, 1999 1.68096861408%
January 1, 2000 1.68096861408%
July 1, 2000 1.78284549978%
January 1, 2001 1.78284549978%
July 1, 2001 1.87492653109%
January 1, 2002 1.87492653109%
July 1, 2002 1.92390580306%
January 1, 2003 1.92390580306%
July 1, 2003 2.00619097997%
January 1, 2004 2.00619097997%
July 1, 2004 2.05321108107%
January 1, 2005 2.05321108107%
July 1, 2005 2.15312879589%
January 1, 2006 2.15312879589%
July 1, 2006 2.26480153598%
January 1, 2007 2.26480153598%
July 1, 2007 2.38627013048%
January 1, 2008 2.38627013048%
July 1, 2008 2.52341209200%
January 1, 2009 2.52341209200%
July 1, 2009 2.67230907879%
January 1, 2010 2.67230907879%
July 1, 2010 2.83883860350%
January 1, 2011 2.83883860350%
July 1, 2011 3.02104149523%
January 1, 2012 3.02104149523%
July 1, 2012 3.22087692488%
January 1, 2013 3.22087692488%
July 1, 2013 3.44030406332%
January 1, 2014 3.44030406332%
July 1, 2014 3.71458798636%
January 1, 2015 3.71458798636%
July 1, 2015 3.98103522589%
January 1, 2016 3.98103522589%
July 1, 2016 1.52815328552%
January 1, 2017 1.52815328552%
Schedule A-12
Exhibit 4.3
- -----------------------------------------------------------------------------
INTERCREDITOR AND COLLATERAL AGENCY AGREEMENT
dated as of August 1, 1995
by and among
FIRST UNION NATIONAL BANK OF GEORGIA, as Trustee under the Trust Indenture dated
as of August 1, 1995
(on behalf of the Holders of the Indenture Securities),
FIRST UNION NATIONAL BANK OF GEORGIA,
as Trustee under the Amended and Restated Indenture of Trust dated as of August
1, 1995 (on behalf of the Holders of the Tax-Exempt Indenture Securities),
BANQUE PARIBAS,
as the Working Capital Facility Provider,
THE INDUSTRIAL DEVELOPMENT BOARD
OF THE CITY OF MOBILE, ALABAMA,
MOBILE ENERGY SERVICES COMPANY, L.L.C.,
MOBILE ENERGY SERVICES HOLDINGS, INC.
and
BANKERS TRUST (DELAWARE),
as Collateral Agent
- -----------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS
OF INTERPRETATION...................... 2
ARTICLE II
APPOINTMENT OF COLLATERAL AGENT;
ESTABLISHMENT OF ACCOUNTS
SECTION 2.1 Appointment of Collateral Agent............................. 2
SECTION 2.2 Establishment of Intercreditor Agreement Accounts........... 3
ARTICLE III
COLLECTION AND APPLICATION OF REVENUES
SECTION 3.1 Collection and Application of Revenues...................... 3
SECTION 3.2 Mill Owner Reimbursement Account............................ 3
SECTION 3.3 Working Capital Facility Account............................ 4
SECTION 3.4 Operating Account........................................... 4
SECTION 3.5 Maintenance Reserve Account................................. 5
SECTION 3.6 Subordinated Debt Account................................... 6
SECTION 3.7 Subordinated Fee Account.................................... 7
SECTION 3.8 Distribution Account........................................ 8
SECTION 3.9 Completion Account.......................................... 9
SECTION 3.10 Loss Proceeds Account...................................... 10
SECTION 3.11 Revenue Account............................................ 13
SECTION 3.12 Investment of Monies in the Intercreditor Agreement
Accounts................................................... 16
SECTION 3.13 Monies to Be Held in Trust................................. 17
SECTION 3.14 Dominion and Control....................................... 17
SECTION 3.15 Reserve Account Security................................... 17
SECTION 3.16 Payment of 1994 Bonds...................................... 18
-i-
<PAGE>
ARTICLE IV
PRIORITIES; SUBORDINATION
SECTION 4.1 Priority of Security Interests............................. 19
SECTION 4.2 Subordination............................................... 19
ARTICLE V
EXERCISE OF RIGHTS....................... 21
ARTICLE VI
DIVISION OF PROCEEDS
SECTION 6.1 Division of Proceeds........................................ 24
SECTION 6.2 Application of Loss Proceeds................................ 25
SECTION 6.3 Specific Collateral......................................... 27
ARTICLE VII
RIGHTS OF SENIOR SECURED PARTIES; RIGHTS
AND DUTIES OF COLLATERAL AGENT
SECTION 7.1 Rights of Senior Secured Parties............................ 27
SECTION 7.2 Duties of Collateral Agent. ............................... 28
SECTION 7.3 Rights of Collateral Agent.................................. 29
SECTION 7.4 Lack of Reliance on the Collateral Agent.................... 31
ARTICLE VIII
INDEMNIFICATION......................... 32
ARTICLE IX
ELIGIBILITY OF COLLATERAL AGENT;
REMOVAL AND REPLACEMENT OF COLLATERAL AGENT
SECTION 9.1 Corporate Collateral Agent Required; Eligibility............ 33
SECTION 9.2 Resignation, Removal and Replacement........................ 33
ARTICLE X
REPRESENTATIONS........................ 34
-ii-
<PAGE>
ARTICLE XI
INDEPENDENT ENGINEER
SECTION 11.1 Removal of Independent Engineer; Payment of Independent
Engineer.................................................. 38
SECTION 11.2 Third Party Engineer Dispute Resolution.................... 38
SECTION 11.3 Qualified Engineers........................................ 39
ARTICLE XII
MISCELLANEOUS
SECTION 12.1 Agreement for Benefit of Parties Hereto.................... 40
SECTION 12.2 No Warranties.............................................. 40
SECTION 12.3 Severability............................................... 40
SECTION 12.4 Notices.................................................... 40
SECTION 12.5 Successors and Assigns..................................... 42
SECTION 12.6 Counterparts............................................... 42
SECTION 12.7 GOVERNING LAW.............................................. 42
SECTION 12.8 No Impairments of Other Rights............................. 42
SECTION 12.9 Amendment; Waiver.......................................... 43
SECTION 12.10 Headings.................................................. 43
SECTION 12.11 Termination............................................... 43
SECTION 12.12 Entire Agreement.......................................... 43
SECTION 12.13 Limited Recourse.......................................... 43
SECTION 12.14 Submission to Jurisdiction................................ 44
APPENDIX A - Defined Terms
SCHEDULE 1 - Third Party Engineers
EXHIBIT A - Form of Requisition or Disbursement from Loss
Proceeds Account
EXHIBIT B - Form of Monthly Transfer Date Certificate
EXHIBIT C-1 - Form of Maintenance Plan Funding Subaccount Southern
Guaranty Agreement
EXHIBIT C-2 - Form of Distribution Account Southern Guaranty
Agreement
EXHIBIT D - Form of Consent to Assignment
-iii-
<PAGE>
INTERCREDITOR AND COLLATERAL AGENCY AGREEMENT, dated as of August 1,
1995, by and among FIRST UNION NATIONAL BANK OF GEORGIA, a national banking
association, as trustee under the Indenture referred to below (on behalf of the
holders of the Indenture Securities referred to below) (the "Indenture
Trustee"), FIRST UNION NATIONAL BANK OF GEORGIA, a national banking association,
as trustee under the Tax-Exempt Indenture referred to below (on behalf of the
holders of the Tax-Exempt Indenture Securities referred to below) (the
"Tax-Exempt Indenture Trustee"), BANQUE PARIBAS, a French banking corporation,
as the Working Capital Facility Provider referred to below, THE INDUSTRIAL
DEVELOPMENT BOARD OF THE CITY OF MOBILE, ALABAMA, an Alabama public corporation
(the "IDB"), MOBILE ENERGY SERVICES COMPANY, L.L.C., an Alabama limited
liability company (the "Company"), MOBILE ENERGY SERVICES HOLDINGS, INC., an
Alabama corporation ("Mobile Energy"), and BANKERS TRUST (DELAWARE), a Delaware
banking corporation, as collateral agent hereunder for the Senior Secured
Parties referred to below (the "Collateral Agent").
W I T N E S S E T H:
WHEREAS, the Company owns and operates an energy and black
liquor recovery complex located at an integrated pulp, paper and tissue
manufacturing facility in Mobile, Alabama (such complex, as more
particularly defined in the Master Operating Agreement (as defined
herein) and including additions thereto and replacements thereof, the
"Energy Complex");
WHEREAS, 99% of the outstanding ownership interests of the
Company are owned by Mobile Energy;
WHEREAS, the Company intends to finance the acquisition,
construction and equipping of the Energy Complex through, among other
things, the issue and sale by the Company of the Indenture Securities,
the proceeds of which, net of underwriting commissions, shall be
received by the Company, and, in consideration for such proceeds, the
Indenture Securities shall be secured by substantially all of the
assets of the Company;
WHEREAS, the Company has duly authorized the creation and
issuance of the Indenture Securities pursuant to the Indenture;
WHEREAS, in connection with the financing of certain portions
of the Energy Complex, the IDB has duly authorized the creation and
issuance of the Tax-Exempt Bonds (as defined herein) pursuant to the
Tax-Exempt Indenture, the proceeds of which shall be used to refund
certain existing tax-exempt securities relating to the Energy Complex,
and the IDB may, from time to time, authorize the creation and issuance
of additional Tax- Exempt Indenture Securities (as defined herein);
WHEREAS, the Company intends to finance certain of its working
capital requirements arising in connection with the operation of the
Energy Complex pursuant to the Working Capital Facility (as defined
herein);
WHEREAS, the Company may, from time to time after the date of
this Agreement, finance certain improvements and other modifications to
the Energy Complex, and certain refundings, with the proceeds of
Subordinated Debt (as defined herein);
WHEREAS, all obligations of the Company and Mobile Energy
under this Agreement, the Working Capital Facility, the Indenture, the
Tax-Exempt Indenture and the other Financing Documents (as defined
herein) will be secured as set forth in the Security Documents (as
defined herein); and
WHEREAS, the parties hereto desire to enter into this
Agreement to set forth their mutual understanding with respect to (a)
the exercise of
<PAGE>
certain rights, remedies and options by the respective parties hereto
under the Financing Documents, (b) the priority of their respective
security interests created by the Security Documents and (c) the
appointment of the Collateral Agent.
NOW, THEREFORE, for and in consideration of the premises and of the
covenants herein contained, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto,
intending to be legally bound, covenant and agree as follows:
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS
OF INTERPRETATION
For all purposes of this Agreement, except as otherwise expressly
provided in this Agreement or unless the context otherwise requires, all terms
used herein shall have the meanings set forth in Appendix A.
ARTICLE II
APPOINTMENT OF COLLATERAL AGENT;
ESTABLISHMENT OF ACCOUNTS
SECTION 2.1 Appointment of Collateral Agent. The Senior Secured Parties
hereby designate and appoint Bankers Trust (Delaware) to act on behalf of the
Senior Secured Parties, as agent, fiduciary and trustee thereof in respect of
the Shared Collateral, in the capacity of Collateral Agent hereunder and under
the other Security Documents, and each of the Senior Secured Parties hereby
authorizes Bankers Trust (Delaware) as the Collateral Agent to enter into the
Mortgage, the Security Agreement and any other Security Documents to which the
Collateral Agent is or is to be a party on behalf of the Senior Secured Parties,
to purchase, maintain, execute, deliver and perform a surety bond (and any
application for a surety bond) relating to any mortgage privilege or recording
tax and enter into any and all agreements relating thereto, to take such actions
on its behalf under the provisions of this Agreement and such other Security
Documents and to exercise such powers and perform such duties as are expressly
delegated to the Collateral Agent by the terms of this Agreement and the other
Security Documents to which it is a party, together with such other powers as
are reasonably incidental thereto. Bankers Trust (Delaware) hereby accepts such
appointment as Collateral Agent hereunder and agrees to administer the
Intercreditor Agreement Accounts and to receive, deposit and disburse all
Revenues and other amounts delivered to it pursuant to the terms of this
Agreement. The Mobile Energy Parties, the IDB and each Subordinated Debt
Provider hereby consent to such appointment. The Collateral Agent shall hold and
safeguard the Intercreditor Agreement Accounts (and the Revenues, cash,
payments, investments, insurance proceeds, securities and other amounts on
deposit therein from time to time) in accordance with the terms hereof.
SECTION 2.2 Establishment of Intercreditor Agreement Accounts. (a) The
following Accounts are hereby established and created with the Collateral Agent:
(i) "Mill Owner Reimbursement Account"; (ii) "Working Capital Facility Account";
(iii) "Revenue Account"; (iv) "Operating Account"; (v) "Maintenance Reserve
Account"; (vi) "Subordinated Debt Account"; (vii) "Subordinated Fee Account";
(viii) "Distribution Account"; (ix) "Completion Account"; and (x) "Loss Proceeds
Account."
(b) The following subaccounts of the Maintenance Reserve Account are
hereby established and created with the Collateral Agent: (i) "Maintenance Plan
Funding Subaccount"; and (ii) "Maintenance Excess Funding Subaccount."
(c) The following subaccounts of the Completion Account are hereby
established and created with the Collateral Agent: (i) "Capital Budget
2
<PAGE>
Subaccount"; (ii) "Optional Modifications Subaccount"; and (iii) "Required
Modifications Subaccount."
ARTICLE III
COLLECTION AND APPLICATION OF REVENUES
SECTION 3.1 Collection and Application of Revenues. The Company will
arrange for the direct payment to the Collateral Agent of all Revenues and, to
the extent any such Revenues are at any time received by either of the Mobile
Energy Parties, the Mobile Energy Parties will hold such Revenues in trust for
the Collateral Agent on behalf of the Senior Secured Parties and, unless
otherwise expressly provided for in any other Financing Document, will transfer
such Revenues to the Collateral Agent for deposit into the Revenue Account, in
each case as soon as reasonably practical but no later than three (3) Business
Days after receipt thereof (duly endorsed, if necessary, to the Collateral
Agent). Without limiting the generality of the foregoing, the Company shall
cause the Mill Owners to pay directly to the Collateral Agent for deposit into
the Revenue Account all amounts payable by the Mill Owners to the Company under
the Energy Services Agreements, the Master Operating Agreement or any other
Project Contract (other than amounts not constituting Revenues that are to be
paid to the Company by the Mill Owners in connection with the exercise by the
Company of the Company Step-In Rights).
SECTION 3.2 Mill Owner Reimbursement Account. The Mill Owner
Reimbursement Account shall be funded by monies transferred from the Revenue
Account as and when specified in Section 3.11(a). The Collateral Agent shall,
upon receipt of an Officer's Certificate of the Company specifying (a) the
amount due and payable to any Mill Owner in connection with the exercise of Mill
Owner Step-In Rights (except as otherwise provided in the Consents to Assignment
to which such Mill Owner is a party) and (b) the manner in and time at which,
and the account for or address to which, the payment thereof to such Mill Owner
shall be made, apply the monies on deposit in the Mill Owner Reimbursement
Account to the payment of such amount no later than such time specified in such
Officer's Certificate, provided the Collateral Agent receives such Officer's
Certificate on or prior to the second Business Day prior to such time.
SECTION 3.3 Working Capital Facility Account. The Working Capital
Facility Account shall be funded with (a) monies transferred from the Revenue
Account as and when specified in Section 3.11(b) and (b) monies on deposit in
the Mill Owner Maintenance Reserve Account used pursuant to Section 5.22 of the
Indenture or Section 4.29 of the IDB Lease Agreement, or any comparable
provision of the Working Capital Facility. The Collateral Agent shall, upon
receipt of an Officer's Certificate of the Company specifying (i) the aggregate
amount due and payable or scheduled to be due and payable on account of
principal of and interest on, and fees and other amounts with respect to, any
Working Capital Facility Loans and (ii) the manner in which and due date for,
and the account for or address to which, the payment thereof to the Working
Capital Facility Provider shall be made, apply the monies on deposit in the
Working Capital Facility Account to the payment of such aggregate amount no
later than such time specified in such Officer's Certificate, provided the
Collateral Agent receives such Officer's Certificate on or prior to the second
Business Day prior to such time.
SECTION 3.4 Operating Account. (a) The Operating Account shall be
funded by monies transferred from the Revenue Account as and when specified in
Section 3.11(c). Amounts in the Operating Account shall be applied to the
payment of Operation and Maintenance Costs other than Subordinated Fees and
Maintenance Expenditures; provided, however, that amounts in the Operating
Account may be applied to pay Maintenance Expenditures if, and solely to the
extent that, the amount of monies, together with the Available Amount under any
Reserve Account Security, then on deposit in the Distribution Account, the
Subordinated Fee Account, the Subordinated Debt Account and the Maintenance
Reserve Account are insufficient therefor.
3
<PAGE>
(b) The Collateral Agent shall, upon receipt of an Officer's
Certificate of the Company specifying (i) the amount to be disbursed from the
Operating Account, (ii) that such amount has been, or within the immediately
succeeding thirty-one (31) days is expected to be, used for Operation and
Maintenance Costs incurred or to be incurred in accordance with Prudent Plant
Operating Standards and (iii) the manner in and time at which, and the account
for or address to which, the payment thereof to the Company shall be made, apply
the monies on deposit in the Operating Account to the payment of such amount no
later than such time specified in such Officer's Certificate, provided the
Collateral Agent receives such Officer's Certificate on or prior to the second
Business Day prior to such time.
(c) The Officer's Certificate of the Company delivered under Section
3.4(b) shall also specify (i) the aggregate monies withdrawn from (A) the
Operating Account (other than any such monies (1) rebated to the United States
government pursuant to Section 148 of the Code, (2) applied to Maintenance
Expenditures, (3) paid in respect of IDB Claims or (4) applied to (or deemed to
be applied to) the payment of the 1994 Bonds pursuant to Section 3.16) and (B)
the Mill Owner Maintenance Reserve Account (other than for any such monies
deposited into the Working Capital Facility Account, the Indenture Securities
Account, or the Tax-Exempt Indenture Securities Account), in each case for use
during the Fiscal Year in which such Officer's Certificate is delivered (without
giving effect to the amount then to be disbursed from the Operating Account as
specified in such Officer's Certificate pursuant to clause (i) of Section
3.4(b)) and (ii) the aggregate amount of Operation and Maintenance Costs (other
than Maintenance Expenditures) set forth in the Annual Budget for such Fiscal
Year (as such Annual Budget may have been amended at the time such Officer's
Certificate is delivered in accordance with the provisions of the other
Financing Documents). The amount of monies so previously withdrawn (as specified
in such Officer's Certificate pursuant to clause (i) above), together with the
amount of Working Capital Facility O&M Loans borrowed during such Fiscal Year
and the amount to be disbursed from the Operating Account (as specified in such
Officer's Certificate pursuant to clause (i) of Section 3.4(b)), shall not,
unless such Officer's Certificate is accompanied by an Independent Engineer
Confirmation, exceed one hundred ten percent (110%) of the aggregate amount of
such Operation and Maintenance Costs (as specified in such Officer's Certificate
pursuant to clause (ii) above).
SECTION 3.5 Maintenance Reserve Account. (a) The Maintenance Reserve
Account shall be funded by monies transferred from the Revenue Account as and
when specified in Section 3.11(f). The Collateral Agent shall deposit all such
monies into the Maintenance Plan Funding Subaccount; provided, however, to the
extent such monies are in excess of the Maintenance Reserve Account Required
Deposit at the time of the deposit thereof, such excess shall be deposited into
the Maintenance Excess Funding Subaccount. The Company may, at its option and
from time to time, deliver to the Collateral Agent monies not then constituting
Revenues (solely to the extent such monies are not otherwise required to be
deposited into any Account pursuant to the terms of any Financing Document),
including monies drawn under any revolving credit facility or liquidity facility
providing liquidity for Southern's obligations in respect of any Southern
Guaranty, for deposit into the Maintenance Plan Funding Subaccount.
(b) Subject to Section 3.5(c), the Collateral Agent shall, upon receipt
of an Officer's Certificate of the Company specifying (i) the amount to be
disbursed from the Maintenance Reserve Account, (ii) that such amount has been,
or within the immediately succeeding thirty-one (31) days is expected to be,
used for Maintenance Expenditures incurred or to be incurred in accordance with
Prudent Plant Operating Standards and (iii) the manner in and time at which, and
the account for or address to which, the payment thereof to the Company shall be
made, apply the monies on deposit in the Maintenance Reserve Account to the
payment of such amount no later than such time specified in such Officer's
Certificate, provided the Collateral Agent receives such Officer's Certificate
on or prior to the second Business Day prior to such time. Such payments shall
be made in the following order of priority: first, from the Maintenance Excess
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Funding Subaccount, to the extent available, and, second, from the Maintenance
Plan Funding Subaccount.
(c) Prior to a Trigger Event, monies on deposit in the Maintenance
Reserve Account (including then Available Amounts under any Reserve Account
Security on deposit in the Maintenance Plan Funding Subaccount) shall first be
transferred by the Collateral Agent to the Indenture Trustee for deposit into
the Indenture Securities Account and to the Tax-Exempt Indenture Trustee for
deposit into the Tax-Exempt Indenture Securities Account, ratably based upon the
respective amounts owing to each such Account, on the Monthly Transfer Date
immediately preceding each Interest Payment Date or Principal Payment Date
therefor, whenever, and to the extent that, the monies on deposit (after giving
effect to any monies to be deposited from the Revenue Account into any Account
on such Monthly Transfer Date) in the Indenture Securities Account, the
Tax-Exempt Indenture Securities Account, each applicable Debt Service Reserve
Account (if any), each applicable Tax-Exempt Debt Service Reserve Account (if
any), the Distribution Account, the Subordinated Fee Account and the
Subordinated Debt Account (including, in the case of any Debt Service Reserve
Account, any Tax- Exempt Debt Service Reserve Account and the Distribution
Account, then Available Amounts under any Reserve Account Security on deposit
therein) are insufficient to make payments when due on the Senior Securities.
Any such transfers shall be made by the Collateral Agent in the following order
of priority: first, transfer monies then on deposit in the Maintenance Excess
Funding Subaccount; second, transfer monies then on deposit in the Maintenance
Plan Funding Subaccount; third, draw upon any Reserve Account Letter of Credit
on deposit in the Maintenance Plan Funding Subaccount pursuant to Section
3.15(d) in an amount up to the Available Amount thereunder and transfer the
monies in respect thereof; and fourth, call upon any Southern Guaranty on
deposit in the Maintenance Plan Funding Subaccount pursuant to Section 3.15(d)
in an amount up to the Available Amount thereunder and transfer the monies in
respect thereof, in each case, directly to the Indenture Trustee or the
Tax-Exempt Indenture Trustee (as the case may be) for payment (to the extent
necessary) of such amounts due and owing in respect of such Senior Securities.
SECTION 3.6 Subordinated Debt Account. (a) The Subordinated Debt
Account shall be funded by monies transferred from the Revenue Account as and
when specified in Section 3.11(i). Subject to Section 3.6(b), the Collateral
Agent shall, upon receipt of an Officer's Certificate of the Company specifying
(i) the aggregate amount due and payable or scheduled to be due and payable on
account of principal of and interest on, and fees and other amounts with respect
to, Non- Affiliate Subordinated Debt and (ii) the manner in which and due date
for, and the account for or address to which, the payment thereof to the
Subordinated Debt Provider of such Non-Affiliate Subordinated Debt shall be
made, apply the monies on deposit in the Subordinated Debt Account to the
payment of such aggregate amount no later than such time specified in such
Officer's Certificate, provided the Collateral Agent receives such Officer's
Certificate on or prior to the second Business Day prior to such time.
(b) Prior to a Trigger Event, monies on deposit in the Subordinated
Debt Account shall be first transferred by the Collateral Agent to the Indenture
Trustee for deposit into the Indenture Securities Account and to the Tax-Exempt
Indenture Trustee for deposit into the Tax-Exempt Indenture Securities Account,
ratably based upon the respective amounts owing to each such Account, on the
Monthly Transfer Date immediately preceding each Interest Payment Date or
Principal Payment Date therefor, whenever, and to the extent that, the monies on
deposit (after giving effect to any monies to be deposited from the Revenue
Account into any Account on such Monthly Transfer Date) in the Indenture
Securities Account, the Tax-Exempt Indenture Securities Account, each applicable
Debt Service Reserve Account (if any), each applicable Tax-Exempt Debt Service
Reserve Account (if any), the Distribution Account and the Subordinated Fee
Account (including, in the case of any Debt Service Reserve Account, any Tax-
Exempt Debt Service Reserve Account and the Distribution Account, then Available
Amounts under any Reserve Account Security on deposit therein) are insufficient
to make payments when due on the Senior Securities; provided, however, that,
prior to a Trigger Event, if an Event of Default shall have occurred and then be
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continuing, the Collateral Agent shall so transfer any amounts on deposit in the
Subordinated Debt Account (after application of monies on deposit in the
Subordinated Fee Account and the Distribution Account) to pay any deficiencies
in the Indenture Securities Account and the Tax-Exempt Indenture Securities
Account before so transferring any monies (including any then Available Amounts
under any Reserve Account Security) on deposit in any Debt Service Reserve
Account or any Tax-Exempt Debt Service Reserve Account for such purpose.
SECTION 3.7 Subordinated Fee Account. (a) The Subordinated Fee Account
shall be funded by monies transferred from the Revenue Account as and when
specified in Section 3.11(j). Subject to Section 3.7(b), the Collateral Agent
shall, upon receipt of an Officer's Certificate of the Company (i) certifying
that the requirements of Section 5.19 of the Indenture and Section 4.19 of the
IDB Lease Agreement, and of any comparable provision of the Working Capital
Facility, are satisfied and (ii) specifying (A) the amount of Subordinated Fees
due and payable or scheduled to be due and payable to either of the Mobile
Energy Parties and (B) the manner in which and due date for, and the account for
or address to which, the payment thereof to such Mobile Energy Party shall be
made, apply the monies on deposit in the Subordinated Fee Account to the payment
of such amount no later than such time specified in such Officer's Certificate,
provided the Collateral Agent receives such Officer's Certificate on or prior to
the second Business Day prior to such time.
(b) Prior to a Trigger Event, monies on deposit in the Subordinated Fee
Account shall first be transferred by the Collateral Agent to the Indenture
Trustee for deposit into the Indenture Securities Account and to the Tax-Exempt
Indenture Trustee for deposit into the Tax-Exempt Indenture Securities Account,
ratably based upon the respective amounts owing to each such Account, on the
Monthly Transfer Date immediately preceding each Interest Payment Date and
Principal Payment Date therefor, whenever, and to the extent that, the monies on
deposit (after giving effect to any monies to be deposited from the Revenue
Account into any Account on such Monthly Transfer Date) in the Indenture
Securities Account, the Tax-Exempt Indenture Securities Account, each applicable
Debt Service Reserve Account (if any), each applicable Tax-Exempt Debt Service
Reserve Account (if any) and the Distribution Account (including, in the case of
any Debt Service Reserve Account, any Tax-Exempt Debt Service Reserve Account
and the Distribution Account, then Available Amounts under any Reserve Account
Security on deposit therein) are insufficient to make payments when due on the
Senior Securities; provided, however, that, prior to a Trigger Event, if an
Event of Default shall have occurred and be continuing, the Collateral Agent
shall so transfer any amounts on deposit in the Subordinated Fee Account (after
application of monies on deposit in the Distribution Account) to pay any
deficiencies in the Indenture Securities Account and the Tax-Exempt Indenture
Securities Account before so transferring any monies (including any then
Available Amounts under any Reserve Account Security) on deposit in any Debt
Service Reserve Account or any Tax-Exempt Debt Service Reserve Account for such
purposes.
SECTION 3.8 Distribution Account. (a) The Distribution Account shall be
funded from monies transferred from the Revenue Account as and when specified in
Section 3.11(k). Subject to Section 3.8(b), the Collateral Agent shall, upon
receipt on or prior to the second Business Day prior to any Distribution Date of
an Officer's Certificate of the Company (i) certifying that the requirements of
Section 5.19 of the Indenture and Section 4.19 of the IDB Lease Agreement, and
of any comparable provision of the Working Capital Facility, are satisfied as of
such Distribution Date, (ii) specifying (A) the aggregate amount due and payable
or scheduled to be due and payable on account of principal of and interest on,
and fees and other amounts with respect to, Affiliate Subordinated Debt and (B)
the manner in which and due date for, and the account for or address to which,
the payment thereof to the Subordinated Debt Provider of such Affiliate
Subordinated Debt shall be made and (iii) specifying (A) the aggregate of any
other amounts to be distributed to any Person (or the Person to whom the balance
of monies on deposit therein shall be distributed) and (B) the manner in and
time at which, and the account for or address to which, the payment thereof to
such Person shall be made, apply the monies on deposit in the Distribution
Account on
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such Distribution Date, first, to the payment specified in clause (ii) above
and, second, to the payment specified in clause (iii) above.
(b) Prior to a Trigger Event, monies on deposit in the Distribution
Account (including then Available Amounts under any Reserve Account Security on
deposit therein) shall first be transferred by the Collateral Agent to the
Indenture Trustee for deposit into the Indenture Securities Account and to the
Tax-Exempt Indenture Trustee for deposit into the Tax-Exempt Indenture
Securities Account, ratably based upon the respective amounts owing to each such
Account, on the Monthly Transfer Date immediately preceding each Interest
Payment Date or Principal Payment Date therefor, whenever, and to the extent
that, the monies on deposit (after giving effect to any monies to be deposited
from the Revenue Account into any Account on such Monthly Transfer Date) in the
Indenture Securities Account, the Tax-Exempt Indenture Securities Account, each
applicable Debt Service Reserve Account (if any) and each applicable Tax-Exempt
Debt Service Reserve Account (if any) (including, in the case of any Debt
Service Reserve Account and any Tax-Exempt Debt Service Reserve Account, then
Available Amounts under any Reserve Account Security on deposit therein) are
insufficient to make payments when due on the Senior Securities; provided,
however, that, prior to a Trigger Event, if an Event of Default shall have
occurred and be continuing, the Collateral Agent shall so transfer any amounts
on deposit in the Distribution Account to pay any deficiencies in the Indenture
Securities Account and the Tax- Exempt Indenture Securities Account before so
transferring any monies (including any then Available Amounts under any Reserve
Account Security) on deposit in any Debt Service Reserve Account or any
Tax-Exempt Debt Service Reserve Account for such purposes. Any such transfers
shall be made by the Collateral Agent in the following order of priority: first,
transfer monies then on deposit in the Distribution Account; second, draw upon
any Reserve Account Letter of Credit on deposit in the Distribution Account
pursuant to Section 3.15(d) in an amount up to the Available Amount thereunder
and transfer the monies in respect thereof; and third, call upon any Southern
Guaranty on deposit in the Distribution Account pursuant to Section 3.15(d) in
an amount up to the Available Amount thereunder and transfer the monies in
respect thereof, in each case, directly to the Indenture Trustee or the
Tax-Exempt Indenture Trustee (as the case may be) for payment (to the extent
necessary) of such amounts due and owing in respect of such Senior Securities.
(c) Notwithstanding Section 3.8(a), if (i) at any time, the amount of
monies on deposit in (without giving effect to amounts then available to be
drawn or called upon under any Reserve Account Security on deposit in) the
Distribution Account exceeds the lesser of (A) the amount of Senior Debt and (B)
$34,000,000 or (ii) on a Distribution Date, the Company shall have provided an
Officer's Certificate (together with an Independent Engineer Certification)
certifying to the Collateral Agent that (A) the Senior Debt Service Coverage
Ratio for the one-year period consisting of the two semi-annual payment periods
immediately preceding such Distribution Date was equal to at least 1.2 to 1.0,
(B) based upon projections prepared by the Company in accordance with Section
1.15 of the Indenture and Section 1.12 of the IDB Lease Agreement, and with any
comparable provision of the Working Capital Facility, the Senior Debt Service
Coverage Ratio for the one year period consisting of the current semi-annual
payment period and the immediately succeeding semi-annual payment period is
projected to be at least 1.2 to 1.0 and (C) the requirements of Section 5.19 of
the Indenture and Section 4.19 of the IDB Lease Agreement, and of any comparable
provision of the Working Capital Facility, have not been satisfied on such
Distribution Date and each of the five (5) Distribution Dates immediately
preceding such Distribution Date, then, in the case of clauses (i) and (ii)
above, in replacement of monies on deposit in the Distribution Account, the
Company may deliver to the Collateral Agent at such time Reserve Account
Security having an Available Amount thereunder equal to the amount of such
monies so replaced and otherwise in accordance with Section 3.15(a); provided,
however, that, in the case of clause (i) above, the amount of monies so replaced
shall not be greater than the amount of the excess described in such clause (i).
Any such Reserve Account Security shall terminate, and be returned to the
Company, on the first Distribution Date following the delivery to the Collateral
Agent of such Reserve Account Security on which the requirements of Section 5.19
of the Indenture and Section 4.19 of the IDB Lease
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Agreement, and of any comparable provision of the Working Capital Facility, have
been satisfied.
SECTION 3.9 Completion Account. (a) On the Closing Date, the Capital
Budget Subaccount shall be funded with monies transferred pursuant to Section
5.18(a)(iii) of the Indenture. Such monies shall be applied to the payment, or
reimbursement to the extent the same have been paid or satisfied by the Company,
of Project Costs in accordance with the Capital Budget.
(b) The Company shall deposit the proceeds of any Debt authorized by
Section 5.17 of the Indenture and Section 4.17 of the IDB Lease Agreement, and
by any comparable provision of the Working Capital Facility, for (i) Optional
Modifications into the Optional Modifications Subaccount and (ii) Required
Modifications into the Required Modifications Subaccount. Such monies shall be
applied to the payment, or reimbursement to the extent the same have been paid
or satisfied by the Company, of costs incurred in connection with Optional
Modifications or Required Modifications (as the case may be) in accordance with
a budget prepared by the Company and approved by the Independent Engineer and
delivered to the Collateral Agent. Such budget shall identify all costs
reasonably anticipated to be incurred in connection with the Optional
Modifications or the Required Modifications (as the case may be) and shall
include a progress payment schedule for the projected requisitions to be made
from the Optional Modifications Subaccount with respect to such Optional
Modifications or the Required Modifications Subaccount with respect to such
Required Modifications (as the case may be).
(c) The Collateral Agent shall transfer monies from the applicable
subaccount of the Completion Account upon receipt of an Officer's Certificate of
the Company (together with an Independent Engineer's Confirmation as to clauses
(i) through (iv) below) specifying (i) the amount to be disbursed from such
subaccount (including reasonable supporting documentation, if available), (ii)
that such amounts have been, or within the immediately succeeding forty-five
(45) days are expected to be, used for (A) in the case of Section 3.9(a),
Project Costs, which do not exceed the aggregate amount of the Capital Budget,
less any amounts that previously have been transferred pursuant to this clause
(ii) and (B) in the case of Section 3.9(b), costs incurred in connection with
Optional Modifications or Required Modifications (as the case may be), (iii) the
item for which payment is requested has not been the basis for a prior
requisition from any Account that has been paid or with respect to which a
request for payment is still pending, (iv) the Person or Persons to whom such
monies shall be transferred (including appropriate account information) and (v)
no Event of Default under the Indenture, the Tax-Exempt Indenture or the Working
Capital Facility has occurred and is continuing. The Company shall provide the
Collateral Agent with written notice when full payment of the Project Costs or
costs incurred in connection with Optional Modifications or Required
Modifications (as the case may be) for which monies were held in the applicable
subaccount of the Completion Account has occurred, whereupon the Collateral
Agent shall, within seven (7) days of receipt of such notice, transfer any
monies remaining in such subaccount to the Revenue Account.
SECTION 3.10 Loss Proceeds Account. (a) All Loss Proceeds shall be
deposited into the Loss Proceeds Account and, subject to the provisions of this
Section 3.10, applied to the payment, or reimbursement to the extent the same
have been paid or satisfied by the Company, of the costs of (i) rebuilding,
repairing and restoring the Energy Complex or any part thereof that has been
affected by an Event of Loss or Event of Eminent Domain or (ii) building a
Replacement Facility.
(b) The Collateral Agent is hereby authorized to disburse from the Loss
Proceeds Account the amount required to be paid for the rebuilding, repair or
restoration of the Energy Complex or any part thereof, or the building of a
Replacement Facility, as specified in Section 3.10(a). The Collateral Agent is
hereby authorized and directed to issue its checks or transfer funds
electronically for each disbursement from the Loss Proceeds Account, upon
receipt of a requisition in substantially the form of Exhibit A, submitted to
the
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Collateral Agent, signed by an Authorized Officer of the Company, together with
an Independent Engineer Confirmation; provided, however, that such Independent
Engineer Confirmation shall not be required if such requisition includes a
certification that the amount requested pursuant to such requisition, together
with the amounts requested or to be requested pursuant to all other such
requisitions made or reasonably expected to be made (i) during the same Fiscal
Year in which such requisition is so submitted to the Collateral Agent, does not
exceed $5,000,000 in the aggregate or (ii) in respect of any Event of Loss or
Event of Eminent Domain, does not exceed $7,500,000 in the aggregate. The
Collateral Agent shall be entitled to rely on all certifications and statements
in such requisitions. The Collateral Agent shall keep and maintain adequate
records pertaining to the Loss Proceeds Account and all disbursements therefrom
and shall file an accounting thereof with the Company, the Independent Engineer
and the Mill Owners within three (3) months following the end of each Fiscal
Year.
(c) If an Event of Loss or an Event of Eminent Domain shall occur, as
soon as reasonably practicable but no later than the date of receipt of Loss
Proceeds with respect thereto, the Company shall make a reasonable good faith
determination as to (i) (A) whether or not (1) the Energy Complex or any portion
thereof can be rebuilt, repaired or restored to permit operation of the Energy
Complex at substantially the same level of performance as the Energy Complex was
capable of being operated immediately prior to such Event of Loss or Event of
Eminent Domain (such determination to take into account the impact of such Event
of Loss or Event of Eminent Domain on the Mills) and (2) such rebuilding, repair
or restoration would be required by Section 10.7(b)(ii) of the Master Operating
Agreement or (B) whether or not (1) a Replacement Facility can be built to
provide services to some or all of the Mills (such determination to take into
account the impact of such Event of Loss or Event of Eminent Domain on the
Mills) and (2) such Replacement Facility would be required by Section
10.7(b)(ii) of the Master Operating Agreement, for which (based upon projections
of the Company prepared in accordance with Section 1.15 of the Indenture and
Section 1.12 of the IDB Lease Agreement and with any comparable provision of the
Working Capital Facility) the minimum Senior Debt Service Coverage Ratio for
each Fiscal Year commencing with such Replacement Facility's anticipated
commercial operation date through the Fiscal Year in which the last maturity of
Senior Debt is scheduled to mature is projected to equal or exceed the minimum
Senior Debt Service Coverage Ratio projected for the Energy Complex for each
such Fiscal Year based upon the circumstances existing immediately prior to such
Event of Loss or Event of Eminent Domain and (ii) whether or not such Loss
Proceeds, together with any Additional Available Proceeds with respect to such
Event of Loss or Event of Eminent Domain, are sufficient to permit such
rebuilding, repair or restoration of the Energy Complex or a portion thereof, or
such building of a Replacement Facility (such determination of sufficiency in
each instance in this Section 3.10 to take into account, among other things,
funds required to pay principal of and interest on the Senior Debt becoming due
during such period in which commercial operation of the Energy Complex is
interrupted as a result of such Event of Loss or Event of Eminent Domain). The
determination of the Company pursuant to this Section 3.10(c) shall be evidenced
by an Officer's Certificate of the Company filed with the Collateral Agent,
which (in the event the Company determines that the Energy Complex or a portion
thereof can be rebuilt, repaired, restored or replaced subject to the conditions
hereof and that such Loss Proceeds, together with such Additional Available
Proceeds, are sufficient therefor) shall also set forth a reasonable good faith
estimate by the Company of the total cost of such rebuilding, repair,
restoration or replacement; provided, however, that if the Mill Owners are the
prevailing party in a dispute the subject matter of which is, or includes,
whether or not the Company is required under the terms of the Master Operating
Agreement to rebuild the Energy Complex, then the Company shall deliver such
Officer's Certificate to the Collateral Agent. The Company shall also deliver to
the Collateral Agent, at the time it delivers such Officer's Certificate, an
Independent Engineer Confirmation, dated the date of such Officer's Certificate,
stating that, based upon reasonable investigation and review of the
determinations made by the Company, the Independent Engineer believes that the
determinations and the estimate of the total cost set forth in such Officer's
Certificate are reasonable.
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(d) (i) If a determination relating to an Event of Loss or
Event of Eminent Domain is made pursuant to Section 3.10(c) that (A)
neither the Energy Complex nor any portion thereof can be rebuilt,
repaired, restored or replaced, subject to the conditions contained
therein, or (B) the Loss Proceeds with respect thereto, together with
any Additional Available Proceeds, are not sufficient to permit such
rebuilding, repair, restoration or replacement, then all of such Loss
Proceeds shall be distributed in accordance with Section 6.2(a). Any
such Loss Proceeds that are distributed to the Senior Secured Parties
shall, pursuant to Section 6.2(a), be applied to the redemption of all
Senior Debt in accordance with the terms of the Financing Documents.
Additional Available Proceeds shall be distributed by the Collateral
Agent (upon receipt by the Collateral Agent of an Officer's Certificate
of the Company to such effect) to the Company.
(ii) Subject to paragraph (iv) of this Section 3.10(d), if a
determination relating to an Event of Loss or Event of Eminent Domain
is made pursuant to Section 3.10(c)(i)(A) that (A) the Energy Complex
can be completely rebuilt, repaired or restored to permit operation on
a commercially feasible basis as described therein and (B) the Loss
Proceeds with respect thereto, together with any Additional Available
Proceeds, are sufficient to permit such rebuilding, repair or
restoration, then all of such Loss Proceeds and Additional Available
Proceeds shall remain on deposit in the Loss Proceeds Account and shall
be applied in accordance with Section 3.10(b). Upon completion of any
such complete rebuilding, repair or restoration of the Energy Complex,
any Excess Loss Proceeds with respect to such Event of Loss or Event of
Eminent Domain shall be distributed in accordance with Section 6.2(b).
Any monies remaining in the Loss Proceeds Account following such
distribution shall be deposited into the Revenue Account; provided,
however, that such monies shall, solely to the extent they constitute
Additional Available Proceeds, be distributed by the Collateral Agent
(upon receipt by the Collateral Agent of an Officer's Certificate of
the Company to such effect) to the Company.
(iii) Subject to paragraph (iv) of this Section 3.10(d), if a
determination relating to an Event of Loss or Event of Eminent Domain
is made pursuant to Section 3.10(c)(i)(A) or 3.10(c)(i)(B) that (A) a
portion of the Energy Complex can be rebuilt, repaired or restored to
permit operation on a commercially feasible basis as described in
Section 3.10(c)(i)(A) or 3.10(c)(i)(B) or a Replacement Facility can be
built, subject to the conditions contained therein, and (B) the Loss
Proceeds with respect thereto, together with any Additional Available
Proceeds, are sufficient to permit such rebuilding, repair, restoration
or replacement, then all of such Loss Proceeds and Additional Available
Proceeds shall remain on deposit in the Loss Proceeds Account and shall
be applied in accordance with Section 3.10(b). Upon completion of any
such rebuilding, repair, restoration or replacement of the Energy
Complex, any Excess Loss Proceeds with respect to such Event of Loss or
Event of Eminent Domain shall be distributed in accordance with Section
6.2(b). Any monies remaining in the Loss Proceeds Account following
such distribution shall be deposited into the Revenue Account;
provided, however, that such monies shall, solely to the extent they
constitute Additional Available Proceeds, be distributed by the
Collateral Agent (upon receipt by the Collateral Agent of an Officer's
Certificate of the Company to such effect) to the Company.
(iv) Notwithstanding paragraphs (ii) and (iii) of this Section
3.10(d), at the election of the Company, all of the Loss Proceeds,
together with any Additional Available Proceeds, with respect to an
Event of Loss or Event of Eminent Domain shall be distributed in
accordance with Section 6.2(a), provided that, at the time of such
election, (A) the Company is not otherwise required under the Master
Operating Agreement or the Lease, as applicable, to rebuild, repair,
restore or replace the Energy Complex or to apply Loss Proceeds to the
rebuilding, repair, restoration or replacement of the Energy Complex
and (B) the Company files
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with the Collateral Agent an Officer's Certificate certifying (together
with an Independent Engineer Confirmation) that (1) the monies on
deposit (including any Additional Available Proceeds) in the Loss
Proceeds Account are sufficient to redeem all Senior Debt, (2) all or
substantially all of the Energy Complex has suffered loss or been
destroyed or otherwise rendered unfit for normal use in connection with
such Event of Loss or all or substantially all of the Energy Complex
has been the subject of a compulsory transfer or taking, or transfer
under threat of compulsory transfer or taking, in connection with such
Event of Eminent Domain and (3) the Company is not otherwise required
under the Master Operating Agreement or the Lease, as applicable, to
rebuild, repair, restore or replace the Energy Complex, or to apply
Loss Proceeds to the rebuilding, repair, restoration or replacement of
the Energy Complex. Such Officer's Certificate shall be accompanied by
an Opinion of Counsel to the effect set forth in clause (3) above;
provided, however, that if any Dispute (as defined in the Master
Operating Agreement) has arisen between the Mill Owners and the Company
with respect to the compliance of such election with the applicable
provisions of the Master Operating Agreement and the Lease, as
applicable, the Company shall also deliver to the Collateral Agent
satisfactory evidence of the conclusive resolution of such Dispute
pursuant to the dispute resolution provisions of the Master Operating
Agreement. Any such Loss Proceeds that are distributed to the Senior
Secured Parties shall, pursuant to Section 6.2(a), be applied to the
redemption of all Senior Debt in accordance with the terms of the
Financing Documents.
(e) Notwithstanding any other provision of this Section 3.10, (i) if
the Loss Proceeds Account does not contain an amount at least equal to the
estimate of the total cost of rebuilding, repair, restoration or replacement set
forth in the Officer's Certificate filed with the Collateral Agent pursuant to
Section 3.10(c), and such amounts have not otherwise been committed by the
applicable insurers or condemning authority as certified in such Officer's
Certificate, by the tenth (10th) Business Day following the determination
contemplated by Section 3.10(d)(ii) or 3.10(d)(iii), then the Company shall be
deemed to have made the determination contemplated by Section 3.10(d)(i) and
(ii) if the Company receives Loss Proceeds from an Event of Loss or Event of
Eminent Domain and the cost to rebuild, repair, restore or replace the Energy
Complex does not, based upon a reasonable and good faith determination of the
Company, exceed in the aggregate $7,500,000, then the Company shall not be
required to comply with the provisions of Section 3.10(c) or 3.10(d) and such
Loss Proceeds shall be deposited into the Loss Proceeds Account and, together
with any Additional Available Proceeds, applied in accordance with Section
3.10(b) to rebuild, repair, restore or replace the Energy Complex to permit the
operation thereof at substantially the same level of performance at which the
Energy Complex was capable to being operated immediately prior to such Event of
Loss or Event of Eminent Domain (as the case may be).
SECTION 3.11 Revenue Account. Subject to Section 6.1, monies on deposit
in the Revenue Account, upon receipt by the Collateral Agent, no later than the
close of business on the Business Day prior to each Monthly Transfer Date, of an
Officer's Certificate of the Company (substantially in the form of Exhibit B)
certifying the amount of such monies to be withdrawn and the application thereof
(including appropriate payment instructions in respect thereof), will be
withdrawn on such Monthly Transfer Date to make the following transfers or
deposits to the following Persons or into the following Accounts and in the
following order of priority (but only to the extent such monies are then on
deposit in the Revenue Account):
(a) for deposit into the Mill Owner Reimbursement Account, an
amount equal to the amount that is or will be reimbursable to the Mill
Owners prior to the next succeeding Monthly Transfer Date in connection
with the exercise of Mill Owner Step-In Rights (except as otherwise
provided in the Consents to Assignment to which the Mill Owners are
parties);
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(b) for deposit into the Working Capital Facility Account, an
amount that is equal to amounts that were scheduled to be due and
payable, but remain unpaid, or are scheduled to become due and payable
for principal of and interest on, and fees and other amounts with
respect to, the Working Capital Facility prior to the next succeeding
Monthly Transfer Date and, upon the occurrence and during the
continuation of a Bankruptcy Event in respect of either of the Mobile
Energy Parties, all other amounts due and payable in respect thereof
(whether as a result of acceleration or otherwise);
(c) for deposit into the Operating Account, an amount
sufficient to cause the aggregate amount therein, after giving effect
to monies deposited therein prior to such Monthly Transfer Date that
have not yet been used for Operation and Maintenance Costs, to be equal
to the amount of Operation and Maintenance Costs (other than (i)
Subordinated Fees, (ii) Operation and Maintenance Costs that the
Company expects to pay with Working Capital Facility O&M Loans and
(iii) unless and to the extent that the monies on deposit in the
Maintenance Reserve Account, the Subordinated Debt Account, the
Subordinated Fee Account and the Distribution Account (including, in
the case of the Maintenance Plan Funding Subaccount and the
Distribution Account, the then Available Amounts under any Reserve
Account Security on deposit therein) are insufficient therefor,
Maintenance Expenditures) that are estimated by the Company to be due
and payable prior to the next succeeding Monthly Transfer Date;
(d) to each of the Collateral Agent, the Indenture Trustee and
the Tax-Exempt Indenture Trustee, an amount that is equal to the amount
due and payable immediately prior to such Monthly Transfer Date to each
of such Persons in their capacities as the Collateral Agent under this
Agreement, the Indenture Trustee under the Indenture and the Tax-Exempt
Indenture Trustee under the Tax-Exempt Indenture, respectively;
provided, however, that if monies on deposit in the Revenue Account are
insufficient on such Monthly Transfer Date to make the transfers
specified in this Section 3.11(d), distribution of monies will be made
ratably to each specified Person based upon the respective amounts
owing to each such Person;
(e) (i) for deposit into the Working Capital Facility Account,
an amount that is equal to, after giving effect to any deposits into
the Working Capital Facility Account in accordance with Section
3.11(b), all amounts due and payable (whether as a result of
acceleration or otherwise) for principal of and interest on, and fees
and other amounts with respect to, the Working Capital Facility
immediately prior to such Monthly Transfer Date; (ii) to the Indenture
Trustee for deposit into (A) the Indenture Securities Interest
Subaccount, an amount equal to the Required Interest Deposit with
respect thereto, (B) the Indenture Securities Principal Subaccount, an
amount equal to the Required Principal Deposit with respect thereto and
(C) the Indenture Securities Redemption Subaccount, an amount equal to
the sum of the Required Interest Deposit and the Required Principal
Deposit, in each case with respect thereto; and (iii) to the Tax-Exempt
Indenture Trustee for deposit into (A) the Tax-Exempt Indenture
Securities Interest Subaccount, an amount equal to the Required
Interest Deposit with respect thereto, (B) the Tax-Exempt Indenture
Securities Principal Subaccount, an amount equal to the Required
Principal Deposit with respect thereto and (C) the Tax-Exempt Indenture
Securities Redemption Subaccount, an amount equal to the sum of the
Required Interest Deposit and the Required Principal Deposit, in each
case with respect thereto; provided, however, that if monies in the
Revenue Account are insufficient on such Monthly Transfer Date to make
the transfers specified in this Section 3.11(e), distribution of monies
shall be made ratably to each specified Account or Person based upon
the respective amounts owing to each such Account or Person;
(f) for deposit into the Maintenance Reserve Account, such amount
as the Company may elect, but in no event less than (and, in the event
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that the amount of monies that are then, or after giving effect to any
monies to be deposited into the Mill Owner Maintenance Reserve Account
on such Monthly Transfer Date will be, on deposit in or otherwise
credited to (in accordance with the Mill Owner Maintenance Reserve
Account Agreement) the Mill Owner Maintenance Reserve Account is less
than $2,000,000, in no event more than) the excess of (i) the
Maintenance Reserve Account Required Deposit with respect to the Fiscal
Quarter in which such Monthly Transfer Date occurs over (ii) the amount
of monies (including then Available Amounts under any Reserve Account
Security), if any, deposited into the Maintenance Reserve Account
(other than any such monies or Reserve Account Security used to replace
other Reserve Account Security or monies on deposit therein) during the
Fiscal Quarter in which such Monthly Transfer Date occurs;
(g) to: (i) the Indenture Trustee, for deposit into each Debt
Service Reserve Account (if any), an amount sufficient to cause the
aggregate amount of monies, together with the then Available Amount
under any Reserve Account Security, on deposit in such Debt Service
Reserve Account to equal the Debt Service Reserve Account Required
Balance immediately prior to such Monthly Transfer Date; and (ii) the
Tax-Exempt Indenture Trustee, for deposit into each Tax-Exempt Debt
Service Reserve Account (if any), an amount sufficient to cause the
aggregate amount of monies, together with the then Available Amount
under any Reserve Account Letter of Credit, on deposit in such
Tax-Exempt Debt Service Reserve Account to equal the Tax-Exempt Debt
Service Reserve Account Required Balance immediately prior to such
Monthly Transfer Date; provided, however, that if monies in the Revenue
Account are insufficient on such Monthly Transfer Date to make the
transfers specified in this Section 3.11(g), distribution of monies
will be made ratably to each specified Person based upon the respective
amounts owing to each such Person;
(h) to the Company for deposit into the Mill Owner Maintenance
Reserve Account, an amount sufficient to cause the aggregate amount of
monies on deposit in or otherwise credited to (in accordance with the
Mill Owner Maintenance Reserve Account Agreement) the Mill Owner
Maintenance Reserve Account to equal $2,000,000;
(i) for deposit into the Subordinated Debt Account, an amount
determined by the Company or otherwise required pursuant to the terms
of any Subordinated Loan Agreement relating to Non-Affiliate
Subordinated Debt to be deposited into the Subordinated Debt Account on
such Monthly
Transfer Date;
(j) for deposit into the Subordinated Fee Account, an amount
that, after giving effect to amounts on deposit therein and a uniform
amount to be deposited therein in each succeeding month prior to the
next Distribution Date, will be equal to the amount of Operation and
Maintenance Costs constituting Subordinated Fees that will be due and
payable or are estimated to be due and payable as of such Distribution
Date; and
(k) to the Distribution Account.
SECTION 3.12 Investment of Monies in the Intercreditor Agreement
Accounts. (a) Amounts deposited into the Intercreditor Agreement Accounts, at
the written request and direction of the Company, shall be invested by the
Collateral Agent in Permitted Investments. Such Permitted Investments shall
mature in such amounts and not later than such times as may be necessary to
provide monies when needed to make payments with such monies as provided in this
Agreement. Net interest or gain received from such Permitted Investments shall
remain in each Intercreditor Agreement Account pending application as provided
in this Agreement. Absent written instructions from the Company, the Collateral
Agent shall invest the amounts held in the Intercreditor Agreement Accounts in
Permitted Investments described in clause (a) of the definition of Permitted
Investments. All such Permitted Investments shall be made in the name of the
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Collateral Agent (it being understood and agreed that the Collateral Agent shall
not be responsible for valuation losses in respect thereof) and shall be made in
such manner as to preserve the Lien of the Security Agreement thereon. The
Collateral Agent shall maintain records reflecting the interest of each
Intercreditor Agreement Account in such Permitted Investments.
(b) In computing the amount in any Intercreditor Agreement Account (or
any other separate account or fund created under the provisions of, and for any
purpose provided in, this Agreement), each Permitted Investment on deposit
therein shall be valued, as reasonably determined by the Collateral Agent (it
being understood and agreed that the Collateral Agent shall not be responsible
for valuation losses in respect thereof), at the fair value thereof, including
accrued interest thereon. On the Business Day immediately preceding each Monthly
Transfer Date and the date of any withdrawal of monies on deposit in any
Intercreditor Agreement Account, the Collateral Agent shall so value each
Permitted Investment on deposit in such Intercreditor Agreement Account and,
promptly thereafter, shall notify the Company, the Senior Secured Parties and
the Independent Engineer as to the amount of any deficiency or surplus in such
Intercreditor Agreement Account as of such date based upon such valuation.
(c) Amounts deposited in any Intercreditor Agreement Account may be
combined with amounts deposited in other Intercreditor Accounts for purposes of
making any Permitted Investment, provided that such Intercreditor Agreement
Account shall maintain an undivided interest in any such combined Permitted
Investment based upon its pro rata share of the amount contributed by such
Intercreditor Agreement Account at the time of the making of such combined
Permitted Investment.
SECTION 3.13 Monies to Be Held in Trust. All monies required to be
deposited with or paid to the Collateral Agent for the account of any
Intercreditor Agreement Account under any provision of this Agreement and all
investments made therewith, and all investments made therewith, and all monies
withdrawn from any Intercreditor Agreement Account and held by the Collateral
Agent, shall be held by the Collateral Agent in trust and, while so held, for
and on behalf of the Senior Secured Parties.
SECTION 3.14 Dominion and Control. Each of the Mobile Energy Parties
hereby transfers, assigns and sets over all of its right, title and interest in
and to all Intercreditor Agreement Accounts and all amounts or investments
deposited or held in any Intercreditor Agreement Account and grants to the
Collateral Agent sole dominion and control over such amounts. Neither of the
Mobile Energy Parties shall have the right to withdraw monies from any
Intercreditor Agreement Account hereunder, except to the extent such monies are
disbursed by the Collateral Agent pursuant to the terms of this Agreement.
SECTION 3.15 Reserve Account Security. (a) In addition to and without
in any way limiting the provisions of Sections 3.5 and 3.8 but subject to
Section 3.15(c), the Company shall not be required at any time to deposit any
monies into the Maintenance Plan Funding Subaccount, and the Company shall be
entitled from time to time to withdraw monies on deposit in the Maintenance Plan
Funding Subaccount or, subject to and in accordance with Section 3.8(c), the
Distribution Account, provided that and for so long as Reserve Account Security
having an Available Amount thereunder equal to the amount of such monies
otherwise required to be and not so deposited or the amount of such monies so
withdrawn (as the case may be) shall have been delivered to the Collateral
Agent, at or prior to such time, for deposit into the Maintenance Plan Funding
Subaccount or the Distribution Account (as the case may be). At the time of any
such deposit, the Collateral Agent shall be entitled to receive, and (subject to
Section 7.2) shall be fully protected in relying upon, an Opinion of Counsel to
the effect that such Reserve Account Security (i) is permitted by this Section
3.15 and has been delivered in accordance with the provisions hereof, (ii) has
been duly authorized, executed and delivered by the provider thereof and (iii)
constitutes a legal, valid and binding obligation of such provider, enforceable
against such provider in accordance with its terms, except as such
enforceability (A) may be limited by applicable bankruptcy, insolvency,
reorganization, fraudulent
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conveyance, moratorium and other similar laws relating to or affecting the
enforcement of creditors' rights and remedies generally as such laws would apply
in the event of a bankruptcy, insolvency or reorganization of, or other similar
occurrence with respect to, such provider and (B) is subject to general
principles of equity (regardless of whether considered in a proceeding in equity
or at law) and other customary qualifications and limitations. The Company may
from time to time, at its discretion, replace or reduce the Available Amount (in
whole or in part) under any Reserve Account Security on deposit in the
Maintenance Plan Funding Subaccount or the Distribution Account (as the case may
be) with other Reserve Account Security having an Available Amount thereunder,
or with monies in an amount, equal to the Available Amount so replaced or
reduced.
(b) Each Reserve Account Security on deposit in the Maintenance Plan
Funding Subaccount or the Distribution Account shall provide that not less than
forty-five (45) days prior to the occurrence of a Termination Event with respect
to such Reserve Account Security, the provider thereof shall deliver written
notice to the Collateral Agent and the Company of such occurrence. The Company
shall provide notice to the Collateral Agent of the occurrence of any Credit
Standard Event or Default Event within three (3) Business Days of its actual or
constructive knowledge of the event giving rise to such occurrence.
(c) If (i) (in lieu of any monies required to be deposited into, or in
replacement of monies or other Reserve Account Security on deposit in, the
Maintenance Plan Funding Subaccount) any Reserve Account Security is on deposit
in the Maintenance Plan Funding Subaccount pursuant to Section 3.15(a), then,
immediately upon the occurrence of a Required Deposit Event with respect to such
Reserve Account Security, the Company agrees to deposit into the Maintenance
Plan Funding Subaccount an amount of monies equal to the Required Deposit with
respect to such Required Deposit Event and (ii) (in lieu of any monies required
to be deposited into, or in replacement of monies or other Reserve Account
Security on deposit in, the Distribution Account) any Reserve Account Security
is on deposit in the Distribution Account pursuant to Section 3.15(a), then,
immediately upon the occurrence of a Required Deposit Event with respect to such
Reserve Account Security, the Company agrees to deposit into the Distribution
Account an amount of monies equal to the Required Deposit with respect to such
Required Deposit Event.
(d) If the Company fails to make any Required Deposit pursuant to
Section 3.15(c) as and when due, then the Collateral Agent shall, and is hereby
authorized and directed to, draw or call upon such Reserve Account Security in
an amount equal to the amount of such Required Deposit that the Company so
failed to deposit; provided, however, that, if a Required Deposit Event occurs
at a time when more than one Reserve Account Letter of Credit or Southern
Guaranty is on deposit in the Maintenance Plan Funding Subaccount or the
Distribution Account, the Collateral Agent may elect, subject to, in the case of
the Maintenance Plan Funding Subaccount, Section 3.5(c) and, in the case of the
Distribution Account, Section 3.8(b), the order in which the Collateral Agent
shall draw upon such Reserve Account Letters of Credit or call upon such
Southern Guaranties (as the case may be). Any amounts drawn or called upon by
the Collateral Agent under any such Reserve Account Security shall be deposited
into the Reserve Account Security Account in which such Reserve Account Security
was deposited. The Company's obligations under Section 3.15(c) shall be
satisfied to the extent of any such deposit.
SECTION 3.16 Payment of 1994 Bonds. On each 1994 Bond Payment Date, the
Collateral Agent shall, upon receipt of an Officer's Certificate of the Company
specifying the aggregate amount due and payable on account of principal of and
premium, if any, and interest on the 1994 Bonds, make payment of such aggregate
amount by debiting the Revenue Account (or, if the monies on deposit in the
Revenue Account are insufficient therefor and so long as no Trigger Event has
occurred and is continuing, the Collateral Agent may debit, in the following
order of priority, the Operating Account, the Maintenance Reserve Account, the
Distribution Account, the Subordinated Fee Account and the Subordinated Debt
Account (including, in the case of the Maintenance Plan Funding Subaccount and
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the Distribution Account, the then Available Amount under any Reserve Account
Security on deposit therein)) to the extent necessary to make, or to cause to be
deemed to be made, such payment, and by immediately paying over to, or deeming
to be immediately paid over to (as applicable), the 1994 Bond Trustee the amount
so debited. The Collateral Agent, in its capacity as the 1994 Bond Trustee and
as Collateral Agent hereunder, and the Company hereby agree that the 1994 Bond
Trustee shall (a) receive each such payment, or shall deem each such payment to
be received by it (as applicable), and (b) immediately pay the amount thereof
over to, or deem such amount to be paid over to (as applicable), the Collateral
Agent (as assignee of the payee under the 1994 Bonds), in respect of the
applicable payment in respect of the 1994 Bonds, for credit to the applicable
Account or Accounts in the amount by which such Account was or Accounts were so
debited in connection with such payment. The provisions of this Section 3.16
shall remain in effect only so long as the Company is the payee under, and the
Collateral Agent is the assignee of, the 1994 Bonds.
ARTICLE IV
PRIORITIES; SUBORDINATION
SECTION 4.1 Priority of Security Interests. (a) Each Senior Secured
Party agrees that, as among the Senior Secured Parties and subject to the
priorities set forth in and the other provisions of Article VI, the Security
Interest of each Senior Secured Party in any Shared Collateral ranks and will
rank equally in priority with the Security Interest of the other Senior Secured
Parties in the same Shared Collateral.
(b) The priorities specified in this Agreement are applicable
irrespective of any statement in any other Security Document or in any other
Contract to the contrary, the time or order or method of attachment or
perfection of Liens or the time or order of filing of Financing Statements or
the giving or failure to give notice of the acquisition or expected acquisition
of purchase money or other security interests and, to the extent not provided
for in this Agreement, the rights and priorities of the Senior Secured Parties
shall be determined in accordance with applicable Law.
(c) The Mobile Energy Parties hereby covenant and agree, as a condition
to entering into any Financing Document or Subordinated Loan Agreement with a
Senior Secured Party or Subordinated Debt Provider (as the case may be), to
cause each Person holding Senior Debt or Subordinated Debt to become a party to
this Agreement by executing an amendment to this Agreement and becoming a Senior
Secured Party or a Subordinated Debt Provider (as the case may be) hereunder,
and each of the Collateral Agent and the Intercreditor Parties hereby covenants
and agrees to cooperate in respect thereof.
SECTION 4.2 Subordination. (a) The Mobile Energy Parties and each
Subordinated Debt Provider hereby agree for the benefit of the Senior Secured
Parties that all Subordinated Debt shall be junior and subordinate, to the
extent and in the manner set forth hereinafter, in right of payment to the prior
indefeasible payment or satisfaction in full in cash of all Secured Obligations.
In furtherance thereof, each Subordinated Debt Provider shall be subject to the
following:
(i) Except for receiving of payments in accordance with
Section 3.11(i), a Subordinated Debt Provider shall not ask, demand,
sue for, take or receive from the Company, directly or indirectly, in
cash or other property or by set-off or in any other manner (including
from or by way of the Collateral or any guaranty of payment or
performance), payment of all or any Subordinated Debt unless and until
the Senior Debt Termination Date shall have occurred.
(ii) Until the Senior Debt Termination Date, a Subordinated
Debt Provider shall not (A) accelerate Subordinated Debt for any reason
(other than as a result of a Bankruptcy Event in respect of either of
the Mobile Energy Parties), (B) exercise any rights or enforce any
remedies or assert
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any claim with respect to the Collateral or any assets of either of the
Mobile Energy Parties or sell any of the Collateral, (C) seek to
foreclose Liens that may be granted to it pursuant to the terms of the
Contracts granting such Liens to such Subordinated Debt Provider or (D)
take any action, directly or indirectly, or institute any proceedings,
directly or indirectly, with respect to the foregoing; provided,
however, that if any principal, interest or other amount required to be
paid to such Subordinated Debt Provider by the Company is not paid when
due, such Subordinated Debt Provider may charge interest at the overdue
rate specified in the applicable Subordinated Loan Agreement.
(iii) Upon any distribution of all or any of the assets of
either of the Mobile Energy Parties to its creditors upon the
dissolution, winding up, liquidation, arrangement, reorganization or
composition of such Mobile Energy Party, whether in any bankruptcy,
insolvency, arrangement, reorganization, receivership or similar
proceedings or upon a general assignment for the benefit of creditors
or any other marshaling of the assets and liabilities of such Mobile
Energy Party or otherwise, any payment or distribution of any kind
(whether in cash, property or securities) that otherwise would be
payable or deliverable upon or with respect to Subordinated Debt shall
be paid or delivered directly to the Collateral Agent, if such payment
is of cash, for application to and, if such payment is of non-cash
property or securities, as Collateral for, in either case, the payment
or prepayment of the Secured Obligations until the Secured Obligations
have been paid or otherwise satisfied in full and the Collateral Agent
shall have received notice of such satisfaction, termination or
expiration.
(iv) Each of the Senior Secured Parties hereby authorizes and
directs the Collateral Agent on its behalf to demand specific
performance of the terms of subordination set forth in this Section
4.2(a), whether or not the Mobile Energy Parties shall have complied
with any of the provisions hereof applicable to them, at any time when
a Subordinated Debt Provider shall have failed to comply with any of
such provisions applicable to such Subordinated Debt Provider. Each
Subordinated Debt Provider hereby irrevocably waives any defense based
upon the adequacy of a remedy at law that might be asserted as a bar to
such remedy of specific performance.
(v) Until the Senior Debt Termination Date, a Subordinated
Debt Provider shall not commence or join with any creditor other than
the Collateral Agent in commencing any proceeding referred to in
paragraph (iii) of this Section 4.2(a) for the payment of any amounts
that otherwise would be payable or deliverable upon or with respect to
Subordinated Debt.
(vi) Subject to the termination of the Financing Commitments
and the indefeasible payment or satisfaction in full of all of the
Financing Liabilities, the Subordinated Debt Providers shall be
subrogated to the rights of the Senior Secured Parties to receive
payments or distributions of assets of the Mobile Energy Parties made
on the Financing Liabilities until the Subordinated Debt shall have
been satisfied in full.
The foregoing provisions of this Section 4.2(a) regarding subordination
are for the benefit of the Senior Secured Parties and shall be enforceable by
them directly against the Subordinated Debt Providers, and no Senior Secured
Party shall be prejudiced in its right to enforce subordination of any
Subordinated Debt by any act or failure to act by either of the Mobile Energy
Parties or anyone in custody of its assets or property. The Mobile Energy
Parties shall not make any payment to the Subordinated Debt Providers, and the
Subordinated Debt Providers shall not retain any payment from the Mobile Energy
Parties, in contravention of this Section 4.2(a).
(b) Each of the parties hereto hereby acknowledges and agrees that all
amounts applied to the payment of rebate pursuant to Section 148 of the Code and
all IDB Claims shall be treated as Operation and Maintenance Costs incurred in
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accordance with Prudent Plant Operating Standards and shall in no way be
affected by or subject to the terms of Section 4.2 of this Agreement.
ARTICLE V
EXERCISE OF RIGHTS
So long as any Secured Obligations remain outstanding, the following
provisions shall apply:
(a) If a Trigger Event shall have occurred and be continuing,
upon the written request of the Required Senior Creditors contained in
Senior Creditor Certificates, the Collateral Agent, on behalf of the
Indenture Trustee, the Tax-Exempt Indenture Trustee and the Working
Capital Facility Provider, as applicable, shall be permitted and is
hereby authorized to take any and all actions and to exercise any and
all rights, remedies and options that it may have under this Agreement,
the other Financing Documents and applicable Law; provided, however,
that if the underlying event that caused such Trigger Event is a
Bankruptcy Event in respect of either of the Mobile Energy Parties, no
written request of the Required Senior Creditors shall be required in
order to permit and authorize the Collateral Agent following such
Trigger Event to take any and all actions and to exercise any and all
rights, remedies and options that it may have under this Agreement, the
other Financing Documents or applicable Law; provided further, however,
that the Collateral Agent shall not amend, modify or supplement (or
agree to consent to any such amendment, modification or supplement),
directly or indirectly or in the name of either of the Mobile Energy
Parties, any Project Contract if such amendment, modification or
supplement shall adversely affect any Senior Secured Party in any
material respect unless the Collateral Agent shall have obtained the
prior written consent of such Senior Secured Party to such amendment,
modification or supplement. The Collateral Agent shall provide each
Senior Secured Party with at least thirty (30) days prior written
notice of all such proposed amendments, modifications or supplements to
the Project Contracts. Nothing contained herein shall be construed as
restricting the right of any Senior Secured Party to cause the
acceleration, in accordance with the applicable Financing Document, of
the Senior Debt held by such Senior Secured Party.
(b) The Senior Secured Parties hereby agree to give each other
and the Collateral Agent written notice of the occurrence of any Event
of Default or Trigger Event as soon as practicable after the occurrence
thereof; provided, however, that the failure to provide such notice
shall not limit or impair the rights of the Senior Secured Parties
hereunder or under any other Financing Document or result in any
liability to the Senior Secured Party failing to do so.
(c) Each Intercreditor Party and the Collateral Agent hereby
acknowledge and agree that to the extent that Indenture Securities
Collateral is held by the Indenture Trustee in accordance with Article
IV of the Indenture, (i) such Indenture Securities Collateral is held
for the benefit of the Holders of the Indenture Securities, (ii) the
Indenture Trustee shall hold such Indenture Securities Collateral
solely for the benefit of the Holders of the Indenture Securities and
(iii) such Indenture Securities Collateral shall not be subject to the
Lien granted by the Security Agreement or the Mortgage. The Indenture
Trustee hereby acknowledges and agrees that it shall make all payments
to the Collateral Agent required to be made by it pursuant to the
Indenture in accordance with the terms and conditions of the Indenture.
(d) Each Intercreditor Party and the Collateral Agent hereby
acknowledge and agree that to the extent Tax-Exempt Indenture
Securities Collateral is held by the Tax-Exempt Indenture Trustee in
accordance with Article IV of the Tax-Exempt Indenture, (i) such
Tax-Exempt Indenture
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Securities Collateral is held for the benefit of the Holders of the
Tax- Exempt Indenture Securities, (ii) the Tax-Exempt Indenture Trustee
shall hold such Tax-Exempt Indenture Securities Collateral solely for
the benefit of the Holders of the Tax-Exempt Indenture Securities and
(iii) such Tax-Exempt Indenture Securities Collateral shall not be
subject to the Lien granted by the Security Agreement or the Mortgage.
The Tax- Exempt Indenture Trustee hereby acknowledges and agrees that
it shall make all payments to the Collateral Agent required to be made
by it pursuant to the Tax-Exempt Indenture in accordance with the terms
and conditions of the Tax-Exempt Indenture.
(e) Each Intercreditor Party hereby acknowledges and agrees
that the Collateral Agent shall administer the Shared Collateral in the
manner contemplated by this Agreement and the other Security Documents
and the Collateral Agent shall exercise, as directed by the Required
Senior Creditors in Senior Creditor Certificates in accordance with
paragraph (a) of this Article V, such rights and remedies with respect
to the Shared Collateral (including the curing of defaults under the
Project Contracts) as are granted to it under the Security Documents,
this Agreement and applicable Law. No Intercreditor Party and no class
or classes of Intercreditor Parties shall have any right (i) to direct
the Collateral Agent to take any action in respect of the Shared
Collateral other than in accordance with paragraph (a) of this Article
V or (ii) to take any action with respect to the Shared Collateral (A)
independently of the Collateral Agent or (B) other than to direct the
Collateral Agent in writing to take action in accordance with paragraph
(a) of this Article V; provided, however, that nothing in paragraph (e)
of this Article V shall be deemed to limit the ability of any Senior
Secured Party to take any action in accordance with paragraph (i) of
this Article V.
(f) From time to time during the continuation of a Trigger
Event, the Collateral Agent shall, as instructed in Senior Creditor
Certificates of the Required Senior Creditors in accordance with
paragraph (a) of this Article V, render an accounting of the current
balance of each Intercreditor Agreement Account or other amounts or
monies administered by the Collateral Agent under this Agreement.
(g) Each of the Mobile Energy Parties covenants and agrees
that it shall not take any action that would prohibit or impair the
ability of the Collateral Agent from participating in any objection to
any foreclosure or similar proceeding instituted by a junior lienor
against either Mobile Energy Party; provided, however, that nothing in
this paragraph (g) shall, or shall be deemed to, affect the
relationship among the Senior Secured Parties or the relationship among
the Senior Secured Parties, the other Intercreditor Parties and the
Collateral Agent, nor shall anything in this paragraph (g) affect any
representation, warranty, covenant or agreement of any Senior Secured
Party under or in this Agreement.
(h) Each Senior Secured Party hereby agrees that, upon the
request of the Collateral Agent, it shall give notice to the Collateral
Agent and the Company of (i) all the outstanding Financing Liabilities
owed to such Senior Secured Party as of the date of such request, (ii)
the unutilized outstanding Financing Commitments of such Senior Secured
Party as of the date of such request and (iii) any other information
that the Collateral Agent may reasonably request. The Company agrees
that, as of the end of each Fiscal Quarter and from time to time upon
the reasonable request of the Collateral Agent, the Company shall send
to the Collateral Agent an Officer's Certificate of the Company
certifying as to the matters described in clauses (i) and (ii) of the
preceding sentence.
(i) Notwithstanding the foregoing provisions of this Article
V, each Senior Secured Party individually shall be authorized to cure
any default of the Company under any Project Contract in accordance
with the Consent to Assignment executed in connection with such Project
Contract; provided, however, that monies advanced in connection with
such cure shall
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not constitute Senior Debt unless such monies would otherwise satisfy
the requirements for the issuance of Senior Debt.
(j) The Intercreditor Parties hereby agree that if, at any
time during the term of this Agreement, any Intercreditor Party
receives any payment or distribution of assets of the Mobile Energy
Parties of any kind or character, whether monies or cash proceeds
resulting from liquidation of the Shared Collateral (other than in
accordance with this Agreement), such Intercreditor Party shall hold
such payment in trust for the benefit of the Senior Secured Parties and
shall immediately remit such payment or distribution to the Collateral
Agent, and the Collateral Agent shall deposit such monies or proceeds
in the Revenue Account (or pursuant to Article VI) for application or
distribution, as the case may be, in accordance with the terms of this
Agreement.
ARTICLE VI
DIVISION OF PROCEEDS
SECTION 6.1 Division of Proceeds. (a) Upon and following a Wind-Up
Event, the proceeds of any sale, disposition or other realization or collection
by the Collateral Agent or by any Senior Secured Party upon the Shared
Collateral (or any portion thereof) pursuant to the Security Documents shall be
distributed in the following order of priorities:
First, to the Tax-Exempt Indenture Trustee from proceeds of
the Shared Collateral, any amount required to be rebated to the United
States government pursuant to Section 148 of the Code in connection
with any series of the Tax-Exempt Indenture Securities (to the extent
not already provided for in the Tax-Exempt Indenture);
Second, to the Collateral Agent, to the Indenture Trustee and
the Tax-Exempt Indenture Trustee and to the IDB, ratably, from proceeds
of the Shared Collateral (other than Receivables and Fuel Inventory),
to the extent available, and then from Receivables and Fuel Inventory,
an amount equal to the amounts due in respect of the Collateral Agent
Claims, the Trustee Claims and the IDB Claims, respectively, due and
payable as of the date of such distribution, provided that, prior to
any such distribution to (i) the Indenture Trustee or the Tax-Exempt
Indenture Trustee, the Collateral Agent shall have received a
certificate signed by a Responsible Officer of the Indenture Trustee
and the Tax-Exempt Indenture Trustee (as the case may be) setting forth
the amount so payable to the Indenture Trustee and the Tax-Exempt
Indenture Trustee (as the case may be) as of the date of such
distribution and (ii) the IDB, the Collateral Agent shall have received
a certificate signed by an Authorized Officer of the IDB setting forth
the amount so payable to the IDB as of the date of such distribution;
Third, to the Working Capital Facility Provider from the
proceeds of Receivables and Fuel Inventory, an amount equal to the
unpaid amount of all Financing Liabilities owed by the Company under
the Working Capital Facility, provided that prior to any such
distribution the Collateral Agent shall have received a certificate
executed by an Authorized Representative of the Working Capital
Facility Provider setting forth the amount so payable to the Working
Capital Facility Provider as of the date of such distribution;
Fourth, to the Senior Secured Parties (including the Working
Capital Facility Provider to the extent that all amounts owed to it
under the Working Capital Facility have not been repaid pursuant to
paragraph Third of this Section 6.1(a)), ratably, an amount equal to
the unpaid amount of all Financing Liabilities owed to the Senior
Secured Parties, provided that prior to any such distribution the
Collateral Agent shall have received a certificate executed by an
Authorized Representative of each
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such Senior Secured Party setting forth the amount so payable to such
Senior Secured Party as of the date of such distribution;
Fifth, to the Subordinated Debt Providers, ratably, an amount
equal to the unpaid obligations owed to such Subordinated Debt
Providers by the Mobile Energy Parties under any Subordinated Loan
Agreement, provided that prior to any such distribution the Collateral
Agent shall have received a certificate executed by an Authorized
Representative of each such Subordinated Debt Provider setting forth
the amount so payable to such Subordinated Debt Provider as of the date
of such distribution; and
Sixth, to the Mobile Energy Parties or their successors or
assigns or to whomever may be lawfully entitled to receive the same or
as a court of competent jurisdiction may direct, any surplus then
remaining from such proceeds, it being understood that each of the
Mobile Energy Parties shall remain liable to the extent of any
deficiency between the amount of the proceeds of the Collateral and the
aggregate of the sums referred to in paragraphs First through Fifth of
this Section 6.1(a).
(b) As used in this Section 6.1, "proceeds" of Shared Collateral shall
mean cash, securities and other property realized in respect of, and
distributions in kind of, Shared Collateral, including any thereof received
under any reorganization, liquidation or adjustment of Debt of the Mobile Energy
Parties or any issuer of or obligor on any of the Shared Collateral.
(c) The Collateral Agent shall, upon receipt of indemnity satisfactory
to it and subject to Section 7.3, use reasonable efforts to join in any
foreclosure or similar proceeding instituted by a junior lienor with respect to
the Shared Collateral. The Collateral Agent shall hold all proceeds of the
Collateral received by it in connection with such proceeding instituted by a
junior lienor and not consolidated with any action by the Collateral Agent on
behalf of the Senior Secured Parties pending application of such proceeds by the
Collateral Agent in accordance with the written instructions of the Required
Senior Creditors.
SECTION 6.2 Application of Loss Proceeds. (a) Subject to Section 6.1,
all Loss Proceeds to be distributed by the Collateral Agent pursuant to Section
3.10(d)(i) or 3.10(d)(iv) shall be distributed within five (5) Business Days of
the receipt by the Collateral Agent of the appropriate notice set forth therein
in the following order of priorities:
First, to the Tax-Exempt Indenture Trustee from proceeds of
the Shared Collateral, any amount required to be rebated to the United
States government pursuant to Section 148 of the Code in connection
with any series of the Tax-Exempt Indenture Securities (to the extent
not already provided for in the Tax-Exempt Indenture);
Second, to the Collateral Agent, to the Indenture Trustee and
the Tax-Exempt Indenture Trustee and to the IDB, ratably, an amount
equal to the amounts due in respect of the Collateral Agent Claims, the
Trustee Claims and the IDB Claims, respectively, due and payable as of
the date of such distribution, provided that, prior to any such
distribution to (i) the Indenture Trustee or the Tax-Exempt Indenture
Trustee, the Collateral Agent shall have received a certificate signed
by a Responsible Officer of the Indenture Trustee or the Tax-Exempt
Indenture Trustee (as the case may be) setting forth the amount so
payable to the Indenture Trustee and the Tax-Exempt Indenture Trustee
(as the case may be) as of the date of such distribution and (ii) the
IDB, the Collateral Agent shall have received a certificate signed by
an Authorized Officer of the IDB setting forth the amount so payable to
the IDB as of the date of such distribution; and provided further that
such amounts shall be payable from proceeds of the Shared Collateral
other than Loss Proceeds relating solely to Receivables and Fuel
Inventory, to the extent available, prior to the application of Loss
Proceeds relating solely to Receivables or Fuel Inventory for such
purpose;
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Third, to the Working Capital Facility Provider, from Loss
Proceeds relating solely to Fuel Inventory, an amount equal to the
unpaid Financing Liabilities owed under the Working Capital Facility,
provided that prior to any such distribution the Collateral Agent shall
have received a certificate executed by a Responsible Officer of the
Working Capital Facility Provider setting forth the amount so payable
to the Working Capital Facility Provider as of the date of such
distribution;
Fourth, to the Senior Secured Parties, ratably, an amount
equal to the unpaid amount of all Financing Liabilities owed to the
Senior Secured Parties, provided that prior to any such distribution
the Collateral Agent shall have received a certificate executed by a
Responsible Officer of each such Senior Secured Party setting forth the
amount so payable to such Senior Secured Party as of the date of such
distribution;
Fifth, to the Mill Owners, in an amount specified pursuant to
Section 10.7 of the Master Operating Agreement or Article XIV of the
Lease, as applicable, provided that prior to any such distributions the
Collateral Agent shall have received a certificate executed by a
Responsible Officer of each of the Mill Owners and the Company setting
forth the amount so payable to each such Mill Owner as of the date of
such distribution;
Sixth, to the Subordinated Debt Providers, ratably, an amount
equal to the unpaid amounts owed to such Subordinated Debt Providers by
the Mobile Energy Parties under any Subordinated Loan Agreement,
provided that prior to any such distribution the Collateral Agent shall
have received a certificate executed by a Responsible Officer of each
such Subordinated Debt Provider setting forth the amount payable to
such Subordinated Debt Provider pursuant to this clause as of the date
of such distribution; and
Seventh, to the Mobile Energy Parties or their successors or
assigns or to whomever may be lawfully entitled to receive the same or
as a court of competent jurisdiction may direct, any surplus then
remaining from such proceeds.
(b) Subject to Section 6.1 and the following sentence, within five (5)
Business Days after the completion of the rebuilding, repair, restoration or
replacement of the Energy Complex contemplated by Section 3.10(d)(ii) or
3.10(d)(iii) in connection with an Event of Loss or Event of Eminent Domain, the
Collateral Agent shall, from any Excess Loss Proceeds with respect thereto and
upon receipt of an Officer's Certificate of the Company specifying the amounts
set forth in clauses (i), (ii) and (iii) below, (i) deposit the Working Capital
Facility Distribution Amount in respect of such Excess Loss Proceeds into the
Working Capital Facility Account, (ii) transfer the Indenture Distribution
Amount in respect of such Excess Loss Proceeds to the Indenture Trustee for
deposit into the Indenture Securities Redemption Subaccount and (iii) transfer
the Tax-Exempt Indenture Distribution Amount to the Tax-Exempt Indenture Trustee
for deposit into the Tax-Exempt Indenture Securities Redemption Subaccount.
Notwithstanding the foregoing, if such Excess Loss Proceeds are less than
$3,000,000, then, upon receipt by the Collateral Agent of an Officer's
Certificate of the Company directing the Collateral Agent to so transfer such
Excess Loss Proceeds, the Collateral Agent shall (A) deposit such Excess Loss
Proceeds into the Revenue Account, provided that, if there are any Tax-Exempt
Indenture Securities then Outstanding, such Officer's Certificate shall be
accompanied by a written opinion of Bond Counsel (which shall also be delivered
to the Tax-Exempt Indenture Trustee) to the effect that such transfer and
deposit will not adversely effect the exclusion of interest on such Tax-Exempt
Indenture Securities from gross income for Federal income tax purposes or (B)
deposit into the Working Capital Facility Account and transfer to the Indenture
Trustee for deposit into the Indenture Securities Principal Subaccount and to
the Tax-Exempt Indenture Trustee for deposit into the Tax-Exempt Indenture
Securities Principal Subaccount an amount equal to such Excess Loss Proceeds,
ratably based upon the respective amounts set forth in clauses (i), (ii) and
(iii) above, to be applied to the payment or redemption of Senior Debt at the
earliest dates permissible under the
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terms thereof. The Company hereby agrees that it will deliver the applicable
Officer's Certificate of the Company specified in this Section 6.2(b) no later
than three (3) Business Days after the completion of such rebuilding, repair,
restoration or replacement of the Energy Complex.
SECTION 6.3 Specific Collateral. Each Senior Secured Party agrees that
the proceeds of any sale, disposition or other realization with respect to
Collateral held by it for the benefit of holders of some but not all of the
Senior Debt shall be applied to the payment of obligations owed to such Senior
Secured Parties for as long as the specific Collateral is held.
ARTICLE VII
RIGHTS OF SENIOR SECURED PARTIES; RIGHTS
AND DUTIES OF COLLATERAL AGENT
SECTION 7.1 Rights of Senior Secured Parties. As between the Senior
Secured Parties and the Subordinated Debt Providers, the Senior Secured Parties
and the Collateral Agent (upon receipt of Senior Creditor Certificates from the
Required Senior Creditors) may, at any time and from time to time, without any
consent of or notice to any Subordinated Debt Providers and in each case in
accordance with the Financing Documents: (a) amend in any manner any Financing
Document in accordance with the terms thereof; (b) sell, exchange, release, not
perfect any Lien in respect of and otherwise deal with any property at any time
pledged, assigned or mortgaged to secure the Financing Liabilities in accordance
with the Financing Documents; (c) release anyone liable in any manner under or
in respect of the Financing Liabilities; (d) exercise or refrain from exercising
any rights against the Mobile Energy Parties and others; and (e) apply any sums
from time to time received to payment or satisfaction of the Financing
Liabilities, except as otherwise provided in Article VI.
SECTION 7.2 Duties of Collateral Agent. (a) The Collateral Agent will
give notice to the Senior Secured Parties of any action taken, or notices
received, by the Collateral Agent hereunder or under any other Financing
Document (other than ministerial actions in the ordinary course of the
administration of the Intercreditor Agreement Accounts, including transfers and
deposits of monies pursuant to Section 3.11). Notice of any action to be taken
hereunder shall be given prior to the taking of such action by the Collateral
Agent unless the Collateral Agent determines that to do so would be detrimental
to the interests of the Senior Secured Parties, in which event such notice shall
be given promptly after the taking of such action.
(b) The Senior Secured Parties agree that all liens on and security
interests in the Shared Collateral securing the Secured Obligations shall be
held in the name of the Collateral Agent and administered by and through the
Collateral Agent in accordance with this Agreement, the other Financing
Documents to which the Collateral Agent is a party and applicable Law. If, as of
the date hereof, or at any time in the future, any Senior Secured Party at any
time holds a lien on or security interest in any Shared Collateral in its own
name, it agrees to assign it, without warranty or recourse, to the Collateral
Agent (to be held by the Collateral Agent as the collateral agent for the Senior
Secured Parties). The Collateral Agent shall hold its liens on and security
interests in the Shared Collateral on behalf of the Senior Secured Parties, as
agent, fiduciary and trustee thereof, in the capacity of Collateral Agent
hereunder and under the other Security Documents, as provided herein and
therein.
(c) Notwithstanding anything to the contrary in this Agreement or any
other Financing Document, the Collateral Agent shall not be required to exercise
any rights or remedies under this Agreement, any of the other Financing
Documents or applicable Law or give any consent under this Agreement or any of
the other Financing Documents or enter into any Contract amending,
supplementing, waiving or otherwise modifying any provision of any this
Agreement or any other Financing Document unless it shall have been directed to
do so in Senior Creditor Certificates of the Required Senior Creditors.
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(d) Upon receipt of Senior Creditor Certificates from Senior Secured
Parties holding or otherwise representing a majority in principal amount of the
Combined Exposure directing the Collateral Agent to deliver the notice specified
in each of Section 5.17(c)(i)(B) of the Indenture and Section 4.17(c)(i)(B) of
the IDB Lease Agreement, and of any comparable provision of the Working Capital
Facility, the Collateral Agent will deliver such notice to each of the Indenture
Trustee, the Tax-Exempt Indenture Trustee and the Working Capital Facility
Provider.
(e) Subject to the provisions of this Article VII, upon the occurrence
of a Trigger Event, the Collateral Agent shall take whatever action may be
necessary or prudent (including qualifying itself or one of its subsidiaries or
Affiliates to do business in the State of Alabama, appointing a co-Collateral
Agent hereunder or taking such other action as the Collateral Agent may
determine to be appropriate under the circumstances, in each case in accordance
with applicable Law), and whether or not directed by the Required Senior
Creditors in Senior Creditor Certificates, in order to exercise such rights and
remedies with respect to the Shared Collateral (including entering and taking
possession of all or any portion thereof, exercising all remedies available to a
secured party under the UCC and curing of defaults under the Project Contracts)
as are granted to it under, and to protect and enforce it rights under, this
Agreement, the other Security Documents and applicable Law.
SECTION 7.3 Rights of Collateral Agent. (a) The Collateral Agent may
execute any of its duties under this Agreement, any other Financing Documents to
which it is a party or applicable Law by or through agents, custodians, nominees
or attorneys-in-fact and shall be entitled to, and (in the absence of bad faith
on its part) may conclusively rely upon, advice of counsel concerning all
matters pertaining to such duties. If at any time or times it shall be necessary
or prudent in order to conform to any law of any jurisdiction in which the
Shared Collateral or any portion thereof is held, or the Collateral Agent shall
be advised by counsel satisfactory to it that it is so necessary or prudent in
the interest of the Senior Secured Parties, or if the Required Senior Creditors
shall so direct the Collateral Agent in Senior Creditor Certificates, the
Collateral Agent and the Intercreditor Parties shall execute and deliver all
instruments and agreements necessary or proper to appoint another Collateral
Agent hereunder or one (1) or more Persons approved by the Collateral Agent
either to act as co- Collateral Agent jointly with the Collateral Agent
originally named herein or any successor or successors or to act as separate
Collateral Agent. In the event any Intercreditor Party shall have not joined in
the execution of such instruments and agreements within ten (10) days after the
receipt of a written request from the Collateral Agent to do so, or during a
Trigger Event Period, the Collateral Agent may act under the foregoing
provisions of this Section 7.3(a) without the concurrence of such Intercreditor
Party; and each of the Intercreditor Parties hereby appoints the Collateral
Agent as its agent and attorney to act under such foregoing provisions in either
of such contingencies.
(b) Neither the Collateral Agent nor any of its officers, directors,
employees, agents, attorneys-in-fact or affiliates shall be (i) liable for any
action lawfully taken or omitted to be taken by it under or in connection with
this Agreement or any other Financing Documents (except for its gross negligence
or willful misconduct) or (ii) responsible in any manner to any of the Senior
Secured Parties for any recitals, statements, representations or warranties made
in this Agreement or any other Financing Documents or in any certificate,
report, statement or other document referred to or provided for in, or received
by the Collateral Agent under or in connection with, this Agreement or any other
Financing Documents or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Financing Documents
or for any failure of the Mobile Energy Parties or any other Person to perform
their obligations hereunder or thereunder.
(c) The Collateral Agent (in the absence of bad faith on its part)
shall be entitled to conclusively rely, and shall be fully protected in relying,
upon any note, writing, resolution, request, direction, certificate, notice,
consent, affidavit, letter, cablegram, telegram, telecopy, telex or teletype
message,
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statement, order or other document or conversation believed by it to be genuine
and correct and to have been signed, sent or made by the proper Person or
Persons or upon an Opinion of Counsel, independent accountants or other experts
selected by the Collateral Agent. In connection with any request or direction of
the Required Senior Creditors, the Collateral Agent shall act in accordance with
directions contained in, and (in the absence of bad faith on its part) shall be
entitled to conclusively rely and shall be fully protected in relying upon, any
Senior Creditor Certificate delivered by a Senior Secured Party in accordance
with this Agreement; provided, however, that in the event the Collateral Agent
receives conflicting directions contained in Senior Creditor Certificates from
more than one of the Senior Secured Parties, the Collateral Agent shall act in
accordance with directions contained in Senior Creditor Certificates
representing the greatest percentage in principal amount of the Combined
Exposure. Subject to this Article VII, the Collateral Agent shall be fully
justified in failing or refusing to take any action under this Agreement or any
other applicable Financing Document (i) if such action would, in the opinion of
the Collateral Agent (which may be based upon an Opinion of Counsel), be
contrary to law or the terms of this Agreement or such other applicable
Financing Document, (ii) if such action is not specifically provided for in this
Agreement or such other Financing Documents or it shall not have received any
such advice or concurrence of the Required Senior Creditors, (iii) if, in
connection with the taking of any such action hereunder or under such Financing
Documents that would constitute an exercise of remedies hereunder or under such
Financing Documents, it shall not first be indemnified to its satisfaction by
the Senior Secured Parties against any and all risk of nonpayment, liability and
expense that may be incurred by it by reason of taking or continuing to take any
such action or (iv) if, notwithstanding anything to the contrary contained in
Section 7.3(e), in connection with the taking of any such action that would
constitute a payment due under any Project Contract, it shall not first have
received from the Senior Secured Parties funds equal to the amount payable. In
no event shall the Collateral Agent be required to risk or expend its own funds.
The Collateral Agent shall in all cases be fully protected in acting, or in
refraining from acting, under this Agreement or any other Financing Document in
accordance with a request contained in Senior Creditor Certificates of the
Required Senior Creditors delivered in accordance with this Agreement, and such
request and any action taken or failure to act pursuant thereto shall be binding
upon all the Intercreditor Parties.
(d) If, with respect to a proposed action to be taken by it, the
Collateral Agent shall determine in good faith that the provisions of this
Agreement or any other Financing Document relating to the functions or
responsibilities or discretionary powers of the Collateral Agent are or may be
ambiguous or inconsistent, the Collateral Agent shall notify the Senior Secured
Parties, identifying the proposed action, and may decline either to perform such
function or responsibility or to take the action requested unless it has
received the written confirmation of the Required Senior Creditors executed by
their Authorized Representatives that the Required Senior Creditors concur in
the circumstances that the action proposed to be taken by the Collateral Agent
is consistent with the terms of this Agreement or such other Financing Document
or is otherwise appropriate. The Collateral Agent shall be fully protected in
acting or refraining from acting upon the confirmation of the Required Senior
Creditors in this respect, and such confirmation shall be binding upon the
Collateral Agent and the other Intercreditor Parties.
(e) The Collateral Agent shall not be deemed to have actual,
constructive, direct or indirect knowledge or notice of the occurrence of any
default or Event of Default unless and until a Responsible Officer of the
Collateral Agent has received a written notice or a certificate from an
Authorized Representative of an Intercreditor Party stating that a default or an
Event of Default has occurred. The Collateral Agent shall have no obligation
whatsoever either prior to or after receiving such notice or certificate to
inquire whether or not a default or an Event of Default has in fact occurred and
shall be entitled to rely conclusively, and shall be fully protected in so
relying, on any notice or certificate so furnished to it. No provision of this
Agreement or any other Financing Document shall require the Collateral Agent to
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expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or under any other Financing Document
or the exercise of any of its rights or powers, if it shall have reasonable
grounds for believing that repayment of such funds or adequate indemnity against
such risk or liability, including an advance of monies necessary to take the
action requested, is not reasonably assured to it; in addition, in respect of
any potential environmental liability or the taking of title to any real
property, the Collateral Agent may decline to act unless it receives indemnity
satisfactory to it in its sole discretion, including an advance of monies
necessary to take the action requested. In the event that the Collateral Agent
receives such a notice of the occurrence of any Event of Default, the Collateral
Agent shall give notice thereof to the Senior Secured Parties. The Senior
Secured Parties shall provide indemnity satisfactory to the Collateral Agent for
any action directed by the Required Senior Creditors including an advance of
monies necessary to take the action requested. The Collateral Agent shall take
such action with respect to such Event of Default as so requested pursuant to
paragraph (a) of Article V, subject, however, to the third sentence of this
Section 7.3(e).
(f) The Mobile Energy Parties will pay upon demand to the Collateral
Agent the amount of any and all reasonable fees and out-of-pocket expenses,
including the reasonable fees and expenses of its counsel (and any one local
counsel) and of any of its experts and agents, that the Collateral Agent may
incur in connection with (i) the administration of this Agreement and the other
Financing Documents (including out-of-pocket expenses incurred in connection
with any mortgage privilege or recording tax, and any surety bonds (and
application for surety bonds) relating thereto), (ii) the custody or
preservation of, or the sale of, collection from, or other realization upon, any
of the Collateral, (iii) the exercise or enforcement (whether through
negotiations, legal proceedings or otherwise) of any of the rights of the
Collateral Agent or the Senior Secured Parties hereunder or under the other
Financing Documents or (iv) the failure by the Mobile Energy Parties to perform
or observe any of the provisions hereof or of any of the other Security
Documents. The provision of this Section 7.3(f) shall survive the expiration or
earlier termination of this Agreement.
(g) Each of (i) the Mobile Energy Parties hereby agrees to deliver to
the Collateral Agent, concurrently with the delivery thereof to any Senior
Secured Party, and (ii) the Senior Secured Parties hereby agrees to deliver to
the Collateral Agent, concurrently with the delivery thereof to either of the
Mobile Energy Parties, all written notices, requested documents and other
instruments delivered by such Person to such Senior Secured Party or the Mobile
Energy Parties (as the case may be) under or pursuant to the Financing
Documents, except to the extent any other Person has agreed to deliver such
notices, requested documents and other instruments pursuant to any other
Financing Document.
(h) The Collateral Agent is hereby authorized to pay or cause to be
paid any mortgage privilege or recording tax, or expenses relating to surety
bonds relating thereto, as instructed by the Company in an Officer's
Certificate.
SECTION 7.4 Lack of Reliance on the Collateral Agent. Each of the
Senior Secured Parties expressly acknowledges that neither the Collateral Agent
nor any of its officers, directors, employees, agents or attorneys-in-fact has
made any representations or warranties to it and that no act by the Collateral
Agent hereafter taken, including any review of the Energy Complex or of the
affairs of the Mobile Energy Parties, shall be deemed to constitute any
representation or warranty by the Collateral Agent to any Senior Secured Party.
Each Senior Secured Party (other than the Indenture Trustee and the Tax-Exempt
Indenture Trustee) represents to the Collateral Agent that it has, independently
and without reliance upon the Collateral Agent or any other Senior Secured
Party, and based upon such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business,
operations, property, financial and other condition and creditworthiness of the
Energy Complex and the Mobile Energy Parties. Each Senior Secured Party (other
than the Indenture Trustee and the Tax-Exempt Indenture Trustee) also represents
that it will, independently and without reliance upon the Collateral Agent or
any other Senior Secured Party, and based upon such documents and information as
it shall deem
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appropriate at the time, continue to make its own credit analysis, appraisals
and decisions in taking or not taking action under this Agreement, and to make
such investigation as it deems necessary to inform itself as to the business,
operations, property, financial and other condition and creditworthiness of the
Energy Complex and the Mobile Energy Parties. Except for notices, reports and
other documents expressly required to be furnished to the Senior Secured Parties
by the Collateral Agent hereunder, the Collateral Agent shall not have any duty
or responsibility to provide any Senior Secured Party with any credit or other
information concerning the business, operations, property, financial and other
condition or creditworthiness of the Energy Complex and the Mobile Energy
Parties that may come into the possession of the Collateral Agent or any of its
officers, directors, employees, agents or attorneys-in-fact.
ARTICLE VIII
INDEMNIFICATION
The Senior Secured Parties severally agree to indemnify the Collateral
Agent in its capacity as such and in its individual capacity (to the extent not
reimbursed by the Mobile Energy Parties and without limiting the obligation of
the Mobile Energy Parties to do so), ratably according to the aggregate amounts
of their respective Secured Obligations on the date the activities giving rise
to the Collateral Agent's demand for indemnification occurred, from and against
any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind whatsoever that
may at any time be imposed on, incurred by or asserted against the Collateral
Agent in its capacity as such and in its individual capacity in any way relating
to or arising out of this Agreement or the other Financing Documents or any
surety bond (and any application for a surety bond) relating to any applicable
mortgage privilege or recording tax or the performance of its duties as
Collateral Agent hereunder or thereunder or any action taken or omitted by the
Collateral Agent in its capacity as such under or in connection with any of the
foregoing (including any claim that the Collateral Agent is the owner or
operator of the Energy Complex and liable as such pursuant to any Environmental
Requirement, and payments made in connection with any applicable mortgage
privilege or recording tax and any surety bonds (and applications for surety
bonds) relating thereto), provided that the Senior Secured Parties shall not be
liable for the payment of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
to the extent that any of the foregoing result from the Collateral Agent's gross
negligence or willful misconduct.
Each of the Mobile Energy Parties agrees, jointly and severally, to
indemnify the Collateral Agent and each Senior Secured Party from and against
any and all claims, losses and liabilities relating to or arising out of (i)
this Agreement or any other Financing Documents (including enforcement of such
Financing Documents, but excluding any such claims, losses or liabilities
resulting from the Collateral Agent's or such Senior Secured Party's gross
negligence or willful misconduct), (ii) any Environmental Requirement applicable
to the Shared Collateral or (iii) any refund or adjustment of any amount paid or
payable to the Collateral Agent or any Senior Secured Party under or in respect
of any Project Contract or any other Shared Collateral, or any interest thereon,
that may be ordered or otherwise required by any Person. The agreements in this
Article VIII shall survive the payment or satisfaction in full of the Secured
Obligations or any other termination of this Agreement.
ARTICLE IX
ELIGIBILITY OF COLLATERAL AGENT;
REMOVAL AND REPLACEMENT OF COLLATERAL AGENT
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SECTION 9.1 Corporate Collateral Agent Required; Eligibility. There
shall at all times be a Collateral Agent hereunder that shall be a bank or trust
company organized and doing business under the laws of the United States of
America or of any State thereof, authorized under such laws and the laws of the
State of Alabama to exercise corporate trust powers, having (or whose
obligations are unconditionally guaranteed by a corporation having) a combined
capital and surplus of at least $250,000,000, which bank or trust company is
subject to supervision or examination by Federal or state authority and does not
provide credit or credit enhancement to either of the Mobile Energy Parties. If
such bank or trust company publishes reports of condition at least annually,
pursuant to Law or to the requirements of the aforesaid supervising or examining
authority, then for the purposes of this Section 9.1, the combined capital and
surplus of such bank or trust company shall be deemed to be its combined capital
and surplus as set forth in its most recent report of condition so published. If
at any time the Collateral Agent shall cease to be eligible in accordance with
the provisions of this Article, it shall resign immediately in the manner and
with the effect hereinafter specified in this Section 9.1. Notwithstanding
anything to the contrary contained in any of the Financing Documents, (a) the
Person acting as Collateral Agent hereunder shall at all times be the 1994 Bond
Trustee, the Secured Party and the Mortgagee, (b) the Person acting as
Collateral Agent hereunder may not at any time resign, or be removed or
replaced, as the Collateral Agent unless it also resigns, or is removed or
replaced, as the 1994 Bond Trustee, the Secured Party and the Mortgagee at such
time and (c) upon the resignation, removal or replacement of the 1994 Bond
Trustee, the Secured Party or the Mortgagee, the Person acting as Collateral
Agent hereunder shall also resign or be removed or replaced.
SECTION 9.2 Resignation, Removal and Replacement. Subject to the last
sentence of Section 9.1, the Collateral Agent may resign as Collateral Agent
upon thirty (30) days' written notice to the Senior Secured Parties and may be
removed at any time with or without cause by the Required Senior Creditors, with
any such resignation or removal to become effective only upon the appointment of
a successor Collateral Agent under this Section 9.2. If the Collateral Agent
shall resign or be removed as Collateral Agent, then the Required Senior
Creditors shall (and if no such successor shall have been appointed within
thirty (30) days of the Collateral Agent's resignation or removal, the
Collateral Agent may) appoint a successor agent for the Senior Secured Parties,
whereupon (provided that the Collateral Agent resigning or being removed shall
be paid all amounts in respect of the Collateral Agent Claims due and owing to
it) such successor agent shall succeed to the rights, powers and duties of the
"Collateral Agent," and the term "Collateral Agent" shall mean such successor
agent effective upon its appointment, and the former Collateral Agent's rights,
powers and duties as Collateral Agent shall be terminated, without any other or
further act or deed on the part of such former Collateral Agent (except that
such former Collateral Agent shall deliver all Collateral then in its possession
to the successor Collateral Agent) or any of the Intercreditor Parties. The
indemnity given any former Collateral Agent pursuant to Article VIII and any
further indemnity granted under Section 6.1(c), 7.3(c), 7.3(e) or 7.3(f) shall
survive any resignation or removal hereunder. After any former Collateral
Agent's resignation or removal hereunder as Collateral Agent, the provisions of
this Agreement shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was Collateral Agent. In the event that a successor
Collateral Agent is not appointed within the time period specified in this
Section 9.2 following a resignation or removal of the Collateral Agent, the
Collateral Agent or any Senior Secured Party may petition a court of competent
jurisdiction for the appointment of a successor Collateral Agent.
ARTICLE X
REPRESENTATIONS
(a) Representations of Mobile Energy Parties. Each of the Mobile
Energy Parties represents and warrants, as to itself and not to the other, to
the Collateral Agent as follows:
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(i) The Company is (A) a limited liability company duly
formed, validly existing and in good standing under the laws of the
State of Alabama and (B) duly authorized to do business and is in good
standing in each jurisdiction where the character of its properties or
the nature of its activities makes such qualification necessary. Mobile
Energy is (A) a corporation duly formed, validly existing and in good
standing under the laws of the State of Alabama and (B) duly authorized
to do business and is in good standing in each jurisdiction where the
character of its properties or the nature of its activities makes such
qualification necessary. Each of the Mobile Energy Parties has all
requisite limited liability company or corporate (as the case may be)
power and authority to own and operate the property it purports to own
and to carry on its business as now being conducted and as proposed to
be conducted in respect of the Energy Complex.
(ii) Each of the Mobile Energy Parties has all necessary
limited liability company or corporate (as the case may be) power and
authority to execute, deliver and perform its obligations under this
Agreement.
(iii) All action on the part of the Mobile Energy Parties that
is required for the authorization, execution, delivery and performance
of this Agreement has been duly and effectively taken. The execution,
delivery and performance of this Agreement by the Mobile Energy Parties
does not require the approval or consent of any member or shareholder,
or holder or trustee of any Debt or other obligations, of either of the
Mobile Energy Parties that has not been obtained.
(iv) This Agreement has been duly executed and delivered by
each of the Mobile Energy Parties and constitutes a legal, valid and
binding obligation of such Mobile Energy Party, enforceable against it
in accordance with the terms thereof, except as such enforceability (i)
may be limited by applicable bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium and similar laws relating to or
affecting the enforcement of creditors' rights and remedies generally
and (ii) is subject to general principles of equity (regardless of
whether enforceability is considered in a proceeding in equity or at
law) and the discretion of the court before which any proceeding
therefor may be brought and to public policy or Federal or state laws
that might limit rights to indemnification.
(v) Neither the execution, delivery and performance of this
Agreement by the Mobile Energy Parties nor the consummation of any of
the transactions contemplated hereby by the Mobile Energy Parties nor
performance of or compliance with the terms and conditions hereof or
thereof by the Mobile Energy Parties (A) contravenes any Governmental
Approvals or any provision of Law applicable to either of the Mobile
Energy Parties or any of the Collateral, (B) conflicts with or
constitutes a default under or results in the violation of the
provisions of the Articles of Organization of the Company or the
Operating Agreement or certificate of incorporation or by-laws of
Mobile Energy or, unless such conflict, default or violation would not
reasonably be expect to have a Material Adverse Effect, of any other
Project Documents or any indenture, mortgage, deed of trust,
sale/leaseback agreement, loan agreement or other similar financing
agreement or instrument or other agreement or instrument to which
either of the Mobile Energy Parties is a party or by which such Mobile
Energy Party or any of its property or assets is bound or to which
either may be subject or (C) results in the creation or imposition of
any Liens (other than Permitted Liens) on any of the property or assets
of either of the Mobile Energy Parties, or results in the acceleration
of any obligation of either of the Mobile Energy Parties, that would
reasonably be expected to have a Material Adverse Effect.
(vi) There are no claims, actions, suits, investigations or
proceedings at law or in equity by or before any arbitrator or any
Governmental Authority now pending or (to the knowledge of the Mobile
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Energy Parties) threatened against either of the Mobile Energy Parties
or any Affiliate thereof, or any property or other assets or rights of
either of the Mobile Energy Parties or any Affiliate thereof with
respect to this Agreement, any other Project Document or the Energy
Complex, that would reasonably be expected to result in a Material
Adverse Effect.
(b) Representations of Senior Secured Parties. Each of the Indenture
Trustee, the Tax-Exempt Indenture Trustee and the Working Capital Facility
Provider represents and warrants, as to itself and not the others, to the
Collateral Agent as follows:
(i) It is duly formed, validly existing and in good standing
under the laws of the jurisdiction of its organization and is duly
qualified to do business and is in good standing in each jurisdiction
where the character of its properties or the nature of its activities
makes such qualification necessary, except where the failure to effect
such qualification would not have a material adverse effect upon its
ability to perform its obligations under this Agreement and the other
Financing Documents to which it is a party. It has all necessary power
and authority (corporate or otherwise) to execute, deliver and perform
under this Agreement and such other Financing Documents.
(ii) All action on its part that is required for the
authorization, execution, delivery and performance of this Agreement
and the other Financing Documents to which it is a party has been duly
and effectively taken. The execution, delivery and performance of this
Agreement and the other Financing Documents to which it is a party do
not require the approval or consent of any shareholder or the holder or
trustee of any Debt or other obligations that has not been obtained.
(iii) This Agreement and each of the other Financing Documents
to which it is a party have been duly executed and delivered by each
such Senior Secured Party and constitute the legal, valid and binding
obligation of each such Senior Secured Party, enforceable against it in
accordance with the terms thereof, except as such enforceability (A)
may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium and other similar laws affecting the enforcement of
creditors' rights and remedies generally and (B) is subject to general
principles of equity (regardless of whether enforceability is
considered in a proceeding in equity or at law).
(iv) Neither the execution, delivery and performance of this
Agreement and the other Financing Documents to which it is a party nor
the consummation of any of the transactions contemplated hereby or
thereby or performance of or compliance with the terms and conditions
hereof or thereof (A) contravenes any Governmental Approvals or any
provision of Law applicable to such Senior Secured Party or (B)
constitutes a default under or results in the violation of the
provisions in the charter, certificate of incorporation or by-laws of
such Senior Secured Party or of any indenture, loan or credit agreement
or any other agreement, lease, instrument or document to which such
Senior Secured Party is a party or by which it or its properties may be
bound.
(v) There are no actions, suits or proceedings at law or in
equity or by or before any Governmental Authority now pending or, to
the best of such Senior Secured Party's knowledge, threatened that
could reasonably be expected to have a material and adverse effect on
the performance by such Senior Secured Party of its obligations
hereunder or under the other Financing Documents to which it is a party
or that questions the validity, binding effect or enforceability hereof
or of such other Financing Documents, any action to be taken pursuant
hereto or thereto or any transactions contemplated hereby or thereby.
(c) Representations of Collateral Agent. The Collateral Agent
represents and warrants to the Senior Secured Parties as follows:
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(i) It is duly formed, validly existing and in good standing
under the laws of the jurisdiction of its organization and is duly
qualified to do business and is in good standing in each jurisdiction
where the character of its properties or the nature of its activities
makes such qualification necessary, except where the failure to effect
such qualification would not have a material adverse effect upon its
ability to perform its obligations under this Agreement and the other
Financing Documents to which it is a party. It has no offices or
employees in, and has no other contacts with, the State of Alabama in
connection with the transactions provided for or otherwise contemplated
by the Financing Documents to which it is a party, in each case that
would require it to so qualify in the State of Alabama. It has all
necessary power and authority (corporate or otherwise) to execute,
deliver and perform under this Agreement and such other Financing
Documents to which it is a party.
(ii) All action on its part that is required for the
authorization, execution, delivery and performance of this Agreement
and the other Financing Documents to which it is a party has been duly
and effectively taken. The execution, delivery and performance of this
Agreement and the other Financing Documents to which it is a party do
not require the approval or consent of any shareholder or the holder or
trustee of any Debt or other obligations that has not been obtained.
(iii) This Agreement and each of the other Financing Documents
to which it is a party have been duly executed and delivered by the
Collateral Agent and constitute the legal, valid and binding obligation
of the Collateral Agent, enforceable against it in accordance with the
terms thereof, except as such enforceability (A) may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium and other
similar laws affecting the enforcement of creditors' rights and
remedies generally and (B) is subject to general principles of equity
(regardless of whether enforceability is considered in a proceeding in
equity or at law).
(iv) Neither the execution, delivery and performance of this
Agreement and the other Financing Documents to which it is a party nor
the consummation of any of the transactions contemplated hereby or
thereby or performance of or compliance with the terms and conditions
hereof or thereof (A) materially contravenes any Governmental Approvals
or any provision of Law applicable to the Collateral Agent or (B)
constitutes a default under or results in the violation of the
provisions in the charter, certificate of incorporation or by-laws of
the Collateral Agent or of any indenture, loan or credit agreement or
any other agreement, lease, instrument or document to which the
Collateral Agent is a party or by which it or its properties may be
bound unless such default or violation could not reasonably be expected
to have a material adverse effect on the ability of the Collateral
Agent to perform its obligations hereunder and under the other
Financing Documents to which it is a party.
(v) There are no actions, suits or proceedings at law or in
equity or by or before any Governmental Authority now pending or, to
the best of the Collateral Agent's knowledge, threatened that could
reasonably be expected to have a material and adverse effect on the
performance by the Collateral Agent of its obligations hereunder or
under the other Financing Documents to which it is a party or that
questions the validity, binding effect or enforceability hereof or of
such other Financing Documents, any action to be taken pursuant hereto
or thereto or any transactions contemplated hereby or thereby.
ARTICLE XI
INDEPENDENT ENGINEER
SECTION 11.1 Removal of Independent Engineer; Payment of Independent
Engineer. (a) Stone & Webster Engineering Corporation is hereby appointed the
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Independent Engineer. The Collateral Agent shall remove the Independent Engineer
(i) upon receipt of an Officer's Certificate of the Company to the effect that
the Independent Engineer has become incapable of acting or is, or is reasonably
likely to be, adjudged bankrupt or insolvent or a receiver has been appointed
for, or any public officer has taken charge or control of, the Independent
Engineer or its property or its affairs for the purpose of rehabilitation,
conservation or liquidation, (ii) upon receipt of Senior Creditor Certificates
of the Required Senior Creditors directing the Collateral Agent to take such
action or (iii) upon receipt of an Officer's Certificate of the Company to the
effect that (A) in the reasonable determination of the Company, the Independent
Engineer has failed to carry out its obligations under the Financing Documents
or (B) a Qualified Engineer has agreed to perform, for costs and fees in an
amount equal to or less than ninety-five percent (95%) of the amount of costs
and fees charged by the then Independent Engineer, the services specified in and
contemplated by the Financing Documents on substantially identical non-price
terms as those contained in the Independent Engineer Agreement relating to the
engagement of the then current Independent Engineer, provided that, in the case
of this clause (B), such Officer's Certificate is delivered to the Collateral
Agent during the last month of any Fiscal Year and the Independent Engineer
Agreement relating to the engagement of such Qualified Engineer is attached to
such Officer's Certificate. Any such removal of the Independent Engineer shall
become effective only upon the appointment of a successor Independent Engineer
under Section 11.1(b).
(b) If the Independent Engineer shall be removed or shall resign, then
the Company shall appoint a successor Independent Engineer from the list of
Qualified Engineers, such successor to be, (i) in the case of a removal of the
Independent Engineer pursuant to Section 11.1(a)(iii)(B), the Qualified Engineer
referred to in such Section 11.1(a)(iii)(B) and (ii) in any other case, one (1)
of two (2) Qualified Engineers designated by the Collateral Agent.
(c) The Company shall pay for all services performed by the Independent
Engineer and its reasonable costs and expenses related thereto.
SECTION 11.2 Third Party Engineer Dispute Resolution. If the Company
and the Independent Engineer are in dispute with respect to (or if the
Independent Engineer fails to timely act with respect to) a notice, plan,
report, certificate or budget, or any other matter for which the Company must
provide an Independent Engineer Confirmation, and they are unable to resolve the
dispute within seven (7) days of the Independent Engineer expressing its
disagreement with (or the Independent Engineer's failing to so timely act with
respect to) such notice, plan, report, certificate or budget, or such other
matter, a Qualified Engineer (the "Third Party Engineer") shall be designated to
consider and decide the issues raised by such dispute. The Company shall
designate the Third Party Engineer not later than the third (3rd) day following
the expiration of the seven (7) day period described above. Within three (3)
days of such designation of a Third Party Engineer, each of the Company and the
Independent Engineer shall submit to the Third Party Engineer a notice setting
forth in detail such Person's position in respect of the issues in dispute. Such
notice shall be accompanied by supporting documentation, if appropriate. The
Third Party Engineer shall complete all proceedings and issue its decision with
regard to the issues in dispute as promptly as reasonably possible, but in any
event within ten (10) days of the date on which it is designated as Third Party
Engineer hereunder unless the Third Party Engineer reasonably determines that
additional time is required in order to give adequate consideration to the
issues raised. In such case, the Third Party Engineer shall state in writing its
reasons for believing that additional time is needed and shall specify the
additional period required, which such period shall not exceed ten (10) days
without the Company's agreement. If the Third Party Engineer determines that the
concerns set forth in the Independent Engineer's notice are valid, the Third
Party Engineer shall so state and shall state the corrective actions to be taken
by the Company, if any. In such case, the Company shall promptly take such
actions. The Company shall thereafter bear all costs that may arise from actions
taken pursuant to the Third Party Engineer's decision. If the Third Party
Engineer determines that the concerns set forth in the Independent Engineer's
notice are not valid, the Third
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Party Engineer shall so state and shall state the appropriate actions to be
taken by the Company, if any. In such case, the Company shall take such actions
and for purposes of this Agreement and the other Financing Documents, the
Independent Engineer shall be deemed to have approved, confirmed, concurred in
or consented to the notice, plan, report, certificate, budget or other such
matter in dispute. The decision of the Third Party Engineer shall be final and
non-appealable. The Company shall bear all reasonable costs incurred by the
Third Party Engineer in connection with this dispute resolution mechanism.
SECTION 11.3 Qualified Engineers. Each successor Independent Engineer
and each Third Party Engineer shall be selected from the list of Qualified
Engineers. At any time either the Company or the Collateral Agent may (and, upon
consultation with the Senior Secured Parties and the Independent Engineer, the
Collateral Agent shall) remove a Qualified Engineer from the list by obtaining
the other Person's consent to such removal (which consent shall not be
unreasonably withheld or delayed). However, neither the Company nor the
Collateral Agent may remove a name or names from the list if such removal would
leave the list without at least three (3) names, unless, concurrently therewith,
the Company and the Collateral Agent (upon consultation with the Senior Secured
Parties and the Independent Engineer) reasonably agree to the addition of one
(1) or more names to such list. During January of each year, each of the Company
and the Collateral Agent (upon consultation with the Senior Secured Parties and
the Independent Engineer) shall review the current list of Qualified Engineers
and give notice to the other of any proposed additions and deletions to the
list. Any such proposed addition or deletion shall become effective upon
obtaining the other party's consent (which may not be unreasonably withheld),
provided that in no event may a deletion be effective if such deletion would
leave the list without at least three (3) names, unless, concurrently therewith,
the Company and the Collateral Agent (upon consultation with the Senior Secured
Parties and the Independent Engineer) reasonably agree to the addition of one
(1) or more names to such list. By mutual agreement between the Company and the
Collateral Agent (upon consultation with the Senior Secured Parties and the
Independent Engineer) a new name or names may be added to the list of Qualified
Engineers at any time.
ARTICLE XII
MISCELLANEOUS
SECTION 12.1 Agreement for Benefit of Parties Hereto. Nothing in this
Agreement, express or implied, is intended or shall be construed to confer upon,
or to give to, any Person other than the parties hereto and Persons for whom the
parties hereto are acting as agents or representatives and, in either case,
their respective successors and assigns, any right, remedy or claim under or by
reason of this Agreement or any covenant, condition or stipulation hereof, and
the covenants, stipulations and agreements contained in this Agreement are and
shall be for the sole and exclusive benefit of the parties hereto and their
respective successors and assigns and Persons for whom the parties hereto are
acting as agents or representatives.
SECTION 12.2 No Warranties. Except as otherwise expressly provided
herein, the Senior Secured Parties have not made to each other nor do they
hereby or otherwise make to each other any warranties, express or implied, nor
do they assume any liability to each other with respect to the enforceability,
validity, value or collectability of the Collateral (or any portion thereof). No
Senior Secured Party shall be liable, except in the case of its gross negligence
or willful misconduct, to any other Intercreditor Party for any action or
failure to act, any error of judgment, any negligence or mistake or any
oversight whatsoever on the part of any Intercreditor Party or any Intercreditor
Party's agents, officers, employees or attorneys with respect to any transaction
relating to any of the Contracts evidencing or entered into with respect to any
of the Secured Obligations or any security therefor.
SECTION 12.3 Severability.In case any provision in this Agreement shall
be invalid, illegal or unenforceable, the validity, legality and enforceability
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of the remaining provisions contained herein shall not in any way be affected or
impaired thereby.
SECTION 12.4 Notices. All notices, demands, certificates or other
communications hereunder shall be in writing and shall be deemed sufficiently
given or served for all purposes when delivered personally, when sent by
certified or registered mail, postage prepaid, return receipt requested or by
private courier service, or, if followed and confirmed by mail or courier
service notice, when telecopied, in each case, with the proper address as
indicated below. Each party hereto may, by written notice given to the other
parties hereto, designate any other address or addresses to which notices,
certificates or other communications to them shall be sent as contemplated by
this Agreement. Notices shall be deemed to have been given if and when received
by an officer, manager or supervisor in the department of the addressee
specified for attention (unless such addressee refuses to accept delivery, in
which case they shall be deemed to have been given when first presented to such
addressee for acceptance). Until otherwise so provided by the respective parties
hereto, all notices, certificates and communications to each of them shall be
addressed as follows:
Indenture Trustee: First Union National Bank of Georgia
Corporate Trust Department
M/C GA9094
999 Peachtree Street, N.E.
Atlanta, Georgia 30309
Attention: Douglas Milner, Assistant
Vice President
Telephone No.: 404-827-7349
Telefax No.: 404-827-7305
Tax-Exempt Indenture Trustee: First Union National Bank of Georgia
Corporate Trust Department
M/C GA9094
999 Peachtree Street, N.E.
Atlanta, Georgia 30309
Attention: Douglas Milner, Assistant
Vice President
Telephone No.: 404-827-7349
Telefax No.: 404-827-7305
Working Capital Facility
Provider: Banque Paribas, as Agent
787 Seventh Avenue
New York, New York 10019
Attention: Project Finance Group
Telephone No.: 212-841-2000
Telefax No.: 212-841-2555
IDB: The Industrial Development Board of
The City of Mobile, Alabama
PO Box 2187
Mobile, Alabama 36652
Attention: Secretary
Telephone No.: 334-433-6951
Telefax No.: 334-431-8608
Company: Mobile Energy Services Company, L.L.C.
900 Ashwood Parkway, Suite 300
Atlanta, Georgia 30338
Attention: President
Telephone No.: 770-673-7781
Telefax No.: 770-392-7644
with a copy to:
Mobile Energy Services Company, L.L.C.
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P.O. Box 2747
200 Bay Bridge Road
Mobile, Alabama 36652
Attention: Vice President and General
Manager
Telephone No.: 334-330-3600
Telefax No.: 334-452-6337
Mobile Energy: Mobile Energy Services Holdings, Inc.
900 Ashwood Parkway, Suite 450
Atlanta, Georgia 30338
Attention: President
Telephone No.: 770-673-7730
Telefax No.: 770-673-7745
Collateral Agent: Bankers Trust (Delaware)
c/o Bankers Trust Company
Four Albany Street, 4th Floor
New York, New York 10006
Attention: Corporate Trust and
Agency Group
Telephone No.: 212-250-6826
Telefax No.: 212-250-6961
SECTION 12.5 Successors and Assigns. All covenants, agreements,
representations and warranties in this Agreement by the parties hereto shall
bind and, to the extent permitted hereby, shall inure to the benefit of and be
enforceable by their respective successors and assigns, whether so expressed or
not.
SECTION 12.6 Counterparts. This Agreement may be executed in any number
of counterparts, each of which when so executed shall be deemed to be an
original, and all such counterparts shall together constitute but one and the
same instrument.
SECTION 12.7 GOVERNING LAW. THE RIGHTS AND DUTIES OF THE COLLATERAL
AGENT AND THE INTERCREDITOR PARTIES SHALL, PURSUANT TO SECTION 5-1401 OF THE NEW
YORK GENERAL OBLIGATIONS LAW, BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK,
WITHOUT REFERENCE TO THE CHOICE OF LAW PROVISIONS THEREOF (OTHER THAN SUCH
SECTION 5- 1401), EXCEPT THAT SUCH LAW SHALL NOT APPLY WITH RESPECT TO ANY
COLLATERAL WHERE, AND TO THE EXTENT THAT, IT IS NECESSARY TO APPLY THE LAWS OF
ANOTHER JURISDICTION TO PERFECT LIENS IN SUCH COLLATERAL RELATING TO DEBT ISSUED
UNDER THE FINANCING DOCUMENTS.
SECTION 12.8 No Impairments of Other Rights. Nothing in this Agreement
is intended or shall be construed to impair, diminish or otherwise adversely
affect any other rights the Senior Secured Parties may have or may obtain
against the Mobile Energy Parties, including the rights referred to in Section
8.10 of the Indenture and Section 8.10 of the Tax-Exempt Indenture.
SECTION 12.9 Amendment; Waiver. No amendment, supplement, waiver or
other modification of this Agreement shall be effective unless such amendment,
supplement, waiver or other modification was effected in accordance with Section
7.2(c) of this Agreement and with the consent of (a) each Senior Secured Party,
(b) each of the Mobile Energy Parties, unless such amendment, supplement, waiver
or other modification relates to Sections 4.1(a) or 4.1(b) or Article V, VI or
VII and would not reasonably be expected to materially and adversely affect such
Mobile Energy Party and (c) the IDB and each Subordinated Debt Provider, unless
such amendment, supplement, waiver or other modification relates to Section 4.1
or Article V, VI, VII or XI and would not reasonably be expected to materially
and adversely affect the IDB or such Subordinated Debt Provider (as the case may
be). Any approval of an amendment to or supplement or other modification of, or
any waiver of any provision of, this Agreement shall be effective only in the
specific instance and for the specific purpose for which such approval or waiver
is given. No delay on the part of any Senior Secured Party in the exercise of
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any right, power or remedy shall operate as a waiver thereof, nor shall any
single or partial waiver by any such Senior Secured Party of any right, power or
remedy preclude any further exercise thereof, or the exercise of any other
right, power or remedy.
SECTION 12.10 Headings. The Article and Section headings herein and the
Table of Contents are for convenience only and shall not affect the construction
hereof.
SECTION 12.11 Termination. This Agreement shall remain in full force
and effect until the Senior Debt Termination Date. Upon termination of this
Agreement pursuant to this Section 12.11, the Collateral Agent shall take such
actions as are reasonably requested by the Company to release and remove of
record any Liens on the Collateral then held by or in favor of the Collateral
Agent.
SECTION 12.12 Entire Agreement. This Agreement, including the documents
referred to herein, embodies the entire agreement and understanding of the
parties hereto and supersedes all prior agreements and understandings of the
parties hereto relating to the subject matter herein contained.
SECTION 12.13 Limited Recourse. Satisfaction of the obligations of the
Mobile Energy Parties under this Agreement shall be had solely from the assets
of the Mobile Energy Parties. No recourse shall be had to (a) any assets or
properties of the Members (other than Mobile Energy as provided in the Guaranty)
or of the stockholders of Mobile Energy, other than their respective interests
in the Collateral, (b) any Member (other than Mobile Energy as provided in the
Guaranty) or (c) any Affiliate, incorporator, stockholder, partner, member,
officer, director or employee of any Member or of the Company (other than the
Mobile Energy Parties and, in respect of any Southern Guaranty on deposit in the
Maintenance Plan Funding Subaccount or the Distribution Account, Southern).
Notwithstanding anything in this Section 12.13 to the contrary, (i) nothing
contained in this Agreement shall limit or otherwise prejudice in any way the
right of the Collateral Agent and the Senior Secured Parties to proceed against
any Person whomsoever (A) with respect to the enforcement of such Person's
obligations under any Project Document (including the Guaranty and any Southern
Guaranty) to which such Person is a party or limit or otherwise prejudice in any
way the right of the Collateral Agent, the Senior Secured Parties, the Holders
of Indenture Securities or the Holders of Tax-Exempt Indenture Securities to
proceed against such Person with respect to the enforcement of such obligations
or (B) to the extent necessary to realize upon the Collateral granted under the
Security Documents and (ii) any limitations of liability herein shall not apply
to any Person if and to the extent that such Person commits fraud or wilful
misrepresentations, including those contained in Officer's Certificates issued
from time to time.
SECTION 12.14 Submission to Jurisdiction. The parties hereto hereby
submit to the nonexclusive jurisdiction of the United States District Court for
the Southern District of New York and of any New York State Court sitting in New
York City for the purposes of all legal proceedings arising out of or relating
to this Agreement or the other Financing Documents of any of the transactions
contemplated herein or therein. The parties hereto hereby irrevocably waive, to
the fullest extent permitted by law, any objection that they may now or
hereafter have to the laying of the venue of any such proceeding brought in such
a court and any claim that any such proceeding brought in such a court has been
brought in an inconvenient forum.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers thereunto duly authorized, as of the
day and year first above written.
FIRST UNION NATIONAL BANK OF GEORGIA, as Trustee
(on behalf of the Holders of the
Indenture Securities)
By: /s/
Name: Doug Milner
Title: Assistant Vice President
FIRST UNION NATIONAL BANK OF
GEORGIA, as Tax- Exempt Indenture
Trustee (on behalf of the Holders of
the Tax-Exempt Indenture Securities)
By: /s/
Name: Doug Milner
Title: Assistant Vice President
BANQUE PARIBAS, as Working Capital Facility
Provider
By: /s/
Name: Glenn R. Tobias
Title: Group Vice President
By: /s/
Name: Francis Ballard, Jr.
Title: Vice President
THE INDUSTRIAL DEVELOPMENT BOARD OF THE CITY OF
MOBILE, ALABAMA
By: /s/
Name: Clarence Boll
Title: Vice Chairman
MOBILE ENERGY SERVICES COMPANY, L.L.C.
By: /s/
Name: Christopher J. Kysar
Title: Vice President
[Intercreditor Agreement]
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MOBILE ENERGY SERVICES HOLDINGS, INC.
By: /s/
Name: Christopher J. Kysar
Title: Vice President
BANKERS TRUST (DELAWARE), as Collateral Agent
By: /s/
Name: James H. Stallkamp
Title: President
[Intercreditor Agreement]
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Appendix A
DEFINED TERMS
For purposes of any Financing Document (as defined herein), terms used
in such Financing Document (including terms used herein) that are not otherwise
defined therein shall have the following meanings, subject to any provisions
contained in such Financing Document that affect the construction or
interpretation of such terms. Except as otherwise expressly provided in any such
Financing Document, if and to the extent that such Financing Document shall be
amended, restated, supplemented or otherwise modified from time to time pursuant
to the terms and provisions thereof, this Appendix A shall be, or be deemed to
have been, amended, restated, supplemented or otherwise modified concurrently
with the execution and delivery of such amendment, restatement, supplement or
other modification in order to conform the terms herein and therein, mutatis
mutandis, to the terms set forth in or required by such amendment, restatement,
supplement or other modification.
Except as otherwise expressly provided in any such Financing Document:
(a) the terms used in such Financing Document have the meanings
assigned to them in this Appendix A and include the plural as well as
the singular; provided, however, that, in the case of the Indenture,
all such terms that are defined in the Trust Indenture Act, either
directly or by reference therein, have the meanings assigned to them
therein;
(b) (i) all accounting terms not otherwise defined in such
Financing Document have the meanings assigned to them, (ii) all
financial statements and all certificates and reports as to financial
matters required to be delivered to the Collateral Agent or any Senior
Secured Party, or any other Person (as the case may be), under such
Financing Document shall be prepared and (iii) all calculations made
for the purpose of determining compliance with such Financing Document
shall (except as otherwise expressly provided herein) be made, in the
case of clauses (i), (ii) and (iii) above, in accordance with, or by
application of, GAAP applied on a basis consistent (except
inconsistencies that are disclosed in writing to the Collateral Agent
or any Senior Secured Party, or any other Person (as the case may be),
and are in accordance with GAAP as certified by a firm of independent
certified public accountants of recognized national standing) with that
used in the preparation of the then most recent corresponding financial
statements furnished under such Financing Document to the Collateral
Agent or any Senior Secured Party, or any other Person (as the case may
be);
(c) all references in such Financing Document to any designated
"Article," "Section," "Appendix," "Schedule," "Exhibit" and other
subdivision are to the designated Article, Section, Appendix, Schedule,
Exhibit and other subdivision, respectively, of such Financing
Document;
(d) all references in such Financing Document to (i) the words
"herein," "hereof" and "hereunder" and other words of similar import
refer to such Financing Document as a whole and not to any particular
Article, Section or other subdivision and (ii) the term "this
Agreement" or "this Indenture" means such Financing Document as a
whole, including Appendices, Schedules and Exhibits thereto;
(e) all references in such Financing Document to any Project
Document or other Contract defined or referred to therein shall include
such Contract (and, in the case of the Senior Securities or any other
instrument, any other instrument issued in substitution therefor) as
the terms thereof may have been or may be amended, supplemented, waived
or otherwise modified, or as such Contract may have been replaced
(including (i) in the case of an Energy Services Agreement or the
Master Operating
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Agreement, any replacement Contract therefor then satisfying the
Restricted Payment Alternative Agreement Requirements with respect
thereto and (ii) in the case of any Project Contract, any replacement
Contract therefor then satisfying the Event of Default Alternative
Agreement Requirements with respect thereto), from time to time;
(f) all references in such Financing Document to any Person
(including any of its capacities) shall include the permitted
successors and assigns of such Person (including in such capacity) in
accordance with the terms of such Financing Document and the other
Project Documents and, in the case of any Governmental Authority, any
Person succeeding to its functions and capacities;
(g) all references in such Financing Document to any Law shall
include such Law or any successor Law as amended, supplemented or
otherwise modified and in effect from time to time, and any other Law
in substance substituted therefor;
(h) any item or list of items set forth following the word
"including," "include" or "includes" in such Financing Document is set
forth only for the purpose of indicating that, regardless of whatever
other items are in the category in which such item or items are
"included," such item or items are in such category, and shall not be
construed as indicating that the items in the category in which such
item or items are "included" are limited to such item or items similar
to such items;
(i) all references in such Financing Document to the Collateral
Agent, the Indenture Trustee, the Tax-Exempt Indenture Trustee, the IDB
or the Working Capital Facility Provider shall be deemed to refer to
each such Person however designated in the Financing Documents so that
(i) references to rights or duties of the Collateral Agent under such
Financing Document shall be deemed to include the rights or duties of
such Person as the "Secured Party" under the Security Agreement and as
the "Mortgagee" under the Mortgage, (ii) references to rights or duties
of the Indenture Trustee under such Financing Document shall be deemed
to include the rights or duties of such Person as a "Senior Secured
Party" under the Intercreditor Agreement, (iii) references to rights or
duties of the Tax- Exempt Indenture Trustee under such Financing
Document shall be deemed to include the rights or duties of such Person
as a "Senior Secured Party" under the Intercreditor Agreement and (iv)
references to rights or duties of the Working Capital Facility Provider
under such Financing Document shall be deemed to include the rights or
duties of such Person as a "Senior Secured Party" under the
Intercreditor Agreement; provided, however, that, if such Financing
Document is (A) the Security Agreement, references to rights or duties
of the "Secured Party" thereunder shall be deemed to include the rights
or duties of such Person as the Collateral Agent, (B) the Mortgage,
references to rights or duties of the "Mortgagee" thereunder shall be
deemed to include the rights or duties of such Person as the Collateral
Agent and (C) the Working Capital Facility, references to rights or
duties of the "Agent" thereunder or a Lender shall be deemed to include
the rights or duties of such Person as the Working Capital Facility
Provider;
(j) all terms defined in such Financing Document shall have the
meanings therein ascribed to them when used in any certificate, opinion
or other document delivered pursuant thereto and, in the case of the
Indenture and the Tax-Exempt Indenture, in the Senior Securities;
(k) all references in such Financing Document to the knowledge of
any Person that is a corporation, limited liability company or
partnership, or any other Person that is not an individual, with
respect to any subject or event (including the occurrence or
non-occurrence of any circumstance, the failure to perform or observe,
or the satisfaction of, any covenant or agreement or the pending or
threatened nature of any action) shall be
[Intercreditor Agreement]
40
<PAGE>
deemed to mean that an Authorized Officer of such Person (or, if such
Person is the Company, the Plant Manager thereof) has actual knowledge
or awareness of such subject or event or when notice of such subject or
event shall have been given, or deemed to have been given, to such
Person in accordance with the provisions of such Financing Document;
and
(l) all references in such Financing Document to the Project
Contracts shall be deemed to exclude any Project Contract (and the
Consent to Assignment (if any) with respect thereto) (i) after the date
on which such Project Contract (A) may have been terminated in
accordance with Section 5.10 of the Indenture or Section 4.10 of the
IDB Lease Agreement (or any comparable provision of the Working Capital
Facility), (B) shall have reached its stated termination date (if any)
or (C) (other than in the case of the Energy Services Agreements and
the Master Operating Agreement in connection with a Mill Closure) shall
have been fully and finally performed by all parties thereto and (ii)
after the date of any disposition of the Company's rights and
obligations under such Project Contract in accordance with Section 5.8
of the Indenture or Section 4.8 of the IDB Lease Agreement (or any
comparable provision of the Working Capital Facility), except, in the
case of clauses (i) and (ii) above, if and to the extent that any
provisions of such Project Contract so excluded provide that the rights
and obligations of any Person that is a party to such Contract shall
survive the termination thereof.
"Accounts" means, collectively, the Intercreditor Agreement Accounts,
the Indenture Accounts and the Tax-Exempt Indenture Accounts.
"Act" has the meaning specified (a) in the case of any Holder of
Indenture Securities, in Section 1.4 of the Indenture and (b) in the case of any
Holder of Tax-Exempt Indenture Securities, in Section 1.4 of the Tax-Exempt
Indenture.
"Additional Available Proceeds" means, with respect to any Event of
Loss or Event of Eminent Domain, monies neither constituting Revenues nor
otherwise required (except pursuant to the provisions of Section 3.10 of the
Intercreditor Agreement) to be deposited into any Account that are deposited
into the Loss Proceeds Account as other amounts available to the Company and
necessary for the rebuilding, repair, restoration or replacement of the Energy
Complex or any part thereof that has been affected by such Event of Loss or
Event of Eminent Domain (as the case may be).
"Affiliate" means, with respect to any Person, any other Person
directly or indirectly controlling or controlled by, or under direct or indirect
common control with, such Person. For purposes of this definition, the term
"control" (including the correlative meanings of the terms "controlled by" and
"under common control with"), as used with respect to any Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management policies of such Person, whether through the
ownership of securities or partnership or other ownership interests or by
contract or otherwise. Notwithstanding the foregoing, Southern, Mobile Energy,
Southern Electric, the Operator and each Person owning, directly or indirectly,
five percent (5%) or more of the membership interests in the Company shall be
deemed to be an Affiliate of the Company.
"Affiliate Subordinated Debt" means any unsecured, subordinated loan or
loans to the Company from any of its Affiliates pursuant to a Subordinated Loan
Agreement, fully subordinated as to payment and exercise of remedies and payable
only from monies otherwise distributable by the Company from the Distribution
Account in accordance with the Intercreditor Agreement.
"Aggregate Demand" has the meaning specified in the Master Operating
Agreement.
"Alabama Act" means Ala. Code ss. 11-54-80 to ss. 11-54-101.
[Intercreditor Agreement]
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"Annual Budget" means the operating plan and budget for the Energy
Complex developed by the Company for operation of the Energy Complex for any
Fiscal Year, as the same may be amended, restated, supplemented or otherwise
modified from time to time and as more particularly described in Section 5.12 of
the Indenture or Section 4.12 of the IDB Lease Agreement (or any comparable
provision of the Working Capital Facility) (as the case may be).
"Approved Institutional Investor" has the meaning specified (a) in the
case of the Tax-Exempt Bonds, in the Limited Offering Memorandum dated August
17, 1995 relating to the initial offering thereof and (b) in the case of any
other Tax- Exempt Indenture Securities, in any other offering memorandum
relating to the initial offering of such Tax-Exempt Indenture Securities.
"Articles of Organization" means the Articles of Organization of the
Company dated July 13, 1995.
"Authenticating Agent" means any Person acting as Authenticating Agent
pursuant to, in the case of the Indenture, Section 9.14(b) thereof and, in the
case of the Tax-Exempt Indenture, Section 9.13(b) thereof.
"Authorized Agent" means any Paying Agent, Authenticating Agent or
Security Registrar or other agent appointed by the Indenture Trustee or the
Tax-Exempt Indenture Trustee (as the case may be) or the Company or the IDB (as
the case may be) in accordance with the Indenture or the Tax-Exempt Indenture
(as the case may be) to perform any function that such indenture authorizes such
agent to perform.
"Authorized Officer" means (a) in the case of a corporation (including
Mobile Energy) or limited liability company (including the Company), the chief
executive officer, the president, the chief financial officer, a vice president,
the treasurer or an assistant treasurer of such corporation or limited liability
company and (b) in the case of any general or limited partnership, any Person
authorized by the managing general partner (or such other Person that is
responsible for the management of such partnership) to take the applicable
action on behalf of such partnership or any officer (with a title specified in
clause (a) above) of such partnership's managing general partner (or such other
Person that is responsible for the management of such managing general partner).
"Authorized Representative" means, in respect of any Person, the
individual or individuals authorized to act on behalf of such Person by the
board of directors, manager, management committee, board of control or any other
governing body of such Person as designated from time to time in a certificate
of such Person, which shall include or attach thereto specimen signatures,
delivered to the Collateral Agent upon which the Collateral Agent may
conclusively rely.
"Authorized Trust Officer" means any officer of the Indenture Trustee
or the Tax-Exempt Indenture Trustee (as the case may be) or any other individual
who shall be duly authorized by appropriate corporate action on the part of
either such trustee to authenticate Senior Securities.
"Automatic Acceleration Default" has the meaning specified (a) in the
case of the Indenture, in Section 8.2(a) thereof and (b) in the case of the
Tax-Exempt Indenture, in Section 8.2(a) thereof.
"Available Amount" means, at any time, (a) in the case of any Reserve
Account Letter of Credit, the undrawn stated amount of such Reserve Account
Letter of Credit at such time and (b) in the case of any Southern Guaranty, an
amount equal to the "Available Amount" set forth therein (as such amount may be
increased or decreased in accordance with such Southern Guaranty).
"Bankruptcy Code" means the Federal Bankruptcy Code of 1978.
"Bankruptcy Event" means, in respect of any Person, (a) such Person's
general inability, or its admission of its inability, to pay its debts as such
debts become due, (b) the application by such Person for or its consent to the
appointment of, or the taking of possession by, a receiver, custodian, trustee
[Intercreditor Agreement]
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or liquidator of itself or of all or a substantial part of its property, (c) the
commencement by such Person of a voluntary case under the Bankruptcy Code, (d)
the making by such Person of a general assignment for the benefit of its
creditors, (e) the filing of a petition by such Person seeking to take advantage
as a debtor of any other law relating to bankruptcy, insolvency, reorganization,
liquidation, dissolution, arrangement, winding-up or readjustment of debts, (f)
the failure by such Person to controvert in a timely and appropriate manner, or
its acquiescence in writing to, any petition filed against it in an involuntary
case under the Bankruptcy Code, (g) the taking of any corporate or other action
by such Person for the purpose of effecting any of the foregoing, (h) the
commencement of a proceeding or case, without the application or consent of such
Person, in any court seeking (i) such Person's reorganization, liquidation,
dissolution, arrangement or winding-up, or the composition or readjustment of
its debts, (ii) the appointment of a trustee, receiver, custodian, liquidator,
examiner or the like of such Person or all or any substantial part of its
property or (iii) similar relief in respect of such Person under any law
relating to bankruptcy, insolvency, reorganization, winding-up or composition or
adjustment of debt and such proceeding or case specified in this clause (h)
shall continue undismissed, or an order, judgment or decree approving or
ordering any of the foregoing shall be entered and continue unstayed and (except
in the case of Section 5.19(a)(ii) of the Indenture or Section 4.19(a)(ii) of
the IDB Lease Agreement (or any comparable provision of the Working Capital
Facility)) in effect, for a period of sixty (60) or more days or (i) an order
for relief against such Person shall be entered in any involuntary case under
the Bankruptcy Code.
"Board of Directors" means (a) when used with respect to the Company,
the Manager of the Company and (b) when used with respect to Mobile Energy,
either the board of directors of Mobile Energy or any committee of such board
duly authorized to act for it.
"Board Resolution" means (a) when used with respect to the Company, a
copy of a resolution certified by an Authorized Officer of the Company or the
secretary or assistant secretary of the Company as having been adopted by the
Manager of the Company and to be in full force and effect on the date of such
certification and (b) when used with respect to Mobile Energy, means a copy of a
resolution certified by an Authorized Officer or the secretary or assistant
secretary of Mobile Energy as having been adopted by the Board of Directors of
Mobile Energy and to be in full force and effect on the date of such
certification.
"Boiler Ash Agreement" means the Boiler Ash Disposal Agreement dated as
of December 12, 1994, as amended by the First Amendment thereto dated as of July
13, 1995, between the Pulp Mill Owner and the Company (as assignee of Mobile
Energy).
"Bond Counsel" means Balch & Bingham or other nationally recognized
counsel experienced in matters of municipal law and the tax-exempt status of
obligations under the Code.
"Business Day" means any day other than a Saturday or Sunday or other
day on which banks in New York, New York or Atlanta, Georgia are authorized or
required to be closed.
"Capital Budget" means the capital plan and budget developed by the
Company with respect to the capital improvements to the Energy Complex specified
in the Master Operating Agreement and certain other planned capital expenditures
thereto.
"Capital Budget Subaccount" means the subaccount of the Completion
Account so designated established and created under Section 2.2(c) of the
Intercreditor Agreement.
"Casualty Proceeds" means all insurance proceeds (including title
insurance proceeds) and other amounts actually received on account of an Event
of Loss, including any net interest thereon or gain in respect thereof, other
than (a)
[Intercreditor Agreement]
43
<PAGE>
proceeds of third-party liability insurance (to the extent paid directly from an
insurer or insurers to a third-party) and (b) proceeds of business interruption
insurance and other payments received for interruption of operations. "Casualty
Proceeds" do not include Additional Available Proceeds with respect to such
Event of Loss.
"Closing Date" means the date on which the First Mortgage Bonds and the
Tax-Exempt Bonds are originally issued.
"Coal Supplier" means E.J. Hodder & Associates, Inc., a Tennessee
corporation.
"Coal Supply Agreement" means the Coal Supply Agreement dated as of May
1, 1995 between the Coal Supplier and the Company.
"Code" means, as applicable, the Internal Revenue Code of 1986 and the
rules and regulations promulgated thereunder or the Internal Revenue Code of
1954 and the rules and regulations promulgated thereunder.
"Collateral" means, collectively, all of the collateral mortgaged,
pledged or assigned, or purported to be mortgaged, pledged or assigned, to the
Collateral Agent, the Indenture Trustee or the Tax-Exempt Indenture Trustee (as
the case may be) by the Company or the IDB (as the case may be), in each case
pursuant to the granting and assigning clauses of the applicable Financing
Documents.
"Collateral Agent" means Bankers Trust (Delaware), a Delaware banking
corporation, or any other Person appointed as a substitute or replacement
Collateral Agent under the Intercreditor Agreement.
"Collateral Agent Claims" means all obligations of the Senior Secured
Parties and the Mobile Energy Parties, now or hereafter existing, to pay fees,
costs and expenses to the Collateral Agent pursuant to Section 7.3(f) and
Article VIII of the Intercreditor Agreement.
"Combined Exposure" means, at any time, the sum of (a) the aggregate
principal amount of all Senior Securities Outstanding and (b) the aggregate
principal amount of all outstanding Working Capital Facility Loans made, and the
unutilized Working Capital Facility Commitment, under the Working Capital
Facility.
"Common Services Agreement" means the Common Services Agreement dated
as of December 12, 1994, as amended by the First Amendment thereto dated as of
July 13, 1995, among the Company (as assignee of Mobile Energy), the Pulp Mill
Owner, the Tissue Mill Owner and the Paper Mill Owner.
"Company" means Mobile Energy Services Company, L.L.C., an Alabama
limited liability company.
"Company Request" and "Company Order" mean, respectively, a written
request or order signed in the name of the Company by an Authorized Officer of
the Company and delivered to the Indenture Trustee or the Tax-Exempt Indenture
Trustee (as the case may be).
"Company Step-In Rights" has the meaning specified for "MESC Step-In
Rights" in the Master Operating Agreement.
"Completion Account" means the Account so designated established and
created under Section 2.2(a) of the Intercreditor Agreement.
"Consents to Assignment" means, collectively, (a) the Consents to
Assignment, the Lease Estoppel and the Supplementary Lease Estoppel of Scott
with respect to the Project Contracts to which it is a party, (b) the Consent to
Assignment of the Pulp Mill Owner with respect to the Project Contracts to which
it is a party, (c) the Consent to Assignment of the Tissue Mill Owner with
respect to the Project Contracts to which it is a party, (d) the Consent to
[Intercreditor Agreement]
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Assignment of the Paper Mill Owner with respect to the Project Contracts to
which it is a party, (e) the Consent to Assignment of Southern Electric with
respect to the Project Contracts to which it is a party, (f) the Consent to
Assignment of SCS with respect to the SCS Agreement, (g) any Consent to
Assignment of the Coal Supplier with respect to the Coal Supply Agreement, (h)
the Consent to Assignment of TRT with respect to the Nondisturbance Agreement
(which may be effected pursuant to the Recognition Agreement to which TRT is a
party), (i) the Consent to Assignment of the IDB with respect to the Project
Contracts to which it is a party (which may be effected pursuant to the
Recognition Agreements) and (j) the Consent to Assignment of Ahlstrom Recovery,
Inc. with respect to Purchase Order Number MG-2601.
"Continuing Disclosure Agreement" means the Continuing Disclosure
Agreement dated as of August 1, 1995 among the Mobile Energy Parties and the
Tax-Exempt Indenture Trustee.
"Contract" means (a) any agreement (whether executory or non-executory
and whether a Person entitled to rights thereunder is so entitled directly or as
a third-party beneficiary), including an indenture, lease or license, (b) any
deed or other instrument of conveyance, (c) any certificate of incorporation,
articles of organization or charter and (d) any by-law.
"Corporate Trust Office" means the principal office of the Collateral
Agent, the Indenture Trustee or the Tax-Exempt Indenture Trustee (as the case
may be) at which at any particular time the corporate trust business thereof
shall be administered, which as of the Closing Date is (a) in the case of the
Collateral Agent, Bankers Trust (Delaware), c/o Bankers Trust Company, Four
Albany Street, New York, New York 10006, Attention: Corporate Trust and Agency
Group, (b) in the case of the Indenture Trustee, First Union National Bank of
Georgia, Corporate Trust Department, M/C GA9094, 999 Peachtree Street, N.E.,
Atlanta, Georgia 30309 and (c) in the case of the Tax-Exempt Indenture Trustee,
First Union National Bank of Georgia, Corporate Trust Department, M/C GA9094,
999 Peachtree Street, N.E., Atlanta, Georgia 30309, or such other office as may
be designated by the Collateral Agent, the Indenture Trustee or the Tax-Exempt
Indenture Trustee (as the case may be) to the Mobile Energy Parties and, in the
case of the Collateral Agent, to the other Intercreditor Parties.
"Credit Standard Event" means (a) with respect to any Reserve Account
Letter of Credit on deposit in any Reserve Account Security Account, the
unsecured long-term Debt of the provider of such Reserve Account Letter of
Credit shall not be rated "A" or higher by S&P, "A" or higher by Fitch and "A2"
or higher by Moody's and (b) with respect to any Southern Guaranty on deposit in
any Reserve Account Security Account, (i) the Collateral Agent or the Indenture
Trustee shall have been provided with an Officer's Certificate of Southern
certifying as to the determination that the Southern Credit Standard has not
been satisfied or (ii) Southern shall have failed, or the Company shall have
failed to cause Southern, to provide to the Collateral Agent or the Indenture
Trustee, on or prior to the date that is forty-five (45) days after the end of
each fiscal quarter of Southern, an Officer's Certificate of Southern certifying
as to the determination that the Southern Credit Standard has been satisfied.
"Current Fiscal Quarter" has the meaning specified in the definition of
Maintenance Reserve Account Required Deposit.
"Debt" means, in respect of any Person, (a) indebtedness for borrowed
money or the deferred purchase price of property or services (excluding
obligations under agreements for the purchase price of goods and services in the
normal course of business which are not more than ninety (90) days past due),
(b) obligations as lessee under leases that shall have been or should be, in
accordance with GAAP, recorded as capital leases, (c) obligations (whether
matured or contingent) with respect to any letters of credit issued for the
account of such Person, (d) obligations under direct or indirect guaranties or
other similar contingent liabilities in respect of, and obligations (contingent
or otherwise) to purchase or otherwise acquire, or otherwise assure a creditor
against loss in respect of, indebtedness or obligations of others of the kinds
[Intercreditor Agreement]
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referred to in clause (a), (b) or (c) above and (e) all Debt of another Person
secured by a lien on any property owned by the first Person (whether or not such
Debt has been assumed by such first Person).
"Debt Service Event" means (a) with respect to any Reserve Account
Letter of Credit on deposit in any Reserve Account Security Account, the
authorization of the Collateral Agent, the Indenture Trustee or the Tax-Exempt
Indenture Trustee (as the case may be) to draw upon such Reserve Account Letter
of Credit pursuant to (i) if such Reserve Account Security Account is the
Maintenance Plan Funding Subaccount, clause third of Section 3.5(c) of the
Intercreditor Agreement, (ii) if such Reserve Account Security Account is the
Distribution Account, clause second of Section 3.8(b) of the Intercreditor
Agreement, (iii) if such Reserve Account Security Account is a Debt Service
Reserve Account, clause second of Section 4.5 of the Indenture and (iv) if such
Reserve Account Security Account is a Tax-Exempt Debt Service Reserve Account,
clause second of Section 4.6 of the Tax-Exempt Indenture and (b) with respect to
any Southern Guaranty on deposit in any Reserve Account Security Account, the
authorization of the Collateral Agent or the Indenture Trustee (as the case may
be) to call upon such Southern Guaranty pursuant to (i) if such Reserve Account
Security Account is the Maintenance Plan Funding Subaccount, clause fourth of
Section 3.5(c) of the Intercreditor Agreement, (ii) if such Reserve Account
Security Account is the Distribution Account, clause third of Section 3.8(b) of
the Intercreditor Agreement and (iii) if such Reserve Account Security Account
is a Debt Service Reserve Account, clause third of Section 4.5 of the Indenture.
"Debt Service Reserve Account" means any Account so designated (if any)
established and created under any Series Supplemental Indenture to the Indenture
for the benefit of Holders of Indenture Securities established thereunder.
"Debt Service Reserve Account Required Balance" means, in respect of
any Debt Service Reserve Account, the amount so designated in the Series
Supplemental Indenture to the Indenture establishing such Debt Service Reserve
Account.
"Default Event" means (a) with respect to any Reserve Account Letter of
Credit on deposit in any Reserve Account Security Account, (i) the provider of
such Reserve Account Letter of Credit shall default in its payment obligations
thereunder or (ii) the provider of such Reserve Account Letter of Credit shall
become insolvent and (b) with respect to any Southern Guaranty, (i) Southern
shall fail to perform any of the "Guaranteed Obligations" thereunder as and when
due or (ii) Southern shall become insolvent.
"Designated Southern Subsidiaries" means, for purposes of the
satisfaction of the Southern Credit Standard, all of the Eligible Southern
Subsidiaries other than, as designated by the Company to be excluded for such
purposes, any one or all (including any combination) of the Eligible Southern
Subsidiaries, provided that the aggregate net worth of such Eligible Southern
Subsidiaries so excluded is equal to or less than ten percent (10%) of the
aggregate net worth of all of the Eligible Southern Subsidiaries. For such
purposes, "net worth" means (a) par value of common stock plus (b) paid-in
capital plus (c) premium on preferred stock plus (d) retained earnings minus (e)
accrued and unpaid dividends on, or other amounts due and payable in respect of,
capital stock, in each case, of each of such Eligible Southern Subsidiaries.
"Determination of Taxability" means a final determination by the
Internal Revenue Service or a court of competent jurisdiction in a proceeding in
which the Company has been afforded an opportunity to participate, or, at the
election of the Company in its sole discretion, a determination by the Company
based on an opinion of Bond Counsel, that as a result of any event the interest
payable on any Tax-Exempt Indenture Security (in respect of which, at the time
of original issuance, the Tax-Exempt Indenture Trustee received an opinion of
Bond Counsel to the effect that interest payable on such Tax-Exempt Indenture
Security was not includable for Federal income tax purposes in the gross income
of any owner of such Tax-Exempt Indenture Security (other than an owner who is a
"substantial user" of the Energy Complex or a "related person" within the
meaning of Section 147(a) of the Code)) is includable for Federal income tax
purposes in the gross
[Intercreditor Agreement]
46
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income of any owner of such Tax-Exempt Indenture Security (other than any owner
who is a "substantial user" of the Energy Complex or a "related person" within
the meaning of Section 147(a) of the Code). No such determination by the
Internal Revenue Service shall be considered final unless the Company has been
given written notice and, if it so desires, has been given the opportunity to
contest the same, either directly or in the name of any owner of a Tax-Exempt
Indenture Security and until the conclusion of any appellate review, if sought.
Interest on Tax-Exempt Indenture Securities shall not be deemed includable for
Federal income tax purposes merely by reason of such interest being treated as a
tax preference item for purposes of a Federal alternative minimum tax, loss of
or reduction in a related deduction or other indirect adverse tax consequences.
"Distribution Account" means the Account so designated established and
created under Section 2.2(a) of the Intercreditor Agreement.
"Distribution Date" means any Business Day following an Interest
Payment Date and preceding the Monthly Transfer Date immediately succeeding
such Interest Payment Date, as selected by the Company.
"Easement Deeds" means, collectively, (a) the Easement Deed, dated as
of December 12, 1994 between the Company (as assignee of Mobile Energy) and the
Pulp Mill Owner granting the Company certain easements, (b) the Easement Deed
dated as of December 12, 1994 between the Company (as assignee of Mobile Energy)
and the Pulp Mill Owner granting the Pulp Mill Owner certain easements, (c) the
Easement Deed dated as of December 12, 1994 between the Company (as assignee of
Mobile Energy) and the Tissue Mill Owner granting the Company certain easements,
(d) the Easement Deed dated as of December 12, 1994 between the Company (as
assignee of Mobile Energy) and the Tissue Mill Owner granting the Tissue Mill
Owner certain easements, (e) the Easement Deed dated as of December 12, 1994
between the Company (as assignee of Mobile Energy) and the Paper Mill Owner
granting the Company certain easements and (f) the Easement Deed dated as of
December 12, 1994 between the Company (as assignee of Mobile Energy) and the
Paper Mill Owner granting the Paper Mill Owner certain easements.
"Easements" means, collectively, all easements, licenses, franchises,
rights-of-way and spur track agreements to which the Company is now or hereafter
a party or beneficiary affecting construction on, or the use or operation of, or
constituting a part of, the Site (including the Easement Deeds).
"Eligible Southern Subsidiaries" means, at any time, each of Alabama
Power Company, an Alabama corporation, Georgia Power Company, a Georgia
corporation, Gulf Power Company, a Maine corporation, Mississippi Power Company,
a Mississippi corporation, and Savannah Electric and Power Company, a Georgia
corporation, provided that a majority of the voting securities of such Person is
owned, directly or indirectly, by Southern at such time.
"Eminent Domain Proceeds" means all amounts and proceeds actually
received in respect of any Event of Eminent Domain, including any net interest
thereon or gain in respect thereof. "Eminent Domain Proceeds" do not include
Additional Available Proceeds with respect to such Event of Eminent Domain.
"Energy Complex" has the meaning specified in the Master Operating
Agreement.
"Energy Services Agreements" means, collectively, the Pulp Mill Energy
Services Agreement, the Tissue Mill Energy Services Agreement and the Paper Mill
Energy Services Agreement.
"Environmental Bonds" means, collectively, (a) (i) the IDB's
Environmental Improvement Revenue Bonds (Scott Paper Company Project), Series A
of 1973, (ii) the IDB's Environmental Improvement Revenue Bonds (Scott Paper
Company Project), Series A of 1976 and (iii) the IDB's Environmental Improvement
Revenue Bonds (Scott Paper Company Project), Series A of 1980, in the case of
clauses (i), (ii) and (iii) above, issued under and secured by a Trust Indenture
dated as of April 1, 1973, as supplemented by a First Supplemental Indenture
thereto dated as of
[Intercreditor Agreement]
47
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September 1, 1976 and a Second Supplemental Indenture thereto dated as of
October 1, 1980 between the IDB and AmSouth Bank of Alabama, as trustee, and (b)
the IDB's Industrial Revenue Bonds (Scott Paper Company Project), Series B of
1976 issued under and secured by a Trust Indenture dated as of September 1, 1976
between the IDB and AmSouth Bank of Alabama, as trustee .
"Environmental Indemnity Agreements" means, collectively, (a) the Pulp
Mill Environmental Indemnity Agreement dated as of December 12, 1994, as amended
by the First Amendment thereto dated as of July 13, 1995, between the Company
(as assignee of Mobile Energy) and the Pulp Mill Owner, (b) the Paper Mill
Environmental Indemnity Agreement dated as of December 12, 1994, as amended by
the First Amendment thereto dated as of July 13, 1995, between the Company (as
assignee of Mobile Energy) and the Paper Mill Owner, (c) the Tissue Mill
Environmental Indemnity Agreement dated as of December 12, 1994, as amended by
the First Amendment thereto dated as of July 13, 1995, between the Company (as
assignee of Mobile Energy) and the Tissue Mill Owner and (d) the Scott
Environmental Indemnity Agreement dated as of December 12, 1994, as amended by
the First Amendment thereto dated as of July 13, 1995, between Scott and the
Company (as assignee of Mobile Energy).
"Environmental Requirement" means any Governmental Approvals in effect
from time to time relating to the protection of the environment or otherwise
addressing environmental issues or environmental requirements of or by any
Governmental Authority, or otherwise relating to noise or to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport,
emission, discharge, release or handling of Hazardous Material, including the
Comprehensive Environmental Response Compensation, and Liability Act of 1980
(42 U.S.C. ss. 9601 et seq.), the Hazardous Materials Transportation Act
(49 U.S.C. ss. 1801 et seq.), the Resource Conservation and Recovery Act
(42 U.S.C. ss. 6901 et seq.), the Toxic Substance Control Act (15 U.S.C. ss.
2601 et seq.), the Clean Air Act (42 U.S.C. ss. 7401 et seq.), the Clean Water
Act (33 U.S.C. ss. 1251 et seq.), the Emergency Planning and Community Right to
Know Act (42 U.S.C. ss. 1101 et seq.), the Federal Insecticide, Fungicide and
Rodenticide Act (7 U.S.C. ss. 136 et seq.), the Oil Pollution Act of 1990 (33
U.S.C. ss. 2761), the Occupational Health and Safety Act (29 U.S.C. ss. 641 et
seq.), the Pollution Prevention Act (42 U.S.C. ss. 1201 et seq.), the Safe
Drinking Water Act (42 U.S.C. ss. 300f et seq.), Preservation Development, Etc.
of Coastal Areas (Ala. Code ss. 9-7-1 et seq.), the Alabama Environmental
Management Act (Ala. Code ss. 22-22A-1 et seq.), the Alabama Water Pollution
Control Act (Ala. Code ss. 22-22A-1 et seq.), the Alabama Safe Drinking Water
Act (Ala. Code ss. 22-23-30 et seq.), Water Well Standards (Ala. Code ss. 22-
24-1 et seq.), Water Wastewater Systems and Treatment Plants (Ala. Code ss.
22-25-1 et seq.), Sewage Collection, Treatment, and Disposal Facilities (Ala.
Code ss. 22-26-1 et seq.), Solid Wastes Disposal Act (Ala. Code ss. 22-27-1 et
seq.), the Alabama Air Pollution Control Act of 1971 (Ala. Code ss. 22-28-1 et
seq.), the Hazardous Wastes Management and Minimization Act (Ala. Code ss.
22-30-1 et seq.), the Alabama Hazardous Substance Cleanup Fund (Ala. Code ss.
22-30A-1 et seq.), the Water Pollution Control Authority (Ala. Code ss. 22-34-1
et seq.), the Alabama Underground and Aboveground and Storage Tank Trust Fund
Act (Ala. Code ss. 22-35-1 et seq.), the Alabama Underground Storage Tank and
Wellhead Protection Act of 1988 (Ala. Code ss. 22-36-1 et seq.) and the Alabama
Lead Ban Act of 1988 (Ala. Code ss. 22-37-1 et seq.) and, in each case, any
regulations promulgated thereunder.
"ERISA" means the Employee Retirement Income Security Act of 1974.
"ESA Blockage Event" means, with respect to any Mill Owner or its
respective Energy Services Agreement or its Mill, that:
(a) such Energy Services Agreement or the Master Operating
Agreement has been declared unenforceable by a Governmental Authority
having jurisdiction, unless the Company has delivered to the applicable
Senior Secured Parties and the Collateral Agent an Officer's
Certificate, together with an Independent Engineer Confirmation,
certifying that either (i) such Energy Services Agreement or the Master
Operating Agreement (as the case may be) has been reinstated on
identical and enforceable terms by
[Intercreditor Agreement]
48
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the Company and such Mill Owner, (ii) such declaration of
enforceability has been overruled, reversed or rescinded by such
Governmental Authority or by another Governmental Authority having
final jurisdiction or greater jurisdiction than such first Governmental
Authority or (iii) the Company has satisfied the Restricted Payment
Alternative Agreement Requirements with respect to such Energy Services
Agreement or the Master Operating Agreement (as the case may be);
(b) such Mill Owner has either (i) terminated, or delivered
written notice pursuant to the Master Operating Agreement of its
intention to terminate (which notice has not been rescinded), its
rights and obligations under such Energy Services Agreement or the
Master Operating Agreement in connection with a Mill Closure with
respect to such Mill or (ii) denied that it has any obligations and
substantially ceased performance under such Energy Services Agreement
or the Master Operating Agreement, unless, in either case, the Company
has delivered to the applicable Senior Secured Parties and the
Collateral Agent an Officer's Certificate, together with an Independent
Engineer Confirmation, certifying that either (A) such Energy Services
Agreement or the Master Operating Agreement (as the case may be) has
been reinstated on identical and enforceable terms by the Company and
such Mill Owner or, provided that another Person is reasonably capable
of performing such Mill Owner's obligations under such Energy Services
Agreement or the Master Operating Agreement (as the case may be), by
the Company and such other Person or (B) the Company has satisfied the
Restricted Payment Alternative Agreement Requirements with respect to
such Energy Services Agreement or the Master Operating Agreement (as
the case may be);
(c) a default has occurred and is continuing in respect of such
Mill Owner's obligations under such Energy Services Agreement or the
Master Operating Agreement, unless, if such Energy Services Agreement
or the Master Operating Agreement with respect to such Mill Owner has
been terminated as a result of such default, the Company has delivered
to the applicable Senior Secured Parties and the Collateral Agent an
Officer's Certificate, together with an Independent Engineer
Confirmation, certifying that the Company has satisfied the Restricted
Payment Alternative Agreement Requirements with respect to such Energy
Services Agreement or the Master Operating Agreement (as the case may
be);
(d) based upon the knowledge of either of the Mobile Energy
Parties, it is reasonably likely that, on or prior to the next
Distribution Date, either (i) there will be a Mill Closure with respect
to such Mill or (ii) such Mill Owner will deliver written notice
pursuant to the Master Operating Agreement of such Mill Owner's
intention to terminate its rights and obligations under such Energy
Services Agreement or the Master Operating Agreement, unless, in either
case, if such Energy Services Agreement or the Master Operating
Agreement with respect to such Mill Owner has been terminated as a
result of such Mill Closure, the Company has delivered to the
applicable Senior Secured Parties and the Collateral Agent an Officer's
Certificate, together with an Independent Engineer Confirmation,
certifying that the Company has satisfied the Restricted Payment
Alternative Agreement Requirements with respect to such Energy Services
Agreement or the Master Operating Agreement (as the case may be); or
(e) a Bankruptcy Event has occurred and is continuing in respect
of such Mill Owner, unless (i) the obligations of such Mill Owner under
such Energy Services Agreement and the Master Operating Agreement have
been expressly assumed with the approval of a court of competent
jurisdiction or (ii) if such Energy Services Agreement or the Master
Operating Agreement with respect to such Mill Owner has been rejected
or otherwise terminated, the Company has delivered to the applicable
Senior Secured Parties and the Collateral Agent an Officer's
Certificate, together with an Independent Engineer Confirmation,
certifying that the Company has satisfied the Restricted Payment
Alternative Agreement Requirement with
[Intercreditor Agreement]
49
<PAGE>
respect to such Energy Services Agreement or the Master Operating
Agreement (as the case may be).
"Event of Default" means, so long as there are any Financing
Commitments or any Financing Liabilities outstanding, an "Event of Default"
under the Indenture, an "Event of Default" under the Tax-Exempt Indenture or an
"Event of Default" under the Working Capital Facility.
"Event of Default Alternative Agreement Requirements" means, with
respect to any Project Contract, another Contract entered into by the Company
with one or more Persons in substitution for or replacement of any such Project
Contract, with respect to some or all of the Processing Services or other
services formerly provided by or to the Company thereunder, provided that such
alternative Contract (a) contains substantially equivalent terms and conditions
or, if such terms and conditions are no longer available on a commercially
reasonable basis, the terms and conditions then available on a commercially
reasonable basis, (b) would, after giving effect to such alternative Contract
and based on projections prepared by the Company on a reasonable basis, maintain
a minimum annual Senior Debt Service Coverage Ratio for each Fiscal Year through
the final maturity date of the Outstanding Indenture Securities or the
Outstanding Tax-Exempt Indenture Securities (as the case may be) projected to be
equal to or greater than the lesser of (i) the minimum annual Senior Debt
Service Coverage Ratio projected to have been in effect for such Fiscal Year had
performance under such Project Contract continued and (ii) 1.2 to 1.0 and (c) is
reasonably capable of being performed by the parties thereto. Notwithstanding
the foregoing, such alternative Contract need not satisfy the conditions
described in clauses (a) and (b) above, provided that (A) the Company delivers
to the applicable Senior Secured Parties an Officer's Certificate, together with
an Independent Engineer Confirmation, certifying that the Company has satisfied
the Restricted Payment Alternative Agreement Requirements (other than the
conditions set forth in subclauses (C) and (D) of clause (b)(ii) of the
definition of Restricted Payment Alternative Agreement Requirements with respect
to such alternative Contract) and (B) after giving effect to such alternative
Contract and based on projections prepared by the Company on a reasonable basis,
the average of the annual Senior Debt Service Coverage Ratios through the final
maturity date of the Outstanding Indenture Securities or the Tax-Exempt
Indenture Securities (as the case may be) is projected to be at least 1.2 to
1.0.
"Event of Eminent Domain" means any compulsory transfer or taking, or
transfer under threat of compulsory transfer or taking, of a material part of
the Energy Complex by any Governmental Authority or any Person acting with the
authority thereof for more than six (6) months, unless such transfer or taking
is the subject of a Good Faith Contest.
"Event of Loss" means any physical loss or destruction of, or
destruction to, the Energy Complex, or any other event that causes all or a
material part of the Energy Complex to be rendered unfit for normal use for any
reason whatsoever, including through failure of title.
"Excess Loss Proceeds" means, with respect to any Event of Loss or
Event of Eminent Domain, monies in an amount equal to the excess, if any, of all
of the Loss Proceeds with respect to such Event of Loss or Event of Eminent
Domain (as the case may be) over the total cost of the rebuilding, repair,
restoration or replacement of the Energy Complex or any part thereof that has
been affected by such Event of Loss or Event of Eminent Domain (as the case may
be).
"Exchange Act" means the Securities Exchange Act of 1934.
"Financing Commitment" means any commitment pursuant to the Financing
Documents to provide credit to the Company.
"Financing Documents" means all Contracts evidencing or securing the
Financing Liabilities.
[Intercreditor Agreement]
50
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"Financing Liabilities" means all indebtedness, liabilities and
obligations of the Mobile Energy Parties (including principal, interest, fees,
reimbursement obligations, penalties, indemnities and legal expenses, whether
due to acceleration or otherwise) owing to the Senior Secured Parties (of
whatsoever nature and however evidenced) under or pursuant to (a) the Indenture
(including the Guaranty), (b) the Senior Securities, (c) the IDB Lease
Agreement, (d) the Tax-Exempt Indenture, (e) the Working Capital Facility and
any evidence of indebtedness entered into thereunder and (f) the other Security
Documents, in the case of clause (a) through (f) above, whether direct or
indirect, primary or secondary, fixed or contingent or now or hereafter arising
out of or relating to any such Contract.
"Financing Statements" means Uniform Commercial Code financing
statements filed in connection with the other Security Documents.
"First Mortgage Bonds" means the Indenture Securities issued on the
Closing Date under the first Series Supplemental Indenture to the Indenture.
"Fiscal Quarter" means the period of time beginning at 12:01 a.m. on
the first day of each calendar quarter and ending at midnight on the last day of
such calendar quarter.
"Fiscal Year" means the period of time beginning at 12:01 a.m. on
January 1 of each year and ending at midnight on December 31 of such year.
"Fitch" means Fitch Investors Service, L.P., a New York limited
partnership.
"Fuel Inventory" means fuel inventory of the Energy Complex, in
whatever form, including oil, gas, coal, black liquor, biomass and sludge.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect from time to time.
"GDPIPD" means the Gross Domestic Product Implicit Price Deflator as
published in the United States Department of Commerce, Bureau of Analysis
publication entitled "Survey of Current Business." If the Gross Domestic Product
Implicit Price Deflator ceases to exist or is no longer available, the Company,
with the approval of the Independent Engineer, shall designate a substitute
index that is reasonably similar to the Gross Domestic Product Implicit Price
Deflator.
"GDPIPD Factor" means, with respect to each Fiscal Year, the GDPIPD
most recently published during or prior to such Fiscal Year divided by the
GDPIPD published with respect to December 1994; provided, however, that such
GDPIPD Factor shall not be less than one (1).
"Good Faith Contest" means the contest of an item if (a) such item is
diligently contested in good faith by appropriate proceedings and adequate
reserves or bonding are established in accordance with GAAP with respect to such
item and (b) the failure to pay or comply with such item during the period of
such contest would not result in a Material Adverse Effect.
"Governmental Approvals" means those authorizations, consents,
approvals, waivers, exemptions, variances, registrations, certifications,
permissions, permits and licenses with any Governmental Authority required for
the ownership and operation of the Energy Complex and the performance of a
Person's obligations under the Project Documents.
"Governmental Authority" means any Federal, state, city, county,
municipal, foreign, international, regional or other governmental or regulatory
authority, agency, department, board, body, instrumentality, commission, arbiter
or court.
"Guaranteed Obligations" means all indebtedness, liabilities,
obligations, covenants and duties of, and all terms and conditions to be
observed by, the Company (including in its capacity as a "debtor in possession"
under the
[Intercreditor Agreement]
51
<PAGE>
Bankruptcy Code) due or owing to, or in favor or for the benefit of, the Senior
Secured Parties under the Security Documents or the Working Capital Facility (as
the case may be), in each case (a) whether due or owing to, or in favor or for
the benefit of, the Senior Secured Parties or any other Person that becomes the
Indenture Trustee, the Tax-Exempt Indenture Trustee or the Working Capital
Facility Provider (as the case may be) by reason of any succession or assignment
at any time thereafter and (b) whether or not an allowable claim against the
Company under the Bankruptcy Code, or otherwise enforceable against the Company,
and including, in any event, interest accruing after the filing by or against
the Company of a petition under the Bankruptcy Code; provided, however, that the
satisfaction of the Guaranteed Obligations 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 to the extent such assets are not
commingled with any of Mobile Energy's other assets or any monies or assets of
the Company.
"Guaranty" means the unconditional guaranty by Mobile Energy of the
Guaranteed Obligations included in Article XIV of the Indenture, Article VIII of
the IDB Lease Agreement and Article VIII of the Working Capital Facility (as the
case may be).
"Hazardous Materials" means hazardous wastes, hazardous substances,
hazardous constituents, air contaminants or toxic substances, whether solids,
liquids or gases, including substances defined or otherwise regulated as
"hazardous materials," "regulated substances," "hazardous wastes," "hazardous
substances," "toxic substances," "pollutants," "contaminants," "carcinogens,"
"hazardous air pollutants," "criteria pollutants," "reproductive toxins,"
"radioactive materials," "toxic chemicals," or other similar designations in, or
otherwise subject to regulation under, any Environmental Requirement, including
petroleum hydrocarbons, asbestos-containing materials, urea formaldehyde foam
insulation, polychlorinated biphenyls and radionuclides.
"Holder" means a Person in whose name an Indenture Security or a
Tax-Exempt Indenture Security (as the case may be) is registered in the register
providing for the registration, including upon transfer or exchange, thereof
pursuant to the Indenture or the Tax-Exempt Indenture (as the case may be).
"IDB" means The Industrial Development Board of the City of Mobile,
Alabama.
"IDB Claims" means all obligations of the Mobile Energy Parties, now or
hereafter existing, to pay fees, costs, expenses, indemnification payments or
other amounts to the IDB under the Financing Documents, other than (a) rent
payments under the IDB Lease Agreement and (b) payments in respect of principal
of and premium, if any, and interest on the 1994 Bonds.
"IDB Lease Agreement" means the Amended and Restated Lease and
Agreement dated as of August 1, 1995 among the IDB and the Mobile Energy
Parties.
"IDB Request" and "IDB Order" mean, respectively, a written request or
order signed in the name of the IDB by an Authorized Officer of the IDB and
delivered to the Tax-Exempt Indenture Trustee.
"Income Tax Deficiency" means (a) with respect to the second
Distribution Date during any Fiscal Year, an amount equal to the excess, if any,
of (i) an amount equal to the sum of (A) the combined Federal and State of
Alabama quarterly estimated income tax payments that would have been required to
be paid by all Members during such Fiscal Year prior to such Distribution Date
and (B) one-half of the amounts estimated to be required to be paid for County
and City of Mobile, Alabama income taxes in respect of such Fiscal Year, if any,
all calculated, solely for this purpose, as if such Members collectively were a
single "stand-alone" domestic Alabama corporation for purposes of Federal, state
and local taxes that would not (1) be a member of a consolidated, affiliated,
combined, unitary or other tax group, (2) be a party to any tax sharing
arrangements with any other Person and (3) have income, loss or credits
[Intercreditor Agreement]
52
<PAGE>
(including loss and credit carryovers) available to it that would not be
attributable to any ownership interest in the Company over (ii) the amount of
distributions, if any, from the Distribution Account and the Subordinated Fee
Account made on the first Distribution Date during such Fiscal Year in excess of
the amount of distributions, if any, that would have been calculated by clause
(b) below with respect to such Distribution Date and (b) with respect to the
first Distribution Date during any Fiscal Year, an amount equal to the excess,
if any, of (i) an amount equal to the estimate, as of such Distribution Date, of
the combined Federal, State of Alabama, and County and City of Mobile, Alabama
income taxes that relate to the immediately preceding Fiscal Year of all
Members, all calculated solely for this purpose, as if such Members collectively
were a single "stand-alone" domestic Alabama corporation for purposes of
Federal, state and local taxes that would not (A) be a member of a consolidated,
affiliated, combined, unitary or other tax group, (B) be a party to any tax
sharing arrangements with any other Person and (C) have income, loss or credits
(including loss and credit carryovers) available to it that would not be
attributable to any ownership interest in the Company over (ii) the amount of
distributions, if any, from the Distribution Account and the Subordinated Fee
Account made on the second Distribution Date of such prior Fiscal Year.
"Indenture" means the Trust Indenture dated as of August 1, 1995 among
the Mobile Energy Parties and the Indenture Trustee.
"Indenture Accounts" means, with respect to the Indenture Securities of
any series, the Indenture Securities Account and each Debt Service Reserve
Account (if any) established for the benefit of Holders of the Indenture
Securities of such series.
"Indenture Distribution Amount" means, in respect of any Excess Loss
Proceeds with respect to an Event of Loss or Event of Eminent Domain to be
applied pursuant to Section 6.2(b) of the Intercreditor Agreement, an amount
equal to the Indenture's Percentage Share of (a) such Excess Loss Proceeds and
(b) the Redistributed Proceeds with respect to such Excess Loss Proceeds.
"Indenture Securities" means all Debt issued pursuant to the Indenture.
"Indenture Securities Account" means the Account so designated
established and created under Section 4.1 of the Indenture.
"Indenture Securities Collateral" means, collectively, (a) all of the
collateral mortgaged, pledged or assigned, or purported to be mortgaged, pledged
or assigned, to the Indenture Trustee by the Company pursuant to the granting
and assigning clauses of the Indenture and (b) the Shared Collateral.
"Indenture Securities Interest Subaccount" means the subaccount of the
Indenture Securities Account so designated established and created under Section
4.1 of the Indenture.
"Indenture Securities Principal Subaccount" means the subaccount of the
Indenture Securities Account so designated established and created under Section
4.1 of the Indenture.
"Indenture Securities Redemption Subaccount" means the subaccount of
the Indenture Securities Account so designated established and created under
Section 4.1 of the Indenture.
"Indenture Trustee" means First Union National Bank of Georgia, a
national banking association organized and existing under the laws of the United
States of America.
"Independent Engineer" means Stone & Webster Engineering Corporation or
another nationally recognized consulting or engineering firm appointed
Independent Engineer pursuant to the terms of the Intercreditor Agreement.
[Intercreditor Agreement]
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"Independent Engineer Agreement" means the Independent Engineer
Agreement dated as of August 1, 1995 between the Company and the Independent
Engineer or any other similar Contract among such Persons.
"Independent Engineer Confirmation" means a certificate signed by an
authorized representative of the Independent Engineer confirming the
reasonableness of statements and projections contained in certain Officer's
Certificates delivered to the applicable Senior Secured Parties or the
Collateral Agent under the Financing Documents, which confirmation may not be
unreasonably withheld, conditioned or delayed.
"Independent Insurance Advisor" means Sedgwick James or another
nationally recognized insurance advisory firm appointed as insurance advisor
under the Indenture and the Tax-Exempt Indenture by the Collateral Agent.
"Intercreditor Agreement" means the Intercreditor and Collateral Agency
Agreement dated as of August 1, 1995 among the Senior Secured Parties, the
Collateral Agent, the IDB and the Mobile Energy Parties.
"Intercreditor Agreement Accounts" means, collectively, the Completion
Account, the Revenue Account, the Mill Owner Reimbursement Account, the Working
Capital Facility Account, the Operating Account, the Maintenance Reserve
Account, the Loss Proceeds Account, the Subordinated Debt Account, the
Subordinated Fee Account and the Distribution Account.
"Intercreditor Parties" means, collectively, the Senior Secured
Parties, the IDB, the Mobile Energy Parties, any Subordinated Debt Provider and
any other Person party to the Intercreditor Agreement (other than the Collateral
Agent).
"Interest Payment Date" means each January 1 and July 1 of each year,
commencing January 1, 1996.
"Investment Grade" means a rating in one of the four highest categories
(without regard to subcategories within such rating categories) by a Rating
Agency.
"Law" means any constitution, treaty, statute, code, ordinance,
regulation, order, decree, writ or judicial or arbitral decision.
"Lease" means the Lease Agreement dated as of December 12, 1994, as
amended by the First Amendment thereto dated as of July, 13, 1995, between
Scott, as lessor, and the Company (as assignee of Mobile Energy), as lessee.
"Lease Documents" means, collectively, the IDB Lease Agreement, the
Tax- Exempt Indenture (including any Series Supplemental Indenture) and (to the
extent relating to, or securing, the Tax-Exempt Indenture Securities) the other
Financing Documents.
"Lease Indemnity" means the Letter Agreement dated August 1, 1995 by
the Mobile Energy Parties in favor of Scott, providing for the indemnification
of Scott with respect to matters arising under the Utilities Land Sublease dated
as of December 1, 1983, as amended, between Scott and the IDB.
"Leased Land" means the land underlying the components of the
Tax-Exempt Project marked on Exhibit A to the IDB Lease Agreement.
"Lenders" has the meaning specified in the Working Capital Facility.
"Lien" means any lien, claim, security interest, mortgage, trust
arrangement, judgment, pledge, option, charge, easement, encumbrance, title
retention, conditional sales agreement, encroachment, right-of-way, building or
use restriction, preferential right or any other security agreement, arrangement
or similar right in favor of any Person, whether voluntarily incurred or arising
by operation of law, and includes any agreement to give any of the foregoing in
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the future, and any contingent sale or other title retention agreement or lease
in the nature thereof.
"Loss Proceeds" means, as applicable, Casualty Proceeds or Eminent
Domain Proceeds.
"Loss Proceeds Account" means the Account so designated established and
created under Section 2.2(a) of the Intercreditor Agreement.
"Maintenance Excess Funding Subaccount" means the subaccount of the
Maintenance Reserve Account so designated established and created under Section
2.2(b) of the Intercreditor Agreement.
"Maintenance Expenditures" means all costs and expenses of operating
and maintaining the Energy Complex and, when the Company is exercising the
Company Step-In Rights, the Pulp Mill Step-In Equipment, other than (a) fuel
costs and expenses, (b) labor and employee expenses, including fringe benefits
and labor relations expense, (c) payments for insurance premiums and like
insurance related expenses required or otherwise maintained under any Project
Document, (d) costs and expenses of consumable items such as process or cleaning
chemicals and lubricants, (e) equipment rental, small tools and vehicle
maintenance expenses, (f) costs and expenses associated with legal, accounting
and other office and administrative functions, (g) permitting fees, (h) costs
and expenses of safety supplies, office supplies and other office expenses, (i)
property taxes and payments made in lieu of taxes, (j) computer maintenance
expenses, (k) any amounts payable for services rendered under the Common
Services Agreement, (l) ash disposal costs, (m) liquidated damages payable to
the Mill Owners under the Master Operating Agreement, (n) amounts payable to the
Mill Owners in connection with the exercise of Mill Owner Step-In Rights, (o)
any amounts required to be rebated to the United States government pursuant to
Section 148 of the Code in connection with any series of the Tax-Exempt
Indenture Securities (to the extent not already provided for in the Tax-Exempt
Indenture) and (p) payments to the IDB (including IDB Claims and payments
required to be made by the Company with respect to the 1994 Bonds), in the case
of clauses (a) through (p) above, to the extent the foregoing costs or expenses
are not customarily treated as capital expenditures.
"Maintenance Plan" means the maintenance plan and budget for the Energy
Complex, as the same may be amended, restated, supplemented or otherwise
modified from time to time and as more particularly described in Section 5.12 of
the Indenture or Section 4.12 of the IDB Lease Agreement (or any comparable
provision of the Working Capital Facility) (as the case may be).
"Maintenance Plan Funding Subaccount" means the subaccount of the
Maintenance Reserve Account so designated established and created under Section
2.2(b) of the Intercreditor Agreement.
"Maintenance Reserve Account" means the Account so designated
established and created under Section 2.2(a) of the Intercreditor Agreement.
"Maintenance Reserve Account Balance" means, with respect to the
Current Fiscal Quarter, the sum of (a) the monies on deposit in the Maintenance
Reserve Account, (b) amounts available to be drawn or called upon under any
Reserve Account Security deposited in the Maintenance Plan Funding Subaccount
and (c) the monies on deposit in, or otherwise credited to (by means of a
guaranty, capital infusion agreement or otherwise), the Mill Owner Maintenance
Reserve Account, in the case of clauses (a), (b) and (c) above, at the beginning
of the Current Fiscal Quarter.
"Maintenance Reserve Account Required Deposit" means, with respect to
any Fiscal Quarter during any Fiscal Year (the "Current Fiscal Quarter"), one or
more deposits into the Maintenance Reserve Account on Monthly Transfer Dates
occurring during the Current Fiscal Quarter in an aggregate amount equal to the
excess of the sum of paragraphs (a), (b) and (c) below over the Maintenance
Reserve Account Balance with respect to the Current Fiscal Quarter:
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(a) the amount of Maintenance Reserve Account Required Deposits
with respect to each Fiscal Quarter preceding the Current Fiscal
Quarter that were required to be deposited into the Maintenance Reserve
Account during each such Fiscal Quarter but were not, and have not been
since, so deposited;
(b) the aggregate amount of any withdrawals from the Maintenance
Reserve Account and the Mill Owner Maintenance Reserve Account during
each Fiscal Quarter preceding the Current Fiscal Quarter that were in
excess of the aggregate projected Maintenance Expenditures for each
such Fiscal Quarter (as specified in the Maintenance Plan) but were
not, and have not been since, redeposited in the Maintenance Reserve
Account; and
(c) the greatest of:
(i) if the Current Fiscal Quarter is the first
Fiscal Quarter of such Fiscal Year, the amount obtained by
dividing the aggregate of the projected Maintenance
Expenditures for the Current Fiscal Quarter and the
immediately succeeding sixteen (16) Fiscal Quarters (in each
case as specified in the Maintenance Plan) by sixteen (16);
(ii) if the Current Fiscal Quarter is the first or
second Fiscal Quarter of such Fiscal Year, the amount obtained
by dividing the aggregate of the projected Maintenance
Expenditures for the Current Fiscal Quarter and the
immediately succeeding fifteen (15) Fiscal Quarters (in each
case as specified in the Maintenance Plan) by fifteen (15);
(iii) if the Current Fiscal Quarter is the first,
second or third Fiscal Quarter of such Fiscal Year, the amount
obtained by dividing the aggregate of the projected
Maintenance Expenditures for the Current Fiscal Quarter and
the immediately succeeding fourteen (14) Fiscal Quarters (in
each case as specified in the Maintenance Plan) by fourteen
(14); and
(iv) if the Current Fiscal Quarter is the first,
second, third or fourth Fiscal Quarter of such Fiscal Year,
the greatest of the amount obtained by dividing the aggregate
of the projected Maintenance Expenditures for any period
consisting of the Current Fiscal Quarter and any number of
consecutive Fiscal Quarters from one (1) to thirteen (13)
immediately succeeding the Current Fiscal Quarter (in each
case as specified in the Maintenance Plan) by such number of
consecutive Fiscal Quarters.
"Manager" means Mobile Energy and any Person appointed as an
additional, substitute or replacement manager of the Company pursuant to the
terms of the Articles of Organization.
"Master Operating Agreement" means the Amended and Restated Master
Operating Agreement dated as of July 13, 1995 among the Company (as assignee of
Mobile Energy), Scott, the Pulp Mill Owner, the Tissue Mill Owner and the Paper
Mill Owner.
"Material Adverse Effect" means (a) a change in the financial condition
of either of the Mobile Energy Parties or the Energy Complex that would
reasonably be expected to materially and adversely affect the ability of either
of the Mobile Energy Parties to pay principal of and interest on the Senior Debt
as and when required or (b) any event or occurrence of whatever nature that
would materially and adversely affect (i) the ability of either of the Mobile
Energy Parties to perform its obligations under the Project Documents or (ii)
the Lien of the Security Documents.
"Member" means any Person owning a membership interest in the Company.
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"Mill Closure" means (a) a public announcement by a Mill Owner that it
will close its respective Mill for a period of at least one (1) year or that it
will reduce production of pulp, paper or tissue (as applicable) at such Mill
(permanently or for a period of at least two (2) years) to less than ten percent
(10%) of 1994 production levels or (b) the occurrence of a two (2) year period
during which, for any reason other than the occurrence of a Force Majeure Event
(as defined in the Master Operating Agreement), such Mill Owner's production of
pulp, paper or tissue (as applicable) at such Mill is less than ten percent
(10%) of 1994 production levels.
"Mill Owner Maintenance Reserve Account" means the account so
designated established and created pursuant to the Master Operating Agreement
for the sole benefit of the Mill Owners.
"Mill Owner Maintenance Reserve Account Agreement" means the Mill Owner
Maintenance Reserve Account Agreement dated as of August 1, 1995 among Southern,
the Company and the Mill Owners.
"Mill Owner Reimbursement Account" means the Account so designated
established and created under Section 2.2(a) of the Intercreditor Agreement.
"Mill Owner Step-In Rights" has the meaning specified in the Master
Operating Agreement.
"Mill Owners" means, collectively, the Pulp Mill Owner, the Tissue Mill
Owner and the Paper Mill Owner.
"Mills" means, collectively, the Pulp Mill, the Tissue Mill and the
Paper Mill.
"Mixed-Use Bonds" means, collectively, the IDB's Industrial Development
Revenue Bonds (Scott Paper Company Project), Series A and the IDB's Industrial
Development Revenue Bonds (Scott Paper Company Project), Series B, in each case
issued under and secured by a Trust Indenture dated as of December 1, 1984, as
supplemented by a First Supplemental Indenture thereto dated as of June 1, 1985,
between the IDB and AmSouth Bank of Alabama, as trustee.
"Mobile Energy" means Mobile Energy Services Holdings, Inc., an Alabama
corporation.
"Mobile Energy Parties" means, collectively, the Company and Mobile
Energy.
"Mobile Energy Request" or "Mobile Energy Order" means, respectively, a
written request or order signed in the name of Mobile Energy by an Authorized
Officer of Mobile Energy and delivered to the Indenture Trustee or the
Tax-Exempt Indenture Trustee (as the case may be).
"Mobile Facility" means the integrated pulp, paper and tissue
manufacturing facility located on a 730-acre site along the Mobile River and the
Chickasaw Creek in Mobile, Alabama, comprised of the Mills and the Energy
Complex.
"Monthly Transfer Date" means the last Business Day of each month of
each Fiscal Year, commencing with the first such day occurring after the Closing
Date.
"Moody's" means Moody's Investors Service, Inc., a Delaware corporation.
"Mortgage" means the Leasehold Mortgage, Assignment of Leases, Rents,
Issues and Profits and Security Agreement and Fixture Filing dated as of August
1, 1995 among the Company, the IDB and the Mortgagee.
"Mortgagee" means Bankers Trust (Delaware), or any other Person
appointed as a substitute or replacement Mortgagee under the Mortgage.
"1983 Bonds" means the IDB's Exempt Facilities Revenue Bonds (Scott
Paper Company Project), 1983 Series B, issued under and secured by a Trust
Indenture
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dated as of December 1, 1983 between the IDB and BankAmerica Trust Company of
New York, as trustee.
"1984 Bonds" means the IDB's Variable Rate Demand Solid Waste Revenue
Refunding Bonds (Scott Paper Company Project) Series 1984 A, B, C, D and E
issued under and secured by the 1984 Indenture.
"1984 Indenture" means the Trust Indenture dated as of December 1,
1984, as supplemented by the First Supplemental Indenture thereto dated as of
January 1, 1985 and the Second Supplemental Indenture thereto dated as of August
1, 1995, between the IDB and Chemical Bank, as trustee.
"1984 Lease" means the Lease and Agreement dated December 1, 1984, as
amended by Amendment No. 1 thereto dated as of November 8, 1994 and Amendment
No. 2 thereto dated as of December 9, 1994, between the IDB and the Company (as
assignee of Mobile Energy (as assignee of Scott)).
"1994 Bond Payment Date" means each June 1 and December 1 of each year,
commencing December 1, 1995.
"1994 Bond Trustee" means Bankers Trust (Delaware), in its capacity as
trustee under the 1994 Indenture.
"1994 Bonds" means the IDB's Industrial Development Revenue Bonds
(Scott Paper Recovery Boiler Project) 1994 Series A. For all purposes of the
Financing Documents, (a) payments in respect of the principal of and premium, if
any, and interest on the 1994 Bonds shall be treated as neither Operation and
Maintenance Costs nor Senior Debt Service Requirements (or any other debt
service) and (b) receipts (or deemed receipts) in respect of the 1994 Bonds
shall not be treated as Revenues.
"1994 Indenture" means the Trust Indenture dated as of December 1, 1994
between the IDB and the 1994 Bond Trustee.
"1995 Bonds" has the meaning specified in Section 2.17(a) of the
Tax-Exempt Indenture, which means the Tax-Exempt Bonds.
"Non-Affiliate Subordinated Debt" means any unsecured loan or loans
from any Person that is not an Affiliate of the Company pursuant to a
Subordinated Loan Agreement, the amounts necessary for repayment of which have
been included in the Annual Budget approved by the Collateral Agent and the
Independent Engineer.
"Nondisturbance Agreement" means the Estoppel and Nondisturbance
Agreement dated as of December 12, 1994 between TRT and the Company (as assignee
of Mobile Energy).
"Officer's Certificate" means a certificate that has been signed by an
Authorized Officer of either of the Mobile Energy Parties or of Southern (as the
case may be).
"O&M Agreement" means the Facility Operations and Maintenance Agreement
dated as of December 12, 1994 between the Company (as assignee of Mobile Energy)
and the Operator.
"Operating Account" means the Account so designated established and
created under Section 2.2(a) of the Intercreditor Agreement.
"Operating Agreement" means the Operating Agreement of the Company
dated as of July 13, 1995, as amended by the First Amendment thereto dated as of
July 13, 1995, among the Members.
"Operation and Maintenance Costs" means all costs and expenses of
operating and maintaining the Energy Complex and, when the Company is exercising
the Company Step-In Rights, the Pulp Mill Step-In Equipment, including and
together
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with (a) Subordinated Fees, (b) Maintenance Expenditures and (c) any such costs
and expenses specified in clauses (a) through (p) of the definition of
Maintenance Expenditures (other than (i) rent payments under the IDB Lease
Agreement and (ii) payments of principal of and premium, if any, and interest on
the 1994 Bonds).
"Operator" means Southern Electric, in its capacity as operator under
the O&M Agreement.
"Opinion of Counsel" means a written opinion of counsel for any Person
either expressly referred to in any Financing Document to which the Collateral
Agent or any of the Senior Secured Parties is a party or otherwise satisfactory
to the Collateral Agent or such Senior Secured Party (which may include counsel
for either of the Mobile Energy Parties, whether or not such counsel is an
employee of either or both of them).
"Optional Modifications" means all modifications to the Energy Complex
that are not Required Modifications.
"Optional Modifications Subaccount" means the subaccount of the
Completion Account so designated established and created under Section 2.2(c) of
the Intercreditor Agreement.
"Outstanding" means, when used with respect to any of the Senior
Securities (however referenced in any Financing Document), as of the date of
determination, all such Senior Securities theretofore authenticated and
delivered under the Indenture or the Tax-Exempt Indenture (as the case may be),
except:
(a) such Senior Securities theretofore canceled by the Indenture
Trustee or the Tax-Exempt Indenture Trustee (as the case may be) or
delivered to either such Trustee for cancellation;
(b) such Senior Securities or portions thereof deemed to have
been paid within the meaning of, in the case of the Indenture, Section
12.1 thereof and, in the case of the Tax-Exempt Indenture, Section 12.1
thereof (as the case may be); and
(c) such Senior Securities that have been exchanged for other
Senior Securities or Senior Securities in lieu of which other Senior
Securities have been authenticated and delivered pursuant to the
Indenture or the Tax-Exempt Indenture (as the case may be) unless held
by a Holder in whose hands such Senior Securities constitute valid
obligations of the Company;
provided, however, that in determining whether the Holders of the requisite
principal amount of Senior Securities (however referenced in any Financing
Document) Outstanding have given any request, demand, authorization, direction,
notice, consent or waiver under the Indenture or the Tax-Exempt Indenture (as
the case may be) or whether or not a quorum is present at a meeting of Holders
of such Senior Securities, such Senior Securities owned by either of the Mobile
Energy Parties (or any Affiliate thereof) shall be disregarded and deemed not to
be Outstanding, except that, in determining whether or not the Indenture Trustee
or the Tax-Exempt Indenture Trustee (as the case may be) shall be protected in
relying upon any such request, demand, authorization, direction, notice, consent
or waiver or upon any such determination as to presence of a quorum, only such
Senior Securities that a Responsible Officer of the Indenture Trustee or the
Tax- Exempt Indenture Trustee (as the case may be) knows to be so owned shall be
so disregarded. Any such Senior Securities so owned that have been pledged in
good faith may be regarded as Outstanding if the pledgee establishes to the
satisfaction of the Indenture Trustee or the Tax-Exempt Indenture Trustee (as
the case may be) such pledgee's right so to act with respect to such Senior
Securities and that such pledgee is not a Mobile Energy Party (or any Affiliate
thereof).
[Intercreditor Agreement]
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"Paper Mill" means the paper mill located at the Mobile Facility,
which as of the Closing Date is owned by S.D. Warren.
"Paper Mill Energy Services Agreement" means the Paper Mill Energy
Services Agreement dated as of December 12, 1994, as amended by the First
Amendment thereto dated July 13, 1995, between the Paper Mill Owner and the
Company (as assignee of Mobile Energy).
"Paper Mill Owner" means S.D. Warren, in its capacity as owner of the
Paper Mill.
"Paying Agent" means any Person acting as Paying Agent pursuant to, in
the case of the Indenture, Section 9.14(b) thereof and, in the case of the
Tax-Exempt Indenture, Section 9.13(b) thereof.
"Percentage Share" means an amount (expressed as a percentage) equal
to:
(a) with respect to the Working Capital Facility, (i) the
Working Capital Facility Commitment in effect immediately prior to any
deposit into the Working Capital Facility Account of any Excess Loss
Proceeds with respect to an Event of Loss or Event of Eminent Domain
pursuant to Section 6.2(b)(i) of the Intercreditor Agreement divided by
(ii) the Combined Exposure immediately prior to such deposit;
(b) with respect to the Indenture, (i) the principal amount of
the Indenture Securities Outstanding immediately prior to any transfer
to the Indenture Trustee for deposit into the Indenture Securities
Account of any Excess Loss Proceeds with respect to an Event of Loss or
Event of Eminent Domain pursuant to Section 6.2(b)(ii) of the
Intercreditor Agreement divided by (ii) in the case of Excess Loss
Proceeds, the Combined Exposure and, in the case of Redistributed
Proceeds, the aggregate principal amount of the Senior Securities
Outstanding, in each case immediately prior to such transfer; and
(c) with respect to the Tax-Exempt Indenture, (i) the
principal amount of the Tax-Exempt Indenture Securities Outstanding
immediately prior to any transfer to the Tax-Exempt Indenture Trustee
for deposit into the Tax-Exempt Indenture Securities Account of any
Excess Loss Proceeds with respect to an Event of Loss or Event of
Eminent Domain pursuant to Section 6.2(b)(iii) of the Intercreditor
Agreement divided by (ii) in the case of Excess Loss Proceeds, the
Combined Exposure and, in the case of Redistributed Proceeds, the
aggregate principal amount of the Senior Securities Outstanding, in
each case immediately prior to such transfer.
"Permitted Indebtedness" means (a) in the case of the Company: (i) the
First Mortgage Bonds; (ii) Debt incurred under a Working Capital Facility having
a Working Capital Facility Commitment not to exceed $15,000,000 (multiplied by
the Working Capital Escalation Factor in effect at any given time, provided (and
the Working Capital Facility shall contain provisions to such effect) that (A)
no more than $5,000,000 (multiplied by the Working Capital Escalation Factor in
effect at any given time) of such Debt may be scheduled to mature during any
calendar month, (B) any Working Capital Facility Loan advanced thereunder shall
mature no later than ninety-three (93) days from the date such Working Capital
Facility Loan was first advanced, (C) the Company shall be required to repay all
amounts advanced thereunder so that no amounts are outstanding once during each
Fiscal Year (other than the Fiscal Year ending December 31, 1995) for a period
of five (5) consecutive days and (D) the Working Capital Facility Provider
thereunder shall become a party to the Intercreditor Agreement; (iii) the
Tax-Exempt Bonds; (iv) reimbursement obligations in respect of letters of credit
(if any) and other financial obligations arising under the Project Contracts and
obligations arising under the Lease Indemnity; (v) purchase money obligations
incurred to finance discrete items of equipment not comprising an integral part
of the Energy Complex that extend only to the equipment being financed and that
do not in the aggregate have annual debt service or lease obligations exceeding
$2,000,000 (multiplied by the GDPIPD Factor in effect at the time such
[Intercreditor Agreement]
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obligations were incurred); (vi) trade accounts payable (other than for borrowed
money) arising, and accrued expenses incurred, in the ordinary course of
business so long as such trade accounts payable are payable within ninety (90)
days of the date the respective goods are delivered or the respective services
are rendered; (vii) obligations in respect of surety bonds or similar
instruments in an aggregate amount not exceeding $10,000,000 (multiplied by the
GDPIPD Factor in effect at the time such obligations were incurred) at any one
time outstanding; (viii) Affiliate Subordinated Debt; (ix) Replacement Debt
permitted to be issued pursuant to the terms of the Financing Documents; (x)
Debt permitted to be issued pursuant to the terms of the Financing Documents for
Required Modifications and Optional Modifications; (xi) Non-Affiliate
Subordinated Debt (including any Non- Affiliate Subordinated Debt permitted by
clause (x) above) in an aggregate principal amount not to exceed $75,000,000
(multiplied by the GDPIPD Factor in effect at the time such Debt was incurred)
permitted to be issued pursuant to the terms of the Financing Documents; (xii)
Refunding Debt permitted to be issued pursuant to the terms of the Financing
Documents; and (xiii) the Company's obligations in respect of the 1994 Bonds,
the Mixed-Use Bonds, the Environmental Bonds and the Refunding Letter of Credit;
and (b) in the case of Mobile Energy, the Guaranty.
"Permitted Investments" means investments in securities that are: (a)
direct obligations of the United States of America or of any agency thereof; (b)
obligations fully guaranteed by the United States of America or any agency
thereof; (c) time deposits (which may be represented by certificates of deposit)
issued by commercial banks organized under the laws of the United States of
America or of any political subdivision thereof or under the laws of Canada,
Japan, Switzerland or any country that is a member of the European Union having
a combined capital and surplus of at least $500,000,000 and having long-term
unsecured Debt having a rating at least equal to (i) the highest rating assigned
to the Outstanding Indenture Securities or the Tax-Exempt Indenture Securities
(as the case may be) by at least two of the Rating Agencies or (ii) "B" by
Thompson Bankwatch, Inc. (in either case provided that such investments shall
not be comprised of more than $30,000,000 in principal amount at any given time
from any one such bank); (d) open market commercial paper of any corporation
incorporated or doing business under the laws of the United States of America or
of any political subdivision thereof then rated at least A-1/P-1 (or an
equivalent thereof) by at least two of the Rating Agencies (provided that such
investments shall not be comprised of more than $30,000,000 in principal amount
at any given time from any one such corporation); (e) obligations issued or
guaranteed by, and any other obligations the interest on which is excluded from
income for Federal income tax purposes issued by, any state of the United States
of America or the District of Columbia or the Commonwealth of Puerto Rico or any
political subdivision, agency, authority or instrumentality thereof, which
issuer or guarantor has (i) a short-term Debt rating which is (on the date of
acquisition thereof) A-1/P-1 (or an equivalent thereof) or better and (ii) a
long-term Debt rating that is (on the date of acquisition thereof) "A" or
better, in each case by at least two of the Rating Agencies (provided that such
investments shall not be comprised of more than $30,000,000 in principal amount
at any given time from any one such issuer or guarantor); (f) guaranteed
investment contracts of any financial institution organized under the laws of
the United States of America or any state thereof or under the laws of Canada,
Japan, Switzerland or any country that is a member of the European Union, which
financial institution has assets of at least $5 billion in the aggregate and has
a long term Debt rating that is (on the date of acquisition thereof) "A" or
better by at least two of the Rating Agencies (provided that such investments
shall not be comprised of more than $30,000,000 in principal amount at any given
time from any one such institution); (g) investment contracts of any financial
institution either (i) (A) fully secured by direct obligations of the United
States, (B) obligations of a Person controlled or supervised by and acting as an
agency or instrumentality of the United States or (C) securities or receipts
evidencing ownership interests in obligations or specified portions thereof
described in clause (A) or (B) above, in each case guaranteed as a full faith
and credit obligation of the United States, having a market value at least equal
to 102% of the amount deposited thereunder and possession of which obligation is
held under arrangements satisfactory to the Collateral Agent, the Indenture
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Trustee or the Tax-Exempt Indenture Trustee (as the case may be) or (ii) with
long-term Debt ratings of "A" or higher and short-term ratings in one of the
highest two major categories by any of the Rating Agencies; (h) a contract or
investment agreement with a provider or guarantor (i) which provider or
guarantor is rated at least "A" or equivalent by each of the Rating Agencies
(provided that if a guarantor is party to the rating, the guaranty is
unconditional and is confirmed in writing prior to any assignment by the
provider to another subsidiary of such guarantor), (ii) providing that monies
invested shall be payable to the Indenture Trustee or the Tax-Exempt Indenture
Trustee (as the case may be) (except to the extent the monies invested
constitute Shared Collateral, which shall be payable to the Collateral Agent)
without condition (other than notice) and without breakage fee or other penalty,
upon not more than two (2) Business Days' notice for application when and as
required or permitted under the Indenture, the Intercreditor Agreement or the
Tax-Exempt Indenture (as applicable), (iii) stating that such contract or
agreement is unconditional, expressly disclaiming any right of setoff and
providing for immediate termination in the event of insolvency of the provider
and termination upon demand of the Indenture Trustee or the Tax-Exempt Indenture
Trustee (as the case may be) (except to the extent the monies invested
constitute Shared Collateral, which shall provide for termination upon demand of
the Collateral Agent) (which demand shall only be made at the direction of the
Company) after any payment or other covenant default by the provider and (iv)
the terms and provisions of which are in form and substance satisfactory to the
Collateral Agent, the Indenture Trustee or the Tax-Exempt Indenture Trustee (as
the case may be); and (i) investments in money market funds registered under the
Investment Company Act of 1940 then rated in the highest category by S&P and
Moody's.
"Permitted Liens" means: (a) Liens specifically created, required or
permitted by the Indenture, the Tax-Exempt Indenture or the IDB Lease Agreement;
(b) the Liens created, or purported to be created, on the Collateral pursuant to
the Security Documents; (c) Liens for taxes that are either not yet due, are due
but payable without penalty or are the subject of a Good Faith Contest; (d) any
exceptions to title that are set forth on Schedule B--Section 2 of the title
insurance policy delivered to the Collateral Agent on the Closing Date (to the
extent that such exceptions have not been released or subordinated prior to the
Closing Date); (e) such minor defects, easements, rights of way, restrictions,
irregularities, encumbrances and clouds on title and statutory liens that do not
materially impair the property affected thereby and that do not individually or
in the aggregate materially impair the value of the security interests granted
under the Financing Documents; (f) the easements and other rights in favor of
third-parties contained in the Project Contracts as of the Closing Date; (g)
deposits or pledges to secure statutory obligations or appeals, release of
attachments, stays of execution or injunction, performance of bids, tenders,
contracts (other than for the repayment of borrowed money) or leases, or for
purposes of like general nature in the ordinary course of business; (h) Liens in
connection with worker's compensation, unemployment insurance or other social
security or pension obligations; (i) legal or equitable encumbrances deemed to
exist by reason of the existence of any litigation or other legal proceeding if
the same are the subject of a Good Faith Contest (excluding any attachment prior
to judgment, judgment lien or attachment in aid of execution on a judgment); (j)
mechanic's, workmen's, materialmen's, construction or other like Liens arising
in the ordinary course of business or incident to the construction or
improvement of any property in respect of obligations that are not yet due or
that are the subject of a Good Faith Contest; (k) Liens securing purchase money
obligations that constitute Permitted Indebtedness; (l) Liens in favor of the
Mill Owners on the Mill Owner Maintenance Reserve Account, including monies on
deposit therein or otherwise credited thereto (in accordance with the Mill Owner
Maintenance Reserve Account Agreement) not exceeding $2,000,000, to the extent
arising under the Master Operating Agreement or the Mill Owner Maintenance
Reserve Account Agreement; and (m) Liens on cash collateral not exceeding
$1,500,000 in favor of the issuer of the Refunding Letter of Credit.
"Person" means any individual, sole proprietorship, corporation,
partnership, limited liability company, joint venture, trust, unincorporated
association, institution, Governmental Authority or any other entity.
[Intercreditor Agreement]
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"Place of Payment" means, when used with respect to the Senior
Securities of any series, the office or agency maintained pursuant to, in the
case of the Indenture, Section 9.14(a) thereof and, in the case of the
Tax-Exempt Indenture, Section 9.13(a) thereof and, in either case, such other
place or places, if any, where the principal of and premium, if any, and
interest on the Senior Securities of such series are payable as specified in the
Series Supplemental Indenture to the Indenture or the Tax-Exempt Indenture (as
the case may be) establishing the Senior Securities of such series.
"Predecessor Securities" means, with respect to any particular Senior
Security, every previous Senior Security evidencing all or a portion of the same
Debt as that evidenced by such particular Senior Security. For purposes of this
definition, any Senior Security authenticated and delivered under, in the case
of any Indenture Security, Section 2.9 of the Indenture and, in the case of any
Tax-Exempt Indenture Security, Section 2.9 of the Tax-Exempt Indenture in lieu
of a lost, destroyed or stolen Senior Security shall be deemed to evidence the
same Debt as such lost, destroyed or stolen Senior Security.
"Prepayment Date" has the meaning specified (a) in the case of the
Indenture, in Section 6.2 thereof and (b) in the case of the Tax-Exempt
Indenture, in Section 6.2 thereof.
"Principal Payment Date" means in respect of (a) the Indenture
Securities, any January 1 or July 1 on which principal payments are due to
Holders thereof and (b) the Tax-Exempt Indenture Securities, any January 1 on
which principal payments are due to Holders thereof.
"Processing Services" has the meaning specified in the Master Operating
Agreement.
"Project Contracts" means, collectively, (a) the Energy Services
Agreements, (b) the Master Operating Agreement, (c) the Lease, (d) the
Supplementary Lease, (e) the O&M Agreement, (f) the Common Services Agreement,
(g) the Water Agreement, (h) the Boiler Ash Agreement, (i) the Environmental
Indemnity Agreements, (j) the Transition Agreement dated as of December 12,
1994, as amended by the First Amendment thereto dated as of June 16, 1995 and
the Second Amendment thereto dated as of July 13, 1995, between Scott and the
Company (as assignee of Mobile Energy), (k) the Employee Transition Agreement
dated as of December 12, 1994, as amended by the First Amendment thereto dated
as of July 13, 1994, among Scott, the Company (as assignee of Mobile Energy) and
Southern Electric, (l) the SCS Agreement, (m) the Easement Deeds, (n) the Asset
Purchase Agreement dated as of December 12, 1994 between Scott, as seller, and
the Company (as assignee of Mobile Energy), as buyer, (o) the Coal Supply
Agreement, (p) any other Contract entered into by either of the Mobile Energy
Parties for the provision of fuel to the Energy Complex, (q) the IDB Lease
Agreement, (r) the Lease Assignment and Assumption Agreement dated as of
December 12, 1994 between Scott and the Company (as assignee of Mobile Energy),
(s) the Construction, Financing and Installment Sale Agreement dated as of April
1, 1973 between the IDB and Scott, (t) the Lease and Assignment Agreement dated
as of December 12, 1994 between Scott and the Company (as assignee of Mobile
Energy), (u) the Facilities Lease and Agreement dated as of December 1, 1984
between the IDB and Scott, (v) the Sublease and Assignment Agreement dated as of
December 12, 1994 between Scott and the Company (as assignee of Mobile Energy),
(w) the Construction, Financing and Installment Sale Agreement dated as of
September 1, 1976 between the IDB and Scott, (x) the Lease and Assignment
Agreement dated as of December 12, 1994 between Scott and the Company (as
assignee of Mobile Energy), (y) the Recovery Boiler Facilities Lease and
Agreement dated as of December 1, 1994 between the IDB and Scott, (z) the Lease
Assignment and Assumption Agreement dated as of December 12, 1994 between Scott
and the Company (as assignee of Mobile Energy), (aa) the Nondisturbance
Agreement, (bb) the Recognition Agreements, (cc) the Mill Owner Maintenance
Reserve Account Agreement and (dd) the Transfer Agreement.
"Project Costs" means costs and expenses (other than financing costs
and expenses) paid, incurred or to be incurred by the Company after the Closing
Date
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to complete the capital improvements to the Energy Complex specified in the
Master Operating Agreement in accordance with the Capital Budget and certain
other planned expenditures relating to the Energy Complex.
"Project Documents" means, collectively, the Project Contracts and the
Financing Documents.
"Project Participant" means each Person that is party to a Project
Document.
"Prudent Plant Operating Standards" has the meaning specified in the
Master Operating Agreement.
"Pulp Mill" means the pulp mill (including a process water plant and
waste water treatment plant) located at the Mobile Facility, which as of the
Closing Date is owned by Scott.
"Pulp Mill Energy Services Agreement" means the Pulp Mill Energy
Services Agreement dated as of December 12, 1994, as amended by the First
Amendment thereto dated as of July 13, 1994, between the Pulp Mill Owner and the
Company (as assignee of Mobile Energy).
"Pulp Mill Owner" means Scott, in its capacity as owner of the Pulp
Mill.
"Pulp Mill Step-In Equipment" has the meaning specified in the Master
Operating Agreement.
"PURPA" means the Public Utility Regulatory Policies Act of 1978.
"Qualified Engineer" means an independent engineer listed on Schedule 1
to the Intercreditor Agreement, as such Schedule may be amended from time to
time in accordance with Section 11.3 of the Intercreditor Agreement.
"Qualifying Facility" means a "Qualifying Cogeneration Facility" as
specified in section 3(18)(B) of the Federal Power Act or a qualifying small
power production facility within the meaning of section 201 of PURPA.
"Rating Agencies" means, collectively, S&P, Fitch and Moody's, together
with any other nationally recognized credit agency of similar standing if any
such Person is not then currently rating the proposed subject of such rating.
"Receivables" means all of the Company's rights to payment for goods
sold or leased or services performed by the Company, including (a) rights
evidenced by an account, note, contract, security, instrument, chattel paper or
other evidence of indebtedness and (b) all "accounts" as defined in Section
9-106 of the Uniform Commercial Code as in effect in the State of New York on
the Closing Date.
"Recognition Agreements" means, collectively, (a) the Recognition,
Cooperation and Consent Agreement relating to the Mixed-Use Bonds dated as of
August 1, 1995 among the Company, the IDB, AmSouth Bank of Alabama, TRT and the
Collateral Agent and (b) the Recognition, Cooperation and Consent Agreement
relating to the Tax-Exempt Bonds dated as of August 1, 1995 among the Company,
the IDB, the Tax-Exempt Indenture Trustee and the Collateral Agent.
"Redemption Date" has the meaning specified (a) in the case of the
Indenture, in Section 6.2 thereof and (b) in the case of the Tax-Exempt
Indenture, in Section 6.2 thereof.
"Redistributed Proceeds" means, with respect to any Excess Loss
Proceeds, the excess, if any, of the Working Capital Facility's Percentage Share
of such Excess Loss Proceeds over the Working Capital Facility Distribution
Amount in respect of such Excess Loss Proceeds.
[Intercreditor Agreement]
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"Refunding Debt" means Debt, the proceeds of which are used to refund
outstanding Senior Debt.
"Refunding Letter of Credit" means one or more letters of credit issued
by a commercial bank in an aggregate amount not to exceed $1,500,000 to provide
for the payment of accrued interest on the 1984 Bonds upon the redemption
thereof.
"Regular Record Date" means, for the Stated Maturity of any Senior
Security of a series, or for the Stated Maturity of any installment of principal
thereof or payment of interest thereon, the 15th day (whether or not a Business
Day) of the month prior to such Stated Maturity, or any other date specified for
such purpose in the form of Senior Security of such series attached to the
Series Supplemental Indenture to the Indenture or the Tax-Exempt Indenture (as
the case may be) relating to the Senior Securities of such series.
"Replacement Debt" means Senior Securities, the proceeds of which are
used to refinance all or a portion of the outstanding Tax-Exempt Indenture
Securities (whether by effecting a gross-up of, or by the issuance of Senior
Securities to replace, affected Tax-Exempt Indenture Securities) upon the
occurrence of a Determination of Taxability.
"Replacement Facility" means a facility with materially different
performance capabilities from the Energy Complex that can be built to provide
services to some or all of the Mills following the occurrence of an Event of
Loss or an Event of Eminent Domain.
"Required Deposit" means, at the time of any Required Deposit Event
with respect to any Reserve Account Security on deposit in any Reserve Account
Security Account, an amount equal to the aggregate Available Amount under such
Reserve Account Security at such time; provided, however, that if such Required
Deposit Event results from the occurrence of a Debt Service Event, such amount
shall be equal to the aggregate amount required to be transferred pursuant to,
if such Reserve Account Security Account is (a) the Maintenance Plan Funding
Subaccount, Section 3.5(c) of the Intercreditor Agreement, (b) the Distribution
Account, Section 3.8(b) of the Intercreditor Agreement, (c) a Debt Service
Reserve Account, Section 4.5 of the Indenture and (d) a Tax-Exempt Debt Service
Reserve Account, Section 4.6 of the Tax-Exempt Indenture.
"Required Deposit Event" means (a) in the case of any Reserve Account
Letter of Credit on deposit in any Reserve Account Security Account, (i) the
occurrence of any Debt Service Event with respect to such Reserve Account Letter
of Credit, (ii) the date that is fifteen (15) days prior to the occurrence of
any Termination Event with respect to such Reserve Account Letter of Credit,
unless such Reserve Account Letter of Credit has been replaced with monies or
other Reserve Account Security (other than, if such Reserve Account Security
Account is a Tax-Exempt Debt Service Reserve Account, a Southern Guaranty) prior
to such date, (iii) the occurrence of a Credit Standard Event or Default Event
with respect to such Reserve Account Letter of Credit and the continuance
thereof for a period of five (5) days, unless such Reserve Account Letter of
Credit has been replaced with other Reserve Account Security (other than, if
such Reserve Account Security Account is a Tax-Exempt Debt Service Reserve
Account, a Southern Guaranty) prior to the expiration of such period or (iv) the
date on which a Trigger Event Notice has been delivered and (b) in the case of
any Southern Guaranty on deposit in any Reserve Account Security Account, (i)
the occurrence of any Debt Service Event with respect to such Southern Guaranty,
(ii) the date that is fifteen (15) days prior to the occurrence of any
Termination Event with respect to such Southern Guaranty, unless such Southern
Guaranty has been replaced with monies or other Reserve Account Security prior
to such date, (iii) the occurrence of a Credit Standard Event with respect to
such Southern Guaranty and the continuance thereof for a period of fifteen (15)
days, unless (A) the Collateral Agent or the Indenture Trustee (as the case may
be) shall have been provided with an Officer's Certificate of Southern
certifying as to the determination that the Southern Credit Standard has been
satisfied after such occurrence and prior to the expiration of such period or
(B) such Southern Guaranty has been replaced with monies or other Reserve
Account Security prior
[Intercreditor Agreement]
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to the expiration of such period, (iv) the occurrence of a Default Event and the
continuance thereof for a period of five (5) days, unless such Southern Guaranty
has been replaced with other Reserve Account Security prior to the expiration of
such period or (v) the date on which a Trigger Event Notice has been delivered.
"Required Interest Deposit" means, in the case of any Monthly Transfer
Date with respect to:
(a) the Indenture Securities Interest Subaccount, an amount
that, after giving effect to monies on deposit therein immediately
prior to such Monthly Transfer Date and together with a uniform amount
to be deposited therein on each succeeding Monthly Transfer Date prior
to the next succeeding Interest Payment Date, is equal to the amount of
interest on the Indenture Securities becoming due on such Interest
Payment Date (such amount to be reduced if and to the extent that a
Redemption Date or Prepayment Date for any of the Indenture Securities
is on or precedes such Interest Payment Date, in which case the amount
of interest payable on the Indenture Securities to be so redeemed or
prepaid shall be provided for pursuant to paragraph (c) below in lieu
of this paragraph (a));
(b) the Tax-Exempt Indenture Securities Interest Subaccount,
an amount that, after giving effect to monies on deposit therein
immediately prior to such Monthly Transfer Date and together with a
uniform amount to be deposited therein on each succeeding Monthly
Transfer Date prior to the next succeeding Interest Payment Date
(unless such next succeeding Interest Payment Date is January 1, 2020,
in which case together with a uniform amount to be deposited therein on
each succeeding Monthly Transfer Date prior to December 1, 2019), is
equal to the amount of interest on the Tax-Exempt Indenture Securities
becoming due on such Interest Payment Date (such amount to be reduced
if and to the extent that a Redemption Date or Prepayment Date for any
of the Tax-Exempt Indenture Securities is on or precedes such Interest
Payment Date, in which case the amount of interest payable on the
Tax-Exempt Indenture Securities to be so redeemed or prepaid shall be
provided for pursuant to paragraph (d) below in lieu of this paragraph
(b));
(c) the Indenture Securities Redemption Subaccount, an amount
that, after giving effect to monies on deposit therein immediately
prior to such Monthly Transfer Date and together with a uniform amount
to be deposited therein on each succeeding Monthly Transfer Date prior
to each succeeding Redemption Date or Prepayment Date for the Indenture
Securities, is equal to the amount of interest thereon becoming due on
each such Redemption Date or Prepayment Date (as the case may be); and
(d) the Tax-Exempt Indenture Securities Redemption Subaccount,
an amount that, after giving effect to monies on deposit therein
immediately prior to such Monthly Transfer Date and together with a
uniform amount to be deposited therein on each succeeding Monthly
Transfer Date prior to each succeeding Redemption Date or Prepayment
Date for the Tax-Exempt Indenture Securities, is equal to the amount of
interest thereon becoming due on each such Redemption Date or
Prepayment Date (as the case may be).
"Required Modifications" means those modifications reasonably necessary
for the Energy Complex to remain in compliance with all material Governmental
Approvals and maintain, at a minimum, the Maximum Capacity (as defined in the
Master Operating Agreement) levels as in effect on the Closing Date.
"Required Modifications Subaccount" means the subaccount of the
Completion Account so designated established and created under Section 2.2(c) of
the Intercreditor Agreement.
"Required Principal Deposit" means in the case of any Monthly Transfer
Date with respect to:
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(a) the Indenture Securities Principal Subaccount, an amount
equal to one-sixth (1/6th) of the amount of principal of the Indenture
Securities becoming due on each Principal Payment Date therefor
occurring within the six (6) months immediately succeeding the month in
which such Monthly Transfer Date occurs (unless such Principal Payment
Date occurs within six (6) months after the Closing Date or any other
date on which any Indenture Securities are originally issued, in which
case an amount that, after giving effect to monies on deposit therein
immediately prior to such Monthly Transfer Date and together with a
uniform amount to be deposited therein on each succeeding Monthly
Transfer Date prior to such Principal Payment Date, is equal to the
amount of principal thereof becoming due on such Principal Payment
Date) (such amount to be reduced if and to the extent that a Redemption
Date or Prepayment Date for any of the Indenture Securities is on or
precedes such Principal Payment Date, in which case the amount of
principal payable with respect to the Indenture Securities to be so
redeemed or prepaid shall be provided for pursuant to paragraph (c)
below in lieu of this paragraph (a));
(b) the Tax-Exempt Indenture Securities Principal Subaccount,
one-twelfth (1/12th) (unless such Monthly Transfer Date occurs on or
after January 1, 2019, in which case one-eleventh (1/11th)) of the
amount of principal of the Tax-Exempt Indenture Securities becoming due
on each Principal Payment Date therefor occurring within the twelve
(12) months immediately succeeding the month in which such Monthly
Transfer Date occurs (unless such Principal Payment Date occurs within
twelve (12) months after the Closing Date or any other date on which
any Tax-Exempt Indenture Securities are originally issued, in which
case an amount that, after giving effect to monies on deposit therein
immediately prior to such Monthly Transfer Date and together with a
uniform amount to be deposited therein on each succeeding Monthly
Transfer Date prior to such Principal Payment Date, is equal to the
amount of principal thereof becoming due on such Principal Payment
Date)(such amount to be reduced if and to the extent that a Redemption
Date or Prepayment Date for any of the Tax-Exempt Indenture Securities
is on or precedes such Principal Payment Date, in which case the amount
of principal payable with respect to the Tax-Exempt Indenture
Securities to be so redeemed or prepaid shall be provided for pursuant
to paragraph (d) below in lieu of this paragraph (b));
(c) the Indenture Securities Redemption Subaccount, an amount
that, after giving effect to monies on deposit therein immediately
prior to such Monthly Transfer Date and together with a uniform amount
to be deposited therein on each succeeding Monthly Transfer Date prior
to each succeeding Redemption Date or Prepayment Date for the Indenture
Securities, is equal to the amount of principal thereof and premium, if
any, thereon becoming due on each such Redemption Date or Prepayment
Date (as the case may be); and
(d) the Tax-Exempt Indenture Securities Redemption Subaccount,
an amount that, after giving effect to monies on deposit therein
immediately prior to such Monthly Transfer Date and together with a
uniform amount to be deposited therein on each succeeding Monthly
Transfer Date prior to each succeeding Redemption Date or Prepayment
Date for the Tax-Exempt Indenture Securities, is equal to the amount of
principal thereof and premium, if any, thereon becoming due on each
such Redemption Date or Prepayment Date (as the case may be).
"Required Senior Creditors" means Senior Secured Parties holding or
otherwise representing 331/3% of the Combined Exposure.
"Reserve Account Letter of Credit" means a letter of credit issued by a
commercial bank whose long-term unsecured Debt is rated at least "A" by S&P, "A"
by Fitch and "A2" by Moody's.
"Reserve Account Security" means either, or any combination of, (a) one
or more Southern Guaranties or (b) one or more Reserve Account Letters of
Credit.
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"Reserve Account Security Accounts" means, collectively, each Debt
Service Reserve Account (if any), each Tax-Exempt Debt Service Reserve Account
(if any), the Maintenance Plan Funding Subaccount and the Distribution Account.
"Responsible Officer" means, when used with respect to the Collateral
Agent, the Indenture Trustee and the Tax-Exempt Indenture Trustee, (a) any
officer of the Collateral Agent, the Indenture Trustee or the Tax-Exempt
Indenture Trustee (as the case may be) within the Corporate Trust Office of the
Collateral Agent, the Indenture Trustee or the Tax-Exempt Indenture Trustee (as
the case may be), including any vice president, any assistant vice president,
any assistant secretary or any assistant treasurer, (b) any other officer of the
Collateral Agent, the Indenture Trustee or the Tax-Exempt Indenture Trustee (as
the case may be) performing functions similar to those performed by any of the
officers designated in clause (a) above and (c) with respect to a particular
corporate trust matter, any other officer of the Collateral Agent, the Indenture
Trustee or the Tax-Exempt Indenture Trustee (as the case may be) to whom such
matter is referred because of such other officer's knowledge of and familiarity
with the particular subject.
"Restricted Payment Alternative Agreement Requirements" means, with
respect to any Project Contract, another Contract entered into by the Company
with one or more other Persons in substitution for or replacement of any such
Project Contract that has been declared unenforceable or rejected or otherwise
terminated, with respect to some or all of the Processing Services or other
services formerly provided by or to the Company thereunder, provided that either
(a) the Company has delivered to the Collateral Agent a letter from any two of
the Rating Agencies (then currently rating the Indenture Securities or the Tax-
Exempt Indenture Securities) confirming that, after giving effect to such
alternative Contract, the ratings of the Outstanding Indenture Securities or the
Outstanding Tax-Exempt Indenture Securities (as the case may be) are Investment
Grade or (b) the Company (i) has provided to the Collateral Agent the Revenue
Sufficiency Certification and (ii) has delivered to the Collateral Agent an
Officer's Certificate, together with an Independent Engineer Confirmation,
certifying that (A) the term of such alternative Contract extends through the
earlier of (1) the final maturity of the Outstanding Indenture Securities or the
Outstanding Tax-Exempt Indenture Securities (as the case may be) and (2) the
term of such Project Contract, (B) such alternative Contract contains
termination provisions no less favorable to the Company than those contained in
such Project Contract, (C) such alternative Contract has been in full force and
effect for at least thirty-six (36) months, (D) the average of the two annual
Senior Debt Service Coverage Ratios for the four immediately preceding
semi-annual payment periods was equal to at least 1.25 to 1.0 and, based on
projections prepared by the Company on a reasonable basis, the average of the
annual Senior Debt Service Coverage Ratios through the final maturity date of
the Outstanding Indenture Securities or the Outstanding Tax-Exempt Indenture
Securities (as the case may be) is projected to be at least 1.25 to 1.0 and (E)
such alternative Contract is reasonably capable of being performed by the
parties thereto.
"Restricted Payments" means, collectively, (a) payments from the
Subordinated Fee Account or any other payment in respect of Subordinated Fees,
(b) distributions (from the Distribution Account or otherwise), including a
return of capital contributions and dividends, paid to, or at the direction or
for the benefit of, any Affiliate of the Company, but excluding distributions of
cash from any Account to the extent such cash has been replaced with Reserve
Account Security in accordance with the terms of the Financing Documents, (c)
the payment of principal of or premium, if any, or interest on any Affiliate
Subordinated Debt, (d) the repurchase by the Company of any interest of any
Member, or (e) the making of any loans or other advances from the Company to any
Affiliate of the Company, but excluding advances of cash to the extent such cash
(i) has been replaced with Reserve Account Security in accordance with the terms
of the Financing Documents or (ii) constitutes a payment required under the O&M
Agreement or the SCS Agreement.
"Revenue Account" means the Account so designated established and
created under Section 2.2(a) of the Intercreditor Agreement.
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"Revenue Sufficiency Certification" means an Officer's Certificate of
the Company, together with an Independent Engineer Confirmation, to the effect
that, based upon projections prepared by the Company in accordance with Section
1.15 of the Indenture or Section 1.12 of the IDB Lease Agreement, or of any
comparable provision of the Working Capital Facility, the Project Contracts then
in effect (including any alternative Contract entered into, or to be entered
into, by the Company with one or more other Persons in substitution or
replacement of any other Project Contract as contemplated by the Event of
Default Alternative Agreement Requirements or the Restricted Payment Alternative
Agreement Requirements) generate sufficient Revenues to enable the Company to
pay its debts and other obligations (including Operation and Maintenance Costs)
when they become due through the final maturity of the Outstanding Indenture
Securities or the Tax-Exempt Indenture Securities (as the case may be).
"Revenues" means (without duplication), for any period, the revenues
received by the Company for use of the services and facilities of the Energy
Complex including (a) amounts received by the Company under the Project
Contracts, (b) interest and other income earned and credited on monies deposited
in the Accounts (to the extent not retained in such Accounts), (c) the proceeds
of the sale of any part of the Energy Complex, provided that such sale is not
prohibited by the Financing Documents, (d) the proceeds of any business
interruption insurance and other payments received for interruption of
operations (excluding any proceeds of any liability or physical damage
insurance) and (e) all other monies that have been deposited into the Revenue
Account as required or permitted by the terms of the Financing Documents.
Notwithstanding the foregoing, "Revenues" do not include (i) capital
contributions to the Company, (ii) the proceeds of any Debt or Loss Proceeds,
(iii) amounts received by the Company in connection with the exercise of Company
Step-In Rights (to the extent in excess of the Company's expenses incurred in
connection therewith, including the cure or the attempted cure of the related
Pulp Mill Triggering Event (as defined in the Master Operating Agreement)), (iv)
monies transferred from the Completion Account to the Revenue Account pursuant
to Section 3.9(c) of the Intercreditor Agreement, (v) monies transferred from
any Debt Service Reserve Account to the Revenue Account pursuant to Section 4.5
of the Indenture, (vi) amounts received by the Company with respect to the 1994
Bonds and (vii) monies deposited into any Reserve Account Security Account in
replacement (or satisfaction) of Reserve Account Security on deposit therein
(including monies deposited into the Maintenance Plan Funding Subaccount
pursuant to the last sentence of Section 3.5(a) of the Intercreditor Agreement).
"S&P" means Standard & Poor's Ratings Group, a New York corporation.
"Scott" means Scott Paper Company, a Pennsylvania corporation.
"SCS" means Southern Company Services, Inc., an Alabama corporation.
"SCS Agreement" means the Agreement dated July 14, 1995 between SCS and
the Company.
"S.D. Warren" means S.D. Warren Company, a Pennsylvania corporation.
"SEC" means the Securities and Exchange Commission of the United States
of America.
"Secretary" means, in the case of a corporation (including Mobile
Energy) or limited liability company (including the Company) the secretary or an
assistant secretary of such corporation or limited liability company (as the
case may be).
"Secured Obligations" means, collectively, the Financing Liabilities,
the Trustee Claims, the Collateral Agent Claims and the IDB Claims.
"Secured Party" means Bankers Trust (Delaware) or any other Person
appointed as a substitute or replacement Secured Party under the Security
Agreement.
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"Securities" has the meaning specified (a) in the case of the
Indenture, in the first "WHEREAS" clause thereof and (b) in the case of the
Tax-Exempt Indenture, in the last "WHEREAS" clause thereof.
"Securities Act" means the Securities Act of 1933.
"Security Agreement" means the Assignment and Security Agreement dated
as of August 1, 1995 among the Company, the IDB and the Secured Party.
"Security Documents" means, collectively, (a) the Mortgage, (b) the
Security Agreement, (c) the Indenture (including any Series Supplemental
Indenture), (d) the Intercreditor Agreement, (e) the Tax-Exempt Indenture
(including any Series Supplemental Indenture), (f) the IDB Lease Agreement, (g)
the Consents to Assignment and (h) each Financing Statement.
"Security Interest" means the Liens created, or purported to be
created, on Shared Collateral pursuant to any Security Document.
"Security Register" has the meaning specified in Section 2.8 of the
Indenture or Section 2.8 of the Tax-Exempt Indenture (as the case may be).
"Security Registrar" means any Person acting as Security Registrar
under the Indenture or the Tax-Exempt Indenture pursuant to Section 9.14 or
Section 9.13 (as the case may be) thereof.
"Senior Creditor Certificate" means a certificate of a Senior Secured
Party, signed by an Authorized Representative of such Senior Secured Party, (a)
setting forth the principal amount of the Financing Liabilities due or owing to,
or in favor of or for the benefit of, such Senior Secured Party as of the date
of such certificate and the outstanding unutilized Financing Commitments of such
Senior Secured Party as of the date of such certificate, (b) setting forth a
contact person for such Senior Secured Party, including phone and facsimile
numbers for such person, (c) directing the Collateral Agent to take a specified
action and (d) stating specifically the action the Collateral Agent is directed
to take and the Security Document and the provision thereof pursuant to which
the Collateral Agent is being directed to act.
"Senior Debt" means, collectively, the Outstanding Senior Securities
and the outstanding Working Capital Facility Loans.
"Senior Debt Service Coverage Ratio" means, for any period and without
duplication, the ratio of (a) (i) the sum of (A) all Revenues for such period
and (B) the amount of interest and other income earned and credited on monies
deposited in the Accounts (to the extent retained in such Accounts) for such
period minus (ii) the sum of (A) Operation and Maintenance Costs for such period
(except for such costs paid with monies on deposit in the Maintenance Reserve
Account and the Mill Owner Maintenance Reserve Account) and (B) the aggregate of
the amounts deposited into the Maintenance Reserve Account for such period (but
for purposes of calculating any projected Senior Debt Service Coverage Ratio,
not less than the Maintenance Reserve Account Required Deposit for such period)
and the Mill Owner Maintenance Reserve Account for such period to (b) the sum of
(i) all amounts payable by the Company during such period in respect of
principal of and premium, if any, and interest on the Outstanding Indenture
Securities, (ii) all amounts payable by the Company during such period in
respect of rent under the IDB Lease Agreement, (iii) all amounts payable by the
Company during such period in respect of payment obligations under the Working
Capital Facility (other than repayment of principal), (iv) all amounts payable
by the Company during such period as fees and other expenses (including any
interest thereon) to any fiduciary acting in such capacity under the Security
Documents and (v) the aggregate amount of overdue payments in respect of clauses
(b)(i) through (iv) above from previous periods, in each case determined on a
cash basis in accordance with GAAP. Neither payments (including deemed payments)
nor receipts (including deemed receipts) in respect of principal of or premium,
if any, or interest on the 1994 Bonds shall be included for purposes of
calculating the Senior Debt Service Coverage Ratio.
[Intercreditor Agreement]
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"Senior Debt Service Requirement" means, for any period, the sum of (a)
all amounts payable by the Company during such period in respect of principal of
and premium, if any, and interest on the Outstanding Indenture Securities, (b)
all amounts payable by the Company during such period in respect of rent under
the IDB Lease Agreement, (c) all amounts payable by the Company during such
period in respect of payment obligations under the Working Capital Facility
(other than repayment of principal), (d) all amounts payable by the Company
during such period as fees and other expenses (including any interest thereon)
to any fiduciary acting in such capacity under the Security Documents and (e)
the aggregate amount of overdue payments in respect of the foregoing from
previous periods, in each case determined on a cash basis in accordance with
GAAP.
"Senior Debt Termination Date" means the date on which all Financing
Liabilities, other than contingent liabilities and obligations that are
unasserted at such date, have been paid and satisfied in full and all Financing
Commitments have been terminated.
"Senior Secured Parties" means, collectively, (a) the Indenture Trustee
(on behalf of the Holders of the Indenture Securities from time to time and,
solely in its capacity as trustee on behalf of such Holders, itself), (b) the
Tax-Exempt Indenture Trustee (on behalf of the Holders of the Tax-Exempt
Indenture Securities from time to time and, solely in its capacity as trustee on
behalf of such Holders, itself) and (c) the Working Capital Facility Provider
(on behalf of the Lenders from time to time and itself).
"Senior Securities" means, collectively, the Indenture Securities and
the Tax-Exempt Indenture Securities.
"Series Supplemental Indenture" means an indenture supplemental to the
Indenture or the Tax-Exempt Indenture entered into by the Mobile Energy Parties
or the IDB (as the case may be) and the Indenture Trustee or the Tax-Exempt
Indenture Trustee (as the case may be) for the purpose of establishing, in
accordance with such indenture, the title, form and terms of the Senior
Securities of any series.
"Shared Collateral" means all Collateral other than (a) the Collateral
referenced in clause (a) of the definition of Indenture Securities Collateral
and (b) the Collateral referenced in clause (a) of the definition of Tax-Exempt
Indenture Securities Collateral.
"Sinking Fund" has the meaning specified in Section 7.2 of the
Indenture or Section 7.2 of the Tax-Exempt Indenture (as the case may be).
"Sinking Fund Redemption Dates" has the meaning specified in Section
7.2 of the Indenture or Section 7.2 of the Tax-Exempt Indenture (as the case may
be).
"Sinking Fund Requirements" has the meaning specified in Section 7.2 of
the Indenture or Section 7.2 of the Tax-Exempt Indenture (as the case may be).
"Site" means the real property on which the Energy Complex is situated,
as more fully described in the Mortgage.
"Southern" means The Southern Company, a Delaware corporation.
"Southern Credit Standard" means, at any time, (a) Southern's
outstanding senior long-term Debt is then rated at least, and not rated less
than, "A" by either S&P or Moody's (unless such senior long-term Debt is not
then rated by either S&P or Moody's, in which case each Designated Southern
Subsidiary has outstanding senior long-term Debt that is then rated at least,
and not rated less than, BBB by S&P or Baa2 by Moody's) and (b) the sum of (i)
cash and cash equivalents (including marketable securities) of Southern and the
Designated Southern Subsidiaries, (ii) amounts available from committed credit
facilities of Southern and the Designated Southern Subsidiaries and (iii)
amounts available from commercial paper authorized to be issued by Southern and
rated not less than A-1/P-1 by S&P or Moody's (in each case as of the end of
Southern's most recently
[Intercreditor Agreement]
71
<PAGE>
completed fiscal quarter and provided that such cash and cash equivalents and
other amounts are available, without restriction, for distribution to the
Collateral Agent or the Indenture Trustee, upon fifteen (15) days' notice) is
equal to at least the aggregate amount of Southern Guaranties then outstanding
multiplied by four.
"Southern Electric" means Southern Electric International, Inc., a
Delaware corporation.
"Southern Guaranty" means one or more unconditional, absolute and
irrevocable guaranties from Southern to be delivered to (a) the Collateral Agent
for deposit into the Maintenance Plan Funding Subaccount or the Distribution
Account pursuant to and in accordance with Section 3.15(a) of, and in
substantially the form attached as Exhibit C to, the Intercreditor Agreement or
(b) the Indenture Trustee for deposit into each Debt Service Reserve Account (if
any) pursuant to and in accordance with Section 4.6(a) of, and in substantially
the form attached as Exhibit A to, the Indenture, provided that, in the case of
clause (a) and (b) above, the Southern Credit Standard is satisfied at the time
of such delivery and deposit.
"Southern Master Tax Sharing Agreement" means the Income Tax Allocation
Agreement dated as of December 29, 1981 among Southern and its corporate
subsidiaries.
"Special Record Date" means, with respect to the payment of any
defaulted principal or interest, a date fixed by the Indenture Trustee or the
Tax-Exempt Indenture Trustee (as the case may be) pursuant to, in the case of
the Indenture Trustee, Section 2.10 of the Indenture and, in the case of the
Tax-Exempt Indenture Trustee, Section 2.10 of the Tax-Exempt Indenture.
"Stated Maturity" means, when used with respect to any Senior Security
or any installment of principal thereof or payment of interest thereon, the date
specified in such Senior Security as the fixed date on which such Senior
Security or such installment of principal or payment of interest is due and
payable.
"Subordinated Debt" means, collectively, Affiliate Subordinated Debt
and Non-Affiliate Subordinated Debt.
"Subordinated Debt Account" means the Account so designated established
and created under Section 2.2(a) of the Intercreditor Agreement.
"Subordinated Debt Provider" means any Person providing Subordinated
Debt pursuant to a Subordinated Loan Agreement.
"Subordinated Fee" means a fee in exchange for the provisions of goods
or services to either of the Mobile Energy Parties, the payment of which is
fully subordinated to the Secured Obligations as to payment and exercise of
remedies and that is payable only to the extent it would otherwise be
distributable if on deposit in the Distribution Account.
"Subordinated Fee Account" means the Account so designated established
and created under Section 2.2(a) of the Intercreditor Agreement.
"Subordinated Loan Agreement" means a binding agreement with a
Subordinated Debt Provider providing unsecured debt financing for the benefit of
the Energy Complex and on terms and conditions that shall satisfy the
requirements of the Financing Documents.
"Supplementary Lease" means the Supplementary Lease Agreement dated as
of December 12, 1994, as amended by the First Amendment thereto dated as of July
13, 1995, between Scott, as lessor, and the Company (as assignee of Mobile
Energy), as lessee.
"Tax-Exempt Bonds" means the Tax-Exempt Indenture Securities issued on
the Closing Date under the Tax-Exempt Indenture.
[Intercreditor Agreement]
72
<PAGE>
"Tax-Exempt Debt Service Reserve Account" means the Account so
designated established and created under Section 4.4(a) of the Tax-Exempt
Indenture and any Account so designated and created under any Series
Supplemental Indenture to the Tax-Exempt Indenture for the benefit of Holders of
the Tax-Exempt Indenture Securities established thereunder.
"Tax-Exempt Debt Service Reserve Account Required Balance" means (a) in
respect of the Tax-Exempt Debt Service Reserve Account established and created
under Section 4.4(a) of the Tax-Exempt Indenture, the amount designated in
Section 4.4(b) thereof and (b) in respect of any other Tax-Exempt Debt Service
Reserve Account, the amount so designated in the Series Supplemental Indenture
to the Tax-Exempt Indenture establishing such Tax-Exempt Debt Service Reserve
Account.
"Tax-Exempt Indenture" means the Amended and Restated Trust Indenture
dated as of August 1, 1995 between the IDB and the Tax-Exempt Indenture Trustee.
"Tax-Exempt Indenture Accounts" means, with respect to the Tax-Exempt
Indenture Securities of any series, the Tax-Exempt Indenture Securities Account
and each Tax-Exempt Debt Service Reserve Account (if any) established for the
benefit of Holders of the Tax-Exempt Indenture Securities of such series.
"Tax-Exempt Indenture Distribution Amount" means, in respect of any
Excess Loss Proceeds with respect to an Event of Loss or Event of Eminent Domain
to be applied pursuant to Section 6.2(b) of the Intercreditor Agreement, an
amount equal to the Tax-Exempt Indenture's Percentage Share of (a) such Excess
Loss Proceeds and (b) the Redistributed Proceeds with respect to such Excess
Loss Proceeds.
"Tax-Exempt Indenture Securities" means all Outstanding Debt issued
pursuant to the Tax-Exempt Indenture.
"Tax-Exempt Indenture Securities Account" means the Account so
designated established and created under Section 4.1 of the Tax-Exempt
Indenture.
"Tax-Exempt Indenture Securities Collateral" means, collectively, (a)
all of the collateral mortgaged, pledged or assigned, or purported to be
mortgaged, pledged or assigned, to the Tax-Exempt Indenture Trustee by the IDB
pursuant to the granting and assigning clauses of the Tax-Exempt Indenture and
(b) the Shared Collateral.
"Tax-Exempt Indenture Securities Interest Subaccount" means the
subaccount of the Tax-Exempt Indenture Securities Account so designated
established and created under Section 4.1 of the Tax-Exempt Indenture.
"Tax-Exempt Indenture Securities Principal Subaccount" means the
subaccount of the Tax-Exempt Indenture Securities Account so designated
established and created under Section 4.1 of the Tax-Exempt Indenture.
"Tax-Exempt Indenture Securities Redemption Subaccount" means the
subaccount of the Tax-Exempt Indenture Securities Account so designated
established and created under Section 4.1 of the Tax-Exempt Indenture.
"Tax-Exempt Indenture Trustee" means First Union National Bank of
Georgia, a national banking association organized and existing under the laws of
the United States of America.
"Tax-Exempt Project" means those portions of the Energy Complex
financed with the proceeds of the 1983 Bonds, as described generally in Exhibit
A to the IDB Lease Agreement.
"Termination Event" means, with respect to any Reserve Account
Security, such Reserve Account Security shall have terminated or expired (other
than any termination thereof pursuant to the last sentence of Section 3.8(c) of
the Intercreditor Agreement).
[Intercreditor Agreement]
73
<PAGE>
"Third Party Engineer" means the independent engineering firm chosen
from the list of engineers maintained as Schedule 1 to the Intercreditor
Agreement and appointed Third Party Engineer pursuant to Section 11.2 of the
Intercreditor Agreement.
"Third Party Engineer Dispute Resolution" means the dispute resolution
process involving a Third Party Engineer pursuant to Section 11.2 of the
Intercreditor Agreement.
"Tissue Mill" means the tissue mill located at the Mobile Facility,
which as of the Closing Date is owned by Scott.
"Tissue Mill Energy Services Agreement" means the Tissue Mill Energy
Services Agreement dated as of December 12, 1994, as amended by the First
Amendment thereto dated as of July 13, 1995, between the Tissue Mill Owner and
the Company (as assignee of Mobile Energy).
"Tissue Mill Owner" means Scott, in its capacity as owner of the Tissue
Mill.
"Total Debt Service Coverage Ratio" means, for any period and without
duplication, the ratio of (a) (i) the sum of (A) all Revenues for such period
and (B) the amount of interest and other income earned and credited on monies
deposited in the Accounts (to the extent retained in such Accounts) for such
period minus (ii) the sum of (A) Operations and Maintenance Costs for such
period (except for such costs paid with monies on deposit in the Maintenance
Reserve Account or the Mill Owner Maintenance Reserve Account) and (B) the
aggregate of the amounts deposited into the Maintenance Reserve Account for such
period (but for purposes of calculating any projected Total Debt Service
Coverage Ratio, not less than the Maintenance Reserve Account Required Deposit
for such period) and the Mill Owner Maintenance Reserve Account for such period
to (b) the sum of (i) all amounts payable by the Company during such period in
respect of principal of and premium, if any, and interest on the Outstanding
Indenture Securities, (ii) all amounts payable by the Company during such period
in respect of rent under the IDB Lease Agreement, (iii) all amounts payable by
the Company during such period in respect of payment obligations under the
Working Capital Facility (other than repayments of principal), (iv) all amounts
payable by the Company as fees and other expenses (including any interest
thereon) to any fiduciary acting in such capacity under the Security Documents,
(v) all amounts payable by the Company during such period in respect of
principal of and premium, if any, and interest on the outstanding Subordinated
Debt, (vi) all amounts payable by the Company during such period as fees and
other expenses (including any interest thereon) to any Subordinated Debt
Provider and (vii) the aggregate amount of overdue payments in respect of
clauses (b)(i) through (vi) above from previous periods, in each case determined
on a cash basis in accordance with GAAP. Neither payments (including deemed
payments) nor receipts (including deemed receipts) in respect of principal of or
premium, if any, or interest on the 1994 Bonds shall be included for purposes of
calculating the Total Debt Service Coverage Ratio.
"Transfer Agreement" means the Omnibus Deed, Bill of Sale, General
Assignment and Conveyance Agreement dated July 14, 1995 between Mobile Energy
and the Company.
"Trigger Event" means (a) an Event of Default under the Indenture and
an acceleration of Indenture Securities thereunder, (b) an Event of Default
under the Tax-Exempt Indenture and an acceleration of Tax-Exempt Indenture
Securities thereunder, (c) an Event of Default under the Working Capital
Facility and an acceleration of Working Capital Facility Loans thereunder or (d)
a Bankruptcy Event in respect of either of the Mobile Energy Parties and the
expiration of the shortest applicable grace period with respect thereto.
"Trigger Event Period" means that a Trigger Event shall have occurred
and be continuing, provided that, except in the case of any such Trigger Event
that shall have resulted from a Bankruptcy Event in respect of either of the
Mobile
[Intercreditor Agreement]
74
<PAGE>
Energy Parties, the written request of the Required Senior Creditors specified
in Section 5.1(a) of the Intercreditor Agreement shall have been delivered to
the Collateral Agent and not been rescinded.
"TRT" means Three Rivers Timber Company, a Washington corporation.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended, as in force at the date as of which the Indenture was executed, except
as provided in Section 11.6 thereof; provided, however, that if the Trust
Indenture Act of 1939 is amended after such date, "Trust Indenture Act" means,
to the extent required by such amendment, the Trust Indenture Act of 1939, as so
amended.
"Trustee Claims" means all obligations of the Mobile Energy Parties,
now or hereafter existing, to pay fees, costs, expenses or other amounts to (a)
the Indenture Trustee under the Indenture or (b) the Tax-Exempt Indenture
Trustee under the Tax-Exempt Indenture.
"Uniform Commercial Code" means the Uniform Commercial Code of the
jurisdiction the law of which governs the Contract in which such term is used.
"U.S. Government Obligations" means non-callable direct obligations of
or obligations as to which the payment of principal of and interest is
unconditionally guaranteed by the United States of America.
"Water Agreement" means the Water Procurement and Effluent Service
Agreement dated as of December 12, 1994, as amended by the First Amendment
thereto dated as of July 13, 1995, among the Company (as assignee of Mobile
Energy), the Pulp Mill Owner, the Paper Mill Owner and the Tissue Mill Owner.
"Wind-Up Event" means, at any time upon and after a Trigger Event, the
application of monies on deposit in any of the Intercreditor Agreement Accounts,
or of proceeds from any sale, disposition or other realization of any Shared
Collateral (other than the Intercreditor Agreement Accounts), in either case to
the payment of amounts owing in respect of any Senior Debt and as a result of
the exercise of remedies by the Collateral Agent under Article V of the
Intercreditor Agreement.
"Working Capital Escalation Factor" means, with respect to any Fiscal
Year, a factor (calculated in June of such Fiscal Year) equal to the amount
obtained by (a) dividing (i) the GDPIPD most recently published during such
Fiscal Year by (ii) the GDPIPD published during the prior Fiscal Year on the
date that most closely corresponds to, and is on or prior to, the date of such
GDPIPD most recently published (provided that if the amount obtained is less
than or equal to 1.015, then such amount shall be deemed to equal 1.015), (b)
then subtracting 0.015, and (c) then multiplying by the Working Capital
Escalation Factor with respect to the immediately preceding Fiscal Year.
"Working Capital Facility" means the Revolving Credit Agreement dated
as of August 1, 1995 between the Company and the Working Capital Facility
Provider or any other Contract between the Company and a Working Capital
Facility Provider pursuant to which funds for the working capital requirements
of the Company are provided.
"Working Capital Facility Account" means the Account so designated
established and created under Section 2.2(a) of the Intercreditor Agreement.
"Working Capital Facility Commitment" means the aggregate of the
commitments of the Lenders under the Working Capital Facility.
"Working Capital Facility Distribution Amount" means, in respect of any
Excess Loss Proceeds with respect to an Event of Loss or Event of Eminent Domain
to be applied pursuant to Section 6.2(b) of the Intercreditor Agreement and
provided that the Working Capital Facility Commitment is subject to reduction in
connection with such Event of Loss or Event of Eminent Domain pursuant to the
[Intercreditor Agreement]
75
<PAGE>
terms of the Working Capital Facility, an amount equal to the excess, if any, of
the Working Capital Facility's Percentage Share of such Excess Loss Proceeds
over the unutilized Working Capital Facility Commitment in effect immediately
prior to such reduction, unless the Company would not be able to borrow Working
Capital Facility Loans (because the conditions set forth in Article III of the
Working Capital Facility are not available or not satisfied), in which case the
lesser of (a) the Working Capital Facility's Percentage Share of such Excess
Loss Proceeds and (b) the outstanding Working Capital Loans at such time.
"Working Capital Facility O&M Loan" means a Working Capital Facility
Loan, to the extent the proceeds thereof are applied to Operation and
Maintenance Costs other than (a) rebates to the United States government
pursuant to Section 148 of the Code, (b) Maintenance Expenditures and (c)
payments of IDB Claims.
"Working Capital Facility Provider" means Banque Paribas, a French
banking corporation, and each other Person providing funds to the Company
pursuant to a Working Capital Facility.
"Working Capital Facility Loan" means a Loan (as defined in the Working
Capital Facility) advanced by the Working Capital Facility Provider pursuant to
the Working Capital Facility.
[Intercreditor Agreement]
76
<PAGE>
Schedule 1
Qualified Engineers
1. R.W. Beck and Associates
2. Jacobs-Sirrine
3. Rust Engineering Company
[Intercreditor Agreement]
77
<PAGE>
Exhibit A
FORM OF REQUISITION FOR DISBURSEMENT FROM LOSS PROCEEDS ACCOUNT
Requisition No. _______
Date:________________
Bankers Trust (Delaware), as Collateral Agent
c/o Bankers Trust Company
Four Albany Street, 4th Floor
New York, New York 10006
Attention: Corporate Trust Department
Ladies and Gentlemen:
Reference is hereby made to that certain Intercreditor and Collateral
Agency Agreement, dated as of August 1, 1995, by and among First Union National
Bank of Georgia, as Trustee, First Union National Bank of Georgia, as Tax-Exempt
Indenture Trustee, Banque Paribas, as Working Capital Facility Provider, The
Industrial Development Board of the City of Mobile, Alabama, Mobile Energy
Services Company, L.L.C. (the "Company"), Mobile Energy Services Holdings, Inc.
and Bankers Trust (Delaware), as Collateral Agent (as such agreement may be
amended, modified or supplemented from time to time, the "Intercreditor
Agreement"). Terms used herein and not otherwise defined herein shall have the
meanings assigned to them in the Intercreditor Agreement.
The Company hereby requests, pursuant to Section 3.10(b) of the
Intercreditor Agreement, that the Collateral Agent make a disbursement from the
Loss Proceeds Account in the aggregate amount of $_____ (the "Requested
Disbursement").
The date that the Requested Disbursement is to be made is _____. Cash
disbursement instructions for the Requested Disbursement are set forth in Annex
1 hereto.
All monies released from the Loss Proceeds Account pursuant to this
Requisition shall continue to constitute Collateral until applied in accordance
with the Financing Documents, including the Mortgage.
The undersigned, an Authorized Officer of the Company, hereby certifies
in connection with this Requisition that (i) the proceeds of the Requested
Disbursement will be used solely for the payment (or reimbursement, to the
extent the same have been paid or satisfied by the Company) of the costs of the
rebuilding, repair and restoration of the Energy Complex or the portion thereof
that has been affected by an Event of Loss or an Event of Eminent Domain, or the
building of a Replacement Facility as a result thereof, (ii) undisbursed funds
in the Loss Proceeds Account are reasonably expected to be sufficient to
complete the rebuilding, repair, restoration or replacement of the Energy
Complex (such determination of sufficiency to take into account, without
limitation, funds required to pay principal of and interest on the Senior Debt
becoming due during such period in which commercial operation of the Energy
Complex is interrupted as a result of such Event of Loss or Event of Eminent
Domain), (iii) no payment default with respect to scheduled debt service under
the Senior Debt has occurred and is continuing and (iv) work performed to date
has been satisfactorily performed in a good and workmanlike manner and according
to the rebuilding, repair, restoration or replacement plans.
The Requested Disbursement, together with all other such requisitions
made or reasonably expected to be made (i) during the current Fiscal Year, total
[Intercreditor Agreement]
Exhibit A-1
<PAGE>
$_____ in the aggregate and (ii) in respect of such Event of Loss or Event of
Eminent Domain, total $_____ in the aggregate, and the approval of the
Independent
Engineer hereto [is] [is not]1/ required.
The Company hereby certifies that all conditions precedent to the
Requested Disbursement as set forth in the Intercreditor Agreement have been
satisfied.
MOBILE ENERGY SERVICES COMPANY, L.L.C.
By:
Name:
Title:
Date:__________________________________
Approved this ___ day of __________________, ____.1
STONE & WEBSTER ENGINEERING CORPORATION
By:_______________________________________
Name:____________________________________
Title:_____________________________________
- --------
1 Not required if the amount of disbursements requested pursuant to such
requisition, together with the aggregate amount of disbursements
requested or to be requested pursuant to all other such requisitions
made or reasonably expected to be made (i) in any one Fiscal Year, does
not exceed $5,000,000 or (ii) in respect of any Event of Loss or Event
of Eminent Domain, does not exceed $7,500,000.
[Intercreditor Agreement]
Exhibit A-2
<PAGE>
Exhibit B
FORM OF MONTHLY TRANSFER DATE CERTIFICATE
Date: ______
Bankers Trust (Delaware), as Collateral Agent
c/o Bankers Trust Company
Four Albany Street, 4th Floor
New York, New York 10006
Attention: Corporate Trust Department
Ladies and Gentlemen:
Reference is hereby made to that certain Intercreditor and Collateral
Agency Agreement, dated as of August 1, 1995, by and among First Union National
Bank of Georgia, as Indenture Trustee, First Union National Bank of Georgia, as
Tax-Exempt Indenture Trustee, Banque Paribas, as Working Capital Facility
Provider, The Industrial Development Board of the City of Mobile, Alabama,
Mobile Energy Services Company, L.L.C., Mobile Energy Services Holdings, Inc.
and Bankers Trust (Delaware), as Collateral Agent (as the same may be amended,
supplemented, waived or otherwise modified from time to time, the "Intercreditor
Agreement"). Terms used herein and not otherwise defined herein shall have the
meanings assigned to them in the Intercreditor Agreement.
The Company hereby certifies, pursuant to Section 3.11 of the
Intercreditor Agreement, that the following monies are to be transferred or
deposited by the Collateral Agent from the Revenue Account, in the order of
priority set forth in such Section 3.11 (but only to the extent such monies are
then on deposit in the Revenue Account), on ___________:
(a) $_____, for deposit into the Mill Owner Reimbursement Account pursuant
to and in accordance with Section 3.11(a);
(b) $_____, for deposit into the Working Capital Facility Account pursuant
to and in accordance with Section 3.11(b) of the Intercreditor
Agreement;
(c) $_____, for deposit into the Operating Account pursuant to and in
accordance with Section 3.11(c) of the Intercreditor Agreement;
(d) $__________, to the Collateral Agent pursuant to and in accordance
with Section 3.11(d) of the Intercreditor Agreement;
(e) $__________, to the Indenture Trustee pursuant to and in accordance
with Section 3.11(d) of the Intercreditor Agreement;
[Intercreditor Agreement]
Exhibit B-1
<PAGE>
(f) $__________, to the Tax-Exempt Indenture Trustee pursuant to and in
accordance with Section 3.11(d) of the Intercreditor Agreement;
(g) $__________, for deposit into the Working Capital Facility Account
pursuant to and in accordance with Section 3.11(e)(i) of the
Intercreditor Agreement;
(h) $__________, $__________ and $__________, to the Indenture Trustee for
deposit into the Indenture Securities Interest Subaccount, the
Indenture Securities Principal Subaccount and the Indenture Securities
Redemption Subaccount pursuant to and in accordance with Section
3.11(e)(ii) of the Intercreditor Agreement, respectively;
(i) $__________, $__________ and $__________, to the Tax-Exempt Indenture
Trustee for deposit into the Tax-Exempt Indenture Securities Interest
Subaccount, Tax-Exempt Indenture Securities Principal Subaccount and
the Tax-Exempt Indenture Securities Redemption Subaccount pursuant to
and in accordance with Section 3.11(e)(iii) of the Intercreditor
Agreement, respectively;
(j) $__________, for deposit into the Maintenance Reserve Account pursuant
to and in accordance with Section 3.11(f) of the Intercreditor
Agreement;
(k) $__________, to the Indenture Trustee for deposit into each Debt
Service Reserve Account pursuant to and in accordance with Section
3.11(g)(i) of the Intercreditor Agreement;
(l) $__________, to the Tax-Exempt Indenture Trustee for deposit into each
Tax-Exempt Debt Service Reserve Account pursuant to and in accordance
with Section 3.11(g)(ii) of the Intercreditor Agreement;
(m) $__________, to the Company for deposit into the Mill Owner
Maintenance Reserve Account pursuant to and in accordance with Section
3.11(h) of the Intercreditor Agreement;
(n) $__________, for deposit into the Subordinated Debt Account pursuant
to and in accordance with Section 3.11(i) of the Intercreditor
Agreement;
(o) $__________, for deposit into the Subordinated Fee Account pursuant to
and in accordance with Section 3.11(j) of the Intercreditor Agreement;
and
Exhibit B-2
<PAGE>
(p) [$__________] [any remaining monies], for deposit into the
Distribution Account pursuant to and in accordance with Section
3.11(k) of the Intercreditor Agreement.
MOBILE ENERGY SERVICES COMPANY, L.L.C.
By:
Name:
Title:
Dated:
cc: Indenture Trustee
Tax-Exempt Indenture Trustee
Working Capital Facility Provider
[Intercreditor Agreement]
Exhibit B-3
<PAGE>
Exhibit C-1
FORM OF MAINTENANCE PLAN FUNDING SUBACCOUNT
SOUTHERN GUARANTY AGREEMENT
Dated as of [_____]
In consideration of the execution and delivery by Bankers Trust
(Delaware), as collateral agent under the Intercreditor Agreement referred to
below for the Senior Secured Parties referred to therein, of the Intercreditor
Agreement dated as of August 1, 1995 among First Union National Bank of Georgia,
as trustee for the holders of the Indenture Securities referred to therein,
First Union National Bank of Georgia, as trustee for the holders of the
Tax-Exempt Indenture Securities referred to therein, Banque Paribas, as the
Working Capital Provider referred to therein, The Industrial Development Board
of The City of Mobile, Alabama, Mobile Energy Services Company, L.L.C., an
Alabama limited liability company (the "Company"), Mobile Energy Services
Holdings, Inc., an Alabama corporation ("Mobile Energy"), and Bankers Trust
(Delaware), as such collateral agent (the "Guaranteed Party") (such
Intercreditor Agreement, as it may be amended, restated, supplemented, waived or
otherwise modified, hereinafter the "Intercreditor Agreement") and of the rights
of the Company under Section 3.15(a) thereof, and acknowledging that such
execution and delivery and such rights of the Company constitute indirect
benefit to the Guarantor at least equal to the Available Amount (as defined
herein), The Southern Company, a Delaware corporation (the "Guarantor"), hereby
agrees with the Guaranteed Party as follows (with terms not defined herein
having the meanings ascribed to them in the Intercreditor Agreement):
1. Guaranty. The Guarantor hereby (a) guarantees to the Guaranteed
Party the due and punctual payment, observance and performance of all
indebtedness, liabilities, obligations, covenants and duties of, and all terms
and conditions to be observed by, the Company due or owing under Section
3.15(c)(i) of the Intercreditor Agreement, in each case (i) whether due or owing
to, or in favor or for the benefit of, the Guaranteed Party for its own benefit
and the benefit of the Senior Secured Parties and the Holders from time to time,
any other Person that becomes the Guaranteed Party by reason of any succession
or assignment at any time thereafter or any Intercreditor Party and (ii) whether
or not an allowable claim against the Company under the Bankruptcy Code, or
otherwise enforceable against the Company, and including, in any event, interest
accruing as provided in clause (F) below after the filing by or against the
Company of a petition under the Bankruptcy Code (collectively, the "Guaranteed
Obligations"), in accordance with their respective terms and when and as due,
without regard to any counterclaim, set-off, deduction or defense of any kind
that the Company may have or assert and (b) agrees so to pay, observe or perform
the same when so due, or deemed to be due, upon demand; provided, however, that
the amount of the payment obligations of the Guarantor in respect of the
Guaranteed Obligations hereunder shall not at any time exceed the Available
[Intercreditor Agreement]
Exhibit C-1-1
<PAGE>
Amount. For purposes of this Agreement, "Available Amount" means (A) $[_____]
minus (B) the aggregate amount of any monies (including interest) paid in
respect of each call honored by the Guarantor under this Agreement minus (C) the
amount of any monies deposited into the Maintenance Plan Funding Subaccount
pursuant to the last sentence of Section 3.5(a) of the Intercreditor Agreement
minus (D) the amount of any other Reserve Account Security deposited into the
Maintenance Plan Funding Subaccount to the extent that monies are not withdrawn
therefrom on account of the deposit of such Reserve Account Security plus (E)
the aggregate amount of monies withdrawn on account of this Agreement from the
Maintenance Plan Funding Subaccount following the delivery of this Agreement to
the Guaranteed Party pursuant to the first sentence of Section 3.15(a) of the
Intercreditor Agreement (which shall not include any amounts (if any) that may
be deemed to have been withdrawn therefrom on the Closing Date) plus (F) if any
call honored by the Guarantor under this Agreement is with respect to a Debt
Service Event, the amount of any interest from (and including) the Business Day
following the date of any written demand on the Guarantor for payment of any of
the Guaranteed Obligations to (but excluding) the date of such payment at the
rate of interest equal to the then highest yield on any of the outstanding
Senior Debt plus two percent (2%) (provided that no such interest shall be
payable with respect to any amounts paid on the Business Day following the date
of any such written demand)[; provided, however, that in no event shall the
Available Amount exceed $[_____] plus interest as provided in clause (F) above].
Upon the written request of the Guarantor, the Guaranteed Party shall provide
the Guarantor with a statement of the Available Amount and a calculation
thereof. Upon the written request of the Guaranteed Party, the Guarantor shall
confirm such statement and calculation.
2. Guaranty Absolute. (a) The Guarantor guarantees that the Guaranteed
Obligations will be paid and performed strictly in accordance with the terms of
the Intercreditor Agreement, regardless of any law or regulation now or
hereafter in effect in any jurisdiction affecting any of such terms or the
rights of the Guaranteed Party with respect thereto. The obligations of the
Guarantor under this Agreement are independent of the Guaranteed Obligations,
and a separate action or actions may be brought and prosecuted against the
Guarantor to enforce this Agreement, irrespective of whether or not any action
is brought against the Company or whether or not the Company is joined in any
such action or actions. The obligations of the Guarantor under this Agreement
shall be irrevocable, absolute and unconditional, shall constitute a guaranty of
payment and performance and not a guaranty of collection, shall be as primary
obligor and not as surety only and shall be irrevocable, in each case
irrespective of: (i) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Guaranteed Obligations, or any other
amendment or waiver of, or any consent to departure from, the Intercreditor
Agreement, or any discharge, disallowance, invalidity, voidness or other
unenforceability of the Guaranteed Obligations; (ii) the existence of any claim,
set-off, defense or other right that the Company or the Guarantor may have at
any time against the Guaranteed Party, whether in connection with this
Agreement, the Intercreditor Agreement or any unrelated transaction; (iii) any
change, restructuring or termination of the corporate structure or existence of
the Company or the partial or total substitution of any other Person in the
place of the Company under the Intercreditor Agreement whether by assignment,
foreclosure or otherwise; or (iv) any other circumstance that might otherwise
constitute a defense available to, or a discharge of, the Company or a
guarantor. This Agreement shall continue to be effective or be reinstated, as
the case may be, if at any time any payment of any of the Guaranteed Obligations
is rescinded or must otherwise be returned by the Guaranteed Party upon the
insolvency,
[Intercreditor Agreement]
Exhibit C-1-2
<PAGE>
bankruptcy or reorganization of the Company or the Guarantor or otherwise, all
as though such payment had not been made.
(b) This Agreement shall not confer upon the Guaranteed Party or any
other Person any right of payment or enforcement with respect to the Company
under the Intercreditor Agreement that is in any manner broader or more
expansive than such Persons' rights of payment and enforcement, if any, with
respect to the Company under the Intercreditor Agreement.
3. Waiver. The Guarantor hereby waives promptness, diligence,
presentment, demand of payment, notice of acceptance, notice of the incurrence
or renewal of any of the Guaranteed Obligations and any other notice with
respect to any of the Guaranteed Obligations and this Agreement and any
requirement that the Guaranteed Party exhaust any right or take any action
against the Company or any other Person or entity.
4. Subrogation. Notwithstanding any payment or payments made by the
Guarantor hereunder, the Guarantor hereby irrevocably waives any and all rights
of subrogation to the rights of the Guaranteed Party against the Company and any
and all rights of reimbursement, assignment, indemnification or implied contract
or any similar rights against the Company or against any endorser or other
guarantor of all or any part of the Guaranteed Obligations until such time as
the Guaranteed Obligations guaranteed hereby have been paid, performed and
observed in full. If, notwithstanding the foregoing, any amount shall be paid to
the Guarantor on account of such subrogation rights at any time when all of such
Guaranteed Obligations shall not have been paid in full, such amount shall be
held by the Guarantor in trust for the Guaranteed Party, segregated from other
funds of the Guarantor, and shall, forthwith upon receipt by the Guarantor, be
turned over to the Guaranteed Party in the exact form received by the Guarantor,
to be applied against such Guaranteed Obligations, whether matured or unmatured,
in such order as the Guaranteed Party may determine.
5. Representations and Warranties. The Guarantor hereby represents
and warrants as follows:
(a) The Guarantor is a corporation duly organized, validly
existing and in good standing under the laws of the state of its
incorporation.
(b) The execution and delivery by the Guarantor of this
Agreement, and the performance by the Guarantor of its obligations
hereunder (i) are within the Guarantor's corporate powers, (ii) have
been duly authorized by all necessary corporate action, (iii) do not
contravene its articles of incorporation or bylaws or any law or
regulation applicable to or binding on the Guarantor or any of its
properties and (iv) do not require the consent or approval of any
Person that has not already been obtained.
(c) This Agreement constitutes the legal, valid and binding
obligation of the Guarantor enforceable against the Guarantor in
accordance with its terms, except to the extent that the enforceability
thereof may be limited by applicable bankruptcy, insolvency,
moratorium, reorganization or other similar laws affecting creditors'
rights generally and by general principles of equity (regardless of
whether enforcement is sought in a proceeding in equity or at law).
[Intercreditor Agreement]
Exhibit C-1-3
<PAGE>
6. Continuing Guaranty; Assignment. This Agreement is a continuing
guaranty and shall (a) apply to all Guaranteed Obligations whenever arising
pursuant to the terms herein, (b) be binding upon the Guarantor and its
successors and permitted assigns and (c) inure to the benefit of, and be
enforceable by, the Guaranteed Party and its successors and permitted assigns.
The Guarantor may not assign its obligations under this Agreement without the
prior written consent of the Guaranteed Party, which consent may be withheld in
the Guaranteed Party's sole discretion. The Guaranteed Party may not assign its
rights under this Agreement without the prior written consent of the Guarantor,
which consent may be withheld in the Guarantor's sole discretion.
7. Notices; Transfer of Funds. (a) The Guarantor shall provide the
Guaranteed Party, no later than forty-five (45) days after the end of each
fiscal quarter of the Guarantor, an Officer's Certificate of the Guarantor
certifying as to the determination of whether or not the Southern Credit
Standard has been satisfied as of the end of such fiscal quarter.
(b) All notices, requests, demands and other communications that are
required or may be given under this Agreement shall be in writing and shall be
deemed to have been duly given when received, if personally delivered; when
transmitted, if transmitted by telecopy, electronic or digital transmission
method, subject to the sender's facsimile machine receiving the correct
answerback of the addressee and confirmation of uninterrupted transmission by a
transmission report or the recipient confirming by telephone to sender that such
recipient has received the facsimile message and subject to a copy being sent
the same day for next day delivery by a reputable overnight delivery service;
the day after it is sent, if sent for next day delivery to a domestic address by
a reputable overnight delivery service; and upon receipt, if sent by certified
or registered mail, return receipt requested. In each case notice shall be sent
(i) if to the Guaranteed Party, to its address set forth in Section 12.4 of the
Intercreditor Agreement and (ii) if to the Guarantor, to:
The Southern Company
64 Perimeter Center East
Atlanta, Georgia 30364
Attention: Secretary
Telecopy: 404-668-3559
with a copy of any demand for payment or notice of breach or
default to:
Troutman Sanders
600 Peachtree Street, N.E.
Suite 5200
Atlanta, Georgia 30308-2216
Attention: John T.W. Mercer, Esq.
Telecopy: 404-885-3525
or to such other place and with such other copies as the Guaranteed Party or the
Guarantor may designate as to itself by written notice to the other pursuant to
this Section 7(b).
[Intercreditor Agreement]
Exhibit C-1-4
<PAGE>
(c) Payments to be made to the Guaranteed Party hereunder shall be made
by wire transfer of funds to the Guaranteed Party, c/o Bankers Trust Company,
for deposit into the Maintenance Plan Funding Subaccount established and created
under the Intercreditor Agreement (ABA No.: 021001033; Account No. 15348), at
Bankers Trust Company, Four Albany Street, New York, New York 10006 or such
other account as the Guaranteed Party may designate by notice hereunder.
8. Delay and Waiver. No failure on the part of the Guaranteed Party to
exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other
right.
9. Entire Agreement; Amendments. This Agreement and any agreement,
document or instrument attached hereto or referred to herein integrate all the
terms and conditions mentioned herein or incidental hereto and supersede all
oral negotiations and prior writings with respect to the subject matter hereof.
In the event of any conflict between the terms, conditions and provisions of
this Agreement and any such agreement, document or instrument, the terms,
conditions and provisions of this Agreement shall prevail. This Agreement may
only be amended or modified by an instrument in writing signed by each of the
Guarantor and the Guaranteed Party.
10. Headings. The headings of the various Sections of this Agreement
are for convenience of reference only and shall not modify, define or limit
any of the terms or provisions hereof.
11. Governing Law; Consent to Jurisdiction. (a) The rights and duties
of the Guaranteed Party and the Guarantor under this Agreement shall, pursuant
to Section 5-1401 of the New York General Obligations Law, be governed by the
law of the State of New York, without reference to the choice of law provisions
of New York law thereof (other than such Section 5-1401).
(b) Each party hereto irrevocably and unconditionally (i) agrees that
any suit, action or other legal proceeding arising out of this Agreement may be
brought in the United States District Court for the Southern District of New
York or, if such court does not have jurisdiction or will not accept
jurisdiction, in any court of general jurisdiction in New York, New York; (ii)
consents to the jurisdiction of any such court in any such suit, action or
proceeding; and (iii) waives any objection that such party may have to the
laying of venue of any such suit, action or proceeding in any such court.
12. WAIVER OF JURY TRIAL. EACH OF THE GUARANTOR AND THE GUARANTEED
PARTY HEREBY IRREVOCABLY WAIVES ALL RIGHT OF TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT
OR ANY MATTER ARISING HEREUNDER.
13. Severability. Any provision of this Agreement that shall be
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions thereof, and
[Intercreditor Agreement]
Exhibit C-1-5
<PAGE>
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.
14. No Recourse to Affiliates. Any obligations created herein shall be
the sole obligations of the Guarantor, unless and to the extent that such
obligations are assigned or delegated by the Guarantor pursuant to Section 6.
The Guaranteed Party shall not have recourse to any subsidiary, partner, joint
venturer, affiliate, director or officer of the Guarantor (or of any Person to
whom the Guarantor's obligations hereunder are assigned or delegated pursuant to
Section 6) for the performance of such obligations unless the obligations are
assumed in writing by the Person against whom recourse is sought.
15. Termination. Subject to the last sentence of Section 2(a), this
Agreement shall immediately terminate and be of no further force and effect upon
the earlier to occur of (a) the reduction of the Available Amount to zero in
accordance with Section 1 (including the deposit of other Reserve Account
Security or any monies into the Maintenance Plan Funding Subaccount in an amount
equal to the then Available Amount, to the extent that, in the case of such
Reserve Account Security, monies are not withdrawn from the Maintenance Plan
Funding Subaccount on account of the deposit of such Reserve Account Security)
or (b) the payment, observance and performance of the Guaranteed Obligations
guaranteed hereby. Upon such termination, the Guaranteed Party shall deliver to
the Guarantor written evidence in form and substance reasonably satisfactory to
the Guarantor of such termination and of the release of the Guarantor from all
of its obligations hereunder.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
[Intercreditor Agreement]
Exhibit C-1-6
<PAGE>
IN WITNESS WHEREOF, the Guarantor and the Guaranteed Party have caused
this Agreement to be duly executed by their duly authorized officers, all as of
the date hereof.
THE SOUTHERN COMPANY
By
Name:
Title:
BANKERS TRUST (DELAWARE),
as Collateral Agent
By
Name:
Title:
[MPFS Southern Guaranty]
<PAGE>
Exhibit C-2
FORM OF DISTRIBUTION ACCOUNT
SOUTHERN GUARANTY AGREEMENT
Dated as of [_____]
In consideration of the execution and delivery by Bankers Trust
(Delaware), as collateral agent under the Intercreditor Agreement referred to
below for the Senior Secured Parties referred to therein, of the Intercreditor
Agreement dated as of August 1, 1995 among First Union National Bank of Georgia,
as trustee for the holders of the Indenture Securities referred to therein,
First Union National Bank of Georgia, as trustee for the holders of the
Tax-Exempt Indenture Securities referred to therein, Banque Paribas, as the
Working Capital Provider referred to therein, The Industrial Development Board
of The City of Mobile, Alabama, Mobile Energy Services Company, L.L.C., an
Alabama limited liability company (the "Company"), Mobile Energy Services
Holdings, Inc., an Alabama corporation ("Mobile Energy"), and Bankers Trust
(Delaware), as such collateral agent (the "Guaranteed Party") (such
Intercreditor Agreement, as it may be amended, restated, supplemented, waived or
otherwise modified, hereinafter the "Intercreditor Agreement") and of the rights
of the Company under Section 3.15(a) thereof, and acknowledging that such
execution and delivery and such rights of the Company constitute indirect
benefit to the Guarantor at least equal to the Available Amount (as defined
herein), The Southern Company, a Delaware corporation (the "Guarantor"), hereby
agrees with the Guaranteed Party as follows (with terms not defined herein
having the meanings ascribed to them in the Intercreditor Agreement):
1. Guaranty. The Guarantor hereby (a) guarantees to the Guaranteed
Party the due and punctual payment, observance and performance of all
indebtedness, liabilities, obligations, covenants and duties of, and all terms
and conditions to be observed by, the Company due or owing under Section
3.15(c)(ii) of the Intercreditor Agreement, in each case (i) whether due or
owing to, or in favor or for the benefit of, the Guaranteed Party for its own
benefit and the benefit of the Senior Secured Parties and the Holders from time
to time, any other Person that becomes the Guaranteed Party by reason of any
succession or assignment at any time thereafter or any Intercreditor Party and
(ii) whether or not an allowable claim against the Company under the Bankruptcy
Code, or otherwise enforceable against the Company, and including, in any event,
interest accruing as provided in clause (D) below after the filing by or against
the Company of a petition under the Bankruptcy Code (collectively, the
"Guaranteed Obligations"), in accordance with their respective terms and when
and as due, without regard to any counterclaim, set-off, deduction or defense of
any kind that the Company may have or assert and (b) agrees so to pay, observe
or perform the same when so due, or deemed to be due, upon demand; provided,
however, that the amount of the payment obligations of the Guarantor in respect
of the Guaranteed Obligations hereunder shall not at any time exceed the
Available Amount. For purposes of this Agreement, "Available Amount" means (A)
$[_____] minus (B) the aggregate amount of any monies (including interest) paid
in respect of each call honored by the Guarantor under this Agreement minus (C)
the amount of any other Reserve Account
Exhibit C-2-1
<PAGE>
Security or any monies not then constituting Revenues deposited into the
Distribution Account to the extent that, in the case of such Reserve Account
Security, monies are not withdrawn from the Distribution Account on account of
the deposit of such Reserve Account Security plus (D) if any call honored by the
Guarantor under this Agreement is with respect to a Debt Service Event, the
amount of any interest from (and including) the Business Day following the date
of any written demand on the Guarantor for payment of any of the Guaranteed
Obligations to (but excluding) the date of such payment at the rate of interest
equal to the then highest yield on any of the outstanding Senior Debt plus two
percent (2%) (provided that no such interest shall be payable with respect to
any amounts paid on the Business Day following the date of any such written
demand)[; provided, however, that in no event shall the Available Amount exceed
[_____] plus interest as provided in clause (D) above]. Upon the written request
of the Guarantor, the Guaranteed Party shall provide the Guarantor with a
statement of the Available Amount and a calculation thereof. Upon the written
request of the Guaranteed Party, the Guarantor shall confirm such statement and
calculation.
2. Guaranty Absolute. (a) The Guarantor guarantees that the Guaranteed
Obligations will be paid and performed strictly in accordance with the terms of
the Intercreditor Agreement, regardless of any law or regulation now or
hereafter in effect in any jurisdiction affecting any of such terms or the
rights of the Guaranteed Party with respect thereto. The obligations of the
Guarantor under this Agreement are independent of the Guaranteed Obligations,
and a separate action or actions may be brought and prosecuted against the
Guarantor to enforce this Agreement, irrespective of whether or not any action
is brought against the Company or whether or not the Company is joined in any
such action or actions. The obligations of the Guarantor under this Agreement
shall be irrevocable, absolute and unconditional, shall constitute a guaranty of
payment and performance and not a guaranty of collection, shall be as primary
obligor and not as surety only and shall be irrevocable, in each case
irrespective of: (i) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Guaranteed Obligations, or any other
amendment or waiver of, or any consent to departure from, the Intercreditor
Agreement, or any discharge, disallowance, invalidity, voidness or other
unenforceability of the Guaranteed Obligations; (ii) the existence of any claim,
set-off, defense or other right that the Company or the Guarantor may have at
any time against the Guaranteed Party, whether in connection with this
Agreement, the Intercreditor Agreement or any unrelated transaction; (iii) any
change, restructuring or termination of the corporate structure or existence of
the Company or the partial or total substitution of any other Person in the
place of the Company under the Intercreditor Agreement whether by assignment,
foreclosure or otherwise; or (iv) any other circumstance that might otherwise
constitute a defense available to, or a discharge of, the Company or a
guarantor. This Agreement shall continue to be effective or be reinstated, as
the case may be, if at any time any payment of any of the Guaranteed Obligations
is rescinded or must otherwise be returned by the Guaranteed Party upon the
insolvency, bankruptcy or reorganization of the Company or the Guarantor or
otherwise, all as though such payment had not been made.
(b) This Agreement shall not confer upon the Guaranteed Party or any
other Person any right of payment or enforcement with respect to the Company
under the Intercreditor Agreement that is in any manner broader or more
expansive than such Persons' rights of payment and enforcement, if any, with
respect to the Company under the Intercreditor Agreement.
Exhibit C-2-2
<PAGE>
3. Waiver. The Guarantor hereby waives promptness, diligence,
presentment, demand of payment, notice of acceptance, notice of the incurrence
or renewal of any of the Guaranteed Obligations and any other notice with
respect to any of the Guaranteed Obligations and this Agreement and any
requirement that the Guaranteed Party exhaust any right or take any action
against the Company or any other Person or entity.
4. Subrogation. Notwithstanding any payment or payments made by the
Guarantor hereunder, the Guarantor hereby irrevocably waives any and all rights
of subrogation to the rights of the Guaranteed Party against the Company and any
and all rights of reimbursement, assignment, indemnification or implied contract
or any similar rights against the Company or against any endorser or other
guarantor of all or any part of the Guaranteed Obligations until such time as
the Guaranteed Obligations guaranteed hereby have been paid, performed and
observed in full. If, notwithstanding the foregoing, any amount shall be paid to
the Guarantor on account of such subrogation rights at any time when all of such
Guaranteed Obligations shall not have been paid in full, such amount shall be
held by the Guarantor in trust for the Guaranteed Party, segregated from other
funds of the Guarantor, and shall, forthwith upon receipt by the Guarantor, be
turned over to the Guaranteed Party in the exact form received by the Guarantor,
to be applied against such Guaranteed Obligations, whether matured or unmatured,
in such order as the Guaranteed Party may determine.
5. Representations and Warranties. The Guarantor hereby represents
and warrants as follows:
(a) The Guarantor is a corporation duly organized, validly
existing and in good standing under the laws of the state of its
incorporation.
(b) The execution and delivery by the Guarantor of this
Agreement, and the performance by the Guarantor of its obligations
hereunder (i) are within the Guarantor's corporate powers, (ii) have
been duly authorized by all necessary corporate action, (iii) do not
contravene its articles of incorporation or bylaws or any law or
regulation applicable to or binding on the Guarantor or any of its
properties and (iv) do not require the consent or approval of any
Person that has not already been obtained.
(c) This Agreement constitutes the legal, valid and binding
obligation of the Guarantor enforceable against the Guarantor in
accordance with its terms, except to the extent that the enforceability
thereof may be limited by applicable bankruptcy, insolvency,
moratorium, reorganization or other similar laws affecting creditors'
rights generally and by general principles of equity (regardless of
whether enforcement is sought in a proceeding in equity or at law).
6. Continuing Guaranty; Assignment. This Agreement is a continuing
guaranty and shall (a) apply to all Guaranteed Obligations whenever arising
pursuant to the terms herein, (b) be binding upon the Guarantor and its
successors and permitted assigns and (c) inure to the benefit of, and be
enforceable by, the Guaranteed Party and its successors and permitted assigns.
The Guarantor may not assign its obligations under this Agreement without the
prior written consent of the Guaranteed Party, which consent may be withheld in
the Guaranteed Party's sole discretion. The Guaranteed Party may not assign its
rights under this Agreement without the
Exhibit C-2-3
<PAGE>
prior written consent of the Guarantor, which consent may be withheld in the
Guarantor's sole discretion.
7. Notices; Transfer of Funds. (a) The Guarantor shall provide the
Guaranteed Party, no later than forty-five (45) days after the end of each
fiscal quarter of the Guarantor, an Officer's Certificate of the Guarantor
certifying as to the determination of whether or not the Southern Credit
Standard has been satisfied as of the end of such fiscal quarter.
(b) All notices, requests, demands and other communications that are
required or may be given under this Agreement shall be in writing and shall be
deemed to have been duly given when received, if personally delivered; when
transmitted, if transmitted by telecopy, electronic or digital transmission
method, subject to the sender's facsimile machine receiving the correct
answerback of the addressee and confirmation of uninterrupted transmission by a
transmission report or the recipient confirming by telephone to sender that such
recipient has received the facsimile message and subject to a copy being sent
the same day for next day delivery by a reputable overnight delivery service;
the day after it is sent, if sent for next day delivery to a domestic address by
a reputable overnight delivery service; and upon receipt, if sent by certified
or registered mail, return receipt requested. In each case notice shall be sent
(i) if to the Guaranteed Party, to its address set forth in Section 12.4 of the
Intercreditor Agreement and (ii) if to the Guarantor, to:
The Southern Company
64 Perimeter Center East
Atlanta, Georgia 30364
Attention: Secretary
Telecopy: 404-668-3559
with a copy of any demand for payment or notice of breach or
default to:
Troutman Sanders
600 Peachtree Street, N.E.
Suite 5200
Atlanta, Georgia 30308-2216
Attention: John T.W. Mercer, Esq.
Telecopy: 404-885-3525
or to such other place and with such other copies as the Guaranteed Party or the
Guarantor may designate as to itself by written notice to the other pursuant to
this Section 7(b).
(c) Payments to be made to the Guaranteed Party hereunder shall be made
by wire transfer of funds to the Guaranteed Party, c/o Bankers Trust Company,
for deposit into the Distribution Account established and created under the
Intercreditor Agreement (ABA No.: 021001033; Account No. 15346), at Bankers
Trust Company, Four Albany Street, New York, New York 10006 or such other
account as the Guaranteed Party may designate by notice hereunder.
Exhibit C-2-4
<PAGE>
8. Delay and Waiver. No failure on the part of the Guaranteed Party to
exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other
right.
9. Entire Agreement; Amendments. This Agreement and any agreement,
document or instrument attached hereto or referred to herein integrate all the
terms and conditions mentioned herein or incidental hereto and supersede all
oral negotiations and prior writings with respect to the subject matter hereof.
In the event of any conflict between the terms, conditions and provisions of
this Agreement and any such agreement, document or instrument, the terms,
conditions and provisions of this Agreement shall prevail. This Agreement may
only be amended or modified by an instrument in writing signed by each of the
Guarantor and the Guaranteed Party.
10. Headings. The headings of the various Sections of this Agreement
are for convenience of reference only and shall not modify, define or limit any
of the terms or provisions hereof.
11. Governing Law; Consent to Jurisdiction. (a) The rights and duties
of the Guaranteed Party and the Guarantor under this Agreement shall, pursuant
to Section 5-1401 of the New York General Obligations Law, be governed by the
law of the State of New York, without reference to the choice of law provisions
of New York law thereof (other than such Section 5-1401).
(b) Each party hereto irrevocably and unconditionally (i) agrees that
any suit, action or other legal proceeding arising out of this Agreement may be
brought in the United States District Court for the Southern District of New
York or, if such court does not have jurisdiction or will not accept
jurisdiction, in any court of general jurisdiction in New York, New York; (ii)
consents to the jurisdiction of any such court in any such suit, action or
proceeding; and (iii) waives any objection that such party may have to the
laying of venue of any such suit, action or proceeding in any such court.
12. WAIVER OF JURY TRIAL. EACH OF THE GUARANTOR AND THE GUARANTEED
PARTY HEREBY IRREVOCABLY WAIVES ALL RIGHT OF TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT
OR ANY MATTER ARISING HEREUNDER.
13. Severability. Any provision of this Agreement that shall be
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions thereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
14. No Recourse to Affiliates. Any obligations created herein shall
be the sole obligations of the Guarantor, unless and to the extent that such
obligations are assigned or delegated by the Guarantor pursuant to Section 6.
The Guaranteed Party shall not have recourse to any subsidiary, partner, joint
venturer, affiliate, director or officer of the Guarantor (or of
Exhibit C-2-5
<PAGE>
any Person to whom the Guarantor's obligations hereunder are assigned or
delegated pursuant to Section 6) for the performance of such obligations unless
the obligations are assumed in writing by the Person against whom recourse is
sought.
15. Termination. Subject to the last sentence of Section 2(a), this
Agreement shall immediately terminate and be of no further force and effect upon
the earlier to occur of (a) the reduction of the Available Amount to zero in
accordance with Section 1 (including the deposit of other Reserve Account
Security or any monies not then constituting Revenues into the Distribution
Account in an amount equal to the then Available Amount, to the extent that, in
the case of such Reserve Account Security, monies are not withdrawn from the
Distribution Account on account of the deposit of such Reserve Account
Security), (b) the payment, observance and performance of the Guaranteed
Obligations guaranteed hereby or (c) the termination of this Agreement pursuant
to the last sentence of Section 3.8(c) of the Intercreditor Agreement. Upon such
termination, the Guaranteed Party shall deliver to the Guarantor written
evidence in form and substance reasonably satisfactory to the Guarantor of such
termination and of the release of the Guarantor from all of its obligations
hereunder.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
Exhibit C-2-6
<PAGE>
IN WITNESS WHEREOF, the Guarantor and the Guaranteed Party have caused
this Agreement to be duly executed by their duly authorized officers, all as of
the date hereof.
THE SOUTHERN COMPANY
By:
Name:
Title:
BANKERS TRUST (DELAWARE),
as Collateral Agent
By:
Name:
Title:
[DA Southern Guaranty]
<PAGE>
EXHIBIT D
FORM OF CONSENT TO ASSIGNMENT
THIS CONSENT TO ASSIGNMENT (this "Consent"), dated as of [_____], is
executed by [_____], a [_____] (the "Consenting Party"), MOBILE ENERGY SERVICES
COMPANY, L.L.C., an Alabama limited liability company (the "Company"), and
BANKERS TRUST (DELAWARE), a Delaware banking corporation, as Collateral Agent
for the Senior Secured Parties (as hereinafter defined) (the "Collateral
Agent").
W I T N E S S E T H:
WHEREAS, the Company, Mobile Energy Services Holdings, Inc.
(formerly known as Mobile Energy Services Company, Inc.), an Alabama
corporation ("Mobile Energy"), and First Union National Bank of
Georgia, as trustee (in such capacity, the "Indenture Trustee"), have
entered into a Trust Indenture dated as of August 1, 1995 (as the same
may be amended, supplemented, waived or otherwise modified, the
"Indenture"), pursuant to which the Company (i) has issued its First
Mortgage Bonds, the proceeds of which were used to (among other things)
repay to The Southern Company a portion of the amounts advanced to pay
certain costs associated with the acquisition of the energy and black
liquor recovery complex located at an integrated pulp, paper and tissue
manufacturing facility in Mobile, Alabama (together with the related
real property rights and other related assets of the Company, the
"Energy Complex") and (ii) may, from time to time, issue additional
Senior Debt (as defined in the Indenture);
WHEREAS, the Company, Mobile Energy and The Industrial
Development Board of the City of Mobile, Alabama (the "IDB") have
entered into an Amended and Restated Lease and Agreement dated as of
August 1, 1995 with respect to a portion of the Energy Complex relating
to the IDB's Solid Waste Revenue Refunding Bonds (Mobile Energy
Services Company, L.L.C. Project), Series 1995, issued for the benefit
of the Company pursuant to an Amended and Restated Trust Indenture
dated as of August 1, 1995 (as the same may be amended, supplemented,
waived or otherwise modified, the "Tax-Exempt Indenture") between the
IDB and First Union National Bank of Georgia, as trustee (in such
capacity, the "Tax-Exempt Trustee"). The proceeds of the Tax-Exempt
Bonds were used to refinance certain outstanding tax-exempt bonds and
to pay for certain other costs. The Company may cause the IDB to issue,
from time to time, additional Senior Debt under the Tax-Exempt
Indenture;
WHEREAS, the Company and Banque Paribas (together with any
lender that is or becomes a provider of the Working Capital Facility
(as hereinafter defined), the "Working Capital Facility Provider" and,
together with the Indenture Trustee and the Tax-Exempt Trustee, the
"Senior Secured Parties") have entered into a Revolving Credit Facility
dated as of August 1, 1995 (as the same may be amended, supplemented,
waived or otherwise modified and, together with any replacement working
capital facility, the
Exhibit D-1
<PAGE>
"Working Capital Facility"), borrowings under which will be used from
time to time to finance certain working capital requirements of the
Company;
WHEREAS, the Consenting Party and the Company have entered
into [specify contracts entered into between the Consenting Party and
the Company] (collectively, as the same may be amended, supplemented,
waived or otherwise modified, the "Contracts");
WHEREAS, the Collateral Agent has been granted a security
interest in the Contracts and the Energy Complex for the benefit of the
Senior Secured Parties pursuant to an Assignment and Security Agreement
dated as of August 1, 1995 between the Collateral Agent and the Company
and a Leasehold Mortgage, Assignment of Leases, Rents, Issues and
Profits dated as of August 1, 1995 between the Collateral Agent and the
Company; and
WHEREAS, the Collateral Agent, the Senior Secured Parties, the
Company and Mobile Energy have entered into a Intercreditor and
Collateral Agency Agreement dated as of August 1, 1995 (as the same may
be amended, supplemented, waived or otherwise modified, the
"Intercreditor Agreement").
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which hereby are acknowledged, the parties hereto hereby agree as
follows.
1. Consent to Assignment. The Consenting Party hereby irrevocably
consents to the Company's assignment of the Contracts to the Collateral Agent as
security; and the Consenting Party shall, at the Collateral Agent's request in
the exercise of its rights as Collateral Agent, continue performance under the
Contracts in accordance with their terms and the terms of this Consent to
Assignment.
2. No Defaults. The Consenting Party represents and warrants to, and
agrees with, the Collateral Agent that (a) the Consenting Party shall perform
and comply with all material terms and provisions of the Contracts applicable to
it, (b) the Contracts are in full force and effect and there are no [further]
amendments, modifications or supplements thereto, either oral or written, (c)
the Consenting Party has not assigned, transferred or hypothecated any of its
right, title and interest in and to any of the Contracts or any interest
therein, (d) the Consenting Party has no knowledge of any default by the Company
in any respect in the performance of any provision of any of the Contracts or of
any claims or rights of set-off by the Consenting Party or any of its affiliates
against the Company, the Company has fulfilled all of its obligations under the
Contracts required to be performed on or prior to the date hereof and there are
no breaches or unsatisfied conditions presently existing (or that, with the
giving of notice or the passage of time or both, would exist) or that would
result from the consummation of any transaction contemplated by the Contracts or
this Consent to Assignment to take place on the date hereof that would allow the
Consenting Party to terminate this Consent to Assignment or the Contracts, (e)
none of the Company's rights under any of the Contracts has been waived, (f) the
security assignment of the Contracts by the Company to the Collateral Agent, and
the acknowledgment of and consent to such assignment by the Consenting Party,
will not cause or constitute a default under any of the Contracts or an event or
condition that, with the giving of notice or the passage
Exhibit D-2
<PAGE>
of time or both, would constitute a default under any of the Contracts and (g) a
foreclosure or other exercise of remedies under the Financing Documents or any
sale thereunder by the Collateral Agent or any of its designees or assignees,
whether by judicial proceedings or under any power of sale contained therein, or
any conveyance from the Company or the Collateral Agent or any such designee or
assignee, in lieu thereof, shall not cause or constitute a default under any of
the Contracts or an event or condition that, with the giving of notice or the
passage of time or both, would constitute a default under any of the Contracts.
3. Notice of Termination, Transfer, Etc.. (a) The Consenting Party will
not, without the prior written consent of the Collateral Agent, (i) cancel,
suspend or terminate any of the Contracts, except as provided in the Contracts
and in accordance with Section 3(b) hereof, or consent to or accept any
cancellation, suspension or termination thereof by the Company, (ii) sell,
assign or otherwise dispose of (by operation of law or otherwise) any part of
its interest in the Contracts, (iii) amend or modify the Contracts in any
respect that may reasonably be expected to have a material effect on the
Company's rights or obligations or (iv) claim prevention of or interference with
performance of its obligations under the Contracts. The Consenting Party agrees
to deliver duplicates or copies of all (i) notices of default delivered under or
pursuant to any of the Contracts to the Collateral Agent promptly upon delivery
thereof to the Company (and the Consenting Party agrees that no such notice of
default shall be effective until received by the Collateral Agent) and (ii)
amendments to any of the Contracts (and the Consenting Party agrees that no such
amendment shall be effective until received by the Collateral Agent).
(b) The Consenting Party will not exercise any right it may have under
any of the Contracts, at law or in equity, to cancel, suspend or terminate any
such Contract (other than upon the stated expiration of the term of such
Contract) or any of its obligations thereunder on account of any default, breach
or other act or omission of the Company thereunder without (i) in the case of a
default by the Company that is the failure by the Company to pay amounts to the
Consenting Party that are due and payable under the Contracts, first providing
to the Collateral Agent written notice of such default, breach or other act or
omission and the greater of (A) the cure period specified in such Contract and
(B) ninety (90) days [If ninety (90) days is impracticable, then sixty (60)
days] from the date such notice is received by the Collateral Agent to pay such
amounts and (ii) in the case of a default, breach or other act or omission that
cannot be cured by the payment of money to the Consenting Party, first providing
to the Collateral Agent written notice of such default, breach or other act or
omission and the greater of (A) the cure period specified in such Contract and
(B) one hundred and eighty (180) days from the date such notice is received by
the Collateral Agent to cure such breach or default so long as the Collateral
Agent or its designee shall have commenced to cure such breach, default or other
act or omission within ninety (90) days and thereafter diligently pursues such
cure to completion or, with respect to any default, breach or other act or
omission that is not susceptible of being cured by the Collateral Agent, to
rectify, to the Consenting Party's reasonable satisfaction, the effect on the
Consenting Party thereof within one hundred and eighty (180) days from the date
such notice is received by the Collateral Agent. If possession of the Energy
Complex (by way of foreclosure proceedings or otherwise) is necessary to cure
such breach, default or other act or omission, the Collateral Agent or its
successor, transferee or assignee will be allowed a reasonable additional period
to complete such proceedings or otherwise accomplish such possession, provided
that in no event shall such additional period exceed ninety (90) days.
Exhibit D-3
<PAGE>
If the Collateral Agent or its successor, transferee or assignee is
prohibited by any court order or bankruptcy or insolvency proceedings from
curing the default, breach or other act or omission or from commencing or
prosecuting foreclosure proceedings, the foregoing time periods shall be
extended by the period of such prohibition. The Consenting Party consents to the
transfer of the Company's interest under the Contracts to the Collateral Agent
for the benefit of the Senior Secured Parties or a purchaser or grantee at a
foreclosure sale by judicial or nonjudicial foreclosure and sale or by a
conveyance by the Company in lieu of foreclosure and agrees that, upon such
foreclosure, sale or conveyance, the Consenting Party shall recognize the
Collateral Agent or such other purchaser or grantee as the applicable party
under any Contracts so transferred, provided that the Collateral Agent or such
purchaser or grantee assumes the obligations of the Company under such
Contracts.
The notice specified in this Section 3(b) shall be in writing and shall
be addressed to the Collateral Agent as set forth below or to such other address
as the Collateral Agent may have specified by written notice delivered in
accordance herewith. Such notice shall be effective (a) if by telecopier, when
transmitted to the telecopier number specified herein and received at such
number, (b) if by registered or certified mail, postage prepaid, return receipt
requested, on the third business day after delivered to a United States post
office and a receipt therefor is issued thereby or (c) if by any other means,
when delivered to the specified address.
Bankers Trust (Delaware)
c/o Bankers Trust Company
Four Albany Street, 4th Floor
New York, New York 10006
Attention: Corporate Trust Department
Telecopier No.: 212-250-6961
Failure of the Consenting Party to provide such notice to the Collateral Agent
shall not constitute a breach of this Consent to Assignment, and the Collateral
Agent agrees that the Consenting Party shall have no liability to the Collateral
Agent for such failure whatsoever; provided, however, that no cancellation,
suspension or termination of any of the Contracts by the Consenting Party, or of
any of the Consenting Party's obligations thereunder by the Consenting Party,
shall be binding upon the Collateral Agent without such notice and the
expiration of the applicable cure period set forth in this Section 3(b).
4. No Previous Assignment. Except for the assignment contemplated by
this Consent to Assignment, the Consenting Party represents and warrants to the
Collateral Agent that it has no actual notice of any assignment of any of the
Contracts and that it has not previously consented to any assignment, transfer
or hypothecation of any of the Contracts or any interest therein by the Company.
5. Payments to Revenue Account. The Consenting Party hereby agrees
that, until the Collateral Agent has given the Consenting Party written notice
that the obligations secured by the Contracts have been paid, observed and
satisfied in full, all payments to be made by the Consenting Party pursuant to
the terms of any of the Contracts shall be in lawful money of the United States
of America, in immediately available funds, directly to the Collateral Agent,
c/o
Exhibit D-4
<PAGE>
Bankers Trust Company, for deposit into the Revenue Account established and
created under the Intercreditor Agreement (Account No. 15351), at Bankers Trust
Company, Four Albany Street, New York, New York 10006, or to such other person
or at such other address as the Collateral Agent may from time to time specify
in writing to the Consenting Party. By executing this Consent to Assignment, the
Company hereby directs the Consenting Party to make all payments due to the
Company under any of the Contracts directly to the Collateral Agent, c/o Bankers
Trust Company, or such other person as provided for above until the Consenting
Party has received the notice referred to in the first sentence of this Section
5.
6. Protection of Collateral Agent. In the event that (a) either (i) the
Company's interest in the Energy Complex shall be sold, assigned or otherwise
transferred pursuant to the exercise of any right, power or remedy by the
Collateral Agent or pursuant to judicial proceedings or (ii) the Company rejects
any of the Contracts under the Federal Bankruptcy Code, or other similar Federal
or state statute, and such rejection is approved by the appropriate bankruptcy
court or is otherwise effective pursuant to such statute and (b) in either case
(i) no funds payable under the Contracts shall be due and payable to the
Consenting Party, (ii) the Collateral Agent shall have arranged for the curing
of any material default or breach by the Company under the Contracts that is
susceptible of being corrected by the Collateral Agent or by a purchaser at any
judicial or non-judicial sale, (iii) the Contracts shall have been terminated
pursuant to the terms thereof by reason of a default or a rejection in
bankruptcy under the Federal Bankruptcy Code, or other similar Federal or state
statute, and (iv) the effect upon the Consenting Party of any default not
susceptible of being corrected shall have been rectified, to the Consenting
Party's reasonable satisfaction, then the Consenting Party shall, within fifteen
(15) days after receipt of written request therefor, execute and deliver to the
Collateral Agent or its nominee, purchaser, assignee or transferee (as the case
may be) an agreement containing the same terms as the Contracts so terminated
for the remainder of the term thereof. References in this Consent to Assignment
to "Contracts" shall be deemed also to refer to such new agreements.
7. Acknowledgment of the Collateral Agent's Obligations and Rights.
None of the Collateral Agent, the Senior Secured Parties or the IDB has any
obligation hereunder to extend credit to the Consenting Party or any contractor
of the Consenting Party at any time for any purpose. None of the Collateral
Agent, the Senior Secured Parties or the IDB shall have any obligation to the
Consenting Party under any of the Contracts unless and until such time as it
succeeds to the interests of the Company under such Contracts.
8. Exercise of Remedies by the Collateral Agent. Upon delivery of
written notice by the Collateral Agent to the Consenting Party that the
Collateral Agent or any of its designees or assignees (as the case may be)
expressly elects to assume the obligations of the Company under any of the
Contracts, the Collateral Agent or any of its designees or assignees shall have
the full right and power to enforce directly against the Consenting Party all
obligations of the Consenting Party under such Contracts and otherwise to
exercise all remedies thereunder and to make all demands and give all notices
and make all requests required or permitted to be made by the Company under such
Contracts. It is expressly understood and agreed by the parties hereto that this
Consent has been executed by Bankers Trust (Delaware), not in its individual
capacity, but solely as Collateral Agent hereunder in the exercise of the power
and authority conferred and vested in it, and nothing contained herein shall be
construed as creating any liability on Bankers
Exhibit D-5
<PAGE>
Trust (Delaware), individually or personally, to perform any covenant, either
express or implied, contained herein, all such liability, if any, being
expressly waived by the parties hereto.
9. The Company Not to Cause Breach. The Company hereby irrevocably
waives any rights that it may have, including those arising under any of the
Contracts, to seek to compel the Consenting Party to act in a manner
inconsistent with this Consent to Assignment while this Consent to Assignment is
in effect.
10. Representations. The Consenting Party represents and warrants to
the Company and the Collateral Agent as follows:
(a) The Consenting Party is duly organized, validly existing
and in good standing under the laws of the State of [insert
jurisdiction of organization] and is qualified to do business in the
State of Alabama.
(b) The Consenting Party has the necessary [corporate] power
and [corporate] authority to execute, deliver and perform the Contracts
and this Consent to Assignment; the execution and delivery by the
Consenting Party of the Contracts and this Consent to Assignment and
the performance of its obligations thereunder and hereunder have been
duly authorized by all necessary [corporate] action and do not and will
not (i) require any consent or approval of the Consenting Party's
[insert board of directors and shareholders or other governing body and
holders of ownership interests], except for those consents and
approvals that have been duly obtained and are in full force and
effect, (ii) violate any provision of the [insert name of charter and
by-laws] of the Consenting Party or any provision of any law, rule or
regulation, or any order, writ, judgment, injunction, decree,
determination or award having applicability to the Consenting Party,
(iii) result in a breach of or constitute a default under any
indenture, loan agreement, credit agreement or any other agreement,
lease or instrument to which the Consenting Party is a party or by
which it or its properties may be bound or affected or (iv) result in,
or require, the creation or imposition of any mortgage, deed of trust,
pledge, lien, security interest, charge or encumbrance of any nature
now owned or hereafter acquired by the Consenting Party; and the
Consenting Party is not in violation, breach or default of any
provision of the [insert name of charter and bylaws] of the Consenting
Party or any provision of any law, rule, regulation, order, writ,
judgment, injunction, decree, determination or award having
applicability to the Consenting Party or any agreement referred to
above in clause (iii) of this Section 10(b), which violation could have
a material adverse effect on the ability of the Consenting Party to
perform its obligations under this Consent to Assignment or any
Contract.
(c) Each of the Contracts and this Consent to Assignment has
been duly executed and delivered and constitutes a valid and binding
obligation of the Consenting Party, enforceable against the Consenting
Party in accordance with its terms, except to the extent that
enforceability may be limited by applicable bankruptcy, insolvency,
moratorium, reorganization or other similar laws affecting the
enforcement of creditors' rights and general equitable principles
(regardless of whether such enforceability is considered in a
proceeding in equity or in law).
Exhibit D-6
<PAGE>
(d) No consent or approval of, or other action by, or any
notice or filing with, any court or administrative or governmental body
(except those previously obtained and in full force and effect) is
required in connection with the execution and delivery of any of the
Contracts or this Consent to Assignment or the performance by the
Consenting Party of its obligations thereunder or hereunder; and the
Consenting Party has obtained all permits, licenses, approvals,
consents, authorizations and exemptions with respect to the performance
of its obligations under the Contracts and this Consent to Assignment
required by applicable laws, statutes, rules and regulations in effect
as of the date hereof.
(e) The Consenting Party is not in default with respect to any
of the Contracts and has no knowledge, as of the date hereof, of any
claims or, except as otherwise set forth in the Contracts, rights of
set-off by the Consenting Party or by any of its affiliates against the
Company. The Consenting Party will not exercise any right of set-off it
may have against the Company or Mobile Energy under any Contract other
than with respect to matters arising under such Contract.
(f) There are no proceedings pending or, to the best of the
Consenting Party's knowledge after due inquiry, threatened against or
affecting the Consenting Party in any court or before any governmental
authority or arbitration board or tribunal (whether or not purportedly
on behalf of the Consenting Party) that may result in a material
adverse effect on the property, business, prospects or financial
condition of the Consenting Party or on the ability of the Consenting
Party to perform its obligations under, or that purports to affect the
legality, validity or enforceability of, any of the Contracts or this
Consent to Assignment; and the Consenting Party is not in default with
respect to any order of any court, governmental authority or
arbitration board or tribunal that may result in a material adverse
effect on the Consenting Party's ability to perform its obligations
under this Consent to Assignment or the Contracts.
11. Binding Upon Successors. All agreements, covenants, conditions,
representations and warranties in this Consent to Assignment shall be binding
upon and inure to the benefit of and be enforceable by the successors and
assigns of each of the parties hereto.
12. Captions. The captions or headings at the beginning of each
Section hereof are for convenience only and shall not affect the construction
hereof.
13. Governing Law. THE RIGHTS AND DUTIES OF THE PARTIES HERETO SHALL,
PURSUANT TO SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW, BE GOVERNED
BY THE LAW OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO THE CHOICE OF LAW
PROVISIONS THEREOF (OTHER THAN SUCH SECTION 5-1401).
14. Amendment. This Consent to Assignment may be modified, amended or
rescinded only by a writing expressly referring to this Consent to Assignment
and signed by all of the parties hereto.
15. Severability. Any provision of this Consent to Assignment that
may be determined by competent authority to be invalid or unenforceable in any
jurisdiction shall, as to such
Exhibit D-7
<PAGE>
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without invalidating or rendering unenforceable any remaining
terms and provisions hereof, and such invalidity or unenforceability shall not
invalidate or render unenforceable such provision in any other jurisdiction.
16. Counterparts. This Consent to Assignment may be executed in any
number of counterparts, each of which when so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same instrument.
Exhibit D-8
<PAGE>
IN WITNESS WHEREOF, each of the Consenting Party, the Collateral Agent
and the Company have duly executed this Consent to Assignment as of the date
first above written.
[insert name of the Consenting Party],
a [insert jurisdiction of organization],
as the Consenting Party
By:
Name:
Title:
BANKERS TRUST (DELAWARE),
a Delaware corporation, not in its individual capacity,
but solely as the Collateral Agent
By:
Name:
Title:
MOBILE ENERGY SERVICES COMPANY,
L.L.C., an Alabama limited
liability company, as the Company
By:
Name:
Title:
Exhibit 4.4
- -------------------------------------------------------------------------------
AMENDED AND RESTATED TRUST INDENTURE
dated as of August 1, 1995
between
THE INDUSTRIAL DEVELOPMENT BOARD
OF THE CITY OF MOBILE, ALABAMA
and
FIRST UNION NATIONAL BANK OF GEORGIA, as Trustee
Providing for the Issuance from Time to Time of
Securities in One or More Series
- -------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I.
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 1.1. Definitions; Construction.............................. 3
SECTION 1.2. Compliance Certificates and Opinions................... 3
SECTION 1.3. Form of Documents Delivered to Trustee................. 4
SECTION 1.4. Acts of Holders........................................ 5
SECTION 1.5. Notices, etc. to Trustee, IDB and Mobile Energy
Parties............................................. 6
SECTION 1.6. Notices to Holders; Waiver............................. 7
SECTION 1.7. Effect of Headings and Table of Contents............... 7
SECTION 1.8. Successors and Assigns................................. 7
SECTION 1.9. Severability Clause.................................... 7
SECTION 1.10. Benefits of Indenture.................................. 7
SECTION 1.11. Governing Law.......................................... 7
SECTION 1.12. Legal Holidays......................................... 8
SECTION 1.13. Execution in Counterparts.............................. 8
SECTION 1.14. Amendment and Restatement.............................. 8
SECTION 1.15. Survival of Assignment Agreement.........................8
ARTICLE II.
THE SECURITIES
SECTION 2.1. Form of Security to be Established by
Series Supplemental Indenture.......................... 9
SECTION 2.2. Form of Trustee's Authentication....................... 9
SECTION 2.3. Amount Unlimited; Issuable in Series; Limitations
on Issuance......................................... 9
SECTION 2.4. Authentication and Delivery of Securities.............. 11
SECTION 2.5. Form and Denominations................................. 12
SECTION 2.6. Execution of Securities................................ 13
SECTION 2.7. Temporary Securities................................... 13
SECTION 2.8. Registration, Transfer and Exchange.................... 13
SECTION 2.9. Mutilated, Destroyed, Lost and Stolen
Securities.......................................... 15
SECTION 2.10. Payment of Principal and Interest; Principal
and Interest Rights Preserved.......................... 15
SECTION 2.11. Persons Deemed Owners.................................. 17
SECTION 2.12. Cancellation........................................... 17
SECTION 2.13. Dating of Securities; Computation of Interest.......... 17
SECTION 2.14. Source of Payments Limited; Rights and
Liabilities of the Mobile Energy Parties............... 17
SECTION 2.15. Parity of Securities................................... 18
SECTION 2.16. Allocation of Principal and Interest................... 18
SECTION 2.17. Authorization and Provisions for Issuance of
1995 Bonds; Application of Proceeds.................... 18
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
SECTION 3.1. Organization, Power, Authority and Status of
IDB.................................................. 20
SECTION 3.2. Authorization; Enforceability; Execution and
Delivery............................................. 20
i
<PAGE>
SECTION 3.3. No Conflicts; Laws and Contracts; No Default........... 21
SECTION 3.4. Litigation............................................. 21
SECTION 3.5. Signed Certificates.................................... 21
ARTICLE IV.
TAX-EXEMPT INDENTURE ACCOUNTS
SECTION 4.1. Establishment of Tax-Exempt Indenture
Securities Account..................................... 22
SECTION 4.2. Payments into Tax-Exempt Indenture Securities
Account............................................. 22
SECTION 4.3. Application of Funds in Tax-Exempt Indenture
Securities Account..................................... 22
SECTION 4.4. Establishment of 1995 Bond Tax-Exempt Debt Service
Reserve Account........................................ 23
SECTION 4.5. Payments into Tax-Exempt Debt Service Reserve
Accounts............................................... 23
SECTION 4.6. Application of Funds in Tax-Exempt Debt Service
Reserve Accounts....................................... 23
SECTION 4.7. Reserve Account Letter of Credit....................... 24
SECTION 4.8. Investment of Monies in the Tax-Exempt
Indenture Accounts..................................... 25
SECTION 4.9. Monies to be Held in Trust............................. 27
SECTION 4.10. Dominion and Control................................... 27
ARTICLE V.
COVENANTS
SECTION 5.1. Payment of Principal, Premium, if any, and
Interest............................................ 27
SECTION 5.2. Performance of Covenants by IDB........................ 27
SECTION 5.3. Rights Under IDB Lease Agreement....................... 27
SECTION 5.4. Arbitrage and Tax Covenants............................ 28
SECTION 5.5. No Disposition of Tax-Exempt Indenture Securities
Collateral............................................. 28
SECTION 5.6. Access to Books........................................ 28
SECTION 5.7. Covenant to Perform Further Acts....................... 28
SECTION 5.8. Enforcement of Duties and Obligations of Mobile
Energy Parties......................................... 29
SECTION 5.9. Further Assurances..................................... 29
SECTION 5.10. Filing and Recording................................... 29
SECTION 5.11. Trustee's Obligations.................................. 29
ARTICLE VI.
REDEMPTION AND PREPAYMENT OF SECURITIES
SECTION 6.1. Applicability of Article............................... 30
SECTION 6.2. Election to Redeem or Prepay; Notice to Trustee........ 30
SECTION 6.3. Optional Redemption; Extraordinary Redemption;
Prepayment; Selection of Securities to Be
Redeemed or Prepaid................................. 30
SECTION 6.4. Notice of Redemption or Prepayment..................... 32
SECTION 6.5. Securities Payable on Redemption Date or
Prepayment Date........................................ 33
SECTION 6.6. Securities Redeemed or Prepaid in Part................. 34
SECTION 6.7. Determination of Taxability............................ 34
ARTICLE VII.
SINKING FUNDS
SECTION 7.1. Applicability of Article............................... 34
SECTION 7.2. Sinking Funds for Securities........................... 35
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ARTICLE VIII.
EVENTS OF DEFAULT; REMEDIES
SECTION 8.1. Events of Default...................................... 35
SECTION 8.2. Enforcement of Remedies................................ 36
SECTION 8.3. Specific Remedies...................................... 37
SECTION 8.4. Judicial Proceedings Instituted by Trustee............. 37
SECTION 8.5. Holders May Demand Enforcement of Rights by
Trustee............................................. 39
SECTION 8.6. Control by Holders..................................... 40
SECTION 8.7. Waiver of Past Events of Defaults...................... 40
SECTION 8.8. Holder May Not Bring Suit Except Under Certain
Conditions............................................. 40
SECTION 8.9. Undertaking to Pay Court Costs......................... 41
SECTION 8.10. Right of Holders to Receive Payment Not to Be
Impaired............................................ 41
SECTION 8.11. Application of Monies Collected by Trustee............. 41
SECTION 8.12. Securities Held by Certain Persons Not to Share in
Distribution........................................... 43
SECTION 8.13. Waiver of Appraisement, Valuation, Stay, Right to
Marshaling............................................. 43
SECTION 8.14. Remedies Cumulative; Delay or Omission Not a
Waiver.............................................. 43
SECTION 8.15. Intercreditor Agreement................................ 44
ARTICLE IX.
THE TRUSTEE
SECTION 9.1. Certain Duties and Responsibilities.................... 44
SECTION 9.2. Notice of Events of Defaults........................... 45
SECTION 9.3. Certain Rights of Trustee.............................. 46
SECTION 9.4. Not Responsible for Recitals or Issuance of
Securities.......................................... 47
SECTION 9.5. May Hold Securities.................................... 47
SECTION 9.6. Funds May Be Held by Trustee or Paying Agent........... 47
SECTION 9.7. Compensation, Reimbursement and Indemnification........ 47
SECTION 9.8. Corporate Trustee Required; Eligibility................ 48
SECTION 9.9. Resignation and Removal; Appointment of
Successor.......................................... 48
SECTION 9.10. Acceptance of Appointment by Successor................. 49
SECTION 9.11. Merger, Conversion, Consolidation or Succession to
Business............................................... 50
SECTION 9.12. Preferential Collection of Claims Against any
Obligor............................................. 50
SECTION 9.13. Maintenance of Offices and Agencies.................... 53
SECTION 9.14. Co-Trustee or Separate Trustee......................... 56
SECTION 9.15. Taxes.................................................. 58
ARTICLE X.
HOLDERS' LISTS AND REPORTS BY TRUSTEE,
IDB AND MOBILE ENERGY PARTIES
SECTION 10.1. IDB to Furnish Trustee Names and Addresses of
Holders............................................. 58
SECTION 10.2. Preservation of Information; Communications to
Holders............................................. 58
SECTION 10.3. Reports by Trustee..................................... 59
SECTION 10.4. Reports by the IDB and Mobile Energy Parties........... 61
ARTICLE XI.
SUPPLEMENTAL INDENTURES AND
AMENDMENTS TO IDB LEASE AGREEMENT
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SECTION 11.1. Supplemental Indentures Without Consent of
Holders............................................ 61
SECTION 11.2. Supplemental Indenture With Consent of Holders......... 62
SECTION 11.3. Documents Affecting Immunity or Indemnity.............. 64
SECTION 11.4. Execution of Supplemental Indentures................... 64
SECTION 11.5. Effect of Supplemental Indentures...................... 64
SECTION 11.6. Reference in Securities to Supplemental
Indentures.......................................... 64
SECTION 11.7. Supplements and Amendments to IDB Lease Agreement
Without Consent of Holders............................. 65
SECTION 11.8. Supplements and Amendments to IDB Lease Agreement
With Consent of Holders................................ 65
ARTICLE XII.
SATISFACTION AND DISCHARGE
SECTION 12.1. Satisfaction and Discharge of Securities............... 66
SECTION 12.2. Satisfaction and Discharge of Indenture................ 70
SECTION 12.3. Application of Trust Money............................. 71
ARTICLE XIII.
MEETINGS OF HOLDERS OF SECURITIES;
ACTION WITHOUT MEETING
SECTION 13.1. Purposes for Which Meetings May Be Called.............. 71
SECTION 13.2. Call, Notice and Place of Meetings..................... 72
SECTION 13.3. Persons Entitled to Vote at Meetings................... 72
SECTION 13.4. Quorum; Action......................................... 72
SECTION 13.5. Attendance at Meetings; Determination of Voting
Rights; Conduct and Adjournment of Meetings......... 73
SECTION 13.6. Counting Votes and Recording Action of Meetings........ 74
SECTION 13.7. Action Without Meeting................................. 75
ARTICLE XIV.
LIMITED OBLIGATIONS OF IDB AND LIMITED RECOURSE
SECTION 14.1. Limited Obligations of IDB............................. 75
SECTION 14.2. Limited Recourse....................................... 75
EXHIBIT A - Form of 1995 Bond
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AMENDED AND RESTATED TRUST INDENTURE, dated as of August 1, 1995,
between THE INDUSTRIAL DEVELOPMENT BOARD OF THE CITY OF MOBILE, ALABAMA (the
"IDB"), a public corporation organized under the laws of the State of Alabama,
its principal office and mailing address being at 451 Government Street, Mobile,
Alabama 36602, and FIRST UNION NATIONAL BANK OF GEORGIA, as trustee (the
"Trustee"), its corporate trust office and mailing address being at 999
Peachtree Street, N.E., 11th Floor, Atlanta, Georgia 30309.
W I T N E S S E T H :
WHEREAS, the IDB is a public corporation organized under the
laws of the State of Alabama under the Alabama Act (as defined below);
and the IDB is authorized and empowered, under the Alabama Act, to
issue bonds for, and to acquire, construct, enlarge, improve, equip,
maintain, lease and dispose of, projects, which is defined to include
any land and any building or other improvement thereon, and all real
and personal properties deemed necessary in connection therewith,
suitable for use by, among other things, any industry for the
manufacturing, processing or assembling of any agricultural,
manufactured or mineral products and facilities for or useful in the
control, reduction, abatement or prevention of pollution of air or
water or both and to sell and lease the same to others for such rentals
or payments and on such terms and conditions as the IDB may deem
advisable;
WHEREAS, the IDB, by due corporate action, previously (a)
authorized the financing of the cost of acquisition and construction of
the Tax-Exempt Project (as defined below) and the leasing thereof to a
predecessor-in-interest of Mobile Energy Services Company, L.L.C., an
Alabama limited liability company (the "Company"), and (b) issued and
sold $112,300,000 principal amount of the 1983 Bonds (as defined below)
to provide funds for and toward the costs thereof;
WHEREAS, the IDB, by due corporate action, previously
authorized the refunding of the 1983 Bonds, and issued and sold
$93,000,000 principal amount (of which $85,000,000 principal amount are
currently outstanding) of the 1984 Bonds (as defined below) pursuant to
the 1984 Indenture (as defined below) to provide funds for the costs of
refunding the 1983 Bonds;
WHEREAS, the IDB, by due corporate action, has authorized the
execution, delivery and performance by it of this Indenture and has
authorized the payment of the 1984 Bonds, within the meaning of Article
VIII of the 1984 Indenture and for all other purposes of the 1984
Indenture, and the redemption of the 1984 Bonds thereafter; and, upon
such payment, and the issuance of the 1995 Bonds (as defined in Section
2.17), (a) the 1984 Lease (as defined below) shall be amended and
restated in its entirety as and by the IDB Lease Agreement (as defined
below) and (b) the 1984 Indenture shall be amended and restated in its
entirety as and by this Indenture (except that the provisions of
Article VIII of the 1984 Indenture shall survive with respect to the
1984 Bonds); and
WHEREAS, the IDB may from time to time issue additional bonds,
debentures, promissory notes or other evidences of indebtedness in one
(1) or more series (together with the 1995 Bonds, the "Securities") in
accordance with the terms of this Indenture; the IDB has duly
authorized the execution, delivery and performance by it of this
Indenture to secure the Securities and to provide for the
authentication and delivery thereof by the Trustee.
NOW, THEREFORE, THIS INDENTURE WITNESSETH, that, for and in
consideration of the premises and of the purchase of the Securities by the
Holders (as defined
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below) thereof, and in order to secure the payment of the principal of and
premium, if any, and interest on all Securities from time to time outstanding
and the performance of the covenants therein and herein contained and to declare
the terms and conditions on which such Securities are secured, the IDB hereby
grants, bargains, mortgages, sells, releases, conveys, assigns, transfers,
pledges, sets over and confirms to the Trustee, and grants to the Trustee a
security interest in, (a) all right, title and interest of the IDB in the IDB
Lease Agreement and all amendments, modifications and renewals thereof,
reserving, however, the IDB's rights to receive notices, to indemnification and
to reimbursement of its fees and expenses incurred under the IDB Lease
Agreement, (b) all right, title and interest of the IDB in and to the Tax-Exempt
Indenture Accounts (as defined below), including any and all monies contained
therein or hereafter delivered to the Trustee for deposit therein and, in each
case, all monies received and the right to receive monies thereunder, and (c)
all right, title and interest of the IDB in and to all monies and securities
from time to time held under the terms of this Indenture, and in any and all
other property of every type and nature from time to time hereafter by delivery
or by writing of any kind given, granted, pledged and assigned as and for
additional security hereunder, by the IDB or by anyone in its behalf or with its
written consent, to the Trustee, which is hereby authorized to receive any and
all such property at any and all times and to hold and apply the same subject to
the terms hereof;
TO HAVE AND TO HOLD all the same with all privileges and appurtenances
hereby given, granted, pledged and assigned, or agreed or intended so to be,
unto the Trustee and its successors in said trust and to it and its assigns
forever;
IN TRUST, NEVERTHELESS, for the equal and proportionate benefit and
security of the Holders from time to time of all Outstanding (as defined below)
Securities without any priority of any such Security over any other such
Security;
PROVIDED, HOWEVER, that the right, title and interest of the Company in
and to any Tax-Exempt Debt Service Reserve Account (as defined below), including
any and all monies contained therein or hereafter delivered to the Trustee for
deposit therein and, in each case, all monies received and the right to receive
monies thereunder, shall be held in trust solely for the equal and proportionate
benefit and security of the Holders from time to time of the Outstanding
Securities for the benefit of whom such Tax-Exempt Debt Service Reserve Account
was established; and
PROVIDED FURTHER, HOWEVER, that if, after the right, title and interest
of the Trustee in and to the Tax-Exempt Indenture Accounts shall have ceased,
terminated and become void in accordance with Article XII, and the principal of
and premium, if any, and interest on the Securities shall have been paid to the
Holders thereof, then and in that case this Indenture and the estate and rights
hereby granted shall cease, terminate and be void, and the Trustee shall cancel
and discharge this Indenture and execute and deliver to the IDB and the Company
such instruments as the IDB and the Company shall require to evidence the
discharge hereof; otherwise this Indenture shall be and remain in full force and
effect; and
THE PARTIES HEREBY COVENANT AND AGREE AS FOLLOWS:
ARTICLE I.
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 1.1. Definitions; Construction. (a) For all purposes of this
Indenture, except as otherwise expressly provided in this Indenture or unless
the context otherwise requires, all terms used herein shall have the meanings
set
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forth in Appendix A to the Intercreditor and Collateral Agency Agreement dated
as of August 1, 1995 among the Trustee, First Union National Bank of Georgia, as
the Indenture Trustee referred to therein, Banque Paribas, as the Working
Capital Facility Provider referred to therein, the IDB, the Company, Mobile
Energy Services Holdings, Inc. and Bankers Trust (Delaware), as the Collateral
Agent referred to therein.
SECTION 1.2. Compliance Certificates and Opinions. Except as otherwise
expressly provided by this Indenture, upon any application or request by either
of the Mobile Energy Parties or the IDB to the Trustee to take any action under
any provision of this Indenture, the Trustee shall be entitled to receive, upon
its request, an Officer's Certificate of such Mobile Energy Party or the IDB (as
the case may be) stating that all conditions precedent, if any, provided for in
this Indenture relating to the proposed action have been complied with and an
Opinion of Counsel stating that in the opinion of such counsel all such
conditions precedent, if any, have been complied with, except that, in the case
of any such application or request as to which the furnishing of documents is
specifically required by any provision of this Indenture relating to such
particular application or request, no additional certificate or opinion need be
furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(a) a statement that each individual signing such certificate or opinion
has read such covenant or condition and the definitions herein
relating thereto;
(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of each such individual, such
individual has made such examination or investigation as is necessary
to enable him to express an informed opinion as to whether or not such
covenant or condition has been complied with;
(d) a statement as to whether or not, in the opinion of each such
individual, such condition or covenant has been complied with; and
(e) in the case of an Officer's Certificate, a statement as to whether or
not any Event of Default under this Indenture has occurred and is
continuing.
SECTION 1.3. Form of Documents Delivered to Trustee. In any case where
several matters are required to be certified by, or covered by an opinion of,
any specified Person, it is not necessary that all such matters be certified by,
or covered by the opinion of, only one (1) such Person, or that they be so
certified or covered by only one (1) document, but one (1) such Person may
certify or give an opinion with respect to some matters and one (1) or more
other such Persons as to other matters, and any such Person may certify or give
an opinion as to such matters in one (1) or several documents.
Any certificate or opinion of an officer of the Company, Mobile Energy
or the IDB may be based, insofar as it relates to legal matters, upon an Opinion
of Counsel or a certificate of counsel unless such officer knows or has reason
to believe that such Opinion of Counsel or certificate with respect to the
matters upon which such officer's certificate or opinion is based are erroneous.
Any such Opinion of Counsel or certificate may be based, insofar as it relates
to factual matters, upon a certificate or opinion of, or representations by, an
Authorized Officer of either of the Mobile Energy Parties or the IDB stating
that the information with respect to such factual matters is in the possession
of such
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Mobile Energy Party or the IDB (as the case may be), unless such counsel knows
that the certificate or opinion or representations with respect to such matters
are erroneous.
Any Opinion of Counsel stated to be based on the opinion of other
counsel shall be accompanied by a copy of such other opinion.
Where any Person is required to make, give or execute two (2) or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one (1) instrument.
SECTION 1.4. Acts of Holders. (a) Any request, demand, authorization,
direction, notice, consent, waiver or other action provided by this Indenture to
be given or taken by Holders may be embodied in and evidenced by one (1) or more
instruments of substantially similar tenor signed by such Holders in person or
by an agent duly appointed in writing or, alternatively, may be embodied in and
evidenced by the record of Holders of Securities voting in favor thereof, either
in person or by proxies duly appointed in writing, at any meeting of Holders of
Securities duly called and held in accordance with the provisions of Article
XIII, or a combination of such instruments and any such record. Except as herein
otherwise expressly provided, such action shall become effective when such
instrument or instruments or record, or both are delivered to the Trustee and,
when it is specifically required herein, to the IDB and either of the Mobile
Energy Parties. Such instrument or instruments and any such record (and the
action embodied therein and evidenced thereby) are herein sometimes referred to
as the "Act" of the Holders signing such instrument or instruments and so voting
at any such meeting. Proof of execution of any such instrument or of a writing
appointing any such agent shall be sufficient for any purpose of this Indenture
and (subject to Section 9.1) conclusive in favor of the Trustee, the IDB and the
Mobile Energy Parties, if made in the manner provided in this Section 1.4. The
record of any meeting of Holders of Securities shall be proved in the manner
provided in Section 13.6.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the certificate of any notary public or
other officer of any jurisdiction authorized to take acknowledgments of deeds or
administer oaths that the Person executing such instrument acknowledged to such
officer the execution thereof, or by an affidavit of a witness to such execution
sworn to before any such notary or other such officer, and where such execution
is by an officer of a corporation or association or a member of a partnership or
limited liability company, on behalf of such corporation, association,
partnership or limited liability company, such certificate or affidavit shall
also constitute sufficient proof of such Person's authority. The fact and date
of the execution of any such instrument or writing, or the authority of the
Person executing the same, may also be proved in any other manner that the
Trustee deems sufficient.
(c) The principal amount and serial numbers of Securities held by any
Person, and the date or dates of holding the same, shall be proven by the
Security Register and the Trustee shall not be affected by notice to the
contrary.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Security shall bind every future
Holder of the same Security, the Holder of every Security issued upon the
transfer thereof or in exchange therefor or in lieu thereof, whether or not
notation of such action is made upon such Security.
(e) Until such time as written instruments shall have been delivered
with respect to the requisite percentage of principal amount of Securities for
the action contemplated by such instruments, any such instrument executed and
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delivered by or on behalf of a Holder of Securities may be revoked with respect
to any or all of such Securities by written notice by such Holder or any
subsequent Holder, proven in the manner in which such instrument was proven.
(f) Securities of any series authenticated and delivered after any Act
of Holders may, and shall if required by the Trustee, bear a notation in form
approved by the Trustee as to any action taken by such Act of Holders. If the
IDB shall so determine, new Securities of any series so modified as to conform,
in the opinion of the Trustee and the IDB, to such action may be prepared and
executed by the IDB and authenticated and delivered by the Trustee in exchange
for Outstanding Securities of such series.
(g) The IDB may fix any day as the record date for the purpose of
determining the Holders entitled to give or take any request, demand,
authorization, direction, notice, consent, waiver or other action, or to vote on
any action, authorized or permitted to be given or taken by Holders. If not set
by the IDB prior to the first solicitation of a Holder made by any Person in
respect of any such action, or, in the case of any such vote, prior to such
vote, the record date for any such action or vote shall be the thirtieth (30th)
day (or, if later, the date of the most recent list of Holders required to be
provided pursuant to Section 10.1) prior to such first solicitation or vote, as
the case may be. With regard to any record date, only the Holders on such date
(or their duly designated proxies) shall be entitled to give or take, or vote
on, the relevant action.
SECTION 1.5. Notices, etc. to Trustee, IDB and Mobile Energy Parties.
Any request, demand, authorization, direction, notice, consent, waiver or Act of
Holders or other document provided or permitted by this Indenture to be made
upon, given or furnished to, or filed with,
(a) the Trustee by any Holder, by the IDB, by either of the
Mobile Energy Parties or by an Authorized Agent shall be sufficient for
every purpose hereunder if made, given, furnished or filed in writing
to the Trustee at its Corporate Trust Office, or
(b) the IDB by the Trustee, by any Holder, by either of the
Mobile Energy Parties or by an Authorized Agent shall be sufficient for
every purpose hereunder if in writing and mailed, first-class postage
prepaid, to the IDB addressed to it at the address of its principal
office specified in the first paragraph of this Indenture or at any
other address previously furnished in writing to the Trustee, each
Holder and the Mobile Energy Parties by the IDB for such purpose;
(c) the Company by the Trustee, by the IDB, by any Holder, by
Mobile Energy or by an Authorized Agent shall be sufficient for every
purpose hereunder if in writing and mailed, first-class postage
prepaid, to the Company addressed to it at 900 Ashwood Parkway, Suite
300, Atlanta, Georgia 30338, together with a copy to it at P.O. Box
2747, 200 Bay Bridge Road, Mobile, Alabama 36652, or at any other
address previously furnished in writing to the Trustee, the IDB, each
Holder and Mobile Energy by the Company for such purpose, or
(d) Mobile Energy by the Trustee, by the IDB, by any Holder,
by the Company or by an Authorized Agent shall be sufficient for every
purpose hereunder if in writing and mailed, first-class postage
prepaid, to Mobile Energy addressed to it at 900 Ashwood Parkway, Suite
450, Atlanta, Georgia 30338, or at any other address previously
furnished in writing to the Trustee, the IDB, each Holder and the
Company by Mobile Energy for such purpose.
SECTION 1.6. Notices to Holders; Waiver. Where this Indenture provides
for notice to Holders of any event, such notice shall be sufficiently given
5
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(unless otherwise herein expressly provided) if in writing and mailed,
first-class postage prepaid, to each Holder, at its address as it appears in the
Security Register, not later than the latest date, and not earlier than the
earliest date, prescribed for the giving of such notice. Where this Indenture
provides for notice in any manner, such notice may be waived in writing by the
Person entitled to receive such notice, either before or after the event, and
such waiver shall be the equivalent of such notice. Waivers of notice by Holders
shall be filed with the Trustee, but such filing shall not be a condition
precedent to the validity of any action taken in reliance upon such waiver. In
any case where notice to Holders is given by mail, neither the failure to mail
such notice, nor any defect in any notice so mailed, to any particular Holder
shall affect the sufficiency of such notice with respect to other Holders, and
any notice that is mailed in the manner herein provided shall be conclusively
presumed to have been duly given.
SECTION 1.7. Effect of Headings and Table of Contents. The Article and
Section headings herein and the Table of Contents are for convenience only and
shall not affect the construction hereof.
SECTION 1.8. Successors and Assigns. All covenants, agreements,
representations and warranties in this Indenture by the Trustee and the IDB
shall bind and, to the extent permitted hereby, shall inure to the benefit of
and be enforceable by their respective successors and assigns, whether so
expressed or not.
SECTION 1.9. Severability Clause. In case any provision in this
Indenture or in the Securities shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
SECTION 1.10. Benefits of Indenture. Nothing in this Indenture or in
the Securities, expressed or implied, shall give to any Person, other than the
parties hereto and their successors hereunder and the Holders of Securities, any
benefit or any legal or equitable right, remedy or claim under this Indenture.
SECTION 1.11. Governing Law. THIS INDENTURE SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF ALABAMA, EXCEPT THAT SUCH
LAWS SHALL NOT APPLY WITH RESPECT TO ANY COLLATERAL WHERE IT IS NECESSARY TO
APPLY THE LAWS OF ANOTHER JURISDICTION TO PERFECT LIENS IN SUCH COLLATERAL
RELATING TO DEBT ISSUED HEREUNDER AND EXCEPT THAT THE RIGHTS, DUTIES, IMMUNITIES
AND STANDARDS OF CARE RELATING TO THE TRUSTEE AND ANY AUTHORIZED AGENTS SHALL BE
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
SECTION 1.12. Legal Holidays. In any case where any Redemption Date or
Prepayment Date or the date of any Stated Maturity of any Security or of any
installment of principal thereof or payment of interest thereon shall not be a
Business Day, then (notwithstanding any other provision of this Indenture or
such Security) payment of interest or principal, or premium, if any, need not be
made on such date, but may be made on the next succeeding Business Day with the
same force and effect as if made on such Redemption Date or Prepayment Date or
the date of such Stated Maturity and, except as provided in the provisions
herein or in the Series Supplemental Indenture establishing the terms of such
Security, if such payment is timely made, no interest shall accrue for the
period from and after such Redemption Date or Prepayment Date or the date of
such Stated Maturity (as the case may be) to the date of such payment.
SECTION 1.13. Execution in Counterparts. This Indenture may be executed
in any number of counterparts, each of which when so executed shall be deemed to
be an original, but all such counterparts shall together constitute but one (1)
and the same instrument.
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SECTION 1.14. Amendment and Restatement. This Indenture amends and
restates the 1984 Indenture, and the parties hereto hereby acknowledge, consent
to, approve and ratify (i) the amendment and restatement of the 1984 Indenture,
as effectuated by this Indenture, including the appointment of the Trustee as
successor trustee to the trustee under the 1984 Indenture (provided that (A) the
provisions of Article VIII of the 1984 Indenture shall survive with respect to
the 1984 Bonds and (B) the trustee under the 1984 Indenture shall continue in
such capacity with respect to the 1984 Bonds), (ii) the amendment and
restatement of the 1984 Lease, as effectuated by the IDB Lease Agreement, (iii)
the termination as of the date hereof of the Remarketing Agreement dated as of
October 30, 1987 among the IDB, the Company (as assignee) and Goldman, Sachs &
Co., as remarketing agent thereunder (subject to the survival of the provisions
of Sections 4 and 5 thereof), and (iv) the termination of Scott's obligations
under the 1984 Indenture, the 1984 Lease, and the 1984 Bonds and the fact that
Scott shall have no obligations under this Indenture, the IDB Lease Agreement or
the Securities; all notices with respect to the foregoing are hereby waived.
SECTION 1.15. Survival of Assignment Agreement. Nothing contained
herein (including Section 1.14) shall be deemed or construed to restrict, waive
or otherwise limit or modify the rights and obligations of any party under the
Lease Assignment and Assumption Agreement dated as of December 12, 1994 between
Scott and the Company (as assignee of Mobile Energy), which agreement remains in
full force and effect.
ARTICLE II.
THE SECURITIES
SECTION 2.1. Form of Security to be Established by Series Supplemental
Indenture. The Securities of each series shall be substantially in the form (not
inconsistent with this Indenture, including Section 2.5 hereof) established in
the Series Supplemental Indenture relating to the Securities of such series
(except the 1995 Bonds, which shall be established pursuant to Section 2.17).
SECTION 2.2. Form of Trustee's Authentication. The Trustee's
certificate of authentication on all Securities shall be in substantially the
following form:
This Security is one of the Securities referred to in
the within-mentioned Indenture.
FIRST UNION NATIONAL BANK
OF GEORGIA, as Trustee
By____________________________
Authorized Trust Officer
SECTION 2.3. Amount Unlimited; Issuable in Series; Limitations on
Issuance. The aggregate principal amount of Securities that may be authenticated
and delivered under this Indenture is unlimited. The provisions of this Section
2.3 shall not be deemed in any way to supersede the restrictions contained in
Sections 4.16 and 4.17 of the IDB Lease Agreement.
The Securities may be issued in one (1) or more series. There shall be
established in one (1) or more Series Supplemental Indentures, prior to the
issuance of Securities of any series (except the 1995 Bonds, which shall be
established pursuant to Section 2.17):
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(a) the title of the Securities of such series (which shall
distinguish the Securities of such series from all other Securities)
and the form or forms of Securities of such series;
(b) any limit upon the aggregate principal amount of the
Securities of such series that may be authenticated and delivered under
this Indenture (except for Securities authenticated and delivered upon
registration of transfer of, or in exchange for, or in lieu of, other
Securities of such series pursuant to Section 2.7, 2.8, 2.9, 6.6 or
11.6 and except for Securities that, pursuant to Section 2.4, are
deemed never to have been authenticated and delivered hereunder);
(c) the date or dates on which the principal of the Securities
of such series is payable, the amounts of principal payable on such
date or dates and the Regular Record Dates for the determination of
Holders to whom principal is payable; and the date or dates on or as of
which the Securities of such series shall be dated, if other than as
provided in Section 2.13;
(d) the rate or rates at which the Securities of such series
shall bear interest, or the method by which such rate or rates shall be
determined, the date or dates from which such interest shall accrue,
the Regular Record Dates for the determination of Holders to whom
interest is payable and the basis of computation of interest, if other
than as provided in Section 2.13(b);
(e) if other than as provided in Section 9.13(a), the place or
places where (i) the principal of and premium, if any, and interest on
Securities of such series shall be payable, (ii) Securities of such
series may be surrendered for registration of transfer or exchange and
(iii) notices and demands to or upon the IDB in respect of the
Securities of such series and this Indenture may be served;
(f) the price or prices at, the period or periods within, and
the terms and conditions upon, which Securities of such series may be
redeemed, in whole or in part, at the option of the IDB;
(g) the obligation, if any, of the IDB to redeem, purchase or
repay Securities of such series pursuant to any sinking fund or
analogous provisions or at the option of a Holder thereof and the price
or prices at which, the period or periods within which and the terms
and conditions upon which Securities of such series shall be redeemed,
purchased or repaid, in whole or in part, pursuant to such obligations;
(h) if other than denominations of $100,000 and integral multiples
of $5,000 in excess thereof, the denominations in which Securities of such
series shall be issuable;
(i) if the Securities are to be issued in whole or in part in
the form of one (1) or more global securities registered in the name of
a clearing corporation or clearing agency registered under the Exchange
Act, as depositary for such Securities, or a nominee of such clearing
corporation or clearing agency, (i) the name of such depositary and any
such nominee, (ii) any limitations on the rights of beneficial holders
thereof to transfer or exchange the same or to obtain the registration
of transfer thereof, (iii) any limitations on the rights of beneficial
holders thereof to obtain certificates therefor in definitive form and
(iv) any and all other matters incidental to such Securities;
(j) any other terms of such series (which terms shall not be
inconsistent with the provisions of this Indenture); and
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(k) any trustees, authenticating or paying agents, warrant
agents, transfer agents or registrars with respect to the Securities of
such series.
SECTION 2.4. Authentication and Delivery of Securities. Subject to
Section 2.3 and to Sections 4.16 and 4.17 of the IDB Lease Agreement, at any
time and from time to time after the execution and delivery of this Indenture,
the IDB may deliver Securities of any series executed by an Authorized Officer
of the IDB to the Trustee for authentication, together with an IDB Order for the
authentication and delivery of such Securities, and the Trustee shall thereupon
authenticate and make available for delivery such Securities in accordance with
such IDB Order, without any further action by the IDB. No Security shall be
secured by or entitled to any benefit under this Indenture or be valid or
obligatory for any purpose unless there appears on such Security a certificate
of authentication, in the form provided for herein, executed by the Trustee by
the manual signature of any Authorized Trust Officer, and such certificate upon
any Security shall be conclusive evidence, and the only evidence, that such
Security has been duly authenticated and delivered hereunder. In authenticating
such Securities and accepting the additional responsibilities under this
Indenture in relation to such Securities, the Trustee shall be entitled to
receive, and (subject to Section 9.1) shall be fully protected in relying upon:
(a) an executed Series Supplemental Indenture with respect to
the Securities of such series (other than the 1995 Bonds) and any
amendment of the IDB Lease Agreement expressly providing that, for all
purposes of this Indenture and the IDB Lease Agreement, the Tax-Exempt
Project shall include any facilities being financed by the additional
Securities and adjusting the payments under the IDB Lease Agreement to
provide for payments by the Mobile Energy Parties of the amounts
necessary to pay the principal of, premium, if any, and interest on
such additional Securities;
(b) an Officer's Certificate of the IDB certifying (i) as to
resolutions of the IDB authorizing the issuance of such Securities, the
execution and delivery of this Indenture (in the case of the 1995
Bonds) and the IDB Lease Agreement and (in the case of Securities other
than the 1995 Bonds) the execution and delivery of the related Series
Supplemental Indenture, (ii) that all conditions precedent under this
Indenture to the Trustee's authentication and delivery of such
Securities have been complied with and (iii) as to the incumbency of
the persons named in such Officer's Certificate;
(c) an Opinion of Counsel to the effect that (i) the form or
forms and the terms of such Securities have been established by a
Series Supplemental Indenture (or, in the case of the 1995 Bonds, by
Section 2.17) as permitted by Sections 2.1 and 2.3 in accordance with
the provisions of this Indenture, (ii) the Securities of such series,
when authenticated and made available for delivery by the Trustee and
issued by the IDB in the manner and subject to any conditions specified
in such Opinion of Counsel, will constitute legal, valid and binding
obligations of the IDB, enforceable against the IDB in accordance with
their terms, except as such enforceability (A) may be limited by
applicable bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium and other similar laws relating to or affecting
the enforcement of creditors' rights and remedies generally and (B) is
subject to general principles of equity (regardless of whether
considered in a proceeding in equity or at law) and the discretion of
the court before which proceedings may be brought and (iii) all laws of
the States of Alabama and New York and the requirements of this
Indenture and the IDB Lease Agreement, in each case in respect of the
execution and delivery by the IDB of such Securities, have been
complied with;
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(d) an Opinion of Counsel of Bond Counsel to the effect that
the exemption from Federal income tax of the interest on the 1995 Bonds
and any additional Securities theretofore issued will not be adversely
affected by the issuance of the additional Securities being issued; and
(e) such other documents and evidence with respect to the IDB
and the Mobile Energy Parties as the Trustee may reasonably request.
Prior to the authentication and delivery of a series of Securities, the
Trustee shall also receive such other funds, accounts, documents, certificates,
instruments or opinions as may be required by the related Series Supplemental
Indenture.
Notwithstanding the foregoing, if any Security shall have been
authenticated and delivered hereunder but never issued and sold by the IDB, and
the IDB shall deliver such Security to the Trustee for cancellation as provided
in Section 2.12 together with a written statement (which need not comply with
Section 1.2 and need not be accompanied by an Opinion of Counsel) stating that
such Security has never been issued and sold by the IDB, for all purposes of
this Indenture such Security shall be deemed never to have been authenticated
and delivered hereunder and shall never have been or be entitled to the benefits
hereof.
SECTION 2.5. Form and Denominations. The Securities of each series
shall be in registered form and may have such letters, numbers or other marks of
identification and such legends or endorsements printed, lithographed, engraved,
typewritten or photocopied thereon, as may be required to comply with any
applicable law and the rules of any securities exchange (if any) upon which the
Securities are to be listed or of any clearing corporation or clearing agency
that is a Holder of such Securities in accordance with Section 2.3(i) or to
conform to any usage in respect thereof, or as may, consistently herewith, be
prescribed by the IDB or by the officers executing such Securities, such
determination by said officers to be evidenced by their signing the Securities.
The definitive Securities shall be printed, lithographed, engraved,
typewritten, photocopied or produced by any combination of these methods or may
be produced in any other manner permitted by the rules of any securities
exchange upon which the Securities of such series are to be listed (if any) or
of any clearing corporation or clearing agency that is a Holder of such
Securities in accordance with Section 2.3(i), all as determined by the officers
executing such Securities, as evidenced by their execution of such Securities.
All Securities of any one (1) series shall be substantially identical
except as to denomination and except as may otherwise be provided herein or in
the Series Supplemental Indenture setting forth the terms of the Securities of
such series.
All Securities in whole or in part in the form of one (1) or more
global securities in accordance with Section 2.3(i) shall comply with the
requirements of the clearing corporation or clearing agency with whom the
registered form of such Security will be deposited.
SECTION 2.6. Execution of Securities. The Securities shall be executed
on behalf of the IDB by its president or any of its vice presidents and its
secretary or assistant secretary under its seal reproduced thereon. The
signature of any such officers on the Securities may be manual or facsimile,
provided that any such signature shall be manually subscribed if so required by
applicable Law.
Securities bearing the manual or facsimile signatures of individuals
who were at the time such signatures were affixed the proper officers of the IDB
shall bind the IDB notwithstanding that such individuals or any of them have
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ceased to hold such offices prior to the authentication and delivery of such
Securities or did not hold such offices at the date of such Securities.
SECTION 2.7. Temporary Securities. Pending the preparation of definitive
Securities of any series, the IDB may execute, and upon receipt of an IDB Order
the Trustee shall authenticate and make available for delivery, temporary
Securities of such series that are printed, lithographed, typewritten,
photocopied or otherwise produced, in any denomination, substantially of the
tenor of the definitive Securities in lieu of which they are issued and with
such appropriate insertions, omissions, substitutions and other variations as
the officers executing such Securities may determine, as evidenced by their
execution of such Securities.
If temporary Securities of any series are issued, the IDB will cause
definitive Securities of such series to be prepared without unreasonable delay.
After the preparation of definitive Securities of such series, the temporary
Securities of such series shall be exchangeable for definitive Securities of
such series upon surrender of the temporary Securities of such series at the
Corporate Trust Office or at the Place of Payment, without charge to the Holder.
Upon surrender for cancellation of any one (1) or more temporary Securities of
any series, the IDB shall execute and the Trustee shall authenticate and make
available for delivery, in exchange therefor, definitive Securities of such
series of authorized denominations and of like tenor and aggregate principal
amount. Until so exchanged such temporary Securities of any series shall in all
respects be entitled to the same benefits under this Indenture as definitive
Securities of such series.
SECTION 2.8. Registration, Transfer and Exchange. The IDB shall cause
to be kept a register that, subject to such reasonable regulations as the IDB
may prescribe, shall provide for the registration of Securities and for the
registration of transfers and exchanges of Securities. This register and, if
there shall be more than one (1) Security Registrar, the combined registers
maintained by all such Security Registrars, are herein sometimes referred to as
the "Security Register." The Trustee is hereby appointed as the initial
"Security Registrar" for the purpose of registering Securities.
If a Person other than the Trustee is appointed by the IDB as Security
Registrar, the IDB will give the Trustee prompt notice of the appointment of the
Security Registrar, and the Trustee shall have the right to inspect the Security
Register at all reasonable times and to obtain copies thereof, and the Trustee
shall have the right to rely upon an Officer's Certificate executed on behalf of
the Security Registrar as to the names and addresses of the Holders of the
Securities and the principal amounts and numbers of such Securities.
At the option of any Holder, Securities of any series may be exchanged
for other Securities of the same series to be registered in the name of such
Holder, of authorized denominations and of like tenor, maturity and aggregate
principal amount, upon surrender of the Securities to be exchanged at any office
or agency maintained for such purpose pursuant to Section 9.13(a). Whenever any
Securities are so surrendered for exchange, the IDB shall execute, and the
Trustee shall authenticate and make available for delivery, the Securities that
the Holder making the exchange is entitled to receive.
All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the IDB, evidencing the same debt,
and entitled to the same security and benefits under this Indenture, as the
Securities surrendered upon such registration of transfer or exchange.
Every Security presented or surrendered for registration of transfer or
exchange shall be duly endorsed, or be accompanied by a written instrument of
transfer in form satisfactory to the IDB and the Security Registrar or any
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transfer agent, duly executed by the Holder thereof or such Holder's attorney
duly authorized in writing.
No service charge shall be required of any Holders participating in any
transfer or exchange of Securities in respect of such transfer or exchange, but
the Security Registrar may require payment of a sum sufficient to cover any tax
or other governmental charge that may be imposed in connection with any transfer
or exchange of Securities, other than exchanges pursuant to Section 2.7, 6.6 or
11.6 not involving any transfer.
The Security Registrar shall not be required (a) to issue, register the
transfer of or exchange any Security of any series during a period (i) beginning
at the opening of business fifteen (15) days before the day of the mailing of a
notice of redemption of Securities of such series selected for redemption under
Section 6.2 or 7.2 and ending at the close of business on the day of such
mailing and (ii) beginning on the Regular Record Date for the Stated Maturity of
any installment of principal of or payment of interest on the Securities of such
series and ending on the Stated Maturity of such installment of principal or
payment of interest or (b) to issue, register the transfer of or exchange any
Security selected pursuant to clause (i) above for redemption in whole or in
part, except the unredeemed portion of any Security selected for redemption in
part.
Notwithstanding anything herein to the contrary, any transfer of the
Securities of any series may be subject to restrictions, if any, set forth in
the Series Supplemental Indenture relating to such series.
SECTION 2.9. Mutilated, Destroyed, Lost and Stolen Securities. If (a)
any mutilated Security is surrendered to the Trustee, or the Security
Registrar and the Trustee receive evidence to their satisfaction of the
destruction, loss or theft of any Security, and (b) there is delivered to
the IDB, the Security Registrar and the Trustee evidence to their
satisfaction of the ownership and authenticity thereof, and such security
or indemnity as may be required by them to save each of them harmless, the
IDB shall execute and upon the IDB's request the Trustee shall authenticate
and make available for delivery, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Security, a new Security of the same
series and of like tenor and principal amount, bearing a number not then
outstanding.
Notwithstanding the foregoing, in case any such mutilated, destroyed,
lost or stolen Security has become or is about to become due and payable, the
IDB, upon satisfaction of the conditions set forth in clauses (a) and (b) of the
immediately preceding paragraph, may, instead of issuing a new Security, pay
such Security.
Upon the issuance of any new Security under this Section 2.9, the IDB
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses connected therewith.
Every new Security issued pursuant to this Section 2.9 in lieu of any
destroyed, lost or stolen Security shall constitute an original additional
contractual obligation of the IDB, whether or not the destroyed, lost or stolen
Security shall be at any time enforceable by anyone, and shall be entitled to
all the security and benefits of this Indenture equally and proportionately with
any and all other Securities duly issued hereunder (except as otherwise
specifically provided in this Indenture and in the other Security Documents).
The provisions of this Section 2.9 are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Securities.
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SECTION 2.10. Payment of Principal and Interest; Principal and Interest
Rights Preserved. Principal of or interest on any Security that is payable, and
is punctually paid or duly provided for, at any Stated Maturity shall be paid to
the Person in whose name that Security (or one (1) or more Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such principal or interest. Payment of principal of and interest on the
Securities of any series shall be made at the Corporate Trust Office or at the
Place of Payment (or, if (i) and for so long as any Outstanding Securities are
not issued in the form of one or more global securities registered in the name
of a clearing corporation or clearing agency registered under the Exchange Act,
as depositary for such Securities, or a nominee of such clearing corporation or
clearing agency and (ii) such office is not in the Borough of Manhattan, the
City of New York, at either such office or an office to be maintained in such
Borough), or by check or in another manner or manners if so provided in the
Series Supplemental Indenture creating the Securities of such series (or, in the
case of the 1995 Bonds, in Section 2.17).
Any principal of or interest on any Security of any series that is
payable, but is not punctually paid or duly provided for, at any Stated Maturity
of an installment of principal or payment of interest shall forthwith cease to
be payable to the Holder on the relevant Regular Record Date by virtue of having
been such Holder to the extent that such defaulted principal or interest may be
paid by the IDB, at its election (at the direction of the Company) in each case,
as provided in paragraph (a) or paragraph (b) below:
(a) The IDB may elect to make payment of all or any portion of
such defaulted principal or interest to the Persons in whose names the
Securities of such series (or their respective Predecessor Securities)
in respect of which principal or interest is in default are registered
at the close of business on a Special Record Date for the payment of
such defaulted principal or interest, which shall be fixed in the
following manner. The IDB shall notify the Trustee and the Paying Agent
in writing of the amount of defaulted principal or interest proposed to
be paid on each Security of such series and the date of the proposed
payment, and concurrently there shall be deposited with the Trustee or
the Paying Agent an amount of money equal to the aggregate amount
proposed to be paid in respect of such defaulted principal or interest
or there shall be made arrangements satisfactory to the Trustee or the
Paying Agent for such deposit prior to the date of the proposed
payment, such money when deposited to be held in trust for the benefit
of the Persons entitled to such defaulted principal or interest as
provided in this paragraph. Thereupon, the Trustee shall fix a Special
Record Date for the payment of such defaulted principal or interest
(together with other amounts payable with respect to such defaulted
principal or interest) that shall not be more than fifteen (15) nor
less than ten (10) days prior to the date of the proposed payment and
not less than ten (10) days after the receipt by the Trustee of the
notice of the proposed payment. The Trustee shall promptly notify the
IDB, the Company and the Security Registrar of such Special Record Date
and, in the name and at the expense of the Company, shall cause notice
of the proposed payment of such defaulted principal or interest and the
Special Record Date therefor to be mailed, first class postage prepaid,
to each Holder of a Security of such series at such Holder's address as
it appears in the Security Register, not less than ten (10) days prior
to such Special Record Date. Notice of the proposed payment of such
defaulted principal or interest and the Special Record Date therefor
having been mailed as aforesaid, such defaulted principal or interest
shall be paid to the Persons in whose names the Securities of such
series (or their respective Predecessor Securities) are registered on
such Special Record Date.
(b) The IDB may make, or cause to be made, payment of any
defaulted principal or interest (together with other amounts payable
with
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respect to such defaulted interest) in any other lawful manner not
inconsistent with the requirements of any securities exchange (if any)
on which the Securities in respect of which principal or interest is in
default may be listed, and upon such notice as may be required by such
exchange, if, after notice given by the IDB or the Company to the
Trustee of the proposed payment pursuant to this paragraph, such
payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section 2.10, each Security
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Security shall carry the rights to interest accrued
and unpaid, and to accrue, that were carried by such other Security, and each
such Security shall bear interest from whatever date shall be necessary so that
neither gain nor loss in interest shall result from such registration of
transfer, exchange or replacement.
SECTION 2.11. Persons Deemed Owners. Prior to due presentment of a
Security for registration of transfer, the Person in whose name any Security is
registered shall be deemed to be the owner of such Security for the purpose of
receiving payment of principal of and premium, if any, and (subject to Section
2.10) interest on such Security and (subject to Section 5.3) for all other
purposes whatsoever, whether or not such Security be overdue, regardless of any
notice to anyone to the contrary.
SECTION 2.12. Cancellation. All Securities surrendered for payment,
redemption, credit against any Sinking Fund payment or registration of transfer
or exchange shall, if surrendered to any Person other than the Trustee, be
delivered to the Trustee for cancellation. The IDB may at any time deliver to
the Trustee for cancellation any Securities previously authenticated and
delivered hereunder that the IDB may have acquired in any manner whatsoever, and
all Securities so delivered shall be promptly canceled by the Trustee. No
Securities shall be authenticated in lieu of or in exchange for any Securities
canceled as provided in this Section 2.12, except as expressly permitted by this
Indenture. All canceled Securities held by the Trustee shall be destroyed and
certification of their destruction delivered to the IDB unless, by IDB Request,
the IDB otherwise directs.
SECTION 2.13. Dating of Securities; Computation of Interest. (a) Except as
otherwise provided in the Series Supplemental Indenture relating to the
Securities of a series, each Security of such series shall be dated the date of
its authentication.
(b) Except as otherwise provided in the Series Supplemental Indenture
relating to the Securities of a series, interest on the Securities of such
series shall be computed on the basis of a 360-day year consisting of twelve
30-day months and, for any period shorter than a full calendar month, on the
basis of the actual number of days elapsed in such period.
SECTION 2.14. Source of Payments Limited; Rights and Liabilities of the
Mobile Energy Parties. Except as otherwise specifically provided in this
Indenture, the IDB Lease Agreement and the Guaranty, all payments of principal
and premium, if any, and interest to be made in respect of the Securities and
this Indenture shall be made only from the Tax-Exempt Indenture Securities
Collateral, the payments therefrom and the income and proceeds received by the
Trustee or the Collateral Agent and allocable to the Trustee therefrom pursuant
to the Security Documents. Each Holder, by its acceptance of a Security, agrees
that (a) it will look solely to the Tax-Exempt Indenture Securities Collateral,
the payments therefrom and the income and proceeds received by the Trustee or
the Collateral Agent and allocable to the Trustee therefrom to the extent
available for distribution to such Holder as herein provided or provided in the
Security Documents and the Guaranty and (b) recourse shall be limited in
accordance with Article XIV.
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SECTION 2.15. Parity of Securities. (a) Except as otherwise
specifically provided in this Indenture and the other Security Documents, all
Securities of a series issued and Outstanding hereunder rank on a parity with
each other Security of the same series and with all Securities of each other
series and each Security of a series shall be secured equally and ratably by
this Indenture and the Security Documents with each other Security of the same
series and with all Securities of each other series, without preference,
priority or distinction of any one (1) thereof over any other by reason of
difference in time of issuance or otherwise, and each Security of a series shall
be entitled to the same benefits and security in this Indenture and the Security
Documents as each other Security of the same series and with all Securities of
each other series.
(b) Notwithstanding anything herein to the contrary, the right, title
and interest of the IDB in and to any Tax-Exempt Debt Service Reserve Account,
including all monies contained therein or hereafter delivered to the Trustee for
deposit therein and, in each case, all monies received and the right to receive
monies thereunder, shall be held in a separate account in trust solely for the
equal and proportionate benefit and security of the Holders from time to time of
the Outstanding Securities for the benefit of whom such Tax-Exempt Debt Service
Reserve Account was established.
SECTION 2.16. Allocation of Principal and Interest. Each payment of
principal of and premium, if any, and interest on each Security shall be
applied, first, to the payment of accrued but unpaid interest on such Security
(as well as any interest on overdue principal or, to the extent permitted by
applicable Law, overdue interest) to the date of such payment, second, to the
payment of the principal amount of and premium, if any, on such Security then
due (including any overdue installment of principal) thereunder and, third, the
balance, if any, to the payment of the principal amount of and premium, if any,
on such Security remaining unpaid.
SECTION 2.17. Authorization and Provisions for Issuance of 1995 Bonds;
Application of Proceeds. (a) There is hereby created a series of Securities
designated "The Industrial Development Board of the City of Mobile, Alabama
Solid Waste Revenue Refunding Bonds (Mobile Energy Services Company, L.L.C.
Project), Series 1995" (the "1995 Bonds"). Upon delivery of an IDB Order to the
Trustee in accordance with the provisions of Section 2.4, the Trustee shall
authenticate and deliver the 1995 Bonds. Such IDB Order shall specify the amount
of the 1995 Bonds to be authenticated and the date on which such Securities are
to be authenticated.
(b) The 1995 Bonds shall be substantially in the form of Exhibit A and
shall have and be subject to such other terms as provided in this Indenture.
(c) Each of the 1995 Bonds shall bear interest on the unpaid principal
amount thereof from time to time Outstanding from the date specified therein
until such amount is paid in full at the rate of interest, and the principal
amount of each of the 1995 Bonds shall be due and payable as, set forth in the
form thereof.
Payment of principal of and premium, if any, and interest on each of
the 1995 Bonds shall be made, if the IDB (at the direction of the Company) so
elects, by check mailed to the Holder at its registered address or otherwise as
provided in Section 2.10 of this Indenture, except that the final payment of
principal of any of the 1995 Bonds shall be made on the due date therefor to the
accounts of the Holders thereof as such accounts shall appear in the Security
Register, which shall be due and payable as set forth in the form thereof
attached hereto. For so long as the 1995 Bonds are issued in the form of one (1)
or more global 1995 Bonds, payment of principal of and premium, if any, and
interest on such 1995 Bonds shall be made in immediately available funds by wire
transfer to the clearing corporation or clearing agency acting as depositary for
such global 1995 Bonds, or a nominee of such clearing corporation or clearing
agency. Any other
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Holder of $1,000,000 or more in aggregate principal amount of 1995 Bonds may, by
delivery of a written notice to the Paying Agent, elect to have all such
payments to such Holder made by wire transfer of immediately available funds to
a designated account maintained in the United States (so long as the Paying
Agent has received proper wire transfer instructions in writing by the Regular
Record Date next preceding the date for such payment).
The 1995 Bonds shall mature on the date set forth in the form thereof.
(d)The 1995 Bonds are subject to optional redemption as set forth in the
form thereof.
(e) In accordance with the provisions of Section 6.3 of this Indenture,
the 1995 Bonds are subject to extraordinary redemption under certain conditions,
and mandatory sinking fund redemption, in each case on the terms set forth in
the form thereof.
(f) Pursuant to Section 4.28 of the IDB Lease Agreement, each of the
Mobile Energy Parties has covenanted and agreed, for the benefit of the Holders
of 1995 Bonds, to comply with and carry out all of the provisions of the
Continuing Disclosure Agreement applicable to such Mobile Energy Party, and such
covenant and agreement is incorporated herein by reference and pursuant to the
assignment of the IDB's rights under the IDB Lease Agreement. Notwithstanding
any other provision of this Indenture, the failure by either of the Mobile
Energy Parties or the Trustee to comply with the Continuing Disclosure Agreement
shall not be considered an Event of Default under this Indenture; provided,
however, that the Trustee may (and, at the request of any Participating
Underwriter (as defined in the Continuing Disclosure Agreement) or the Holders
of at least 25% in aggregate principal amount of Outstanding 1995 Bonds, shall)
or any beneficial holder of a 1995 Bond may take such actions as may be
necessary and appropriate, including seeking mandamus or specific performance by
court order, to cause such Mobile Energy Party or the Trustee (as the case may
be) to comply with its obligations under this Section 2.17(f).
(g) The Trustee hereby covenants and agrees that any Holder of a 1995
Bond or an owner of a beneficial interest therein or any prospective investor of
a 1995 Bond may, upon reasonable notice, inspect any of the Project Documents at
the Corporate Trust Office of the Trustee.
(h) Promptly upon receipt by the Trustee (on behalf of the IDB) of the
proceeds from the sale of the 1995 Bonds, the Trustee shall (i) deposit any
proceeds representing accrued interest into the Tax-Exempt Indenture Securities
Interest Subaccount and apply such amount to the payment of interest on the 1995
Bonds on the first Interest Payment Date and (ii) make an irrevocable transfer
of the balance of such proceeds to the trustee under the 1984 Indenture, to be
applied to the payment of the 1984 Bonds, within the meaning of Article VIII of
the 1984 Indenture and for all other purposes of the 1984 Indenture, and
thereafter to the redemption of the 1984 Bonds.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
The IDB represents and warrants, as of the Closing Date, to the Trustee
as follows:
SECTION 3.1. Organization, Power, Authority and Status of IDB. The IDB
is a public corporation duly formed, validly existing and in good standing under
the laws of the State of Alabama. The IDB has complied with all of the
provisions of the constitution and laws of the State of Alabama, including the
Alabama Act.
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SECTION 3.2. Authorization; Enforceability; Execution and Delivery. (a)
The IDB has all necessary power and authority to execute, deliver and perform
its obligations under this Indenture, the Securities, the IDB Lease Agreement
and each other Project Document to which it is a party, and any and all other
agreements relating thereto. All action on the part of the IDB that is required
for the authorization, execution, delivery and performance of this Indenture,
the Securities and each other Project Document to which the IDB is a party has
been duly and effectively taken.
(b) This Indenture, the Securities and each other Project Document to
which the IDB is a party has been duly executed and delivered by the IDB. Each
of this Indenture, the Securities and each other Project Document to which the
IDB is a party constitutes a legal, valid and binding obligation of the IDB,
enforceable against it in accordance with the terms thereof, except as such
enforceability (i) may be limited by applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium and similar laws relating to
or affecting the enforcement of creditors' rights and remedies generally and
(ii) is subject to general principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at law) and the
discretion of the court before which any proceeding therefor may be brought and
to public policy or Federal or state laws that may limit rights to
indemnification.
SECTION 3.3. No Conflicts; Laws and Contracts; No Default. (a) Neither
the execution and delivery of this Indenture, the Securities and each other
Project Document to which the IDB is a party nor the consummation of any of the
transactions contemplated hereby or thereby nor performance of or compliance
with the terms and conditions hereof or thereof (i) conflicts or is inconsistent
with or constitutes a default under or results in the violation of the
provisions of the organizational documents of the IDB, or of any other Project
Document or any indenture, mortgage, deed of trust, sale/leaseback agreement,
loan agreement or other similar financing agreement or instrument or other
agreement or instrument to which the IDB is a party or by which the IDB or any
of its property or assets is bound or to which either may be subject or (ii)
results in the creation or imposition of any Liens on any of the property or
assets of the IDB or (other than Permitted Liens) either of the Mobile Energy
Parties, or results in the acceleration of any obligation of either of the
Mobile Energy Parties.
(b) Neither the IDB nor (to the knowledge of the IDB without
independent investigation) any other party to a Project Document to which the
IDB is a party, to the 1984 Indenture or to the 1984 Lease is in material
default in the performance of any term, covenant or obligation under such
Contract and no event has occurred that with the lapse of time, notice or both
could result in a default thereunder; no material force majeure event has
occurred and is continuing under any Project Document to which the IDB is a
party; and (to the knowledge of the IDB without independent investigation) each
such Project Document is in full force and effect.
SECTION 3.4. Litigation. There are no claims, actions, suits,
investigations or proceedings at law or in equity by or before any arbitrator or
any Governmental Authority now pending or (to the knowledge of the IDB without
independent investigation) threatened against the IDB, or any property or other
assets or rights of the IDB with respect to this Indenture, any other Project
Document to which the IDB is a party or the Energy Complex, that would
reasonably be expected to adversely affect the transactions contemplated hereby,
the validity of, or the power of the IDB to execute and deliver, this Indenture,
the Securities or any other Project Document to which the IDB is a party or the
right of the IDB to finance the Tax-Exempt Project.
SECTION 3.5. Signed Certificates. Any certificate signed by any official of
the IDB and delivered to the parties hereto shall be deemed a
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representation and warranty by the IDB to the respective parties as to the
statements made therein.
ARTICLE IV.
TAX-EXEMPT INDENTURE ACCOUNTS
SECTION 4.1. Establishment of Tax-Exempt Indenture Securities Account. An
account designated the "Tax-Exempt Indenture Securities Account" is hereby
established and created with the Trustee. The following subaccounts of the Tax-
Exempt Indenture Securities Account are hereby established and created with the
Trustee: (a) "Tax-Exempt Indenture Securities Interest Subaccount"; (b) "Tax-
Exempt Indenture Securities Principal Subaccount"; and (c) "Tax-Exempt Indenture
Securities Redemption Subaccount."
SECTION 4.2. Payments into Tax-Exempt Indenture Securities Account. The
Tax-Exempt Indenture Securities Account shall be funded with (a) monies
transferred by the Collateral Agent from the Revenue Account pursuant to
Sections 3.11(e)(iii) of the Intercreditor Agreement, (b) monies transferred by
the Collateral Agent from the Maintenance Reserve Account pursuant to Section
3.5(c) of the Intercreditor Agreement, (c) monies transferred by the Collateral
Agent from the Distribution Account pursuant to Section 3.8(b) of the
Intercreditor Agreement, (d) monies transferred by the Collateral Agent from the
Subordinated Fee Account pursuant to Section 3.7(b) of the Intercreditor
Agreement, (e) monies transferred by the Collateral Agent from the Subordinated
Debt Account pursuant to Section 3.6(b) of the Intercreditor Agreement, (f) Loss
Proceeds transferred by the Collateral Agent from the Loss Proceeds Account
pursuant to Section 3.10 of the Intercreditor Agreement and (g) monies on
deposit in the Mill Owner Maintenance Reserve Account used pursuant to the
proviso contained in Section 4.29 of the IDB Lease Agreement. The Trustee shall
deposit all monies received by it for (i) payment of interest on the Securities
at Stated Maturity into the Tax-Exempt Indenture Securities Interest Subaccount,
(ii) payment of principal of the Securities at Stated Maturity into the
Tax-Exempt Indenture Securities Principal Subaccount and (iii) redemption of
Securities other than at Stated Maturity into the Tax-Exempt Indenture
Securities Redemption Subaccount, in each case as specified in the Officer's
Certificate of the Company delivered pursuant to Section 3.11 of the
Intercreditor Agreement (which the Company shall deliver to the Trustee) and in
each case for disbursement in accordance with Section 4.3.
SECTION 4.3. Application of Funds in Tax-Exempt Indenture Securities
Account. (a) The Trustee is hereby authorized and directed to disburse from (i)
the Tax-Exempt Indenture Securities Interest Subaccount, the amount required to
pay interest on Securities when due (whether on an Interest Payment Date or at
any other Stated Maturity, but not on any Redemption Date or Prepayment Date),
(ii) the Tax-Exempt Indenture Securities Principal Subaccount, the amount
required to pay principal of the Securities when due (whether on a Principal
Payment Date or at any other Stated Maturity, but not on any Redemption Date or
Prepayment Date) and (iii) the Tax-Exempt Indenture Securities Redemption
Subaccount, the amount required to pay principal of and premium, if any, and
interest on the Securities when due otherwise than at Stated Maturity (whether
upon acceleration or on any Redemption Date or Prepayment Date); provided,
however, that if there are insufficient monies in (A) the Tax-Exempt Indenture
Securities Interest Subaccount to pay the interest then due on the Securities,
then the Trustee shall, in the following order of priority: first, transfer
monies on deposit in the Tax-Exempt Indenture Securities Redemption Subaccount
and, second, transfer monies on deposit in the Tax-Exempt Indenture Securities
Principal Subaccount to the Tax-Exempt Indenture Securities Interest Subaccount
to be applied to make such payment, (B) the Tax-Exempt Indenture Securities
Principal Subaccount to pay the principal then due on the Securities, then the
Trustee shall transfer monies on deposit in the Tax-Exempt Indenture Securities
Redemption Subaccount to the Tax-Exempt Indenture Securities Principal
Subaccount
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to be applied to make such payment and (C) the Tax-Exempt Indenture Securities
Redemption Subaccount to pay the principal of and premium, if any, and interest
on the Securities then due upon acceleration or on any Redemption Date or
Prepayment Date, then the Trustee shall transfer monies on deposit in the Tax-
Exempt Indenture Securities Principal Subaccount and the Tax-Exempt Indenture
Securities Interest Subaccount (but only, in each case, to the extent such
monies are in excess of the amount necessary for payment of principal of and
interest on the Securities not being redeemed or prepaid) to be applied to make
such payment.
SECTION 4.4. Establishment of 1995 Bond Tax-Exempt Debt Service Reserve
Account. (a) An account designated the "1995 Bond Tax-Exempt Debt Service
Reserve Account" is hereby established and created with the Trustee for the
benefit of the Holders of the 1995 Bonds.
(b) The Tax-Exempt Debt Service Reserve Account Required Balance in
respect of the 1995 Bond Tax-Exempt Debt Service Reserve Account shall be an
amount equal to $5,908,000. The 1995 Bond Tax-Exempt Debt Service Reserve
Account shall be funded on the Closing Date in an amount equal to such
Tax-Exempt Debt Service Reserve Account Required Balance.
SECTION 4.5. Payments into Tax-Exempt Debt Service Reserve Accounts.
Subject to Section 4.7, each Tax-Exempt Debt Service Reserve Account (if any)
shall be funded (a) with monies to be deposited therein on the date of original
issuance of any Securities for whose benefit any such Tax-Exempt Debt Service
Reserve Account was established and created, in accordance with the Series
Supplemental Indenture establishing such Securities (except the 1995 Bonds, in
which case in accordance with Section 4.4), and (b) with monies to be
transferred thereto by the Collateral Agent pursuant to Section 3.11(g)(ii) of
the Intercreditor Agreement, in the case of clauses (a) and (b) above, to the
extent necessary so that the amount of monies, together with the Available
Amount under any Reserve Account Letter of Credit, then on deposit in such
Tax-Exempt Debt Service Reserve Account shall be equal to the Tax-Exempt Debt
Service Reserve Account Required Balance in respect of such Tax-Exempt Debt
Service Reserve Account.
SECTION 4.6. Application of Funds in Tax-Exempt Debt Service Reserve
Accounts. If, following the application of monies on deposit in the Tax-Exempt
Indenture Securities Account in accordance with Section 4.3, amounts are due and
owing in respect of principal of or premium, if any, or interest on any
Securities for whose benefit a Tax-Exempt Debt Service Reserve Account was
established and created, in accordance with the Series Supplemental Indenture
establishing such Securities (except the 1995 Bonds, in which case in accordance
with Section 4.4), the Trustee shall, in the following order of priority: first,
apply monies then on deposit in such Tax-Exempt Debt Service Reserve Account;
and, second, draw upon any Reserve Account Letter of Credit on deposit in such
Tax-Exempt Debt Service Reserve Account pursuant to Section 4.7(d) in an amount
up to the Available Amount thereunder and apply the monies in respect thereof,
in each case, directly to the payment (to the extent necessary) of such amounts
due and owing in respect of such Securities; provided, however, that, prior to a
Trigger Event, if an Event of Default has occurred and is then continuing, the
Trustee shall provide notice thereof to the Collateral Agent, and the Collateral
Agent shall (to the extent necessary), in the following order of priority,
transfer monies on deposit in the Distribution Account, the Subordinated Fee
Account and the Subordinated Debt Account (including then Available Amounts
under any Reserve Account Security on deposit therein) in accordance with and
subject to Sections 3.8, 3.7 and 3.6, respectively, of the Intercreditor
Agreement, to the Trustee for application to the payment of such amounts due and
payable in respect of such Securities, prior to the application of monies
pursuant to clauses first and second above. Notwithstanding anything in this
Agreement or any other Financing Document to the contrary, the Trustee is hereby
authorized and directed to transfer monies on deposit in any Tax-Exempt Debt
Service Reserve
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Account (together with then Available Amounts under any Reserve Account Letter
of Credit deposited therein) into a segregated account to be held by the Trustee
for the purpose of paying any amount required to be rebated to the United States
government pursuant to Section 148 of the Code in connection with any series of
the Securities. The Company shall comply with Article IX of the Company's Tax
and Non-Arbitrage Certification dated August 24, 1995. Unless the Trustee shall
have received an Officer's Certificate of the Company, not later than thirty
(30) days after each installment computation date (as defined in such Tax and
Non-Arbitrage Certification), specifying the amount of such rebate, and the
calculation thereof, that would be required to be so paid, the Trustee is hereby
authorized and directed to employ such Person or Persons, which shall be expert
in such matters, as it may reasonably select, for the purpose of making such
calculations.
SECTION 4.7. Reserve Account Letter of Credit. (a) Subject to Section
4.7(c), the IDB shall not be required at any time to deposit any monies into any
Tax-Exempt Debt Service Reserve Account, and the Company shall be entitled from
time to time to withdraw monies on deposit in such Tax-Exempt Debt Service
Reserve Account, provided that and for so long as one (1) or more Reserve
Account Letters of Credit having an Available Amount thereunder equal to the
amount of such monies otherwise required to be and not so deposited or the
amount of such monies so withdrawn (as the case may be) shall have been
delivered to the Trustee, at or prior to such time, for deposit into such
Tax-Exempt Debt Service Reserve Account. At the time of any such deposit, the
Trustee shall be entitled to receive, and (subject to Section 9.1) shall be
fully protected in relying upon, an Opinion of Counsel to the effect that such
Reserve Account Letter of Credit (i) is permitted by this Section 4.7 and has
been delivered in accordance with the provisions hereof, (ii) has been duly
authorized, executed and delivered by the provider thereof and (iii) constitutes
a legal, valid and binding obligation of such provider, enforceable against such
provider in accordance with its terms, except as such enforceability (A) may be
limited by applicable bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium and other similar laws relating to or affecting the
enforcement of creditors' rights and remedies generally as such laws would apply
in the event of a bankruptcy, insolvency or reorganization of, or other similar
occurrence with respect to, such provider and (B) is subject to general
principles of equity (regardless of whether considered in a proceeding in equity
or at law) or other customary qualifications and limitations. The Company may
from time to time, at its discretion, replace or reduce the Available Amount (in
whole or in part) under any Reserve Account Letter of Credit on deposit in any
Tax-Exempt Debt Service Reserve Account with one (1) or more other Reserve
Account Letters of Credit having an Available Amount thereunder, or with monies
in an amount, equal to the Available Amount so replaced or reduced.
(b) Each Reserve Account Letter of Credit on deposit in any Tax-Exempt
Debt Service Reserve Account shall provide that not less than forty-five (45)
days prior to the occurrence of a Termination Event with respect to such Reserve
Account Letter of Credit, the provider thereof shall deliver written notice to
the Trustee and the Company of such occurrence. The Company shall provide notice
to the Trustee of the occurrence of any Credit Standard Event or Default Event
within three (3) Business Days of its actual or constructive knowledge of the
event giving rise to such occurrence.
(c) If (in lieu of any monies required to be deposited into, or in
replacement of monies or one (1) or more other Reserve Account Letters of Credit
on deposit in, any Tax-Exempt Debt Service Reserve Account) any Reserve Account
Letter of Credit is on deposit in such Tax-Exempt Debt Service Reserve Account
pursuant to Section 4.7(a), then, immediately upon the occurrence of a Required
Deposit Event with respect to such Reserve Account Letter of Credit, the Company
agrees to deposit into such Tax-Exempt Debt Service Reserve Account an amount of
monies equal to the Required Deposit with respect to such Required Deposit
Event.
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(d) If the Company fails to make any Required Deposit pursuant to
Section 4.6(c) as and when due, then the Trustee shall, and is hereby authorized
and directed to, draw upon any such Reserve Account Letter of Credit in an
amount equal to the amount of such Required Deposit that the Company so failed
to deposit; provided, however, that, if a Required Deposit Event occurs at a
time when more than one (1) Reserve Account Letter of Credit is on deposit in
such Tax-Exempt Debt Service Reserve Account, the Trustee may elect, subject to
Section 4.6, the order in which the Trustee shall draw upon such Reserve Account
Letters of Credit. Any amounts drawn by the Trustee under any Reserve Account
Letter of Credit on deposit in any Tax-Exempt Debt Service Reserve Account shall
be deposited into such Tax-Exempt Debt Service Reserve Account. The Company's
obligations under Section 4.7(c) shall be satisfied to the extent of any such
deposit.
SECTION 4.8. Investment of Monies in the Tax-Exempt Indenture Accounts.
(a) Amounts deposited in the Tax-Exempt Indenture Accounts, at the written
request and direction of the Company, shall be invested by the Trustee in
Permitted Investments. Such Permitted Investments shall mature in such amounts
and not later than such times as may be necessary to provide monies when needed
to make payments from such monies as provided in this Indenture. Net interest or
gain received from such Permitted Investments shall remain in the respective
subaccounts of the Tax-Exempt Indenture Securities Account and in each
Tax-Exempt Debt Service Reserve Account (if any) pending application as provided
in this Indenture, provided that (i) to the extent that monies on deposit in any
Tax- Exempt Debt Service Reserve Account (together with then Available Amounts
under any Reserve Account Letter of Credit deposited therein) exceed the
Tax-Exempt Debt Service Reserve Account Required Balance therefor, such monies
shall be transferred to the Collateral Agent for deposit into the Revenue
Account and (ii) net interest on monies deposited into the Tax-Exempt Indenture
Securities Account Principal Subaccount shall be transferred to the Tax-Exempt
Indenture Securities Account Interest Subaccount immediately prior to each
Monthly Transfer Date. In the event monies are required for payment of any
amounts to be paid by the Trustee pursuant to Article VI in respect of any
series of Securities and for any payment of the principal of or premium, if any,
or interest on any series of Securities, the Trustee shall, at the written
request and direction of the Company, sell such Permitted Investments as
required to restore to cash such amounts as are needed for any such payments.
Absent written instructions from the Company, the Trustee shall invest the
amounts held in the Tax-Exempt Indenture Securities Account and each Tax-Exempt
Debt Service Reserve Account in Permitted Investments described in clause (a) of
the definition thereof. All such Permitted Investments shall be made in the name
of the Trustee (it being understood and agreed that the Trustee shall not be
responsible for losses in respect thereof) and shall be made in such manner as
to preserve the Lien of this Indenture thereon. The Trustee shall maintain
records reflecting the interest of each Tax-Exempt Indenture Account in such
Permitted Investments.
(b) In computing the amount in any Tax-Exempt Indenture Account (or any
other separate account or fund created under the provisions of, and for any
purpose provided in, this Indenture), each Permitted Investment on deposit
therein shall be valued at the fair value thereof, including accrued interest
thereon. On the Business Day immediately preceding each Monthly Transfer Date
and the date of any withdrawal of monies on deposit in any Tax-Exempt Indenture
Account, the Trustee shall so value each Permitted Investment on deposit in such
Tax-Exempt Indenture Account and, promptly thereafter, shall notify the Company,
the Collateral Agent and the Independent Engineer as to the amount of any
deficiency or surplus in such Tax-Exempt Indenture Account as of such date based
upon such valuation.
(c) In addition to the records referenced above, the Trustee shall keep
and retain or cause to be kept and retained, until at least six (6) years after
the discharge and retirement of the Securities, whether at maturity, redemption
or acceleration, the following records with respect to Permitted Investments:
(i)
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purchase price, (ii) purchase date, (iii) type of investment, (iv) accrued
interest paid, (v) interest rate (if applicable), (vi) principal amount, (vii)
maturity date, (viii) interest payment date (if applicable), (ix) date of
liquidation and (x) receipt upon liquidation. If any investment is retained
following the date the last Security is retired, the records required to be kept
by the Trustee shall include the fair value of such investment on the date the
last Security is retired. Amounts shall be segregated wherever held in order to
maintain the foregoing records.
SECTION 4.9. Monies to be Held in Trust. All monies required to be
deposited with or paid to the Trustee for the account of any Tax-Exempt
Indenture Account under any provision of this Indenture and all investments made
therewith, and all investments made therewith, and all monies withdrawn from any
Tax-Exempt Indenture Account and held by the Trustee or any Paying Agent, shall
be held by the Trustee or the Paying Agent in trust, and while so held shall be
held in trust for the Holders of the Securities.
SECTION 4.10. Dominion and Control. The IDB hereby transfers, assigns
and sets over all of its right, title and interest in and to all amounts
deposited or held in any Tax-Exempt Indenture Account and grants the Trustee
(acting on behalf of the Holders of the Securities) sole dominion and control
over such amounts. Neither the Mobile Energy Parties nor the IDB shall have the
right to withdraw monies from any Tax-Exempt Indenture Account hereunder.
ARTICLE V.
COVENANTS
The IDB hereby covenants and agrees that so long as this Indenture is
in effect and any Securities remain Outstanding:
SECTION 5.1. Payment of Principal, Premium, if any, and Interest. The IDB
shall duly and punctually pay, or cause to be paid, the principal of and
premium, if any, and interest on, and all other amounts payable in respect of,
the Securities of each series in accordance with their terms and the terms of
this Indenture and (other than in the case of the 1995 Bonds) of the related
Series Supplemental Indenture, provided that the principal of and premium, if
any, and interest on the Securities are payable by the IDB solely and only from
the Tax-Exempt Indenture Securities Collateral. The Securities are not general
obligations of the IDB but are limited obligations payable solely and only from
the Tax-Exempt Indenture Securities Collateral.
SECTION 5.2. Performance of Covenants by IDB. The IDB covenants and
agrees that it will faithfully perform at all times any and all covenants,
undertakings and provisions contained in this Indenture, in any and every
Security executed, authenticated and delivered hereunder and in all of its
proceedings pertaining hereto, and that it will diligently enforce the
performance of any and all covenants, undertakings and provisions of the Mobile
Energy Parties contained in the IDB Lease Agreement.
SECTION 5.3. Rights Under IDB Lease Agreement. The IDB Lease Agreement
sets forth the covenants and obligations of the IDB and the Mobile Energy
Parties, including provisions to the effect that, subsequent to the issuance of
the Securities and prior to the payment in full or provision for payment thereof
in accordance with the provisions hereof, the IDB Lease Agreement (except as
expressly provided therein) may not be effectively terminated, amended,
supplemented, waived or otherwise modified without the concurring written
consent of the Trustee, and reference is hereby made to the IDB Lease Agreement
for a detailed statement of such covenants and obligations of the Mobile Energy
Parties, and the IDB agrees that the Trustee in its name or (to the extent
required by Law) in the name of the IDB, may enforce all rights of the IDB and
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all obligations of the Mobile Energy Parties, under and pursuant to the IDB
Lease Agreement for and on behalf of the Holders of Securities, whether or not
the IDB is in default hereunder. The IDB shall cooperate with the Trustee in
enforcing the obligations of the Mobile Energy Parties to pay or cause to be
paid all amounts payable by the Mobile Energy Parties under the IDB Lease
Agreement.
SECTION 5.4. Arbitrage and Tax Covenants. The IDB shall not knowingly
use or permit the use of any proceeds of Securities or any other funds of the
IDB, directly or indirectly, to acquire any securities or obligations, and shall
not knowingly use or permit the use of any revenues of the IDB from the IDB
Lease Agreement in any manner, and shall not knowingly take or permit to be
taken any other action or actions, that would cause any Security to be an
"arbitrage bond" within the meaning of Section 148 of the Code, or that would
otherwise cause interest on the Securities to become subject to Federal income
tax. The IDB, at the direction of the Company, shall comply with all applicable
provisions of Section 148 of the Code.
The IDB shall at all times do and perform all acts reasonably requested
by the Company or the Trustee and things permitted by Law and necessary or
desirable in order to assure that interest paid by the IDB on the Securities
shall, for the purposes of Federal income tax, be exempt from all income
taxation under any valid provision of Law.
SECTION 5.5. No Disposition of Tax-Exempt Indenture Securities
Collateral. Except as permitted by this Indenture, the IDB Lease Agreement, the
Intercreditor Agreement, the Mortgage, the Security Agreement or the Recognition
Agreement relating to the 1995 Bonds, the IDB shall not sell, lease, pledge,
assign or otherwise encumber or dispose of its interest in the Tax-Exempt
Indenture Securities Collateral and will promptly pay or cause to be discharged
(but solely from the Tax-Exempt Indenture Securities Collateral), or make
adequate provision in the judgment of the Trustee to discharge, any lien or
charge on any part thereof not permitted hereby.
SECTION 5.6. Access to Books. All books and documents in the possession
of the IDB relating to the Tax-Exempt Project, the revenues of the IDB from the
IDB Lease Agreement, and the Tax-Exempt Indenture Securities Collateral shall at
all reasonable times be open to inspection by such accountants or other agencies
as the Trustee may from time to time designate.
SECTION 5.7. Covenant to Perform Further Acts. The IDB covenants that
it will do, execute, acknowledge and deliver or cause to be done, executed,
acknowledged and delivered, such indentures supplemental hereto and such further
acts, instruments and transfers as the Trustee may reasonably require for the
better pledging unto the Trustee all and singular the rental payments under the
IDB Lease Agreement and any other income, monies, rights and properties pledged
hereby to the payment of the principal of and interest and premium, if any, on
the Securities.
SECTION 5.8. Enforcement of Duties and Obligations of Mobile Energy
Parties. The IDB shall take all legally available action to cause the Mobile
Energy Parties to fully perform all duties and acts and fully comply with the
covenants of the Mobile Energy Parties imposed by the Lease Documents in the
manner and at the times provided therein. So long as no Event of Default
hereunder shall have occurred and be continuing, the IDB may exercise all its
rights under the Lease Documents, but the IDB shall not amend any of the same so
as to diminish the amounts payable thereunder or otherwise so as to adversely
affect the IDB's ability to perform its covenants under this Indenture.
SECTION 5.9. Further Assurances. The IDB shall not enter into any Contract
or take any action by which the rights of the Trustee or the Holders may be
impaired and shall, from time to time, execute and deliver such further
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instruments and take such further action as may be required to carry out the
purposes of this Indenture.
SECTION 5.10. Filing and Recording. The IDB, at the expense of the
Company, shall cause all documents, statements, memoranda or other instruments
to be registered, filed or recorded in such manner and at such places as may be
required by law fully to protect the security of the Holders and the right,
title and interest of the Trustee in and to any monies or securities held
hereunder or any part thereof (including any refilings, continuation statements
or such other documents as may be required).
SECTION 5.11. Trustee's Obligations. (a) The Trustee covenants and
agrees that, as assignee of the rights of the IDB under the IDB Lease Agreement,
it will not suffer, permit or take any action or do anything or fail to take any
action or fail to do anything that may result in the termination of the IDB
Lease Agreement prior to its stated expiration date so long as any Security is
Outstanding; that it will fulfill its obligations (as assignee of the IDB) and
will require the Mobile Energy Parties to perform punctually the duties and
obligations of the Mobile Energy Parties under the IDB Lease Agreement and will
otherwise administer the IDB Lease Agreement in accordance with its terms and
assure the continued ownership, operation, management, repair and maintenance of
the Tax-Exempt Project by the Company and the Company's payment of the rental
payments thereunder and the costs and expenses of ownership, operation,
management, repair and maintenance of the Tax-Exempt Project, all in accordance
with the terms of the IDB Lease Agreement; that (as assignee of the IDB) it will
not terminate the IDB Lease Agreement or cause it to be terminated except in
strict accordance with the terms thereof; that it will not agree to any
termination, amendment, supplement, waiver or other modification of or to the
IDB Lease Agreement except by supplemental Contract duly executed by the Mobile
Energy Parties and the IDB and upon the further terms and conditions set forth
in Article XI of this Indenture; and that (as assignee of the IDB), except as
expressly provided in the IDB Lease Agreement and herein, it will not agree to
any abatement, reduction, abrogation, waiver, diminution or other modification
in any manner or to any extent whatsoever of the obligation of the Mobile Energy
Parties or any successor under the IDB Lease Agreement to pay the rental
payments to meet its other obligations as provided in the IDB Lease Agreement.
(b) The Trustee covenants and agrees that it will undertake to enforce
to the extent reasonably practicable and necessary for and on behalf of the IDB
the obligations of the Mobile Energy Parties to the IDB and the Trustee under
the IDB Lease Agreement.
(c) The IDB covenants that it will promptly notify the Trustee of any
actual or alleged Event of Default, whether by the IDB or the Mobile Energy
Parties, of which it is aware, and will further notify the Trustee at least
thirty (30) days before the proposed date of effectiveness thereof of any
proposed termination or amendment of the IDB Lease Agreement.
ARTICLE VI.
REDEMPTION AND PREPAYMENT OF SECURITIES
SECTION 6.1. Applicability of Article. Securities of any series that
are subject to redemption or prepayment before their Stated Maturity (or, if the
principal of the Securities of any series is payable in installments, the Stated
Maturity of the final installment of the principal thereof) shall be redeemed or
prepaid in accordance with their terms and (except as otherwise specified in the
Series Supplemental Indenture creating such series) in accordance with this
Article VI.
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SECTION 6.2. Election to Redeem or Prepay; Notice to Trustee. The election
or requirement of the IDB to redeem or prepay any Securities otherwise than
through a Sinking Fund shall be evidenced by an IDB Order. If the IDB determines
(at the direction of the Company) or is required to redeem or prepay any
Securities, the IDB (or the Company on behalf of the IDB) shall, at least
fifteen (15) days prior to the date upon which notice of redemption or
prepayment is required to be given to the Holders pursuant to Section 6.4 hereof
(unless a shorter notice period shall be satisfactory to the Trustee), deliver
to the Trustee an IDB Order specifying the date on which such redemption or
prepayment shall occur (a "Redemption Date" or "Prepayment Date," as the case
may be) and the series and principal amount of Securities to be redeemed or
prepaid. In the case of any redemption or prepayment of Securities (a) prior to
the expiration of any restriction on such redemption or prepayment provided in
the terms of such Securities, the Series Supplemental Indenture relating thereto
or elsewhere in this Indenture or (b) pursuant to an election of the IDB (at the
direction of the Company) that is subject to a condition specified in the terms
of such Securities or in the Series Supplemental Indenture relating thereto, the
IDB (or the Company on behalf of the IDB) shall furnish the Trustee with an
Officer's Certificate and Opinion of Counsel evidencing compliance with such
restriction or condition.
SECTION 6.3. Optional Redemption; Extraordinary Redemption; Prepayment;
Selection of Securities to Be Redeemed or Prepaid. (a) The Securities of any
series shall be subject to redemption from time to time at the option of the IDB
(at the direction of the Company) only as provided in the terms of such
Securities or in the Series Supplemental Indenture relating thereto.
(b) Unless otherwise provided in the terms of such Securities or in a
Series Supplemental Indenture, all Outstanding Securities shall be redeemed
prior to maturity, as a whole, at a redemption price equal to the principal
amount thereof, together with any interest on the principal amount of the
Securities accrued to the Redemption Date, upon an Event of Loss or an Event of
Eminent Domain if (i) the determination is made in accordance with Section
3.10(c) of the Intercreditor Agreement that neither the Energy Complex nor any
portion thereof can be rebuilt, repaired, restored or replaced with a
Replacement Facility (subject to the conditions specified in the Intercreditor
Agreement) or that the Loss Proceeds with respect thereto, together with
Additional Available Proceeds, are not sufficient to permit such rebuilding,
repair, restoration or replacement or (ii) if (A) the monies on deposit in the
Loss Proceeds Account, including all Additional Available Proceeds, are
sufficient to redeem all Senior Debt, (B) all or substantially all of the Energy
Complex is destroyed or otherwise rendered unfit for normal use or is the
subject of a compulsory transfer or taking or transfer under threat of a
compulsory transfer or taking, (C) the Company elects not to rebuild, repair,
restore or replace the Energy Complex and (D) the Company provides an Officer's
Certificate to the Trustee and the Collateral Agent certifying that the Company
is not otherwise required under the Master Operating Agreement or the Lease to
rebuild, repair, restore or replace the Energy Complex, or to apply Loss
Proceeds to the rebuilding, repairing, restoration or replacement of the Energy
Complex (which certification shall be confirmed by an Opinion of Counsel to such
effect). All Loss Proceeds received by the Trustee from the Collateral Agent
pursuant to Section 6.2(a) of the Intercreditor Agreement with respect to such
Event of Loss or Event of Eminent Domain (as the case may be) shall be deposited
into the Tax-Exempt Indenture Securities Redemption Subaccount and applied by
the Trustee to the redemption of all Outstanding Securities pursuant to this
Section 6.3(b).
Any redemption pursuant to this Section 6.3(b) shall be made within
ninety (90) days after the receipt by the Trustee of the Excess Loss Proceeds
from the Collateral Agent.
(c) The Outstanding Securities shall be partially redeemed, ratably
among, and by lot within, all outstanding series and maturities, prior to
maturity at a redemption price equal to the principal amount thereof, together
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with any interest on the principal amount of the Outstanding Securities accrued
to the Redemption Date, upon completion of the rebuilding, repair, restoration
or replacement of the Energy Complex following an Event of Loss or an Event of
Eminent Domain where a determination is made that the Energy Complex or any
portion thereof can be rebuilt, repaired, restored or replaced with a
Replacement Facility and that the Company has sufficient monies available for
such rebuilding, repair, restoration or replacement. The foregoing provisions of
this Section 6.3(c) may be altered in a Series Supplemental Indenture, but such
altered provisions shall not be effective while any Securities Outstanding as of
the date of such Series Supplemental Indenture remain outstanding.
The aggregate amount of Securities to be redeemed shall be equal to the
Tax-Exempt Indenture Distribution Amount transferred to the Trustee for such
purpose pursuant to Section 6.2(b)(iii) of the Intercreditor Agreement. All
Excess Loss Proceeds so transferred to the Trustee shall be deposited into the
Tax-Exempt Indenture Securities Redemption Subaccount and applied by the Trustee
to the redemption of such Securities pursuant to this Section 6.3(c); provided,
however, that, to the extent that any of such Excess Loss Proceeds is
transferred to the Trustee pursuant to clause (B) of the last sentence of
Section 6.2(b) of the Intercreditor Agreement, the Trustee shall deposit such
Excess Loss Proceeds into the Tax-Exempt Indenture Securities Principal
Subaccount to be applied to the payment or redemption of Securities at the
earliest date permitted by the terms thereof.
Any redemption pursuant to this Section 6.3(c) shall be made within
ninety (90) days after the receipt by the Trustee of such Excess Loss Proceeds
(other than any such Excess Loss Proceeds transferred to the Indenture
Securities Principal Subaccount).
(d) Except as otherwise specified herein, in the terms of the
Securities of any series or in the Series Supplemental Indenture relating to
such Securities, if less than all the Securities of such series are to be
redeemed or prepaid pursuant to Section 6.3(a), the particular Securities of
such series to be redeemed or prepaid shall be selected by the Trustee from the
Outstanding Securities of such series not previously called for redemption or
prepayment in whole, by such method (including by lot) as the Trustee shall deem
fair and appropriate.
(e) The Trustee shall promptly notify the Company in writing of the
Securities selected for redemption or prepayment and, in the case of any
Securities to be redeemed or prepaid in part, the principal amount thereof to be
redeemed or prepaid.
(f) For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption or prepayment of Securities
shall relate, in the case of any Securities redeemed or prepaid or to be
redeemed or prepaid only in part, to the portion of the principal amount of such
Securities that has been or is to be redeemed or prepaid.
SECTION 6.4. Notice of Redemption or Prepayment. Except as otherwise
specified in the Series Supplemental Indenture relating to the Securities of a
series, or in the terms of the Securities of any series, to be redeemed or
prepaid, notice of redemption or prepayment (including any Sinking Fund
redemption pursuant to Article VII hereof) shall be given in the manner provided
in Section 1.6 to the Holders of Securities of such series to be redeemed or
prepaid at least thirty (30) days but not more than sixty (60) days prior to the
Redemption Date or Prepayment Date (as the case may be). All notices of
redemption or prepayment shall state:
(a) the Redemption Date or Prepayment Date (as the case may be);
(b) the premium payable on redemption or prepayment, if any;
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(c) if less than all the Outstanding Securities of any series are to
be redeemed or prepaid in whole, (i) the particular Securities of
such series to be redeemed or prepaid in whole, (ii) the portion
of the principal amount of each Security of such series to be
redeemed or prepaid in part and (iii) that, on and after the
Redemption Date or Prepayment Date (as the case may be), upon
surrender of such Security, a new Security or Securities of such
series in principal amount equal to the remaining unpaid
principal amount thereof will be issued;
(d) that on the Redemption Date or Prepayment Date (as the case may
be), interest on the Securities of such series to be redeemed or
prepaid will cease to accrue on and after such date;
(e) the Place or Places of Payment where such Securities are to be
surrendered for payment of the amount in respect of such
redemption or prepayment; and
(f) that such redemption is for a Sinking Fund, if such is the case.
In addition to the notice described above, each notice of redemption
shall be sent two (2) Business Days prior to such notice by telecopy or telefax
to the registered securities depository holding any global securities if the
Securities are in book-entry form, and each of the registered securities
depositaries then in the business of holding substantial amounts of obligations
similar to the Securities (such depositaries as of the date hereof consisting of
The Depository Trust Company, New York, New York, Midwest Securities Trust
Company, Chicago, Illinois and Philadelphia Depository Trust Company,
Philadelphia, Pennsylvania) and to two (2) or more national information services
that disseminate notices of redemption of obligations such as the Securities
(such as Financial Information, Inc.'s Financial Daily Called Bond Service,
Kenny Information Service's Called Bond Service, Bloomberg Financial Markets
Commodities News, Moody's Municipal and Government Called Bond Record and
Standard & Poor's Called Bond Service).
Notice of redemption of Securities to be redeemed at the election of
the IDB shall be given by the Trustee in the name of the IDB and at the expense
of the Company. The Company shall provide the Trustee with a copy of the form of
notice of redemption or prepayment of the Securities at the time the Company
directs the IDB with respect to such redemption or prepayment pursuant to
Section 6.2 hereof.
SECTION 6.5. Securities Payable on Redemption Date or Prepayment Date.
Notice of redemption or prepayment (as the case may be) having been given as
aforesaid, and the conditions, if any, set forth in such notice having been
satisfied, the Securities or portions thereof so to be redeemed or prepaid
shall, on the Redemption Date or Prepayment Date (as the case may be), become
due and payable, and from and after such date such Securities or portions
thereof shall cease to bear interest. Upon surrender of any such Security for
redemption or prepayment in accordance with such notice, an amount in respect of
such Security or portion thereof shall be paid as provided therein; provided,
however, that any payment of interest on any Security the Stated Maturity of
which payment is on or prior to the Redemption Date or Prepayment Date (as the
case may be) shall be payable to the Holder of such Security, or one (1) or more
Predecessor Securities, registered as such at the close of business on the
related Regular Record Date according to the terms of such Security and subject
to the provisions of Section 2.10. If any Security called for redemption or
prepayment shall not be so paid upon surrender thereof for redemption or
repayment (as the case may be), the principal of and premium, if any, and
interest on such Security shall, until paid, bear interest from the Redemption
Date or the Prepayment Date (as the case may be) at the rate prescribed in the
Security.
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SECTION 6.6. Securities Redeemed or Prepaid in Part. Any Security that
is to be redeemed or prepaid only in part shall be surrendered at a Place of
Payment therefor (with, if the Company or the Trustee so requires, due
endorsement by, or a written instrument of transfer in form satisfactory to the
Company and the Trustee duly executed by, the Holder thereof or such Holder's
attorney duly authorized in writing), and the Mobile Energy Parties shall
execute, and the Trustee shall authenticate and make available for delivery to
the Holder of such Security without service charge, a new Security or Securities
of the same series, of any authorized denomination requested by such Holder and
of like tenor and in aggregate principal amount equal to and in exchange for the
remaining unpaid principal amount of the Security so surrendered.
SECTION 6.7. Determination of Taxability. In the case of the 1995 Bonds
and any other Securities (excluding any Securities in respect of which no
opinion of Bond Counsel was delivered at the time of original issuance to the
effect that interest thereon is exempt from Federal income taxation), if the
Trustee receives written notice from any Holder or beneficial holder of a
Security to the effect that (i) such Holder or beneficial holder of a Security
has been notified in writing by the Internal Revenue Service that it proposes to
include the interest on any such Security in the gross income of such Holder or
beneficial holder, which the Trustee determines may lead to a Determination of
Taxability (for any of the reasons described in the definition thereof, or
because of institution of proceedings against such Holder or beneficial holder
or otherwise) and (ii) such Holder or beneficial holder will afford the Trustee
the opportunity to contest the same in accordance with the procedures set forth
in the definition of Determination of Taxability, either directly or in the name
of such Holder or beneficial holder, and until a conclusion of any appellate
review, if sought, and the Trustee has received a copy of the notice described
in clause (i), then the Trustee shall promptly give notice thereof to the Mobile
Energy Parties, the IDB, the Collateral Agent and the Indenture Trustee and to
each Holder and each beneficial holder of Securities. The Trustee shall
thereafter coordinate any similar requests or notices it may receive or may have
received from other Holder or beneficial holders of Securities and shall monitor
the progress of any administrative proceedings or litigation with respect
thereto.
ARTICLE VII.
SINKING FUNDS
SECTION 7.1. Applicability of Article. The provisions of this Article
VII shall be applicable to any sinking fund for the retirement of the Securities
of any series except as otherwise specified in the Series Supplemental Indenture
creating the Securities of such series or in the terms of the Securities of any
series.
SECTION 7.2. Sinking Funds for Securities. Any Series Supplemental
Indenture may provide for a sinking fund for the retirement of the Securities of
the series created thereby (hereinafter called a "Sinking Fund") in accordance
with which the IDB will be required to redeem on the dates set forth therein
(hereinafter called "Sinking Fund Redemption Dates") Securities of principal
amounts set forth therein (hereinafter called "Sinking Fund Requirements").
Except as otherwise specified in the Series Supplemental Indenture
relating to the Securities of a series (except the 1995 Bonds, in which case in
Section 2.17), the particular Securities of such series, if any, to be redeemed
through a Sinking Fund shall be selected in the manner provided in Section
6.3(d), and notice of such redemption shall be given in the manner provided in
Section 6.4.
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ARTICLE VIII.
EVENTS OF DEFAULT; REMEDIES
SECTION 8.1. Events of Default. The term "Event of Default," whenever
used herein, shall mean any of the following events (whatever the reason for
such event and whether it shall be voluntary or involuntary or come about or be
affected by operation of law, or be pursuant to or in compliance with any
applicable Law), and such event shall continue to be an Event of Default if and
for so long as it shall not have been remedied:
(a) the IDB shall fail to pay any principal of or premium, if
any, or interest on any Security when the same becomes due and
payable, whether by scheduled maturity or required prepayment or by
acceleration or otherwise, for fifteen (15) or more days; or
(b) an "Event of Default" under the IDB Lease Agreement shall
have occurred and be continuing; or
(c) the IDB shall fail to perform or observe any material
covenant or agreement to be performed or observed by it under the
provisions of this Indenture (other than those referred to in Section
8.1(a)) and such failure shall continue uncured for thirty (30) or
more days after the IDB and the Company have been given notice in
writing of such failure; provided, however, that if (and for so long
as a representative of the IDB certifies (or, in lieu thereof, an
Authorized Officer of the Company provides an Officer's Certificate
certifying) that) (i) such failure is capable of being remedied and
the IDB or the Company is diligently attempting to remedy such failure
and (ii) no other Event of Default has occurred and is continuing,
then the IDB or the Company, as applicable, may continue to effect
such cure of the default for an additional one hundred eighty (180)
days.
SECTION 8.2. Enforcement of Remedies. (a) If one (1) or more Events of
Default shall have occurred and be continuing, then:
(i) in the case of an Event of Default described in Section
8.1(b) that arises from an "Event of Default" under the IDB Lease
Agreement described in Section 7.1(n) thereof (an "Automatic
Acceleration Default"), the entire principal amounts of the Securities
Outstanding, all interest accrued and unpaid thereon, and all premium
and other amounts payable under the Securities and this Indenture, if
any, shall automatically become due and payable without presentment,
demand, protest or notice of any kind, all of which are hereby waived;
or
(ii) (A) in the case of an Event of Default described in
Section 8.1(a), upon the direction of the Holders of not less than
twenty-five percent (25%) in aggregate principal amount of the
Outstanding Securities or (B) in the case of an Event of Default
described in Section 8.1(b) that arises from an "Event of Default"
under the IDB Lease Agreement described in Sections 7.1(b) through (m),
(o) or (p) thereof, upon the direction of the Holders of not less than
thirty-three and one-third percent (331/3%) in aggregate principal
amount of the Outstanding Securities, the Trustee shall, by notice to
the IDB (with a copy to each of the Mobile Energy Parties), declare the
entire principal amounts of the Securities Outstanding, all interest
accrued and unpaid thereon, and all premium and other amounts payable
under the Securities and this Indenture, if any, to be due and payable,
whereupon the same shall become due and payable without presentment,
demand, protest or further notice of any kind, all of which are to the
extent permitted by law hereby waived.
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(b) If an Event of Default occurs and is continuing and is known to a
Responsible Officer of the Trustee, the Trustee shall mail to each Holder a
notice of such Event of Default within thirty (30) days after the occurrence
thereof. Except in the case of an Event of Default in payment of principal of or
premium, if any, or interest on any Security, the Trustee may withhold the
notice to the Holders if and for so long as a committee of its Responsible
Officers in good faith determines that withholding such notice is in the
interest of the Holders. In addition, if the Event of Default described in
Section 8.1(a) shall have occurred and be continuing, the Trustee may accelerate
the maturity of the Securities as provided in Section 8.2(a)(ii) notwithstanding
the absence of direction from the Holders if in the judgment of the Trustee such
action is necessary to protect the interests of the Holders.
(c) At any time after the principal of the Securities shall have become
due and payable upon an acceleration as provided herein, and before any judgment
or decree for the payment of the money so due, or any portion thereof, shall be
entered, such declaration and its consequences shall be deemed to be rescinded
and annulled if:
(i) there shall have been paid to or deposited with the Trustee a
sum sufficient to pay
(A) all overdue installments of interest on the Securities,
(B) the principal of and premium, if any, on any Securities
that have become due otherwise than by such declaration of
acceleration and interest thereon at the respective rates
provided in the Securities for late payments of principal or
premium,
(C) to the extent that payment of such interest is lawful,
interest upon overdue installments of interest at the respective
rates provided in the Securities for late payments of interest,
and
(D) all sums paid or advanced by the Trustee hereunder and
the reasonable compensation, expenses, disbursements and advances
of the Trustee, the IDB and their agents and counsel; and
(ii) all Events of Default, other than the non-payment of the
principal of the Securities that has become due solely by such
acceleration, have been cured or waived as provided in Section 8.7.
No such rescission and annulment shall affect any subsequent default or impair
any right consequent thereon.
SECTION 8.3. Specific Remedies. If any Event of Default shall have
occurred and be continuing and an acceleration shall have occurred pursuant to
Section 8.2, subject to the provisions of Sections 8.2, 8.5, 8.6 and 8.15, the
Trustee, by such officer or agent as it may appoint, may deliver notice to the
Collateral Agent in accordance with the Intercreditor Agreement requesting that
the Collateral Agent sell, without recourse, for cash, or credit or for other
property, for immediate or future delivery, and for such price or prices and on
such terms as the Collateral Agent in its discretion may determine, the Shared
Collateral as an entirety, or in such portions as the Holders of a majority in
aggregate principal amount of the Securities then Outstanding shall request by
an Act of Holders, or, in the absence of such request, as the Trustee in its
discretion shall deem expedient in the interest of the Holders, at public or
private sale.
SECTION 8.4. Judicial Proceedings Instituted by Trustee. (a) Trustee May
Bring Suit. If there shall exist an Event of Default, then the Trustee, in its
own name, and as trustee of an express trust, subject to the provisions of
Sections 2.14 and 8.2, shall be entitled and empowered to institute any suits,
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actions or proceedings at law, in equity or otherwise, for the collection of the
sums so due and unpaid on the Securities, and may prosecute any such claim or
proceeding to judgment or final decree, and may enforce any such judgment or
final decree and collect the monies adjudged or decreed to be payable in any
manner provided by law, whether before or after or during the pendency of any
proceedings for the enforcement of the Lien of this Indenture, or of any of the
Trustee's rights or the rights of the Holders under this Indenture, and such
power of the Trustee shall not be affected by any sale hereunder or by the
exercise of any other right, power or remedy for the enforcement of the
provisions of this Indenture or for the foreclosure of the Lien hereof.
(b) Trustee May Recover Unpaid Indebtedness after Sale of Collateral.
Subject to Section 2.14, in the case of a sale of the Tax-Exempt Indenture
Securities Collateral and of the application of the proceeds of such sale to the
payment of the indebtedness secured by this Indenture, the Trustee, in its own
name, and as trustee of an express trust, shall be entitled and empowered, by
any appropriate means, legal, equitable or otherwise, to enforce payment of, and
to receive all amounts then remaining due and unpaid upon, all or any of the
Securities, for the benefit of the Holders thereof, and upon any other portion
of such indebtedness remaining unpaid, with interest at the rates specified in
the respective Securities on the overdue principal of and premium, if any, and
(to the extent that payment of such interest is legally enforceable) on the
overdue installments of interest.
(c) Recovery of Judgment Does Not Affect Lien of Indenture or Other
Rights. No recovery of any such judgment or final decree by the Trustee and no
levy of any execution under any such judgment upon any of the Tax-Exempt
Indenture Securities Collateral, or upon any other property, shall in any manner
or to any extent affect the Lien of this Indenture upon any of the Tax-Exempt
Indenture Securities Collateral, or any rights, powers or remedies of the
Trustee, or any liens, rights, powers or remedies of the Holders, but all such
liens, rights, powers or remedies shall continue unimpaired as before.
(d) Trustee May File Proofs of Claim; Appointment of Trustee as
Attorney-in-Fact in Judicial Proceedings. The Trustee in its own name, or as
trustee of an express trust, or as attorney-in-fact for the Holders, or in any
one (1) or more of such capacities (irrespective of whether the principal of the
Securities shall then be due and payable as therein expressed or by declaration
or otherwise and irrespective of whether the Trustee shall have made any demand
for the payment of overdue principal, premium, if any, or interest), shall be
entitled and empowered to file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee and of the Holders (whether such claims be based upon the provisions of
the Securities or of this Indenture) allowed in any equity, receivership,
insolvency, bankruptcy, liquidation, readjustment, reorganization or any other
judicial proceedings relating to the IDB, either of the Mobile Energy Parties or
any obligor on the Securities, the creditors of the IDB, or any such obligor,
the Tax-Exempt Indenture Securities Collateral or any other property of the IDB,
either of the Mobile Energy Parties or any such obligor and any receiver,
assignee, trustee, liquidator, sequestrator (or other similar official) in any
such judicial proceeding is hereby authorized by each Holder to make such
payments to the Trustee and, in the event that the Trustee shall consent to the
making of such payments directly to the Holders, to pay to the Trustee any
amount due to it for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel. The Trustee is hereby
irrevocably appointed (and the successive respective Holders of the Securities,
by taking and holding the same, shall be conclusively deemed to have so
appointed the Trustee) the true and lawful attorney-in-fact of the respective
Holders, with authority to (i) make and file in the respective names of the
Holders (subject to deduction from any such claims of the amounts of any claims
filed by any of the Holders themselves) any claim, proof of claim or amendment
thereof, debt, proof of debt or amendment thereof, petition or other document in
any such proceedings and to
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receive payment of any amounts distributable on account thereof, (ii) execute
any such other papers and documents and to do and perform any and all such acts
and things for and on behalf of such Holders, as may be necessary or advisable
in order to have the respective claims of the Trustee and of the Holders against
the IDB, either of the Mobile Energy Parties or any such obligor, the Tax-Exempt
Indenture Securities Collateral or any other property of the IDB, the Mobile
Energy Parties or any such obligor allowed in any such proceeding and (iii)
receive payment of or on account of such claims and debt; provided, however,
that nothing contained in this Indenture shall be deemed to give to the Trustee
any right to accept or consent to any plan of reorganization or otherwise by
action of any character in any such proceeding to waive or change in any way any
right of any Holder. Any monies collected by the Trustee under this Section 8.4
shall be applied as provided in Section 8.11.
(e) Trustee Need Not have Possession of Securities. All proofs of
claim, rights of action and rights to assert claims under this Indenture or
under any of the Securities may be enforced by the Trustee without the
possession of the Securities or the production thereof at any trial or other
proceedings instituted by the Trustee. In any proceedings brought by the Trustee
(and also any proceedings involving the interpretation of any provision of this
Indenture to which the Trustee shall be a party) the Trustee shall be held to
represent all the Holders of the Securities and it shall not be necessary to
make any such Holders parties to such proceedings.
(f) Suit to Be Brought for Ratable Benefit of Holders. Any suit, action
or other proceeding at law, in equity or otherwise that shall be instituted by
the Trustee under any of the provisions of this Indenture shall be for the
equal, ratable and common benefit of all the Holders, subject to the provisions
of this Indenture.
(g) Trustee May Be Restored to Former Position and Rights in Certain
Circumstances. In case the Trustee shall have instituted any proceeding to
enforce any right, power or remedy under this Indenture by foreclosure, entry or
otherwise, and such proceedings shall have been discontinued or abandoned for
any reason or shall have been determined adversely to the Trustee, then and in
every such case the IDB, the Mobile Energy Parties and the Trustee shall be
restored to their former positions and rights hereunder, and all rights, powers
and remedies of the Trustee shall continue as if no such proceedings had been
taken.
SECTION 8.5. Holders May Demand Enforcement of Rights by Trustee. If an
Event of Default shall have occurred and shall be continuing, the Trustee shall,
upon the written request of the Holders of a majority in aggregate principal
amount of the Securities then Outstanding and upon the offering of indemnity as
provided in Section 9.3(e), but subject in all cases to the provisions of
Section 8.3, proceed to institute one (1) or more suits, actions or proceedings
at law, in equity or otherwise, or take any other appropriate remedy, to enforce
payment of the principal of or premium, if any, or interest on the Securities,
to foreclose the Lien of this Indenture or to deliver notice to the Collateral
Agent in accordance with the Intercreditor Agreement requesting that the
Collateral Agent foreclose the Lien of the other Security Documents or to sell
the Shared Collateral under a judgment or decree of a court or courts of
competent jurisdiction or under the power of sale herein granted, or take such
other appropriate legal, equitable or other remedy, as the Trustee, being
advised by counsel, shall deem most effectual to protect and enforce any of the
rights or powers of the Trustee or the Holders, or, in case such Holders shall
have requested a specific method of enforcement permitted hereunder, in the
manner requested, provided that such action shall not be otherwise than in
accordance with Law and the provisions of this Indenture, and the Trustee,
subject to such indemnity provisions, shall have the right to decline to follow
any such request if the Trustee in good faith shall determine that the suit,
proceeding or exercise of the remedy so requested would involve the Trustee in
personal liability or expense.
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SECTION 8.6. Control by Holders. Subject to the Intercreditor
Agreement, the Holders of not less than a majority in aggregate principal amount
of the Outstanding Securities shall have the right to direct the time, method
and place of conducting any proceeding for any remedy available to the Trustee
or exercising any trust or power conferred on the Trustee, provided that (a)
such direction shall not be in conflict with any Law or with this Indenture and
(b) the Trustee may take any other action deemed proper by the Trustee that is
not inconsistent with such direction.
SECTION 8.7. Waiver of Past Events of Defaults. The Holders of not less
than a majority in aggregate principal amount of the Outstanding Securities may
on behalf of the Holders of all Securities waive any past Event of Default and
its consequences, except that only the Holders of all Securities affected
thereby may waive an Event of Default (a) in the payment of the principal of or
premium, if any, or interest on, or other amounts due under, any Security then
Outstanding or (b) in respect of a covenant or provision hereof that under
Article XI cannot be modified or amended without the consent of the Holder of
each Security Outstanding affected. Upon any such waiver such Event of Default
shall cease to exist and shall be deemed to have been cured for every purpose of
this Indenture, but no such waiver shall extend to any subsequent or other Event
of Default or impair any right consequent thereon.
SECTION 8.8. Holder May Not Bring Suit Except Under Certain Conditions.
A Holder shall not have the right to institute any suit, action or proceeding at
law or in equity or otherwise for the foreclosure of the Lien of this Indenture,
for the appointment of a receiver or for the enforcement of any other remedy
under or upon this Indenture, unless:
(a) such Holder previously shall have given written notice to the
Trustee of a continuing Event of Default;
(b) the Holders of at least twenty-five percent (25%) in
aggregate principal amount of the Outstanding Securities shall have
requested the Trustee in writing to institute such action, suit or
proceeding and shall have offered to the Trustee indemnity as provided
in Section 9.3(e);
(c) the Trustee shall have refused or neglected to institute any
such action, suit or proceeding for sixty (60) days after receipt of
such notice, request and offer of indemnity; and
(d) no direction inconsistent with such written request has been
given to the Trustee during such sixty (60)-day period by the Holders
of a majority in principal amount of Outstanding Securities.
It is understood and intended that no one (1) or more of the Holders
shall have any right in any manner whatever hereunder or under the Securities to
(i) surrender, impair, waive, affect, disturb or prejudice the Lien of the
Security Documents or the Lease Documents on any property subject thereto or the
rights of the Holders of any other Securities, (ii) obtain or seek to obtain
priority or preference over any other such Holder or (iii) enforce any right
under this Indenture, except in the manner herein provided and for the equal,
ratable and common benefit of all the Holders subject to the provisions of this
Indenture.
SECTION 8.9. Undertaking to Pay Court Costs. All parties to this
Indenture, and each Holder by such Holder's acceptance of a Security, shall be
deemed to have agreed that any court may in its discretion require, in any suit,
action or proceeding for the enforcement of any right or remedy under this
Indenture, or in any suit, action or proceeding against the Trustee for any
action taken or omitted by it as Trustee hereunder, the filing by any party
litigant in such suit, action or proceeding of an undertaking to pay the costs
of such suit, action or proceeding, and that such court may, in its discretion,
assess reasonable costs, including reasonable attorneys' fees, against any party
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litigant in such suit, action or proceeding, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; provided,
however, that the provisions of this Section 8.9 regarding such agreement by the
parties to this Indenture and each Holder shall not apply to (a) any suit,
action or proceeding instituted by the Trustee, (b) any suit, action or
proceeding instituted by any Holder or group of Holders holding in the aggregate
more than ten percent (10%) in aggregate principal amount of the Outstanding
Securities or (c) any suit, action or proceeding instituted by any Holder for
the enforcement of the payment of the principal of or premium, if any, or
interest on any of the Securities, on or after the respective due dates
expressed therein.
SECTION 8.10. Right of Holders to Receive Payment Not to Be Impaired.
Anything in this Indenture or in the Intercreditor Agreement to the contrary
notwithstanding, the right of any Holder to receive payment of the principal of
and premium, if any, and interest on such Security, on or after the respective
due dates expressed in such Security (or, in case of redemption, on the
Redemption Date fixed for such Security), or to institute suit for the
enforcement of any such payment on or after such respective dates, shall not be
impaired or affected without the consent of such Holder.
SECTION 8.11. Application of Monies Collected by Trustee. Any monies
collected or to be applied by the Trustee pursuant to this Article VIII in
respect of the Securities of a series, together with any other monies that may
then be held by the Trustee under any of the provisions of this Indenture as
security for the Securities of such series (other than as set forth in the
Intercreditor Agreement and other than monies at the time required to be held
for the payment of specific Securities of such series at their Stated Maturities
or at a time fixed for the redemption thereof) shall be applied in the following
order from time to time, on the date or dates fixed by the Trustee and, in the
case of a distribution of such monies on account of principal, premium, if any,
or interest, upon presentation of the Outstanding Securities of such series, and
stamping thereon of payment, if only partially paid, and upon surrender thereof,
if fully paid:
FIRST: to the payment of any amount required to be rebated
to the United States government pursuant to Section 148 of the
Code in connection with any series of Securities;
SECOND: to the payment of all taxes, assessments or liens
prior to the Lien of the Security Documents, except those subject
to which any sale shall have been made, all reasonable costs and
expenses of collection, including the reasonable costs and
expenses of handling the Tax-Exempt Indenture Securities
Collateral (other than the Shared Collateral) and of any sale
thereof pursuant to the provisions of the Security Documents, and
to the payment of all amounts due the Trustee or any predecessor
Trustee under Section 9.7 and to the payment of all amounts due
the IDB under Article VI of the IDB Lease Agreement;
THIRD: in case the unpaid principal amount of the
Outstanding Securities of such series or any of them shall not
have become due, to the payment of any interest in default, in
the order of the maturity of the payments thereof, with interest
at the rates specified in the respective Securities of such
series in respect of overdue payments (to the extent that payment
of such interest shall be legally enforceable) on the payments of
interest then overdue;
FOURTH: in case the unpaid principal amount of any of but
not all the Outstanding Securities of such series shall have
become due, first to the payment of accrued interest on all
Outstanding Securities of such series in the order of the
maturity of the payments thereof, with interest at the respective
rates specified in the Securities of such series for overdue
payments of principal, premium, if any, and (to the extent that
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payment of such interest shall be legally enforceable) interest then
overdue, and next to the payment of the unpaid principal amount of all
Securities then due;
FIFTH: in case the unpaid principal amount of all the
Outstanding Securities of such series shall have become due, to
the payment of the whole amount then due and unpaid upon the
Outstanding Securities of such series for principal, premium, if
any, and interest, together with interest at the respective rates
specified in the Securities of such series for overdue payments
on principal, premium, if any, and (to the extent that payment of
such interest shall be legally enforceable) interest then
overdue; and
SIXTH: in case the unpaid principal amount of all the
Outstanding Securities of such series shall have become due, and
all of the Outstanding Securities of such series shall have been
fully paid, any surplus then remaining shall be paid to the
Collateral Agent (to be applied pursuant to the terms and
conditions of the Intercreditor Agreement), or to whomsoever may
be lawfully entitled to receive the same, or as a court of
competent jurisdiction may direct;
provided, however, that all payments in respect of the Securities of a series to
be made pursuant to clauses "THIRD" through "FIFTH" of this Section 8.11 shall
be made ratably to the Holders of Securities of such series entitled thereto,
without discrimination or preference, based upon the ratio of the unpaid
principal amount of the Securities of such series in respect of which such
payments are to be made held by each such Holder to the unpaid principal amount
of all Securities of such series.
SECTION 8.12. Securities Held by Certain Persons Not to Share in
Distribution. Any Securities known to a Responsible Officer of the Trustee to be
owned or held by, or for the account or benefit of, the IDB or either of the
Mobile Energy Parties or an Affiliate thereof, shall not be entitled to share in
any payment or distribution provided for in this Article VIII until all
Securities held by other Persons have been indefeasibly paid in full.
SECTION 8.13. Waiver of Appraisement, Valuation, Stay, Right to
Marshaling. To the full extent it may lawfully do so, the IDB and each of the
Mobile Energy Parties, for itself and for any other Person who may claim through
or under it, hereby:
(a) agrees that neither it nor any such Person will set up,
plead, claim or in any manner whatsoever take advantage of any
appraisal, valuation, stay, extension or redemption Laws, now or
hereafter in force in any jurisdiction that may delay, prevent or
otherwise hinder (i) the performance or enforcement or
foreclosure of this Indenture and the other Security Documents,
(ii) the sale of any of the Tax-Exempt Indenture Securities
Collateral or (iii) the putting of the purchaser or purchasers
thereof into possession of such Tax-Exempt Indenture Securities
Collateral immediately after the sale thereof;
(b) waives all benefit or advantage of any such Laws;
(c) consents and agrees that the Collateral may be sold by
the Collateral Agent as an entirety or in parts; and
(d) waives and releases all rights to have the Tax-Exempt
Indenture Securities Collateral marshaled upon any foreclosure,
sale or other enforcement of this Indenture.
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SECTION 8.14. Remedies Cumulative; Delay or Omission Not a Waiver. To the
extent permitted by law, each and every right, power and remedy herein
specifically given to the Trustee shall be cumulative and shall be in addition
to every other right, power and remedy herein specifically given or now or
hereafter existing at law, in equity or by statute, and each and every right,
power and remedy whether specifically herein given or otherwise existing may be
exercised from time to time and as often and in such order as may be deemed
expedient by the Trustee and the exercise or the beginning of the exercise of
any right, power or remedy shall not be construed to be a waiver of the right to
exercise at the same time or thereafter any other right, power or remedy, and no
delay or omission by the Trustee in the exercise of any right, power or remedy
or in the pursuance of any remedy shall impair any such right, power or remedy
or be construed to be a waiver of any default on the part of the IDB or either
of the Mobile Energy Parties or to be an acquiescence therein.
SECTION 8.15. Intercreditor Agreement. Simultaneously with the
execution and delivery of this Indenture, the Trustee (on behalf of itself and
all Holders of any of the Outstanding Securities and all future Holders of
Securities) and the IDB shall enter into the Intercreditor Agreement.
Notwithstanding any other provision of this Indenture to the contrary, all
rights, powers and remedies available to the Holders of any of the Outstanding
Securities, and all future Holders of any of the Securities or the Trustee, with
respect to the Shared Collateral, or otherwise pursuant to the Security
Documents and the Lease Documents, shall be subject to the Intercreditor
Agreement, including, in all cases, the ability to enforce any remedy other than
remedies specified in Section 8.2 and Section 8.10 of this Indenture. To the
extent that the Collateral Agent has been authorized to exercise any such
rights, powers and remedies under the Intercreditor Agreement, any right given
to the Trustee hereunder to exercise any remedy with respect to the Shared
Collateral shall, during such time as the Intercreditor Agreement is in effect,
be a right of the Trustee to direct the Collateral Agent to take such action to
the extent set forth in the Intercreditor Agreement.
ARTICLE IX.
THE TRUSTEE
SECTION 9.1. Certain Duties and Responsibilities. (a) Except during the
continuance of an Event of Default:
(i) the Trustee undertakes to perform such duties and
only such duties as are specifically set forth in this Indenture, and
no implied covenants or obligations shall be read into this Indenture
against the Trustee; and
(ii) in the absence of bad faith on its part, the
Trustee may conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Indenture; but in the case of any such certificates or opinions
that by any provisions hereof are specifically required to be furnished
to the Trustee, the Trustee shall be under a duty to examine the same
to determine whether or not they conform to the requirements of this
Indenture.
(b) In case an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in their exercise, as a
prudent man would exercise or use under the circumstances in the conduct of his
own affairs.
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(c) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct, except that:
(i) this Section 9.1(c) shall not be construed to limit the
effect of Section 9.1(a);
(ii) the Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the
Trustee, unless it shall be proved that the Trustee was negligent
in ascertaining the pertinent facts;
(iii) the Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of not less than a
majority in aggregate principal amount of the Outstanding
Securities relating to the time, method and place of conducting
any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee, under
this Indenture; and
(iv) no provision of this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if
it shall have reasonable grounds for believing that repayment of
such funds or adequate indemnity against such risk or liability
is not reasonably assured to it.
(d) Whether or not herein expressly so provided, every provision of
this Indenture relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this
Section 9.1.
SECTION 9.2. Notice of Events of Defaults. In addition to its
obligation to give notice to Holders as provided in Section 1.6, as promptly as
practicable after, and in any event within thirty (30) days after, the
occurrence of any Event of Default hereunder, the Trustee shall transmit by mail
to all Holders, as their names and addresses appear in the Security Register,
notice of such Event of Default hereunder known to the Trustee, unless such
Event of Default shall have been cured or waived; provided, however, that,
except in the case of an Event of Default in the payment of the principal of or
premium, if any, or interest on any Security, or in the payment of any Sinking
Fund Requirement, the Trustee shall be protected in withholding such notice if
and so long as a committee of its Responsible Officers in good faith determines
that withholding the notice is in the interest of the Holders.
SECTION 9.3. Certain Rights of Trustee. Except as otherwise provided in
Section 9.1:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting in reliance upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture or other paper or document believed by
it to be genuine and to have been signed or presented by the purported
proper party or parties;
(b) any request or direction of either of the Mobile Energy
Parties or the IDB mentioned herein shall be sufficiently evidenced by
a Company Request or Company Order or a Mobile Energy Request or Mobile
Energy Order or an IDB Request or IDB Order (as the case may be), and
any resolution of the Board of Directors of either of the Mobile Energy
Parties or the IDB may be sufficiently evidenced by a Board Resolution
of such Mobile Energy Party or the IDB (as the case may be);
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(c) whenever in the administration of this Indenture the
Trustee shall deem it desirable that a matter be proved or established
prior to taking, suffering or omitting any action hereunder, the
Trustee (unless other evidence be herein specifically prescribed) may,
in the absence of bad faith on its part, rely upon an Officer's
Certificate of either of the Mobile Energy Parties or of the IDB;
(d) the Trustee may consult with counsel and the advice of
such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered
or omitted by it hereunder in good faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request
or direction of any of the Holders pursuant to this Indenture, unless
such Holders shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities that might be
incurred by it in compliance with such request or direction;
(f) the Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture or other paper or document, but the
Trustee, in its discretion, may make such further inquiry or
investigation into such facts or matters as it may see fit, and, if the
Trustee shall determine to make such further inquiry or investigation,
it shall be entitled to examine the books, records and premises of
either of the Mobile Energy Parties or the IDB personally or by agent
or attorney;
(g) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents or attorneys and the Trustee shall not be responsible
for any misconduct or negligence on the part of any agent or attorney
appointed with due care by it hereunder; and
(h) the Trustee shall not be charged with knowledge of any
Event of Default unless either (i) a Responsible Officer of the Trustee
shall have actual knowledge of such Event of Default or (ii) written
notice of such Event of Default shall have been given to the Trustee by
either of the Mobile Energy Parties, by the IDB or by any Holder.
SECTION 9.4. Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Securities, except the certificates of
authentication, shall not be taken as the statements of the Trustee, and the
Trustee assumes no responsibility for their correctness. The Trustee makes no
representations as to the validity or sufficiency of this Indenture, the Tax-
Exempt Indenture Securities Collateral or the Securities, except that the
Trustee hereby represents and warrants that this Indenture has been executed and
delivered by one (1) of its officers who is duly authorized to execute and
deliver such document on its behalf. The Trustee shall not be accountable for
the use or application by either of the Mobile Energy Parties or the IDB of the
Securities or the proceeds thereof.
SECTION 9.5. May Hold Securities. The Trustee, any Paying Agent,
Security Registrar or Authenticating Agent, or any Affiliate thereof, in its
individual or any other capacity, may become the owner or pledgee of Securities
and, subject to Section 9.12, may otherwise deal with the Mobile Energy Parties
and the IDB with the same rights it would have if it were not Trustee, Paying
Agent, Security Registrar, Authenticating Agent or such other agent.
SECTION 9.6. Funds May Be Held by Trustee or Paying Agent. Any monies
received by the Trustee or any Paying Agent shall, until used or applied as
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herein provided, be held in trust for the purposes for which they were received,
but need not be segregated from other funds except to the extent required by
law. Neither the Trustee nor the Paying Agent shall have any liability for
interest upon any such monies. Amounts so received, at the written request and
direction of the Company, shall be invested by the Trustee in Permitted
Investments. Such investments shall mature in such amounts and not later than
such times as may be necessary to provide monies when needed to make payments
from such monies as provided in the Indenture.
SECTION 9.7. Compensation, Reimbursement and Indemnification. Each of the
Mobile Energy Parties agrees:
(a) to pay, or cause to be paid, to each of the Trustee and any
Authorized Agent from time to time reasonable compensation for all services
rendered by it hereunder;
(b) to reimburse, or cause to be reimbursed, each of the Trustee and
any Authorized Agent upon its request for all expenses, disbursements and
advances incurred or made by it in accordance with any provision of this
Indenture (including the reasonable compensation and the expenses and
disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable of its own negligence,
willful misconduct or bad faith; and
(c) to indemnify, or cause to be indemnified, each of the Trustee, any
predecessor Trustee and any Authorized Agent for, and to hold it harmless
against, any loss, liability or expense incurred without negligence,
willful misconduct or bad faith on its part, arising out of or in
connection with the acceptance or administration of this trust or the
performance of its duties hereunder, including the costs and expenses of
defending itself against any claim or liability in connection with the
exercise or performance of any of its powers or duties hereunder.
As security for the performance of the obligations of the Mobile Energy
Parties and the IDB under this Section 9.7, the Trustee shall have a Lien prior
to the Securities upon all property and funds held or collected by the Trustee
as such, except funds held in trust under Section 12.3.
SECTION 9.8. Corporate Trustee Required; Eligibility. There shall at
all times be a Trustee hereunder that shall be a bank or trust company,
organized and doing business under the laws of the United States of America or
of any State thereof, authorized under such laws to exercise corporate trust
powers, having (or whose obligations are unconditionally guaranteed by a
corporation having) a combined capital and surplus of at least $500,000,000,
which bank or trust company is subject to supervision or examination by Federal
or state authority and does not provide credit or credit enhancement to either
of the Mobile Energy Parties. If such bank or trust company publishes reports of
condition at least annually, pursuant to law or to the requirements of the
aforesaid supervising or examining authority, then for the purposes of this
Section 9.8, the combined capital and surplus of such bank or trust company
shall be deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published. If at any time the Trustee shall cease
to be eligible in accordance with the provisions of this Section 9.8, it shall
resign immediately in the manner and with the effect hereinafter specified in
this Article IX.
SECTION 9.9. Resignation and Removal; Appointment of Successor. (a) No
resignation or removal of the Trustee and no appointment of a successor Trustee
pursuant to this Article IX shall become effective until the acceptance of
appointment by the successor Trustee as provided in Section 9.10.
(b) The Trustee may resign at any time by giving written notice
thereof to the IDB, the Mobile Energy Parties and to the Holders of
Securities in the
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manner provided in Section 1.6. If an instrument of acceptance by a successor
Trustee shall not have been delivered to the IDB, the Mobile Energy Parties and
the Trustee within thirty (30) days after the giving of such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee, or any Holder who has
been a bona fide holder of a Security for at least six (6) months may, subject
to Section 8.9, on behalf of such Holder and all others similarly situated,
petition any such court for the appointment of a successor Trustee.
(c) The Trustee may be removed at any time by Act of the Holders of
not less than a majority in principal amount of the Outstanding Securities,
delivered to the Trustee, the IDB and the Mobile Energy Parties.
(d) If at any time:
(i) the Trustee shall cease to be eligible under
Section 9.8 and shall fail to resign after written request therefor by
any such Holder or the Company, or
(ii) the Trustee shall become incapable of acting or
shall be adjudged a bankrupt or insolvent or a receiver of the Trustee
or of its property shall be appointed or any public officer shall take
charge or control of the Trustee or of its property or affairs for the
purpose of rehabilitation, conservation or liquidation,
then, in any such case, (A) the IDB may remove the Trustee by Board Resolution
or (B) subject to Section 8.9, any Holder who has been a bona fide holder of a
Security for at least six (6) months may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction for the removal
of the Trustee and the appointment of a successor Trustee.
(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause, the
IDB shall promptly appoint by Board Resolution a successor Trustee, which shall
be reasonably acceptable to the Company. If no successor Trustee shall have been
so appointed by the IDB, or by the Holders, and accepted appointment in the
manner hereinafter provided, any Holder who has been a bona fide holder of a
Security for at least six (6) months may, subject to Section 8.9, on behalf of
himself and all others similarly situated, petition any court of competent
jurisdiction for the appointment of a successor Trustee.
(f) The IDB or the Company shall give notice of each resignation and
each removal of the Trustee and each appointment of a successor Trustee by
mailing written notice of such event by first-class mail, postage prepaid, to
the Holders of Securities as their names and addresses appear in the Security
Register. Each notice shall include the name of the successor Trustee and the
address of its Corporate Trust Office. If the IDB and the Company fail to give
such notice within ten (10) days after acceptance of appointment by the
successor Trustee, the successor Trustee shall cause such notice to be given at
the expense of the Company.
SECTION 9.10. Acceptance of Appointment by Successor. Every successor
Trustee appointed hereunder shall execute, acknowledge and deliver to the IDB,
the retiring Trustee and each of the Mobile Energy Parties an instrument
accepting such appointment, and thereupon the resignation or removal of the
retiring Trustee shall become effective and such successor Trustee, without any
further act, deed or conveyance, shall become vested with all the rights,
powers, trusts and duties of the retiring Trustee but, on request of the IDB or
of the successor Trustee, such retiring Trustee shall, upon payment of its
charges, execute and deliver an instrument prepared by either of the Mobile
Energy Parties transferring to such successor Trustee all the rights, powers and
trusts of the retiring Trustee, and shall duly assign, transfer and deliver to
such successor
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Trustee all property and money held by such retiring Trustee hereunder, subject
nevertheless to its Lien, if any, provided for in Section 9.7. Upon request of
any such successor Trustee, the IDB and the Mobile Energy Parties shall execute
any and all instruments for more fully and certainly vesting in and confirming
to such successor Trustee all such rights, powers and trusts.
No successor Trustee shall accept its appointment unless at the time of
such acceptance such successor Trustee shall be qualified and eligible under
this Article IX.
SECTION 9.11. Merger, Conversion, Consolidation or Succession to
Business. Any Person into which the Trustee may be merged or converted or with
which it may be consolidated, or any Person resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any Person
succeeding to all or substantially all of the corporate trust business of the
Trustee, shall be the successor of the Trustee hereunder, provided such
successor Trustee shall be otherwise qualified and eligible under this Article
IX, without the execution or filing of any paper or any further act on the part
of any of the parties hereto. In case any Securities shall have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may adopt
such authentication and deliver the Securities so authenticated with the same
effect as if such successor Trustee had itself authenticated such Securities.
SECTION 9.12. Preferential Collection of Claims Against any Obligor.
(a) Subject to Section 9.12(b), if the Trustee shall be or shall become a
creditor, directly or indirectly, secured or unsecured, of any obligor (as
defined in Section 9.12(c)) on the Securities within three (3) months prior to a
default (as defined in Section 9.12(c)) or subsequent to such a default, then,
unless and until such default shall be cured, the Trustee shall set apart and
hold in a special account for the benefit of the Trustee individually and the
Holders of the Securities:
(i) an amount equal to any and all reductions in the
amount due and owing upon any claim as such creditor in respect of
principal or interest, effected after the beginning of such three (3)
month period and valid as against any obligor on the Securities and its
other creditors, except any such reduction resulting from the receipt
or disposition of any property described in paragraph (ii) of this
Section 9.12(a), or from the exercise of any right of set-off that the
Trustee could have exercised if a petition in bankruptcy had been filed
by or against any such obligor upon the date of such default; and
(ii) all property received by the Trustee in respect
of any claim as such creditor, either as security therefor, or in
satisfaction or composition thereof, or otherwise, after the beginning
of such three (3) month period, or an amount equal to the proceeds of
any such property, if disposed of, subject, however, to the rights, if
any, of any obligor on the Securities and its other creditors in such
property or such proceeds.
Nothing herein contained, however, shall affect the right of the
Trustee:
(A) to retain for its own account (1) payments made on account
of any such claim by any Person (other than an obligor on the
Securities) who is liable thereon, (2) the proceeds of the bona fide
sale of any such claim by the Trustee to a third person and (3)
distributions made in cash, securities or other property in respect of
claims filed against such obligor in bankruptcy or receivership or in
proceedings for reorganization pursuant to the Bankruptcy Code or
applicable state law;
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(B) to realize, for its own account, upon any property held by
it as security for any such claim, if such property was so held prior
to the beginning of such three (3) month period;
(C) to realize, for its own account, but only to the extent of
the claim hereinafter mentioned, upon any property held by it as
security for any such claim, if such claim was created after the
beginning of such three (3) month period and such property was received
as security therefor simultaneously with the creation thereof, and if
the Trustee shall sustain the burden of proving that at the time such
property was so received the Trustee had no reasonable cause to believe
that a default (as defined in Section 9.12(c)) would occur within three
(3) months; or
(D) to receive payment on any claim referred to in paragraph
(B) or (C) above, against the release of any property held as security
for such claim as provided in paragraph (B) or (C) above (as the case
may be), to the extent of the fair value of such property.
For the purposes of paragraphs (B), (C) and (D) of the immediately
preceding paragraph, property substituted after the beginning of such three (3)
month period for property held as security at the time of such substitution
shall, to the extent of the fair value of the property released, have the same
status as the property released, and, to the extent that any claim referred to
in any of such clauses is created in renewal of or in substitution for or for
the purpose of repaying or refunding any pre-existing claim of the Trustee as
such creditor, such claim shall have the same status as such pre-existing claim.
If the Trustee shall be required to account, the funds and property
held in such special account and the proceeds thereof shall be apportioned
between the Trustee and the Holders in such manner that the Trustee and the
Holders realize, as a result of payments from such special account and payments
of dividends on claims filed against the obligor on the Securities in bankruptcy
or receivership or in proceedings for reorganization pursuant to the Bankruptcy
Code or applicable state law, the same percentage of their respective claims,
figured before crediting to the claim of the Trustee anything on account of the
receipt by it from such obligor of the funds and property in such special
account and before crediting to the respective claims of the Trustee and the
Holders dividends on claims filed against such obligor in bankruptcy or
receivership or in proceedings for reorganization pursuant to the Bankruptcy
Code or applicable state law, but after crediting thereon receipts on account of
the indebtedness represented by their respective claims from all sources other
than from such dividends and from the funds and property so held in such special
account. As used in this paragraph, with respect to any claim, the term
"dividends" shall include any distribution with respect to such claim, in
bankruptcy or receivership or proceedings for reorganization pursuant to the
Bankruptcy Code or applicable state law, whether such distribution is made in
cash, securities or other property, but shall not include any such distribution
with respect to the secured portion, if any, of such claim. The court in which
such bankruptcy, receivership or proceedings for reorganization is pending shall
have jurisdiction (1) to apportion between the Trustee and the Holders in
accordance with the provisions of this paragraph, the funds and property held in
such special account and proceeds thereof, or (2) in lieu of such apportionment,
in whole or in part, to give to the provisions of this paragraph due
consideration in determining the fairness of the distributions to be made to the
Trustee and the Holders with respect to their respective claims, in which event
it shall not be necessary to liquidate or to appraise the value of any
securities or other property held in such special account or as security for any
such claim, or to make a specific allocation of such distributions as between
the secured and unsecured portions of such claims, or otherwise to apply the
provisions of this paragraph as a mathematical formula.
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Any Trustee that has resigned or been removed after the beginning of
such three (3) month period shall be subject to the provisions of this
subsection as though such resignation or removal had not occurred. If any
Trustee has resigned or been removed prior to the beginning of such three (3)
month period, it shall be subject to the provisions of this Section 9(a) if and
only if the following conditions exist: (x) the receipt of property or reduction
of claim, which would have given rise to the obligation to account if such
Trustee had continued as Trustee, occurred after the beginning of such three (3)
month period; and (y) such receipt of property or reduction of claim occurred
within three (3) months after such resignation or removal.
(b) There shall be excluded from the operation of Section 9.12(a) a
creditor relationship arising from:
(i) the ownership or acquisition of securities issued under any
indenture, or any security or securities having a maturity of one (1)
year or more at the time of acquisition by the Trustee;
(ii) advances authorized by a receivership or bankruptcy court of
competent jurisdiction, or by this Indenture, for the purpose of
preserving the property that shall at any time be subject to the Lien
of this Indenture or of discharging tax liens or other prior liens or
encumbrances thereon, if notice of such advances and of the
circumstances surrounding the making thereof is given to the Holders
at the time and in the manner provided in this Indenture;
(iii) disbursements made in the ordinary course of business in
the capacity of trustee under an indenture, transfer agent, registrar,
custodian, paying agent, fiscal agent or depositary, or other similar
capacity;
(iv) an indebtedness created as a result of services rendered or
premises rented; or an indebtedness created as a result of goods or
securities sold in a cash transaction (as defined in Section 9.12(c));
(v) the ownership of stock or of other securities of a
corporation organized under the provisions of Section 25(a) of the
Federal Reserve Act that is directly or indirectly a creditor of an
obligor upon the securities; or
(vi) the acquisition, ownership, acceptance or negotiation of any
drafts, bills of exchange, acceptances or obligations that fall within
the classification of self-liquidating paper (as defined in Section
9.12(c)).
(c) For the purposes of this Section 9.12 only:
(i) The term "default" means any failure to make
payment in full of the principal of or interest on any of the
Securities when and as such principal or interest becomes due and
payable;
(ii) The term "cash transaction" means any
transaction in which full payment for goods or securities sold is made
within seven (7) days after delivery of the goods or securities in
currency or in checks or other orders drawn upon banks or bankers and
payable upon demand; and
(iii) The term "self-liquidating paper" means any
draft, bill of exchange, acceptance or obligation that is made, drawn,
negotiated or incurred by any obligor on the Securities for the purpose
of financing the purchase, processing, manufacturing, shipment, storage
or sale of goods, wares or merchandise and that is secured by documents
evidencing title to, possession of or a lien upon, the goods, wares or
merchandise or the
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receivables or proceeds arising from the sale of the goods, wares or
merchandise previously constituting the security, provided the security
is received by the Trustee simultaneously with the creation of the
creditor relationship with such obligor arising from the making,
drawing, negotiating or incurring of the draft, bill of exchange,
acceptance or obligation.
SECTION 9.13. Maintenance of Offices and Agencies. (a) There shall at
all times be maintained an office or agency where Securities may be presented or
surrendered for registration of transfer or exchange and for payment of
principal, premium, if any, and interest, and where notices and demands to or
upon the Trustee in respect of the Securities or this Indenture may be served
(i) in the borough of Manhattan, the City of New York, if, and for so long as,
any Outstanding Securities are not issued in the form of one or more global
Securities registered in the name of a clearing corporation or clearing agency
registered under the Exchange Act, as depositary for such Securities, or a
nominee of such clearing corporation or clearing agency and (ii) in such Place
of Payment (which may be the office or agency maintained pursuant to Section
9.13(a)(i), if any), and such additional Places of Payment, if any, as shall be
specified for the Securities of any series in the related Series Supplemental
Indenture or in the terms of such Securities. Except as otherwise provided in
the related Series Supplemental Indenture or in the terms of the Securities of
any series, such office or agency shall be initially at the office of the
Trustee specified in the first paragraph of this Indenture. Written notice of
the location of each of such other office or agency and of any change of
location thereof shall be given by the IDB to the Trustee and by the Trustee to
the Holders in the manner specified in Section 1.6. In the event that no such
office or agency shall be maintained or no such notice of location or of change
of location shall be given, presentations, surrenders and demands may be made
and notices may be served at the Corporate Trust Office.
(b) There shall at all times be a Security Registrar and a Paying Agent
(which may be the Trustee) appointed by the IDB hereunder (which shall be
reasonably acceptable to the Company). In addition, at any time when any
Securities remain Outstanding, the Trustee may appoint an Authenticating Agent
or Agents with respect to the Securities of one (1) or more series that shall be
authorized to act on behalf of the Trustee to authenticate Securities of such
series issued upon original issuance, exchange, registration of transfer or
partial redemption thereof or pursuant to Section 2.7 or 2.9, and Securities so
authenticated shall be entitled to the benefits of this Indenture and shall be
valid and obligatory for all purposes as if authenticated by the Trustee
hereunder (it being understood that wherever reference is made in this Indenture
to the authentication and delivery of Securities by the Trustee or the Trustee's
certificate of authentication, such reference shall be deemed to include
authentication and delivery on behalf of the Trustee by an Authenticating Agent
and a certificate of authentication executed on behalf of the Trustee by an
Authenticating Agent). If an appointment of an Authenticating Agent with respect
to the Securities of one (1) or more series shall be made pursuant to this
Section 9.13(b), the Securities of such series may have endorsed thereon, in
addition to the Trustee's certificate of authentication, an alternate
certificate of authentication in the following form:
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This Security is one of the Securities referred to in the
within-mentioned Indenture.
FIRST UNION NATIONAL BANK OF GEORGIA,
as Trustee
By________________________________________
Authenticating Agent
By________________________________________
Authorized Signatory
Any Authorized Agent shall be a bank or trust company, shall be a Person
organized and doing business under the laws of the United States or any state
thereof, having a combined capital and surplus of at least $500,000,000, and
shall be authorized under such laws to exercise corporate trust powers, subject
to supervision by Federal or state authorities. If such Authorized Agent
publishes reports of its condition at least annually, pursuant to law or to the
requirements of the aforesaid supervising or examining authority, then for the
purposes of this Section 9.13, the combined capital and surplus of such
Authorized Agent shall be deemed to be its combined capital and surplus as set
forth in its most recent report of condition so published. If at any time an
Authorized Agent shall cease to be eligible in accordance with the provisions of
this Section 9.13, such Authorized Agent shall resign immediately in the manner
and with the effect specified in this Section 9.13. The Trustee at its office
specified in the first paragraph of this Indenture, is hereby appointed as
Paying Agent and Security Registrar hereunder.
(c) Any Paying Agent (other than the Trustee) from time to time
appointed hereunder shall execute and deliver to the Trustee an instrument in
which such Paying Agent shall agree with the Trustee, subject to the provisions
of this Section 9.13, that such Paying Agent will:
(i) hold all sums held by it for the payment of
principal of and premium, if any, and interest on the Securities in
trust for the benefit of the Persons entitled thereto until such sums
shall be paid to such Persons or otherwise disposed of as herein
provided;
(ii) give the Trustee within five (5) days thereafter
notice of any default by any obligor upon the Securities in the making
of any such payment of principal, premium, if any, or interest; and
(iii) at any time during the continuance of any such
default, upon the written request of the Trustee, forthwith pay to the
Trustee all sums so held in trust by such Paying Agent.
Notwithstanding any other provision of this Indenture, any payment required to
be made to or received or held by the Trustee may, to the extent authorized by
written instructions of the Trustee, be made to or received or held by a Paying
Agent in the Borough of Manhattan, the City of New York, for the account of the
Trustee.
(d) Any Person into which any Authorized Agent may be merged or
converted or with which it may be consolidated, or any Person resulting from any
merger, consolidation or conversion to which any Authorized Agent shall be a
party, or any Person succeeding to the corporate trust business of any
Authorized Agent, shall be the successor of such Authorized Agent hereunder, if
such successor
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corporation is otherwise eligible under this Section 9.13, without the execution
or filing of any paper or any further act on the part of the parties hereto or
such Authorized Agent or such successor Person.
(e) Any Authorized Agent may at any time resign by giving written
notice of resignation to the Trustee, the IDB and the Mobile Energy Parties. The
IDB may, and at the request of the Trustee shall, at any time, terminate the
agency of any Authorized Agent by giving written notice of termination to such
Authorized Agent and to the Trustee. Upon the resignation or termination of an
Authorized Agent or in case at any time any such Authorized Agent shall cease to
be eligible under this Section 9.13 (when, in either case, no other Authorized
Agent performing the functions of such Authorized Agent shall have been
appointed), the IDB shall promptly appoint one (1) or more qualified successor
Authorized Agents approved by the Trustee and the Mobile Energy Parties to
perform the functions of the Authorized Agent that has resigned or whose agency
has been terminated or that shall have ceased to be eligible under this Section
9.13. The Company shall give written notice of any such appointment to all
Holders as their names and addresses appear on the Security Register.
SECTION 9.14. Co-Trustee or Separate Trustee. (a) If at any time or
times it shall be necessary, prudent or desirable in order to conform to any Law
of any jurisdiction in which property shall be held subject to the Lien of this
Indenture or the other Security Documents, or the Trustee shall be advised by
counsel satisfactory to it that it is so necessary or prudent in the interest of
the Holders, or the Holders of a majority in principal amount of Outstanding
Securities shall in writing so request, the Trustee, the IDB and the Mobile
Energy Parties shall execute and deliver all instruments and agreements
necessary or proper to constitute another bank or trust company or one (1) or
more Persons approved by the Trustee either to act as co-trustee or co-trustees
of all or any part of the Tax-Exempt Indenture Securities Collateral (other than
the Shared Collateral) jointly with the Trustee originally named herein or any
successor or successors, or to act as separate trustee or trustees of all or any
such property. In the event the IDB or the Mobile Energy Parties shall have not
joined in the execution of such instruments and agreements within ten (10) days
after the receipt of a written request from the Trustee so to do, or in case an
Event of Default with respect to the Securities of a series shall have occurred
and be continuing, the Trustee may act under the foregoing provisions of this
Section 9.14 without the concurrence of either of the IDB or the Mobile Energy
Parties; and the IDB and the Mobile Energy Parties hereby appoint the Trustee as
agent and attorney to act under the foregoing provisions of this Section 9.14 in
either of such contingencies.
(b) Every additional trustee hereunder shall, to the extent permitted
by law, be appointed and act, and such additional trustee and its successors
shall act, subject to the following provisions and conditions, namely:
(i) the Securities shall be authenticated and delivered,
and all powers, duties, obligations and rights conferred upon the
Trustee in respect of the custody, control and management of monies,
papers or securities, shall be exercised, solely by the Trustee (or, in
the case of authentication and delivery of Securities, by any
Authenticating Agent);
(ii) all rights, powers, duties and obligations conferred or
imposed upon the Trustee or the additional trustee or trustees shall be
conferred or imposed upon and exercised or performed by the Trustee or
the Trustee and such additional trustee or trustees jointly, except to
the extent that under any law of any jurisdiction in which any
particular act or acts are to be performed, the Trustee shall be
incompetent or unqualified to perform such act or acts, in which event
such rights, powers, duties and obligations shall be exercised and
performed by such additional trustee or trustees;
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(iii) no power given hereby to, or which it is provided
hereby may be exercised by, any such additional trustee or trustees,
shall be exercised hereunder by such additional trustee or trustees,
except jointly with, or with the consent in writing of, the Trustee,
anything herein contained to the contrary notwithstanding;
(iv) no trustee hereunder shall be personally liable by
reason of any act or omission of any other trustee hereunder; and
(v) the IDB and the Trustee, at any time, by an instrument
in writing, executed by them jointly, may remove any such additional
trustee, and in that case, by an instrument in writing executed by them
jointly, may appoint a successor or successors to such additional
trustee or trustees (as the case may be), anything herein contained to
the contrary notwithstanding. In the event that the IDB shall have
joined in the execution of any such instrument within ten (10) days
after the receipt of a written request from the Trustee to do so, the
Trustee shall have the power to remove any such additional trustee and
to appoint a successor additional trustee without the concurrence of
the IDB, the IDB hereby appointing the Trustee its agent and attorney
to act for it in such connection in such contingency. In the event that
the Trustee alone shall have appointed an additional trustee or
trustees or co-trustee or co-trustees as above provided, it may at any
time, by an instrument in writing, remove any such additional trustee
or co-trustee, the successor to any such trustee or co-trustee so
removed to be appointed by the IDB and the Trustee, or by the Trustee
alone, as hereinbefore in this Section 9.14 provided.
SECTION 9.15. Taxes. Any United States withholding taxes imposed with
respect to payments made to a Holder of a Security shall be the sole
responsibility of such Holder and therefore no Holder shall have the right to
have any payment to it "grossed-up" for, or paid free of, any such withholding
taxes.
ARTICLE X.
HOLDERS' LISTS AND REPORTS BY TRUSTEE,
IDB AND MOBILE ENERGY PARTIES
SECTION 10.1. IDB to Furnish Trustee Names and Addresses of Holders.
The IDB will furnish or cause to be furnished to the Trustee semiannually,
between April 1 and April 15 and between October 1 and October 15, in each year,
and at such other times as the Trustee may request in writing, within thirty
(30) days after receipt by the IDB of any such request, a list, in such form as
the Trustee may reasonably require, of the names and addresses of the Holders,
in each case as of a date not more than fifteen (15) days prior to the time such
list is furnished; provided, however, that so long as the Trustee is the sole
Security Registrar or is otherwise furnished a copy of the Security Register, no
such list need be furnished.
SECTION 10.2. Preservation of Information; Communications to Holders.
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders (i) contained in the most recent
list furnished to the Trustee as provided in Section 10.1 and (ii) received by
the Trustee in its capacity as Security Registrar, if so acting. The Trustee may
destroy any list furnished to it upon receipt of a new list so furnished.
(b) If three (3) or more Holders (hereinafter referred to as
"applicants") apply in writing to the Trustee, and furnish to the Trustee
reasonable proof that each such applicant has owned a Security for a period of
at least six (6) months preceding the date of such application, and such
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application states that the applicants desire to communicate with other Holders
with respect to their rights under this Indenture or under the Securities and is
accompanied by a copy of the form of proxy or other communication that such
applicants propose to transmit, then the Trustee shall, within five (5) Business
Days after the receipt of such application, at its election, either:
(i) afford such applicants access to the information preserved at
the time by the Trustee in accordance with Section 10.2(a), or
(ii) inform such applicants as to the approximate number of
Holders of Securities whose names and addresses appear in the
information preserved at the time by the Trustee in accordance with
Section 10.2(a), and as to the approximate cost of mailing to such
Holders the form of proxy or other communication, if any, specified in
such application.
If the Trustee shall elect not to afford such applicants access to such
information, the Trustee shall, upon the written request of such applicants,
mail to each Holder whose name and address appears in the information preserved
at the time by the Trustee in accordance with Section 10.2(a), a copy of the
form of proxy or other communication that is specified in such request, with
reasonable promptness after a tender to the Trustee of the material to be mailed
and of payment, or provision for the payment, of the reasonable expenses of
mailing, unless within five (5) days after such tender, the Trustee shall mail
to such applicants, together with a copy of the material to be mailed, a written
statement to the effect that, in the opinion of the Trustee, such mailing would
be contrary to the best interests of the Holders or would be in violation of
applicable law. Such written statement shall specify the basis of such opinion.
In such case, the Trustee shall be relieved of any obligation or duty to such
applicants respecting their application.
(c) Every Holder of Securities, by receiving and holding the same,
agrees with the IDB, the Mobile Energy Parties and the Trustee that none of the
IDB, the Mobile Energy Parties and the Trustee shall be held accountable by
reason of the disclosure of any such information as to the names and addresses
of the Holders in accordance with Section 10.2 (b), regardless of the source
from which such information was derived.
SECTION 10.3. Reports by Trustee. (a) Within sixty (60) days after May
1 in each year, commencing with May 1996, the Trustee shall transmit by mail to
all Holders, as their names and addresses appear in the Security Register, a
brief report dated as of such May 1 with respect to (but if no such event has
occurred within the one (1) year period ending such May 1, no report need be
transmitted):
(i) any change to its eligibility under Section 9.8;
(ii) the character and amount of any advances (and if the
Trustee elects so to state, the circumstances surrounding the making
thereof) made by the Trustee (as such) that remain unpaid on the date
of such report, and for the reimbursement of which it claims or may
claim a lien or charge, prior to that of the Securities, on the trust
estate or any property or funds held or collected by it as Trustee,
except that the Trustee shall not be required (but may elect) to report
such advances if such advances so remaining unpaid aggregate not more
than one-half of one percent (1/2 of 1%) of the principal amount of the
Securities Outstanding on the date of such report;
(iii) the amount, interest rate and maturity date of all
other indebtedness owing by an obligor on the Securities within the
meaning of the Trust Indenture Act to the Trustee in its individual
capacity, on the date of such report, with a brief description of any
property held as collateral security therefor, except an indebtedness
based upon a creditor
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relationship arising in any manner described in Section 9.12(b)(ii),
(iii), (iv) or (vi);
(iv) any change to the property and funds physically in the
possession of the Trustee (as such) on the date of such report;
(v) any release, or release and substitution, of property subject
to the Lien of this Indenture (and the consideration therefor, if any)
that the Trustee has not previously reported;
(vi) any additional issue of Securities that the Trustee has not
previously reported; and
(vii) any action taken by the Trustee in the performance of
its duties hereunder that it has not previously reported and that in
its opinion materially affects the Securities of any series, except
action in respect of an Event of Default, notice of which has been or
is to be withheld by the Trustee in accordance with Section 9.2.
(b) The Trustee shall transmit by mail to all Holders, as their names
and addresses appear in the Security Register, a brief report with respect to:
(i) the release, or release and substitution, of property
subject to the Lien of this Indenture (and the consideration therefor,
if any) unless the fair value of such property is less than ten percent
(10%) of the principal amount of Securities Outstanding at the time of
such release, or such release and substitution, such report to be
transmitted within ninety (90) days after such release or release and
substitution; and
(ii) the character and amount of any advances (and if the
Trustee elects so to state the circumstances surrounding the making
thereof) made by the Trustee (as such) since the date of the last
report transmitted pursuant to Section 10.3(a) (or if no such report
has yet been so transmitted, since the date of execution of this
instrument) for the reimbursement of which it claims or may claim a
lien or charge, prior to that of the Securities of any series, on
property or funds held or collected by it as Trustee, and that it has
not previously reported pursuant to this Section 10.3(b), except that
the Trustee shall not be required (but may elect) to report such
advances if such advances remaining unpaid at any time aggregate ten
percent (10%) or less of the principal amount of Securities Outstanding
at such time, such report to be transmitted within ninety (90) days
after such advance.
(c) A copy of each such report shall, at the time of such transmission
to Holders, be filed by the Trustee with each stock exchange, if any, upon which
the Securities are listed. The IDB will notify the Trustee when the Securities
of any series are listed on any stock exchange.
SECTION 10.4. Reports by the IDB and Mobile Energy Parties. Each of the IDB
and the Mobile Energy Parties will:
(a) file with the Trustee, within fifteen (15) days after it
is required to file the same with the SEC, copies of the annual reports
and of the information, documents and other reports (or copies of such
portions of any of the foregoing as the SEC may from time to time by
rules and regulations prescribe) that the IDB or either of the Mobile
Energy Parties may be required to file with the SEC pursuant to Section
13 or Section 15(d) of the Exchange Act;
(b) file with the Trustee and the SEC, in accordance with
rules and regulations prescribed from time to time by the SEC,
such additional
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information, documents and reports with respect to compliance by the
IDB and the Mobile Energy Parties with the conditions and covenants of
this Indenture, as may be required by such rules and regulations;
(c) transmit by mail to all Holders, as their names and
addresses appear in the Security Register, within thirty (30) days
after the filing thereof with the Trustee, such summaries of any
information, documents and reports required to be filed by the Mobile
Energy Parties pursuant to Section 10.4 (a) and (b) as may be required
by rules and regulations prescribed from time to time by the SEC.
ARTICLE XI.
SUPPLEMENTAL INDENTURES AND
AMENDMENTS TO IDB LEASE AGREEMENT
SECTION 11.1. Supplemental Indentures Without Consent of Holders.
Without the consent of the Holders of any Securities, the IDB and the Trustee,
at any time and from time to time, may enter into one (1) or more indentures
supplemental hereto in form satisfactory to the Trustee, for any of the
following purposes:
(a) to establish the form and terms of Securities of any
series permitted by Sections 2.1 and 2.3 and to provide for the sale,
authentication and delivery of additional Securities and refunding
Securities and the disposition of the proceeds from the sale thereof,
in the manner and to the extent authorized by this Indenture; or
(b) to grant to or confer upon the Holders or the Trustee for
the benefit of the Holders any additional rights, remedies, powers or
authorities or security that may lawfully be granted to or conferred
upon the Holders or the Trustee; or
(c) to evidence the succession of a new Trustee hereunder or
a co-trustee or separate trustee pursuant to Section 9.14; or
(d) to add to the covenants of the IDB, for the benefit of
the Holders, or to surrender any right or power herein conferred
upon the IDB; or
(e) to convey, transfer and assign to the Trustee, and to
subject to the Lien of this Indenture, additional properties or assets,
and to correct or amplify the description of any property at any time
subject to the Lien of this Indenture or to assure, convey and confirm
unto the Trustee any property subject or required to be subject to the
Lien of this Indenture; or
(f) to modify, eliminate or add to the provisions of this
Indenture to such extent as shall be necessary to qualify or continue
the qualification of this Indenture (including any supplemental
indenture) under the Trust Indenture Act or to maintain any exemption
therefrom, or under any similar Federal statute hereafter enacted, or
to permit the qualification of any Securities for sale under the
securities laws of any of the States of the United States, and to add
to this Indenture such other provisions as may be expressly permitted
by the Trust Indenture Act, or under any similar Federal statute
hereafter enacted, excluding, however, the provisions referred to in
Section 316(a)(2) of the Trust Indenture Act as in effect at the date
as of which this instrument was executed or any corresponding provision
in any similar Federal statute hereafter enacted; or
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(g) to permit or facilitate the issuance of Securities in
uncertificated form or to provide for the cessation thereof; or
(h) to cure any ambiguity, inconsistency or formal defect or
omission, or to make any other provisions with respect to matters or
questions arising under this Indenture, provided such action shall not
be inconsistent with this Indenture, shall not impair the security for
the Securities and shall not adversely affect the interest of the
Holders of any series; or
(i) to secure or maintain the rating for any Securities from
any Rating Agency; or
(j) to cure any defect in the Indenture that would, if not
cured, cause the interest on any Securities (excluding any Securities
in respect of which no opinion of Bond Counsel was delivered at the
time of original issuance to the effect that interest thereon is exempt
from Federal income taxation) to be included in gross income of the
Holders thereof for Federal income tax purposes.
SECTION 11.2. Supplemental Indenture With Consent of Holders. With the
consent of the Holders of not less than a majority in aggregate principal amount
of the Securities of all series then Outstanding, considered as one (1) class,
by Act of such Holders delivered to the IDB, the Mobile Energy Parties and the
Trustee, the IDB, when authorized by Board Resolutions, may, and the Trustee,
subject to Sections 11.3 and 11.4, shall, enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Indenture; provided,
however, that if there shall be Securities of more than one (1) series
Outstanding hereunder and if a proposed supplemental indenture shall directly
affect the rights of the Holders of one (1) or more, but less than all, of such
series, then the consent only of the Holders of not less than a majority in
aggregate principal amount of the Outstanding Securities of all series so
directly affected, considered as one (1) class, shall be required; provided
further, however, that no such supplemental indenture shall, without the consent
of the Holder of each Outstanding Security directly affected thereby:
(a) change the Stated Maturity of any Security (or, if the
principal thereof is payable in installments, the Stated Maturity of
any such installment), or of any payment of interest thereon, or the
dates or circumstances of payment of premium, if any, on any Security,
or change the principal amount thereof or the interest thereon or any
premium payable upon the redemption thereof, or change the place of
payment where, or the coin or currency in which, any Security or the
premium, if any, or the interest thereon is payable, or impair the
right to institute suit for the enforcement of any such payment of
principal or interest on or after the Stated Maturity thereof (or, in
the case of redemption, on or after the Redemption Date) or such
payment of premium, if any, on or after the date such premium becomes
due and payable or change the dates or the amounts of payments to be
made through the operation of the Sinking Fund in respect of such
Securities, if any; or
(b) permit the creation of any Lien prior to or pari passu
with the Lien of the Security Documents with respect to any of the
Tax-Exempt Indenture Securities Collateral, or terminate the Lien of
the Security Documents on any Tax-Exempt Indenture Securities
Collateral or deprive any Holder of the security afforded by the Lien
of the Security Documents, except to the extent expressly permitted by
this Indenture or any of the Security Documents; or
(c) reduce the percentage in principal amount of the
Outstanding Securities, the consent of whose Holders is required
for any such
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supplemental indenture, or the consent of whose Holders is required for
any waiver (of compliance with certain provisions of this Indenture or
certain defaults hereunder and their consequences) provided for in this
Indenture, or reduce the requirements of Section 13.4 for quorum or
voting; or
(d) modify any of the provisions of Section 3.2 or Section 8.7
(except to increase the percentage of the principal amount of the
Outstanding Securities required to waive past defaults) or of this
Section 11.2 (except to provide that certain other provisions of this
Indenture cannot be modified or waived without the consent of the
Holder of each Security affected thereby).
A supplemental indenture that changes or eliminates any covenant or
other provision of this Indenture that has expressly been included solely for
the benefit of one (1) or more particular series of Securities, or that modifies
the rights of the Holders of Securities of such series with respect to such
covenant or other provision, shall be deemed not to affect the rights under this
Indenture of the Holders of Securities of any other series.
Upon receipt by the Trustee of Board Resolutions of the IDB and such
other documentation as the Trustee may reasonably require and upon the filing
with the Trustee of evidence of the Act of such Holders, the Trustee shall join
in the execution of such supplemental indenture or other instrument (as the case
may be), subject to the provisions of Sections 11.3 and 11.4.
It shall not be necessary for any Act of Holders under this Section
11.2 to approve the particular form of any proposed supplemental indenture, but
it shall be sufficient if such Act shall approve the substance thereof.
SECTION 11.3. Documents Affecting Immunity or Indemnity. If in the
opinion of the IDB or the Trustee any document required to be executed by it
pursuant to the terms of Section 11.2 affects any interest, right, duty,
immunity or indemnity in favor of the IDB or the Trustee under this Indenture,
the IDB or the Trustee (as the case may be), may in its discretion decline to
execute such document.
SECTION 11.4. Execution of Supplemental Indentures. In executing, or
accepting the additional trusts created by, any Series Supplemental Indenture or
other supplemental indenture permitted by this Article XI or the modifications
thereby of the trusts created by this Indenture, the Trustee shall be entitled
to receive, and (subject to section 9.1) shall be fully protected in relying
upon, an Opinion of Counsel stating that the execution of such supplemental
indenture is authorized or permitted by this Indenture and will not adversely
affect the exemption of interest on the Securities from Federal income taxation.
SECTION 11.5. Effect of Supplemental Indentures. Upon the execution of
any supplemental indenture under this Article XI, this Indenture shall be
modified in accordance therewith, and such supplemental indenture shall form a
part of this Indenture for all purposes; and every Holder of Securities
theretofore or thereafter authenticated and delivered hereunder shall be bound
thereby.
SECTION 11.6. Reference in Securities to Supplemental Indentures.
Securities authenticated and delivered after the execution of any supplemental
indenture pursuant to this Article XI may, and if required by the IDB or the
Company shall, bear a notation in form approved by the IDB, the Company and the
Trustee as to any matter provided for in such supplemental indenture; and, in
such case, suitable notation may be made upon Outstanding Securities after
proper presentation and demand. If the IDB shall so determine, new Securities so
modified as to conform, in the opinion of the IDB and the Trustee, to any such
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supplemental indenture may be prepared and executed by the IDB and authenticated
and delivered by the Trustee in exchange for Outstanding Securities.
SECTION 11.7. Supplements and Amendments to IDB Lease Agreement Without
Consent of Holders. Without the consent of the Holders of any Securities, the
IDB and the Trustee, at any time and from time to time, may enter into such
amendments and supplements to the IDB Lease Agreement as therein permitted, for
any of the following purposes:
(a) to grant to or confer upon the Holders or the Trustee for
the benefit of the Holders any additional rights, remedies, powers or
authorities or security that may lawfully be granted to or conferred
upon the Holders or the Trustee; or
(b) to correct any description of the Tax-Exempt Project, to
add to the covenants of the Mobile Energy Parties, for the benefit of
the Holders, or to surrender any right or power herein conferred upon
the Mobile Energy Parties; or
(c) to cure any ambiguity, inconsistency or formal defect or
omission, or to make any other provisions with respect to matters or
questions arising under the IDB Lease Agreement, provided such action
shall not be inconsistent with the IDB Lease Agreement, shall not
impair the security in the Securities and shall not adversely affect
the interest of the Holders of any Securities; or
(d) to secure or maintain the rating for any Securities from
any Rating Agency; or
(e) to cure any defect in the IDB Lease Agreement that would,
if not cured, cause the interest on any Securities (excluding any
Securities in respect of which no opinion of Bond Counsel was delivered
at the time of original issuance to the effect that interest thereon is
exempt from Federal income taxation) to be included in gross income of
the Holders thereof for Federal income tax purposes; or
(f) to provide for the issuance of additional Securities
pursuant to Article III.
Before the IDB shall enter into, and the Trustee shall consent to, any
supplement or amendment to the IDB Lease Agreement pursuant to this Section
11.8, there shall have been delivered to the IDB and the Trustee an Opinion of
Counsel of Bond Counsel stating that such supplement or amendment is authorized
or permitted by this Indenture and the Alabama Act, complies with their
respective terms, will, upon the execution and delivery thereof, be valid and
binding upon the IDB and the Company in accordance with its terms (subject to
customary exceptions) and will not adversely affect the exemption of interest on
the Securities from Federal income taxation.
SECTION 11.8. Supplements and Amendments to IDB Lease Agreement With
Consent of Holders. Except for supplements and amendments provided for in
Section 11.7, the IDB and the Trustee shall not consent to any supplement or
amendment to the IDB Lease Agreement unless approved by the Holders of not less
than a majority in aggregate principal amount of the Securities in the manner
provided for in Section 11.2; provided, however, that unless approved in writing
by Holders of all Outstanding Securities, nothing herein shall permit, or be
construed to permit, any change in the obligations of the Company under Section
4.1(a) of the IDB Lease Agreement.
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ARTICLE XII.
SATISFACTION AND DISCHARGE
SECTION 12.1. Satisfaction and Discharge of Securities. (a) Except as
otherwise provided with respect to the Securities of any series in the Series
Supplemental Indenture relating thereto, or in the terms of the Securities of
any series, the Securities of such series shall, prior to the Stated Maturity
thereof (or, if principal is payable in installments, the Stated Maturity of the
final installment of principal thereof), on the ninety-first (91st) day after
the date of the deposit referred to in paragraph (i) below, be deemed to have
been paid for all purposes of this Indenture, and the entire indebtedness of the
IDB and the Mobile Energy Parties in respect thereof shall be deemed to have
been satisfied and discharged, upon satisfaction of the following conditions:
(i) the IDB shall have irrevocably deposited or caused to be
deposited with the Trustee, in trust, specifically pledged as security
for and dedicated solely for the benefit of the Holders of Securities
of such series (A) monies in an amount that shall be sufficient, (B)
U.S. Government Obligations, the payment of interest and principal on
which when due, without any regard to reinvestment thereof, will
provide monies that shall be sufficient or (C) any combination of
clause (A) and (B) above that shall be sufficient, in each case, in the
opinion of a firm of independent certified public accountants of
recognized national standing expressed in a written certification
thereof delivered to the Trustee, to pay when due the principal of and
premium, if any, and interest due and to become due on the Securities
of such series, whether at Stated Maturity or upon redemption,
acceleration or otherwise;
(ii) if any such deposit of monies or U.S. Government
Obligations shall have been made prior to the Stated Maturity (or, if
principal is payable in installments, the Stated Maturity of the final
installment of principal) or Redemption Date or Prepayment Date of such
Securities, the IDB shall have delivered to the Trustee an IDB Order
stating that such monies shall be held by the Trustee, in trust, as
provided in Section 12.3;
(iii) if the IDB has deposited or caused to be deposited
monies or U.S. Government Obligations (or a combination thereof) to pay
or discharge the principal of and premium, if any, and interest on the
Outstanding Securities of such series to and including a Redemption
Date on which all of the Outstanding Securities of such series are
eligible for optional redemption and on which all of the Outstanding
Securities of such series are to be redeemed, such Redemption Date
shall be irrevocably designated by a Board Resolution of the IDB
delivered to the Trustee on or prior to the date of such deposit of
such monies or U.S. Government Obligations, and such Board Resolution
shall be accompanied by an irrevocable IDB Request that the Trustee
give notice of such redemption in the name and at the expense of the
Company not less than thirty (30) nor more than sixty (60) days prior
to such redemption in accordance with Section 6.4;
(iv) the IDB shall have delivered, or cause to be delivered,
to the Trustee an Opinion of Counsel to the effect that (A) the trust
resulting from such deposit does not constitute an investment company
under the Investment Company Act of 1940 and (B) the Holders shall have
a perfected security interest under applicable Law in the monies and
U.S. Government Obligations so deposited;
(v) no Event of Default, or event that with notice, lapse of
time or both would become an Event of Default (including by reason of
such deposit), in any case arising pursuant to Section 8.1(a) or, if
arising from an "Event of Default" under the IDB Lease Agreement
described in
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Section 7.1(n) thereof, Section 8.1(b) with respect to the Securities
of such series shall have occurred and be continuing on the date of
deposit or during the period ending on the ninety-first (91st) day
after such date;
(vi) the IDB shall have delivered, or caused to be delivered,
to the Trustee an Opinion of Counsel to the effect that (A) based upon
(1) a change in the applicable Federal income tax law since the date of
this Indenture (or a change in the official interpretation thereof) or
(2) the receipt by the Company from, or the publishing by, the Internal
Revenue Service of a ruling on which such counsel is relying for the
opinion contemplated herein, the Holders of Securities of such series
will not recognize income, gain or loss for Federal income tax purposes
as a result of the deposit, defeasance and discharge pursuant to this
Section 12.1(a) and will be subject to Federal income tax on the same
amounts and in the same manner and at the same times as would have been
the case if such deposit, defeasance and discharge had not occurred and
(B) the deposit, defeasance and discharge pursuant to this Section
12.1(a) will not adversely affect the exemption of interest on the
Securities from Federal income taxation; and
(vii) there shall have been delivered to the Trustee an
Officer's Certificate of the IDB and each of the Mobile Energy Parties
and an Opinion of Counsel, each stating that all conditions precedent
herein provided for relating to the satisfaction and discharge of the
Securities of such series have been complied with;
provided, however, that if each of the conditions set forth in this Section
12.1(a) shall have been satisfied with respect to the Outstanding Securities of
any series, but the ninety-one (91) day period referenced above shall not have
elapsed, the Securities of such series shall nevertheless be deemed to have been
paid for all purposes of this Indenture on the date of the deposit referred to
in paragraph (i) above if the IDB shall have delivered, or caused to be
delivered, to the Trustee an opinion of qualified nationally recognized
bankruptcy counsel acceptable to the Trustee to the effect that the use by the
Trustee of such monies in accordance with this Indenture would not constitute an
avoidable preference or be subject to the provisions of Sections 544 and 547,
would not be recoverable under Section 550 and would not be subject to the
provisions of Section 362(a), in each case of the Bankruptcy Code or similar
laws of the United States of America or the State of Alabama, if a Bankruptcy
Event in respect of the Person making such deposit were to occur.
Upon satisfaction of the aforesaid conditions with respect to the
Securities of any series, the Trustee shall, upon receipt of an IDB Request,
acknowledge in writing that the Securities of such series are deemed to have
been paid for all purposes of this Indenture and that the entire indebtedness of
the IDB and the Mobile Energy Parties in respect thereof is deemed to have been
satisfied and discharged.
In the event that Securities that shall be deemed to have been paid as
provided in this Section 12.1(a) do not mature and are not to be redeemed within
the sixty (60) day period commencing on the date of the deposit with the Trustee
of monies, the IDB or the Mobile Energy Parties shall, as promptly as
practicable, give a notice, in the same manner as a notice of redemption with
respect to such Securities, to the Holders of such Securities to the effect that
such Securities are deemed to have been paid and the circumstances thereof.
Notwithstanding the satisfaction and discharge of any Securities as
aforesaid, (i) the rights of Holders of Securities of such series to receive,
solely from the trust funds described in paragraph (i) of this Section 12.1(a),
payment of the principal of and premium, if any, and interest on the Securities
of such series on the Stated Maturity thereof (to and including the Redemption
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Date, if any, designated pursuant to paragraph (iii) of this Section 12.1(a))
and (ii) the rights and obligations of the Holders of Securities of such series,
the IDB, the Mobile Energy Parties and the Trustee in respect of the Securities
of such series under Sections 2.7, 2.8, 2.9, 2.10, 2.11, 2.12 and 2.15, Article
VI (in the case of redemption as contemplated by paragraph (iii) of this Section
12.1(a), to the extent Article VI applies to the redemption to be made on such
Redemption Date), Sections 9.3(e) and 9.7 and this Article XII shall survive.
(b) If (i) each of the conditions set forth in paragraphs (i), (ii),
(iii), (iv) and (v) of Section 12.1(a) shall have been satisfied with respect to
the Outstanding Securities of any series, but the conditions set forth in
paragraphs (vi) and (vii) thereof are not satisfied and (ii) the IDB shall have
delivered to the Trustee (A) an Opinion of Counsel to the effect that the
Holders of such series will not recognize income, gain or loss for Federal
income tax purposes as a result of the deposit, defeasance and discharge
pursuant to this Section 12.1(b) and will be subject to Federal income tax on
the same amounts and in the same manner and at the same times as would have been
the case if such deposit, defeasance and discharge had not occurred and (B) an
Officer's Certificate of the IDB and each of the Mobile Energy Parties and an
Opinion of Counsel, each stating that all conditions precedent herein provided
for relating to the defeasance of the Securities of such series pursuant to this
Section 12.1(b) have been complied with, then:
(A)with respect to the Securities of such series, the IDB and
the Mobile Energy Parties shall be released from their covenants and
other obligations contained in Articles IV (other than Section 4.3) and
VIII of the IDB Lease Agreement and Section 2.15 of this Indenture and
all their obligations under the other Security Documents, and may omit
to comply with and shall have no liability in respect of any term,
condition or limitation set forth in any such covenant or obligation
whether directly or indirectly, by reason of any reference elsewhere
herein to any other provision of this Indenture or any other document
and any failure to comply with any such covenant shall not constitute
an Event of Default with respect to the Securities of such series;
(B)the occurrence of any event specified in any of paragraphs
(b) through (m), (o) or (p) of Section 7.1 of the IDB Lease Agreement
shall not constitute an Event of Default under the IDB Lease Agreement
and shall not result in an Event of Default pursuant to Section 8.1(b)
with respect to the Securities of such series;
(C)the Securities of such series shall thereafter be deemed
not to be "Outstanding" solely for purposes of determining whether or
not the Holders of the requisite aggregate principal amount of
Securities have concurred in any Act under this Indenture with respect
to any covenant or obligation from which the Mobile Energy Parties have
been released pursuant to paragraph (A) above, or with respect to any
event that shall have ceased to be an Event of Default with respect to
Securities of such series pursuant to paragraph (B) above (or the
consequences thereof); and
(D)the Securities of such series shall cease to be secured by
or to be entitled to any benefit under the Security Documents or any
other Lien upon any Collateral, including any monies, security or other
property held by the Trustee (other than monies and U.S. Obligations
deposited with the Trustee pursuant to paragraph (i) of Section 12.1(a)
in respect of Securities of such series and interest and other amounts
earned and received thereon);
provided, however, that the provisions of this Section 12.1(b) shall not be
deemed to relieve the IDB or the Mobile Energy Parties of its obligations with
respect to the payment of the principal of and premium, if any, and interest on
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the Outstanding Securities of such series. In respect of the foregoing, it is
understood and agreed that:
(1) satisfaction by the IDB of the conditions necessary to
achieve the consequences specified in this Section 12.1(b) with respect
to any series of Securities shall not be construed to preclude the IDB
from achieving the consequences specified in Section 12.1(a) with
respect to such Securities at a later date upon satisfaction of the
conditions set forth in Section 12.1(a); and
(2) if at any time the only Outstanding Securities are
Securities with respect to which the conditions described in this
Section 12.1(b) have been satisfied, the Trustee shall, upon receipt of
an IDB Request, take the actions specified in the last paragraph of
Section 12.2 notwithstanding the failure to satisfy and discharge the
Indenture as provided in Section 12.2.
(c) For purposes of this Section 12.1, if the IDB, the Mobile Energy
Parties, or any of them, shall incur any Debt and all or any portion of the
proceeds thereof are concurrently applied to make a deposit pursuant to
paragraph (i) of Section 12.1(a) in respect of any series of Securities (or to
acquire U.S. Government Obligations that are concurrently so deposited), whether
for purposes of Section 12.1(a) or 12.1(b), then any Event of Default that would
arise as a result of such incurrence or as a result of any Lien granted to
secure such Debt shall not constitute an Event of Default with respect to the
Securities of such series; provided, however, that if, on or before the
ninety-first (91st) day after the date of such deposit any of the applicable
conditions under Section 12.1(a) or (b), as the case may be, required to be
satisfied on such date or during the period ending on such date are not
satisfied, then any such Event of Default shall be deemed to have occurred at
the time and to the extent such Event of Default would have occurred without
regard to this Section 12.1(c).
(d) Notwithstanding anything herein to the contrary, if, at any time
after a Security would be deemed to have been paid for purposes of this
Indenture, and, if such is the case, the IDB and the Company's indebtedness in
respect thereof would be deemed to have been satisfied and discharged, pursuant
to this Section 12.1 (without regard to provisions of this paragraph), the
Trustee or any Paying Agent, as the case may be, shall be required to return the
monies or U.S. Government Obligations, or combination thereof, deposited with it
to the IDB or either of the Mobile Energy Parties or any Affiliate thereof or
its representatives under any applicable Federal or state bankruptcy, insolvency
or other similar Law such Security shall thereupon be deemed retroactively not
to have been paid and any satisfaction and discharge of the Company's
indebtedness in respect thereof shall retroactively be deemed not have been
effected, and such Security shall be deemed to remain Outstanding.
SECTION 12.2. Satisfaction and Discharge of Indenture. This Indenture
shall upon an IDB Request, a Company Request and a Mobile Energy Request cease
to be of further effect (except as hereinafter expressly provided), and the
Trustee, at the expense of the Company, shall execute proper instruments
prepared by the Company and the IDB acknowledging satisfaction and discharge of
this Indenture, when:
(a) either
(i) all Securities theretofore authenticated and delivered
(other than (A) Securities that have been destroyed, lost or stolen and
that have been replaced or paid as provided in Section 2.9 and (B)
Securities deemed to have been paid in accordance with Section 12.1)
have been delivered to the Trustee for cancellation; or
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(ii) all Securities not theretofore delivered to the Trustee
for cancellation shall be deemed to have been paid in accordance
with Section 12.1;
(b) all other sums due and payable hereunder have been paid;
and
(c) the IDB and the Mobile Energy Parties have delivered to
the Trustee an Officer's Certificate and an Opinion of Counsel, each
stating that all conditions precedent herein provided for relating to
the satisfaction and discharge of this Indenture have been complied
with.
Upon satisfaction of the aforesaid conditions, the Trustee shall, upon
receipt of an IDB Request, Company Request and Mobile Energy Request,
acknowledge in writing the satisfaction and discharge of this Indenture.
Notwithstanding the satisfaction and discharge of this Indenture as
aforesaid, if at the time of such satisfaction and discharge any Securities are
deemed to have been paid in accordance with Section 12.1, but have not actually
been fully paid, then the rights and obligations of the IDB, the Mobile Energy
Parties and the Trustee in respect of such Securities shall survive to the
extent provided in Section 12.1 until all such Securities have actually been
repaid in full.
Upon satisfaction and discharge of this Indenture as provided in this
Section 12.2, the Trustee shall assign, transfer and turn over to or upon the
order of the Company, any and all monies, securities and other property then
held by the Trustee for the benefit of the Holders other than monies and U.S.
Government Obligations deposited with the Trustee pursuant to Section 12.1 and
interest and other amounts earned or received thereon.
SECTION 12.3. Application of Trust Money. The monies deposited with the
Trustee pursuant to Section 12.1 and all monies received by the Trustee in
respect of U.S. Government Obligations deposited with the Trustee pursuant to
Section 12.1 shall not be withdrawn or used for any purpose other than, and
shall be held in trust for, the payment of the principal of and premium, if any,
and interest on the Securities or portions of principal amount thereof in
respect of which such deposit was made. The Company shall pay and shall
indemnify the Trustee against any tax, fee or other charge imposed on or
assessed against U.S. Government Obligations deposited pursuant to Section 12.1
or the interest and principal received in respect of such obligations other than
any such tax, fee or other charge payable by or on behalf of Holders.
ARTICLE XIII.
MEETINGS OF HOLDERS OF SECURITIES;
ACTION WITHOUT MEETING
SECTION 13.1. Purposes for Which Meetings May Be Called. A meeting of
Holders of Securities of one (1) or more, or all, series, may be called at any
time and from time to time pursuant to this Article XIII to make, give or take
any request, demand, authorization, direction, notice, consent, waiver or other
action provided by this Indenture to be made, given or taken by Holders of such
series.
SECTION 13.2. Call, Notice and Place of Meetings. (a) The Trustee may
at any time call a meeting of Holders of one (1) or more, or all, series of
Securities for any purposes specified in Section 13.1, to be held at such time
and at such place in the Borough of Manhattan, The City of New York, or at such
other place, as the Trustee shall determine. Notice of every such meeting,
setting forth the time and the place of such meeting and in general terms the
action proposed to be taken at such meeting, shall be given, in the manner
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provided in Section 1.6, not less than twenty (20) nor more than sixty (60) days
prior to the date fixed for the meeting.
(b) If the Trustee shall have been requested to call a meeting of the
Holders of Securities of one (1) or more, or all, series, by the IDB, by the
Company, by Mobile Energy or by the Holders of ten percent (10%) in aggregate
principal amount of the Outstanding Securities of such series (or, in the case
of a meeting of the Holders of the Securities of all series, ten percent (10%)
in aggregate principal amount of the Outstanding Securities of all series,
considered as one (1) class), by written request setting forth in reasonable
detail the action proposed to be taken at the meeting, and the Trustee shall not
have made the first mailing of the notice of such meeting within twenty-one (21)
days after receipt of such request or shall not thereafter proceed to cause the
meeting to be held as provided herein, then the IDB, the Mobile Energy Parties
or such Holders (as the case may be) may determine the time and the place in the
Borough of Manhattan, the City of New York, or in such other place as the IDB,
Mobile Energy Parties or such Holders (as the case may be) shall determine, for
such meeting and may call such meeting for such purposes by giving notice
thereof as provided in Section 13.2(a).
(c) Any meeting of Holders of Securities of one (1) or more, or all,
series shall be valid without notice if the Holders of all Outstanding
Securities of such series are present in person or by proxy and the Trustee is
present, or if notice is waived in writing before or after the meeting by the
Holders of all Outstanding Securities of such series, or by such of them as are
not present at the meeting in person or by proxy.
SECTION 13.3. Persons Entitled to Vote at Meetings. To be entitled to
vote at any meeting of Holders of Securities of one (1) or more, or all, series,
a Person shall be (a) a Holder of one (1) or more Outstanding Securities of such
series or (b) a Person appointed by an instrument in writing as proxy for a
Holder or Holders of one (1) or more Outstanding Securities of such series by
such Holder or Holders. The only Persons who shall be entitled to attend any
meeting shall be the Holders described above and any proxies of such Holders and
their respective counsel, any representatives of the Trustee and its counsel and
any representatives of the IDB, the Mobile Energy Parties and their respective
counsels.
SECTION 13.4. Quorum; Action. The Persons entitled to vote a majority
in aggregate principal amount of the Outstanding Securities of the series with
respect to which a meeting shall have been called as hereinbefore provided,
considered as one (1) class, shall constitute a quorum for a meeting of Holders
of Securities of such series; provided, however, that if any action is to be
taken at such meeting that this Indenture expressly provides may be taken by the
Holders of a specified percentage that is less than a majority in principal
amount of the Outstanding Securities of such series, considered as one (1)
class, the Persons entitled to vote such specified percentage in principal
amount of the Outstanding Securities of such series, considered as one (1)
class, shall constitute a quorum. In the absence of a quorum, the meeting may be
adjourned for a period of not less than ten (10) days as determined by the
chairman of the meeting prior to the adjournment of such meeting. In the absence
of a quorum at any such adjourned meeting, such adjourned meeting may be further
adjourned for a period of not less than ten (10) days as determined by the
chairman of the meeting prior to the adjournment of such adjourned meeting.
Except as provided in Section 13.5(e), notice of the reconvening of any
adjourned meeting shall be given as provided in Section 13.2(a), except that
such notice need be given only once not less than five (5) days prior to the
date on which the meeting is scheduled to be reconvened. Notice of the
reconvening of an adjourned meeting shall state expressly the percentage, as
provided above, of the principal amount of the Outstanding Securities of such
series that shall constitute a quorum.
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Except as limited by Section 11.2, any resolution presented to a
meeting or adjourned meeting duly reconvened at which a quorum is present as
aforesaid may be adopted by the affirmative vote of the Holders of a majority in
aggregate principal amount of the Outstanding Securities of the series with
respect to which such meeting shall have been called, considered as one (1)
class; provided, however, that, except as so limited, any resolution with
respect to any action that this Indenture expressly provides may be taken by the
Holders of a specified percentage that is less than a majority in principal
amount of the Outstanding Securities of such series, considered as one (1)
class, may be adopted at a meeting or an adjourned meeting duly reconvened and
at which a quorum is present as aforesaid by the affirmative vote of the Holders
of such specified percentage in principal amount of the Outstanding Securities
of such series, considered as one (1) class.
Any resolution passed or decision taken at any meeting of Holders of
Securities duly held in accordance with this Section 13.4 shall be binding on
all the Holders of Securities of the series with respect to which such meeting
shall have been held, whether or not present or represented at the meeting.
SECTION 13.5. Attendance at Meetings; Determination of Voting Rights;
Conduct and Adjournment of Meetings. (a) Attendance at meetings of Holders of
Securities may be in person or by proxy, and, to the extent permitted by law,
any such proxy shall remain in effect and be binding upon any future Holder of
the Securities with respect to which it was given, unless and until specifically
revoked by the Holder or future Holder of such Securities before being voted.
(b) Notwithstanding any other provision of this Indenture, the Trustee
may make such reasonable regulations as it may deem advisable for any meeting of
Holders of Securities in regard to proof of the holding of such Securities and
of the appointment of proxies and in regard to the appointment and duties of
inspectors of votes, the submission and examination of proxies, certificates and
other evidence of the right to vote, and such other matters concerning the
conduct of the meeting as it shall deem appropriate. Except as otherwise
permitted or required by any such regulations, the holding of Securities shall
be proved in the manner specified in Section 1.4 and the appointment of any
proxy shall be proved in the manner specified in Section 1.4. Such regulations
may provide that written instruments appointing proxies, regular on their face,
may be presumed valid and genuine without the proof specified in Section 1.4 or
other proof.
(c) The Trustee shall, by an instrument in writing, appoint a temporary
chairman of the meeting, unless the meeting shall have been called by the IDB,
by either of the Mobile Energy Parties or by Holders of Securities as provided
in Section 13.2(b), in which case the IDB, such Mobile Energy Party or the
Holders of Securities of the series calling the meeting (as the case may be)
shall in like manner appoint a temporary chairman. A permanent chairman and a
permanent secretary of the meeting shall be elected by vote of the Persons
entitled to vote a majority in aggregate principal amount of the Outstanding
Securities of all series represented at the meeting, considered as one (1)
class.
(d) At any meeting each Holder of an Outstanding Security of any series
or such Holder's proxy shall be entitled to one (1) vote for each $1,000
original principal amount of Securities of such series held or represented by
such Holder, and each Holder of any such Security or such Holder's proxy shall
be entitled to divide the votes carried by such Security, casting some for and
some against a particular action, as such Holder sees fit; provided, however,
that no vote shall be cast or counted at any meeting in respect of any Security
challenged as not Outstanding and ruled by the chairman of the meeting to be not
Outstanding. The chairman of the meeting shall have no right to vote, except as
a Holder of a Security or proxy.
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(e) Any meeting duly called pursuant to Section 13.2 at which a quorum
is present may be adjourned from time to time by Persons entitled to vote a
majority in aggregate principal amount of the Outstanding Securities of all
series represented at the meeting, considered as one (1) class; and the meeting
may be held as so adjourned without further notice.
SECTION 13.6. Counting Votes and Recording Action of Meetings. The vote
upon any resolution submitted to any meeting of Holders of Securities shall be
by written ballots on which shall be subscribed the signatures of the Holders of
Outstanding Securities or of their representatives by proxy and the principal
amounts and serial numbers of the Outstanding Securities, of the series with
respect to which the meeting shall have been called, held or represented by
them. The permanent chairman of the meeting shall appoint two (2) inspectors of
votes who shall count all votes cast at the meeting for or against any
resolution and who shall make and file with the secretary of the meeting their
verified written reports in quadruplicate of all votes cast at the meeting. A
record, at least in quadruplicate, of the proceedings of each meeting of Holders
of Securities shall be prepared by the secretary of the meeting and there shall
be attached to such record the original reports of the inspectors of votes on
any vote by ballot taken thereat and affidavits by one (1) or more persons
having knowledge of the facts setting forth a copy of the notice of the meeting
and showing that such notice was given as provided in Section 13.2 and, if
applicable, Section 13.4. Each copy shall be signed and verified by the
affidavits of the permanent chairman and secretary of the meeting and one (1)
such copy shall be delivered to each of the Mobile Energy Parties, one such copy
shall be delivered to the IDB and another to the Trustee to be preserved by the
Trustee, the last to have attached thereto the ballots voted at the meeting. Any
record so signed and verified shall be conclusive evidence of the matters
therein stated.
SECTION 13.7. Action Without Meeting. In lieu of the vote of Holders of
Securities at a meeting as hereinbefore contemplated in this Article XIII, any
request, demand, authorization, direction, notice, consent, waiver or other
action may be made, given or taken by Holders of Securities by written
instruments as provided in Section 1.4.
ARTICLE XIV.
LIMITED OBLIGATIONS OF IDB AND LIMITED RECOURSE
SECTION 14.1. Limited Obligations of IDB. (a) THE SECURITIES ARE
LIMITED OBLIGATIONS OF THE IDB PAYABLE SOLELY FROM THE REVENUES AND RECEIPTS
DERIVED FROM, AND CERTAIN ACCOUNTS CREATED UNDER, THE IDB LEASE AGREEMENT, THIS
INDENTURE AND THE INTERCREDITOR AGREEMENT. THE SECURITIES SHALL NOT CONSTITUTE
AN INDEBTEDNESS OR OTHER LIABILITY OF THE STATE OF ALABAMA, THE CITY OF MOBILE,
ALABAMA OR ANY POLITICAL SUBDIVISION OF THE STATE OF ALABAMA. NEITHER THE FULL
FAITH OR CREDIT OF THE STATE OF ALABAMA OR THE CITY OF MOBILE, ALABAMA, NOR ANY
OTHER POLITICAL SUBDIVISION OF THE STATE OF ALABAMA, NOR THE IDB, WILL BE
PLEDGED TO THE PAYMENT OF THE SECURITIES OR THE INTEREST THEREON, AND THE
ISSUANCE OF THE SECURITIES WILL NOT DIRECTLY, INDIRECTLY OR CONTINGENTLY
OBLIGATE THE STATE OF ALABAMA, THE CITY OF MOBILE, ALABAMA OR ANY OTHER
POLITICAL SUBDIVISION OF THE STATE OF ALABAMA TO APPLY MONEY FOR, OR TO LEVY OR
PLEDGE ANY FORM OF TAXATION WHATEVER TO THE PAYMENT OF, THE PRINCIPAL OF,
PREMIUM, IF ANY, OR INTEREST ON, THE SECURITIES. THE IDB HAS NO TAXING POWER.
(b) No covenant or agreement contained in the Securities or in this
Indenture shall be deemed to be the covenant or agreement of any official,
officer, agent, employee or attorney of the IDB in his individual capacity, and
neither the members of the IDB nor any official executing the Securities shall
be personally liable on the Securities or subject to any personal liability or
accountability by reason of the issuance thereof.
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<PAGE>
SECTION 14.2. Limited Recourse. Satisfaction of the obligations of the
Mobile Energy Parties (including pursuant to the Guaranty) under this Indenture
and the IDB Lease Agreement for the payment of the principal of or premium, if
any, or interest on any Securities, or any part thereof, or for any claim based
thereon or otherwise in respect thereof or related thereto, shall be had solely
from the assets of the Mobile Energy Parties. No recourse shall be had to (a)
any assets or properties of the Members (other than Mobile Energy as provided in
Article VIII of the IDB Lease Agreement) or of the stockholders of Mobile
Energy, other than their respective interests in the Tax-Exempt Indenture
Securities Collateral, if any, (b) any Member (other than Mobile Energy as
provided in Article VIII of the IDB Lease Agreement) or (c) any Affiliate,
incorporator, stockholder, partner, member, officer, director or employee of any
Member or the Company (other than the Mobile Energy Parties and, in respect of
any Southern Guaranty on deposit in the Maintenance Plan Funding Subaccount or
the Distribution Account, Southern) and in the event of any non-performance by
either of the Mobile Energy Parties of its obligation to make rental payments
under the IDB Lease Agreement, or any part thereof, or for any claim based
thereon or otherwise in respect thereof, no judgment for any deficiency upon the
obligations of either of the Mobile Energy Parties under this Indenture or the
IDB Lease Agreement, for the payment of the principal of or premium, if any, or
interest on any Securities, or any part thereof, or for any claim based thereon
or otherwise in respect thereof or related thereto, shall be obtainable by the
Holders, the IDB, the Trustee or the Collateral Agent against any Member or any
Affiliate, incorporator, stockholder, partner, member, officer, director or
employee of any Member or of the Company (other than the Mobile Energy Parties
and, in respect of any Southern Guaranty on deposit in the Maintenance Plan
Funding Subaccount or the Distribution Account, Southern). Notwithstanding
anything in this Article XIV to the contrary, (i) satisfaction of the Guaranteed
Obligations 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 to the extent such assets are not commingled with any of
Mobile Energy's other assets or any monies or assets of the Company, (ii)
nothing contained herein or in the Securities shall limit or otherwise prejudice
in any way the right of the Trustee, the IDB, the Collateral Agent or any Holder
to proceed against any Person whomsoever (A) with respect to the enforcement of
such Person's obligations under any Project Document (including the Guaranty and
any Southern Guaranty) to which such Person is a party or limit or otherwise
prejudice in any way the right of the Holders, the IDB, the Trustee or the
Collateral Agent to proceed against such Person with respect to the enforcement
of such obligations or (B) to the extent necessary to realize upon the
Tax-Exempt Indenture Securities Collateral granted hereunder or under the
Security Documents and (iii) any limitations of liability herein shall not apply
to any Person if and to the extent that such Person commits fraud or wilful
misrepresentations, including those contained in Officer's Certificates issued
from time to time.
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IN WITNESS WHEREOF, the parties have caused this Indenture to be duly
executed, and their seals to be hereunto affixed and attested, by their
respective officers thereunto duly authorized as of the day and year first above
written.
[SEAL] THE INDUSTRIAL DEVELOPMENT
BOARD OF THE CITY OF MOBILE,
Attest: ALABAMA
/s/ By: /s/
Name: Clarence M. Boll, Jr.
Title: Vice President of the
Board of Directors
[SEAL] FIRST UNION NATIONAL BANK
OF GEORGIA, as Trustee
Attest:
/s/ By: /s/
Name: Doug Milner
Title: Assistant Vice President
<PAGE>
STATE OF )
) ss.:
COUNTY OF )
I, the undersigned Notary Public in and for said County in
said State, hereby certify that Clarence M. Boll, Jr. whose name as Vice
Chairman of The Industrial Development Board of the City of Mobile, Alabama, a
public corporation organized under the laws of the State of Alabama, is signed
to the foregoing Amended and Restated Trust Indenture and who is known to me,
acknowledged before me on this day that, being informed of the contents of the
instrument, he, as such officer and with full authority, executed the same
voluntarily for and as the act of said public corporation.
Given under my hand and seal this the 17 day of August, 1995.
/s/ (seal)
Notary Public
STATE OF New York )
) ss.:
COUNTY OF New York )
I, the undersigned Notary Public in and for said County in
said State, hereby certify that R. Douglas Milner whose name as Assistant Vice
President of First Union National Bank of Georgia, a national banking
association organized and existing under the laws of the United States of
America, is signed to the foregoing Amended and Restated Lease and Agreement and
who is known to me, acknowledged before me on this day that, being informed of
the contents of the instrument, he, as such officer and with full authority,
executed the same voluntarily for and as the act of said national banking
association.
Given under my hand and seal this the 23rd day of August,
1995.
/s/ (seal)
Notary Public
<PAGE>
EXHIBIT A
[FORM OF 1995 BOND]
[Unless this Security is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the issuer hereof
or its agent for registration of transfer, exchange or payment, and any Security
of this series issued is registered in the name of Cede & Co. or such other name
as requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.]
UNITED STATES OF AMERICA
STATE OF ALABAMA
THE INDUSTRIAL DEVELOPMENT BOARD OF THE CITY OF MOBILE, ALABAMA
SOLID WASTE REVENUE REFUNDING BONDS
(MOBILE ENERGY SERVICES COMPANY, L.L.C. PROJECT)
SERIES 1995
No. R- CUSIP No. 607168AY7
Principal Amount Maturity Date Dated Date Interest Rate
$85,000,000.00 January 1, 2020 August 1, 1995 6.95%
THE INDUSTRIAL DEVELOPMENT BOARD OF THE CITY OF MOBILE, ALABAMA, a
public corporation organized and existing under the laws of the State of Alabama
(herein called the "Issuer," which term includes any permitted successor or
assign under the Indenture referred to below), for value received, hereby
promises to pay to [CEDE & CO.], or its registered assigns, solely from the
funds provided therefor as hereinafter set forth, the Principal Amount set forth
above on the Maturity Date set forth above (subject to any right of redemption),
and to pay interest on the Principal Amount set forth above at the Interest Rate
set forth above from the most recent Interest Payment Date to which interest has
been paid or duly provided for, or if no interest has been paid or duly provided
for, from August 1, 1995, semi-annually on January 1 and July 1 in each year,
commencing on January 1, 1996, until the Principal Amount set forth above is
paid in full or payment therefor is duly provided for. Any payment of principal,
any payment of premium, and, to the extent permitted by applicable Law, any
payment of interest not punctually paid or duly provided for shall continue to
bear interest at a rate equal to the Interest Rate set forth above plus two
percent (2%). The principal, premium, if any, and interest so payable on any
payment date shall, as provided in the Indenture, be paid to the Person in whose
name this Security (or one or more Predecessor Securities) is registered in the
Security Register at the close of business on the Regular Record Date for such
payment of principal or interest, which shall be the preceding December 15 and
June 15, respectively, provided that interest payable on the Maturity Date set
forth above shall be payable to the Person to whom the principal hereof shall be
payable. Any such principal or interest not so punctually paid or duly provided
for shall forthwith cease to be payable to the Person in whose name this
Security (or one or more Predecessor Securities) was registered in the Security
Register at the close of business on the Regular Record Date therefor, and may
be paid to the Person in whose name this Security is registered at the close of
business on a Special Record Date for the payment of such defaulted principal or
interest to be fixed by the Trustee referred to below, notice of which shall be
given to the Holder hereof to be mailed not less than ten (10) days prior to
such Special Record Date, or may be paid at any time in any other lawful manner
not inconsistent with the requirements of
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any securities exchange (if any) on which this Security may be listed, and upon
such notice as may be required by such exchange, all as more fully provided in
the Indenture. All payments in respect of this Security shall be made in such
coin or currency of the United States of America as at the time of payment is
legal tender for payment of debts, in immediately available funds. Interest on
this Security shall be computed on the basis of a 360-day year of twelve 30-day
months and, for any period shorter than a full calendar month, on the basis of
the actual number of days elapsed in such period.
Principal of and interest on this Security payable on the Maturity Date
set forth above shall be paid upon presentation and surrender of this Security
at the office of the Paying Agent. Payments of principal of and interest on this
Security shall be made, so long as this Security is issued in the form of a
global security, in immediately available funds by wire transfer or, if this
Security is not held in the form of a global security, by check mailed on or
prior to the date for such payment to the address of the Holder entitled thereto
as such address appears on the Security Register; provided, however, that if
this Security is not held in the form of a global security, any Holder of
$1,000,000 or more in aggregate principal amount of Securities of this series
may, by delivery of a written request to the Paying Agent, elect to have all
such payments to such Holder made by wire transfer of immediately available
funds to a designated account maintained in the United States (so long as the
Paying Agent has received proper wire transfer instructions in writing by the
Regular Record Date next preceding the date for such payment).
The provisions of this Security are continued on the reverse hereof and
such continued provisions shall for all purposes have the same effect as though
fully set forth at this place.
This Security shall not be entitled to any benefit under the Indenture,
or be valid or become obligatory for any purpose, until FIRST UNION NATIONAL
BANK OF GEORGIA, the Trustee under the Indenture, or its successor thereunder or
an Authenticating Agent on behalf thereof, shall have authenticated the form of
certificate endorsed hereon or an alternative certificate of authentication
provided for in the Indenture.
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<PAGE>
IN WITNESS WHEREOF, The Industrial Development Board of the City of
Mobile, Alabama has caused this Security to be signed in its name by its
President or Vice President, by the signature or a facsimile thereof, attested
by its Secretary by the signature or a facsimile thereof.
Dated:
THE INDUSTRIAL DEVELOPMENT BOARD
OF THE CITY OF MOBILE, ALABAMA
[Seal] By:
Name:
Title:
Attest:
By:
Secretary
TRUSTEE'S AUTHENTICATION CERTIFICATE
This Security is one of the Securities referred to in the
within-mentioned Indenture.
FIRST UNION NATIONAL BANK OF GEORGIA,
as Trustee
By:
Authorized Trust Officer
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<PAGE>
[REVERSE]
UNITED STATES OF AMERICA
STATE OF ALABAMA
THE INDUSTRIAL DEVELOPMENT BOARD OF THE CITY OF MOBILE, ALABAMA
SOLID WASTE REVENUE REFUNDING BONDS
(MOBILE ENERGY SERVICES COMPANY, L.L.C. PROJECT)
SERIES 1995
This Security is one of an authorized issue of Securities of the
Issuer, known as its Solid Waste Revenue Refunding Bonds (Mobile Energy Services
Company, L.L.C. Project), Series 1995, to be issued under an Amended and
Restated Trust Indenture, dated as of August 1, 1995 (as the same may be
amended, modified and supplemented, the "Indenture"), between the Issuer and
First Union National Bank of Georgia, as trustee (the "Trustee"). Capitalized
terms used herein, but not otherwise defined herein, shall have the meanings
assigned thereto in the Indenture.
As provided in the Indenture, the aggregate principal amount of
Securities that may be issued thereunder is unlimited. The Securities of this
series are limited in principal amount to $85,000,000.
All Securities shall be secured equally and ratably with one another
(except as to any Tax-Exempt Debt Service Reserve Account or Sinking Fund
established in accordance with the Indenture for the benefit of any particular
series). Reference is hereby made to the Indenture for a description of the
nature of the Securities, the respective rights of the Holders, the Trustee, and
the Issuer in respect of the Securities, and the terms upon which the Securities
are to be authenticated and delivered. The terms of the Securities include those
stated in the Indenture.
The Indenture amends and restates the 1984 Indenture, and the proceeds
of the Securities of this series will be used to pay and redeem the outstanding
1984 Bonds issued under the 1984 Indenture. Proceeds of the 1984 Bonds were used
to refinance the 1983 Bonds, the proceeds of which were used to finance the cost
of acquisition and construction of the Tax-Exempt Project. The Tax-Exempt
Project is leased to Mobile Energy Services Company, L.L.C., an Alabama limited
liability company (the "Company"), pursuant to an Amended and Restated Lease and
Agreement, dated as of August 1, 1995 (the "IDB Lease Agreement"), among the
Issuer, the Company and Mobile Energy Services Holdings, Inc., an Alabama
corporation ("Mobile Energy"), as guarantor of the Company's obligations
thereunder. Pursuant to the IDB Lease Agreement (which amends and restates the
1984 Lease), the Company has agreed to lease the Tax- Exempt Project, and make
rental payments therefor, by paying to the Trustee for the account of the Issuer
an amount equal to the principal of and premium, if any, and interest on the
Securities of this series when due.
By acceptance of the Securities of this series, the initial Holder
hereof hereby acknowledges, consents to, approves and ratifies the amendment and
restatement of the 1984 Indenture and the 1984 Lease, as effectuated by the
Indenture and the IDB Lease Agreement, respectively.
The principal of, premium, if any, and interest on this Security are
payable only from, and secured by, the Tax-Exempt Indenture Securities
Collateral, and all payments of principal and interest shall be made in
accordance with the terms of the Indenture.
The Securities, and the rights of the Holders in respect of the Shared
Collateral, are subject to the terms of an Intercreditor and Collateral Agency
Agreement, dated as of August 1, 1995 (the "Intercreditor Agreement"), among
Bankers Trust (Delaware), as collateral agent, the Trustee (on behalf of the
Holders of the Securities), First Union National Bank of Georgia, as trustee (on
behalf of the holders of the securities issued under a Trust Indenture, dated as
of August 1, 1995, with the Company and Mobile Energy), Banque
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<PAGE>
Paribas, as the Working Capital Provider, the Issuer, the Company and Mobile
Energy, to which reference is hereby made.
As provided in Section 6.3(b) of the Indenture, all Outstanding
Securities shall be subject to redemption in whole prior to the Maturity Date
set forth on the face of this Security at a redemption price equal to one
hundred percent (100%) of the principal amount thereof plus accrued interest
thereon, if any, to the Redemption Date, if an Event of Loss or an Event of
Eminent Domain shall occur and, subject to the terms of the Intercreditor
Agreement, the Energy Complex is not rebuilt, repaired, restored or replaced.
Pursuant to Section 6.3(c) of the Indenture, the Outstanding Securities
shall be subject to partial redemption, ratably among, and by lot within, all
outstanding series and maturities, prior to the Maturity Date set forth on the
face of this Security at a redemption price equal to one hundred percent (100%)
of the principal amount thereof plus accrued interest thereon, if any, to the
Redemption Date, if (i) an Event of Loss or an Event of Eminent Domain shall
occur, to the extent of any Excess Loss Proceeds and provided, subject to
certain exceptions described in the Intercreditor Agreement, that such Excess
Loss Proceeds exceed $3,000,000 and (ii) the Energy Complex or a portion thereof
is rebuilt, repaired, restored or replaced. The aggregate amount of Securities
to be so redeemed will equal the amount made available to the Trustee for such
purpose pursuant to the Intercreditor Agreement, which, subject to certain
exceptions, will equal the ratable share of the Securities of this series (based
upon the principal amount of Securities and Indenture Securities then
Outstanding and the Working Capital Facility Commitment under the Working
Capital Facility, as further described in the Intercreditor Agreement) of the
amount by which all of the Loss Proceeds in respect of such Event of Loss or
Event of Eminent Domain exceeds the total cost of rebuilding, repairing,
restoring or replacing the Energy Complex.
Securities of this series shall be subject to mandatory sinking fund
redemption in part, prior to maturity, by lot, on January 1, 2017 and on January
1 of each year thereafter to and including January 1, 2020, at a redemption
price equal to one hundred percent (100%) of the principal amount thereof plus
accrued interest thereon, if any, to the Redemption Date, according to the
schedule set forth below:
Redemption Date Principal Amount
(January 1,) to be Redeemed
2017.........................................$13,700,000
2018......................................... 22,400,000
2019......................................... 23,750,000
2020*........................................ 25,150,000
- ---------------
* Final Maturity
The Securities of this series shall be subject to redemption at the
option of the Issuer (at the direction of the Company) in the event of a
Determination of Taxability with respect to the Securities of this series, in
whole (or in part if in the opinion of Bond Counsel redemption of a portion of
the Securities of this series would result in the interest on the Securities of
this series outstanding thereafter remaining exempt from federal income
taxation) on a date specified by the Issuer (or the Company on behalf of the
Issuer), which date shall not be more than one hundred eighty (180) days
following such Determination of Taxability, at a redemption price equal to one
hundred percent (100%) of the principal amount thereof plus accrued interest
thereon, if any, to the Redemption Date. Any such redemption of less than all of
the Securities of this series shall be by lot or by such other method, and in
such amounts and/or in such manner, as the Trustee, with the advice of Bond
Counsel, shall deem proper.
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<PAGE>
If the Trustee receives written notice from the Holder or any
beneficial holder hereof to the effect that (i) such Holder or beneficial holder
has been notified in writing by the Internal Revenue Service that it proposes to
include the interest on this Security in the gross income of such Holder or
beneficial holder, which the Trustee determines may lead to a Determination of
Taxability (for any of the reasons described in the definition thereof, because
a proceeding has been instituted against such Holder or otherwise) and (ii) such
Holder or beneficial holder will afford the Trustee the opportunity to contest
the same in accordance with the procedures set forth in the Indenture, either
directly or in the name of such Holder or beneficial holder, and until a
conclusion of any appellate review, if sought, and the Trustee has received a
copy of the notification described in clause (i) above, then the Trustee shall
promptly give notice thereof to the Company, Mobile Energy, the Issuer, the
Collateral Agent and the Indenture Trustee and to each other Holder and
beneficial holder of the Securities of this series. The Trustee shall thereafter
coordinate any similar requests or notices it may receive or may have received
from other Holders or beneficial holders of the Securities of this series and
shall monitor the progress of any administrative proceedings or litigation with
respect thereto. If a Determination of Taxability thereafter occurs and the
Company directs the Issuer to redeem the Securities of this series, in whole or
in part, the Trustee shall make demand for prepayment and give notice of the
redemption of the appropriate amount of the Securities of this series, the
Redemption Date to be no later than the date specified above. In taking any
action or making any determination in this regard, the Trustee may rely upon a
favorable opinion of Bond Counsel.
Securities of this series shall be subject to redemption prior to the
Maturity Date set forth on the face of this Security at the option of the Issuer
(at the direction of the Company), in whole or in part (if in part, by lot or by
such other method as the Trustee shall deem fair or appropriate), on or after
January 1, 2005 at any time upon thirty (30) days' notice at the following
redemption prices, plus accrued interest on the principal amount of such
Security, if any, to the Redemption Date:
Period During Which Redeemed Redemption
(both dates inclusive) Price
January 1, 2005 through December 31, 2005...........102%
January 1, 2006 through December 31, 2006...........101%
January 1, 2007 and thereafter......................100%
Notice of any redemption of Securities will be given at least thirty
(30) but not more than sixty (60) days prior to the Redemption Date.
The Indenture contains provisions permitting the Holders of specified
percentages in aggregate principal amount of the Securities at the time
Outstanding, on behalf of the Holders of all the Securities, to waive compliance
by the Issuer with certain provisions of the Indenture and certain past defaults
under the Indenture and their consequences. Any such consent or waiver or
direction shall be conclusive and binding upon the Holder, and all future
Holders, of this Security and of any Security issued upon the transfer hereof
whether or not citation of such consent or waiver is made upon this Security.
As more fully described therein, the Indenture and the IDB Lease
Agreement permit, with certain exceptions, the amendment thereof and of the
rights and obligations of the Issuer, the Company, Mobile Energy and the Holders
of the Securities thereunder, at any time with the consent of the Holders of not
less than a majority in aggregate principal amount of the Securities at the time
Outstanding and, in certain cases, without any consent or other action by
Holders of the Securities.
The principal hereof may be declared or may become due on the
conditions, in the manner and at the time set forth in the Indenture, upon the
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<PAGE>
occurrence and during the continuance of an Event of Default as provided in
the Indenture.
The Securities of this series are issuable only as registered bonds
without coupons in denominations of $100,000 and integral multiples of $5,000 in
excess thereof. This Security is transferable as prescribed in the Indenture by
the registered owner hereof, in person or by attorney duly authorized, at an
office or agency of the Trustee, upon surrender and cancellation of this
Security and thereupon a new registered Security or Securities of the same
series for a like principal amount, in authorized denominations, will be issued
to the transferee in exchange therefor, as provided in the Indenture. The Issuer
and the Trustee shall deem and treat the Person in whose name this Security is
registered as the absolute owner for the purpose of receiving payment of or on
account of the principal due hereof and interest due hereon and for all other
purposes. Registered Securities of this series shall be exchangeable at such
offices or agencies of the Trustee for registered Securities of other authorized
denominations having the same aggregate principal amount, in the manner and upon
the conditions prescribed in the Indenture. No service charge shall be required
of any Holder in connection with any transfer or exchange, but the Security
Registrar may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith. Notwithstanding any
provision of the Indenture, neither the Issuer nor the Trustee shall be required
to register the transfer of or exchange of any Securities of this series during
the period (i) beginning at the opening of business fifteen (15) days before the
day of the mailing of a notice of redemption of Securities of this series under
the Indenture and ending on the close of business on the day of such mailing and
(ii) beginning on the Regular Record Date for the Stated Maturity of principal
of or interest on the Securities of this series and ending on the Stated
Maturity of such payment, or to register the transfer or exchange any Securities
of this series so selected for redemption in whole or in part, except the
unredeemed portion of any Security of this series selected for redemption in
part. The Holder hereof, by the acceptance of this Security, agrees that each
payment received by it hereunder shall be applied in the manner set forth in
Section 2.16 of the Indenture.
This Security is a global security within the meaning of the Indenture
and is registered in the name of a depositary or its nominee with respect to the
Securities of this series. This Security is exchangeable for other Securities of
this series registered in the name of a Person other than such depositary or its
nominee only if (i) the Issuer advises the Trustee in writing that such
depositary is no longer willing or able to discharge properly its
responsibilities as depositary with respect to the Securities of this series and
is unable to locate a qualified successor, (ii) the Issuer, at its option elects
to terminate the book-entry system through such depositary with respect to the
Securities of this series and (iii) after the occurrence of an Event of Default,
beneficial owners of the Securities of this series holding interests
representing an aggregate principal amount of the Securities of this series of
not less than a majority in principal amount of the Securities of this series
represented by this global security advise the Trustee through such depositary
in writing that the continuation of a book-entry system through such depositary
(or any successor thereto) with respect to the Securities of this series is no
longer in such beneficial owners' best interest.
THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF ALABAMA.
THE SECURITIES OF THIS SERIES WILL BE LIMITED OBLIGATIONS OF THE
ISSUER, PAYABLE SOLELY FROM THE REVENUES AND RECEIPTS DERIVED FROM, AND CERTAIN
ACCOUNTS CREATED UNDER, THE IDB LEASE AGREEMENT, THE INDENTURE AND THE
INTERCREDITOR AGREEMENT. THE SECURITIES OF THIS SERIES WILL NOT CONSTITUTE AN
INDEBTEDNESS OR OTHER LIABILITY OF THE STATE OF ALABAMA, THE CITY OF MOBILE,
ALABAMA OR ANY POLITICAL SUBDIVISION OF THE STATE OF ALABAMA. NEITHER THE FULL
FAITH OR CREDIT OF THE STATE OF ALABAMA OR THE CITY OF MOBILE, ALABAMA, NOR ANY
OTHER POLITICAL SUBDIVISION OF THE STATE OF ALABAMA, NOR THE ISSUER, WILL BE
PLEDGED TO THE PAYMENT OF THE SECURITIES OF THIS SERIES, OR THE PREMIUM, IF ANY,
OR THE INTEREST THEREON, AND THE ISSUANCE OF THE SECURITIES
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OF THIS SERIES WILL NOT DIRECTLY, INDIRECTLY OR CONTINGENTLY OBLIGATE THE STATE
OF ALABAMA, THE CITY OF MOBILE, ALABAMA, OR ANY OTHER POLITICAL SUBDIVISION OF
THE STATE OF ALABAMA TO APPLY MONEY FOR, OR TO LEVY OR PLEDGE ANY FORM OF
TAXATION WHATEVER TO THE PAYMENT OF, THE PRINCIPAL OF OR PREMIUM, IF ANY, OR
INTEREST ON THE SECURITIES OF THIS SERIES. THE ISSUER HAS NO TAXING POWER.
Satisfaction of the obligations of the Company and Mobile Energy
(including pursuant to the Guaranty) under the Indenture and the IDB Lease
Agreement for the payment of the principal of or premium, if any, or interest on
any Securities, or any part thereof, or for any claim based thereon or otherwise
in respect thereof or related thereto, shall be had solely from the assets of
the Company or (except to the extent provided in the Guaranty) Mobile Energy. No
recourse shall be had to (a) any assets or properties of the Members (other than
Mobile Energy as provided in the Guaranty) or of the stockholders of Mobile
Energy, other than their respective interests in the Tax-Exempt Indenture
Securities Collateral, if any, (b) any Member (other than Mobile Energy as
provided in the Guaranty) or (c) any Affiliate, incorporator, stockholder,
partner, member, officer, director or employee of any Member or of the Company
(other than Mobile Energy and, in respect of any Southern Guaranty on deposit in
the Maintenance Plan Funding Subaccount or the Distribution Account, Southern)
and in the event of any non-performance by either of the Company or Mobile
Energy of its obligation to make rental payment under the IDB Lease Agreement,
or any part thereof, or for any claim based thereon or otherwise in respect
thereof, no judgment for any deficiency upon the obligations of either of the
Company or Mobile Energy under the Indenture or the IDB Lease Agreement, for the
payment of the principal of or premium, if any, or interest on any Securities,
or any part thereof, or for any claim based thereon or otherwise in respect
thereof or related thereto, shall be obtainable by the Holders, the Issuer, the
Trustee or the Collateral Agent against any Member (other than Mobile Energy as
provided in the Guaranty) or any Affiliate, incorporator, stockholder, partner,
member, officer, director or employee of any Member or of the Company (other
than the Mobile Energy Parties and, in respect of any Southern Guaranty on
deposit in the Maintenance Plan Funding Subaccount or the Distribution Account,
Southern). Notwithstanding anything in this Security to the contrary, (i)
satisfaction of the Guaranteed Obligations 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 to the extent such assets are not
commingled with any of Mobile Energy's other assets or any monies or assets of
the Company, (ii) nothing contained herein or in the Securities shall limit or
otherwise prejudice in any way the right of the Trustee, the Issuer, the
Collateral Agent or any Holder to proceed against any Person whomsoever (A) with
respect to the enforcement of such Person's obligations under any Project
Document (including the Guaranty and any Southern Guaranty) to which such Person
is a party or limit or otherwise prejudice in any way the right of the Holders,
the Issuer, the Trustee or the Collateral Agent to proceed against such Person
with respect to the enforcement of such obligations or (B) to the extent
necessary to realize upon the Tax-Exempt Indenture Securities Collateral granted
hereunder or under the Security Documents and (iii) any limitations of liability
herein shall not apply to any Person if and to the extent that such Person
commits fraud or willful misrepresentations, including those contained in
Officer's Certificates issued from time to time.
A-8
<PAGE>
ABBREVIATIONS
The following abbreviations when used in the inscription on the face of
this instrument shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM -- as tenants in common
TEN ENT -- as tenants by the entireties
JT TEN -- as joint tenants with right of survivorship and
not as tenants in common
UNIF GIFT MIN ACT ___________________
(Cust) (Minor)
under Uniform Gift to Minors Act
---------------------------------------
(State)
Additional abbreviations may also be used though
not in the above list
- -----------------
A-9
<PAGE>
FOR VALUE RECEIVED the undersigned hereby sell(s), assign(s) and transfer(s)
unto
Social Security Number or Other
Identifying Number of Assignee
(Please print or typewrite name and address,
including zip code of Assignee)
the written Security and all rights thereunder, hereby irrevocably constituting
and appointing ________________________ attorney to transfer such Security on
the books of the Issuer, with full power of substitution in the premises.
Dated:
NOTICE: The signature to this assignment must correspond with the name
as written upon the first page of the within instrument in
every particular, without alteration or enlargement or any
change whatsoever.
A-10
<PAGE>
Exhibit 4.5
- -------------------------------------------------------------------------------
AMENDED AND RESTATED LEASE AND AGREEMENT
dated as of August 1, 1995
among
MOBILE ENERGY SERVICES COMPANY, L.L.C.,
MOBILE ENERGY SERVICES HOLDINGS, INC.
and
THE INDUSTRIAL DEVELOPMENT BOARD OF
THE CITY OF MOBILE, ALABAMA
- -------------------------------------------------------------------------------
THIS INSTRUMENT AMENDS AND RESTATES THE LEASE AND AGREEMENT DATED AS OF DECEMBER
1, 1984, AND RECORDED AT BOOK 2702, PAGE 434, IN THE PROBATE OFFICE OF MOBILE
COUNTY, ALABAMA, AS AMENDED BY AMENDMENT NO. 1 TO SUCH LEASE AND AGREEMENT DATED
AS OF NOVEMBER 8, 1994 RECORDED AT BOOK 4221, PAGE 31 AND BY AMENDMENT NO. 2 TO
SUCH LEASE AND AGREEMENT DATED AS OF DECEMBER 9, 1994. THIS INSTRUMENT DOES NOT
INCREASE THE AMOUNT OF SECURED INDEBTEDNESS OR EXTEND THE MATURITY DATE OF THE
LEASE AND AGREEMENT HEREBY AMENDED AND RESTATED. ACCORDINGLY, THIS INSTRUMENT IS
EXEMPT FROM THE PAYMENT OF MORTGAGE PRIVILEGE TAXES. THE TAX-EXEMPT INDENTURE
(REFERRED TO HEREIN) APPEARS AS EXHIBIT __ TO THE UCC-1 BEING FILED IN THE
OFFICE OF THE JUDGE OF PROBATE OF MOBILE COUNTY, ALABAMA SIMULTANEOUSLY
HEREWITH.
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I.
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 1.1 Definitions; Construction................................... 2
SECTION 1.2 Compliance Certificates and Opinions........................ 2
SECTION 1.3 Form of Documents Delivered to IDB or
Tax-Exempt Indenture Trustee................................ 3
SECTION 1.4 Notices, etc. to IDB, Tax-Exempt
Indenture Trustee and Mobile Energy Parties................. 4
SECTION 1.5 Waiver of Notice............................................ 4
SECTION 1.6 Effect of Headings and Table of Contents.................... 5
SECTION 1.7 Successors and Assigns...................................... 5
SECTION 1.8 Severability Clause......................................... 5
SECTION 1.9 Benefits of Agreement....................................... 5
SECTION 1.10 Governing Law............................................... 5
SECTION 1.11 Execution in Counterparts................................... 5
SECTION 1.12 Projections................................................. 5
SECTION 1.13 Duration of Agreement....................................... 6
SECTION 1.14 Assignment by IDB........................................... 6
SECTION 1.15 Mobile Energy Parties' Performance Under
Tax-Exempt Indenture........................................ 6
SECTION 1.16 Amounts Remaining in Tax-Exempt Indenture
Accounts.................................................... 7
SECTION 1.17 Delegation of Duties by IDB................................. 7
SECTION 1.18 Supplements and Amendments.................................. 7
SECTION 1.19 Filing of Financing Statements.............................. 7
SECTION 1.20 Approval of Tax-Exempt Indenture............................ 7
SECTION 1.21 Further Assurances.......................................... 7
SECTION 1.22 Rights Not Extinguished..................................... 8
SECTION 1.23 Mortgage and Security Interest.............................. 8
<PAGE>
ARTICLE II.
ISSUANCE OF TAX-EXEMPT BONDS; LEASE OF TAX-EXEMPT
PROJECT TO COMPANY; RELATED OBLIGATIONS
SECTION 2.1 Issuance of Tax-Exempt Bonds; Deposit
of Proceeds................................................. 8
SECTION 2.2 Issuance of Additional Tax-Exempt Indenture
Securities.................................................. 8
SECTION 2.3 Lease of Tax-Exempt Project and Leased Land;
Option to Purchase.......................................... 9
SECTION 2.4 Disbursement of Tax-Exempt Indenture
Securities Proceeds......................................... 10
SECTION 2.5 Payments for Tax-Exempt Project by Company;
Obligation Absolute......................................... 10
SECTION 2.6 Source of Payments Limited; Rights and
Liabilities of Mobile Energy Parties........................ 12
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
SECTION 3.1 Representations by Mobile Energy Parties.................... 13
SECTION 3.2 Representations by IDB...................................... 18
ARTICLE IV.
COVENANTS
SECTION 4.1 Payment of Principal, Premium, if any,
and Interest; Mobile Energy as Guarantor.................... 19
SECTION 4.2 Maintenance of Insurance.................................... 19
SECTION 4.3 Reporting Requirements...................................... 20
SECTION 4.4 Maintenance of Existence and Governmental
Approvals; Rate Regulation.................................. 22
SECTION 4.5 Nature of Business.......................................... 23
SECTION 4.6 Operation and Maintenance................................... 23
SECTION 4.7 Compliance with Law and Organizational
Documents................................................... 23
SECTION 4.8 Prohibition on Fundamental Changes and
Disposition of Assets....................................... 23
SECTION 4.9 Transactions with Affiliates................................ 24
SECTION 4.10 Amendments to Project Documents............................. 25
SECTION 4.11 Performance Under Project Contracts......................... 25
SECTION 4.12 Annual Budget............................................... 26
SECTION 4.13 Insurance Reports........................................... 27
SECTION 4.14 Liens....................................................... 27
SECTION 4.15 Investments................................................. 27
SECTION 4.16 Indebtedness................................................ 27
SECTION 4.17 Debt for Modifications; Replacement Debt;
Refunding Debt.............................................. 27
SECTION 4.18 Application of Proceeds from Sale of
Tax-Exempt Bonds and First Mortgage Bonds................... 30
<PAGE>
SECTION 4.19 Restricted Payments......................................... 31
SECTION 4.20 Casualty Proceeds; Eminent Domain Proceeds.................. 32
SECTION 4.21 Benefit Plan Liabilities.................................... 32
SECTION 4.22 Maintenance of Tax-Exempt Project; Remodeling............... 33
SECTION 4.23 IDB's Access to Project..................................... 33
SECTION 4.24 Tax Covenants............................................... 33
SECTION 4.25 Company to Pursue Remedies Against Contractors.............. 34
SECTION 4.26 Assignment, Sale, Leasing................................... 35
SECTION 4.27 Past Due Payments........................................... 35
SECTION 4.28 Continuing Disclosure Agreement............................. 35
SECTION 4.29 Mill Owner Maintenance Reserve Account...................... 35
ARTICLE V.
PREPAYMENT OF RENTAL PAYMENTS;
DETERMINATION OF TAXABILITY
SECTION 5.1 Mandatory Prepayments....................................... 36
SECTION 5.2 Optional Prepayments........................................ 36
SECTION 5.3 Determination of Taxability................................. 36
ARTICLE VI.
OTHER AGREEMENTS AND COVENANTS
SECTION 6.1 Agreements of Parties....................................... 36
SECTION 6.2 Indemnification............................................. 37
SECTION 6.3 Payment of Expenses; Obligations under
Tax-Exempt Indenture........................................ 38
SECTION 6.4 Financing Statements........................................ 39
SECTION 6.5 Limited Liability of IDB.................................... 39
SECTION 6.6 Recording and Filing; Further Instruments................... 39
ARTICLE VII.
EVENTS OF DEFAULT; REMEDIES
SECTION 7.1 Events of Default........................................... 40
SECTION 7.2 Enforcement of Remedies..................................... 43
SECTION 7.3 Remedies Cumulative; Delay or Omission Not a
Waiver...................................................... 44
SECTION 7.4 Reimbursement of Attorneys' Fees............................ 44
SECTION 7.5 Waiver of Breach............................................ 45
SECTION 7.6 Unforeseen Requirements..................................... 45
SECTION 7.7 Intercreditor Agreement..................................... 45
<PAGE>
ARTICLE VIII.
GUARANTY
SECTION 8.1 Guaranty of Payment and Performance......................... 46
SECTION 8.2 Continuance and Acceleration of Guaranteed
Obligations upon Certain Events............................. 46
SECTION 8.3 Recovered Payments.......................................... 46
SECTION 8.4 Evidence of Guaranteed Obligations.......................... 47
SECTION 8.5 Binding Nature of Certain Adjudications..................... 47
SECTION 8.6 Nature of Mobile Energy's Obligations....................... 47
SECTION 8.7 No Release of Mobile Energy................................. 47
SECTION 8.8 Certain Waivers............................................. 48
SECTION 8.9 Independent Credit Evaluation............................... 48
SECTION 8.10 Subordination of Rights Against Company,
Other Guarantors and Collateral............................. 49
SECTION 8.11 Payments by Mobile Energy................................... 49
SECTION 8.12 Continuance of Guaranty; Survival........................... 50
SECTION 8.13 Assignments and Participations; Assignments................. 50
SECTION 8.14 Benefit and Enforcement..................................... 50
ARTICLE IX.
LIMITED RECOURSE............................................ 50
Appendix A DEFINED TERMS
Schedule 4.2 INSURANCE POLICIES
Exhibit A TAX-EXEMPT PROJECT AND LEASED LAND
<PAGE>
AMENDED AND RESTATED LEASE AND AGREEMENT, dated as of August
1, 1995, among MOBILE ENERGY SERVICES COMPANY, L.L.C., an Alabama limited
liability company (the "Company"), its principal office and mailing address
being at 900 Ashwood Parkway, Suite 300, Atlanta, Georgia 30338, MOBILE ENERGY
SERVICES HOLDINGS, INC., an Alabama corporation ("Mobile Energy"), its principal
office and mailing address being at 900 Ashwood Parkway, Suite 450, Atlanta,
Georgia 30338, and THE INDUSTRIAL DEVELOPMENT BOARD OF THE CITY OF MOBILE,
ALABAMA, a public corporation organized under the laws of the State of Alabama
(the "IDB"), its principal office and mailing address being at 451 Government
Street, Mobile, Alabama 36602.
W I T N E S S E T H:
WHEREAS, the IDB is a public corporation organized under the
laws of the State of Alabama under the Alabama Act (as defined below);
and the IDB is authorized and empowered, under the Alabama Act, to
issue bonds for, and to acquire, construct, enlarge, improve, equip,
maintain, lease and dispose of, projects, which are defined to include
any land and any building or other improvement thereon, and all real
and personal properties deemed necessary in connection therewith,
suitable for use by, among other things, any industry for the
manufacturing, processing or assembling of any agricultural,
manufactured or mineral products and facilities for or useful in the
control, reduction, abatement or prevention of pollution of air or
water or both and to sell and lease the same to others for such rentals
or payments and on such terms and conditions as the IDB may deem
advisable;
WHEREAS, the IDB, by due corporate action, previously (a)
authorized the financing of the cost of the acquisition and
construction of the Tax-Exempt Project (as defined below) and the
leasing thereof to a predecessor-in-interest of the Company and (b)
issued and sold $112,300,000 principal amount of the 1983 Bonds (as
defined below) to provide funds for and toward the costs thereof;
WHEREAS, the IDB, by due corporate action, previously (a)
authorized the refunding of the 1983 Bonds and (b) issued and sold
$93,000,000 principal amount (of which $85,000,000 principal amount are
currently outstanding) of the 1984 Bonds (as defined below) pursuant to
the 1984 Indenture (as defined below) to provide funds for the costs of
refunding the 1983 Bonds;
WHEREAS, the IDB, by due corporate action, has authorized the
execution, delivery and performance by it of this Agreement and has
authorized the payment of the 1984 Bonds, within the meaning of Article
VIII of the 1984 Indenture and for all other purposes of the 1984
Indenture, and the redemption of the 1984 Bonds thereafter; and, upon
such payment and in connection therewith, (a) the 1984 Lease (as
<PAGE>
defined below) shall be deemed to be amended and restated in its
entirety as and by this Agreement, (b) the 1984 Indenture shall be
deemed to be amended and restated in its entirety as and by the
Tax-Exempt Indenture (as defined below) and (c) the Tax-Exempt Bonds
(as defined below) shall be issued to so pay and refund the 1984 Bonds;
WHEREAS, the IDB may from time to time issue additional bonds,
debentures, promissory notes or other evidences of indebtedness in one
(1) or more series in accordance with the terms of the Tax-Exempt
Indenture;
WHEREAS, the Company has duly authorized the execution,
delivery and performance by it of this Agreement to secure the
Tax-Exempt Indenture Securities (as defined below);
WHEREAS, Mobile Energy will benefit from the Tax-Exempt
Project and from the sale of the Tax-Exempt Indenture Securities and
the use of the net proceeds therefrom as contemplated by the Tax-Exempt
Indenture and has duly authorized the execution, delivery and
performance by it of this Agreement; and
WHEREAS, Mobile Energy wishes to provide its guaranty to
secure the Guaranteed Obligations (as defined below), including the
payment of all rental payments hereunder.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the parties hereto agree as follows:
ARTICLE I.
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 1.1 Definitions; Construction. (a) For all purposes of
this Agreement, except as otherwise expressly provided in this Agreement or
unless the context otherwise requires, all terms used herein shall have the
meanings ascribed thereto in Appendix A.
SECTION 1.2 Compliance Certificates and Opinions. Except as
otherwise expressly provided by this Agreement, upon any application or request
by either of the Mobile Energy Parties to the IDB or the Tax-Exempt Indenture
Trustee to take any action under any provision of this Agreement or the
Tax-Exempt Indenture, the Tax-Exempt Indenture Trustee shall be entitled to
receive upon its request an Officer's Certificate of such Mobile Energy Parties
or the IDB (as the case may be) stating that all conditions precedent, if any,
provided for in this Agreement or the Tax-Exempt
2
<PAGE>
Indenture (as the case may be) relating to the proposed action have been
complied with and an Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent, if any, have been complied with, except
that in the case of any such application or request as to which the furnishing
of documents is specifically required by any provision of this Agreement or the
Tax-Exempt Indenture relating to such particular application or request, no
additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Agreement or the Tax-Exempt Indenture
shall include:
(a) a statement that each individual signing such
certificate or opinion has read such covenant or condition and
the definitions herein relating thereto;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or
opinions contained in such certificate or opinion are based;
(c) a statement that, in the opinion of each such individual,
such individual has made such examination or investigation as is
necessary to enable him to express an informed opinion as to whether or
not such covenant or condition has been complied with;
(d) a statement as to whether or not, in the opinion of
each such individual, such condition or covenant has been
complied with; and
(e) in the case of an Officer's Certificate, a statement as to
whether or not any Event of Default under this Agreement or the
Tax-Exempt Indenture has occurred and is continuing.
SECTION 1.3 Form of Documents Delivered to IDB or Tax- Exempt
Indenture Trustee. In any case where several matters are required to be
certified by, or covered by an opinion of, any specified Person, it is not
necessary that all such matters be certified by, or covered by the opinion of,
only one (1) such Person, or that they be so certified or covered by only one
(1) document; but one (1) such Person may certify or give an opinion with
respect to some matters and one (1) or more other such Persons as to other
matters, and any such Person may certify or give an opinion as to such matters
in one (1) or several documents.
Any certificate or opinion of an officer of the Company or of Mobile
Energy may be based, insofar as it relates to legal matters, upon an Opinion of
Counsel or a certificate of counsel unless such officer knows or has reason to
believe that such Opinion of Counsel or certificate with respect to the matters
upon which such officer's certificate or opinion is based is erroneous. Any such
3
<PAGE>
Opinion of Counsel or certificate may be based, insofar as it relates to factual
matters, upon a certificate or opinion of, or representations by, an Authorized
Officer of either of the Mobile Energy Parties stating that the information with
respect to such factual matters is in the possession of such Mobile Energy
Party, unless such counsel knows that the certificate or opinion or
representations with respect to such matters are erroneous.
Any Opinion of Counsel stated to be based on the opinion of
other counsel shall be accompanied by a copy of such other opinion.
Where any Person is required to make, give or execute two (2)
or more applications, requests, consents, certificates, statements, opinions or
other instruments under this Agreement, they may, but need not, be consolidated
and form one (1) instrument.
SECTION 1.4 Notices, etc. to IDB, Tax-Exempt Indenture
Trustee and Mobile Energy Parties. Any request, demand,
authorization, direction, notice, consent, waiver or other document
provided or permitted by this Agreement to be made upon, given or
furnished to, or filed with,
(a) the IDB by the Tax-Exempt Indenture Trustee, by either of
the Mobile Energy Parties or by an Authorized Agent shall be sufficient
for every purpose hereunder if in writing and mailed, first-class
postage prepaid, to the IDB addressed to it at the address specified in
the first paragraph of this Agreement or at any other address
previously furnished in writing to the Tax-Exempt Indenture Trustee and
the Mobile Energy Parties by the IDB for such purpose.
(b) the Tax-Exempt Indenture Trustee, by the IDB, by either of
the Mobile Energy Parties or by an Authorized Agent shall be sufficient
for every purpose hereunder if made, given, furnished or filed in
writing to the Tax-Exempt Indenture Trustee at its Corporate Trust
Office, or
(c) the Company, by the IDB, by the Tax-Exempt Indenture
Trustee, by Mobile Energy or by an Authorized Agent shall be sufficient
for every purpose hereunder if in writing and mailed, first-class
postage prepaid, to the Company addressed to it at the address of its
principal office specified in the first paragraph of this Agreement,
together with a copy to it at P.O. Box 2747, 200 Bay Bridge Road,
Mobile, Alabama 36652, or at any other address previously furnished in
writing to the IDB, the Tax-Exempt Indenture Trustee and Mobile Energy
by the Company for such purpose, or
(d) Mobile Energy by the IDB, by the Tax-Exempt
Indenture Trustee, by the Company or by an Authorized Agent
4
<PAGE>
shall be sufficient for every purpose hereunder if in writing and
mailed, first-class postage prepaid, to Mobile Energy addressed to it
at the address of its principal office specified in the first paragraph
of this Agreement or at any other address previously furnished in
writing to the IDB, the Tax-Exempt Indenture Trustee and the Company by
Mobile Energy for such purpose.
SECTION 1.5 Waiver of Notice. Where this Agreement provides
for notice in any manner, such notice may be waived in writing by the Person
entitled to receive such notice, either before or after the event, and such
waiver shall be the equivalent of such notice.
SECTION 1.6 Effect of Headings and Table of Contents. The
Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
SECTION 1.7 Successors and Assigns. All covenants, agreements,
representations and warranties in this Agreement by the IDB and the Mobile
Energy Parties shall bind and, to the extent permitted hereby, shall inure to
the benefit of and be enforceable by their respective successors and assigns,
whether so expressed or not.
SECTION 1.8 Severability Clause. In case any provision in this
Agreement shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
SECTION 1.9 Benefits of Agreement. Nothing in this Agreement,
expressed or implied, shall give to any Person, other than the parties hereto
and their successors hereunder, the Tax- Exempt Indenture Trustee and the
Holders of Tax-Exempt Indenture Securities, any benefit or any legal or
equitable right, remedy or
claim under this Agreement.
SECTION 1.10 Governing Law. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF ALABAMA, EXCEPT
THAT SUCH LAWS SHALL NOT APPLY WITH RESPECT TO ANY COLLATERAL WHERE IT IS
NECESSARY TO APPLY THE LAWS OF ANOTHER JURISDICTION TO PERFECT LIENS IN SUCH
COLLATERAL RELATING TO DEBT ISSUED UNDER ANY OTHER FINANCING DOCUMENTS.
SECTION 1.11 Execution in Counterparts. This Agreement may be
executed in any number of counterparts, each of which when so executed shall be
deemed to be an original, but all such counterparts shall together constitute
but one (1) and the same instrument.
5
<PAGE>
SECTION 1.12 Projections. All projections contemplated herein
(including projections prepared in connection with the determination of any
Revenue Sufficiency Certification, Senior Debt Service Coverage Ratio, Senior
Debt Service Requirement or Total Debt Service Coverage Ratio for a period that
includes, or consists entirely of, future periods) shall be prepared by the
Company in good faith based upon assumptions reasonably believed by the Company
to be consistent with the Project Documents and the historical operating results
of the Energy Complex as adjusted by reasonable assumptions as to future
operating results; provided, however, that all projections prepared by the
Company in connection with the determination of Senior Debt Service Coverage
Ratios pursuant to Section 4.19(b) shall assume that (a) the Company shall
receive no revenues under the Tissue Mill Energy Services Agreement upon the
occurrence and during the continuation of an ESA Blockage Event with respect to
the Tissue Mill Owner, the Tissue Mill Energy Services Agreement or the Tissue
Mill and (b) the Company shall receive no revenues under the Paper Mill Energy
Services Agreement upon the occurrence and during the continuation of an ESA
Blockage Event with respect to the Paper Mill Owner, the Paper Mill Energy
Services Agreement or the Paper Mill.
SECTION 1.13 Duration of Agreement. This Agreement shall
become effective upon its execution and delivery and, subject to the other
provisions hereof, shall expire at 11:59 p.m. on December 1, 2019 (provided that
(a) the amount of monies on deposit in the Tax-Exempt Indenture Securities
Account at such time is equal to the aggregate amount of principal of and
premium, if any, and interest on the Outstanding Tax-Exempt Indenture Securities
to be due on the final Principal Payment Date therefor, (b) all other amounts
are paid hereunder and (c) the Mobile Energy Parties have satisfied all of their
other obligations under this Agreement, the Tax-Exempt Indenture and the other
Lease Documents), except that (i) the provisions of Section 6.2 shall survive
the termination of this Agreement, (ii) the provisions of Section 2.3(b) shall
survive such termination so long as necessary for the Company to exercise the
option to purchase set forth therein and (iii) the provisions of Sections 4.22
and 4.24 shall survive such termination so long as necessary to maintain the
exclusion from gross income for Federal income tax purposes of interest on the
Tax-Exempt Indenture Securities.
SECTION 1.14 Assignment by IDB. The IDB hereby notifies the
Mobile Energy Parties, and the Mobile Energy Parties acknowledge and agree, that
all the IDB's right, title and interest in this Agreement have been assigned to
the Tax-Exempt Indenture Trustee and pledged by the IDB under the Tax-Exempt
Indenture as security for, and for the benefit of the Holders of, the Tax-Exempt
Indenture Securities, except that the IDB retains (but without prejudice to the
assignment of such right, title and interest to the Tax-Exempt Indenture
Trustee, including the ability of the Tax- Exempt Indenture Trustee to exercise
fully and independently its
6
<PAGE>
rights with respect thereto) equally but severally with the Tax- Exempt
Indenture Trustee such right, title and interest to receive indemnity against
claims and payment of its fees and expenses, to receive notices, information and
reports, to give consents and approvals and to enforce covenants of the Mobile
Energy Parties in furtherance of the Alabama Act. In furtherance of such
assignment and pledge, the IDB hereby unconditionally directs the Mobile Energy
Parties to make, and the Mobile Energy Parties hereby covenant to make, all
rental payments hereunder directly to the Collateral Agent in accordance with
the Lease Documents. In addition, in order to further secure the payment of the
Tax-Exempt Indenture Securities and to further secure the performance of all
covenants in the Tax-Exempt Indenture and the Tax-Exempt Indenture Securities,
the Company hereby pledges to the Tax-Exempt Indenture Trustee, and grants to
the Tax-Exempt Indenture Trustee a security interest in, for the benefit of the
Holders of the Tax-Exempt Indenture Securities, all right, title and interest of
the Company in and to the Tax-Exempt Indenture Accounts and all monies contained
therein or hereafter delivered to the Tax-Exempt Indenture Trustee for deposit
therein and, in each case, all monies received and the right to receive monies
thereunder.
SECTION 1.15 Mobile Energy Parties' Performance Under
Tax-Exempt Indenture. The Mobile Energy Parties agree, for the benefit of the
Holders of Tax-Exempt Indenture Securities, to do and perform all acts and
things contemplated in the Tax-Exempt Indenture to be done or performed by them
and hereby authorize and direct the Tax-Exempt Indenture Trustee to do and
perform all things that it is required to do on behalf of the Mobile Energy
Parties under the Tax-Exempt Indenture.
SECTION 1.16 Amounts Remaining in Tax-Exempt Indenture
Accounts. It is agreed by the parties hereto that any amounts remaining in the
Tax-Exempt Indenture Accounts upon the termination of this Agreement, after
payment in full of all Outstanding Tax- Exempt Indenture Securities and the
charges and expenses of the Tax-Exempt Indenture Trustee, its Authorized Agents
and the IDB, shall be disposed of in accordance with the terms of the Tax-Exempt
Indenture.
SECTION 1.17 Delegation of Duties by IDB. It is agreed that
under the terms of this Agreement, the IDB has delegated certain of its duties
hereunder to the Mobile Energy Parties and that under the terms of the
Tax-Exempt Indenture the IDB has delegated certain of its duties thereunder to
the Tax-Exempt Indenture Trustee. With respect to such duties, the IDB shall
have the right at all times to act in reliance on the authorization,
representation or certification of an Authorized Officer of the Mobile Energy
Parties or an Authorized Agent of the Tax-Exempt Indenture Trustee.
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SECTION 1.18 Supplements and Amendments. Subsequent to the
issuance of Tax-Exempt Indenture Securities and prior to the payment in full of
all Tax-Exempt Indenture Securities (or provision for the payment thereof having
been made in accordance with the provisions of the Tax-Exempt Indenture), this
Agreement may be amended, supplemented waived or otherwise modified only in the
manner provided by Sections 11.7 and 11.8 of the Tax-Exempt Indenture, and this
Agreement may not be effectively terminated, amended, supplemented, waived or
otherwise modified without the concurring written consent of the Tax-Exempt
Indenture Trustee, given in accordance with the provisions of the Tax-Exempt
Indenture or this Agreement, except as permitted herein or in the Tax-Exempt
Indenture.
SECTION 1.19 Filing of Financing Statements. The Mobile Energy
Parties shall cause all Financing Statements and any other documents,
statements, memoranda or other instruments as may be required to be registered,
filed or recorded as provided in Section 5.10 of the Tax-Exempt Indenture to be
so registered, filed or recorded, all as contemplated thereby, and the IDB
agrees to cooperate with the Mobile Energy Parties in executing any such
Financing Statements, documents, statements, memoranda or other instruments.
SECTION 1.20 Approval of Tax-Exempt Indenture. The Mobile
Energy Parties have reviewed, and hereby approve, the Tax- Exempt Indenture and
the form of Tax-Exempt Bonds and covenant that they will faithfully perform at
all times any and all covenants, undertakings, stipulations and provisions
contained in the Tax- Exempt Indenture, in the Tax-Exempt Indenture Securities
authenticated and delivered thereunder and in all proceedings of the IDB
pertaining thereto, on their part to be observed or performed, whether express
or implied.
SECTION 1.21 Further Assurances. The Mobile Energy Parties
shall, at their expense, promptly and duly execute, acknowledge and deliver to
the Tax-Exempt Indenture Trustee and to the IDB, as appropriate, such further
financing and similar statements under the Uniform Commercial Code, and such
further documents, memoranda and other instruments and assurances and take such
further action as may from time to time be reasonably required or requested by
the Tax-Exempt Indenture Trustee or the IDB in order more effectively to carry
out the intent and purposes of this Agreement, the Tax-Exempt Indenture and the
Tax-Exempt Indenture Securities issued thereunder, the Mortgage, the
Intercreditor Agreement, the Security Agreement, the other Security Documents
and other instruments contemplated thereby. If the term of this Agreement shall
not have ended prior to such dates, on or before April 15, 2000, and on or
before April 15 of every fifth year thereafter during the term of this
Agreement, the Mobile Energy Parties will deliver to the Tax-Exempt Indenture
Trustee an Opinion of Counsel to the effect that the filings required to
continue the
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perfection of the security interests described herein have been
accomplished.
SECTION 1.22 Rights Not Extinguished. Except to the extent
prohibited by applicable Law, any right, interest or remedy that shall have
accrued during the term of this Agreement shall not be terminated or
extinguished by the expiration or termination of this Agreement, but may be
enforced by the Person for whose benefit such right, interest or remedy shall
have accrued and may be enforceable by such Person in accordance with the terms
of this Agreement as if it had not terminated or expired or otherwise in
accordance with Law.
SECTION 1.23 Mortgage and Security Interest. In order to
secure its performance under this Agreement, including its obligation to pay the
rental payments hereunder and its obligations under Sections 6.2, 6.3 and 7.4,
the Company has simultaneously with the execution of this Agreement mortgaged,
pledged and collaterally assigned to the Collateral Agent, and granted to and in
favor of the Collateral Agent a continuing lien upon, and a continuing security
interest in, substantially all of the Company's assets, to secure the Tax-Exempt
Indenture Securities and all other Senior Debt now or hereafter issued.
ARTICLE II.
ISSUANCE OF TAX-EXEMPT BONDS; LEASE OF TAX-EXEMPT
PROJECT TO COMPANY; RELATED OBLIGATIONS
SECTION 2.1 Issuance of Tax-Exempt Bonds; Deposit of Proceeds.
To provide funds to cause the 1984 Bonds to be deemed to be paid within the
meaning of Article VIII of the 1984 Indenture and for all other purposes of the
1984 Indenture, and for the redemption of the 1984 Bonds thereafter, the IDB,
concurrently with the execution and delivery of this Agreement, and upon
satisfaction of the conditions to the delivery of the Tax-Exempt Bonds set forth
in the Tax-Exempt Indenture, shall issue, sell and deliver the Tax- Exempt Bonds
and will deposit the proceeds thereof with the trustee under the 1984 Indenture
in accordance with the 1984 Indenture.
SECTION 2.2 Issuance of Additional Tax-Exempt Indenture
Securities. (a) The IDB may (subject to compliance with the provisions of
Section 4.17), at the request of an Authorized Officer of the Company, authorize
the issuance of additional Tax- Exempt Indenture Securities upon the terms and
conditions provided herein and in the Tax-Exempt Indenture. Such additional
Tax-Exempt Indenture Securities may be issued to provide funds to pay any one
(1) or more of the following: (i) the costs of additions to the Tax-Exempt
Project (including payment of costs permitted under the Alabama Act), (ii) the
costs of making at any time or from time to time such substitutions, additions,
repairs, modifications and
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improvements in, on, or to the Tax-Exempt Project authorized by the Alabama Act
as the Company may deem necessary or desirable, (iii) the costs of refunding, to
the extent permitted by Law, any outstanding Tax-Exempt Indenture Securities,
(iv) the costs of the issuance and sale of such additional Tax-Exempt Indenture
Securities and capitalized interest for such period and other costs reasonably
related to such issuance (including the funding of any Tax-Exempt Debt Service
Reserve Account established and created for the benefit of Holders of such
additional Tax-Exempt Indenture Securities) as shall be agreed upon by the
Company and the IDB and (v) the costs and other amounts contemplated by Section
4.17; provided, however, that (A) the terms of such additional Tax-Exempt
Indenture Securities, the purchase price to be paid therefor and the manner in
which the proceeds therefrom are to be disbursed shall have been approved in
writing by the Mobile Energy Parties, (B) the IDB is not in default under the
Tax-Exempt Indenture or any provision thereof and the Mobile Energy Parties are
not in default under this Agreement or any provision hereof, and the issuance of
such additional Tax-Exempt Indenture Securities will not constitute a default
under this Agreement or cause any violation of the covenants or representations
of the Mobile Energy Parties in this Agreement, (C) the Mobile Energy Parties
and the IDB shall have entered into an amendment to this Agreement to provide
(1) that, for all purposes of this Agreement, the Tax-Exempt Project shall
include any facilities being financed by such additional Tax-Exempt Indenture
Securities, (2) for such increase in the payments to be made by the Company to
the IDB in such amounts as shall be necessary to pay the principal of and
premium, if any, and interest on such additional Tax-Exempt Indenture Securities
as provided to be paid in the Series Supplemental Indenture with respect to such
additional Tax-Exempt Indenture Securities required by Section 2.3 of the
Tax-Exempt Indenture and (3) for the extension of the term of this Agreement if
the maturity of any of such additional Tax- Exempt Indenture Securities would
otherwise occur after the expiration of such term and (D) the IDB shall have
otherwise complied with the provisions of Article II and the other provisions of
the Tax-Exempt Indenture with respect to the issuance of such additional
Tax-Exempt Indenture Securities.
(b) The Company expressly reserves the right to request the
IDB to issue additional Tax-Exempt Indenture Securities or to enter into, to the
extent permitted by Law, a Contract other than this Agreement with respect to
the issuance by the IDB under an indenture or indentures other than the
Tax-Exempt Indenture to provide additional funds to complete the Tax-Exempt
Project, to refund all or any principal amount of the Tax-Exempt Indenture
Securities, for the other purposes contemplated by Section 4.17 or any
combination of the foregoing.
SECTION 2.3 Lease of Tax-Exempt Project and Leased Land;
Option to Purchase. (a) The IDB hereby demises and leases to the
Company the Tax-Exempt Project and the Leased Land, and the Company
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hereby leases the Tax-Exempt Project and the Leased Land from the IDB upon the
terms and conditions of this Agreement.
(b) The Company shall purchase the Tax-Exempt Project and the IDB's
interest in the Leased Land at the expiration of the term of this Agreement for
the purchase price of ten dollars ($10). The Company shall give written notice
to the IDB of the date of such payment. The IDB, upon payment of such purchase
price, will convey to the Company all its right, title and interest in and to
the Leased Land and the Tax-Exempt Project as it then exists, subject to those
liens and encumbrances existing prior to acquisition of the Leased Land and the
Tax-Exempt Project by the IDB or created by the Company or to the creation or
suffering of which the Company consented. The IDB will take such actions and
execute such documents as may be deemed necessary or desirable by the Company to
evidence and confirm such conveyance of title. The Company will pay all expenses
applicable to or arising from such conveyance of title.
SECTION 2.4 Disbursement of Tax-Exempt Indenture Securities
Proceeds. The IDB shall establish the Tax-Exempt Indenture Securities Account
(and the subaccounts thereof specified in Section 4.1(a) of the Tax-Exempt
Indenture) and each Tax-Exempt Debt Service Reserve Account (if any) in
accordance with the Tax- Exempt Indenture and any Series Supplemental Indenture
relating to the Tax-Exempt Indenture Securities. Amounts in each such Account
shall be invested and disbursed by the Tax-Exempt Indenture Trustee as provided
in the Tax-Exempt Indenture. Until monies in each such Account are applied by
the Tax-Exempt Indenture Trustee as provided in the Tax-Exempt Indenture, such
monies shall be subject to the lien of the Tax-Exempt Indenture as a part of the
Tax-Exempt Indenture Collateral and held in trust by the Tax-Exempt Indenture
Trustee for the benefit of the Holders of Tax-Exempt Indenture Securities, and
the Company shall have no right, title or interest therein.
SECTION 2.5 Payments for Tax-Exempt Project by Company;
Obligation Absolute. (a) The Company agrees to lease the Tax- Exempt Project,
and make rental payments therefor, by paying to the Tax-Exempt Indenture Trustee
for the account of the IDB an amount equal to principal of and premium, if any,
and interest on the Tax- Exempt Indenture Securities when due, at the times, in
the manner, in the amounts and at the rate or rates of interest provided in the
Tax-Exempt Indenture.
(b) The obligation of the Company to make the payments
required to be made under this Section 2.5 and Section 2.6 and Article V shall
be absolute and unconditional, and shall not be subject to abatement,
diminution, postponement or deduction, or to any defense other than payment or
to any right of setoff, counterclaim or recoupment arising out of any breach
under this Agreement, the Tax-Exempt Indenture or otherwise by the IDB, the
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Tax-Exempt Indenture Trustee, any Authorized Representatives, the Holders, or
any other person, or out of any obligation or liability at any time owing to the
Company by any of the foregoing. Until such time as the principal of and
premium, if any, and interest on the Tax-Exempt Indenture Securities and all
other amounts payable under this Agreement, the Tax-Exempt Indenture and the
other Lease Documents have been paid in full, the Company will not suspend or
discontinue any payments required to be made hereunder or thereunder, except to
the extent the same have been prepaid, and will not fail to perform and observe
all of its other agreements contained herein or therein for any cause including
any acts or circumstances that may constitute failure of consideration, sale,
loss, eviction or constructive eviction, destruction of or damage to the
Tax-Exempt Project or commercial frustration of purpose, any change in the tax
or other Laws or any failure of the IDB to perform and observe any agreement,
whether express or implied, or any duty, liability or obligation arising out of
or in connection herewith, with the Tax-Exempt Indenture or with the other Lease
Documents. The Company hereby waives, to the extent permitted by applicable Law,
any and all rights that it may now have or that may at any time hereafter be
conferred upon it, by statute or otherwise, to terminate, cancel, quit or
surrender any of its obligations under the Lease Documents and agrees that if,
for any reason whatsoever, any of the Lease Documents shall be terminated in
whole or in part by operation of Law or otherwise, the Company will nonetheless
promptly pay to the Tax-Exempt Indenture Trustee amounts equal to all such
amounts that shall become due and payable in respect of this Agreement, to the
same extent as if any such Lease Document had not been terminated in whole or in
part. Nothing contained in this Section 2.5 shall be construed to release the
IDB from the performance of any of the agreements on its part herein contained,
and if the IDB should fail to perform any such agreement, the Company may
institute such action against the IDB as the Company may deem necessary to
compel performance so long as such action shall not seek to excuse the Company
from the performance of the agreement on the part of the Company contained in
the preceding sentence. The Company may, however, at its own cost and expense
and in its own name or in the name of the IDB prosecute or defend any action or
proceeding or take any other action involving third Persons that the Company
deems reasonably necessary to secure or protect the Company's right of
possession, occupancy and use of the Tax-Exempt Project, and in such event the
IDB hereby agrees to cooperate fully with the Company, to the extent it may
legally do so, in any such action or proceeding if the Company shall so request.
(c) The obligation of the Company to make any rental payment
in respect of the lease of the Tax-Exempt Project shall be reduced (without
duplication) by the amount of any reduction under the Tax-Exempt Indenture of
the corresponding payment to be made by the IDB thereunder with respect to the
Tax-Exempt Indenture Securities.
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(d) At or before 10:00 A.M. New York time on each date
provided in or pursuant to the Tax-Exempt Indenture for the payment of principal
of (whether at maturity, upon redemption or acceleration or otherwise) or
premium, if any, or interest on the Tax-Exempt Indenture Securities until the
principal of and premium, if any, and interest on the Tax-Exempt Indenture
Securities shall have been fully paid or provision for the payment thereof shall
have been made in accordance with the Tax-Exempt Indenture, the Company
covenants and agrees, in accordance with the Intercreditor Agreement, to pay, or
cause to be paid (whether by the Collateral Agent or otherwise), to the
Tax-Exempt Indenture Trustee in Federal or other funds that are immediately
available for deposit into the Tax-Exempt Indenture Securities Account, as a
rental payment, a sum equal, except as provided for in the next succeeding
paragraph, to the amount payable on such date as principal (whether at maturity,
upon redemption or acceleration or otherwise) and premium, if any, and interest
on the Tax-Exempt Indenture Securities as provided in the Tax-Exempt Indenture,
less monies then on deposit in the Tax- Exempt Indenture Securities Account and
available for such purpose (without giving effect to the proviso contained in
Section 4.3 of the Tax-Exempt Indenture). Each payment made hereunder to the
Tax- Exempt Indenture Trustee for deposit into the Tax-Exempt Indenture
Securities Account shall be deemed to be a credit against the corresponding
obligation of the Company under this Section 2.5.
Each payment pursuant to this Section 2.5 shall at all times
be sufficient to pay (but need not be in excess of) the total amount of
principal (whether at maturity, upon redemption or acceleration or otherwise),
premium, if any, and interest in respect of the Tax-Exempt Indenture Securities
payable on the date that such payment is due.
If, on the Business Day prior to any such payment date, the
monies on deposit in the Tax-Exempt Indenture Securities Account are less than
the amount required to be paid therefrom or to be on deposit therein pursuant to
the provisions of the Tax- Exempt Indenture and the Tax-Exempt Indenture
Securities, the Company will forthwith pay, or cause to be paid, any such
deficiency to the Tax-Exempt Indenture Trustee for deposit into the Tax-Exempt
Indenture Securities Account.
(e) The Company agrees, in accordance with the Intercreditor
Agreement, to pay or cause to be paid to the Tax- Exempt Indenture Trustee (i)
the reasonable fees and charges of the Tax-Exempt Indenture Trustee for all
services of the Tax-Exempt Indenture Trustee and all expenses (including
reasonable counsel, certified public accountants, engineering and inspection
fees and expenses) incurred under or arising directly or indirectly from
services rendered pursuant to the Tax-Exempt Indenture, as and when the same
become due and (ii) the reasonable fees and charges of the Tax-Exempt Indenture
Trustee, as Security Registrar under the Tax-
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Exempt Indenture, and any other Authorized Agents thereof as and when the same
become due.
(f) The Company agrees to pay or cause to be paid to the IDB
an amount equal to the reasonable costs and expenses of the IDB incurred in
connection with the issuance of the Tax-Exempt Bonds, including the reasonable
fees and expenses of its counsel and the reasonable fees and expenses, if any,
incurred in connection with the administration of the Tax-Exempt Project.
(g) The Company shall designate the series of Tax-Exempt
Indenture Securities with respect to which a payment is made pursuant to this
Section 2.5.
SECTION 2.6 Source of Payments Limited; Rights and Liabilities
of Mobile Energy Parties. Except as otherwise specifically provided in this
Agreement (including the Guaranty), all rental payments hereunder shall be made
only from the Tax- Exempt Indenture Securities Collateral, the payments
therefrom and the income and proceeds received by the Tax-Exempt Indenture
Trustee or the Collateral Agent and allocable to the Tax-Exempt Indenture
Trustee therefrom pursuant to the Security Documents. The IDB agrees that (a) it
will look solely to the Tax-Exempt Indenture Securities Collateral, the payments
therefrom and the income and proceeds received by the Tax-Exempt Indenture
Trustee or the Collateral Agent and allocable to the Tax-Exempt Indenture
Trustee therefrom to the extent available for distribution to the IDB as herein
provided or provided in the Security Documents and the Guaranty and (b) recourse
shall be limited in accordance with Article IX.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
SECTION 3.1 Representations by Mobile Energy Parties. Each of
the Mobile Energy Parties represents and warrants, as of the Closing Date, to
the IDB as follows:
(a) The Company (i) is a limited liability company duly
formed, validly existing and in good standing under the laws of the
State of Alabama and (ii) is duly authorized to do business and is in
good standing in each jurisdiction where the character of its
properties or the nature of its activities makes such qualification
necessary. Mobile Energy (A) is a corporation duly formed, validly
existing and in good standing under the laws of the State of Alabama
and (B) is duly authorized to do business and is in good standing in
each jurisdiction where the character of its properties or the nature
of its activities makes such qualification necessary. Each of the
Mobile Energy Parties has all requisite limited
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liability company or corporate (as the case may be) power and authority
to own and operate the property it purports to own and to carry on its
business as now being conducted and as proposed to be conducted in
respect of the Energy Complex.
(b) Each of the Mobile Energy Parties has all necessary
limited liability company or corporate (as the case may be) power and
authority to execute, deliver and perform its obligations under this
Agreement, the Tax-Exempt Indenture Securities and each other Project
Document to which it is a party.
(c) All action on the part of each of the Mobile Energy
Parties that is required for the authorization, execution, delivery and
performance of this Agreement and each other Project Document to which
such Mobile Energy Party is a party has been duly and effectively
taken, except (in the case of the Project Contracts) such actions the
failure to take would not reasonably be expected to have a Material
Adverse Effect; and the execution, delivery and performance by each of
the Mobile Energy Parties of this Agreement and each such other Project
Document does not require the approval or consent of any holder or
trustee of any Debt or other obligations of such Mobile Energy Party
that has not been obtained.
(d) This Agreement and each other Project Document to which
either of the Mobile Energy Parties is a party has been duly executed
and delivered by such Mobile Energy Party. Each of this Agreement and
each other Project Document to which either of the Mobile Energy
Parties is a party constitutes a legal, valid and binding obligation of
such Mobile Energy Party, enforceable against it in accordance with the
terms thereof (other than with respect to step-in rights or arbitration
provisions or to agreements to agree at future dates, as to which no
representation or warranty is made), except as such enforceability (i)
may be limited by applicable bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium and similar laws relating to or
affecting the enforcement of creditors' rights and remedies generally
and (ii) is subject to general principles of equity (regardless of
whether enforceability is considered in a proceeding in equity or at
law) and the discretion of the court before which any proceeding
therefor may be brought and to public policy or Federal or state laws
that may limit rights to indemnification.
(e) Neither the execution and delivery of this Agreement and
each other Project Document to which either of the Mobile Energy
Parties is a party nor the consummation of any of the transactions
contemplated hereby or thereby nor performance of or compliance with
the terms and conditions hereof or thereof (i) contravenes any
Governmental Approvals or any provision of
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Law applicable to either of the Mobile Energy Parties or to any of the
Collateral, (ii) conflicts or is inconsistent with or constitutes a
default under or results in the violation of the provisions of the
Articles of Organization of the Company or the Operating Agreement or
the articles of incorporation or by-laws of Mobile Energy or, unless
such conflict, inconsistency, default or violation would not reasonably
be expected to have a Material Adverse Effect, of any other Project
Document or any indenture, mortgage, deed of trust, sale/leaseback
agreement, loan agreement or other similar financing agreement or
instrument or other agreement or instrument to which either of the
Mobile Energy Parties is a party or by which either of the Mobile
Energy Parties or any of its property or assets is bound or to which
either may be subject or (iii) results in the creation or imposition of
any Liens (other than Permitted Liens) on any of the property or assets
of either of the Mobile Energy Parties, or results in the acceleration
of any obligation of either of the Mobile Energy Parties, that would
reasonably be expected to have a Material Adverse Effect.
(f) Each of the Mobile Energy Parties and the Energy Complex
is in compliance with all Laws applicable to the Mobile Energy Parties
or the Energy Complex (as the case may be), unless such non-compliance
would not reasonably be expected to have a Material Adverse Effect.
(g) Neither of the Mobile Energy Parties nor (to the knowledge
of the Mobile Energy Parties) any other party to a Project Document is
in material default in the performance of any term, covenant or
obligation under any Project Document; no event has occurred that with
lapse of time, notice or both could result in a default under a Project
Document by either of the Mobile Energy Parties or (to the knowledge of
the Mobile Energy Parties) any other party thereto that would
reasonably be expected to have a Material Adverse Effect; no material
force majeure event has occurred and is continuing under any Project
Document; and (to the knowledge of the Mobile Energy Parties) each
Project Document is in full force and effect.
(h) All material Governmental Approvals that are required to
be obtained as of the date hereof by or on behalf of either of the
Mobile Energy Parties in connection with (i) the capital improvements
contemplated by the Capital Budget and the operation and maintenance of
the Energy Complex (including the provision of Processing Services
pursuant to the Energy Services Agreements and the Master Operating
Agreement) and (ii) the issuance of the Tax-Exempt Indenture Securities
and the Guaranty and the execution, delivery and performance by the
Mobile Energy Parties of the Project Documents to which they are
parties are in effect on the date
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hereof. Each of the material Governmental Approvals required to be
obtained as of the date hereof by either of the Mobile Energy Parties
has been duly obtained, was (to the knowledge of the Mobile Energy
Parties) validly issued and is in full force and effect. The Mobile
Energy Parties are in compliance with all material Governmental
Approvals required to be obtained as of the Closing Date unless such
noncompliance would not reasonably be expected to result in a Material
Adverse Effect. Neither of the Mobile Energy Parties has any reason to
believe that it will be unable to obtain the Governmental Approvals
that are not required to be obtained prior to the Closing Date in the
ordinary course of business, without substantial expense, and at such
time or times as may be necessary to avoid any delay in, or material
impairment to, the consummation and performance of the transactions as
contemplated by this Agreement and the other Project Documents.
(i) There are no claims, actions, suits, investigations or
proceedings at law or in equity by or before any arbitrator or any
Governmental Authority now pending or (to the knowledge of the Mobile
Energy Parties) threatened against either of the Mobile Energy Parties
or (to the knowledge of the Mobile Energy Parties) now pending or
threatened against any Affiliate thereof, or any property or other
assets or rights of either of the Mobile Energy Parties or any
Affiliate thereof with respect to this Agreement, any other Project
Document or the Energy Complex, that would reasonably be expected to
result in a Material Adverse Effect.
(j) Neither the Tax-Exempt Indenture Trustee, the Collateral
Agent or the IDB nor any Holder will be as of the Closing Date (under
applicable Law as of the date hereof and solely as a result of the
ownership, operation and maintenance of the Energy Complex by either of
the Mobile Energy Parties, the purchase and ownership of the Tax-Exempt
Indenture Securities or any other transaction contemplated by the
Financing Documents) subject to regulation under the Federal Power Act
of 1920 or by the State of Alabama Public Service Commission or
otherwise be subject to rate regulation under Federal, state or local
Law; neither of the Mobile Energy Parties is, nor as of the Closing
Date will be, subject to rate regulation under Federal, state or local
Law; and none of the execution, delivery or performance by each of the
Mobile Energy Parties of all the provisions of the Project Documents as
in effect on the Closing Date to which such Mobile Energy Party is a
party or the consummation of the transactions contemplated thereby will
violate Chapter 14 of Title 37 of the Code of Alabama (1975): Service
Territories for Electric Suppliers as in effect on the Closing Date.
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(k) The Company has, or has valid and enforceable rights to
acquire, good, valid title or valid leasehold rights in and to all of
the Collateral purported to be covered by the Security Documents to
which it is a party and is the owner and holder of a valid and
subsisting leasehold estate to the interests in the Site and the
tangible personal property forming a part of the Collateral purported
to be covered by the Security Documents to which it is a party, subject
only to Permitted Liens, and is lawfully possessed of, or has valid and
enforceable rights to acquire, a valid and subsisting grant for a term
in and of the Easements, subject only to Permitted Liens.
(l) With respect to the personal property forming a part of
the Collateral, all filings, recordings, registrations and other
actions have been made, obtained and taken in all relevant
jurisdictions that are necessary to create and perfect the Liens in all
right, title, estate and interest of the Company in the Collateral
covered thereby subject to no Liens other than Permitted Liens.
(m) The Mobile Energy Parties have obtained and hold in full
force and effect, or have the right to obtain (or are in the process of
obtaining and expect to obtain in the ordinary course of business), all
patents, trademarks, copyrights and other such rights or adequate
licenses therein, free from restrictions that could reasonably be
expected to result in a Material Adverse Effect, that are necessary for
the ownership, construction, operation and maintenance of the Energy
Complex.
(n) Each of the Mobile Energy Parties has filed, or caused to
be filed, all tax and information returns that are required to have
been filed by it in any jurisdiction and has paid (prior to their
delinquency dates) all taxes shown to be due and payable on such
returns and all other taxes and assessments payable by it, to the
extent the same have become due and payable, except to the extent there
is a Good Faith Contest thereof by either of the Mobile Energy Parties.
(o) To the knowledge of the Mobile Energy Parties, neither the
Site nor the Energy Complex has been contaminated with Hazardous
Materials that requires remediation under any applicable Environmental
Requirement, except where such remediation would not have a Material
Adverse Effect.
(p) The Company, the Energy Complex and the Site are in
compliance with all applicable Environmental Requirements affecting the
Site and the Energy Complex, except where noncompliance would not
reasonably be expected to have a Material Adverse Effect; and (to the
knowledge of the Mobile Energy Parties) there are no environmental
conditions that
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could reasonably be expected to materially interfere with the
commercial operation of the Energy Complex.
(q) Neither of the Mobile Energy Parties has engaged in any
business or activity other than in connection with the acquisition,
development, ownership, operation and financing of the Energy Complex
as contemplated by the Project Documents to which such Mobile Energy
Party is a party (or, in the case of Mobile Energy, the ownership of
the Company).
(r) Mobile Energy's sole material non-cash assets consist of
its ownership interest in the Company and its rights in respect of the
Southern Master Tax Sharing Agreement.
(s) 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 plan, (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 should 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 such event or condition set
forth in clause (a) through (e) above, together with all such other
events or conditions, causes either of the Mobile Energy Parties to
incur or be reasonably likely to incur, or any other member of such
controlled group to incur any 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.
(t) The representations and certifications of the Company
concerning the cost, character and function of the Tax-Exempt Project
contained in the Company's certification to Bond Counsel delivered on
the date of delivery of this Agreement are true and correct in all
material respects. To the best of the Company's knowledge, the
Tax-Exempt Project currently constitutes a "solid waste disposal
facility" under the Code.
(u) The proceeds of the Tax-Exempt Bonds will be used to pay
the 1984 Bonds, within the meaning of Article VIII of the 1984
Indenture and for all other purposes of the 1984
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Indenture, and to effect the redemption of the 1984 Bonds thereafter.
(v) The Tax-Exempt Project consists of land or property
subject to the allowance for depreciation under the Code and, to the
best of the Company's knowledge, substantially all (at least 90%) of
the proceeds received from the sale of the 1983 Bonds and interest
earnings thereon were used to pay costs of the acquisition and
construction of the Tax-Exempt Project (excluding any proceeds of the
Series 1983 Bonds and any investment earnings thereon applied to the
redemption of the Series 1983 Bonds) and such amounts (excluding any
proceeds of the Series 1983 Bonds and any investment earnings thereon
applied to the redemption of the Series 1983 Bonds) were or could have
been charged with a proper election by the Company (or its
predecessors-in-interest) to the capital account of the Tax-Exempt
Project for Federal income tax purposes.
(w) No changes shall be made in the Tax-Exempt Project and no
actions will be taken by the Company or Mobile Energy that shall in any
way result in the loss, in whole or in part, of the exclusion of
interest on the Tax-Exempt Bonds from gross income for Federal income
tax purposes.
(x) It is presently expected that the Tax-Exempt Project will
not be sold or disposed of in a manner producing proceeds that,
together with accumulated proceeds or earnings thereon, would be
sufficient to enable the Company to retire substantially all of the
Tax-Exempt Bonds prior to the maturity of the Tax-Exempt Bonds.
(y) The average maturity of the Tax-Exempt Bonds does not
exceed one hundred twenty percent (120%) of the average remaining
reasonably expected economic life of the assets financed with the
proceeds of the 1983 Bonds and the 1984 Bonds, with the average
reasonably expected economic life of each asset being measured from the
date such asset was placed in service and by taking into account the
respective cost of each asset being financed.
(z) The average maturity of the Tax-Exempt Bonds does
not exceed the average remaining maturity of the 1984 Bonds.
(aa) The payment of principal of or interest on the Tax-
Exempt Bonds is not guaranteed (in whole or in part) by the United
States (or any agency or instrumentality thereof); and less than five
percent (5%) of the proceeds of the Tax-Exempt Bonds will be (i) used
in making loans the payment of principal of and interest on are to be
guaranteed (in whole or in part) by the United States (or any agency or
instrumentality thereof) or (ii) invested (directly or
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indirectly) in federally insured deposits or accounts as
defined in Section 149(b)(4)(B) of the Code.
SECTION 3.2 Representations by IDB. The IDB represents and
warrants, as of the Closing Date, to the Mobile Energy Parties as follows:
(a) The IDB is a public corporation duly formed, validly
existing and in good standing under the laws of the State of Alabama.
The IDB has complied with all of the provisions of the constitution and
laws of the State of Alabama (including the Alabama Act). The IDB has
all necessary corporate power and authority to execute, deliver and
perform its obligations under this Agreement, the Tax-Exempt Indenture
Securities, each other Project Document to which it is a party and any
and all other Contracts relating thereto.
(b) The IDB has found and determined that the issuance of the
Tax-Exempt Bonds to refund the 1984 Bonds, which were issued to refund
the 1983 Bonds issued to finance the construction and acquisition of
the Tax-Exempt Project, will further the purposes of the Alabama Act.
(c) Neither the execution and delivery of this Agreement and
each other Project Document to which the IDB is a party nor the
consummation of any of the transactions contemplated hereby or thereby
nor performance of or compliance with the terms and conditions hereof
or thereof (i) conflicts or is inconsistent with or constitutes a
default under or results in the violation of the provisions of any
charter of the IDB or, unless such conflict, inconsistency, default or
violation would not reasonably be expected to have a Material Adverse
Effect, of any other Project Documents or any indenture, mortgage, deed
of trust, sale/leaseback agreement, loan agreement or other similar
financing agreement or instrument or other agreement or instrument to
which the IDB is a party or by which the IDB or any of its property or
assets is bound or to which it may be subject or (ii) results in the
creation or imposition of any Liens (other than Permitted Liens) on any
of the property or assets of the IDB, or results in the acceleration of
any obligation of the IDB.
(d) To accomplish the transactions contemplated by this
Agreement, the Tax-Exempt Indenture and the other Lease Documents, the
IDB proposes to issue the Tax-Exempt Indenture Securities on the terms
and on the basis set forth in the Tax- Exempt Indenture and to use the
proceeds thereof as specified therein and herein.
(e) This Agreement has not been pledged or hypothecated
by the IDB in any manner or for any purpose other than as
provided in the Tax-Exempt Indenture as security for the
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payment of the Tax-Exempt Indenture Securities and other amounts
payable under the Lease Documents.
ARTICLE IV.
COVENANTS
Each of the Mobile Energy Parties hereby covenants and agrees
that so long as this Agreement is in effect:
SECTION 4.1 Payment of Principal, Premium, if any, and
Interest; Mobile Energy as Guarantor. (a) The Company shall duly and punctually
pay, or cause to be paid, the rental payments specified in Article II.
(b) Subject to Article VIII, Mobile Energy agrees to act as
guarantor on this Agreement, and agrees that the Tax-Exempt Indenture Trustee on
its behalf, and as assignee, of the IDB may enforce against Mobile Energy
payment of the rental payments specified in Article II, and all other amounts
payable hereunder to the same extent as the IDB may against the Company.
SECTION 4.2 Maintenance of Insurance. The Company shall
maintain or cause to be maintained on its behalf the required insurance policies
in accordance with Schedule 4.2. All property and liability insurance policies
shall name each of the Collateral Agent and the IDB as an additional insured and
the Collateral Agent as loss payee. If at any time any of the required insurance
(other than lenders' policy title insurance) shall no longer be available on
commercially reasonable terms and premiums, the Company shall procure substitute
insurance coverage that is the most equivalent to the required coverage and that
is available on commercially reasonable terms and premiums.
SECTION 4.3 Reporting Requirements. The Mobile Energy Parties
shall furnish to the Tax-Exempt Indenture Trustee, and to any Holder of a
Security or an owner of a beneficial interest therein requesting the same in
writing and to any prospective investor of a Security requesting the same in
writing and providing written evidence to either of the Mobile Energy Parties
demonstrating that such prospective investor is an Approved Institutional
Investor (whether or not either of the Mobile Energy Parties is then required to
file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act):
(a) As soon as practicable and in any event within sixty (60)
days after the end of the first, second and third Fiscal Quarters of
each Fiscal Year of the Company (commencing with the Fiscal Quarter
ending September 30, 1995) or, in the case of any such request made
after such sixty (60) day period, promptly thereafter, an unaudited
balance sheet of the Company
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as of the last day of such Fiscal Quarter and the related statements of
income, cash flows and members' equity of the Company and (in the case
of such second and third Fiscal Quarters) for the applicable portions
of the Fiscal Year ending with the last day of such Fiscal Quarter,
setting forth (except in the case of any such Fiscal Quarter ending
prior to March 31, 1996) in each case in comparative form corresponding
unaudited figures from the preceding Fiscal Year, all in accordance
with GAAP, and accompanied by a written statement of an Authorized
Officer of the Company to the effect that such financial statements
fairly represent the Company's financial condition and results of
operations at and as of their date in accordance with GAAP.
(b) As soon as practicable and in any event within one hundred
twenty (120) days after the end of each Fiscal Year of the Company
(commencing with the Fiscal Year ending December 31, 1995) or, in the
case of any such request made after such period, promptly thereafter,
(i) a balance sheet of the Company as of the end of such Fiscal Year
and the related statements of income, cash flow and members' equity of
the Company during such Fiscal Year setting forth (except in the case
of the Fiscal Year ending December 31, 1995) in each case in
comparative form corresponding figures from the preceding Fiscal Year,
all in accordance with GAAP, accompanied by an audit report thereon of
a firm of independent public accountants of recognized national
standing, which opinion shall state that such financial statements
fairly represent the Company's financial condition and results of
operations at and as of their date in accordance with GAAP, (ii) a
certification of such accountants stating that, in the course of making
the examinations necessary for their opinion, they obtained no
knowledge, except as specifically stated, of any event or condition
that constitutes (or that, upon notice or lapse of time or both, would
constitute) an Event of Default, (iii) management's discussion and
analysis of financial condition and results of operations prepared in
accordance with Item 303 of Regulation S-K under the Securities Act and
(iv) such other matters as determined by the Mobile Energy Parties.
(c) With each annual or quarterly financial statement
furnished pursuant to Section 4.3(a) or 4.3(b), an Officer's
Certificate of Mobile Energy or the Company (as applicable) certifying
as to (i) the aggregate amount of all Restricted Payments made by the
Company and (ii) the entering into by the Company of any additional
Project Documents or of any amendments, replacements or modifications
of, or any notices of termination received by either of the Mobile
Energy Parties with respect to, any of the Project Documents (together
with copies of any such additional Project Documents or amendments,
replacements, modifications or notices attached to such
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Officer's Certificate), in the case of clauses (i) and (ii) above,
during the period covered by such financial statement.
(d) Not less often than annually, a brief certificate
(complying with the provisions of Section 314(a)(4) of the Trust
Indenture Act) from the principal executive officer, principal
financial officer or principal accounting officer of each of the Mobile
Energy Parties as to such officer's knowledge of such Mobile Energy
Party's compliance with all conditions and covenants under this
Agreement (or, if either of the Mobile Energy Parties is not so in
compliance, a description of any such non-compliance). For purposes of
this paragraph, such compliance shall be determined without regard to
any period of grace or requirement of notice provided hereunder or
under the Tax-Exempt Indenture.
(e) Each of the following items:
(i) promptly after any Authorized Officer of either
of the Mobile Energy Parties learns or shall become aware of
the occurrence thereof, written notice of the occurrence of
any event or condition that constitutes (or that, upon notice
or lapse of time or both, would constitute) an Event of
Default, specifically stating that such event or condition has
occurred and describing it and the action being or proposed to
be taken with respect thereto;
(ii) written notice of the occurrence of any Event of
Eminent Domain or any Event of Loss and an Officer's
Certificate of the Company setting forth the details thereof
and the action being or proposed to be taken with respect
thereto;
(iii) written notice of the occurrence of any event giving
rise, or reasonably expected to give rise, to a claim under
any insurance policy maintained in respect of the Energy
Complex in an amount greater than $5,000,000;
(iv) promptly after any Authorized Officer of either of
the Mobile Energy Parties learns or shall become aware of the
occurrence thereof, written notice of the occurrence of any
event or condition that constitutes a material violation by
either of the Mobile Energy Parties of any Environmental
Requirement; and
(v) any other information required to be
furnished by the Mobile Energy Parties to the Indenture
Trustee pursuant to the Security Documents.
(f) If the Company has deposited a Southern Guaranty
into, and for so long as such Southern Guaranty remains on
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deposit in, the Maintenance Plan Funding Subaccount or the Distribution
Account pursuant to the terms of the Intercreditor Agreement, the
Company shall cause Southern to provide to the Collateral Agent no
later than forty-five (45) days after the end of each fiscal quarter of
Southern, an Officer's Certificate of Southern certifying as to the
determination of whether or not the Southern Credit Standard has been
satisfied as of the end of such fiscal quarter.
SECTION 4.4 Maintenance of Existence and Governmental
Approvals; Rate Regulation. (a) Each of the Mobile Energy Parties shall at all
times preserve and maintain in full force and effect (i) its existence and form
as a limited liability company or corporation (as the case may be) and its good
standing under the laws of its state of organization or incorporation (as the
case may be) and (ii) its qualification to do business in each jurisdiction in
which the character of the properties owned or leased by it or in which the
transaction of its business as conducted or proposed to be conducted makes such
qualification necessary.
(b) Each of the Mobile Energy Parties shall obtain and
maintain in full force and effect all Governmental Approvals (including
maintaining compliance with Environmental Requirements), except where the
failure to obtain and maintain in full force and effect such Governmental
Approvals or the noncompliance with such Environmental Requirements would not
have a Material Adverse Effect.
(c) Each of the Mobile Energy Parties shall preserve and
maintain good and marketable title to its properties and assets (subject to no
liens other than Permitted Liens).
(d) Each of the Mobile Energy Parties shall pay all taxes and
other governmental charges except where such taxes or charges are being
contested in a Good Faith Contest and where the failure to pay such taxes or
charges does not affect the enforceability of the Project Documents.
(e) If (i) either of the Mobile Energy Parties shall be
subject to regulation as to rates with respect to the provision of Processing
Services or (ii) the revenues or other amounts received or receivable by the
Company under the Project Contracts for the use of Processing Services or other
services and facilities of the Energy Complex shall be subject to regulation, in
either case by any Governmental Authority having jurisdiction over either of the
Mobile Energy Parties under Federal, state or local law, the Mobile Energy
Parties shall (A) prior to the issuance by such Governmental Authority of any
order with respect to such regulation (whether or not final or subject to review
on appeal), contest such regulation in a Good Faith Contest and (B) within
fifteen (15) days following (1) the issuance by such Governmental Authority of a
binding order (which shall be final and not be subject to review on appeal) to
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the effect that either of the Mobile Energy Parties, or such revenues or other
amounts, shall be subject to such regulation and (2) any amendment or other
modification (adverse in any respect) of the provisions of such final and
non-appealable order by, or the issuance of another binding order (which shall
be final and not be subject to review on appeal and shall not constitute an
amendment or other modification to an existing order) of, or the taking of other
action relating to such final and non-appealable order that would reasonably be
expected to have a Material Adverse Effect by, such Governmental Authority (or
another Governmental Authority having jurisdiction over either of the Mobile
Energy Parties under Federal, state or local law) affecting such regulation,
provide a Revenue Sufficiency Certification (based upon and after giving effect
to such regulation) to the Tax-Exempt Indenture Trustee.
SECTION 4.5 Nature of Business. Neither of the Mobile Energy
Parties shall engage in any business other than the ownership, financing,
operation, maintenance and improvement of the Energy Complex as contemplated by
the Project Documents. If Mobile Energy acquires more than nominal assets
(excluding (a) its ownership of member interests in the Company, (b) its rights
under the Southern Master Tax Sharing Agreement) and (c) any Contract providing
for administrative services), Mobile Energy shall immediately grant a first
priority security interest therein to the Collateral Agent on behalf of the
Senior Secured Parties on the same conditions as set forth in the Mortgage and
the other Security Documents.
SECTION 4.6 Operation and Maintenance. The Company shall, and
shall cause the Operator to, use, maintain and operate the Energy Complex and
the Site in compliance with Prudent Plant Operating Standards and the material
provisions of all relevant Project Documents, except where noncompliance would
not have a Material Adverse Effect.
SECTION 4.7 Compliance with Law and Organizational Documents.
(a) Each of the Mobile Energy Parties shall comply with, and the Company shall
ensure that the Energy Complex is maintained and operated in compliance with,
and shall make such alterations to the Energy Complex and the Site as may be
required for compliance with, all applicable Governmental Approvals and all
material applicable Laws, except where noncompliance would not have a Material
Adverse Effect.
(b) Each of the Mobile Energy Parties shall comply with all
material provisions of its Articles of Organization or articles of incorporation
(as the case may be).
SECTION 4.8 Prohibition on Fundamental Changes and Disposition
of Assets. (a) Neither of the Mobile Energy Parties shall enter into any
transaction of merger or consolidation, change its form of organization, or
liquidate or dissolve itself (or
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suffer any liquidation or dissolution). Neither of the Mobile Energy Parties
shall purchase or otherwise acquire all or substantially all of the assets of
any other Person.
(b) Neither of the Mobile Energy Parties shall amend, modify
or otherwise change its Articles of Organization or articles of incorporation
(as the case may be) in any manner that would reasonably be expected to have a
Material Adverse Effect or that alters or supersedes any of the provisions of
such organizational documents concerning (i) nature of business, (ii) the
requirement of an independent director (with respect to Mobile Energy), (iii)
the Manager of the Company, (iv) unanimous votes for certain matters, (v)
commingling of funds and (vi) maintaining separateness and observing corporate
or other entity formalities.
(c) Except as contemplated by the Financing Documents, neither
of the Mobile Energy Parties shall sell, lease (as lessor) or otherwise transfer
(as transferor) any property or assets material to the operation of the Energy
Complex except in the ordinary course of business to the extent that such
property is worn out or is no longer useful or necessary in connection with the
operation of the Energy Complex; provided, however, that to the extent the
aggregate fair market value of all sales, leases and other transfers (other than
any such transfers from Mobile Energy to the Company) in any Fiscal Year exceeds
$2,000,000 (multiplied by the GDPIPD Factor in effect at the time of such sale,
lease or transfer), neither of the Mobile Energy Parties shall be permitted to
sell, lease or otherwise transfer any of such property or assets during the
remainder of such Fiscal Year unless the Company delivers an Officer's
Certificate to the Tax-Exempt Indenture Trustee and the Collateral Agent
(together with an Independent Engineer Confirmation) to the effect that such
property is or such assets are worn out or no longer useful or necessary in
connection with the operation of the Energy Complex; provided further, however,
that notwithstanding anything in this Section 4.8 to the contrary, subject only
to Section 7.1(k), Mobile Energy shall be permitted to transfer its ownership
interests in the Company.
SECTION 4.9 Transactions with Affiliates. Neither of the
Mobile Energy Parties shall enter into or permit the Operator to enter into any
Contract related to the Energy Complex with any of its Affiliates, other than
(a) the Project Documents entered into as of the Closing Date and, in the case
of Mobile Energy, the Southern Master Tax Sharing Agreement, (b) transactions in
the ordinary course of business on fair and reasonable terms no less favorable
to either of the Mobile Energy Parties or to the Operator (as the case may be)
than either of the Mobile Energy Parties or the Operator (as the case may be)
would obtain in an arm's length transaction with a Person that is not an
Affiliate thereof (it being understood that transactions involving the provision
of goods or services to either of the Mobile Energy Parties or the Operator in
exchange for reimbursement of costs and expenses (including
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reasonably allocated overhead expenses) shall be deemed to be in compliance with
this Section 4.9), (c) transactions or Contracts involving Affiliate
Subordinated Debt and (d) transactions or Contracts involving the provision of
goods or services to either of the Mobile Energy Parties in exchange for
Subordinated Fees.
SECTION 4.10 Amendments to Project Documents. (a) The
Company shall not terminate, amend, replace or otherwise modify
(other than any such amendments or modifications that are
immaterial or any such replacement entered into in satisfaction of
the Event of Default Alternative Agreement Requirements) any of the
Project Contracts to which it is a party (other than any such
Project Contracts that are immaterial), unless the Company delivers
to the Tax-Exempt Indenture Trustee an Officer's Certificate,
together with an Independent Engineer Confirmation, certifying that
(i) such termination, amendment, replacement, modification or
addition would not reasonably be expected to have a Material
Adverse Effect or (ii) such termination, amendment, replacement,
modification or addition is reasonably required to comply with Law
or any Governmental Approval and would not have a Material Adverse
Effect in light of the consequences of not terminating, amending,
replacing, modifying or adding such Project Contract. Promptly
upon the execution of any replacement or additional Project
Contract, the Company shall take all actions necessary to grant the
Collateral Agent (A) an assignment of the Company's rights under
such Project Contract (including causing each Project Participant
(other than the Mobile Energy Parties) party thereto to execute and
deliver to the Collateral Agent a Consent to Assignment having
terms no less favorable to the Collateral Agent and the Holders
than (1) in the case of a replacement Project Contract, the Consent
to Assignment delivered to the Collateral Agent in respect of the
Project Contract being replaced and (2) in the case of an
additional Project Contract, the form of Consent to Assignment
attached as Exhibit D to the Intercreditor Agreement) and (B) a
Lien on all property interests acquired by the Company in
connection therewith (perfected to the extent such Lien can be
perfected by filing a mortgage or fixture filing under local law or
a financing statement under the Uniform Commercial Code, provided
that no such assignment or Lien shall be required with respect to
equipment financed with purchase money obligations permitted under
this Agreement if prohibited by the terms of such purchase money
obligations).
(b) Without the consent of the Holders of a majority in
aggregate principal amount of the Outstanding Tax-Exempt Indenture Securities in
accordance with the Tax-Exempt Indenture, the Mobile Energy Parties shall not
terminate, amend, replace or otherwise modify any of the Financing Documents to
which neither the Collateral Agent nor the Tax-Exempt Indenture Trustee is a
party (other than this Agreement and the Working Capital Facility) unless the
Company delivers to the Tax-Exempt Indenture Trustee an Officer's Certificate,
together with an Independent Engineer
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Confirmation, certifying that such termination, amendment, replacement or
modification would not reasonably be expected to reduce the likelihood of
payment on the Outstanding Tax-Exempt Indenture Securities or otherwise
materially and adversely affect the Holders of the Outstanding Tax-Exempt
Indenture Securities.
SECTION 4.11 Performance Under Project Contracts. The Company
shall perform all covenants, undertakings, stipulations and provisions contained
in each Project Contract to which neither the Tax-Exempt Indenture Trustee nor
the Collateral Agent is a party, except to the extent that the failure to so
perform would not reasonably be expected to have a Material Adverse Effect.
SECTION 4.12 Annual Budget. The Company shall submit to the
Independent Engineer, in draft form and detailed by month, an operating plan and
budget with respect to the Energy Complex (a) on or prior to the Closing Date
covering the period from the Closing Date through the end of the Fiscal Year in
which the Closing Date occurs and (b) sixty (60) days prior to the commencement
of each Fiscal Year commencing after the Closing Date covering such Fiscal Year
(each such budget, an "Annual Budget"). Each Annual Budget shall specify the
estimated project revenues, the estimated rates and revenues for each category
of Processing Services, all Operation and Maintenance Costs and a maintenance
plan covering all projected Maintenance Expenditures required during a period of
seventeen (17) Fiscal Quarters commencing with the first Fiscal Quarter covered
by such Annual Budget (the "Maintenance Plan"). Each Annual Budget shall also
include, solely for informational purposes and based upon projections prepared
by the Company in accordance with Section 1.12, the projected Senior Debt
Service Coverage Ratio for the Fiscal Year then ending and the immediately
succeeding Fiscal Year. The Independent Engineer shall provide its comments, if
any, to the Company within thirty (30) days of its receipt of the proposed
Annual Budget and the Company shall incorporate the Independent Engineer's
reasonable suggestions into a final Annual Budget, which shall then be provided
to the Collateral Agent. If, after reasonable efforts, the Company and the
Independent Engineer cannot agree on a final Annual Budget, the Company may
invoke the Third Party Engineer Dispute Resolution as set forth in Section 11.2
of the Intercreditor Agreement. If a final Annual Budget for a given Fiscal Year
is not established by the process described above by the end of the prior Fiscal
Year, the Annual Budget for such Fiscal Year shall, until a final Annual Budget
is so established, be deemed to consist of the previous year's Annual Budget,
escalated at the GDPIPD for the previous Fiscal Year; provided, however, that
with respect to any Fiscal Year that a final Annual Budget has not been
established, the Company may, with the Independent Engineer's reasonable
approval, amend the prior Fiscal Year's Annual Budget to make reasonable and
adequate provision for scheduled Maintenance Expenditures. The Company shall
operate and maintain the Energy Complex, or cause the Energy Complex to be
operated and maintained, in accordance with
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such final Annual Budget as approved by the Independent Engineer, other than
deviations resulting from dispatch and other operating requirements, provided
that any deviations that would reasonably be expected to result in a Material
Adverse Effect shall be approved by the Independent Engineer as being reasonably
necessary to comply with Project Contracts or for operation of the Energy
Complex in compliance with Prudent Plant Operating Standards; provided further,
however, that withdrawals of monies from the Operating Account (other than for
any such monies (i) rebated to the United States Government pursuant to Section
148 of the Code, (ii) applied to Maintenance Expenditures, (iii) applied to the
payment of IDB Claims or (iv) applied to (or deemed to be applied to) the
payment of the 1994 Bonds pursuant to Section 3.16 of the Intercreditor
Agreement) and from the Mill Owner Maintenance Reserve Account (other than for
any such monies deposited into the Working Capital Facility Account, the
Indenture Securities Account or the Tax- Exempt Indenture Securities Account) in
any Fiscal Year, together with the amount of any Working Capital Facility O&M
Loans during such Fiscal Year, not in excess of one hundred ten percent (110%)
of the aggregate amount of Operation and Maintenance Costs (other than
Maintenance Expenditures) set forth in the Annual Budget for such Fiscal Year
shall be deemed not to reasonably be expected to have a Material Adverse Effect.
Each Annual Budget and the Maintenance Plan may be amended, restated,
supplemented or otherwise modified from time to time, at the request of the
Company with the approval of the Independent Engineer.
SECTION 4.13 Insurance Reports. Not later than thirty (30)
days prior to the expiration of any insurance required to be maintained by the
Company pursuant to the Project Documents, the Company shall submit to the
Tax-Exempt Indenture Trustee an Officer's Certificate certifying that such
insurance (a) has been renewed or replaced and will continue in full force and
effect and all premiums for such renewal or replacement term have been fully
paid, together with evidence of such renewal or replacement, or (b) will not be
required to be maintained pursuant to the Project Documents following its
expiration. Within thirty (30) days after the end of each Fiscal Year, the
Company shall submit to the Tax- Exempt Indenture Trustee an Officer's
Certificate (accompanied by a certificate signed by the Independent Insurance
Advisor) (i) listing all insurance being carried by, or on behalf of, the
Company pursuant to the Project Documents and (ii) certifying that all insurance
required to be maintained by the Company pursuant to the Project Documents is in
full force and effect and all premiums therefor have been fully paid.
SECTION 4.14 Liens. Neither of the Mobile Energy Parties shall
create or suffer to exist or permit any Lien upon or with respect to any of its
properties other than Permitted Liens.
SECTION 4.15 Investments. Neither of the Mobile Energy Parties
shall make any investment other than Permitted Investments.
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SECTION 4.16 Indebtedness. Neither of the Mobile Energy
Parties shall create or incur or suffer to exist any Debt or lease obligations
of such Mobile Energy Party other than Permitted Indebtedness.
SECTION 4.17 Debt for Modifications; Replacement Debt;
Refunding Debt. The Company may incur Permitted Indebtedness to be
used for Required Modifications, Optional Modifications,
Replacement Debt and Refunding Debt provided that:
(a) The Company shall not issue Senior Debt for Required
Modifications or Optional Modifications unless (i) such Senior Debt is
issued under the Indenture or the Tax-Exempt Indenture, (ii) the
Company delivers to the Tax-Exempt Indenture Trustee an Officer's
Certificate (together with an Independent Engineer Confirmation)
certifying that (A) based upon projections prepared by the Company in
accordance with Section 1.12, the average of the annual Senior Debt
Service Coverage Ratios after giving effect to the proposed issuance of
such Senior Debt through the final maturity date of the Outstanding
Tax-Exempt Indenture Securities is projected to be equal to or greater
than the lesser of (1) the then projected average of the annual Senior
Debt Service Coverage Ratios without giving effect to such proposed
issuance through the final maturity date of the Outstanding Tax-Exempt
Indenture Securities and (2) 1.25 to 1.0 in the case of Required
Modifications and 1.5 to 1.0 in the case of Optional Modifications, (B)
in the case of Optional Modifications, based upon projections prepared
by the Company in accordance with Section 1.12, the minimum annual
Senior Debt Service Coverage Ratio after giving effect to such proposed
issuance in each Fiscal Year through the final maturity date of the
Outstanding Tax-Exempt Indenture Securities is projected to be equal to
or greater than the lesser of (1) the then projected minimum annual
Senior Debt Service Coverage Ratio without giving effect to such
proposed issuance in each Fiscal Year and (2) 1.35 to 1.0 and (C) (1)
there will be no fundamental change in the use of the Energy Complex as
a result of such proposed issuance, (2) the proceeds of such proposed
issuance, together with proceeds of additional equity funds provided by
the Company or of Subordinated Debt, will be sufficient for the
proposed purpose of such proposed issuance and (3) in the case of
Optional Modifications, the proposed purpose of such proposed issuance
will not impair the operations or reliability of the Energy Complex,
(iii) the assets to be financed with such proposed issuance (and, to
the extent a Lien can be granted therein under applicable Law, all
tangible and intangible rights related to the construction, operation
or ownership of such assets) will be subject to the Lien of the
Security Documents and (iv) in the case of Optional Modifications, the
Company provides to the Tax-Exempt Indenture Trustee a letter from two
(2) of the Rating Agencies
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(then currently rating the Outstanding Tax-Exempt Indenture Securities)
confirming that the issuance of such Senior Debt and the obligations to
be undertaken by the Company in connection with the facilities to be
constructed with the proceeds of such proposed issuance will not,
solely as a result thereof, result in any downgrading of the rating on
the Outstanding Tax-Exempt Indenture Securities.
(b) The Company shall not issue Senior Debt for Replacement
Debt or Refunding Debt unless (i) such Senior Debt is issued under the
Tax-Exempt Indenture or the Indenture, (ii) (A) monies in an amount
sufficient to effect payment of the principal of and premium, if any,
and interest on the Senior Debt to be redeemed are held in trust or (B)
U.S. Government Obligations in an amount sufficient and having such
terms and qualifications so as to defease the Senior Debt to be
redeemed in accordance with the Tax-Exempt Indenture or the Indenture
(as the case may be) are held in trust, (iii) in the case of
Replacement Debt, the Company provides an Officer's Certificate to the
Tax-Exempt Indenture Trustee stating that (A) based upon projections
prepared by the Company in accordance with Section 1.12, the average of
the annual Senior Debt Coverage Ratios after giving effect to such
proposed issuance and the repayment or defeasance of any Tax-Exempt
Indenture Securities occasioned thereby through the final maturity date
of the Outstanding Tax-Exempt Indenture Securities is projected to be
equal to or greater than the lesser of (1) the then projected average
of the annual Senior Debt Service Coverage Ratios without giving effect
to such proposed issuance through the final maturity date of the
Outstanding Tax-Exempt Indenture Securities and (2) 1.25 to 1.0 and
(iv) in the case of Refunding Debt, the Company delivers to the
Tax-Exempt Indenture Trustee an Officer's Certificate (together with an
Independent Engineer Confirmation) certifying that, based upon
projections prepared by the Company in accordance with Section 1.12,
(A) the projected Senior Debt Service Requirement after giving effect
to such proposed issuance will not exceed the projected Senior Debt
Service Requirement without giving effect to such proposed issuance by
more than ten percent (10%) for any Fiscal Year through the final
maturity of the Outstanding Tax- Exempt Indenture Securities and (B)
either (1) the projected average of the annual Senior Debt Service
Requirements after giving effect to such proposed issuance will not
exceed the projected average of the annual Senior Debt Service
Requirements without giving effect to such proposed issuance or (2) the
minimum annual Senior Debt Service Coverage Ratio after giving effect
to such proposed issuance in each Fiscal Year through the final
maturity date of the Outstanding Tax- Exempt Indenture Securities is
projected to be equal to or greater than 1.35 to 1.0 and the average of
the annual Senior Debt Service Coverage Ratios after giving effect to
such
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proposed issuance through the final maturity date of the Outstanding
Tax-Exempt Indenture Securities is projected to be equal to or greater
than 1.5 to 1.0.
(c) The Company shall not issue Subordinated Debt for Required
Modifications unless (i) the Company delivers to the Tax-Exempt
Indenture Trustee an Officer's Certificate (together with an
Independent Engineer Confirmation) certifying that, based upon
projections prepared by the Company in accordance with Section 1.12,
the average of the annual Total Debt Service Coverage Ratios after
giving effect to the proposed issuance of such Subordinated Debt
through the final maturity of the Outstanding Tax-Exempt Indenture
Securities is projected to be equal to or greater than (A) 1.15 to 1.0
or (B) 1.0 to 1.0, unless, in the case of this clause (B), the
Tax-Exempt Indenture Trustee receives notice objecting to such proposed
issuance from the Collateral Agent pursuant to Section 7.2(d) of the
Intercreditor Agreement no later than eighty-five (85) days after the
notice from the Company to the Senior Secured Parties described in
Section 4.17(d) and (ii) the assets to be financed with the proposed
issuance (and, to the extent a Lien can be granted therein under
applicable Law, all tangible and intangible rights related to the
construction, operation or ownership of such assets) will be subject to
the Lien of the Security Documents; provided, however, that if the
Company proposes to issue Subordinated Debt for Required Modifications
other than as described in clause (i)(B) above, and such average of the
annual Total Debt Service Coverage Ratios after giving effect to such
proposed issuance is projected to be less than 1.25 to 1.0, such
proposed Subordinated Debt shall not be issued unless the Company
provides proceeds of additional equity funds or of Affiliate
Subordinated Debt such that the ratio of such additional equity
(including the Affiliate Subordinated Debt) to total funds used for
such Required Modifications is equal to or greater than the ratio of
the Company's equity to total capitalization on the Closing Date.
(d) Upon notice from the Company to the Senior Secured Parties
(i) stating that the Company proposes to issue Subordinated Debt for
Required Modifications and that the average of the annual Total Debt
Service Coverage Ratios after giving effect to such proposed issuance
through the final maturity of the Outstanding Tax-Exempt Indenture
Securities is projected to be equal to or greater than 1.0 to 1.0 (but
less than 1.15 to 1.0), (ii) setting forth a description of such
Required Modifications and (iii) directing the Tax-Exempt Indenture
Trustee to give notice to the Holders of such proposed issuance, the
Tax-Exempt Indenture Trustee shall within fifteen (15) days of such
notice from the Company, give notice to all of the Holders, in a manner
provided in Section 1.6 of the Tax-Exempt Indenture, specifying that,
unless a
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majority in principal amount of the Combined Exposure gives notice to
the Senior Secured Parties objecting to such proposed issuance within
the period expiring on the date that is seventy-five (75) days after
such notice from the Company, the Company may issue such Subordinated
Debt. Upon the objection of the Holders of not less than a majority in
aggregate principal amount of the Outstanding Tax-Exempt Indenture
Securities on or prior to the expiration of such period, the Tax-Exempt
Indenture Trustee shall promptly (but in no event later than five (5)
days after such notice to the Senior Secured Parties) furnish to the
Collateral Agent a Senior Creditor Certificate directing the Collateral
Agent, subject to receipt by the Collateral Agent of Senior Creditor
Certificates from Senior Secured Parties holding or otherwise
representing a majority in principal amount of the Combined Exposure to
deliver to the Tax-Exempt Indenture Trustee the notice pursuant to
Section 7.2(d) of the Intercreditor Agreement objecting to such
proposed issuance.
(e) The Company shall not issue Subordinated Debt for Optional
Modifications unless (i) the Company delivers to the Tax-Exempt
Indenture Trustee an Officer's Certificate (together with an
Independent Engineer Confirmation) certifying that such proposed
Optional Modifications (A) are not reasonably likely to result in a
Material Adverse Effect, (B) are technically feasible and (C) are not
reasonably expected to materially and adversely affect the operation or
reliability of the Energy Complex, (ii) the assets to be financed with
such proposed issuance (and, to the extent a Lien can be granted
therein under applicable Law, all tangible and intangible rights
related to the construction, operation or ownership of such assets)
will be subject to the Lien of the Security Documents and (iii) the
Company provides to the Tax-Exempt Indenture Trustee a letter from two
(2) Rating Agencies (then currently rating the Outstanding Tax-Exempt
Indenture Securities) confirming that the proposed issuance of such
Subordinated Debt and the obligations to be undertaken by the Company
in connection with the facilities to be constructed with the proceeds
will not, solely as a result thereof, result in any downgrading on the
Outstanding Tax- Exempt Indenture Securities.
SECTION 4.18 Application of Proceeds from Sale of Tax- Exempt
Bonds and First Mortgage Bonds. (a) Promptly upon issuance of the Tax-Exempt
Bonds, the Company shall cause the proceeds thereof to be applied as
contemplated by Section 6.1(a).
(b) Promptly upon receipt by the Company of the net proceeds
from the sale of the First Mortgage Bonds, the Company shall (i) apply
$190,000,000 to repay to Southern a bridge loan in the principal amount of
$190,000,000 and distribute to the Company's owners $10,523,620, which, in turn,
will be dividended to
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Southern, (ii) repay to Southern Electric $200,000 representing certain costs
incurred by Southern Electric associated with the offering of the First Mortgage
Bonds and the Tax-Exempt Bonds, (iii) transfer $9,000,000 to the Collateral
Agent for deposit into the Capital Budget Subaccount to finance Project Costs in
accordance with the Capital Budget, (iv) apply $1,405,979 to pay outstanding
attorneys' fees associated with the acquisition of the Energy Complex from
Scott, (v) apply $9,552,623 to pay certain financing costs incurred in
connection with the transactions contemplated by the Financing Documents,
including certain financing costs incurred in connection with the offering of
the Tax-Exempt Bonds and the First Mortgage Bonds, and (vi) apply $32,294,690 to
pay breakage costs in connection with the termination of the interest hedging
arrangements entered into in connection with the acquisition of the Energy
Complex from Scott.
(c) Promptly upon receipt by the Company of the proceeds from
any sale of Senior Securities (other than the First Mortgage Bonds) of any
series (net of any underwriting commission) for purposes of (i) financing
Optional Modifications or Required Modifications, the Company shall deposit all
such proceeds into the Optional Modifications Subaccount or the Required
Modifications Subaccount (as the case may be) for application in accordance with
the Intercreditor Agreement or (ii) Replacement Debt or Refunding Debt (as the
case may be), the Company shall apply such proceeds for such purposes.
SECTION 4.19 Restricted Payments. (a) The Company shall not
make any Restricted Payments unless, in the case of any Restricted Payment
proposed to be made on a Distribution Date, the Company delivers an Officer's
Certificate to the Collateral Agent certifying that as of such Distribution Date
(i) no Event of Default has occurred and is continuing, and no breach of this
Section 4.19 then exists (whether or not such breach is a matured Event of
Default), (ii) the Company is not insolvent and would not be rendered insolvent
by the making of such proposed Restricted Payment and no Bankruptcy Event has
occurred and is continuing in respect of either of the Mobile Energy Parties,
(iii) no ESA Blockage Event with respect to the Pulp Mill Owner or its Energy
Services Agreement or its Mill has occurred and is continuing, (iv) the
provisions of the Tax-Exempt Indenture, the Intercreditor Agreement and the
Indenture relating to the funding of the Accounts established thereunder have
been complied with as of such Distribution Date, and amounts on deposit in the
Debt Service Reserve Account are equal to the Debt Service Reserve Account
Required Balance, amounts on deposit in the Tax-Exempt Debt Service Reserve
Account are equal to the Tax-Exempt Debt Service Reserve Account Required
Balance and amounts on deposit in each of the other Accounts are equal to the
then required balances (including, in the case of the Maintenance Reserve
Account, the Maintenance Reserve Account Required Deposit with respect to the
most recently completed Fiscal Quarter has been made), (v) no Mill Owner is then
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exercising Mill Owner Step-In Rights and (vi) neither of the Mobile Energy
Parties shall be subject to regulation as to rates with respect to the provision
of Processing Services, nor shall the revenues or other amounts received or
receivable by the Company under the Project Contracts for the use of Processing
Services or other services and facilities of the Energy Complex be subject to
regulation, in either case by any Governmental Authority having jurisdiction
over either of the Mobile Energy Parties under Federal, state or local law,
unless the Company has provided a Revenue Sufficiency Certification (based upon
and after giving effect to such regulation) to the Tax-Exempt Indenture Trustee
upon the earlier of (A) the issuance of a binding order (which shall be final
and not subject to review on appeal) of such Governmental Authority to the
effect that either of the Mobile Energy Parties, or such revenues or other
amounts, shall be subject to such regulation and (B) the application of
regulation as to the rates, or revenues or other amounts, received or receivable
by the Company under the Project Contracts, including the imposition of any
order or other action by a Governmental Authority to the effect that such
revenues and other amounts received or receivable by the Company shall be
subject to refund.
(b) The Company shall not make any Restricted Payments
permitted pursuant to Section 4.19(a) on any Distribution Date unless the
Company provides an Officer's Certificate to the Collateral Agent certifying
that as of such Distribution Date (i) the Senior Debt Service Coverage Ratio for
the period consisting of the two (2) semi-annual payment periods immediately
preceding such Distribution Date was equal to at least 1.25 to 1 and (ii) based
upon projections prepared by the Company in accordance with Section 1.12 (which
projections shall, at the request of the Collateral Agent, be reviewed by the
Independent Engineer if the Senior Debt Service Coverage Ratio referred to below
is less than 1.30 to 1), the Senior Debt Service Coverage Ratio for the period
consisting of the current semi-annual payment period and the next succeeding
semi-annual payment period is projected to be at least 1.25 to 1; provided,
however, that notwithstanding the requirements of this Section 4.19(b), the
Company shall be permitted to make Restricted Payments solely to fund an Income
Tax Deficiency if the Company provides an Officer's Certificate to the
Collateral Agent stating that (A) the Senior Debt Service Coverage Ratio for the
period consisting of the two (2) semi-annual payment periods immediately prior
to the Distribution Date was equal to at least 1.10 to 1 and (B) based upon
projections prepared by the Company in accordance with Section 1.12, the Senior
Debt Service Coverage Ratio for the period consisting of the current semi-annual
payment period and the next succeeding semi-annual payment period is projected
to be at least 1.10 to 1; provided further, however, that the historical tests
set forth in clause (i) of this Section 4.19(b) and in clause (A) of the
immediately preceding proviso (1) are not required to be satisfied on the first
Distribution Date following the Closing Date and (2) are required to be
satisfied only for the semi-annual
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payment period immediately preceding such Distribution Date on the second
Distribution Date following the Closing Date.
SECTION 4.20 Casualty Proceeds; Eminent Domain Proceeds. The
Company shall cause all Casualty Proceeds and Eminent Domain Proceeds to be
deposited into the Loss Proceeds Account and applied in accordance with the
provisions of this Agreement and the Intercreditor Agreement.
SECTION 4.21 Benefit Plan Liabilities. Neither of the Mobile
Energy Parties shall, nor shall they permit any Person who is a member of a
controlled group of corporations, or a group of trades or businesses under
common control with the Company (within the meaning of Section 414 of the Code)
to, (a) fail to fulfill its obligations under or to comply in any material
respect with the requirements of ERISA or the Code with respect to any employee
benefit plans, (b) seek a waiver of the minimum funding standard of Section 412
of the Code, (c) fail to make any contribution or payment to or in respect of
any employee benefit plan required to be made by Law or by the terms of such
plan, (d) make any amendment to any employee benefit plan that has resulted or
should result in the imposition of a lien or the posting of a bond or other
security under ERISA or the Code or (e) incur any liability under Title IV of
ERISA other than a liability to the Pension Benefit Guaranty Corporation for
premiums under Section 4007 of ERISA, if as a result of any such event or
conditions set forth in clauses (a) through (e) above, together with all such
other events and conditions, either of the Mobile Energy Parties shall incur or
be reasonably likely to incur, or any other member of such controlled group
shall incur or be reasonably likely to incur any 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.
SECTION 4.22 Maintenance of Tax-Exempt Project; Remodeling.
The Company shall at all times cause the Tax-Exempt Project, and every element
and unit thereof, to be maintained, preserved and kept in reasonable repair,
working order and condition, and from time to time make all needful proper
repairs and renewals thereto; provided, however, that, subject to Section 4.8,
the Company may exercise all of its rights, powers, elections and options to
cause the discontinuance of the operation of the Tax-Exempt Project, or any
element or unit thereof, if, in the judgment of the Company, it is no longer
advisable to operate the same, or if the Company intends to sell and dispose of
the same and within a reasonable time shall endeavor to effectuate such sale or
disposition.
Subject to Section 4.6, the Company, as agent for the IDB, may
at its own expense cause the Tax-Exempt Project to be remodeled or cause
substitutions, modifications and improvements to be made to the Tax-Exempt
Project from time to time as it, in its
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discretion, may deem to be desirable for its uses and purposes, which shall be
included under the terms of this Agreement as part of the Tax-Exempt Project. No
modification of the Tax-Exempt Project shall be made, however, that would
adversely affect the exemption from Federal income taxes of interest on the
Tax-Exempt Indenture Securities.
SECTION 4.23 IDB's Access to Project. The IDB and its
authorized representatives shall have the right, upon appropriate prior notice
to the Company, to have reasonable access to the Tax- Exempt Project during
normal business hours for the purpose of making examinations and inspections of
the same.
SECTION 4.24 Tax Covenants. (a) The IDB and the Company
mutually covenant for the benefit of the purchasers of the Tax-Exempt Indenture
Securities that the Company will not, and the IDB will not knowingly, use the
proceeds of the Tax-Exempt Indenture Securities, the earnings thereon and any
other monies on deposit in any fund or account maintained in respect of the Tax-
Exempt Indenture Securities (whether such monies were derived from the proceeds
of the sale of the Tax-Exempt Indenture Securities or from other sources) in a
manner that would cause the Tax-Exempt Indenture Securities to be "arbitrage
bonds" within the meaning of Section 148 of the Code.
(b) The Company will not take or permit to be taken any
action, including the making of any changes in the design, function, fuel mix or
feedstock of the Tax-Exempt Project, that would have the effect, directly or
indirectly, of subjecting interest on any of the Tax-Exempt Indenture Securities
(excluding Tax-Exempt Indenture Securities held by a "substantial user" of the
Tax-Exempt Project or a "related person" within the meaning of Section 147(a) of
the Code and Tax-Exempt Indenture Securities in respect of which no opinion of
Bond Counsel was delivered at the time of original issuance to the effect that
interest thereon is exempt from Federal income taxation) to Federal income
taxation.
(c) The Company shall at all times do and perform all acts and
things necessary in order to assure that interest paid on the Tax-Exempt
Indenture Securities (excluding any Tax-Exempt Indenture Securities in respect
of which no opinion of Bond Counsel was delivered at the time of original
issuance to the effect that interest thereon is exempt from Federal income
taxation) shall be excludable from the gross income of the recipients thereof
for purposes of Federal income taxation.
(d) In the event the IDB shall have been contacted by the
Internal Revenue Service regarding the tax-exempt status of any of the
Tax-Exempt Indenture Securities (excluding any Tax-Exempt Indenture Securities
in respect of which no opinion of Bond Counsel was delivered at the time of
original issuance to the effect that interest thereon is exempt from Federal
income taxation), the IDB
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shall promptly notify the Company thereof. If the Internal Revenue Service shall
call into question the tax-exempt status of such Tax- Exempt Indenture
Securities, by commencing an audit or otherwise, the IDB hereby authorizes the
Company to select tax counsel, which is reasonably satisfactory to the IDB, to
represent the IDB in connection with such matter. The IDB hereby further agrees
to take such lawful action and enter into any closing or settlement agreement as
may be advised by tax counsel and requested by the Company. All costs and
expenses of the IDB or that are otherwise incurred by the IDB in connection with
any such proceeding shall be borne by the Company. As a condition to taking any
action hereunder, the IDB may demand that the Company provide adequate assurance
that such costs and expenses will be promptly paid or reimbursed.
SECTION 4.25 Company to Pursue Remedies Against Contractors.
In the event of default of any contractor or subcontractor under any contract or
purchase order made by the Company with respect to the Tax-Exempt Project, the
Company, in its own name or as agent for the IDB, shall be entitled, either
separately or in conjunction with others, to exhaust the remedies of the IDB or
the Company against the contractor or subcontractor so in default and against
its surety (if any) for the performance of such contract or purchase order. The
Company shall advise the IDB of the steps it intends to take in connection with
any such default and the Company shall pay all costs, fees and expenses
incurred. The Company may, in its own name or in the name of the IDB, prosecute
or defend any action or proceeding, or take any other action involving any such
vendor, contractor, subcontractor or surety, that the Company deems reasonably
necessary, and in such event the IDB will cooperate fully with the Company and
will take all action necessary to effect the substitution of the Company for the
IDB in any such action or proceeding. Any amounts recovered by way of damages,
refunds, adjustments or otherwise in connection with the foregoing shall be paid
to the Collateral Agent for deposit into the Revenue Account.
SECTION 4.26 Assignment, Sale, Leasing. Subject to Section
4.8, the Company's interest in this Agreement may be assigned in whole or in
part, and the Tax-Exempt Project may be leased or the Company's interest in the
Tax-Exempt Project may be sold as a whole or in part (whether a specific element
or unit or an undivided interest), by the Company, subject, however, to the
condition that no assignment, lease or sale shall relieve the Company from
primary liability for its obligations to make the rental payments hereunder for
the Tax-Exempt Project or for any other of its obligations hereunder.
After any such lease or sale of any element or unit of the
Tax-Exempt Project, or any interest therein, such element or unit, or interest
therein, shall no longer be deemed to be part of the Tax-Exempt Project for the
purposes of this Agreement.
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The Company shall, within fifteen (15) days after the delivery thereof,
furnish to the IDB and the Tax-Exempt Indenture Trustee a true and complete copy
of the agreements or other documents effectuating any such assignment, lease or
sale.
SECTION 4.27 Past Due Payments. In the event the Company shall
fail to pay any amounts required to be paid hereunder, any such past due amounts
shall bear interest at a rate, to the extent permitted by Law, equal to the then
highest yield on any of the Outstanding Tax-Exempt Indenture Securities plus two
percent (2%) from the date such payment was originally due to and including the
date such payment is made.
SECTION 4.28 Continuing Disclosure Agreement. Each of the
Mobile Energy Parties hereby covenants and agrees that it will comply with and
carry out all of the provisions of the Continuing Disclosure Agreement
applicable to such Mobile Energy Party.
SECTION 4.29 Mill Owner Maintenance Reserve Account. The
Company hereby agrees that monies on deposit in or otherwise credited to (in
accordance with the Mill Owner Maintenance Reserve Account Agreement) the Mill
Owner Maintenance Reserve Account shall be used solely for Operation and
Maintenance Costs or by the Mills as permitted by the Mill Owner Maintenance
Reserve Account Agreement; provided, however, that, prior to a Trigger Event,
such monies shall be used, as contemplated by the Mill Owner Maintenance Reserve
Account Agreement, for payment to the Indenture Trustee for deposit into the
Indenture Securities Account, to the Tax-Exempt Indenture Trustee for deposit
into the Tax-Exempt Indenture Securities Account and to the Collateral Agent for
deposit into the Working Capital Account, ratably based upon the respective
amounts owing to each such Account, on the Monthly Transfer Date immediately
preceding each Interest Payment Date or Principal Payment Date therefor,
whenever, and to the extent that, the amount of monies on deposit (after giving
effect to any monies to be deposited from the Revenue Account into any Account
on such Monthly Transfer Date) in the Working Capital Facility Account, the
Indenture Securities Account, the Tax-Exempt Indenture Securities Account, the
Maintenance Reserve Account, each applicable Debt Service Reserve Account (if
any), each applicable Tax-Exempt Debt Service Reserve Account (if any), the
Distribution Account, the Subordinated Fee Account and the Subordinated Debt
Account (including, in the case of the Maintenance Plan Funding Subaccount and
the Distribution Account, the then Available Amount under any Reserve Account
Security on deposit therein) are insufficient to make payments when due on the
Senior Debt.
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ARTICLE V.
PREPAYMENT OF RENTAL PAYMENTS;
DETERMINATION OF TAXABILITY
SECTION 5.1 Mandatory Prepayments. The Company shall prepay
the rental payments payable hereunder, in whole or in part, to the extent
necessary to carry out the redemption of Tax-Exempt Indenture Securities as
required by Article VI of the Tax-Exempt Indenture.
SECTION 5.2 Optional Prepayments. The Company may prepay
amounts payable hereunder, in whole or in part, at any time, and any amounts so
prepaid shall be applied to the redemption of Tax-Exempt Indenture Securities to
the extent provided in, and permitted by, the Tax-Exempt Indenture and directed
by the Company at the time of such prepayment.
SECTION 5.3 Determination of Taxability. Upon the occurrence
of a Determination of Taxability with respect to any series of Tax-Exempt
Indenture Securities, the Company shall be obligated, at its own expense, either
to register the Outstanding Tax-Exempt Indenture Securities of such series under
the Securities Act or to obtain an Opinion of Counsel acceptable to the IDB and
addressed to the IDB and the Tax-Exempt Indenture Trustee to the effect that
such registration is not required (unless the Tax- Exempt Indenture Securities
of such series have been redeemed in accordance with their terms).
ARTICLE VI.
OTHER AGREEMENTS AND COVENANTS
SECTION 6.1 Agreements of Parties. It is hereby agreed by and
between the IDB and the Company that:
(a) The Company proposes to refinance the Tax-Exempt Project
by causing the IDB to issue the Tax-Exempt Bonds and apply the
principal proceeds thereof, together with other funds, to pay the 1984
Bonds, within the meaning of Article VIII of the 1984 Indenture and for
all other purposes of the 1984 Indenture, and to redeem the 1984 Bonds
thereafter, all for the purposes of fostering the industrial and
business development of, and improving living conditions in, the
jurisdiction of the IDB and otherwise contributing to the welfare of
the State of Alabama and its inhabitants.
(b) This Agreement amends and restates the 1984 Lease,
and the parties hereto hereby acknowledge, consent to, approve
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and ratify (i) the amendment and restatement of the 1984 Lease, as
effectuated by this Agreement, (ii) the amendment and restatement of
the 1984 Indenture, as effectuated by the Tax-Exempt Indenture,
including the appointment of the Tax- Exempt Indenture Trustee as
successor trustee to the trustee under the 1984 Indenture (provided
that (A) the provisions of Article VIII of the 1984 Indenture shall
survive with respect to the 1984 Bonds and (B) the trustee under the
1984 Indenture shall continue in such capacity with respect to the 1984
Bonds), (iii) the termination as of the date hereof of the Remarketing
Agreement dated as of October 30, 1987 among the IDB, the Company (as
assignee) and Goldman, Sachs & Co., as remarketing agent thereunder
(subject to the survival of the provisions of Sections 4 and 5
thereof), and (iv) the termination of Scott's obligations under the
1984 Lease, the 1984 Indenture, and the 1984 Bonds and the fact that
Scott shall have no obligations under this Agreement, the Tax-Exempt
Indenture or the Tax-Exempt Indenture Securities.
(c) All of the Tax-Exempt Indenture Securities will be issued
under the Tax-Exempt Indenture and will mature, bear interest, be
redeemable and have the other terms and provisions set forth in the
Tax-Exempt Indenture, pursuant to which the IDB's interest in the Lease
Documents and the revenues and receipts thereunder, including the
rental payments hereunder, but subject to Section 1.14, will be pledged
and conveyed to the Tax-Exempt Indenture Trustee or the Collateral
Agent as security for payment of the principal of and premium, if any,
and interest on the Tax-Exempt Indenture Securities.
(d) Nothing contained herein (including Section 6.1(b) hereof)
shall be deemed or construed to restrict, waive or otherwise limit or
modify the rights and obligations of any party under the Lease
Assignment and Assumption Agreement dated as of December 12, 1994
between Scott and the Company (as assignee of Mobile Energy), which
agreement remains in full force and effect.
SECTION 6.2 Indemnification. The Mobile Energy Parties hereby
release the IDB, and agree to indemnify and hold harmless the IDB, from any
liability, whether arising out of a tort, contractual or other claim of any
nature whatsoever, including claims for any loss or damage to property, or any
injury to or death of any person, that may be occasioned by any cause whatsoever
pertaining to the acquisition, construction or operation of the Tax-Exempt
Project, issuance of the Tax-Exempt Indenture Securities or the performance of
this Agreement. If any such claim is asserted, the IDB will give prompt notice
to the Mobile Energy Parties and the Mobile Energy Parties will assume the
defense thereof, including the employment of counsel, and payment of all
expenses and the right to negotiate and consent to settlement. The
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IDB shall have the right to employ separate counsel in any such action and to
participate in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of the IDB unless (i) employment of such counsel has
been specifically authorized by the Mobile Energy Parties, (ii) the Mobile
Energy Parties have failed to assume the defense and employ counsel or (iii) the
named parties to any such action (including any impleaded parties) include both
the IDB and either of the Mobile Energy Parties and the IDB shall have been
advised by counsel that there are actual or potential conflicting interests
between the IDB and any other party represented by counsel that is proposed by
the Mobile Energy Parties to represent the IDB, including any such conflicting
interests arising from situations in which there are one (1) or more legal
defenses available to it that are different from or additional to those
available to the Mobile Energy Parties, and that representation of the IDB and
the Mobile Energy Parties, by counsel employed by the Mobile Energy Parties,
would be inappropriate under applicable standards of professional conduct (in
which event the Mobile Energy Parties shall not have the right to assume the
defense of such action on behalf of the IDB). The Mobile Energy Parties shall
not be liable for any settlement of any such action affected without their
consent, but if settled with the consent of the Mobile Energy Parties or if
there is a final judgment for the plaintiff in any such action, the Mobile
Energy Parties will indemnify and hold harmless the IDB from and against any
loss or liability by reason of such settlement or judgment.
The term "IDB" in this Section 6.2 includes its members,
officers, agents, employees and attorneys, in each case to the extent acting for
or on behalf of the IDB.
The Mobile Energy Parties agree to indemnify each Authorized
Agent for, and to hold each of them harmless against, any loss, liability or
expense incurred without negligence or bad faith on any of their parts arising
out of or in connection with any of their duties under the Lease Documents,
including each of their costs and expenses of defending themselves against any
claim or liability in connection with the exercise or performance of any of
their powers or duties thereunder. Insofar as such provisions may be applicable,
each Authorized Agent shall enjoy the same protective provisions in the
performance of their respective duties as are specified in Section 9.3 of the
Tax-Exempt Indenture with respect to the Tax-Exempt Indenture Trustee. The
provisions of this Section 6.2 shall survive the defeasance or termination of
the Tax-Exempt Indenture.
The Mobile Energy Parties hereby irrevocably waive any claim
that they may otherwise have at any time against the Tax- Exempt Indenture
Trustee in the event that the Tax-Exempt Indenture Trustee shall (a) at the
direction of Holders of not less than such percentage in principal amount of
Tax-Exempt Indenture Securities as is specified in the Tax-Exempt Indenture, in
accordance
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therewith, declare the Tax-Exempt Indenture Securities to be due and payable or
(b) when so directed, take any other action required to be taken by it under the
Tax-Exempt Indenture at the direction of Holders of Tax-Exempt Indenture
Securities.
SECTION 6.3 Payment of Expenses; Obligations under Tax- Exempt
Indenture. The Mobile Energy Parties shall pay, or cause to be paid, all
administration expenses and any out-of-pocket expenses of the IDB incurred in
the performance of this Agreement and the other Lease Documents, including (a)
the reasonable fees of its counsel, the Independent Engineer, the Independent
Insurance Advisor, or any other consultant or advisor retained by the IDB in
connection with the performance of its duties under the Lease Documents and (b)
the expenses of the Tax-Exempt Indenture Trustee in connection with any actions
taken by the Tax-Exempt Indenture Trustee to enforce any of the Lease Documents,
including the reasonable fees and expenses of its counsel, the Independent
Engineer, the Independent Insurance Advisor or any other consultant or advisor
retained by the Tax-Exempt Indenture Trustee in connection with the performance
of its duties under the Lease Documents, and agrees to perform all obligations
set forth in the Tax-Exempt Indenture to be performed by the Mobile Energy
Parties or by the Mobile Energy Parties on behalf of the IDB.
SECTION 6.4 Financing Statements. The Mobile Energy Parties
shall file or cause to be filed all financing statements and continuation
statements necessary to perfect the security interest of the Tax-Exempt
Indenture Trustee in this Agreement and the Collateral Agent in the Revenues and
the other Tax-Exempt Indenture Collateral.
SECTION 6.5 Limited Liability of IDB. THE TAX-EXEMPT INDENTURE
SECURITIES ARE LIMITED OBLIGATIONS OF THE IDB, PAYABLE SOLELY FROM THE REVENUES
AND RECEIPTS DERIVED FROM, AND CERTAIN ACCOUNTS CREATED UNDER, THIS AGREEMENT,
THE TAX-EXEMPT INDENTURE AND THE INTERCREDITOR AGREEMENT. THE TAX-EXEMPT
INDENTURE SECURITIES DO NOT AND SHALL NEVER CONSTITUTE AN INDEBTEDNESS OR OTHER
LIABILITY OF THE STATE OF ALABAMA, THE CITY OF MOBILE, ALABAMA OR ANY POLITICAL
SUBDIVISION OF THE STATE OF ALABAMA, WITHIN THE MEANING OF ANY CONSTITUTIONAL OR
STATUTORY PROVISION WHATSOEVER. NEITHER THE FULL FAITH OR CREDIT OF THE STATE OF
ALABAMA OR THE CITY OF MOBILE, ALABAMA, NOR ANY OTHER POLITICAL SUBDIVISION OF
THE STATE OF ALABAMA, NOR THE IDB, WILL BE PLEDGED TO THE PAYMENT OF THE
TAX-EXEMPT INDENTURE OR THE INTEREST THEREON, AND THE ISSUANCE OF THE TAX-EXEMPT
INDENTURE SECURITIES WILL NOT DIRECTLY, INDIRECTLY OR CONTINGENTLY OBLIGATE THE
STATE OF ALABAMA, THE CITY OF MOBILE, ALABAMA OR ANY OTHER POLITICAL SUBDIVISION
OF THE STATE OF ALABAMA TO APPLY MONEY FOR, OR TO LEVY OR PLEDGE ANY FORM OF
TAXATION WHATEVER TO THE PAYMENT OF, THE PRINCIPAL OF OR PREMIUM, IF ANY, OR
INTEREST ON THE TAX-EXEMPT INDENTURE SECURITIES. THE IDB HAS NO TAXING POWER.
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SECTION 6.6 Recording and Filing; Further Instruments. (a) The
Mobile Energy Parties will cause to be filed all necessary financing statements
related to this Agreement and the Tax-Exempt Indenture and all supplements
hereto and thereto, and such other documents as may be, in the opinion of
counsel reasonably acceptable to the Tax-Exempt Indenture Trustee, reasonably
necessary to be kept and filed in such manner and in such places as may be
required by law in order to preserve and protect fully the security of the
owners of the Tax-Exempt Indenture Securities and the rights of the Tax-Exempt
Indenture Trustee hereunder and under the Tax-Exempt Indenture.
(b) The IDB shall, upon the reasonable request of the
Tax-Exempt Indenture Trustee or either of the Mobile Energy Parties, from time
to time execute and deliver such further instruments and take such further
action as may be reasonable and as may be required to effectuate the purposes of
this Agreement and the Tax-Exempt Indenture or any provision hereof or thereof;
provided, however, that no such instruments or actions shall pledge the general
credit or the full faith of the IDB, the City of Mobile, the State of Alabama or
any other municipality or political subdivision thereof, or the taxing power of
the City of Mobile, Alabama, the State of Alabama or any other municipality or
political subdivision thereof.
ARTICLE VII.
EVENTS OF DEFAULT; REMEDIES
SECTION 7.1 Events of Default. The term "Event of Default,"
whenever used herein, shall mean any of the following events (whatever the
reason for such event and whether it shall be voluntary or involuntary or come
about or be affected by operation of law, or be pursuant to or in compliance
with any applicable Law), and such event shall continue to be an Event of
Default if and for so long as it shall not have been remedied:
(a) the Mobile Energy Parties shall fail to pay any rental
payment required pursuant to Section 2.5 when the same becomes due and
payable, for fifteen (15) or more days; or
(b) either of the Mobile Energy Parties shall fail to perform
or observe any covenant or agreement contained in: (i) Section 4.4(e);
(ii) Section 4.7(b) (insofar as such failure relates to matters
specified in Section 4.8(b)(iv)); (iii) Section 4.8(b) (other than
clause (v) thereof); (iv) Section 4.10; or (v) Section 4.19; or
(c) either of the Mobile Energy Parties shall fail to
perform or observe any covenant or agreement contained in: (i)
Section 4.2; (ii) Section 4.4(a); (iii) Section 4.5; (iv)
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Section 4.7(a); (v) Section 4.7(b) (insofar as such failure would
reasonably be expected to have a Material Adverse Effect or relates to
matters specified in Section 4.8(b)(v)); (vi) Section 4.8(a), 4.8(b)(v)
or 4.8(c); (vii) Section 4.13; (viii) Section 4.14; (ix) Section 4.15;
(x) Section 4.16; (xi) Section 3(e), 3(f), 3(g), 3(h), 3(i) or 3(j) of
the Security Agreement; or (xii) Section 8, 10, 13, 14 or 15 of the
Mortgage; and, in the case of clauses (i) through (xii) above, such
failure shall continue uncured for thirty (30) or more days after
either of the Mobile Energy Parties has knowledge of such failure; or
(d) either of the Mobile Energy Parties shall fail to perform
or observe any covenant or agreement contained in: (i) Section 4.4(b);
or (ii) Section 4.7(b) (insofar as such failure relates to matters
specified in Section 4.8(b)(i) or 4.8(b)(iii)); and, in the case of
clauses (i) and (ii) above, such failure continues for more than thirty
(30) days after either of the Mobile Energy Parties has knowledge of
such failure; provided, however, that if (and for so long as an
Authorized Officer of either of the Mobile Energy Parties provides an
Officer's Certificate certifying that) (A) such failure is capable of
being remedied and either of the Mobile Energy Parties is diligently
attempting to remedy such failure, (B) no other Event of Default has
occurred and is continuing and (C) such failure would not have a
Material Adverse Effect, then either of the Mobile Energy Parties may
continue to effect such cure of the default for an additional sixty
(60) days; or
(e) either of the Mobile Energy Parties shall fail to perform
or observe any material covenant or agreement to be performed or
observed by it under the provisions of this Agreement, the Tax-Exempt
Indenture, the Security Agreement or the Mortgage (other than those
referred to in Sections 7.1(a), (b), (c) and (d)) and such failure
shall continue uncured for thirty (30) or more days after either of the
Mobile Energy Parties has knowledge of such failure; provided, however,
that if (and for so long as an Authorized Officer of either of the
Mobile Energy Parties provides an Officer's Certificate certifying
that) (i) such failure is capable of being remedied and either of the
Mobile Energy Parties is diligently attempting to remedy such failure
and (ii) no other Event of Default has occurred and is continuing, then
either of the Mobile Energy Parties may continue to effect such cure of
the default for an additional one hundred twenty (120) days; or
(f) any representation or warranty made by either of the
Mobile Energy Parties herein or in any other Financing Document or in
any certificate, financial statement or other document furnished to the
Tax-Exempt Indenture Trustee or the Collateral Agent hereunder or
thereunder shall prove to have
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been false or misleading in any respect as of the time made, confirmed
or furnished and the inaccuracy has resulted or would reasonably be
expected to result in a Material Adverse Effect and (if capable of
being cured) such misrepresentation shall continue uncured for thirty
(30) or more days after either of the Mobile Energy Parties has
knowledge thereof; provided, however, that if (and for so long as an
Authorized Officer of either of the Mobile Energy Parties provides an
Officer's Certificate certifying that) (i) such failure is capable of
being remedied and either of the Mobile Energy Parties is diligently
attempting to remedy such misrepresentation and (ii) no other Event of
Default has occurred and is continuing, either of the Mobile Energy
Parties may continue to effect such cure of the misrepresentation, and
such misrepresentation shall not be deemed an Event of Default, for an
additional sixty (60) days; provided further, however, that if (and for
so long as) (A) an Authorized Officer of either of the Mobile Energy
Parties provides an Officer's Certificate certifying that such
misrepresentation will not have a Material Adverse Effect and (B) the
Tax-Exempt Indenture Trustee consents thereto, then either of the
Mobile Energy Parties may continue to effect such cure of the
misrepresentation beyond such additional sixty (60) days; or
(g) either of the Mobile Energy Parties shall fail to perform
any obligation in respect of any Debt in an amount exceeding $5,000,000
and acceleration shall be declared with respect to such Debt; or
(h) with respect to any Project Contract to which the Company
is a party: (i) such Project Contract is declared unenforceable by a
Governmental Authority; (ii) any other party thereto terminates such
Project Contract prior to its stated expiration or denies it has an
obligation and substantially ceases performance thereunder (other than,
in either case, in connection with a Mill Closure with respect to the
Tissue Mill or the Paper Mill, if the Company has provided the Revenue
Sufficiency Certification to the Collateral Agent); or (iii) any other
party thereto defaults in respect of its obligations under such Project
Contract; and, in the case of any event described in clauses (i), (ii)
and (iii) above (other than with respect to the Pulp Mill Energy
Services Agreement), such event would result in a Material Adverse
Effect; provided, however, that none of such events shall be an Event
of Default hereunder if within one hundred eighty (180) days from the
occurrence of such an event, the Company shall have provided an
Officer's Certificate certifying, together with an Independent Engineer
Confirmation, to the Tax-Exempt Indenture Trustee that (A) such Project
Contract and (if such Project Contract is an Energy Service Agreement)
the applicable Mill Owner's
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obligations under the Master Operating Agreement have been reinstated
on identical terms pursuant to the provisions of the Master Operating
Agreement, provided that if the obligor thereunder is different from
the obligor prior to such reinstatement, such obligor is reasonably
capable of performing its obligations under such Project Contract or
(B) the Company has satisfied the Event of Default Alternative
Agreement Requirements with respect to such Project Contract; or
(i) (i) an Event of Default under any Working Capital Facility
shall have occurred and be continuing and shall not have been waived by
the Working Capital Facility Provider; (ii) an Event of Default under
the Indenture shall have occurred and be continuing and shall not have
been waived by the Indenture Trustee; (iii) an Event of Default under
the Tax-Exempt Indenture shall have occurred and be continuing and
shall not have been waived by the Tax-Exempt Indenture Trustee; or (iv)
an Event of Default under any Security Document shall have occurred and
be continuing and shall not have been waived; or
(j) a final and non-appealable judgment or judgments for the
payment of money in an aggregate amount in excess of $5,000,000 shall
be rendered against either of the Mobile Energy Parties, and the same
shall not be stayed or discharged within thirty (30) days from the date
of entry thereof; or
(k) at any time Southern shall fail to (i) continue to
control, directly or indirectly, the management and operations of the
Company (except if necessary to comply with applicable regulatory
restrictions, including (if the Company elects, or the Members elect,
to qualify the Energy Complex as a Qualifying Facility under PURPA)
those imposed on Qualifying Facilities under PURPA and the rules
promulgated thereunder) or (ii) maintain ownership, directly or
indirectly, of at least fifty percent (50%) of the ownership interests
in the Company; or
(l) at any time the Company shall fail to maintain Southern
Electric or an Affiliate thereof as Operator, unless the Company
provides a letter from any two (2) Rating Agencies (then currently
rating the Outstanding Tax-Exempt Indenture Securities) confirming that
the rating of such Tax-Exempt Indenture Securities will not be
adversely affected by such failure; or
(m) any grant of a Lien contained in the Security Documents
shall cease to be effective to grant a perfected Lien to the Collateral
Agent, the Indenture Trustee or the Tax-Exempt Indenture Trustee (as
the case may be) on the Collateral described therein with the priority
purported to be
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created thereby; provided, however, that the Company shall have ten
(10) days from actual knowledge or constructive knowledge thereof to
cure any such cessation; or
(n) a Bankruptcy Event in respect of either of the
Mobile Energy Parties shall have occurred and be continuing;
or
(o) if any Southern Guaranty is in effect with respect to any
Reserve Account Security Account, a Bankruptcy Event in respect of
Southern shall have occurred and be continuing, unless a Reserve
Account Letter of Credit or cash in the amount of the then Available
Amount under such Southern Guaranty is provided within fifteen (15)
days of such Bankruptcy Event; or
(p) the failure by Southern to perform any of the "Guaranteed
Obligations" under any Southern Guaranty and such failure shall
continue for fifteen (15) or more days.
SECTION 7.2 Enforcement of Remedies. If one (1) or more Events
of Default shall have occurred and be continuing and, in accordance with the
terms of the Tax-Exempt Indenture, the Tax- Exempt Indenture Securities shall
have been declared to be or become immediately due and payable pursuant to any
provision of the Tax-Exempt Indenture, then:
(a) All rental payments hereunder shall, without further
action, become and be immediately due and payable, anything herein to
the contrary notwithstanding. Upon such acceleration of the rental
payments hereunder, the Mobile Energy Parties shall pay an amount
sufficient to enable the Tax-Exempt Indenture Trustee to pay the
aggregate principal amount of the Outstanding Tax-Exempt Indenture
Securities and all interest and premium, if any, on the Tax-Exempt
Indenture Securities then due and to become due to the date of payment
of the Tax-Exempt Indenture Securities. In addition, the Mobile Energy
Parties shall pay all fees and expenses of the Tax-Exempt Indenture
Trustee accrued and to accrue through the date of such acceleration,
including the reasonable fees and expenses of counsel to the Tax-Exempt
Indenture Trustee. The Tax-Exempt Indenture Trustee shall rescind any
such declaration of acceleration of the rental payments under this
Agreement concurrently with any rescission of acceleration of the
Tax-Exempt Indenture Securities pursuant to Section 8.2 of the
Tax-Exempt Indenture.
(b) The Collateral Agent, on behalf of the Tax-Exempt
Indenture Trustee and the other Senior Secured Parties, may exercise
through the Collateral Agent all remedies provided in the Mortgage, the
Security Agreement and the Intercreditor
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Agreement, subject to the terms of the Intercreditor Agreement.
(c) The Tax-Exempt Indenture Trustee, on behalf of the IDB,
may inspect, examine and make copies of the books and records and any
and all accounts and data of the Mobile Energy Parties relating to the
use and operation of the Energy Complex.
(d) Subject to the provisions of the Intercreditor Agreement
and to the extent not prohibited by applicable Law, the Tax-Exempt
Indenture Trustee, on behalf of the IDB, may take all other actions and
pursue all other remedies available under any other contract or
agreement or otherwise by statute, at Law or in equity, whether or not
inconsistent with the foregoing, that may appear necessary or
appropriate to collect the sums then due and thereafter to become due
from the Mobile Energy Parties by reason of this Agreement, or to
enforce specific performance and observance of any obligation,
agreement or contract of the Mobile Energy Parties under this
Agreement.
Any amounts collected pursuant to action taken pursuant to this Section 7.2
shall be applied in accordance with the provisions of the Tax-Exempt Indenture.
SECTION 7.3 Remedies Cumulative; Delay or Omission Not a
Waiver. To the extent permitted by law each and every right, power and remedy
herein specifically given to the IDB (or the Tax- Exempt Indenture Trustee
acting on its behalf) shall be cumulative and shall be in addition to every
other right, power and remedy herein specifically given or now or hereafter
existing at law, in equity or by statute, and each and every right, power and
remedy whether specifically herein given or otherwise existing may be exercised
from time to time and as often and in such order as may be deemed expedient by
the IDB (or the Tax-Exempt Indenture Trustee acting on its behalf) and the
exercise or the beginning of the exercise of any right, power or remedy shall
not be construed to be a waiver of the right to exercise at the same time or
thereafter any other right, power or remedy, and no delay or omission by the IDB
(or the Tax-Exempt Indenture Trustee acting on its behalf) in the exercise of
any right, power or remedy or in the pursuance of any remedy shall impair any
such right, power or remedy or be construed to be a waiver by the IDB (or the
Tax-Exempt Indenture Trustee acting on its behalf) of any default on the part of
either of the Mobile Energy Parties or to be an acquiescence therein. (In order
to entitle the IDB to exercise any remedy reserved to it in this Article VII, it
shall not be necessary to give any notice, other than such notice as may be
herein expressly required. Such rights and remedies as are granted the IDB
hereunder shall also extend to the Tax-Exempt Indenture Trustee, and the
Tax-Exempt Indenture Trustee and the Holders of Tax-Exempt Indenture
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Securities shall be deemed to be third party beneficiaries of all covenants and
agreements herein contained.)
SECTION 7.4 Reimbursement of Attorneys' Fees. If
either of the Mobile Energy Parties shall default under any of the
provisions hereof and the IDB or the Tax-Exempt Indenture Trustee
shall employ attorneys or incur other reasonable expenses for the
collection of payments due hereunder or for the enforcement of
performance or observance of any obligation or agreement on the
part of the Mobile Energy Parties contained herein, the Mobile
Energy Parties will on demand therefor reimburse the IDB or the
Tax-Exempt Indenture Trustee, as the case may be, for the
reasonable fees of such attorneys and such other reasonable
expenses so incurred.
SECTION 7.5 Waiver of Breach. In the event any obligation
created hereby shall be breached by any of the parties and such breach shall
thereafter be waived, such waiver shall be limited to the particular breach so
waived and shall not be deemed to waive any other breach hereunder. In view of
the assignment of certain of the IDB's rights and interest hereunder to the Tax-
Exempt Indenture Trustee, the IDB shall have no power to waive any default
hereunder by the Mobile Energy Parties in respect of such rights and interest
without the consent of the Tax-Exempt Indenture Trustee, and the Tax-Exempt
Indenture Trustee may exercise any of the rights of the IDB hereunder.
SECTION 7.6 Unforeseen Requirements. The Mobile Energy Parties
may take any action under this Agreement, whether or not specifically stated
herein, without the consent of Holders of the Tax-Exempt Indenture Securities
but with the consent of the Tax-Exempt Indenture Trustee and Bond Counsel to (a)
avoid a potential Determination of Taxability or (b) obtain, upgrade or maintain
any rating of the Tax-Exempt Indenture Securities.
SECTION 7.7 Intercreditor Agreement. Simultaneously
with the execution and delivery of this Agreement, the IDB and the
Tax-Exempt Indenture Trustee shall enter into the Intercreditor
Agreement on behalf of itself and, in the case of the Tax-Exempt
Indenture Trustee, all Holders of any of the Outstanding Tax-Exempt
Securities and all future Holders of Tax-Exempt Indenture
Securities. Notwithstanding any other provision of this Agreement
to the contrary, all rights, powers and remedies available to the
Tax-Exempt Indenture Trustee, the IDB, the Holders of any of the
Outstanding Tax-Exempt Indenture Securities and all future Holders
of any of the Tax-Exempt Indenture Securities or the Tax-Exempt
Indenture Trustee, with respect to the Shared Collateral, or
otherwise pursuant to the Security Documents, shall be subject to
the Intercreditor Agreement, including, in all cases, the ability
to enforce any remedy other than remedies specified in Section 7.2
of this Agreement. To the extent that the Collateral Agent has
been authorized to exercise any such rights, powers and remedies
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under the Intercreditor Agreement, any right given to the Tax- Exempt Indenture
Trustee hereunder to exercise any remedy with respect to the Shared Collateral
shall, during such time as the Intercreditor Agreement is in effect, be a right
of the Tax-Exempt Indenture Trustee to direct the Collateral Agent to take such
action to the extent set forth in the Intercreditor Agreement.
ARTICLE VIII.
GUARANTY
SECTION 8.1 Guaranty of Payment and Performance. Mobile Energy
hereby (a) guarantees to the IDB for its own benefit and the benefit of the
Tax-Exempt Indenture Trustee and the Holders of Tax-Exempt Indenture Securities
from time to time the due and punctual payment, observance and performance of
all of the Guaranteed Obligations in accordance with their respective terms and
when and as due (whether at maturity of the Tax-Exempt Indenture Securities, by
reason of acceleration or otherwise), or deemed to be due pursuant to Section
8.2, and (b) agrees so to pay, observe or perform the same when so due, or
deemed to be due, upon demand.
SECTION 8.2 Continuance and Acceleration of Guaranteed
Obligations upon Certain Events. If (a) any Event of Default described in
Section 7.1(n) shall have occurred and be continuing, (b) any injunction, stay
or the like that enjoins any acceleration, or demand for the payment, observance
or performance, of any Guaranteed Obligations that would otherwise be required
or permitted under the Security Documents shall become effective or (c) any
Guaranteed Obligations shall be or be determined to be or become discharged,
disallowed, invalid, illegal, void or otherwise unenforceable (whether by
operation of any present or future law or by order of any Governmental
Authority) against the Company then (i) such Guaranteed Obligations shall, for
all purposes of this Agreement, be deemed (A) in the case of clause (c) above,
to continue to be outstanding and in full force and effect notwithstanding the
unenforceability thereof against the Company, and (B) if such is not already the
case, to have thereupon become immediately due and payable and to have commenced
bearing interest at the rate equal to the then highest yield on any of the
Outstanding Securities plus two percent (2%) and (ii) the IDB may, with respect
to such Guaranteed Obligations, exercise all of the rights and remedies
hereunder that would be available to it during an Event of Default.
SECTION 8.3 Recovered Payments. The Guaranteed Obligations
shall be deemed not to have been paid, observed or performed, and Mobile
Energy's obligations under this Guaranty in respect thereof shall continue and
not be discharged, to the extent that any payment, observance or performance
thereof by the Company
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or any other guarantor, or out of the proceeds of any collateral, is recovered
from or paid over by or for the account of the IDB or the Tax-Exempt Indenture
Trustee for any reason, including as a preference or fraudulent transfer or by
virtue of any subordination (whether present or future or contractual or
otherwise) of the Guaranteed Obligations, whether such recovery or payment over
is effected by any judgment, decree or order of any Governmental Authority, by
any plan of reorganization or by settlement or compromise by the IDB or the
Tax-Exempt Indenture Trustee (whether or not consented to by either of the
Mobile Energy Parties or any other guarantor) of any claim for any such recovery
or payment over. To the extent not prohibited by applicable Law, Mobile Energy
hereby expressly waives the benefit of any applicable statute of limitations and
agrees that it shall be liable hereunder with respect to any Guaranteed
Obligation whenever such a recovery or payment over thereof occurs.
SECTION 8.4 Evidence of Guaranteed Obligations. The records of
the Tax-Exempt Indenture Trustee shall be conclusive evidence (absent manifest
error) of the Guaranteed Obligations and of all payments, observances and
performances in respect thereof.
SECTION 8.5 Binding Nature of Certain Adjudications. Mobile
Energy shall be conclusively bound by the adjudication in any action or
proceeding, legal or otherwise, involving any controversy arising under, in
connection with, or in any way related to, any of the Guaranteed Obligations,
and by a judgment, award or decree entered therein, if Mobile Energy shall have
had the right, or shall have been given the opportunity, to participate in such
action or proceeding and shall have been given notice of such action or
proceeding in time to exercise such right or avail itself of such opportunity.
SECTION 8.6 Nature of Mobile Energy's Obligations. Mobile
Energy's obligations hereunder (a) are absolute and unconditional, (b) are
unlimited in amount, (c) constitute a guaranty of payment and performance and
not a guaranty of collection, (d) are as primary obligor and not as a surety
only, (e) shall be a continuing guaranty of all present and future Guaranteed
Obligations and all promissory notes and other documentation given in extension
or renewal or substitution for any of the Guaranteed Obligations and (f) shall
be irrevocable.
SECTION 8.7 No Release of Mobile Energy. The
obligations of Mobile Energy under this Guaranty shall not be
reduced, limited or terminated, nor shall Mobile Energy be
discharged from any thereof, for any reason whatsoever (other than,
subject to Sections 8.3 and 8.12, the payment, observance and
performance of the Guaranteed Obligations), including (and whether
or not the same shall have occurred or failed to occur once or more
than once and whether or not Mobile Energy shall have received
notice thereof): (a) (i) any increase in the principal amount of,
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or interest rate applicable to, (ii) any extension of the time of payment,
observance or performance of, (iii) any other amendment or modification of any
of the other terms and provisions of, (iv) any release, composition or
settlement (whether by way of acceptance of a plan of reorganization or
otherwise) of, (v) any subordination (whether present or future or contractual
or otherwise) of or (vi) any discharge, disallowance, invalidity, illegality,
voidness or other unenforceability of, in each case the Guaranteed Obligations;
(b) (i) any failure to obtain any release, composition or settlement of, (ii)
any amendment or modification of any of the terms and provisions of, (iii) any
subordination of or (iv) any discharge, disallowance, invalidity, illegality,
voidness or other unenforceability of, in each case any guaranties of the
Guaranteed Obligations; (c) (i) any failure to obtain any release of, (ii) any
failure to protect or preserve, (iii) any release, compromise, settlement or
extension of the time of payment of any obligations constituting, (iv) any
failure to perfect or maintain the perfection or priority of any Lien upon, (v)
any subordination of any Lien upon or (vi) any discharge, disallowance,
invalidity, illegality, voidness or other unenforceability of any Lien or
intended Lien upon, in each case any collateral now or hereafter securing the
Guaranteed Obligations or any other guaranties thereof; (d) any termination of
or change in any relationship between Mobile Energy and the Company, including
any such termination or change resulting from a change in the ownership of
Mobile Energy or the Company or from the cessation of any commercial
relationship between Mobile Energy and the Company; (e) any exercise of, or any
election not or failure to exercise, delay in the exercise of, waiver of, or
forbearance or other indulgence with respect to, any right, remedy or power
available to the IDB or the Tax-Exempt Indenture Trustee, including (i) any
election not or failure to exercise any right of setoff, recoupment or
counterclaim, (ii) any election of remedies effected by the IDB or the
Tax-Exempt Indenture Trustee, including the foreclosure upon any real estate
constituting collateral, whether or not such election affects the right to
obtain a deficiency judgment and (iii) any election by the IDB or the Tax-Exempt
Indenture Trustee in any proceeding under the Bankruptcy Code of the application
of Section 1111(b)(2) of such Code; and (f) any other act or failure to act or
any other event or circumstance that (i) varies the risk of Mobile Energy under
this Guaranty or (ii) but for the provisions hereof, would, as a matter of
statute or rule of law or equity, operate to reduce, limit or terminate the
obligations of Mobile Energy hereunder or discharge Mobile Energy from any
thereof.
SECTION 8.8 Certain Waivers. Mobile Energy waives (a) any
requirement, and any right to require, that any right or power be exercised or
any action be taken against the Company, any other guarantor or any collateral
for the Guaranteed Obligations or any guaranty thereof, (b) all defenses to, and
all setoffs, counterclaims and claims of recoupment against, the Guaranteed
Obligations that may at any time be available to the Company or any
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guarantor, (c) (i) notice of acceptance of and intention to rely on this
Guaranty, (ii) notice of the issuance of any Tax-Exempt Indenture Securities
under the Tax-Exempt Indenture and of the incurrence or renewal of any other
Guaranteed Obligations, (iii) notice of any of the matters referred to in
Section 8.7 and (iv) all other notices that may be required by Law or otherwise
to preserve any rights against Mobile Energy under this Guaranty, including any
notice of default, demand, dishonor, presentment and protest, (d) diligence, (e)
any defense based upon, arising out of or in any way related to (i) any claim
that any sale or other disposition of any collateral for the Guaranteed
Obligations or any guaranty thereof was not conducted in a commercially
reasonable fashion or that a public sale, should the IDB, the Tax-Exempt
Indenture Trustee or the Collateral Agent (as the case may be), have elected to
so proceed, was, in and of itself, not a commercially reasonable method of sale,
(ii) any claim that any election of remedies by the IDB, the Tax-Exempt
Indenture Trustee or the Collateral Agent (as the case may be) including the
exercise by the IDB, the Tax-Exempt Indenture Trustee or the Collateral Agent
(as the case may be), of any rights against any collateral, impaired, reduced,
released or otherwise extinguished any right that Mobile Energy might otherwise
have had against the Company or any other guarantor or against any collateral,
including any right of subrogation, exoneration, reimbursement or contribution
or right to obtain a deficiency judgment, (iii) any claim based upon, arising
out of or in any way related to any of the matters referred to in Section 8.7
and (iv) any claim that this Guaranty should be strictly construed against the
Tax-Exempt Indenture Trustee and (f) ALL OTHER DEFENSES UNDER APPLICABLE LAW
THAT WOULD, BUT FOR THIS CLAUSE (f), BE AVAILABLE TO MOBILE ENERGY AS A DEFENSE
AGAINST OR A REDUCTION OR LIMITATION OF ITS OBLIGATIONS HEREUNDER.
SECTION 8.9 Independent Credit Evaluation. Mobile
Energy has independently, and without reliance on any information
supplied by the IDB or the Tax-Exempt Indenture Trustee, taken, and
will continue to take, whatever steps it deems necessary to
evaluate the financial condition and affairs of the Company, and
the IDB and the Tax-Exempt Indenture Trustee shall have no duty to
advise Mobile Energy of information at any time known to them
regarding such financial condition or affairs.
SECTION 8.10 Subordination of Rights Against Company, Other
Guarantors and Collateral. All rights that Mobile Energy may at any time have
against the Company, any other guarantor or any collateral for the Guaranteed
Obligations or any guaranty thereof (including rights of subrogation,
exoneration, reimbursement and contribution and whether arising under Law or
otherwise), and all obligations that the Company or any other guarantor may at
any time have to Mobile Energy, Mobile Energy's obligations hereunder or any
payment made are hereby expressly subordinated to the prior payment, observance
and performance in full of the Guaranteed Obligations and any other such
guaranty. Mobile Energy shall not
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enforce any of the rights, or attempt to obtain payment or performance of any of
the obligations, subordinated pursuant to this Section 8.10 until the Guaranteed
Obligations have been paid, observed and performed in full, except that such
prohibition shall not apply to routine acts, such as the giving of notices and
the filing of continuation statements, necessary to preserve any such rights. If
any amount shall be paid to or recovered by Mobile Energy (whether directly or
by way of setoff, recoupment or counterclaim) on account of any right or
obligation subordinated pursuant to this Section 8.10, such amount shall be held
in trust by Mobile Energy for the benefit of the IDB and the Tax-Exempt
Indenture Trustee, not commingled with any of Mobile Energy's other funds and
forthwith paid over to the Tax-Exempt Indenture Trustee, in the exact form
received, together with any necessary endorsements, to be applied and credited
against, or held as security for, the Guaranteed Obligations and the obligations
of Mobile Energy hereunder. Notwithstanding the foregoing, nothing herein shall
restrict or otherwise limit the ability of Mobile Energy to receive monies
distributed to it by the Collateral Agent pursuant to Section 3.11 of the
Intercreditor Agreement, which monies need not be held in trust by Mobile
Energy.
SECTION 8.11 Payments by Mobile Energy. (a) All
payments due to the IDB or the Tax-Exempt Indenture Trustee
hereunder shall be made to the Tax-Exempt Indenture Trustee at the
Corporate Trust Office or at such other address the Tax-Exempt
Indenture Trustee may designate by notice to Mobile Energy. A
payment shall not be deemed to have been made on any day unless
such payment has been received by the Tax-Exempt Indenture Trustee
at the required place of payment, in lawful money of the United
States of America in funds immediately available to the Tax-Exempt
Indenture Trustee.
(b) All payments due the IDB or the Tax-Exempt Indenture
Trustee under this Guaranty, and all of the other terms, conditions, covenants
and agreements to be observed and performed by Mobile Energy under this
Guaranty, shall be made, observed or performed by Mobile Energy without any
reduction or deduction whatsoever, including any reduction or deduction for any
set-off, recoupment, counterclaim (whether, in any case, in respect of an
obligation owed by the IDB or the Tax-Exempt Indenture Trustee to Mobile Energy,
the Company or any other guarantor and, in the case of a counterclaim, whether
sounding in tort, contract or otherwise) or tax.
(c) Mobile Energy hereby authorizes the Tax-Exempt Indenture
Trustee, if and to the extent any amount payable by Mobile Energy under this
Guaranty is not otherwise paid when due, to charge such amount against any or
all of the accounts of Mobile Energy with the Tax-Exempt Indenture Trustee or
any of its Affiliates (whether maintained at a branch or office located within
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or without the United States), with Mobile Energy remaining liable
for any deficiency.
(d) Whenever any payment to the IDB or the Tax-Exempt
Indenture Trustee under this Article VIII would otherwise be due (except by
reason of acceleration) on a day that is not a Business Day, such payment shall
instead be due on the next succeeding Business Day. If the date any payment
hereunder is due is extended (whether by operation of this Agreement, Law or
otherwise), such payment shall bear interest for such extended time at the rate
of interest applicable hereunder.
SECTION 8.12 Continuance of Guaranty; Survival. The
obligations of Mobile Energy and the rights of the IDB and the Tax- Exempt
Indenture Trustee under Article VIII of this Agreement shall continue in full
force and effect until the payment, observance and performance in full of the
Guaranteed Obligations.
SECTION 8.13 Assignments and Participations; Assignments.
Mobile Energy may not assign any of its rights or obligations under this
Guaranty without the prior written consent of the Tax-Exempt Indenture Trustee,
and no assignment of any such obligation shall release Mobile Energy therefrom
unless the Tax- Exempt Indenture Trustee shall have consented to such release in
a writing specifically referring to the obligation from which Mobile Energy is
to be released.
SECTION 8.14 Benefit and Enforcement. This Guaranty is given
for the benefit of the IDB, the Tax-Exempt Indenture Trustee and, subject to the
terms and conditions set forth herein, the Holders from time to time of the
Tax-Exempt Indenture Securities, all of whom shall be entitled in the same
manner as set forth herein to enforce performance and observance of this
Guaranty.
ARTICLE IX.
LIMITED RECOURSE
Satisfaction of the obligations of the Mobile Energy Parties
(including pursuant to the Guaranty) under this Agreement for the making of
rental payments, or any part thereof, or for any claim based thereon or
otherwise in respect thereof or related thereto, shall be had solely from the
assets of the Mobile Energy Parties. No recourse shall be had to (a) any assets
or properties of the Members (other than Mobile Energy as provided in Article
VIII) or of the stockholders of Mobile Energy, other than their respective
interests in the Tax-Exempt Securities Collateral, if any, (b) any Member (other
than Mobile Energy as provided in Article VIII) or (c) any Affiliate,
incorporator, stockholder, partner, member, officer, director or employee of any
Member or of the Company (other than the Mobile Energy Parties and, in respect
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of any Southern Guaranty on deposit in the Maintenance Plan Funding Subaccount
or the Distribution Account, Southern) and in the event of any non-performance
by either of the Company or Mobile Energy of its obligation to make rental
payments, or any part thereof, or for any claim based thereon or otherwise in
respect thereof, no judgment for any deficiency upon the obligations of either
of the Company or Mobile Energy under this Agreement, for the making of rental
payments, or any part thereof, or for any claim based thereon or otherwise in
respect thereof or related thereto, shall be obtainable by the IDB, the Holders,
the Tax-Exempt Indenture Trustee or the Collateral Agent against any Member
(other than Mobile Energy as provided in Article VIII) or any Affiliate,
incorporator, stockholder, partner, member, officer, director or employee of any
Member or of the Company (other than the Mobile Energy Parties and, in respect
of any Southern Guaranty on deposit in the Maintenance Plan Funding Subaccount
or the Distribution Account, Southern). Notwithstanding anything in this Article
IX to the contrary, (i) satisfaction of the Guaranteed Obligations 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 to the
extent such assets are not commingled with any of Mobile Energy's other assets
or any monies or assets of the Company, (ii) nothing contained herein, in the
Tax-Exempt Indenture or in the Tax-Exempt Indenture Securities shall limit or
otherwise prejudice in any way the right of the IDB, the Tax-Exempt Indenture
Trustee, the Collateral Agent or any Holder to proceed against any Person
whomsoever (A) with respect to the enforcement of such Person's obligations
under any Project Document (including the Guaranty and any Southern Guaranty) to
which such Person is a party or limit or otherwise prejudice in any way the
right of the IDB, the Holders, the Tax-Exempt Indenture Trustee or the
Collateral Agent to proceed against such Person with respect to the enforcement
of such obligations or (B) to the extent necessary to realize upon the
Tax-Exempt Indenture Securities Collateral granted hereunder or under the
Security Documents and (iii) any limitations of liability herein shall not apply
to any Person if and to the extent that such Person commits fraud or wilful
misrepresentations, including those contained in Officer's Certificates issued
from time to time.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed, and their seals to be hereunto affixed and attested, by their
respective officers thereunto duly authorized as of the day and year first above
written.
[Seal] MOBILE ENERGY SERVICES COMPANY, L.L.C.
Attest:
/s/ By: /s/
Assistant Secretary Name:Christoper J. Kysar
Title: Vice President
[Seal] MOBILE ENERGY SERVICES HOLDINGS, INC.
Attest:
By:
/s/
/s/ Name: Christoper J. Kysar
Assistant Secretary Title:Vice President
[Seal] THE INDUSTRIAL DEVELOPMENT BOARD
OF THE CITY OF MOBILE, ALABAMA
Attest:
By:
/s/
/s/ Name: Clarence M. Boll, Jr.
Secretary Title: Vice President of the Board
of Director
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
I, the undersigned Notary Public in and for said County in
said State, hereby certify that Christopher Kysar whose name as Vice President
of Mobile Energy Services Company, L.L.C., an Alabama limited liability company,
is signed to the foregoing Amended and Restated Lease and Agreement and who is
known to me, acknowledged before me on this day that, being informed of the
contents of the instrument, he, as such officer and with full authority,
executed the same voluntarily for and as the act of said limited liability
company.
Given under my hand and seal this the 23rd day of August,
1995.
/s/ (seal)
Notary Public
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
I, the undersigned Notary Public in and for said County in
said State, hereby certify that Christopher Kysar whose name as Vice President
of Mobile Energy Services Holdings, Inc., an Alabama corporation, is signed to
the foregoing Amended and Restated Lease and Agreement and who is known to me,
acknowledged before me on this day that, being informed of the contents of the
instrument, he, as such officer and with full authority, executed the same
voluntarily for and as the act of said corporation.
Given under my hand and seal this the 23rd day of August,
1995.
/s/ (seal)
Notary Public
<PAGE>
STATE OF ALABAMA )
) ss.:
COUNTY OF MOBILE )
I, the undersigned Notary Public in and for said County in
said State, hereby certify that Clarence Boll, Jr. whose name as Vice Chairman
of The Industrial Development Board of the City of Mobile, Alabama, a public
corporation organized under the laws of the State of Alabama, is signed to the
foregoing Amended and Restated Lease and Agreement and who is known to me,
acknowledged before me on this day that, being informed of the contents of the
instrument, he, as such officer and with full authority, executed the same
voluntarily for and as the act of said public corporation.
Given under my hand and seal this the 17th day of August,
1995.
/s/ (seal)
Notary Public
<PAGE>
Appendix A
DEFINED TERMS
For purposes of any Financing Document (as defined herein), terms used
in such Financing Document (including terms used herein) that are not otherwise
defined therein shall have the following meanings, subject to any provisions
contained in such Financing Document that affect the construction or
interpretation of such terms. Except as otherwise expressly provided in any such
Financing Document, if and to the extent that such Financing Document shall be
amended, restated, supplemented or otherwise modified from time to time pursuant
to the terms and provisions thereof, this Appendix A shall be, or be deemed to
have been, amended, restated, supplemented or otherwise modified concurrently
with the execution and delivery of such amendment, restatement, supplement or
other modification in order to conform the terms herein and therein, mutatis
mutandis, to the terms set forth in or required by such amendment, restatement,
supplement or other modification.
Except as otherwise expressly provided in any such Financing Document:
(a) the terms used in such Financing Document have the
meanings assigned to them in this Appendix A and include the plural as
well as the singular; provided, however, that, in the case of the
Indenture, all such terms that are defined in the Trust Indenture Act,
either directly or by reference therein, have the meanings assigned to
them therein;
(b) (i) all accounting terms not otherwise defined in such
Financing Document have the meanings assigned to them, (ii) all
financial statements and all certificates and reports as to financial
matters required to be delivered to the Collateral Agent or any Senior
Secured Party, or any other Person (as the case may be), under such
Financing Document shall be prepared and (iii) all calculations made
for the purpose of determining compliance with such Financing Document
shall (except as otherwise expressly provided herein) be made, in the
case of clauses (i), (ii) and (iii) above, in accordance with, or by
application of, GAAP applied on a basis consistent (except
inconsistencies that are disclosed in writing to the Collateral Agent
or any Senior Secured Party, or any other Person (as the case may be),
and are in accordance with GAAP as certified by a firm of independent
certified public accountants of recognized national standing) with that
used in the preparation of the then most recent corresponding financial
statements furnished under such Financing Document to the Collateral
Agent or any Senior Secured Party, or any other Person (as the case may
be);
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(c) all references in such Financing Document to any
designated "Article," "Section," "Appendix," "Schedule," "Exhibit" and
other subdivision are to the designated Article, Section, Appendix,
Schedule, Exhibit and other subdivision, respectively, of such
Financing Document;
(d) all references in such Financing Document to (i) the words
"herein," "hereof" and "hereunder" and other words of similar import
refer to such Financing Document as a whole and not to any particular
Article, Section or other subdivision and (ii) the term "this
Agreement" or "this Indenture" means such Financing Document as a
whole, including Appendices, Schedules and Exhibits thereto;
(e) all references in such Financing Document to any Project
Document or other Contract defined or referred to therein shall include
such Contract (and, in the case of the Senior Securities or any other
instrument, any other instrument issued in substitution therefor) as
the terms thereof may have been or may be amended, supplemented, waived
or otherwise modified, or as such Contract may have been replaced
(including (i) in the case of an Energy Services Agreement or the
Master Operating Agreement, any replacement Contract therefor then
satisfying the Restricted Payment Alternative Agreement Requirements
with respect thereto and (ii) in the case of any Project Contract, any
replacement Contract therefor then satisfying the Event of Default
Alternative Agreement Requirements with respect thereto), from time to
time;
(f) all references in such Financing Document to any Person
(including any of its capacities) shall include the permitted
successors and assigns of such Person (including in such capacity) in
accordance with the terms of such Financing Document and the other
Project Documents and, in the case of any Governmental Authority, any
Person succeeding to its functions and capacities;
(g) all references in such Financing Document to any Law shall
include such Law or any successor Law as amended, supplemented or
otherwise modified and in effect from time to time, and any other Law
in substance substituted therefor;
(h) any item or list of items set forth following the word
"including," "include" or "includes" in such Financing Document is set
forth only for the purpose of indicating that, regardless of whatever
other items are in the category in which such item or items are
"included," such item or items are in such category, and shall not be
construed as indicating that the items in the category in which such
item or items are "included" are limited to such item or items similar
to such items;
(i) all references in such Financing Document to the
Collateral Agent, the Indenture Trustee, the Tax-Exempt
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Indenture Trustee, the IDB or the Working Capital Facility Provider
shall be deemed to refer to each such Person however designated in the
Financing Documents so that (i) references to rights or duties of the
Collateral Agent under such Financing Document shall be deemed to
include the rights or duties of such Person as the "Secured Party"
under the Security Agreement and as the "Mortgagee" under the Mortgage,
(ii) references to rights or duties of the Indenture Trustee under such
Financing Document shall be deemed to include the rights or duties of
such Person as a "Senior Secured Party" under the Intercreditor
Agreement, (iii) references to rights or duties of the Tax-Exempt
Indenture Trustee under such Financing Document shall be deemed to
include the rights or duties of such Person as a "Senior Secured Party"
under the Intercreditor Agreement and (iv) references to rights or
duties of the Working Capital Facility Provider under such Financing
Document shall be deemed to include the rights or duties of such Person
as a "Senior Secured Party" under the Intercreditor Agreement;
provided, however, that, if such Financing Document is (A) the Security
Agreement, references to rights or duties of the "Secured Party"
thereunder shall be deemed to include the rights or duties of such
Person as the Collateral Agent, (B) the Mortgage, references to rights
or duties of the "Mortgagee" thereunder shall be deemed to include the
rights or duties of such Person as the Collateral Agent and (C) the
Working Capital Facility, references to rights or duties of the "Agent"
thereunder or a Lender shall be deemed to include the rights or duties
of such Person as the Working Capital Facility Provider;
(j) all terms defined in such Financing Document shall have
the meanings therein ascribed to them when used in any certificate,
opinion or other document delivered pursuant thereto and, in the case
of the Indenture and the Tax-Exempt Indenture, in the Senior
Securities;
(k) all references in such Financing Document to the knowledge
of any Person that is a corporation, limited liability company or
partnership, or any other Person that is not an individual, with
respect to any subject or event (including the occurrence or
non-occurrence of any circumstance, the failure to perform or observe,
or the satisfaction of, any covenant or agreement or the pending or
threatened nature of any action) shall be deemed to mean that an
Authorized Officer of such Person (or, if such Person is the Company,
the Plant Manager thereof) has actual knowledge or awareness of such
subject or event or when notice of such subject or event shall have
been given, or deemed to have been given, to such Person in accordance
with the provisions of such Financing Document; and
(l) all references in such Financing Document to the Project
Contracts shall be deemed to exclude any Project Contract (and the
Consent to Assignment (if any) with respect thereto) (i) after the date
on which such Project
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Contract (A) may have been terminated in accordance with Section 5.10
of the Indenture or Section 4.10 of the IDB Lease Agreement (or any
comparable provision of the Working Capital Facility), (B) shall have
reached its stated termination date (if any) or (C) (other than in the
case of the Energy Services Agreements and the Master Operating
Agreement in connection with a Mill Closure) shall have been fully and
finally performed by all parties thereto and (ii) after the date of any
disposition of the Company's rights and obligations under such Project
Contract in accordance with Section 5.8 of the Indenture or Section 4.8
of the IDB Lease Agreement (or any comparable provision of the Working
Capital Facility), except, in the case of clauses (i) and (ii) above,
if and to the extent that any provisions of such Project Contract so
excluded provide that the rights and obligations of any Person that is
a party to such Contract shall survive the termination thereof.
"Accounts" means, collectively, the Intercreditor Agreement
Accounts, the Indenture Accounts and the Tax-Exempt Indenture
Accounts.
"Act" has the meaning specified (a) in the case of any Holder of
Indenture Securities, in Section 1.4 of the Indenture and (b) in the case of any
Holder of Tax-Exempt Indenture Securities, in Section 1.4 of the Tax-Exempt
Indenture.
"Additional Available Proceeds" means, with respect to any Event of
Loss or Event of Eminent Domain, monies neither constituting Revenues nor
otherwise required (except pursuant to the provisions of Section 3.10 of the
Intercreditor Agreement) to be deposited into any Account that are deposited
into the Loss Proceeds Account as other amounts available to the Company and
necessary for the rebuilding, repair, restoration or replacement of the Energy
Complex or any part thereof that has been affected by such Event of Loss or
Event of Eminent Domain (as the case may be).
"Affiliate" means, with respect to any Person, any other Person
directly or indirectly controlling or controlled by, or under direct or indirect
common control with, such Person. For purposes of this definition, the term
"control" (including the correlative meanings of the terms "controlled by" and
"under common control with"), as used with respect to any Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management policies of such Person, whether through the
ownership of securities or partnership or other ownership interests or by
contract or otherwise. Notwithstanding the foregoing, Southern, Mobile Energy,
Southern Electric, the Operator and each Person owning, directly or indirectly,
five percent (5%) or more of the membership interests in the Company shall be
deemed to be an Affiliate of the Company.
"Affiliate Subordinated Debt" means any unsecured, subordinated loan or
loans to the Company from any of its Affiliates pursuant to a Subordinated Loan
Agreement, fully
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subordinated as to payment and exercise of remedies and payable only from monies
otherwise distributable by the Company from the Distribution Account in
accordance with the Intercreditor Agreement.
"Aggregate Demand" has the meaning specified in the Master
Operating Agreement.
"Alabama Act" means Ala. Code ss. 11-54-80 to ss. 11-54-101.
"Annual Budget" means the operating plan and budget for the Energy
Complex developed by the Company for operation of the Energy Complex for any
Fiscal Year, as the same may be amended, restated, supplemented or otherwise
modified from time to time and as more particularly described in Section 5.12 of
the Indenture or Section 4.12 of the IDB Lease Agreement (or any comparable
provision of the Working Capital Facility) (as the case may be).
"Approved Institutional Investor" has the meaning specified (a) in the
case of the Tax-Exempt Bonds, in the Limited Offering Memorandum dated August
17, 1995 relating to the initial offering thereof and (b) in the case of any
other Tax-Exempt Indenture Securities, in any other offering memorandum relating
to the initial offering of such Tax-Exempt Indenture Securities.
"Articles of Organization" means the Articles of Organization of the
Company dated July 13, 1995.
"Authenticating Agent" means any Person acting as Authenticating Agent
pursuant to, in the case of the Indenture, Section 9.14(b) thereof and, in the
case of the Tax-Exempt Indenture, Section 9.13(b) thereof.
"Authorized Agent" means any Paying Agent, Authenticating Agent or
Security Registrar or other agent appointed by the Indenture Trustee or the
Tax-Exempt Indenture Trustee (as the case may be) or the Company or the IDB (as
the case may be) in accordance with the Indenture or the Tax-Exempt Indenture
(as the case may be) to perform any function that such indenture authorizes such
agent to perform.
"Authorized Officer" means (a) in the case of a corporation (including
Mobile Energy) or limited liability company (including the Company), the chief
executive officer, the president, the chief financial officer, a vice president,
the treasurer or an assistant treasurer of such corporation or limited liability
company and (b) in the case of any general or limited partnership, any Person
authorized by the managing general partner (or such other Person that is
responsible for the management of such partnership) to take the applicable
action on behalf of such partnership or any officer (with a title specified in
clause (a) above) of such partnership's managing general partner (or such other
Person that is responsible for the management of such managing general partner).
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"Authorized Representative" means, in respect of any Person, the
individual or individuals authorized to act on behalf of such Person by the
board of directors, manager, management committee, board of control or any other
governing body of such Person as designated from time to time in a certificate
of such Person, which shall include or attach thereto specimen signatures,
delivered to the Collateral Agent upon which the Collateral Agent may
conclusively rely.
"Authorized Trust Officer" means any officer of the Indenture Trustee
or the Tax-Exempt Indenture Trustee (as the case may be) or any other individual
who shall be duly authorized by appropriate corporate action on the part of
either such trustee to authenticate Senior Securities.
"Automatic Acceleration Default" has the meaning specified (a) in the
case of the Indenture, in Section 8.2(a) thereof and (b) in the case of the
Tax-Exempt Indenture, in Section 8.2(a) thereof.
"Available Amount" means, at any time, (a) in the case of any Reserve
Account Letter of Credit, the undrawn stated amount of such Reserve Account
Letter of Credit at such time and (b) in the case of any Southern Guaranty, an
amount equal to the "Available Amount" set forth therein (as such amount may be
increased or decreased in accordance with such Southern Guaranty).
"Bankruptcy Code" means the Federal Bankruptcy Code of 1978.
"Bankruptcy Event" means, in respect of any Person, (a) such Person's
general inability, or its admission of its inability, to pay its debts as such
debts become due, (b) the application by such Person for or its consent to the
appointment of, or the taking of possession by, a receiver, custodian, trustee
or liquidator of itself or of all or a substantial part of its property, (c) the
commencement by such Person of a voluntary case under the Bankruptcy Code, (d)
the making by such Person of a general assignment for the benefit of its
creditors, (e) the filing of a petition by such Person seeking to take advantage
as a debtor of any other law relating to bankruptcy, insolvency, reorganization,
liquidation, dissolution, arrangement, winding-up or readjustment of debts, (f)
the failure by such Person to controvert in a timely and appropriate manner, or
its acquiescence in writing to, any petition filed against it in an involuntary
case under the Bankruptcy Code, (g) the taking of any corporate or other action
by such Person for the purpose of effecting any of the foregoing, (h) the
commencement of a proceeding or case, without the application or consent of such
Person, in any court seeking (i) such Person's reorganization, liquidation,
dissolution, arrangement or winding-up, or the composition or readjustment of
its debts, (ii) the appointment of a trustee, receiver, custodian, liquidator,
examiner or the like of such Person or all or any substantial part of its
property or (iii) similar relief in respect of such Person under any law
relating to bankruptcy, insolvency, reorganization, winding-up or
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composition or adjustment of debt and such proceeding or case specified in this
clause (h) shall continue undismissed, or an order, judgment or decree approving
or ordering any of the foregoing shall be entered and continue unstayed and
(except in the case of Section 5.19(a)(ii) of the Indenture or Section
4.19(a)(ii) of the IDB Lease Agreement (or any comparable provision of the
Working Capital Facility)) in effect, for a period of sixty (60) or more days or
(i) an order for relief against such Person shall be entered in any involuntary
case under the Bankruptcy Code.
"Board of Directors" means (a) when used with respect to the Company,
the Manager of the Company and (b) when used with respect to Mobile Energy,
either the board of directors of Mobile Energy or any committee of such board
duly authorized to act for it.
"Board Resolution" means (a) when used with respect to the Company, a
copy of a resolution certified by an Authorized Officer of the Company or the
secretary or assistant secretary of the Company as having been adopted by the
Manager of the Company and to be in full force and effect on the date of such
certification and (b) when used with respect to Mobile Energy, means a copy of a
resolution certified by an Authorized Officer or the secretary or assistant
secretary of Mobile Energy as having been adopted by the Board of Directors of
Mobile Energy and to be in full force and effect on the date of such
certification.
"Boiler Ash Agreement" means the Boiler Ash Disposal Agreement dated as
of December 12, 1994, as amended by the First Amendment thereto dated as of July
13, 1995, between the Pulp Mill Owner and the Company (as assignee of Mobile
Energy).
"Bond Counsel" means Balch & Bingham or other nationally recognized
counsel experienced in matters of municipal law and the tax-exempt status of
obligations under the Code.
"Business Day" means any day other than a Saturday or Sunday or other
day on which banks in New York, New York or Atlanta, Georgia are authorized or
required to be closed.
"Capital Budget" means the capital plan and budget developed by the
Company with respect to the capital improvements to the Energy Complex specified
in the Master Operating Agreement and certain other planned capital expenditures
thereto.
"Capital Budget Subaccount" means the subaccount of the Completion
Account so designated established and created under Section 2.2(c) of the
Intercreditor Agreement.
"Casualty Proceeds" means all insurance proceeds (including title
insurance proceeds) and other amounts actually received on account of an Event
of Loss, including any net interest thereon or gain in respect thereof, other
than (a) proceeds of third-party liability insurance (to the extent paid
directly from
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an insurer or insurers to a third-party) and (b) proceeds of business
interruption insurance and other payments received for interruption of
operations. "Casualty Proceeds" do not include Additional Available Proceeds
with respect to such Event of Loss.
"Closing Date" means the date on which the First Mortgage Bonds and the
Tax-Exempt Bonds are originally issued.
"Coal Supplier" means E.J. Hodder & Associates, Inc., a
Tennessee corporation.
"Coal Supply Agreement" means the Coal Supply Agreement dated as of May
1, 1995 between the Coal Supplier and the Company.
"Code" means, as applicable, the Internal Revenue Code of 1986 and the
rules and regulations promulgated thereunder or the Internal Revenue Code of
1954 and the rules and regulations promulgated thereunder.
"Collateral" means, collectively, all of the collateral mortgaged,
pledged or assigned, or purported to be mortgaged, pledged or assigned, to the
Collateral Agent, the Indenture Trustee or the Tax-Exempt Indenture Trustee (as
the case may be) by the Company or the IDB (as the case may be), in each case
pursuant to the granting and assigning clauses of the applicable Financing
Documents.
"Collateral Agent" means Bankers Trust (Delaware), a Delaware banking
corporation, or any other Person appointed as a substitute or replacement
Collateral Agent under the Intercreditor Agreement.
"Collateral Agent Claims" means all obligations of the Senior Secured
Parties and the Mobile Energy Parties, now or hereafter existing, to pay fees,
costs and expenses to the Collateral Agent pursuant to Section 7.3(f) and
Article VIII of the Intercreditor Agreement.
"Combined Exposure" means, at any time, the sum of (a) the aggregate
principal amount of all Senior Securities Outstanding and (b) the aggregate
principal amount of all outstanding Working Capital Facility Loans made, and the
unutilized Working Capital Facility Commitment, under the Working Capital
Facility.
"Common Services Agreement" means the Common Services Agreement dated
as of December 12, 1994, as amended by the First Amendment thereto dated as of
July 13, 1995, among the Company (as assignee of Mobile Energy), the Pulp Mill
Owner, the Tissue Mill Owner and the Paper Mill Owner.
"Company" means Mobile Energy Services Company, L.L.C., an Alabama
limited liability company.
"Company Request" and "Company Order" mean, respectively, a
written request or order signed in the name of the Company by an
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Authorized Officer of the Company and delivered to the Indenture Trustee or the
Tax-Exempt Indenture Trustee (as the case may be).
"Company Step-In Rights" has the meaning specified for "MESC Step-In
Rights" in the Master Operating Agreement.
"Completion Account" means the Account so designated established and
created under Section 2.2(a) of the Intercreditor Agreement.
"Consents to Assignment" means, collectively, (a) the Consents to
Assignment, the Lease Estoppel and the Supplementary Lease Estoppel of Scott
with respect to the Project Contracts to which it is a party, (b) the Consent to
Assignment of the Pulp Mill Owner with respect to the Project Contracts to which
it is a party, (c) the Consent to Assignment of the Tissue Mill Owner with
respect to the Project Contracts to which it is a party, (d) the Consent to
Assignment of the Paper Mill Owner with respect to the Project Contracts to
which it is a party, (e) the Consent to Assignment of Southern Electric with
respect to the Project Contracts to which it is a party, (f) the Consent to
Assignment of SCS with respect to the SCS Agreement, (g) any Consent to
Assignment of the Coal Supplier with respect to the Coal Supply Agreement, (h)
the Consent to Assignment of TRT with respect to the Nondisturbance Agreement
(which may be effected pursuant to the Recognition Agreement to which TRT is a
party), (i) the Consent to Assignment of the IDB with respect to the Project
Contracts to which it is a party (which may be effected pursuant to the
Recognition Agreements) and (j) the Consent to Assignment of Ahlstrom Recovery,
Inc. with respect to Purchase Order Number MG-2601.
"Continuing Disclosure Agreement" means the Continuing Disclosure
Agreement dated as of August 1, 1995 among the Mobile Energy Parties and the
Tax-Exempt Indenture Trustee.
"Contract" means (a) any agreement (whether executory or non-executory
and whether a Person entitled to rights thereunder is so entitled directly or as
a third-party beneficiary), including an indenture, lease or license, (b) any
deed or other instrument of conveyance, (c) any certificate of incorporation,
articles of organization or charter and (d) any by-law.
"Corporate Trust Office" means the principal office of the Collateral
Agent, the Indenture Trustee or the Tax-Exempt Indenture Trustee (as the case
may be) at which at any particular time the corporate trust business thereof
shall be administered, which as of the Closing Date is (a) in the case of the
Collateral Agent, Bankers Trust (Delaware), c/o Bankers Trust Company, Four
Albany Street, New York, New York 10006, Attention: Corporate Trust and Agency
Group, (b) in the case of the Indenture Trustee, First Union National Bank of
Georgia, Corporate Trust Department, M/C GA9094, 999 Peachtree Street, N.E.,
Atlanta, Georgia 30309 and (c) in the case of the Tax-Exempt Indenture Trustee,
First Union National Bank of Georgia, Corporate Trust Department, M/C GA9094,
999 Peachtree Street, N.E., Atlanta, Georgia 30309, or
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such other office as may be designated by the Collateral Agent, the Indenture
Trustee or the Tax-Exempt Indenture Trustee (as the case may be) to the Mobile
Energy Parties and, in the case of the Collateral Agent, to the other
Intercreditor Parties.
"Credit Standard Event" means (a) with respect to any Reserve Account
Letter of Credit on deposit in any Reserve Account Security Account, the
unsecured long-term Debt of the provider of such Reserve Account Letter of
Credit shall not be rated "A" or higher by S&P, "A" or higher by Fitch and "A2"
or higher by Moody's and (b) with respect to any Southern Guaranty on deposit in
any Reserve Account Security Account, (i) the Collateral Agent or the Indenture
Trustee shall have been provided with an Officer's Certificate of Southern
certifying as to the determination that the Southern Credit Standard has not
been satisfied or (ii) Southern shall have failed, or the Company shall have
failed to cause Southern, to provide to the Collateral Agent or the Indenture
Trustee, on or prior to the date that is forty-five (45) days after the end of
each fiscal quarter of Southern, an Officer's Certificate of Southern certifying
as to the determination that the Southern Credit Standard has been satisfied.
"Current Fiscal Quarter" has the meaning specified in the definition of
Maintenance Reserve Account Required Deposit.
"Debt" means, in respect of any Person, (a) indebtedness for borrowed
money or the deferred purchase price of property or services (excluding
obligations under agreements for the purchase price of goods and services in the
normal course of business which are not more than ninety (90) days past due),
(b) obligations as lessee under leases that shall have been or should be, in
accordance with GAAP, recorded as capital leases, (c) obligations (whether
matured or contingent) with respect to any letters of credit issued for the
account of such Person, (d) obligations under direct or indirect guaranties or
other similar contingent liabilities in respect of, and obligations (contingent
or otherwise) to purchase or otherwise acquire, or otherwise assure a creditor
against loss in respect of, indebtedness or obligations of others of the kinds
referred to in clause (a), (b) or (c) above and (e) all Debt of another Person
secured by a lien on any property owned by the first Person (whether or not such
Debt has been assumed by such first Person).
"Debt Service Event" means (a) with respect to any Reserve Account
Letter of Credit on deposit in any Reserve Account Security Account, the
authorization of the Collateral Agent, the Indenture Trustee or the Tax-Exempt
Indenture Trustee (as the case may be) to draw upon such Reserve Account Letter
of Credit pursuant to (i) if such Reserve Account Security Account is the
Maintenance Plan Funding Subaccount, clause third of Section 3.5(c) of the
Intercreditor Agreement, (ii) if such Reserve Account Security Account is the
Distribution Account, clause second of Section 3.8(b) of the Intercreditor
Agreement, (iii) if such Reserve Account Security Account is a Debt Service
Reserve Account, clause second of Section 4.5 of the Indenture and (iv)
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if such Reserve Account Security Account is a Tax-Exempt Debt Service Reserve
Account, clause second of Section 4.6 of the Tax- Exempt Indenture and (b) with
respect to any Southern Guaranty on deposit in any Reserve Account Security
Account, the authorization of the Collateral Agent or the Indenture Trustee (as
the case may be) to call upon such Southern Guaranty pursuant to (i) if such
Reserve Account Security Account is the Maintenance Plan Funding Subaccount,
clause fourth of Section 3.5(c) of the Intercreditor Agreement, (ii) if such
Reserve Account Security Account is the Distribution Account, clause third of
Section 3.8(b) of the Intercreditor Agreement and (iii) if such Reserve Account
Security Account is a Debt Service Reserve Account, clause third of Section 4.5
of the Indenture.
"Debt Service Reserve Account" means any Account so designated (if any)
established and created under any Series Supplemental Indenture to the Indenture
for the benefit of Holders of Indenture Securities established thereunder.
"Debt Service Reserve Account Required Balance" means, in respect of
any Debt Service Reserve Account, the amount so designated in the Series
Supplemental Indenture to the Indenture establishing such Debt Service Reserve
Account.
"Default Event" means (a) with respect to any Reserve Account Letter of
Credit on deposit in any Reserve Account Security Account, (i) the provider of
such Reserve Account Letter of Credit shall default in its payment obligations
thereunder or (ii) the provider of such Reserve Account Letter of Credit shall
become insolvent and (b) with respect to any Southern Guaranty, (i) Southern
shall fail to perform any of the "Guaranteed Obligations" thereunder as and when
due or (ii) Southern shall become insolvent.
"Designated Southern Subsidiaries" means, for purposes of the
satisfaction of the Southern Credit Standard, all of the Eligible Southern
Subsidiaries other than, as designated by the Company to be excluded for such
purposes, any one or all (including any combination) of the Eligible Southern
Subsidiaries, provided that the aggregate net worth of such Eligible Southern
Subsidiaries so excluded is equal to or less than ten percent (10%) of the
aggregate net worth of all of the Eligible Southern Subsidiaries. For such
purposes, "net worth" means (a) par value of common stock plus (b) paid-in
capital plus (c) premium on preferred stock plus (d) retained earnings minus (e)
accrued and unpaid dividends on, or other amounts due and payable in respect of,
capital stock, in each case, of each of such Eligible Southern Subsidiaries.
"Determination of Taxability" means a final determination by the
Internal Revenue Service or a court of competent jurisdiction in a proceeding in
which the Company has been afforded an opportunity to participate, or, at the
election of the Company in its sole discretion, a determination by the Company
based on an opinion of Bond Counsel, that as a result of any event the interest
payable on any Tax-Exempt Indenture Security (in respect
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of which, at the time of original issuance, the Tax-Exempt Indenture Trustee
received an opinion of Bond Counsel to the effect that interest payable on such
Tax-Exempt Indenture Security was not includable for Federal income tax purposes
in the gross income of any owner of such Tax-Exempt Indenture Security (other
than an owner who is a "substantial user" of the Energy Complex or a "related
person" within the meaning of Section 147(a) of the Code)) is includable for
Federal income tax purposes in the gross income of any owner of such Tax-Exempt
Indenture Security (other than any owner who is a "substantial user" of the
Energy Complex or a "related person" within the meaning of Section 147(a) of the
Code). No such determination by the Internal Revenue Service shall be considered
final unless the Company has been given written notice and, if it so desires,
has been given the opportunity to contest the same, either directly or in the
name of any owner of a Tax-Exempt Indenture Security and until the conclusion of
any appellate review, if sought. Interest on Tax-Exempt Indenture Securities
shall not be deemed includable for Federal income tax purposes merely by reason
of such interest being treated as a tax preference item for purposes of a
Federal alternative minimum tax, loss of or reduction in a related deduction or
other indirect adverse tax consequences.
"Distribution Account" means the Account so designated established and
created under Section 2.2(a) of the Intercreditor Agreement.
"Distribution Date" means any Business Day following an Interest
Payment Date and preceding the Monthly Transfer Date immediately succeeding such
Interest Payment Date, as selected by
the Company.
"Easement Deeds" means, collectively, (a) the Easement Deed, dated as
of December 12, 1994 between the Company (as assignee of Mobile Energy) and the
Pulp Mill Owner granting the Company certain easements, (b) the Easement Deed
dated as of December 12, 1994 between the Company (as assignee of Mobile Energy)
and the Pulp Mill Owner granting the Pulp Mill Owner certain easements, (c) the
Easement Deed dated as of December 12, 1994 between the Company (as assignee of
Mobile Energy) and the Tissue Mill Owner granting the Company certain easements,
(d) the Easement Deed dated as of December 12, 1994 between the Company (as
assignee of Mobile Energy) and the Tissue Mill Owner granting the Tissue Mill
Owner certain easements, (e) the Easement Deed dated as of December 12, 1994
between the Company (as assignee of Mobile Energy) and the Paper Mill Owner
granting the Company certain easements and (f) the Easement Deed dated as of
December 12, 1994 between the Company (as assignee of Mobile Energy) and the
Paper Mill Owner granting the Paper Mill Owner certain easements.
"Easements" means, collectively, all easements, licenses, franchises,
rights-of-way and spur track agreements to which the Company is now or hereafter
a party or beneficiary affecting construction on, or the use or operation of, or
constituting a part of, the Site (including the Easement Deeds).
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"Eligible Southern Subsidiaries" means, at any time, each of Alabama
Power Company, an Alabama corporation, Georgia Power Company, a Georgia
corporation, Gulf Power Company, a Maine corporation, Mississippi Power Company,
a Mississippi corporation, and Savannah Electric and Power Company, a Georgia
corporation, provided that a majority of the voting securities of such Person is
owned, directly or indirectly, by Southern at such time.
"Eminent Domain Proceeds" means all amounts and proceeds actually
received in respect of any Event of Eminent Domain, including any net interest
thereon or gain in respect thereof. "Eminent Domain Proceeds" do not include
Additional Available Proceeds with respect to such Event of Eminent Domain.
"Energy Complex" has the meaning specified in the Master
Operating Agreement.
"Energy Services Agreements" means, collectively, the Pulp Mill Energy
Services Agreement, the Tissue Mill Energy Services Agreement and the Paper Mill
Energy Services Agreement.
"Environmental Bonds" means, collectively, (a) (i) the IDB's
Environmental Improvement Revenue Bonds (Scott Paper Company Project), Series A
of 1973, (ii) the IDB's Environmental Improvement Revenue Bonds (Scott Paper
Company Project), Series A of 1976 and (iii) the IDB's Environmental Improvement
Revenue Bonds (Scott Paper Company Project), Series A of 1980, in the case of
clauses (i), (ii) and (iii) above, issued under and secured by a Trust Indenture
dated as of April 1, 1973, as supplemented by a First Supplemental Indenture
thereto dated as of September 1, 1976 and a Second Supplemental Indenture
thereto dated as of October 1, 1980 between the IDB and AmSouth Bank of Alabama,
as trustee, and (b) the IDB's Industrial Revenue Bonds (Scott Paper Company
Project), Series B of 1976 issued under and secured by a Trust Indenture dated
as of September 1, 1976 between the IDB and AmSouth Bank of Alabama, as trustee
.
"Environmental Indemnity Agreements" means, collectively, (a) the Pulp
Mill Environmental Indemnity Agreement dated as of December 12, 1994, as amended
by the First Amendment thereto dated as of July 13, 1995, between the Company
(as assignee of Mobile Energy) and the Pulp Mill Owner, (b) the Paper Mill
Environmental Indemnity Agreement dated as of December 12, 1994, as amended by
the First Amendment thereto dated as of July 13, 1995, between the Company (as
assignee of Mobile Energy) and the Paper Mill Owner, (c) the Tissue Mill
Environmental Indemnity Agreement dated as of December 12, 1994, as amended by
the First Amendment thereto dated as of July 13, 1995, between the Company (as
assignee of Mobile Energy) and the Tissue Mill Owner and (d) the Scott
Environmental Indemnity Agreement dated as of December 12, 1994, as amended by
the First Amendment thereto dated as of July 13, 1995, between Scott and the
Company (as assignee of Mobile Energy).
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"Environmental Requirement" means any Governmental Approvals
in effect from time to time relating to the protection of the
environment or otherwise addressing environmental issues or
environmental requirements of or by any Governmental Authority,
or otherwise relating to noise or to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport,
emission, discharge, release or handling of Hazardous Material,
including the Comprehensive Environmental Response Compensation,
and Liability Act of 1980 (42 U.S.C. ss. 9601 et seq.), the
Hazardous Materials Transportation Act (49 U.S.C. ss. 1801 et
seq.), the Resource Conservation and Recovery Act (42 U.S.C. ss.
6901 et seq.), the Toxic Substance Control Act (15 U.S.C. ss. 2601
et seq.), the Clean Air Act (42 U.S.C. ss. 7401 et seq.), the Clean
Water Act (33 U.S.C. ss. 1251 et seq.), the Emergency Planning and
Community Right to Know Act (42 U.S.C. ss. 1101 et seq.), the
Federal Insecticide, Fungicide and Rodenticide Act (7 U.S.C. ss.
136 et seq.), the Oil Pollution Act of 1990 (33 U.S.C. ss. 2761),
the Occupational Health and Safety Act (29 U.S.C. ss. 641 et seq.),
the Pollution Prevention Act (42 U.S.C. ss. 1201 et seq.), the Safe
Drinking Water Act (42 U.S.C. ss. 300f et seq.), Preservation
Development, Etc. of Coastal Areas (Ala. Code ss. 9-7-1 et seq.),
the Alabama Environmental Management Act (Ala. Code ss. 22-22A-1 et
seq.), the Alabama Water Pollution Control Act (Ala. Code ss. 22-
22A-1 et seq.), the Alabama Safe Drinking Water Act (Ala. Code ss.
22-23-30 et seq.), Water Well Standards (Ala. Code ss. 22-24-1 et
seq.), Water Wastewater Systems and Treatment Plants (Ala. Code ss.
22-25-1 et seq.), Sewage Collection, Treatment, and Disposal
Facilities (Ala. Code ss. 22-26-1 et seq.), Solid Wastes Disposal
Act (Ala. Code ss. 22-27-1 et seq.), the Alabama Air Pollution
Control Act of 1971 (Ala. Code ss. 22-28-1 et seq.), the Hazardous
Wastes Management and Minimization Act (Ala. Code ss. 22-30-1 et
seq.), the Alabama Hazardous Substance Cleanup Fund (Ala. Code ss.
22-30A-1 et seq.), the Water Pollution Control Authority (Ala.
Code ss. 22-34-1 et seq.), the Alabama Underground and Aboveground
and Storage Tank Trust Fund Act (Ala. Code ss. 22-35-1 et seq.),
the Alabama Underground Storage Tank and Wellhead Protection Act
of 1988 (Ala. Code ss. 22-36-1 et seq.) and the Alabama Lead Ban
Act of 1988 (Ala. Code ss. 22-37-1 et seq.) and, in each case, any
regulations promulgated thereunder.
"ERISA" means the Employee Retirement Income Security Act of
1974.
"ESA Blockage Event" means, with respect to any Mill Owner or its
respective Energy Services Agreement or its Mill, that:
(a) such Energy Services Agreement or the Master Operating
Agreement has been declared unenforceable by a Governmental Authority
having jurisdiction, unless the Company has delivered to the applicable
Senior Secured Parties and the Collateral Agent an Officer's
Certificate, together with an Independent Engineer Confirmation,
certifying that either (i) such Energy Services Agreement or the Master
Operating Agreement (as the case may be) has been reinstated on
identical and enforceable terms by the Company and such Mill Owner,
(ii) such declaration of enforceability
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has been overruled, reversed or rescinded by such Governmental
Authority or by another Governmental Authority having final
jurisdiction or greater jurisdiction than such first Governmental
Authority or (iii) the Company has satisfied the Restricted Payment
Alternative Agreement Requirements with respect to such Energy Services
Agreement or the Master Operating Agreement (as the case may be);
(b) such Mill Owner has either (i) terminated, or delivered
written notice pursuant to the Master Operating Agreement of its
intention to terminate (which notice has not been rescinded), its
rights and obligations under such Energy Services Agreement or the
Master Operating Agreement in connection with a Mill Closure with
respect to such Mill or (ii) denied that it has any obligations and
substantially ceased performance under such Energy Services Agreement
or the Master Operating Agreement, unless, in either case, the Company
has delivered to the applicable Senior Secured Parties and the
Collateral Agent an Officer's Certificate, together with an Independent
Engineer Confirmation, certifying that either (A) such Energy Services
Agreement or the Master Operating Agreement (as the case may be) has
been reinstated on identical and enforceable terms by the Company and
such Mill Owner or, provided that another Person is reasonably capable
of performing such Mill Owner's obligations under such Energy Services
Agreement or the Master Operating Agreement (as the case may be), by
the Company and such other Person or (B) the Company has satisfied the
Restricted Payment Alternative Agreement Requirements with respect to
such Energy Services Agreement or the Master Operating Agreement (as
the case may be);
(c) a default has occurred and is continuing in respect of
such Mill Owner's obligations under such Energy Services Agreement or
the Master Operating Agreement, unless, if such Energy Services
Agreement or the Master Operating Agreement with respect to such Mill
Owner has been terminated as a result of such default, the Company has
delivered to the applicable Senior Secured Parties and the Collateral
Agent an Officer's Certificate, together with an Independent Engineer
Confirmation, certifying that the Company has satisfied the Restricted
Payment Alternative Agreement Requirements with respect to such Energy
Services Agreement or the Master Operating Agreement (as the case may
be);
(d) based upon the knowledge of either of the Mobile Energy
Parties, it is reasonably likely that, on or prior to the next
Distribution Date, either (i) there will be a Mill Closure with respect
to such Mill or (ii) such Mill Owner will deliver written notice
pursuant to the Master Operating Agreement of such Mill Owner's
intention to terminate its rights and obligations under such Energy
Services Agreement or the Master Operating Agreement, unless, in either
case, if such Energy Services Agreement or the Master Operating
Agreement with respect to such Mill Owner has been
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terminated as a result of such Mill Closure, the Company has delivered
to the applicable Senior Secured Parties and the Collateral Agent an
Officer's Certificate, together with an Independent Engineer
Confirmation, certifying that the Company has satisfied the Restricted
Payment Alternative Agreement Requirements with respect to such Energy
Services Agreement or the Master Operating Agreement (as the case may
be); or
(e) a Bankruptcy Event has occurred and is continuing in
respect of such Mill Owner, unless (i) the obligations of such Mill
Owner under such Energy Services Agreement and the Master Operating
Agreement have been expressly assumed with the approval of a court of
competent jurisdiction or (ii) if such Energy Services Agreement or the
Master Operating Agreement with respect to such Mill Owner has been
rejected or otherwise terminated, the Company has delivered to the
applicable Senior Secured Parties and the Collateral Agent an Officer's
Certificate, together with an Independent Engineer Confirmation,
certifying that the Company has satisfied the Restricted Payment
Alternative Agreement Requirement with respect to such Energy Services
Agreement or the Master Operating Agreement (as the case may be).
"Event of Default" means, so long as there are any Financing
Commitments or any Financing Liabilities outstanding, an "Event of Default"
under the Indenture, an "Event of Default" under the Tax-Exempt Indenture or an
"Event of Default" under the Working Capital Facility.
"Event of Default Alternative Agreement Requirements" means, with
respect to any Project Contract, another Contract entered into by the Company
with one or more Persons in substitution for or replacement of any such Project
Contract, with respect to some or all of the Processing Services or other
services formerly provided by or to the Company thereunder, provided that such
alternative Contract (a) contains substantially equivalent terms and conditions
or, if such terms and conditions are no longer available on a commercially
reasonable basis, the terms and conditions then available on a commercially
reasonable basis, (b) would, after giving effect to such alternative Contract
and based on projections prepared by the Company on a reasonable basis, maintain
a minimum annual Senior Debt Service Coverage Ratio for each Fiscal Year through
the final maturity date of the Outstanding Indenture Securities or the
Outstanding Tax-Exempt Indenture Securities (as the case may be) projected to be
equal to or greater than the lesser of (i) the minimum annual Senior Debt
Service Coverage Ratio projected to have been in effect for such Fiscal Year had
performance under such Project Contract continued and (ii) 1.2 to 1.0 and (c) is
reasonably capable of being performed by the parties thereto. Notwithstanding
the foregoing, such alternative Contract need not satisfy the conditions
described in clauses (a) and (b) above, provided that (A) the Company delivers
to the applicable Senior Secured Parties an Officer's Certificate, together with
an Independent Engineer Confirmation, certifying that the Company has satisfied
the
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Restricted Payment Alternative Agreement Requirements (other than the conditions
set forth in subclauses (C) and (D) of clause (b)(ii) of the definition of
Restricted Payment Alternative Agreement Requirements with respect to such
alternative Contract) and (B) after giving effect to such alternative Contract
and based on projections prepared by the Company on a reasonable basis, the
average of the annual Senior Debt Service Coverage Ratios through the final
maturity date of the Outstanding Indenture Securities or the Tax-Exempt
Indenture Securities (as the case may be) is projected to be at least 1.2 to
1.0.
"Event of Eminent Domain" means any compulsory transfer or taking, or
transfer under threat of compulsory transfer or taking, of a material part of
the Energy Complex by any Governmental Authority or any Person acting with the
authority thereof for more than six (6) months, unless such transfer or taking
is the subject of a Good Faith Contest.
"Event of Loss" means any physical loss or destruction of, or
destruction to, the Energy Complex, or any other event that causes all or a
material part of the Energy Complex to be rendered unfit for normal use for any
reason whatsoever, including through failure of title.
"Excess Loss Proceeds" means, with respect to any Event of Loss or
Event of Eminent Domain, monies in an amount equal to the excess, if any, of all
of the Loss Proceeds with respect to such Event of Loss or Event of Eminent
Domain (as the case may be) over the total cost of the rebuilding, repair,
restoration or replacement of the Energy Complex or any part thereof that has
been affected by such Event of Loss or Event of Eminent Domain (as the case may
be).
"Exchange Act" means the Securities Exchange Act of 1934.
"Financing Commitment" means any commitment pursuant to the Financing
Documents to provide credit to the Company.
"Financing Documents" means all Contracts evidencing or
securing the Financing Liabilities.
"Financing Liabilities" means all indebtedness, liabilities and
obligations of the Mobile Energy Parties (including principal, interest, fees,
reimbursement obligations, penalties, indemnities and legal expenses, whether
due to acceleration or otherwise) owing to the Senior Secured Parties (of
whatsoever nature and however evidenced) under or pursuant to (a) the Indenture
(including the Guaranty), (b) the Senior Securities, (c) the IDB Lease
Agreement, (d) the Tax-Exempt Indenture, (e) the Working Capital Facility and
any evidence of indebtedness entered into thereunder and (f) the other Security
Documents, in the case of clause (a) through (f) above, whether direct or
indirect, primary or secondary, fixed or contingent or now or hereafter arising
out of or relating to any such Contract.
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"Financing Statements" means Uniform Commercial Code financing
statements filed in connection with the other Security Documents.
"First Mortgage Bonds" means the Indenture Securities issued
on the Closing Date under the first Series Supplemental Indenture
to the Indenture.
"Fiscal Quarter" means the period of time beginning at 12:01
a.m. on the first day of each calendar quarter and ending at
midnight on the last day of such calendar quarter.
"Fiscal Year" means the period of time beginning at 12:01
a.m. on January 1 of each year and ending at midnight on December
31 of such year.
"Fitch" means Fitch Investors Service, L.P., a New York
limited partnership.
"Fuel Inventory" means fuel inventory of the Energy Complex, in
whatever form, including oil, gas, coal, black liquor, biomass and sludge.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect from time to time.
"GDPIPD" means the Gross Domestic Product Implicit Price Deflator as
published in the United States Department of Commerce, Bureau of Analysis
publication entitled "Survey of Current Business." If the Gross Domestic Product
Implicit Price Deflator ceases to exist or is no longer available, the Company,
with the approval of the Independent Engineer, shall designate a substitute
index that is reasonably similar to the Gross Domestic Product Implicit Price
Deflator.
"GDPIPD Factor" means, with respect to each Fiscal Year, the GDPIPD
most recently published during or prior to such Fiscal Year divided by the
GDPIPD published with respect to December 1994; provided, however, that such
GDPIPD Factor shall not be less than one (1).
"Good Faith Contest" means the contest of an item if (a) such item is
diligently contested in good faith by appropriate proceedings and adequate
reserves or bonding are established in accordance with GAAP with respect to such
item and (b) the failure to pay or comply with such item during the period of
such contest would not result in a Material Adverse Effect.
"Governmental Approvals" means those authorizations, consents,
approvals, waivers, exemptions, variances, registrations, certifications,
permissions, permits and licenses with any Governmental Authority required for
the ownership and operation of the Energy Complex and the performance of a
Person's obligations under the Project Documents.
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"Governmental Authority" means any Federal, state, city, county,
municipal, foreign, international, regional or other governmental or regulatory
authority, agency, department, board, body, instrumentality, commission, arbiter
or court.
"Guaranteed Obligations" means all indebtedness, liabilities,
obligations, covenants and duties of, and all terms and conditions to be
observed by, the Company (including in its capacity as a "debtor in possession"
under the Bankruptcy Code) due or owing to, or in favor or for the benefit of,
the Senior Secured Parties under the Security Documents or the Working Capital
Facility (as the case may be), in each case (a) whether due or owing to, or in
favor or for the benefit of, the Senior Secured Parties or any other Person that
becomes the Indenture Trustee, the Tax-Exempt Indenture Trustee or the Working
Capital Facility Provider (as the case may be) by reason of any succession or
assignment at any time thereafter and (b) whether or not an allowable claim
against the Company under the Bankruptcy Code, or otherwise enforceable against
the Company, and including, in any event, interest accruing after the filing by
or against the Company of a petition under the Bankruptcy Code; provided,
however, that the satisfaction of the Guaranteed Obligations 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 to the
extent such assets are not commingled with any of Mobile Energy's other assets
or any monies or assets of the Company.
"Guaranty" means the unconditional guaranty by Mobile Energy of the
Guaranteed Obligations included in Article XIV of the Indenture, Article VIII of
the IDB Lease Agreement and Article VIII of the Working Capital Facility (as the
case may be).
"Hazardous Materials" means hazardous wastes, hazardous substances,
hazardous constituents, air contaminants or toxic substances, whether solids,
liquids or gases, including substances defined or otherwise regulated as
"hazardous materials," "regulated substances," "hazardous wastes," "hazardous
substances," "toxic substances," "pollutants," "contaminants," "carcinogens,"
"hazardous air pollutants," "criteria pollutants," "reproductive toxins,"
"radioactive materials," "toxic chemicals," or other similar designations in, or
otherwise subject to regulation under, any Environmental Requirement, including
petroleum hydrocarbons, asbestos-containing materials, urea formaldehyde foam
insulation, polychlorinated biphenyls and radionuclides.
"Holder" means a Person in whose name an Indenture Security or a
Tax-Exempt Indenture Security (as the case may be) is registered in the register
providing for the registration, including upon transfer or exchange, thereof
pursuant to the Indenture or the Tax-Exempt Indenture (as the case may be).
"IDB" means The Industrial Development Board of the City of
Mobile, Alabama.
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"IDB Claims" means all obligations of the Mobile Energy Parties, now or
hereafter existing, to pay fees, costs, expenses, indemnification payments or
other amounts to the IDB under the Financing Documents, other than (a) rent
payments under the IDB Lease Agreement and (b) payments in respect of principal
of and premium, if any, and interest on the 1994 Bonds.
"IDB Lease Agreement" means the Amended and Restated Lease and
Agreement dated as of August 1, 1995 among the IDB and the Mobile Energy
Parties.
"IDB Request" and "IDB Order" mean, respectively, a written request or
order signed in the name of the IDB by an Authorized Officer of the IDB and
delivered to the Tax-Exempt Indenture Trustee.
"Income Tax Deficiency" means (a) with respect to the second
Distribution Date during any Fiscal Year, an amount equal to the excess, if any,
of (i) an amount equal to the sum of (A) the combined Federal and State of
Alabama quarterly estimated income tax payments that would have been required to
be paid by all Members during such Fiscal Year prior to such Distribution Date
and (B) one-half of the amounts estimated to be required to be paid for County
and City of Mobile, Alabama income taxes in respect of such Fiscal Year, if any,
all calculated, solely for this purpose, as if such Members collectively were a
single "stand-alone" domestic Alabama corporation for purposes of Federal, state
and local taxes that would not (1) be a member of a consolidated, affiliated,
combined, unitary or other tax group, (2) be a party to any tax sharing
arrangements with any other Person and (3) have income, loss or credits
(including loss and credit carryovers) available to it that would not be
attributable to any ownership interest in the Company over (ii) the amount of
distributions, if any, from the Distribution Account and the Subordinated Fee
Account made on the first Distribution Date during such Fiscal Year in excess of
the amount of distributions, if any, that would have been calculated by clause
(b) below with respect to such Distribution Date and (b) with respect to the
first Distribution Date during any Fiscal Year, an amount equal to the excess,
if any, of (i) an amount equal to the estimate, as of such Distribution Date, of
the combined Federal, State of Alabama, and County and City of Mobile, Alabama
income taxes that relate to the immediately preceding Fiscal Year of all
Members, all calculated solely for this purpose, as if such Members collectively
were a single "stand-alone" domestic Alabama corporation for purposes of
Federal, state and local taxes that would not (A) be a member of a consolidated,
affiliated, combined, unitary or other tax group, (B) be a party to any tax
sharing arrangements with any other Person and (C) have income, loss or credits
(including loss and credit carryovers) available to it that would not be
attributable to any ownership interest in the Company over (ii) the amount of
distributions, if any, from the Distribution Account and the Subordinated Fee
Account made on the second Distribution Date of such prior Fiscal Year.
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"Indenture" means the Trust Indenture dated as of August 1, 1995 among
the Mobile Energy Parties and the Indenture Trustee.
"Indenture Accounts" means, with respect to the Indenture Securities of
any series, the Indenture Securities Account and each Debt Service Reserve
Account (if any) established for the benefit of Holders of the Indenture
Securities of such series.
"Indenture Distribution Amount" means, in respect of any Excess Loss
Proceeds with respect to an Event of Loss or Event of Eminent Domain to be
applied pursuant to Section 6.2(b) of the Intercreditor Agreement, an amount
equal to the Indenture's Percentage Share of (a) such Excess Loss Proceeds and
(b) the Redistributed Proceeds with respect to such Excess Loss Proceeds.
"Indenture Securities" means all Debt issued pursuant to the
Indenture.
"Indenture Securities Account" means the Account so designated
established and created under Section 4.1 of the Indenture.
"Indenture Securities Collateral" means, collectively, (a) all of the
collateral mortgaged, pledged or assigned, or purported to be mortgaged, pledged
or assigned, to the Indenture Trustee by the Company pursuant to the granting
and assigning clauses of the Indenture and (b) the Shared Collateral.
"Indenture Securities Interest Subaccount" means the subaccount of the
Indenture Securities Account so designated established and created under Section
4.1 of the Indenture.
"Indenture Securities Principal Subaccount" means the subaccount of the
Indenture Securities Account so designated established and created under Section
4.1 of the Indenture.
"Indenture Securities Redemption Subaccount" means the subaccount of
the Indenture Securities Account so designated established and created under
Section 4.1 of the Indenture.
"Indenture Trustee" means First Union National Bank of Georgia, a
national banking association organized and existing under the laws of the United
States of America.
"Independent Engineer" means Stone & Webster Engineering Corporation or
another nationally recognized consulting or engineering firm appointed
Independent Engineer pursuant to the terms of the Intercreditor Agreement.
"Independent Engineer Agreement" means the Independent Engineer
Agreement dated as of August 1, 1995 between the Company and the Independent
Engineer or any other similar Contract among such Persons.
"Independent Engineer Confirmation" means a certificate
signed by an authorized representative of the Independent
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Engineer confirming the reasonableness of statements and projections contained
in certain Officer's Certificates delivered to the applicable Senior Secured
Parties or the Collateral Agent under the Financing Documents, which
confirmation may not be unreasonably withheld, conditioned or delayed.
"Independent Insurance Advisor" means Sedgwick James or another
nationally recognized insurance advisory firm appointed as insurance advisor
under the Indenture and the Tax-Exempt Indenture by the Collateral Agent.
"Intercreditor Agreement" means the Intercreditor and Collateral Agency
Agreement dated as of August 1, 1995 among the Senior Secured Parties, the
Collateral Agent, the IDB and the Mobile Energy Parties.
"Intercreditor Agreement Accounts" means, collectively, the
Completion Account, the Revenue Account, the Mill Owner Reimbursement Account,
the Working Capital Facility Account, the Operating Account, the Maintenance
Reserve Account, the Loss Proceeds Account, the Subordinated Debt Account, the
Subordinated Fee Account and the Distribution Account.
"Intercreditor Parties" means, collectively, the Senior Secured
Parties, the IDB, the Mobile Energy Parties, any Subordinated Debt Provider and
any other Person party to the Intercreditor Agreement (other than the Collateral
Agent).
"Interest Payment Date" means each January 1 and July 1 of each year,
commencing January 1, 1996.
"Investment Grade" means a rating in one of the four highest categories
(without regard to subcategories within such rating categories) by a Rating
Agency.
"Law" means any constitution, treaty, statute, code, ordinance,
regulation, order, decree, writ or judicial or arbitral decision.
"Lease" means the Lease Agreement dated as of December 12, 1994, as
amended by the First Amendment thereto dated as of July, 13, 1995, between
Scott, as lessor, and the Company (as assignee of Mobile Energy), as lessee.
"Lease Documents" means, collectively, the IDB Lease Agreement, the
Tax-Exempt Indenture (including any Series Supplemental Indenture) and (to the
extent relating to, or securing, the Tax-Exempt Indenture Securities) the other
Financing Documents.
"Lease Indemnity" means the Letter Agreement dated August 1, 1995 by
the Mobile Energy Parties in favor of Scott, providing for the indemnification
of Scott with respect to matters arising under the Utilities Land Sublease dated
as of December 1, 1983, as amended, between Scott and the IDB.
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"Leased Land" means the land underlying the components of the
Tax-Exempt Project marked on Exhibit A to the IDB Lease Agreement.
"Lenders" has the meaning specified in the Working Capital
Facility.
"Lien" means any lien, claim, security interest, mortgage, trust
arrangement, judgment, pledge, option, charge, easement, encumbrance, title
retention, conditional sales agreement, encroachment, right-of-way, building or
use restriction, preferential right or any other security agreement, arrangement
or similar right in favor of any Person, whether voluntarily incurred or arising
by operation of law, and includes any agreement to give any of the foregoing in
the future, and any contingent sale or other title retention agreement or lease
in the nature thereof.
"Loss Proceeds" means, as applicable, Casualty Proceeds or
Eminent Domain Proceeds.
"Loss Proceeds Account" means the Account so designated established and
created under Section 2.2(a) of the Intercreditor Agreement.
"Maintenance Excess Funding Subaccount" means the subaccount of the
Maintenance Reserve Account so designated established and created under Section
2.2(b) of the Intercreditor Agreement.
"Maintenance Expenditures" means all costs and expenses of operating
and maintaining the Energy Complex and, when the Company is exercising the
Company Step-In Rights, the Pulp Mill Step-In Equipment, other than (a) fuel
costs and expenses, (b) labor and employee expenses, including fringe benefits
and labor relations expense, (c) payments for insurance premiums and like
insurance related expenses required or otherwise maintained under any Project
Document, (d) costs and expenses of consumable items such as process or cleaning
chemicals and lubricants, (e) equipment rental, small tools and vehicle
maintenance expenses, (f) costs and expenses associated with legal, accounting
and other office and administrative functions, (g) permitting fees, (h) costs
and expenses of safety supplies, office supplies and other office expenses, (i)
property taxes and payments made in lieu of taxes, (j) computer maintenance
expenses, (k) any amounts payable for services rendered under the Common
Services Agreement, (l) ash disposal costs, (m) liquidated damages payable to
the Mill Owners under the Master Operating Agreement, (n) amounts payable to the
Mill Owners in connection with the exercise of Mill Owner Step-In Rights, (o)
any amounts required to be rebated to the United States government pursuant to
Section 148 of the Code in connection with any series of the Tax-Exempt
Indenture Securities (to the extent not already provided for in the Tax-Exempt
Indenture) and (p) payments to the IDB (including IDB Claims and payments
required to be made by the Company with respect to the 1994 Bonds), in the case
of clauses (a) through
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(p) above, to the extent the foregoing costs or expenses are not
customarily treated as capital expenditures.
"Maintenance Plan" means the maintenance plan and budget for the Energy
Complex, as the same may be amended, restated, supplemented or otherwise
modified from time to time and as more particularly described in Section 5.12 of
the Indenture or Section 4.12 of the IDB Lease Agreement (or any comparable
provision of the Working Capital Facility) (as the case may be).
"Maintenance Plan Funding Subaccount" means the subaccount of the
Maintenance Reserve Account so designated established and created under Section
2.2(b) of the Intercreditor Agreement.
"Maintenance Reserve Account" means the Account so designated
established and created under Section 2.2(a) of the Intercreditor Agreement.
"Maintenance Reserve Account Balance" means, with respect to the
Current Fiscal Quarter, the sum of (a) the monies on deposit in the Maintenance
Reserve Account, (b) amounts available to be drawn or called upon under any
Reserve Account Security deposited in the Maintenance Plan Funding Subaccount
and (c) the monies on deposit in, or otherwise credited to (by means of a
guaranty, capital infusion agreement or otherwise), the Mill Owner Maintenance
Reserve Account, in the case of clauses (a), (b) and (c) above, at the beginning
of the Current Fiscal Quarter.
"Maintenance Reserve Account Required Deposit" means, with respect to
any Fiscal Quarter during any Fiscal Year (the "Current Fiscal Quarter"), one or
more deposits into the Maintenance Reserve Account on Monthly Transfer Dates
occurring during the Current Fiscal Quarter in an aggregate amount equal to the
excess of the sum of paragraphs (a), (b) and (c) below over the Maintenance
Reserve Account Balance with respect to the Current Fiscal Quarter:
(a) the amount of Maintenance Reserve Account Required
Deposits with respect to each Fiscal Quarter preceding the Current
Fiscal Quarter that were required to be deposited into the Maintenance
Reserve Account during each such Fiscal Quarter but were not, and have
not been since, so deposited;
(b) the aggregate amount of any withdrawals from the
Maintenance Reserve Account and the Mill Owner Maintenance Reserve
Account during each Fiscal Quarter preceding the Current Fiscal Quarter
that were in excess of the aggregate projected Maintenance Expenditures
for each such Fiscal Quarter (as specified in the Maintenance Plan) but
were not, and have not been since, redeposited in the Maintenance
Reserve Account; and
(c) the greatest of:
(i) if the Current Fiscal Quarter is the first
Fiscal Quarter of such Fiscal Year, the amount obtained
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by dividing the aggregate of the projected Maintenance
Expenditures for the Current Fiscal Quarter and the
immediately succeeding sixteen (16) Fiscal Quarters (in each
case as specified in the Maintenance Plan) by sixteen (16);
(ii) if the Current Fiscal Quarter is the first or
second Fiscal Quarter of such Fiscal Year, the amount obtained
by dividing the aggregate of the projected Maintenance
Expenditures for the Current Fiscal Quarter and the
immediately succeeding fifteen (15) Fiscal Quarters (in each
case as specified in the Maintenance Plan) by fifteen (15);
(iii) if the Current Fiscal Quarter is the first,
second or third Fiscal Quarter of such Fiscal Year, the amount
obtained by dividing the aggregate of the projected
Maintenance Expenditures for the Current Fiscal Quarter and
the immediately succeeding fourteen (14) Fiscal Quarters (in
each case as specified in the Maintenance Plan) by fourteen
(14); and
(iv) if the Current Fiscal Quarter is the first,
second, third or fourth Fiscal Quarter of such Fiscal Year,
the greatest of the amount obtained by dividing the aggregate
of the projected Maintenance Expenditures for any period
consisting of the Current Fiscal Quarter and any number of
consecutive Fiscal Quarters from one (1) to thirteen (13)
immediately succeeding the Current Fiscal Quarter (in each
case as specified in the Maintenance Plan) by such number of
consecutive Fiscal Quarters.
"Manager" means Mobile Energy and any Person appointed as an
additional, substitute or replacement manager of the Company pursuant to the
terms of the Articles of Organization.
"Master Operating Agreement" means the Amended and Restated Master
Operating Agreement dated as of July 13, 1995 among the Company (as assignee of
Mobile Energy), Scott, the Pulp Mill Owner, the Tissue Mill Owner and the Paper
Mill Owner.
"Material Adverse Effect" means (a) a change in the financial condition
of either of the Mobile Energy Parties or the Energy Complex that would
reasonably be expected to materially and adversely affect the ability of either
of the Mobile Energy Parties to pay principal of and interest on the Senior Debt
as and when required or (b) any event or occurrence of whatever nature that
would materially and adversely affect (i) the ability of either of the Mobile
Energy Parties to perform its obligations under the Project Documents or (ii)
the Lien of the Security Documents.
"Member" means any Person owning a membership interest in
the Company.
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"Mill Closure" means (a) a public announcement by a Mill Owner that it
will close its respective Mill for a period of at least one (1) year or that it
will reduce production of pulp, paper or tissue (as applicable) at such Mill
(permanently or for a period of at least two (2) years) to less than ten percent
(10%) of 1994 production levels or (b) the occurrence of a two (2) year period
during which, for any reason other than the occurrence of a Force Majeure Event
(as defined in the Master Operating Agreement), such Mill Owner's production of
pulp, paper or tissue (as applicable) at such Mill is less than ten percent
(10%) of 1994 production levels.
"Mill Owner Maintenance Reserve Account" means the account so
designated established and created pursuant to the Master Operating Agreement
for the sole benefit of the Mill Owners.
"Mill Owner Maintenance Reserve Account Agreement" means the Mill Owner
Maintenance Reserve Account Agreement dated as of August 1, 1995 among Southern,
the Company and the Mill Owners.
"Mill Owner Reimbursement Account" means the Account so designated
established and created under Section 2.2(a) of the Intercreditor Agreement.
"Mill Owner Step-In Rights" has the meaning specified in the
Master Operating Agreement.
"Mill Owners" means, collectively, the Pulp Mill Owner, the
Tissue Mill Owner and the Paper Mill Owner.
"Mills" means, collectively, the Pulp Mill, the Tissue Mill
and the Paper Mill.
"Mixed-Use Bonds" means, collectively, the IDB's Industrial Development
Revenue Bonds (Scott Paper Company Project), Series A and the IDB's Industrial
Development Revenue Bonds (Scott Paper Company Project), Series B, in each case
issued under and secured by a Trust Indenture dated as of December 1, 1984, as
supplemented by a First Supplemental Indenture thereto dated as of June 1, 1985,
between the IDB and AmSouth Bank of Alabama, as trustee.
"Mobile Energy" means Mobile Energy Services Holdings, Inc.,
an Alabama corporation.
"Mobile Energy Parties" means, collectively, the Company and
Mobile Energy.
"Mobile Energy Request" or "Mobile Energy Order" means, respectively, a
written request or order signed in the name of Mobile Energy by an Authorized
Officer of Mobile Energy and delivered to the Indenture Trustee or the
Tax-Exempt Indenture Trustee (as the case may be).
"Mobile Facility" means the integrated pulp, paper and
tissue manufacturing facility located on a 730-acre site along
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the Mobile River and the Chickasaw Creek in Mobile, Alabama, comprised of the
Mills and the Energy Complex.
"Monthly Transfer Date" means the last Business Day of each month of
each Fiscal Year, commencing with the first such day occurring after the Closing
Date.
"Moody's" means Moody's Investors Service, Inc., a Delaware
corporation.
"Mortgage" means the Leasehold Mortgage, Assignment of Leases, Rents,
Issues and Profits and Security Agreement and Fixture Filing dated as of August
1, 1995 among the Company, the IDB and the Mortgagee.
"Mortgagee" means Bankers Trust (Delaware), or any other Person
appointed as a substitute or replacement Mortgagee under the Mortgage.
"1983 Bonds" means the IDB's Exempt Facilities Revenue Bonds (Scott
Paper Company Project), 1983 Series B, issued under and secured by a Trust
Indenture dated as of December 1, 1983 between the IDB and BankAmerica Trust
Company of New York, as trustee.
"1984 Bonds" means the IDB's Variable Rate Demand Solid Waste Revenue
Refunding Bonds (Scott Paper Company Project) Series 1984 A, B, C, D and E
issued under and secured by the 1984 Indenture.
"1984 Indenture" means the Trust Indenture dated as of December 1,
1984, as supplemented by the First Supplemental Indenture thereto dated as of
January 1, 1985 and the Second Supplemental Indenture thereto dated as of August
1, 1995, between the IDB and Chemical Bank, as trustee.
"1984 Lease" means the Lease and Agreement dated December 1, 1984, as
amended by Amendment No. 1 thereto dated as of November 8, 1994 and Amendment
No. 2 thereto dated as of December 9, 1994, between the IDB and the Company (as
assignee of Mobile Energy (as assignee of Scott)).
"1994 Bond Payment Date" means each June 1 and December 1 of each year,
commencing December 1, 1995.
"1994 Bond Trustee" means Bankers Trust (Delaware), in its capacity as
trustee under the 1994 Indenture.
"1994 Bonds" means the IDB's Industrial Development Revenue Bonds
(Scott Paper Recovery Boiler Project) 1994 Series A. For all purposes of the
Financing Documents, (a) payments in respect of the principal of and premium, if
any, and interest on the 1994 Bonds shall be treated as neither Operation and
Maintenance Costs nor Senior Debt Service Requirements (or any other debt
service) and (b) receipts (or deemed receipts) in respect of the 1994 Bonds
shall not be treated as Revenues.
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"1994 Indenture" means the Trust Indenture dated as of December 1, 1994
between the IDB and the 1994 Bond Trustee.
"1995 Bonds" has the meaning specified in Section 2.17(a) of the
Tax-Exempt Indenture, which means the Tax-Exempt Bonds.
"Non-Affiliate Subordinated Debt" means any unsecured loan or loans
from any Person that is not an Affiliate of the Company pursuant to a
Subordinated Loan Agreement, the amounts necessary for repayment of which have
been included in the Annual Budget approved by the Collateral Agent and the
Independent Engineer.
"Nondisturbance Agreement" means the Estoppel and Nondisturbance
Agreement dated as of December 12, 1994 between TRT and the Company (as assignee
of Mobile Energy).
"Officer's Certificate" means a certificate that has been signed by an
Authorized Officer of either of the Mobile Energy Parties or of Southern (as the
case may be).
"O&M Agreement" means the Facility Operations and Maintenance Agreement
dated as of December 12, 1994 between the Company (as assignee of Mobile Energy)
and the Operator.
"Operating Account" means the Account so designated established and
created under Section 2.2(a) of the Intercreditor Agreement.
"Operating Agreement" means the Operating Agreement of the Company
dated as of July 13, 1995, as amended by the First Amendment thereto dated as of
July 13, 1995, among the Members.
"Operation and Maintenance Costs" means all costs and expenses of
operating and maintaining the Energy Complex and, when the Company is exercising
the Company Step-In Rights, the Pulp Mill Step-In Equipment, including and
together with (a) Subordinated Fees, (b) Maintenance Expenditures and (c) any
such costs and expenses specified in clauses (a) through (p) of the definition
of Maintenance Expenditures (other than (i) rent payments under the IDB Lease
Agreement and (ii) payments of principal of and premium, if any, and interest on
the 1994 Bonds).
"Operator" means Southern Electric, in its capacity as
operator under the O&M Agreement.
"Opinion of Counsel" means a written opinion of counsel for any Person
either expressly referred to in any Financing Document to which the Collateral
Agent or any of the Senior Secured Parties is a party or otherwise satisfactory
to the Collateral Agent or such Senior Secured Party (which may include counsel
for either of the Mobile Energy Parties, whether or not such counsel is an
employee of either or both of them).
"Optional Modifications" means all modifications to the
Energy Complex that are not Required Modifications.
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"Optional Modifications Subaccount" means the subaccount of the
Completion Account so designated established and created under Section 2.2(c) of
the Intercreditor Agreement.
"Outstanding" means, when used with respect to any of the Senior
Securities (however referenced in any Financing Document), as of the date of
determination, all such Senior Securities theretofore authenticated and
delivered under the Indenture or the Tax-Exempt Indenture (as the case may be),
except:
(a) such Senior Securities theretofore canceled by the
Indenture Trustee or the Tax-Exempt Indenture Trustee (as
the case may be) or delivered to either such Trustee for
cancellation;
(b) such Senior Securities or portions thereof deemed to have
been paid within the meaning of, in the case of the Indenture, Section
12.1 thereof and, in the case of the Tax- Exempt Indenture, Section
12.1 thereof (as the case may be); and
(c) such Senior Securities that have been exchanged for other
Senior Securities or Senior Securities in lieu of which other Senior
Securities have been authenticated and delivered pursuant to the
Indenture or the Tax-Exempt Indenture (as the case may be) unless held
by a Holder in whose hands such Senior Securities constitute valid
obligations of the Company;
provided, however, that in determining whether the Holders of the requisite
principal amount of Senior Securities (however referenced in any Financing
Document) Outstanding have given any request, demand, authorization, direction,
notice, consent or waiver under the Indenture or the Tax-Exempt Indenture (as
the case may be) or whether or not a quorum is present at a meeting of Holders
of such Senior Securities, such Senior Securities owned by either of the Mobile
Energy Parties (or any Affiliate thereof) shall be disregarded and deemed not to
be Outstanding, except that, in determining whether or not the Indenture Trustee
or the Tax-Exempt Indenture Trustee (as the case may be) shall be protected in
relying upon any such request, demand, authorization, direction, notice, consent
or waiver or upon any such determination as to presence of a quorum, only such
Senior Securities that a Responsible Officer of the Indenture Trustee or the
Tax-Exempt Indenture Trustee (as the case may be) knows to be so owned shall be
so disregarded. Any such Senior Securities so owned that have been pledged in
good faith may be regarded as Outstanding if the pledgee establishes to the
satisfaction of the Indenture Trustee or the Tax-Exempt Indenture Trustee (as
the case may be) such pledgee's right so to act with respect to such Senior
Securities and that such pledgee is not a Mobile Energy Party (or any Affiliate
thereof).
"Paper Mill" means the paper mill located at the Mobile
Facility, which as of the Closing Date is owned by S.D. Warren.
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"Paper Mill Energy Services Agreement" means the Paper Mill Energy
Services Agreement dated as of December 12, 1994, as amended by the First
Amendment thereto dated July 13, 1995, between the Paper Mill Owner and the
Company (as assignee of Mobile Energy).
"Paper Mill Owner" means S.D. Warren, in its capacity as
owner of the Paper Mill.
"Paying Agent" means any Person acting as Paying Agent pursuant to, in
the case of the Indenture, Section 9.14(b) thereof and, in the case of the
Tax-Exempt Indenture, Section 9.13(b) thereof.
"Percentage Share" means an amount (expressed as a
percentage) equal to:
(a) with respect to the Working Capital Facility, (i) the
Working Capital Facility Commitment in effect immediately prior to any
deposit into the Working Capital Facility Account of any Excess Loss
Proceeds with respect to an Event of Loss or Event of Eminent Domain
pursuant to Section 6.2(b)(i) of the Intercreditor Agreement divided by
(ii) the Combined Exposure immediately prior to such deposit;
(b) with respect to the Indenture, (i) the principal amount of
the Indenture Securities Outstanding immediately prior to any transfer
to the Indenture Trustee for deposit into the Indenture Securities
Account of any Excess Loss Proceeds with respect to an Event of Loss or
Event of Eminent Domain pursuant to Section 6.2(b)(ii) of the
Intercreditor Agreement divided by (ii) in the case of Excess Loss
Proceeds, the Combined Exposure and, in the case of Redistributed
Proceeds, the aggregate principal amount of the Senior Securities
Outstanding, in each case immediately prior to such transfer; and
(c) with respect to the Tax-Exempt Indenture, (i) the
principal amount of the Tax-Exempt Indenture Securities Outstanding
immediately prior to any transfer to the Tax- Exempt Indenture Trustee
for deposit into the Tax-Exempt Indenture Securities Account of any
Excess Loss Proceeds with respect to an Event of Loss or Event of
Eminent Domain pursuant to Section 6.2(b)(iii) of the Intercreditor
Agreement divided by (ii) in the case of Excess Loss Proceeds, the
Combined Exposure and, in the case of Redistributed Proceeds, the
aggregate principal amount of the Senior Securities Outstanding, in
each case immediately prior to such transfer.
"Permitted Indebtedness" means (a) in the case of the Company: (i) the
First Mortgage Bonds; (ii) Debt incurred under a Working Capital Facility having
a Working Capital Facility Commitment not to exceed $15,000,000 (multiplied by
the Working Capital Escalation Factor in effect at any given time, provided
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(and the Working Capital Facility shall contain provisions to such effect) that
(A) no more than $5,000,000 (multiplied by the Working Capital Escalation Factor
in effect at any given time) of such Debt may be scheduled to mature during any
calendar month, (B) any Working Capital Facility Loan advanced thereunder shall
mature no later than ninety-three (93) days from the date such Working Capital
Facility Loan was first advanced, (C) the Company shall be required to repay all
amounts advanced thereunder so that no amounts are outstanding once during each
Fiscal Year (other than the Fiscal Year ending December 31, 1995) for a period
of five (5) consecutive days and (D) the Working Capital Facility Provider
thereunder shall become a party to the Intercreditor Agreement; (iii) the
Tax-Exempt Bonds; (iv) reimbursement obligations in respect of letters of credit
(if any) and other financial obligations arising under the Project Contracts and
obligations arising under the Lease Indemnity; (v) purchase money obligations
incurred to finance discrete items of equipment not comprising an integral part
of the Energy Complex that extend only to the equipment being financed and that
do not in the aggregate have annual debt service or lease obligations exceeding
$2,000,000 (multiplied by the GDPIPD Factor in effect at the time such
obligations were incurred); (vi) trade accounts payable (other than for borrowed
money) arising, and accrued expenses incurred, in the ordinary course of
business so long as such trade accounts payable are payable within ninety (90)
days of the date the respective goods are delivered or the respective services
are rendered; (vii) obligations in respect of surety bonds or similar
instruments in an aggregate amount not exceeding $10,000,000 (multiplied by the
GDPIPD Factor in effect at the time such obligations were incurred) at any one
time outstanding; (viii) Affiliate Subordinated Debt; (ix) Replacement Debt
permitted to be issued pursuant to the terms of the Financing Documents; (x)
Debt permitted to be issued pursuant to the terms of the Financing Documents for
Required Modifications and Optional Modifications; (xi) Non-Affiliate
Subordinated Debt (including any Non-Affiliate Subordinated Debt permitted by
clause (x) above) in an aggregate principal amount not to exceed $75,000,000
(multiplied by the GDPIPD Factor in effect at the time such Debt was incurred)
permitted to be issued pursuant to the terms of the Financing Documents; (xii)
Refunding Debt permitted to be issued pursuant to the terms of the Financing
Documents; and (xiii) the Company's obligations in respect of the 1994 Bonds,
the Mixed-Use Bonds, the Environmental Bonds and the Refunding Letter of Credit;
and (b) in the case of Mobile Energy, the Guaranty.
"Permitted Investments" means investments in securities that are: (a)
direct obligations of the United States of America or of any agency thereof; (b)
obligations fully guaranteed by the United States of America or any agency
thereof; (c) time deposits (which may be represented by certificates of deposit)
issued by commercial banks organized under the laws of the United States of
America or of any political subdivision thereof or under the laws of Canada,
Japan, Switzerland or any country that is a member of the European Union having
a combined capital and surplus of at least $500,000,000 and having long-term
unsecured Debt having a
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rating at least equal to (i) the highest rating assigned to the Outstanding
Indenture Securities or the Tax-Exempt Indenture Securities (as the case may be)
by at least two of the Rating Agencies or (ii) "B" by Thompson Bankwatch, Inc.
(in either case provided that such investments shall not be comprised of more
than $30,000,000 in principal amount at any given time from any one such bank);
(d) open market commercial paper of any corporation incorporated or doing
business under the laws of the United States of America or of any political
subdivision thereof then rated at least A-1/P-1 (or an equivalent thereof) by at
least two of the Rating Agencies (provided that such investments shall not be
comprised of more than $30,000,000 in principal amount at any given time from
any one such corporation); (e) obligations issued or guaranteed by, and any
other obligations the interest on which is excluded from income for Federal
income tax purposes issued by, any state of the United States of America or the
District of Columbia or the Commonwealth of Puerto Rico or any political
subdivision, agency, authority or instrumentality thereof, which issuer or
guarantor has (i) a short-term Debt rating which is (on the date of acquisition
thereof) A-1/P-1 (or an equivalent thereof) or better and (ii) a long-term Debt
rating that is (on the date of acquisition thereof) "A" or better, in each case
by at least two of the Rating Agencies (provided that such investments shall not
be comprised of more than $30,000,000 in principal amount at any given time from
any one such issuer or guarantor); (f) guaranteed investment contracts of any
financial institution organized under the laws of the United States of America
or any state thereof or under the laws of Canada, Japan, Switzerland or any
country that is a member of the European Union, which financial institution has
assets of at least $5 billion in the aggregate and has a long term Debt rating
that is (on the date of acquisition thereof) "A" or better by at least two of
the Rating Agencies (provided that such investments shall not be comprised of
more than $30,000,000 in principal amount at any given time from any one such
institution); (g) investment contracts of any financial institution either (i)
(A) fully secured by direct obligations of the United States, (B) obligations of
a Person controlled or supervised by and acting as an agency or instrumentality
of the United States or (C) securities or receipts evidencing ownership
interests in obligations or specified portions thereof described in clause (A)
or (B) above, in each case guaranteed as a full faith and credit obligation of
the United States, having a market value at least equal to 102% of the amount
deposited thereunder and possession of which obligation is held under
arrangements satisfactory to the Collateral Agent, the Indenture Trustee or the
Tax-Exempt Indenture Trustee (as the case may be) or (ii) with long-term Debt
ratings of "A" or higher and short-term ratings in one of the highest two major
categories by any of the Rating Agencies; (h) a contract or investment agreement
with a provider or guarantor (i) which provider or guarantor is rated at least
"A" or equivalent by each of the Rating Agencies (provided that if a guarantor
is party to the rating, the guaranty is unconditional and is confirmed in
writing prior to any assignment by the provider to another subsidiary of such
guarantor), (ii) providing that monies invested shall be payable to the
Indenture
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Trustee or the Tax-Exempt Indenture Trustee (as the case may be) (except to the
extent the monies invested constitute Shared Collateral, which shall be payable
to the Collateral Agent) without condition (other than notice) and without
breakage fee or other penalty, upon not more than two (2) Business Days' notice
for application when and as required or permitted under the Indenture, the
Intercreditor Agreement or the Tax-Exempt Indenture (as applicable), (iii)
stating that such contract or agreement is unconditional, expressly disclaiming
any right of setoff and providing for immediate termination in the event of
insolvency of the provider and termination upon demand of the Indenture Trustee
or the Tax-Exempt Indenture Trustee (as the case may be) (except to the extent
the monies invested constitute Shared Collateral, which shall provide for
termination upon demand of the Collateral Agent) (which demand shall only be
made at the direction of the Company) after any payment or other covenant
default by the provider and (iv) the terms and provisions of which are in form
and substance satisfactory to the Collateral Agent, the Indenture Trustee or the
Tax-Exempt Indenture Trustee (as the case may be); and (i) investments in money
market funds registered under the Investment Company Act of 1940 then rated in
the highest category by S&P and Moody's.
"Permitted Liens" means: (a) Liens specifically created, required or
permitted by the Indenture, the Tax-Exempt Indenture or the IDB Lease Agreement;
(b) the Liens created, or purported to be created, on the Collateral pursuant to
the Security Documents; (c) Liens for taxes that are either not yet due, are due
but payable without penalty or are the subject of a Good Faith Contest; (d) any
exceptions to title that are set forth on Schedule B--Section 2 of the title
insurance policy delivered to the Collateral Agent on the Closing Date (to the
extent that such exceptions have not been released or subordinated prior to the
Closing Date); (e) such minor defects, easements, rights of way, restrictions,
irregularities, encumbrances and clouds on title and statutory liens that do not
materially impair the property affected thereby and that do not individually or
in the aggregate materially impair the value of the security interests granted
under the Financing Documents; (f) the easements and other rights in favor of
third-parties contained in the Project Contracts as of the Closing Date; (g)
deposits or pledges to secure statutory obligations or appeals, release of
attachments, stays of execution or injunction, performance of bids, tenders,
contracts (other than for the repayment of borrowed money) or leases, or for
purposes of like general nature in the ordinary course of business; (h) Liens in
connection with worker's compensation, unemployment insurance or other social
security or pension obligations; (i) legal or equitable encumbrances deemed to
exist by reason of the existence of any litigation or other legal proceeding if
the same are the subject of a Good Faith Contest (excluding any attachment prior
to judgment, judgment lien or attachment in aid of execution on a judgment); (j)
mechanic's, workmen's, materialmen's, construction or other like Liens arising
in the ordinary course of business or incident to the construction or
improvement of any property in respect of obligations that are not yet due or
that are the subject of a
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Good Faith Contest; (k) Liens securing purchase money obligations that
constitute Permitted Indebtedness; (l) Liens in favor of the Mill Owners on the
Mill Owner Maintenance Reserve Account, including monies on deposit therein or
otherwise credited thereto (in accordance with the Mill Owner Maintenance
Reserve Account Agreement) not exceeding $2,000,000, to the extent arising under
the Master Operating Agreement or the Mill Owner Maintenance Reserve Account
Agreement; and (m) Liens on cash collateral not exceeding $1,500,000 in favor of
the issuer of the Refunding Letter of Credit.
"Person" means any individual, sole proprietorship, corporation,
partnership, limited liability company, joint venture, trust, unincorporated
association, institution, Governmental Authority or any other entity.
"Place of Payment" means, when used with respect to the Senior
Securities of any series, the office or agency maintained pursuant to, in the
case of the Indenture, Section 9.14(a) thereof and, in the case of the
Tax-Exempt Indenture, Section 9.13(a) thereof and, in either case, such other
place or places, if any, where the principal of and premium, if any, and
interest on the Senior Securities of such series are payable as specified in the
Series Supplemental Indenture to the Indenture or the Tax- Exempt Indenture (as
the case may be) establishing the Senior Securities of such series.
"Predecessor Securities" means, with respect to any particular Senior
Security, every previous Senior Security evidencing all or a portion of the same
Debt as that evidenced by such particular Senior Security. For purposes of this
definition, any Senior Security authenticated and delivered under, in the case
of any Indenture Security, Section 2.9 of the Indenture and, in the case of any
Tax-Exempt Indenture Security, Section 2.9 of the Tax-Exempt Indenture in lieu
of a lost, destroyed or stolen Senior Security shall be deemed to evidence the
same Debt as such lost, destroyed or stolen Senior Security.
"Prepayment Date" has the meaning specified (a) in the case of the
Indenture, in Section 6.2 thereof and (b) in the case of the Tax-Exempt
Indenture, in Section 6.2 thereof.
"Principal Payment Date" means in respect of (a) the Indenture
Securities, any January 1 or July 1 on which principal payments are due to
Holders thereof and (b) the Tax-Exempt Indenture Securities, any January 1 on
which principal payments are due to Holders thereof.
"Processing Services" has the meaning specified in the
Master Operating Agreement.
"Project Contracts" means, collectively, (a) the Energy Services
Agreements, (b) the Master Operating Agreement, (c) the Lease, (d) the
Supplementary Lease, (e) the O&M Agreement, (f) the Common Services Agreement,
(g) the Water Agreement, (h) the Boiler Ash Agreement, (i) the Environmental
Indemnity Agreements,
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(j) the Transition Agreement dated as of December 12, 1994, as amended by the
First Amendment thereto dated as of June 16, 1995 and the Second Amendment
thereto dated as of July 13, 1995, between Scott and the Company (as assignee of
Mobile Energy), (k) the Employee Transition Agreement dated as of December 12,
1994, as amended by the First Amendment thereto dated as of July 13, 1994, among
Scott, the Company (as assignee of Mobile Energy) and Southern Electric, (l) the
SCS Agreement, (m) the Easement Deeds, (n) the Asset Purchase Agreement dated as
of December 12, 1994 between Scott, as seller, and the Company (as assignee of
Mobile Energy), as buyer, (o) the Coal Supply Agreement, (p) any other Contract
entered into by either of the Mobile Energy Parties for the provision of fuel to
the Energy Complex, (q) the IDB Lease Agreement, (r) the Lease Assignment and
Assumption Agreement dated as of December 12, 1994 between Scott and the Company
(as assignee of Mobile Energy), (s) the Construction, Financing and Installment
Sale Agreement dated as of April 1, 1973 between the IDB and Scott, (t) the
Lease and Assignment Agreement dated as of December 12, 1994 between Scott and
the Company (as assignee of Mobile Energy), (u) the Facilities Lease and
Agreement dated as of December 1, 1984 between the IDB and Scott, (v) the
Sublease and Assignment Agreement dated as of December 12, 1994 between Scott
and the Company (as assignee of Mobile Energy), (w) the Construction, Financing
and Installment Sale Agreement dated as of September 1, 1976 between the IDB and
Scott, (x) the Lease and Assignment Agreement dated as of December 12, 1994
between Scott and the Company (as assignee of Mobile Energy), (y) the Recovery
Boiler Facilities Lease and Agreement dated as of December 1, 1994 between the
IDB and Scott, (z) the Lease Assignment and Assumption Agreement dated as of
December 12, 1994 between Scott and the Company (as assignee of Mobile Energy),
(aa) the Nondisturbance Agreement, (bb) the Recognition Agreements, (cc) the
Mill Owner Maintenance Reserve Account Agreement and (dd) the Transfer
Agreement.
"Project Costs" means costs and expenses (other than financing costs
and expenses) paid, incurred or to be incurred by the Company after the Closing
Date to complete the capital improvements to the Energy Complex specified in the
Master Operating Agreement in accordance with the Capital Budget and certain
other planned expenditures relating to the Energy Complex.
"Project Documents" means, collectively, the Project
Contracts and the Financing Documents.
"Project Participant" means each Person that is party to a
Project Document.
"Prudent Plant Operating Standards" has the meaning
specified in the Master Operating Agreement.
"Pulp Mill" means the pulp mill (including a process water plant and
waste water treatment plant) located at the Mobile Facility, which as of the
Closing Date is owned by Scott.
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"Pulp Mill Energy Services Agreement" means the Pulp Mill Energy
Services Agreement dated as of December 12, 1994, as amended by the First
Amendment thereto dated as of July 13, 1994, between the Pulp Mill Owner and the
Company (as assignee of Mobile Energy).
"Pulp Mill Owner" means Scott, in its capacity as owner of
the Pulp Mill.
"Pulp Mill Step-In Equipment" has the meaning specified in
the Master Operating Agreement.
"PURPA" means the Public Utility Regulatory Policies Act of
1978.
"Qualified Engineer" means an independent engineer listed on Schedule 1
to the Intercreditor Agreement, as such Schedule may be amended from time to
time in accordance with Section 11.3 of the Intercreditor Agreement.
"Qualifying Facility" means a "Qualifying Cogeneration Facility" as
specified in section 3(18)(B) of the Federal Power Act or a qualifying small
power production facility within the meaning of section 201 of PURPA.
"Rating Agencies" means, collectively, S&P, Fitch and Moody's, together
with any other nationally recognized credit agency of similar standing if any
such Person is not then currently rating the proposed subject of such rating.
"Receivables" means all of the Company's rights to payment for goods
sold or leased or services performed by the Company, including (a) rights
evidenced by an account, note, contract, security, instrument, chattel paper or
other evidence of indebtedness and (b) all "accounts" as defined in Section
9-106 of the Uniform Commercial Code as in effect in the State of New York on
the Closing Date.
"Recognition Agreements" means, collectively, (a) the Recognition,
Cooperation and Consent Agreement relating to the Mixed-Use Bonds dated as of
August 1, 1995 among the Company, the IDB, AmSouth Bank of Alabama, TRT and the
Collateral Agent and (b) the Recognition, Cooperation and Consent Agreement
relating to the Tax-Exempt Bonds dated as of August 1, 1995 among the Company,
the IDB, the Tax-Exempt Indenture Trustee and the Collateral Agent.
"Redemption Date" has the meaning specified (a) in the case of the
Indenture, in Section 6.2 thereof and (b) in the case of the Tax-Exempt
Indenture, in Section 6.2 thereof.
"Redistributed Proceeds" means, with respect to any Excess Loss
Proceeds, the excess, if any, of the Working Capital Facility's Percentage Share
of such Excess Loss Proceeds over the Working Capital Facility Distribution
Amount in respect of such Excess Loss Proceeds.
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"Refunding Debt" means Debt, the proceeds of which are used to refund
outstanding Senior Debt.
"Refunding Letter of Credit" means one or more letters of credit issued
by a commercial bank in an aggregate amount not to exceed $1,500,000 to provide
for the payment of accrued interest on the 1984 Bonds upon the redemption
thereof.
"Regular Record Date" means, for the Stated Maturity of any Senior
Security of a series, or for the Stated Maturity of any installment of principal
thereof or payment of interest thereon, the 15th day (whether or not a Business
Day) of the month prior to such Stated Maturity, or any other date specified for
such purpose in the form of Senior Security of such series attached to the
Series Supplemental Indenture to the Indenture or the Tax- Exempt Indenture (as
the case may be) relating to the Senior Securities of such series.
"Replacement Debt" means Senior Securities, the proceeds of which are
used to refinance all or a portion of the outstanding Tax-Exempt Indenture
Securities (whether by effecting a gross-up of, or by the issuance of Senior
Securities to replace, affected Tax-Exempt Indenture Securities) upon the
occurrence of a Determination of Taxability.
"Replacement Facility" means a facility with materially different
performance capabilities from the Energy Complex that can be built to provide
services to some or all of the Mills following the occurrence of an Event of
Loss or an Event of Eminent Domain.
"Required Deposit" means, at the time of any Required Deposit Event
with respect to any Reserve Account Security on deposit in any Reserve Account
Security Account, an amount equal to the aggregate Available Amount under such
Reserve Account Security at such time; provided, however, that if such Required
Deposit Event results from the occurrence of a Debt Service Event, such amount
shall be equal to the aggregate amount required to be transferred pursuant to,
if such Reserve Account Security Account is (a) the Maintenance Plan Funding
Subaccount, Section 3.5(c) of the Intercreditor Agreement, (b) the Distribution
Account, Section 3.8(b) of the Intercreditor Agreement, (c) a Debt Service
Reserve Account, Section 4.5 of the Indenture and (d) a Tax-Exempt Debt Service
Reserve Account, Section 4.6 of the Tax-Exempt Indenture.
"Required Deposit Event" means (a) in the case of any Reserve Account
Letter of Credit on deposit in any Reserve Account Security Account, (i) the
occurrence of any Debt Service Event with respect to such Reserve Account Letter
of Credit, (ii) the date that is fifteen (15) days prior to the occurrence of
any Termination Event with respect to such Reserve Account Letter of Credit,
unless such Reserve Account Letter of Credit has been replaced with monies or
other Reserve Account Security (other than, if such Reserve Account Security
Account is a Tax-Exempt Debt Service Reserve Account, a Southern Guaranty) prior
to such
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date, (iii) the occurrence of a Credit Standard Event or Default Event with
respect to such Reserve Account Letter of Credit and the continuance thereof for
a period of five (5) days, unless such Reserve Account Letter of Credit has been
replaced with other Reserve Account Security (other than, if such Reserve
Account Security Account is a Tax-Exempt Debt Service Reserve Account, a
Southern Guaranty) prior to the expiration of such period or (iv) the date on
which a Trigger Event Notice has been delivered and (b) in the case of any
Southern Guaranty on deposit in any Reserve Account Security Account, (i) the
occurrence of any Debt Service Event with respect to such Southern Guaranty,
(ii) the date that is fifteen (15) days prior to the occurrence of any
Termination Event with respect to such Southern Guaranty, unless such Southern
Guaranty has been replaced with monies or other Reserve Account Security prior
to such date, (iii) the occurrence of a Credit Standard Event with respect to
such Southern Guaranty and the continuance thereof for a period of fifteen (15)
days, unless (A) the Collateral Agent or the Indenture Trustee (as the case may
be) shall have been provided with an Officer's Certificate of Southern
certifying as to the determination that the Southern Credit Standard has been
satisfied after such occurrence and prior to the expiration of such period or
(B) such Southern Guaranty has been replaced with monies or other Reserve
Account Security prior to the expiration of such period, (iv) the occurrence of
a Default Event and the continuance thereof for a period of five (5) days,
unless such Southern Guaranty has been replaced with other Reserve Account
Security prior to the expiration of such period or (v) the date on which a
Trigger Event Notice has been delivered.
"Required Interest Deposit" means, in the case of any Monthly Transfer
Date with respect to:
(a) the Indenture Securities Interest Subaccount, an amount
that, after giving effect to monies on deposit therein immediately
prior to such Monthly Transfer Date and together with a uniform amount
to be deposited therein on each succeeding Monthly Transfer Date prior
to the next succeeding Interest Payment Date, is equal to the amount of
interest on the Indenture Securities becoming due on such Interest
Payment Date (such amount to be reduced if and to the extent that a
Redemption Date or Prepayment Date for any of the Indenture Securities
is on or precedes such Interest Payment Date, in which case the amount
of interest payable on the Indenture Securities to be so redeemed or
prepaid shall be provided for pursuant to paragraph (c) below in lieu
of this paragraph (a));
(b) the Tax-Exempt Indenture Securities Interest Subaccount,
an amount that, after giving effect to monies on deposit therein
immediately prior to such Monthly Transfer Date and together with a
uniform amount to be deposited therein on each succeeding Monthly
Transfer Date prior to the next succeeding Interest Payment Date
(unless such next succeeding Interest Payment Date is January 1, 2020,
in which case together with a uniform amount to be deposited
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therein on each succeeding Monthly Transfer Date prior to December 1,
2019), is equal to the amount of interest on the Tax-Exempt Indenture
Securities becoming due on such Interest Payment Date (such amount to
be reduced if and to the extent that a Redemption Date or Prepayment
Date for any of the Tax-Exempt Indenture Securities is on or precedes
such Interest Payment Date, in which case the amount of interest
payable on the Tax-Exempt Indenture Securities to be so redeemed or
prepaid shall be provided for pursuant to paragraph (d) below in lieu
of this paragraph (b));
(c) the Indenture Securities Redemption Subaccount, an amount
that, after giving effect to monies on deposit therein immediately
prior to such Monthly Transfer Date and together with a uniform amount
to be deposited therein on each succeeding Monthly Transfer Date prior
to each succeeding Redemption Date or Prepayment Date for the Indenture
Securities, is equal to the amount of interest thereon becoming due on
each such Redemption Date or Prepayment Date (as the case may be); and
(d) the Tax-Exempt Indenture Securities Redemption Subaccount,
an amount that, after giving effect to monies on deposit therein
immediately prior to such Monthly Transfer Date and together with a
uniform amount to be deposited therein on each succeeding Monthly
Transfer Date prior to each succeeding Redemption Date or Prepayment
Date for the Tax-Exempt Indenture Securities, is equal to the amount of
interest thereon becoming due on each such Redemption Date or
Prepayment Date (as the case may be).
"Required Modifications" means those modifications reasonably necessary
for the Energy Complex to remain in compliance with all material Governmental
Approvals and maintain, at a minimum, the Maximum Capacity (as defined in the
Master Operating Agreement) levels as in effect on the Closing Date.
"Required Modifications Subaccount" means the subaccount of the
Completion Account so designated established and created under Section 2.2(c) of
the Intercreditor Agreement.
"Required Principal Deposit" means in the case of any Monthly Transfer
Date with respect to:
(a) the Indenture Securities Principal Subaccount, an amount
equal to one-sixth (1/6th) of the amount of principal of the Indenture
Securities becoming due on each Principal Payment Date therefor
occurring within the six (6) months immediately succeeding the month in
which such Monthly Transfer Date occurs (unless such Principal Payment
Date occurs within six (6) months after the Closing Date or any other
date on which any Indenture Securities are originally issued, in which
case an amount that, after giving effect to monies on deposit therein
immediately prior to such Monthly Transfer Date and together with a
uniform amount to be deposited therein on each succeeding Monthly
Transfer Date
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prior to such Principal Payment Date, is equal to the amount of
principal thereof becoming due on such Principal Payment Date) (such
amount to be reduced if and to the extent that a Redemption Date or
Prepayment Date for any of the Indenture Securities is on or precedes
such Principal Payment Date, in which case the amount of principal
payable with respect to the Indenture Securities to be so redeemed or
prepaid shall be provided for pursuant to paragraph (c) below in lieu
of this paragraph (a));
(b) the Tax-Exempt Indenture Securities Principal Subaccount,
one-twelfth (1/12th) (unless such Monthly Transfer Date occurs on or
after January 1, 2019, in which case one-eleventh (1/11th)) of the
amount of principal of the Tax-Exempt Indenture Securities becoming due
on each Principal Payment Date therefor occurring within the twelve
(12) months immediately succeeding the month in which such Monthly
Transfer Date occurs (unless such Principal Payment Date occurs within
twelve (12) months after the Closing Date or any other date on which
any Tax-Exempt Indenture Securities are originally issued, in which
case an amount that, after giving effect to monies on deposit therein
immediately prior to such Monthly Transfer Date and together with a
uniform amount to be deposited therein on each succeeding Monthly
Transfer Date prior to such Principal Payment Date, is equal to the
amount of principal thereof becoming due on such Principal Payment
Date)(such amount to be reduced if and to the extent that a Redemption
Date or Prepayment Date for any of the Tax-Exempt Indenture Securities
is on or precedes such Principal Payment Date, in which case the amount
of principal payable with respect to the Tax-Exempt Indenture
Securities to be so redeemed or prepaid shall be provided for pursuant
to paragraph (d) below in lieu of this paragraph (b));
(c) the Indenture Securities Redemption Subaccount, an amount
that, after giving effect to monies on deposit therein immediately
prior to such Monthly Transfer Date and together with a uniform amount
to be deposited therein on each succeeding Monthly Transfer Date prior
to each succeeding Redemption Date or Prepayment Date for the Indenture
Securities, is equal to the amount of principal thereof and premium, if
any, thereon becoming due on each such Redemption Date or Prepayment
Date (as the case may be); and
(d) the Tax-Exempt Indenture Securities Redemption Subaccount,
an amount that, after giving effect to monies on deposit therein
immediately prior to such Monthly Transfer Date and together with a
uniform amount to be deposited therein on each succeeding Monthly
Transfer Date prior to each succeeding Redemption Date or Prepayment
Date for the Tax-Exempt Indenture Securities, is equal to the amount of
principal thereof and premium, if any, thereon becoming due on each
such Redemption Date or Prepayment Date (as the case may be).
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"Required Senior Creditors" means Senior Secured Parties holding or
otherwise representing 331/3% of the Combined Exposure.
"Reserve Account Letter of Credit" means a letter of credit issued by a
commercial bank whose long-term unsecured Debt is rated at least "A" by S&P, "A"
by Fitch and "A2" by Moody's.
"Reserve Account Security" means either, or any combination of, (a) one
or more Southern Guaranties or (b) one or more Reserve Account Letters of
Credit.
"Reserve Account Security Accounts" means, collectively, each Debt
Service Reserve Account (if any), each Tax-Exempt Debt Service Reserve Account
(if any), the Maintenance Plan Funding Subaccount and the Distribution Account.
"Responsible Officer" means, when used with respect to the Collateral
Agent, the Indenture Trustee and the Tax-Exempt Indenture Trustee, (a) any
officer of the Collateral Agent, the Indenture Trustee or the Tax-Exempt
Indenture Trustee (as the case may be) within the Corporate Trust Office of the
Collateral Agent, the Indenture Trustee or the Tax-Exempt Indenture Trustee (as
the case may be), including any vice president, any assistant vice president,
any assistant secretary or any assistant treasurer, (b) any other officer of the
Collateral Agent, the Indenture Trustee or the Tax-Exempt Indenture Trustee (as
the case may be) performing functions similar to those performed by any of the
officers designated in clause (a) above and (c) with respect to a particular
corporate trust matter, any other officer of the Collateral Agent, the Indenture
Trustee or the Tax-Exempt Indenture Trustee (as the case may be) to whom such
matter is referred because of such other officer's knowledge of and familiarity
with the particular subject.
"Restricted Payment Alternative Agreement Requirements" means, with
respect to any Project Contract, another Contract entered into by the Company
with one or more other Persons in substitution for or replacement of any such
Project Contract that has been declared unenforceable or rejected or otherwise
terminated, with respect to some or all of the Processing Services or other
services formerly provided by or to the Company thereunder, provided that either
(a) the Company has delivered to the Collateral Agent a letter from any two of
the Rating Agencies (then currently rating the Indenture Securities or the
Tax-Exempt Indenture Securities) confirming that, after giving effect to such
alternative Contract, the ratings of the Outstanding Indenture Securities or the
Outstanding Tax-Exempt Indenture Securities (as the case may be) are Investment
Grade or (b) the Company (i) has provided to the Collateral Agent the Revenue
Sufficiency Certification and (ii) has delivered to the Collateral Agent an
Officer's Certificate, together with an Independent Engineer Confirmation,
certifying that (A) the term of such alternative Contract extends through the
earlier of (1) the final maturity of the Outstanding Indenture Securities or the
Outstanding Tax-Exempt Indenture Securities (as the case may be) and (2) the
term of such Project Contract, (B) such alternative
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Contract contains termination provisions no less favorable to the Company than
those contained in such Project Contract, (C) such alternative Contract has been
in full force and effect for at least thirty-six (36) months, (D) the average of
the two annual Senior Debt Service Coverage Ratios for the four immediately
preceding semi-annual payment periods was equal to at least 1.25 to 1.0 and,
based on projections prepared by the Company on a reasonable basis, the average
of the annual Senior Debt Service Coverage Ratios through the final maturity
date of the Outstanding Indenture Securities or the Outstanding Tax-Exempt
Indenture Securities (as the case may be) is projected to be at least 1.25 to
1.0 and (E) such alternative Contract is reasonably capable of being performed
by the parties thereto.
"Restricted Payments" means, collectively, (a) payments from the
Subordinated Fee Account or any other payment in respect of Subordinated Fees,
(b) distributions (from the Distribution Account or otherwise), including a
return of capital contributions and dividends, paid to, or at the direction or
for the benefit of, any Affiliate of the Company, but excluding distributions of
cash from any Account to the extent such cash has been replaced with Reserve
Account Security in accordance with the terms of the Financing Documents, (c)
the payment of principal of or premium, if any, or interest on any Affiliate
Subordinated Debt, (d) the repurchase by the Company of any interest of any
Member, or (e) the making of any loans or other advances from the Company to any
Affiliate of the Company, but excluding advances of cash to the extent such cash
(i) has been replaced with Reserve Account Security in accordance with the terms
of the Financing Documents or (ii) constitutes a payment required under the O&M
Agreement or the SCS Agreement.
"Revenue Account" means the Account so designated established and
created under Section 2.2(a) of the Intercreditor Agreement.
"Revenue Sufficiency Certification" means an Officer's Certificate of
the Company, together with an Independent Engineer Confirmation, to the effect
that, based upon projections prepared by the Company in accordance with Section
1.15 of the Indenture or Section 1.12 of the IDB Lease Agreement, or of any
comparable provision of the Working Capital Facility, the Project Contracts then
in effect (including any alternative Contract entered into, or to be entered
into, by the Company with one or more other Persons in substitution or
replacement of any other Project Contract as contemplated by the Event of
Default Alternative Agreement Requirements or the Restricted Payment Alternative
Agreement Requirements) generate sufficient Revenues to enable the Company to
pay its debts and other obligations (including Operation and Maintenance Costs)
when they become due through the final maturity of the Outstanding Indenture
Securities or the Tax-Exempt Indenture Securities (as the case may be).
"Revenues" means (without duplication), for any period, the revenues
received by the Company for use of the services and facilities of the Energy
Complex including (a) amounts received
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by the Company under the Project Contracts, (b) interest and other income earned
and credited on monies deposited in the Accounts (to the extent not retained in
such Accounts), (c) the proceeds of the sale of any part of the Energy Complex,
provided that such sale is not prohibited by the Financing Documents, (d) the
proceeds of any business interruption insurance and other payments received for
interruption of operations (excluding any proceeds of any liability or physical
damage insurance) and (e) all other monies that have been deposited into the
Revenue Account as required or permitted by the terms of the Financing
Documents. Notwithstanding the foregoing, "Revenues" do not include (i) capital
contributions to the Company, (ii) the proceeds of any Debt or Loss Proceeds,
(iii) amounts received by the Company in connection with the exercise of Company
Step-In Rights (to the extent in excess of the Company's expenses incurred in
connection therewith, including the cure or the attempted cure of the related
Pulp Mill Triggering Event (as defined in the Master Operating Agreement)), (iv)
monies transferred from the Completion Account to the Revenue Account pursuant
to Section 3.9(c) of the Intercreditor Agreement, (v) monies transferred from
any Debt Service Reserve Account to the Revenue Account pursuant to Section 4.5
of the Indenture, (vi) amounts received by the Company with respect to the 1994
Bonds and (vii) monies deposited into any Reserve Account Security Account in
replacement (or satisfaction) of Reserve Account Security on deposit therein
(including monies deposited into the Maintenance Plan Funding Subaccount
pursuant to the last sentence of Section 3.5(a) of the Intercreditor Agreement).
"S&P" means Standard & Poor's Ratings Group, a New York
corporation.
"Scott" means Scott Paper Company, a Pennsylvania
corporation.
"SCS" means Southern Company Services, Inc., an Alabama
corporation.
"SCS Agreement" means the Agreement dated July 14, 1995 between SCS and
the Company.
"S.D. Warren" means S.D. Warren Company, a Pennsylvania
corporation.
"SEC" means the Securities and Exchange Commission of the
United States of America.
"Secretary" means, in the case of a corporation (including Mobile
Energy) or limited liability company (including the Company) the secretary or an
assistant secretary of such corporation or limited liability company (as the
case may be).
"Secured Obligations" means, collectively, the Financing
Liabilities, the Trustee Claims, the Collateral Agent Claims and
the IDB Claims.
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"Secured Party" means Bankers Trust (Delaware) or any other Person
appointed as a substitute or replacement Secured Party under the Security
Agreement.
"Securities" has the meaning specified (a) in the case of the
Indenture, in the first "WHEREAS" clause thereof and (b) in the case of the
Tax-Exempt Indenture, in the last "WHEREAS" clause thereof.
"Securities Act" means the Securities Act of 1933.
"Security Agreement" means the Assignment and Security Agreement dated
as of August 1, 1995 among the Company, the IDB and the Secured Party.
"Security Documents" means, collectively, (a) the Mortgage, (b) the
Security Agreement, (c) the Indenture (including any Series Supplemental
Indenture), (d) the Intercreditor Agreement, (e) the Tax-Exempt Indenture
(including any Series Supplemental Indenture), (f) the IDB Lease Agreement, (g)
the Consents to Assignment and (h) each Financing Statement.
"Security Interest" means the Liens created, or purported to be
created, on Shared Collateral pursuant to any Security Document.
"Security Register" has the meaning specified in Section 2.8 of the
Indenture or Section 2.8 of the Tax-Exempt Indenture (as the case may be).
"Security Registrar" means any Person acting as Security Registrar
under the Indenture or the Tax-Exempt Indenture pursuant to Section 9.14 or
Section 9.13 (as the case may be) thereof.
"Senior Creditor Certificate" means a certificate of a Senior Secured
Party, signed by an Authorized Representative of such Senior Secured Party, (a)
setting forth the principal amount of the Financing Liabilities due or owing to,
or in favor of or for the benefit of, such Senior Secured Party as of the date
of such certificate and the outstanding unutilized Financing Commitments of such
Senior Secured Party as of the date of such certificate, (b) setting forth a
contact person for such Senior Secured Party, including phone and facsimile
numbers for such person, (c) directing the Collateral Agent to take a specified
action and (d) stating specifically the action the Collateral Agent is directed
to take and the Security Document and the provision thereof pursuant to which
the Collateral Agent is being directed to act.
"Senior Debt" means, collectively, the Outstanding Senior
Securities and the outstanding Working Capital Facility Loans.
"Senior Debt Service Coverage Ratio" means, for any period and without
duplication, the ratio of (a) (i) the sum of (A) all Revenues for such period
and (B) the amount of interest and other
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income earned and credited on monies deposited in the Accounts (to the extent
retained in such Accounts) for such period minus (ii) the sum of (A) Operation
and Maintenance Costs for such period (except for such costs paid with monies on
deposit in the Maintenance Reserve Account and the Mill Owner Maintenance
Reserve Account) and (B) the aggregate of the amounts deposited into the
Maintenance Reserve Account for such period (but for purposes of calculating any
projected Senior Debt Service Coverage Ratio, not less than the Maintenance
Reserve Account Required Deposit for such period) and the Mill Owner Maintenance
Reserve Account for such period to (b) the sum of (i) all amounts payable by the
Company during such period in respect of principal of and premium, if any, and
interest on the Outstanding Indenture Securities, (ii) all amounts payable by
the Company during such period in respect of rent under the IDB Lease Agreement,
(iii) all amounts payable by the Company during such period in respect of
payment obligations under the Working Capital Facility (other than repayment of
principal), (iv) all amounts payable by the Company during such period as fees
and other expenses (including any interest thereon) to any fiduciary acting in
such capacity under the Security Documents and (v) the aggregate amount of
overdue payments in respect of clauses (b)(i) through (iv) above from previous
periods, in each case determined on a cash basis in accordance with GAAP.
Neither payments (including deemed payments) nor receipts (including deemed
receipts) in respect of principal of or premium, if any, or interest on the 1994
Bonds shall be included for purposes of calculating the Senior Debt Service
Coverage Ratio.
"Senior Debt Service Requirement" means, for any period, the sum of (a)
all amounts payable by the Company during such period in respect of principal of
and premium, if any, and interest on the Outstanding Indenture Securities, (b)
all amounts payable by the Company during such period in respect of rent under
the IDB Lease Agreement, (c) all amounts payable by the Company during such
period in respect of payment obligations under the Working Capital Facility
(other than repayment of principal), (d) all amounts payable by the Company
during such period as fees and other expenses (including any interest thereon)
to any fiduciary acting in such capacity under the Security Documents and (e)
the aggregate amount of overdue payments in respect of the foregoing from
previous periods, in each case determined on a cash basis in accordance with
GAAP.
"Senior Debt Termination Date" means the date on which all Financing
Liabilities, other than contingent liabilities and obligations that are
unasserted at such date, have been paid and satisfied in full and all Financing
Commitments have been terminated.
"Senior Secured Parties" means, collectively, (a) the Indenture Trustee
(on behalf of the Holders of the Indenture Securities from time to time and,
solely in its capacity as trustee on behalf of such Holders, itself), (b) the
Tax-Exempt Indenture Trustee (on behalf of the Holders of the Tax-Exempt
Indenture Securities from time to time and, solely in its
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capacity as trustee on behalf of such Holders, itself) and (c) the Working
Capital Facility Provider (on behalf of the Lenders from time to time and
itself).
"Senior Securities" means, collectively, the Indenture
Securities and the Tax-Exempt Indenture Securities.
"Series Supplemental Indenture" means an indenture supplemental to the
Indenture or the Tax-Exempt Indenture entered into by the Mobile Energy Parties
or the IDB (as the case may be) and the Indenture Trustee or the Tax-Exempt
Indenture Trustee (as the case may be) for the purpose of establishing, in
accordance with such indenture, the title, form and terms of the Senior
Securities of any series.
"Shared Collateral" means all Collateral other than (a) the Collateral
referenced in clause (a) of the definition of Indenture Securities Collateral
and (b) the Collateral referenced in clause (a) of the definition of Tax-Exempt
Indenture Securities Collateral.
"Sinking Fund" has the meaning specified in Section 7.2 of the
Indenture or Section 7.2 of the Tax-Exempt Indenture (as the case may be).
"Sinking Fund Redemption Dates" has the meaning specified in Section
7.2 of the Indenture or Section 7.2 of the Tax-Exempt Indenture (as the case may
be).
"Sinking Fund Requirements" has the meaning specified in Section 7.2 of
the Indenture or Section 7.2 of the Tax-Exempt Indenture (as the case may be).
"Site" means the real property on which the Energy Complex is situated,
as more fully described in the Mortgage.
"Southern" means The Southern Company, a Delaware
corporation.
"Southern Credit Standard" means, at any time, (a) Southern's
outstanding senior long-term Debt is then rated at least, and not rated less
than, "A" by either S&P or Moody's (unless such senior long-term Debt is not
then rated by either S&P or Moody's, in which case each Designated Southern
Subsidiary has outstanding senior long-term Debt that is then rated at least,
and not rated less than, BBB by S&P or Baa2 by Moody's) and (b) the sum of (i)
cash and cash equivalents (including marketable securities) of Southern and the
Designated Southern Subsidiaries, (ii) amounts available from committed credit
facilities of Southern and the Designated Southern Subsidiaries and (iii)
amounts available from commercial paper authorized to be issued by Southern and
rated not less than A-1/P-1 by S&P or Moody's (in each case as of the end of
Southern's most recently completed fiscal quarter and provided that such cash
and cash equivalents and other amounts are available, without restriction, for
distribution to the Collateral Agent or the Indenture
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Trustee, upon fifteen (15) days' notice) is equal to at least the aggregate
amount of Southern Guaranties then outstanding multiplied by four.
"Southern Electric" means Southern Electric International,
Inc., a Delaware corporation.
"Southern Guaranty" means one or more unconditional, absolute and
irrevocable guaranties from Southern to be delivered to (a) the Collateral Agent
for deposit into the Maintenance Plan Funding Subaccount or the Distribution
Account pursuant to and in accordance with Section 3.15(a) of, and in
substantially the form attached as Exhibit C to, the Intercreditor Agreement or
(b) the Indenture Trustee for deposit into each Debt Service Reserve Account (if
any) pursuant to and in accordance with Section 4.6(a) of, and in substantially
the form attached as Exhibit A to, the Indenture, provided that, in the case of
clause (a) and (b) above, the Southern Credit Standard is satisfied at the time
of such delivery and deposit.
"Southern Master Tax Sharing Agreement" means the Income Tax
Allocation Agreement dated as of December 29, 1981 among Southern
and its corporate subsidiaries.
"Special Record Date" means, with respect to the payment of any
defaulted principal or interest, a date fixed by the Indenture Trustee or the
Tax-Exempt Indenture Trustee (as the case may be) pursuant to, in the case of
the Indenture Trustee, Section 2.10 of the Indenture and, in the case of the
Tax-Exempt Indenture Trustee, Section 2.10 of the Tax-Exempt Indenture.
"Stated Maturity" means, when used with respect to any Senior Security
or any installment of principal thereof or payment of interest thereon, the date
specified in such Senior Security as the fixed date on which such Senior
Security or such installment of principal or payment of interest is due and
payable.
"Subordinated Debt" means, collectively, Affiliate
Subordinated Debt and Non-Affiliate Subordinated Debt.
"Subordinated Debt Account" means the Account so designated established
and created under Section 2.2(a) of the Intercreditor Agreement.
"Subordinated Debt Provider" means any Person providing
Subordinated Debt pursuant to a Subordinated Loan Agreement.
"Subordinated Fee" means a fee in exchange for the provisions of goods
or services to either of the Mobile Energy Parties, the payment of which is
fully subordinated to the Secured Obligations as to payment and exercise of
remedies and that is payable only to the extent it would otherwise be
distributable if on deposit in the Distribution Account.
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"Subordinated Fee Account" means the Account so designated established
and created under Section 2.2(a) of the Intercreditor Agreement.
"Subordinated Loan Agreement" means a binding agreement with a
Subordinated Debt Provider providing unsecured debt financing for the benefit of
the Energy Complex and on terms and conditions that shall satisfy the
requirements of the Financing Documents.
"Supplementary Lease" means the Supplementary Lease Agreement dated as
of December 12, 1994, as amended by the First Amendment thereto dated as of July
13, 1995, between Scott, as lessor, and the Company (as assignee of Mobile
Energy), as lessee.
"Tax-Exempt Bonds" means the Tax-Exempt Indenture Securities
issued on the Closing Date under the Tax-Exempt Indenture.
"Tax-Exempt Debt Service Reserve Account" means the Account so
designated established and created under Section 4.4(a) of the Tax-Exempt
Indenture and any Account so designated and created under any Series
Supplemental Indenture to the Tax-Exempt Indenture for the benefit of Holders of
the Tax-Exempt Indenture Securities established thereunder.
"Tax-Exempt Debt Service Reserve Account Required Balance" means (a) in
respect of the Tax-Exempt Debt Service Reserve Account established and created
under Section 4.4(a) of the Tax- Exempt Indenture, the amount designated in
Section 4.4(b) thereof and (b) in respect of any other Tax-Exempt Debt Service
Reserve Account, the amount so designated in the Series Supplemental Indenture
to the Tax-Exempt Indenture establishing such Tax- Exempt Debt Service Reserve
Account.
"Tax-Exempt Indenture" means the Amended and Restated Trust Indenture
dated as of August 1, 1995 between the IDB and the Tax- Exempt Indenture
Trustee.
"Tax-Exempt Indenture Accounts" means, with respect to the Tax-Exempt
Indenture Securities of any series, the Tax-Exempt Indenture Securities Account
and each Tax-Exempt Debt Service Reserve Account (if any) established for the
benefit of Holders of the Tax-Exempt Indenture Securities of such series.
"Tax-Exempt Indenture Distribution Amount" means, in respect of any
Excess Loss Proceeds with respect to an Event of Loss or Event of Eminent Domain
to be applied pursuant to Section 6.2(b) of the Intercreditor Agreement, an
amount equal to the Tax-Exempt Indenture's Percentage Share of (a) such Excess
Loss Proceeds and (b) the Redistributed Proceeds with respect to such Excess
Loss Proceeds.
"Tax-Exempt Indenture Securities" means all Outstanding Debt
issued pursuant to the Tax-Exempt Indenture.
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"Tax-Exempt Indenture Securities Account" means the Account so
designated established and created under Section 4.1 of the Tax-Exempt
Indenture.
"Tax-Exempt Indenture Securities Collateral" means, collectively, (a)
all of the collateral mortgaged, pledged or assigned, or purported to be
mortgaged, pledged or assigned, to the Tax-Exempt Indenture Trustee by the IDB
pursuant to the granting and assigning clauses of the Tax-Exempt Indenture and
(b) the Shared Collateral.
"Tax-Exempt Indenture Securities Interest Subaccount" means the
subaccount of the Tax-Exempt Indenture Securities Account so designated
established and created under Section 4.1 of the Tax- Exempt Indenture.
"Tax-Exempt Indenture Securities Principal Subaccount" means the
subaccount of the Tax-Exempt Indenture Securities Account so designated
established and created under Section 4.1 of the Tax- Exempt Indenture.
"Tax-Exempt Indenture Securities Redemption Subaccount" means the
subaccount of the Tax-Exempt Indenture Securities Account so designated
established and created under Section 4.1 of the Tax-Exempt Indenture.
"Tax-Exempt Indenture Trustee" means First Union National Bank of
Georgia, a national banking association organized and existing under the laws of
the United States of America.
"Tax-Exempt Project" means those portions of the Energy Complex
financed with the proceeds of the 1983 Bonds, as described generally in Exhibit
A to the IDB Lease Agreement.
"Termination Event" means, with respect to any Reserve Account
Security, such Reserve Account Security shall have terminated or expired (other
than any termination thereof pursuant to the last sentence of Section 3.8(c) of
the
Intercreditor Agreement).
"Third Party Engineer" means the independent engineering firm chosen
from the list of engineers maintained as Schedule 1 to the Intercreditor
Agreement and appointed Third Party Engineer pursuant to Section 11.2 of the
Intercreditor Agreement.
"Third Party Engineer Dispute Resolution" means the dispute resolution
process involving a Third Party Engineer pursuant to Section 11.2 of the
Intercreditor Agreement.
"Tissue Mill" means the tissue mill located at the Mobile Facility,
which as of the Closing Date is owned by Scott.
"Tissue Mill Energy Services Agreement" means the Tissue Mill Energy
Services Agreement dated as of December 12, 1994, as amended by the First
Amendment thereto dated as of July 13, 1995,
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between the Tissue Mill Owner and the Company (as assignee of
Mobile Energy).
"Tissue Mill Owner" means Scott, in its capacity as owner of
the Tissue Mill.
"Total Debt Service Coverage Ratio" means, for any period and without
duplication, the ratio of (a) (i) the sum of (A) all Revenues for such period
and (B) the amount of interest and other income earned and credited on monies
deposited in the Accounts (to the extent retained in such Accounts) for such
period minus (ii) the sum of (A) Operations and Maintenance Costs for such
period (except for such costs paid with monies on deposit in the Maintenance
Reserve Account or the Mill Owner Maintenance Reserve Account) and (B) the
aggregate of the amounts deposited into the Maintenance Reserve Account for such
period (but for purposes of calculating any projected Total Debt Service
Coverage Ratio, not less than the Maintenance Reserve Account Required Deposit
for such period) and the Mill Owner Maintenance Reserve Account for such period
to (b) the sum of (i) all amounts payable by the Company during such period in
respect of principal of and premium, if any, and interest on the Outstanding
Indenture Securities, (ii) all amounts payable by the Company during such period
in respect of rent under the IDB Lease Agreement, (iii) all amounts payable by
the Company during such period in respect of payment obligations under the
Working Capital Facility (other than repayments of principal), (iv) all amounts
payable by the Company as fees and other expenses (including any interest
thereon) to any fiduciary acting in such capacity under the Security Documents,
(v) all amounts payable by the Company during such period in respect of
principal of and premium, if any, and interest on the outstanding Subordinated
Debt, (vi) all amounts payable by the Company during such period as fees and
other expenses (including any interest thereon) to any Subordinated Debt
Provider and (vii) the aggregate amount of overdue payments in respect of
clauses (b)(i) through (vi) above from previous periods, in each case determined
on a cash basis in accordance with GAAP. Neither payments (including deemed
payments) nor receipts (including deemed receipts) in respect of principal of or
premium, if any, or interest on the 1994 Bonds shall be included for purposes of
calculating the Total Debt Service Coverage Ratio.
"Transfer Agreement" means the Omnibus Deed, Bill of Sale,
General Assignment and Conveyance Agreement dated July 14, 1995
between Mobile Energy and the Company.
"Trigger Event" means (a) an Event of Default under the Indenture and
an acceleration of Indenture Securities thereunder, (b) an Event of Default
under the Tax-Exempt Indenture and an acceleration of Tax-Exempt Indenture
Securities thereunder, (c) an Event of Default under the Working Capital
Facility and an acceleration of Working Capital Facility Loans thereunder or (d)
a Bankruptcy Event in respect of either of the Mobile Energy Parties and the
expiration of the shortest applicable grace period with respect thereto.
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"Trigger Event Period" means that a Trigger Event shall have occurred
and be continuing, provided that, except in the case of any such Trigger Event
that shall have resulted from a Bankruptcy Event in respect of either of the
Mobile Energy Parties, the written request of the Required Senior Creditors
specified in Section 5.1(a) of the Intercreditor Agreement shall have been
delivered to the Collateral Agent and not been rescinded.
"TRT" means Three Rivers Timber Company, a Washington
corporation.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended, as in force at the date as of which the Indenture was executed, except
as provided in Section 11.6 thereof; provided, however, that if the Trust
Indenture Act of 1939 is amended after such date, "Trust Indenture Act" means,
to the extent required by such amendment, the Trust Indenture Act of 1939, as so
amended.
"Trustee Claims" means all obligations of the Mobile Energy Parties,
now or hereafter existing, to pay fees, costs, expenses or other amounts to (a)
the Indenture Trustee under the Indenture or (b) the Tax-Exempt Indenture
Trustee under the Tax-Exempt Indenture.
"Uniform Commercial Code" means the Uniform Commercial Code of the
jurisdiction the law of which governs the Contract in which such term is used.
"U.S. Government Obligations" means non-callable direct
obligations of or obligations as to which the payment of
principal of and interest is unconditionally guaranteed by the
United States of America.
"Water Agreement" means the Water Procurement and Effluent Service
Agreement dated as of December 12, 1994, as amended by the First Amendment
thereto dated as of July 13, 1995, among the Company (as assignee of Mobile
Energy), the Pulp Mill Owner, the Paper Mill Owner and the Tissue Mill Owner.
"Wind-Up Event" means, at any time upon and after a Trigger Event, the
application of monies on deposit in any of the Intercreditor Agreement Accounts,
or of proceeds from any sale, disposition or other realization of any Shared
Collateral (other than the Intercreditor Agreement Accounts), in either case to
the payment of amounts owing in respect of any Senior Debt and as a result of
the exercise of remedies by the Collateral Agent under Article V of the
Intercreditor Agreement.
"Working Capital Escalation Factor" means, with respect to any Fiscal
Year, a factor (calculated in June of such Fiscal Year) equal to the amount
obtained by (a) dividing (i) the GDPIPD most recently published during such
Fiscal Year by (ii) the GDPIPD published during the prior Fiscal Year on the
date that most closely corresponds to, and is on or prior to, the date of such
GDPIPD most recently published (provided that if the amount obtained is less
than or equal to 1.015, then such amount shall
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be deemed to equal 1.015), (b) then subtracting 0.015, and (c) then multiplying
by the Working Capital Escalation Factor with respect to the immediately
preceding Fiscal Year.
"Working Capital Facility" means the Revolving Credit Agreement dated
as of August 1, 1995 between the Company and the Working Capital Facility
Provider or any other Contract between the Company and a Working Capital
Facility Provider pursuant to which funds for the working capital requirements
of the Company are provided.
"Working Capital Facility Account" means the Account so designated
established and created under Section 2.2(a) of the Intercreditor Agreement.
"Working Capital Facility Commitment" means the aggregate of the
commitments of the Lenders under the Working Capital Facility.
"Working Capital Facility Distribution Amount" means, in respect of any
Excess Loss Proceeds with respect to an Event of Loss or Event of Eminent Domain
to be applied pursuant to Section 6.2(b) of the Intercreditor Agreement and
provided that the Working Capital Facility Commitment is subject to reduction in
connection with such Event of Loss or Event of Eminent Domain pursuant to the
terms of the Working Capital Facility, an amount equal to the excess, if any, of
the Working Capital Facility's Percentage Share of such Excess Loss Proceeds
over the unutilized Working Capital Facility Commitment in effect immediately
prior to such reduction, unless the Company would not be able to borrow Working
Capital Facility Loans (because the conditions set forth in Article III of the
Working Capital Facility are not available or not satisfied), in which case the
lesser of (a) the Working Capital Facility's Percentage Share of such Excess
Loss Proceeds and (b) the outstanding Working Capital Loans at such time.
"Working Capital Facility O&M Loan" means a Working Capital Facility
Loan, to the extent the proceeds thereof are applied to Operation and
Maintenance Costs other than (a) rebates to the United States government
pursuant to Section 148 of the Code, (b) Maintenance Expenditures and (c)
payments of IDB Claims.
"Working Capital Facility Provider" means Banque Paribas, a French
banking corporation, and each other Person providing funds to the Company
pursuant to a Working Capital Facility.
"Working Capital Facility Loan" means a Loan (as defined in the Working
Capital Facility) advanced by the Working Capital Facility Provider pursuant to
the Working Capital Facility.
113
<PAGE>
Schedule 4.2
INSURANCE POLICIES
General Conditions:
(a) All policies shall waive the rights of subrogation
against the Collateral Agent.
(b) All property and liability policies shall name each of the
Collateral Agent and the IDB as an additional insured. All policies protecting
real and personal property or loss of income shall include a Lenders Loss
Payable provision for the benefit of the Collateral Agent.
(c) All policies shall be endorsed to provide a minimum of thirty (30)
days notice of cancellation, nonrenewal, or material change (restricting
coverage) (ten (10) days in the case of cancellation for non-payment of
premiums) to the Collateral Agent and the Company.
(d) Where commercially available, all policies shall stipulate by
endorsement or equivalent policy language that the additional insured status of
the Collateral Agent and the IDB places no responsibility on the Collateral
Agent or the IDB (as the case may be) for the payment of policy premiums, nor
does the action or failure to take action by any other insured or additional
insured invalidate coverages for the Collateral Agent or the IDB under said
policy.
(e) A severability of interest clause or equivalent cross
liability endorsement shall be included in each policy.
(f) All policies shall be primary as respects coverage
provided for the Energy Complex and the Site.
(g) All policies shall be provided through insurance carriers rated
A-IX or better by the Best's Insurance Guide (except for policies underwritten
by Lloyd's of London, AEGIS and approved English companies) or other insurance
companies reasonably acceptable to the Collateral Agent, in each case, which are
authorized to do business in the State of Alabama.
(h) All policies shall stipulate by endorsement or equivalent policy
language that following a Wind-Up Event, the Collateral Agent shall have the
right to make all claims made under said policy.
(i) All policies (other than liability policies) shall stipulate by
endorsement or equivalent policy language that following a Wind-Up Event, said
policy can be assigned to the Collateral Agent.
Schedule 4.2-1
<PAGE>
The following coverages shall be maintained in effect at all times
until all obligations of the Mobile Energy Parties pursuant to this Agreement,
the Tax-Exempt Indenture Securities, the Working Capital Facility, the Guaranty
and the other Security Documents have been fully discharged:
Required Insurance:
(a) Workers' Compensation Insurance. Workers' compensation insurance,
as required by state and Federal laws (including United States Longshoremen and
Harbor Workers and Maritime Liability (Jones Act) Insurance), including
employer's liability insurance for all employees of the Energy Complex in the
minimum amount of $1,000,000 per occurrence and in the aggregate where
applicable; provided, however, that the Company may satisfy such obligations, in
whole or in part, through the self-insurance of the Operator against workers'
compensation claims.
(b) Comprehensive General Liability Insurance. Comprehensive general
liability insurance against claims for personal injury (including bodily injury
and death), and property damage. Such insurance shall provide coverage for
products-completed operations, premises/operations, blanket contractual,
explosion, collapse and underground coverage, broad form property damage and
personal injury insurance coverage to protect the Collateral Agent against
claims arising out of operations performed by the Company and its
subcontractors, with a $1,000,000 minimum limit per occurrence for combined
bodily injury and property damage and with an aggregate of $2,000,000. The
general liability insurance shall, at a minimum, be provided under a 1986 ISO
Commercial General Liability form of policy or equivalent policy and shall be
written on an occurrence basis, or the AEGIS claim-first-made policy form.
(c) Comprehensive Automobile Liability. Comprehensive automobile
liability insurance against claims of personal injury (including bodily injury
and death) and property damage, including loss of use thereof, covering all
owned, leased, non-owned and hired vehicles used by the Company in the operation
of the Energy Complex, with a $1,000,000 minimum limit per occurrence for bodily
injury and property damage and a $2,000,000 minimum limit per occurrence for
combined bodily injury and property damage.
(d) Aircraft and Watercraft Liability. Aircraft Liability insurance (if
applicable), including Passengers and Crew Liability, and Watercraft Liability
insurance (if applicable), each having a $25,000,000 minimum limit per
occurrence for property damage and bodily injury, covering all aircraft or
watercraft that is owned, leased or chartered by the Company or any of its
subcontractors. If the performance of any obligations by a subcontractor in
connection with services performed at the Energy Complex requires the use of any
aircraft or watercraft that is owned, leased or chartered by such subcontractor
or any of its subcontractors, such subcontractor shall obtain Aircraft Liability
and Watercraft
Schedule 4.2-2
<PAGE>
Liability insurance with a $25,000,000 minimum limit per occurrence for property
damage and bodily injury. If a helicopter is used to lift materials or
equipment, any Aircraft Liability insurance required hereunder shall not contain
any exclusion of coverage for "slung-cargo."
(e) Umbrella Liability or Excess Insurance. Excess Liability insurance
on an "occurrence" basis, or the AEGIS claims-first-made policy form pursuant to
an "Umbrella" policy covering claims in excess of and following the terms of the
underlying insurance as set forth in (a), (b) and (c) with a $24,000,000 minimum
limit per occurrence and a $24,000,000 annual aggregate limit; provided that, in
the event that claims under such aggregate liability coverage would reduce the
coverage to an amount less than or equal to $50,000,000, the Company shall
provide prompt written notice thereof to the Collateral Agent and promptly after
such claims are made, restore the coverage under such policy to the coverage
amount maintained prior to the assertion of such claims.
(f) Property Damage Insurance. Property Damage insurance on an "all
risk" replacement cost basis including coverage against damage or loss caused by
earth movement, flood and windstorm and providing (i) coverage for the Energy
Complex in a minimum aggregate amount of the lesser of (A) the full replacement
value of the Energy Complex and (B) the outstanding amount of Senior Debt
(including the unutilized Working Capital Facility Commitment) of the Company
(for which purpose there shall be included all steam, gas and electrical
transmission lines along with related equipment for which the Company has an
insurable interest) and (ii) Transit coverage, including Ocean marine coverage
(if applicable), with sub-limits sufficient to insure the full replacement value
of all property or equipment removed from the Energy Complex, provided that, for
the perils of flood, earth movement, increased cost of construction, debris
removal and loss to undamaged property, any sub-limit shall be not less than
$100,000,000. For purposes of this paragraph (f), "replacement cost," including
any improvements and equipment and supplies, shall be without deduction for
physical depreciation. All such policies may have deductibles of not greater
than $1,000,000, except for earth movement, flood and windstorm, which will have
the lowest deductible available on commercially reasonable terms in the
insurance marketplace. Such insurance shall include and "Agreed Amount" Clause
or Waiver of Co-Insurance and shall provide for increased cost of construction,
debris removal, and loss to undamaged property as the result of enforcement of
building laws or ordinances.
(g) Boiler and Machinery Insurance. Boiler and Machinery insurance
coverage to be written on a "comprehensive form" basis for all insurable objects
including all production machinery, pressure vessels, electrical turbines and
equipment, motors, air tanks, boilers, machinery, pressure piping or any other
similar objects located on or adjacent to the Site in a minimum aggregate amount
equal to the maximum foreseeable loss and expediting
Schedule 4.2-3
<PAGE>
expenses in the amount of $2,500,000 (with losses to be adjusted on a
replacement value) (subject to the limit set forth in paragraph (f) above). All
such policies may have deductibles of not greater than $1,000,000.
(h) Business Interruption and Extra Expense Insurance. Business
Interruption insurance covering as a minimum amount all fixed expenses and debt
service for a period of twelve (12) months arising from any loss insured by (f)
and (g). The maximum deductible shall be no greater than thirty (30) days. There
shall be either an Agreed Amount Clause or Waiver of Coinsurance.
(i) Subcontractor Insurance. To the extent required by the Master
Operating Agreement or any Energy Services Agreement, the Company shall require
each of its subcontractors expected to perform work with a value in excess of
$5,000,000 (including the Operator) to obtain, from an insurance company meeting
the qualifications set forth above, on or before the effective date of any
agreement between the Company and such subcontractor with respect to the Energy
Complex, each of the insurance coverages set forth in paragraphs (a), (b) and
(c). Each subcontractor shall furnish to the Company, and the Company shall
furnish to the Collateral Agent, the Tax-Exempt Indenture Trustee and the
Working Capital Facility Provider, a certificate of insurance verifying that the
insurance to be provided as required hereunder has been secured.
Schedule 4.2-4
<PAGE>
Exhibit A
TAX-EXEMPT PROJECT AND LEASED LAND
The Tax-Exempt Project consists of solid waste disposal
facilities at the Mobile, Alabama plant of the Company presently existing, under
construction or to be constructed, including a multi-fuel power boiler and
auxiliaries, the portion of the central control system associated with the solid
waste disposal function, the portion of the water and compressed air system
serving the multi-fuel power boiler, the portion of a power complex structure
associated with the solid waste disposal function, a biomass handling system,
sludge burning facilities, a coal handling system and a portion of certain
underground process sewers, storm sewers and utilities associated with the solid
waste disposal facilities.
<PAGE>
EXHIBIT A
Description of Leased Land
Those certain premises located in the County of Mobile, State of
Alabama bounded and described as follows:
RECOVERY AREA NO. 7
Beginning at a Point at Alabama State Plane Coordinate N 268944.583,
E327580.044, said point being 2458.36 ft. North and 1588.85 ft. East of the Site
of the Great Magnolia; Thence S-17(degree)-10'-07"-E for 26.11 ft.; Thence
S-26(degree)-37'-14"-E for 164.93 ft.; Thence S-29(degree)-44'-52"-E for 142.73
ft.; Thence S-44(degree)-22'-46"-E for 28.07 ft.; Thence S-25(degree)-30'-05"-W
for 50.78 ft.; Thence S-79(degree)-06'-46"-W for 410.18 ft.; Thence
N-10(degree)-49'-45"-W for 384.40 ft.; Thence N-79(degree)-10'-15"-E for 282.10
ft.; Thence N-10(degree)-49'-30"-W for 18.51 ft.; Thence N-79(degree)-10'-38"-E
for 29.76 ft.; Thence S-10(degree)-49'-34"-E for 18.51 ft.; Thence
N-79(degree)-10'-08"-E for 18.85 ft.
to the Point of Beginning.
SLUDGE BUILDING
ALSO:
Beginning at a Point at Alabama State Plane Coordinate N 268777.532, E
327712.983, said point being 2291.31 ft. North and 1721.79 ft. East of the Site
of the Great Magnolia; Thence N-30(degree)-36'-15"-W for 22.16 ft.; Thence
N-59(degree)-23'-39"-E for 27.51 ft.; Thence S-30(degree)-36'-18"-E for 22.16
ft.; Thence S-59(degree)-23'-49"-W for 27.51 ft. to the Point of Beginning.
SLUDGE TOWER
Beginning at a Point at Alabama State Plane Coordinate N 268984.742, E
327588.763, said point being 2498.52 ft. North and 1597.57 ft. East of the Site
of the Great Magnolia; Thence N-78(degree)-58'-04"-E for 15.66 ft.; Thence
N-11(degree)-01'-56"-W for 12.11 ft.; Thence N-78(degree)-58'-04"-E for 17.76
ft.; Thence S-11(degree)-01'-56"-E for 32.08 ft.; Thence S-78(degree)-58'-04"-W
for 33.41 ft.; Thence N-11(degree)-01'-58"-W for 19.97 ft. to the Point of
Beginning.
A-2
<PAGE>
BIOMASS TOWER
ALSO:
Beginning at a Point at Alabama State Plane Coordinate N 268989.042, E
327343.762, said point being 2502.82 ft. North and 1352.57 ft. East of the Site
of the Great Magnolia; Thence S-78(degree)-55'-12"-W for 24.05 ft.; Thence
N-11(degree)-04'-48"-W for 31.70 ft.; Thence N-78(degree)-55'-12"-E for 24.05
ft.; Thence S-11(degree)-04'-48"-E for 31.70 ft. to the Point of Beginning.
COAL TOWER
ALSO:
Beginning at a Point at Alabama State Plane Coordinate N 268846.988, E
326816.353, said point being 2360.76 ft. North and 825.167 ft. East of the Site
of the Great Magnolia; Thence S-75(degree)-10'-05"-W for 33.09 ft.; Thence
N-14(degree)-49'-56"-W for 26.97 ft.; Thence N-75(degree)-10'-05"-E for 33.09
ft.; Thence S-14(degree)-49'-56"-E for 26.97 ft. to the Point of Beginning.
COAL UNLOADING BUILDING
ALSO:
Beginning at a Point at Alabama State Plane Coordinate N 268573.700, E
326422.793, said point being 2087.48 ft. North and 431.60 ft. East of the Site
of the Great Magnolia; Thence N-32(degree)-45'-47"-W for 50.48 ft.; Thence
N-57(degree)-14'-13"-E for 20.34 ft.; Thence S-32(degree)-45'-47"-E for 50.48
ft.; Thence S-57(degree)-14'-13"-W for 20.34 ft. to the Point of Beginning.
AREA CONVEYORS
ALSO:
4 strips of land being 10 feet in width and lying 5 feet each side of the
following described centerlines.
TO-WIT:
Beginning at a Point at Alabama State Plane Coordinate N 268792.160, E
327704.257, said point being 2305.94 ft. North and 1713.07 ft. East of the Site
of the Great Magnolia; Thence S-63(degree)-24'-43"-W for 4.45 ft.; Thence
N-26(degree)-36'-02"-W for 200.15 ft. to the Point of ending of the Centerline
herein described.
Beginning at a Point at Alabama State Plane Coordinate N
268990.737, E 327615.688, said point being 2504.51 ft. North and
1624.50 ft. East of the Site of the Great Magnolia; Thence
A-3
<PAGE>
N-88(degree)-52'-24"-W for 273.56 ft. to the Point of Ending of the
Centerline herein described.
Beginning at a Point at Alabama State Plane Coordinate N 268995.750, E
327317.964, said point being 2509.53 ft. North and 1326.77 ft. East of the Site
of the Great Magnolia; Thence S-75(degree)-08'-47"-W for 522.98 ft. to the Point
of Ending of the Centerline herein described.
Beginning at a Point at Alabama State Plane Coordinate N 268842.848, E
326783.217, said point being 2356.62 ft. North and 792.03 ft. East of the Site
of the Great Magnolia; Thence S-57(degree)-47'-29"-W for 428.42 ft. to the Point
of Ending of the Centerline herein described.
Being a portion of the premises conveyed by Augustine Meaher, Jr., et al., to
Scott Paper Company by deed dated July 25, 1994 record in the office of the
Judge of Probate of Mobile County Alabama in Real Property Book 4183, Page 1204.
A-4
Exhibit 4.6
EXECUTION COPY
- ------------------------------------------------------------------------------
REVOLVING CREDIT AGREEMENT
among
MOBILE ENERGY SERVICES COMPANY, L.L.C.
MOBILE ENERGY SERVICES HOLDINGS, INC.
and
THE LENDERS NAMED HEREIN
and
BANQUE PARIBAS,
as Agent
dated as of August 1, 1995
- ------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS
OF INTERPRETATION........................ 1
ARTICLE II
COMMITMENTS AND LOANS........................ 5
SECTION 2.1. The Facility................................................ 5
SECTION 2.2. Making Loans................................................ 7
SECTION 2.3. Interest.................................................... 8
SECTION 2.4. Repayment................................................... 9
SECTION 2.5. Prepayments................................................. 9
SECTION 2.6. Fees........................................................ 10
SECTION 2.7. Security.................................................... 10
SECTION 2.8. Payments.................................................... 10
SECTION 2.9. Computation of Interest and Fees............................ 11
SECTION 2.10. Payments on Non-Business Days.............................. 11
SECTION 2.11. Sharing of Payments, Etc................................... 12
SECTION 2.12. Evidence of Debt........................................... 12
SECTION 2.13. Increased Costs............................................ 13
SECTION 2.14. Taxes...................................................... 14
SECTION 2.15. Illegality................................................. 16
SECTION 2.16. Inability to Determine Interest Rate....................... 17
SECTION 2.17. Transfer of Lending Office.................................. 17
ARTICLE III
CONDITIONS PRECEDENT........................ 18
SECTION 3.1. Conditions Precedent to Initial Borrowing................... 18
SECTION 3.2. Conditions Precedent to Each Borrowing...................... 19
ARTICLE IV
REPRESENTATIONS AND WARRANTIES.................. 19
ARTICLE V
COVENANTS............................. 20
-i-
<PAGE>
Page
ARTICLE VI
DEFAULTS AND REMEDIES........................ 22
ARTICLE VII
THE AGENT............................. 24
SECTION 7.1. Authorization and Action.................................... 24
SECTION 7.2. Agent's Reliance, Etc....................................... 24
SECTION 7.3. Initial Lender and Affiliates............................... 25
SECTION 7.4. Lender Credit Decision...................................... 25
SECTION 7.5. Indemnification............................................. 25
SECTION 7.6. Successor Agent............................................. 26
ARTICLE VIII
GUARANTY............................... 26
SECTION 8.1. Guaranty of Payment and Performance......................... 26
SECTION 8.2. Continuance and Acceleration of Obligations upon
Certain Events............................................. 26
SECTION 8.3. Recovered Payments.......................................... 27
SECTION 8.4. Evidence of Obligations..................................... 27
SECTION 8.5. Binding Nature of Certain Adjudications..................... 27
SECTION 8.6. Nature of Mobile Energy's Obligations....................... 28
SECTION 8.7. No Release of Mobile Energy................................. 28
SECTION 8.8. Certain Waivers............................................. 29
SECTION 8.9. Independent Credit Evaluation............................... 30
SECTION 8.10. Subordination of Rights Against Company, Other Guarantors
and Collateral............................................. 30
SECTION 8.11. Payments by Mobile Energy................................... 30
SECTION 8.12. Continuance of Guaranty; Survival........................... 31
SECTION 8.13. Assignments and Participations.............................. 31
SECTION 8.14. Benefit and Enforcement..................................... 31
ARTICLE IX
MISCELLANEOUS........................... 32
SECTION 9.1. Amendments, Etc............................................. 32
SECTION 9.2. Notices, Etc................................................ 32
SECTION 9.3. No Waiver; Remedies......................................... 32
SECTION 9.4. Costs and Expenses.......................................... 33
SECTION 9.5. Application of Monies....................................... 33
SECTION 9.6. Severability................................................ 34
SECTION 9.7. Non-recourse Liability...................................... 34
SECTION 9.8. Binding Effect.............................................. 35
SECTION 9.9. Assignments and Participations.............................. 35
-ii-
<PAGE>
Page
SECTION 9.10. Indemnification............................................ 37
SECTION 9.11. Governing Law.............................................. 39
SECTION 9.12. Headings................................................... 39
SECTION 9.13. Execution in Counterparts.................................. 39
SECTION 9.14. Third Party Beneficiaries.................................. 39
SECTION 9.15. Waiver of Jury Trial....................................... 39
SECTION 9.16. Submission To Jurisdiction; Waivers........................ 39
-iii-
<PAGE>
REVOLVING CREDIT AGREEMENT, dated as of August 1, 1995, among
MOBILE ENERGY SERVICES COMPANY, L.L.C., an Alabama limited liability company
(the "Company"), MOBILE ENERGY SERVICES HOLDINGS, INC., an Alabama corporation
("Mobile Energy"), BANQUE PARIBAS (in its individual capacity, the "Initial
Lender"), each other lender that becomes a party hereto pursuant to Section 9.9
(together with the Initial Lender, collectively, the "Lenders") and BANQUE
PARIBAS, as agent (in such capacity, the "Agent") for the Lenders.
W I T N E S S E T H :
WHEREAS, the Company owns and operates the Energy Complex (as
defined herein) and is financing the acquisition, construction and equipping of
the Energy Complex through, among other things, the issue and sale by the
Company of the First Mortgage Bonds (as defined herein);
WHEREAS, in connection with the financing of certain portions
of the Energy Complex, the IDB (as defined herein) will issue the Tax-Exempt
Bonds (as defined herein);
WHEREAS, the Company may, from time to time after the date of
this Agreement, issue additional Indenture Securities (as defined herein), or
cause the IDB to issue additional Tax-Exempt Indenture Securities (as defined
herein), for the purposes described in the Financing Documents (as defined
herein); and
WHEREAS, the Company intends to finance certain of its working
capital requirements arising in connection with the operation of the Energy
Complex pursuant to, and the Company has requested that the Lenders make
available to the Company, and the Lenders are willing to make available to the
Company, a revolving credit facility of up to the maximum aggregate principal
amount of $15,000,000, upon the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained and other good and valuable consideration, the
adequacy and receipt of which are hereby acknowledged, and intending to be
legally bound, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS
OF INTERPRETATION
(a) For the purposes of this Agreement, except as expressly
provided in this Agreement or unless the context otherwise requires, all terms
used herein shall have the meanings set forth in Appendix A to the Intercreditor
and Collateral Agency Agreement dated as of August 1, 1995 among First Union
National Bank of Georgia, as the Indenture Trustee and Tax-Exempt Indenture
Trustee referred to therein, the Initial Lender, The Industrial Development
Board of the City of Mobile, Alabama, the
<PAGE>
2
Company, Mobile Energy and Bankers Trust (Delaware), as the Collateral Agent
referred to therein.
(b) The following terms are used in this Agreement
with the following respective meanings:
"Adjusted Base Rate" means the higher of (i) the Federal Funds
Rate plus one-half of one percent (0.50%) and (ii) the Reference Rate.
"Adjusted Base Rate Loan" means any Loan the interest on which
is, or is to be, as the context may require, computed on the basis of
the Adjusted Base Rate.
"Borrowing" means a borrowing by the Company consisting
of Loans made on the same day by the Lenders.
"Closing Date" means the date on which the conditions
precedent set forth in Article III have been fulfilled.
"Commitment" means, with respect to each Lender, (i) the
amount set forth opposite such Lender's name on the signature pages
hereof or (ii) if such Lender has entered into one (1) or more
Commitment Transfer Supplements, the amount set forth for such Lender
in the register maintained by the Agent, as the same may be ratably
reduced from time to time pursuant to Section 2.1(c).
"Commitment Transfer Supplement" means such document
substantially in the form of Exhibit C.
"Credit Documents" means this Agreement and each Note.
"Default" means an event that with the giving of any required
notice or the lapse of any required period of time would constitute an
Event of Default.
"Eurodollar Business Day" means any Business Day on which
dealings in United States dollar deposits are carried on by Banque
Paribas in the interbank eurodollar market and on which commercial
banks in London are generally open for domestic and foreign exchange
business (including dealings in United States dollar deposits).
"Event of Default" has the meaning specified in Article
VI.
"Expiration Date" means the earliest of (i) the Scheduled
Expiration Date, (ii) the date on which the Commitments are fully
canceled pursuant to Section 2.1(c) and (iii) the occurrence of an
Event of Default and the Agent's termination (or any automatic
termination) of the obligation of each Lender to make Loans hereunder,
in accordance with the provisions of Article VI.
<PAGE>
3
"Extension Request" has the meaning specified in
Section 2.1(b).
"Federal Funds Rate" means, for any day, the rate per annum
equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by
Federal funds brokers, as published for such day (or, if such day is
not a Business Day, for the next preceding Business Day) by the Federal
Reserve Bank of New York or, if such rate is not so published for any
day that is a Business Day, the average of the quotations for such day
on such transactions received by the Agent from three Federal funds
brokers of recognized standing selected by it.
"Guaranty" means the guaranty of the Obligations by
Mobile Energy set forth in Article VIII.
"Indemnified Party" has the meaning specified in
Section 9.10.
"Interest Period" means, with respect to any LIBOR Rate Loan,
the period commencing on the date of the making of such Loan and ending
on and including the day preceding the same day in the first, second or
third calendar month thereafter, as selected by the Company and
specified in the related Notice of Borrowing; provided, however, that
(i) any Interest Period that would otherwise end on a day that is not a
Eurodollar Business Day shall be extended to the next succeeding
Eurodollar Business Day, unless such Eurodollar Business Day falls in a
different calendar month, in which case such Interest Period shall end
on the next preceding Eurodollar Business Day, and (ii) any Interest
Period that begins on the last Eurodollar Business Day of a calendar
month (or on a day for which there is no numerically corresponding day
in the calendar month in which such Interest Period ends) shall end on
the last Eurodollar Business Day of a calendar month. The Company shall
select Interest Periods so as not to require a payment or prepayment of
any LIBOR Rate Loan other than on the last day of the Interest Period
for such LIBOR Rate Loan.
"LIBOR Rate" means, with respect to each day during any
Interest Period, a rate per annum (rounded upwards, if necessary, to
the nearest 1/16th of one percent (0.0625%)) determined by the Agent to
be equal to (i) (A) the arithmetic mean of the rate at which deposits
in United States dollars (in the approximate amount of the Loan of
Banque Paribas to which such Interest Period applies) are offered to
Banque Paribas in the interbank eurodollar market at approximately
11:00 a.m. (New York time), two Eurodollar Business Days prior to the
first day of such Interest Period, divided by (B) 100% minus the
Reserve Requirement for such day, plus (ii) one percent (1.0000%).
<PAGE>
4
"LIBOR Rate Loan" means any Loan the interest on which is, or
is to be, as the context may require, computed on the basis of the
LIBOR Rate.
"Loan" means a loan by a Lender to the Company pursuant
to Section 2.1(a).
"Loan Repayment Date" means, in respect of each Loan, the
Business Day specified as such on the Notice of Borrowing relating
thereto; provided, however, that (i) such date shall not be later than
the Scheduled Expiration Date, (ii) such date shall not exceed 93 days
from the date such Loan is advanced to the Company pursuant to the
terms of this Agreement, (iii) in the case of LIBOR Rate Loans, such
date shall correspond to the last day of the Interest Period specified
in the related Notice of Borrowing and (iv) no more than $5,000,000
principal amount of Loans may be scheduled to mature within any
calendar month.
"Note" has the meaning specified in Section 2.12(a).
"Notice of Borrowing" means a Notice of Borrowing properly
completed and executed by an Authorized Officer of the Company
substantially in the form of Exhibit B.
"Obligations" means all of the obligations of the Mobile
Energy Parties to the Lenders and the Agent under the Credit Documents,
whether for principal, interest (including post-petition interest,
whether or not allowed as a claim), fees, expenses, indemnification or
otherwise.
"Participant" has the meaning specified in Section
9.9(b).
"Purchasing Lender" has the meaning specified in
Section 9.9(a).
"Reference Rate" means the variable rate of interest per annum
officially announced or published by Citibank, N.A. in New York, New
York from time to time as its "prime" or "reference" rate for United
States dollar loans in the United States, it being understood that the
Reference Rate is not necessarily the lowest or best rate actually
charged to any customer of Citibank, N.A. and that Citibank, N.A. may
make various commercial or other loans at rates of interest having no
relationship to such rate. For purposes of this Agreement, each change
in the Reference Rate shall be effective as of the opening of business
on the date announced as the effective date of the change in such
"prime" or "reference" rate.
"Regulation D" means Regulation D of the Board of Governors of
the Federal Reserve System.
"Regulatory Change" means, subsequent to the date of
this Agreement, any adoption of or change in United States
<PAGE>
5
(including Federal, state or municipal) or foreign law or regulations
or the adoption or change or making of any application, interpretation,
directive, request or guideline of or under any United States
(including Federal, state or municipal) or foreign law or regulations
by any Governmental Authority, in each case whether or not having the
force of law.
"Required Lenders" means, at any time, Lenders holding Notes
evidencing at least 66-2/3% of the aggregate unpaid principal amount of
the Loans or, if no Loans are then outstanding, having at least 66-2/3%
of the Total Commitment.
"Reserve Requirement" means, for any day as applied to a LIBOR
Rate Loan, the aggregate (without duplication) of the rates (expressed
as a decimal) of reserve requirements in effect on such day (including
basic, supplemental, marginal and emergency reserves under any
regulations of the Board of Governors of the Federal Reserve System or
other Governmental Authority having jurisdiction with respect thereto)
dealing with reserve requirements prescribed for eurocurrency funding
(currently referred to as "Eurocurrency Liabilities" in Regulation D)
maintained by a member bank of the Federal Reserve System. The LIBOR
Rate shall be adjusted automatically on and as of the effective date of
any change in the Reserve Requirement.
"Scheduled Expiration Date" means December 31, 2001, unless
extended pursuant to Section 2.1(b), in which case it shall be such
extended date.
"Total Commitment" means $15,000,000, which is the aggregate
amount of the Commitments, as such amount may be reduced from time to
time pursuant to Sections 2.1(c) and 2.1(d).
ARTICLE II
COMMITMENTS AND LOANS
SECTION 2.1. The Facility. (a) Subject to the terms and
conditions of this Agreement, each Lender severally agrees to make Loans to the
Company from time to time on any Business Day in the case of Adjusted Base Rate
Loans and on any Eurodollar Business Day in the case of LIBOR Rate Loans during
the period from the Closing Date to the Expiration Date in an aggregate unpaid
principal amount not to exceed at any time such Lender's Commitment. Each
Borrowing shall consist of Loans bearing interest at the same rate made on the
same day by Lenders ratably according to their respective Commitments. Each
Borrowing consisting of Adjusted Base Rate Loans shall be in an amount equal to
$50,000 or an integral multiple of $10,000 in excess thereof (or the amount of
the unused Total Commitment) and each Borrowing consisting of LIBOR Rate Loans
shall be in an amount
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6
equal to $200,000 or an integral multiple of $25,000 in excess thereof (or the
amount of the unused Total Commitment). There shall not be Loans representing
more than five Borrowings outstanding on any date.
(b) Subject to the terms and conditions of this Section
2.1(b), the Scheduled Expiration Date may be extended by an additional year from
time to time at the written request of the Company (an "Extension Request").
Each Extension Request shall be delivered to the Agent not more than fifteen
(15) months and not less than twelve (12) months prior to the Scheduled
Expiration Date. If the Agent receives an Extension Request, it will give prompt
notice thereof to each Lender, and each Lender shall have the right to approve
or reject, in its sole and absolute discretion, such Extension Request by giving
the Agent written notice of its decision within sixty (60) days following its
receipt of the Agent's notice thereof. If the Lenders unanimously approve such
Extension Request, the Agent shall so notify the Company within ninety (90) days
following its receipt of such Extension Request and the Scheduled Expiration
Date shall, effective from the date of such notice, be the date one (1) year
subsequent to the prior Scheduled Expiration Date. If for any reason the Agent
does not respond to such Extension Request within ninety (90) days following its
receipt thereof or if such Extension Request is not approved by each Lender,
such Extension Request shall be deemed to have been rejected.
(c) The Company shall have the right, upon at least five (5)
Business Days' notice to the Agent, to terminate in whole, or from time to time
reduce in part, the unused portion of the Total Commitment, provided that each
partial reduction of the unused portion of the Total Commitment shall be in an
amount equal to $1,000,000 or an integral multiple of $1,000,000 in excess
thereof. Upon receipt of any such notice, the Agent shall promptly notify each
Lender of the contents thereof and the amount to which such Lender's Commitment
is to be ratably reduced.
(d) If an Event of Loss or Event of Eminent Domain shall have
occurred in connection with which the Company shall not have fully rebuilt,
repaired, restored or replaced the Energy Complex or the part thereof that has
been affected by such Event of Loss or Event of Eminent Domain (as the case may
be), and Loss Proceeds with respect thereto are to be distributed by the
Collateral Agent pursuant to Section 6.2(b) of the Intercreditor Agreement, the
Total Commitment in effect immediately prior to such distribution shall be
automatically and permanently reduced (but not to less than zero) by an amount
equal to the Working Capital Facility's Percentage Share of the Excess Loss
Proceeds (calculated without regard to the Working Capital Facility Distribution
Amount) with respect to such Event of Loss or Event of Eminent Domain. Such
reduction shall be effective on the first date on which the Company is required
to redeem or prepay such Senior Securities, provided that if at or prior to the
time of any such redemption or prepayment of the Senior Securities the Energy
Complex has been fully rebuilt, repaired, restored and
<PAGE>
7
replaced to the same operating capacities and operating standards and to the
same condition as existed prior to the occurrence of such Event of Loss or Event
of Eminent Domain and the Company has delivered a written request to the Agent
requesting that the Total Commitment not be reduced in connection with such
Event of Loss or Event of Eminent Domain, then the Total Commitment shall be
reduced pursuant to this paragraph (b) only if the Required Lenders have
requested that the Total Commitment be so reduced.
SECTION 2.2. Making Loans. (a) The Company shall deliver to
the Agent a Notice of Borrowing not later than 11:00 a.m., New York time, (i) at
least one (1) Business Day prior to the date of the proposed Borrowing in the
case of a Borrowing consisting of Adjusted Base Rate Loans and (ii) at least
three (3) Eurodollar Business Days prior to the date of the proposed Borrowing
in the case of a Borrowing consisting of LIBOR Rate Loans, and, in each case,
the Agent shall give each Lender prompt notice thereof by telecopier. Each
Lender shall, before 11:00 a.m., New York time, on the date of such Borrowing,
make available to the Agent at its address set forth in Section 9.2, in
immediately available funds, such Lender's ratable portion of such Borrowing.
After the Agent's receipt of such funds and upon fulfillment of the applicable
conditions set forth in Article III, the Agent will make such funds available to
the Company by transferring such funds to the Collateral Agent for deposit into
the Operating Account or such other account as the Company may designate (in
each case, as specified in the applicable Notice of Borrowing), unless the
proceeds of such Loans are to be used to pay any Obligations, in which case such
proceeds will be applied directly to the payment of such Obligations.
(b) Each Notice of Borrowing shall be irrevocable and binding
on the Company, unless revoked by the Company in writing (i) in the case of
Adjusted Base Rate Loans, at least three (3) Business Days prior to the date of
such proposed Borrowing and (ii) in the case of LIBOR Rate Loans, at least five
(5) Eurodollar Days prior to the date of such proposed Borrowing.
(c) Unless the Agent receives notice from a Lender prior to
the date of any Borrowing that such Lender will not make available to the Agent
such Lender's ratable portion of such Borrowing, the Agent may assume that such
Lender has made such portion available to the Agent on the date of such
Borrowing in accordance with Section 2.2(a), and the Agent may, in reliance upon
such assumption, make available to the Company on such date a corresponding
amount on behalf of such Lender. If and to the extent that such Lender has not
made such ratable portion available to the Agent, and Agent has made such amount
available to the Company, the Agent shall first make written demand upon such
Lender for payment and shall be entitled to recover such corresponding amount on
demand from such Lender. If such Lender does not pay such corresponding amount
forthwith upon the Agent's demand therefor, the Agent shall promptly notify the
Company and the Company shall immediately repay such corresponding amount to the
Agent; provided, however, that if the Company repays such corresponding amount
to the Agent and such Lender subsequently
<PAGE>
8
makes available to the Agent its ratable portion of such Borrowing, the Agent
shall promptly make the proceeds thereof available to the Company. The Agent
shall also be entitled to recover from such Lender or the Company, as the case
may be, interest on such corresponding amount in respect of each day from the
date such corresponding amount was made available by the Agent to the Company to
the date such corresponding amount is recovered by the Agent at the following
interest rates: (i) with respect to interest from the Company, at the applicable
interest rate for the type of Loan selected by the Company with respect to such
amount; and (ii) with respect to interest from such Lender, at the Federal Funds
Rate until and including the second Business Day after demand is made and
thereafter at the Adjusted Base Rate. If such Lender pays to the Agent such
corresponding amount, such amount so paid shall constitute such Lender's Loan as
part of such Borrowing for purposes of this Agreement.
(d) The obligations of the Lenders to make Loans to the
Company pursuant to this Agreement are several and not joint or joint and
several, and the failure of any Lender to make the Loan to be made by it as part
of any Borrowing shall not relieve any other Lender of its obligation, if any,
hereunder to make its Loan on the date of such Borrowing, but no Lender shall be
responsible for the failure of any other Lender to make the Loan to be made by
such other Lender on the date of any Borrowing.
SECTION 2.3. Interest. (a) Unless an Event of Default is
continuing, each Loan shall bear interest at the rates set forth below, and the
Company shall pay interest on the unpaid principal amount of each Loan made by
each Lender from the date of such Loan until the principal amount thereof has
been repaid in full, at the times and at the rates per annum set forth below:
(i) Adjusted Base Rate Loans shall bear interest at a rate per
annum equal at all times to the Adjusted Base Rate in effect from time
to time, payable on (A) the related Loan Repayment Date, (B) the date
of any prepayment of such Loan pursuant to Section 2.5 and (C) the
Expiration Date;
(ii) LIBOR Rate Loans shall bear interest for each day during
each Interest Period with respect thereto at a rate per annum equal to
the LIBOR Rate for such day, payable on (A) the last day of such
Interest Period, (B) the date of any prepayment of such Loan pursuant
to Section 2.5 and (C) the Expiration Date.
(b) On and after the date of the occurrence of any Event of
Default caused by the failure to make a monetary payment hereunder, so long as
such Event of Default is continuing, to the extent permitted by applicable Law
the Loans shall bear interest at a rate per annum equal at all times to the
Adjusted Base Rate in effect from time to time plus two percent (2%), payable on
demand.
<PAGE>
9
SECTION 2.4. Repayment. The Company shall repay each
Loan on the earlier of (a) the applicable Loan Repayment Date and
(b) the Expiration Date.
SECTION 2.5. Prepayments. (a) Subject to the provisions of
Section 2.5(d), the Company may, at any time and from time to time on any
Business Day in the case of Adjusted Base Rate Loans and on any Eurodollar
Business Day in the case of LIBOR Rate Loans, prepay without premium or penalty
the outstanding principal amount of the Loans making up one (1) or more
Borrowings in whole or ratably in part, together with accrued interest to the
date of such prepayment on the principal amount prepaid. The Company shall give
the Agent irrevocable prior written notice of any such prepayment not later than
11:00 a.m., New York time, at least one (1) Business Day or Eurodollar Business
Day, as the case may be, prior to the date of any such prepayment, such notice
stating the proposed date and specifying the Borrowing or Borrowings and
aggregate principal amount of the Loans to be prepaid.
(b) If at any time the aggregate principal amount of the Loans
exceeds the Total Commitment in effect at such time, the Company shall at such
time repay or prepay the Loans in an amount equal to the amount of such excess.
Any such repayment or prepayment shall by accompanied by the payment of interest
on the amount repaid or prepaid.
(c) Notwithstanding anything to the contrary contained in this
Agreement, the Company shall repay Loans so that, or otherwise ensure that, no
Loans are outstanding for a period of five (5) consecutive days during each
Fiscal Year subsequent to 1995.
(d) The Company agrees to indemnify each Lender and to hold
each Lender harmless from any loss or expense that such Lender may sustain or
incur as a consequence of (i) default by the Company in making a borrowing of,
conversion into or continuation of LIBOR Rate Loans after the Company has given
a notice requesting the same in accordance with the provisions of this
Agreement, (ii) default by the Company in making payment or any prepayment after
the Company has given notice thereof in accordance with the provisions of this
Agreement or (iii) the making of a payment of LIBOR Rate Loans on a day that is
not the last day of an Interest Period with respect thereto. Such
indemnification may include an amount equal to the excess, if any, of (A) the
amount of interest that would have accrued on the amount so prepaid, or not so
borrowed, converted or continued, for the period from the date of such payment
or prepayment or of such failure to borrow, convert or continue to the last day
of such Interest Period (or, in the case of a failure to borrow, convert or
continue, the Interest Period that would have commenced on the date of such
failure), in each case at the applicable rate of interest for such Loans
provided for herein over (B) the amount of interest (as reasonably determined by
such Lender) that would have accrued to such Lender on such amount by placing
such amount on deposit for a comparable period with
<PAGE>
10
leading banks in the interbank eurodollar market. This covenant shall survive
the termination of this Agreement and the payment of the Loans and all other
amounts payable hereunder.
(e) Each prepayment of Loans shall be applied first to
Adjusted Base Rate Loans and then to LIBOR Rate Loans, such application of LIBOR
Rate Loans to be made to LIBOR Rate Loans based on the direct order of maturing
Interest Periods. In the event that any LIBOR Rate Loan is required to be repaid
during an Interest Period therefor as a result of a reduction in the Total
Commitment pursuant to Section 2.1(d), then, if no Default or Event of Default
is then continuing, the Company may, in lieu of making such repayment of LIBOR
Rate Loans, deposit with the Agent an amount of cash equal to the amount of such
required repayment to be held by the Agent as cash collateral for payment of the
Loans and to be applied to repayment of such LIBOR Rate Loans on the last day of
the respective Interest Periods therefor. The Company agrees to execute and
record in the appropriate offices such documents as the Agent may request with
respect to such cash collateral arrangements, including with respect to the
creation and perfection of such liens.
SECTION 2.6. Fees. (a) The Company shall pay to the Agent, for
the respective accounts of the Lenders, a commitment fee for the period from and
including the Closing Date to but excluding the Expiration Date, computed at the
rate of .375% per annum on the average daily unused amount of the Total
Commitment, payable quarterly in arrears on the last day of each March, June,
September and December and on the Expiration Date or such earlier date as the
Total Commitment shall terminate as provided herein, commencing on the first of
such dates to occur after the Closing Date.
(b) The Company shall also pay to Banque Paribas the fees set
forth in the separate letter agreement dated August 1, 1995 between the Company
and Banque Paribas.
SECTION 2.7. Security. The Obligations shall be
secured as provided in the Security Documents, and the rights and
remedies of the Lenders contained therein shall be exercised as
provided in the Intercreditor Agreement.
SECTION 2.8. Payments. (a) The Company shall make each payment
hereunder and under the Notes not later than 11:00 a.m., New York time, on the
day when due in United States dollars to the Agent at its address set forth in
Section 9.2, in immediately available funds. The Agent will promptly thereafter
cause to be distributed like funds relating to the payment of principal,
interest or fees ratably (other than amounts payable pursuant to Sections 9.4
and other amounts paid for the account of a specific Lender) to the Lenders and
like funds relating to the payment of any other amount payable to any Lender to
such Lender, in each case to be applied in accordance with the terms of this
Agreement.
<PAGE>
11
(b) Unless the Agent receives notice from the Company before
the date on which any payment is due to the Lenders hereunder that the Company
will not make such payment in full, the Agent may assume that the Company has
made such payment in full to the Agent on such date, and the Agent may, in
reliance upon such assumption, cause to be distributed to each Lender on such
due date an amount equal to the amount then due to such Lender. If and to the
extent that the Company has not so made such payment in full to the Agent, each
Lender shall repay to the Agent forthwith on demand such amount distributed to
such Lender, together with interest thereon for each day from the date such
amount is distributed to such Lender until the date on which such Lender repays
such amount to the Agent, at the Federal Funds Rate until (and including) the
third (3rd) Business Day after demand is made and thereafter at the Adjusted
Base Rate.
(c) All payments due by the Company to the Agent or
any of the Lenders under the Credit Documents will be made
without setoff, counterclaim or other deduction.
SECTION 2.9. Computation of Interest and Fees. Interest on
LIBOR Rate Loans shall be computed on the basis of a year of three hundred and
sixty (360) days and paid for the actual number of days elapsed. Interest on
Adjusted Base Rate Loans and all fees shall be computed on the basis of a year
of three hundred and sixty-five (365) or three hundred and sixty-six (366) days,
as applicable, and paid for the actual number of days elapsed. Interest on
Adjusted Base Rate Loans and fees for any period shall be calculated from and
including the first day thereof to but excluding the last day thereof. Interest
on LIBOR Rate Loans for any Interest Period shall be calculated from and
including the first day thereof to and including the last day thereof. Each
determination by the Agent of an interest rate hereunder shall be conclusive
(absent manifest error).
SECTION 2.10. Payments on Non-Business Days. Whenever any
payment hereunder or under any Note is stated to be due on a day other than a
Business Day, such payment shall be made on the next succeeding Business Day,
and such extension of time shall in such case be included in the computation of
payment of interest or fees (as the case may be); provided, however, that any
payment with respect to any LIBOR Rate Loan stated to be due on a day other than
a Eurodollar Business Day shall be made on the immediately preceding Eurodollar
Business Day. If no due date is specified for the payment of any amount payable
by the Company hereunder, such amount shall be due and payable not later than
the later to occur of (a) ten (10) Business Days after receipt by the Company of
written demand from the Agent for payment thereof and (b) two (2) Business Days
following the next Monthly Transfer Date following such written demand.
SECTION 2.11. Sharing of Payments, Etc. If any Lender obtains
any payment (whether voluntary, involuntary, through the exercise of any right
of setoff, or otherwise) on account of its Commitment or the Loans made by it
(other than pursuant to Section 9.4 and any other payment appropriately made for
the
<PAGE>
12
account of a specific Lender hereunder), in excess of its ratable share of
payments on account of the Commitments or the Loans obtained by all of the
Lenders, then such Lender shall be deemed to have received such payment as agent
for, and on behalf of, all the Lenders and shall immediately advise the Agent of
the receipt of such funds and promptly transmit the amount thereof to the Agent
for prompt distribution among the Lenders as provided for in this Agreement and
such funds transmitted to the Agent shall be credited as a payment by the
Company under this Agreement; provided, however, that such Lender so
transmitting funds to the Agent shall not be deemed to have received, and the
Company shall be deemed not to have made to such Lender (to the extent funds are
transmitted to the Agent), any payment transmitted to the Agent by such Lender
pursuant to this Section 2.11; provided further, however, that if all or any
portion of such payment is thereafter recovered from such Lender, such credited
payment shall be rescinded, and the purchase price and benefits returned, to the
extent of such recovery, but without interest.
SECTION 2.12. Evidence of Debt. (a) The indebtedness of the
Company resulting from all Loans made by each Lender from time to time shall be
evidenced by an appropriately completed and executed Revolving Promissory Note
substantially in the form of Exhibit A (each a "Note"), delivered by the Company
to each Lender.
(b) The Agent, on behalf of the Company, shall maintain at the
address of the Agent referred to in Section 9.2 a copy of each Commitment
Transfer Supplement delivered to it and a register (the "Register") for the
recordation of the names and addresses of the Lenders and the Commitment of, and
principal amount of the Loans owing to, each Lender from time to time. The
entries in the Register shall be conclusive, in the absence of manifest error,
and the Company, the Agent and the Lenders may (and, in the case of any Loan or
other obligation hereunder not evidenced by a Note, shall) treat each Person
whose name is recorded in the Register as the owner of a Loan or other
obligation hereunder as the owner thereof for all purposes of this Agreement and
the other Credit Documents, notwithstanding any notice to the contrary. Any
assignment of any Loan or other obligation hereunder not evidenced by a Note
shall be effective only upon appropriate entries with respect thereto being made
in the Register. The Register shall be available for inspection by the Company
or any Lender at any reasonable time and from time to time upon reasonable prior
notice. The books and accounts of the Agent shall be conclusive evidence (absent
manifest error) of the amounts of all Loans, fees, interest and other amounts
advanced, due, outstanding, payable or paid pursuant to this Agreement or any
Note.
SECTION 2.13. Increased Costs. (a) In the event that any
requirement of law or any change therein or in the interpretation or application
thereof or compliance by any Lender with any request or directive (whether or
not having the force of law) from any central bank or other Governmental
Authority:
<PAGE>
13
(i) does or shall subject any Lender to any tax (except to
the extent such tax is the subject of the agreements set forth in
Section 2.14) of any kind whatsoever with respect to this Agreement,
any Note or any payments with respect to LIBOR Rate Loans made by it,
or changes the basis of taxation of payments to such Lender of
principal, fees, interest or any other amount payable hereunder (except
for changes in the rate of tax on the overall net income or capital of
such Lender);
(ii) does or shall impose, modify or hold applicable any
reserve, special deposit, compulsory loan or similar requirement
against assets held by, or deposits or other liabilities in or for the
account of, advances or loans by, or other credit extended by, or any
other acquisition of funds by, any office of such Lender which are not
otherwise included in the determination of the LIBOR Rate; or
(iii) does or shall impose on such Lender any other
condition;
and the result of any of the foregoing is to increase the cost to such Lender,
by any amount which such Lender deems to be material, of making, renewing or
maintaining advances or extensions of credit hereunder or to reduce any amount
receivable hereunder, in each case in respect of its LIBOR Rate Loans, then, in
any such case, the Company shall pay to such Lender, no later than the later to
occur of (A) 10 Business Days after demand by such Lender (through the Agent) in
accordance with paragraph (c) of this Section and (B) two (2) Business Days
after the next Monthly Transfer Date following such written demand, any
additional amounts necessary to compensate such Lender for such additional costs
or reduced amount receivable.
(b) In the event that any Lender shall have determined that
the adoption after the date hereof of any law, rule, guideline or regulation
regarding capital adequacy, or any change after the date hereof in any existing
or future law, rule, guideline or regulation regarding capital adequacy or in
the interpretation or application thereof, or compliance by any Lender or any
corporation controlling such Lender with any request or directive made or
adopted after the date hereof regarding capital adequacy (whether or not having
the force of law) from any central bank or Governmental Authority, does or shall
have the effect of reducing the rate of return on such Lender's or such
corporation's capital as a consequence of its obligations hereunder to a level
below that which such Lender or such corporation could have achieved but for
such adoption, change or compliance (taking into consideration such Lender's or
such corporation's policies with respect to capital adequacy) by an amount
deemed by such Lender to be material, then from time to time, no later than the
later to occur of (i) 10 Business Days after submission by such Lender to the
Company (through the Agent) of a written request therefor in accordance with
paragraph (c) of this subsection and (ii) two (2) Business Days after the next
Monthly Transfer Date following such written demand, the
<PAGE>
14
Company shall pay to such Lender such additional amount or amounts as will
compensate such Lender for such reduction.
(c) A Lender intending to make a claim pursuant to paragraph
(a) or (b) of this Section shall deliver to the Company through the Agent, as
soon as practicable after becoming aware of the circumstances giving or which
shall give rise to such claim, notice of such Lender's intention to make a
claim, specifying the event by which it is or shall be entitled to make such
claim and setting out in reasonable detail the expected basis and computation of
such claim (and the Agent shall promptly upon receipt thereof deliver such
notice to the Company); provided that no claim shall be made by any Lender, and
the Company shall not be required to indemnify any Lender, with respect to any
cost, increased cost or other liability or reduction described in paragraph (a)
or (b) of this Section which is incurred by such Lender and which is payable, or
which is applicable to any period, more than 90 days prior to the date the
Company is first notified by the Agent pursuant to the foregoing provisions of
this paragraph (c) that such Lender is incurring such costs, other liability or
reduction, as the case may be.
(d) A certificate as to any additional amounts payable to any
Lender pursuant to this Section 2.13, submitted by such Lender to the Company
and showing in reasonable detail that such amounts were computed in accordance
with this Section 2.13, shall be conclusive in the absence of manifest error.
The provisions of this Section 2.13 shall survive the termination of this
Agreement and the payment of the Loans and all other amounts payable hereunder.
SECTION 2.14. Taxes. (a) All payments made by the Company
under this Agreement shall be made free and clear of, and without reduction or
withholding for or on account of, any present or future income, stamp or other
taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now
or hereafter imposed, levied, collected, withheld or assessed by any
Governmental Authority excluding, in the case of the Agent and each Lender, net
income and franchise taxes imposed on the Agent or such Lender by the
jurisdiction under the laws of which the Agent or such Lender is organized or
any political subdivision or taxing authority thereof or therein, or by any
jurisdiction in which such Lender's lending office, is located or any political
subdivision or taxing authority thereof or therein (all such non- excluded
taxes, levies, imposts, deductions, charges or withholdings being hereinafter
called "Taxes"). If any Taxes are required to be withheld from any amounts
payable to the Agent or any Lender hereunder or under the Notes, the amounts so
payable to the Agent or such Lender shall be increased to the extent necessary
to yield to the Agent or such Lender (after payment of all Taxes, including
penalties and expenses related thereto) interest or any such other amounts
payable hereunder at the rates or in the amounts specified in this Agreement and
the Notes. Whenever any Taxes are payable by the Company, as promptly as
possible thereafter, the Company shall send to the Agent for its own account a
certified copy of an original official receipt
<PAGE>
15
received by the Company showing payment thereof. If the Company fails to pay any
Taxes when due to the appropriate taxing authority or fails to remit to the
Agent the required receipts or other required documentary evidence, the Company
shall indemnify the Agent and the Lenders for any incremental taxes, interest or
penalties that may become payable by the Agent or any Lender as a result of such
failure.
(b) Each Lender shall, prior to the Closing Date (or, if a
Lender has become a party hereto pursuant to Section 9.9, the date upon which
such Lender becomes a party hereto), deliver to the Agent and the Company (i)
either (A) a letter stating that it is incorporated under the laws of the United
States of America or a state thereof or (B) if it is not so incorporated, either
two duly completed copies of United States Internal Revenue Service Form 1001 or
4224 or successor applicable form, as the case may be, certifying in each case
that such Lender is entitled to receive payments under this Agreement without
deduction or withholding of any United States federal income taxes or, in the
case of a Lender claiming exemption from United States withholding tax under
Section 871(h) or 881(c) of the Code with respect to payments of "portfolio
interest" by the Company under this Agreement, an annual certificate
representing that such Lender is not a bank for purposes of Section 881(c) of
the Code, is not subject to regulatory or other legal requirements as a bank in
any jurisdiction, and has not been treated as a bank for purposes of any tax,
securities law or other filing or submission made to any Governmental Authority,
any application made to a rating agency or qualification for any exemption from
tax, securities law or other legal requirements, is not a 10-percent shareholder
of the Company within the meaning of Section 881(c)(3)(B) of the Code and is not
a controlled foreign corporation receiving interest from a related person within
the meaning of Section 881(c)(3)(C) of the Code and (ii) an Internal Revenue
Service Form W-8 or W-9 or successor applicable form, as the case may be, to
establish an exemption from United States backup withholding tax. Each such
Lender shall deliver to the Company and the Agent two further copies of any such
form, or successor applicable forms, or other manner of certification, as the
case may be, on or before the date that any such form expires or becomes
obsolete or after the occurrence of any event requiring a change in the most
recent form previously delivered by it to the Company, and such extensions or
renewals thereof as may reasonably be requested by the Company, to the effect
that such Lender is entitled to receive payments under this Agreement and the
Notes without deduction or withholding of any United States federal income
taxes, unless an event (including, without limitation, any change in treaty, law
or regulation) has occurred prior to the date on which any such delivery would
otherwise be required that renders any such forms inapplicable or that would
prevent such Lender from duly completing and delivering any such form with
respect to it and such Lender advises the Company that it is not capable of
receiving payments without any deduction or withholding of United States federal
income tax or establishing an exemption from United States backup withholding
tax. The provisions of this Section 2.14(b) shall apply to any successor
<PAGE>
16
holder of a Note, including without limitation, Purchasing Lenders and
Participants pursuant to Section 9.9.
(c) Notwithstanding anything to the contrary contained in this
Section 2.14, the Company shall not be required to indemnify or reimburse any
Lender who has failed to make available to the Agent its ratable portion of any
Borrowing on the date required pursuant to this Agreement, after the Agent has
made written demand upon such Lender for such payment, for any additional
documentary stamp taxes or intangibles taxes incurred by such Lender solely as a
result of such failure.
SECTION 2.15. Illegality. Notwithstanding any other provision
of this Agreement, if any Regulatory Change shall make it unlawful for any
Lender to make or maintain LIBOR Loans as contemplated by this Agreement, such
Lender shall give telex, telecopy or telephonic notice thereof to the Company
and the Agent (specifying the reason for such illegality) as soon as practicable
and (a) the commitment of such Lender hereunder to make LIBOR Rate Loans,
continue LIBOR Rate Loans as such and convert Adjusted Base Rate Loans to LIBOR
Rate Loans shall forthwith be suspended until such time as such Lender may again
lawfully make and maintain LIBOR Rate Loans, and (b) such Lender's LIBOR Rate
Loans then outstanding, if any, shall be converted automatically to Adjusted
Base Rate Loans on the respective last days of the then current Interest Periods
with respect to such Loans or within such earlier period (determined by its sole
judgment) as required by law. If, as a result of any such Regulatory Change, any
such conversion of a LIBOR Rate loan occurs on a day which is not the last day
of the then current Interest Period with respect thereto, the Company shall pay
to such Lender such amounts, if any, as might be required pursuant to Section
2.5(d) with respect to such conversion.
SECTION 2.16. Inability to Determine Interest Rate. In the
event that, prior to the first day of any Interest Period, (a) the Agent shall
have determined (which determination shall be conclusive and binding upon the
Company) that, by reason of circumstances affecting the relevant market,
adequate and reasonable means do not for ascertaining the LIBOR Rate for such
Interest Period or (b) the Agent shall have received notice from the Required
Lenders that the LIBOR Rate determined or to be determined for such Interest
Period will not adequately and fairly reflect the cost to such Lenders of making
or maintaining their affected Loans during such Interest Period, the Agent shall
give telex, telecopy or telephonic notice thereof (stating the reason therefor)
to the Company and the Lenders as soon as practicable. If such notice is given
(i) any LIBOR Rate Loans requested to be made on the first day of such Interest
Period shall be made as Adjusted Base Rate Loans, (ii) any Loans that were to
have been converted on the first day of such Interest Period to LIBOR Rate Loans
shall be converted to or continued as Adjusted Base Rate Loans and (iii) any
outstanding LIBOR Rate Loans shall be converted, on the first day of such
Interest Period, to Adjusted Base Rate Loans. Until such notice has been
withdrawn by the Agent or, in the case of any notice given by the
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17
Required Lenders pursuant to clause (b) of the first sentence of this Section,
by the Required Lenders, no further LIBOR Rate Loans shall be made or continued
as such, nor shall the Company have the right to convert Loans to LIBOR Rate
Loans.
SECTION 2.17. Transfer of Lending Office. Each Lender agrees
that, as promptly as practicable after it shall have notified the Company that
additional amounts are or will be due to such Lender under Section 2.13 or 2.14,
it will, to the extent not inconsistent with such Lender's internal policies,
make, fund or maintain its Loans through another lending office of such Lender
if as a result thereof such additional amounts would not be required to be so
paid and if, as determined by such Lender in its sole discretion, the making,
funding or maintaining of such Loans through such other lending office (i) would
be permitted by applicable requirements of law and (ii) would not adversely
affect its Loans or such Lender. The Company hereby agrees to pay all reasonable
expenses incurred by a Lender in utilizing another lending office of such Lender
as provided in this Section.
ARTICLE III
CONDITIONS PRECEDENT
SECTION 3.1. Conditions Precedent to Initial Borrowing. The
obligation of each Lender under this Agreement is subject to the satisfaction on
the Closing Date of the following conditions precedent:
(a) the Agent shall have received the following, each dated on
or before the Closing Date, in form and substance satisfactory to the
Agent and in the number of originals reasonably required by the Agent:
(i) this Agreement and the Notes, duly executed by the
Company;
(ii) the Security Documents (other than the Indenture
and the Tax-Exempt Indenture), duly executed by the parties
thereto;
(iii) the Indenture and the Tax-Exempt Indenture, duly
executed by the parties thereto and certified as to
completeness and authenticity by an Authorized Officer of
each of the Mobile Energy Parties; and
(iv) written opinions of counsel to the Company and
Mobile Energy, as to such matters as the Agent may
reasonably request;
(b) all Contracts referred to in Section 3.1(a)(i),
(ii) and (iii) remain in full force and effect;
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18
(c) the Company shall have paid all accrued fees and expenses
of the Agent and the Lenders as provided in Section 9.4, to the extent
one or more statements for such fees and expenses have been presented
for payment;
(d) the conditions precedent contained in the
Underwriting Agreement dated August 15, 1995 between the
Mobile Energy Parties and Goldman, Sachs & Co., Bear,
Stearns & Co. and Lehman Brothers Inc. shall have been
satisfied (without waiver, unless approved by the Agent),
and the initial purchase of the First Mortgage Bonds shall
have occurred; and
(e) the conditions precedent contained in the Bond Purchase
Agreement dated August 17, 1995 between Goldman Sachs & Co. and the IDB
shall have been satisfied (without waiver, unless approved by the
Agent), and the initial purchase of the Tax-Exempt Bonds shall have
occurred.
SECTION 3.2. Conditions Precedent to Each Borrowing. The
obligation of each Lender to make a Loan on the occasion of each Borrowing,
including the initial Borrowing, is subject to the satisfaction of the following
further conditions precedent:
(a) the conditions precedent set forth in Section 3.1
shall have been satisfied (or waived by the Agent in writing
as of the Closing Date);
(b) the Agent shall have received a Notice of
Borrowing with respect to such Loan;
(c) the following statements shall be true (and the acceptance
by the Company of the proceeds of such Borrowing shall constitute a
representation and warranty by the Company that on the date of such
Borrowing such statements are true):
(i) the representations and warranties of the Mobile
Energy Parties and each Affiliate thereof incorporated by
reference into this Agreement or contained in any Security
Document are true in all material respects on and as of the
date of such Borrowing, before and after giving effect to
such Borrowing and to the application of the proceeds
therefrom, as though made on and as of such date; and
(ii) no Default or Event of Default has occurred and is
continuing; and
(d) no payment default shall have occurred and be
continuing with respect to any Senior Securities.
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19
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Each of the Mobile Energy Parties hereby makes, for the
benefit of the Agent and the Lenders, all of the representations and warranties
of the Mobile Energy Parties made in Article III of the Indenture, in the form
of such representations and warranties (including all schedules referred to
therein) as they exist on the date of this Agreement and as they may hereafter
be amended from time to time, but only to the extent that the incorporation of
any such amendments into this Agreement has been consented to by the Required
Lenders at such time. Such representations and warranties (including all
schedules referred to therein) are hereby, mutatis mutandis, incorporated herein
by reference (with appropriate substitutions, including the following: (i) the
terms "Indenture," "Securities," "Trustee" and "Holder," as they appear in
Article III of the Indenture, shall be replaced by the terms "Agreement,"
"Notes," "Agent" and "Lender," respectively, (ii) the phrase "the purchase and
ownership of the Securities" as it appears in Section 3.6(a) of the Indenture
shall be replaced by the phrase "the making of Loans", (iii) the phrase "as of
the date hereof", as it appears in Sections 3.4 and 3.6 of the Indenture, shall
be replaced by the phrase "as of each Borrowing Date", (iv) the phrase "now
pending", as it appears in Section 3.5 of the Indenture, shall be replaced by
the phrase "pending on each Borrowing Date", (vi) the phrase "the Closing Date",
as it appears in Article III of the Indenture, shall be replaced by the phrase
"each Borrowing Date", (vii) the reference to "Guaranty" in Section 3.4 of the
Indenture shall be deemed to be a reference to the Guaranty under this Agreement
and "the Security Register" in Section 10.4 shall be deemed to be a reference to
"this Agreement") as if set forth at length in this Agreement. All such
representations and warranties shall be deemed to be made on the date of each
Borrowing.
ARTICLE V
COVENANTS
So long as any Commitment is in effect or any Obligation
remains unpaid, unless compliance has been waived in writing by the Required
Lenders:
(a) all of the covenants of the Mobile Energy Parties
contained in Sections 1.15 and 10.4 and Article V of the Indenture,
together with any schedules referred to therein (in the form of such
covenants and schedules as they exist as of the date of this Agreement
and as they may hereafter be amended from time to time, but only to the
extent that the incorporation of any such amendments into this
Agreement has been consented to by the Required Lenders at such time),
are hereby, mutatis mutandis, incorporated herein by reference (with
appropriate substitutions, including the
<PAGE>
20
following: (i) the term "Indenture", as it appears in Sections 1.15 and
10.4 and Article V (other than Section 5.17) of the Indenture, shall be
replaced by the term "Agreement"; (ii) the term "Trustee", as it
appears in Article V and Section 10.4 of the Indenture, shall be
replaced by the word "Agent"; (iii) the terms "Securities" and
"Outstanding Securities", as they appear in Article V (other than
Section 5.17) of the Indenture, shall be replaced by the terms "Loans"
and "outstanding Loans", respectively; (iv) the term "Event of
Default", as it appears in Article V of the Indenture, shall include
Events of Default under this Agreement; (v) the phrase "the principal
of and premium, if any, and interest on, and all other amounts payable
in respect of, the Securities of each series in accordance with their
terms and the terms of this Indenture and of the related Series
Supplemental Indenture", as it appears in Article V of the Indenture,
shall be replaced by the phrase "all of the Obligations in accordance
with the terms of this Agreement"; (vi) the phrases "Holders" and
"Holder of a Security or an owner of a beneficial interest therein
requesting the same in writing", as they appear in Article V and
Section 10.4 of the Indenture, shall be replaced by the term "Lender"
or "Lenders" and (vii) for purposes of Section 5.17 of the Indenture
(A) references to the "Indenture" in clauses (a)(i) and (b)(i) thereof
shall be deemed to be references to the Indenture and not this
Agreement, (B) references therein to the "final maturity date of the
Outstanding Securities" shall be deemed to be references to the later
of the final maturity date of the Notes and the final maturity date of
the Outstanding Securities, (C) references therein to "any downgrading
of the rating on the Outstanding Securities" shall be deemed to be
references to any downgrading of the rating on the Outstanding
Securities and, if then rated, this Agreement and (D) the reference to
"Outstanding Securities" in the second sentence of paragraph (d)
thereof shall be deemed to be a reference to the Loans) as if set forth
at length in this Agreement, and each of the Mobile Energy Parties will
observe and perform all of such incorporated covenants;
(b) neither of the Mobile Energy Parties will terminate,
amend, replace or otherwise modify, or permit or suffer any
termination, replacement or modification of, any provision of any
Financing Document to which the Agent is not a party, unless such
termination, amendment, replacement or other modification would not, in
the reasonable opinion of the Required Lenders, be expected to reduce
the likelihood of payment on the Loans or otherwise materially and
adversely affect the Agent or the Lenders;
(c) the Company will use the proceeds of the Loans
only to pay Operation and Maintenance Costs and to pay
principal, interest, fees and other amounts payable
hereunder;
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21
(d) neither of the Mobile Energy Parties will permit any
collateral (except any Indenture Securities Collateral and any
Tax-Exempt Indenture Securities Collateral other than, in each case,
Shared Collateral) to secure any Senior Debt unless such collateral
also secures the Obligations or the Guaranty (as the case may be) on a
pari passu basis; and
(e) without limiting the obligations of the Company pursuant
to paragraph (a) above, the Company will deliver to the Agent all
financial information, reports, certificates, budgets, requests and
other information as it is required to deliver pursuant to Article V
and Section 10.4 of the Indenture; and
(f) the Company will promptly deliver such additional
financial and other information as any Lender may from time to time
reasonably request.
ARTICLE VI
DEFAULTS AND REMEDIES
If any one (1) of the following events (each an "Event of
Default") shall occur and be continuing:
(a) any amount due under any Credit Document shall not
be paid in full within fifteen (15) days after its due date;
or
(b) monies on deposit in the Working Capital Facility Account
on any date do not equal the required balance therefor, as provided by
Section 3.11(b) of the Intercreditor Agreement, and such deficit shall
continue for fifteen (15) or more days, unless on such date the
following conditions are satisfied: (i) the Company would be able to
borrow Loans (because of availability and satisfaction of conditions
set forth in Article III) under this Agreement in an amount equal to
the deficiency in such required balance on such date, (ii) none of the
payments made on the Senior Securities on the immediately preceding
Interest Payment Date or Principal Payment Date, as the case may be,
shall have been made from amounts transferred into the Indenture
Securities Account or the Tax-Exempt Indenture Securities Account
pursuant to Section 3.5(c), 3.6(c), 3.7(b) or 3.8(b) of the
Intercreditor Agreement and (iii) there shall be no deficiency in the
funding of the Indenture Securities Account and the Tax-Exempt
Indenture Securities Account (or any subaccounts therein), excluding,
for purpose of calculating any deficiency, any amounts transferred to
the Indenture Securities Account and the Tax-Exempt Indenture
Securities Account pursuant to Sections 3.5(c), 3.6(c), 3.7(b) and
3.8(b) of the Intercreditor Agreement; or
<PAGE>
22
(c) the Company shall fail to perform or observe any
covenant or agreement contained in Section 5.1(b), 5.1(c) or
5.1(d) of this Agreement; or
(d) either of the Mobile Energy Parties shall fail to perform
or observe any covenant or agreement contained in Section 5.4(e),
5.7(b) (insofar as such failure relates to matters specified in Section
5.8(b)(iv)), 5.8(b) (other than clause (v) thereof), 5.10 or 5.19 of
the Indenture, as such covenants and agreements are incorporated in
paragraph (a) of Article V hereof by reference; or
(e) either of the Mobile Energy Parties shall fail to perform
or observe any covenant or agreement contained in (i) Section 5.2,
5.4(a), 5.5, 5.7(a), 5.7(b) (insofar as such failure would reasonably
be expected to have a Material Adverse Effect or relates to matters
specified in Section 5.8(b)(v)), 5.8(a), 5.8(b)(v), 5.8(c), 5.13, 5.14,
5.15 or 5.16 of the Indenture), (ii) Section 3(e), 3(f), 3(g), 3(h),
3(i) or 3(j) of the Security Agreement or (iii) Section 8, 10, 13, 14
or 15 of the Mortgage and, in the case of clause (i), (ii) and (iii)
above, such failure shall continue uncured for thirty (30) or more days
after either of the Mobile Energy Parties has knowledge thereof and as
such covenants and agreements are incorporated in Article V by
reference; or
(f) an Event of Default under the Indenture shall have
occurred and be continuing and shall not have been waived by the
Indenture Trustee until the earlier of (i) the expiration of thirty
(30) days after such occurrence and (ii) an acceleration of the
Indenture Securities; or
(g) an Event of Default under the Tax-Exempt Indenture shall
have occurred and be continuing and shall not have been waived by the
Tax-Exempt Indenture Trustee until the earlier of (i) the expiration of
thirty (30) days and (ii) an acceleration of the Tax-Exempt Indenture
Securities; or
(h) any grant of a Lien contained in the Security Documents
shall cease to be effective to grant a perfected Lien to the Collateral
Agent on the Collateral described therein with the priority created
therein; provided, however, that the Company shall have ten (10) days
from actual knowledge or constructive knowledge thereof to cure any
such cessation;
then, and in any such event, the Agent shall at the request, or may with the
consent, of the Required Lenders, by notice to the Company, (i) declare the
obligation of each Lender to make Loans to be terminated, whereupon the same
shall forthwith terminate, (ii) declare the Obligations to be forthwith due and
payable, whereupon the Obligations shall become and be forthwith due and
payable, without presentment, demand, protest or further notice of any kind, all
of which are hereby expressly waived by the Company and (iii) subject to the
Intercreditor Agreement, take
<PAGE>
23
any other action and exercise any right or remedy available to it, including
exercising rights and remedies under the Financing Documents and directing the
Collateral Agent to take actions and exercise rights and remedies; provided,
however, that upon the occurrence of an Event of Default specified in paragraph
(f) or (g) above that arises from an Event of Default under the Indenture
described in Section 8.1(n) thereof or arises from an Event of Default under the
Tax-Exempt Indenture described in Section 8.1(b) that arises from an Event of
Default under the IDB Lease Agreement described in Section 7.1(n) thereof,
automatically and without any notice to the Company, (A) the obligation of each
Lender to make Loans shall be terminated and (B) the Obligations shall be
forthwith due and payable, without presentment, demand, protest or further
notice of any kind, all of which are hereby expressly waived by the Company.
ARTICLE VII
THE AGENT
SECTION 7.1. Authorization and Action. Each Lender hereby
appoints and authorizes the Agent to take such action as agent on its behalf and
to exercise such powers under this Agreement as are delegated to the Agent by
the terms hereof, together with such powers as are reasonably incidental
thereto. As to any matters not expressly provided for by the Credit Documents
(including enforcement of and collection under any Credit Document or Security
Document), the Agent shall not be required to exercise any discretion or take
any action, but shall be required to act or to refrain from acting (and shall be
fully protected in so acting or refraining from acting) upon the instructions of
the Required Lenders, and such instructions shall be binding upon all Lenders
and all holders of Notes; provided, however, that the Agent shall not be
required to take any action that exposes the Agent to personal liability or that
is contrary to any Credit Document or Security Document or applicable law. In
performing its function and duties hereunder, Agent shall act solely as the
agent of the Lenders and does not assume and shall not be deemed to have assumed
any obligation towards or relationship of agency or trust with or for the
Company or any other party to any Project Document.
SECTION 7.2. Agent's Reliance, Etc. Neither the Agent nor any
of its directors, officers, agents or employees shall be liable for any action
taken or omitted to be taken by it or them under or in connection with any
Credit Document or Security Document, except for its or their own gross
negligence or willful misconduct. Without limiting the generality of the
foregoing, the Agent (a) may treat any Lender that has signed a Commitment
Transfer Supplement as the holder of the applicable portion of the Obligations;
(b) may consult with legal counsel, independent public accountants and other
experts selected by it and shall not be liable for any action taken or omitted
to be taken in good faith by it in accordance with the advice of such counsel,
accountants or experts; (c) makes no warranty or representation
<PAGE>
24
to any Lender and shall not be responsible to any Lender for any statements,
warranties or representations made in or in connection with any Credit Document
or Security Document; (d) shall not have any duty to ascertain or to inquire as
to the performance or observance of any of the terms, covenants or conditions of
any Credit Document or Security Document on the part of the Company or any
Affiliate thereof or to inspect the property (including the books and records)
of the Company or any Affiliate thereof; (e) shall not be responsible to any
Lender for the due execution, legality, validity, enforceability, genuineness,
sufficiency or value of any Credit Document or Security Document or any other
instrument or document furnished pursuant hereto or thereto; and (f) shall incur
no liability under or in respect of any Credit Document or Security Document by
acting upon any notice, consent, certificate or other instrument or writing
(which may be by telecopier or otherwise) believed by it to be genuine and
signed or sent by the proper party or parties.
SECTION 7.3. Initial Lender and Affiliates. With respect to
its Commitment, the Loans made by it and the Note issued to it, the Initial
Lender shall have the same rights and powers under this Agreement as any other
Lender and may exercise the same as though it were not the Agent; and the term
"Lender" or "Lenders" shall, unless otherwise expressly indicated, include the
Initial Lender in its individual capacity. The Initial Lender and its Affiliates
may accept deposits from, lend money to, act as trustee under indentures of, and
generally engage in any kind of business with, the Company, any Affiliate
thereof and any Person that may do business with or own securities of the
Company or any Affiliate thereof, all as if the Initial Lender were not the
Agent and without any duty to account therefor to the Lenders.
SECTION 7.4. Lender Credit Decision. Each Lender acknowledges
that it has, independently and without reliance on the Agent or any other Lender
and based on such documents and information as it has deemed appropriate, made
its own credit analysis and decision to enter into this Agreement. Each Lender
also acknowledges that it will, independently and without reliance on the Agent
or any other Lender and based on such documents and information as it deems
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement.
SECTION 7.5. Indemnification. The Lenders severally agree to
indemnify the Agent (to the extent not promptly reimbursed by the Company and
without limiting the obligation of the Company to do so), ratably according to
their respective Commitments (or, if the Commitments have been fully canceled
pursuant to Section 2.1(c), the respective Commitments that were in effect
immediately prior to such cancellation), from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses and disbursements of any kind or nature whatsoever that may at
any time (including at any time following the payment of any
<PAGE>
25
Obligations or termination of this Agreement) be imposed on, incurred by or
asserted against the Agent in any way relating to or arising out of any Credit
Document or Security Document or any action taken or omitted by the Agent under
any Credit Document or Security Document; provided, however, that no Lender
shall be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from the Agent's gross negligence or willful misconduct. Without
limiting the foregoing, each Lender agrees to reimburse the Agent promptly upon
demand for its ratable share of any costs and expenses payable by the Company
under Section 9.4, to the extent that the Agent is not reimbursed for such costs
and expenses by the Company.
SECTION 7.6. Successor Agent. The Agent may resign at any time
by giving thirty (30) days prior written notice thereof to the Lenders and the
Company. Upon any such resignation, the Required Lenders shall have the right to
appoint a successor Agent with the consent of the Company, which consent shall
not be unreasonably withheld or delayed. If no successor Agent has been so
appointed by the Required Lenders and accepted such appointment within thirty
(30) days after the retiring Agent's giving of notice of resignation, then the
retiring Agent may, on behalf of the Lenders, appoint a successor Agent with the
consent of the Company, which shall not be unreasonably withheld or delayed,
which successor Agent shall be a commercial bank organized under the laws of the
United States of America or of any state thereof and having a combined capital
and surplus of at least $500,000,000. Upon the acceptance of any appointment as
Agent hereunder by a successor Agent, such successor Agent shall thereupon
succeed to and become vested with all of the rights, powers, privileges and
duties of the retiring Agent, and the retiring Agent shall be discharged from
its duties and obligations under the Credit Documents and the other Project
Agreements. After any retiring Agent's resignation as Agent, the provisions of
this Article VII shall inure to its benefit as to any actions taken or omitted
to be taken by it while it was acting as the Agent.
ARTICLE VIII
GUARANTY
SECTION 8.1. Guaranty of Payment and Performance. Mobile
Energy hereby (a) guarantees to the Agent and each Lender from time to time the
due and punctual payment, observance and performance of all of the Obligations
in accordance with their respective terms and when and as due (whether at a Loan
Repayment Date, by reason of acceleration or otherwise), or deemed to be due
pursuant to Section 8.2, and (b) agrees so to pay, observe or perform the same
when so due, or deemed to be due, upon demand.
SECTION 8.2. Continuance and Acceleration of
Obligations upon Certain Events. If (a) any Event of Default
specified in paragraph (f) or (g) of Article VI that arises from
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26
an Event of Default under the Indenture described in Section 8.1(n) thereof or
arises from an Event of Default under the Tax- Exempt Indenture described in
Section 8.1(b) that arises from an Event of Default under the IDB Lease
Agreement described in Section 7.1(n) thereof shall have occurred and be
continuing, (b) any injunction, stay or the like that enjoins any acceleration,
or demand for the payment, observance or performance, of any Obligations that
would otherwise be required or permitted under the Security Documents shall
become effective or (c) any Obligations shall be or be determined to be or
become discharged, disallowed, invalid, illegal, void or otherwise unenforceable
(whether by operation of any present or future law or by order of any
Governmental Authority) against the Company then (i) such Obligations shall, for
all purposes of this Agreement, be deemed (A) in the case of clause (c) above,
to continue to be outstanding and in full force and effect notwithstanding the
unenforceability thereof against the Company and (B) if such is not already the
case, to have thereupon become immediately due and payable and to have commenced
bearing interest at the rate equal to the Adjusted Base Rate plus two percent
(2%) and (ii) the Agent and each Lender may, with respect to such Obligations,
exercise all of the rights and remedies hereunder that would be available to it
during an Event of Default.
SECTION 8.3. Recovered Payments. The Obligations shall be
deemed not to have been paid, observed or performed, and Mobile Energy's
obligations under the Guaranty in respect thereof shall continue and not be
discharged, to the extent that any payment, observance or performance thereof by
the Company or any other guarantor, or out of the proceeds of any collateral, is
recovered from or paid over by or for the account of the Agent or and Lender for
any reason, including as a preference or fraudulent transfer or by virtue of any
subordination (whether present or future or contractual or otherwise) of the
Obligations, whether such recovery or payment over is effected by any judgment,
decree or order of any Governmental Authority, by any plan of reorganization or
by settlement or compromise by the Agent or any Lender (whether or not consented
to by either of the Mobile Energy Parties or any other guarantor) of any claim
for any such recovery or payment over. Mobile Energy hereby expressly waives the
benefit of any applicable statute of limitations and agrees that it shall be
liable hereunder with respect to any Obligation whenever such a recovery or
payment over thereof occurs.
SECTION 8.4. Evidence of Obligations. The records of the Agent
shall be conclusive evidence (absent manifest error) of the Obligations and of
all payments, observances and performances in respect thereof.
SECTION 8.5. Binding Nature of Certain Adjudications. Mobile
Energy shall be conclusively bound by the adjudication in any action or
proceeding, legal or otherwise, involving any controversy arising under, in
connection with, or in any way related to, any of the Obligations, and by a
judgment, award or decree entered therein, if Mobile Energy shall have had the
<PAGE>
27
right, or shall have been given the opportunity, to participate in such action
or proceeding and shall have been given notice of such action or proceeding in
time to exercise such right or avail itself of such opportunity.
SECTION 8.6. Nature of Mobile Energy's Obligations. Mobile
Energy's obligations hereunder (a) are absolute and unconditional, (b) are
unlimited in amount, (c) constitute a guaranty of payment and performance and
not a guaranty of collection, (d) are as primary obligor and not as a surety
only, (e) shall be a continuing guaranty of all present and future Obligations
and all promissory notes and other documentation given in extension or renewal
or substitution for any of the Obligations and (f) shall be irrevocable.
SECTION 8.7. No Release of Mobile Energy. The obligations of
Mobile Energy under this Guaranty shall not be reduced, limited or terminated,
nor shall Mobile Energy be discharged from any thereof, for any reason
whatsoever (other than, subject to Sections 8.3 and 8.12, the payment,
observance and performance of the Obligations), including (and whether or not
the same shall have occurred or failed to occur once or more than once and
whether or not Mobile Energy shall have received notice thereof): (a) (i) any
increase in the principal amount of, or interest rate applicable to, (ii) any
extension of the time of payment, observance or performance of, (iii) any other
amendment or modification of any of the other terms and provisions of, (iv) any
release, composition or settlement (whether by way of acceptance of a plan of
reorganization or otherwise) of, (v) any subordination (whether present or
future or contractual or otherwise) of or (vi) any discharge, disallowance,
invalidity, illegality, voidness or other unenforceability of, in each case the
Obligations; (b) (i) any failure to obtain, (ii) any release, composition or
settlement of, (iii) any amendment or modification of any of the terms and
provisions of, (iv) any subordination of or (v) any discharge, disallowance,
invalidity, illegality, voidness or other unenforceability of, in each case any
guaranties of the Obligations; (c) (i) any failure to obtain or any release of,
(ii) any failure to protect or preserve, (iii) any release, compromise,
settlement or extension of the time of payment of any obligations constituting,
(iv) any failure to perfect or maintain the perfection or priority of any Lien
upon, (v) any subordination of any Lien upon or (vi) any discharge,
disallowance, invalidity, illegality, voidness or other unenforceability of any
Lien or intended Lien upon, in each case any collateral now or hereafter
securing the Obligations or any other guaranties thereof; (d) any termination of
or change in any relationship between Mobile Energy and the Company, including
any such termination or change resulting from a change in the ownership of
Mobile Energy or the Company or from the cessation of any commercial
relationship between Mobile Energy and the Company; (e) any exercise of, or any
election not or failure to exercise, delay in the exercise of, waiver of, or
forbearance or other indulgence with respect to, any right, remedy or power
available to the Agent or any Lender, including (i) any election
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28
not or failure to exercise any right of setoff, recoupment or counterclaim, (ii)
any election of remedies effected by the Agent or any Lender, including the
foreclosure upon any real estate constituting collateral, whether or not such
election affects the right to obtain a deficiency judgment and (iii) any
election by the Agent or any Lender in any proceeding under the Bankruptcy Code
of the application of Section 1111(b)(2) of the Bankruptcy Code; and (f) any
other act or failure to act or any other event or circumstance that (i) varies
the risk of Mobile Energy under this Guaranty or (ii) but for the provisions
hereof, would, as a matter of statute or rule of law or equity, operate to
reduce, limit or terminate the obligations of Mobile Energy hereunder or
discharge Mobile Energy from any thereof.
SECTION 8.8. Certain Waivers. Mobile Energy waives (a) any
requirement, and any right to require, that any right or power be exercised or
any action be taken against the Company, any other guarantor or any collateral
for the Obligations or any guaranty thereof, (b) all defenses to, and all
setoffs, counterclaims and claims of recoupment against, the Obligations that
may at any time be available to the Company or any other guarantor, (c) (i)
notice of acceptance of and intention to rely on this Guaranty, (ii) notice of
any Loans hereunder and of the incurrence or renewal of any other Obligations,
(iii) notice of any of the matters referred to in Section 8.7 and (iv) all other
notices that may be required by Law or otherwise to preserve any rights against
Mobile Energy under this Guaranty, including any notice of default, demand,
dishonor, presentment and protest, (d) diligence, (e) any defense based upon,
arising out of or in any way related to (i) any claim that any sale or other
disposition of any collateral for the Obligations or any guaranty thereof was
not conducted in a commercially reasonable fashion or that a public sale, should
the Agent, any Lender or the Collateral Agent (as the case may be), have elected
to so proceed, was, in and of itself, not a commercially reasonable method of
sale, (ii) any claim that any election of remedies by the Agent, any Lender or
the Collateral Agent (as the case may be), including the exercise by the Agent,
any Lender or the Collateral Agent (as the case may be) of any rights against
any collateral, impaired, reduced, released or otherwise extinguished any right
that Mobile Energy might otherwise have had against the Company or any other
guarantor or against any collateral, including any right of subrogation,
exoneration, reimbursement or contribution or right to obtain a deficiency
judgment, (iii) any claim based upon, arising out of or in any way related to
any of the matters referred to in Section 8.7 and (iv) any claim that this
Guaranty should be strictly construed against the Agent or any Lender and (f)
ALL OTHER DEFENSES UNDER APPLICABLE LAW THAT WOULD, BUT FOR THIS CLAUSE (f), BE
AVAILABLE TO MOBILE ENERGY AS A DEFENSE AGAINST OR A REDUCTION OR LIMITATION OF
ITS OBLIGATIONS HEREUNDER.
SECTION 8.9. Independent Credit Evaluation. Mobile
Energy has independently, and without reliance on any information
supplied by the Agent or any Lender, taken, and will continue to
take, whatever steps it deems necessary to evaluate the financial
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29
condition and affairs of the Company, and neither the Agent nor any Lender shall
have any duty to advise Mobile Energy of information at any time known to it
regarding such financial condition or affairs.
SECTION 8.10. Subordination of Rights Against Company, Other
Guarantors and Collateral. All rights that Mobile Energy may at any time have
against the Company, any other guarantor or any collateral for the Obligations
or any guaranty thereof (including rights of subrogation, exoneration,
reimbursement and contribution and whether arising under Law or otherwise), and
all obligations that the Company or any other guarantor may at any time have to
Mobile Energy, Mobile Energy's obligations hereunder or any payment made are
hereby expressly subordinated to the prior payment, observance and performance
in full of the Obligations and any other such Guaranty. Mobile Energy shall not
enforce any of the rights, or attempt to obtain payment or performance of any of
the obligations, subordinated pursuant to this Section 8.10 until the
Obligations have been paid, observed and performed in full, except that such
prohibition shall not apply to routine acts, such as the giving of notices and
the filing of continuation statements, necessary to preserve any such rights. If
any amount shall be paid to or recovered by Mobile Energy (whether directly or
by way of setoff, recoupment or counterclaim) on account of any right or
obligation subordinated pursuant to this Section 8.10, such amount shall be held
in trust by Mobile Energy for the benefit of the Agent and the Lenders, not
commingled with any of Mobile Energy's other funds and forthwith paid over to
the Agent, in the exact form received, together with any necessary endorsements,
to be applied and credited against, or held as security for, the Obligations and
the obligations of Mobile Energy hereunder. Notwithstanding the foregoing,
nothing herein shall restrict or otherwise limit the ability of Mobile Energy to
receive monies distributed thereto by the Collateral Agent pursuant to Section
3.11 of the Intercreditor Agreement, which monies need not be held in trust by
Mobile Energy.
SECTION 8.11. Payments by Mobile Energy. (a) All
payments due to the Agent or any Lender hereunder shall be made
to the Agent or such Lender at the address indicated in Section
9.2. A payment shall not be deemed to have been made on any day
unless such payment has been received by the Agent or the Lender
(as the case may be) at the required place of payment, in lawful
money of the United States of America in funds immediately
available to the Agent or such Lender (as the case may be).
(b) All payments due the Agent or any Lender under this
Guaranty, and all of the other terms, conditions, covenants and agreements to be
observed and performed by Mobile Energy under this Guaranty, shall be made,
observed or performed by Mobile Energy without any reduction or deduction
whatsoever, including any reduction or deduction for any set-off, recoupment,
counterclaim (whether, in any case, in respect of an obligation owed by the
Agent or any Lender to Mobile Energy, the Company or
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30
any other guarantor and, in the case of a counterclaim, whether sounding in
tort, contract or otherwise) or tax.
(c) Mobile Energy hereby authorizes the Agent and each Lender,
if and to the extent any amount payable by Mobile Energy under this Guaranty is
not otherwise paid when due, to charge such amount against any or all of the
accounts of Mobile Energy with the Agent or such Lender or any of its Affiliates
(whether maintained at a branch or office located within or without the United
States), with Mobile Energy remaining liable for any deficiency.
(d) Whenever any payment to the Agent or any Lender under this
Article VIII would otherwise be due (except by reason of acceleration) on a day
that is not a Business Day, such payment shall instead be due on the next
succeeding Business Day; provided, however, that any payment with respect to any
LIBOR Rate Loan stated to be due on a day other than a Eurodollar Business Day
shall be made on the immediately preceding Eurodollar Business Day. If the date
any payment hereunder is due is extended (whether by operation of this
Agreement, Law or otherwise), such payment shall bear interest for such extended
time at the rate of interest applicable hereunder.
SECTION 8.12. Continuance of Guaranty; Survival. The
obligations of Mobile Energy and the rights of the Agent and the Lenders under
this Article VIII shall continue in full force and effect until the payment,
observance and performance in full of the Obligations, subject to Section 8.3.
SECTION 8.13. Assignments and Participations; Assignments.
Mobile Energy may not assign any of its rights or obligations under this
Guaranty without the prior written consent of the Agent, and no assignment of
any such obligation shall release Mobile Energy therefrom unless the Agent shall
have consented to such release in a writing specifically referring to the
obligation from which Mobile Energy is to be released.
SECTION 8.14. Benefit and Enforcement. This Guaranty is given
for the benefit of the Agent and each Lender, each of whom shall be entitled in
the same manner as set forth herein to enforce performance and observance of
this Guaranty.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1. Amendments, Etc. No amendment or waiver of any
provision of this Agreement or any Note, or consent to any departure by either
of the Mobile Energy Parties therefrom, shall be effective unless in writing and
signed or consented to (in writing) by the Required Lenders (and, in the case of
amendments, the Mobile Energy Parties), and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given; provided, however, that no amendment,
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31
waiver or consent shall, unless in writing and signed or consented to (in
writing) by all of the Lenders, do any of the following: (a) waive any of the
conditions specified in Article III; (b) increase the Commitments of the Lenders
or subject the Lenders to any additional obligations; (c) reduce the principal
of, or interest on, the Loans or any fees or other amounts payable hereunder;
(d) postpone any date fixed for (i) payment of principal of, or interest on, the
Loans or (ii) payment of fees or other amounts payable hereunder; (e) change the
percentage of the Commitments or of the Loans outstanding, or the number of
Lenders, required for the Lenders or any of them to take any action hereunder;
or (f) amend this Section 8.1.
SECTION 9.2. Notices, Etc. All notices and other
communications provided for hereunder shall be in writing (including by
telecopier) and shall be mailed, telecopied or delivered; if to the Company, to
it at 900 Ashwood Parkway, Suite 300, Atlanta, Georgia 30338, Attention:
President, telephone: 770-673-7781; telecopier: 770-392-7644, with a copy to it
at P.O. Box 2747, 200 Bay Bridge Road, Mobile, Alabama 36652, Attention: Vice
President and General Manager, telephone: 334-330-3600, telecopier:
334-452-6337; if to Mobile Energy, to it at 900 Ashwood Parkway, Suite 450,
Atlanta, Georgia 30338, Attention: President, telephone: 770-673-7781;
telecopier: 770-392-7644; if to any Lender other than the Initial Lender, to it
at the address or telecopier number set forth below its name in the Commitment
Transfer Supplement by which it became a party hereto; if to the Agent or
Initial Lender, to it at 787 Seventh Avenue, New York, New York 10019, telephone
212-841-2000, telecopier 212-841-2555, Attention: Project Finance Group; or, as
to each party, to it at such other address or telecopier number as designated by
such party in a written notice to the other parties. All such notices and
communications shall be deemed received, (a) if personally delivered, upon
delivery, (b) if sent by first class mail, on the third Business Day following
deposit into the mails and (c) if sent by telecopier, upon acknowledgment of
receipt thereof by the recipient, except that notices and communications to the
Agent pursuant to Article II or VII shall not be effective until received by the
Agent.
SECTION 9.3. No Waiver; Remedies. No failure on the part of
any Lender or the Agent to exercise, and no delay in exercising, any right
hereunder shall operate as a waiver thereof, and no single or partial exercise
of any such right shall preclude any other or further exercise thereof or the
exercise of any other right. The remedies provided herein are cumulative and not
exclusive of any remedies provided by law.
SECTION 9.4. Costs and Expenses. Whether or not any Loans are
made hereunder, the Company shall pay to the Agent on demand (a) all reasonable
costs and expenses of the Agent and the Lenders in connection with the
preparation, execution, delivery, administration, modification and amendment of
this Agreement, the Notes and the other documents to be delivered hereunder,
including the reasonable fees and out-of-pocket expenses of counsel for the
Agent and the Lenders with respect thereto and
<PAGE>
32
with respect to advising the Agent and the Lenders as to their rights and
responsibilities, or the perfection, protection or reservation of rights or
interests, under this Agreement, the Notes, the Security Documents and the other
documents to be delivered hereunder and (b) all reasonable costs and expenses of
the Agent and the Lenders (including the reasonable fees and out-of-pocket
expenses of counsel for the Agent and the Lenders) in connection with the
enforcement (whether through negotiations, legal proceedings or otherwise) of
this Agreement, the Notes, the Security Documents and the other documents to be
delivered hereunder, whether in any action, suit or litigation, any bankruptcy,
insolvency or similar proceeding or otherwise. The Company will pay, indemnify,
and hold each Lender and the Agent harmless from and against any and all other
liabilities, obligations, losses, damages, penalties, actions (whether sounding
in contract, in tort or on any other ground), judgments, suits, costs, expenses
or disbursements of any kind or nature whatsoever with respect to the execution,
delivery, enforcement, performance and administration of, or in any other way
arising out of or relating to, this Agreement, the Notes, the other Financing
Documents or the use of the proceeds of the Loans or any other documents
contemplated by or referred to herein or therein or any action taken or omitted
to be taken by any Lender or the Agent with respect to any of the foregoing,
provided, however, that the Company shall not be required to indemnify the Agent
or any Lender for any liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements to the extent caused
by the Agent's or such Lender's willful misconduct or gross negligence. In
addition, the Company shall pay any and all stamp and other taxes and fees
payable or determined to be payable in connection with the execution, delivery,
filing and recording of any of the aforementioned documents, and the Company
agrees to indemnify and hold the Agent and the Lenders harmless from and against
any and all liabilities with respect to or resulting from any delay in paying or
omission to pay any of the foregoing.
SECTION 9.5. Application of Monies. If any sum paid or
recovered in respect of the Obligations is less than the amount then due, the
Agent may apply that sum to principal, interest, fees or any other amount due
under this Agreement in such proportions and order and generally in such manner
as the Agent shall determine.
SECTION 9.6. Severability. Any provision of this Agreement
that is prohibited, unenforceable or not authorized in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such prohibition,
unenforceability or nonauthorization without invalidating the remaining
provisions of this Agreement or affecting the validity, enforceability or
authorization of such provision in any other jurisdiction.
SECTION 9.7. Non-recourse Liability. Satisfaction of
the Obligations (including those under the Guaranty) shall be had
solely from the assets of the Mobile Energy Parties. No recourse
shall be had to (a) any assets or properties of any Members
<PAGE>
33
(other than Mobile Energy as provided in Article VIII) or of the stockholders of
Mobile Energy, other than their respective interests in the Collateral, (b) any
Member (other than Mobile Energy as provided in Article VIII) or (c) any
Affiliate, incorporator, stockholder, partner, member, officer, director or
employee of any Member or of the Company (other than the Company, Mobile Energy
and, in respect of any Southern Guaranty on deposit in the Maintenance Reserve
Account or the Distribution Account, Southern) and, in the event of
non-performance by either of the Mobile Energy Parties of any of the
Obligations, no judgment for any deficiency upon the Obligations shall be
obtainable by the Lenders or the Agent against any Member (other than Mobile
Energy as provided in Article VIII) or any Affiliate, incorporator, stockholder,
partner, member, officer, director or employee of any Member or of the Company
(other than the Company, Mobile Energy and, in respect of any Southern Guaranty
on deposit in the Maintenance Reserve Account or the Distribution Account,
Southern) (other than Mobile Energy as provided in Article VIII and, in respect
of any Southern Guaranty on deposit in the Maintenance Reserve Account or the
Distribution Account, Southern). Notwithstanding anything in this Section 9.7 to
the contrary (i) satisfaction of the Obligations 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 to the extent such assets
are not commingled with any of Mobile Energy's other assets or any monies or
assets of the Company, (ii) nothing contained herein or in the Notes shall limit
or otherwise prejudice in any way the right of the Agent, the Collateral Agent
or any Lender to proceed against any Person whomsoever (A) with respect to the
enforcement of such Person's obligations under any Project Document (including
the Guaranty and any Southern Guaranty) to which such Person is a party or to
proceed against such Person with respect to the enforcement of such obligations
or (B) to the extent necessary to realize upon the Collateral granted hereunder
or under the Security Documents and (iii) any limitations of liability herein
shall not apply to any Person if and to the extent that such Person commits
fraud or wilful misrepresentations, including those contained in Officer's
Certificates issued from time to time.
SECTION 9.8. Binding Effect. This Agreement shall be binding
upon and inure to the benefit of the Company, the Agent, the Lenders and their
respective successors and permitted assigns, except that the Company shall not
have the right to assign any of its rights and obligations hereunder without the
prior written consent of all of the Lenders.
SECTION 9.9. Assignments and Participations. (a) Any
------------------------------
Lender may at any time (with the prior written consent of the
Company, unless such sale is to a Lender or an Affiliate of a
Lender, such consent not to be unreasonably withheld or delayed,
the prior written consent of the Agent, such consent not to be
unreasonably withheld or delayed, and the prior written consent
of the Initial Lender) sell to one (1) or more banks or other
entities (a "Purchasing Lender") all or any part of its rights
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34
and obligations under the Credit Documents (which, except in the case of an
assignment to a Person that, immediately before such assignment, was a Lender,
shall be equal to at least $2,500,000) pursuant to a Commitment Transfer
Supplement, executed by such Purchasing Lender, such transferor Lender, the
Agent and the Initial Lender (and, in the case of a Purchasing Lender that is
not then a Lender or an Affiliate thereof, by the Company). Upon (i) the
execution of such Commitment Transfer Supplement and (ii) delivery of a copy
thereof to the Company and payment of the amount of the purchase price for its
participation to such transferor Lender, such Purchasing Lender shall for all
purposes be a Lender party to this Agreement and shall have all the rights and
obligations of a Lender under this Agreement, to the same extent as if it were
an original party hereto with the Commitment as set forth in such Commitment
Transfer Supplement, which shall be deemed to amend this Agreement to the
extent, and only to the extent, necessary to reflect the addition of such
Purchasing Lender and the resulting adjustment of Commitments arising from the
purchase by such Purchasing Lender of all or a portion of the rights and
obligations of such transferor Lender under the Credit Documents. Upon the
consummation of any transfer pursuant to this Section 9.9, the transferor
Lender, the Agent and the Company shall make appropriate arrangements so that,
if required, a replacement Note is issued to such transferor Lender and a new
Note or, as appropriate, a replacement Note, is issued to such Purchasing
Lender, in each case, in principal amounts reflecting their Commitments.
(b) Any Lender may, from time to time, sell or offer to sell
participating interests in any Loans owing to such Lender, any Note held by such
Lender, any Commitment of such Lender or any other interests and obligations of
such Lender hereunder, to one (1) or more banks or other entities (each, a
"Participant"), on such terms and conditions as may be determined by the selling
Lender, without the consent of the Company. The selling Lender shall notify the
Company of the identity of each Participant within thirty (30) days following
such participation; provided, however, that failure to give such notice within
such thirty (30) day period will not affect the validity or effectiveness of
such participation. The grant of such participation shall not relieve any such
Lender of its obligations, or impair the rights of any such Lender, hereunder.
In the event of any such sale by a Lender of a participating interest to a
Participant, such Lender shall remain solely responsible for the performance of
such Lender's obligations under this Agreement, such Lender shall remain the
holder of any such Note for all purposes under this Agreement, and the Company,
the Agent and the Lenders will continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under this
Agreement and such Lender shall retain the sole right and responsibility to
exercise the rights of such Lender, and enforce the obligations of the Company,
including the right to approve any amendment, modification, supplement or waiver
of any provision of any Credit Document and the right to take action under
Article VI hereof and such Lender shall not grant any such Participant any
voting rights or veto power over
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35
any such action by such Lender under this Agreement (provided that such Lender
may agree not to consent to any modification, amendment or waiver of this
Agreement, without the consent of the Participant, that would alter the
principal of or interest on the Loans, postpone the date fixed for any payment
of principal of or interest thereon, release any Collateral or extend the
Scheduled Expiration Date). No Participant shall have any rights under this
Agreement to receive payment of principal, interest or any other amount except
through a Lender and as provided in this Section 9.9. The Company also agrees
that each Participant shall be entitled to the benefits of Sections 2.5(d),
2.13, 2.14, 2.15 and 2.16 with respect to its participation granted hereunder,
provided that no Participant shall be entitled to receive any greater amount
pursuant to such Sections than the Lender transferring such participation would
have been entitled to receive in respect of the amount of the participation
transferred to such Participant had no such transfer occurred.
(c) Any Lender may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
9.9, disclose to the Purchasing Lender or Participant or proposed Purchasing
Lender or Participant any information relating to the Company furnished to such
Lender by or on behalf of the Company.
(d) Nothing herein shall prohibit any Lender from pledging or
assigning any Note to any Federal Reserve Bank in accordance with applicable
law.
(e) In the event any Lender notifies the Company pursuant to
Section 2.15 that it may no longer make or maintain LIBOR Rate Loans or demands
payment of additional amounts pursuant to Section 2.13 or 2.14, the Company, at
its expense, at any time within 180 days after such demand, so long as no
Default or Event of Default shall have occurred and be continuing, may require
such Lender to sell in accordance with the foregoing provisions of this Section
9.9, at par plus accrued interest, without recourse or warranty and pursuant to
a Commitment Transfer Supplement, its rights and obligations hereunder
(including its Commitment and the Loans at the time owing to it and the Notes
held by it) to a Qualified Financial Institution specified by the Company that
is willing to purchase such rights and obligations on the terms hereof and is
reasonably acceptable to the Agent, provided that (i) such assignment shall not
conflict with or violate any requirement of law applicable to or binding on such
assigning Lender, and (ii) the Company shall have paid to such assigning Lender
all amounts (other than interest) accrued and owing hereunder to it (including,
without limitation, amounts owing pursuant to Sections 2.5(d), 2.13 and 2.14).
Notwithstanding anything set forth above in this subsection 9.9(e) to the
contrary, the Company shall not be entitled to require an assignment under this
Section 9.9(e) with respect to any Lender demanding payment under Section 2.13
or 2.14 if (x) prior to any such requirement by the Company, such Lender shall
have changed its lending office so as to eliminate the incurrence of the costs
in respect of which such payment was
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36
demanded or (y) the circumstances giving rise to such Lender's demand for
payment of such additional amounts are applicable to all the Lenders. As used
herein, "Qualified Financial Institution" means (a) any bank that has capital,
surplus and undivided profits of at least $500,000,000 and that is either
organized under the laws of the United States or any state thereof or has a
branch office or agency located in the United States, and (b) any other bank or
financial institution approved by the Agent and the Company (which approval will
not be unreasonably withheld).
SECTION 9.10. Indemnification. Each of the Mobile Energy
Parties agrees to indemnify and hold harmless the Agent and each Lender and each
of their respective officers, directors, employees, agents and Affiliates (each,
an "Indemnified Party") from and against any and all direct (as opposed to
consequential) claims, damages, losses, liabilities, costs and expenses
whatsoever that an Indemnified Party may incur (or that may be claimed against
an Indemnified Party by any Person) arising under, relating to or resulting from
any demand, claim, suit, proceeding or action of any kind or nature whatsoever
of any third party (including without limitation, any holder of any securities
issued on behalf of the Company, any trustee on behalf of any such holders or
any underwriter, placement agent or remarketing agent for such securities)
against or affecting an Indemnified Party (1) with respect to the execution,
delivery, enforcement and performance of this Agreement, the other Project
Documents, any other documents related to the Energy Complex entered into by the
Company or the transactions contemplated hereby or thereby, (2) with respect to
the offering and sale of any securities, (3) with respect to a default by the
Company in the performance of its respective agreements, rights or obligations
contained in this Agreement, the other Project Documents or and any other
documents related to the Project entered into by the Company, or any other
instrument or agreement entered into by the Company in connection herewith or
therewith, (4) resulting from injury to or death of any person whomsoever, and
damage to or loss or destruction of any property whatsoever, which in any way
arises in connection with, is incidental to or is caused by the construction or
operation of the Energy Complex or any activity on or near the Site or the
Energy Complex, (5) in any way relating to or arising out of the Project, or the
manufacture, financing, construction, purchase, acceptance, rejection,
ownership, acquisition, delivery, nondelivery, preparation, installation,
storage, maintenance, repair, transfer of title, abandonment, possession,
rental, use, operation, environmental clean-up, condition, sale, return,
importation, exportation or other application or disposition of all or any part
of any interest in the Site or the Energy Complex, (6) resulting from the
violation of any environmental law or the existence or release of any hazardous
materials at the Site or the Energy Complex or any other property of the Company
(including, without limitation, clean-up costs, response costs, costs of
corrective action and natural resources damages) or (7) any use of the proceeds
of a Loan; provided, however, that the
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37
Mobile Energy Parties shall not be required to indemnify any Indemnified Party
for any claims, damages, losses, liabilities, costs or expenses to the extent
caused by such Indemnified Party's willful misconduct or gross negligence. The
Mobile Energy Parties, upon demand by any Indemnified Party at any time, shall
also reimburse such party for any reasonable legal or other expenses incurred in
connection with investigating or defending against any of the foregoing. If any
action, suit or proceeding arising from any of the foregoing is brought against
any Indemnified Party, such Indemnified Party shall promptly notify the Mobile
Energy Parties in writing, enclosing a copy of all papers served, but the
omission so to notify the Mobile Energy Parties of any such action shall not
relieve it of any obligation to indemnify such Indemnified Party; provided,
however, that the Mobile Energy Parties shall not be liable for any settlement
of any such action effected without either of the Mobile Energy Party's prior
written consent, not to be unreasonably withheld. If any such action shall be
brought against any Indemnified Party and it shall notify either of the Mobile
Energy Parties of the commencement thereof, either of the Mobile Energy Parties
shall be entitled to participate in and, to the extent that it shall wish, to
assume the defense thereof with counsel reasonably satisfactory to such
Indemnified Party, and after notice from such Mobile Energy Party to such
Indemnified Party of such Mobile Energy Party's election so to assume the
defense thereof, the Mobile Energy Parties shall not be liable to such
Indemnified Party for any subsequent legal or other expenses attributable to
such defense, except as provided below, other than reasonable costs of
investigation subsequently incurred by such Indemnified Party in connection with
the defense thereof. The Indemnified Party shall have the right to employ its
own counsel in any such action where either of the Mobile Energy Parties has
assumed the defense, but the fees and expenses of such counsel shall be at the
expense of such Indemnified Party unless (i) the employment of counsel by such
Indemnified Party has been authorized by either of the Mobile Energy Parties,
(ii) the Indemnified Party shall have reasonably concluded that there may be a
conflict of interest between either of the Mobile Energy Parties and the
Indemnified Party in the conduct of the defense of such action (in which case
the Mobile Energy Parties shall not have the right to direct the defense of such
action on behalf of the Indemnified Party) or (iii) the Mobile Energy Parties
shall not in fact have employed counsel reasonably satisfactory to the
Indemnified Party to assume the defense of such action, provided that the Mobile
Energy Parties shall not be required to pay the fees and expenses of more than
one such separate counsel for all the Lenders.
SECTION 9.11. Governing Law. THIS AGREEMENT AND THE
NOTES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO THE CONFLICT-
OF-LAW PRINCIPLES THEREOF.
SECTION 9.12. Headings. The section and subsection
headings used herein have been inserted for convenience of
reference only and do not constitute matters to be considered in
interpreting this Agreement.
<PAGE>
38
SECTION 9.13. Execution in Counterparts. This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one (1) and the same
agreement.
SECTION 9.14. Third Party Beneficiaries. Nothing contained in
this Agreement or in the Notes, express or implied, shall give to any Person,
other than the parties hereto and their successors and permitted assigns, any
benefits or any legal or equitable right, remedy or claim under this Agreement
or the Notes.
SECTION 9.15. Waiver of Jury Trial. THE MOBILE ENERGY PARTIES,
THE AGENT AND THE LENDERS HEREBY IRREVOCABLY WAIVE ALL RIGHT TO TRIAL BY JURY IN
ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO ANY OF THE
CREDIT DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY.
SECTION 9.16. Submission To Jurisdiction; Waivers.
Each of the Company and Mobile Energy hereby irrevocably and
unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Financing Documents
to which it is a party, or for recognition and enforcement of any
judgment in respect thereof, to the non-exclusive general jurisdiction
of the Courts of the State of New York, the courts of the United States
of America for the Southern District of New York and appellate courts
from any thereof;
(b) consents that any such action or proceeding may be brought
in such courts and waives any objection that it may now or hereafter
have to the venue of any such action or proceeding in any such court or
that such action or proceeding was brought in an inconvenient court and
agrees not to plead or claim the same;
(c) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form of mail), postage
prepaid, to such Person at its address set forth in Section 9.2 or at
such other address of which the Agent shall have been notified pursuant
thereto;
(d) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law or shall
limit the right to sue in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any
right it may have to claim or recover in any legal action or proceeding
referred to in this Section any special, exemplary, punitive or
consequential damages, other
<PAGE>
39
than, in the case of punitive damages, with respect to any Lender or
the Agent which engages in willful misconduct.
<PAGE>
40
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective officers thereunto duly
authorized, as of the day and year first above written.
MOBILE ENERGY SERVICES
COMPANY, L.L.C.
By: /s/
Name: Christopher J. Kysar
Title: Vice President
MOBILE ENERGY SERVICES
HOLDINGS, INC.
By: /s/
Name: Christopher Kysar
Title: Vice President
Commitment
$15,000,000.00 BANQUE PARIBAS, as Agent and
as a Lender
By: /s/
Name: Glenn R. Tobias
Title: Group Vice President
By:
Name: Francis Ballard, Jr.
Title:Vice President
<PAGE>
THIS REVOLVING PROMISSORY NOTE MAY NOT BE TRANSFERRED EXCEPT IN COMPLIANCE WITH
THE TERMS AND PROVISIONS OF THE CREDIT AGREEMENT REFERRED TO BELOW. TRANSFERS OF
THIS REVOLVING PROMISSORY NOTE MUST BE RECORDED IN THE REGISTER MAINTAINED BY
THE AGENT PURSUANT TO THE TERMS OF SUCH CREDIT AGREEMENT.
Exhibit A
REVOLVING PROMISSORY NOTE
$15,000,000.00 New York, New York
August 24, 1995
FOR VALUE RECEIVED, the undersigned, MOBILE ENERGY SERVICES COMPANY,
L.L.C., an Alabama limited liability company (the "Company"), hereby
unconditionally promises to pay to the order of BANQUE PARIBAS (the "Lender")
the lesser of (i) the principal sum of fifteen million dollars ($15,000,000.00)
and (ii) the aggregate unpaid principal amount of the Loans made by the Lender
to the Company under the Credit Agreement referred to below, on the dates and in
the amounts specified therein.
The Company further promises to pay interest on the daily unpaid
principal amount hereof from time to time outstanding on the dates and at the
rates specified in the Credit Agreement. This Note is hereby expressly limited
so that in no contingency or event, whether by reason of acceleration of the
maturity of any indebtedness evidenced hereby or otherwise, shall the interest
contracted for or charged or received by the Lender exceed the maximum amount
permissible under applicable law. If, from any circumstance whatsoever, interest
would otherwise be payable to the Lender in excess of the maximum lawful amount,
the interest payable to the Lender shall be reduced to the maximum amount
permitted under applicable law, and the amount of interest for any subsequent
period, to the extent less than that permitted by applicable law, shall to that
extent be increased by the amount of such reduction.
Each holder hereof is authorized to endorse on the schedule attached
hereto, or on a continuation thereof, the date each such interest payment is due
and the amount of each such interest payment determined in accordance with the
Credit Agreement. All such notations shall constitute conclusive evidence
(absent manifest error) of the accuracy of the information so recorded and be
enforceable against the Company with the same force and effect as if such
amounts were each set forth in a separate note executed by the Company.
All payments due hereunder shall be made without setoff, counterclaim
or deduction of any nature to Banque Paribas, as
<PAGE>
2
Agent under the Credit Agreement, at 787 Seventh Avenue, New York, New York
10019, in lawful money of the United States of America and in immediately
available funds, or at such other place and in such other manner as may be
specified by the Agent pursuant to the Credit Agreement.
Each holder hereof is authorized to endorse on the schedule attached
hereto, or on a continuation thereof, the date and amount of each Loan made to
the Company and each payment or prepayment of principal thereof, provided that
the failure of such holder to make, or any error in making, any such recordation
or endorsement shall not affect the obligations of the Company hereunder or
under the Credit Agreement. All such notations shall constitute conclusive
evidence (absent manifest error) of the accuracy of the information so recorded
and be enforceable against the Company with the same force and effect as if such
amounts were each set forth in a separate note executed by the Company.
This Note is the "Note" of the Company to the Lender referred to in,
evidences each Loan made by the Lender to the Company under, is subject to the
provisions of, and entitles its holder to the benefits of, the Revolving Credit
Agreement dated as of August 1, 1995 (the "Credit Agreement") among the Mobile
Energy Parties, the Lender and the other lender parties thereto, and Banque
Paribas, as Agent for the Lender and such other lenders, as the same may be
amended, supplemented or otherwise modified from time to time and to which
reference is hereby made for a more complete statement of the terms and
conditions under which each Loan evidenced hereby is to be made and repaid.
Capitalized terms in this Note that are not specifically defined herein shall
have the meanings ascribed to them in the Credit Agreement.
The Credit Agreement provides for, among other things, the acceleration
of the maturity of the unpaid principal amount hereof upon the occurrence of
certain stated events and for voluntary prepayments in certain circumstances and
upon certain terms and conditions. The obligations of the Company under the
Credit Agreement and this Note are secured as provided under, and the holder
hereof is entitled to the benefit of, the Security Documents.
In addition to any and all costs, fees and expenses for which the
Company is liable under the Credit Agreement, the Company promises to pay all
costs and expenses, including reasonable attorneys' fees and disbursements,
incurred in the collection and enforcement hereof or any appeal of any judgment
rendered hereon.
The Company hereby expressly waives diligence, presentment, protest,
demand, dishonor, nonpayment and notice of every kind to the fullest extent
permitted by applicable law. No failure or delay by any holder of this Note to
exercise any right or remedy under this Note or any other document or instrument
entered into
<PAGE>
3
pursuant to the Credit Agreement shall operate or be construed as a waiver or
modification hereof or thereof.
This Note shall be binding upon the successors and permitted assigns of
the Company and shall inure to the Lender and its successors, endorsees and
permitted assigns. If any term or provision of this Note shall be held invalid,
illegal or unenforceable, the validity of all other terms and provisions hereof
shall in no way be affected thereby.
Recourse under this Note is limited in accordance with Section 9.7 of
the Credit Agreement, and the provisions of Section 9.7 of the Credit Agreement
are incorporated herein by reference.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO THE
CONFLICT-OF-LAW PRINCIPLES THEREOF.
The Company hereby expressly and irrevocably agrees and consents that
any suit, action or proceeding arising out of or related to this Note may be
instituted in any state or federal court (at Lender's option) sitting in the
County of New York, State of New York, and, by the execution and delivery of
this Note, the Company expressly waives any objection that it may have now or
hereafter to the venue or to the jurisdiction of any such suit, action or
proceeding, and irrevocably submits generally and unconditionally to the
jurisdiction of any such court in any such suit, action or proceeding.
All excise tax due on this Note has been paid by the Company and proper
stamps affixed to the Mortgage securing this Note.
MOBILE ENERGY SERVICES
COMPANY, L.L.C.
By: _______________________
Name:
Title:
<PAGE>
<TABLE>
SCHEDULE
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Total
Principal
Principal Amount of Unpaid Amount of
Date Amount Principal Paid Principal Date Interest Amount of Loans Notation
Made of Loan or Prepaid Balance Payment is Due Interest Due Outstanding Made by
---- ------- ---------- ------- -------------- ------------ ----------- -------
</TABLE>
<PAGE>
Exhibit B
NOTICE OF BORROWING
[Mobile Energy Services Company, L.L.C. Letterhead]
[Date - at least one (1) Business Day (or
three (3) Eurodollar Business Days for LIBOR
Rate Loans) prior to proposed date of
Borrowing]
Banque Paribas, as Agent
787 Seventh Avenue
New York, New York 10019
Attention:
Ladies and Gentlemen:
Pursuant to the Revolving Credit Agreement, dated as of August 1, 1995
among Mobile Energy Services Company, L.L.C. (the "Company"), Mobile Energy
Services Holdings, Inc., the financial institutions named therein (the
"Lenders") and Banque Paribas, as Agent for the Lenders (as the same may be
amended, modified or supplemented from time to time, the "Credit Agreement")
(capitalized terms used herein, unless otherwise noted, shall have the meanings
ascribed to them in the Credit Agreement). The Company hereby requests that the
Lenders make available to the Company on ______, the following amount:
Funds required by the Company to pay
for Operation and Maintenance Costs $______
Funds required by the Company to pay
Obligations under the Credit Agreement $______
Total Funds Required $______
This Borrowing shall consist of [choose Adjusted Base Rate Loans or
LIBOR Rate Loans - if LIBOR Rate Loans, specify Interest Period of one (1), two
(2) or three (3) months] with a Loan Repayment Date of [Date - not later than
the Scheduled Expiration Date; not later than 93 days from date of Borrowing; no
more than $5,000,000 may be scheduled for repayment within any calendar month;
if LIBOR Rate Loans, must correspond with last day of specified Interest
Period].
<PAGE>
2
Attached hereto are invoices or other evidence of amounts due
evidencing the uses contemplated for the requested Borrowing. We request that
$______ of the funds representing the requested Borrowing be deposited in the
Operating Account established and created under the Intercreditor Agreement and
$______ of the funds representing the requested Borrowing be deposited in
account no. ______, located at __________, ABA no.
_______ (which may be the Company's checking account).
In connection with this request for a Borrowing, the Company further
certifies that the proceeds of the Borrowing being requested herein are to be
applied for the uses permitted by the Credit Agreement.
The Company hereby certifies that, as of the date of this request for a
Borrowing, the Company is in compliance, subject to the satisfaction or waiver
by the Agent, with all conditions precedent set forth in Section [in the case of
the initial Borrowing, 3.1 and] 3.2 of the Credit Agreement.
MOBILE ENERGY SERVICES
COMPANY, L.L.C.
By: _____________________________
Name:
Title:
cc: Bankers Trust (Delaware),
as Collateral Agent
<PAGE>
Exhibit C
Form of Commitment Transfer Supplement
COMMITMENT TRANSFER SUPPLEMENT, dated as of the date set forth in Item
1 of Schedule I hereto, among each Transferor Lender set forth in Item 2 of
Schedule I hereto (each, a "Transferor Lender"), each Purchasing Lender set
forth in Item 3 of Schedule I hereto (each, a "Purchasing Lender") and Banque
Paribas, as the Initial Lender and as Agent under the Credit Agreement described
below.
W I T N E S S E T H:
WHEREAS, this Commitment Transfer Supplement is being executed
and delivered in accordance with Section 9.9 of the Revolving Credit
Agreement dated as of August 1, 1995 among (i) Mobile Energy Services
Company, L.L.C., an Alabama limited liability company (the "Company"),
(ii) Mobile Energy Services Holdings, Inc., an Alabama corporation,
(iii) Banque Paribas, in its individual capacity as initial lender (the
"Initial Lender"), and the other Lenders named therein (collectively,
the "Lenders") and (iv) Banque Paribas, as agent for the Lenders (the
"Agent") (terms defined therein being used herein as therein defined);
and
WHEREAS, each Purchasing Lender desires to purchase and assume
from its respective Transferor Lender certain rights, obligations and
commitments under the Credit Agreement and, if it is not already a
Lender party to the Credit Agreement, desires to become a Lender party
to the Credit Agreement; and
WHEREAS, each Transferor Lender desires to sell and assign to
its respective Purchasing Lender, certain rights, obligations and
commitments under the Credit Agreement.
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Upon receipt by Agent of [ ] ([ ]) fully executed originals of this
Commitment Transfer Supplement, to each of which is attached a fully completed
Schedule I and Schedule II, and each of which has been executed by each
Transferor Lender, each Purchasing Lender and any other Person required by the
Credit Agreement to execute this Commitment Transfer Supplement, Agent will
transmit to the Company, each Transferor Lender and each Purchasing Lender a
Transfer Effective Notice, substantially in the form of Schedule IV hereto (a
"Transfer Effective Notice"). Such Transfer Effective Notice shall set forth,
among other things, the date on which the transfer effected by this Commitment
Transfer Supplement shall become effective (the "Transfer Effective Date"),
which date shall be the
<PAGE>
2
date hereof. From and after the Transfer Effective Date each Purchasing Lender
shall be a Lender party to the Credit Agreement for all purposes thereof.
2. Each Purchasing Lender shall pay to each of its respective
Transferor Lenders an amount in United States dollars equal to the purchase
price, as agreed between such Transferor Lender and each such Purchasing Lender
(the "Purchase Price"), for the portion being purchased (such Purchasing
Lender's "Purchased Percentage") by such Purchasing Lender of the Commitment of,
and outstanding Loans and other amounts owing to, the respective Transferor
Lender under the Credit Agreement and the Notes (the "Outstanding Obligations").
Each Purchasing Lender shall pay the appropriate Purchase Price to its
respective Transferor Lender(s), in immediately available funds, at or before
12:00 noon, local time of the appropriate Transferor Lender, on the Transfer
Effective Date. Effective upon the Transfer Effective Date, each Transferor
Lender hereby irrevocably sells, assigns and transfers to each of its respective
Purchasing Lenders, without recourse, representation or warranty other than as
set forth in Section 8, and each such Purchasing Lender hereby irrevocably
purchases, takes and assumes from its respective Transferor Lender(s), such
Purchasing Lender's Purchased Percentage of the Commitment of, and presently
outstanding Loans and other amounts owing to, each such Transferor Lender under
the Credit Agreement and the Notes.
3. Each Transferor Lender has made arrangements with its respective
Purchasing Lender(s) with respect to (a) the portion, if any, to be paid, and
the date or dates for payment, by such Transferor Lender to its respective
Purchasing Lender(s) of any fees heretofore received by such Transferor Lender
pursuant to the Credit Agreement prior to the Transfer Effective Date that apply
to periods subsequent to the Transfer Effective Date and (b) the portion, if
any, to be paid, and the date or dates for payment, by each such Purchasing
Lender to its respective Transferor Lender(s) of fees or interest received by
each such Purchasing Lender pursuant to the Credit Agreement from and after the
Transfer Effective Date that apply to periods prior to the Transfer Effective
Date.
4. All payments of principal that would otherwise be payable, and all
interest, fees and other amounts that would otherwise accrue, from and after the
Transfer Effective Date to or for the account of any Transferor Lender pursuant
to the Credit Agreement and the Notes shall instead be payable and accrue to or
for the account of, the Transferor Lender(s) and the Purchasing Lender(s) in
accordance with their respective interests as reflected in this Commitment
Transfer Supplement.
5. On or prior to the Transfer Effective Date, each Transferor Lender
will deliver to the Agent its Note. On or prior to the Transfer Effective Date,
the Company will deliver to the Agent a new Note for each Purchasing Lender and
each Transferor Lender (if applicable), in each case in principal amounts
reflecting the revised Commitments of such Lenders (as adjusted pursuant to this
Commitment Transfer Supplement). Promptly after the Transfer Effective Date, the
Agent will send to each Transferor Lender (if applicable) and Purchasing Lender
its new Note with the superseded Note of each Transferor Lender attached to the
new Note (or if there is more than one (1) new Note, the superseded Note
attached to one (1) of such new Notes and copies thereof attached to all other
new Notes).
<PAGE>
3
6. Concurrently with the execution and delivery hereof, the Transferor
Lenders will provide to each Purchasing Lender (if it is not already a Lender
party to the Credit Agreement) copies of all documents delivered to the
Transferor Lenders evidencing satisfaction of the conditions precedent set forth
in the Credit Agreement.
7. Each of the parties to this Commitment Transfer Supplement agrees
that at any time and from time to time upon the written request of any other
party, it will execute and deliver such further documents and do such further
acts and things as such other party may reasonably request in order to effect
the purposes of this Commitment Transfer Supplement.
8. By executing and delivering this Commitment Transfer Supplement,
each Transferor Lender and each Purchasing Lender confirms to and agrees with
each other, the Agent, the Initial Lender and the Lenders as follows: (a) other
than the representation and warranty that it is the legal and beneficial owner
of the interest being assigned hereby, free and clear of any adverse claim, each
such Transferor Lender makes no representation or warranty and assumes no
responsibility with respect to (i) any statements, warranties or representations
made in or in connection with the Credit Agreement or (ii) the execution,
legality, validity, enforceability, genuineness, sufficiency or value of the
Credit Agreement, the Notes or any other instrument or document furnished
pursuant thereto, (b) each such Transferor Lender makes no representation or
warranty and assumes no responsibility with respect to the financial condition
of the Company or the performance or observance by the Company of any of its
obligations under the Credit Agreement, the Notes or any other instrument or
document furnished pursuant thereto, (c) each such Purchasing Lender confirms
that it has received a copy of the Credit Agreement, together with copies of
such other documents and information as it has deemed appropriate to make its
own credit analysis and decision to enter into this Commitment Transfer
Supplement, (d) each such Purchasing Lender will, independently and without
reliance upon Agent, its respective Transferor Lender(s) or any other Lender or
the Initial Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under the Credit Agreement, (e) each such Purchasing Lender
appoints and authorizes Agent to take such action as agent on its behalf and to
exercise such powers under the Credit Agreement as are delegated to the Agent by
the terms thereof together with such powers as are reasonably incidental thereto
and (f) each such Purchasing Lender agrees that it will perform in accordance
with their terms all of the obligations that by the terms of the Credit
Agreement are required to be performed by it as a Lender.
9. Schedule II hereto sets forth for each Transferor Lender and each
Purchasing Lender the revised Commitment of each Transferor Lender and each
Purchasing Lender, as well as certain administrative information with respect to
each Purchasing Lender.
10. Notwithstanding anything to the contrary contained in this
Commitment Transfer Supplement, if the long-term debt rating of any Purchasing
Lender shall, at any time, be less than a rating of BBB or the equivalent
thereof by S&P or Baa or the equivalent thereof by Moody's, then the Initial
Lender may, in its sole and absolute discretion, purchase all or any part (as
determined by the Initial Lender) of such Purchasing Lender's participating
interest hereunder (the "Purchased Interests") by providing such Purchasing
Lender with at least two Business Days' prior notice of such purchase and making
a payment to such Purchasing
<PAGE>
4
Lender equal to all outstanding amounts owing to it under the Credit Agreement
in respect of the Purchased Interests on the date of such purchase as set forth
in such notice. Upon any such purchase of the Purchased Interests, such
Purchasing Lender shall no longer have any rights or obligations as a Purchasing
Lender hereunder or as a Lender under the Credit Agreement or under any other
instruments or documents furnished pursuant thereto with respect to the
Purchased Interests. The Initial Lender may, in its sole and absolute
discretion, retain for its own account and/or sell its interest in all or any
portion of the Purchased Interests.
11. THIS COMMITMENT TRANSFER SUPPLEMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK WITHOUT REFERENCE TO THE CONFLICT-OF-LAW PRINCIPLES
THEREOF.
12. This Commitment Transfer Supplement may be executed in two (2) or
more counterparts, each of which shall be deemed an original but all of which
together shall constitute one (1) and the same document.
13. Execution of this Commitment Transfer Supplement by the Agent and
the Company as set forth below shall constitute any consent of such Person
required pursuant to Section 9.9 of the Credit Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Commitment
Transfer Supplement to be executed by their respective duly authorized officers
on Schedule I hereto as of the date set forth in Item 1 of Schedule I hereto.
<PAGE>
Schedule I
to Commitment
Transfer
Supplement
COMPLETION OF INFORMATION
AND SIGNATURES FOR COMMITMENT TRANSFER SUPPLEMENT
Re: Revolving Credit Agreement with Mobile Energy Services Company, L.L.C.
Item 1 Date of Commitment Transfer Supplement: [Insert date of Commitment
Transfer Supplement]
Item 2 Transferor Lenders: [Insert names of Transferor Lenders]
Item 3 Purchasing Lenders: [Insert names of Purchasing Lenders]
Item 4 Signatures of Parties to Commitment Transfer Supplement:
______________________, as a
Transferor Lender
By: ________________________
Name:
Title:
______________________, as a
Purchasing Lender
By: ________________________
Name:
Title:
BANQUE PARIBAS, as the Initial Lender
and Agent
By: _________________________
Name: ___________________
Title: __________________
CONSENTED TO AND ACKNOWLEDGED:
MOBILE ENERGY SERVICES COMPANY, L.L.C.
<PAGE>
2
By: ____________________________
Name: ______________________
Title: _____________________
ACCEPTED FOR RECORDATION IN REGISTER:
BANQUE PARIBAS, as Agent
By: ___________________________
Name: ______________________
Title: _____________________
<PAGE>
3
Schedule II
to Commitment
Transfer
Supplement
COMMITMENT AMOUNTS AND PROPORTIONATE SHARES
Names of Transferor
Lenders Revised Commitment
---------- $-----
---------- $-----
Names of Purchasing
Lenders New Commitment
---------- $-----
[NAME PURCHASING LENDER]
Address for Notices:
Attention:
Telex:
Answerback:
Telephone:
Telecopier:
Clearing Account:
[Insert Acct. #]
<PAGE>
Schedule III
to Commitment
Transfer
Supplement
TRANSFER EFFECTIVE NOTICE
[Date]
Transferor Lenders: __________
Purchasing Lenders: __________
Re: Revolving Credit Agreement with Mobile Energy Services Company, L.L.C.
The undersigned, as Agent under the Revolving Credit Agreement, dated
as of August 1, 1995, among (i) Mobile Energy Services Company, L.L.C., an
Alabama limited liability company (the "Company"), (ii) Mobile Energy Services
Holdings, Inc., an Alabama corporation, (iii) Banque Paribas, as initial lender,
and the other Lenders named therein (collectively, the "Lenders"), and (iv)
Banque Paribas, as agent for the Lenders (the "Agent"), acknowledges receipt of
[ ] ([ ]) copies of the Commitment Transfer Supplement as described in Annex I
hereto, each fully executed. Terms defined in such Commitment Transfer
Supplement are used herein as therein defined.
1. Pursuant to such Commitment Transfer Supplement, you are advised that
the Transfer Effective Date will be the date hereof.
2. Pursuant to such Commitment Transfer Supplement, each Transferor Lender
is required to deliver to Agent on or before the Transfer Effective Date its
Note.
3. Pursuant to such Commitment Transfer Supplement, the Company is required
to deliver to the Agent on or before the Transfer Effective Date the following
Notes:
[Describe each new Note for Transferor Lender (if applicable) and Purchasing
Lender as to principal amount and payee.]
<PAGE>
2
4. Pursuant to such Commitment Transfer Supplement, each Purchasing
Lender is required to pay its Purchase Price, in immediately available funds, to
the appropriate Transferor Lender at or before 12:00 noon, local time of the
appropriate Transferor Lender, on the Transfer Effective Date.
Very truly yours,
BANQUE PARIBAS, as Agent
By: ______________________
Name: ______________
Title: _____________
<PAGE>
ANNEX I
INFORMATION IDENTIFYING
COMMITMENT TRANSFER SUPPLEMENT
Re: Revolving Credit Agreement with Mobile Energy Services Company, L.L.C.
Item 1 Date of Commitment
Transfer Supplement: __________
Item 2 Transferor Lenders: __________
Item 3 Purchasing Lenders: __________
Exhibit 4.7
- ------------------------------------------------------------------------------
LEASEHOLD MORTGAGE, ASSIGNMENT OF LEASES,
RENTS, ISSUES AND PROFITS
and
SECURITY AGREEMENT AND FIXTURE FILING
among
MOBILE ENERGY SERVICES COMPANY, L.L.C.
and
THE INDUSTRIAL DEVELOPMENT BOARD
OF THE CITY OF MOBILE, ALABAMA
as Mortgagors
and
BANKERS TRUST (DELAWARE)
as Mortgagee
Dated as of August 1, 1995
Location: County of Mobile
State of Alabama
- -------------------------------------------------------------------------------
THIS INSTRUMENT IS FILED AND SHALL CONSTITUTE A FIXTURE FILING IN
ACCORDANCE WITH THE PROVISIONS OF SECTION 7-9-402(6) OF THE CODE OF
ALABAMA.
THIS INSTRUMENT IS A "CONSTRUCTION MORTGAGE" AS DEFINED IN SECTION 7-9-313(1)(C)
OF THE CODE OF ALABAMA AND SECURES, AMONG OTHER OBLIGATIONS, AN OBLIGATION
INCURRED FOR THE CONSTRUCTION OF AN IMPROVEMENT ON LAND.
THIS INSTRUMENT WAS PREPARED BY AND SHOULD BE RETURNED TO T. BRUCE McGOWIN,
ESQ., HAND, ARENDALL, BEDSOLE, GREAVES & JOHNSTON, L.L.C., 3000 FIRST NATIONAL
BANK BUILDING, MOBILE, ALABAMA 36602.
<PAGE>
TABLE OF CONTENTS
Page
CERTAIN DEFINITIONS....................................................... 3
GRANTING CLAUSE........................................................... 3
REPRESENTATIONS, WARRANTIES AND COVENANTS OF MORTGAGOR.................... 9
1. Rights and Obligations................................................ 9
2. Payments.............................................................. 9
3. Compliance With Law................................................... 9
4. Warranty of Title..................................................... 9
5. No Actions or Proceedings............................................. 10
6. After-Acquired Property............................................... 10
7. Maintenance and Modification of Collateral by
Mortgagor............................................................. 10
8. Liens................................................................. 10
9. Taxes and Governmental and Utility Charges............................ 11
10. Condemnation.......................................................... 11
11. Leases and Rents...................................................... 12
12. Concerning the Conveyance Leases...................................... 13
13. Transfer or Encumbrance of the Collateral............................. 15
14. Advances.............................................................. 15
15. Indemnification; Waiver of Offset..................................... 16
16. Security Agreement.................................................... 17
17. Performance of Other Agreements....................................... 18
MORTGAGE EVENTS OF DEFAULT/REMEDIES....................................... 21
18. Mortgage Events of Default............................................ 21
19. Mortgagee's Right to Cure Defaults.................................... 21
20. Non-Waiver............................................................ 22
21. Remedies.............................................................. 22
22. Mortgagor as Tenant Holding Over...................................... 27
23. Leases................................................................ 27
MISCELLANEOUS............................................................. 27
24. Filing of Mortgage, etc............................................... 27
25. Usury Laws............................................................ 27
26. Option To Release Certain Real Estate................................. 28
27. Release of Collateral................................................. 29
28. Severability.......................................................... 29
29. Notices............................................................... 29
30. Amendments, Changes and Modifications................................. 29
31. Fixture Financing Statement........................................... 29
32. Invalidity of Certain Provisions...................................... 30
33. No Merger............................................................. 30
34. Matters in Bankruptcy................................................. 30
35. Environmental Matters................................................. 30
36. Estoppel Affidavits................................................... 31
37. Assignment............................................................ 31
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38. Entire Agreement...................................................... 31
39. Action Affecting the Collateral....................................... 31
40. Actions by Mortgagee to Preserve the Collateral....................... 31
41. Remedies Not Exclusive................................................ 32
42. Relationship.......................................................... 32
43. Time of the Essence................................................... 32
44. Severance of Counterclaims............................................ 32
45. Notice Limiting Advances.............................................. 33
46. Governing Law......................................................... 33
47. Shared Draftsmanship.................................................. 33
48. No Third Party Beneficiary............................................ 33
49. Security Only......................................................... 33
50. Release by Mortgagee.................................................. 33
51. Further Assurances.................................................... 33
52. Limitation of Liability of Mortgagee.................................. 33
53. Conflict with Intercreditor Agreement................................. 34
54. Effect of Termination of Intercreditor Agreement...................... 34
55. IDB Joinder........................................................... 34
56. Limited Recourse...................................................... 34
APPENDIX A - Defined Terms
EXHIBIT A - Leased Premises
EXHIBIT B - Conveyance Leases
EXHIBIT C - Easement Premises
EXHIBIT D - Easements
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This LEASEHOLD MORTGAGE, ASSIGNMENT OF LEASES, RENTS, ISSUES AND
PROFITS AND SECURITY AGREEMENT AND FIXTURE FILING (this "Mortgage"), made as of
the first day of August, 1995, by and between MOBILE ENERGY SERVICES COMPANY,
L.L.C., an Alabama limited liability company, as a mortgagor, having its usual
place of business at 900 Ashwood Parkway, Suite 300, Atlanta, Georgia 30338
(together with its permitted successors and assigns, the "Company"), THE
INDUSTRIAL DEVELOPMENT BOARD OF THE CITY OF MOBILE, ALABAMA, having its usual
place of business at 451 Government Street; Mobile, Alabama 36602, as a
mortgagor (the "IDB" and, singularly or plurally, as applicable, with the
Company, the "Mortgagors"), and BANKERS TRUST (DELAWARE), a Delaware banking
corporation, having its usual place of business at Four Albany Street, New York,
New York 10006, not individually, but solely in its capacity as Collateral Agent
under the Intercreditor Agreement referred to below for each of the Indenture
Trustee, the Tax-Exempt Indenture Trustee and the Working Capital Facility
Provider referred to below (the "Collateral Agent").
W I T N E S S E T H :
WHEREAS, the Mortgagors hold certain interests in certain real
property that are being mortgaged to the Collateral Agent pursuant to
this Mortgage;
WHEREAS, the Company holds interests in certain real property
described in Exhibit A (collectively, the "Leased Premises") and in
certain facilities constructed on the Leased Premises (collectively,
the "Facilities"), under and pursuant to the documents described in
Exhibit B (collectively, the "Conveyance Leases");
WHEREAS, the Company further holds interests in certain real
property described in Exhibit C (collectively, the "Easement
Premises"), under and pursuant to the documents described in Exhibit D
(collectively, the "Easements");
WHEREAS, the Facilities are and will be constructed upon the
Leased Premises and the Easement Premises (the Leased Premises, the
Easement Premises and the Easements collectively, the "Site");
WHEREAS, the IDB holds interests in certain real property
described in Exhibit A-2, and in certain facilities and assets
constructed on the Leased Premises (collectively, the "IDB
Properties");
WHEREAS, the Company will issue certain bonds in connection
with the Site and the Facilities in a principal amount equal to
$255,210,000 (the "First Mortgage Bonds");
WHEREAS, the First Mortgage Bonds are to be issued pursuant to
that certain Trust Indenture, dated as of August 1, 1995 (the
"Indenture"), by and among the Company, MOBILE ENERGY SERVICES
HOLDINGS, INC., an Alabama corporation
<PAGE>
("Mobile Energy"), and FIRST UNION NATIONAL BANK OF GEORGIA,
as trustee (the "Indenture Trustee");
WHEREAS, the proceeds of the First Mortgage Bonds will be used
to, among other things, (a) repay to The Southern Company, a Delaware
corporation ("Southern"), a bridge loan in the principal amount of
$190,000,000 and distribute to the Company's owners approximately
$10,600,000, which, in turn will be dividended to Southern, (b) repay
to Southern Electric International, Inc., a Delaware corporation
("Southern Electric"), approximately $200,000 representing certain
costs incurred by Southern Electric associated with the offering of the
First Mortgage Bonds and the Tax-Exempt Bonds, (c) transfer
approximately $9,200,000 to the Company for deposit into the Capital
Budget Subaccount (as defined herein) to finance Project Costs (as
defined herein), (d) apply approximately $1,400,000 pay outstanding
attorneys' fees associated with the acquisition of the Energy Complex
(as defined herein), (e) apply approximately $9,300,000 to pay certain
financing costs incurred in connection with the transactions
contemplated by the Financing Documents (as defined herein), including
certain financing costs incurred in connection with the offering of the
Tax-Exempt Bonds and (f) apply approximately $32,300,000 to pay
breakage costs in connection with the termination of the interest rate
hedging arrangements entered into in connection with the acquisition of
the Site and the Facilities;
WHEREAS, concurrently with the issuance of the First Mortgage
Bonds, the IDB will issue a series of tax-exempt bonds (the "Tax-Exempt
Bonds") for the purpose of refunding $85,000,000 of the IDB's Variable
Rate Demand Solid Waste Revenue Refunding Bonds (Scott Paper Project)
Series 1984 A,
B, C, D and E;
WHEREAS, the IDB will issue the Tax Exempt Bonds pursuant to
that certain Amended and Restated Trust Indenture, dated as of August
1, 1995 (the "Tax-Exempt Indenture"), by and between the IDB and FIRST
UNION NATIONAL BANK OF GEORGIA, as trustee (the "Tax-Exempt Indenture
Trustee"), in a principal amount equal to $85,000,000; and payments on
the Tax-Exempt Bonds shall be made from, and secured by, payments made
by the Company pursuant to that certain Amended and Restated Lease
Agreement, dated as of August 1, 1995 (the "IDB Lease Agreement"), by
and among the IDB, the Company and Mobile Energy;
WHEREAS, BANQUE PARIBAS (together with its permitted
successors and assigns or any other Person (as defined herein)
providing funds for the working capital needs of the Company in
accordance with the Financing Documents, the "Working Capital Facility
Provider") will provide up to $15,000,000 (multiplied by the Working
Capital Escalation Factor (as defined herein) as in effect the, Working
Capital Facility
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Commitment (as defined herein) is first established) of funds for the
working capital needs of Mortgagee pursuant to that certain Revolving
Credit Agreement, dated as of August 1, 1995 (or any other Contract (as
defined herein) pursuant to which funds for the working capital needs
of Mortgagee are provided in accordance with the Indenture and the
Tax-Exempt Indenture, the "Working Capital Facility"), by and between
the Company and the Working Capital Facility Provider;
WHEREAS, as security for the Company's obligations under the
Indenture in connection with the issuance of the First Mortgage Bonds,
the Indenture Trustee has required that Mortgagors grant Mortgagee a
first priority mortgage and lien on and security interest in the
Collateral (as defined herein);
WHEREAS, as security for the Company's obligations under the
IDB Lease Agreement in connection with the issuance of the Tax-Exempt
Bonds, the Tax-Exempt Indenture Trustee has required that Mortgagors
grant to Mortgagee a first priority mortgage and lien on and security
interest in the Collateral;
WHEREAS, as security for the Company's obligations under the
Working Capital Facility, the Working Capital Facility Provider has
required Mortgagors to grant to Mortgagee a first priority mortgage and
lien on and security interest in the
Collateral;
WHEREAS, pursuant to that certain Intercreditor and Collateral
Agency Agreement, dated as of August 1, 1995 (the "Intercreditor
Agreement"), by and among the Indenture Trustee (on behalf of the
holders from time to time of the Indenture Securities (as defined
herein), the Tax-Exempt Indenture Trustee (on behalf of the holders
from time to time of the Tax-Exempt Indenture Securities (as defined
herein), the Working Capital Facility Provider (the Trustee, the
Tax-Exempt Trustee and the Working Capital Facility Provider,
collectively, the "Senior Secured Parties"), the Collateral Agent, the
IDB, the Company and Mobile Energy, the Senior Secured Parties have
required Mortgagors to grant to Mortgagee a first priority mortgage and
lien on and security interest in the Collateral; and
WHEREAS, this Mortgage is intended to ratably secure each of
the Secured Obligations (as defined herein) pari passu.
NOW, THEREFORE, in consideration of the premises set forth above, and
for other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, and FOR THE PURPOSE OF SECURING the payment and performance
of the Secured Obligations, which Secured Obligations may increase, decrease and
increase again, from time to time, Mortgagors and Mortgagee hereby agree as
follows:
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CERTAIN DEFINITIONS
For all purposes of this Mortgage, except as otherwise expressly
provided in this Mortgage or unless the context otherwise requires, all terms
used herein shall have the meanings set forth in Appendix A.
GRANTING CLAUSE
In order to secure the payment of all Financing Liabilities (as defined
in Appendix A, and including advances, obligations or value relating to future
advances, open-end revolving and other lines of credit) and other sums, amounts
and expenses incurred hereunder and under the other Financing Documents by
Mortgagee according to the terms hereof, together with interest thereon, and to
secure the payment of such additional advances as may be made pursuant to and in
accordance with the Financing Documents to Mortgagors (it being agreed that
Financing Liabilities shall include advances under the Working Capital
Facility), for any purpose, provided that all such advances are to be made
within such lesser period of time as may be provided by Law as a prerequisite
for the sufficiency of actual notice or record notice of the optional additional
advances as against the rights of creditors or subsequent purchasers for
valuable consideration, and to secure all other obligations under the Financing
Documents (all of the aforesaid are hereinafter referred to collectively as the
"Secured Obligations"), (i) the Company has bargained and sold and hereby
irrevocably grants, bargains, sells, remises, releases, conveys, warrants,
assigns, transfers, mortgages, pledges, delivers, grants a security interest,
sets over and confirms unto Mortgagee for the benefit and use of the Senior
Secured Parties forever, with warranties of title as set forth in Section 4,
subject to the terms and conditions hereinafter set forth, all rights, title and
interests of the Company in all its property (real and personal) of whatsoever
nature and wherever located, and whether now held, owned or hereafter acquired,
including without limitation, all interest of the Company in the properties,
estates, rights and interests described in (a)-(x) below (except as to property,
estate, rights and interest expressly excluded herefrom), and (ii) the IDB has
bargained and sold and hereby irrevocably grants, bargains, sells, remises,
releases, conveys, warrants, assigns, transfers, mortgages, pledges, delivers,
grants a security interest, sets over and confirms unto Mortgagee for the
benefit and use of the Senior Secured Parties forever, with warranties of title
as set forth in Section 4, subject to the terms and conditions hereinafter set
forth, all right, title and interest of the IDB, whether now held, owned or
hereafter acquired in and to all property, estate, rights and interests of the
IDB in the properties, estates, rights and interests described in (a)-(x) below
(except as to property, estate, rights and interests expressly excluded
herefrom) (all such property, estate, rights and interests hereby granted by the
Company and the IDB not expressly excluded herefrom being hereinbefore and
hereinafter collectively referred to as the "Collateral").
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The Collateral shall include:
(a) any and all of the estate, right, title and interest
of IDB in and to the IDB Properties;
(b) any and all of the estate, right, title and interest of
each Mortgagor in the Leased Premises, including the leasehold estate
created by the Conveyance Leases and any fee estate, right, title and
interest in the Leased Premises that either of them may acquire during
the term of this Mortgage;
(c) any and all of the estate, right, title and interest
of each Mortgagor under and pursuant to, and all
modifications, extensions and renewals of, the Easements and
the rights created thereunder;
(d) any and all of the estate, right, title and interest of
each Mortgagor under and pursuant to, and all modifications, extensions
and renewals of, each of the Conveyance Leases, including (i) all
monies and claims for monies due and to become due thereunder and (ii)
all rights of either of them to exercise any remedy, election or option
or to make any decision or determination or to give any notice,
consent, waiver or approval under or in respect of any of the
Conveyance Leases;
(e) any and all of the estate, right, title and interest
of each Mortgagor in the buildings, improvements and fixtures
now or hereafter located on the Site (hereinafter referred to
as the "Improvements");
(f) any and all of the estate, right, title, interest, claim
or demand of any nature whatsoever of each Mortgagor, either in Law or
in equity, in possession or expectancy, in and to the Collateral and in
all replacements, substitutes, renewals, betterments and extensions of,
and all additions and appurtenances to, any of the Collateral, or any
part thereof (including any subsequent fee interest of either of them),
and all conversions of the security constituted thereby, which,
immediately upon such conversion, and in each case without further
mortgage, conveyance, assignment or other act by either of them shall
become subject to the lien of this Mortgage as fully and completely,
and with the same effect, as though now owned by such Mortgagor and
specifically described herein;
(g) any and all of the estate, right, title and interest of
each Mortgagor in the easements, rights-of-way, gores of land, streets,
ways, alleys, passages, sewer rights, waters, water courses, water
rights and powers, and all estates, rights, titles, interests,
privileges, liberties, tenements, hereditaments, revocable consents,
options, appendages and appurtenances of any nature whatsoever, in any
way belonging, relating or pertaining to the Collateral (including any
and
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<PAGE>
all development rights, air rights, water rights, minerals, mineral
rights or similar or comparable rights of any nature whatsoever now or
hereafter appurtenant to the Leased Premises or now or hereafter
transferred to the Leased Premises, together with any and all rights of
each Mortgagor to renew, extend, supplement, amend, cancel or terminate
the same (which rights to renew, extend, supplement, amend, cancel or
terminate shall be subject to the approval required under the
Intercreditor Agreement), and each Mortgagor's estate, right, title and
interest in all land lying in the bed of any street, road or avenue,
opened or proposed, in front of or adjoining the Site to the center
line thereof;
(h) any and all of the estate, right, title and interest of
each Mortgagor in all machinery, apparatus, equipment, fittings,
fixtures and other property of every kind and nature whatsoever owned
by either of them, or in which either of them has or shall have an
interest, now or hereafter located upon the Site and/or the
Improvements or appurtenances thereto, and usable in connection with
the present or future operation and occupancy of the Site and/or the
Improvements and/or the Facilities and all equipment, materials,
supplies, apparatus and other items now or hereafter attached to,
installed in or used (temporarily or permanently) on or in connection
with the present or future operation and occupancy of the Site and/or
the Improvements and/or the Facilities, of any nature whatsoever, owned
by either of them, or in which either of them has or shall have an
interest, now or hereafter located upon the Site and/or the
Improvements and/or the Facilities and all renewals, replacements and
substitutions thereof and additions thereto owned by either of them or
in which either of them has or shall have an interest, including any
and all partitions, ducts, shafts, pipes, radiators, conduits, wiring,
floor coverings, awnings, motors, engines, boilers, stokers, pumps,
dynamos, transformers, turbines, generators, fans, blowers, vents,
switchboards, elevators, mail or coal conveyors, escalators,
compressors, furnaces, cleaning equipment, call and sprinkler systems,
fire extinguishing apparatus, water and other tanks, heating,
ventilating, plumbing, laundry, incinerating, air conditioning and air
cooling systems and water, gas, telephone, telecommunications,
telemetry and electric equipment (hereinafter collectively referred to
as the "Equipment"), and the right, title and interest of either of
them in and to any of the Equipment that may be subject to any security
agreements (as defined in the Uniform Commercial Code as in effect in
the State of Alabama (the "UCC")), superior in lien to the lien of this
Mortgage;
(i) any and all of the estate, right, title, interest, claim
or demand of any nature whatsoever of each Mortgagor, in Law or in
equity, in and to all awards or payments, including interest thereon,
and the right to receive the same, which may be made with respect to
the Collateral, from the exercise of the right of eminent domain,
condemnation or otherwise
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<PAGE>
(including any transfer made in lieu of the exercise of said right),
changes of grade of street or for any other injury to or decrease in
the value of the Collateral now or hereafter located thereon, whether
direct or consequential, which said awards and payments are hereby
assigned, and Mortgagee is hereby authorized to collect and receive the
proceeds thereof (which shall be applied according to the provisions of
the Intercreditor Agreement) and to give proper receipts and
acquittances therefor;
(j) any and all of the estate, right, title, interest, claim
or demand of any nature whatsoever of each Mortgagor, in Law or in
equity, in and to all refunds or rebates of taxes or charges in lieu of
taxes, now or hereafter assessed or levied against the Collateral
(which shall be applied according to the provisions of the
Intercreditor Agreement);
(k) any and all of the estate, right, title, claim, demand and
interest of each Mortgagor in and to all leases (including oil, gas and
other mineral leases), lettings, occupancy agreements, subleases,
franchises, licenses, concessions, permits, contracts and other
agreements affecting the use or occupancy of the Collateral, or any
part thereof, now or hereafter entered into and any renewals or
extensions thereof (hereinafter referred to collectively as the
"Leases") and all right, title and interest of either of them
thereunder, including the right to receive the rents, issues and
profits of the Collateral (subject to the terms and conditions
hereinafter set forth), including the proceeds of all minerals, steam,
electricity, hydrocarbons, green liquor and similar substances produced
from the Collateral and all delay rentals and bonuses from any steam,
electricity, and any oil, gas or other mineral lease (hereinafter
referred to collectively as the "Rents");
(l) any and all of the estate, right, title, interest, claim
or demand of any nature whatsoever of each Mortgagor, in Law or in
equity, in and to all "accounts," "inventory", "equipment" and "general
intangibles" (as such quoted terms are defined in the UCC as in effect
on the date hereof) and all contract rights in connection therewith,
now or hereafter owned by either of them, or in which either of them
now has or hereafter shall have any right, title or interest, now or
hereafter located upon, arising in connection with or concerning the
Collateral; provided, however, that no Debt Service Reserve Account,
Tax-Exempt Debt Service Reserve Account or Mill Owner Maintenance
Reserve Account, nor (except in the case of the Mill Owner Maintenance
Reserve Account, to the extent in excess of $2 million) any monies
contained therein or hereafter transferred thereto or deposited therein
(nor any right to receive monies thereunder), shall be included in the
Collateral and no mortgage, lien or security interest therein shall be
deemed to be created hereby;
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<PAGE>
(m) any and all of the estate, right, title, interest, claim
or demand of any nature whatsoever of each Mortgagor, in Law or in
equity, in and to the Intercreditor Agreement Accounts, together with
any right to payment for goods sold or leased or for services rendered
in connection with the Intercreditor Agreement Accounts, whether or not
it has been earned by performance;
(n) any and all of the estate, right, title, interest, claim
or demand of any nature whatsoever of each Mortgagor, in Law or in
equity, in and to all proceeds of and any unearned premiums on any
insurance policies covering the Collateral and title thereto, including
the right to receive the proceeds of any insurance, judgments, or
settlements made in lieu thereof, for damage to or impairment of title
to the Collateral (which shall be applied according to the provisions
of the Intercreditor Agreement);
(o) to the extent permitted by Law, the nonexclusive right, in
the name and on behalf of each Mortgagor, to appear in and defend any
action or proceeding brought with respect to the estate, right, title
or interest of either of them in and to the Collateral and to commence
any action or proceeding to protect the estate, right, title or
interest of Mortgagee in and to the Collateral (subject, however, to
the provisions of this Mortgage hereinafter set forth and the
provisions of the Intercreditor Agreement);
(p) any and all of each Mortgagor's right, title and interest
in and to all plans and specifications prepared for construction of the
Facilities, Improvements or other development of the Collateral
(including all amendments, modifications, supplements, general
conditions and addenda thereof or thereto) and all studies, data and
drawings (including architectural, engineering, mechanical and
electrical drawings) related thereto, and all contracts and agreements
of either of them relating to the aforesaid plans and specifications or
to the aforesaid studies, data and drawings or to the construction of
the Facilities and Improvements on the Collateral;
(q) any and all of each Mortgagor's right, title and interest
in and to all contracts with property managers, surveyors, real estate
advisors and consultants, real estate brokers and other like agents and
professionals that relate to any part of the Collateral, including any
of the Improvements constructed or to be constructed on the Collateral,
and all maps, reports, surveys, and studies of or relating to any of
the Collateral, now or hereafter owned by either of them or in which
either of them has or hereafter shall have an interest and now or
hereafter in the possession of either of them or any such agent or
professional;
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(r) to the extent permitted by Law, any and all of each
Mortgagor's right, title and interest in and to all present and future
Governmental Approvals in any way relating or pertaining to the
Collateral; provided, however, that any of the Governmental Approvals
that by their terms or by operation of Law would become void, voidable,
terminable or revocable or would constitute a breach or default
thereunder if pledged or assigned hereunder or if a security interest
therein were granted hereunder are expressly excepted and excluded from
the lien and terms of this Mortgage to the extent necessary to avoid
such voidness, voidability, terminability, revocability, breach or
default;
(s) any and all of each Mortgagor's right, title and
interest in and to all warranties, indemnities and guarantees
of contractors, subcontractors, materialmen, vendors and
suppliers relating to the Improvements and the Facilities;
(t) any and all right, title and interest of each
Mortgagor in and under the "Collateral" described in the
Security Agreement;
(u) to the extent permitted by Law, any and all of each
Mortgagor's rights to file for record a notice limiting the maximum
principal amount that may be secured by this Mortgage and any and all
of each Mortgagor's rights under applicable Law to reject any of the
Financing Documents in the event of bankruptcy;
(v) to the extent permitted by Law, any and all of each
Mortgagor's rights and remedies at any time arising under or pursuant
to Section 365(h) of the United States Bankruptcy Code, including all
of the Company's and the IDB's rights to remain in possession of all or
any part of the Collateral;
(w) any and all right, title and interest hereafter acquired
by each Mortgagor in and to any and all of the real and personal
property described in paragraphs (a) through (u) above, whether
pursuant to any option contained in any of the Conveyance Leases or
otherwise; and
(x) any and all of the estate, right, title, interest, claim
or demand of any nature whatsoever of each Mortgagor, in Law or in
equity, in and to all products and proceeds of any of the Collateral
herein described.
TO HAVE AND TO HOLD the above granted and described Collateral unto
Mortgagee and its successors and assigns, on behalf of the Senior Secured
Parties and their successors and assigns, forever, to secure the Secured
Obligations, subject to the terms and conditions hereinafter set forth.
SUBJECT only to Permitted Liens and the matters described in Exhibit
A-2, which describes the IDB Properties.
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PROVIDED HOWEVER, that the mortgage, lien and security interest granted
hereby in favor of Mortgagee shall be released without condition as to monies
deposited into any Indenture Account or Tax-Exempt Indenture Account or into the
Mill Owner Maintenance Reserve Account upon, in each case, the deposit of such
monies therein, and the Collateral shall not include, and no Security Interest
is granted hereby in, any right, title or interest of Debtor in any Indenture
Account or Tax-Exempt Indenture Account or the Mill Owner Maintenance Reserve
Account, all sums of money, from any source whatsoever, now or hereafter
transferred to or deposited into any Indenture Account or Tax-Exempt Indenture
Account (or delivered to the Indenture Trustee or the Tax-Exempt Indenture
Trustee for deposit therein) or, except to the extent monies on deposit therein
exceed $2,000,000, the Mortgagee's right to receive such excess from the Mill
Owner Maintenance Reserve Account, including, in each case, all credit balances
therein, any and all cash and investments at any time on deposit in any
Indenture Account or any Tax-Exempt Indenture Account or the Mill Owner
Maintenance Reserve Account, and any and all interest, dividends and other
income derived from such monies and investments on deposit therein and all
certificates, passbooks and instruments representing any Indenture Account or
Tax-Exempt Indenture Account or the Mill Owner Maintenance Reserve Account and
all other property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any Indenture Account or Tax-Exempt
Indenture Account or the Mill Owner Maintenance Reserve Account.
PROVIDED FURTHER, HOWEVER, that the mortgage, lien and security
interest granted hereby by the IDB in favor of Mortgagee shall be, and shall at
all times continue to be, subject and subordinate in all respects the matters
set forth in Exhibit A-2 hereto, including, in each case, any renewal,
modification, extension, substitution, replacement or consolidation thereof.
Such subordination shall not be affected by any further advance, repayment and
readvance or prepayment under or in respect of any instrument secured by the
Tax-Exempt Indenture.
PROVIDED FURTHER, HOWEVER, that if the Secured Obligations are paid in
full in accordance with the Financing Documents, then this Mortgage shall cease,
terminate and be void in accordance with Section 50 of this Mortgage.
REPRESENTATIONS, WARRANTIES AND COVENANTS OF MORTGAGORS
1. Rights and Obligations. This Mortgage shall not be
construed to be a consent by Mortgagee to any contract, lease,
license, permit or governmental action or to impose any obligation
with respect to the same.
2. Payments. The Company shall pay all sums, including
interest, secured hereby when due, as provided for in the Financing
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Documents and in this Mortgage, and any renewal, extension or modification of
any thereof.
3. Compliance With Law. The Company shall comply with all
applicable Law and Governmental Approvals to the extent
contemplated hereby or by any of the other Financing Documents.
4. Warranty of Title.
(a) The Company is the sole owner and holder of the entire tenant's
interest under the Conveyance Leases, free and clear of any Liens and
encumbrances except for Permitted Liens.
(b) The Company has full right, power and authority to mortgage its
right, title and interest in and under the Conveyance Leases to Mortgagee
pursuant hereto, and each lessor under the Conveyance Leases (a "Ground Lessor")
has granted its express consent to this Mortgage.
(c) Each of the Conveyance Leases is in full force and effect
and such Mortgagor has not waived any of its rights thereunder.
(d) Neither the Company nor, to the knowledge of the Company, any
Ground Lessor is in material default with respect to any of the terms of any of
the Conveyance Leases and the Company knows of no acts or occurrences
constituting a material default thereunder.
(e) The Company knows of no adverse claim to the title or possession of
the Company or any Ground Lessor with respect to any part of the Site, except
for Permitted Liens.
(f) The Company has received no notice from any Ground Lessor
terminating any of the Conveyance Leases or demanding performance or compliance
with any of the terms, covenants or conditions thereof.
(g) Since the Company acquired its interest in the Facility, no fire or
casualty has affected the Site and the Company knows of no proposed condemnation
or eminent domain proceeding or settlement in lieu thereof that may affect the
Site.
(h) (i) The Company is now, and after giving effect to this Mortgage,
will be, in a solvent condition, (ii) the execution and delivery of this
Mortgage by the Company does not constitute a "fraudulent conveyance" within the
meaning of Title 11 of the United States Code as now constituted or under any
other applicable Law and (iii) no bankruptcy or insolvency proceedings are
pending or contemplated by or, to the knowledge of the Company, threatened
against the Company.
5. No Actions or Proceedings. There are no actions, suits
or proceedings pending or, to the knowledge of the Company,
threatened against or affecting the Company, the Facilities, the
Site or the Collateral, or that involve the validity or
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enforceability of this Mortgage or the priority of the lien hereof, at Law or in
equity, or before or by any Governmental Authority.
6. After-Acquired Property. Unless expressly excluded hereby, all
property at any time acquired by the Company shall, immediately upon the
acquisition thereof by the Company and without any further act, become and be
subject to the lien of this Mortgage as Collateral, as fully and completely as
though now owned by the Company, and specifically described in the granting
clauses hereof.
7. Maintenance and Modification of Collateral by Mortgagor.
(a) The Company agrees that at no time will the Company permit waste to
be committed upon the Collateral and the Company will operate and maintain the
Collateral or cause the Collateral to be operated and maintained pursuant to
Section 5.6 of the Indenture and Section 4.6 of the IDB Lease Agreement and to
any comparable provision of the Working Capital Facility. The Company agrees
that it shall not modify, nor cause to be modified, the Collateral, or any part
thereof, except as expressly permitted by the other Financing Documents.
(b) Any property for which a substitution or replacement is made as
permitted by the Financing Documents may be disposed of by the Company in any
manner and in the sole discretion of the Company free and clear of the lien of
this Mortgage.
8. Liens. The Company will not permit any mechanic's,
materialmen's or other Lien or encumbrance, other than Permitted
Liens, to be established or remain against the Collateral, and if
any such liens are filed, the Company shall promptly have them
removed by bond or otherwise.
9. Taxes and Governmental and Utility Charges.
(a) The Company will pay or cause to be paid, before the date when
interest (provided that "interest" shall not include discounts for early payment
under the Law of the State of Alabama (the "State")) and penalties become due
thereon, all taxes and governmental and utility charges of any kind whatsoever
that may at any time be lawfully assessed or levied against or with respect to
the Collateral or any part thereof (other than taxes or charges that are the
subject of a Good Faith Contest), including, without limiting the generality of
the foregoing, (i) all ad valorem taxes levied against the Collateral and any
other taxes levied upon the Collateral that, if not paid, will become a Lien on
the receipts from the Collateral or against the Collateral or any interest
therein or the revenues derived therefrom; (ii) all utility and other charges
incurred in the operation, maintenance, use, occupancy and upkeep of the
Collateral that, if not paid, will become a Lien on the receipts from the
Collateral or a Lien against the Collateral or any interest therein or the
revenues derived therefrom; and (iii) all assessments and charges lawfully made
by any Governmental Authority for public improvements that may be
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secured by a Lien on the Collateral, provided that, with respect to special
assessments or other governmental charges that may lawfully be paid in
installments over a period of years, the Company shall be obligated to pay only
such installments when and as they are required to be paid.
(b) In the event of the passage after the date of this Mortgage of any
Law of the State or in any other state in which the Collateral is located,
changing in any way the Laws now in force for the taxation of mortgages, deeds
of trust or debts secured thereby, for state or local purposes, or the manner of
the operation of any such taxes so as to adversely affect the interest of
Mortgagee, then and in such event, the Company shall bear and pay the full
amount of such taxes; provided, however, that if for any reason payment by the
Company of any such new or additional taxes would be unlawful or if the payment
thereof would constitute usury or render the loan or indebtedness secured hereby
wholly or partially usurious under any of the terms or provisions of this
Mortgage, or otherwise, Mortgagee may, at its option, either (i) exercise its
remedies under Section 21 as soon as the failure to pay such taxes results in a
Mortgage Event of Default (as defined herein) or (ii) waive, as directed by the
Required Senior Creditors in Senior Creditor Certificates, any such Mortgage
Event of Default and any payment received from the Company to the extent of such
unlawful or usurious amount and the Company shall concurrently therewith pay the
remaining lawful and non-usurious portion or balance of said taxes.
10. Condemnation. Notwithstanding any taking by any public or other
body given the power of eminent domain through eminent domain, condemnation or
otherwise, the Company shall continue to pay the Secured Obligations at the time
and in the manner provided for their payment in the Financing Documents, and the
Secured Obligations shall not be reduced until, and only to the extent that, any
award of payment therefor shall have been actually received and applied by
Mortgagee in accordance with the Intercreditor Agreement to the discharge of the
Secured Obligations. The Company shall file and prosecute its claim or claims
for any award or payment in a Good Faith Contest and shall cause the same to be
collected and paid over to Mortgagee for application as set forth in the
Intercreditor Agreement. Each Mortgagor hereby irrevocably authorizes and
empowers Mortgagee in the name thereof or otherwise to collect and receive any
such award or payment and to file and prosecute such claim or claims if (a)
either Mortgagor fail to do so within a reasonable time prior to the expiration
of the period allowed therefor by applicable Law or (b) a Mortgage Event of
Default hereunder has occurred and is continuing. Although it is hereby
expressly agreed that the same shall not be necessary in any event, the Company
shall, upon demand of Mortgagee upon advice of counsel, make, execute and
deliver any and all assignments and other instruments sufficient for the purpose
of assigning any such award or payment to Mortgagee free and clear of any
encumbrances of any kind or nature whatsoever.
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11. Leases and Rents.
(a) Except as provided in the Financing Documents, the Company shall
not lease or sublease, as lessor, all or any portion of the Leased Premises.
(b) Each Mortgagor hereby assigns to Mortgagee, as security for the
payment and performance of the Secured Obligations, any and all of each
Mortgagor's right, title and interest in and to the Leases and the Rents.
Subject to the terms of this Section 11(b), Mortgagee shall refrain from
exercising the right to enter the Leased Premises for purposes of collecting the
Rents and grants to the Company the right and license to collect the Rents, as
to all of the Collateral except the IDB Properties, and grants to the IDB the
right and license to collect the Rents related to the IDB Properties. The
Company shall hold the Rents, or an amount sufficient to discharge all sums
currently due on the Secured Obligations, in trust for use in payment of the
Secured Obligations. The right of the Company to collect the Rents may be
revoked by Mortgagee upon the occurrence and during the continuation of any
Mortgage Event of Default by the Company herein by giving written notice of such
revocation to the Company. Following such notice, Mortgagee may collect, retain
and apply the Rents during the continuation of such Mortgage Event of Default
toward payment of the Secured Obligations according to the Financing Documents
and in such order, priority and proportions, or to the operation, maintenance
and repair of the Leased Premises, as Mortgagee shall deem proper irrespective
of whether Mortgagee shall have commenced a foreclosure of this Mortgage or
shall have applied or arranged for the appointment of a receiver. Except to the
extent permitted or authorized by the Financing Documents, neither Mortgagor
shall, without the consent of Mortgagee, which consent shall not be unreasonably
withheld, make, or suffer to be made, any Leases or modify or cancel any Leases
or accept prepayments of installments of the Rents for a period of more than one
month in advance or further assign the whole or any part of the Rents. The
Company shall (i) fulfill or perform each and every provision of the Leases on
the part of either Mortgagor to be fulfilled or performed, (ii) promptly send
copies of all notices of default that either Mortgagor shall send or receive
under the Leases to Mortgagee and (iii) enforce, short of termination of the
Leases, the performance or observance of the provisions thereof by the other
parties thereto.
(c) The Company agrees that it will not further pledge or assign its
interest in any of the Leases, or further assign the Rents, so long as any of
the Secured Obligations remain unpaid except as otherwise permitted by the
Financing Documents.
(d) Nothing contained in this Section 11 shall be construed as imposing
on Mortgagee any of the obligations of the parties under the Leases.
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(d) The assignment of the Leases and Rents in this Section 11 is
intended to be an absolute present assignment from each Mortgagor to Mortgagee
and not merely a passing of a security interest.
12. Concerning the Conveyance Leases. Notwithstanding anything
contained herein to the contrary, and in addition to any rights, privileges and
remedies granted to Mortgagee elsewhere in this Mortgage, Mortgagee shall have,
and the Company hereby grants to Mortgagee, any and all rights, privileges and
remedies of leasehold mortgagees provided for in each of the Conveyance Leases
(including the Company's renewal rights, if any) without the necessity of
particularly specifying any or all of such rights, privileges and remedies that
are or could be granted to leasehold mortgagees pursuant to any of the Ground
Leases.
The Company hereby represents, warrants, covenants and agrees that:
(a) This Mortgage is lawfully executed and delivered in
conformity with each of the Conveyance Leases.
(b) The Company shall promptly pay or cause to be paid, when
due and payable, the net rent, additional rents, taxes and all other
sums and charges mentioned in and made payable by the Company under
each of the Conveyance Leases.
(c) The Company shall promptly perform and observe, or cause
to be performed and observed, all of the terms, covenants and
conditions required to be performed and observed by the Company under
each of the Conveyance Leases, within the periods provided therein, and
will do all things necessary to preserve and to keep unimpaired its
rights under each of the Conveyance Leases. Notwithstanding the
foregoing, a failure by the Company to comply with the provisions of
this Section 12(c) shall not be deemed to be a Mortgage Event of
Default unless and until an "Event of Default" has occurred under any
of the Conveyance Leases, which has not been waived or cured.
(d) The Company shall promptly notify Mortgagee in writing of
any default by the Company in the performance or observance of any of
the terms, covenants, or conditions on the part of the Company to be
performed or observed under any of the Conveyance Lease.
(e) The Company shall (i) promptly notify Mortgagee in writing
of the receipt by the Company of any notice of termination of any of
the Conveyance Leases or any notice noting or claiming any default by
the Company under any of the Conveyance Leases; (ii) promptly deliver
to Mortgagee a copy of each such notice; and (iii) promptly deliver to
Mortgagee a copy of any material notice sent to any Ground Lessor,
including any notice of election or the exercise of any rights of
renewal under said instrument.
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(f) The Company shall not, without the prior written consent
of Mortgagee, terminate, modify or surrender any of the Conveyance
Leases or suffer or permit any termination, modification or surrender
thereof.
(g) The Company shall, within ten (10) days after written
demand from Mortgagee, use its good faith efforts to obtain from each
Ground Lessor and deliver to Mortgagee a certificate stating that such
instrument is in full force and effect, is unmodified, that no notice
of termination thereon has been served, stating the date to which the
rent has been paid and stating whether or not there are any defaults
thereunder and specifying the nature of such defaults, if any.
(h) The Company shall furnish to Mortgagee, within five (5)
business days after demand therefor, proof of payment of all items that
are required to be paid by the Company pursuant to each of the
Conveyance Leases.
(i) The Company shall not consent to any waiver, modification
or cancellation of any provision of any of the Conveyance Leases nor to
the subordination of any of the Conveyance Leases to any other interest
or instrument whatsoever, including any Lien (other than Permitted
Liens) on the fee estate of any Ground Lessor under any of the
Conveyance Leases without obtaining the prior written consent of
Mortgagee thereto.
(j) The Company does hereby irrevocably appoint and constitute
Mortgagee as its true and lawful attorney-in-fact in its name, place
and stead to perform and comply with all obligations of such Mortgagor
under all of the Conveyance Leases without relying on any grace period
provided therein, to do and take, without the obligation to do so, any
action Mortgagee deems necessary or desirable to prevent or cure any
default by the Company under each of the Conveyance Leases, including
any act, deed, matter or thing whatsoever that the Company may do in
order to cure a default under any of the Conveyance Leases, to enter in
and upon the Leased Premises or any part thereof to such extent and as
often as Mortgagee, in its sole discretion, deems necessary or
desirable in order to prevent or cure any default by the Company under
any of the Conveyance Leases or to perform or complete any obligation
of the Company pursuant thereto. The Company shall, within five (5)
business days after written request is made therefor by Mortgagee,
execute and deliver to Mortgagee or to any Person that Mortgagee shall
designate, such further instruments, agreements, powers, deeds,
conveyances or the like as may be necessary to complete or perfect the
interest, rights or powers of Mortgagee pursuant to this Section 12 or
as may be reasonably required by Mortgagee. The Company hereby ratifies
all that Mortgagee shall do or cause to be done as the Company's
attorney-in-fact consistent with the foregoing. The Company also
authorizes Mortgagee, upon the occurrence and
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during the continuance of a Mortgage Event of Default, to communicate
in its own name with any party to any Project Document at any time,
with regard to any matter relating to such Project Document.
(k) Until and unless Mortgagee shall elect otherwise by
written notice to the Company and either of the Ground Lessors,
Mortgagee shall be the "Leasehold Mortgagee" for all purposes of each
of the Conveyance Leases. The Company shall deliver all necessary
notices, and take all such other actions, as may be necessary from time
to time, in order to designate Mortgagee as the "Leasehold Mortgagee"
under each of the Conveyance Leases.
(l) If the Company or the IDB acquires the estate of the
landlord under any of the Conveyance Leases (i) there shall be no
merger between such acquired estate and the estate of either of the
Company or the IDB under any of the Conveyance Leases unless all
Persons (including Mortgagee) having an interest in any of the
Conveyance Leases shall consent thereto in writing and (ii) this
Mortgage and the lien hereof shall, ipso facto, without the necessity
of any further conveyance, simultaneously with such acquisition, be
spread to cover such acquired estate and as so spread shall, be prior
to the Lien of any mortgage placed on the acquired estate subsequent to
the date of this Mortgage.
(m) The generality of the provisions of this Section 12
relating to the Conveyance Leases shall not be limited by other
provisions of this Mortgage setting forth particular obligations of the
Company that are also required of the Company as the lessee under any
of the Conveyance Leases.
(n) If any of the Conveyance Leases shall be terminated prior
to the natural expiration of its term due to default by either of the
Company or the IDB, and if, pursuant to any provision of any of the
Conveyance Leases, Mortgagee or its designee shall acquire from the
applicable Ground Lessor a new lease of any part of the Site, the
Company and the IDB shall have no right, title or interest in or to
such new lease or the leasehold estate created thereby, or renewal
privileges therein contained.
(o) The Company shall at all times cause the Company's estate,
rights, title and interest in, to and under the Leased Premises to be
subject to no interests, Liens, charges or encumbrances other than the
interest of any Ground Lessor under the applicable Conveyance Leases
and any of the Permitted Liens. The Company shall defend the Company's
estate, rights, title and interest in, to and under the Leased Premises
and the interest in, to and under the Leased Premises and the priority
thereof, and the priority and validity of the Lien hereof, against the
claims of all Persons except as aforesaid.
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13. Transfer or Encumbrance of the Collateral. Except to the extent
permitted by the Financing Documents, no part of the Collateral shall in any
manner be further encumbered, sold, transferred, leased, subleased, assigned or
conveyed, or permitted or suffered to be further encumbered, sold, transferred,
assigned or conveyed.
14. Advances. If the Company fails to pay or cause to be paid, subject
to any right hereunder to contest, any claim, Lien or encumbrance (other than
Permitted Liens), or, prior to delinquency, any tax or assessment, or, when due,
any insurance premium, or to keep the Collateral in repair, or shall commit or
permit waste, or if there shall be commenced any action or proceeding affecting
the Collateral or any part thereof or the title thereto, or the interest of
Mortgagee therein, including condemnation or eminent domain proceedings,
bankruptcy or reorganization proceedings or any proceeding regarding an
Environmental Requirement, then Mortgagee or any Senior Secured Party (upon
written notice to Mortgagee and each other Senior Secured Party), at its option,
may, but shall not be required to, pay said claim, Lien, encumbrance, tax,
assessment or premium, with right of subrogation thereunder, following a
Mortgage Event of Default and during the continuation thereof, or at such
earlier time as permitted by any Consent to Assignment of a Project Contract to
Mortgagee, may make such repairs and take such steps as it deems advisable to
prevent or cure such waste, and may appear in any such action or proceeding and
retain counsel therein, and take such action therein as Mortgagee or such Senior
Secured Party deems advisable, and for any of said purposes Mortgagee or such
Senior Secured Party may advance such sums of money, including all costs,
attorneys' fees and other items of expense as it deems necessary. The Company
shall pay or cause to be paid, upon demand, to Mortgagee or such Senior Secured
Party, as the case may be, all sums of money so advanced, together with interest
on each such advance at an interest rate per annum equal to the yield on the
First Mortgage Bonds plus three percent (3%), and the repayment of such advances
shall be secured hereby and by the other Security Documents. In making any
payment or securing any performance relating to any obligation of either
Mortgagor under this Mortgage, Mortgagee, as long as it acts in good faith,
shall be the sole judge of the legality, validity and amount of any Lien or
encumbrance and of all other matters necessary to be determined in satisfaction
thereof. No such action of Mortgagee shall be considered a waiver of any right
accruing to it hereunder. Mortgagee shall not be held accountable for any delay
in making any such payment, which delay may result in any additional interest,
costs, charges or expenses.
15. Indemnification; Waiver of Offset.
(a) If Mortgagee is made a party defendant to any litigation,
proceeding, action, suit, claim, demand or judgment of any nature or form, by or
on behalf of any person, concerning this Mortgage or the Leased Premises or any
part thereof, including any eminent domain, condemnation or other proceeding,
any proceeding, action,
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suit, claim, demand or judgment arising in any manner from an Environmental
Requirement concerning the Leased Premises, and any contest, action or
proceeding pursuant to Sections 39, 40 and 41, then the Company shall indemnify,
defend and hold Mortgagee harmless from any and all liability, loss or expense
by reason of said litigation, proceeding, action, suit, claim, demand or
judgment (including any appeals therefrom), including attorneys' fees and
expenses incurred by Mortgagee in any such litigation, proceeding, action, suit,
claim, demand or judgment (including any appeals therefrom), but excluding
liability for gross negligence or willful misconduct by Mortgagee other than
gross negligence or willful misconduct imputed to Mortgagee solely by reason of
its interest in the Leased Premises, whether or not any such litigation,
proceeding, action, suit, claim or demand is prosecuted to judgment. If
Mortgagee commences an action against either Mortgagor to enforce any of the
terms hereof by reason of a default of the Company hereunder, or for the
recovery of any sum secured hereby, or if the Company breaches any term of this
Mortgage, the Company shall pay to Mortgagee attorneys' fees and disbursements
(including any of the same incurred on appeal), and the right to such attorneys'
fees and expenses shall be deemed to have accrued on the commencement of such
action and shall be enforceable whether or not such action is prosecuted to
judgment.
(b) The Company waives any and all right to claim or recover against
Mortgagee, and its directors, officers, employees and representatives, for loss
of or damage to the Company, the Collateral or any part thereof, the Company's
property or the property of others under the Company's control, from any cause
to the extent insured against or required to be insured against by the
provisions of the Financing Documents.
16. Security Agreement. This Mortgage constitutes both a real property
mortgage and a "security agreement," within the meaning of the UCC, and the
Collateral includes both real and personal property any and all other rights and
interests, whether tangible or intangible in nature, of each Mortgagor in the
Collateral. Information relative to the security interest created hereby may be
obtained by application to Mortgagee at the address provided in the introductory
clause. Each Mortgagor, by executing and delivering this Mortgage, has granted
as security for the Secured Obligations a lien on and security interest in such
of the Collateral as is governed by the UCC in favor of Mortgagee. During a
Trigger Event Period, Mortgagee, in addition to any other rights and remedies
that it may have, shall have and may exercise immediately and without demand,
any and all rights and remedies granted to Mortgagee upon default under the UCC,
including, without limiting the generality of the foregoing, the right to take
possession of such of the Collateral as is governed by the UCC or any part
thereof and such other rights specified in Section 21(a)(ii)(C), and to take
such other measures as Mortgagee may deem necessary for the care, protection and
preservation thereof. Upon request or demand of Mortgagee, the Company shall at
its expense assemble such of the Collateral as is governed by the UCC and make
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it available to Mortgagee on demand and shall reimburse Mortgagee for any and
all expense, including legal expenses and attorneys' fees, incurred or paid by
Mortgagee in protecting its interest in such of the Collateral as is governed by
the UCC and in enforcing the rights granted hereunder with respect to such of
the Collateral as is governed by the UCC. Any notice of sale, disposition or
other intended action by Mortgagee with respect to such of the Collateral as is
governed by the UCC sent to either Mortgagor in accordance with the provisions
of this Mortgage at least ten (10) days prior to such action shall constitute
reasonable notice to such Mortgagor. Any method of sale or disposition or other
intended action in accordance with the UCC shall conclusively be deemed to be
commercially reasonable within the meaning of the UCC unless objected to in
writing by either the Company or the IDB within ten (10) days after receipt by
such Mortgagor of such notice. The proceeds of any sale or disposition of such
of the Collateral as is governed by the UCC, or any part thereof, shall be
applied by Mortgagee to the payment of the Secured Obligations in such order,
priority and proportions as set forth in Article VI of the Intercreditor
Agreement.
Notwithstanding anything contained in this Section 16 to the contrary,
with respect to any Collateral that is also defined as "Collateral" under the
Security Agreement, Mortgagee hereby reserves, and Mortgagee shall be entitled
to exercise, each of its rights, powers and remedies under the Security
Agreement with
respect to such Collateral.
At the request of Mortgagee upon advice of counsel, each Mortgagor will
execute one or more Financing Statements and renewals and amendments thereof
pursuant to the UCC of any jurisdiction deemed applicable by Mortgagee in form
satisfactory to Mortgagee, and the Company will pay the cost of filing the same
in all public offices wherever filing is deemed by Mortgagee to be necessary or
desirable.
The Company covenants to execute and deliver Mortgagee, upon demand,
such additional assurances, writings and other instruments as may be reasonably
required by Mortgagee to effect the purpose hereof or to perfect the interest of
Mortgagee in any security hereby given, including a copy of any opinion it may
deliver to the Indenture Trustee in connection with the Indenture and a reliance
letter addressed to it in connection therewith.
Each Mortgagor hereby appoints (such appointment being coupled with an
interest), until the Secured Obligations are paid in full, Mortgagee as
attorney-in-fact for such Mortgagor and to execute in the name thereof any
financing statements or other comparable documents reasonably deemed by
Mortgagee to be necessary or desirable to perfect or protect or continue the
lien and security interest hereby granted. Each Mortgagor hereby ratifies all
that Mortgagee shall do or cause to be done as such Mortgagor's attorney-in-fact
consistent with the foregoing.
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17. Performance of Other Agreements.
(a) The Company shall (i) pay all rents, fees, additional rents and
other sums required to be paid by the Company, as grantee, under and pursuant to
the provisions of the Easements, (ii) diligently perform and observe all of the
terms, covenants and conditions of the Easements on the part of the Company, as
grantee, to be performed and observed, unless such performance or observance
shall be waived, excused or otherwise not required by the grantor under the
Easements, to the end that all things shall be done that are necessary to keep
unimpaired the rights of the Company, as grantee, under the Easements and (iii)
promptly notify Mortgagee of the giving of any notice by the grantor under any
of the Easements to the Company of any default by the Company, as grantee, in
the performance or observance of any of the terms, covenants or conditions of
any of the Easements on the part of the Company, as grantee, to be performed or
observed and deliver to Mortgagee a true copy of each such notice. The Company
shall not, except to the extent permitted or authorized by the Financing
Documents, surrender any of the Easements or terminate or cancel any of the
Easements or take any action to modify, change, supplement, alter or amend any
of the Easements, in any respect, either orally or in writing, and the Company
hereby assigns to Mortgagee, as further security for the payment of the
obligations evidenced by the Financing Documents and for the performance and
observance of the terms, covenants and conditions of this Mortgage, all of the
rights, privileges and prerogatives of the Company, as grantee, to surrender any
of the Easements or to terminate, cancel, modify, change, supplement, alter or
amend any of the Easements, and any such surrender of any of the Easements or
termination, cancellation, modification, change, supplement, alteration or
amendment of any of the Easements without the prior consent of Mortgagee, as
directed by Required Senior Creditors in Senior Creditor Certificates, and such
other Persons as shall be required by any Financing Document shall be void and
of no force and effect. If the Company shall default in the performance or
observance of any term, covenant or condition of any of the Easements on the
part of the Company, as grantee, to be performed or observed, and such default
continues beyond applicable grace periods, then, without limiting the generality
of the other provisions of this Mortgage, and without waiving or releasing the
Company from any of its obligations hereunder, Mortgagee shall have the right,
but shall be under no obligation, to pay any sums and to perform any act or take
any action as may be reasonably necessary (or, during a Trigger Event Period,
pay any sums and perform any act or take any action) to cause all of the terms,
covenants and conditions of the Easements on the part of the Company, as
grantee, to be performed or observed to be promptly performed or observed on
behalf of the Company to the end that the rights of the Company in, to and under
the Easements shall be kept unimpaired and free from any default. If Mortgagee
shall make any payment or perform any act or take action in accordance with the
preceding sentence, Mortgagee will notify such Mortgagor of the making of any
such payment, the performance of any such act or the taking of any such action.
In
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any such event, Mortgagee and any person designated by Mortgagee shall have, and
are hereby granted, the right to enter upon the Collateral or any part thereof
at any time and from time to time for the purpose of taking or performing any
such action. If any grantor under any of the Easements shall deliver to
Mortgagee a copy of any notice of default sent by said grantor to the Company,
such notice shall constitute full protection to Mortgagee for any action taken
or omitted to be taken by Mortgagee, in good faith, consistent with the
foregoing, in reliance thereon. The Company shall, from time to time, use
reasonable efforts to obtain from the grantors under the Easements such
certificates of estoppel with respect to compliance by the Company with the
terms of the Easements as may be requested by Mortgagee. The Company shall
exercise each individual option, if any, to extend or renew the term of the
Easements in conformance with such option upon demand by Mortgagee made at any
time, and, until the Secured Obligations are paid in full, the Company hereby
expressly authorizes and appoints Mortgagee its attorney-in-fact to exercise,
either jointly or individually, any such option in the name of and upon behalf
of the Company if the Company fails to do so within a reasonable time prior to
the expiration thereof, which power of attorney shall be irrevocable and shall
be deemed to be coupled with an interest.
(b) The Company shall not, without Mortgagee's prior consent, as
directed by Required Senior Creditors in Senior Creditor Certificates, elect to
treat any of the Easements as terminated under Subsection 365(h)(1) or any other
provision of the Bankruptcy Code, after rejection or disaffirmance of any such
Easements by the grantor thereunder or by any trustee of such party, and any
such election made without such consent shall be void and ineffective.
(c) Subject to the Company's right to seek and retain certain offsets
as permitted hereunder, the Company hereby assigns, transfers and sets over to
Mortgagee as security all of the Company's claims and rights to the payment of
damages that may hereafter arise as a result of any rejection or disaffirmance
of any of the Easements by the grantor thereof or by any trustee of such party,
pursuant to the Bankruptcy Code. Mortgagee shall have and is hereby granted the
right to proceed, in its own name or in the name of either the Company in
respect of any claim, suit, action or proceeding relating to the rejection or
disaffirmance of any Easements (including the right to file and prosecute, to
the exclusion of such Mortgagor, any proofs of claim, complaints, motions,
applications, notices and other documents) in any case in respect of such
grantor under the Bankruptcy Code, (i) if the Company fails to do so within a
reasonable time prior to the expiration of the period allowed therefor by
applicable Law, except in the case of any such Trigger Event that shall have
resulted from a Bankruptcy Event in respect of the Mortgagor or Mobile Energy,
or (ii) during a Trigger Event Period. This assignment constitutes a present,
irrevocable, non-exclusive and unconditional assignment of the foregoing claims,
rights and remedies, and shall continue in effect until the Secured Obligations
shall have been satisfied and discharged in full. Any amounts received by
Mortgagee as damages
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arising out of any such rejection of any Easements shall be applied in
accordance with the provisions of Article VI of the Intercreditor Agreement.
(d) In the event that, pursuant to Section 365(h)(2) or any other
provision of the Bankruptcy Code, the Company seeks to offset against the rent
or other sums payable under any of the Easements the amount of any damages
caused by the nonperformance by the grantor thereunder of such grantor's
obligations under any of the Easements after rejection or disaffirmance thereof
under the Bankruptcy Code, the Company shall, prior to effecting such offset,
notify Mortgagee in writing of such Mortgagor's intent to do so, setting forth
the amounts proposed to be so offset and the basis therefor. Mortgagee shall, as
directed by Required Senior Creditors in Senior Creditor Certificates, have the
right to object in writing (stating the reasons therefor) to all or any part of
such offset, and, in the event of such objection, the Company shall not effect
any offset of the amounts so objected to by Mortgagee. If Mortgagee shall have
failed to object as aforesaid within twenty (20) days after such notice,
Mortgagee's consent will be deemed to have been given and the Company may
proceed to effect such offset in the amounts set forth in such notice. If, in
the good faith business judgment of the Company, such offset is justified and
Mortgagee has received the aforesaid notices and has not objected but its time
to do so has not expired, then the Company shall have the right to make such
offset and the Company shall set aside the offset amount as a reserve to be paid
only if Mortgagee objects within the aforesaid time. The Company shall indemnify
and hold Mortgagee and each of its officers, directors, employees and agents
harmless from and against any and all claims, demands, actions, suits,
proceedings, damages, losses, costs and expenses of every nature whatsoever
(including reasonable legal fees and disbursements) arising from or relating to
any such offset by the Company.
(e) The Company shall, promptly after obtaining knowledge thereof, use
good faith efforts to give prompt oral notice to Mortgagee of any actual or
contemplated filing by or against any grantor of any Easement of a petition
under the Bankruptcy Code, and give prompt written notice thereof to Mortgagee
of such actual or contemplated filing. The aforesaid written notice shall set
forth any information reasonably available to the Company concerning the date or
anticipated date of such filing, the court in which such petition was filed or
is expected to be filed, and the relief sought or reasonably expected to be
sought therein. The Company shall, promptly after receipt thereof, deliver to
Mortgagee any and all notices, summonses, applications and other documents
received by the Company in connection with any such petition and any proceedings
related thereto.
(f) Subject to the second sentence of this Section 17(f), in the event
that any action, proceeding, motion or notice shall be commenced or filed in
respect of any grantor under any Easement or any part thereof, in connection
with any case under the Bankruptcy
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Code, Mortgagee shall have, and is hereby granted, the option, to the exclusion
of each Mortgagor, exercisable upon notice from Mortgagee to such Mortgagor, to
conduct and control any such litigation with counsel of Mortgagee's choice.
Mortgagee may proceed, in its own name or in the name of either Mortgagor, in
connection with any such litigation, (i) if such Mortgagor fails to do so within
a reasonable time prior to the expiration of the period allowed therefor by
applicable Law and Mortgagee, if so directed to proceed by Required Senior
Creditors in Senior Creditor Certificates or (ii) during a Trigger Event Period,
and such Mortgagor agrees to execute any and all powers, authorizations,
consents and other documents required by Mortgagee in connection therewith. The
Company shall, upon demand, pay to Mortgagee all costs and expenses (including
reasonable legal fees and disbursements) paid or incurred by Mortgagee in
connection with the prosecution or conduct of any such proceedings, and, to the
extent permitted by law, such costs and expenses shall be deemed expenses
incurred in upholding the lien of this Mortgage and added to the Secured
Obligations. The Company shall not, without the prior consent of Mortgagee
(which consent of Mortgagee shall not be unreasonably withheld), commence any
action, suit, proceeding or case, or file any application or make any motion, in
respect of any of the Easements in any such case under the Bankruptcy Code.
(g) In the event that a petition under the Bankruptcy Code shall be
filed by or against either Mortgagor, and such Mortgagor, or anyone claiming
through or under such Mortgagor or a trustee in bankruptcy shall have the right
to reject any of the Easements pursuant to Section 365(a) or any other provision
of the Bankruptcy Code, such Mortgagor shall give Mortgagee at least ten (10)
days' prior written notice of the date on which application shall be made to the
court for authority to reject any such Easement; provided, however, that if a
trustee in bankruptcy shall have a right to reject any Easement in less than ten
(10) days, then such Mortgagor shall give such notice to Mortgagee immediately
upon such Mortgagor's obtaining knowledge of such application. Mortgagee shall
have the right, but not the obligation (subject to the rights of a trustee in
bankruptcy), to exercise such right, as directed by Required Senior Creditors in
Senior Creditor Certificates, and such Mortgagor hereby assigns such right to
Mortgagee. If at any time any grantor under any Easements, or anyone holding by,
through or under the grantor under any Easements or a trustee in bankruptcy,
shall elect to reject such Easements pursuant to Section 365(a) or any other
provision of the Bankruptcy Code, thereby giving to such Mortgagor the right to
elect to treat such Easements as terminated pursuant to Section 365(h)(1) or any
other provision of the Bankruptcy Code, Mortgagee shall have the right to
exercise such right (i) if such Mortgagor fails to do so within a reasonable
time prior to the expiration of the period allowed therefor by applicable Law
and Mortgagee is so directed to proceed by Required Senior Creditors in Senior
Creditor Certificates or (ii) during a Trigger Event Period, and such Mortgagor
hereby assigns said right to Mortgagee on a non-exclusive basis. If either of
the assignments provided for in this Section 17(g) is held to be
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enforceable, then such Mortgagor, anyone claiming by, through or under such
Mortgagor or a trustee in bankruptcy, shall not exercise rights purportedly
assigned to such Mortgagor without the prior consent of Mortgagee, and if
Mortgagee shall give such consent, such Mortgagor, anyone claiming by, through
or under such Mortgagor or a trustee in bankruptcy shall promptly exercise
either of such rights.
(h) To the extent permitted by applicable law, each Mortgagor hereby
assigns, transfers and sets over to Mortgagee the right, as directed by Required
Senior Creditors in Senior Creditor Certificates, on a non-exclusive basis, to
apply to the Bankruptcy Court under Section 365(d)(4) or any other provision of
the Bankruptcy Code for an order extending the period during which any Easements
may be rejected or assumed after the entry of any order for relief under Chapter
7 or Chapter 11 of the Bankruptcy Code in respect thereof.
MORTGAGE EVENTS OF DEFAULT/REMEDIES
18. Mortgage Events of Default. The occurrence of and
continuation of any Trigger Event shall be deemed a "Mortgage Event
of Default" under this Mortgage.
19. Mortgagee's Right to Cure Defaults. During a Trigger Event Period,
Mortgagee or any Senior Secured Party (upon notice to Mortgagee and each other
Senior Secured Party) may remedy the same in accordance with the applicable
provisions hereof and of the Intercreditor Agreement and for such purpose shall
have the right to enter upon the Collateral or any portion thereof without
thereby becoming liable to such Mortgagor or any person in possession thereof
holding under such Mortgagor.
20. Non-Waiver. The failure of Mortgagee to insist upon strict
performance of any term of this Mortgage shall not be deemed to be a waiver of
any term of this Mortgage. The Company shall not be relieved of either the
Company's obligation to pay or perform the Secured Obligations at the time and
in the manner provided in the Financing Documents by reason of (i) the failure
to comply with any request of either Mortgagor to take any action to foreclose
this Mortgage or otherwise enforce any of the provisions hereof or of the
Financing Documents or any other mortgage, deed of trust, security agreement,
instrument or document evidencing, securing or guaranteeing payment of the
Secured Obligations or any portion thereof, (ii) the release, regardless of
consideration, of the whole or any part of the Collateral or any other security
for the Secured Obligations or (iii) any agreement or stipulation between
Mortgagee and any subsequent owner or owners of the Collateral or other Person
extending the time of payment or otherwise modifying or supplementing the terms
of this Mortgage, any other Financing Document or any other mortgage, deed of
trust, security agreement, instrument or document evidencing, securing or
guaranteeing payment or performance of the Secured Obligations or any portion
thereof, without first having obtained the consent of either the Company or
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the IDB (but without prejudice to the rights of the Company or the IDB under the
Financing Documents), and in the latter event, such Mortgagor shall continue to
be obligated to pay the Secured Obligations at the time and in the manner
provided in the Financing Documents and this Mortgage, as so extended, modified
and/or supplemented, unless expressly released and discharged from such
obligation by Mortgagee in accordance with the directions given pursuant to the
Intercreditor Agreement. Regardless of consideration, and without the necessity
for any notice to or consent by the holder of any subordinate Lien or other
interest in the Collateral, Mortgagee may, in accordance with the directions
given pursuant to the Intercreditor Agreement, release any Person at any time
liable for the payment of the Secured Obligations or any portion thereof or all
or any part of the security held for the Secured Obligations and may extend the
time of payment or otherwise modify the terms of the Financing Documents,
without in any manner impairing or affecting this Mortgage or the lien thereof
or the priority of this Mortgage as so extended and modified, as security for
the Secured Obligations over any such subordinate Lien or interest. Mortgagee
may resort for the payment of the Secured Obligations to any other security held
by Mortgagee in such order and manner as Mortgagee may, in accordance with the
directions given pursuant to the Intercreditor Agreement, elect. Mortgagee may
take action to recover the Secured Obligations, or any portion thereof, or to
enforce any covenant hereof in each case in accordance with the terms hereof and
of the Intercreditor Agreement, without prejudice to the right of Mortgagee
thereafter to foreclose this Mortgage. Mortgagee shall not be limited
exclusively to the rights and remedies herein stated but shall be entitled to
every additional right and remedy now or hereafter afforded by Law or equity,
subject to the terms of the Intercreditor Agreement with respect to the exercise
thereof. The rights of Mortgagee under this Mortgage shall be separate, distinct
and cumulative, and none shall be given effect to the exclusion of the others.
No act of Mortgagee shall be construed as an election to proceed under any one
provision herein to the exclusion of any other provision.
21. Remedies.
(a) Subject to Section 8.2 of the Indenture and Section 7.2 of the IDB
Lease Agreement and to any comparable provision of the Working Capital Facility,
during a Trigger Event Period, Mortgagee may, to the maximum extent permitted by
Law, exercise any right, power or remedy permitted to it hereunder, under any
other Security Documents or by Law, and, without limiting the generality of the
foregoing, Mortgagee may, personally or by its agents, to the maximum extent
permitted by Law, do any or all of the following:
(i) without assuming liability for the performance of any of
the Company's or the IDB's obligations hereunder or under the Project
Contracts, enter and take possession of the Collateral or any part
thereof, exclude such Mortgagor and all persons claiming under such
Mortgagor whose claims are junior
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to this Mortgage, wholly or partly therefrom, and use, operate, manage
and control the same either in the name of such Mortgagor or otherwise
as Mortgagee shall deem best, and upon such entry, from time to time at
the expense of the Company and the Collateral, make all such repairs,
replacements, alterations, additions or improvements to the Collateral
or any part thereof and, whether or not Mortgagee has so entered and
taken possession of the Collateral or any part thereof, collect and
receive all the Rents and apply the same, to the extent permitted by
Law, to the payment of all expenses that Mortgagee may be authorized to
make under this Mortgage, the remainder to be applied to the payment of
the Secured Obligations until the same shall have been repaid in full;
if Mortgagee demands or attempts to take possession of the Collateral
or any portion thereof in the proper exercise of any rights hereunder,
the Company and the IDB shall promptly turn over and deliver complete
possession thereof to Mortgagee; and
(ii) with or without entry:
(A) subject to applicable Law, sell all or any part
of the Collateral for cash (1) to the highest bidder at public
auction in front of the courthouse door in the county or
counties, as may be required, where the Collateral is located,
whether in person or by auctioneer, after having first given
notice of the time, place and terms of sale, together with a
description of the property to be sold, by publication once a
week for three (3) successive weeks prior to such sale in some
newspaper published in such county or counties, as may be
required, and, upon payment of the purchase money, Mortgagee
or any Person conducting the sale for Mortgagee is authorized
to execute and deliver to the purchaser at such sale a deed to
the Collateral so purchased, (2) otherwise at an auction or
foreclosure sale held at such place or places and time and
upon such notice and otherwise in such manner as may be
required by Law or (3) in the absence of any such
requirements, as Mortgagee may deem appropriate and in
accordance with the provisions hereof (and in taking such
action, Mortgagee may act in accordance with an opinion of
counsel, upon which Mortgagee may conclusively rely) and, in
the case of any of clauses (1), (2) or (3) above, from time to
time adjourn any such sale by announcement at the time and
place specified for such sale or for such adjourned sale
without further notice, except as may be required by Law;
(B) proceed to protect and enforce its rights under
this Mortgage, by suit for specific performance of any
covenant contained herein or in any other Security Document or
in aid of the execution of any power granted herein or in any
other Security Document, or for the foreclosure of this
Mortgage (as a mortgage or
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otherwise) and the sale for cash of the Collateral under the
judgment or decree of a court of competent jurisdiction, or
for the enforcement of any other right as Mortgagee shall deem
most effectual for such purpose (and in taking such action,
Mortgagee may act in accordance with an opinion of counsel,
upon which Mortgagee may conclusively rely); provided,
however, that in the event of a sale, by foreclosure or
otherwise, of less than all of the Collateral, this Mortgage
shall continue as a lien on and security interest in the
remaining portion of the Collateral, and Mortgagee shall not
be obligated to sell upon credit unless Mortgagee shall have
expressly consented in writing to a sale upon credit; or
(C) exercise any or all of the remedies available to
a secured party under the UCC, including:
(1) either personally or by means of a court
appointed receiver, without notice to or demand upon
the Company or the IDB take possession of all or any
portion of the Collateral as shall be covered by the
UCC and exclude therefrom such Mortgagor and all
persons claiming under such Mortgagor, and thereafter
hold, store, use, operate, manage, maintain and
control, make repairs, replacements, alterations,
additions and improvements to, and exercise all
rights and powers of such Mortgagor in respect of,
any portion of the Collateral as shall be covered by
the UCC; if Mortgagee demands or attempts to take
possession of any portion of the Collateral, as shall
be covered by the UCC in the proper exercise of any
rights hereunder, each Mortgagor shall promptly turn
over and deliver complete possession thereof to
Mortgagee;
(2) without notice to or demand upon the
Company or the IDB, make such payments and do such
acts as Mortgagee (and in taking such action,
Mortgagee may act in accordance with an opinion of
counsel, upon which Mortgagee may conclusively rely)
may deem necessary to protect its lien on and
security interest in any portion of the Collateral as
shall be covered by the UCC, including paying,
purchasing, contesting or compromising any
encumbrance that is prior to or superior to the lien
and security interest granted hereunder, and in
exercising any such powers or authority paying all
expenses incurred in connection therewith;
(3) require the Company to assemble the
Collateral as shall be covered by the UCC, or any
portion thereof, at a place designated by Mortgagee
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and reasonably convenient to each Mortgagor and
Mortgagee, and promptly to deliver the portions of
the Collateral as may be covered by the UCC to
Mortgagee, or an agent or representative designated
by it; Mortgagee, and its agents and representatives,
shall have the right to enter upon the Site and
property of such Mortgagor to exercise Mortgagee's
rights hereunder;
(4) sell, lease or otherwise dispose of such
portions of the Collateral as may be covered by the
UCC, with or without having such portions of the
Collateral as may be covered by the UCC at the place
of sale, and upon such terms and in such manner as
Mortgagee may determine (and Mortgagee may be a
purchaser at any such sale); and
(5) unless the Collateral is perishable or
threatens to decline speedily in value or is of a
type customarily sold on a recognized market,
Mortgagee shall give each Mortgagor at least ten (10)
days' prior notice of the time and place of any sale
or other intended disposition, such Mortgagor
agreeing that such ten (10) day notice period is
sufficient to constitute a commercially reasonable
sale of the Collateral.
(b) During a Trigger Event Period, or upon the actual or threatened
waste to any part of the Collateral, Mortgagee, to the maximum extent permitted
by Law and upon application to a court of competent jurisdiction, shall be
entitled to the appointment of a receiver of the Collateral, without notice or
demand, and without regard to the adequacy of the security for the Secured
Obligations or the solvency of the Company or the IDB. Notwithstanding the
foregoing, in the event of threatened waste to any part of the Collateral (but
not actual waste), during a Trigger Event Period, Mortgagee shall provide notice
to each of the Company and the IDB of its intent to appoint a receiver and shall
permit such Mortgagor a reasonable period of time to eliminate such threatened
waste prior to the appointment of said receiver. The Company and the IDB hereby
irrevocably consent to the appointment of a receiver pursuant to this Section
21(b) and, except as otherwise hereinbefore specifically provided or as required
by Law, waives notice of any application therefor. Any such receiver or
receivers shall have all the usual powers and duties of receivers in like or
similar cases and all the powers and duties of a mortgagee in case of entry and
shall continue as such and exercise all such powers until the date of
confirmation of sale of the Collateral, unless such receivership is sooner
terminated. Specifically, Mortgagee or any receiver shall be entitled to take
possession of the Collateral from the owners, tenants and/or occupants of the
whole or any part thereof and to collect and receive the Rents and the value of
the use and occupation of the Collateral, or any part thereof, from the
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then owner, tenants and/or occupants thereof for the benefit of
Mortgagee.
(c) In any sale under any provision of this Mortgage during a Trigger
Event Period or pursuant to any judgment or decree of court thereafter granted,
the Collateral, to the maximum extent permitted by Law, may be sold in one or
more parcels or as an entirety and in such order as Mortgagee may elect, without
regard to the right of either Mortgagor or any person claiming under such
Mortgagor to the marshalling of assets. The purchaser at any such sale shall
take title to the Collateral or the part thereof so sold free and discharged of
the estate of either Mortgagor therein, the purchaser being hereby discharged
from all liability to see to the application of the purchase money. Any person,
including Mortgagee and any Senior Secured Parties, may purchase at any such
sale if the highest bidder therefor. The purchaser of the Collateral or any
successor shall succeed to all rights of either Mortgagor, including any rights
to proceeds of insurance and in and to all policies or certificates of insurance
assigned and delivered to Mortgagee pursuant to this Mortgage and the Financing
Documents. Upon the completion of any such sale by virtue of this Section 21(c),
Mortgagee shall, to the extent permitted by applicable Law, execute and deliver
to such purchaser an appropriate instrument that shall effectively transfer all
of each Mortgagor's estate, right, title, interest, property, claim and demand
in and to the Collateral or portion thereof so sold. During a Trigger Event
Period, Mortgagee is hereby irrevocably appointed the attorney-in-fact of each
Mortgagor in its name and stead to make all appropriate transfers and deliveries
of the Collateral or any portions thereof so sold and, for that purpose,
Mortgagee may execute all appropriate deeds and other instruments of transfer,
and may substitute one or more persons with like power. The Company and the IDB
hereby ratify all that said attorneys or such substitute or substitutes shall
lawfully do or cause to be done as such Mortgagor's attorney-in-fact consistent
with the foregoing. Nevertheless, the Company and the IDB shall ratify and
confirm, or cause to be ratified and confirmed, any such sale or sales by
executing and delivering, or by causing to be executed and delivered, to
Mortgagee or to such purchaser or purchasers all such instruments as may be
advisable (in accordance with an opinion of counsel, upon which Mortgagee may
conclusively rely) for such purpose, and as may be designated in such request.
The Company and the IDB also authorize said attorneys or such substitute or
substitutes, during a Trigger Event Period, to communicate in its own name with
any party to any Project Contracts at any time, with regard to any matter
relating to such Project Contracts. Any sale or sales made under or by virtue of
this Mortgage, whether under the power of sale hereunder, or by virtue of
judicial process or a judgment or decree of purchase and sale, to the extent not
prohibited by Law, shall operate to divest all the estate, right, title,
interest, property, claim and demand whatsoever, whether at Law or in equity, of
either Mortgagor in, to and under the Collateral, or any portions thereof so
sold, and shall be a perpetual bar both at Law and in equity against such
Mortgagor and
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against any and all persons claiming or who may claim to have any rights with
respect to the sale, or any part thereof, by, through or under such Mortgagor.
The powers and agency herein granted are coupled with an interest and are
irrevocable. Upon a sale of the Collateral, in whole or in part, under and by
virtue of the provisions of this Mortgage, every purchaser shall have immediate
and peaceable possession of the Collateral to the extent sold; and if either
Mortgagor shall remain in possession after the effective date of such sale, such
possession shall be as a tenancy at sufferance only, giving unto the purchaser
all remedies by way of summary possession or otherwise under applicable Law for
recovery of possession.
(d) All rights of action under this Mortgage or the other Security
Documents may, to the extent permitted by applicable Law, be enforced by
Mortgagee without the possession or production thereof at any trial or other
proceeding relative thereto.
(e) Mortgagee shall have the right, from time to time, to bring an
appropriate action to recover any sums required to be paid by the Company under
the terms of this Mortgage, as they become due, without regard to whether or not
the Secured Obligations secured by this Mortgage shall be due, and without
prejudice to the right of Mortgagee thereafter to bring an action of
foreclosure, or any other action, for any default by either Mortgagor existing
at the time the earlier action was commenced.
(f) Mortgagee may exercise any and all rights granted to
"Leasehold Mortgagee" under any of the Conveyance Leases.
(g) Mortgagee may consult, at the Company's expense, with counsel (who
may or may not be counsel to the Company), and the opinion of such counsel shall
be full and complete authorization and protection, and Mortgagee shall be
entitled to conclusively rely on such opinion of counsel, in respect of any
action taken or not taken or suffered by Mortgagee under this Mortgage.
The proceeds of any foreclosure, collection, recovery, receipt,
appropriation, realization or sale pursuant to this Section 21 shall be applied
by Mortgagee in accordance with Article VI of the Intercreditor Agreement.
22. Mortgagor as Tenant Holding Over. In the event of any foreclosure
sale by Mortgagee, either Mortgagor shall be deemed a tenant holding over and
shall forthwith deliver possession to the purchaser or purchasers at such sale
or be summarily dispossessed according to provisions of Law applicable to
tenants holding over.
23. Leases. Mortgagee is authorized (but not obligated) to
subordinate this Mortgage to any Leases and to foreclose this
Mortgage subject to the rights of any tenants of the Collateral,
provided that the failure to so subordinate or to make any such
tenants parties to any such foreclosure proceedings and to
foreclose their rights will not be, nor be asserted to be by either
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Mortgagor, a defense to any proceedings instituted by Mortgagee to collect the
Secured Obligations.
MISCELLANEOUS
24. Filing of Mortgage, etc. The Company forthwith, upon the execution
and delivery of this Mortgage and thereafter, from time to time, will cause this
Mortgage and any security instrument creating a Lien or evidencing or perfecting
the Lien hereof upon the Collateral and each instrument of further assurance to
be filed, registered or recorded in such manner and in such places as may be
required by any present or future Law in order to publish notice of and fully to
protect, preserve and perfect the Lien hereof upon, and the interest of
Mortgagee in the Collateral. The Company will pay all filing, registration or
recording fees, and all expenses incurred by Mortgagee incident to the
preparation, execution and acknowledgment of this Mortgage, any mortgage or deed
of trust supplemental hereto, any security instrument with respect to the
Collateral and any instrument of further assurance, and all Federal, State,
County, City and municipal taxes, duties, imposts, assessments and charges
arising out of or in connection with the execution and delivery of this
Mortgage, any mortgage or deed of trust supplemental hereto, any security
instrument with respect to the Collateral or any financing statement,
continuation statement or other instrument of further assurance, including all
documentary stamp taxes and intangible personal property taxes, if any. The
Company shall hold harmless and indemnify Mortgagee, its successors and assigns,
against any liability, damages, legal expenses, interest and penalties, and
intervening Liens, incurred by reason of the imposition of any tax on the making
and recording of this Mortgage, including, but not limited to, annual mortgage
privilege or recordation tax, or surety bonds for the same.
25. Usury Laws. This Mortgage and the other Financing Documents are
subject to the express condition that at no time shall either Mortgagor be
obligated or required to pay interest on the principal balance due under the
Secured Obligations at a rate that could subject the holders of the Secured
Obligations to either civil or criminal liability as a result of being in excess
of the maximum interest rate that such Mortgagor is permitted by Law to contract
or agree to pay. If by the terms of this Mortgage or any other Financing
Document, either Mortgagor is at any time required or obligated to pay interest
on the principal balance due under any Financing Document at a rate in excess of
such maximum rate, the rate of interest under the Financing Document shall be
deemed to be immediately reduced to such maximum rate and the interest payments
in excess of such maximum rate shall be applied toward reduction of principal.
26. Option To Release Certain Real Estate. Notwithstanding
any other provisions of this Mortgage, Mortgagee hereby agrees, at
any time and from time to time, provided each Mortgagor is not in
default under any of the provisions of this Mortgage, and that no
Mortgage Event of Default then exists (of which a Responsible
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Officer of Mortgagee has actual knowledge), to release from this Mortgage any
part of the Site with respect to which fee title is to be conveyed to a
railroad, public utility or public body in order that railroad service, utility
services or roads may be provided for the Collateral, upon receipt of:
(a) Copies of the instrument of release, in recordable
form;
(b) A certificate of such Mortgagor (i) stating that such
Mortgagor is not in default under any of the provisions of this
Mortgage and that no Mortgage Event of Default then exists, (ii) giving
an adequate legal description of that portion of the Site to be
released, (iii) stating the purpose for which the release is desired
and (iv) requesting such release;
(c) If applicable, a copy of the instrument conveying
the portion of the Site to be released;
(d) Any instrument or instruments required by the terms
of such release;
(e) A certificate of the Independent Engineer stating that, in
its opinion, (i) the release of the portion of the Site so proposed to
be released is necessary or desirable in order to obtain railroad
service, utility services or roads to benefit the Collateral, (ii) the
release so proposed to be made will not impair the use or usefulness of
the Collateral as a facility for the purposes for which it was designed
and will not materially impair the means of ingress there into and
egress therefrom and (iii) the release so proposed to be made is not
reasonably expected to result in a Material Adverse Effect or
materially increase the likelihood of the future occurrence of a
Material Adverse Effect; and
(f) an opinion of counsel that the release is permitted by the
Financing Documents, all necessary consents, if any, have been obtained
and all conditions precedent to such release have been satisfied;
provided, however, that if the portion of the Site to be released has
transportation or utility facilities located upon it, such Mortgagor
shall retain an easement to use such facilities to the extent necessary
for the efficient operation of the Collateral.
Mortgagee agrees that upon receipt of the items required in this
Section 26, it will promptly execute and deliver to such Mortgagor the proposed
release prepared by such Mortgagor covering the portion of the Site to be
released. In the event of any such release, such Mortgagor shall not be entitled
to any postponement, abatement or diminution of amounts payable on account of
the indebtedness secured hereby. The Company shall pay all costs (including
reasonable legal fees and expenses, transfer taxes, and recording fees) relating
to such release.
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27. Release of Collateral.
(a) The Company shall not sell, lease (as lessor), transfer or dispose
of any of the Collateral except in accordance with the Financing Documents.
(b) Upon the request of the Company, subject to compliance with the
Financing Documents, Mortgagee shall, at the Company's sole cost and expense,
deliver and cause to be delivered to the Company such instruments prepared by
the Company as are reasonably necessary to confirm the release of removed items
of the Equipment from the lien of this Mortgage and cancel any security interest
with respect thereto, provided that such request complies with the Financing
Documents. The Company shall pay all costs (including reasonable legal fees,
transfer taxes, and recording fees) relating to such release.
28. Severability. In the event that any one or more of the provisions
contained in this Mortgage shall for any reason be held to be invalid, illegal
or unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision of this Mortgage, but this Mortgage shall
be construed as if such invalid, illegal or unenforceable provision had never
been contained herein or therein.
29. Notices. All notices, certificates or other communications
hereunder shall be sufficiently given and shall be deemed given three (3)
Business Days after mailing by registered mail, postage prepaid, addressed as
follows: if to the Company, to it at the address of its usual place of business
in the first paragraph of this Mortgage, Attention: President, together with a
copy to it at 200 Bay Bridge Road, Mobile, Alabama 36652, Attention: Vice
President and General Manager; if to the IDB, to it at the address of its usual
place of business in the first paragraph of this Mortgage, Attention: Secretary;
and if to Mortgagee, to it c/o Bankers Trust Company at Four Albany Street, New
York, New York 10006, Attention: Corporate Trust and Agency Group. Any party
hereto may, by written notice given hereunder, designate any additional or
different addresses to which subsequent notices, certificates or other
communications shall be sent.
30. Amendments, Changes and Modifications. This Mortgage may not be
effectively amended, restated, changed or otherwise modified, or terminated,
except as permitted under the other Financing Documents. Each Mortgagor shall
join in any such amendment, change, modification or termination if required for
such agreement to be effective under applicable Law. No waiver of any term,
covenant or provision of this Mortgage shall be effective unless given in
writing by Mortgagee, and if so given by Mortgagee, shall be effective only in
the specific instance in which given.
31. Fixture Financing Statement. This Mortgage shall be
recorded in the Office of the Judge of Probate, Mobile County,
Alabama and, from the date of its recording, this Mortgage shall be
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effective as a fixture financing statement filed with respect to all property
constituting part of the Collateral that is or is to become fixtures. For the
purposes of the foregoing, each Mortgagor is the debtor (with its address as set
forth in the preamble of this Mortgage), Mortgagee is the secured party (with
its address as set forth in the preamble of this Mortgage), and one of more of
Scott, S.D. Warren and Alabama State Docks Department, an agency of the State of
Alabama, is the record owner of the fee interest in the parcels comprising the
Site. Each Mortgagor has an interest of record in each such parcel of real
property in which such Mortgagor has granted a security interest in fixtures to
Mortgagee.
32. Invalidity of Certain Provisions. If the lien of this Mortgage is
invalid or unenforceable as to any part of the Collateral, the unsecured or
partially secured portion of the Secured Obligations shall be completely paid
prior to the payment of the remaining and secured or partially secured portion
of the Secured Obligations and all payments made on the Secured Obligations,
whether voluntary or under foreclosure or other enforcement action or procedure,
shall be considered to have been first paid on and applied to the full payment
of that portion of the Secured Obligations that is not secured or fully secured
by the lien of this Mortgage.
33. No Merger. If both the lessor's and lessee's estates under any
lease or any portion thereof that constitutes a part of the Collateral shall, at
any time, become vested in one owner, this Mortgage and the lien created hereby
shall not be destroyed or terminated by application of the doctrine of merger
and in such event Mortgagee shall continue to have and enjoy all of the rights
and privileges of Mortgagee as to the separate estates. In addition, upon the
foreclosure of the lien of this Mortgage on the Collateral pursuant to the
provisions hereof, any leases or subleases then existing and created by either
Mortgagor shall not be destroyed or terminated by application of the Law of
merger or as a matter of Law or as a result of such foreclosure unless Mortgagee
or any purchaser at any such foreclosure sale shall so elect. No act by or on
behalf of Mortgagee or any such purchaser shall constitute a termination of any
lease or sublease unless Mortgagee or such purchaser shall give written notice
thereof to such tenant or subtenant.
34. Matters in Bankruptcy. To the extent permitted by applicable laws,
each Mortgagor hereby assigns to Mortgagee (a) its right under Section 365 of
the United States Bankruptcy Code and other applicable Laws to elect to assume
or reject any or all of the Conveyance Leases in the event of the bankruptcy or
insolvency of such Mortgagor and to elect to remain in possession under each of
the Conveyance Leases in the event of the bankruptcy of the lessor thereunder;
and (b) its claims and rights to the payment of the damages arising from a
rejection, if any, of any of the Conveyance Leases under Section 365 of the
United States Bankruptcy Code or other applicable Laws, it being agreed,
however, that provided no Mortgage Event of Default shall have occurred,
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Mortgagee shall not make any decisions that affect any of the Conveyance Leases
in the event of the bankruptcy of the lessor thereunder, without such
Mortgagor's prior consent.
35. Environmental Matters.
(a) The Company shall comply, and shall use its best efforts to cause
all other Persons occupying or conducting operations on the Site or at the
Facilities to comply, in all material respects with all Environmental
Requirements pursuant to Section 5.7 of the Indenture and Section 4.7 of the IDB
Lease Agreement and to any comparable provision of the Working Capital Facility.
(b) The Company shall indemnify and hold Mortgagee and its officers,
directors, employees and agents harmless from and against any and all damages,
penalties, fines, claims, Liens, suits, liabilities, costs (including cleanup
costs) judgments and expenses (including attorneys', consultants' or experts'
fees and expenses) of every kind and nature suffered by or asserted against
Mortgagee as a direct or indirect result of (i) any warranty or representation
made by the Company regarding compliance with Environmental Requirements being
false or untrue in any respect or (ii) the Company, any of the Facilities, the
Site or any other Person occupying or conducting operations on the Site or at
the Facilities, that fail to comply with any Environmental Requirement,
including any Environmental Requirement relating to the elimination or removal
of Hazardous Materials.
(c) The Company's obligations to Mortgagee and its officers, directors,
employees and agents under this Section 35 shall not be limited to any extent by
the term of the First Mortgage Bonds, the Tax Exempt Bonds or the other
Financing Documents, and shall continue, survive, and remain in full force and
effect notwithstanding payment in full and satisfaction of the Mortgage or any
other Financing Document or foreclosure under this Mortgage or delivery of a
deed-in-lieu of foreclosure.
36. Estoppel Affidavits. The Company, within ten (10) days after
written request from Mortgagee, shall furnish a written statement, setting forth
the unpaid principal of, and interest on, the Secured Obligations and confirming
that no offsets or defenses exist against payments owing to Mortgagee, including
principal or interest.
37. Assignment. Mortgagee may assign this Mortgage to any
successor Collateral Agent under and in accordance with the
Intercreditor Agreement.
38. Entire Agreement. Each Mortgagor acknowledges that the
Financing Documents set forth the entire agreement and
understanding of such Mortgagor and Mortgagee with respect to the
matters set forth therein, and no oral or other agreements,
understanding, representations or warranties exist with respect to
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those matters other than those set forth in the Financing
Documents.
39. Action Affecting the Collateral.
(a) The Company agrees to appear in and contest any action or
proceeding purporting to adversely affect the security hereof or the rights or
powers of Mortgagee and to pay all costs and expenses of Mortgagee, including
costs of evidence of title and attorneys' fees and expenses, in any such action
or proceeding in which Mortgagee may appear.
(b) Mortgagee shall have the right to appear in and defend any action
or proceeding brought with respect to the Collateral and to bring any action or
proceeding, in the name and on behalf of either Mortgagor or Mortgagee, that
Mortgagee determines to be necessary or reasonably advisable to protect its
interest in the Collateral (i) if such Mortgagor fails to defend or bring such
action or proceeding, as appropriate, in a prompt and diligent manner, or
thereafter fails to proceed with diligence in the defense or prosecution of the
same or (ii) during a Trigger Event Period.
40. Actions by Mortgagee to Preserve the Collateral. Except as
hereinbefore expressly provided, during a Trigger Event Period, Mortgagee or any
Senior Secured Party (upon notice to Mortgagee and each other Senior Secured
Party), without obligation so to do and without notice to or demand upon either
Mortgagor and without releasing such Mortgagor from any obligation, may make any
payment or do any act as and in the manner provided in the Financing Documents
in such manner and to such extent as Mortgagee or such Senior Secured Party may
deem necessary to protect the security hereof. In connection therewith (without
limiting any general powers of Mortgagee or such Senior Secured Party), each of
Mortgagee and such Senior Secured Party shall have and is hereby given the
right, but not the obligation, (i) to the fullest extent permitted in Law and in
accordance with the Intercreditor Agreement and the other Project Documents, to
make additions, alterations, repairs and improvements to the Collateral that it
may consider necessary to keep the Collateral in good condition and repair and
(ii) in exercising such powers, to pay necessary expenses, including engagement
of counsel or other necessary or desirable consultants. The Company shall,
immediately upon demand therefor by Mortgagee or such Senior Secured Party, pay
all costs and expenses incurred by Mortgagee or such Senior Secured Party in
connection with the exercise by Mortgagee or such Senior Secured Party of the
foregoing rights, including costs of evidence of title, court costs, appraisals,
surveys and attorneys' fees and expenses.
41. Remedies Not Exclusive. Mortgagee shall be entitled to
enforce payment and performance of any indebtedness or obligations
secured hereby and to exercise all rights and powers granted under
this Mortgage or under any other Security Document or any other
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<PAGE>
agreement or any Laws now or hereafter in force, notwithstanding some or all of
the indebtedness and obligations secured hereby may now or hereafter be
otherwise secured, whether by mortgage, deed of trust, pledge, Lien, assignment
or otherwise. Neither the acceptance of this Mortgage nor its enforcement,
whether by court action or pursuant to the power of sale or other powers herein
contained, shall prejudice or in any manner affect Mortgagee's right to realize
upon or enforce any other security now or hereafter held by Mortgagee, it being
agreed that Mortgagee shall be entitled to enforce this Mortgage and any other
security now or hereafter held by Mortgagee in such order and manner as it may
in its absolute discretion determine. No remedy herein conferred upon or
reserved is intended to be exclusive of any other remedy herein or by Law
provided or permitted, but each shall be cumulative and shall be in addition to
every other remedy given hereunder or now or hereafter existing at Law or in
equity or by statute. Every right, power or remedy given by any of the Security
Documents to Mortgagee may be exercised, concurrently or independently, from
time to time and as often as may be deemed expedient by Mortgagee.
42. Relationship. Nothing herein is intended to create, or shall in any
event or under any circumstance be construed as creating, a partnership, joint
venture, tenancy-in- common, joint tenancy or other relationship of any nature
whatsoever between Mortgagee and each Mortgagor other than as lender and
borrower.
43. Time of the Essence. TIME IS OF THE ESSENCE WITH RESPECT
TO EACH AND EVERY COVENANT, AGREEMENT AND OBLIGATION OF EACH
MORTGAGOR UNDER THIS MORTGAGE AND THE OTHER FINANCING DOCUMENTS.
44. Severance of Counterclaims. In the event of foreclosure of this
Mortgage, any and all counterclaims filed by either Mortgagor against Mortgagee,
to the extent permitted by Law, shall be severed by the court having
jurisdiction over the foreclosure action, for all purposes from the basic
foreclosure action, on an ex parte basis and without notice to such Mortgagor.
Each Mortgagor, by its execution and delivery hereof, hereby expressly consents
and agrees to such severance.
45. Notice Limiting Advances. Each Mortgagor hereby waives the right to
limit the maximum principal amount that may be secured by this Mortgage and in
accordance with the other Financing Documents and agrees that all sums advanced
under and pursuant to this Mortgage and any Financing Document shall be secured
hereby. The filing or attempted filing of any notice limiting, or purporting to
limit, the maximum principal amount that may be secured by this Mortgage shall
be a Mortgage Event of Default.
46. Governing Law. THIS MORTGAGE IS GOVERNED BY AND SHALL BE
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF ALABAMA.
47. Shared Draftsmanship. If there shall be any ambiguity in
the terms of this Mortgage, the doctrine of construction that holds
that the language of the document shall be construed against its
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drafter shall not apply as all parties have shared in the drafting
of this Mortgage.
48. No Third Party Beneficiary. This Mortgage and the other Security
Documents are for the sole benefit of each Mortgagor, Mortgagee, and all Senior
Secured Parties, and are not for the benefit of any third party, and no third
party shall gain any subrogation rights against either Mortgagor or in, to or
with respect to any portion of the Collateral by reason of this Mortgage or the
provisions hereof.
49. Security Only. This Mortgage is granted for security purposes only.
Accordingly, except as otherwise permitted by the Security Documents or as
otherwise specifically provided in this Mortgage, Mortgagee shall not, except
during a Trigger Event Period, enforce either Mortgagor's rights with respect to
the Collateral.
50. Release by Mortgagee. Upon the payment, performance and
satisfaction in full of the Secured Obligations, as set forth above in the
granting clause of this Mortgage, Mortgagee shall at the Company's request and
expense, promptly release the lien of this Mortgage or reconvey the Collateral
to either Mortgagor or the person or persons entitled thereto by an appropriate
instrument duly acknowledged and in proper form for recording.
51. Further Assurances. The Company shall, at the sole cost of the
Company and without expense to Mortgagee, on demand, do, execute, acknowledge
and deliver all and every such further acts, deeds, conveyances, mortgages,
assignments, notices of assignment, transfers and assurances as Mortgagee shall,
from time to time, reasonably require for better assuring, conveying, assigning,
transferring and confirming unto Mortgagee the property and rights hereby
mortgaged or assigned or intended now or hereafter so to be, or that the Company
may be or may hereafter become bound to convey, mortgage or assign to Mortgagee,
or for carrying out the intention or facilitating the performance of the terms
of this Mortgage, or for filing, registering or recording this Mortgage.
52. Limitation of Liability of Mortgagee. Notwithstanding anything to
the contrary contained herein or in any of the other Financing Documents, this
Mortgage has been executed by Bankers Trust Company not in its individual
capacity but solely as Mortgagee in its capacity as Collateral Agent under the
Intercreditor Agreement and, except in the case of its gross negligence or
willful misconduct, Bankers Trust Company in its individual capacity shall have
no liability for the representations, warranties, covenants, agreements or other
obligations of Mortgagee hereunder or in any certificates, notices or agreements
delivered pursuant hereto. For all purposes of this Mortgage, in the performance
of its duties or obligations hereunder, Mortgagee shall be subject to, and
entitled to the benefits of, the terms and provisions of Article VII of the
Intercreditor Agreement.
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53. Conflict with Intercreditor Agreement. Notwithstanding anything to
the contrary contained herein or in any of the other Financing Documents, all
rights, duties, obligations and indemnities of Mortgagee hereunder (including
the standard of care pursuant to which it acts) shall be governed by the
provisions of the Intercreditor Agreement, including the exercise of any and all
remedies hereunder. In the event of a conflict between this Agreement and the
Intercreditor Agreement, the provisions of the Intercreditor Agreement shall
control.
54. Effect of Termination of Intercreditor Agreement. Notwithstanding
anything to the contrary contained herein, if the Intercreditor Agreement shall
be terminated while this Mortgage remains in effect, each reference in this
Mortgage to a Trigger Event shall be deemed to be a reference to an Event of
Default and no Senior Creditor Certificates under the Intercreditor Agreement
shall be required to be received by Mortgagee prior to its exercise of remedies
hereunder and the term "Mortgage Event of Default" shall be deemed to include
any Event of Default and the term "Trigger Event Period" shall be deemed to mean
the period commencing upon the occurrence of any Event of Default and continuing
for so long as such Event of Default continues.
55. IDB Joinder. Mortgagee acknowledges and agrees that IDB is joined
as a party to this instrument solely for the purpose of conveying its right,
title, interest and estate in and to the IDB Properties and the other Collateral
to the lien, encumbrance, and effect of this Mortgage, as security for the
Secured Obligations, but the IDB shall not be responsible for paying any sums of
money or taking any affirmative actions whatsoever under or pursuant to the
terms of this Mortgage to perform any covenants or obligations hereunder or to
comply with any conditions or requirements hereunder. No money judgment shall
ever be sought or obtained by Mortgagee against IDB for any liabilities or
obligations under this Mortgage. Mortgagee also agrees with IDB that prior to
exercising any rights or remedies against the IDB Properties hereunder,
Mortgagee shall give written notice to IDB at the address indicated in the
introductory paragraph hereof specifying the nature of any breach or default
hereunder, and shall permit IDB to cure such breach or default within the period
permitted for the Company.
56. Limited Recourse. Satisfaction of the obligations of the Company
(including pursuant to the Guaranty) and the IDB under this Mortgage shall be
had solely from the assets of the IDB mortgaged herein and the general assets of
the Mobile Energy Parties. No recourse shall be had to (a) any assets or
properties of the Members (other than Mobile Energy as provided in the Guaranty
or of the stockholders of Mobile Energy, other than their respective interests
in the Collateral, (b) any Member (other than Mobile Energy as provided in the
Guaranty) or (c) any Affiliate, incorporator, stockholder, partner, member,
officer, director or employee of any Member or of the Company (other than the
Mobile Energy Parties and, in respect of any Southern Guaranty on deposit in any
Reserve Account Security Account, Southern).
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Notwithstanding anything in this Section 56 to the contrary, (i) nothing
contained herein or in the Securities shall limit or otherwise prejudice in any
way the satisfaction of the Guaranteed Obligations shall be non-recourse to any
monies or other assets of Mobile Energy acquired through or on account of its
right of the Trustee, the Collateral Agent or any Holder to proceed against any
Person whomsoever (A) with respect to the enforcement of such Person's
obligations under any Project Document (including the Guaranty and any Southern
Guaranty) to which such Person is a party) or limit or otherwise prejudice in
any way the right of the Holders, the Trustee or the Collateral Agent to proceed
against such Person with respect to the enforcement of such obligations or (B)
to the extent necessary to realize upon the Indenture Securities Collateral
granted hereunder or under the Security Documents and: (ii) any limitations of
liability herein shall not apply if and to the extent that any Person commits
fraud or wilful misrepresentations, including those contained in Officer's
Certificates issued from time to time.
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IN WITNESS WHEREOF, the parties hereby have caused this Mortgage to be
duly executed as of the date first written above.
MORTGAGORS:
MOBILE ENERGY SERVICES COMPANY, L.L.C.,
an Alabama limited liability company
By: /s/
Name: Christopher J. Kysar
Title: Vice President
THE INDUSTRIAL DEVELOPMENT BOARD
OF THE CITY OF MOBILE, ALABAMA
By: /s/
Name: Clarence Boll, Jr.
Title: Vice President
MORTGAGEE:
BANKERS TRUST (DELAWARE), as Collateral Agent
By: /s/
Name: James H. Stallkamp
Title: President
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
I, the undersigned Notary Public in and for said County in
said State, hereby certify that Christopher J. Kysar whose name as Vice
President of Mobile Energy Services Company, L.L.C., an Alabama limited
liability company, is signed to the foregoing Leasehold Mortgage, Assignment of
Leases, Rents, Issues and Profits and Security Agreement and Fixture Filing and
who is known to me, acknowledged before me on this day that, being informed of
the contents of the instrument, he, as such officer and with full authority,
executed the same voluntarily for and as the act of said limited liability
company.
Given under my hand and seal this the 24th day of August,
1995.
/s/ (seal)
Notary Public
STATE OF ALABAMA )
) ss.:
COUNTY OF MOBILE )
I, the undersigned Notary Public in and for said County in
said State, hereby certify that Clarence Boll, Jr. whose name as Vice President
of The Industrial Development Board of the City of Mobile, Alabama, a public
corporation organized under the laws of the State of Alabama, is signed to the
foregoing Leasehold Mortgage, Assignment of Leases, Rents, Issues and Profits
and Security Agreement and Fixture Filing and who is known to me, acknowledged
before me on this day that, being informed of the contents of the instrument,
he, as such officer and with full authority, executed the same voluntarily for
and as the act of said public corporation.
Given under my hand and seal this the 17 day of August,
1995.
/s/ (seal)
Notary Public
<PAGE>
STATE OF DELAWARE )
) ss.:
COUNTY OF NEW CASTLE )
I, the undersigned Notary Public in and for said County in
said State, hereby certify that James H. Stallkamp whose name as President of
Bankers Trust (Delaware), a Delaware banking corporation, is signed to the
foregoing Leasehold Mortgage, Assignment of Leases, Rents, Issues and Profits
and Security Agreement and Fixture Filing and who is known to me, acknowledged
before me on this day that, being informed of the contents of the instrument,
he, as such officer and with full authority, executed the same voluntarily for
and as the act of said banking corporation.
Given under my hand and seal this the 21 day of August,
1995.
/s/ (seal)
Notary Public
<PAGE>
Appendix A
DEFINED TERMS
For purposes of any Financing Document (as defined herein), terms used
in such Financing Document (including terms used herein) that are not otherwise
defined therein shall have the following meanings, subject to any provisions
contained in such Financing Document that affect the construction or
interpretation of such terms. Except as otherwise expressly provided in any such
Financing Document, if and to the extent that such Financing Document shall be
amended, restated, supplemented or otherwise modified from time to time pursuant
to the terms and provisions thereof, this Appendix A shall be, or be deemed to
have been, amended, restated, supplemented or otherwise modified concurrently
with the execution and delivery of such amendment, restatement, supplement or
other modification in order to conform the terms herein and therein, mutatis
mutandis, to the terms set forth in or required by such amendment, restatement,
supplement or other modification.
Except as otherwise expressly provided in any such Financing Document:
(a) the terms used in such Financing Document have the
meanings assigned to them in this Appendix A and include the plural as
well as the singular; provided, however, that, in the case of the
Indenture, all such terms that are defined in the Trust Indenture Act,
either directly or by reference therein, have the meanings assigned to
them therein;
(b) (i) all accounting terms not otherwise defined in such
Financing Document have the meanings assigned to them, (ii) all
financial statements and all certificates and reports as to financial
matters required to be delivered to the Collateral Agent or any Senior
Secured Party, or any other Person (as the case may be), under such
Financing Document shall be prepared and (iii) all calculations made
for the purpose of determining compliance with such Financing Document
shall (except as otherwise expressly provided herein) be made, in the
case of clauses (i), (ii) and (iii) above, in accordance with, or by
application of, GAAP applied on a basis consistent (except
inconsistencies that are disclosed in writing to the Collateral Agent
or any Senior Secured Party, or any other Person (as the case may be),
and are in accordance with GAAP as certified by a firm of independent
certified public accountants of recognized national standing) with that
used in the preparation of the then most recent corresponding financial
statements furnished under such Financing Document to the Collateral
Agent or any Senior Secured Party, or any other Person (as the case may
be);
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(c) all references in such Financing Document to any
designated "Article," "Section," "Appendix," "Schedule," "Exhibit" and
other subdivision are to the designated Article, Section, Appendix,
Schedule, Exhibit and other subdivision, respectively, of such
Financing Document;
(d) all references in such Financing Document to (i) the words
"herein," "hereof" and "hereunder" and other words of similar import
refer to such Financing Document as a whole and not to any particular
Article, Section or other subdivision and (ii) the term "this
Agreement" or "this Indenture" means such Financing Document as a
whole, including Appendices, Schedules and Exhibits thereto;
(e) all references in such Financing Document to any Project
Document or other Contract defined or referred to therein shall include
such Contract (and, in the case of the Senior Securities or any other
instrument, any other instrument issued in substitution therefor) as
the terms thereof may have been or may be amended, supplemented, waived
or otherwise modified, or as such Contract may have been replaced
(including (i) in the case of an Energy Services Agreement or the
Master Operating Agreement, any replacement Contract therefor then
satisfying the Restricted Payment Alternative Agreement Requirements
with respect thereto and (ii) in the case of any Project Contract, any
replacement Contract therefor then satisfying the Event of Default
Alternative Agreement Requirements with respect thereto), from time to
time;
(f) all references in such Financing Document to any Person
(including any of its capacities) shall include the permitted
successors and assigns of such Person (including in such capacity) in
accordance with the terms of such Financing Document and the other
Project Documents and, in the case of any Governmental Authority, any
Person succeeding to its functions and capacities;
(g) all references in such Financing Document to any Law shall
include such Law or any successor Law as amended, supplemented or
otherwise modified and in effect from time to time, and any other Law
in substance substituted therefor;
(h) any item or list of items set forth following the word
"including," "include" or "includes" in such Financing Document is set
forth only for the purpose of indicating that, regardless of whatever
other items are in the category in which such item or items are
"included," such item or items are in such category, and shall not be
construed as indicating that the items in the category in which such
item or items are "included" are limited to such item or items similar
to such items;
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(i) all references in such Financing Document to the
Collateral Agent, the Indenture Trustee, the Tax-Exempt Indenture
Trustee, the IDB or the Working Capital Facility Provider shall be
deemed to refer to each such Person however designated in the Financing
Documents so that (i) references to rights or duties of the Collateral
Agent under such Financing Document shall be deemed to include the
rights or duties of such Person as the "Secured Party" under the
Security Agreement and as the "Mortgagee" under the Mortgage, (ii)
references to rights or duties of the Indenture Trustee under such
Financing Document shall be deemed to include the rights or duties of
such Person as a "Senior Secured Party" under the Intercreditor
Agreement, (iii) references to rights or duties of the Tax-Exempt
Indenture Trustee under such Financing Document shall be deemed to
include the rights or duties of such Person as a "Senior Secured Party"
under the Intercreditor Agreement and (iv) references to rights or
duties of the Working Capital Facility Provider under such Financing
Document shall be deemed to include the rights or duties of such Person
as a "Senior Secured Party" under the Intercreditor Agreement;
provided, however, that, if such Financing Document is (A) the Security
Agreement, references to rights or duties of the "Secured Party"
thereunder shall be deemed to include the rights or duties of such
Person as the Collateral Agent, (B) the Mortgage, references to rights
or duties of the "Mortgagee" thereunder shall be deemed to include the
rights or duties of such Person as the Collateral Agent and (C) the
Working Capital Facility, references to rights or duties of the "Agent"
thereunder or a Lender shall be deemed to include the rights or duties
of such Person as the Working Capital Facility Provider;
(j) all terms defined in such Financing Document shall have
the meanings therein ascribed to them when used in any certificate,
opinion or other document delivered pursuant thereto and, in the case
of the Indenture and the Tax-Exempt Indenture, in the Senior
Securities;
(k) all references in such Financing Document to the knowledge
of any Person that is a corporation, limited liability company or
partnership, or any other Person that is not an individual, with
respect to any subject or event (including the occurrence or
non-occurrence of any circumstance, the failure to perform or observe,
or the satisfaction of, any covenant or agreement or the pending or
threatened nature of any action) shall be deemed to mean that an
Authorized Officer of such Person (or, if such Person is the Company,
the Plant Manager thereof) has actual knowledge or awareness of such
subject or event or when notice of such subject or event shall have
been given, or deemed to have been given, to such Person in accordance
with the provisions of such Financing Document; and
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(l) all references in such Financing Document to the Project
Contracts shall be deemed to exclude any Project Contract (and the
Consent to Assignment (if any) with respect thereto) (i) after the date
on which such Project Contract (A) may have been terminated in
accordance with Section 5.10 of the Indenture or Section 4.10 of the
IDB Lease Agreement (or any comparable provision of the Working Capital
Facility), (B) shall have reached its stated termination date (if any)
or (C) (other than in the case of the Energy Services Agreements and
the Master Operating Agreement in connection with a Mill Closure) shall
have been fully and finally performed by all parties thereto and (ii)
after the date of any disposition of the Company's rights and
obligations under such Project Contract in accordance with Section 5.8
of the Indenture or Section 4.8 of the IDB Lease Agreement (or any
comparable provision of the Working Capital Facility), except, in the
case of clauses (i) and (ii) above, if and to the extent that any
provisions of such Project Contract so excluded provide that the rights
and obligations of any Person that is a party to such Contract shall
survive the termination thereof.
"Accounts" means, collectively, the Intercreditor Agreement
Accounts, the Indenture Accounts and the Tax-Exempt Indenture
Accounts.
"Act" has the meaning specified (a) in the case of any Holder of
Indenture Securities, in Section 1.4 of the Indenture and (b) in the case of any
Holder of Tax-Exempt Indenture Securities, in Section 1.4 of the Tax-Exempt
Indenture.
"Additional Available Proceeds" means, with respect to any Event of
Loss or Event of Eminent Domain, monies neither constituting Revenues nor
otherwise required (except pursuant to the provisions of Section 3.10 of the
Intercreditor Agreement) to be deposited into any Account that are deposited
into the Loss Proceeds Account as other amounts available to the Company and
necessary for the rebuilding, repair, restoration or replacement of the Energy
Complex or any part thereof that has been affected by such Event of Loss or
Event of Eminent Domain (as the case may be).
"Affiliate" means, with respect to any Person, any other Person
directly or indirectly controlling or controlled by, or under direct or indirect
common control with, such Person. For purposes of this definition, the term
"control" (including the correlative meanings of the terms "controlled by" and
"under common control with"), as used with respect to any Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management policies of such Person, whether through the
ownership of securities or partnership or other ownership interests or by
contract or otherwise. Notwithstanding the foregoing, Southern, Mobile Energy,
Southern Electric, the Operator and each Person owning, directly or indirectly,
five percent (5%) or more of the membership interests in the Company shall be
deemed to be an Affiliate of the Company.
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"Affiliate Subordinated Debt" means any unsecured, subordinated loan or
loans to the Company from any of its Affiliates pursuant to a Subordinated Loan
Agreement, fully subordinated as to payment and exercise of remedies and payable
only from monies otherwise distributable by the Company from the Distribution
Account in accordance with the Intercreditor Agreement.
"Aggregate Demand" has the meaning specified in the Master
Operating Agreement.
"Alabama Act" means Ala. Code ss. 11-54-80 to ss. 11-54-101.
"Annual Budget" means the operating plan and budget for the Energy
Complex developed by the Company for operation of the Energy Complex for any
Fiscal Year, as the same may be amended, restated, supplemented or otherwise
modified from time to time and as more particularly described in Section 5.12 of
the Indenture or Section 4.12 of the IDB Lease Agreement (or any comparable
provision of the Working Capital Facility) (as the case may be).
"Approved Institutional Investor" has the meaning specified (a) in the
case of the Tax-Exempt Bonds, in the Limited Offering Memorandum dated August
17, 1995 relating to the initial offering thereof and (b) in the case of any
other Tax-Exempt Indenture Securities, in any other offering memorandum relating
to the initial offering of such Tax-Exempt Indenture Securities.
"Articles of Organization" means the Articles of Organization of the
Company dated July 13, 1995.
"Authenticating Agent" means any Person acting as Authenticating Agent
pursuant to, in the case of the Indenture, Section 9.14(b) thereof and, in the
case of the Tax-Exempt Indenture, Section 9.13(b) thereof.
"Authorized Agent" means any Paying Agent, Authenticating Agent or
Security Registrar or other agent appointed by the Indenture Trustee or the
Tax-Exempt Indenture Trustee (as the case may be) or the Company or the IDB (as
the case may be) in accordance with the Indenture or the Tax-Exempt Indenture
(as the case may be) to perform any function that such indenture authorizes such
agent to perform.
"Authorized Officer" means (a) in the case of a corporation (including
Mobile Energy) or limited liability company (including the Company), the chief
executive officer, the president, the chief financial officer, a vice president,
the treasurer or an assistant treasurer of such corporation or limited liability
company and (b) in the case of any general or limited partnership, any Person
authorized by the managing general partner (or such other Person that is
responsible for the management of such partnership) to take the applicable
action on behalf of such partnership or any officer (with a title specified in
clause (a) above) of such partnership's
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managing general partner (or such other Person that is responsible for the
management of such managing general partner).
"Authorized Representative" means, in respect of any Person, the
individual or individuals authorized to act on behalf of such Person by the
board of directors, manager, management committee, board of control or any other
governing body of such Person as designated from time to time in a certificate
of such Person, which shall include or attach thereto specimen signatures,
delivered to the Collateral Agent upon which the Collateral Agent may
conclusively rely.
"Authorized Trust Officer" means any officer of the Indenture Trustee
or the Tax-Exempt Indenture Trustee (as the case may be) or any other individual
who shall be duly authorized by appropriate corporate action on the part of
either such trustee to authenticate Senior Securities.
"Automatic Acceleration Default" has the meaning specified (a) in the
case of the Indenture, in Section 8.2(a) thereof and (b) in the case of the
Tax-Exempt Indenture, in Section 8.2(a) thereof.
"Available Amount" means, at any time, (a) in the case of any Reserve
Account Letter of Credit, the undrawn stated amount of such Reserve Account
Letter of Credit at such time and (b) in the case of any Southern Guaranty, an
amount equal to the "Available Amount" set forth therein (as such amount may be
increased or decreased in accordance with such Southern Guaranty).
"Bankruptcy Code" means the Federal Bankruptcy Code of 1978.
"Bankruptcy Event" means, in respect of any Person, (a) such Person's
general inability, or its admission of its inability, to pay its debts as such
debts become due, (b) the application by such Person for or its consent to the
appointment of, or the taking of possession by, a receiver, custodian, trustee
or liquidator of itself or of all or a substantial part of its property, (c) the
commencement by such Person of a voluntary case under the Bankruptcy Code, (d)
the making by such Person of a general assignment for the benefit of its
creditors, (e) the filing of a petition by such Person seeking to take advantage
as a debtor of any other law relating to bankruptcy, insolvency, reorganization,
liquidation, dissolution, arrangement, winding-up or readjustment of debts, (f)
the failure by such Person to controvert in a timely and appropriate manner, or
its acquiescence in writing to, any petition filed against it in an involuntary
case under the Bankruptcy Code, (g) the taking of any corporate or other action
by such Person for the purpose of effecting any of the foregoing, (h) the
commencement of a proceeding or case, without the application or consent of such
Person, in any court seeking (i) such Person's reorganization, liquidation,
dissolution, arrangement or winding-up, or the composition or readjustment of
its debts, (ii) the appointment of a trustee, receiver, custodian, liquidator,
examiner or the like of such Person or all or any substantial part of its
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property or (iii) similar relief in respect of such Person under any law
relating to bankruptcy, insolvency, reorganization, winding-up or composition or
adjustment of debt and such proceeding or case specified in this clause (h)
shall continue undismissed, or an order, judgment or decree approving or
ordering any of the foregoing shall be entered and continue unstayed and (except
in the case of Section 5.19(a)(ii) of the Indenture or Section 4.19(a)(ii) of
the IDB Lease Agreement (or any comparable provision of the Working Capital
Facility)) in effect, for a period of sixty (60) or more days or (i) an order
for relief against such Person shall be entered in any involuntary case under
the Bankruptcy Code.
"Board of Directors" means (a) when used with respect to the Company,
the Manager of the Company and (b) when used with respect to Mobile Energy,
either the board of directors of Mobile Energy or any committee of such board
duly authorized to act for it.
"Board Resolution" means (a) when used with respect to the Company, a
copy of a resolution certified by an Authorized Officer of the Company or the
secretary or assistant secretary of the Company as having been adopted by the
Manager of the Company and to be in full force and effect on the date of such
certification and (b) when used with respect to Mobile Energy, means a copy of a
resolution certified by an Authorized Officer or the secretary or assistant
secretary of Mobile Energy as having been adopted by the Board of Directors of
Mobile Energy and to be in full force and effect on the date of such
certification.
"Boiler Ash Agreement" means the Boiler Ash Disposal Agreement dated as
of December 12, 1994, as amended by the First Amendment thereto dated as of July
13, 1995, between the Pulp Mill Owner and the Company (as assignee of Mobile
Energy).
"Bond Counsel" means Balch & Bingham or other nationally recognized
counsel experienced in matters of municipal law and the tax-exempt status of
obligations under the Code.
"Business Day" means any day other than a Saturday or Sunday or other
day on which banks in New York, New York or Atlanta, Georgia are authorized or
required to be closed.
"Capital Budget" means the capital plan and budget developed by the
Company with respect to the capital improvements to the Energy Complex specified
in the Master Operating Agreement and certain other planned capital expenditures
thereto.
"Capital Budget Subaccount" means the subaccount of the Completion
Account so designated established and created under Section 2.2(c) of the
Intercreditor Agreement.
"Casualty Proceeds" means all insurance proceeds (including title
insurance proceeds) and other amounts actually received on account of an Event
of Loss, including any net interest thereon or gain in respect thereof, other
than (a) proceeds of third-party
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liability insurance (to the extent paid directly from an insurer or insurers to
a third-party) and (b) proceeds of business interruption insurance and other
payments received for interruption of operations. "Casualty Proceeds" do not
include Additional Available Proceeds with respect to such Event of Loss.
"Closing Date" means the date on which the First Mortgage Bonds and the
Tax-Exempt Bonds are originally issued.
"Coal Supplier" means E.J. Hodder & Associates, Inc., a
Tennessee corporation.
"Coal Supply Agreement" means the Coal Supply Agreement dated as of May
1, 1995 between the Coal Supplier and the Company.
"Code" means, as applicable, the Internal Revenue Code of 1986 and the
rules and regulations promulgated thereunder or the Internal Revenue Code of
1954 and the rules and regulations promulgated thereunder.
"Collateral" means, collectively, all of the collateral mortgaged,
pledged or assigned, or purported to be mortgaged, pledged or assigned, to the
Collateral Agent, the Indenture Trustee or the Tax-Exempt Indenture Trustee (as
the case may be) by the Company or the IDB (as the case may be), in each case
pursuant to the granting and assigning clauses of the applicable Financing
Documents.
"Collateral Agent" means Bankers Trust (Delaware), a Delaware banking
corporation, or any other Person appointed as a substitute or replacement
Collateral Agent under the Intercreditor Agreement.
"Collateral Agent Claims" means all obligations of the Senior Secured
Parties and the Mobile Energy Parties, now or hereafter existing, to pay fees,
costs and expenses to the Collateral Agent pursuant to Section 7.3(f) and
Article VIII of the Intercreditor Agreement.
"Combined Exposure" means, at any time, the sum of (a) the aggregate
principal amount of all Senior Securities Outstanding and (b) the aggregate
principal amount of all outstanding Working Capital Facility Loans made, and the
unutilized Working Capital Facility Commitment, under the Working Capital
Facility.
"Common Services Agreement" means the Common Services Agreement dated
as of December 12, 1994, as amended by the First Amendment thereto dated as of
July 13, 1995, among the Company (as assignee of Mobile Energy), the Pulp Mill
Owner, the Tissue Mill Owner and the Paper Mill Owner.
"Company" means Mobile Energy Services Company, L.L.C., an Alabama
limited liability company.
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"Company Request" and "Company Order" mean, respectively, a written
request or order signed in the name of the Company by an Authorized Officer of
the Company and delivered to the Indenture Trustee or the Tax-Exempt Indenture
Trustee (as the case may be).
"Company Step-In Rights" has the meaning specified for "MESC Step-In
Rights" in the Master Operating Agreement.
"Completion Account" means the Account so designated established and
created under Section 2.2(a) of the Intercreditor Agreement.
"Consents to Assignment" means, collectively, (a) the Consents to
Assignment, the Lease Estoppel and the Supplementary Lease Estoppel of Scott
with respect to the Project Contracts to which it is a party, (b) the Consent to
Assignment of the Pulp Mill Owner with respect to the Project Contracts to which
it is a party, (c) the Consent to Assignment of the Tissue Mill Owner with
respect to the Project Contracts to which it is a party, (d) the Consent to
Assignment of the Paper Mill Owner with respect to the Project Contracts to
which it is a party, (e) the Consent to Assignment of Southern Electric with
respect to the Project Contracts to which it is a party, (f) the Consent to
Assignment of SCS with respect to the SCS Agreement, (g) any Consent to
Assignment of the Coal Supplier with respect to the Coal Supply Agreement, (h)
the Consent to Assignment of TRT with respect to the Nondisturbance Agreement
(which may be effected pursuant to the Recognition Agreement to which TRT is a
party), (i) the Consent to Assignment of the IDB with respect to the Project
Contracts to which it is a party (which may be effected pursuant to the
Recognition Agreements) and (j) the Consent to Assignment of Ahlstrom Recovery,
Inc. with respect to Purchase Order Number MG-2601.
"Continuing Disclosure Agreement" means the Continuing Disclosure
Agreement dated as of August 1, 1995 among the Mobile Energy Parties and the
Tax-Exempt Indenture Trustee.
"Contract" means (a) any agreement (whether executory or non- executory
and whether a Person entitled to rights thereunder is so entitled directly or as
a third-party beneficiary), including an indenture, lease or license, (b) any
deed or other instrument of conveyance, (c) any certificate of incorporation,
articles of organization or charter and (d) any by-law.
"Corporate Trust Office" means the principal office of the Collateral
Agent, the Indenture Trustee or the Tax-Exempt Indenture Trustee (as the case
may be) at which at any particular time the corporate trust business thereof
shall be administered, which as of the Closing Date is (a) in the case of the
Collateral Agent, Bankers Trust (Delaware), c/o Bankers Trust Company, Four
Albany Street, New York, New York 10006, Attention: Corporate Trust and Agency
Group, (b) in the case of the Indenture Trustee, First Union National Bank of
Georgia, Corporate Trust Department, M/C GA9094, 999 Peachtree Street, N.E.,
Atlanta, Georgia 30309 and (c) in the
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case of the Tax-Exempt Indenture Trustee, First Union National Bank of Georgia,
Corporate Trust Department, M/C GA9094, 999 Peachtree Street, N.E., Atlanta,
Georgia 30309, or such other office as may be designated by the Collateral
Agent, the Indenture Trustee or the Tax-Exempt Indenture Trustee (as the case
may be) to the Mobile Energy Parties and, in the case of the Collateral Agent,
to the other Intercreditor Parties.
"Credit Standard Event" means (a) with respect to any Reserve Account
Letter of Credit on deposit in any Reserve Account Security Account, the
unsecured long-term Debt of the provider of such Reserve Account Letter of
Credit shall not be rated "A" or higher by S&P, "A" or higher by Fitch and "A2"
or higher by Moody's and (b) with respect to any Southern Guaranty on deposit in
any Reserve Account Security Account, (i) the Collateral Agent or the Indenture
Trustee shall have been provided with an Officer's Certificate of Southern
certifying as to the determination that the Southern Credit Standard has not
been satisfied or (ii) Southern shall have failed, or the Company shall have
failed to cause Southern, to provide to the Collateral Agent or the Indenture
Trustee, on or prior to the date that is forty-five (45) days after the end of
each fiscal quarter of Southern, an Officer's Certificate of Southern certifying
as to the determination that the Southern Credit Standard has been satisfied.
"Current Fiscal Quarter" has the meaning specified in the definition of
Maintenance Reserve Account Required Deposit.
"Debt" means, in respect of any Person, (a) indebtedness for borrowed
money or the deferred purchase price of property or services (excluding
obligations under agreements for the purchase price of goods and services in the
normal course of business which are not more than ninety (90) days past due),
(b) obligations as lessee under leases that shall have been or should be, in
accordance with GAAP, recorded as capital leases, (c) obligations (whether
matured or contingent) with respect to any letters of credit issued for the
account of such Person, (d) obligations under direct or indirect guaranties or
other similar contingent liabilities in respect of, and obligations (contingent
or otherwise) to purchase or otherwise acquire, or otherwise assure a creditor
against loss in respect of, indebtedness or obligations of others of the kinds
referred to in clause (a), (b) or (c) above and (e) all Debt of another Person
secured by a lien on any property owned by the first Person (whether or not such
Debt has been assumed by such first Person).
"Debt Service Event" means (a) with respect to any Reserve Account
Letter of Credit on deposit in any Reserve Account Security Account, the
authorization of the Collateral Agent, the Indenture Trustee or the Tax-Exempt
Indenture Trustee (as the case may be) to draw upon such Reserve Account Letter
of Credit pursuant to (i) if such Reserve Account Security Account is the
Maintenance Plan Funding Subaccount, clause third of Section 3.5(c) of the
Intercreditor Agreement, (ii) if such Reserve Account Security
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Account is the Distribution Account, clause second of Section 3.8(b) of the
Intercreditor Agreement, (iii) if such Reserve Account Security Account is a
Debt Service Reserve Account, clause second of Section 4.5 of the Indenture and
(iv) if such Reserve Account Security Account is a Tax-Exempt Debt Service
Reserve Account, clause second of Section 4.6 of the Tax-Exempt Indenture and
(b) with respect to any Southern Guaranty on deposit in any Reserve Account
Security Account, the authorization of the Collateral Agent or the Indenture
Trustee (as the case may be) to call upon such Southern Guaranty pursuant to (i)
if such Reserve Account Security Account is the Maintenance Plan Funding
Subaccount, clause fourth of Section 3.5(c) of the Intercreditor Agreement, (ii)
if such Reserve Account Security Account is the Distribution Account, clause
third of Section 3.8(b) of the Intercreditor Agreement and (iii) if such Reserve
Account Security Account is a Debt Service Reserve Account, clause third of
Section 4.5 of the Indenture.
"Debt Service Reserve Account" means any Account so designated (if any)
established and created under any Series Supplemental Indenture to the Indenture
for the benefit of Holders of Indenture Securities established thereunder.
"Debt Service Reserve Account Required Balance" means, in respect of
any Debt Service Reserve Account, the amount so designated in the Series
Supplemental Indenture to the Indenture establishing such Debt Service Reserve
Account.
"Default Event" means (a) with respect to any Reserve Account Letter of
Credit on deposit in any Reserve Account Security Account, (i) the provider of
such Reserve Account Letter of Credit shall default in its payment obligations
thereunder or (ii) the provider of such Reserve Account Letter of Credit shall
become insolvent and (b) with respect to any Southern Guaranty, (i) Southern
shall fail to perform any of the "Guaranteed Obligations" thereunder as and when
due or (ii) Southern shall become insolvent.
"Designated Southern Subsidiaries" means, for purposes of the
satisfaction of the Southern Credit Standard, all of the Eligible Southern
Subsidiaries other than, as designated by the Company to be excluded for such
purposes, any one or all (including any combination) of the Eligible Southern
Subsidiaries, provided that the aggregate net worth of such Eligible Southern
Subsidiaries so excluded is equal to or less than ten percent (10%) of the
aggregate net worth of all of the Eligible Southern Subsidiaries. For such
purposes, "net worth" means (a) par value of common stock plus (b) paid-in
capital plus (c) premium on preferred stock plus (d) retained earnings minus (e)
accrued and unpaid dividends on, or other amounts due and payable in respect of,
capital stock, in each case, of each of such Eligible Southern Subsidiaries.
"Determination of Taxability" means a final determination by the
Internal Revenue Service or a court of competent jurisdiction in a proceeding in
which the Company has been afforded an
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opportunity to participate, or, at the election of the Company in its sole
discretion, a determination by the Company based on an opinion of Bond Counsel,
that as a result of any event the interest payable on any Tax-Exempt Indenture
Security (in respect of which, at the time of original issuance, the Tax-Exempt
Indenture Trustee received an opinion of Bond Counsel to the effect that
interest payable on such Tax-Exempt Indenture Security was not includable for
Federal income tax purposes in the gross income of any owner of such Tax-Exempt
Indenture Security (other than an owner who is a "substantial user" of the
Energy Complex or a "related person" within the meaning of Section 147(a) of the
Code)) is includable for Federal income tax purposes in the gross income of any
owner of such Tax-Exempt Indenture Security (other than any owner who is a
"substantial user" of the Energy Complex or a "related person" within the
meaning of Section 147(a) of the Code). No such determination by the Internal
Revenue Service shall be considered final unless the Company has been given
written notice and, if it so desires, has been given the opportunity to contest
the same, either directly or in the name of any owner of a Tax-Exempt Indenture
Security and until the conclusion of any appellate review, if sought. Interest
on Tax-Exempt Indenture Securities shall not be deemed includable for Federal
income tax purposes merely by reason of such interest being treated as a tax
preference item for purposes of a Federal alternative minimum tax, loss of or
reduction in a related deduction or other indirect adverse tax consequences.
"Distribution Account" means the Account so designated established and
created under Section 2.2(a) of the Intercreditor Agreement.
"Distribution Date" means any Business Day following an Interest
Payment Date and preceding the Monthly Transfer Date immediately succeeding such
Interest Payment Date, as selected by
the Company.
"Easement Deeds" means, collectively, (a) the Easement Deed, dated as
of December 12, 1994 between the Company (as assignee of Mobile Energy) and the
Pulp Mill Owner granting the Company certain easements, (b) the Easement Deed
dated as of December 12, 1994 between the Company (as assignee of Mobile Energy)
and the Pulp Mill Owner granting the Pulp Mill Owner certain easements, (c) the
Easement Deed dated as of December 12, 1994 between the Company (as assignee of
Mobile Energy) and the Tissue Mill Owner granting the Company certain easements,
(d) the Easement Deed dated as of December 12, 1994 between the Company (as
assignee of Mobile Energy) and the Tissue Mill Owner granting the Tissue Mill
Owner certain easements, (e) the Easement Deed dated as of December 12, 1994
between the Company (as assignee of Mobile Energy) and the Paper Mill Owner
granting the Company certain easements and (f) the Easement Deed dated as of
December 12, 1994 between the Company (as assignee of Mobile Energy) and the
Paper Mill Owner granting the Paper Mill Owner certain easements.
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"Easements" means, collectively, all easements, licenses, franchises,
rights-of-way and spur track agreements to which the Company is now or hereafter
a party or beneficiary affecting construction on, or the use or operation of, or
constituting a part of, the Site (including the Easement Deeds).
"Eligible Southern Subsidiaries" means, at any time, each of Alabama
Power Company, an Alabama corporation, Georgia Power Company, a Georgia
corporation, Gulf Power Company, a Maine corporation, Mississippi Power Company,
a Mississippi corporation, and Savannah Electric and Power Company, a Georgia
corporation, provided that a majority of the voting securities of such Person is
owned, directly or indirectly, by Southern at such time.
"Eminent Domain Proceeds" means all amounts and proceeds actually
received in respect of any Event of Eminent Domain, including any net interest
thereon or gain in respect thereof. "Eminent Domain Proceeds" do not include
Additional Available Proceeds with respect to such Event of Eminent Domain.
"Energy Complex" has the meaning specified in the Master
Operating Agreement.
"Energy Services Agreements" means, collectively, the Pulp Mill Energy
Services Agreement, the Tissue Mill Energy Services Agreement and the Paper Mill
Energy Services Agreement.
"Environmental Bonds" means, collectively, (a) (i) the IDB's
Environmental Improvement Revenue Bonds (Scott Paper Company Project), Series A
of 1973, (ii) the IDB's Environmental Improvement Revenue Bonds (Scott Paper
Company Project), Series A of 1976 and (iii) the IDB's Environmental Improvement
Revenue Bonds (Scott Paper Company Project), Series A of 1980, in the case of
clauses (i), (ii) and (iii) above, issued under and secured by a Trust Indenture
dated as of April 1, 1973, as supplemented by a First Supplemental Indenture
thereto dated as of September 1, 1976 and a Second Supplemental Indenture
thereto dated as of October 1, 1980 between the IDB and AmSouth Bank of Alabama,
as trustee, and (b) the IDB's Industrial Revenue Bonds (Scott Paper Company
Project), Series B of 1976 issued under and secured by a Trust Indenture dated
as of September 1, 1976 between the IDB and AmSouth Bank of Alabama, as trustee
.
"Environmental Indemnity Agreements" means, collectively, (a) the Pulp
Mill Environmental Indemnity Agreement dated as of December 12, 1994, as amended
by the First Amendment thereto dated as of July 13, 1995, between the Company
(as assignee of Mobile Energy) and the Pulp Mill Owner, (b) the Paper Mill
Environmental Indemnity Agreement dated as of December 12, 1994, as amended by
the First Amendment thereto dated as of July 13, 1995, between the Company (as
assignee of Mobile Energy) and the Paper Mill Owner, (c) the Tissue Mill
Environmental Indemnity Agreement dated as of December 12, 1994, as amended by
the First Amendment thereto dated as of July 13, 1995, between the Company (as
assignee of Mobile
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Energy) and the Tissue Mill Owner and (d) the Scott Environmental Indemnity
Agreement dated as of December 12, 1994, as amended by the First Amendment
thereto dated as of July 13, 1995, between Scott and the Company (as assignee of
Mobile Energy).
"Environmental Requirement" means any Governmental Approvals
in effect from time to time relating to the protection of the
environment or otherwise addressing environmental issues or
environmental requirements of or by any Governmental Authority, or
otherwise relating to noise or to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport,
emission, discharge, release or handling of Hazardous Material,
including the Comprehensive Environmental Response Compensation,
and Liability Act of 1980 (42 U.S.C. ss. 9601 et seq.), the Hazardous
Materials Transportation Act (49 U.S.C. ss. 1801 et seq.), the
Resource Conservation and Recovery Act (42 U.S.C. ss. 6901 et seq.),
the Toxic Substance Control Act (15 U.S.C. ss. 2601 et seq.), the
Clean Air Act (42 U.S.C. ss. 7401 et seq.), the Clean Water Act (33
U.S.C. ss. 1251 et seq.), the Emergency Planning and Community Right
to Know Act (42 U.S.C. ss. 1101 et seq.), the Federal Insecticide,
Fungicide and Rodenticide Act (7 U.S.C. ss. 136 et seq.), the Oil
Pollution Act of 1990 (33 U.S.C. ss. 2761), the Occupational Health
and Safety Act (29 U.S.C. ss. 641 et seq.), the Pollution Prevention
Act (42 U.S.C. ss. 1201 et seq.), the Safe Drinking Water Act (42
U.S.C. ss. 300f et seq.), Preservation Development, Etc. of Coastal
Areas (Ala. Code ss. 9-7-1 et seq.), the Alabama Environmental
Management Act (Ala. Code ss. 22-22A-1 et seq.), the Alabama Water
Pollution Control Act (Ala. Code ss. 22-22A-1 et seq.), the Alabama
Safe Drinking Water Act (Ala. Code ss. 22-23-30 et seq.), Water Well
Standards (Ala. Code ss. 22-24-1 et seq.), Water Wastewater Systems
and Treatment Plants (Ala. Code ss. 22-25-1 et seq.), Sewage
Collection, Treatment, and Disposal Facilities (Ala. Code ss. 22-26-1
et seq.), Solid Wastes Disposal Act (Ala. Code ss. 22-27-1 et seq.),
the Alabama Air Pollution Control Act of 1971 (Ala. Code ss. 22-28-1
et seq.), the Hazardous Wastes Management and Minimization Act
(Ala. Code ss. 22-30-1 et seq.), the Alabama Hazardous Substance
Cleanup Fund (Ala. Code ss. 22-30A-1 et seq.), the Water Pollution
Control Authority (Ala. Code ss. 22-34-1 et seq.), the Alabama
Underground and Aboveground and Storage Tank Trust Fund Act (Ala.
Code ss. 22-35-1 et seq.), the Alabama Underground Storage Tank and
Wellhead Protection Act of 1988 (Ala. Code ss. 22-36-1 et seq.) and
the Alabama Lead Ban Act of 1988 (Ala. Code ss. 22-37-1 et seq.) and,
in each case, any regulations promulgated thereunder.
"ERISA" means the Employee Retirement Income Security Act of
1974.
"ESA Blockage Event" means, with respect to any Mill Owner or its
respective Energy Services Agreement or its Mill, that:
(a) such Energy Services Agreement or the Master Operating
Agreement has been declared unenforceable by a Governmental Authority
having jurisdiction, unless the Company has delivered to the applicable
Senior Secured Parties and the
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Collateral Agent an Officer's Certificate, together with an Independent
Engineer Confirmation, certifying that either (i) such Energy Services
Agreement or the Master Operating Agreement (as the case may be) has
been reinstated on identical and enforceable terms by the Company and
such Mill Owner, (ii) such declaration of enforceability has been
overruled, reversed or rescinded by such Governmental Authority or by
another Governmental Authority having final jurisdiction or greater
jurisdiction than such first Governmental Authority or (iii) the
Company has satisfied the Restricted Payment Alternative Agreement
Requirements with respect to such Energy Services Agreement or the
Master Operating Agreement (as the case may be);
(b) such Mill Owner has either (i) terminated, or delivered
written notice pursuant to the Master Operating Agreement of its
intention to terminate (which notice has not been rescinded), its
rights and obligations under such Energy Services Agreement or the
Master Operating Agreement in connection with a Mill Closure with
respect to such Mill or (ii) denied that it has any obligations and
substantially ceased performance under such Energy Services Agreement
or the Master Operating Agreement, unless, in either case, the Company
has delivered to the applicable Senior Secured Parties and the
Collateral Agent an Officer's Certificate, together with an Independent
Engineer Confirmation, certifying that either (A) such Energy Services
Agreement or the Master Operating Agreement (as the case may be) has
been reinstated on identical and enforceable terms by the Company and
such Mill Owner or, provided that another Person is reasonably capable
of performing such Mill Owner's obligations under such Energy Services
Agreement or the Master Operating Agreement (as the case may be), by
the Company and such other Person or (B) the Company has satisfied the
Restricted Payment Alternative Agreement Requirements with respect to
such Energy Services Agreement or the Master Operating Agreement (as
the case may be);
(c) a default has occurred and is continuing in respect of
such Mill Owner's obligations under such Energy Services Agreement or
the Master Operating Agreement, unless, if such Energy Services
Agreement or the Master Operating Agreement with respect to such Mill
Owner has been terminated as a result of such default, the Company has
delivered to the applicable Senior Secured Parties and the Collateral
Agent an Officer's Certificate, together with an Independent Engineer
Confirmation, certifying that the Company has satisfied the Restricted
Payment Alternative Agreement Requirements with respect to such Energy
Services Agreement or the Master Operating Agreement (as the case may
be);
(d) based upon the knowledge of either of the Mobile Energy
Parties, it is reasonably likely that, on or prior to the next
Distribution Date, either (i) there will be a Mill
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Closure with respect to such Mill or (ii) such Mill Owner will deliver
written notice pursuant to the Master Operating Agreement of such Mill
Owner's intention to terminate its rights and obligations under such
Energy Services Agreement or the Master Operating Agreement, unless, in
either case, if such Energy Services Agreement or the Master Operating
Agreement with respect to such Mill Owner has been terminated as a
result of such Mill Closure, the Company has delivered to the
applicable Senior Secured Parties and the Collateral Agent an Officer's
Certificate, together with an Independent Engineer Confirmation,
certifying that the Company has satisfied the Restricted Payment
Alternative Agreement Requirements with respect to such Energy Services
Agreement or the Master Operating Agreement (as the case may be); or
(e) a Bankruptcy Event has occurred and is continuing in
respect of such Mill Owner, unless (i) the obligations of such Mill
Owner under such Energy Services Agreement and the Master Operating
Agreement have been expressly assumed with the approval of a court of
competent jurisdiction or (ii) if such Energy Services Agreement or the
Master Operating Agreement with respect to such Mill Owner has been
rejected or otherwise terminated, the Company has delivered to the
applicable Senior Secured Parties and the Collateral Agent an Officer's
Certificate, together with an Independent Engineer Confirmation,
certifying that the Company has satisfied the Restricted Payment
Alternative Agreement Requirement with respect to such Energy Services
Agreement or the Master Operating Agreement (as the case may be).
"Event of Default" means, so long as there are any Financing
Commitments or any Financing Liabilities outstanding, an "Event of Default"
under the Indenture, an "Event of Default" under the Tax- Exempt Indenture or an
"Event of Default" under the Working Capital Facility.
"Event of Default Alternative Agreement Requirements" means, with
respect to any Project Contract, another Contract entered into by the Company
with one or more Persons in substitution for or replacement of any such Project
Contract, with respect to some or all of the Processing Services or other
services formerly provided by or to the Company thereunder, provided that such
alternative Contract (a) contains substantially equivalent terms and conditions
or, if such terms and conditions are no longer available on a commercially
reasonable basis, the terms and conditions then available on a commercially
reasonable basis, (b) would, after giving effect to such alternative Contract
and based on projections prepared by the Company on a reasonable basis, maintain
a minimum annual Senior Debt Service Coverage Ratio for each Fiscal Year through
the final maturity date of the Outstanding Indenture Securities or the
Outstanding Tax-Exempt Indenture Securities (as the case may be) projected to be
equal to or greater than the lesser of (i) the minimum annual Senior Debt
Service Coverage Ratio projected to have been in effect for such Fiscal Year had
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performance under such Project Contract continued and (ii) 1.2 to 1.0 and (c) is
reasonably capable of being performed by the parties thereto. Notwithstanding
the foregoing, such alternative Contract need not satisfy the conditions
described in clauses (a) and (b) above, provided that (A) the Company delivers
to the applicable Senior Secured Parties an Officer's Certificate, together with
an Independent Engineer Confirmation, certifying that the Company has satisfied
the Restricted Payment Alternative Agreement Requirements (other than the
conditions set forth in subclauses (C) and (D) of clause (b)(ii) of the
definition of Restricted Payment Alternative Agreement Requirements with respect
to such alternative Contract) and (B) after giving effect to such alternative
Contract and based on projections prepared by the Company on a reasonable basis,
the average of the annual Senior Debt Service Coverage Ratios through the final
maturity date of the Outstanding Indenture Securities or the Tax-Exempt
Indenture Securities (as the case may be) is projected to be at least 1.2 to
1.0.
"Event of Eminent Domain" means any compulsory transfer or taking, or
transfer under threat of compulsory transfer or taking, of a material part of
the Energy Complex by any Governmental Authority or any Person acting with the
authority thereof for more than six (6) months, unless such transfer or taking
is the subject of a Good Faith Contest.
"Event of Loss" means any physical loss or destruction of, or
destruction to, the Energy Complex, or any other event that causes all or a
material part of the Energy Complex to be rendered unfit for normal use for any
reason whatsoever, including through failure of title.
"Excess Loss Proceeds" means, with respect to any Event of Loss or
Event of Eminent Domain, monies in an amount equal to the excess, if any, of all
of the Loss Proceeds with respect to such Event of Loss or Event of Eminent
Domain (as the case may be) over the total cost of the rebuilding, repair,
restoration or replacement of the Energy Complex or any part thereof that has
been affected by such Event of Loss or Event of Eminent Domain (as the case may
be).
"Exchange Act" means the Securities Exchange Act of 1934.
"Financing Commitment" means any commitment pursuant to the Financing
Documents to provide credit to the Company.
"Financing Documents" means all Contracts evidencing or
securing the Financing Liabilities.
"Financing Liabilities" means all indebtedness, liabilities and
obligations of the Mobile Energy Parties (including principal, interest, fees,
reimbursement obligations, penalties, indemnities and legal expenses, whether
due to acceleration or otherwise) owing to the Senior Secured Parties (of
whatsoever nature and however evidenced) under or pursuant to (a) the Indenture
(including the
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Guaranty), (b) the Senior Securities, (c) the IDB Lease Agreement, (d) the
Tax-Exempt Indenture, (e) the Working Capital Facility and any evidence of
indebtedness entered into thereunder and (f) the other Security Documents, in
the case of clause (a) through (f) above, whether direct or indirect, primary or
secondary, fixed or contingent or now or hereafter arising out of or relating to
any such Contract.
"Financing Statements" means Uniform Commercial Code financing
statements filed in connection with the other Security Documents.
"First Mortgage Bonds" means the Indenture Securities issued
on the Closing Date under the first Series Supplemental Indenture
to the Indenture.
"Fiscal Quarter" means the period of time beginning at 12:01
a.m. on the first day of each calendar quarter and ending at
midnight on the last day of such calendar quarter.
"Fiscal Year" means the period of time beginning at 12:01 a.m.
on January 1 of each year and ending at midnight on December 31 of
such year.
"Fitch" means Fitch Investors Service, L.P., a New York
limited partnership.
"Fuel Inventory" means fuel inventory of the Energy Complex, in
whatever form, including oil, gas, coal, black liquor, biomass and sludge.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect from time to time.
"GDPIPD" means the Gross Domestic Product Implicit Price Deflator as
published in the United States Department of Commerce, Bureau of Analysis
publication entitled "Survey of Current Business." If the Gross Domestic Product
Implicit Price Deflator ceases to exist or is no longer available, the Company,
with the approval of the Independent Engineer, shall designate a substitute
index that is reasonably similar to the Gross Domestic Product Implicit Price
Deflator.
"GDPIPD Factor" means, with respect to each Fiscal Year, the GDPIPD
most recently published during or prior to such Fiscal Year divided by the
GDPIPD published with respect to December 1994; provided, however, that such
GDPIPD Factor shall not be less than one (1).
"Good Faith Contest" means the contest of an item if (a) such item is
diligently contested in good faith by appropriate proceedings and adequate
reserves or bonding are established in accordance with GAAP with respect to such
item and (b) the failure to pay or comply with such item during the period of
such contest would not result in a Material Adverse Effect.
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"Governmental Approvals" means those authorizations, consents,
approvals, waivers, exemptions, variances, registrations, certifications,
permissions, permits and licenses with any Governmental Authority required for
the ownership and operation of the Energy Complex and the performance of a
Person's obligations under the Project Documents.
"Governmental Authority" means any Federal, state, city, county,
municipal, foreign, international, regional or other governmental or regulatory
authority, agency, department, board, body, instrumentality, commission, arbiter
or court.
"Guaranteed Obligations" means all indebtedness, liabilities,
obligations, covenants and duties of, and all terms and conditions to be
observed by, the Company (including in its capacity as a "debtor in possession"
under the Bankruptcy Code) due or owing to, or in favor or for the benefit of,
the Senior Secured Parties under the Security Documents or the Working Capital
Facility (as the case may be), in each case (a) whether due or owing to, or in
favor or for the benefit of, the Senior Secured Parties or any other Person that
becomes the Indenture Trustee, the Tax-Exempt Indenture Trustee or the Working
Capital Facility Provider (as the case may be) by reason of any succession or
assignment at any time thereafter and (b) whether or not an allowable claim
against the Company under the Bankruptcy Code, or otherwise enforceable against
the Company, and including, in any event, interest accruing after the filing by
or against the Company of a petition under the Bankruptcy Code; provided,
however, that the satisfaction of the Guaranteed Obligations 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 to the
extent such assets are not commingled with any of Mobile Energy's other assets
or any monies or assets of the Company.
"Guaranty" means the unconditional guaranty by Mobile Energy of the
Guaranteed Obligations included in Article XIV of the Indenture, Article VIII of
the IDB Lease Agreement and Article VIII of the Working Capital Facility (as the
case may be).
"Hazardous Materials" means hazardous wastes, hazardous substances,
hazardous constituents, air contaminants or toxic substances, whether solids,
liquids or gases, including substances defined or otherwise regulated as
"hazardous materials," "regulated substances," "hazardous wastes," "hazardous
substances," "toxic substances," "pollutants," "contaminants," "carcinogens,"
"hazardous air pollutants," "criteria pollutants," "reproductive toxins,"
"radioactive materials," "toxic chemicals," or other similar designations in, or
otherwise subject to regulation under, any Environmental Requirement, including
petroleum hydrocarbons, asbestos-containing materials, urea formaldehyde foam
insulation, polychlorinated biphenyls and radionuclides.
"Holder" means a Person in whose name an Indenture Security or
a Tax-Exempt Indenture Security (as the case may be) is registered
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in the register providing for the registration, including upon transfer or
exchange, thereof pursuant to the Indenture or the Tax- Exempt Indenture (as the
case may be).
"IDB" means The Industrial Development Board of the City of
Mobile, Alabama.
"IDB Claims" means all obligations of the Mobile Energy Parties, now or
hereafter existing, to pay fees, costs, expenses, indemnification payments or
other amounts to the IDB under the Financing Documents, other than (a) rent
payments under the IDB Lease Agreement and (b) payments in respect of principal
of and premium, if any, and interest on the 1994 Bonds.
"IDB Lease Agreement" means the Amended and Restated Lease and
Agreement dated as of August 1, 1995 among the IDB and the Mobile Energy
Parties.
"IDB Request" and "IDB Order" mean, respectively, a written request or
order signed in the name of the IDB by an Authorized Officer of the IDB and
delivered to the Tax-Exempt Indenture Trustee.
"Income Tax Deficiency" means (a) with respect to the second
Distribution Date during any Fiscal Year, an amount equal to the excess, if any,
of (i) an amount equal to the sum of (A) the combined Federal and State of
Alabama quarterly estimated income tax payments that would have been required to
be paid by all Members during such Fiscal Year prior to such Distribution Date
and (B) one-half of the amounts estimated to be required to be paid for County
and City of Mobile, Alabama income taxes in respect of such Fiscal Year, if any,
all calculated, solely for this purpose, as if such Members collectively were a
single "stand-alone" domestic Alabama corporation for purposes of Federal, state
and local taxes that would not (1) be a member of a consolidated, affiliated,
combined, unitary or other tax group, (2) be a party to any tax sharing
arrangements with any other Person and (3) have income, loss or credits
(including loss and credit carryovers) available to it that would not be
attributable to any ownership interest in the Company over (ii) the amount of
distributions, if any, from the Distribution Account and the Subordinated Fee
Account made on the first Distribution Date during such Fiscal Year in excess of
the amount of distributions, if any, that would have been calculated by clause
(b) below with respect to such Distribution Date and (b) with respect to the
first Distribution Date during any Fiscal Year, an amount equal to the excess,
if any, of (i) an amount equal to the estimate, as of such Distribution Date, of
the combined Federal, State of Alabama, and County and City of Mobile, Alabama
income taxes that relate to the immediately preceding Fiscal Year of all
Members, all calculated solely for this purpose, as if such Members collectively
were a single "stand-alone" domestic Alabama corporation for purposes of
Federal, state and local taxes that would not (A) be a member of a consolidated,
affiliated, combined, unitary or other tax group, (B) be a party to any tax
sharing
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arrangements with any other Person and (C) have income, loss or credits
(including loss and credit carryovers) available to it that would not be
attributable to any ownership interest in the Company over (ii) the amount of
distributions, if any, from the Distribution Account and the Subordinated Fee
Account made on the second Distribution Date of such prior Fiscal Year.
"Indenture" means the Trust Indenture dated as of August 1, 1995 among
the Mobile Energy Parties and the Indenture Trustee.
"Indenture Accounts" means, with respect to the Indenture Securities of
any series, the Indenture Securities Account and each Debt Service Reserve
Account (if any) established for the benefit of Holders of the Indenture
Securities of such series.
"Indenture Distribution Amount" means, in respect of any Excess Loss
Proceeds with respect to an Event of Loss or Event of Eminent Domain to be
applied pursuant to Section 6.2(b) of the Intercreditor Agreement, an amount
equal to the Indenture's Percentage Share of (a) such Excess Loss Proceeds and
(b) the Redistributed Proceeds with respect to such Excess Loss Proceeds.
"Indenture Securities" means all Debt issued pursuant to the
Indenture.
"Indenture Securities Account" means the Account so designated
established and created under Section 4.1 of the Indenture.
"Indenture Securities Collateral" means, collectively, (a) all of the
collateral mortgaged, pledged or assigned, or purported to be mortgaged, pledged
or assigned, to the Indenture Trustee by the Company pursuant to the granting
and assigning clauses of the Indenture and (b) the Shared Collateral.
"Indenture Securities Interest Subaccount" means the subaccount of the
Indenture Securities Account so designated established and created under Section
4.1 of the Indenture.
"Indenture Securities Principal Subaccount" means the subaccount of the
Indenture Securities Account so designated established and created under Section
4.1 of the Indenture.
"Indenture Securities Redemption Subaccount" means the subaccount of
the Indenture Securities Account so designated established and created under
Section 4.1 of the Indenture.
"Indenture Trustee" means First Union National Bank of Georgia, a
national banking association organized and existing under the laws of the United
States of America.
"Independent Engineer" means Stone & Webster Engineering Corporation or
another nationally recognized consulting or engineering firm appointed
Independent Engineer pursuant to the terms of the Intercreditor Agreement.
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"Independent Engineer Agreement" means the Independent Engineer
Agreement dated as of August 1, 1995 between the Company and the Independent
Engineer or any other similar Contract among such Persons.
"Independent Engineer Confirmation" means a certificate signed by an
authorized representative of the Independent Engineer confirming the
reasonableness of statements and projections contained in certain Officer's
Certificates delivered to the applicable Senior Secured Parties or the
Collateral Agent under the Financing Documents, which confirmation may not be
unreasonably withheld, conditioned or delayed.
"Independent Insurance Advisor" means Sedgwick James or another
nationally recognized insurance advisory firm appointed as insurance advisor
under the Indenture and the Tax-Exempt Indenture by the Collateral Agent.
"Intercreditor Agreement" means the Intercreditor and Collateral Agency
Agreement dated as of August 1, 1995 among the Senior Secured Parties, the
Collateral Agent, the IDB and the Mobile Energy Parties.
"Intercreditor Agreement Accounts" means, collectively, the
Completion Account, the Revenue Account, the Mill Owner Reimbursement Account,
the Working Capital Facility Account, the Operating Account, the Maintenance
Reserve Account, the Loss Proceeds Account, the Subordinated Debt Account, the
Subordinated Fee Account and the Distribution Account.
"Intercreditor Parties" means, collectively, the Senior Secured
Parties, the IDB, the Mobile Energy Parties, any Subordinated Debt Provider and
any other Person party to the Intercreditor Agreement (other than the Collateral
Agent).
"Interest Payment Date" means each January 1 and July 1 of each year,
commencing January 1, 1996.
"Investment Grade" means a rating in one of the four highest categories
(without regard to subcategories within such rating categories) by a Rating
Agency.
"Law" means any constitution, treaty, statute, code, ordinance,
regulation, order, decree, writ or judicial or arbitral decision.
"Lease" means the Lease Agreement dated as of December 12, 1994, as
amended by the First Amendment thereto dated as of July, 13, 1995, between
Scott, as lessor, and the Company (as assignee of Mobile Energy), as lessee.
"Lease Documents" means, collectively, the IDB Lease Agreement, the
Tax-Exempt Indenture (including any Series Supplemental Indenture) and (to the
extent relating to, or
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securing, the Tax-Exempt Indenture Securities) the other Financing
Documents.
"Lease Indemnity" means the Letter Agreement dated August 1, 1995 by
the Mobile Energy Parties in favor of Scott, providing for the indemnification
of Scott with respect to matters arising under the Utilities Land Sublease dated
as of December 1, 1983, as amended, between Scott and the IDB.
"Leased Land" means the land underlying the components of the
Tax-Exempt Project marked on Exhibit A to the IDB Lease Agreement.
"Lenders" has the meaning specified in the Working Capital
Facility.
"Lien" means any lien, claim, security interest, mortgage, trust
arrangement, judgment, pledge, option, charge, easement, encumbrance, title
retention, conditional sales agreement, encroachment, right-of-way, building or
use restriction, preferential right or any other security agreement, arrangement
or similar right in favor of any Person, whether voluntarily incurred or arising
by operation of law, and includes any agreement to give any of the foregoing in
the future, and any contingent sale or other title retention agreement or lease
in the nature thereof.
"Loss Proceeds" means, as applicable, Casualty Proceeds or
Eminent Domain Proceeds.
"Loss Proceeds Account" means the Account so designated established and
created under Section 2.2(a) of the Intercreditor Agreement.
"Maintenance Excess Funding Subaccount" means the subaccount of the
Maintenance Reserve Account so designated established and created under Section
2.2(b) of the Intercreditor Agreement.
"Maintenance Expenditures" means all costs and expenses of operating
and maintaining the Energy Complex and, when the Company is exercising the
Company Step-In Rights, the Pulp Mill Step-In Equipment, other than (a) fuel
costs and expenses, (b) labor and employee expenses, including fringe benefits
and labor relations expense, (c) payments for insurance premiums and like
insurance related expenses required or otherwise maintained under any Project
Document, (d) costs and expenses of consumable items such as process or cleaning
chemicals and lubricants, (e) equipment rental, small tools and vehicle
maintenance expenses, (f) costs and expenses associated with legal, accounting
and other office and administrative functions, (g) permitting fees, (h) costs
and expenses of safety supplies, office supplies and other office expenses, (i)
property taxes and payments made in lieu of taxes, (j) computer maintenance
expenses, (k) any amounts payable for services rendered under the Common
Services Agreement, (l) ash disposal costs, (m) liquidated damages payable to
the Mill Owners under the Master Operating Agreement, (n) amounts payable to the
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Mill Owners in connection with the exercise of Mill Owner Step-In Rights, (o)
any amounts required to be rebated to the United States government pursuant to
Section 148 of the Code in connection with any series of the Tax-Exempt
Indenture Securities (to the extent not already provided for in the Tax-Exempt
Indenture) and (p) payments to the IDB (including IDB Claims and payments
required to be made by the Company with respect to the 1994 Bonds), in the case
of clauses (a) through (p) above, to the extent the foregoing costs or expenses
are not customarily treated as capital expenditures.
"Maintenance Plan" means the maintenance plan and budget for the Energy
Complex, as the same may be amended, restated, supplemented or otherwise
modified from time to time and as more particularly described in Section 5.12 of
the Indenture or Section 4.12 of the IDB Lease Agreement (or any comparable
provision of the Working Capital Facility) (as the case may be).
"Maintenance Plan Funding Subaccount" means the subaccount of the
Maintenance Reserve Account so designated established and created under Section
2.2(b) of the Intercreditor Agreement.
"Maintenance Reserve Account" means the Account so designated
established and created under Section 2.2(a) of the Intercreditor Agreement.
"Maintenance Reserve Account Balance" means, with respect to the
Current Fiscal Quarter, the sum of (a) the monies on deposit in the Maintenance
Reserve Account, (b) amounts available to be drawn or called upon under any
Reserve Account Security deposited in the Maintenance Plan Funding Subaccount
and (c) the monies on deposit in, or otherwise credited to (by means of a
guaranty, capital infusion agreement or otherwise), the Mill Owner Maintenance
Reserve Account, in the case of clauses (a), (b) and (c) above, at the beginning
of the Current Fiscal Quarter.
"Maintenance Reserve Account Required Deposit" means, with respect to
any Fiscal Quarter during any Fiscal Year (the "Current Fiscal Quarter"), one or
more deposits into the Maintenance Reserve Account on Monthly Transfer Dates
occurring during the Current Fiscal Quarter in an aggregate amount equal to the
excess of the sum of paragraphs (a), (b) and (c) below over the Maintenance
Reserve Account Balance with respect to the Current Fiscal Quarter:
(a) the amount of Maintenance Reserve Account Required
Deposits with respect to each Fiscal Quarter preceding the Current
Fiscal Quarter that were required to be deposited into the Maintenance
Reserve Account during each such Fiscal Quarter but were not, and have
not been since, so deposited;
(b) the aggregate amount of any withdrawals from the
Maintenance Reserve Account and the Mill Owner Maintenance Reserve
Account during each Fiscal Quarter preceding the Current Fiscal Quarter
that were in excess of the aggregate projected Maintenance Expenditures
for each such Fiscal
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Quarter (as specified in the Maintenance Plan) but were not, and have
not been since, redeposited in the Maintenance Reserve Account; and
(c) the greatest of:
(i) if the Current Fiscal Quarter is the first
Fiscal Quarter of such Fiscal Year, the amount obtained by
dividing the aggregate of the projected Maintenance
Expenditures for the Current Fiscal Quarter and the
immediately succeeding sixteen (16) Fiscal Quarters (in each
case as specified in the Maintenance Plan) by sixteen (16);
(ii) if the Current Fiscal Quarter is the first or
second Fiscal Quarter of such Fiscal Year, the amount obtained
by dividing the aggregate of the projected Maintenance
Expenditures for the Current Fiscal Quarter and the
immediately succeeding fifteen (15) Fiscal Quarters (in each
case as specified in the Maintenance Plan) by fifteen (15);
(iii) if the Current Fiscal Quarter is the first,
second or third Fiscal Quarter of such Fiscal Year, the amount
obtained by dividing the aggregate of the projected
Maintenance Expenditures for the Current Fiscal Quarter and
the immediately succeeding fourteen (14) Fiscal Quarters (in
each case as specified in the Maintenance Plan) by fourteen
(14); and
(iv) if the Current Fiscal Quarter is the first,
second, third or fourth Fiscal Quarter of such Fiscal Year,
the greatest of the amount obtained by dividing the aggregate
of the projected Maintenance Expenditures for any period
consisting of the Current Fiscal Quarter and any number of
consecutive Fiscal Quarters from one (1) to thirteen (13)
immediately succeeding the Current Fiscal Quarter (in each
case as specified in the Maintenance Plan) by such number of
consecutive Fiscal Quarters.
"Manager" means Mobile Energy and any Person appointed as an
additional, substitute or replacement manager of the Company pursuant to the
terms of the Articles of Organization.
"Master Operating Agreement" means the Amended and Restated Master
Operating Agreement dated as of July 13, 1995 among the Company (as assignee of
Mobile Energy), Scott, the Pulp Mill Owner, the Tissue Mill Owner and the Paper
Mill Owner.
"Material Adverse Effect" means (a) a change in the financial condition
of either of the Mobile Energy Parties or the Energy Complex that would
reasonably be expected to materially and adversely affect the ability of either
of the Mobile Energy Parties to pay principal of and interest on the Senior Debt
as and when
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required or (b) any event or occurrence of whatever nature that would materially
and adversely affect (i) the ability of either of the Mobile Energy Parties to
perform its obligations under the Project Documents or (ii) the Lien of the
Security Documents.
"Member" means any Person owning a membership interest in the
Company.
"Mill Closure" means (a) a public announcement by a Mill Owner that it
will close its respective Mill for a period of at least one (1) year or that it
will reduce production of pulp, paper or tissue (as applicable) at such Mill
(permanently or for a period of at least two (2) years) to less than ten percent
(10%) of 1994 production levels or (b) the occurrence of a two (2) year period
during which, for any reason other than the occurrence of a Force Majeure Event
(as defined in the Master Operating Agreement), such Mill Owner's production of
pulp, paper or tissue (as applicable) at such Mill is less than ten percent
(10%) of 1994 production levels.
"Mill Owner Maintenance Reserve Account" means the account so
designated established and created pursuant to the Master Operating Agreement
for the sole benefit of the Mill Owners.
"Mill Owner Maintenance Reserve Account Agreement" means the Mill Owner
Maintenance Reserve Account Agreement dated as of August 1, 1995 among Southern,
the Company and the Mill Owners.
"Mill Owner Reimbursement Account" means the Account so designated
established and created under Section 2.2(a) of the Intercreditor Agreement.
"Mill Owner Step-In Rights" has the meaning specified in the
Master Operating Agreement.
"Mill Owners" means, collectively, the Pulp Mill Owner, the
Tissue Mill Owner and the Paper Mill Owner.
"Mills" means, collectively, the Pulp Mill, the Tissue Mill
and the Paper Mill.
"Mixed-Use Bonds" means, collectively, the IDB's Industrial Development
Revenue Bonds (Scott Paper Company Project), Series A and the IDB's Industrial
Development Revenue Bonds (Scott Paper Company Project), Series B, in each case
issued under and secured by a Trust Indenture dated as of December 1, 1984, as
supplemented by a First Supplemental Indenture thereto dated as of June 1, 1985,
between the IDB and AmSouth Bank of Alabama, as trustee.
"Mobile Energy" means Mobile Energy Services Holdings, Inc.,
an Alabama corporation.
"Mobile Energy Parties" means, collectively, the Company and
Mobile Energy.
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"Mobile Energy Request" or "Mobile Energy Order" means, respectively, a
written request or order signed in the name of Mobile Energy by an Authorized
Officer of Mobile Energy and delivered to the Indenture Trustee or the
Tax-Exempt Indenture Trustee (as the case may be).
"Mobile Facility" means the integrated pulp, paper and tissue
manufacturing facility located on a 730-acre site along the Mobile River and the
Chickasaw Creek in Mobile, Alabama, comprised of the Mills and the Energy
Complex.
"Monthly Transfer Date" means the last Business Day of each month of
each Fiscal Year, commencing with the first such day occurring after the Closing
Date.
"Moody's" means Moody's Investors Service, Inc., a Delaware
corporation.
"Mortgage" means the Leasehold Mortgage, Assignment of Leases, Rents,
Issues and Profits and Security Agreement and Fixture Filing dated as of August
1, 1995 among the Company, the IDB and the Mortgagee.
"Mortgagee" means Bankers Trust (Delaware), or any other Person
appointed as a substitute or replacement Mortgagee under the Mortgage.
"1983 Bonds" means the IDB's Exempt Facilities Revenue Bonds (Scott
Paper Company Project), 1983 Series B, issued under and secured by a Trust
Indenture dated as of December 1, 1983 between the IDB and BankAmerica Trust
Company of New York, as trustee.
"1984 Bonds" means the IDB's Variable Rate Demand Solid Waste Revenue
Refunding Bonds (Scott Paper Company Project) Series 1984 A, B, C, D and E
issued under and secured by the 1984 Indenture.
"1984 Indenture" means the Trust Indenture dated as of December 1,
1984, as supplemented by the First Supplemental Indenture thereto dated as of
January 1, 1985 and the Second Supplemental Indenture thereto dated as of August
1, 1995, between the IDB and Chemical Bank, as trustee.
"1984 Lease" means the Lease and Agreement dated December 1, 1984, as
amended by Amendment No. 1 thereto dated as of November 8, 1994 and Amendment
No. 2 thereto dated as of December 9, 1994, between the IDB and the Company (as
assignee of Mobile Energy (as assignee of Scott)).
"1994 Bond Payment Date" means each June 1 and December 1 of each year,
commencing December 1, 1995.
"1994 Bond Trustee" means Bankers Trust (Delaware), in its capacity as
trustee under the 1994 Indenture.
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"1994 Bonds" means the IDB's Industrial Development Revenue Bonds
(Scott Paper Recovery Boiler Project) 1994 Series A. For all purposes of the
Financing Documents, (a) payments in respect of the principal of and premium, if
any, and interest on the 1994 Bonds shall be treated as neither Operation and
Maintenance Costs nor Senior Debt Service Requirements (or any other debt
service) and (b) receipts (or deemed receipts) in respect of the 1994 Bonds
shall not be treated as Revenues.
"1994 Indenture" means the Trust Indenture dated as of December 1, 1994
between the IDB and the 1994 Bond Trustee.
"1995 Bonds" has the meaning specified in Section 2.17(a) of the
Tax-Exempt Indenture, which means the Tax-Exempt Bonds.
"Non-Affiliate Subordinated Debt" means any unsecured loan or loans
from any Person that is not an Affiliate of the Company pursuant to a
Subordinated Loan Agreement, the amounts necessary for repayment of which have
been included in the Annual Budget approved by the Collateral Agent and the
Independent Engineer.
"Nondisturbance Agreement" means the Estoppel and Nondisturbance
Agreement dated as of December 12, 1994 between TRT and the Company (as assignee
of Mobile Energy).
"Officer's Certificate" means a certificate that has been signed by an
Authorized Officer of either of the Mobile Energy Parties or of Southern (as the
case may be).
"O&M Agreement" means the Facility Operations and Maintenance Agreement
dated as of December 12, 1994 between the Company (as assignee of Mobile Energy)
and the Operator.
"Operating Account" means the Account so designated established and
created under Section 2.2(a) of the Intercreditor Agreement.
"Operating Agreement" means the Operating Agreement of the Company
dated as of July 13, 1995, as amended by the First Amendment thereto dated as of
July 13, 1995, among the Members.
"Operation and Maintenance Costs" means all costs and expenses of
operating and maintaining the Energy Complex and, when the Company is exercising
the Company Step-In Rights, the Pulp Mill Step-In Equipment, including and
together with (a) Subordinated Fees, (b) Maintenance Expenditures and (c) any
such costs and expenses specified in clauses (a) through (p) of the definition
of Maintenance Expenditures (other than (i) rent payments under the IDB Lease
Agreement and (ii) payments of principal of and premium, if any, and interest on
the 1994 Bonds).
"Operator" means Southern Electric, in its capacity as
operator under the O&M Agreement.
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"Opinion of Counsel" means a written opinion of counsel for any Person
either expressly referred to in any Financing Document to which the Collateral
Agent or any of the Senior Secured Parties is a party or otherwise satisfactory
to the Collateral Agent or such Senior Secured Party (which may include counsel
for either of the Mobile Energy Parties, whether or not such counsel is an
employee of either or both of them).
"Optional Modifications" means all modifications to the Energy
Complex that are not Required Modifications.
"Optional Modifications Subaccount" means the subaccount of the
Completion Account so designated established and created under Section 2.2(c) of
the Intercreditor Agreement.
"Outstanding" means, when used with respect to any of the Senior
Securities (however referenced in any Financing Document), as of the date of
determination, all such Senior Securities theretofore authenticated and
delivered under the Indenture or the Tax-Exempt Indenture (as the case may be),
except:
(a) such Senior Securities theretofore canceled by the
Indenture Trustee or the Tax-Exempt Indenture Trustee (as the
case may be) or delivered to either such Trustee for
cancellation;
(b) such Senior Securities or portions thereof deemed to have
been paid within the meaning of, in the case of the Indenture, Section
12.1 thereof and, in the case of the Tax- Exempt Indenture, Section
12.1 thereof (as the case may be); and
(c) such Senior Securities that have been exchanged for other
Senior Securities or Senior Securities in lieu of which other Senior
Securities have been authenticated and delivered pursuant to the
Indenture or the Tax-Exempt Indenture (as the case may be) unless held
by a Holder in whose hands such Senior Securities constitute valid
obligations of the Company;
provided, however, that in determining whether the Holders of the requisite
principal amount of Senior Securities (however referenced in any Financing
Document) Outstanding have given any request, demand, authorization, direction,
notice, consent or waiver under the Indenture or the Tax-Exempt Indenture (as
the case may be) or whether or not a quorum is present at a meeting of Holders
of such Senior Securities, such Senior Securities owned by either of the Mobile
Energy Parties (or any Affiliate thereof) shall be disregarded and deemed not to
be Outstanding, except that, in determining whether or not the Indenture Trustee
or the Tax-Exempt Indenture Trustee (as the case may be) shall be protected in
relying upon any such request, demand, authorization, direction, notice, consent
or waiver or upon any such determination as to presence of a quorum, only such
Senior Securities that a Responsible Officer of the Indenture Trustee or the
Tax-Exempt
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Indenture Trustee (as the case may be) knows to be so owned shall be so
disregarded. Any such Senior Securities so owned that have been pledged in good
faith may be regarded as Outstanding if the pledgee establishes to the
satisfaction of the Indenture Trustee or the Tax-Exempt Indenture Trustee (as
the case may be) such pledgee's right so to act with respect to such Senior
Securities and that such pledgee is not a Mobile Energy Party (or any Affiliate
thereof).
"Paper Mill" means the paper mill located at the Mobile
Facility, which as of the Closing Date is owned by S.D. Warren.
"Paper Mill Energy Services Agreement" means the Paper Mill Energy
Services Agreement dated as of December 12, 1994, as amended by the First
Amendment thereto dated July 13, 1995, between the Paper Mill Owner and the
Company (as assignee of Mobile Energy).
"Paper Mill Owner" means S.D. Warren, in its capacity as owner
of the Paper Mill.
"Paying Agent" means any Person acting as Paying Agent pursuant to, in
the case of the Indenture, Section 9.14(b) thereof and, in the case of the
Tax-Exempt Indenture, Section 9.13(b) thereof.
"Percentage Share" means an amount (expressed as a percentage)
equal to:
(a) with respect to the Working Capital Facility, (i) the
Working Capital Facility Commitment in effect immediately prior to any
deposit into the Working Capital Facility Account of any Excess Loss
Proceeds with respect to an Event of Loss or Event of Eminent Domain
pursuant to Section 6.2(b)(i) of the Intercreditor Agreement divided by
(ii) the Combined Exposure immediately prior to such deposit;
(b) with respect to the Indenture, (i) the principal amount of
the Indenture Securities Outstanding immediately prior to any transfer
to the Indenture Trustee for deposit into the Indenture Securities
Account of any Excess Loss Proceeds with respect to an Event of Loss or
Event of Eminent Domain pursuant to Section 6.2(b)(ii) of the
Intercreditor Agreement divided by (ii) in the case of Excess Loss
Proceeds, the Combined Exposure and, in the case of Redistributed
Proceeds, the aggregate principal amount of the Senior Securities
Outstanding, in each case immediately prior to such transfer; and
(c) with respect to the Tax-Exempt Indenture, (i) the
principal amount of the Tax-Exempt Indenture Securities Outstanding
immediately prior to any transfer to the Tax- Exempt Indenture Trustee
for deposit into the Tax-Exempt Indenture Securities Account of any
Excess Loss Proceeds with respect to an Event of Loss or Event of
Eminent Domain
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pursuant to Section 6.2(b)(iii) of the Intercreditor Agreement divided
by (ii) in the case of Excess Loss Proceeds, the Combined Exposure and,
in the case of Redistributed Proceeds, the aggregate principal amount
of the Senior Securities Outstanding, in each case immediately prior to
such transfer.
"Permitted Indebtedness" means (a) in the case of the Company: (i) the
First Mortgage Bonds; (ii) Debt incurred under a Working Capital Facility having
a Working Capital Facility Commitment not to exceed $15,000,000 (multiplied by
the Working Capital Escalation Factor in effect at any given time, provided (and
the Working Capital Facility shall contain provisions to such effect) that (A)
no more than $5,000,000 (multiplied by the Working Capital Escalation Factor in
effect at any given time) of such Debt may be scheduled to mature during any
calendar month, (B) any Working Capital Facility Loan advanced thereunder shall
mature no later than ninety-three (93) days from the date such Working Capital
Facility Loan was first advanced, (C) the Company shall be required to repay all
amounts advanced thereunder so that no amounts are outstanding once during each
Fiscal Year (other than the Fiscal Year ending December 31, 1995) for a period
of five (5) consecutive days and (D) the Working Capital Facility Provider
thereunder shall become a party to the Intercreditor Agreement; (iii) the
Tax-Exempt Bonds; (iv) reimbursement obligations in respect of letters of credit
(if any) and other financial obligations arising under the Project Contracts and
obligations arising under the Lease Indemnity; (v) purchase money obligations
incurred to finance discrete items of equipment not comprising an integral part
of the Energy Complex that extend only to the equipment being financed and that
do not in the aggregate have annual debt service or lease obligations exceeding
$2,000,000 (multiplied by the GDPIPD Factor in effect at the time such
obligations were incurred); (vi) trade accounts payable (other than for borrowed
money) arising, and accrued expenses incurred, in the ordinary course of
business so long as such trade accounts payable are payable within ninety (90)
days of the date the respective goods are delivered or the respective services
are rendered; (vii) obligations in respect of surety bonds or similar
instruments in an aggregate amount not exceeding $10,000,000 (multiplied by the
GDPIPD Factor in effect at the time such obligations were incurred) at any one
time outstanding; (viii) Affiliate Subordinated Debt; (ix) Replacement Debt
permitted to be issued pursuant to the terms of the Financing Documents; (x)
Debt permitted to be issued pursuant to the terms of the Financing Documents for
Required Modifications and Optional Modifications; (xi) Non-Affiliate
Subordinated Debt (including any Non-Affiliate Subordinated Debt permitted by
clause (x) above) in an aggregate principal amount not to exceed $75,000,000
(multiplied by the GDPIPD Factor in effect at the time such Debt was incurred)
permitted to be issued pursuant to the terms of the Financing Documents; (xii)
Refunding Debt permitted to be issued pursuant to the terms of the Financing
Documents; and (xiii) the Company's obligations in respect of the 1994 Bonds,
the Mixed-Use Bonds, the Environmental Bonds and the Refunding Letter of Credit;
and (b) in the case of Mobile Energy, the Guaranty.
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"Permitted Investments" means investments in securities that are: (a)
direct obligations of the United States of America or of any agency thereof; (b)
obligations fully guaranteed by the United States of America or any agency
thereof; (c) time deposits (which may be represented by certificates of deposit)
issued by commercial banks organized under the laws of the United States of
America or of any political subdivision thereof or under the laws of Canada,
Japan, Switzerland or any country that is a member of the European Union having
a combined capital and surplus of at least $500,000,000 and having long-term
unsecured Debt having a rating at least equal to (i) the highest rating assigned
to the Outstanding Indenture Securities or the Tax-Exempt Indenture Securities
(as the case may be) by at least two of the Rating Agencies or (ii) "B" by
Thompson Bankwatch, Inc. (in either case provided that such investments shall
not be comprised of more than $30,000,000 in principal amount at any given time
from any one such bank); (d) open market commercial paper of any corporation
incorporated or doing business under the laws of the United States of America or
of any political subdivision thereof then rated at least A-1/P-1 (or an
equivalent thereof) by at least two of the Rating Agencies (provided that such
investments shall not be comprised of more than $30,000,000 in principal amount
at any given time from any one such corporation); (e) obligations issued or
guaranteed by, and any other obligations the interest on which is excluded from
income for Federal income tax purposes issued by, any state of the United States
of America or the District of Columbia or the Commonwealth of Puerto Rico or any
political subdivision, agency, authority or instrumentality thereof, which
issuer or guarantor has (i) a short-term Debt rating which is (on the date of
acquisition thereof) A- 1/P-1 (or an equivalent thereof) or better and (ii) a
long-term Debt rating that is (on the date of acquisition thereof) "A" or
better, in each case by at least two of the Rating Agencies (provided that such
investments shall not be comprised of more than $30,000,000 in principal amount
at any given time from any one such issuer or guarantor); (f) guaranteed
investment contracts of any financial institution organized under the laws of
the United States of America or any state thereof or under the laws of Canada,
Japan, Switzerland or any country that is a member of the European Union, which
financial institution has assets of at least $5 billion in the aggregate and has
a long term Debt rating that is (on the date of acquisition thereof) "A" or
better by at least two of the Rating Agencies (provided that such investments
shall not be comprised of more than $30,000,000 in principal amount at any given
time from any one such institution); (g) investment contracts of any financial
institution either (i) (A) fully secured by direct obligations of the United
States, (B) obligations of a Person controlled or supervised by and acting as an
agency or instrumentality of the United States or (C) securities or receipts
evidencing ownership interests in obligations or specified portions thereof
described in clause (A) or (B) above, in each case guaranteed as a full faith
and credit obligation of the United States, having a market value at least equal
to 102% of the amount deposited thereunder and possession of which obligation is
held under arrangements satisfactory to the Collateral Agent, the
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Indenture Trustee or the Tax-Exempt Indenture Trustee (as the case may be) or
(ii) with long-term Debt ratings of "A" or higher and short-term ratings in one
of the highest two major categories by any of the Rating Agencies; (h) a
contract or investment agreement with a provider or guarantor (i) which provider
or guarantor is rated at least "A" or equivalent by each of the Rating Agencies
(provided that if a guarantor is party to the rating, the guaranty is
unconditional and is confirmed in writing prior to any assignment by the
provider to another subsidiary of such guarantor), (ii) providing that monies
invested shall be payable to the Indenture Trustee or the Tax-Exempt Indenture
Trustee (as the case may be) (except to the extent the monies invested
constitute Shared Collateral, which shall be payable to the Collateral Agent)
without condition (other than notice) and without breakage fee or other penalty,
upon not more than two (2) Business Days' notice for application when and as
required or permitted under the Indenture, the Intercreditor Agreement or the
Tax-Exempt Indenture (as applicable), (iii) stating that such contract or
agreement is unconditional, expressly disclaiming any right of setoff and
providing for immediate termination in the event of insolvency of the provider
and termination upon demand of the Indenture Trustee or the Tax-Exempt Indenture
Trustee (as the case may be) (except to the extent the monies invested
constitute Shared Collateral, which shall provide for termination upon demand of
the Collateral Agent) (which demand shall only be made at the direction of the
Company) after any payment or other covenant default by the provider and (iv)
the terms and provisions of which are in form and substance satisfactory to the
Collateral Agent, the Indenture Trustee or the Tax-Exempt Indenture Trustee (as
the case may be); and (i) investments in money market funds registered under the
Investment Company Act of 1940 then rated in the highest category by S&P and
Moody's.
"Permitted Liens" means: (a) Liens specifically created, required or
permitted by the Indenture, the Tax-Exempt Indenture or the IDB Lease Agreement;
(b) the Liens created, or purported to be created, on the Collateral pursuant to
the Security Documents; (c) Liens for taxes that are either not yet due, are due
but payable without penalty or are the subject of a Good Faith Contest; (d) any
exceptions to title that are set forth on Schedule B--Section 2 of the title
insurance policy delivered to the Collateral Agent on the Closing Date (to the
extent that such exceptions have not been released or subordinated prior to the
Closing Date); (e) such minor defects, easements, rights of way, restrictions,
irregularities, encumbrances and clouds on title and statutory liens that do not
materially impair the property affected thereby and that do not individually or
in the aggregate materially impair the value of the security interests granted
under the Financing Documents; (f) the easements and other rights in favor of
third-parties contained in the Project Contracts as of the Closing Date; (g)
deposits or pledges to secure statutory obligations or appeals, release of
attachments, stays of execution or injunction, performance of bids, tenders,
contracts (other than for the repayment of borrowed money) or leases, or for
purposes of like general nature in the ordinary
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course of business; (h) Liens in connection with worker's compensation,
unemployment insurance or other social security or pension obligations; (i)
legal or equitable encumbrances deemed to exist by reason of the existence of
any litigation or other legal proceeding if the same are the subject of a Good
Faith Contest (excluding any attachment prior to judgment, judgment lien or
attachment in aid of execution on a judgment); (j) mechanic's, workmen's,
materialmen's, construction or other like Liens arising in the ordinary course
of business or incident to the construction or improvement of any property in
respect of obligations that are not yet due or that are the subject of a Good
Faith Contest; (k) Liens securing purchase money obligations that constitute
Permitted Indebtedness; (l) Liens in favor of the Mill Owners on the Mill Owner
Maintenance Reserve Account, including monies on deposit therein or otherwise
credited thereto (in accordance with the Mill Owner Maintenance Reserve Account
Agreement) not exceeding $2,000,000, to the extent arising under the Master
Operating Agreement or the Mill Owner Maintenance Reserve Account Agreement; and
(m) Liens on cash collateral not exceeding $1,500,000 in favor of the issuer of
the Refunding Letter of Credit.
"Person" means any individual, sole proprietorship, corporation,
partnership, limited liability company, joint venture, trust, unincorporated
association, institution, Governmental Authority or any other entity.
"Place of Payment" means, when used with respect to the Senior
Securities of any series, the office or agency maintained pursuant to, in the
case of the Indenture, Section 9.14(a) thereof and, in the case of the
Tax-Exempt Indenture, Section 9.13(a) thereof and, in either case, such other
place or places, if any, where the principal of and premium, if any, and
interest on the Senior Securities of such series are payable as specified in the
Series Supplemental Indenture to the Indenture or the Tax-Exempt Indenture (as
the case may be) establishing the Senior Securities of such series.
"Predecessor Securities" means, with respect to any particular Senior
Security, every previous Senior Security evidencing all or a portion of the same
Debt as that evidenced by such particular Senior Security. For purposes of this
definition, any Senior Security authenticated and delivered under, in the case
of any Indenture Security, Section 2.9 of the Indenture and, in the case of any
Tax-Exempt Indenture Security, Section 2.9 of the Tax-Exempt Indenture in lieu
of a lost, destroyed or stolen Senior Security shall be deemed to evidence the
same Debt as such lost, destroyed or stolen Senior Security.
"Prepayment Date" has the meaning specified (a) in the case of the
Indenture, in Section 6.2 thereof and (b) in the case of the Tax-Exempt
Indenture, in Section 6.2 thereof.
"Principal Payment Date" means in respect of (a) the Indenture
Securities, any January 1 or July 1 on which principal payments are
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due to Holders thereof and (b) the Tax-Exempt Indenture Securities, any January
1 on which principal payments are due to Holders thereof.
"Processing Services" has the meaning specified in the Master
Operating Agreement.
"Project Contracts" means, collectively, (a) the Energy Services
Agreements, (b) the Master Operating Agreement, (c) the Lease, (d) the
Supplementary Lease, (e) the O&M Agreement, (f) the Common Services Agreement,
(g) the Water Agreement, (h) the Boiler Ash Agreement, (i) the Environmental
Indemnity Agreements, (j) the Transition Agreement dated as of December 12,
1994, as amended by the First Amendment thereto dated as of June 16, 1995 and
the Second Amendment thereto dated as of July 13, 1995, between Scott and the
Company (as assignee of Mobile Energy), (k) the Employee Transition Agreement
dated as of December 12, 1994, as amended by the First Amendment thereto dated
as of July 13, 1994, among Scott, the Company (as assignee of Mobile Energy) and
Southern Electric, (l) the SCS Agreement, (m) the Easement Deeds, (n) the Asset
Purchase Agreement dated as of December 12, 1994 between Scott, as seller, and
the Company (as assignee of Mobile Energy), as buyer, (o) the Coal Supply
Agreement, (p) any other Contract entered into by either of the Mobile Energy
Parties for the provision of fuel to the Energy Complex, (q) the IDB Lease
Agreement, (r) the Lease Assignment and Assumption Agreement dated as of
December 12, 1994 between Scott and the Company (as assignee of Mobile Energy),
(s) the Construction, Financing and Installment Sale Agreement dated as of April
1, 1973 between the IDB and Scott, (t) the Lease and Assignment Agreement dated
as of December 12, 1994 between Scott and the Company (as assignee of Mobile
Energy), (u) the Facilities Lease and Agreement dated as of December 1, 1984
between the IDB and Scott, (v) the Sublease and Assignment Agreement dated as of
December 12, 1994 between Scott and the Company (as assignee of Mobile Energy),
(w) the Construction, Financing and Installment Sale Agreement dated as of
September 1, 1976 between the IDB and Scott, (x) the Lease and Assignment
Agreement dated as of December 12, 1994 between Scott and the Company (as
assignee of Mobile Energy), (y) the Recovery Boiler Facilities Lease and
Agreement dated as of December 1, 1994 between the IDB and Scott, (z) the Lease
Assignment and Assumption Agreement dated as of December 12, 1994 between Scott
and the Company (as assignee of Mobile Energy), (aa) the Nondisturbance
Agreement, (bb) the Recognition Agreements, (cc) the Mill Owner Maintenance
Reserve Account Agreement and (dd) the Transfer Agreement.
"Project Costs" means costs and expenses (other than financing costs
and expenses) paid, incurred or to be incurred by the Company after the Closing
Date to complete the capital improvements to the Energy Complex specified in the
Master Operating Agreement in accordance with the Capital Budget and certain
other planned expenditures relating to the Energy Complex.
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"Project Documents" means, collectively, the Project Contracts
and the Financing Documents.
"Project Participant" means each Person that is party to a
Project Document.
"Prudent Plant Operating Standards" has the meaning specified
in the Master Operating Agreement.
"Pulp Mill" means the pulp mill (including a process water plant and
waste water treatment plant) located at the Mobile Facility, which as of the
Closing Date is owned by Scott.
"Pulp Mill Energy Services Agreement" means the Pulp Mill Energy
Services Agreement dated as of December 12, 1994, as amended by the First
Amendment thereto dated as of July 13, 1994, between the Pulp Mill Owner and the
Company (as assignee of Mobile Energy).
"Pulp Mill Owner" means Scott, in its capacity as owner of the
Pulp Mill.
"Pulp Mill Step-In Equipment" has the meaning specified in the
Master Operating Agreement.
"PURPA" means the Public Utility Regulatory Policies Act of
1978.
"Qualified Engineer" means an independent engineer listed on Schedule 1
to the Intercreditor Agreement, as such Schedule may be amended from time to
time in accordance with Section 11.3 of the Intercreditor Agreement.
"Qualifying Facility" means a "Qualifying Cogeneration Facility" as
specified in section 3(18)(B) of the Federal Power Act or a qualifying small
power production facility within the meaning of section 201 of PURPA.
"Rating Agencies" means, collectively, S&P, Fitch and Moody's, together
with any other nationally recognized credit agency of similar standing if any
such Person is not then currently rating the proposed subject of such rating.
"Receivables" means all of the Company's rights to payment for goods
sold or leased or services performed by the Company, including (a) rights
evidenced by an account, note, contract, security, instrument, chattel paper or
other evidence of indebtedness and (b) all "accounts" as defined in Section
9-106 of the Uniform Commercial Code as in effect in the State of New York on
the Closing Date.
"Recognition Agreements" means, collectively, (a) the Recognition,
Cooperation and Consent Agreement relating to the Mixed-Use Bonds dated as of
August 1, 1995 among the Company, the IDB, AmSouth Bank of Alabama, TRT and the
Collateral Agent and (b)
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the Recognition, Cooperation and Consent Agreement relating to the Tax-Exempt
Bonds dated as of August 1, 1995 among the Company, the IDB, the Tax-Exempt
Indenture Trustee and the Collateral Agent.
"Redemption Date" has the meaning specified (a) in the case of the
Indenture, in Section 6.2 thereof and (b) in the case of the Tax-Exempt
Indenture, in Section 6.2 thereof.
"Redistributed Proceeds" means, with respect to any Excess Loss
Proceeds, the excess, if any, of the Working Capital Facility's Percentage Share
of such Excess Loss Proceeds over the Working Capital Facility Distribution
Amount in respect of such Excess Loss Proceeds.
"Refunding Debt" means Debt, the proceeds of which are used to refund
outstanding Senior Debt.
"Refunding Letter of Credit" means one or more letters of credit issued
by a commercial bank in an aggregate amount not to exceed $1,500,000 to provide
for the payment of accrued interest on the 1984 Bonds upon the redemption
thereof.
"Regular Record Date" means, for the Stated Maturity of any Senior
Security of a series, or for the Stated Maturity of any installment of principal
thereof or payment of interest thereon, the 15th day (whether or not a Business
Day) of the month prior to such Stated Maturity, or any other date specified for
such purpose in the form of Senior Security of such series attached to the
Series Supplemental Indenture to the Indenture or the Tax-Exempt Indenture (as
the case may be) relating to the Senior Securities of such series.
"Replacement Debt" means Senior Securities, the proceeds of which are
used to refinance all or a portion of the outstanding Tax-Exempt Indenture
Securities (whether by effecting a gross-up of, or by the issuance of Senior
Securities to replace, affected Tax-Exempt Indenture Securities) upon the
occurrence of a Determination of Taxability.
"Replacement Facility" means a facility with materially different
performance capabilities from the Energy Complex that can be built to provide
services to some or all of the Mills following the occurrence of an Event of
Loss or an Event of Eminent Domain.
"Required Deposit" means, at the time of any Required Deposit Event
with respect to any Reserve Account Security on deposit in any Reserve Account
Security Account, an amount equal to the aggregate Available Amount under such
Reserve Account Security at such time; provided, however, that if such Required
Deposit Event results from the occurrence of a Debt Service Event, such amount
shall be equal to the aggregate amount required to be transferred pursuant to,
if such Reserve Account Security Account is (a) the Maintenance Plan Funding
Subaccount, Section 3.5(c) of the Intercreditor Agreement, (b) the Distribution
Account, Section
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3.8(b) of the Intercreditor Agreement, (c) a Debt Service Reserve Account,
Section 4.5 of the Indenture and (d) a Tax-Exempt Debt Service Reserve Account,
Section 4.6 of the Tax-Exempt Indenture.
"Required Deposit Event" means (a) in the case of any Reserve Account
Letter of Credit on deposit in any Reserve Account Security Account, (i) the
occurrence of any Debt Service Event with respect to such Reserve Account Letter
of Credit, (ii) the date that is fifteen (15) days prior to the occurrence of
any Termination Event with respect to such Reserve Account Letter of Credit,
unless such Reserve Account Letter of Credit has been replaced with monies or
other Reserve Account Security (other than, if such Reserve Account Security
Account is a Tax-Exempt Debt Service Reserve Account, a Southern Guaranty) prior
to such date, (iii) the occurrence of a Credit Standard Event or Default Event
with respect to such Reserve Account Letter of Credit and the continuance
thereof for a period of five (5) days, unless such Reserve Account Letter of
Credit has been replaced with other Reserve Account Security (other than, if
such Reserve Account Security Account is a Tax-Exempt Debt Service Reserve
Account, a Southern Guaranty) prior to the expiration of such period or (iv) the
date on which a Trigger Event Notice has been delivered and (b) in the case of
any Southern Guaranty on deposit in any Reserve Account Security Account, (i)
the occurrence of any Debt Service Event with respect to such Southern Guaranty,
(ii) the date that is fifteen (15) days prior to the occurrence of any
Termination Event with respect to such Southern Guaranty, unless such Southern
Guaranty has been replaced with monies or other Reserve Account Security prior
to such date, (iii) the occurrence of a Credit Standard Event with respect to
such Southern Guaranty and the continuance thereof for a period of fifteen (15)
days, unless (A) the Collateral Agent or the Indenture Trustee (as the case may
be) shall have been provided with an Officer's Certificate of Southern
certifying as to the determination that the Southern Credit Standard has been
satisfied after such occurrence and prior to the expiration of such period or
(B) such Southern Guaranty has been replaced with monies or other Reserve
Account Security prior to the expiration of such period, (iv) the occurrence of
a Default Event and the continuance thereof for a period of five (5) days,
unless such Southern Guaranty has been replaced with other Reserve Account
Security prior to the expiration of such period or (v) the date on which a
Trigger Event Notice has been delivered.
"Required Interest Deposit" means, in the case of any Monthly Transfer
Date with respect to:
(a) the Indenture Securities Interest Subaccount, an amount
that, after giving effect to monies on deposit therein immediately
prior to such Monthly Transfer Date and together with a uniform amount
to be deposited therein on each succeeding Monthly Transfer Date prior
to the next succeeding Interest Payment Date, is equal to the amount of
interest on the Indenture Securities becoming due on such Interest
Payment Date (such amount to be reduced if and to the extent that a
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Redemption Date or Prepayment Date for any of the Indenture Securities
is on or precedes such Interest Payment Date, in which case the amount
of interest payable on the Indenture Securities to be so redeemed or
prepaid shall be provided for pursuant to paragraph (c) below in lieu
of this paragraph (a));
(b) the Tax-Exempt Indenture Securities Interest Subaccount,
an amount that, after giving effect to monies on deposit therein
immediately prior to such Monthly Transfer Date and together with a
uniform amount to be deposited therein on each succeeding Monthly
Transfer Date prior to the next succeeding Interest Payment Date
(unless such next succeeding Interest Payment Date is January 1, 2020,
in which case together with a uniform amount to be deposited therein on
each succeeding Monthly Transfer Date prior to December 1, 2019), is
equal to the amount of interest on the Tax-Exempt Indenture Securities
becoming due on such Interest Payment Date (such amount to be reduced
if and to the extent that a Redemption Date or Prepayment Date for any
of the Tax-Exempt Indenture Securities is on or precedes such Interest
Payment Date, in which case the amount of interest payable on the Tax-
Exempt Indenture Securities to be so redeemed or prepaid shall be
provided for pursuant to paragraph (d) below in lieu of this paragraph
(b));
(c) the Indenture Securities Redemption Subaccount, an amount
that, after giving effect to monies on deposit therein immediately
prior to such Monthly Transfer Date and together with a uniform amount
to be deposited therein on each succeeding Monthly Transfer Date prior
to each succeeding Redemption Date or Prepayment Date for the Indenture
Securities, is equal to the amount of interest thereon becoming due on
each such Redemption Date or Prepayment Date (as the case may be); and
(d) the Tax-Exempt Indenture Securities Redemption Subaccount,
an amount that, after giving effect to monies on deposit therein
immediately prior to such Monthly Transfer Date and together with a
uniform amount to be deposited therein on each succeeding Monthly
Transfer Date prior to each succeeding Redemption Date or Prepayment
Date for the Tax- Exempt Indenture Securities, is equal to the amount
of interest thereon becoming due on each such Redemption Date or
Prepayment Date (as the case may be).
"Required Modifications" means those modifications reasonably necessary
for the Energy Complex to remain in compliance with all material Governmental
Approvals and maintain, at a minimum, the Maximum Capacity (as defined in the
Master Operating Agreement) levels as in effect on the Closing Date.
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"Required Modifications Subaccount" means the subaccount of the
Completion Account so designated established and created under Section 2.2(c) of
the Intercreditor Agreement.
"Required Principal Deposit" means in the case of any Monthly Transfer
Date with respect to:
(a) the Indenture Securities Principal Subaccount, an amount
equal to one-sixth (1/6th) of the amount of principal of the Indenture
Securities becoming due on each Principal Payment Date therefor
occurring within the six (6) months immediately succeeding the month in
which such Monthly Transfer Date occurs (unless such Principal Payment
Date occurs within six (6) months after the Closing Date or any other
date on which any Indenture Securities are originally issued, in which
case an amount that, after giving effect to monies on deposit therein
immediately prior to such Monthly Transfer Date and together with a
uniform amount to be deposited therein on each succeeding Monthly
Transfer Date prior to such Principal Payment Date, is equal to the
amount of principal thereof becoming due on such Principal Payment
Date) (such amount to be reduced if and to the extent that a Redemption
Date or Prepayment Date for any of the Indenture Securities is on or
precedes such Principal Payment Date, in which case the amount of
principal payable with respect to the Indenture Securities to be so
redeemed or prepaid shall be provided for pursuant to paragraph (c)
below in lieu of this paragraph (a));
(b) the Tax-Exempt Indenture Securities Principal Subaccount,
one-twelfth (1/12th) (unless such Monthly Transfer Date occurs on or
after January 1, 2019, in which case one- eleventh (1/11th)) of the
amount of principal of the Tax- Exempt Indenture Securities becoming
due on each Principal Payment Date therefor occurring within the twelve
(12) months immediately succeeding the month in which such Monthly
Transfer Date occurs (unless such Principal Payment Date occurs within
twelve (12) months after the Closing Date or any other date on which
any Tax-Exempt Indenture Securities are originally issued, in which
case an amount that, after giving effect to monies on deposit therein
immediately prior to such Monthly Transfer Date and together with a
uniform amount to be deposited therein on each succeeding Monthly
Transfer Date prior to such Principal Payment Date, is equal to the
amount of principal thereof becoming due on such Principal Payment
Date)(such amount to be reduced if and to the extent that a Redemption
Date or Prepayment Date for any of the Tax-Exempt Indenture Securities
is on or precedes such Principal Payment Date, in which case the amount
of principal payable with respect to the Tax-Exempt Indenture
Securities to be so redeemed or prepaid shall be provided for pursuant
to paragraph (d) below in lieu of this paragraph (b));
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(c) the Indenture Securities Redemption Subaccount, an amount
that, after giving effect to monies on deposit therein immediately
prior to such Monthly Transfer Date and together with a uniform amount
to be deposited therein on each succeeding Monthly Transfer Date prior
to each succeeding Redemption Date or Prepayment Date for the Indenture
Securities, is equal to the amount of principal thereof and premium, if
any, thereon becoming due on each such Redemption Date or Prepayment
Date (as the case may be); and
(d) the Tax-Exempt Indenture Securities Redemption Subaccount,
an amount that, after giving effect to monies on deposit therein
immediately prior to such Monthly Transfer Date and together with a
uniform amount to be deposited therein on each succeeding Monthly
Transfer Date prior to each succeeding Redemption Date or Prepayment
Date for the Tax- Exempt Indenture Securities, is equal to the amount
of principal thereof and premium, if any, thereon becoming due on each
such Redemption Date or Prepayment Date (as the case may be).
"Required Senior Creditors" means Senior Secured Parties holding or
otherwise representing 331/3% of the Combined Exposure.
"Reserve Account Letter of Credit" means a letter of credit issued by a
commercial bank whose long-term unsecured Debt is rated at least "A" by S&P, "A"
by Fitch and "A2" by Moody's.
"Reserve Account Security" means either, or any combination of, (a) one
or more Southern Guaranties or (b) one or more Reserve Account Letters of
Credit.
"Reserve Account Security Accounts" means, collectively, each Debt
Service Reserve Account (if any), each Tax-Exempt Debt Service Reserve Account
(if any), the Maintenance Plan Funding Subaccount and the Distribution Account.
"Responsible Officer" means, when used with respect to the Collateral
Agent, the Indenture Trustee and the Tax-Exempt Indenture Trustee, (a) any
officer of the Collateral Agent, the Indenture Trustee or the Tax-Exempt
Indenture Trustee (as the case may be) within the Corporate Trust Office of the
Collateral Agent, the Indenture Trustee or the Tax-Exempt Indenture Trustee (as
the case may be), including any vice president, any assistant vice president,
any assistant secretary or any assistant treasurer, (b) any other officer of the
Collateral Agent, the Indenture Trustee or the Tax-Exempt Indenture Trustee (as
the case may be) performing functions similar to those performed by any of the
officers designated in clause (a) above and (c) with respect to a particular
corporate trust matter, any other officer of the Collateral Agent, the Indenture
Trustee or the Tax-Exempt Indenture Trustee (as the case may be) to whom such
matter is referred because of such other officer's knowledge of and familiarity
with the particular subject.
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"Restricted Payment Alternative Agreement Requirements" means, with
respect to any Project Contract, another Contract entered into by the Company
with one or more other Persons in substitution for or replacement of any such
Project Contract that has been declared unenforceable or rejected or otherwise
terminated, with respect to some or all of the Processing Services or other
services formerly provided by or to the Company thereunder, provided that either
(a) the Company has delivered to the Collateral Agent a letter from any two of
the Rating Agencies (then currently rating the Indenture Securities or the
Tax-Exempt Indenture Securities) confirming that, after giving effect to such
alternative Contract, the ratings of the Outstanding Indenture Securities or the
Outstanding Tax-Exempt Indenture Securities (as the case may be) are Investment
Grade or (b) the Company (i) has provided to the Collateral Agent the Revenue
Sufficiency Certification and (ii) has delivered to the Collateral Agent an
Officer's Certificate, together with an Independent Engineer Confirmation,
certifying that (A) the term of such alternative Contract extends through the
earlier of (1) the final maturity of the Outstanding Indenture Securities or the
Outstanding Tax-Exempt Indenture Securities (as the case may be) and (2) the
term of such Project Contract, (B) such alternative Contract contains
termination provisions no less favorable to the Company than those contained in
such Project Contract, (C) such alternative Contract has been in full force and
effect for at least thirty-six (36) months, (D) the average of the two annual
Senior Debt Service Coverage Ratios for the four immediately preceding
semi-annual payment periods was equal to at least 1.25 to 1.0 and, based on
projections prepared by the Company on a reasonable basis, the average of the
annual Senior Debt Service Coverage Ratios through the final maturity date of
the Outstanding Indenture Securities or the Outstanding Tax-Exempt Indenture
Securities (as the case may be) is projected to be at least 1.25 to 1.0 and (E)
such alternative Contract is reasonably capable of being performed by the
parties thereto.
"Restricted Payments" means, collectively, (a) payments from the
Subordinated Fee Account or any other payment in respect of Subordinated Fees,
(b) distributions (from the Distribution Account or otherwise), including a
return of capital contributions and dividends, paid to, or at the direction or
for the benefit of, any Affiliate of the Company, but excluding distributions of
cash from any Account to the extent such cash has been replaced with Reserve
Account Security in accordance with the terms of the Financing Documents, (c)
the payment of principal of or premium, if any, or interest on any Affiliate
Subordinated Debt, (d) the repurchase by the Company of any interest of any
Member, or (e) the making of any loans or other advances from the Company to any
Affiliate of the Company, but excluding advances of cash to the extent such cash
(i) has been replaced with Reserve Account Security in accordance with the terms
of the Financing Documents or (ii) constitutes a payment required under the O&M
Agreement or the SCS Agreement.
"Revenue Account" means the Account so designated established and
created under Section 2.2(a) of the Intercreditor Agreement.
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"Revenue Sufficiency Certification" means an Officer's Certificate of
the Company, together with an Independent Engineer Confirmation, to the effect
that, based upon projections prepared by the Company in accordance with Section
1.15 of the Indenture or Section 1.12 of the IDB Lease Agreement, or of any
comparable provision of the Working Capital Facility, the Project Contracts then
in effect (including any alternative Contract entered into, or to be entered
into, by the Company with one or more other Persons in substitution or
replacement of any other Project Contract as contemplated by the Event of
Default Alternative Agreement Requirements or the Restricted Payment Alternative
Agreement Requirements) generate sufficient Revenues to enable the Company to
pay its debts and other obligations (including Operation and Maintenance Costs)
when they become due through the final maturity of the Outstanding Indenture
Securities or the Tax-Exempt Indenture Securities (as the case may be).
"Revenues" means (without duplication), for any period, the revenues
received by the Company for use of the services and facilities of the Energy
Complex including (a) amounts received by the Company under the Project
Contracts, (b) interest and other income earned and credited on monies deposited
in the Accounts (to the extent not retained in such Accounts), (c) the proceeds
of the sale of any part of the Energy Complex, provided that such sale is not
prohibited by the Financing Documents, (d) the proceeds of any business
interruption insurance and other payments received for interruption of
operations (excluding any proceeds of any liability or physical damage
insurance) and (e) all other monies that have been deposited into the Revenue
Account as required or permitted by the terms of the Financing Documents.
Notwithstanding the foregoing, "Revenues" do not include (i) capital
contributions to the Company, (ii) the proceeds of any Debt or Loss Proceeds,
(iii) amounts received by the Company in connection with the exercise of Company
Step-In Rights (to the extent in excess of the Company's expenses incurred in
connection therewith, including the cure or the attempted cure of the related
Pulp Mill Triggering Event (as defined in the Master Operating Agreement)), (iv)
monies transferred from the Completion Account to the Revenue Account pursuant
to Section 3.9(c) of the Intercreditor Agreement, (v) monies transferred from
any Debt Service Reserve Account to the Revenue Account pursuant to Section 4.5
of the Indenture, (vi) amounts received by the Company with respect to the 1994
Bonds and (vii) monies deposited into any Reserve Account Security Account in
replacement (or satisfaction) of Reserve Account Security on deposit therein
(including monies deposited into the Maintenance Plan Funding Subaccount
pursuant to the last sentence of Section 3.5(a) of the Intercreditor Agreement).
"S&P" means Standard & Poor's Ratings Group, a New York
corporation.
"Scott" means Scott Paper Company, a Pennsylvania corporation.
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"SCS" means Southern Company Services, Inc., an Alabama
corporation.
"SCS Agreement" means the Agreement dated July 14, 1995 between SCS and
the Company.
"S.D. Warren" means S.D. Warren Company, a Pennsylvania
corporation.
"SEC" means the Securities and Exchange Commission of the
United States of America.
"Secretary" means, in the case of a corporation (including Mobile
Energy) or limited liability company (including the Company) the secretary or an
assistant secretary of such corporation or limited liability company (as the
case may be).
"Secured Obligations" means, collectively, the Financing
Liabilities, the Trustee Claims, the Collateral Agent Claims and
the IDB Claims.
"Secured Party" means Bankers Trust (Delaware) or any other Person
appointed as a substitute or replacement Secured Party under the Security
Agreement.
"Securities" has the meaning specified (a) in the case of the
Indenture, in the first "WHEREAS" clause thereof and (b) in the case of the
Tax-Exempt Indenture, in the last "WHEREAS" clause thereof.
"Securities Act" means the Securities Act of 1933.
"Security Agreement" means the Assignment and Security Agreement dated
as of August 1, 1995 among the Company, the IDB and the Secured Party.
"Security Documents" means, collectively, (a) the Mortgage, (b) the
Security Agreement, (c) the Indenture (including any Series Supplemental
Indenture), (d) the Intercreditor Agreement, (e) the Tax-Exempt Indenture
(including any Series Supplemental Indenture), (f) the IDB Lease Agreement, (g)
the Consents to Assignment and (h) each Financing Statement.
"Security Interest" means the Liens created, or purported to be
created, on Shared Collateral pursuant to any Security Document.
"Security Register" has the meaning specified in Section 2.8 of the
Indenture or Section 2.8 of the Tax-Exempt Indenture (as the case may be).
"Security Registrar" means any Person acting as Security Registrar
under the Indenture or the Tax-Exempt Indenture pursuant to Section 9.14 or
Section 9.13 (as the case may be) thereof.
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"Senior Creditor Certificate" means a certificate of a Senior Secured
Party, signed by an Authorized Representative of such Senior Secured Party, (a)
setting forth the principal amount of the Financing Liabilities due or owing to,
or in favor of or for the benefit of, such Senior Secured Party as of the date
of such certificate and the outstanding unutilized Financing Commitments of such
Senior Secured Party as of the date of such certificate, (b) setting forth a
contact person for such Senior Secured Party, including phone and facsimile
numbers for such person, (c) directing the Collateral Agent to take a specified
action and (d) stating specifically the action the Collateral Agent is directed
to take and the Security Document and the provision thereof pursuant to which
the Collateral Agent is being directed to act.
"Senior Debt" means, collectively, the Outstanding Senior
Securities and the outstanding Working Capital Facility Loans.
"Senior Debt Service Coverage Ratio" means, for any period and without
duplication, the ratio of (a) (i) the sum of (A) all Revenues for such period
and (B) the amount of interest and other income earned and credited on monies
deposited in the Accounts (to the extent retained in such Accounts) for such
period minus (ii) the sum of (A) Operation and Maintenance Costs for such period
(except for such costs paid with monies on deposit in the Maintenance Reserve
Account and the Mill Owner Maintenance Reserve Account) and (B) the aggregate of
the amounts deposited into the Maintenance Reserve Account for such period (but
for purposes of calculating any projected Senior Debt Service Coverage Ratio,
not less than the Maintenance Reserve Account Required Deposit for such period)
and the Mill Owner Maintenance Reserve Account for such period to (b) the sum of
(i) all amounts payable by the Company during such period in respect of
principal of and premium, if any, and interest on the Outstanding Indenture
Securities, (ii) all amounts payable by the Company during such period in
respect of rent under the IDB Lease Agreement, (iii) all amounts payable by the
Company during such period in respect of payment obligations under the Working
Capital Facility (other than repayment of principal), (iv) all amounts payable
by the Company during such period as fees and other expenses (including any
interest thereon) to any fiduciary acting in such capacity under the Security
Documents and (v) the aggregate amount of overdue payments in respect of clauses
(b)(i) through (iv) above from previous periods, in each case determined on a
cash basis in accordance with GAAP. Neither payments (including deemed payments)
nor receipts (including deemed receipts) in respect of principal of or premium,
if any, or interest on the 1994 Bonds shall be included for purposes of
calculating the Senior Debt Service Coverage Ratio.
"Senior Debt Service Requirement" means, for any period, the sum of (a)
all amounts payable by the Company during such period in respect of principal of
and premium, if any, and interest on the Outstanding Indenture Securities, (b)
all amounts payable by the Company during such period in respect of rent under
the IDB Lease Agreement, (c) all amounts payable by the Company during such
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period in respect of payment obligations under the Working Capital Facility
(other than repayment of principal), (d) all amounts payable by the Company
during such period as fees and other expenses (including any interest thereon)
to any fiduciary acting in such capacity under the Security Documents and (e)
the aggregate amount of overdue payments in respect of the foregoing from
previous periods, in each case determined on a cash basis in accordance with
GAAP.
"Senior Debt Termination Date" means the date on which all Financing
Liabilities, other than contingent liabilities and obligations that are
unasserted at such date, have been paid and satisfied in full and all Financing
Commitments have been terminated.
"Senior Secured Parties" means, collectively, (a) the Indenture Trustee
(on behalf of the Holders of the Indenture Securities from time to time and,
solely in its capacity as trustee on behalf of such Holders, itself), (b) the
Tax-Exempt Indenture Trustee (on behalf of the Holders of the Tax-Exempt
Indenture Securities from time to time and, solely in its capacity as trustee on
behalf of such Holders, itself) and (c) the Working Capital Facility Provider
(on behalf of the Lenders from time to time and itself).
"Senior Securities" means, collectively, the Indenture
Securities and the Tax-Exempt Indenture Securities.
"Series Supplemental Indenture" means an indenture supplemental to the
Indenture or the Tax-Exempt Indenture entered into by the Mobile Energy Parties
or the IDB (as the case may be) and the Indenture Trustee or the Tax-Exempt
Indenture Trustee (as the case may be) for the purpose of establishing, in
accordance with such indenture, the title, form and terms of the Senior
Securities of any series.
"Shared Collateral" means all Collateral other than (a) the Collateral
referenced in clause (a) of the definition of Indenture Securities Collateral
and (b) the Collateral referenced in clause (a) of the definition of Tax-Exempt
Indenture Securities Collateral.
"Sinking Fund" has the meaning specified in Section 7.2 of the
Indenture or Section 7.2 of the Tax-Exempt Indenture (as the case may be).
"Sinking Fund Redemption Dates" has the meaning specified in Section
7.2 of the Indenture or Section 7.2 of the Tax-Exempt Indenture (as the case may
be).
"Sinking Fund Requirements" has the meaning specified in Section 7.2 of
the Indenture or Section 7.2 of the Tax-Exempt Indenture (as the case may be).
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"Site" means the real property on which the Energy Complex is situated,
as more fully described in the Mortgage.
"Southern" means The Southern Company, a Delaware corporation.
"Southern Credit Standard" means, at any time, (a) Southern's
outstanding senior long-term Debt is then rated at least, and not rated less
than, "A" by either S&P or Moody's (unless such senior long-term Debt is not
then rated by either S&P or Moody's, in which case each Designated Southern
Subsidiary has outstanding senior long-term Debt that is then rated at least,
and not rated less than, BBB by S&P or Baa2 by Moody's) and (b) the sum of (i)
cash and cash equivalents (including marketable securities) of Southern and the
Designated Southern Subsidiaries, (ii) amounts available from committed credit
facilities of Southern and the Designated Southern Subsidiaries and (iii)
amounts available from commercial paper authorized to be issued by Southern and
rated not less than A-1/P-1 by S&P or Moody's (in each case as of the end of
Southern's most recently completed fiscal quarter and provided that such cash
and cash equivalents and other amounts are available, without restriction, for
distribution to the Collateral Agent or the Indenture Trustee, upon fifteen (15)
days' notice) is equal to at least the aggregate amount of Southern Guaranties
then outstanding multiplied by four.
"Southern Electric" means Southern Electric International,
Inc., a Delaware corporation.
"Southern Guaranty" means one or more unconditional, absolute and
irrevocable guaranties from Southern to be delivered to (a) the Collateral Agent
for deposit into the Maintenance Plan Funding Subaccount or the Distribution
Account pursuant to and in accordance with Section 3.15(a) of, and in
substantially the form attached as Exhibit C to, the Intercreditor Agreement or
(b) the Indenture Trustee for deposit into each Debt Service Reserve Account (if
any) pursuant to and in accordance with Section 4.6(a) of, and in substantially
the form attached as Exhibit A to, the Indenture, provided that, in the case of
clause (a) and (b) above, the Southern Credit Standard is satisfied at the time
of such delivery and deposit.
"Southern Master Tax Sharing Agreement" means the Income Tax
Allocation Agreement dated as of December 29, 1981 among Southern
and its corporate subsidiaries.
"Special Record Date" means, with respect to the payment of any
defaulted principal or interest, a date fixed by the Indenture Trustee or the
Tax-Exempt Indenture Trustee (as the case may be) pursuant to, in the case of
the Indenture Trustee, Section 2.10 of the Indenture and, in the case of the
Tax-Exempt Indenture Trustee, Section 2.10 of the Tax-Exempt Indenture.
"Stated Maturity" means, when used with respect to any Senior
Security or any installment of principal thereof or payment of
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interest thereon, the date specified in such Senior Security as the fixed date
on which such Senior Security or such installment of principal or payment of
interest is due and payable.
"Subordinated Debt" means, collectively, Affiliate
Subordinated Debt and Non-Affiliate Subordinated Debt.
"Subordinated Debt Account" means the Account so designated established
and created under Section 2.2(a) of the Intercreditor Agreement.
"Subordinated Debt Provider" means any Person providing
Subordinated Debt pursuant to a Subordinated Loan Agreement.
"Subordinated Fee" means a fee in exchange for the provisions of goods
or services to either of the Mobile Energy Parties, the payment of which is
fully subordinated to the Secured Obligations as to payment and exercise of
remedies and that is payable only to the extent it would otherwise be
distributable if on deposit in the Distribution Account.
"Subordinated Fee Account" means the Account so designated established
and created under Section 2.2(a) of the Intercreditor Agreement.
"Subordinated Loan Agreement" means a binding agreement with a
Subordinated Debt Provider providing unsecured debt financing for the benefit of
the Energy Complex and on terms and conditions that shall satisfy the
requirements of the Financing Documents.
"Supplementary Lease" means the Supplementary Lease Agreement dated as
of December 12, 1994, as amended by the First Amendment thereto dated as of July
13, 1995, between Scott, as lessor, and the Company (as assignee of Mobile
Energy), as lessee.
"Tax-Exempt Bonds" means the Tax-Exempt Indenture Securities
issued on the Closing Date under the Tax-Exempt Indenture.
"Tax-Exempt Debt Service Reserve Account" means the Account so
designated established and created under Section 4.4(a) of the Tax- Exempt
Indenture and any Account so designated and created under any Series
Supplemental Indenture to the Tax-Exempt Indenture for the benefit of Holders of
the Tax-Exempt Indenture Securities established thereunder.
"Tax-Exempt Debt Service Reserve Account Required Balance" means (a) in
respect of the Tax-Exempt Debt Service Reserve Account established and created
under Section 4.4(a) of the Tax-Exempt Indenture, the amount designated in
Section 4.4(b) thereof and (b) in respect of any other Tax-Exempt Debt Service
Reserve Account, the amount so designated in the Series Supplemental Indenture
to the Tax-Exempt Indenture establishing such Tax-Exempt Debt Service Reserve
Account.
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"Tax-Exempt Indenture" means the Amended and Restated Trust Indenture
dated as of August 1, 1995 between the IDB and the Tax- Exempt Indenture
Trustee.
"Tax-Exempt Indenture Accounts" means, with respect to the Tax-Exempt
Indenture Securities of any series, the Tax-Exempt Indenture Securities Account
and each Tax-Exempt Debt Service Reserve Account (if any) established for the
benefit of Holders of the Tax-Exempt Indenture Securities of such series.
"Tax-Exempt Indenture Distribution Amount" means, in respect of any
Excess Loss Proceeds with respect to an Event of Loss or Event of Eminent Domain
to be applied pursuant to Section 6.2(b) of the Intercreditor Agreement, an
amount equal to the Tax-Exempt Indenture's Percentage Share of (a) such Excess
Loss Proceeds and (b) the Redistributed Proceeds with respect to such Excess
Loss Proceeds.
"Tax-Exempt Indenture Securities" means all Outstanding Debt
issued pursuant to the Tax-Exempt Indenture.
"Tax-Exempt Indenture Securities Account" means the Account so
designated established and created under Section 4.1 of the Tax- Exempt
Indenture.
"Tax-Exempt Indenture Securities Collateral" means, collectively, (a)
all of the collateral mortgaged, pledged or assigned, or purported to be
mortgaged, pledged or assigned, to the Tax-Exempt Indenture Trustee by the IDB
pursuant to the granting and assigning clauses of the Tax-Exempt Indenture and
(b) the Shared Collateral.
"Tax-Exempt Indenture Securities Interest Subaccount" means the
subaccount of the Tax-Exempt Indenture Securities Account so designated
established and created under Section 4.1 of the Tax- Exempt Indenture.
"Tax-Exempt Indenture Securities Principal Subaccount" means the
subaccount of the Tax-Exempt Indenture Securities Account so designated
established and created under Section 4.1 of the Tax- Exempt Indenture.
"Tax-Exempt Indenture Securities Redemption Subaccount" means the
subaccount of the Tax-Exempt Indenture Securities Account so designated
established and created under Section 4.1 of the Tax- Exempt Indenture.
"Tax-Exempt Indenture Trustee" means First Union National Bank of
Georgia, a national banking association organized and existing under the laws of
the United States of America.
"Tax-Exempt Project" means those portions of the Energy Complex
financed with the proceeds of the 1983 Bonds, as described generally in Exhibit
A to the IDB Lease Agreement.
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"Termination Event" means, with respect to any Reserve Account
Security, such Reserve Account Security shall have terminated or expired (other
than any termination thereof pursuant to the last sentence of Section 3.8(c) of
the Intercreditor Agreement).
"Third Party Engineer" means the independent engineering firm chosen
from the list of engineers maintained as Schedule 1 to the Intercreditor
Agreement and appointed Third Party Engineer pursuant
to Section 11.2 of the Intercreditor Agreement.
"Third Party Engineer Dispute Resolution" means the dispute resolution
process involving a Third Party Engineer pursuant to Section 11.2 of the
Intercreditor Agreement.
"Tissue Mill" means the tissue mill located at the Mobile Facility,
which as of the Closing Date is owned by Scott.
"Tissue Mill Energy Services Agreement" means the Tissue Mill Energy
Services Agreement dated as of December 12, 1994, as amended by the First
Amendment thereto dated as of July 13, 1995, between the Tissue Mill Owner and
the Company (as assignee of Mobile Energy).
"Tissue Mill Owner" means Scott, in its capacity as owner of
the Tissue Mill.
"Total Debt Service Coverage Ratio" means, for any period and without
duplication, the ratio of (a) (i) the sum of (A) all Revenues for such period
and (B) the amount of interest and other income earned and credited on monies
deposited in the Accounts (to the extent retained in such Accounts) for such
period minus (ii) the sum of (A) Operations and Maintenance Costs for such
period (except for such costs paid with monies on deposit in the Maintenance
Reserve Account or the Mill Owner Maintenance Reserve Account) and (B) the
aggregate of the amounts deposited into the Maintenance Reserve Account for such
period (but for purposes of calculating any projected Total Debt Service
Coverage Ratio, not less than the Maintenance Reserve Account Required Deposit
for such period) and the Mill Owner Maintenance Reserve Account for such period
to (b) the sum of (i) all amounts payable by the Company during such period in
respect of principal of and premium, if any, and interest on the Outstanding
Indenture Securities, (ii) all amounts payable by the Company during such period
in respect of rent under the IDB Lease Agreement, (iii) all amounts payable by
the Company during such period in respect of payment obligations under the
Working Capital Facility (other than repayments of principal), (iv) all amounts
payable by the Company as fees and other expenses (including any interest
thereon) to any fiduciary acting in such capacity under the Security Documents,
(v) all amounts payable by the Company during such period in respect of
principal of and premium, if any, and interest on the outstanding Subordinated
Debt, (vi) all amounts payable by the Company during such period as fees and
other expenses (including any interest thereon) to any Subordinated Debt
Provider and (vii) the aggregate
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<PAGE>
amount of overdue payments in respect of clauses (b)(i) through (vi) above from
previous periods, in each case determined on a cash basis in accordance with
GAAP. Neither payments (including deemed payments) nor receipts (including
deemed receipts) in respect of principal of or premium, if any, or interest on
the 1994 Bonds shall be included for purposes of calculating the Total Debt
Service Coverage Ratio.
"Transfer Agreement" means the Omnibus Deed, Bill of Sale,
General Assignment and Conveyance Agreement dated July 14, 1995
between Mobile Energy and the Company.
"Trigger Event" means (a) an Event of Default under the Indenture and
an acceleration of Indenture Securities thereunder, (b) an Event of Default
under the Tax-Exempt Indenture and an acceleration of Tax-Exempt Indenture
Securities thereunder, (c) an Event of Default under the Working Capital
Facility and an acceleration of Working Capital Facility Loans thereunder or (d)
a Bankruptcy Event in respect of either of the Mobile Energy Parties and the
expiration of the shortest applicable grace period with respect thereto.
"Trigger Event Period" means that a Trigger Event shall have occurred
and be continuing, provided that, except in the case of any such Trigger Event
that shall have resulted from a Bankruptcy Event in respect of either of the
Mobile Energy Parties, the written request of the Required Senior Creditors
specified in Section 5.1(a) of the Intercreditor Agreement shall have been
delivered to the Collateral Agent and not been rescinded.
"TRT" means Three Rivers Timber Company, a Washington
corporation.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended, as in force at the date as of which the Indenture was executed, except
as provided in Section 11.6 thereof; provided, however, that if the Trust
Indenture Act of 1939 is amended after such date, "Trust Indenture Act" means,
to the extent required by such amendment, the Trust Indenture Act of 1939, as so
amended.
"Trustee Claims" means all obligations of the Mobile Energy Parties,
now or hereafter existing, to pay fees, costs, expenses or other amounts to (a)
the Indenture Trustee under the Indenture or (b) the Tax-Exempt Indenture
Trustee under the Tax-Exempt Indenture.
"Uniform Commercial Code" means the Uniform Commercial Code of the
jurisdiction the law of which governs the Contract in which such term is used.
"U.S. Government Obligations" means non-callable direct
obligations of or obligations as to which the payment of principal
of and interest is unconditionally guaranteed by the United States
of America.
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<PAGE>
"Water Agreement" means the Water Procurement and Effluent Service
Agreement dated as of December 12, 1994, as amended by the First Amendment
thereto dated as of July 13, 1995, among the Company (as assignee of Mobile
Energy), the Pulp Mill Owner, the Paper Mill Owner and the Tissue Mill Owner.
"Wind-Up Event" means, at any time upon and after a Trigger Event, the
application of monies on deposit in any of the Intercreditor Agreement Accounts,
or of proceeds from any sale, disposition or other realization of any Shared
Collateral (other than the Intercreditor Agreement Accounts), in either case to
the payment of amounts owing in respect of any Senior Debt and as a result of
the exercise of remedies by the Collateral Agent under Article V of the
Intercreditor Agreement.
"Working Capital Escalation Factor" means, with respect to any Fiscal
Year, a factor (calculated in June of such Fiscal Year) equal to the amount
obtained by (a) dividing (i) the GDPIPD most recently published during such
Fiscal Year by (ii) the GDPIPD published during the prior Fiscal Year on the
date that most closely corresponds to, and is on or prior to, the date of such
GDPIPD most recently published (provided that if the amount obtained is less
than or equal to 1.015, then such amount shall be deemed to equal 1.015), (b)
then subtracting 0.015, and (c) then multiplying by the Working Capital
Escalation Factor with respect to the immediately preceding Fiscal Year.
"Working Capital Facility" means the Revolving Credit Agreement dated
as of August 1, 1995 between the Company and the Working Capital Facility
Provider or any other Contract between the Company and a Working Capital
Facility Provider pursuant to which funds for the working capital requirements
of the Company are provided.
"Working Capital Facility Account" means the Account so designated
established and created under Section 2.2(a) of the Intercreditor Agreement.
"Working Capital Facility Commitment" means the aggregate of the
commitments of the Lenders under the Working Capital Facility.
"Working Capital Facility Distribution Amount" means, in respect of any
Excess Loss Proceeds with respect to an Event of Loss or Event of Eminent Domain
to be applied pursuant to Section 6.2(b) of the Intercreditor Agreement and
provided that the Working Capital Facility Commitment is subject to reduction in
connection with such Event of Loss or Event of Eminent Domain pursuant to the
terms of the Working Capital Facility, an amount equal to the excess, if any, of
the Working Capital Facility's Percentage Share of such Excess Loss Proceeds
over the unutilized Working Capital Facility Commitment in effect immediately
prior to such reduction, unless the Company would not be able to borrow Working
Capital Facility Loans (because the conditions set forth in Article III of the
Working Capital Facility are not available or not satisfied),
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<PAGE>
in which case the lesser of (a) the Working Capital Facility's Percentage Share
of such Excess Loss Proceeds and (b) the outstanding Working Capital Loans at
such time.
"Working Capital Facility O&M Loan" means a Working Capital Facility
Loan, to the extent the proceeds thereof are applied to Operation and
Maintenance Costs other than (a) rebates to the United States government
pursuant to Section 148 of the Code, (b) Maintenance Expenditures and (c)
payments of IDB Claims.
"Working Capital Facility Provider" means Banque Paribas, a French
banking corporation, and each other Person providing funds to the Company
pursuant to a Working Capital Facility.
"Working Capital Facility Loan" means a Loan (as defined in the Working
Capital Facility) advanced by the Working Capital Facility Provider pursuant to
the Working Capital Facility.
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<PAGE>
EXHIBIT "A"
Parcel A:
Lots 7 and 9 of Scott Paper Company Subdivision as shown on the plat thereof as
recorded in Map Book 64, Page 39, in the records appearing in the Office of the
Judge of Probate of Mobile County, Alabama.
Exhibit A-1
<PAGE>
EXHIBIT "A"
Property Description of Leased Premises
ALL that certain plot, piece or parcel of land, situate, lying and being in the
City of Mobile, County of Mobile, and State of Alabama, bounded and described as
follows:
Parcel I
Beginning at a point in Lot 11 of the Scott Paper Company Subdivision
as recorded in Map Book 64, Page 39, in the Office of the Judge of
Probate of Mobile County, Alabama, said point being 3570.10 feet North
and 431.54 feet East of the Site of the Great Magnolia, and at Alabama
State Plane Coordinate, (West Zone, NAD 1927), North 270056.327 and
East 326422.733; Thence N-10-53'-56"-W for 356.22 ft.; Thence
S-89-01'-08"-E for 105.36 ft.; Thence S-68-5 2'-49"-E for 194.97 ft.;
Thence S-15-17'-38"-E for 241.11 ft.; Thence S-80-56'-54"-W for 287.04
ft. to the Point of Beginning. Said Parcel (the "East Fuel Tank
Parcel") lying and being in Lot 11 of the Scott Paper Company
Subdivision and containing 1.968 acres, more or less.
LESS AND EXCEPT:
Beginning at a point 38.85 feet South and 7.65 feet West of the North
East corner of the Parcel described above, said point being at Alabama
State Plane Coordinate, (West Zone, NAD 1927), North 270295.212 and
East 326634.957; Thence S-42-00'-44"-W for 42.00 ft.; Thence
N-47-59'-16"-W for 50.00 ft.; Thence N-42-00'-44"-E for 42.00 ft.;
Thence S-47-59'-16"-E for 50 ft. to the Point of Beginning. Said Parcel
(the "Excluded Parcel") lying entirely within the East Fuel Tank Parcel
described above and containing 2100.00 square feet, more or less.
Parcel II
Beginning at a point in Lot 11 of the Scott Paper Company Subdivision
as recorded in Map Book 64, Page 39, in the office of the judge of
Probate of Mobile County, Alabama: Said point being 2027.703 feet North
and 2186.144 feet East of the Site of the Great Magnolia, and at
Alabama State Plane Coordinate, West Zone, NAD 1927, North 268513.927,
East 328177.335: Thence N-41(degree)-44'-09"-E for 195.20 feet; Thence
S-26(degree)-32'-42"-E for 119.38 feet; Thence S-34(degree)-20'-56"-E
for 102.00 feet; Thence S-41(degree)-44'-09"-W for 144.25 feet; Thence
Northwesterly, around a curve to the left having a radius of 438.67
feet and a Delta angle of 27(degree)-48'-23", the Chord of which bears
N-43(degree)-25'-40"-W for 210.66 feet, for an arc distance of 212.74
feet to the Point of Beginning. Said Parcel lying and being entirely
within the boundaries of Lot 11 of the aforesaid
Exhibit A-2
<PAGE>
Scott Paper Company Subdivision, and containing 0.759 acres, more or
less.
Exhibit A-3
<PAGE>
EXHIBIT "A"
Parcel C:
NO. 8 RECOVERY BOILER BUILDING
Beginning at the Northeast corner of Lot 9 of the Scott Paper Company
Subdivision as recorded in Map Book 64, Page 39 in the Office of the Judge of
Probate of Mobile County, Alabama, said point being at Alabama State Plane
Coordinate, North 269059.626, East 327544.503: thence South 17 degrees 10
minutes 05 seconds East along the East line of said Lot 9 for 91.82 feet; thence
South 79 degrees 05 minutes 11 seconds West, leaving the East line of said Lot
9, for 61.16 feet; thence South 10 degrees 55 minutes 44 seconds East for 27.93
feet; thence South 79 degrees 04 minutes 16 seconds West for 239.72 feet; thence
North 10 degrees 55 minutes 44 seconds West for 145.10 feet to a point on the
North line of aforesaid Lot 9; thence South 74 degrees 19 minutes 51 seconds
East along the North line of said Lot 9 for 56.98 feet; thence North 79 degrees
10 minutes 01 seconds East along the North line of said Lot 9 for 70.09 feet;
thence North 10 degrees 50 minutes 10 seconds West along the North line of said
Lot 9 for 6.00 feet; thence North 46 degrees 30 minutes 09 seconds East along
the North line of said Lot 9 for 6.90 feet; thence South 68 degrees 10 minutes
10 seconds East along the North line of said Lot 9 for 6.90 feet; thence South
10 degrees 50 minutes 10 seconds East along the North line of said Lot 9 for
6.00 feet; thence North 79 degrees 10 minutes 01 seconds East for 158.24 feet to
the point of beginning. Said parcel lying and being in Lot 9 of the Scott Paper
Company Subdivision and containing 34507.69 square feet, more or less.
WEST WATER TANK FARM AREA
Beginning at a point on the East right of way of Main Street as shown on the
record plat of the Scott Paper Company Subdivision as recorded in Map Book 64,
Page 39 in the Office of the Judge of Probate of Mobile County, Alabama, said
point being 25.72 feet, South 10 degrees 52 minutes 25 seconds East of the
intersection of the North right of way of West Energy Drive with the East right
of way of Main Street, as shown on the recorded plat of said Scott Paper Company
Subdivision and being at Alabama State Plane Coordinate, North 268901.518, East
327151.667; thence North 79 degrees 07 minutes 35 seconds East, leaving the East
right of way of said Main Street, for 98.10 feet; thence South 10 degrees 52
minutes 00 seconds East for 195.30 feet to a point on the Southwest line of Lot
9 of aforesaid Scott Paper Company Subdivision; thence South 79 degrees 07
minutes 56 seconds West along the Southwest line of said Lot 9 for 45.85 feet;
thence South 11 degrees 08 minutes 40 seconds East along the Southwest line of
said Lot 9 for
Exhibit A-4
<PAGE>
1.70 feet; thence Northeasterly along the Southwest line of said Lot 9 and
around a curve to the right having a radius of 16.29 feet and a central angle of
314 degrees 59 minutes 51 seconds for an arc distance of 89.55 feet; thence
North 79 degrees 07 minutes 56 seconds East along the Southwest line of said Lot
9 for 34.74 feet; thence North 10 degrees 52 minutes 06 seconds West along said
Southwest line for 38.77 feet; thence South 79 degrees 07 minutes 59 seconds
West along the Southwest line of said Lot 9 for 12.76 feet; thence North 71
degrees 22 minutes 15 seconds West along the Southwest line of said Lot 9 for
85.22 feet to a point on the East right of way of aforesaid Main Street; thence
North 10 degrees 52 minutes 25 seconds West along the East right of way of said
Main Street for 103.79 feet to the point of beginning. Said parcel lying and
being in Lot 9 of the Scott Paper Company Subdivision and containing 14492.34
square feet, more or less.
Exhibit A-5
<PAGE>
EXHIBIT A
Description of Leased Land
Those certain premises located in the County of Mobile, State of
Alabama bounded and described as follows:
RECOVERY AREA NO. 7
Beginning at a Point at Alabama State Plane Coordinate N 268944.583,
E327580.044, said point being 2458.36 ft. North and 1588.85 ft. East of the Site
of the Great Magnolia; Thence S-17(degree)-10'-07"-E for 26.11 ft.; Thence
S-26(degree)-37'-14"-E for 164.93 ft.; Thence S-29(degree)-44'-52"-E for 142.73
ft.; Thence S-44(degree)-22'-46"-E for 28.07 ft.; Thence S-25(degree)-30'-05"-W
for 50.78 ft.; Thence S-79(degree)-06'-46"-W for 410.18 ft.; Thence
N-10(degree)-49'-45"-W for 384.40 ft.; Thence N-79(degree)-10'-15"-E for 282.10
ft.; Thence N-10(degree)-49'-30"-W for 18.51 ft.; Thence N-79(degree)-10'-38"-E
for 29.76 ft.; Thence S-10(degree)-49'-34"-E for 18.51 ft.; Thence
N-79(degree)-10'-08"-E for 18.85 ft.
to the Point of Beginning.
SLUDGE BUILDING
ALSO:
Beginning at a Point at Alabama State Plane Coordinate N 268777.532, E
327712.983, said point being 2291.31 ft. North and 1721.79 ft. East of the Site
of the Great Magnolia; Thence N-30(degree)-36'-15"-W for 22.16 ft.; Thence
N-59(degree)-23'-39"-E for 27.51 ft.; Thence S-30(degree)-36'-18"-E for 22.16
ft.; Thence S-59(degree)-23'-49"-W for 27.51 ft. to the Point of Beginning.
SLUDGE TOWER
Beginning at a Point at Alabama State Plane Coordinate N 268984.742, E
327588.763, said point being 2498.52 ft. North and 1597.57 ft. East of the Site
of the Great Magnolia; Thence N-78(degree)-58'-04"-E for 15.66 ft.; Thence
N-11(degree)-01'-56"-W for 12.11 ft.; Thence N-78(degree)-58'-04"-E for 17.76
ft.; Thence S-11(degree)-01'-56"-E for 32.08 ft.; Thence S-78(degree)-58'-04"-W
for 33.41 ft.; Thence N-11(degree)-01'-58"-W for 19.97 ft. to the Point of
Beginning.
BIOMASS TOWER
ALSO:
Beginning at a Point at Alabama State Plane Coordinate N 268989.042, E
327343.762, said point being 2502.82 ft. North and 1352.57 ft. East of the Site
of the Great Magnolia; Thence S-78(degree)-55'-12"-W for 24.05 ft.; Thence
N-11(degree)-04'-48"-W for 31.70
Exhibit A-6
<PAGE>
ft.; Thence N-78(degree)-55'-12"-E for 24.05 ft.; Thence S-11(degree)-04'-48"-E
for 31.70 ft. to the Point of Beginning.
COAL TOWER
ALSO:
Beginning at a Point at Alabama State Plane Coordinate N 268846.988, E
326816.353, said point being 2360.76 ft. North and 825.167 ft. East of the Site
of the Great Magnolia; Thence S-75(degree)-10'-05"-W for 33.09 ft.; Thence
N-14(degree)-49'-56"-W for 26.97 ft.; Thence N-75(degree)-10'-05"-E for 33.09
ft.; Thence S-14(degree)-49'-56"-E for 26.97 ft. to the Point of Beginning.
COAL UNLOADING BUILDING
ALSO:
Beginning at a Point at Alabama State Plane Coordinate N 268573.700, E
326422.793, said point being 2087.48 ft. North and 431.60 ft. East of the Site
of the Great Magnolia; Thence N-32(degree)-45'-47"-W for 50.48 ft.; Thence
N-57(degree)-14'-13"-E for 20.34 ft.; Thence S-32(degree)-45'-47"-E for 50.48
ft.; Thence S-57(degree)-14'-13"-W for 20.34 ft. to the Point of Beginning.
AREA CONVEYORS
ALSO:
4 strips of land being 10 feet in width and lying 5 feet each side of the
following described centerlines.
TO-WIT:
Beginning at a Point at Alabama State Plane Coordinate N 268792.160, E
327704.257, said point being 2305.94 ft. North and 1713.07 ft. East of the Site
of the Great Magnolia; Thence S-63(degree)-24'-43"-W for 4.45 ft.; Thence
N-26(degree)-36'-02"-W for 200.15 ft. to the Point of ending of the Centerline
herein described.
Beginning at a Point at Alabama State Plane Coordinate N 268990.737, E
327615.688, said point being 2504.51 ft. North and 1624.50 ft. East of the Site
of the Great Magnolia; Thence N-88(degree)-52'-24"-W for 273.56 ft. to the Point
of Ending of the Centerline herein described.
Beginning at a Point at Alabama State Plane Coordinate N 268995.750, E
327317.964, said point being 2509.53 ft. North and 1326.77 ft. East of the Site
of the Great Magnolia; Thence S-75(degree)-08'-47"-W for 522.98 ft. to the Point
of Ending of the Centerline herein described.
Exhibit A-7
<PAGE>
Beginning at a Point at Alabama State Plane Coordinate N 268842.848, E
326783.217, said point being 2356.62 ft. North and 792.03 ft. East of the Site
of the Great Magnolia; Thence S-57(degree)-47'-29"-W for 428.42 ft. to the Point
of Ending of the Centerline herein described.
Being a portion of the premises conveyed by Augustine Meaher, Jr., et al., to
Scott Paper Company by deed dated July 25, 1994 record in the office of the
Judge of Probate of Mobile County Alabama in Real Property Book 4183, Page 1204.
Exhibit A-8
<PAGE>
CHIP STORAGE AND BIOMASS AREA
ALSO:
Beginning at a Point at Alabama State Plane Coordinate N 269052.227, E
327505.839, said point being 2566.00 ft. North and 1514.65 ft. East of the Site
of the Great Magnolia; Thence S-79(degree)-10'-00"-W for 195.25 ft.; Thence
S-11(degree)-04'-48"-E for 31.70 ft.; Thence S-74(degree)-56'-08"-W for 104.22
ft.; Thence S-60(degree)-54'-39"-W for 52.00 ft.; Thence S-79(degree)-03'-27"-W
for 27.77 ft.; Thence N-28(degree)-25'-54"-W for 112.22 ft.; Thence
N-61(degree)-34'-28"-E for 7.77 ft.; Thence N-28(degree)-25'-53"-W for 513.29
ft.; Thence S-61(degree)-17'-22"-W for 11.08 ft.; Thence N-28(degree)-42'-36"-W
for 20.23 ft.; Thence N-60(degree)-59'-48"-E for 230.48 ft.; Thence
N-47(degree)-00'-32"-E for 66.51 ft.; Thence S-30(degree)-11'-18"-E for 16.35
ft.; Thence N-60(degree)-36'-59"-E for 26.14 ft.; Thence S-29(degree)-04'-06"-E
for 266.19 ft.; Thence N-60(degree)-55'-58"-E for 31.18 ft.; Thence
S-29(degree)-04'-14"-E for 90.07 ft.; Thence S-60(degree)-55'-56"-W for 31.19
ft.; Thence S-29(degree)-04'-06"-E for 235.44 ft.; Thence N-61(degree)-12'-24"-E
for 50.07 ft.; Thence S-28(degree)-47'-34"-E for 118.07 ft. to the Point of
Beginning.
Exhibit A-9
<PAGE>
Exhibit A-2
IDB PROPERTIES
THE FOLLOWING ESTATES OR INTEREST IN REAL PROPERTY:
1. The leasehold estate granted pursuant to that certain
Utilities Land Sublease by and between Scott Paper Company and
the Industrial Development Board of the City of Mobile, dated
December 1, 1983, and recorded in Real Property Book 2557,
Page 176, Office of the Judge of Probate, Mobile County,
Alabama Records, amended December 1, 1983, and subsequently
amended by amendment No. 2 to Utilities Land Sublease, dated
November 8, 1994, and recorded in Real Property Book 4221,
Page 41, aforesaid records, subject to the rights granted to
the Scott Paper Company and its successors and assigns
pursuant to the certain Lease and Agreement by and between the
Industrial Development Board of the City of Mobile and Scott
Paper Company dated December 1, 1984 and recorded in Real
Property Book 2702, page 434, aforesaid records and amended by
Amendment No. 1, dated November 8, 1984 and recorded in Real
Property Book 4221, Page 31 aforesaid records.
2. Assets owned by the Industrial Development Board of the City
of Mobile, described in and subject to that certain Lease and
Agreement by and between the Industrial Development Board of
the City of Mobile and Scott Paper Company, dated December 1,
1984, and recorded in Real Property Book 2702, Page 434 and
amended by Amendment No. 1, dated November 8, 1984, and
recorded in Real Property Book 4221, page 31 aforesaid
records.
3. Assets owned by the Industrial Development Board of the City
of Mobile, subject to and described in Paragraph 2 of Exhibit
A of that certain Facilities Lease and Agreement by and
between the Industrial Development Board of the City of Mobile
and Scott Paper Company dated December 1, 1984, and recorded
in Real Property Book 2753, Page 124, as amended by First
Supplemental Facilities Lease Agreement dated June 1, 1985 and
recorded in Real Property Book 2770, Page 290, and further
amended by Second Supplemental Facilities Lease and Agreement,
dated November 8, 1994, and recorded in Real Property Book
4221, Page 17, aforesaid records.
4. Assets owned by the Industrial Development Board of the City
of Mobile, subject to that certain Construction, Financing and
Installment Sale Agreement by and between the Industrial
Development Board of the City of Mobile and Scott Paper
Company, dated November 1, 1976 and recorded in Real Property
Book 1644, Page 153, aforesaid records, and amended by
Supplemental Amendment dated June 1, 1977 and recorded in Real
Property Book 1719, Page 38, aforesaid records.
5. Assets owned by the Industrial Development Board of the City
of Mobile, subject to that certain Construction, Financing and
Page 1 of 3
<PAGE>
Installment Sale Agreement by and between the Industrial Development
Board of the City of Mobile and Scott Paper Company, dated April 1,
1973, as amended by First Supplemental Construction, Financing and
Installment Sale Agreement, dated as of September 1, 1976, recorded in
Real Property Book 1625, Page 496, aforesaid records, and a Second
Supplemental Financing and Installment Sale Agreement, dated as of
October 1, 1980, recorded in Real Property Book 2159, Page 199,
aforesaid records.
6. Assets owned by the Industrial Development Board of the City of Mobile,
described in and subject to that certain Recovery Boiler Facilities
Lease and Agreement by and between the Industrial Development Board of
the City of Mobile and Scott Paper Company, dated December 1, 1994, and
recorded in Real Property Book 4221, Page 968, aforesaid records.
7. The leasehold interest pursuant to that certain Land Lease by
and between Scott Paper Company and the Industrial Development
Board of the City of Mobile, dated December 1, 1994, and
recorded in Real Property Book 4221, Page 955, aforesaid
records, subject to the rights of Scott Paper Company and its
successors and assigns under that certain Recovery Boiler
Facilities Lease and Agreement by and between the Industrial
Development Board of the City of Mobile and Scott Paper
Company dated December 1, 1994, and recorded in Real Property
Book 4221, page 968, aforesaid records.
8. The leasehold interest pursuant to that certain Woodyard Land
Sublease No. 2, dated December 1, 1984, and recorded in Real
Property Book 2753, Page 157, aforesaid records, subject to
the rights of Scott Paper Company and its successors and
assigns under that certain Facilities Lease and Agreement by
and between the Industrial Development Board of the City of
Mobile and Scott Paper Company dated December 1, 1984, and
recorded in Real Property Book 2753, Page 124, as amended by
First Supplemental Facilities Lease Agreement dated June 1,
1985 and recorded in Real Property Book 2770, Page 290, and
further amended by Second Supplemental Facilities Lease and
Agreement, dated November 8, 1994, and recorded in Real
Property Book 4221, page 17, aforesaid records.
PROVIDED, HOWEVER, this Mortgage and the conveyance herein of the
rights of the IDB are expressly made subject to all matters affecting
the same of record in the Office of the Judge of Probate, Mobile
County, Alabama, including, without limitations the following (a) all
rights of the various leases, subleases and assignments owned by the
Company and described in this Mortgage, and (b) the following Trust
Indentures:
(i) TRUST INDENTURE dated April 1, 1973
between
THE INDUSTRIAL DEVELOPMENT BOARD OF THE CITY
Page 2 of 3
<PAGE>
OF MOBILE, ALABAMA and THE FIRST NATIONAL BANK
OF MOBILE, as Trustee.
(ii) TRUST INDENTURE dated November 1, 1976 between
THE INDUSTRIAL DEVELOPMENT BOARD OF THE CITY OF MOBILE,
ALABAMA and THE FIRST NATIONAL BANK OF MOBILE, as Trustee,
recorded in Book 1644, page 0194 in the office of the Probate
Judge of Mobile County, Alabama.
Page 3 of 3
<PAGE>
(iii) TRUST INDENTURE dated December 1, 1983 between
THE INDUSTRIAL DEVELOPMENT BOARD OF THE CITY OF MOBILE,
ALABAMA and BANKAMERICA TRUST COMPANY OF NEW YORK, as Trustee,
recorded in Book 2557, page 079, aforesaid Records.
(iv) TRUST INDENTURE dated December 1, 1984 between THE
INDUSTRIAL DEVELOPMENT BOARD OF THE CITY OF MOBILE, ALABAMA
and CHEMICAL BANK, as Trustee, recorded in Book 2702, page
469, aforesaid Records.
(v) TRUST INDENTURE dated December 1, 1984 between
THE INDUSTRIAL DEVELOPMENT BOARD OF THE CITY OF MOBILE,
ALABAMA and THE FIRST NATIONAL BANK OF MOBILE, as Trustee,
recorded in Book 2753, page 172, aforesaid Records.
(vi) TRUST INDENTURE dated June 1, 1985 between THE
INDUSTRIAL DEVELOPMENT BOARD OF THE CITY OF MOBILE , ALABAMA
and THE FIRST NATIONAL BANK OF MOBILE, as Trustee, recorded in
Book 2770, page 297, aforesaid Records.
(vii) TRUST INDENTURE dated December 1, 1994 between
THE INDUSTRIAL DEVELOPMENT BOARD OF THE CITY OF MOBILE,
ALABAMA and AMSOUTH BANK OF ALABAMA, as Trustee, recorded in
Book 4221, page 1002, aforesaid Records.
Page 4 of 3
<PAGE>
Exhibit B
CONVEYANCE LEASES
ALL OF THE FOLLOWING DOCUMENTS HAVE BEEN CONVEYED BY MOBILE ENERGY
SERVICES HOLDINGS, INC. (FORMERLY KNOWN AS MOBILE ENERGY SERVICES
COMPANY, INC.) TO MOBILE ENERGY SERVICES COMPANY, L.L.C. BY VIRTUE
OF THAT CERTAIN OMNIBUS DEED, BILL OF SALE, GENERAL ASSIGNMENT AND
CONVEYANCE AGREEMENT DATED AS OF JULY 14, 1995:
(a) That certain Construction, Financing and Installment Sale
Agreement between THE INDUSTRIAL DEVELOPMENT BOARD OF THE CITY
OF MOBILE, ALABAMA and SCOTT PAPER COMPANY, dated as of April
1, 1973, as amended by a First Supplemental Construction,
Financing and Installment Sale Agreement, dated as of
September 1, 1976, recorded in the Office of the Judge of
Probate, Mobile County, Alabama in Real Property Book 1625,
Page 496, and a Second Supplemental Financing and Installment
Sale Agreement, dated as of October 1, 1980, recorded in the
Office of the Judge of Probate, Mobile County, Alabama in Real
Property Book 2159, Page 199, as partially assigned to MOBILE
ENERGY SERVICES COMPANY, INC. by that certain Lease and
Assignment Agreement, dated as of December 12, 1994.
(b) That certain Construction, Financing and Installment Sale
Agreement between THE INDUSTRIAL DEVELOPMENT BOARD OF THE CITY
OF MOBILE, ALABAMA and SCOTT PAPER COMPANY, dated as of
September 1, 1976, recorded in the Office of the Judge of
Probate, Mobile County, Alabama in Real Property Book 1625 at
Page 541, as partially assigned to MOBILE ENERGY SERVICES
COMPANY, INC. by that certain Lease and Assignment Agreement,
dated as of December 12, 1994.
(c) That certain Facilities Lease and Agreement between THE
INDUSTRIAL DEVELOPMENT BOARD OF THE CITY OF MOBILE, ALABAMA
and SCOTT PAPER COMPANY, dated as of December 1, 1984, as
amended by that certain First Supplemental Facilities Lease
and Agreement, dated as of June 1, 1985, recorded in the
Office of the Judge of Probate, Mobile County, Alabama in Real
Property Book 2770, Page 2770, at Page 240, and that certain
Second Supplemental Facilities Lease and Agreement, dated as
of November 8, 1994, as assigned by that certain Sublease and
Assignment Agreement, dated as of December 12, 1994.
(d) That certain Lease and Agreement between THE INDUSTRIAL
DEVELOPMENT BOARD OF THE CITY OF MOBILE, ALABAMA and SCOTT
PAPER COMPANY, dated as of December 1, 1984, recorded in the
Office of the Judge of Probate, Mobile County, Alabama in Real
Property Book 2702 at Page 436, as amended by that certain
Amendment No. 1 to Lease and Agreement, dated as of November
8, 1994, recorded in Real Property Book 2702, Page 31,
aforesaid records, and by Amendment No. 2 to Lease and
Page 1 of 2
<PAGE>
Agreement, dated as of December 9, 1994, recorded in Real Property Book
4221, Page 41, aforesaid records, as assigned by that certain Lease
Assignment and Assumption Agreement between SCOTT PAPER COMPANY and
MOBILE ENERGY SERVICES COMPANY, INC., dated as of December 12, 1994
(concurrently herewith, this lease is being amended and restated in
connection with the refunding of the IDB's Variable Rate Demand Solid
Waste Revenue Refunding Bonds (Scott Paper Company Project) Series 1984
A, B, C, D & E).
(e) That certain Recovery Boiler Facilities Lease and Agreement
between THE INDUSTRIAL DEVELOPMENT BOARD OF THE CITY OF
MOBILE, ALABAMA and SCOTT PAPER COMPANY, dated as of December
1, 1994, recorded in the Office of the Judge of Probate,
Mobile County, Alabama in Real Property Book 4221 at Page 968
(which was entered into as a part of a transaction to issue
Industrial Development Revenue Bonds pursuant to an Inducement
Resolution dated December 19, 1991), as assigned to MOBILE
ENERGY SERVICES COMPANY, INC. by that certain Lease Assignment
and Assumption Agreement, dated as of December 12, 1994.
(f) That certain Lease Agreement between SCOTT PAPER COMPANY and MOBILE
ENERGY SERVICES COMPANY, INC., dated as of December 12, 1994, a
Memorandum of Lease of which has been recorded in the Office of the
Judge of Probate, Mobile County, Alabama in Real Property Book 4222 at
Page 1240.
(g) That certain Supplementary Lease Agreement between SCOTT PAPER COMPANY
and MOBILE ENERGY SERVICES COMPANY, INC., dated as of December 12,
1994, a Memorandum of Lease of which has been recorded in the Office of
the Judge of Probate, Mobile County, Alabama in Real Property Book 4222
at Page 1248, as amended by that certain letter agreement, dated as of
December 15, 1994.
Page 2 of 2
<PAGE>
Exhibit C
EASEMENT PREMISES
Scott Paper Company Subdivision (the "Subdivision") as depicted on that
certain recorded plat of such subdivision recorded in Map Book 64, page 39,
Office of the Judge of Probate of Mobile County, Alabama.
LESS AND EXCEPT Lots 7 and 9 of the Subdivision and those portions of
Lot 11 of the subdivision leased from Scott Paper Company to Mobile Energy
Services Holdings, Inc. (formerly known as "Mobile Energy Services Company,
Inc.") pursuant to that certain Supplementary Lease Agreement, dated as of
December 12, 1994, a memorandum of which has been recorded in Real Property Book
4222, Page 1248, Office of the Judge of Probate, Mobile County, Alabama, as
assigned to Mobile Energy Services Company, L.L.C. pursuant to that certain
Omnibus Deed, Bill of Sale, General Assignment and Conveyance, dated as of July
14, 1994.
Together With:
Any and all rights of the Company to any land described in the
following easements:
a) That certain Crossing Easement from Alabama State Docks
Department to Scott Paper Company, dated October 20, 1994 and
recorded in Real Property Book 4215, Page 232; and
b) that certain Grade Crossing Easement from Alabama State
Docks Department to Scott Paper Company, dated October 20,
1994 and recorded in Real Property Book 4215, Page 237; and
c) that certain Agreement Easement and Rights of Ways granted
Hollingsworth & Whitney Company by the State Docks Commission, dated
April 14, 1938 and recorded in Deed Book 279, Page 109; all of the
Office of the Judge of Probate of Mobile County, Alabama.
Page 1 of 1
<PAGE>
Exhibit D
EASEMENTS
1. That certain Easement Deed between S.D. WARREN COMPANY and
MOBILE ENERGY SERVICES COMPANY, INC., dated as of December 12,
1994, recorded in the Office of the Judge of Probate, Mobile
County, Alabama in Real Property Book 4222 at Page 1525, as
now or hereafter amended, as assigned to Mortgagee by that
certain Omnibus Deed, Bill of Sale, General Assignment and
Conveyance, dated as of July 14, 1995, and to be recorded in
the Office of the Judge of Probate, Mobile County, Alabama.
2. That certain Easement Deed between SCOTT PAPER COMPANY and
MOBILE ENERGY SERVICES COMPANY, INC., dated as of December 12,
1994, recorded in the Office of the Judge of Probate, Mobile
County, Alabama in Real Property Book 4222 at Page 1334, as
now or hereafter amended, as assigned to Mortgagee by that
certain Omnibus Deed, Bill of Sale, General Assignment and
Conveyance, dated as of July 14, 1995, and to be recorded in
the Office of the Judge of Probate, Mobile County, Alabama.
3. That certain Easement Deed between SCOTT PAPER COMPANY and
MOBILE ENERGY SERVICES COMPANY, INC., dated as of December 12,
1994, recorded in the Office of the Judge of Probate, Mobile
County, Alabama in Real Property Book 4222 at Page 1616, as
now or hereafter amended, as assigned to Mortgagee by that
certain Omnibus Deed, Bill of Sale, General Assignment and
Conveyance, dated as of July 14, 1995, and to be recorded in
the Office of the Judge of Probate, Mobile County, Alabama.
4. That certain Easement Deed between SCOTT PAPER COMPANY and
MOBILE ENERGY SERVICES COMPANY, L.L.C. dated August __, 1995,
to be recorded in the Office of the Judge of Probate, Mobile
County, Alabama records.
5. That certain Crossing Easement from Alabama State Docks Department to
Scott Paper Company, dated October 20, 1994 and recorded in Real
Property Book 4215, Page 232, Office of the Judge of Probate, Mobile
County, Alabama.
6. That certain Grade Crossing Easement from Alabama State Docks
Department to Scott Paper Company, dated October 20, 1994 and recorded
in Real Property Book 4215, Page 237, Office of the Judge of Probate,
Mobile County, Alabama.
7. That certain Agreement Easement and Rights of Ways granted
Hollingsworth & Whitney Company by the State Docks Commission, dated
April 14, 1938 and recorded in Deed Book 279, Page 109, Office of the
Judge of Probate, Mobile County, Alabama.
Page 1 of 1
Exhibit 4.8
This instrument prepared by and
when recorded, please return to:
Troutman Sanders
600 Peachtree Street
Suite 5200 CROSS REFERENCE:
Atlanta, Georgia 30308-2216 RP 4285,
Attn: Elizabeth Chandler, Esq. PAGE 1121,
Mobile County,
Alabama records
FIRST AMENDMENT TO LEASEHOLD MORTGAGE, ASSIGNMENT OF LEASES,
RENTS, ISSUES AND PROFITS AND SECURITY AGREEMENT AND
FIXTURE FILING
This FIRST AMENDMENT TO LEASEHOLD MORTGAGE, ASSIGNMENT OF LEASES, RENTS,
ISSUES AND PROFITS AND SECURITY AGREEMENT AND FIXTURE FILING is entered into and
executed by and among MOBILE ENERGY SERVICES COMPANY, L.L.C., an Alabama limited
liability company ("MESC"), THE INDUSTRIAL DEVELOPMENT BOARD OF THE CITY OF
MOBILE, ALABAMA ("IDB"; MESC and IDB are collectively referred to herein as
"Mortgagor"), and BANKERS TRUST (DELAWARE), not individually, but solely in its
capacity as "Collateral Agent" under the Intercreditor Agreement ("Mortgagee").
W I T N E S S E T H:
WHEREAS, Scott Paper Company ("Lessor") and Mobile Energy Services
Company, Inc., an Alabama corporation ("MESC") entered into that certain
Supplementary Lease Agreement, dated as of December 12, 1994 (the "Original
Lease"), the subject of which was to lease certain improved real property which
is more particularly described on Exhibit "B" attached to the Original Lease
(the "Original Leased Premises"); and
WHEREAS, the Original Lease was amended by that certain First Amendment
to Supplementary Lease Agreement ("First Lease Amendment"), dated as of July 13,
1995, and that certain Second Amendment to Supplementary Lease Agreement
("Second Lease Amendment"), dated as of August 1, 1995 (the Original Lease, as
amended by the First Amendment and the Second Lease Amendment shall be referred
to herein as the "Lease"); and
WHEREAS, MESC is the successor-in-interest to Mobile Energy Services
Holdings, Inc., an Alabama corporation, which is formerly known as "Mobile
Energy Services Company, Inc.;" and
WHEREAS, Mortgagor and Mortgagee entered into that certain Leasehold
Mortgage, Assignment of Rents, Rents, Issues and Profits and Security Agreement
and Fixture Filing (the "Mortgage"), dated as of August 1, 1995 and filed for
record in
<PAGE>
RP 4285, Page 1121, in the Office of the Judge of Probate, Mobile County,
Alabama, with respect to certain real property located in Mobile County,
Alabama, including, without limitation, the Original Leased Premises; and
WHEREAS, concurrently herewith, Lessor and MESC are entering into that
certain Third Amendment to Supplementary Lease Agreement to change, among other
matters, the description of the Original Leased Premises (the "Relocated
Premises"), upon the terms and conditions therein contained; and
WHEREAS, Mortgagor and Mortgagee wish to modify the Mortgage to include
that certain portion of the Relocated Premises which was not contained in the
Original Leased Premises and for other purposes more particularly described
herein.
NOW, THEREFORE, for and in consideration of the premises described
above and of the mutual benefits to be received by the parties each from the
other, Mortgagor and Mortgagee do hereby execute this First Amendment and do
hereby covenant, certify and agree with each other as follows:
1. The recitals set forth above are incorporated into the agreement
between them for all purposes, and the parties hereby agree that said recitals
are true and correct in all material respects. Except as otherwise specified
herein, capitalized terms used herein but not defined herein shall have the
meanings specified in the Mortgage.
2. In addition to the Collateral subject to the Mortgage, MESC has
bargained and sold, and hereby irrevocably grants, bargains, sells, remises,
releases, conveys, warrants, assigns, transfers mortgages, pledges, delivers,
grants a security interest, sets over and confirms unto Mortgagee for the
benefit and used of the Senior Secured Parties forever, with warranties of title
as set forth in Section 4 of the Mortgage, subject to the terms and conditions
set forth in the Mortgage, all rights, title and interest of MESC in and to that
certain property (the "Additional Collateral") more particularly described on
Exhibit "A" attached hereto and by this reference incorporated herein so that
from and after the date hereof, the Collateral, as such term is defined in the
Mortgage shall include the Additional Collateral.
3. Following the grant described in Paragraph 2 above, Parcel II
described in Exhibit "A", page 2 of 8 of the Mortgage, shall be deleted and that
certain parcel of land described on Exhibit "B" attached hereto and by this
reference incorporated herein shall be replaced in lieu thereof.
4. Except as expressly modified hereby, all other terms
and provisions of the Mortgage shall remain the same, and shall
remain in full force and effect, and the parties hereto do hereby
ratify and affirm each and every term thereof. Mortgagor hereby
<PAGE>
reaffirms its obligation and liability under the Mortgage, acknowledges that it
has no defenses to said obligation and liability, and further agrees to abide by
all terms and provisions of the Mortgage, as amended herein. The terms of this
First Amendment shall in no event occasion a release of any of the Collateral.
The parties hereto agree that this First Amendment shall not constitute a
novation of the Mortgage, or of any security, title or interest created thereby,
or of any of the obligations thereunder. To the extent that any of the terms of
the Mortgage conflict with or are inconsistent with the terms of this First
Amendment, then the terms of this First Amendment shall control.
That except as specifically modified by the First Amendment, the Mortgage,
shall remain in full force and effect.
IN WITNESS WHEREOF, the undersigned have duly caused this First Amendment
to be duly executed this the 8th day of December, 1995.
"MORTGAGEE"
BANKERS TRUST (DELAWARE),
as Collateral Agent
By: /s/
Name: James H. Stallkamp
Title: President
"MORTGAGOR"
MOBILE ENERGY SERVICES
COMPANY, L.L.C., an Alabama
limited liability company
By: /s/
Name: S. Marce Fuller
Title: Vice President
THE INDUSTRIAL DEVELOPMENT
BOARD OF THE CITY OF MOBILE,
ALABAMA
By: /s/
Name: Robert S. Wilbanks
Title: Secretary
<PAGE>
STATE OF Delaware
COUNTY OF Newcastle
I, the undersigned Notary Public in and for said County in said State,
hereby certify that James H. Stallcamp whose name as President of Bankers Trust
(Delaware), is signed to the foregoing First Amendment and who is known to me,
acknowledged before me on this day that, being informed of the contents of the
instrument, he, as such officer and with full authority, executed the same
voluntarily for and as the act of said corporation.
Given under my hand and seal this the 7th day of December, 1995.
/s/
Notary Public
[AFFIX NOTARY SEAL]
STATE OF Georgia
COUNTY OF Fulton
I, the undersigned Notary Public in and for said County in said State,
hereby certify that S. Marce Fuller whose name as Vice President of Mobile
Energy Services Co., L.L.C., is signed to the foregoing First Amendment and who
is known to me, acknowledged before me on this day that, being informed of the
contents of the instrument, he, as such officer and with full authority,
executed the same voluntarily for and as the act of said corporation.
Given under my hand and seal this the 21st day of December, 1995.
/s/
Notary Public
[AFFIX NOTARY SEAL]
<PAGE>
STATE OF Alabama
COUNTY OF Mobile
I, the undersigned Notary Public in and for said County in said State,
hereby certify that Robert Wilbank whose name as Secretary of the Board, is
signed to the foregoing First Amendment and who is known to me, acknowledged
before me on this day that, being informed of the contents of the instrument,
he, as such officer and with full authority, executed the same voluntarily for
and as the act of said corporation.
Given under my hand and seal this the 17th day of December, 1995.
/s/
Notary Public
[AFFIX NOTARY SEAL]
<PAGE>
EXHIBIT "A"
Beginning at a point in Lot 11 of Scott Paper Company Subdivision as recorded in
Map Book 64, Page 39, in the office of the Judge of Probate of Mobile County,
Alabama, said point being 2029.873 feet North and 2185.566 feet East of the Site
of the Great Magnolia and at Alabama State Plane Coordinate, West Zone, N
268516.099, E 328173.913; Thence N-41(degree)-44'-09" E for 197.45 ft.; Thence
S-26(degree)-32'-42"-E for 4.30 ft.; Thence S-41(degree)-44'-09"-W for 195.20
ft. to a point on a curve to the left having a radius of 438.37 ft., the chord
of which bears N-57(degree)-35'-46"-W for 4.05 ft. for an arc distance of 4.05
ft. to the Point of Beginning. Said parcel lying and being in Lot 11 of the
Scott Paper Company Subdivision as recorded in Map Book 64 page 39 in the office
of the Judge of Probate of Mobile, County, Alabama, and containing 785.121
square feet, more or less.
<PAGE>
EXHIBIT "B"
Beginning at a point in Lot 11 of the Scott Paper Company Subdivision as
recorded in Map Book 64, Page 39, in the office of the Judge of Probate of
Mobile County, Alabama; Said point being 2029.873 feet North and 2185.566 feet
East of the Site of the Great Magnolia, and at Alabama State Plan Coordinate,
West Zone, NAD 1927, North 268516.099, East 328173.913; Thence N-41(degree)-44'-
09"-E for 197.45 feet; Thence S-26(degree)-32'-42"-E for 123.69 feet; Thence
S-34(degree)-20'-56"-E for 96.39 feet; Thence 41(degree)-44'-09"-W for 143.79
feet; Thence Northwesterly, around a curve to the left having a radius of 438.37
feet and a Delta angle of 27(degree)-35'-10", the Chord of which bears
N-44(degree)-04'-04"-W for 209.02 feet, for an arc distance of 211.06 feet to
the Point of Beginning. Said Parcel lying and being entirely within the
boundaries of Lot 11 of the aforesaid Scott Paper Company Subdivision, and
containing 0.759 acres, more or less.
Exhibit 4.9
- -------------------------------------------------------------------------------
ASSIGNMENT AND SECURITY AGREEMENT
between
MOBILE ENERGY SERVICES COMPANY, L.L.C.
and
THE INDUSTRIAL DEVELOPMENT BOARD
OF THE CITY OF MOBILE, ALABAMA,
as Debtors,
and
BANKERS TRUST (DELAWARE),
as the Secured Party
Dated as of August 1, 1995
- -------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
1. Definitions and other Provisions of Interpretation......................1
2. Creation of Security Interest...........................................1
3. Representations, Warranties and Covenants...............................5
4. Default.................................................................7
5. Rights and Remedies During Trigger Event Period.........................7
6. Assignment of Governmental Approvals....................................8
7. Security Interest Absolute..............................................8
8. Attorney-in-Fact........................................................9
9. Secured Party and Senior Secured Parties May Perform...................10
10. The Company Remains Liable............................................10
11. Indemnification; Subrogation; Waiver of Offset........................10
12. Reasonable Care.......................................................11
13. Waivers of Rights Inhibiting Enforcement..............................11
14. No Duty on Secured Party's Part.......................................11
15. Notices...............................................................12
16. Other Remedies........................................................12
17. Waiver................................................................12
18. Time of Essence.......................................................12
19. Successors and Assigns................................................12
20. Headings..............................................................12
21. Governing Law.........................................................12
22. Amendments, Changes and Modifications.................................13
23. Assignment............................................................13
24. Severability..........................................................13
25. Secured Party Not Liable..............................................13
26. No Recourse...........................................................13
27. Counterparts..........................................................13
28. Continuing Assignment, Pledge and Security Interest...................13
29. Security Only.........................................................14
30. Payments Set Aside....................................................14
31. Further Assurances....................................................14
32. Shared Drafting.......................................................14
34. Conflict with Intercreditor Agreement.................................15
35. Effect of Termination of Intercreditor Agreement......................15
APPENDIX A - Defined Terms
-i-
<PAGE>
This ASSIGNMENT AND SECURITY AGREEMENT (this "Agreement"),
dated as of August 1, 1995, among MOBILE ENERGY SERVICES COMPANY, L.L.C., an
Alabama limited liability company ("Company"), THE INDUSTRIAL DEVELOPMENT BOARD
OF THE CITY OF MOBILE, ALABAMA, a public corporation organized and existing
under the laws of the State of Alabama (the "IDB" and, severally and not jointly
with the Company, "Debtors"), and BANKERS TRUST (DELAWARE), a Delaware banking
corporation, as Collateral Agent under the Intercreditor Agreement referred to
below (the "Secured Party").
W I T N E S S E T H :
WHEREAS, in consideration of (a) the execution and delivery by
the Secured Party and the Senior Secured Parties (as defined below) of
the Financing Documents (as defined below) to which they are parties,
(b) the Senior Secured Parties making available to the Company the
Financing Commitments (as defined below) and advancing monies
thereunder and (c) the Senior Secured Party providing certain services
under this Agreement, the Mortgage (as defined below), the
Intercreditor Agreement and any other Financing Documents to which the
Secured Party is a party, the Senior Secured Parties require each
Debtor to grant the security interest contemplated by this Agreement to
the Secured Party to secure the Secured Obligations (as defined below);
and
WHEREAS, this Agreement is intended as security for the
Secured Obligations.
NOW, THEREFORE, in consideration of the premises set forth
above and the mutual covenants contained herein, in order to induce each Senior
Secured Party to issue or make available the Secured Obligations pursuant to the
terms and provisions of the Financing Documents to which each such Senior
Secured Party is a party and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and FOR THE PURPOSE OF
SECURING the payment and performance of the Secured Obligations, which Secured
Obligations may increase, decrease and increase again, from time to time, the
parties hereto hereby agree as follows:
1. Definitions and other Provisions of Interpretation. For all
purposes of this Agreement, except as otherwise expressly provided in this
Agreement or unless the context otherwise requires, all terms used herein shall
have the meanings set forth in Appendix A to the Intercreditor and Collateral
Agency Agreement dated as of August 1, 1995 among the First Union National Bank
of Georgia, as the Indenture Trustee referred to therein, First Union National
Bank of Georgia, as the Tax-Exempt Indenture Trustee referred to therein, Banque
Paribas, as the Working Capital Facility Provider referred to therein, the IDB,
the Company, Mobile Energy Services Holdings, Inc. and the Secured Party.
<PAGE>
2. Creation of Security Interest. (a) As security for the full
payment, observance and performance when due (whether at stated maturity, by
acceleration or otherwise) of any and all of the Secured Obligations now
existing or hereafter arising, each Debtor hereby mortgages, pledges and
collaterally assigns to the Secured Party (for the ratable benefit of the Senior
Secured Parties), and grants to and in favor of the Secured Party (for the
ratable benefit of the Senior Secured Parties) a continuing lien upon, and a
continuing security interest in, all estate, right, title and interest (whatever
it may be) of such Debtor in, to and under the following (whether now
foreseeable, whether or not the same is subject to Article 8 or 9 of the Uniform
Commercial Code or constitutes Collateral by reason of one or more of the
following paragraphs and wherever the same may be located) (collectively, the
"Collateral"):
(i) all Project Contracts and any other Contract, commitment
or understanding heretofore or hereafter executed by (or on behalf of)
such Debtor in connection with the Energy Complex, the Site or any of
the Project Documents (the "Assigned Agreements"), including (A) all
rights of such Debtor to receive monies due and to become due, and all
monies actually received by such Debtor, under or pursuant to the
Assigned Agreements, (B) all rights of such Debtor to receive proceeds
of any performance or payment bond, insurance, indemnity, warranty or
guaranty with respect to the Assigned Agreements, (C) all claims of
such Debtor for damages arising out of or for breach of or default
under the Assigned Agreements and (D) all rights of such Debtor to take
any action to terminate, amend, supplement, modify or waive performance
of the Assigned Agreements, to perform thereunder and to compel
performance and otherwise exercise all remedies thereunder; provided,
however, that, except during a Trigger Event Period, such Debtor may
exercise all of the foregoing rights in any lawful manner not
inconsistent with this Agreement, the Mortgage or any of the other
Security Documents;
(ii) all automobiles, trucks, boats and other rolling stock
or moveable personal property ("Rolling Stock"), including Rolling
Stock for which the title thereto is evidenced by a certificate of
title issued by the United States or a state that permits or requires a
lien thereon to be evidenced upon such certificate, in which the
Company now or at any time in the future may have an interest or in
which the IDB now or at any time in future may have an interest in
connection with the Energy Complex or the Site. In connection
therewith, such Debtor shall notify the Secured Party before acquiring
any such Rolling Stock, and provide the Secured Party with (A) all lien
entry forms and similar documents, duly completed, executed and
acknowledged, (B) the certificates of title to such Rolling Stock and
(C) such other information or documents, in each case, to the extent
required or reasonably desirable in order to enable the Secured Party
-2-
<PAGE>
to perfect the lien granted hereunder on such Rolling Stock. Upon
execution of such lien entry forms and other documents by the Secured
Party, such Debtor shall, at the sole cost and expense of the Company,
cause such lien entry forms and other documents to be presented to the
appropriate authorities in order to perfect the lien granted hereunder
on such Rolling Stock for the benefit of the Secured Party;
(iii) to the extent permitted by Law, all Governmental
Approvals relating to the Energy Complex; provided, however, that any
of such Governmental Approvals that by their terms or by operation of
Law would become void, voidable, terminable or revocable or would
constitute a breach or default thereunder if pledged or assigned
hereunder or if a security interest therein were granted hereunder are
expressly excepted and excluded from the lien and terms of this
Agreement to the extent necessary to avoid such voidness, voidability,
terminability or revocability;
(iv) all Equipment (as such term is defined in the
Uniform Commercial Code as in effect on the date hereof);
(v) all accounts (as defined in the Uniform Commercial
Code), together with any right to payment for goods sold or leased or
for services rendered in connection with such accounts, whether or not
such right to payment has been earned by performance, and all
agreements, rights, interests, inventory (including fuel supplies
including oil, gas, coal, weak black liquor, biomass and sludge) goods,
chattel paper, documents, instruments, general intangibles, fixtures,
trade fixtures, consumer goods, money and other assets owned by such
Debtor on the date hereof or hereafter arising or acquired, including
the 1994 Bonds, the Improvements (as such term is defined in the
Mortgage), and designs, plans and specifications relating to the Site
and the facilities owned by such Debtor on the date hereof or hereafter
acquired, if applicable, all offsets or allowances under the Clean Air
Act Amendments of 1990 and any implementing state Laws in respect
thereof and any right, title or interest of such Debtor under any
indemnity, warranty or guaranty in respect of the Site and the Energy
Complex or of any of the foregoing and any rents, revenues, incomes and
profits in respect of the Site and the Energy Complex; provided,
however, that no Debt Service Reserve Account, Tax-Exempt Debt Service
Reserve Account or Mill Owner Maintenance Reserve Account, nor (except
in the case of the Mill Owner Maintenance Reserve Account, the
Company's right to receive amounts therein to the extent such amounts
are in excess of $2 million) any monies contained therein or hereafter
transferred thereto or deposited therein (nor any right to receive
monies thereunder), shall be included in the Collateral and no lien or
security interest therein shall be deemed to be created hereby;
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(vi) all proceeds of and any unearned premiums on any
insurance policies covering the Collateral, including the right to
receive the proceeds of any insurance, judgments or settlements made in
lieu thereof for damage to the Collateral;
(vii) (A) the Intercreditor Agreement Accounts, all sums of
money, from any source whatsoever, now or hereafter transferred to and
comprising the Intercreditor Agreement Accounts or delivered to the
Secured Party for deposit therein, including all credit balances
therein, any and all cash and investments at any time on deposit in the
Intercreditor Agreement Accounts and any and all interest and dividends
or other income derived from such monies and investments, and (B) all
statements, certificates, passbooks and instruments representing the
Intercreditor Agreement Accounts and all other property from time to
time received, receivable or otherwise distributed in respect of or in
exchange for the Intercreditor Agreement Accounts; and
(viii) to the extent not included in the foregoing, all
proceeds, products and accessions of and to any and all of the
foregoing, including "proceeds" (within the meaning of the Uniform
Commercial Code) and whatever is received upon any collection,
exchange, sale or other disposition of any of the Collateral, and any
property into which any of the Collateral is converted, whether cash or
noncash proceeds, and any and all other amounts paid or payable under
or in connection with any of the Collateral.
Notwithstanding the foregoing, the Security Interest granted
hereby in favor of the Secured Party shall be released without condition as to
monies deposited into any Indenture Account or Tax-Exempt Indenture Account or
into the Mill Owner Maintenance Reserve Account upon, in each case, the deposit
of such monies therein, and the Collateral shall not include, and no Security
Interest is granted hereby in, any right, title or interest of either Debtor in
any Indenture Account or Tax-Exempt Indenture Account or the Mill Owner
Maintenance Reserve Account, all sums of money, from any source whatsoever, now
or hereafter transferred to or deposited into any Indenture Account or
Tax-Exempt Indenture Account (or delivered to the Indenture Trustee or the
Tax-Exempt Indenture Trustee for deposit therein) or, except to the extent
monies on deposit therein exceed $2,000,000, the Company's right to receive such
excess from the Mill Owner Maintenance Reserve Account, including, in each case,
all credit balances therein, any and all cash and investments at any time on
deposit in any Indenture Account or any Tax-Exempt Indenture Account or the Mill
Owner Maintenance Reserve Account, and any and all interest, dividends and other
income derived from such monies and investments on deposit therein and all
certificates, passbooks and instruments representing any Indenture Account or
Tax-Exempt Indenture Account or the Mill Owner Maintenance Reserve Account and
all other property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any Indenture Account
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or Tax-Exempt Indenture Account or the Mill Owner Maintenance
Reserve Account.
In addition, notwithstanding the foregoing, the Security
Interest granted hereby shall be, and shall at all times continue to be, subject
and subordinate in all respects to the lien and security interest of the
Tax-Exempt Indenture Trustee granted by the IDB pursuant to or in connection
with the Tax-Exempt Indenture Securities, the 1983 Bonds, the 1984 Bonds, the
1994 Bonds, the Mixed-Use Bonds and the Environmental Bonds, including, in each
case, any renewal, modification, extension, substitution, replacement or
consolidation thereof. Such subordination shall not be affected by any further
advance, repayment and readvance or prepayment under or in respect of any
instrument secured by the Tax-Exempt Indenture.
It is the intention of the parties that the foregoing
description of the Collateral shall be sufficient, together with the description
of the Collateral set forth in the Mortgage, to enable the Secured Party to take
possession of, or foreclose upon, all of the right, title and interest of each
Debtor in and to the Shared Collateral, including the Site and the Energy
Complex and any and all real property and personal property, tangible and
intangible, used or useable in connection therewith, and to enable the Secured
Party or its designee to, in accordance with the terms hereof and of the
Mortgage, operate, sell or otherwise dispose of the entire interest of such
Debtor in and to the Shared Collateral, including the Site and the Energy
Complex or any part thereof, during a Trigger Event Period; provided, however,
that all of the Collateral is hereby assigned to the Secured Party solely as
security, and the Secured Party shall have no duty, liability or obligation
whatsoever to such Debtor with respect to any of the Collateral, unless the
Secured Party so elects in writing consistent with its rights under this
Agreement.
(b) This Agreement secures, in accordance with the
provisions hereof, the Secured Obligations.
3. Representations, Warranties and Covenants. The
Company hereby represents, warrants and covenants as follows:
(a) The Security Interest granted and created pursuant to this
Agreement is a legal and valid security interest in the Collateral now
owned by the Company or hereafter acquired.
(b) The Security Interest granted and created pursuant to this
Agreement (i) with respect to such of the Collateral in which a
security interest may be perfected by the filing of a Financing
Statement under the Uniform Commercial Code will, upon the filing of
the necessary Financing Statements in all appropriate jurisdictions,
create a perfected first priority security interest in such Collateral
now owned by the Company or hereafter acquired, prior and superior to
all other Liens (other than Permitted Liens), and (ii) with respect to
all of
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the other Collateral to which the Uniform Commercial Code is applicable
will, upon the Secured Party's taking possession of such Collateral,
create a perfected first priority security interest in such Collateral
now owned by the Company or hereafter acquired, prior and superior to
all other Liens (other than Permitted Liens).
(c) The Company is the legal and beneficial owner of the
Collateral now owned by it, and will be the legal and beneficial owner
of the interest in the Collateral hereafter acquired by it, free and
clear of all Liens (other than Permitted Liens).
(d) No authorization, approval or other action by, and no
notice to or filing with, any Governmental Authority, any regulatory
body or any other Person is required of the Company with respect to the
execution, delivery and performance of, or the grant of the Security
Interest pursuant to, this Agreement (other than the filing of the
Financing Statements referred to in Section 3(b) and such
authorizations, approvals and other actions that have been obtained and
are in full force and effect).
(e) The Company shall notify the Secured Party promptly in
writing of any claim against the Collateral adverse in any material
respect to the interest of the Secured Party hereunder.
(f) The Company agrees that from time to time upon the request
of the Secured Party, the Company will, at its sole cost and expense,
promptly execute and deliver all further instruments and documents, and
take all further action, that may be necessary or advisable, or that
the Secured Party may request, in order to perfect, maintain, preserve
and protect the Security Interest granted or purported to be granted
hereby in the Collateral, maintain, preserve and protect the
Collateral, or to enable the Secured Party to exercise and enforce its
rights and remedies hereunder with respect to the Collateral. Without
limiting the generality of the foregoing, the Company will (i) if any
Collateral shall be evidenced by a promissory note or other instrument,
deliver and pledge to the Secured Party hereunder such note or
instrument duly endorsed and accompanied by duly executed instruments
of transfer or assignment, all in form and substance satisfactory to
the Secured Party, and (ii) execute and file such financing or
continuation statements, or amendments thereto and assignments thereof,
and such other instruments, endorsements or notices, as may be
necessary, or as the Secured Party may request, in order to perfect,
maintain, preserve and protect the Security Interest granted or
purported to be granted hereby. Each Debtor hereby authorizes the
Secured Party to file one or more financing or continuation statements,
and amendments thereto and assignments thereof, relating to all or
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any part of the Collateral without the signature of such
Debtor where permitted by Law.
(g) The Company shall keep and maintain, at its sole cost and
expense, satisfactory and complete records of the Collateral. The
Company shall furnish to the Secured Party from time to time statements
and schedules further identifying and describing the Collateral and
such other reports in connection with the Collateral (including such
file search reports from such Uniform Commercial Code and other filing
and recording offices and such opinions of counsel relating to the
Collateral and the attachment and perfection of the Security Interest)
as the Secured Party may request. The Company's chief executive office
and principal place of business is 900 Ashwood Parkway, Suite 300,
Atlanta, Georgia 30338; the Company shall promptly notify the Secured
Party of any change of the foregoing.
(h) The Company shall not create, incur or permit to exist,
and shall defend the Collateral against and take such other action as
is necessary to remove, any Lien or claim on or to the Collateral,
other than Permitted Liens, and will defend the right, title and
interest of the Secured Party in and to any of the Collateral against
the claims and demands of all Persons whomsoever. Except with respect
to Permitted Liens, neither Debtor shall file or suffer to be on file,
or authorize or permit to be filed or to be on file, in any
jurisdiction, any financing statement or like instrument with respect
to the Collateral in which the Secured Party is not named as the sole
secured party (other than any such instrument on file as of the date
hereof (and any continuation thereof) naming the Company as secured
party.
(i) The Company shall notify the Secured Party promptly if any
tangible, material items of Collateral, or any material items that are
to become Collateral, are to be stored for any length of time (other
than temporary storage incident to transportation to the Site) in any
location other than the Site. The notice shall specify, in such detail
as is required by the Secured Party, (i) the items that are to be
stored, (ii) the location at which such items are to be stored and the
name and address of the owner and operator of the storage facility,
(iii) the length of time that such items are to be stored at such
location and (iv) the name of the Person who is the owner of such
items. To the extent necessary, the Company shall execute additional
security agreements, financing statements and other related documents,
covering the items that are to be stored, so as to perfect a first
priority security interest therein in favor of the Secured Party. If
for any reason a first priority security interest cannot be perfected
in the items stored or to be stored, the Company shall promptly
transport such items to the Site. Upon instructions from the Secured
Party, the Company shall obtain such additional insurance on the
Collateral stored at any
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location other than the Site as the Secured Party, based on the advice
of the Independent Insurance Advisor, reasonably deems necessary,
consistent with the requirements of the Financing Documents, to protect
the Secured Party's interests.
(j) In the event that the Company shall receive directly from
any party to the Assigned Agreements any payments thereunder, the
Company shall receive such payments in constructive trust for the
benefit of the Secured Party, shall segregate such payments from other
funds of the Company and shall forthwith transmit and deliver such
payments to the Secured Party in the same form as so received (with any
necessary endorsements), in each case in accordance with the
Intercreditor Agreement.
4. Default. The occurrence and continuation of a
Trigger Event shall be deemed a "Security Agreement Event of
Default" under this Agreement.
5. Rights and Remedies During Trigger Event Period. (a)
During a Trigger Event Period, the Secured Party may, in accordance
with its obligations under the Intercreditor Agreement, do one or
more of the following:
(i) notwithstanding anything in the Financing Documents to
the contrary, take all cash held by the Secured Party (including any
resulting from the liquidation of investments) as Collateral, including
all cash proceeds received or receivable by the Secured Party in
respect of the Collateral, and use such cash for such purposes in
accordance with its obligations under the Intercreditor Agreement, and
in the interest of the Energy Complex and/or apply the same in whole or
in part, in satisfaction of all or any part of the Secured Obligations
(whether or not due and payable) in the manner specified in Section
5(b);
(ii) upon notice to the Company, which notice need not be in
writing (but which notice shall promptly be confirmed in writing), make
such payments and do such acts in accordance with its obligations under
the Intercreditor Agreement, to protect, maintain, preserve, perfect or
continue the perfection of the Security Interest in the Collateral and
to maintain, preserve and protect the Collateral, including paying,
purchasing, contesting or compromising any Lien that is, or purports to
be, prior to or superior to the Security Interest granted hereunder,
and commencing, appearing or otherwise participating in or controlling
any action or proceeding purporting to affect the Security Interest in
or ownership of the Collateral;
(iii) foreclose this Agreement as herein provided or in any
manner permitted by Law and exercise any and all of the rights and
remedies conferred upon the Secured Party by the Security Documents
either concurrently or in such order as the
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Secured Party may determine without affecting the rights or remedies to
which the Secured Party may be entitled under the Security Documents;
(iv) require the Company to, and the Company hereby agrees
that it will, at its expense and upon request of the Secured Party
forthwith, assemble all or part of the Collateral as directed by the
Secured Party and make it available to the Secured Party at a place to
be designated by the Secured Party that is reasonably convenient to
both parties;
(v) without notice or demand or legal process, enter
upon any premises of the Company and take possession of the
Collateral;
(vi) without notice, except as specified below, sell the
Collateral or any part thereof in one or more parcels at public or
private sale, at any of the Secured Party's offices or elsewhere, at
such time or times, for cash, on credit or for future delivery, and at
such price or prices and upon such other terms as the Secured Party may
deem commercially reasonable. The Company agrees that, to the extent
notice of sale shall be required by Law, at least ten (10) days' notice
to the Company of the time and the place of any public sale or the time
after which any private sale is to be made shall constitute reasonable
notification. At any sale of the Collateral, if permitted by Law, the
Secured Party or any Senior Secured Party may bid (which bid may be, in
whole or in part, in the form of cancellation of indebtedness) for the
purchase of the Collateral or any portion thereof for the account of
the Secured Party or such Senior Secured Party. The Secured Party shall
not be obligated to make any sale of Collateral regardless of notice of
sale having been given. The Secured Party may adjourn any public or
private sale from time to time by announcement at the time and place
fixed therefor, and such sale may, without further notice, be made at
the time and place to which it was so adjourned. Each Debtor authorizes
the Secured Party, at any time and from time to time, to execute, in
connection with a sale of the Collateral pursuant to the provisions of
this Agreement, any endorsements, assignments or other instruments of
conveyance or transfer with respect to the Collateral; and
(vii) exercise with respect to the Collateral, in addition to
other rights and remedies provided for herein or otherwise available to
it, all the rights and remedies of a secured party after default under
the Uniform Commercial Code.
(b) The proceeds of any sale or realization of the
Collateral shall be applied in accordance with Section 6.1 of the
Intercreditor Agreement.
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(c) The Secured Party may consult, at the Company's expense,
with counsel (who may or may not be counsel to the Company), and the opinion of
such counsel shall be full and complete authorization and protection, and the
Secured Party shall be entitled to conclusively rely on the opinion of such
counsel, in respect of any action taken or not taken or suffered by the Secured
Party under this Agreement.
6. Assignment of Governmental Approvals. During a Trigger
Event Period, the Company agrees to use its best efforts to have renewed or
extended in the name of the Secured Party (or other Person operating the Energy
Complex) or otherwise to obtain for the Secured Party (or such other Person) the
benefits of all of the Company's Governmental Approvals to the extent that such
Governmental Approvals and other rights shall not be assignable or transferable.
7. Security Interest Absolute. All rights of the
Secured Party hereunder, the Security Interest and all obligations
of the Company hereunder, shall be absolute and unconditional
irrespective of:
(a) any lack of validity or enforceability of any of the
Project Documents, any of the Collateral (including the Assigned
Agreements) or any other agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Secured Obligations, or any
other amendment or waiver of or any consent to any departure from any
of the Project Documents or any of the Collateral (including the
Assigned Agreements);
(c) any exchange, release or non-perfection of any Collateral
or any other collateral, or any release or amendment or waiver of or
consent to or departure from any guaranty, for all or any of the
Secured Obligations; or
(d) to the fullest extent permitted by Law, any other
circumstance that might otherwise constitute a defense available to, or
a discharge of, the Company or any third party pledgor.
8. Attorney-in-Fact. Each Debtor, until payment in full of the
Secured Obligations, irrevocably constitutes and appoints the Secured Party, and
any other Person that the Secured Party may designate, to act, upon the
occurrence and during a Trigger Event Period, as such Debtor's attorney-in-fact
(which appointment as attorney-in-fact shall be coupled with an interest and be
irrevocable), with full authority in the place and stead of such Debtor and in
the name of such Debtor or otherwise, from time to time in the Secured Party's
discretion and subject to Section 7.3 of the Intercreditor Agreement, to take
any action and to execute any and all documents and instruments that the Secured
Party may
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deem necessary or advisable to accomplish the purposes of this
Agreement, including:
(a) to receive, endorse and collect all instruments made
payable to such Debtor representing any dividends, interest payments or
other distributions constituting Collateral or any part thereof and to
give full discharge for the same and to file any claim or to take any
other action or proceeding in any court of Law or equity or otherwise
deemed appropriate by the Secured Party for the purpose of collecting
any and all of such dividends, payments or other distributions;
(b) to pay or discharge taxes and Liens levied or placed
on the Collateral; and
(c) (i) to direct any party liable for any payment under or
with respect to any of the Collateral to make payment of any and all
monies due or to become due thereunder or with respect thereto directly
to the Secured Party or as the Secured Party shall direct, (ii) to ask
or demand for, to collect and to receive payment of and receipt for any
and all monies, claims and other amounts due or to become due at any
time in respect of or arising out of any Collateral, (iii) to commence
and prosecute any suits, actions or proceedings at Law or in equity in
any court of competent jurisdiction to collect the Collateral or any
part thereof and to enforce any other right in respect of any
Collateral, (iv) to defend any suit, action or proceeding brought
against such Debtor with respect to any Collateral, (v) to settle,
compromise or adjust any suit, action or proceeding described in
clauses (iii) and (iv) above and, in connection therewith, to give such
discharges or releases as the Secured Party may deem appropriate and
(vi) generally, to sell, transfer, pledge and make any agreement with
respect to or otherwise deal with any of the Collateral as fully and
completely as though the Secured Party were the absolute owner thereof
for all purposes and to do, at the Secured Party's option and at such
Debtor's sole cost and expense, at any time, or from time to time, all
acts and things that the Secured Party deems necessary to protect,
maintain, preserve or realize upon the Collateral and the Security
Interest granted herein and to effect the intent of this Agreement, all
as fully and effectively as such Debtor might do.
Each Debtor hereby ratifies all that the Secured Party shall
do or cause to be done as such Debtor's attorney-in-fact consistent with the
foregoing. Each Debtor also authorizes the Secured Party, during a Trigger Event
Period, to communicate in its own name with any party to any Project Document at
any time, with regard to any matter relating to such Project Document.
9. Secured Party and Senior Secured Parties May Perform.
The Secured Party or any Senior Secured Party (upon notice to the
Secured Party and each other Senior Secured Party), without
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releasing the Company from any obligation, covenant or condition hereof, itself
may (but shall not be obligated to), during any Trigger Event Period, make any
payment or perform, or cause the performance of, any such obligation, covenant,
condition or agreement or any other action in such manner and to such extent as
the Secured Party may deem necessary to protect, perfect, maintain, preserve or
continue the perfection of the Security Interest in the Collateral or to
protect, maintain or preserve the Collateral. Any costs or expenses incurred by
the Secured Party or any Senior Secured Party in connection with the foregoing,
including reasonable attorneys' fees and expenses, shall constitute a part of
the Secured Obligations, shall bear interest at a rate per annum equal to the
then highest yield on any of the Outstanding Senior Debt plus two percent (2%)
and shall be payable upon demand by the Secured Party or such Senior Secured
Party, as the case may be.
10. The Company Remains Liable. Anything herein to the
contrary notwithstanding, the Company shall remain liable under the Assigned
Agreements and any other Contracts included in the Collateral to the extent set
forth therein to perform all of its duties and obligations thereunder to the
same extent as if this Agreement had not been executed. The exercise by the
Secured Party of any of the rights or remedies hereunder shall not release the
Company from any of its duties or obligations under the Assigned Agreements or
any other Contracts included in the Collateral, except to the extent the Company
is expressly released therefrom by the Secured Party in writing. The Secured
Party shall not have any obligation or liability under the Assigned Agreements
or any other Contracts included in the Collateral by reason of this Agreement,
nor shall the Secured Party be obligated to perform any of the obligations or
duties of the Company thereunder or to take any action to collect or enforce any
claim for payment assigned hereunder, except to the extent the Secured Party
expressly assumes such obligations or duties in writing consistent with its
rights under this Agreement.
11. Indemnification; Subrogation; Waiver of Offset. (a) The
Company shall indemnify the Secured Party from and against any and all claims,
losses and liabilities growing out of or resulting from this Agreement or the
Collateral or any part thereof (including enforcement of this Agreement, but
excluding any such claims, losses or liabilities resulting from the Secured
Party's gross negligence or willful misconduct).
(b) The Company waives any and all right to claim or recover
against the Secured Party, and its directors, officers, employees, agents and
representatives, for loss of or damage to the Company, the Collateral, the
Company's property or the property of others under the Company's control from
any cause to the extent insured against or required to be insured against by the
provisions of the Financing Documents, except for such loss or damage to the
extent due to gross negligence or willful misconduct of the Secured Party or its
directors, officers, employees or representatives.
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12. Reasonable Care. The Secured Party shall exercise the same
degree of care hereunder as it exercises or would exercise in connection with
similar transactions for its own account. The Secured Party shall be deemed to
have exercised reasonable care in the custody and preservation of the Collateral
in its possession if the Collateral is accorded treatment substantially equal to
that which the Secured Party accords or would accord collateral held by the
Secured Party in similar transactions for its own account.
Without limiting the generality of the foregoing and except as
otherwise provided by applicable Law, the Secured Party shall not be required to
marshall any collateral, including the Collateral subject to the Security
Interest created hereby, or to resort to any item of Collateral in any
particular order; and all of the Secured Party's rights hereunder and in respect
of such Collateral shall be cumulative and in addition to all other rights,
however existing or arising. To the extent that it lawfully may, each Debtor
hereby agrees that it will not invoke any Law relating to the marshaling of
collateral that might cause delay in or impede the enforcement of the Secured
Party's rights under this Agreement, the Mortgage or under any other instrument
evidencing any of the Secured Obligations or under which any of the Secured
Obligations is outstanding or by which any of the Secured Obligations is secured
or guaranteed.
13. Waivers of Rights Inhibiting Enforcement. Each Debtor
waives (a) any claim that, as to any part of the Collateral, a public sale, if
such Debtor elects so to proceed, is, in and of itself, not a commercially
reasonable method of sale for such Collateral, (b) the right to assert in any
action or proceeding between it and the Secured Party any offsets or
counterclaims that it may have, (c) except as otherwise provided in any of the
Security Documents, TO THE EXTENT PERMITTED BY APPLICABLE LAW, NOTICE OR
JUDICIAL HEARING IN CONNECTION WITH THE SECURED PARTY'S TAKING POSSESSION OR
DISPOSITION OF ANY OF THE COLLATERAL, INCLUDING ANY AND ALL PRIOR NOTICE AND
HEARING FOR ANY PREJUDGMENT REMEDY OR REMEDIES AND ANY SUCH RIGHT THAT EACH
DEBTOR WOULD OTHERWISE HAVE UNDER THE CONSTITUTION OR ANY STATUTE OF THE UNITED
STATES OR OF ANY STATE, AND ALL OTHER REQUIREMENTS AS TO THE TIME, PLACE AND
TERMS OF SALE OR OTHER REQUIREMENTS WITH RESPECT TO THE ENFORCEMENT OF THE
SECURED PARTY'S RIGHTS HEREUNDER, (d) all rights of redemption, appraisement,
valuation, stay and extension or moratorium, (e) to the extent permitted by Law,
the benefits of all Laws referred to in Section 12 and (f) all other rights the
exercise of which would, directly or indirectly, prevent, delay or inhibit the
enforcement of any of the rights or remedies under the Security Documents or the
absolute sale of the Collateral, now or hereafter in force under any applicable
Law, and each Debtor, for itself and all who may claim under it, insofar as it
or they now or hereafter lawfully may, hereby waives the benefit of all such
Laws and rights.
14. No Duty on Secured Party's Part. The powers
conferred on the Secured Party hereunder are solely to protect the
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Secured Party's interests in the Collateral and shall not impose any duty upon
it to exercise any such powers. The Secured Party shall be accountable only for
amounts that it receives as a result of the exercise of such powers, and neither
it nor any of its officers, directors, employees or agents shall be responsible
to the Company for any act or failure to act hereunder, except for its own gross
negligence or willful misconduct.
15. Notices. All notices, demands, requests and other
communications required or permitted hereunder shall be in writing
and shall be given and deemed to have been given in accordance with
Section 12.4 of the Intercreditor Agreement.
16. Other Remedies. The remedies herein provided are
cumulative and not exclusive of any remedies provided by Law. The Secured Party
shall have all of the rights and remedies granted under the Security Documents
and available at Law or in equity, and these same rights and remedies may be
pursued separately, successively or concurrently against the Company or any
collateral under the Security Documents, at the sole discretion of the Secured
Party. The application of the Collateral to satisfy the Secured Obligations
pursuant to the terms hereof shall not operate to release the Company from its
Secured Obligations until payment in full of any deficiency has been made in
cash.
17. Waiver. By exercising or failing to exercise any of its
rights, options or elections hereunder (without also expressly waiving the same
in writing), the Secured Party shall not be deemed to have waived any breach or
default on the part of the Company or to have released the Company from any of
its obligations secured hereby. No failure on the part of the Secured Party to
exercise, and no delay in exercising (without also expressly waiving the same in
writing), any right, power or privilege shall preclude any other or further
exercise thereof, or the exercise of any other right, power or privilege.
18. Time of Essence. TIME IS OF THE ESSENCE WITH
RESPECT TO EACH AND EVERY COVENANT, AGREEMENT AND OBLIGATION UNDER
THIS AGREEMENT.
19. Successors and Assigns. All covenants, agreements,
representations and warranties in this Agreement by the parties hereto shall
bind and, to the extent permitted hereby, shall inure to the benefit of and be
enforceable by their respective successors and assigns, whether so expressed or
not.
20. Headings. The captions, headings and table of
contents used in this Agreement are for convenience only and shall
not affect the construction hereof.
21. Governing Law. THE RIGHTS AND DUTIES OF EACH DEBTOR
AND THE SECURED PARTY SHALL, PURSUANT TO SECTION 5-1401 OF THE NEW
YORK GENERAL OBLIGATIONS LAW, BE GOVERNED BY THE LAW OF THE STATE
OF NEW YORK, WITHOUT REFERENCE TO THE CHOICE OF LAW PROVISIONS
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THEREOF (OTHER THAN SUCH SECTION 5-1401), EXCEPT THAT SUCH LAW SHALL NOT APPLY
WITH RESPECT TO ANY COLLATERAL WHERE, AND TO THE EXTENT THAT, IT IS NECESSARY TO
APPLY THE LAWS OF ANOTHER JURISDICTION TO PERFECT LIENS RELATING TO DEBT ISSUED
UNDER THE FINANCING DOCUMENTS.
22. Amendments, Changes and Modifications. This
Agreement may not be effectively amended or terminated except as
permitted by the Intercreditor Agreement.
23. Assignment. The Secured Party may assign this
Agreement to any successor Secured Party under and in accordance
with the Intercreditor Agreement.
24. Severability. Any provision of this Agreement that is
prohibited, unenforceable or not authorized in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition,
unenforceability or non-authorization, without invalidating the remaining
provisions hereof or affecting the validity, enforceability or legality of such
provision in any other jurisdiction.
25. Secured Party Not Liable. Neither this Agreement nor any
action on the part of the Secured Party (other than an express written
assumption) shall constitute an assumption by the Secured Party of any of the
obligations of the Company related to any of the Collateral, and the Company
shall continue to be liable for all such obligations whether incurred before or
after a Security Agreement Event of Default.
26. No Recourse. Satisfaction of the obligations of the
Company under this Agreement shall be had solely from the assets of the Mobile
Energy Parties. No recourse shall be had to (a) any assets or properties of the
Members (other than Mobile Energy as provided in the Guaranty) or of the
stockholders of Mobile Energy, other than their respective interests in the
Collateral, (b) any Member (other than Mobile Energy as provided in the
Guaranty) or (c) any Affiliate, incorporator, stockholder, partner, member,
officer, director or employee of any Member (other than the Mobile Energy
Parties and, in respect of any Southern Guaranty on deposit in any Reserve
Account Security Account, Southern) or of the Company (other than Mobile Energy
and, in respect of any Southern Guaranty on deposit in any Reserve Account
Security Account, Southern). Notwithstanding anything in this Section 26 to the
contrary, (i) nothing contained in this Agreement shall limit or otherwise
prejudice in any way the right of the Secured Party and the Senior Secured
Parties to proceed against any Person whomsoever (A) with respect to the
enforcement of such Person's obligations under any Project Document (including
the Guaranty and any Southern Guaranty to which such Person is a party) or limit
or otherwise prejudice in any way the right of the Secured Party, the Senior
Secured Parties or the Holders of any Senior Securities to proceed against such
Person with respect to the enforcement of such obligations or (B) to the extent
necessary to realize the benefit
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<PAGE>
of the Collateral granted under the Security Documents and (ii) any limitations
of liability herein shall not apply if and to the extent that any Person commits
fraud or willful misrepresentations, including those contained in Officer's
Certificates issued from time to time.
27. Counterparts. This Agreement may be executed in any
number of counterparts, each of which when so executed shall be
deemed to be an original, and all such counterparts shall together
constitute but one and the same instrument.
28. Continuing Assignment, Pledge and Security Interest. This
Agreement shall create a continuing assignment, pledge and security interest in
the Collateral and shall remain in full force and effect for the benefit of the
Secured Party until the satisfaction in full of the Secured Obligations. Except
as set fourth in Section 30, upon the payment in full of the Secured Obligations
and all other amounts owing to the Secured Party under the Financing Documents,
the Security Interest granted hereby shall terminate and all rights to the
Collateral shall revert to each Debtor. In connection with such termination, the
Secured Party shall execute such instruments of release prepared by each Debtor
as such Debtor shall reasonably request at the Company's sole cost and expense.
29. Security Only. This Agreement is granted for
security purposes only. Accordingly, except as otherwise permitted
by any of the Security Documents, the Secured Party shall not
enforce its rights with respect to the Collateral other than during
a Trigger Event Period.
30. Payments Set Aside. To the extent that either Debtor or
any other Person on behalf of such Debtor makes a payment or payments to the
Secured Party, or the Secured Party enforces its security interests or exercises
its rights of setoff, and such payment or payments or the proceeds of such
enforcement or setoff or any part thereof are subsequently invalidated, declared
to be fraudulent or preferential, set aside and/or required to be repaid to a
trustee, receiver or any other party under any bankruptcy Law, state or Federal
Law, common Law or equitable cause, then, to the extent of such recovery, the
Secured Obligations, or any part thereof originally intended to be satisfied,
and this Agreement and all Liens, rights and remedies therefor, shall be revived
and continued in full force and effect as if such payment had not been made or
such enforcement or setoff had not occurred.
31. Further Assurances. The Company shall, at its sole cost
and without expense to the Secured Party, do, execute, acknowledge and deliver
all and every further acts, deeds, conveyances, mortgages, assignments, notices
of assignment, transfers and assurances as the Secured Party shall, from time to
time, reasonably require for better assuring, conveying, assigning, transferring
and confirming unto the Secured Party the property hereby conveyed, mortgaged or
assigned or intended now or hereafter
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so to be, or that the Company may be or hereafter become bound to convey,
mortgage or assign to the Secured Party, or for carrying out the intention or
facilitating the performance of the terms of this Agreement, or for filing,
registering or recording this Agreement.
32. Shared Drafting. If there shall be any ambiguity in the
terms of this Agreement, the doctrine of construction that holds that the
language of the document shall be construed against its drafter shall not apply
as all parties have shared in the drafting of this Agreement.
33. Limitation of Liability of Secured Party. Notwithstanding
anything to the contrary contained herein or in any of the other Financing
Documents, this Agreement has been executed by Bankers Trust (Delaware) not in
its individual capacity but solely as the Secured Party in its capacity as
Collateral Agent under the Intercreditor Agreement and, except in the case of
its gross negligence or willful misconduct, Bankers Trust (Delaware) in its
individual capacity shall have no liability for the representations, warranties,
covenants, agreements or other obligations of the Secured Party hereunder or in
any certificates, notices or agreements delivered pursuant hereto. For all
purposes of this Agreement, in the performance of its duties or obligations
hereunder, the Secured Party shall be subject to, and entitled to the benefits
of, the terms and provisions of Article VII of the Intercreditor Agreement.
34. Conflict with Intercreditor Agreement. Notwithstanding
anything to the contrary contained herein or in any of the other Financing
Documents, all rights, duties, obligations and indemnities of the Secured Party
hereunder (including the standard of care pursuant to which it acts) shall be
governed by the provisions of the Intercreditor Agreement, including the
exercise of any and all remedies hereunder. In the event of a conflict between
this Agreement and the Intercreditor Agreement, the provisions of the
Intercreditor Agreement shall control.
35. Effect of Termination of Intercreditor Agreement.
Notwithstanding anything to the contrary contained herein, if the Intercreditor
Agreement shall be terminated while this Agreement remains in effect, each
reference in this Agreement to a Trigger Event shall be deemed to be a reference
to an Event of Default and no Senior Creditor Certificates under the
Intercreditor Agreement shall be required to be received by the Secured Party
prior to its exercise of remedies hereunder and the term "Trigger Event Period"
shall be deemed to mean the period commencing upon the occurrence of any Event
of Default and continuing for so long as such Event of Default continues.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date first written above.
MOBILE ENERGY SERVICES COMPANY, L.L.C.,
an Alabama limited liability company
By: /s/
Name: Christopher J. Kysar
Title: Vice President
THE INDUSTRIAL DEVELOPMENT BOARD
OF THE CITY OF MOBILE, ALABAMA
By: /s/
Name: Clarence Boll, Jr.
Title: Vice President
BANKERS TRUST (DELAWARE), a New York banking
corporation, as Collateral Agent under
the Intercreditor Agreement
By: /s/
Name: James H. Stallkamp
Title: President
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
I, the undersigned Notary Public in and for said County in
said State, hereby certify that Christopher J. Kysar whose name as Vice
President of Mobile Energy Services Company, L.L.C., an Alabama limited
liability company, is signed to the foregoing Assignment and Security Agreement
and who is known to me, acknowledged before me on this day that, being informed
of the contents of the instrument, he, as such officer and with full authority,
executed the same voluntarily for and as the act of said limited liability
company.
Given under my hand and seal this the 24th day of August,
1995.
/s/ (seal)
Notary Public
STATE OF ALABAMA )
) ss.:
COUNTY OF MOBILE )
I, the undersigned Notary Public in and for said County in
said State, hereby certify that Clarence Boll, Jr. whose name as Vice President
of The Industrial Development Board of the City of Mobile, Alabama, a public
corporation organized under the laws of the State of Alabama, is signed to the
foregoing Assignment and Security Agreement and who is known to me, acknowledged
before me on this day that, being informed of the contents of the instrument,
he, as such officer and with full authority, executed the same voluntarily for
and as the act of said public corporation.
Given under my hand and seal this the 17th day of August,
1995.
/s/ (seal)
Notary Public
<PAGE>
STATE OF DELAWARE )
) ss.:
COUNTY OF NEW CASTLE )
I, the undersigned Notary Public in and for said County in
said State, hereby certify that James H. Stallkamp whose name as President of
Bankers Trust (Delaware), a Delaware banking corporation, is signed to the
foregoing Assignment and Security Agreement and who is known to me, acknowledged
before me on this day that, being informed of the contents of the instrument,
he, as such officer and with full authority, executed the same voluntarily for
and as the act of said banking corporation.
Given under my hand and seal this the 21 day of August,
1995.
/s/ (seal)
Notary Public
<PAGE>
Appendix A
DEFINED TERMS
For purposes of any Financing Document (as defined herein), terms used
in such Financing Document (including terms used herein) that are not otherwise
defined therein shall have the following meanings, subject to any provisions
contained in such Financing Document that affect the construction or
interpretation of such terms. Except as otherwise expressly provided in any such
Financing Document, if and to the extent that such Financing Document shall be
amended, restated, supplemented or otherwise modified from time to time pursuant
to the terms and provisions thereof, this Appendix A shall be, or be deemed to
have been, amended, restated, supplemented or otherwise modified concurrently
with the execution and delivery of such amendment, restatement, supplement or
other modification in order to conform the terms herein and therein, mutatis
mutandis, to the terms set forth in or required by such amendment, restatement,
supplement or other modification.
Except as otherwise expressly provided in any such Financing Document:
(a) the terms used in such Financing Document have the
meanings assigned to them in this Appendix A and include the plural as
well as the singular; provided, however, that, in the case of the
Indenture, all such terms that are defined in the Trust Indenture Act,
either directly or by reference therein, have the meanings assigned to
them therein;
(b) (i) all accounting terms not otherwise defined in such
Financing Document have the meanings assigned to them, (ii) all
financial statements and all certificates and reports as to financial
matters required to be delivered to the Collateral Agent or any Senior
Secured Party, or any other Person (as the case may be), under such
Financing Document shall be prepared and (iii) all calculations made
for the purpose of determining compliance with such Financing Document
shall (except as otherwise expressly provided herein) be made, in the
case of clauses (i), (ii) and (iii) above, in accordance with, or by
application of, GAAP applied on a basis consistent (except
inconsistencies that are disclosed in writing to the Collateral Agent
or any Senior Secured Party, or any other Person (as the case may be),
and are in accordance with GAAP as certified by a firm of independent
certified public accountants of recognized national standing) with that
used in the preparation of the then most recent corresponding financial
statements furnished under such Financing Document to the Collateral
Agent or any Senior Secured Party, or any other Person (as the case may
be);
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(c) all references in such Financing Document to any
designated "Article," "Section," "Appendix," "Schedule," "Exhibit" and
other subdivision are to the designated Article, Section, Appendix,
Schedule, Exhibit and other subdivision, respectively, of such
Financing Document;
(d) all references in such Financing Document to (i) the words
"herein," "hereof" and "hereunder" and other words of similar import
refer to such Financing Document as a whole and not to any particular
Article, Section or other subdivision and (ii) the term "this
Agreement" or "this Indenture" means such Financing Document as a
whole, including Appendices, Schedules and Exhibits thereto;
(e) all references in such Financing Document to any Project
Document or other Contract defined or referred to therein shall include
such Contract (and, in the case of the Senior Securities or any other
instrument, any other instrument issued in substitution therefor) as
the terms thereof may have been or may be amended, supplemented, waived
or otherwise modified, or as such Contract may have been replaced
(including (i) in the case of an Energy Services Agreement or the
Master Operating Agreement, any replacement Contract therefor then
satisfying the Restricted Payment Alternative Agreement Requirements
with respect thereto and (ii) in the case of any Project Contract, any
replacement Contract therefor then satisfying the Event of Default
Alternative Agreement Requirements with respect thereto), from time to
time;
(f) all references in such Financing Document to any Person
(including any of its capacities) shall include the permitted
successors and assigns of such Person (including in such capacity) in
accordance with the terms of such Financing Document and the other
Project Documents and, in the case of any Governmental Authority, any
Person succeeding to its functions and capacities;
(g) all references in such Financing Document to any Law shall
include such Law or any successor Law as amended, supplemented or
otherwise modified and in effect from time to time, and any other Law
in substance substituted therefor;
(h) any item or list of items set forth following the word
"including," "include" or "includes" in such Financing Document is set
forth only for the purpose of indicating that, regardless of whatever
other items are in the category in which such item or items are
"included," such item or items are in such category, and shall not be
construed as indicating that the items in the category in which such
item or items are "included" are limited to such item or items similar
to such items;
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(i) all references in such Financing Document to the
Collateral Agent, the Indenture Trustee, the Tax-Exempt Indenture
Trustee, the IDB or the Working Capital Facility Provider shall be
deemed to refer to each such Person however designated in the Financing
Documents so that (i) references to rights or duties of the Collateral
Agent under such Financing Document shall be deemed to include the
rights or duties of such Person as the "Secured Party" under the
Security Agreement and as the "Mortgagee" under the Mortgage, (ii)
references to rights or duties of the Indenture Trustee under such
Financing Document shall be deemed to include the rights or duties of
such Person as a "Senior Secured Party" under the Intercreditor
Agreement, (iii) references to rights or duties of the Tax-Exempt
Indenture Trustee under such Financing Document shall be deemed to
include the rights or duties of such Person as a "Senior Secured Party"
under the Intercreditor Agreement and (iv) references to rights or
duties of the Working Capital Facility Provider under such Financing
Document shall be deemed to include the rights or duties of such Person
as a "Senior Secured Party" under the Intercreditor Agreement;
provided, however, that, if such Financing Document is (A) the Security
Agreement, references to rights or duties of the "Secured Party"
thereunder shall be deemed to include the rights or duties of such
Person as the Collateral Agent, (B) the Mortgage, references to rights
or duties of the "Mortgagee" thereunder shall be deemed to include the
rights or duties of such Person as the Collateral Agent and (C) the
Working Capital Facility, references to rights or duties of the "Agent"
thereunder or a Lender shall be deemed to include the rights or duties
of such Person as the Working Capital Facility Provider;
(j) all terms defined in such Financing Document shall have
the meanings therein ascribed to them when used in any certificate,
opinion or other document delivered pursuant thereto and, in the case
of the Indenture and the Tax-Exempt Indenture, in the Senior
Securities;
(k) all references in such Financing Document to the knowledge
of any Person that is a corporation, limited liability company or
partnership, or any other Person that is not an individual, with
respect to any subject or event (including the occurrence or
non-occurrence of any circumstance, the failure to perform or observe,
or the satisfaction of, any covenant or agreement or the pending or
threatened nature of any action) shall be deemed to mean that an
Authorized Officer of such Person (or, if such Person is the Company,
the Plant Manager thereof) has actual knowledge or awareness of such
subject or event or when notice of such subject or event shall have
been given, or deemed to have been given, to such Person in accordance
with the provisions of such Financing Document; and
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(l) all references in such Financing Document to the Project
Contracts shall be deemed to exclude any Project Contract (and the
Consent to Assignment (if any) with respect thereto) (i) after the date
on which such Project Contract (A) may have been terminated in
accordance with Section 5.10 of the Indenture or Section 4.10 of the
IDB Lease Agreement (or any comparable provision of the Working Capital
Facility), (B) shall have reached its stated termination date (if any)
or (C) (other than in the case of the Energy Services Agreements and
the Master Operating Agreement in connection with a Mill Closure) shall
have been fully and finally performed by all parties thereto and (ii)
after the date of any disposition of the Company's rights and
obligations under such Project Contract in accordance with Section 5.8
of the Indenture or Section 4.8 of the IDB Lease Agreement (or any
comparable provision of the Working Capital Facility), except, in the
case of clauses (i) and (ii) above, if and to the extent that any
provisions of such Project Contract so excluded provide that the rights
and obligations of any Person that is a party to such Contract shall
survive the termination thereof.
"Accounts" means, collectively, the Intercreditor Agreement
Accounts, the Indenture Accounts and the Tax-Exempt Indenture
Accounts.
"Act" has the meaning specified (a) in the case of any Holder of
Indenture Securities, in Section 1.4 of the Indenture and (b) in the case of any
Holder of Tax-Exempt Indenture Securities, in Section 1.4 of the Tax-Exempt
Indenture.
"Additional Available Proceeds" means, with respect to any Event of
Loss or Event of Eminent Domain, monies neither constituting Revenues nor
otherwise required (except pursuant to the provisions of Section 3.10 of the
Intercreditor Agreement) to be deposited into any Account that are deposited
into the Loss Proceeds Account as other amounts available to the Company and
necessary for the rebuilding, repair, restoration or replacement of the Energy
Complex or any part thereof that has been affected by such Event of Loss or
Event of Eminent Domain (as the case may be).
"Affiliate" means, with respect to any Person, any other Person
directly or indirectly controlling or controlled by, or under direct or indirect
common control with, such Person. For purposes of this definition, the term
"control" (including the correlative meanings of the terms "controlled by" and
"under common control with"), as used with respect to any Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management policies of such Person, whether through the
ownership of securities or partnership or other ownership interests or by
contract or otherwise. Notwithstanding the foregoing, Southern, Mobile Energy,
Southern Electric, the Operator and each Person owning, directly or indirectly,
five percent (5%) or more of the membership interests in the Company shall be
deemed to be an Affiliate of the Company.
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<PAGE>
"Affiliate Subordinated Debt" means any unsecured, subordinated loan or
loans to the Company from any of its Affiliates pursuant to a Subordinated Loan
Agreement, fully subordinated as to payment and exercise of remedies and payable
only from monies otherwise distributable by the Company from the Distribution
Account in accordance with the Intercreditor Agreement.
"Aggregate Demand" has the meaning specified in the Master
Operating Agreement.
"Alabama Act" means Ala. Code ss. 11-54-80 to ss. 11-54-101.
"Annual Budget" means the operating plan and budget for the Energy
Complex developed by the Company for operation of the Energy Complex for any
Fiscal Year, as the same may be amended, restated, supplemented or otherwise
modified from time to time and as more particularly described in Section 5.12 of
the Indenture or Section 4.12 of the IDB Lease Agreement (or any comparable
provision of the Working Capital Facility) (as the case may be).
"Approved Institutional Investor" has the meaning specified (a) in the
case of the Tax-Exempt Bonds, in the Limited Offering Memorandum dated August
17, 1995 relating to the initial offering thereof and (b) in the case of any
other Tax-Exempt Indenture Securities, in any other offering memorandum relating
to the initial offering of such Tax-Exempt Indenture Securities.
"Articles of Organization" means the Articles of Organization of the
Company dated July 13, 1995.
"Authenticating Agent" means any Person acting as Authenticating Agent
pursuant to, in the case of the Indenture, Section 9.14(b) thereof and, in the
case of the Tax-Exempt Indenture, Section 9.13(b) thereof.
"Authorized Agent" means any Paying Agent, Authenticating Agent or
Security Registrar or other agent appointed by the Indenture Trustee or the
Tax-Exempt Indenture Trustee (as the case may be) or the Company or the IDB (as
the case may be) in accordance with the Indenture or the Tax-Exempt Indenture
(as the case may be) to perform any function that such indenture authorizes such
agent to perform.
"Authorized Officer" means (a) in the case of a corporation (including
Mobile Energy) or limited liability company (including the Company), the chief
executive officer, the president, the chief financial officer, a vice president,
the treasurer or an assistant treasurer of such corporation or limited liability
company and (b) in the case of any general or limited partnership, any Person
authorized by the managing general partner (or such other Person that is
responsible for the management of such partnership) to take the applicable
action on behalf of such partnership or any officer (with a title specified in
clause (a) above) of such partnership's
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managing general partner (or such other Person that is responsible for the
management of such managing general partner).
"Authorized Representative" means, in respect of any Person, the
individual or individuals authorized to act on behalf of such Person by the
board of directors, manager, management committee, board of control or any other
governing body of such Person as designated from time to time in a certificate
of such Person, which shall include or attach thereto specimen signatures,
delivered to the Collateral Agent upon which the Collateral Agent may
conclusively rely.
"Authorized Trust Officer" means any officer of the Indenture Trustee
or the Tax-Exempt Indenture Trustee (as the case may be) or any other individual
who shall be duly authorized by appropriate corporate action on the part of
either such trustee to authenticate Senior Securities.
"Automatic Acceleration Default" has the meaning specified (a) in the
case of the Indenture, in Section 8.2(a) thereof and (b) in the case of the
Tax-Exempt Indenture, in Section 8.2(a) thereof.
"Available Amount" means, at any time, (a) in the case of any Reserve
Account Letter of Credit, the undrawn stated amount of such Reserve Account
Letter of Credit at such time and (b) in the case of any Southern Guaranty, an
amount equal to the "Available Amount" set forth therein (as such amount may be
increased or decreased in accordance with such Southern Guaranty).
"Bankruptcy Code" means the Federal Bankruptcy Code of 1978.
"Bankruptcy Event" means, in respect of any Person, (a) such Person's
general inability, or its admission of its inability, to pay its debts as such
debts become due, (b) the application by such Person for or its consent to the
appointment of, or the taking of possession by, a receiver, custodian, trustee
or liquidator of itself or of all or a substantial part of its property, (c) the
commencement by such Person of a voluntary case under the Bankruptcy Code, (d)
the making by such Person of a general assignment for the benefit of its
creditors, (e) the filing of a petition by such Person seeking to take advantage
as a debtor of any other law relating to bankruptcy, insolvency, reorganization,
liquidation, dissolution, arrangement, winding-up or readjustment of debts, (f)
the failure by such Person to controvert in a timely and appropriate manner, or
its acquiescence in writing to, any petition filed against it in an involuntary
case under the Bankruptcy Code, (g) the taking of any corporate or other action
by such Person for the purpose of effecting any of the foregoing, (h) the
commencement of a proceeding or case, without the application or consent of such
Person, in any court seeking (i) such Person's reorganization, liquidation,
dissolution, arrangement or winding-up, or the composition or readjustment of
its debts, (ii) the appointment of a trustee, receiver, custodian, liquidator,
examiner or the like of such Person or all or any substantial part of its
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property or (iii) similar relief in respect of such Person under any law
relating to bankruptcy, insolvency, reorganization, winding-up or composition or
adjustment of debt and such proceeding or case specified in this clause (h)
shall continue undismissed, or an order, judgment or decree approving or
ordering any of the foregoing shall be entered and continue unstayed and (except
in the case of Section 5.19(a)(ii) of the Indenture or Section 4.19(a)(ii) of
the IDB Lease Agreement (or any comparable provision of the Working Capital
Facility)) in effect, for a period of sixty (60) or more days or (i) an order
for relief against such Person shall be entered in any involuntary case under
the Bankruptcy Code.
"Board of Directors" means (a) when used with respect to the Company,
the Manager of the Company and (b) when used with respect to Mobile Energy,
either the board of directors of Mobile Energy or any committee of such board
duly authorized to act for it.
"Board Resolution" means (a) when used with respect to the Company, a
copy of a resolution certified by an Authorized Officer of the Company or the
secretary or assistant secretary of the Company as having been adopted by the
Manager of the Company and to be in full force and effect on the date of such
certification and (b) when used with respect to Mobile Energy, means a copy of a
resolution certified by an Authorized Officer or the secretary or assistant
secretary of Mobile Energy as having been adopted by the Board of Directors of
Mobile Energy and to be in full force and effect on the date of such
certification.
"Boiler Ash Agreement" means the Boiler Ash Disposal Agreement dated as
of December 12, 1994, as amended by the First Amendment thereto dated as of July
13, 1995, between the Pulp Mill Owner and the Company (as assignee of Mobile
Energy).
"Bond Counsel" means Balch & Bingham or other nationally recognized
counsel experienced in matters of municipal law and the tax-exempt status of
obligations under the Code.
"Business Day" means any day other than a Saturday or Sunday or other
day on which banks in New York, New York or Atlanta, Georgia are authorized or
required to be closed.
"Capital Budget" means the capital plan and budget developed by the
Company with respect to the capital improvements to the Energy Complex specified
in the Master Operating Agreement and certain other planned capital expenditures
thereto.
"Capital Budget Subaccount" means the subaccount of the Completion
Account so designated established and created under Section 2.2(c) of the
Intercreditor Agreement.
"Casualty Proceeds" means all insurance proceeds (including title
insurance proceeds) and other amounts actually received on account of an Event
of Loss, including any net interest thereon or gain in respect thereof, other
than (a) proceeds of third-party
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liability insurance (to the extent paid directly from an insurer or insurers to
a third-party) and (b) proceeds of business interruption insurance and other
payments received for interruption of operations. "Casualty Proceeds" do not
include Additional Available Proceeds with respect to such Event of Loss.
"Closing Date" means the date on which the First Mortgage Bonds and the
Tax-Exempt Bonds are originally issued.
"Coal Supplier" means E.J. Hodder & Associates, Inc., a
Tennessee corporation.
"Coal Supply Agreement" means the Coal Supply Agreement dated as of May
1, 1995 between the Coal Supplier and the Company.
"Code" means, as applicable, the Internal Revenue Code of 1986 and the
rules and regulations promulgated thereunder or the Internal Revenue Code of
1954 and the rules and regulations promulgated thereunder.
"Collateral" means, collectively, all of the collateral mortgaged,
pledged or assigned, or purported to be mortgaged, pledged or assigned, to the
Collateral Agent, the Indenture Trustee or the Tax-Exempt Indenture Trustee (as
the case may be) by the Company or the IDB (as the case may be), in each case
pursuant to the granting and assigning clauses of the applicable Financing
Documents.
"Collateral Agent" means Bankers Trust (Delaware), a Delaware banking
corporation, or any other Person appointed as a substitute or replacement
Collateral Agent under the Intercreditor Agreement.
"Collateral Agent Claims" means all obligations of the Senior Secured
Parties and the Mobile Energy Parties, now or hereafter existing, to pay fees,
costs and expenses to the Collateral Agent pursuant to Section 7.3(f) and
Article VIII of the Intercreditor Agreement.
"Combined Exposure" means, at any time, the sum of (a) the aggregate
principal amount of all Senior Securities Outstanding and (b) the aggregate
principal amount of all outstanding Working Capital Facility Loans made, and the
unutilized Working Capital Facility Commitment, under the Working Capital
Facility.
"Common Services Agreement" means the Common Services Agreement dated
as of December 12, 1994, as amended by the First Amendment thereto dated as of
July 13, 1995, among the Company (as assignee of Mobile Energy), the Pulp Mill
Owner, the Tissue Mill Owner and the Paper Mill Owner.
"Company" means Mobile Energy Services Company, L.L.C., an Alabama
limited liability company.
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"Company Request" and "Company Order" mean, respectively, a written
request or order signed in the name of the Company by an Authorized Officer of
the Company and delivered to the Indenture Trustee or the Tax-Exempt Indenture
Trustee (as the case may be).
"Company Step-In Rights" has the meaning specified for "MESC Step-In
Rights" in the Master Operating Agreement.
"Completion Account" means the Account so designated established and
created under Section 2.2(a) of the Intercreditor Agreement.
"Consents to Assignment" means, collectively, (a) the Consents to
Assignment, the Lease Estoppel and the Supplementary Lease Estoppel of Scott
with respect to the Project Contracts to which it is a party, (b) the Consent to
Assignment of the Pulp Mill Owner with respect to the Project Contracts to which
it is a party, (c) the Consent to Assignment of the Tissue Mill Owner with
respect to the Project Contracts to which it is a party, (d) the Consent to
Assignment of the Paper Mill Owner with respect to the Project Contracts to
which it is a party, (e) the Consent to Assignment of Southern Electric with
respect to the Project Contracts to which it is a party, (f) the Consent to
Assignment of SCS with respect to the SCS Agreement, (g) any Consent to
Assignment of the Coal Supplier with respect to the Coal Supply Agreement, (h)
the Consent to Assignment of TRT with respect to the Nondisturbance Agreement
(which may be effected pursuant to the Recognition Agreement to which TRT is a
party), (i) the Consent to Assignment of the IDB with respect to the Project
Contracts to which it is a party (which may be effected pursuant to the
Recognition Agreements) and (j) the Consent to Assignment of Ahlstrom Recovery,
Inc. with respect to Purchase Order Number MG-2601.
"Continuing Disclosure Agreement" means the Continuing Disclosure
Agreement dated as of August 1, 1995 among the Mobile Energy Parties and the
Tax-Exempt Indenture Trustee.
"Contract" means (a) any agreement (whether executory or non- executory
and whether a Person entitled to rights thereunder is so entitled directly or as
a third-party beneficiary), including an indenture, lease or license, (b) any
deed or other instrument of conveyance, (c) any certificate of incorporation,
articles of organization or charter and (d) any by-law.
"Corporate Trust Office" means the principal office of the Collateral
Agent, the Indenture Trustee or the Tax-Exempt Indenture Trustee (as the case
may be) at which at any particular time the corporate trust business thereof
shall be administered, which as of the Closing Date is (a) in the case of the
Collateral Agent, Bankers Trust (Delaware), c/o Bankers Trust Company, Four
Albany Street, New York, New York 10006, Attention: Corporate Trust and Agency
Group, (b) in the case of the Indenture Trustee, First Union National Bank of
Georgia, Corporate Trust Department, M/C GA9094, 999 Peachtree Street, N.E.,
Atlanta, Georgia 30309 and (c) in the
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case of the Tax-Exempt Indenture Trustee, First Union National Bank of Georgia,
Corporate Trust Department, M/C GA9094, 999 Peachtree Street, N.E., Atlanta,
Georgia 30309, or such other office as may be designated by the Collateral
Agent, the Indenture Trustee or the Tax-Exempt Indenture Trustee (as the case
may be) to the Mobile Energy Parties and, in the case of the Collateral Agent,
to the other Intercreditor Parties.
"Credit Standard Event" means (a) with respect to any Reserve Account
Letter of Credit on deposit in any Reserve Account Security Account, the
unsecured long-term Debt of the provider of such Reserve Account Letter of
Credit shall not be rated "A" or higher by S&P, "A" or higher by Fitch and "A2"
or higher by Moody's and (b) with respect to any Southern Guaranty on deposit in
any Reserve Account Security Account, (i) the Collateral Agent or the Indenture
Trustee shall have been provided with an Officer's Certificate of Southern
certifying as to the determination that the Southern Credit Standard has not
been satisfied or (ii) Southern shall have failed, or the Company shall have
failed to cause Southern, to provide to the Collateral Agent or the Indenture
Trustee, on or prior to the date that is forty-five (45) days after the end of
each fiscal quarter of Southern, an Officer's Certificate of Southern certifying
as to the determination that the Southern Credit Standard has been satisfied.
"Current Fiscal Quarter" has the meaning specified in the definition of
Maintenance Reserve Account Required Deposit.
"Debt" means, in respect of any Person, (a) indebtedness for borrowed
money or the deferred purchase price of property or services (excluding
obligations under agreements for the purchase price of goods and services in the
normal course of business which are not more than ninety (90) days past due),
(b) obligations as lessee under leases that shall have been or should be, in
accordance with GAAP, recorded as capital leases, (c) obligations (whether
matured or contingent) with respect to any letters of credit issued for the
account of such Person, (d) obligations under direct or indirect guaranties or
other similar contingent liabilities in respect of, and obligations (contingent
or otherwise) to purchase or otherwise acquire, or otherwise assure a creditor
against loss in respect of, indebtedness or obligations of others of the kinds
referred to in clause (a), (b) or (c) above and (e) all Debt of another Person
secured by a lien on any property owned by the first Person (whether or not such
Debt has been assumed by such first Person).
"Debt Service Event" means (a) with respect to any Reserve Account
Letter of Credit on deposit in any Reserve Account Security Account, the
authorization of the Collateral Agent, the Indenture Trustee or the Tax-Exempt
Indenture Trustee (as the case may be) to draw upon such Reserve Account Letter
of Credit pursuant to (i) if such Reserve Account Security Account is the
Maintenance Plan Funding Subaccount, clause third of Section 3.5(c) of the
Intercreditor Agreement, (ii) if such Reserve Account Security
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Account is the Distribution Account, clause second of Section 3.8(b) of the
Intercreditor Agreement, (iii) if such Reserve Account Security Account is a
Debt Service Reserve Account, clause second of Section 4.5 of the Indenture and
(iv) if such Reserve Account Security Account is a Tax-Exempt Debt Service
Reserve Account, clause second of Section 4.6 of the Tax-Exempt Indenture and
(b) with respect to any Southern Guaranty on deposit in any Reserve Account
Security Account, the authorization of the Collateral Agent or the Indenture
Trustee (as the case may be) to call upon such Southern Guaranty pursuant to (i)
if such Reserve Account Security Account is the Maintenance Plan Funding
Subaccount, clause fourth of Section 3.5(c) of the Intercreditor Agreement, (ii)
if such Reserve Account Security Account is the Distribution Account, clause
third of Section 3.8(b) of the Intercreditor Agreement and (iii) if such Reserve
Account Security Account is a Debt Service Reserve Account, clause third of
Section 4.5 of the Indenture.
"Debt Service Reserve Account" means any Account so designated (if any)
established and created under any Series Supplemental Indenture to the Indenture
for the benefit of Holders of Indenture Securities established thereunder.
"Debt Service Reserve Account Required Balance" means, in respect of
any Debt Service Reserve Account, the amount so designated in the Series
Supplemental Indenture to the Indenture establishing such Debt Service Reserve
Account.
"Default Event" means (a) with respect to any Reserve Account Letter of
Credit on deposit in any Reserve Account Security Account, (i) the provider of
such Reserve Account Letter of Credit shall default in its payment obligations
thereunder or (ii) the provider of such Reserve Account Letter of Credit shall
become insolvent and (b) with respect to any Southern Guaranty, (i) Southern
shall fail to perform any of the "Guaranteed Obligations" thereunder as and when
due or (ii) Southern shall become insolvent.
"Designated Southern Subsidiaries" means, for purposes of the
satisfaction of the Southern Credit Standard, all of the Eligible Southern
Subsidiaries other than, as designated by the Company to be excluded for such
purposes, any one or all (including any combination) of the Eligible Southern
Subsidiaries, provided that the aggregate net worth of such Eligible Southern
Subsidiaries so excluded is equal to or less than ten percent (10%) of the
aggregate net worth of all of the Eligible Southern Subsidiaries. For such
purposes, "net worth" means (a) par value of common stock plus (b) paid-in
capital plus (c) premium on preferred stock plus (d) retained earnings minus (e)
accrued and unpaid dividends on, or other amounts due and payable in respect of,
capital stock, in each case, of each of such Eligible Southern Subsidiaries.
"Determination of Taxability" means a final determination by the
Internal Revenue Service or a court of competent jurisdiction in a proceeding in
which the Company has been afforded an
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opportunity to participate, or, at the election of the Company in its sole
discretion, a determination by the Company based on an opinion of Bond Counsel,
that as a result of any event the interest payable on any Tax-Exempt Indenture
Security (in respect of which, at the time of original issuance, the Tax-Exempt
Indenture Trustee received an opinion of Bond Counsel to the effect that
interest payable on such Tax-Exempt Indenture Security was not includable for
Federal income tax purposes in the gross income of any owner of such Tax-Exempt
Indenture Security (other than an owner who is a "substantial user" of the
Energy Complex or a "related person" within the meaning of Section 147(a) of the
Code)) is includable for Federal income tax purposes in the gross income of any
owner of such Tax-Exempt Indenture Security (other than any owner who is a
"substantial user" of the Energy Complex or a "related person" within the
meaning of Section 147(a) of the Code). No such determination by the Internal
Revenue Service shall be considered final unless the Company has been given
written notice and, if it so desires, has been given the opportunity to contest
the same, either directly or in the name of any owner of a Tax-Exempt Indenture
Security and until the conclusion of any appellate review, if sought. Interest
on Tax-Exempt Indenture Securities shall not be deemed includable for Federal
income tax purposes merely by reason of such interest being treated as a tax
preference item for purposes of a Federal alternative minimum tax, loss of or
reduction in a related deduction or other indirect adverse tax consequences.
"Distribution Account" means the Account so designated established and
created under Section 2.2(a) of the Intercreditor Agreement.
"Distribution Date" means any Business Day following an Interest
Payment Date and preceding the Monthly Transfer Date immediately succeeding such
Interest Payment Date, as selected by
the Company.
"Easement Deeds" means, collectively, (a) the Easement Deed, dated as
of December 12, 1994 between the Company (as assignee of Mobile Energy) and the
Pulp Mill Owner granting the Company certain easements, (b) the Easement Deed
dated as of December 12, 1994 between the Company (as assignee of Mobile Energy)
and the Pulp Mill Owner granting the Pulp Mill Owner certain easements, (c) the
Easement Deed dated as of December 12, 1994 between the Company (as assignee of
Mobile Energy) and the Tissue Mill Owner granting the Company certain easements,
(d) the Easement Deed dated as of December 12, 1994 between the Company (as
assignee of Mobile Energy) and the Tissue Mill Owner granting the Tissue Mill
Owner certain easements, (e) the Easement Deed dated as of December 12, 1994
between the Company (as assignee of Mobile Energy) and the Paper Mill Owner
granting the Company certain easements and (f) the Easement Deed dated as of
December 12, 1994 between the Company (as assignee of Mobile Energy) and the
Paper Mill Owner granting the Paper Mill Owner certain easements.
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"Easements" means, collectively, all easements, licenses, franchises,
rights-of-way and spur track agreements to which the Company is now or hereafter
a party or beneficiary affecting construction on, or the use or operation of, or
constituting a part of, the Site (including the Easement Deeds).
"Eligible Southern Subsidiaries" means, at any time, each of Alabama
Power Company, an Alabama corporation, Georgia Power Company, a Georgia
corporation, Gulf Power Company, a Maine corporation, Mississippi Power Company,
a Mississippi corporation, and Savannah Electric and Power Company, a Georgia
corporation, provided that a majority of the voting securities of such Person is
owned, directly or indirectly, by Southern at such time.
"Eminent Domain Proceeds" means all amounts and proceeds actually
received in respect of any Event of Eminent Domain, including any net interest
thereon or gain in respect thereof. "Eminent Domain Proceeds" do not include
Additional Available Proceeds with respect to such Event of Eminent Domain.
"Energy Complex" has the meaning specified in the Master
Operating Agreement.
"Energy Services Agreements" means, collectively, the Pulp Mill Energy
Services Agreement, the Tissue Mill Energy Services Agreement and the Paper Mill
Energy Services Agreement.
"Environmental Bonds" means, collectively, (a) (i) the IDB's
Environmental Improvement Revenue Bonds (Scott Paper Company Project), Series A
of 1973, (ii) the IDB's Environmental Improvement Revenue Bonds (Scott Paper
Company Project), Series A of 1976 and (iii) the IDB's Environmental Improvement
Revenue Bonds (Scott Paper Company Project), Series A of 1980, in the case of
clauses (i), (ii) and (iii) above, issued under and secured by a Trust Indenture
dated as of April 1, 1973, as supplemented by a First Supplemental Indenture
thereto dated as of September 1, 1976 and a Second Supplemental Indenture
thereto dated as of October 1, 1980 between the IDB and AmSouth Bank of Alabama,
as trustee, and (b) the IDB's Industrial Revenue Bonds (Scott Paper Company
Project), Series B of 1976 issued under and secured by a Trust Indenture dated
as of September 1, 1976 between the IDB and AmSouth Bank of Alabama, as trustee
.
"Environmental Indemnity Agreements" means, collectively, (a) the Pulp
Mill Environmental Indemnity Agreement dated as of December 12, 1994, as amended
by the First Amendment thereto dated as of July 13, 1995, between the Company
(as assignee of Mobile Energy) and the Pulp Mill Owner, (b) the Paper Mill
Environmental Indemnity Agreement dated as of December 12, 1994, as amended by
the First Amendment thereto dated as of July 13, 1995, between the Company (as
assignee of Mobile Energy) and the Paper Mill Owner, (c) the Tissue Mill
Environmental Indemnity Agreement dated as of December 12, 1994, as amended by
the First Amendment thereto dated as of July 13, 1995, between the Company (as
assignee of Mobile
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Energy) and the Tissue Mill Owner and (d) the Scott Environmental Indemnity
Agreement dated as of December 12, 1994, as amended by the First Amendment
thereto dated as of July 13, 1995, between Scott and the Company (as assignee of
Mobile Energy).
"Environmental Requirement" means any Governmental Approvals
in effect from time to time relating to the protection of the
environment or otherwise addressing environmental issues or
environmental requirements of or by any Governmental Authority, or
otherwise relating to noise or to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport,
emission, discharge, release or handling of Hazardous Material,
including the Comprehensive Environmental Response Compensation,
and Liability Act of 1980 (42 U.S.C. ss. 9601 et seq.), the Hazardous
Materials Transportation Act (49 U.S.C. ss. 1801 et seq.), the
Resource Conservation and Recovery Act (42 U.S.C. ss. 6901 et seq.),
the Toxic Substance Control Act (15 U.S.C. ss. 2601 et seq.), the
Clean Air Act (42 U.S.C. ss. 7401 et seq.), the Clean Water Act (33
U.S.C. ss. 1251 et seq.), the Emergency Planning and Community Right
to Know Act (42 U.S.C. ss. 1101 et seq.), the Federal Insecticide,
Fungicide and Rodenticide Act (7 U.S.C. ss. 136 et seq.), the Oil
Pollution Act of 1990 (33 U.S.C. ss. 2761), the Occupational Health
and Safety Act (29 U.S.C. ss. 641 et seq.), the Pollution Prevention
Act (42 U.S.C. ss. 1201 et seq.), the Safe Drinking Water Act (42
U.S.C. ss. 300f et seq.), Preservation Development, Etc. of Coastal
Areas (Ala. Code ss. 9-7-1 et seq.), the Alabama Environmental
Management Act (Ala. Code ss. 22-22A-1 et seq.), the Alabama Water
Pollution Control Act (Ala. Code ss. 22-22A-1 et seq.), the Alabama
Safe Drinking Water Act (Ala. Code ss. 22-23-30 et seq.), Water Well
Standards (Ala. Code ss. 22-24-1 et seq.), Water Wastewater Systems
and Treatment Plants (Ala. Code ss. 22-25-1 et seq.), Sewage
Collection, Treatment, and Disposal Facilities (Ala. Code ss. 22-26-1
et seq.), Solid Wastes Disposal Act (Ala. Code ss. 22-27-1 et seq.),
the Alabama Air Pollution Control Act of 1971 (Ala. Code ss. 22-28-1
et seq.), the Hazardous Wastes Management and Minimization Act
(Ala. Code ss. 22-30-1 et seq.), the Alabama Hazardous Substance
Cleanup Fund (Ala. Code ss. 22-30A-1 et seq.), the Water Pollution
Control Authority (Ala. Code ss. 22-34-1 et seq.), the Alabama
Underground and Aboveground and Storage Tank Trust Fund Act (Ala.
Code ss. 22-35-1 et seq.), the Alabama Underground Storage Tank and
Wellhead Protection Act of 1988 (Ala. Code ss. 22-36-1 et seq.) and
the Alabama Lead Ban Act of 1988 (Ala. Code ss. 22-37-1 et seq.) and,
in each case, any regulations promulgated thereunder.
"ERISA" means the Employee Retirement Income Security Act of
1974.
"ESA Blockage Event" means, with respect to any Mill Owner or its
respective Energy Services Agreement or its Mill, that:
(a) such Energy Services Agreement or the Master Operating
Agreement has been declared unenforceable by a Governmental Authority
having jurisdiction, unless the Company has delivered to the applicable
Senior Secured Parties and the
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Collateral Agent an Officer's Certificate, together with an Independent
Engineer Confirmation, certifying that either (i) such Energy Services
Agreement or the Master Operating Agreement (as the case may be) has
been reinstated on identical and enforceable terms by the Company and
such Mill Owner, (ii) such declaration of enforceability has been
overruled, reversed or rescinded by such Governmental Authority or by
another Governmental Authority having final jurisdiction or greater
jurisdiction than such first Governmental Authority or (iii) the
Company has satisfied the Restricted Payment Alternative Agreement
Requirements with respect to such Energy Services Agreement or the
Master Operating Agreement (as the case may be);
(b) such Mill Owner has either (i) terminated, or delivered
written notice pursuant to the Master Operating Agreement of its
intention to terminate (which notice has not been rescinded), its
rights and obligations under such Energy Services Agreement or the
Master Operating Agreement in connection with a Mill Closure with
respect to such Mill or (ii) denied that it has any obligations and
substantially ceased performance under such Energy Services Agreement
or the Master Operating Agreement, unless, in either case, the Company
has delivered to the applicable Senior Secured Parties and the
Collateral Agent an Officer's Certificate, together with an Independent
Engineer Confirmation, certifying that either (A) such Energy Services
Agreement or the Master Operating Agreement (as the case may be) has
been reinstated on identical and enforceable terms by the Company and
such Mill Owner or, provided that another Person is reasonably capable
of performing such Mill Owner's obligations under such Energy Services
Agreement or the Master Operating Agreement (as the case may be), by
the Company and such other Person or (B) the Company has satisfied the
Restricted Payment Alternative Agreement Requirements with respect to
such Energy Services Agreement or the Master Operating Agreement (as
the case may be);
(c) a default has occurred and is continuing in respect of
such Mill Owner's obligations under such Energy Services Agreement or
the Master Operating Agreement, unless, if such Energy Services
Agreement or the Master Operating Agreement with respect to such Mill
Owner has been terminated as a result of such default, the Company has
delivered to the applicable Senior Secured Parties and the Collateral
Agent an Officer's Certificate, together with an Independent Engineer
Confirmation, certifying that the Company has satisfied the Restricted
Payment Alternative Agreement Requirements with respect to such Energy
Services Agreement or the Master Operating Agreement (as the case may
be);
(d) based upon the knowledge of either of the Mobile Energy
Parties, it is reasonably likely that, on or prior to the next
Distribution Date, either (i) there will be a Mill
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Closure with respect to such Mill or (ii) such Mill Owner will deliver
written notice pursuant to the Master Operating Agreement of such Mill
Owner's intention to terminate its rights and obligations under such
Energy Services Agreement or the Master Operating Agreement, unless, in
either case, if such Energy Services Agreement or the Master Operating
Agreement with respect to such Mill Owner has been terminated as a
result of such Mill Closure, the Company has delivered to the
applicable Senior Secured Parties and the Collateral Agent an Officer's
Certificate, together with an Independent Engineer Confirmation,
certifying that the Company has satisfied the Restricted Payment
Alternative Agreement Requirements with respect to such Energy Services
Agreement or the Master Operating Agreement (as the case may be); or
(e) a Bankruptcy Event has occurred and is continuing in
respect of such Mill Owner, unless (i) the obligations of such Mill
Owner under such Energy Services Agreement and the Master Operating
Agreement have been expressly assumed with the approval of a court of
competent jurisdiction or (ii) if such Energy Services Agreement or the
Master Operating Agreement with respect to such Mill Owner has been
rejected or otherwise terminated, the Company has delivered to the
applicable Senior Secured Parties and the Collateral Agent an Officer's
Certificate, together with an Independent Engineer Confirmation,
certifying that the Company has satisfied the Restricted Payment
Alternative Agreement Requirement with respect to such Energy Services
Agreement or the Master Operating Agreement (as the case may be).
"Event of Default" means, so long as there are any Financing
Commitments or any Financing Liabilities outstanding, an "Event of Default"
under the Indenture, an "Event of Default" under the Tax- Exempt Indenture or an
"Event of Default" under the Working Capital Facility.
"Event of Default Alternative Agreement Requirements" means, with
respect to any Project Contract, another Contract entered into by the Company
with one or more Persons in substitution for or replacement of any such Project
Contract, with respect to some or all of the Processing Services or other
services formerly provided by or to the Company thereunder, provided that such
alternative Contract (a) contains substantially equivalent terms and conditions
or, if such terms and conditions are no longer available on a commercially
reasonable basis, the terms and conditions then available on a commercially
reasonable basis, (b) would, after giving effect to such alternative Contract
and based on projections prepared by the Company on a reasonable basis, maintain
a minimum annual Senior Debt Service Coverage Ratio for each Fiscal Year through
the final maturity date of the Outstanding Indenture Securities or the
Outstanding Tax-Exempt Indenture Securities (as the case may be) projected to be
equal to or greater than the lesser of (i) the minimum annual Senior Debt
Service Coverage Ratio projected to have been in effect for such Fiscal Year had
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performance under such Project Contract continued and (ii) 1.2 to 1.0 and (c) is
reasonably capable of being performed by the parties thereto. Notwithstanding
the foregoing, such alternative Contract need not satisfy the conditions
described in clauses (a) and (b) above, provided that (A) the Company delivers
to the applicable Senior Secured Parties an Officer's Certificate, together with
an Independent Engineer Confirmation, certifying that the Company has satisfied
the Restricted Payment Alternative Agreement Requirements (other than the
conditions set forth in subclauses (C) and (D) of clause (b)(ii) of the
definition of Restricted Payment Alternative Agreement Requirements with respect
to such alternative Contract) and (B) after giving effect to such alternative
Contract and based on projections prepared by the Company on a reasonable basis,
the average of the annual Senior Debt Service Coverage Ratios through the final
maturity date of the Outstanding Indenture Securities or the Tax-Exempt
Indenture Securities (as the case may be) is projected to be at least 1.2 to
1.0.
"Event of Eminent Domain" means any compulsory transfer or taking, or
transfer under threat of compulsory transfer or taking, of a material part of
the Energy Complex by any Governmental Authority or any Person acting with the
authority thereof for more than six (6) months, unless such transfer or taking
is the subject of a Good Faith Contest.
"Event of Loss" means any physical loss or destruction of, or
destruction to, the Energy Complex, or any other event that causes all or a
material part of the Energy Complex to be rendered unfit for normal use for any
reason whatsoever, including through failure of title.
"Excess Loss Proceeds" means, with respect to any Event of Loss or
Event of Eminent Domain, monies in an amount equal to the excess, if any, of all
of the Loss Proceeds with respect to such Event of Loss or Event of Eminent
Domain (as the case may be) over the total cost of the rebuilding, repair,
restoration or replacement of the Energy Complex or any part thereof that has
been affected by such Event of Loss or Event of Eminent Domain (as the case may
be).
"Exchange Act" means the Securities Exchange Act of 1934.
"Financing Commitment" means any commitment pursuant to the Financing
Documents to provide credit to the Company.
"Financing Documents" means all Contracts evidencing or
securing the Financing Liabilities.
"Financing Liabilities" means all indebtedness, liabilities and
obligations of the Mobile Energy Parties (including principal, interest, fees,
reimbursement obligations, penalties, indemnities and legal expenses, whether
due to acceleration or otherwise) owing to the Senior Secured Parties (of
whatsoever nature and however evidenced) under or pursuant to (a) the Indenture
(including the
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Guaranty), (b) the Senior Securities, (c) the IDB Lease Agreement, (d) the
Tax-Exempt Indenture, (e) the Working Capital Facility and any evidence of
indebtedness entered into thereunder and (f) the other Security Documents, in
the case of clause (a) through (f) above, whether direct or indirect, primary or
secondary, fixed or contingent or now or hereafter arising out of or relating to
any such Contract.
"Financing Statements" means Uniform Commercial Code financing
statements filed in connection with the other Security Documents.
"First Mortgage Bonds" means the Indenture Securities issued
on the Closing Date under the first Series Supplemental Indenture
to the Indenture.
"Fiscal Quarter" means the period of time beginning at 12:01
a.m. on the first day of each calendar quarter and ending at
midnight on the last day of such calendar quarter.
"Fiscal Year" means the period of time beginning at 12:01 a.m.
on January 1 of each year and ending at midnight on December 31 of
such year.
"Fitch" means Fitch Investors Service, L.P., a New York
limited partnership.
"Fuel Inventory" means fuel inventory of the Energy Complex, in
whatever form, including oil, gas, coal, black liquor, biomass and sludge.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect from time to time.
"GDPIPD" means the Gross Domestic Product Implicit Price Deflator as
published in the United States Department of Commerce, Bureau of Analysis
publication entitled "Survey of Current Business." If the Gross Domestic Product
Implicit Price Deflator ceases to exist or is no longer available, the Company,
with the approval of the Independent Engineer, shall designate a substitute
index that is reasonably similar to the Gross Domestic Product Implicit Price
Deflator.
"GDPIPD Factor" means, with respect to each Fiscal Year, the GDPIPD
most recently published during or prior to such Fiscal Year divided by the
GDPIPD published with respect to December 1994; provided, however, that such
GDPIPD Factor shall not be less than one (1).
"Good Faith Contest" means the contest of an item if (a) such item is
diligently contested in good faith by appropriate proceedings and adequate
reserves or bonding are established in accordance with GAAP with respect to such
item and (b) the failure to pay or comply with such item during the period of
such contest would not result in a Material Adverse Effect.
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"Governmental Approvals" means those authorizations, consents,
approvals, waivers, exemptions, variances, registrations, certifications,
permissions, permits and licenses with any Governmental Authority required for
the ownership and operation of the Energy Complex and the performance of a
Person's obligations under the Project Documents.
"Governmental Authority" means any Federal, state, city, county,
municipal, foreign, international, regional or other governmental or regulatory
authority, agency, department, board, body, instrumentality, commission, arbiter
or court.
"Guaranteed Obligations" means all indebtedness, liabilities,
obligations, covenants and duties of, and all terms and conditions to be
observed by, the Company (including in its capacity as a "debtor in possession"
under the Bankruptcy Code) due or owing to, or in favor or for the benefit of,
the Senior Secured Parties under the Security Documents or the Working Capital
Facility (as the case may be), in each case (a) whether due or owing to, or in
favor or for the benefit of, the Senior Secured Parties or any other Person that
becomes the Indenture Trustee, the Tax-Exempt Indenture Trustee or the Working
Capital Facility Provider (as the case may be) by reason of any succession or
assignment at any time thereafter and (b) whether or not an allowable claim
against the Company under the Bankruptcy Code, or otherwise enforceable against
the Company, and including, in any event, interest accruing after the filing by
or against the Company of a petition under the Bankruptcy Code; provided,
however, that the satisfaction of the Guaranteed Obligations 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 to the
extent such assets are not commingled with any of Mobile Energy's other assets
or any monies or assets of the Company.
"Guaranty" means the unconditional guaranty by Mobile Energy of the
Guaranteed Obligations included in Article XIV of the Indenture, Article VIII of
the IDB Lease Agreement and Article VIII of the Working Capital Facility (as the
case may be).
"Hazardous Materials" means hazardous wastes, hazardous substances,
hazardous constituents, air contaminants or toxic substances, whether solids,
liquids or gases, including substances defined or otherwise regulated as
"hazardous materials," "regulated substances," "hazardous wastes," "hazardous
substances," "toxic substances," "pollutants," "contaminants," "carcinogens,"
"hazardous air pollutants," "criteria pollutants," "reproductive toxins,"
"radioactive materials," "toxic chemicals," or other similar designations in, or
otherwise subject to regulation under, any Environmental Requirement, including
petroleum hydrocarbons, asbestos-containing materials, urea formaldehyde foam
insulation, polychlorinated biphenyls and radionuclides.
"Holder" means a Person in whose name an Indenture Security or
a Tax-Exempt Indenture Security (as the case may be) is registered
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in the register providing for the registration, including upon transfer or
exchange, thereof pursuant to the Indenture or the Tax- Exempt Indenture (as the
case may be).
"IDB" means The Industrial Development Board of the City of
Mobile, Alabama.
"IDB Claims" means all obligations of the Mobile Energy Parties, now or
hereafter existing, to pay fees, costs, expenses, indemnification payments or
other amounts to the IDB under the Financing Documents, other than (a) rent
payments under the IDB Lease Agreement and (b) payments in respect of principal
of and premium, if any, and interest on the 1994 Bonds.
"IDB Lease Agreement" means the Amended and Restated Lease and
Agreement dated as of August 1, 1995 among the IDB and the Mobile Energy
Parties.
"IDB Request" and "IDB Order" mean, respectively, a written request or
order signed in the name of the IDB by an Authorized Officer of the IDB and
delivered to the Tax-Exempt Indenture Trustee.
"Income Tax Deficiency" means (a) with respect to the second
Distribution Date during any Fiscal Year, an amount equal to the excess, if any,
of (i) an amount equal to the sum of (A) the combined Federal and State of
Alabama quarterly estimated income tax payments that would have been required to
be paid by all Members during such Fiscal Year prior to such Distribution Date
and (B) one-half of the amounts estimated to be required to be paid for County
and City of Mobile, Alabama income taxes in respect of such Fiscal Year, if any,
all calculated, solely for this purpose, as if such Members collectively were a
single "stand-alone" domestic Alabama corporation for purposes of Federal, state
and local taxes that would not (1) be a member of a consolidated, affiliated,
combined, unitary or other tax group, (2) be a party to any tax sharing
arrangements with any other Person and (3) have income, loss or credits
(including loss and credit carryovers) available to it that would not be
attributable to any ownership interest in the Company over (ii) the amount of
distributions, if any, from the Distribution Account and the Subordinated Fee
Account made on the first Distribution Date during such Fiscal Year in excess of
the amount of distributions, if any, that would have been calculated by clause
(b) below with respect to such Distribution Date and (b) with respect to the
first Distribution Date during any Fiscal Year, an amount equal to the excess,
if any, of (i) an amount equal to the estimate, as of such Distribution Date, of
the combined Federal, State of Alabama, and County and City of Mobile, Alabama
income taxes that relate to the immediately preceding Fiscal Year of all
Members, all calculated solely for this purpose, as if such Members collectively
were a single "stand-alone" domestic Alabama corporation for purposes of
Federal, state and local taxes that would not (A) be a member of a consolidated,
affiliated, combined, unitary or other tax group, (B) be a party to any tax
sharing
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arrangements with any other Person and (C) have income, loss or credits
(including loss and credit carryovers) available to it that would not be
attributable to any ownership interest in the Company over (ii) the amount of
distributions, if any, from the Distribution Account and the Subordinated Fee
Account made on the second Distribution Date of such prior Fiscal Year.
"Indenture" means the Trust Indenture dated as of August 1, 1995 among
the Mobile Energy Parties and the Indenture Trustee.
"Indenture Accounts" means, with respect to the Indenture Securities of
any series, the Indenture Securities Account and each Debt Service Reserve
Account (if any) established for the benefit of Holders of the Indenture
Securities of such series.
"Indenture Distribution Amount" means, in respect of any Excess Loss
Proceeds with respect to an Event of Loss or Event of Eminent Domain to be
applied pursuant to Section 6.2(b) of the Intercreditor Agreement, an amount
equal to the Indenture's Percentage Share of (a) such Excess Loss Proceeds and
(b) the Redistributed Proceeds with respect to such Excess Loss Proceeds.
"Indenture Securities" means all Debt issued pursuant to the
Indenture.
"Indenture Securities Account" means the Account so designated
established and created under Section 4.1 of the Indenture.
"Indenture Securities Collateral" means, collectively, (a) all of the
collateral mortgaged, pledged or assigned, or purported to be mortgaged, pledged
or assigned, to the Indenture Trustee by the Company pursuant to the granting
and assigning clauses of the Indenture and (b) the Shared Collateral.
"Indenture Securities Interest Subaccount" means the subaccount of the
Indenture Securities Account so designated established and created under Section
4.1 of the Indenture.
"Indenture Securities Principal Subaccount" means the subaccount of the
Indenture Securities Account so designated established and created under Section
4.1 of the Indenture.
"Indenture Securities Redemption Subaccount" means the subaccount of
the Indenture Securities Account so designated established and created under
Section 4.1 of the Indenture.
"Indenture Trustee" means First Union National Bank of Georgia, a
national banking association organized and existing under the laws of the United
States of America.
"Independent Engineer" means Stone & Webster Engineering Corporation or
another nationally recognized consulting or engineering firm appointed
Independent Engineer pursuant to the terms of the Intercreditor Agreement.
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"Independent Engineer Agreement" means the Independent Engineer
Agreement dated as of August 1, 1995 between the Company and the Independent
Engineer or any other similar Contract among such Persons.
"Independent Engineer Confirmation" means a certificate signed by an
authorized representative of the Independent Engineer confirming the
reasonableness of statements and projections contained in certain Officer's
Certificates delivered to the applicable Senior Secured Parties or the
Collateral Agent under the Financing Documents, which confirmation may not be
unreasonably withheld, conditioned or delayed.
"Independent Insurance Advisor" means Sedgwick James or another
nationally recognized insurance advisory firm appointed as insurance advisor
under the Indenture and the Tax-Exempt Indenture by the Collateral Agent.
"Intercreditor Agreement" means the Intercreditor and Collateral Agency
Agreement dated as of August 1, 1995 among the Senior Secured Parties, the
Collateral Agent, the IDB and the Mobile Energy Parties.
"Intercreditor Agreement Accounts" means, collectively, the
Completion Account, the Revenue Account, the Mill Owner Reimbursement Account,
the Working Capital Facility Account, the Operating Account, the Maintenance
Reserve Account, the Loss Proceeds Account, the Subordinated Debt Account, the
Subordinated Fee Account and the Distribution Account.
"Intercreditor Parties" means, collectively, the Senior Secured
Parties, the IDB, the Mobile Energy Parties, any Subordinated Debt Provider and
any other Person party to the Intercreditor Agreement (other than the Collateral
Agent).
"Interest Payment Date" means each January 1 and July 1 of each year,
commencing January 1, 1996.
"Investment Grade" means a rating in one of the four highest categories
(without regard to subcategories within such rating categories) by a Rating
Agency.
"Law" means any constitution, treaty, statute, code, ordinance,
regulation, order, decree, writ or judicial or arbitral decision.
"Lease" means the Lease Agreement dated as of December 12, 1994, as
amended by the First Amendment thereto dated as of July, 13, 1995, between
Scott, as lessor, and the Company (as assignee of Mobile Energy), as lessee.
"Lease Documents" means, collectively, the IDB Lease Agreement, the
Tax-Exempt Indenture (including any Series Supplemental Indenture) and (to the
extent relating to, or
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securing, the Tax-Exempt Indenture Securities) the other Financing
Documents.
"Lease Indemnity" means the Letter Agreement dated August 1, 1995 by
the Mobile Energy Parties in favor of Scott, providing for the indemnification
of Scott with respect to matters arising under the Utilities Land Sublease dated
as of December 1, 1983, as amended, between Scott and the IDB.
"Leased Land" means the land underlying the components of the
Tax-Exempt Project marked on Exhibit A to the IDB Lease Agreement.
"Lenders" has the meaning specified in the Working Capital
Facility.
"Lien" means any lien, claim, security interest, mortgage, trust
arrangement, judgment, pledge, option, charge, easement, encumbrance, title
retention, conditional sales agreement, encroachment, right-of-way, building or
use restriction, preferential right or any other security agreement, arrangement
or similar right in favor of any Person, whether voluntarily incurred or arising
by operation of law, and includes any agreement to give any of the foregoing in
the future, and any contingent sale or other title retention agreement or lease
in the nature thereof.
"Loss Proceeds" means, as applicable, Casualty Proceeds or
Eminent Domain Proceeds.
"Loss Proceeds Account" means the Account so designated established and
created under Section 2.2(a) of the Intercreditor Agreement.
"Maintenance Excess Funding Subaccount" means the subaccount of the
Maintenance Reserve Account so designated established and created under Section
2.2(b) of the Intercreditor Agreement.
"Maintenance Expenditures" means all costs and expenses of operating
and maintaining the Energy Complex and, when the Company is exercising the
Company Step-In Rights, the Pulp Mill Step-In Equipment, other than (a) fuel
costs and expenses, (b) labor and employee expenses, including fringe benefits
and labor relations expense, (c) payments for insurance premiums and like
insurance related expenses required or otherwise maintained under any Project
Document, (d) costs and expenses of consumable items such as process or cleaning
chemicals and lubricants, (e) equipment rental, small tools and vehicle
maintenance expenses, (f) costs and expenses associated with legal, accounting
and other office and administrative functions, (g) permitting fees, (h) costs
and expenses of safety supplies, office supplies and other office expenses, (i)
property taxes and payments made in lieu of taxes, (j) computer maintenance
expenses, (k) any amounts payable for services rendered under the Common
Services Agreement, (l) ash disposal costs, (m) liquidated damages payable to
the Mill Owners under the Master Operating Agreement, (n) amounts payable to the
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Mill Owners in connection with the exercise of Mill Owner Step-In Rights, (o)
any amounts required to be rebated to the United States government pursuant to
Section 148 of the Code in connection with any series of the Tax-Exempt
Indenture Securities (to the extent not already provided for in the Tax-Exempt
Indenture) and (p) payments to the IDB (including IDB Claims and payments
required to be made by the Company with respect to the 1994 Bonds), in the case
of clauses (a) through (p) above, to the extent the foregoing costs or expenses
are not customarily treated as capital expenditures.
"Maintenance Plan" means the maintenance plan and budget for the Energy
Complex, as the same may be amended, restated, supplemented or otherwise
modified from time to time and as more particularly described in Section 5.12 of
the Indenture or Section 4.12 of the IDB Lease Agreement (or any comparable
provision of the Working Capital Facility) (as the case may be).
"Maintenance Plan Funding Subaccount" means the subaccount of the
Maintenance Reserve Account so designated established and created under Section
2.2(b) of the Intercreditor Agreement.
"Maintenance Reserve Account" means the Account so designated
established and created under Section 2.2(a) of the Intercreditor Agreement.
"Maintenance Reserve Account Balance" means, with respect to the
Current Fiscal Quarter, the sum of (a) the monies on deposit in the Maintenance
Reserve Account, (b) amounts available to be drawn or called upon under any
Reserve Account Security deposited in the Maintenance Plan Funding Subaccount
and (c) the monies on deposit in, or otherwise credited to (by means of a
guaranty, capital infusion agreement or otherwise), the Mill Owner Maintenance
Reserve Account, in the case of clauses (a), (b) and (c) above, at the beginning
of the Current Fiscal Quarter.
"Maintenance Reserve Account Required Deposit" means, with respect to
any Fiscal Quarter during any Fiscal Year (the "Current Fiscal Quarter"), one or
more deposits into the Maintenance Reserve Account on Monthly Transfer Dates
occurring during the Current Fiscal Quarter in an aggregate amount equal to the
excess of the sum of paragraphs (a), (b) and (c) below over the Maintenance
Reserve Account Balance with respect to the Current Fiscal Quarter:
(a) the amount of Maintenance Reserve Account Required
Deposits with respect to each Fiscal Quarter preceding the Current
Fiscal Quarter that were required to be deposited into the Maintenance
Reserve Account during each such Fiscal Quarter but were not, and have
not been since, so deposited;
(b) the aggregate amount of any withdrawals from the
Maintenance Reserve Account and the Mill Owner Maintenance Reserve
Account during each Fiscal Quarter preceding the Current Fiscal Quarter
that were in excess of the aggregate projected Maintenance Expenditures
for each such Fiscal
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Quarter (as specified in the Maintenance Plan) but were not, and have
not been since, redeposited in the Maintenance Reserve Account; and
(c) the greatest of:
(i) if the Current Fiscal Quarter is the first
Fiscal Quarter of such Fiscal Year, the amount obtained by
dividing the aggregate of the projected Maintenance
Expenditures for the Current Fiscal Quarter and the
immediately succeeding sixteen (16) Fiscal Quarters (in each
case as specified in the Maintenance Plan) by sixteen (16);
(ii) if the Current Fiscal Quarter is the first or
second Fiscal Quarter of such Fiscal Year, the amount obtained
by dividing the aggregate of the projected Maintenance
Expenditures for the Current Fiscal Quarter and the
immediately succeeding fifteen (15) Fiscal Quarters (in each
case as specified in the Maintenance Plan) by fifteen (15);
(iii) if the Current Fiscal Quarter is the first,
second or third Fiscal Quarter of such Fiscal Year, the amount
obtained by dividing the aggregate of the projected
Maintenance Expenditures for the Current Fiscal Quarter and
the immediately succeeding fourteen (14) Fiscal Quarters (in
each case as specified in the Maintenance Plan) by fourteen
(14); and
(iv) if the Current Fiscal Quarter is the first,
second, third or fourth Fiscal Quarter of such Fiscal Year,
the greatest of the amount obtained by dividing the aggregate
of the projected Maintenance Expenditures for any period
consisting of the Current Fiscal Quarter and any number of
consecutive Fiscal Quarters from one (1) to thirteen (13)
immediately succeeding the Current Fiscal Quarter (in each
case as specified in the Maintenance Plan) by such number of
consecutive Fiscal Quarters.
"Manager" means Mobile Energy and any Person appointed as an
additional, substitute or replacement manager of the Company pursuant to the
terms of the Articles of Organization.
"Master Operating Agreement" means the Amended and Restated Master
Operating Agreement dated as of July 13, 1995 among the Company (as assignee of
Mobile Energy), Scott, the Pulp Mill Owner, the Tissue Mill Owner and the Paper
Mill Owner.
"Material Adverse Effect" means (a) a change in the financial condition
of either of the Mobile Energy Parties or the Energy Complex that would
reasonably be expected to materially and adversely affect the ability of either
of the Mobile Energy Parties to pay principal of and interest on the Senior Debt
as and when
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required or (b) any event or occurrence of whatever nature that would materially
and adversely affect (i) the ability of either of the Mobile Energy Parties to
perform its obligations under the Project Documents or (ii) the Lien of the
Security Documents.
"Member" means any Person owning a membership interest in the
Company.
"Mill Closure" means (a) a public announcement by a Mill Owner that it
will close its respective Mill for a period of at least one (1) year or that it
will reduce production of pulp, paper or tissue (as applicable) at such Mill
(permanently or for a period of at least two (2) years) to less than ten percent
(10%) of 1994 production levels or (b) the occurrence of a two (2) year period
during which, for any reason other than the occurrence of a Force Majeure Event
(as defined in the Master Operating Agreement), such Mill Owner's production of
pulp, paper or tissue (as applicable) at such Mill is less than ten percent
(10%) of 1994 production levels.
"Mill Owner Maintenance Reserve Account" means the account so
designated established and created pursuant to the Master Operating Agreement
for the sole benefit of the Mill Owners.
"Mill Owner Maintenance Reserve Account Agreement" means the Mill Owner
Maintenance Reserve Account Agreement dated as of August 1, 1995 among Southern,
the Company and the Mill Owners.
"Mill Owner Reimbursement Account" means the Account so designated
established and created under Section 2.2(a) of the Intercreditor Agreement.
"Mill Owner Step-In Rights" has the meaning specified in the
Master Operating Agreement.
"Mill Owners" means, collectively, the Pulp Mill Owner, the
Tissue Mill Owner and the Paper Mill Owner.
"Mills" means, collectively, the Pulp Mill, the Tissue Mill
and the Paper Mill.
"Mixed-Use Bonds" means, collectively, the IDB's Industrial Development
Revenue Bonds (Scott Paper Company Project), Series A and the IDB's Industrial
Development Revenue Bonds (Scott Paper Company Project), Series B, in each case
issued under and secured by a Trust Indenture dated as of December 1, 1984, as
supplemented by a First Supplemental Indenture thereto dated as of June 1, 1985,
between the IDB and AmSouth Bank of Alabama, as trustee.
"Mobile Energy" means Mobile Energy Services Holdings, Inc.,
an Alabama corporation.
"Mobile Energy Parties" means, collectively, the Company and
Mobile Energy.
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"Mobile Energy Request" or "Mobile Energy Order" means, respectively, a
written request or order signed in the name of Mobile Energy by an Authorized
Officer of Mobile Energy and delivered to the Indenture Trustee or the
Tax-Exempt Indenture Trustee (as the case may be).
"Mobile Facility" means the integrated pulp, paper and tissue
manufacturing facility located on a 730-acre site along the Mobile River and the
Chickasaw Creek in Mobile, Alabama, comprised of the Mills and the Energy
Complex.
"Monthly Transfer Date" means the last Business Day of each month of
each Fiscal Year, commencing with the first such day occurring after the Closing
Date.
"Moody's" means Moody's Investors Service, Inc., a Delaware
corporation.
"Mortgage" means the Leasehold Mortgage, Assignment of Leases, Rents,
Issues and Profits and Security Agreement and Fixture Filing dated as of August
1, 1995 among the Company, the IDB and the Mortgagee.
"Mortgagee" means Bankers Trust (Delaware), or any other Person
appointed as a substitute or replacement Mortgagee under the Mortgage.
"1983 Bonds" means the IDB's Exempt Facilities Revenue Bonds (Scott
Paper Company Project), 1983 Series B, issued under and secured by a Trust
Indenture dated as of December 1, 1983 between the IDB and BankAmerica Trust
Company of New York, as trustee.
"1984 Bonds" means the IDB's Variable Rate Demand Solid Waste Revenue
Refunding Bonds (Scott Paper Company Project) Series 1984 A, B, C, D and E
issued under and secured by the 1984 Indenture.
"1984 Indenture" means the Trust Indenture dated as of December 1,
1984, as supplemented by the First Supplemental Indenture thereto dated as of
January 1, 1985 and the Second Supplemental Indenture thereto dated as of August
1, 1995, between the IDB and Chemical Bank, as trustee.
"1984 Lease" means the Lease and Agreement dated December 1, 1984, as
amended by Amendment No. 1 thereto dated as of November 8, 1994 and Amendment
No. 2 thereto dated as of December 9, 1994, between the IDB and the Company (as
assignee of Mobile Energy (as assignee of Scott)).
"1994 Bond Payment Date" means each June 1 and December 1 of each year,
commencing December 1, 1995.
"1994 Bond Trustee" means Bankers Trust (Delaware), in its capacity as
trustee under the 1994 Indenture.
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"1994 Bonds" means the IDB's Industrial Development Revenue Bonds
(Scott Paper Recovery Boiler Project) 1994 Series A. For all purposes of the
Financing Documents, (a) payments in respect of the principal of and premium, if
any, and interest on the 1994 Bonds shall be treated as neither Operation and
Maintenance Costs nor Senior Debt Service Requirements (or any other debt
service) and (b) receipts (or deemed receipts) in respect of the 1994 Bonds
shall not be treated as Revenues.
"1994 Indenture" means the Trust Indenture dated as of December 1, 1994
between the IDB and the 1994 Bond Trustee.
"1995 Bonds" has the meaning specified in Section 2.17(a) of the
Tax-Exempt Indenture, which means the Tax-Exempt Bonds.
"Non-Affiliate Subordinated Debt" means any unsecured loan or loans
from any Person that is not an Affiliate of the Company pursuant to a
Subordinated Loan Agreement, the amounts necessary for repayment of which have
been included in the Annual Budget approved by the Collateral Agent and the
Independent Engineer.
"Nondisturbance Agreement" means the Estoppel and Nondisturbance
Agreement dated as of December 12, 1994 between TRT and the Company (as assignee
of Mobile Energy).
"Officer's Certificate" means a certificate that has been signed by an
Authorized Officer of either of the Mobile Energy Parties or of Southern (as the
case may be).
"O&M Agreement" means the Facility Operations and Maintenance Agreement
dated as of December 12, 1994 between the Company (as assignee of Mobile Energy)
and the Operator.
"Operating Account" means the Account so designated established and
created under Section 2.2(a) of the Intercreditor Agreement.
"Operating Agreement" means the Operating Agreement of the Company
dated as of July 13, 1995, as amended by the First Amendment thereto dated as of
July 13, 1995, among the Members.
"Operation and Maintenance Costs" means all costs and expenses of
operating and maintaining the Energy Complex and, when the Company is exercising
the Company Step-In Rights, the Pulp Mill Step-In Equipment, including and
together with (a) Subordinated Fees, (b) Maintenance Expenditures and (c) any
such costs and expenses specified in clauses (a) through (p) of the definition
of Maintenance Expenditures (other than (i) rent payments under the IDB Lease
Agreement and (ii) payments of principal of and premium, if any, and interest on
the 1994 Bonds).
"Operator" means Southern Electric, in its capacity as
operator under the O&M Agreement.
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"Opinion of Counsel" means a written opinion of counsel for any Person
either expressly referred to in any Financing Document to which the Collateral
Agent or any of the Senior Secured Parties is a party or otherwise satisfactory
to the Collateral Agent or such Senior Secured Party (which may include counsel
for either of the Mobile Energy Parties, whether or not such counsel is an
employee of either or both of them).
"Optional Modifications" means all modifications to the Energy
Complex that are not Required Modifications.
"Optional Modifications Subaccount" means the subaccount of the
Completion Account so designated established and created under Section 2.2(c) of
the Intercreditor Agreement.
"Outstanding" means, when used with respect to any of the Senior
Securities (however referenced in any Financing Document), as of the date of
determination, all such Senior Securities theretofore authenticated and
delivered under the Indenture or the Tax-Exempt Indenture (as the case may be),
except:
(a) such Senior Securities theretofore canceled by the
Indenture Trustee or the Tax-Exempt Indenture Trustee (as the
case may be) or delivered to either such Trustee for
cancellation;
(b) such Senior Securities or portions thereof deemed to have
been paid within the meaning of, in the case of the Indenture, Section
12.1 thereof and, in the case of the Tax- Exempt Indenture, Section
12.1 thereof (as the case may be); and
(c) such Senior Securities that have been exchanged for other
Senior Securities or Senior Securities in lieu of which other Senior
Securities have been authenticated and delivered pursuant to the
Indenture or the Tax-Exempt Indenture (as the case may be) unless held
by a Holder in whose hands such Senior Securities constitute valid
obligations of the Company;
provided, however, that in determining whether the Holders of the requisite
principal amount of Senior Securities (however referenced in any Financing
Document) Outstanding have given any request, demand, authorization, direction,
notice, consent or waiver under the Indenture or the Tax-Exempt Indenture (as
the case may be) or whether or not a quorum is present at a meeting of Holders
of such Senior Securities, such Senior Securities owned by either of the Mobile
Energy Parties (or any Affiliate thereof) shall be disregarded and deemed not to
be Outstanding, except that, in determining whether or not the Indenture Trustee
or the Tax-Exempt Indenture Trustee (as the case may be) shall be protected in
relying upon any such request, demand, authorization, direction, notice, consent
or waiver or upon any such determination as to presence of a quorum, only such
Senior Securities that a Responsible Officer of the Indenture Trustee or the
Tax-Exempt
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Indenture Trustee (as the case may be) knows to be so owned shall be so
disregarded. Any such Senior Securities so owned that have been pledged in good
faith may be regarded as Outstanding if the pledgee establishes to the
satisfaction of the Indenture Trustee or the Tax-Exempt Indenture Trustee (as
the case may be) such pledgee's right so to act with respect to such Senior
Securities and that such pledgee is not a Mobile Energy Party (or any Affiliate
thereof).
"Paper Mill" means the paper mill located at the Mobile
Facility, which as of the Closing Date is owned by S.D. Warren.
"Paper Mill Energy Services Agreement" means the Paper Mill Energy
Services Agreement dated as of December 12, 1994, as amended by the First
Amendment thereto dated July 13, 1995, between the Paper Mill Owner and the
Company (as assignee of Mobile Energy).
"Paper Mill Owner" means S.D. Warren, in its capacity as owner
of the Paper Mill.
"Paying Agent" means any Person acting as Paying Agent pursuant to, in
the case of the Indenture, Section 9.14(b) thereof and, in the case of the
Tax-Exempt Indenture, Section 9.13(b) thereof.
"Percentage Share" means an amount (expressed as a percentage)
equal to:
(a) with respect to the Working Capital Facility, (i) the
Working Capital Facility Commitment in effect immediately prior to any
deposit into the Working Capital Facility Account of any Excess Loss
Proceeds with respect to an Event of Loss or Event of Eminent Domain
pursuant to Section 6.2(b)(i) of the Intercreditor Agreement divided by
(ii) the Combined Exposure immediately prior to such deposit;
(b) with respect to the Indenture, (i) the principal amount of
the Indenture Securities Outstanding immediately prior to any transfer
to the Indenture Trustee for deposit into the Indenture Securities
Account of any Excess Loss Proceeds with respect to an Event of Loss or
Event of Eminent Domain pursuant to Section 6.2(b)(ii) of the
Intercreditor Agreement divided by (ii) in the case of Excess Loss
Proceeds, the Combined Exposure and, in the case of Redistributed
Proceeds, the aggregate principal amount of the Senior Securities
Outstanding, in each case immediately prior to such transfer; and
(c) with respect to the Tax-Exempt Indenture, (i) the
principal amount of the Tax-Exempt Indenture Securities Outstanding
immediately prior to any transfer to the Tax- Exempt Indenture Trustee
for deposit into the Tax-Exempt Indenture Securities Account of any
Excess Loss Proceeds with respect to an Event of Loss or Event of
Eminent Domain
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pursuant to Section 6.2(b)(iii) of the Intercreditor Agreement divided
by (ii) in the case of Excess Loss Proceeds, the Combined Exposure and,
in the case of Redistributed Proceeds, the aggregate principal amount
of the Senior Securities Outstanding, in each case immediately prior to
such transfer.
"Permitted Indebtedness" means (a) in the case of the Company: (i) the
First Mortgage Bonds; (ii) Debt incurred under a Working Capital Facility having
a Working Capital Facility Commitment not to exceed $15,000,000 (multiplied by
the Working Capital Escalation Factor in effect at any given time, provided (and
the Working Capital Facility shall contain provisions to such effect) that (A)
no more than $5,000,000 (multiplied by the Working Capital Escalation Factor in
effect at any given time) of such Debt may be scheduled to mature during any
calendar month, (B) any Working Capital Facility Loan advanced thereunder shall
mature no later than ninety-three (93) days from the date such Working Capital
Facility Loan was first advanced, (C) the Company shall be required to repay all
amounts advanced thereunder so that no amounts are outstanding once during each
Fiscal Year (other than the Fiscal Year ending December 31, 1995) for a period
of five (5) consecutive days and (D) the Working Capital Facility Provider
thereunder shall become a party to the Intercreditor Agreement; (iii) the
Tax-Exempt Bonds; (iv) reimbursement obligations in respect of letters of credit
(if any) and other financial obligations arising under the Project Contracts and
obligations arising under the Lease Indemnity; (v) purchase money obligations
incurred to finance discrete items of equipment not comprising an integral part
of the Energy Complex that extend only to the equipment being financed and that
do not in the aggregate have annual debt service or lease obligations exceeding
$2,000,000 (multiplied by the GDPIPD Factor in effect at the time such
obligations were incurred); (vi) trade accounts payable (other than for borrowed
money) arising, and accrued expenses incurred, in the ordinary course of
business so long as such trade accounts payable are payable within ninety (90)
days of the date the respective goods are delivered or the respective services
are rendered; (vii) obligations in respect of surety bonds or similar
instruments in an aggregate amount not exceeding $10,000,000 (multiplied by the
GDPIPD Factor in effect at the time such obligations were incurred) at any one
time outstanding; (viii) Affiliate Subordinated Debt; (ix) Replacement Debt
permitted to be issued pursuant to the terms of the Financing Documents; (x)
Debt permitted to be issued pursuant to the terms of the Financing Documents for
Required Modifications and Optional Modifications; (xi) Non-Affiliate
Subordinated Debt (including any Non-Affiliate Subordinated Debt permitted by
clause (x) above) in an aggregate principal amount not to exceed $75,000,000
(multiplied by the GDPIPD Factor in effect at the time such Debt was incurred)
permitted to be issued pursuant to the terms of the Financing Documents; (xii)
Refunding Debt permitted to be issued pursuant to the terms of the Financing
Documents; and (xiii) the Company's obligations in respect of the 1994 Bonds,
the Mixed-Use Bonds, the Environmental Bonds and the Refunding Letter of Credit;
and (b) in the case of Mobile Energy, the Guaranty.
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"Permitted Investments" means investments in securities that are: (a)
direct obligations of the United States of America or of any agency thereof; (b)
obligations fully guaranteed by the United States of America or any agency
thereof; (c) time deposits (which may be represented by certificates of deposit)
issued by commercial banks organized under the laws of the United States of
America or of any political subdivision thereof or under the laws of Canada,
Japan, Switzerland or any country that is a member of the European Union having
a combined capital and surplus of at least $500,000,000 and having long-term
unsecured Debt having a rating at least equal to (i) the highest rating assigned
to the Outstanding Indenture Securities or the Tax-Exempt Indenture Securities
(as the case may be) by at least two of the Rating Agencies or (ii) "B" by
Thompson Bankwatch, Inc. (in either case provided that such investments shall
not be comprised of more than $30,000,000 in principal amount at any given time
from any one such bank); (d) open market commercial paper of any corporation
incorporated or doing business under the laws of the United States of America or
of any political subdivision thereof then rated at least A-1/P-1 (or an
equivalent thereof) by at least two of the Rating Agencies (provided that such
investments shall not be comprised of more than $30,000,000 in principal amount
at any given time from any one such corporation); (e) obligations issued or
guaranteed by, and any other obligations the interest on which is excluded from
income for Federal income tax purposes issued by, any state of the United States
of America or the District of Columbia or the Commonwealth of Puerto Rico or any
political subdivision, agency, authority or instrumentality thereof, which
issuer or guarantor has (i) a short-term Debt rating which is (on the date of
acquisition thereof) A- 1/P-1 (or an equivalent thereof) or better and (ii) a
long-term Debt rating that is (on the date of acquisition thereof) "A" or
better, in each case by at least two of the Rating Agencies (provided that such
investments shall not be comprised of more than $30,000,000 in principal amount
at any given time from any one such issuer or guarantor); (f) guaranteed
investment contracts of any financial institution organized under the laws of
the United States of America or any state thereof or under the laws of Canada,
Japan, Switzerland or any country that is a member of the European Union, which
financial institution has assets of at least $5 billion in the aggregate and has
a long term Debt rating that is (on the date of acquisition thereof) "A" or
better by at least two of the Rating Agencies (provided that such investments
shall not be comprised of more than $30,000,000 in principal amount at any given
time from any one such institution); (g) investment contracts of any financial
institution either (i) (A) fully secured by direct obligations of the United
States, (B) obligations of a Person controlled or supervised by and acting as an
agency or instrumentality of the United States or (C) securities or receipts
evidencing ownership interests in obligations or specified portions thereof
described in clause (A) or (B) above, in each case guaranteed as a full faith
and credit obligation of the United States, having a market value at least equal
to 102% of the amount deposited thereunder and possession of which obligation is
held under arrangements satisfactory to the Collateral Agent, the
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Indenture Trustee or the Tax-Exempt Indenture Trustee (as the case may be) or
(ii) with long-term Debt ratings of "A" or higher and short-term ratings in one
of the highest two major categories by any of the Rating Agencies; (h) a
contract or investment agreement with a provider or guarantor (i) which provider
or guarantor is rated at least "A" or equivalent by each of the Rating Agencies
(provided that if a guarantor is party to the rating, the guaranty is
unconditional and is confirmed in writing prior to any assignment by the
provider to another subsidiary of such guarantor), (ii) providing that monies
invested shall be payable to the Indenture Trustee or the Tax-Exempt Indenture
Trustee (as the case may be) (except to the extent the monies invested
constitute Shared Collateral, which shall be payable to the Collateral Agent)
without condition (other than notice) and without breakage fee or other penalty,
upon not more than two (2) Business Days' notice for application when and as
required or permitted under the Indenture, the Intercreditor Agreement or the
Tax-Exempt Indenture (as applicable), (iii) stating that such contract or
agreement is unconditional, expressly disclaiming any right of setoff and
providing for immediate termination in the event of insolvency of the provider
and termination upon demand of the Indenture Trustee or the Tax-Exempt Indenture
Trustee (as the case may be) (except to the extent the monies invested
constitute Shared Collateral, which shall provide for termination upon demand of
the Collateral Agent) (which demand shall only be made at the direction of the
Company) after any payment or other covenant default by the provider and (iv)
the terms and provisions of which are in form and substance satisfactory to the
Collateral Agent, the Indenture Trustee or the Tax-Exempt Indenture Trustee (as
the case may be); and (i) investments in money market funds registered under the
Investment Company Act of 1940 then rated in the highest category by S&P and
Moody's.
"Permitted Liens" means: (a) Liens specifically created, required or
permitted by the Indenture, the Tax-Exempt Indenture or the IDB Lease Agreement;
(b) the Liens created, or purported to be created, on the Collateral pursuant to
the Security Documents; (c) Liens for taxes that are either not yet due, are due
but payable without penalty or are the subject of a Good Faith Contest; (d) any
exceptions to title that are set forth on Schedule B--Section 2 of the title
insurance policy delivered to the Collateral Agent on the Closing Date (to the
extent that such exceptions have not been released or subordinated prior to the
Closing Date); (e) such minor defects, easements, rights of way, restrictions,
irregularities, encumbrances and clouds on title and statutory liens that do not
materially impair the property affected thereby and that do not individually or
in the aggregate materially impair the value of the security interests granted
under the Financing Documents; (f) the easements and other rights in favor of
third-parties contained in the Project Contracts as of the Closing Date; (g)
deposits or pledges to secure statutory obligations or appeals, release of
attachments, stays of execution or injunction, performance of bids, tenders,
contracts (other than for the repayment of borrowed money) or leases, or for
purposes of like general nature in the ordinary
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course of business; (h) Liens in connection with worker's compensation,
unemployment insurance or other social security or pension obligations; (i)
legal or equitable encumbrances deemed to exist by reason of the existence of
any litigation or other legal proceeding if the same are the subject of a Good
Faith Contest (excluding any attachment prior to judgment, judgment lien or
attachment in aid of execution on a judgment); (j) mechanic's, workmen's,
materialmen's, construction or other like Liens arising in the ordinary course
of business or incident to the construction or improvement of any property in
respect of obligations that are not yet due or that are the subject of a Good
Faith Contest; (k) Liens securing purchase money obligations that constitute
Permitted Indebtedness; (l) Liens in favor of the Mill Owners on the Mill Owner
Maintenance Reserve Account, including monies on deposit therein or otherwise
credited thereto (in accordance with the Mill Owner Maintenance Reserve Account
Agreement) not exceeding $2,000,000, to the extent arising under the Master
Operating Agreement or the Mill Owner Maintenance Reserve Account Agreement; and
(m) Liens on cash collateral not exceeding $1,500,000 in favor of the issuer of
the Refunding Letter of Credit.
"Person" means any individual, sole proprietorship, corporation,
partnership, limited liability company, joint venture, trust, unincorporated
association, institution, Governmental Authority or any other entity.
"Place of Payment" means, when used with respect to the Senior
Securities of any series, the office or agency maintained pursuant to, in the
case of the Indenture, Section 9.14(a) thereof and, in the case of the
Tax-Exempt Indenture, Section 9.13(a) thereof and, in either case, such other
place or places, if any, where the principal of and premium, if any, and
interest on the Senior Securities of such series are payable as specified in the
Series Supplemental Indenture to the Indenture or the Tax-Exempt Indenture (as
the case may be) establishing the Senior Securities of such series.
"Predecessor Securities" means, with respect to any particular Senior
Security, every previous Senior Security evidencing all or a portion of the same
Debt as that evidenced by such particular Senior Security. For purposes of this
definition, any Senior Security authenticated and delivered under, in the case
of any Indenture Security, Section 2.9 of the Indenture and, in the case of any
Tax-Exempt Indenture Security, Section 2.9 of the Tax-Exempt Indenture in lieu
of a lost, destroyed or stolen Senior Security shall be deemed to evidence the
same Debt as such lost, destroyed or stolen Senior Security.
"Prepayment Date" has the meaning specified (a) in the case of the
Indenture, in Section 6.2 thereof and (b) in the case of the Tax-Exempt
Indenture, in Section 6.2 thereof.
"Principal Payment Date" means in respect of (a) the Indenture
Securities, any January 1 or July 1 on which principal payments are
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due to Holders thereof and (b) the Tax-Exempt Indenture Securities, any January
1 on which principal payments are due to Holders thereof.
"Processing Services" has the meaning specified in the Master
Operating Agreement.
"Project Contracts" means, collectively, (a) the Energy Services
Agreements, (b) the Master Operating Agreement, (c) the Lease, (d) the
Supplementary Lease, (e) the O&M Agreement, (f) the Common Services Agreement,
(g) the Water Agreement, (h) the Boiler Ash Agreement, (i) the Environmental
Indemnity Agreements, (j) the Transition Agreement dated as of December 12,
1994, as amended by the First Amendment thereto dated as of June 16, 1995 and
the Second Amendment thereto dated as of July 13, 1995, between Scott and the
Company (as assignee of Mobile Energy), (k) the Employee Transition Agreement
dated as of December 12, 1994, as amended by the First Amendment thereto dated
as of July 13, 1994, among Scott, the Company (as assignee of Mobile Energy) and
Southern Electric, (l) the SCS Agreement, (m) the Easement Deeds, (n) the Asset
Purchase Agreement dated as of December 12, 1994 between Scott, as seller, and
the Company (as assignee of Mobile Energy), as buyer, (o) the Coal Supply
Agreement, (p) any other Contract entered into by either of the Mobile Energy
Parties for the provision of fuel to the Energy Complex, (q) the IDB Lease
Agreement, (r) the Lease Assignment and Assumption Agreement dated as of
December 12, 1994 between Scott and the Company (as assignee of Mobile Energy),
(s) the Construction, Financing and Installment Sale Agreement dated as of April
1, 1973 between the IDB and Scott, (t) the Lease and Assignment Agreement dated
as of December 12, 1994 between Scott and the Company (as assignee of Mobile
Energy), (u) the Facilities Lease and Agreement dated as of December 1, 1984
between the IDB and Scott, (v) the Sublease and Assignment Agreement dated as of
December 12, 1994 between Scott and the Company (as assignee of Mobile Energy),
(w) the Construction, Financing and Installment Sale Agreement dated as of
September 1, 1976 between the IDB and Scott, (x) the Lease and Assignment
Agreement dated as of December 12, 1994 between Scott and the Company (as
assignee of Mobile Energy), (y) the Recovery Boiler Facilities Lease and
Agreement dated as of December 1, 1994 between the IDB and Scott, (z) the Lease
Assignment and Assumption Agreement dated as of December 12, 1994 between Scott
and the Company (as assignee of Mobile Energy), (aa) the Nondisturbance
Agreement, (bb) the Recognition Agreements, (cc) the Mill Owner Maintenance
Reserve Account Agreement and (dd) the Transfer Agreement.
"Project Costs" means costs and expenses (other than financing costs
and expenses) paid, incurred or to be incurred by the Company after the Closing
Date to complete the capital improvements to the Energy Complex specified in the
Master Operating Agreement in accordance with the Capital Budget and certain
other planned expenditures relating to the Energy Complex.
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"Project Documents" means, collectively, the Project Contracts
and the Financing Documents.
"Project Participant" means each Person that is party to a
Project Document.
"Prudent Plant Operating Standards" has the meaning specified
in the Master Operating Agreement.
"Pulp Mill" means the pulp mill (including a process water plant and
waste water treatment plant) located at the Mobile Facility, which as of the
Closing Date is owned by Scott.
"Pulp Mill Energy Services Agreement" means the Pulp Mill Energy
Services Agreement dated as of December 12, 1994, as amended by the First
Amendment thereto dated as of July 13, 1994, between the Pulp Mill Owner and the
Company (as assignee of Mobile Energy).
"Pulp Mill Owner" means Scott, in its capacity as owner of the
Pulp Mill.
"Pulp Mill Step-In Equipment" has the meaning specified in the
Master Operating Agreement.
"PURPA" means the Public Utility Regulatory Policies Act of
1978.
"Qualified Engineer" means an independent engineer listed on Schedule 1
to the Intercreditor Agreement, as such Schedule may be amended from time to
time in accordance with Section 11.3 of the Intercreditor Agreement.
"Qualifying Facility" means a "Qualifying Cogeneration Facility" as
specified in section 3(18)(B) of the Federal Power Act or a qualifying small
power production facility within the meaning of section 201 of PURPA.
"Rating Agencies" means, collectively, S&P, Fitch and Moody's, together
with any other nationally recognized credit agency of similar standing if any
such Person is not then currently rating the proposed subject of such rating.
"Receivables" means all of the Company's rights to payment for goods
sold or leased or services performed by the Company, including (a) rights
evidenced by an account, note, contract, security, instrument, chattel paper or
other evidence of indebtedness and (b) all "accounts" as defined in Section
9-106 of the Uniform Commercial Code as in effect in the State of New York on
the Closing Date.
"Recognition Agreements" means, collectively, (a) the Recognition,
Cooperation and Consent Agreement relating to the Mixed-Use Bonds dated as of
August 1, 1995 among the Company, the IDB, AmSouth Bank of Alabama, TRT and the
Collateral Agent and (b)
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the Recognition, Cooperation and Consent Agreement relating to the Tax-Exempt
Bonds dated as of August 1, 1995 among the Company, the IDB, the Tax-Exempt
Indenture Trustee and the Collateral Agent.
"Redemption Date" has the meaning specified (a) in the case of the
Indenture, in Section 6.2 thereof and (b) in the case of the Tax-Exempt
Indenture, in Section 6.2 thereof.
"Redistributed Proceeds" means, with respect to any Excess Loss
Proceeds, the excess, if any, of the Working Capital Facility's Percentage Share
of such Excess Loss Proceeds over the Working Capital Facility Distribution
Amount in respect of such Excess Loss Proceeds.
"Refunding Debt" means Debt, the proceeds of which are used to refund
outstanding Senior Debt.
"Refunding Letter of Credit" means one or more letters of credit issued
by a commercial bank in an aggregate amount not to exceed $1,500,000 to provide
for the payment of accrued interest on the 1984 Bonds upon the redemption
thereof.
"Regular Record Date" means, for the Stated Maturity of any Senior
Security of a series, or for the Stated Maturity of any installment of principal
thereof or payment of interest thereon, the 15th day (whether or not a Business
Day) of the month prior to such Stated Maturity, or any other date specified for
such purpose in the form of Senior Security of such series attached to the
Series Supplemental Indenture to the Indenture or the Tax-Exempt Indenture (as
the case may be) relating to the Senior Securities of such series.
"Replacement Debt" means Senior Securities, the proceeds of which are
used to refinance all or a portion of the outstanding Tax-Exempt Indenture
Securities (whether by effecting a gross-up of, or by the issuance of Senior
Securities to replace, affected Tax-Exempt Indenture Securities) upon the
occurrence of a Determination of Taxability.
"Replacement Facility" means a facility with materially different
performance capabilities from the Energy Complex that can be built to provide
services to some or all of the Mills following the occurrence of an Event of
Loss or an Event of Eminent Domain.
"Required Deposit" means, at the time of any Required Deposit Event
with respect to any Reserve Account Security on deposit in any Reserve Account
Security Account, an amount equal to the aggregate Available Amount under such
Reserve Account Security at such time; provided, however, that if such Required
Deposit Event results from the occurrence of a Debt Service Event, such amount
shall be equal to the aggregate amount required to be transferred pursuant to,
if such Reserve Account Security Account is (a) the Maintenance Plan Funding
Subaccount, Section 3.5(c) of the Intercreditor Agreement, (b) the Distribution
Account, Section
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3.8(b) of the Intercreditor Agreement, (c) a Debt Service Reserve Account,
Section 4.5 of the Indenture and (d) a Tax-Exempt Debt Service Reserve Account,
Section 4.6 of the Tax-Exempt Indenture.
"Required Deposit Event" means (a) in the case of any Reserve Account
Letter of Credit on deposit in any Reserve Account Security Account, (i) the
occurrence of any Debt Service Event with respect to such Reserve Account Letter
of Credit, (ii) the date that is fifteen (15) days prior to the occurrence of
any Termination Event with respect to such Reserve Account Letter of Credit,
unless such Reserve Account Letter of Credit has been replaced with monies or
other Reserve Account Security (other than, if such Reserve Account Security
Account is a Tax-Exempt Debt Service Reserve Account, a Southern Guaranty) prior
to such date, (iii) the occurrence of a Credit Standard Event or Default Event
with respect to such Reserve Account Letter of Credit and the continuance
thereof for a period of five (5) days, unless such Reserve Account Letter of
Credit has been replaced with other Reserve Account Security (other than, if
such Reserve Account Security Account is a Tax-Exempt Debt Service Reserve
Account, a Southern Guaranty) prior to the expiration of such period or (iv) the
date on which a Trigger Event Notice has been delivered and (b) in the case of
any Southern Guaranty on deposit in any Reserve Account Security Account, (i)
the occurrence of any Debt Service Event with respect to such Southern Guaranty,
(ii) the date that is fifteen (15) days prior to the occurrence of any
Termination Event with respect to such Southern Guaranty, unless such Southern
Guaranty has been replaced with monies or other Reserve Account Security prior
to such date, (iii) the occurrence of a Credit Standard Event with respect to
such Southern Guaranty and the continuance thereof for a period of fifteen (15)
days, unless (A) the Collateral Agent or the Indenture Trustee (as the case may
be) shall have been provided with an Officer's Certificate of Southern
certifying as to the determination that the Southern Credit Standard has been
satisfied after such occurrence and prior to the expiration of such period or
(B) such Southern Guaranty has been replaced with monies or other Reserve
Account Security prior to the expiration of such period, (iv) the occurrence of
a Default Event and the continuance thereof for a period of five (5) days,
unless such Southern Guaranty has been replaced with other Reserve Account
Security prior to the expiration of such period or (v) the date on which a
Trigger Event Notice has been delivered.
"Required Interest Deposit" means, in the case of any Monthly Transfer
Date with respect to:
(a) the Indenture Securities Interest Subaccount, an amount
that, after giving effect to monies on deposit therein immediately
prior to such Monthly Transfer Date and together with a uniform amount
to be deposited therein on each succeeding Monthly Transfer Date prior
to the next succeeding Interest Payment Date, is equal to the amount of
interest on the Indenture Securities becoming due on such Interest
Payment Date (such amount to be reduced if and to the extent that a
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Redemption Date or Prepayment Date for any of the Indenture Securities
is on or precedes such Interest Payment Date, in which case the amount
of interest payable on the Indenture Securities to be so redeemed or
prepaid shall be provided for pursuant to paragraph (c) below in lieu
of this paragraph (a));
(b) the Tax-Exempt Indenture Securities Interest Subaccount,
an amount that, after giving effect to monies on deposit therein
immediately prior to such Monthly Transfer Date and together with a
uniform amount to be deposited therein on each succeeding Monthly
Transfer Date prior to the next succeeding Interest Payment Date
(unless such next succeeding Interest Payment Date is January 1, 2020,
in which case together with a uniform amount to be deposited therein on
each succeeding Monthly Transfer Date prior to December 1, 2019), is
equal to the amount of interest on the Tax-Exempt Indenture Securities
becoming due on such Interest Payment Date (such amount to be reduced
if and to the extent that a Redemption Date or Prepayment Date for any
of the Tax-Exempt Indenture Securities is on or precedes such Interest
Payment Date, in which case the amount of interest payable on the Tax-
Exempt Indenture Securities to be so redeemed or prepaid shall be
provided for pursuant to paragraph (d) below in lieu of this paragraph
(b));
(c) the Indenture Securities Redemption Subaccount, an amount
that, after giving effect to monies on deposit therein immediately
prior to such Monthly Transfer Date and together with a uniform amount
to be deposited therein on each succeeding Monthly Transfer Date prior
to each succeeding Redemption Date or Prepayment Date for the Indenture
Securities, is equal to the amount of interest thereon becoming due on
each such Redemption Date or Prepayment Date (as the case may be); and
(d) the Tax-Exempt Indenture Securities Redemption Subaccount,
an amount that, after giving effect to monies on deposit therein
immediately prior to such Monthly Transfer Date and together with a
uniform amount to be deposited therein on each succeeding Monthly
Transfer Date prior to each succeeding Redemption Date or Prepayment
Date for the Tax- Exempt Indenture Securities, is equal to the amount
of interest thereon becoming due on each such Redemption Date or
Prepayment Date (as the case may be).
"Required Modifications" means those modifications reasonably necessary
for the Energy Complex to remain in compliance with all material Governmental
Approvals and maintain, at a minimum, the Maximum Capacity (as defined in the
Master Operating Agreement) levels as in effect on the Closing Date.
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"Required Modifications Subaccount" means the subaccount of the
Completion Account so designated established and created under Section 2.2(c) of
the Intercreditor Agreement.
"Required Principal Deposit" means in the case of any Monthly Transfer
Date with respect to:
(a) the Indenture Securities Principal Subaccount, an amount
equal to one-sixth (1/6th) of the amount of principal of the Indenture
Securities becoming due on each Principal Payment Date therefor
occurring within the six (6) months immediately succeeding the month in
which such Monthly Transfer Date occurs (unless such Principal Payment
Date occurs within six (6) months after the Closing Date or any other
date on which any Indenture Securities are originally issued, in which
case an amount that, after giving effect to monies on deposit therein
immediately prior to such Monthly Transfer Date and together with a
uniform amount to be deposited therein on each succeeding Monthly
Transfer Date prior to such Principal Payment Date, is equal to the
amount of principal thereof becoming due on such Principal Payment
Date) (such amount to be reduced if and to the extent that a Redemption
Date or Prepayment Date for any of the Indenture Securities is on or
precedes such Principal Payment Date, in which case the amount of
principal payable with respect to the Indenture Securities to be so
redeemed or prepaid shall be provided for pursuant to paragraph (c)
below in lieu of this paragraph (a));
(b) the Tax-Exempt Indenture Securities Principal Subaccount,
one-twelfth (1/12th) (unless such Monthly Transfer Date occurs on or
after January 1, 2019, in which case one- eleventh (1/11th)) of the
amount of principal of the Tax- Exempt Indenture Securities becoming
due on each Principal Payment Date therefor occurring within the twelve
(12) months immediately succeeding the month in which such Monthly
Transfer Date occurs (unless such Principal Payment Date occurs within
twelve (12) months after the Closing Date or any other date on which
any Tax-Exempt Indenture Securities are originally issued, in which
case an amount that, after giving effect to monies on deposit therein
immediately prior to such Monthly Transfer Date and together with a
uniform amount to be deposited therein on each succeeding Monthly
Transfer Date prior to such Principal Payment Date, is equal to the
amount of principal thereof becoming due on such Principal Payment
Date)(such amount to be reduced if and to the extent that a Redemption
Date or Prepayment Date for any of the Tax-Exempt Indenture Securities
is on or precedes such Principal Payment Date, in which case the amount
of principal payable with respect to the Tax-Exempt Indenture
Securities to be so redeemed or prepaid shall be provided for pursuant
to paragraph (d) below in lieu of this paragraph (b));
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(c) the Indenture Securities Redemption Subaccount, an amount
that, after giving effect to monies on deposit therein immediately
prior to such Monthly Transfer Date and together with a uniform amount
to be deposited therein on each succeeding Monthly Transfer Date prior
to each succeeding Redemption Date or Prepayment Date for the Indenture
Securities, is equal to the amount of principal thereof and premium, if
any, thereon becoming due on each such Redemption Date or Prepayment
Date (as the case may be); and
(d) the Tax-Exempt Indenture Securities Redemption Subaccount,
an amount that, after giving effect to monies on deposit therein
immediately prior to such Monthly Transfer Date and together with a
uniform amount to be deposited therein on each succeeding Monthly
Transfer Date prior to each succeeding Redemption Date or Prepayment
Date for the Tax- Exempt Indenture Securities, is equal to the amount
of principal thereof and premium, if any, thereon becoming due on each
such Redemption Date or Prepayment Date (as the case may be).
"Required Senior Creditors" means Senior Secured Parties holding or
otherwise representing 331/3% of the Combined Exposure.
"Reserve Account Letter of Credit" means a letter of credit issued by a
commercial bank whose long-term unsecured Debt is rated at least "A" by S&P, "A"
by Fitch and "A2" by Moody's.
"Reserve Account Security" means either, or any combination of, (a) one
or more Southern Guaranties or (b) one or more Reserve Account Letters of
Credit.
"Reserve Account Security Accounts" means, collectively, each Debt
Service Reserve Account (if any), each Tax-Exempt Debt Service Reserve Account
(if any), the Maintenance Plan Funding Subaccount and the Distribution Account.
"Responsible Officer" means, when used with respect to the Collateral
Agent, the Indenture Trustee and the Tax-Exempt Indenture Trustee, (a) any
officer of the Collateral Agent, the Indenture Trustee or the Tax-Exempt
Indenture Trustee (as the case may be) within the Corporate Trust Office of the
Collateral Agent, the Indenture Trustee or the Tax-Exempt Indenture Trustee (as
the case may be), including any vice president, any assistant vice president,
any assistant secretary or any assistant treasurer, (b) any other officer of the
Collateral Agent, the Indenture Trustee or the Tax-Exempt Indenture Trustee (as
the case may be) performing functions similar to those performed by any of the
officers designated in clause (a) above and (c) with respect to a particular
corporate trust matter, any other officer of the Collateral Agent, the Indenture
Trustee or the Tax-Exempt Indenture Trustee (as the case may be) to whom such
matter is referred because of such other officer's knowledge of and familiarity
with the particular subject.
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"Restricted Payment Alternative Agreement Requirements" means, with
respect to any Project Contract, another Contract entered into by the Company
with one or more other Persons in substitution for or replacement of any such
Project Contract that has been declared unenforceable or rejected or otherwise
terminated, with respect to some or all of the Processing Services or other
services formerly provided by or to the Company thereunder, provided that either
(a) the Company has delivered to the Collateral Agent a letter from any two of
the Rating Agencies (then currently rating the Indenture Securities or the
Tax-Exempt Indenture Securities) confirming that, after giving effect to such
alternative Contract, the ratings of the Outstanding Indenture Securities or the
Outstanding Tax-Exempt Indenture Securities (as the case may be) are Investment
Grade or (b) the Company (i) has provided to the Collateral Agent the Revenue
Sufficiency Certification and (ii) has delivered to the Collateral Agent an
Officer's Certificate, together with an Independent Engineer Confirmation,
certifying that (A) the term of such alternative Contract extends through the
earlier of (1) the final maturity of the Outstanding Indenture Securities or the
Outstanding Tax-Exempt Indenture Securities (as the case may be) and (2) the
term of such Project Contract, (B) such alternative Contract contains
termination provisions no less favorable to the Company than those contained in
such Project Contract, (C) such alternative Contract has been in full force and
effect for at least thirty-six (36) months, (D) the average of the two annual
Senior Debt Service Coverage Ratios for the four immediately preceding
semi-annual payment periods was equal to at least 1.25 to 1.0 and, based on
projections prepared by the Company on a reasonable basis, the average of the
annual Senior Debt Service Coverage Ratios through the final maturity date of
the Outstanding Indenture Securities or the Outstanding Tax-Exempt Indenture
Securities (as the case may be) is projected to be at least 1.25 to 1.0 and (E)
such alternative Contract is reasonably capable of being performed by the
parties thereto.
"Restricted Payments" means, collectively, (a) payments from the
Subordinated Fee Account or any other payment in respect of Subordinated Fees,
(b) distributions (from the Distribution Account or otherwise), including a
return of capital contributions and dividends, paid to, or at the direction or
for the benefit of, any Affiliate of the Company, but excluding distributions of
cash from any Account to the extent such cash has been replaced with Reserve
Account Security in accordance with the terms of the Financing Documents, (c)
the payment of principal of or premium, if any, or interest on any Affiliate
Subordinated Debt, (d) the repurchase by the Company of any interest of any
Member, or (e) the making of any loans or other advances from the Company to any
Affiliate of the Company, but excluding advances of cash to the extent such cash
(i) has been replaced with Reserve Account Security in accordance with the terms
of the Financing Documents or (ii) constitutes a payment required under the O&M
Agreement or the SCS Agreement.
"Revenue Account" means the Account so designated established and
created under Section 2.2(a) of the Intercreditor Agreement.
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"Revenue Sufficiency Certification" means an Officer's Certificate of
the Company, together with an Independent Engineer Confirmation, to the effect
that, based upon projections prepared by the Company in accordance with Section
1.15 of the Indenture or Section 1.12 of the IDB Lease Agreement, or of any
comparable provision of the Working Capital Facility, the Project Contracts then
in effect (including any alternative Contract entered into, or to be entered
into, by the Company with one or more other Persons in substitution or
replacement of any other Project Contract as contemplated by the Event of
Default Alternative Agreement Requirements or the Restricted Payment Alternative
Agreement Requirements) generate sufficient Revenues to enable the Company to
pay its debts and other obligations (including Operation and Maintenance Costs)
when they become due through the final maturity of the Outstanding Indenture
Securities or the Tax-Exempt Indenture Securities (as the case may be).
"Revenues" means (without duplication), for any period, the revenues
received by the Company for use of the services and facilities of the Energy
Complex including (a) amounts received by the Company under the Project
Contracts, (b) interest and other income earned and credited on monies deposited
in the Accounts (to the extent not retained in such Accounts), (c) the proceeds
of the sale of any part of the Energy Complex, provided that such sale is not
prohibited by the Financing Documents, (d) the proceeds of any business
interruption insurance and other payments received for interruption of
operations (excluding any proceeds of any liability or physical damage
insurance) and (e) all other monies that have been deposited into the Revenue
Account as required or permitted by the terms of the Financing Documents.
Notwithstanding the foregoing, "Revenues" do not include (i) capital
contributions to the Company, (ii) the proceeds of any Debt or Loss Proceeds,
(iii) amounts received by the Company in connection with the exercise of Company
Step-In Rights (to the extent in excess of the Company's expenses incurred in
connection therewith, including the cure or the attempted cure of the related
Pulp Mill Triggering Event (as defined in the Master Operating Agreement)), (iv)
monies transferred from the Completion Account to the Revenue Account pursuant
to Section 3.9(c) of the Intercreditor Agreement, (v) monies transferred from
any Debt Service Reserve Account to the Revenue Account pursuant to Section 4.5
of the Indenture, (vi) amounts received by the Company with respect to the 1994
Bonds and (vii) monies deposited into any Reserve Account Security Account in
replacement (or satisfaction) of Reserve Account Security on deposit therein
(including monies deposited into the Maintenance Plan Funding Subaccount
pursuant to the last sentence of Section 3.5(a) of the Intercreditor Agreement).
"S&P" means Standard & Poor's Ratings Group, a New York
corporation.
"Scott" means Scott Paper Company, a Pennsylvania corporation.
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<PAGE>
"SCS" means Southern Company Services, Inc., an Alabama
corporation.
"SCS Agreement" means the Agreement dated July 14, 1995 between SCS and
the Company.
"S.D. Warren" means S.D. Warren Company, a Pennsylvania
corporation.
"SEC" means the Securities and Exchange Commission of the
United States of America.
"Secretary" means, in the case of a corporation (including Mobile
Energy) or limited liability company (including the Company) the secretary or an
assistant secretary of such corporation or limited liability company (as the
case may be).
"Secured Obligations" means, collectively, the Financing
Liabilities, the Trustee Claims, the Collateral Agent Claims and
the IDB Claims.
"Secured Party" means Bankers Trust (Delaware) or any other Person
appointed as a substitute or replacement Secured Party under the Security
Agreement.
"Securities" has the meaning specified (a) in the case of the
Indenture, in the first "WHEREAS" clause thereof and (b) in the case of the
Tax-Exempt Indenture, in the last "WHEREAS" clause thereof.
"Securities Act" means the Securities Act of 1933.
"Security Agreement" means the Assignment and Security Agreement dated
as of August 1, 1995 among the Company, the IDB and the Secured Party.
"Security Documents" means, collectively, (a) the Mortgage, (b) the
Security Agreement, (c) the Indenture (including any Series Supplemental
Indenture), (d) the Intercreditor Agreement, (e) the Tax-Exempt Indenture
(including any Series Supplemental Indenture), (f) the IDB Lease Agreement, (g)
the Consents to Assignment and (h) each Financing Statement.
"Security Interest" means the Liens created, or purported to be
created, on Shared Collateral pursuant to any Security Document.
"Security Register" has the meaning specified in Section 2.8 of the
Indenture or Section 2.8 of the Tax-Exempt Indenture (as the case may be).
"Security Registrar" means any Person acting as Security Registrar
under the Indenture or the Tax-Exempt Indenture pursuant to Section 9.14 or
Section 9.13 (as the case may be) thereof.
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"Senior Creditor Certificate" means a certificate of a Senior Secured
Party, signed by an Authorized Representative of such Senior Secured Party, (a)
setting forth the principal amount of the Financing Liabilities due or owing to,
or in favor of or for the benefit of, such Senior Secured Party as of the date
of such certificate and the outstanding unutilized Financing Commitments of such
Senior Secured Party as of the date of such certificate, (b) setting forth a
contact person for such Senior Secured Party, including phone and facsimile
numbers for such person, (c) directing the Collateral Agent to take a specified
action and (d) stating specifically the action the Collateral Agent is directed
to take and the Security Document and the provision thereof pursuant to which
the Collateral Agent is being directed to act.
"Senior Debt" means, collectively, the Outstanding Senior
Securities and the outstanding Working Capital Facility Loans.
"Senior Debt Service Coverage Ratio" means, for any period and without
duplication, the ratio of (a) (i) the sum of (A) all Revenues for such period
and (B) the amount of interest and other income earned and credited on monies
deposited in the Accounts (to the extent retained in such Accounts) for such
period minus (ii) the sum of (A) Operation and Maintenance Costs for such period
(except for such costs paid with monies on deposit in the Maintenance Reserve
Account and the Mill Owner Maintenance Reserve Account) and (B) the aggregate of
the amounts deposited into the Maintenance Reserve Account for such period (but
for purposes of calculating any projected Senior Debt Service Coverage Ratio,
not less than the Maintenance Reserve Account Required Deposit for such period)
and the Mill Owner Maintenance Reserve Account for such period to (b) the sum of
(i) all amounts payable by the Company during such period in respect of
principal of and premium, if any, and interest on the Outstanding Indenture
Securities, (ii) all amounts payable by the Company during such period in
respect of rent under the IDB Lease Agreement, (iii) all amounts payable by the
Company during such period in respect of payment obligations under the Working
Capital Facility (other than repayment of principal), (iv) all amounts payable
by the Company during such period as fees and other expenses (including any
interest thereon) to any fiduciary acting in such capacity under the Security
Documents and (v) the aggregate amount of overdue payments in respect of clauses
(b)(i) through (iv) above from previous periods, in each case determined on a
cash basis in accordance with GAAP. Neither payments (including deemed payments)
nor receipts (including deemed receipts) in respect of principal of or premium,
if any, or interest on the 1994 Bonds shall be included for purposes of
calculating the Senior Debt Service Coverage Ratio.
"Senior Debt Service Requirement" means, for any period, the sum of (a)
all amounts payable by the Company during such period in respect of principal of
and premium, if any, and interest on the Outstanding Indenture Securities, (b)
all amounts payable by the Company during such period in respect of rent under
the IDB Lease Agreement, (c) all amounts payable by the Company during such
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period in respect of payment obligations under the Working Capital Facility
(other than repayment of principal), (d) all amounts payable by the Company
during such period as fees and other expenses (including any interest thereon)
to any fiduciary acting in such capacity under the Security Documents and (e)
the aggregate amount of overdue payments in respect of the foregoing from
previous periods, in each case determined on a cash basis in accordance with
GAAP.
"Senior Debt Termination Date" means the date on which all Financing
Liabilities, other than contingent liabilities and obligations that are
unasserted at such date, have been paid and satisfied in full and all Financing
Commitments have been terminated.
"Senior Secured Parties" means, collectively, (a) the Indenture Trustee
(on behalf of the Holders of the Indenture Securities from time to time and,
solely in its capacity as trustee on behalf of such Holders, itself), (b) the
Tax-Exempt Indenture Trustee (on behalf of the Holders of the Tax-Exempt
Indenture Securities from time to time and, solely in its capacity as trustee on
behalf of such Holders, itself) and (c) the Working Capital Facility Provider
(on behalf of the Lenders from time to time and itself).
"Senior Securities" means, collectively, the Indenture
Securities and the Tax-Exempt Indenture Securities.
"Series Supplemental Indenture" means an indenture supplemental to the
Indenture or the Tax-Exempt Indenture entered into by the Mobile Energy Parties
or the IDB (as the case may be) and the Indenture Trustee or the Tax-Exempt
Indenture Trustee (as the case may be) for the purpose of establishing, in
accordance with such indenture, the title, form and terms of the Senior
Securities of any series.
"Shared Collateral" means all Collateral other than (a) the Collateral
referenced in clause (a) of the definition of Indenture Securities Collateral
and (b) the Collateral referenced in clause (a) of the definition of Tax-Exempt
Indenture Securities Collateral.
"Sinking Fund" has the meaning specified in Section 7.2 of the
Indenture or Section 7.2 of the Tax-Exempt Indenture (as the case may be).
"Sinking Fund Redemption Dates" has the meaning specified in Section
7.2 of the Indenture or Section 7.2 of the Tax-Exempt Indenture (as the case may
be).
"Sinking Fund Requirements" has the meaning specified in Section 7.2 of
the Indenture or Section 7.2 of the Tax-Exempt Indenture (as the case may be).
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"Site" means the real property on which the Energy Complex is situated,
as more fully described in the Mortgage.
"Southern" means The Southern Company, a Delaware corporation.
"Southern Credit Standard" means, at any time, (a) Southern's
outstanding senior long-term Debt is then rated at least, and not rated less
than, "A" by either S&P or Moody's (unless such senior long-term Debt is not
then rated by either S&P or Moody's, in which case each Designated Southern
Subsidiary has outstanding senior long-term Debt that is then rated at least,
and not rated less than, BBB by S&P or Baa2 by Moody's) and (b) the sum of (i)
cash and cash equivalents (including marketable securities) of Southern and the
Designated Southern Subsidiaries, (ii) amounts available from committed credit
facilities of Southern and the Designated Southern Subsidiaries and (iii)
amounts available from commercial paper authorized to be issued by Southern and
rated not less than A-1/P-1 by S&P or Moody's (in each case as of the end of
Southern's most recently completed fiscal quarter and provided that such cash
and cash equivalents and other amounts are available, without restriction, for
distribution to the Collateral Agent or the Indenture Trustee, upon fifteen (15)
days' notice) is equal to at least the aggregate amount of Southern Guaranties
then outstanding multiplied by four.
"Southern Electric" means Southern Electric International,
Inc., a Delaware corporation.
"Southern Guaranty" means one or more unconditional, absolute and
irrevocable guaranties from Southern to be delivered to (a) the Collateral Agent
for deposit into the Maintenance Plan Funding Subaccount or the Distribution
Account pursuant to and in accordance with Section 3.15(a) of, and in
substantially the form attached as Exhibit C to, the Intercreditor Agreement or
(b) the Indenture Trustee for deposit into each Debt Service Reserve Account (if
any) pursuant to and in accordance with Section 4.6(a) of, and in substantially
the form attached as Exhibit A to, the Indenture, provided that, in the case of
clause (a) and (b) above, the Southern Credit Standard is satisfied at the time
of such delivery and deposit.
"Southern Master Tax Sharing Agreement" means the Income Tax
Allocation Agreement dated as of December 29, 1981 among Southern
and its corporate subsidiaries.
"Special Record Date" means, with respect to the payment of any
defaulted principal or interest, a date fixed by the Indenture Trustee or the
Tax-Exempt Indenture Trustee (as the case may be) pursuant to, in the case of
the Indenture Trustee, Section 2.10 of the Indenture and, in the case of the
Tax-Exempt Indenture Trustee, Section 2.10 of the Tax-Exempt Indenture.
"Stated Maturity" means, when used with respect to any Senior
Security or any installment of principal thereof or payment of
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interest thereon, the date specified in such Senior Security as the fixed date
on which such Senior Security or such installment of principal or payment of
interest is due and payable.
"Subordinated Debt" means, collectively, Affiliate
Subordinated Debt and Non-Affiliate Subordinated Debt.
"Subordinated Debt Account" means the Account so designated established
and created under Section 2.2(a) of the Intercreditor Agreement.
"Subordinated Debt Provider" means any Person providing
Subordinated Debt pursuant to a Subordinated Loan Agreement.
"Subordinated Fee" means a fee in exchange for the provisions of goods
or services to either of the Mobile Energy Parties, the payment of which is
fully subordinated to the Secured Obligations as to payment and exercise of
remedies and that is payable only to the extent it would otherwise be
distributable if on deposit in the Distribution Account.
"Subordinated Fee Account" means the Account so designated established
and created under Section 2.2(a) of the Intercreditor Agreement.
"Subordinated Loan Agreement" means a binding agreement with a
Subordinated Debt Provider providing unsecured debt financing for the benefit of
the Energy Complex and on terms and conditions that shall satisfy the
requirements of the Financing Documents.
"Supplementary Lease" means the Supplementary Lease Agreement dated as
of December 12, 1994, as amended by the First Amendment thereto dated as of July
13, 1995, between Scott, as lessor, and the Company (as assignee of Mobile
Energy), as lessee.
"Tax-Exempt Bonds" means the Tax-Exempt Indenture Securities
issued on the Closing Date under the Tax-Exempt Indenture.
"Tax-Exempt Debt Service Reserve Account" means the Account so
designated established and created under Section 4.4(a) of the Tax- Exempt
Indenture and any Account so designated and created under any Series
Supplemental Indenture to the Tax-Exempt Indenture for the benefit of Holders of
the Tax-Exempt Indenture Securities established thereunder.
"Tax-Exempt Debt Service Reserve Account Required Balance" means (a) in
respect of the Tax-Exempt Debt Service Reserve Account established and created
under Section 4.4(a) of the Tax-Exempt Indenture, the amount designated in
Section 4.4(b) thereof and (b) in respect of any other Tax-Exempt Debt Service
Reserve Account, the amount so designated in the Series Supplemental Indenture
to the Tax-Exempt Indenture establishing such Tax-Exempt Debt Service Reserve
Account.
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<PAGE>
"Tax-Exempt Indenture" means the Amended and Restated Trust Indenture
dated as of August 1, 1995 between the IDB and the Tax- Exempt Indenture
Trustee.
"Tax-Exempt Indenture Accounts" means, with respect to the Tax-Exempt
Indenture Securities of any series, the Tax-Exempt Indenture Securities Account
and each Tax-Exempt Debt Service Reserve Account (if any) established for the
benefit of Holders of the Tax-Exempt Indenture Securities of such series.
"Tax-Exempt Indenture Distribution Amount" means, in respect of any
Excess Loss Proceeds with respect to an Event of Loss or Event of Eminent Domain
to be applied pursuant to Section 6.2(b) of the Intercreditor Agreement, an
amount equal to the Tax-Exempt Indenture's Percentage Share of (a) such Excess
Loss Proceeds and (b) the Redistributed Proceeds with respect to such Excess
Loss Proceeds.
"Tax-Exempt Indenture Securities" means all Outstanding Debt
issued pursuant to the Tax-Exempt Indenture.
"Tax-Exempt Indenture Securities Account" means the Account so
designated established and created under Section 4.1 of the Tax- Exempt
Indenture.
"Tax-Exempt Indenture Securities Collateral" means, collectively, (a)
all of the collateral mortgaged, pledged or assigned, or purported to be
mortgaged, pledged or assigned, to the Tax-Exempt Indenture Trustee by the IDB
pursuant to the granting and assigning clauses of the Tax-Exempt Indenture and
(b) the Shared Collateral.
"Tax-Exempt Indenture Securities Interest Subaccount" means the
subaccount of the Tax-Exempt Indenture Securities Account so designated
established and created under Section 4.1 of the Tax- Exempt Indenture.
"Tax-Exempt Indenture Securities Principal Subaccount" means the
subaccount of the Tax-Exempt Indenture Securities Account so designated
established and created under Section 4.1 of the Tax- Exempt Indenture.
"Tax-Exempt Indenture Securities Redemption Subaccount" means the
subaccount of the Tax-Exempt Indenture Securities Account so designated
established and created under Section 4.1 of the Tax- Exempt Indenture.
"Tax-Exempt Indenture Trustee" means First Union National Bank of
Georgia, a national banking association organized and existing under the laws of
the United States of America.
"Tax-Exempt Project" means those portions of the Energy Complex
financed with the proceeds of the 1983 Bonds, as described generally in Exhibit
A to the IDB Lease Agreement.
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<PAGE>
"Termination Event" means, with respect to any Reserve Account
Security, such Reserve Account Security shall have terminated or expired (other
than any termination thereof pursuant to the last sentence of Section 3.8(c) of
the Intercreditor Agreement).
"Third Party Engineer" means the independent engineering firm chosen
from the list of engineers maintained as Schedule 1 to the Intercreditor
Agreement and appointed Third Party Engineer pursuant
to Section 11.2 of the Intercreditor Agreement.
"Third Party Engineer Dispute Resolution" means the dispute resolution
process involving a Third Party Engineer pursuant to Section 11.2 of the
Intercreditor Agreement.
"Tissue Mill" means the tissue mill located at the Mobile Facility,
which as of the Closing Date is owned by Scott.
"Tissue Mill Energy Services Agreement" means the Tissue Mill Energy
Services Agreement dated as of December 12, 1994, as amended by the First
Amendment thereto dated as of July 13, 1995, between the Tissue Mill Owner and
the Company (as assignee of Mobile Energy).
"Tissue Mill Owner" means Scott, in its capacity as owner of
the Tissue Mill.
"Total Debt Service Coverage Ratio" means, for any period and without
duplication, the ratio of (a) (i) the sum of (A) all Revenues for such period
and (B) the amount of interest and other income earned and credited on monies
deposited in the Accounts (to the extent retained in such Accounts) for such
period minus (ii) the sum of (A) Operations and Maintenance Costs for such
period (except for such costs paid with monies on deposit in the Maintenance
Reserve Account or the Mill Owner Maintenance Reserve Account) and (B) the
aggregate of the amounts deposited into the Maintenance Reserve Account for such
period (but for purposes of calculating any projected Total Debt Service
Coverage Ratio, not less than the Maintenance Reserve Account Required Deposit
for such period) and the Mill Owner Maintenance Reserve Account for such period
to (b) the sum of (i) all amounts payable by the Company during such period in
respect of principal of and premium, if any, and interest on the Outstanding
Indenture Securities, (ii) all amounts payable by the Company during such period
in respect of rent under the IDB Lease Agreement, (iii) all amounts payable by
the Company during such period in respect of payment obligations under the
Working Capital Facility (other than repayments of principal), (iv) all amounts
payable by the Company as fees and other expenses (including any interest
thereon) to any fiduciary acting in such capacity under the Security Documents,
(v) all amounts payable by the Company during such period in respect of
principal of and premium, if any, and interest on the outstanding Subordinated
Debt, (vi) all amounts payable by the Company during such period as fees and
other expenses (including any interest thereon) to any Subordinated Debt
Provider and (vii) the aggregate
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amount of overdue payments in respect of clauses (b)(i) through (vi) above from
previous periods, in each case determined on a cash basis in accordance with
GAAP. Neither payments (including deemed payments) nor receipts (including
deemed receipts) in respect of principal of or premium, if any, or interest on
the 1994 Bonds shall be included for purposes of calculating the Total Debt
Service Coverage Ratio.
"Transfer Agreement" means the Omnibus Deed, Bill of Sale,
General Assignment and Conveyance Agreement dated July 14, 1995
between Mobile Energy and the Company.
"Trigger Event" means (a) an Event of Default under the Indenture and
an acceleration of Indenture Securities thereunder, (b) an Event of Default
under the Tax-Exempt Indenture and an acceleration of Tax-Exempt Indenture
Securities thereunder, (c) an Event of Default under the Working Capital
Facility and an acceleration of Working Capital Facility Loans thereunder or (d)
a Bankruptcy Event in respect of either of the Mobile Energy Parties and the
expiration of the shortest applicable grace period with respect thereto.
"Trigger Event Period" means that a Trigger Event shall have occurred
and be continuing, provided that, except in the case of any such Trigger Event
that shall have resulted from a Bankruptcy Event in respect of either of the
Mobile Energy Parties, the written request of the Required Senior Creditors
specified in Section 5.1(a) of the Intercreditor Agreement shall have been
delivered to the Collateral Agent and not been rescinded.
"TRT" means Three Rivers Timber Company, a Washington
corporation.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended, as in force at the date as of which the Indenture was executed, except
as provided in Section 11.6 thereof; provided, however, that if the Trust
Indenture Act of 1939 is amended after such date, "Trust Indenture Act" means,
to the extent required by such amendment, the Trust Indenture Act of 1939, as so
amended.
"Trustee Claims" means all obligations of the Mobile Energy Parties,
now or hereafter existing, to pay fees, costs, expenses or other amounts to (a)
the Indenture Trustee under the Indenture or (b) the Tax-Exempt Indenture
Trustee under the Tax-Exempt Indenture.
"Uniform Commercial Code" means the Uniform Commercial Code of the
jurisdiction the law of which governs the Contract in which such term is used.
"U.S. Government Obligations" means non-callable direct
obligations of or obligations as to which the payment of principal
of and interest is unconditionally guaranteed by the United States
of America.
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"Water Agreement" means the Water Procurement and Effluent Service
Agreement dated as of December 12, 1994, as amended by the First Amendment
thereto dated as of July 13, 1995, among the Company (as assignee of Mobile
Energy), the Pulp Mill Owner, the Paper Mill Owner and the Tissue Mill Owner.
"Wind-Up Event" means, at any time upon and after a Trigger Event, the
application of monies on deposit in any of the Intercreditor Agreement Accounts,
or of proceeds from any sale, disposition or other realization of any Shared
Collateral (other than the Intercreditor Agreement Accounts), in either case to
the payment of amounts owing in respect of any Senior Debt and as a result of
the exercise of remedies by the Collateral Agent under Article V of the
Intercreditor Agreement.
"Working Capital Escalation Factor" means, with respect to any Fiscal
Year, a factor (calculated in June of such Fiscal Year) equal to the amount
obtained by (a) dividing (i) the GDPIPD most recently published during such
Fiscal Year by (ii) the GDPIPD published during the prior Fiscal Year on the
date that most closely corresponds to, and is on or prior to, the date of such
GDPIPD most recently published (provided that if the amount obtained is less
than or equal to 1.015, then such amount shall be deemed to equal 1.015), (b)
then subtracting 0.015, and (c) then multiplying by the Working Capital
Escalation Factor with respect to the immediately preceding Fiscal Year.
"Working Capital Facility" means the Revolving Credit Agreement dated
as of August 1, 1995 between the Company and the Working Capital Facility
Provider or any other Contract between the Company and a Working Capital
Facility Provider pursuant to which funds for the working capital requirements
of the Company are provided.
"Working Capital Facility Account" means the Account so designated
established and created under Section 2.2(a) of the Intercreditor Agreement.
"Working Capital Facility Commitment" means the aggregate of the
commitments of the Lenders under the Working Capital Facility.
"Working Capital Facility Distribution Amount" means, in respect of any
Excess Loss Proceeds with respect to an Event of Loss or Event of Eminent Domain
to be applied pursuant to Section 6.2(b) of the Intercreditor Agreement and
provided that the Working Capital Facility Commitment is subject to reduction in
connection with such Event of Loss or Event of Eminent Domain pursuant to the
terms of the Working Capital Facility, an amount equal to the excess, if any, of
the Working Capital Facility's Percentage Share of such Excess Loss Proceeds
over the unutilized Working Capital Facility Commitment in effect immediately
prior to such reduction, unless the Company would not be able to borrow Working
Capital Facility Loans (because the conditions set forth in Article III of the
Working Capital Facility are not available or not satisfied),
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in which case the lesser of (a) the Working Capital Facility's Percentage Share
of such Excess Loss Proceeds and (b) the outstanding Working Capital Loans at
such time.
"Working Capital Facility O&M Loan" means a Working Capital Facility
Loan, to the extent the proceeds thereof are applied to Operation and
Maintenance Costs other than (a) rebates to the United States government
pursuant to Section 148 of the Code, (b) Maintenance Expenditures and (c)
payments of IDB Claims.
"Working Capital Facility Provider" means Banque Paribas, a French
banking corporation, and each other Person providing funds to the Company
pursuant to a Working Capital Facility.
"Working Capital Facility Loan" means a Loan (as defined in the Working
Capital Facility) advanced by the Working Capital Facility Provider pursuant to
the Working Capital Facility.
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Exhibit 10.10
SECOND AMENDMENT TO SUPPLEMENTARY LEASE AGREEMENT
THIS SECOND AMENDMENT TO SUPPLEMENTARY LEASE AGREEMENT (the "Second
Amendment"), is made as of this 1st day of August, 1995, by and between SCOTT
PAPER COMPANY, a Pennsylvania corporation (as "Lessor") and MOBILE ENERGY
SERVICES COMPANY, L.L.C., an Alabama limited liability company (as "Lessee").
W I T N E S S E T H:
WHEREAS, Lessor and Mobile Energy Services Company, Inc., an Alabama
corporation ("MESC") did enter into that certain Supplementary Lease Agreement,
dated as of December 12, 1994 (the "Original Lease"), the subject of which was
to lease certain improved real property which is more particularly described on
Exhibit "B" attached to the Original Lease (the "Original Leased Premises"), and
WHEREAS, the Original Lease was amended by that certain First Amendment
to Supplementary Lease Agreement ("First Amendment"), dated as of July 13, 1995
(the Original Lease, as amended by the First Amendment shall sometimes be
referred to herein as the "Lease"), and
WHEREAS, Lessee is the successor-in-interest to Mobile Energy Services
Holdings, Inc., an Alabama corporation, which is formerly known as "Mobile
Energy Services Company, Inc.," and
WHEREAS, Lessor and Lessee desire to modify and amend the Original
Lease to change, among other matters, the description of the Original Premises,
upon the terms and conditions herein contained.
NOW THEREFORE, for and in consideration of the mutual covenants
contained herein, and for Ten and No/100 Dollars ($10.00) and other good and
valuable consideration, paid by the parties hereto to one another, the receipt
and sufficiency of which are acknowledged by the parties hereto, the parties
hereto hereby covenant and agree as follows:
1. Leased Premises. Lessor shall lease and rent to Lessee, and Lessee
shall lease and rent from Lessor, from and after the date hereof, that certain
tract of land as shown on Exhibit "A" attached hereto and by this reference
incorporated herein (the "Premises"), such that from and after the date hereof,
the "Leased Premises," as such term is used in the Lease shall be deemed to be
the Premises, as depicted and described on Exhibit "A" attached to this Second
Amendment. Lessee hereby forever releases any rights Lessee might have in and to
any part of the Original Leased Premises, except as expressly granted herein.
<PAGE>
2. No Other Modification. Lessor and Lessee hereby affirm,
confirm, and ratify the Lease, as amended hereby, and agree that
the Lease, including terms granting certain options of Lessee to
purchase the Premises, is and shall remain in full force and
effect.
3. Transfers, Successors and Assigns. This Second Amendment
shall inure to the benefit of and be binding upon Lessor, Lessee
and their respective transfers, successors and assigns.
IN WITNESS WHEREOF, the undersigned have caused this Second Amendment
to be executed and delivered on the day and year first above written.
"LESSOR"
SCOTT PAPER COMPANY, a
Pennsylvania corporation
By: /s/
Name: Thomas C. Deas, Jr.
Title:________________
"LESSEE"
MOBILE ENERGY SERVICES COMPANY,
L.L.C., an Alabama limited
liability company
By: /s/
Name: Mark R. Ogle
Title: Vice President
<PAGE>
State of PENNSYLVANIA}
}
County of DELAWARE }
I DIANE M. DE ORIO, a Notary Public in and for said County, in
said State, hereby certify that THOMAS C. DEAS, JR., whose name as ASSISTANT
TREASURER of SCOTT PAPER COMPANY, is signed to the foregoing instrument, and who
is known to me, acknowledged before me on this day that, being informed of the
contents of the instrument he, as such officer and with full authority, executed
the same voluntarily for and as the act of said corporation.
Given under my hand and official seal, this the 17th day of August,
1995.
/s/
Notary Public
State of New York }
}
County of New York }
I Juan Ospina, a Notary Public in and for said County, in said
State, hereby certify that Mark R. Ogle, whose name as Vice President of Mobile
Energy Services Company, L.L.C. is signed to the foregoing instrument, and who
is known to me, acknowledged before me on this day that, being informed of the
contents of the instrument he, as such officer and with full authority, executed
the same voluntarily for and as the act of said corporation.
Given under my hand and official seal, this the 23 day of August, 1995.
/s/
Notary Public
<PAGE>
EXHIBIT "A"
Property Description of Leased Premises
ALL that certain plot, piece or parcel of land, situate, lying and being in the
City of Mobile, County of Mobile, and State of Alabama, bounded and described as
follows:
Parcel I
Beginning at a point in Lot 11 of the Scott Paper Company Subdivision
as recorded in Map Book 64, Page 39, in the Office of the Judge of
Probate of Mobile County, Alabama, said point being 3570.10 feet North
and 431.54 feet East of the Site of the Great Magnolia, and at Alabama
State Plane Coordinate, (West Zone, NAD 1927), North 270056.327 and
East 326422.733; Thence N-10-53'-56"-W for 356.22 ft.; Thence
S-89-01'-08"-E for 105.36 ft.; Thence S-68-5 2'-49"-E for 194.97 ft.;
Thence S-15-17'-38"-E for 241.11 ft.; Thence S-80-56'-54"-W for 287.04
ft. to the Point of Beginning. Said Parcel (the "East Fuel Tank
Parcel") lying and being in Lot 11 of the Scott Paper Company
Subdivision and containing 1.968 acres, more or less.
LESS AND EXCEPT:
Beginning at a point 38.85 feet South and 7.65 feet West of the North
East corner of the Parcel described above, said point being at Alabama
State Plane Coordinate, (West Zone, NAD 1927), North 270295.212 and
East 326634.957; Thence S-42-00'- 44"-W for 42.00 ft.; Thence
N-47-59'-16"-W for 50.00 ft.; Thence N-42-00'-44"-E for 42.00 ft.;
Thence S-47-59'-16"-E for 50 ft. to the Point of Beginning. Said Parcel
(the "Excluded Parcel") lying entirely within the East Fuel Tank Parcel
described above and containing 2100.00 square feet, more or less.
Parcel II
Beginning at a point in Lot 11 of the Scott Paper Company Subdivision
as recorded in Map Book 64, Page 39, in the office of the judge of
Probate of Mobile County, Alabama: Said point being 2027.703 feet North
and 2186.144 feet East of the Site of the Great Magnolia, and at
Alabama State Plane Coordinate, West Zone, NAD 1927, North 268513.927,
East 328177.335: Thence N-41(degree)-44'-09"-E for 195.20 feet; Thence
S-26(degree)-32'-42"-E for 119.38 feet; Thence S-34(degree)-20'-56"-E
for 102.00 feet; Thence S-41(degree)-44'-09"-W for 144.25 feet; Thence
Northwesterly, around a curve to the left having a radius of 438.67
feet and a Delta angle of 27(degree)-48'-23", the Chord of which bears
N-43(degree)- 25'-40"-W for 210.66 feet, for an arc distance of 212.74
feet to the Point of Beginning. Said Parcel lying and being entirely
within the boundaries of Lot 11 of the aforesaid Scott Paper Company
Subdivision, and containing 0.759 acres, more or less.
Exhibit 10.11
This instrument prepared by and Cross Reference:
When recorded, please return to: RP4222, Page 1248 and
Troutman Sanders LLP RP 4285, Page 0949
NationsBank Plaza, Suite 5200 Mobile County,
600 Peachtree Street, N.E. Alabama Records
Attention: Elizabeth B. Chandler, Esq.
THIRD AMENDMENT TO SUPPLEMENTARY LEASE AGREEMENT
THIS THIRD AMENDMENT TO SUPPLEMENTARY LEASE AGREEMENT (the "Third
Amendment"), is made as of this 8th day of December, 1995, by and between SCOTT
PAPER COMPANY, a Pennsylvania corporation (as "Lessor") and MOBILE ENERGY
SERVICES COMPANY, L.L.C., an Alabama limited liability company (as "Lessee").
W I T N E S S E T H:
WHEREAS, Lessor and Mobile Energy Services Company, Inc., an Alabama
corporation ("MESC") did enter into that certain Supplementary Lease Agreement,
dated as of December 12, 1994 (the "Original Lease"), the subject of which was
to lease certain improved real property which is more particularly described on
Exhibit "B" attached to the Original Lease (the "Original Leased Premises") and
a memorandum of which was recorded in RP 4222, Page 1248, Office of the Judge of
Probate, Mobile County, Alabama records, and
WHEREAS, the Original Lease was amended by that certain First Amendment
to Supplementary Lease Agreement ("First Amendment"), dated as of July 13, 1995,
and that certain Second Amendment to Supplementary Lease Agreement ("Second
Amendment"), dated as of August 1, 1995, a memorandum of which was recorded in
RP 4285, Page 0949, Office of the Judge of Probate, Mobile County, Alabama
records (the Original Lease, as amended by the First Amendment and the Second
Amendment shall sometimes be referred to herein as the "Lease"), and
WHEREAS, Lessee is the successor-in-interest to Mobile Energy Services
Holdings, Inc., an Alabama corporation, which is formerly known as "Mobile
Energy Services Company, Inc.," and
WHEREAS, Lessor and Lessee desire to modify and amend the Lease to
change, among other matters, the description of the Original Leased Premises,
upon the terms and conditions herein contained.
NOW THEREFORE, for and in consideration of the mutual
covenants contained herein, and for Ten and No/100 Dollars ($10.00)
<PAGE>
and other good and valuable consideration, paid by the parties hereto to one
another, the receipt and sufficiency of which are acknowledged by the parties
hereto, the parties hereto hereby covenant and agree as follows:
1. Leased Premises. Lessor shall lease and rent to Lessee, and Lessee
shall lease and rent from Lessor, from and after the date hereof, that certain
tract of land as shown on Exhibit "A" attached hereto and by this reference
incorporated herein (the "Additional Premises"), such that from and after the
date hereof, the "Leased Premises," as such term is used in the Lease shall be
deemed to be the Premises, as described on Exhibit "B" attached hereto and by
this reference incorporated herein. Lessee hereby forever releases any rights
Lessee might have in and to that portion of the Original Leased Premises, more
particularly described on Exhibit "C" attached hereto and by this reference
incorporated herein.
2. No Other Modification. Lessor and Lessee hereby affirm,
confirm, and ratify the Lease, as amended hereby, and agree that
the Lease, including terms granting certain options of Lessee to
purchase the Premises, is and shall remain in full force and
effect.
3. Transfers, Successors and Assigns. This Third Amendment
shall inure to the benefit of and be binding upon Lessor, Lessee
and their respective transfers, successors and assigns.
IN WITNESS WHEREOF, the undersigned have caused this Third Amendment to
be executed and delivered on the day and year first above written.
"LESSOR"
SCOTT PAPER COMPANY, a
Pennsylvania corporation
By: /s/
Name: Thomas C. Deas, Jr.
Title: Assistant Treasurer
"LESSEE"
MOBILE ENERGY SERVICES COMPANY,
L.L.C., an Alabama limited
liability company
By: /s/
Name: S. Marce Fuller
Title: Vice President
-2-
<PAGE>
State of Alabama
County of Mobile
I Gail Bryant Yance, a Notary Public in and for said County,
in said State, hereby certify that Thomas C. Deas, Jr., whose name as Assistant
Secretary of Scott Paper Company, is signed to the foregoing instrument, and who
is known to me, acknowledged before me on this day that, being informed of the
contents of the instrument he, as such officer and with full authority, executed
the same voluntarily for and as the act of said corporation.
Given under my hand and official seal, this the 8th day of December,
1995.
/s/
Notary Public
[Affix Notary Seal]
State of Georgia
County of Fulton
I Jane C. Bryan, a Notary Public in and for said County, in
said State, hereby certify that S. Marce Fuller, whose name as Vice President of
Mobile Engery Services Co., LLC, is signed to the foregoing instrument, and who
is known to me, acknowledged before me on this day that, being informed of the
contents of the instrument he, as such officer and with full authority, executed
the same voluntarily for and as the act of said corporation.
Given under my hand and official seal, this the 16th day of January,
1996.
/s/
Notary Public
[Affix Notary Seal]
-3-
<PAGE>
EXHIBIT "A"
Beginning at a point in Lot 11 of Scott Paper Company Subdivision as recorded in
Map Book 64, Page 39, in the office of the Judge of Probate of Mobile County,
Alabama, said point being 2029.873 feet North and 2185.566 feet East of the Site
of the Great Magnolia and at Alabama State Plane Coordinate, West Zone, N
268516.099, E 328173.913; Thence N-41(degree)-44'-09" E for 197.45 ft.; Thence
S-26(degree)- 32'-42"-E for 4.30 ft.; Thence S-41(degree)-44'-09"-W for 195.20
ft. to a point on a curve to the left having a radius of 438.37 ft., the chord
of which bears N-57(degree)-35'-46"-W for 4.05 ft. for an arc distance of 4.05
ft. to the Point of Beginning. Said parcel lying and being in Lot 11 of the
Scott Paper Company Subdivision as recorded in Map Book 64 page 39 in the office
of the Judge of Probate of Mobile, County, Alabama, and containing 785.121
square feet, more or less.
-4-
<PAGE>
EXHIBIT "B"
ALL that certain plot, piece or parcel of land, situate, lying and being in the
City of Mobile, County of Mobile, and State of Alabama, bounded and described as
follows:
Parcel I
Beginning at a point in Lot 11 of the Scott Paper Company Subdivision
as recorded in Map Book 64, Page 39, in the Office of the Judge of
Probate of Mobile County, Alabama, said point being 3570.10 feet North
and 431.54 feet East of the Site of the Great Magnolia, and at Alabama
State Plan Coordinate, (West Zone, NAD 1927), North 270056.327 and East
326422.733; Thence N-10-53'-56"-W for 356.22 ft.; Thence S-89-01'-08"-E
for 105.36 ft.; Thence S-68-5 2'-49"-E for 194.97 ft.; Thence
S-15-17'-38"-E for 241.11 ft.; Thence S-80-56'-54"-W for 287.04 ft. to
the Point of Beginning. Said Parcel (the "East Fuel Tank Parcel") lying
and being in Lot 11 of the Scott Paper Company Subdivision and
containing 1.968 acres, more or less.
LESS AND EXCEPT:
Beginning at a point 38.85 feet South and 7.65 feet West of the North
East corner of the Parcel described above, said point being at Alabama
State Plane Coordinate, (West Zone, NAD 1927), North 270295.212 and
East 326634.957; Thence S-42-00'- 44"-W for 42.00 ft.; Thence
N-47-59'-16"-W for 50.00 ft.; Thence N-42-00'-44"-E for 42.00 ft.;
Thence S-47-59'-16"-E for 50 ft. to the Point of Beginning. Said Parcel
(the "Excluded Parcel") lying entirely within the East Fuel Tank Parcel
described above and containing 2100.00 square feet, more or less.
Parcel II
Beginning at a point in Lot 11 of the Scott Paper Company Subdivision as
recorded in Map Book 64, Page 39, in the office of the Judge of Probate of
Mobile County, Alabama; Said point being 2029.873 feet North and 2185.566 feet
East of the Site of the Great Magnolia, and at Alabama State Plan Coordinate,
West Zone, NAD 1927, North 268516.099, East 328173.913; Thence
N-41(degree)-44'-09"-E for 197.45 feet; Thence S-26(degree)-32'-42"-E for 123.69
feet; Thence S-34(degree)- 20'-56"-E for 96.39 feet; Thence 41(degree)-44'-09"-W
for 143.79 feet; Thence Northwesterly, around a curve to the left having a
radius of 438.37 feet and a Delta angle of 27(degree)-35'-10", the Chord of
which bears N-44(degree)-04'-04"-W for 209.02 feet, for an arc distance of
211.06 feet to the Point of Beginning. Said Parcel lying and being entirely
within the boundaries of Lot 11 of the aforesaid Scott Paper Company
Subdivision, and containing 0.759 acres, more or less.
-5-
<PAGE>
EXHIBIT "C"
Beginning at a point in Lot 11 of Scott Paper Company Subdivision as recorded in
Map Book 64, Page 39, in the office of the Judge of Probate of Mobile County,
Alabama, said point being 1879.685 feet North and 2330.945 feet East of the Site
of the Great Magnolia and at Alabama State Plane Coordinate, West Zone, N
268365.911, E 328365.911; Thence N-41(degree)-44'-09"-E for 143.79 ft.; Thence
S-34(degree)- 20'-56"-E for 5.61 ft.; Thence S-41(degree)-44'-09"-W for 144.25
ft. to a point on a curve to the left having a radius of 438.37 ft., the chord
of which bears N-29(degree)-56"-04"-W for 5.74 ft., for an arc distance of 5.74
ft. to the Point of the Beginning. Said parcel lying and being in Lot 11 of the
Scott Paper Company as recorded in Map Book 64 page 39 in the office of the
Judge of Probate of Mobile County, Alabama, and containing 784.370 square feet,
more or less.
-6-
Exhibit 10.16
This instrument prepared by and
when recorded, please return to:
Elizabeth B. Chandler, Esq.
Troutman Sanders LLP
600 Peachtree Street, Suite 5200
Atlanta, Georgia 30308-2216
EASEMENT DEED
WITNESSETH this Easement Deed ("Easement Deed") by and between Scott
Paper Company and Mobile Energy Services Company, L.L.C., dated as of the 8th
day of December, 1995.
R E C I T A L S
(i) Scott Paper Company ("Scott") is a Pennsylvania corporation with
an office at Scott Plaza, Philadelphia, Pennsylvania 19113-1585;
and
(ii) Mobile Energy Services Company, L.L.C. ("MESC"), is an Alabama
limited liability company whose principal place of business is at
200 Bay Bridge Road, Mobile, Alabama 36652; and
(iii)Scott owns Lots 8, 10, and 11 (separately, "Lot 8," "Lot 10," or
"Lot 11," Lot 8 and 11 together, "Lots 8 and 11") of the Scott
Paper Company Subdivision (the "Scott Subdivision") as shown on a
plat thereof recorded in Map Book 64, page 39, in the Office of
the Judge of Probate of Mobile County, Alabama; and
(iv) By lease agreement ("MESC Lease") dated as of December 12, 1994,
Scott leased and demised unto Mobile Energy Services Holdings,
Inc. ("MESH") (formerly known as "Mobile Energy Services Company,
Inc.") portions of Lot 11, a memorandum of which is recorded in
Real Property Book 4222, page 1248, in the Office of the Judge of
Probate of Mobile County, Alabama; and
(v) By bill of sale dated as of December 12, 1994, and pursuant to
the Asset Lease Assumption Agreements, Scott transferred to MESH
various utility and recovery pipes, structures, and equipment
(collectively, the "MESC Equipment") situated upon the Leased
Premises and upon Lots 8 and 11; and
(vi) Scott, MESH and S.D. Warren Company entered that certain
unrecorded Master Operating Agreement ("Master Operating
Agreement") dated as of December 12, 1994; and
(vii)By Omnibus Deed, Bill of Sale, General Assignment and
Conveyance, dated as of July 14, 1995, MESH transferred the MESC
Equipment to MESC and assigned all of MESH's right, title, and
interest in and to the MESC Lease; and
(viii) By Second Amendment to Supplementary Lease Agreement, dated as
of August 1, 1995, Scott and MESC amended the MESC lease to
substitute for the Original
- 1 -
<PAGE>
Leased Premises the legal descriptions which are attached
hereto as Exhibit "A" and by this reference incorporated
herein (collectively, the "Leased Premises"), a memorandum of
which is recorded in Real Property Book ___, page ___, in the
Office of the Judge of Probate, Mobile County, Alabama
records; and
(ix) Scott and MESC agree that MESC may need access to (1) various
utility and recovery pipes, structures, and equipment
(collectively, the "Pulp Mill Utility Equipment") that benefit
the Leased Premises and that are situated upon Lots 8 and 11,
and/or (ii) certain services utilized by MESC employees, invitees
and/or licensees ("Utilized Services") performed or provided for
the benefit of the Leased Premises at facilities situated upon,
or to which access is obtained through and/or over, Lot 8, Lot
11, and/or Lots 8 and 11, and (iii) the Leased Premises; and
(x) MESC acknowledges that it is aware that Scott intends to
construct a clarifier on the portion of Lot 11 (the "Clarifier
Site") to the north and the west of Parcel II of the Leased
Premises in the vicinity of "Landing Lane" west of its
intersection with "Environmental Land", and MESC agrees that it
will select routes for the various services across Lot 11 to and
from Parcel II of the Leased Premises that will not occupy the
Clarifier Site; and
(xi) Capitalized terms used herein that are not otherwise defined
herein shall have the meanings given in Exhibit A to the Master
Operating Agreement; and
AGREEMENTS
AND
GRANTS OF EASEMENTS
1. Scott and MESC hereby agree that the RECITALS hereto, Exhibit "A"
hereto, the Master Operating Agreement, and Exhibit "A" to the Master Operating
Agreement shall be, and hereby are, incorporated herein as a part of this
Easement Deed.
2. For and in consideration of the premises, the mutual covenants
herein contained, the sum of Ten and No/100ths Dollars ($10.00), and other good
and valuable consideration in hand paid to Scott by MESC, the receipt and
sufficiency of which Scott hereby acknowledges and confirms, Scott does, subject
to the reservations and restrictions set forth herein, hereby grant, bargain,
sell, and convey unto MESC a non-exclusive easement upon, over, beneath, and
across Lot 11, as indicated below (excluding the Clarifier Site) (and Lots 8
and/or 10 where indicated below), for the following purposes:
- 2 -
<PAGE>
a. Ingress to and egress from, and for operation and use of, all pipes
located on the Lots 8 and 11 utilized by or in connection with the
Leased Premises;
b. Pedestrian and vehicular ingress to and egress from the Leased
Premises and the buildings and facilities at which the Utilized
Services are provided or performed, over that part of Environmental
Lane situated in Lot 10 and all present and future roads located on
Lot 11, including (except as to "Landing Lane," west of its
intersection with "Environmental Lane") and otherwise without
limitation, all of the roads shown as being located on Lot 11 at the
Pulp Mill on the Scott Paper Company Mill Wide Road Plan, Drawing
A52045, prepared by BE&K Engineering Company in February, 1991, and
revised on February 26, 1991, April 23, 1991, and August 8, 1993;
c. Ingress to and egress from the location of, and for the support,
use, installation (in such location(s) thereof as to be mutually
agreed upon by Scott and MESC), repair, replacement, alteration, and
restoration, of the electrical wiring and facilities owned by MESC and
located on Lot 8 and/or Lot 10 and/or Lot 11 for the use of the Leased
Premises;
d. Ingress to and egress from the location of, and for the
installation, operation and maintenance of a storm sewer system in
such location(s) thereof as to be mutually agreed upon by Scott and
MESC to benefit Parcel II of the Leased Premises on, under, over, and
across: (i) that part of Lot 11 lying due east of Parcel II of the
Leased Premises; and (ii) if a storm sewer connection exists as of the
date hereof on Lot 10, that part of Lot 10 between such existing storm
sewer connection and Parcel II of the Leased Premises;
e. Ingress to and egress from the location of, and for the
installation, operation and maintenance of a potable water system to
benefit Parcel II the Leased Premises on, under, over and across Lot
11 (excluding the Clarifier Site) in such location(s) as to be
mutually agreed upon by Scott and MESC;
f. Ingress to and egress from the location of, and for the
installation, operation and maintenance of a process sewer system in
such location(s) as to be mutually agreed upon by Scott and MESC to
benefit Parcel II of the Leased Premises on, under, over, and across:
(i) Lot 11 (excluding the Clarifier Site); and (ii) if a process sewer
connection exists as of the date hereof on Lot 10, that part of Lot 10
between such existing process sewer connection and Parcel II of the
Leased Premises;
g. Ingress to and egress from the location of, and for the
installation, operation and maintenance of a sanitary sewer system to
benefit Parcel II of the Leased Premises on, under, over, and across
Lot 11 (excluding the Clarifier Site) in such location(s) as to be
mutually agreed upon by Scott and MESC;
- 3 -
<PAGE>
h. Ingress to and egress from the location of, and for the
installation, operation and maintenance of telephone and communications
lines to benefit Parcel II of the Leased Premises on, under, over and
across Lot 10 and Lot 11 in such location(s) as to be mutually agreed
upon by Scott and MESC;
i. Ingress to and egress from the location of, and for support,
operation, use, maintenance, repair, (and in such location(s) as to be
mutually agreed upon by Scott and MESC, the construction, erection,
replacement, improvement, alteration, and reinstallation of), to the
extent owned by MESC for the operation and use of the Leased Premises
the fire protection system located on Lots 8 and 11;
j. Ingress to and egress from, and for the operation and use of a
drainage system in such location(s) as to be mutually agreed upon by
Scott and MESC on, under, over, and across: (i) that part of Lot 11
lying due east of Parcel II of the Leased Premises, including, but not
limited to, the right to discharge surface water, if any, from the
Parcel II of the Leased Premises on to that part of Lot 11 lying due
east of Parcel II of the Leased Premises from time to time; and (ii) if
a surface water drain exists as of the date hereof on Lot 10, the right
to tie into such existing surface water drain on Lot 10 together with
ingress thereto and egress therefrom;
k. Ingress to and egress from, and for the installation, maintenance,
operation and use of all existing pipes, electrical lines, instrument
lines, and communication lines serving Parcel I of the Leased
Premises;
together with all rights and privileges necessary for the use, maintenance, and
enjoyment by MESC of the aforesaid easements (the "Easements").
TO HAVE AND TO HOLD the Easements unto MESC and its successors and assigns from
the date hereof until the termination of the Easements as set forth herein.
3. In addition, Scott does, subject to the reservations and
restrictions set forth herein, hereby grant, bargain, sell and convey unto MESC
a non-exclusive temporary construction easement (the "Interim Easement") upon,
over, beneath, and across the a strip of land lying between Parcel II of the
Leased Premises and the boundary of Lot 11 or a distance of fifty feet,
whichever is larger, but excluding the Clarifier Site for the storage of
materials during the construction of a maintenance facility (the "Maintenance
Facility") on Parcel II of the Leases Premises;
TO HAVE AND TO HOLD such Interim Easement unto MESC and its successors and
assigns from the date hereof until the termination of such Interim Easement as
set forth herein.
- 4 -
<PAGE>
4. MESC shall exercise its easement rights granted hereunder in such a
manner as not to interfere unreasonably with the use, occupancy, or enjoyment of
Lot 8, Lot 11, and/or Lots 8 and 11 or the improvements thereon, taking such
precautions as may be reasonably necessary to prevent unnecessary foreseeable
damage to adjacent or adjoining property or injury to persons. Upon MESC's
completion of any maintenance, repair, or replacement work, MESC shall restore
the subject area to its former condition (insofar as possible) with all debris
removed.
5. Scott shall not interfere in any manner with the easements granted
hereunder, nor with the location any of the MESC Equipment, Pulp Mill Utility
Equipment, or Utilized Services to which MESC has access, use and/or other
rights hereunder, except as expressly permitted as hereinafter provided. Scott
reserves the right to relocate, at its sole cost and expense, any and/or all of
the MESC Equipment located on Lot 8, Lot 10, Lot 11, and/or Lots 8 and 11, the
Pulp Mill Utility Equipment and the Utilized Services (collectively, the "Pulp
Mill Facilities") subject to the following restraints on such relocation rights:
a. Scott shall have the right from time to time to relocate any
one or more of such Pulp Mill Facilities to other locations
within the Pulp Mill Lots, subject to the terms and provisions
of this Easement Deed.
b. Prior to any relocation of any one or more of the Pulp Mill
Facilities, Scott shall give thirty (30) days' written notice of
the proposed relocation(s) to MESC and to the Site Operating
Committee. The notice shall include a detailed description of the
design for the relocated Pulp Mill Facility. With respect to the
relocation of any Pulp Mill Facility that transfers electricity,
gas, any fluid, or any other Metered Flow, the proposed design
for the relocated Pulp Mill Facility shall ensure that the
relocated Pulp Mill Facility will not cause any increase in costs
to MESC or any system changes reasonably unacceptable to MESC.
c. Scott shall not commence construction of any such relocated
Pulp Mill Facility without obtaining MESC's written approval
of the proposed design for the relocated Pulp Mill Facility,
provided, however, that MESC shall not unreasonably withhold
such approval. Any dispute regarding the withholding of such
approval shall be resolved as provided in the Master Operating
Agreement.
d. Scott shall conduct such post-construction tests of any such
relocated Pulp Mill Facility as may be reasonably required by
MESC. Any dispute regarding such required tests shall be
resolved as provided in the Master Operating Agreement.
e. If relocating a Pulp Mill Facility shall require an outage,
shutdown, or slowdown, the Site Operating Committee shall
determine the appropriate date and time for
- 5 -
<PAGE>
such relocation, provided however, that such relocation shall
occur not later than the next scheduled Cold Shutdown.
6. This Easement Deed and the easements created hereunder shall run
with the land and are and shall be binding upon and inure to the benefit of
Scott and MESC and their respective successors and assigns. The easements herein
granted to MESC may be utilized by MESC's employees, invitees, and licensees.
7. The Interim Easement herein granted to MESC hereunder shall cease
and terminate upon the earlier to occur of (a) May 30, 1996, and (b) the
thirtieth (30th) day following the date upon which the facility that MESC
desires to construct upon Parcel II of the Leased Premises is substantially
completed.
8. The easement herein granted to MESC pursuant to Paragraph B hereof
and all rights of MESC hereunder, except to the extent otherwise provided in
Paragraph 7, shall cease and terminate upon the expiration or termination of all
rights of MESC under the MESC Lease, including, without limitation, as
applicable, upon the expiration or termination of all of any New Tenant's rights
under a New Lease entered into pursuant to the Mortgagee Cure Rights set forth
in Section 11.5 of the MESC Lease.
IN WITNESS WHEREOF, Scott and MESC have caused their names to be
executed hereto as of the date first set out above by their duly authorized
representatives.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
- 6 -
<PAGE>
SCOTT PAPER COMPANY
By: /s/
As Its: Assistant Treasurer
STATE OF ALABAMA
COUNTY OF MOBILE
I, the undersigned Notary Public in and for said County in said State,
hereby certify that Thomas C. Deas, Jr., whose name as Assistant Treasurer of
Scott Paper Company, a Pennsylvania corporation, is signed to the foregoing
easement deed, and who is known to me, acknowledged before me on this day that,
being informed of the contents of the instrument, he, as such officer executed
the same voluntarily for and as the act of said corporation.
Given under my hand and official seal this the 8th day of December,
1995.
/s/
Notary Public
[AFFIX NOTARIAL SEAL]
My Commission Expires: April 23, 1997
- 7 -
<PAGE>
MOBILE ENERGY SERVICES COMPANY,
L.L.C.
By: /s/
As Its: Vice President
STATE OF GEORGIA
COUNTY OF FULTON
I, the undersigned Notary Public in and for said County in said State,
hereby certify that S. Marce Fuller, whose name as Vice President of Mobile
Energy Services Company, L.L.C., an Alabama limited liability company, is signed
to the foregoing easement deed, and who is known to me, acknowledged before me
on this day that, being informed of the contents of the instrument, he, as such
officer executed the same voluntarily for and as the act of said corporation.
Given under my hand and official seal this the 16th day of January,
1996.
/s/
Notary Public
[AFFIX NOTARIAL SEAL]
My Commission Expires: June 19, 1996
- 8 -
<PAGE>
EXHIBIT "A"
ALL that certain plot, piece or parcel of land, situate, lying and being in the
City of Mobile, County of Mobile, and State of Alabama, bounded and described as
follows:
Parcel I
Beginning at a point in Lot 11 of the Scott Paper Company Subdivision as
recorded in Map Book 64, Page 39, in the Office of the Judge of Probate of
Mobile County, Alabama, said point being 3570.10 feet North and 431.54 feet East
of the Site of the Great Magnolia, and at Alabama State Plane Coordinate, (West
Zone, NAD 1927), North 270056.327 and East 326422.733; Thence N-10-53'-56"-W for
356.22 ft.; Thence S-89-01'-08"-E for 105.36 ft.; Thence S-68-5 2'-49"-E for
194.97 ft.; Thence S-15-17'-38"-E for 241.11 ft.; Thence S-80-56'- 54"-W for
287.04 ft. to the Point of Beginning. Said Parcel (the "East Fuel Tank Parcel")
lying and being in Lot 11 of the Scott Paper Company Subdivision and containing
1.968 acres, more or less.
LESS AND EXCEPT:
Beginning at a point 38.85 feet South and 7.65 feet West of the North East
corner of the Parcel described above, said point being at Alabama State Plane
Coordinate, (West Zone, NAD 1927), North 270295.212 and East 326634.957; Thence
S-42-00'-44"-W for 42.00 ft.; Thence N-47- 59'-16"-W for 50.00 ft.; Thence
N-42-00'-44"-E for 42.00 ft.; Thence S-47-59'-16"-E for 50 ft. to the Point of
Beginning. Said Parcel (the "Excluded Parcel") lying entirely within the East
Fuel Tank Parcel described above and containing 2100.00 square feet, more or
less.
Parcel II
Beginning at a point in Lot 11 of the Scott Paper Company Subdivision as
recorded in Map Book 64, Page 39, in the office of the Judge of Probate of
Mobile County, Alabama; Said point being 2029.873 feet North and 2185.566 feet
East of the Site of the Great Magnolia, and at Alabama State Plane Coordinate,
West Zone, NAD 1927, North 268516.033, East 328173.913; Thence
N-41(degree)-44'-09"-E for 197.45 feet; Thence S-26(degree)-32'-42"-E for 123.69
feet; Thence S- 34(degree)-20'-56"-E fir 96.39 feet; Thence
S-41(degree)-44'-09"-W for 143.79 feet; Thence Northwesterly, around a curve to
the left having a radius of 438.37 feet and a Delta angle of 27(degree)-35'-10",
the Chord of which bears N-44(degree)-04'-04"-W for 209.02 feet, for an arc
distance of 211.06 feet to the Point of Beginning. Said Parcel lying and being
entirely within the boundaries of Lot 11 of the aforesaid Scott Paper Company
Subdivision, and containing 0.759 acres, more or less.
Exhibit 10.42
CONSENT AND AGREEMENT
THIS CONSENT AND AGREEMENT (this "Consent"), dated as of
August 1, 1995, is executed by SCOTT PAPER COMPANY, a Pennsylvania corporation
(the "Consenting Party"), MOBILE ENERGY SERVICES COMPANY, L.L.C., an Alabama
limited liability company (the "Borrower")(which is an indirect wholly-owned
subsidiary of The Southern Company, a Delaware corporation ("Southern")), and
BANKERS TRUST (DELAWARE), a Delaware banking corporation, as Collateral Agent
for the Secured Parties (as hereinafter defined) (the "Collateral Agent").
A. The Borrower, Mobile Energy Services Holdings, Inc.
(formerly known as Mobile Energy Services Company, Inc.), an Alabama corporation
("Mobile Energy"), and First Union National Bank of Georgia, as trustee (in such
capacity, the "Taxable Trustee"), have entered into a Trust Indenture dated as
of August 1, 1995 (the "Taxable Indenture"), pursuant to which the Borrower (i)
is issuing its First Mortgage Bonds (the "Taxable Bonds"), the proceeds of which
will be used to (among other things) repay to Southern a portion of the amounts
advanced to pay certain costs associated with the acquisition of the Energy
Complex (as defined in the Master Operating Agreement (as hereinafter defined))
and (ii) may, from time to time, issue additional Senior Debt (as defined in the
Taxable Indenture).
B. The Borrower, Mobile Energy and The Industrial Development
Board of the City of Mobile, Alabama (the "Board") have entered into an Amended
and Restated Lease and Agreement dated as of August 1, 1995 with respect to part
of the Energy Complex, relating to The Industrial Development Board of the City
of Mobile, Alabama Solid Waste Revenue Refunding Bonds (Mobile Energy Services
Company, L.L.C. Project), Series 1995A (the "Tax-Exempt Bonds" and, together
with the Taxable Bonds, the "Bonds") to be issued for the benefit of the
Borrower pursuant to an Amended and Restated Indenture dated as of August 1,
1995 (the "Tax-Exempt Indenture" and, together with the Taxable Indenture, the
"Indentures") between the Board and First Union National Bank of Georgia, as
trustee (in such capacity, the "Tax-Exempt Trustee"). The proceeds of the Tax-
Exempt Bonds will be used to refinance the 1984 Tax-Exempt Bonds and to pay for
certain other costs.
C. The Borrower and Banque Paribas (together with any lender
that is or becomes a provider of the Working Capital Facility (as hereinafter
defined), the "Working Capital Facility Provider" and, together with the Taxable
Trustee and the Tax-Exempt Trustee, the "Secured Parties") have entered into a
Revolving Credit Facility dated as of August 1, 1995 and together with any
replacement working capital facility, the "Working Capital
<PAGE>
Facility"), borrowings under which will be used to finance certain working
capital requirements of the Borrower.
D. The Consenting Party and Mobile Energy have entered into
(i) that certain Amended and Restated Master Operating Agreement dated as of
July 13, 1995 and effective as of December 12, 1994 (the "Master Operating
Agreement"); (ii) that certain 1984 Tax-Exempt Lease Agreement dated as of
December 12, 1994; (iii) that certain 1984 Taxable Lease Agreement dated as of
December 12, 1994; (iv) that certain 1973 Tax-Exempt Lease Agreement dated as of
December 12, 1994; (v) that certain 1976 Tax-Exempt Lease Agreement dated as of
December 12, 1994; (vi) that certain Lease Assignment Agreement dated as of
December 12, 1994; (vii) that certain Lease dated as of December 12, 1994 (as
amended pursuant to the First Amendment to Lease Agreement dated as of July 13,
1995); (viii) that certain Supplementary Lease dated as of December 12, 1994 (as
amended pursuant to the First Amendment to Supplementary Lease Agreement dated
as of July 13, 1995); (ix) that certain Scott Environmental Indemnity Agreement
dated as of December 12, 1994 (as amended pursuant to the First Amendment to
Environmental Indemnity Agreement dated as of July 13, 1995); (x) that certain
Transition Agreement dated as of December 12, 1994 (as amended pursuant to the
First Amendment to Transition Agreement dated as of July 13, 1995); (xi) those
certain Memoranda of Leases dated as of December 12, 1994; (xii) that certain
Common Services Agreement dated as of December 12, 1994; and (xiii) those
certain Easement Deeds to which the Consenting Party is a party dated as of
December 12, 1994 (collectively, as the same may be amended, waived or otherwise
modified, the "Contracts").
E. Pursuant to an Omnibus Deed, Bill of Sale, General
Assignment and Conveyance Agreement between Mobile Energy and the Borrower dated
as of July 14, 1995, Mobile Energy has assigned to the Borrower, and the
Borrower has assumed, all of Mobile Energy's rights and obligations under the
Contracts.
F. The Collateral Agent has been granted a security interest
in the Contracts and the Energy Complex for the benefit of the Secured Parties
pursuant to an Intercreditor and Collateral Agency Agreement dated as of August
1, 1995 by and among the Secured Parties, the Board, the Collateral Agent, the
Borrower and Mobile Energy (as the same may be amended, supplemented, waived or
otherwise modified, the "Intercreditor Agreement") and the other Financing
Documents (as defined in the Master Operating Agreement).
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. The Consenting Party acknowledges the assignments referred
to in Recitals E and F above and hereby irrevocably consents to such
assignments, and each of the parties hereto agrees as follows:
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<PAGE>
(a) Definitions; Rules of Interpretation. Unless
otherwise defined herein, all terms used in this Consent shall have the meanings
given in Exhibit A to the Master Operating Agreement. Except as otherwise
expressly provided herein, the rules of interpretation set forth in said Exhibit
A shall apply to this Consent. The parties hereto acknowledge that the
Collateral Agent, acting on behalf of the Secured Parties, is a "Lender" within
the meaning of the Master Operating Agreement, and that, without the consent of
the parties hereto, no other Person (other than a secured Lender who executes a
counterpart of, or acknowledges to be bound by, this Consent) shall be deemed a
Lender under the Contracts. Any such Lenders shall coordinate so as not to give
any conflicting instructions or demands to the Consenting Party.
(b) Step-In Rights. The Mill Owners shall have the
right to exercise the Mill Owner Step-In Rights in accordance with Section
11.4(a)(ii) of the Master Operating Agreement. The Collateral Agent acknowledges
that (A) the Mill Owner Step-In Rights give the Mill Owners the right, under the
circumstances set forth in Section 11.4(a)(ii) of the Master Operating
Agreement, to, among other things, take possession of or obtain entry to the
Energy Complex and to assume and exercise operational control of the Energy
Complex and (B) in so assuming or exercising operational control of the Energy
Complex, the Mill Owners may exclude the Collateral Agent from assuming or
exercising operational control of the Energy Complex until such time as the
Collateral Agent shall have foreclosed upon the Energy Complex, subject to
Section 1(d) hereof.
The parties hereto agree that if the Mill Owners continue to exercise the Mill
Owner Step-In Rights at the end of the initial term of the Contracts, the
Borrower may not exercise the renewal term for the Contracts; provided that, if
the Mill Owners desire to continue their Mill Owner Step-in Rights, and if there
is any Original Debt (as hereinafter defined) outstanding under the Financing
Documents at the end of such initial term, a Master Operating Agreement Renewal
Term shall be deemed to be exercised, which such renewal term shall terminate on
the earlier of the expiration of such Master Operating Agreement Renewal Term
and the date no Original Debt remains outstanding without prejudice to the Mill
Owners' rights to terminate the Mill Owner Step-In Rights at any time pursuant
to the terms of the Contracts and to terminate or allow the Contracts to expire
in accordance with their terms (subject to the provisions of Section 1(e)
hereof). If at any time on or after December 16, 2019 the Mill Owners are
exercising the Mill Owner Step-In Rights at the time all Original Debt
outstanding has been repaid, the Mill Owners may, at the option of the Mill
Owners exercised in their sole and absolute discretion, elect to acquire all of
the Borrower's right, title and interest in and to the Energy Complex by written
notice delivered to the Borrower and the Lender, provided that in the event any
of the Mill Owners exercises the foregoing option, the Borrower and the
Collateral Agent shall execute and deliver all agreements, instruments and other
documents, and shall take or cause to be taken such other
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<PAGE>
actions as required under applicable law, as shall be necessary to assign and
transfer all of the Borrower's right, title and interest in and to the Energy
Complex to the Mill Owners that elect to exercise said option; and provided,
further, that such option shall expire, if not theretofore exercised,
immediately upon the cessation of such Mill Owner Step-In Rights. "Original
Debt" shall mean all Indebtedness (as defined in Section 1(l) hereof) the
aggregate scheduled annual debt service for which in any year does not exceed
that set forth on Schedule I hereto. Without limiting the foregoing, "Original
Debt" shall include Indebtedness outstanding from time to time under the Working
Capital Facility complying with clause (b) of Section (l) hereof, provided that
the limitations contained in the preceding sentence regarding scheduled annual
debt service on Original Debt not exceeding the amount set forth on Schedule I
hereto shall be determined without regard to principal payments under the
Working Capital Facility. For purposes hereof, "debt service" means payments of
principal, interest and other payments, costs, fees and expenses under any
Indebtedness.
Nothing in this Section 1(b) shall be deemed to limit or restrict any of the
other rights and remedies available to the Collateral Agent under the Financing
Documents (subject to the other terms and provisions hereof) and no provision of
any of the Financing Documents shall be deemed to limit or restrict any of the
other rights and remedies of the Consenting Party hereunder (subject to the
other terms and provisions hereof).
Notwithstanding any provision to the contrary set forth herein, the failure to
exercise any Mill Owner Step-In Rights shall not act as a waiver or release of
such Mill Owner Step-In Rights and the termination of the exercise of any Mill
Owner Step-In Rights shall not act as a waiver or release of any other Mill
Owner Step-In Rights that may arise after such termination; provided that no
provision in this Consent shall be deemed to permit the Mill Owners, upon
termination of Mill Owner Step-In Rights with respect to any Energy Complex
Triggering Event, to elect to exercise Mill Owner Step-In Rights with respect to
any Energy Complex Triggering Event that was in existence and of which the Mill
Owners were aware at the time of such termination, or otherwise to increase the
availability or scope of Mill Owner Step-In Rights beyond that specified in the
Master Operating Agreement and the other Contracts.
(c) Cure Rights and Payments. Subject to Section
1(b) hereof, the Collateral Agent shall be entitled to exercise all rights and
to cure any defaults of the Borrower under and strictly in accordance with the
terms of the Contracts (or as otherwise expressly provided in this Consent), and
the Consenting Party agrees to permit and accept such exercise and cure by the
Collateral Agent in accordance with their terms except as expressly provided
herein. The Consenting Party agrees to render all payments due by it to the
Borrower under the Contracts directly to the Collateral Agent, c/o Bankers Trust
Company, for deposit into
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<PAGE>
the Borrower's Account No. 15351 maintained with Bankers Trust Company, or to
such other person and/or at such other address as the Collateral Agent may from
time to time specify in writing to the Consenting Party. Upon receipt by the
Consenting Party of notice from the Collateral Agent that a Trigger Event (as
defined in the Intercreditor Agreement as in effect on the date hereof) has
occurred, the Consenting Party agrees, subject to Section 1(b) hereof, to render
all performance due by it under the Contracts and this Consent to the Collateral
Agent for the benefit of the Secured Parties. The Borrower hereby acknowledges
and agrees that payments made by the Consenting Party to the Collateral Agent in
accordance with the Collateral Agent's directions pursuant to this Section 1(c)
and performance to the Collateral Agent shall satisfy the Consenting Party's
obligations to make payments or to perform such obligations (as the case may be)
to the Borrower in accordance with the Contracts, and shall relieve the
Consenting Party of all liability with respect to such payments or performance.
During the term of this Consent, the Borrower hereby waives any right it may
have to require that payments be made or performance be rendered in any manner
other than the manner designated by the Collateral Agent pursuant to this
Section 1(c).
(d) Foreclosure. (i) The Collateral Agent shall
not commence foreclosure proceedings upon the Energy Complex or the Contracts
without first providing the Consenting Party with fifteen (15) days advance
written notice thereof. Contemporaneously with or immediately following such
foreclosure upon the Contracts, the Collateral Agent shall notify the Consenting
Party that the Collateral Agent or a purchaser (either such person, in such
circumstance, constituting a "New Owner") has succeeded to the Borrower's
interest under the Contracts pursuant to documentation satisfactory to the
Consenting Party and the New Owner. At the time of foreclosure, the Collateral
Agent shall not make an assignment of the Contracts to a third party unless (i)
such third party assumes liability for all of the Borrower's and the Collateral
Agent's (as the case may be) obligations under the Contracts (including the
obligation to continue operation of the Energy Complex in accordance with the
terms of the Contracts) (provided that the New Owner need not assume obligations
under any Contract with respect to any Mill Owner as to which a Mill Owner Event
of Default has occurred and is continuing) pursuant to documentation
satisfactory to the Consenting Party in form and substance and (ii) such third
party is a Qualified Purchaser and has substantial expertise (or is controlled
or managed by, or has retained as an operator of the Energy Complex, a person
with substantial expertise) in operating and managing facilities similar to the
Energy Complex and there is a reasonable basis to conclude that the operations
at the Energy Complex will be conducted in accordance with Prudent Plant
Operating Standards following such assignment.
(ii) If the Collateral Agent determines that it wishes to foreclose
upon (or accept title in lieu of foreclosure to) the Energy Complex, the Lease,
the Supplementary Lease and the Easement
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<PAGE>
Deeds but not to foreclose upon (or accept title in lieu of foreclosure to) all
of the other Contracts (other than Contracts as to which a Mill Owner Event of
Default has occurred and is continuing), the Collateral Agent shall provide
written notice to the Mill Owners of such determination. The Mill Owners may
elect by written notice to the Collateral Agent within thirty (30) days of
receipt of the foregoing notice (or on the date that the Collateral Agent
obtains title to the Energy Complex, if later) to take possession of and operate
the Energy Complex:
(A) for a period of up to eighteen months, commencing
on the date of receipt by the Collateral Agent of the Mill Owners'
written notice of election (the "Limited Standstill Period"), provided
that, and for so long as, (1) during the Limited Standstill Period, the
Master Operating Agreement and the other Contracts shall remain in
effect and the Mill Owners shall operate the Energy Complex in
compliance with the standards set forth in the Contracts applicable to
the Mill Owner Step-In Rights (or, if the Energy Complex is not
operable, the Mill Owners shall use their good faith efforts to restore
the Energy Complex to operability) and no Liquidated Damages shall be
payable and (2) the Mill Owners and the Collateral Agent shall attempt
in good faith to negotiate in the interests of all such parties; or
(B) for an unlimited period, commencing on the date
of receipt by the Collateral Agent of the Mill Owners' written notice
of election (the "Unlimited Standstill Period"), provided that, and for
so long as, (1) any of (a) the second Demand Anniversary Date has not
occurred, (b) the annualized Demand Charge for the then current Demand
Period is set at a level equal to or greater than 77% of the Demand
Charge during the First Contract Year (the "Minimum Demand Charge") or
(c) if the provisions of clause (b) are not satisfied, the Mill Owners
commit to pay the Collateral Agent during the then current Demand
Period all amounts payable under the Contracts and agree that the
Demand Charge for the then current Demand Period shall be deemed to
equal the Minimum Demand Charge, (2) during the Unlimited Standstill
Period, the Master Operating Agreement and the other Contracts shall
remain in effect, and the Mill Owners shall operate the Energy Complex
in compliance with the standards set forth in the Contracts applicable
to the Mill Owner Step-In Rights and shall comply with all obligations
of the Mill Owners under the Contracts (including, without limitation,
the obligation to pay Demand Charges, subject to Demand Charge
Reductions), except that (i) all liabilities incurred in connection
with the operation of the Energy Complex during the Unlimited
Standstill Period (excluding debt service on the Original Debt
outstanding, but including, without limitation, rent, real estate taxes
and similar impositions that are otherwise payable by the lessee under
the Lease and the Supplementary Lease, operation and maintenance
expenses and capital expenditures, and all amounts payable to the Mill
Owners in
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<PAGE>
reimbursement thereof) shall be expressly subordinated and junior in
right of payment to the payment of scheduled debt service on Original
Debt outstanding; (ii) except as provided in clause (iv) of Section
1(d)(ii)(B)(2) hereof, no rights of set-off, counterclaim, deduction or
defense of any kind shall be exercised or asserted against the Demand
Charges and other amounts payable to the Collateral Agent under the
Contracts or payment thereof; (iii) no Liquidated Damages shall be
payable; and (iv) all amounts payable by the Mill Owners under the
Contracts in excess of the sum of (w) scheduled debt service on the
Original Debt outstanding, (x) operation and maintenance expenses, (y)
capital expenditures and (z) amounts otherwise payable to the Mill
Owners pursuant to rights of set-off, counterclaim, deduction or
defense, shall be applied to redemption of the Original Debt
outstanding, which shall be redeemed in accordance with the terms
thereof to the extent of such available funds, and (3) the Mill Owners
and the Collateral Agent shall attempt in good faith to negotiate in
the interests of all such parties.
(iii) If at any time none of the conditions specified in Section
1(d)(ii)(B)(1) hereof is satisfied, the Collateral Agent shall have the right to
convert the Unlimited Standstill Period into a Limited Standstill Period, in
which case the Mill Owners' rights to enter into an Unlimited Standstill Period
shall terminate. If at any time any of the other conditions specified in Section
1(d)(ii)(A) or 1(d)(ii)(B) hereof is not satisfied, the Collateral Agent may
elect to terminate the Limited Standstill Period or the Unlimited Standstill
Period (as the case may be).
(iv) Upon termination (or, in the case of the Limited Standstill
Period, expiration) of the Limited Standstill Period or the Unlimited Standstill
Period (as the case may be), the New Owner may elect either to assume all of the
Contracts (other than obligations under any Contracts with respect to any Mill
Owner as to which a Mill Owner Event of Default has occurred and is continuing,
which the New Owner may either assume or not assume, at its option) or to
terminate all of the Contracts (other than, if the New Owner so elects, the
Lease, the Supplemental Lease and the Easement Deeds) and to dispose of the
Energy Complex in any manner that it chooses.
If the New Owner elects to assume the Contracts, the term of each Contract shall
be deemed to be extended by the term of the Limited Standstill Period if, at the
end of such Contract's term, any Original Debt is outstanding.
(v) The Borrower and the Collateral Agent acknowledge and agree that
(A) during the Limited Standstill Period or Unlimited Standstill Period, the
Mill Owners shall have the right and option to purchase the Energy Complex for a
purchase price equal to all outstanding principal and interest due and owing to
the Secured Parties in respect of the Original Debt outstanding and (B) at the
end of the initial term of the Lease, the Mill Owners shall have
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<PAGE>
the right and option to purchase the Energy Complex in accordance with Article
15 of the Lease and, in each case, the Mill Owners shall acquire the Energy
Complex free and clear of all liens and encumbrances that at any time secured
the repayment of the Original Debt outstanding; provided that all Original Debt
outstanding and all other amounts payable to the Senior Secured Parties or the
New Owner (as the case may be) under the Contracts shall have been paid in full.
(vi) Notwithstanding any provision in the Contracts or the arrangements
establishing the Mill Owner Maintenance Reserve Account to the contrary, the
Borrower agrees that in the event the Mill Owners are operating the Energy
Complex during the Limited Standstill Period or the Unlimited Standstill Period,
the Mill Owner Maintenance Reserve Account shall be available to the Mill Owners
(but not to the Collateral Agent) for the payment of operation, maintenance or
capital expenses.
(e) Termination/Transfer. (i) The Consenting
Party will not, without the prior written consent of the Collateral Agent, (A)
cancel or terminate any of the Contracts except as provided in the Contracts and
in accordance with Section 1(e)(ii) hereof, or consent to or accept any
cancellation or termination thereof by the Borrower, (B) sell, assign or
otherwise dispose of (by operation of law or otherwise) any part of its interest
in the Contracts, except as set forth in Article 15 of the Master Operating
Agreement, or (C) amend or modify the Contracts in any respect that may
reasonably be expected to have a material effect on the Borrower's rights or
obligations. The Consenting Party agrees to deliver duplicates or copies of all
(i) notices of default delivered under or pursuant to any of the Contracts to
the Collateral Agent promptly upon delivery thereof to the Borrower (and the
Consenting Party agrees that no such notice of default shall be effective until
received by Collateral Agent), and (ii) amendments to any of the Contracts that
in any respect may reasonably be expected to have a material effect on the
Borrower's rights or obligations (and the Consenting Party agrees that no such
amendment shall be effective until received by the Collateral Agent); provided,
that any failure by the Consenting Party to deliver to the Collateral Agent any
such duplicates or copies shall not subject the Consenting Party to any
liability whatsoever.
(ii) The Consenting Party will not terminate the Contracts or any of
its obligations thereunder on account of any default or breach of the Borrower
thereunder without (A) in the case of a default by the Borrower that is the
failure by the Borrower to pay amounts to the Consenting Party which are due and
payable under the Contracts, first providing to the Collateral Agent written
notice of such default and ninety (90) days from the date such notice is
delivered to the Collateral Agent to pay such amounts and (B) in the case of a
default that cannot be cured by the payment of money to the Consenting Party,
first providing to the Collateral Agent written notice of such default and a
reasonable opportunity (in any event at least ninety (90) days but no more than
one hundred eighty
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<PAGE>
(180) days) to cure such breach or default so long as the Collateral Agent or
its designee shall have commenced to cure the breach or default within such
ninety-day period and thereafter diligently pursues such cure to completion and
continues to perform any monetary obligations of the Borrower to the Consenting
Party under the Contracts and all other obligations of the Borrower under the
Contracts are performed by the Borrower (or the Collateral Agent on behalf of
the Borrower) or with respect to any defaults that are not susceptible of being
cured by the Collateral Agent, to rectify to the Consenting Party's reasonable
satisfaction the effect on the Consenting Party of such default within such
period. If possession of the Energy Complex (by way of foreclosure proceedings
or otherwise) is necessary to cure such breach or default, the Collateral Agent
or its successor, transferee or assignee will be allowed a reasonable period to
complete such proceedings or otherwise accomplish such possession; provided,
that in no event shall such additional period exceed thirty (30) days. The
Collateral Agent acknowledges and agrees that during the foregoing time periods
the Consenting Party shall be entitled to exercise any set-off right which the
Consenting Party may have against the Borrower under the Contracts.
If the Collateral Agent or its successor, transferee or assignee is prohibited
by any court order or bankruptcy or insolvency proceedings from curing the
default or from commencing or prosecuting foreclosure proceedings, the foregoing
time periods shall be extended by the period of such prohibition. Subject to
Section 1(d) hereof, the Consenting Party consents to the transfer of the
Borrower's interest under the Contracts to the Collateral Agent for the benefit
of the Secured Parties or a purchaser or grantee at a foreclosure sale by
judicial or nonjudicial foreclosure and sale or by a conveyance by the Borrower
in lieu of foreclosure and agrees that upon such foreclosure, sale or
conveyance, the Consenting Party shall recognize the Collateral Agent or other
purchaser or grantee as the applicable party under the transferred Contracts
(provided that the Collateral Agent or such purchaser or grantee assumes the
obligations of the Borrower under the transferred Contracts as provided in
Section 1(d) hereof).
(f) Bankruptcy. In the event that any of the
Contracts is rejected by a trustee or debtor-in-possession in any bankruptcy or
insolvency proceeding, or if any of the Contracts is terminated for any reason
other than a default that could have been but was not cured by the Collateral
Agent as provided in Section 1(e)(ii) hereof, and if, within sixty (60) days
after such rejection or termination, the Collateral Agent or its successor,
transferee or assignee shall so request, the Consenting Party will execute and
deliver to the Collateral Agent or its successor, transferee or assignee for the
benefit of the Secured Parties a new Contract, which Contract shall be on
substantially the same terms and conditions as the original Contract for the
remaining term of the Contract before giving effect to such rejection or
termination
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<PAGE>
(but in no event on less favorable terms and conditions as the
original Contract).
(g) Liability. (i) None of the Collateral Agent,
the Secured Parties or the holders of Bonds shall be liable for any of the
obligations or duties of the Borrower (including, without limitation, the
obligation to deliver title to the Energy Complex free of any lien upon the
exercise of a Repurchase Option (as defined in the Master Operating Agreement)
by the Consenting Party), unless and until the Collateral Agent or its successor
expressly assumes the Contracts or any or all of such obligations or duties.
(ii) In the event the Collateral Agent or its successor elects to
perform the Borrower's obligations under the Contracts or to enter into any new
Contract as provided in Section 1(d), 1(e)(ii) or 1(f) hereof, the Collateral
Agent, the Secured Parties and the holders of Bonds, and their successors, shall
have no liability to the Consenting Party for the performance of such
obligations, and the sole recourse of the Consenting Party in seeking the
enforcement of such obligations shall be to such parties' interest in the Energy
Complex.
(iii) It is expressly understood and agreed by the parties hereto that
this Consent has been executed by Bankers Trust (Delaware), not in its
individual capacity, but solely as Collateral Agent hereunder in the exercise of
the power and authority conferred and vested in it.
(h) Cure Duties; Assignment. In the event the
Collateral Agent or its successor, transferee or assignee succeeds to the
Borrower's interest under the Contracts, the Collateral Agent or its successor,
transferee or assignee shall cure any defaults of the Borrower existing under
the Contracts that are reasonably capable of being cured and, with respect to
any defaults that are not susceptible of being cured by the Collateral Agent,
shall rectify to the Consenting Party's reasonable satisfaction the effect on
the Consenting Party of such default within such period. The Collateral Agent
shall have the right to assign its interest in this Consent to any person or
entity to whom the Original Debt is transferred, provided such transferee
assumes the obligations of the Borrower (or the Collateral Agent, as the case
may be) under this Consent. Upon such assignment, the Collateral Agent and the
Secured Parties (including their agents and employees) shall be released from
any further liability under this Consent and the Contracts to the extent of the
interest assigned.
(i) Insurance Proceeds. The parties hereto
acknowledge and agree that the disposition of insurance proceeds with respect to
the Energy Complex is subject to the terms and conditions of Section 10.7 of the
Master Operating Agreement and this Section 1(i), and the Collateral Agent
acknowledges that the independent engineer under the Financing Documents shall
be required, if appropriate, to deliver to the Collateral Agent the
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certificate contemplated by Section 3.10(c) of the Intercreditor Agreement (a
copy of which is attached as Exhibit A thereto), such certificate not to be
unreasonably withheld. Notwithstanding anything herein or in the Master
Operating Agreement to the contrary, the parties hereto acknowledge that until
all Original Debt has been paid in full, Casualty Proceeds and Eminent Domain
Proceeds (each as defined in the Intercreditor Agreement) will be disposed of
pursuant to the terms of Sections 3.10 and 6.2 of the Intercreditor Agreement,
which provisions shall not be amended, supplemented or otherwise modified,
directly or indirectly, without the prior written consent of the Consenting
Party.
(j) Borrower Not to Cause Breach. The Borrower
hereby irrevocably waives any rights that it may have, including those arising
under any of the Contracts, to seek or compel the Consenting Party to act in a
manner that is inconsistent with this Consent while this Consent is in effect.
(k) Acknowledgment of Lien. The Consenting Party
hereby acknowledges that the Energy Complex is subject to the lien of the
Financing Documents. The Collateral Agent, the Secured Parties and the holders
of the Bonds have no obligation to release such lien until all obligations
secured thereby have been paid in full.
(l) Approval Rights; Additional Debt. The Borrower
and the Collateral Agent agree that they will not amend, modify, supplement or
provide waivers under the Financing Documents that would result in (A) the
scheduled annual debt service (as "debt service" is defined in Section 1(b)
hereof), except for principal payments under the Working Capital Facility, in
any year being greater than the scheduled annual debt service for such year as
set forth on Schedule I hereto, (B) the Working Capital Facility having terms
and conditions (including the maximum aggregate principal amount that can be
outstanding thereunder) inconsistent with those described in clause (a)(ii) of
the definition of "Permitted Indebtedness" contained in the Indenture (as such
definition is in effect as of the date hereof, provided that amendments to such
definition shall be permitted to reduce any payments of principal, interest or
other amounts that may be scheduled to become due in any month) or (C) any
modifications, direct or indirect, to the provisions of Sections 3.10 and 3.11
of the Intercreditor Agreement. This provision is not intended to apply to
consensual restructurings of Original Debt due to non-payment of Original Debt
that results in an accrual of past due scheduled annual debt service, and is not
intended to require the Collateral Agent or the Secured Parties to exercise
remedies. The Borrower agrees not to (and the Collateral Agent acknowledges that
the Borrower is not permitted to) (i) make, issue or cause to be suffered
secured Indebtedness that would result in the scheduled annual debt service in
any year, except for principal payments under the Working Capital Facility,
being greater than the scheduled annual debt service for such years as set forth
on Schedule I hereto, and (ii) issue unsecured Indebtedness that, when taken
together with all
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<PAGE>
other Indebtedness, would exceed Original Debt in an amount greater than
$5,000,000 (in the aggregate) escalated at the rate of change in the PPI. As a
condition to the Borrower's issuance of any additional secured Indebtedness, the
Borrower shall cause the holder of any additional secured Indebtedness to
execute a counterpart of, or acknowledge to be bound by, this Consent.
"Indebtedness" shall mean at any date, without duplication, (a)(i) all
obligations of the Borrower for borrowed money, (ii) all obligations of the
Borrower evidenced by bonds, debentures, notes or other similar instruments,
(iii) all obligations of the Borrower to pay the deferred purchase price of
property or services, except trade accounts payable arising in the ordinary
course of business and that mature not more than 180 days after the date
originally incurred, (iv) the aggregate of all guarantee or purchase obligations
of the Borrower with respect to capital stock of any person, including any
capital stock of a consolidated subsidiary that is required to be shown as a
liability on a balance sheet of the Borrower, (v) the aggregate of all
redeemable shares of common or preferred stock of the Borrower, (vi) all
obligations of the Borrower, whether direct or contingent, matured or unmatured,
to reimburse banks in respect of drawings made under letters of credit that are
issued to secure or provide for the payment of Indebtedness of the Borrower,
(vii) foreign currency exchanges, (viii) currency and interest rate swaps and
similar derivatives, and (ix) commodities hedges and (b) in each case to the
extent, and only to the extent, such obligations (or the Borrower's liability
with respect thereto) are required to be shown as a liability on a consolidated
balance sheet of the Borrower prepared as of such date, (i) all obligations of
the Borrower as lessee under capital leases, (ii) all Indebtedness of others
secured by a lien on any asset of the Borrower, whether or not such Indebtedness
is assumed by the Borrower, and (iii) all Indebtedness of others guaranteed by
the Borrower. "Indebtedness" shall not include (i) purchase money notes secured
by equipment (but otherwise non-recourse to the Borrower's other properties)
that is not material to the operations of the Energy Complex, (ii) financial
instruments that could not reasonably be expected to have a material adverse
effect on the Borrower and (iii) the Borrower's obligations (if any) in respect
of the 1994 Bonds, the 1984 Taxable Lease Agreement, the 1973 Tax- Exempt Lease
Agreement and the 1976 Tax-Exempt Lease Agreement, except for any refinancing by
the Borrower of any such obligation.
(m) The Collateral Agent hereby acknowledges that
it has no lien on the Mill Owner Maintenance Reserve Account established
pursuant to the Mill Owner Maintenance Reserve Account Agreement dated as of
August 1, 1995 among the Borrower, Southern, the Consenting Party (in its
capacity as the owner and operator of the Tissue Mill and the Pulp Mill) and
S.D. Warren (in its capacity as the owner and operator of the Paper Mill) or any
amounts on deposit therein.
(n) Mill Owner Payment Default Cure Right. The
Mill Owners shall be entitled to cure any payment defaults of the Borrower under
and strictly in accordance with the terms of the
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<PAGE>
Borrower's cure rights under the Financing Documents. The Collateral Agent
agrees to deliver to the Mill Owners duplicates or copies of all notices of
payment default delivered under or pursuant to any of the Financing Documents to
the Borrower, and the Collateral Agent agrees that no notice of payment default
shall be effective until received by the Mill Owners; provided, that any failure
by the Collateral Agent to deliver to the Mill Owners any such duplicates or
copies shall not subject the Collateral Agent to any liability whatsoever; and
provided, further, that the Mill Owners shall be entitled to reimbursement for
any amounts paid thereby to cure any payment default to the extent that such
reimbursement is made from funds that otherwise are permitted to be distributed
to the equity holders of the Borrower under the Financing Documents. The
Borrower agrees to provide each of the Mill Owners with one copy of the
Financing Documents (including any amendments or modifications thereto), as well
as copies of all notices of default from the Secured Parties, all material
notices to bondholders (including notices from the Secured Parties to the
bondholders) and copies of all financial statements provided to the Secured
Parties.
(o) The Borrower hereby acknowledges and agrees to
the terms and conditions set forth in this Consent, and agrees that to the
extent any of the terms and conditions set forth herein are inconsistent with
the terms and conditions of the Project Documents, the terms and conditions of
this Consent shall control.
2. The Consenting Party hereby represents and warrants
that:
(a) The Consenting Party is a corporation duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Pennsylvania. The execution, delivery and performance by the
Consenting Party of the Contracts and this Consent have been duly authorized by
all necessary corporate action, and do not and will not require any further
consents or approvals which have not been obtained, or violate any provision of
the corporate charter or by-laws of the Consenting Party or any law, regulation,
order, judgment, injunction or similar matters or breach any agreement presently
in effect with respect to or binding on the Consenting Party or its properties
or result in, or require, the creation or imposition of any mortgage, deed of
trust, pledge, lien, security interest, charge or encumbrance of any nature that
could adversely affect the Consenting Party's ability to perform its obligations
under the Contracts or this Consent;
(b) This Consent and the Contracts have been duly
executed and delivered and are legal, valid and binding obligations of the
Consenting Party enforceable against the Consenting Party in accordance with
their respective terms, except as such enforceability may be limited by (i)
bankruptcy, insolvency, reorganization, moratorium or similar laws of general
applicability affecting the enforcement of creditors' rights, and (ii) the
application of general principles of equity (regardless of whether
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<PAGE>
such enforceability is considered in a proceeding in equity or at
law);
(c) As of the date hereof, the Contracts are in
full force and effect and, except as described in Recital D above, have not been
amended, supplemented or otherwise modified, other than such amendments,
supplements and modifications as may have been agreed to by the Site Operating
Committee that do not materially affect the material obligations of the
Consenting Party under the Contracts; and
(d) None of senior management of the Consenting
Party, the Pulp Mill SOC Representative and the Tissue Mill SOC Representative
has actual knowledge of any facts that would allow the Consenting Party to
terminate this Consent or the Contracts, and the Consenting Party has no present
intention to deliver a notice of default or a notice of termination thereunder;
the consummation of any transaction contemplated by this Consent to take place
on the date hereof would not allow the Consenting Party to terminate this
Consent or the Contracts.
(e) The Consenting Party has no actual notice of
any assignment of any Contract (other than the assignment referred to in Recital
E above and the assignment contemplated by this Consent).
(f) The Consenting Party has not assigned,
transferred or hypothecated the Contracts or any interest therein.
3. All notices required or permitted hereunder shall be in
writing and shall be effective (a) upon receipt if hand delivered, (b) upon
telephonic verification of receipt if sent by telefacsimile and (c) if otherwise
delivered, upon the earlier of receipt or two (2) business days after being sent
by registered or certified mail, return receipt requested, with proper postage
affixed thereto, or by private courier or delivery service with charges prepaid,
and addressed as specified below:
If to the Consenting Party:
Attention:
Thomas C. Deas, Jr.
Scott Paper Company
Scott Plaza
Philadelphia, Pennsylvania 19113-1585
Telecopy No.: (610) 522-5665
Telephone No.: (610) 522-5560
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<PAGE>
If to the Collateral Agent:
Attention:
Bankers Trust (Delaware)
c/o Bankers Trust Company
Four Albany Street, 4th Floor
New York, New York 10006
Telecopy No.: 212-250-6961
Telephone No.: 212-250-6826
If to the Borrower:
Attention:
Mobile Energy Services Company, L.L.C.
900 Ashwood Parkway, Suite 300
Atlanta, Georgia 30338
Telecopy No.: 770-673-7781
Telephone No.: 770-392-7644
with a copy to:
Mobile Energy Services Company, L.L.C.
P.O. Box 2747
200 Bay Bridge Road
Mobile, Alabama 36652
Telecopy No.: 334-452-6337
Telephone No.: 334-330-3600
4. This Consent shall be binding upon and benefit the
successors and assigns of the Consenting Party, the Borrower, the Collateral
Agent, the Secured Parties and their respective successors, transferees and
assigns (including, without limitation, any entity that refinances all or any
portion of the obligations under the Financing Documents and that, if required
by Section 1(l) hereof, countersigns this Consent). The Consenting Party agrees
to confirm such continuing obligation in writing upon the reasonable request of
the Borrower, the Collateral Agent, the Secured Parties or any of their
respective successors, transferees or assigns. No termination, amendment,
variation or waiver of any provisions of this Consent shall be effective unless
in writing and signed by the Consenting Party, the Collateral Agent and, in the
case of a termination, amendment, variation, or waiver sought prior to a Trigger
Event, the Borrower. This Consent shall be governed by the laws of the State of
New York, without reference to principles of conflict of laws (other than
Section 5-1401 of the New York General Obligations Law).
5. If any term or provision hereof is declared by a court of
competent jurisdiction to be illegal, invalid or unenforceable for any reason
whatsoever, such illegality, invalidity or unenforceability shall not affect the
other terms and provisions hereof, which shall remain binding and enforceable,
and to the extent possible, all of such other provisions shall remain in full
force and effect.
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<PAGE>
6. This Consent may be executed in one or more duplicate
counterparts, and when executed and delivered by all the parties listed below,
shall constitute a single binding agreement.
7. Subject to the following Section 8, this Consent shall be
deemed to be terminated and of no further force and effect when the Consenting
Party receives written notice from the Borrower and the Collateral Agent stating
that no Original Debt is outstanding and all amounts owing to the Secured
Parties in respect of the Original Debt (including, without limitation,
principal, interest, fees and reimbursement obligations, whether upon maturity,
acceleration or otherwise) have been paid in full; provided, however, that the
obligations of the Borrower to provide the Consenting Party with copies of the
Borrower's financial statements as required under Section 1(n) shall survive the
termination of this Consent.
8. If at any time any payment in respect of Original Debt is
rescinded or must otherwise be restored or returned by the holder of such
Original Debt in connection with any bankruptcy, insolvency or other similar or
related proceeding, or upon or as a result of the appointment of a receiver,
intervenor or conservator of, or trustee or similar officer for, the Borrower or
any substantial part of the Borrower's property, the rights and obligations of
the holder of such Original Debt under this Consent shall continue to be
effective, or be reinstated as of the time such payment in respect of Original
Debt is so rescinded or must otherwise be restored, as the case may be, all as
though such payment had not been made.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto by their officers
thereunto duly authorized, have duly executed this Consent as of the date set
forth below.
Dated as of: August 1, 1995
SCOTT PAPER COMPANY, a Pennsylvania
corporation
By: /s/
Name: Thomas C. Deas
Title: Assistant Treasurer
BANKERS TRUST (DELAWARE), a Delaware
banking corporation, as Collateral
Agent
By: /s/
Name: James H. Stallkamp
Title: President
MOBILE ENERGY SERVICES COMPANY,
L.L.C., an Alabama limited liability
company, as Borrower
By: /s/
Name: Christopher J. Kysar
Title: Vice President
ACKNOWLEDGED:
MOBILE ENERGY SERVICES HOLDINGS, INC.,
an Alabama corporation
By: /s/
Name: Christopher J. Kysar
Title: Vice President
<PAGE>
SCHEDULE I
Total Debt Service
(in thousands)
1995 40,500
1996 40,500
1997 40,000
1998 40,000
1999 39,500
2000 39,000
2001 38,500
2002 38,000
2003 37,500
2004 37,000
2005 36,500
2006 36,000
2007 35,500
2008 35,000
2009 34,500
2010 34,000
2011 33,500
2012 33,000
2013 32,500
2014 32,000
2015 31,500
2016 31,500
2017 35,000
2018 35,000
2019 through
January 3, 2020 35,000
thereafter 0
Exhibit 10.43
CONSENT AND AGREEMENT
THIS CONSENT AND AGREEMENT (this "Consent"), dated as of
August 1, 1995, is executed by SCOTT PAPER COMPANY, a Pennsylvania corporation
(the "Consenting Party"), MOBILE ENERGY SERVICES COMPANY, L.L.C., an Alabama
limited liability company (the "Borrower")(which is an indirect wholly-owned
subsidiary of The Southern Company, a Delaware corporation ("Southern")), and
BANKERS TRUST (DELAWARE), a Delaware banking corporation, as Collateral Agent
for the Secured Parties (as hereinafter defined) (the "Collateral Agent").
A. The Borrower, Mobile Energy Services Holdings, Inc.
(formerly known as Mobile Energy Services Company, Inc.), an Alabama corporation
("Mobile Energy"), and First Union National Bank of Georgia, as trustee (in such
capacity, the "Taxable Trustee"), have entered into a Trust Indenture dated as
of August 1, 1995 (the "Taxable Indenture"), pursuant to which the Borrower (i)
is issuing its First Mortgage Bonds (the "Taxable Bonds"), the proceeds of which
will be used to (among other things) repay to Southern a portion of the amounts
advanced to pay certain costs associated with the acquisition of the Energy
Complex (as defined in the Master Operating Agreement (as hereinafter defined))
and (ii) may, from time to time, issue additional Senior Debt (as defined in the
Taxable Indenture).
B. The Borrower, Mobile Energy and The Industrial Development
Board of the City of Mobile, Alabama (the "Board") have entered into an Amended
and Restated Lease and Agreement dated as of August 1, 1995 with respect to part
of the Energy Complex, relating to The Industrial Development Board of the City
of Mobile, Alabama Solid Waste Revenue Refunding Bonds (Mobile Energy Services
Company, L.L.C. Project), Series 1995 (the "Tax-Exempt Bonds" and, together with
the Taxable Bonds, the "Bonds") to be issued for the benefit of the Borrower
pursuant to an Amended and Restated Indenture dated as of August 1, 1995 (the
"Tax-Exempt Indenture" and, together with the Taxable Indenture, the
"Indentures") between the Board and First Union National Bank of Georgia, as
trustee (in such capacity, the "Tax-Exempt Trustee"). The proceeds of the Tax-
Exempt Bonds will be used to refinance the 1984 Tax-Exempt Bonds and to pay for
certain other costs.
C. The Borrower and Banque Paribas (together with any lender
that is or becomes a provider of the Working Capital Facility (as hereinafter
defined), the "Working Capital Facility Provider" and, together with the Taxable
Trustee and the Tax-Exempt Trustee, the "Secured Parties") have entered into a
Revolving Credit Facility dated as of August 1, 1995 and together with any
replacement working capital facility, the "Working Capital
<PAGE>
Facility"), borrowings under which will be used to finance certain working
capital requirements of the Borrower.
D. The Consenting Party and Mobile Energy have entered into
(i) that certain Asset Purchase Agreement dated as of December 12, 1994; (ii)
that certain Assignment and Assumption Agreement dated as of December 12, 1994;
and (iii) that certain Employee Transition Agreement dated as of December 12,
1994, as amended pursuant to the First Amendment to Employee Transition
Agreement dated as of July 13, 1995 (collectively, as the same may be amended,
waived or otherwise modified, the "Contracts").
E. Pursuant to an Omnibus Deed, Bill of Sale, General
Assignment and Conveyance Agreement between Mobile Energy and the Borrower dated
as of July 14, 1995, Mobile Energy has assigned to the Borrower, and the
Borrower has assumed, all of Mobile Energy's rights and obligations under the
Contracts.
F. The Collateral Agent has been granted a security interest
in the Contracts and the Energy Complex for the benefit of the Secured Parties
pursuant to an Intercreditor and Collateral Agency Agreement dated as of August
1, 1995 by and among the Secured Parties, the Board, the Collateral Agent, the
Borrower and Mobile Energy (as the same may be amended, supplemented, waived or
otherwise modified, the "Intercreditor Agreement") and the other Financing
Documents (as defined in the Amended and Restated Master Operating Agreement
dated as of July 13, 1995 and effective as of December 12, 1994 (the "Master
Operating Agreement").
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. The Consenting Party acknowledges the assignments referred
to in Recitals E and F above and hereby irrevocably consents to such
assignments, and each of the parties hereto agrees as follows:
(a) Unless otherwise defined herein, all terms used
in this Consent shall have the meanings given in Exhibit A to the Master
Operating Agreement. Except as otherwise expressly provided herein, the rules of
interpretation set forth in said Exhibit A shall apply to this Consent.
(b) The Collateral Agent shall be entitled to
exercise all rights of the Borrower under the Contracts and to cure any defaults
of the Borrower under the Contracts within the time periods set forth in the
Contracts or within thirty (30) days of receiving notice of such default,
whichever is later. Upon receipt of the foregoing notice from the Collateral
Agent, the Consenting Party agrees to accept such exercise and cure by the
Collateral Agent, in each case strictly in accordance with the Contracts (except
as provided above) and to render all performance due by it under the Contracts
and this Consent to the Collateral Agent. The Consenting Party agrees to make
all payments (if any) to be made by
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<PAGE>
it under the Contracts directly to the Collateral Agent for the benefit of the
Secured Parties upon receipt of the Collateral Agent's written instructions and
each of the Consenting Party and the Collateral Agent agree that any payments
made by the Consenting Party to the Collateral Agent pursuant to such
instructions shall satisfy the Consenting Party's obligations to make such
payments to the Borrower in accordance with the Contracts and shall relieve the
Consenting Party of all liability with respect to such payments. To the extent
that the Collateral Agent assumes all of the Borrower's indemnification rights
under the Contracts, the Borrower shall not be entitled to indemnification
thereunder with respect to identical claims.
(c) The Consenting Party agrees to deliver
duplicates or copies of all notices of default delivered under or pursuant to
the Contracts to the Collateral Agent promptly upon receipt thereof; provided
that any failure by the Consenting Party to deliver to the Collateral Agent any
such duplicates or copies shall not subject the Consenting Party to any
liability whatsoever.
2. The Consenting Party will not, without the prior written
consent of the Collateral Agent, terminate, amend or modify the Contracts in any
respect that has a material adverse effect on the Borrower's rights or
obligations.
3. This Consent shall be binding upon and benefit the
successors and assigns of the Consenting Party, the Borrower, the Collateral
Agent, the Secured Parties and their respective successors, transferees and
assigns (including, without limitation, any entity that refinances all or any
portion of the obligations under the Financing Documents and that countersigns
this Consent). This Consent shall be governed by the laws of the State of New
York, without reference to principles of conflict of laws (other than Section
5-1401 of the New York General Obligations Law).
4. This Consent may be executed in one or more duplicate
counterparts, and when executed and delivered by all the parties listed below,
shall constitute a single binding agreement.
5. It is expressly understood and agreed by the parties hereto
that this Consent has been executed by Bankers Trust (Delaware), not in its
individual capacity, but solely as Collateral Agent hereunder in the exercise of
the power and authority conferred and invested in it.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto by their officers
thereunto duly authorized, have duly executed this Consent as of the date set
forth below.
Dated as of: August 1, 1995
SCOTT PAPER COMPANY, a Pennsylvania
corporation
By: /s/
Name: Thomas C. Deas, Jr.
Title: Assistant Treasurer
BANKERS TRUST (DELAWARE), a Delaware
banking corporation, as Collateral
Agent
By: /s/
Name: James H. Stallkamp
Title:President
MOBILE ENERGY SERVICES COMPANY,
L.L.C., an Alabama limited liability
company, as Borrower
By: /s/
Name: Christopher J. Kysar
Title: Vice President
ACKNOWLEDGED:
MOBILE ENERGY SERVICES HOLDINGS, INC.,
an Alabama corporation
By: /s/
Name: Christopher J. Kysar
Title: Vice President
Exhibit 10.44
CONSENT AND AGREEMENT
THIS CONSENT AND AGREEMENT (this "Consent"), dated as of
August 1, 1995, is executed by S.D. WARREN COMPANY, a Pennsylvania corporation
(the "Consenting Party"), in its capacity as Paper Mill Owner, MOBILE ENERGY
SERVICES COMPANY, L.L.C., an Alabama limited liability company (the
"Borrower")(which is an indirect wholly-owned subsidiary of The Southern
Company, a Delaware corporation ("Southern")), and BANKERS TRUST (DELAWARE), a
Delaware banking corporation, as Collateral Agent for the Secured Parties (as
hereinafter defined) (the "Collateral Agent").
A. The Borrower, Mobile Energy Services Holdings, Inc.
(formerly known as Mobile Energy Services Company, Inc.), an Alabama corporation
("Mobile Energy"), and First Union National Bank of Georgia, as trustee (in such
capacity, the "Taxable Trustee"), have entered into a Trust Indenture dated as
of August 1, 1995 (the "Taxable Indenture"), pursuant to which the Borrower (i)
is issuing its First Mortgage Bonds (the "Taxable Bonds"), the proceeds of which
will be used to (among other things) repay to Southern a portion of the amounts
advanced to pay certain costs associated with the acquisition of the Energy
Complex (as defined in the Master Operating Agreement (as hereinafter defined))
and (ii) may, from time to time, issue additional Senior Debt (as defined in the
Taxable Indenture).
B. The Borrower, Mobile Energy and The Industrial Development
Board of the City of Mobile, Alabama (the "Board") have entered into an Amended
and Restated Lease and Agreement dated as of August 1, 1995 with respect to part
of the Energy Complex, relating to The Industrial Development Board of the City
of Mobile, Alabama Solid Waste Revenue Refunding Bonds (Mobile Energy Services
Company, L.L.C. Project), Series 1995A (the "Tax-Exempt Bonds" and, together
with the Taxable Bonds, the "Bonds") to be issued for the benefit of the
Borrower pursuant to an Amended and Restated Indenture dated as of August 1,
1995 (the "Tax-Exempt Indenture" and, together with the Taxable Indenture, the
"Indentures") between the Board and First Union National Bank of Georgia, as
trustee (in such capacity, the "Tax-Exempt Trustee"). The proceeds of the Tax-
Exempt Bonds will be used to refinance the 1984 Tax-Exempt Bonds and to pay for
certain other costs.
C. The Borrower and Banque Paribas (together with any lender
that is or becomes a provider of the Working Capital Facility (as hereinafter
defined), the "Working Capital Facility Provider" and, together with the Taxable
Trustee and the Tax-Exempt Trustee, the "Secured Parties") have entered into a
Revolving Credit Facility dated as of August 1, 1995 and together with any
replacement working capital facility, the "Working Capital
<PAGE>
Facility"), borrowings under which will be used to finance certain working
capital requirements of the Borrower.
D. The Consenting Party and Mobile Energy have entered into
(i) that certain Amended and Restated Master Operating Agreement dated as of
July 13, 1995 and effective as of December 12, 1994 (the "Master Operating
Agreement"); (ii) that certain Paper Mill Energy Services Agreement dated as of
December 12, 1994 (as amended by the First Amendment thereto dated as of July
13, 1995); (iii) that certain Paper Mill Environmental Indemnity Agreement (as
amended by the First Amendment thereto dated as of July 13, 1995); (iv) that
certain Water Procurement and Effluent Service Agreement dated as of December
12, 1994 (as amended by the First Amendment thereto dated as of July 13, 1995);
(v) those certain Easement Deeds to which the Consenting Party is a party dated
as of December 12, 1994; and (vi) that certain Common Services Agreement dated
as of December 12, 1994 (as amended by the First Amendment thereto dated as of
July 13, 1995 (collectively, as the same may be amended, waived or otherwise
modified, the "Contracts").
E. Pursuant to an Omnibus Deed, Bill of Sale, General
Assignment and Conveyance Agreement between Mobile Energy and the Borrower dated
as of July 14, 1995, Mobile Energy has assigned to the Borrower, and the
Borrower has assumed, all of Mobile Energy's rights and obligations under the
Contracts.
F. The Collateral Agent has been granted a security interest
in the Contracts and the Energy Complex for the benefit of the Secured Parties
pursuant to an Intercreditor and Collateral Agency Agreement dated as of August
1, 1995 by and among the Secured Parties, the Board, the Collateral Agent, the
Borrower and Mobile Energy (as the same may be amended, supplemented, waived or
otherwise modified, the "Intercreditor Agreement") and the other Financing
Documents (as defined in the Master Operating Agreement).
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. The Consenting Party acknowledges the assignments referred
to in Recitals E and F above and hereby irrevocably consents to such
assignments, and each of the parties hereto agrees as follows:
(a) Definitions; Rules of Interpretation. Unless
otherwise defined herein, all terms used in this Consent shall have the meanings
given in Exhibit A to the Master Operating Agreement. Except as otherwise
expressly provided herein, the rules of interpretation set forth in said Exhibit
A shall apply to this Consent. The parties hereto acknowledge that the
Collateral Agent, acting on behalf of the Secured Parties, is a "Lender" within
the meaning of the Master Operating Agreement, and that, without the consent of
the parties hereto, no other Person (other than a secured Lender who executes a
counterpart of, or acknowledges to be
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<PAGE>
bound by, this Consent) shall be deemed a Lender under the Contracts. Any such
Lenders shall coordinate so as not to give any conflicting instructions or
demands to the Consenting Party.
(b) Step-In Rights. The Mill Owners shall have the
right to exercise the Mill Owner Step-In Rights in accordance with Section
11.4(a)(ii) of the Master Operating Agreement. The Collateral Agent acknowledges
that (A) the Mill Owner Step-In Rights give the Mill Owners the right, under the
circumstances set forth in Section 11.4(a)(ii) of the Master Operating
Agreement, to, among other things, take possession of or obtain entry to the
Energy Complex and to assume and exercise operational control of the Energy
Complex and (B) in so assuming or exercising operational control of the Energy
Complex, the Mill Owners may exclude the Collateral Agent from assuming or
exercising operational control of the Energy Complex until such time as the
Collateral Agent shall have foreclosed upon the Energy Complex, subject to
Section 1(d) hereof.
The parties hereto agree that if the Mill Owners continue to exercise the Mill
Owner Step-In Rights at the end of the initial term of the Contracts, the
Borrower may not exercise the renewal term for the Contracts; provided that, if
the Mill Owners desire to continue their Mill Owner Step-in Rights, and if there
is any Original Debt (as hereinafter defined) outstanding under the Financing
Documents at the end of such initial term, a Master Operating Agreement Renewal
Term shall be deemed to be exercised, which such renewal term shall terminate on
the earlier of the expiration of such Master Operating Agreement Renewal Term
and the date no Original Debt remains outstanding without prejudice to the Mill
Owners' rights to terminate the Mill Owner Step-In Rights at any time pursuant
to the terms of the Contracts and to terminate or allow the Contracts to expire
in accordance with their terms (subject to the provisions of Section 1(e)
hereof). If at any time on or after December 16, 2019 the Mill Owners are
exercising the Mill Owner Step-In Rights at the time all Original Debt
outstanding has been repaid, the Mill Owners may, at the option of the Mill
Owners exercised in their sole and absolute discretion, elect to acquire all of
the Borrower's right, title and interest in and to the Energy Complex by written
notice delivered to the Borrower and the Lender, provided that in the event that
any of the Mill Owners exercises the foregoing option, the Borrower and the
Collateral Agent shall execute and deliver all agreements, instruments and other
documents, and shall take or cause to be taken such other actions as required
under applicable law, as shall be necessary to assign and transfer all of the
Borrower's right, title and interest in and to the Energy Complex to the Mill
Owners that elect to exercise said option; and provided, further, that such
option shall expire, if not theretofore exercised, immediately upon the
cessation of such Mill Owner Step-In Rights. "Original Debt" shall mean all
Indebtedness (as defined in Section 1(l) hereof) the aggregate scheduled annual
debt service for which in any year does not exceed that set forth on Schedule I
hereto. Without limiting the foregoing, "Original Debt" shall include
Indebtedness
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outstanding from time to time under the Working Capital Facility complying with
clause (b) of Section 1(l) hereof, provided that the limitations contained in
the preceding sentence regarding scheduled annual debt service on Original Debt
not exceeding the amount set forth on Schedule I hereto shall be determined
without regard to principal payments under the Working Capital Facility. For
purposes hereof, "debt service" means payments of principal, interest and other
payments, costs, fees and expenses under any Indebtedness.
Nothing in this Section 1(b) shall be deemed to limit or restrict any of the
other rights and remedies available to the Collateral Agent under the Financing
Documents (subject to the other terms and provisions hereof) and no provision of
any of the Financing Documents shall be deemed to limit or restrict any of the
other rights and remedies of the Consenting Party hereunder (subject to the
other terms and provisions hereof).
Notwithstanding any provision to the contrary set forth herein, the failure to
exercise any Mill Owner Step-In Rights shall not act as a waiver or release of
such Mill Owner Step-In Rights and the termination of the exercise of any Mill
Owner Step-In Rights shall not act as a waiver or release of any other Mill
Owner Step-In Rights that may arise after such termination; provided that no
provision in this Consent shall be deemed to permit the Mill Owners, upon
termination of Mill Owner Step-In Rights with respect to any Energy Complex
Triggering Event, to elect to exercise Mill Owner Step-In Rights with respect to
any Energy Complex Triggering Event that was in existence and of which the Mill
Owners were aware at the time of such termination, or otherwise to increase the
availability or scope of Mill Owner Step-In Rights beyond that specified in the
Master Operating Agreement and the other Contracts.
(c) Cure Rights and Payments. Subject to Section
1(b) hereof, the Collateral Agent shall be entitled to exercise all rights and
to cure any defaults of the Borrower under and strictly in accordance with the
terms of the Contracts (or as otherwise expressly provided in this Consent), and
the Consenting Party agrees to permit and accept such exercise and cure by the
Collateral Agent in accordance with their terms except as expressly provided
herein. The Consenting Party agrees to render all payments due by it to the
Borrower under the Contracts directly to the Collateral Agent, c/o Bankers Trust
Company, for deposit into the Borrower's Account No. 15351 maintained with
Bankers Trust Company, or to such other person and/or at such other address as
the Collateral Agent may from time to time specify in writing to the Consenting
Party. Upon receipt by the Consenting Party of notice from the Collateral Agent
that a Trigger Event (as defined in the Intercreditor Agreement as in effect on
the date hereof) has occurred, the Consenting Party agrees, subject to Section
1(b) hereof, to render all performance due by it under the Contracts and this
Consent to the Collateral Agent for the benefit of the Secured Parties. The
Borrower hereby acknowledges and agrees that payments
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made by the Consenting Party to the Collateral Agent in accordance with the
Collateral Agent's directions pursuant to this Section 1(c) and performance to
the Collateral Agent shall satisfy the Consenting Party's obligations to make
payments or to perform such obligations (as the case may be) to the Borrower in
accordance with the Contracts, and shall relieve the Consenting Party of all
liability with respect to such payments or performance. During the term of this
Consent, the Borrower hereby waives any right it may have to require that
payments be made or performance be rendered in any manner other than the manner
designated by the Collateral Agent pursuant to this Section 1(c).
(d) Foreclosure. (i) The Collateral Agent shall
not commence foreclosure proceedings upon the Energy Complex or the Contracts
without first providing the Consenting Party with fifteen (15) days advance
written notice thereof. Contemporaneously with or immediately following such
foreclosure upon the Contracts, the Collateral Agent shall notify the Consenting
Party that the Collateral Agent or a purchaser (either such person, in such
circumstance, constituting a "New Owner") has succeeded to the Borrower's
interest under the Contracts pursuant to documentation satisfactory to the
Consenting Party and the New Owner. At the time of foreclosure, the Collateral
Agent shall not make an assignment of the Contracts to a third party unless (i)
such third party assumes liability for all of the Borrower's and the Collateral
Agent's (as the case may be) obligations under the Contracts (including the
obligation to continue operation of the Energy Complex in accordance with the
terms of the Contracts) (provided that the New Owner need not assume obligations
under any Contract with respect to any Mill Owner as to which a Mill Owner Event
of Default has occurred and is continuing) pursuant to documentation
satisfactory to the Consenting Party in form and substance and (ii) such third
party is a Qualified Purchaser and has substantial expertise (or is controlled
or managed by, or has retained as an operator of the Energy Complex, a person
with substantial expertise) in operating and managing facilities similar to the
Energy Complex and there is a reasonable basis to conclude that the operations
at the Energy Complex will be conducted in accordance with Prudent Plant
Operating Standards following such assignment.
(ii) If the Collateral Agent determines that it wishes to foreclose
upon (or accept title in lieu of foreclosure to) the Energy Complex, the Lease,
the Supplementary Lease and the Easement Deeds but not to foreclose upon (or
accept title in lieu of foreclosure to) all of the other Contracts (other than
Contracts as to which a Mill Owner Event of Default has occurred and is
continuing), the Collateral Agent shall provide written notice to the Mill
Owners of such determination. The Mill Owners may elect by written notice to the
Collateral Agent within thirty (30) days of receipt of the foregoing notice (or
on the date that the Collateral Agent obtains title to the Energy Complex, if
later) to take possession of and operate the Energy Complex:
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(A) for a period of up to eighteen months, commencing
on the date of receipt by the Collateral Agent of the Mill Owners'
written notice of election (the "Limited Standstill Period"), provided
that, and for so long as, (1) during the Limited Standstill Period, the
Master Operating Agreement and the other Contracts shall remain in
effect and the Mill Owners shall operate the Energy Complex in
compliance with the standards set forth in the Contracts applicable to
the Mill Owner Step-In Rights (or, if the Energy Complex is not
operable, the Mill Owners shall use their good faith efforts to restore
the Energy Complex to operability) and no Liquidated Damages shall be
payable and (2) the Mill Owners and the Collateral Agent shall attempt
in good faith to negotiate in the interests of all such parties; or
(B) for an unlimited period, commencing on the date
of receipt by the Collateral Agent of the Mill Owners' written notice
of election (the "Unlimited Standstill Period"), provided that, and for
so long as, (1) any of (a) the second Demand Anniversary Date has not
occurred, (b) the annualized Demand Charge for the then current Demand
Period is set at a level equal to or greater than 77% of the Demand
Charge during the First Contract Year (the "Minimum Demand Charge") or
(c) if the provisions of clause (b) are not satisfied, the Mill Owners
commit to pay the Collateral Agent during the then current Demand
Period all amounts payable under the Contracts and agree that the
Demand Charge for the then current Demand Period shall be deemed to
equal the Minimum Demand Charge, (2) during the Unlimited Standstill
Period, the Master Operating Agreement and the other Contracts shall
remain in effect, and the Mill Owners shall operate the Energy Complex
in compliance with the standards set forth in the Contracts applicable
to the Mill Owner Step-In Rights and shall comply with all obligations
of the Mill Owners under the Contracts (including, without limitation,
the obligation to pay Demand Charges, subject to Demand Charge
Reductions), except that (i) all liabilities incurred in connection
with the operation of the Energy Complex during the Unlimited
Standstill Period (excluding debt service on the Original Debt
outstanding, but including, without limitation, rent, real estate taxes
and similar impositions that are otherwise payable by the lessee under
the Lease and the Supplementary Lease, operation and maintenance
expenses and capital expenditures, and all amounts payable to the Mill
Owners in reimbursement thereof) shall be expressly subordinated and
junior in right of payment to the payment of scheduled debt service on
Original Debt outstanding; (ii) except as provided in clause (iv) of
Section 1(d)(ii)(B)(2) hereof, no rights of set-off, counterclaim,
deduction or defense of any kind shall be exercised or asserted against
the Demand Charges and other amounts payable to the Collateral Agent
under the Contracts or payment thereof; (iii) no Liquidated Damages
shall be payable; and (iv) all amounts payable by the Mill Owners under
the Contracts in excess of the sum of (w) scheduled debt service
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on the Original Debt outstanding, (x) operation and maintenance
expenses, (y) capital expenditures and (z) amounts otherwise payable to
the Mill Owners pursuant to rights of set-off, counterclaim, deduction
or defense, shall be applied to redemption of the Original Debt
outstanding, which shall be redeemed in accordance with the terms
thereof to the extent of such available funds, and (3) the Mill Owners
and the Collateral Agent shall attempt in good faith to negotiate in
the interests of all such parties.
(iii) If at any time none of the conditions specified in Section
1(d)(ii)(B)(1) hereof is satisfied, the Collateral Agent shall have the right to
convert the Unlimited Standstill Period into a Limited Standstill Period, in
which case the Mill Owners' rights to enter into an Unlimited Standstill Period
shall terminate. If at any time any of the other conditions specified in Section
1(d)(ii)(A) or 1(d)(ii)(B) hereof is not satisfied, the Collateral Agent may
elect to terminate the Limited Standstill Period or the Unlimited Standstill
Period (as the case may be).
(iv) Upon termination (or, in the case of the Limited Standstill
Period, expiration) of the Limited Standstill Period or the Unlimited Standstill
Period (as the case may be), the New Owner may elect either to assume all of the
Contracts (other than obligations under any Contracts with respect to any Mill
Owner as to which a Mill Owner Event of Default has occurred and is continuing,
which the New Owner may either assume or not assume, at its option) or to
terminate all of the Contracts (other than, if the New Owner so elects, the
Lease, the Supplemental Lease and the Easement Deeds) and to dispose of the
Energy Complex in any manner that it chooses.
If the New Owner elects to assume the Contracts, the term of each Contract shall
be deemed to be extended by the term of the Limited Standstill Period if, at the
end of such Contract's term, any Original Debt is outstanding.
(v) The Borrower and the Collateral Agent acknowledge and agree that
(A) during the Limited Standstill Period or Unlimited Standstill Period, the
Mill Owners shall have the right and option to purchase the Energy Complex for a
purchase price equal to all outstanding principal and interest due and owing to
the Secured Parties in respect of the Original Debt outstanding and (B) at the
end of the initial term of the Lease, the Mill Owners shall have the right and
option to purchase the Energy Complex in accordance with Article 15 of the Lease
and, in each case, the Mill Owners shall acquire the Energy Complex free and
clear of all liens and encumbrances that at any time secured the repayment of
the Original Debt outstanding; provided that all Original Debt outstanding and
all other amounts payable to the Senior Secured Parties or the New Owner (as the
case may be) under the Contracts shall have been paid in full.
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(vi) Notwithstanding any provision in the Contracts or the arrangements
establishing the Mill Owner Maintenance Reserve Account to the contrary, the
Borrower agrees that in the event the Mill Owners are operating the Energy
Complex during the Limited Standstill Period or the Unlimited Standstill Period,
the Mill Owner Maintenance Reserve Account shall be available to the Mill Owners
(but not to the Collateral Agent) for the payment of operation, maintenance or
capital expenses.
(e) Termination/Transfer. (i) The Consenting
Party will not, without the prior written consent of the Collateral Agent, (A)
cancel or terminate any of the Contracts except as provided in the Contracts and
in accordance with Section 1(e)(ii) hereof, or consent to or accept any
cancellation or termination thereof by the Borrower, (B) sell, assign or
otherwise dispose of (by operation of law or otherwise) any part of its interest
in the Contracts, except as set forth in Article 15 of the Master Operating
Agreement, or (C) amend or modify the Contracts in any respect that may
reasonably be expected to have a material effect on the Borrower's rights or
obligations. The Consenting Party agrees to deliver duplicates or copies of all
(i) notices of default delivered under or pursuant to any of the Contracts to
the Collateral Agent promptly upon delivery thereof to the Borrower (and the
Consenting Party agrees that no such notice of default shall be effective until
received by Collateral Agent), and (ii) amendments to any of the Contracts that
in any respect may reasonably be expected to have a material effect on the
Borrower's rights or obligations (and the Consenting Party agrees that no such
amendment shall be effective until received by the Collateral Agent); provided,
that any failure by the Consenting Party to deliver to the Collateral Agent any
such duplicates or copies shall not subject the Consenting Party to any
liability whatsoever.
(ii) The Consenting Party will not terminate the Contracts or any of
its obligations thereunder on account of any default or breach of the Borrower
thereunder without (A) in the case of a default by the Borrower that is the
failure by the Borrower to pay amounts to the Consenting Party which are due and
payable under the Contracts, first providing to the Collateral Agent written
notice of such default and ninety (90) days from the date such notice is
delivered to the Collateral Agent to pay such amounts and (B) in the case of a
default that cannot be cured by the payment of money to the Consenting Party,
first providing to the Collateral Agent written notice of such default and a
reasonable opportunity (in any event at least ninety (90) days but no more than
one hundred eighty (180) days) to cure such breach or default so long as the
Collateral Agent or its designee shall have commenced to cure the breach or
default within such ninety-day period and thereafter diligently pursues such
cure to completion and continues to perform any monetary obligations of the
Borrower to the Consenting Party under the Contracts and all other obligations
of the Borrower under the Contracts are performed by the Borrower (or the
Collateral Agent on behalf of the Borrower) or with respect to any defaults that
are not susceptible of being cured by the Collateral Agent, to
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rectify to the Consenting Party's reasonable satisfaction the effect on the
Consenting Party of such default within such period. If possession of the Energy
Complex (by way of foreclosure proceedings or otherwise) is necessary to cure
such breach or default, the Collateral Agent or its successor, transferee or
assignee will be allowed a reasonable period to complete such proceedings or
otherwise accomplish such possession; provided, that in no event shall such
additional period exceed thirty (30) days. The Collateral Agent acknowledges and
agrees that during the foregoing time periods the Consenting Party shall be
entitled to exercise any set-off right which the Consenting Party may have
against the Borrower under the Contracts.
If the Collateral Agent or its successor, transferee or assignee is prohibited
by any court order or bankruptcy or insolvency proceedings from curing the
default or from commencing or prosecuting foreclosure proceedings, the foregoing
time periods shall be extended by the period of such prohibition. Subject to
Section 1(d) hereof, the Consenting Party consents to the transfer of the
Borrower's interest under the Contracts to the Collateral Agent for the benefit
of the Secured Parties or a purchaser or grantee at a foreclosure sale by
judicial or nonjudicial foreclosure and sale or by a conveyance by the Borrower
in lieu of foreclosure and agrees that upon such foreclosure, sale or
conveyance, the Consenting Party shall recognize the Collateral Agent or other
purchaser or grantee as the applicable party under the transferred Contracts
(provided that the Collateral Agent or such purchaser or grantee assumes the
obligations of the Borrower under the transferred Contracts as provided in
Section 1(d) hereof).
(f) Bankruptcy. In the event that any of the
Contracts is rejected by a trustee or debtor-in-possession in any bankruptcy or
insolvency proceeding, or if any of the Contracts is terminated for any reason
other than a default that could have been but was not cured by the Collateral
Agent as provided in Section 1(e)(ii) hereof, and if, within sixty (60) days
after such rejection or termination, the Collateral Agent or its successor,
transferee or assignee shall so request, the Consenting Party will execute and
deliver to the Collateral Agent or its successor, transferee or assignee for the
benefit of the Secured Parties a new Contract, which Contract shall be on
substantially the same terms and conditions as the original Contract for the
remaining term of the Contract before giving effect to such rejection or
termination (but in no event on less favorable terms and conditions as the
original Contract).
(g) Liability. (i) None of the Collateral Agent,
the Secured Parties or the holders of Bonds shall be liable for any of the
obligations or duties of the Borrower (including, without limitation, the
obligation to deliver title to the Energy Complex free of any lien upon the
exercise of a Repurchase Option (as defined in the Master Operating Agreement)
by the Consenting Party), unless and until the Collateral Agent or its successor
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expressly assumes the Contracts or any or all of such obligations
or duties.
(ii) In the event the Collateral Agent or its successor elects to
perform the Borrower's obligations under the Contracts or to enter into any new
Contract as provided in Section 1(d), 1(e)(ii) or 1(f) hereof, the Collateral
Agent, the Secured Parties and the holders of Bonds, and their successors, shall
have no liability to the Consenting Party for the performance of such
obligations, and the sole recourse of the Consenting Party in seeking the
enforcement of such obligations shall be to such parties' interest in the Energy
Complex.
(iii) It is expressly understood and agreed by the parties hereto that
this Consent has been executed by Bankers Trust (Delaware), not in its
individual capacity, but solely as Collateral Agent hereunder in the exercise of
the power and authority conferred and vested in it.
(h) Cure Duties; Assignment. In the event the
Collateral Agent or its successor, transferee or assignee succeeds to the
Borrower's interest under the Contracts, the Collateral Agent or its successor,
transferee or assignee shall cure any defaults of the Borrower existing under
the Contracts that are reasonably capable of being cured and, with respect to
any defaults that are not susceptible of being cured by the Collateral Agent,
shall rectify to the Consenting Party's reasonable satisfaction the effect on
the Consenting Party of such default within such period. The Collateral Agent
shall have the right to assign its interest in this Consent to any person or
entity to whom the Original Debt is transferred, provided such transferee
assumes the obligations of the Borrower (or the Collateral Agent, as the case
may be) under this Consent. Upon such assignment, the Collateral Agent and the
Secured Parties (including their agents and employees) shall be released from
any further liability under this Consent and the Contracts to the extent of the
interest assigned.
(i) Insurance Proceeds. The parties hereto
acknowledge and agree that the disposition of insurance proceeds with respect to
the Energy Complex is subject to the terms and conditions of Section 10.7 of the
Master Operating Agreement and this Section 1(i), and the Collateral Agent
acknowledges that the independent engineer under the Financing Documents shall
be required, if appropriate, to deliver to the Collateral Agent the certificate
contemplated by Section 3.10(c) of the Intercreditor Agreement (a copy of which
is attached as Exhibit A thereto), such certificate not to be unreasonably
withheld. Notwithstanding anything herein or in the Master Operating Agreement
to the contrary, the parties hereto acknowledge that until all Original Debt has
been paid in full, Casualty Proceeds and Eminent Domain Proceeds (each as
defined in the Intercreditor Agreement) will be disposed of pursuant to the
terms of Sections 3.10 and 6.2 of the Intercreditor Agreement, which provisions
shall not be amended,
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supplemented or otherwise modified, directly or indirectly, without the prior
written consent of the Consenting Party.
(j) Borrower Not to Cause Breach. The Borrower
hereby irrevocably waives any rights that it may have, including those arising
under any of the Contracts, to seek or compel the Consenting Party to act in a
manner that is inconsistent with this Consent while this Consent is in effect.
(k) Acknowledgment of Lien. The Consenting Party
hereby acknowledges that the Energy Complex is subject to the lien of the
Financing Documents. The Collateral Agent, the Secured Parties and the holders
of the Bonds have no obligation to release such lien until all obligations
secured thereby have been paid in full.
(l) Approval Rights; Additional Debt. The Borrower
and the Collateral Agent agree that they will not amend, modify, supplement or
provide waivers under the Financing Documents that would result in (A) the
scheduled annual debt service (as "debt service" is defined in Section 1(b)
hereof), except for principal payments under the Working Capital Facility, in
any year being greater than the scheduled annual debt service for such year as
set forth on Schedule I hereto, (B) the Working Capital Facility having terms
and conditions (including the maximum aggregate principal amount that can be
outstanding thereunder) inconsistent with those described in clause (a)(ii) of
the definition of "Permitted Indebtedness" contained in the Indenture (as such
definition is in effect as of the date hereof, provided that amendments to such
definition shall be permitted to reduce any payments of principal, interest or
other amount, that may be scheduled to become due in any month) or (C) any
modifications, direct or indirect, to the provisions of Sections 3.10 and 3.11
of the Intercreditor Agreement. This provision is not intended to apply to
consensual restructurings of Original Debt due to non-payment of Original Debt
that results in an accrual of past due scheduled annual debt service, and is not
intended to require the Collateral Agent or the Secured Parties to exercise
remedies. The Borrower agrees not to (and the Collateral Agent acknowledges that
the Borrower is not permitted to) (i) make, issue or cause to be suffered
secured Indebtedness that would result in the scheduled annual debt service in
any year, except for principal payments under the Working Capital Facility,
being greater than the scheduled annual debt service for such years as set forth
on Schedule I hereto, and (ii) issue unsecured Indebtedness that, when taken
together with all other Indebtedness, would exceed Original Debt in an amount
greater than $5,000,000 (in the aggregate) escalated at the rate of change in
the PPI. As a condition to the Borrower's issuance of any additional secured
Indebtedness, the Borrower shall cause the holder of any additional secured
Indebtedness to execute a counterpart of, or acknowledge to be bound by, this
Consent. "Indebtedness" shall mean at any date, without duplication, (a)(i) all
obligations of the Borrower for borrowed money, (ii) all obligations of the
Borrower evidenced by bonds, debentures, notes
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or other similar instruments, (iii) all obligations of the Borrower to pay the
deferred purchase price of property or services, except trade accounts payable
arising in the ordinary course of business and that mature not more than 180
days after the date originally incurred, (iv) the aggregate of all guarantee or
purchase obligations of the Borrower with respect to capital stock of any
person, including any capital stock of a consolidated subsidiary that is
required to be shown as a liability on a balance sheet of the Borrower, (v) the
aggregate of all redeemable shares of common or preferred stock of the Borrower,
(vi) all obligations of the Borrower, whether direct or contingent, matured or
unmatured, to reimburse banks in respect of drawings made under letters of
credit that are issued to secure or provide for the payment of Indebtedness of
the Borrower, (vii) foreign currency exchanges, (viii) currency and interest
rate swaps and similar derivatives, and (ix) commodities hedges and (b) in each
case to the extent, and only to the extent, such obligations (or the Borrower's
liability with respect thereto) are required to be shown as a liability on a
consolidated balance sheet of the Borrower prepared as of such date, (i) all
obligations of the Borrower as lessee under capital leases, (ii) all
Indebtedness of others secured by a lien on any asset of the Borrower, whether
or not such Indebtedness is assumed by the Borrower, and (iii) all Indebtedness
of others guaranteed by the Borrower. "Indebtedness" shall not include (i)
purchase money notes secured by equipment (but otherwise non-recourse to the
Borrower's other properties) that is not material to the operations of the
Energy Complex, (ii) financial instruments that could not reasonably be expected
to have a material adverse effect on the Borrower and (iii) the Borrower's
obligations (if any) in respect of the 1994 Bonds, the 1984 Taxable Lease
Agreement, the 1973 Tax- Exempt Lease Agreement and the 1976 Tax-Exempt Lease
Agreement, except for any refinancing by the Borrower of any such obligation.
(m) The Collateral Agent hereby acknowledges that
it has no lien on the Mill Owner Maintenance Reserve Account established
pursuant to the Mill Owner Maintenance Reserve Account Agreement dated as of
August 1, 1995 among the Borrower, Southern, S.D. Warren (in its capacity as the
owner and operator of the Paper Mill) and Scott (in its capacity as the owner
and operator of the Tissue Mill and the Pulp Mill) or any amounts on deposit
therein.
(n) Mill Owner Payment Default Cure Right. The
Mill Owners shall be entitled to cure any payment defaults of the Borrower under
and strictly in accordance with the terms of the Borrower's cure rights under
the Financing Documents. The Collateral Agent agrees to deliver to the Mill
Owners duplicates or copies of all notices of payment default delivered under or
pursuant to any of the Financing Documents to the Borrower, and the Collateral
Agent agrees that no notice of payment default shall be effective until received
by the Mill Owners; provided, that any failure by the Collateral Agent to
deliver to the Mill Owners any such duplicates or copies shall not subject the
Collateral Agent to any liability whatsoever; and provided, further, that the
Mill Owners shall be entitled to reimbursement for any amounts paid
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thereby to cure any payment default to the extent that such reimbursement is
made from funds that otherwise are permitted to be distributed to the equity
holders of the Borrower under the Financing Documents. The Borrower agrees to
provide each of the Mill Owners with one copy of the Financing Documents
(including any amendments or modifications thereto), as well as copies of all
notices of default from the Secured Parties, all material notices to bondholders
(including notices from the Secured Parties to the bondholders) and copies of
all financial statements provided to the Secured Parties.
(o) The Borrower hereby acknowledges and agrees to
the terms and conditions set forth in this Consent, and agrees that to the
extent any of the terms and conditions set forth herein are inconsistent with
the terms and conditions of the Project Documents, the terms and conditions of
this Consent shall control.
2. The Consenting Party hereby represents and warrants
that:
(a) The Consenting Party is a corporation duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Pennsylvania. The execution, delivery and performance by the
Consenting Party of the Contracts and this Consent have been duly authorized by
all necessary corporate action, and do not and will not require any further
consents or approvals which have not been obtained, or violate any provision of
the corporate charter or by-laws of the Consenting Party or any law, regulation,
order, judgment, injunction or similar matters or breach any agreement presently
in effect with respect to or binding on the Consenting Party or its properties
or result in, or require, the creation or imposition of any mortgage, deed of
trust, pledge, lien, security interest, charge or encumbrance of any nature that
could adversely affect the Consenting Party's ability to perform its obligations
under the Contracts or this Consent;
(b) This Consent and the Contracts have been duly
executed and delivered and are legal, valid and binding obligations of the
Consenting Party enforceable against the Consenting Party in accordance with
their respective terms, except as such enforceability may be limited by (i)
bankruptcy, insolvency, reorganization, moratorium or similar laws of general
applicability affecting the enforcement of creditors' rights, and (ii) the
application of general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law);
(c) As of the date hereof, the Contracts are in
full force and effect and, except as described in Recital D above, have not been
amended, supplemented or otherwise modified, other than such amendments,
supplements and modifications as may have been agreed to by the Site Operating
Committee that do not materially affect the obligations of the Consenting Party
under the Contracts; and
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(d) Neither senior management of the Consenting
Party, nor the Paper Mill SOC Representative has actual knowledge of any facts
that would allow the Consenting Party to terminate this Consent or the
Contracts, and the Consenting Party has no present intention to deliver a notice
of default or a notice of termination thereunder; the consummation of any
transaction contemplated by this Consent to take place on the date hereof would
not allow the Consenting Party to terminate this Consent or the Contracts.
(e) The Consenting Party has no actual notice of
any assignment of any Contract (other than the assignment referred to in Recital
E above and the assignment contemplated by this Consent).
(f) The Consenting Party has not assigned,
transferred or hypothecated the Contracts or any interest therein.
3. All notices required or permitted hereunder shall be in
writing and shall be effective (a) upon receipt if hand delivered, (b) upon
telephonic verification of receipt if sent by telefacsimile and (c) if otherwise
delivered, upon the earlier of receipt or two (2) business days after being sent
by registered or certified mail, return receipt requested, with proper postage
affixed thereto, or by private courier or delivery service with charges prepaid,
and addressed as specified below:
If to the Consenting Party:
Attention:
S.D. Warren Company
225 Franklin Street
Boston, Massachusetts 02111
Telecopy No.: (617) 423-5451
Telephone No.: ________________
If to the Collateral Agent:
Attention:
Bankers Trust (Delaware)
c/o Bankers Trust Company
Four Albany Street, 4th Floor
New York, New York 10006
Telecopy No.: 212-250-6961
Telephone No.: 212-250-6826
If to the Borrower:
Attention:
Mobile Energy Services Company, L.L.C.
900 Ashwood Parkway, Suite 300
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<PAGE>
Atlanta, Georgia 30338
Telecopy No.: 770-673-7781
Telephone No.: 770-392-7644
with a copy to:
Mobile Energy Services Company, L.L.C.
P.O. Box 2747
200 Bay Bridge Road
Mobile, Alabama 36652
Telecopy No.: 334-452-6337
Telephone No.: 334-330-3600
4. This Consent shall be binding upon and benefit the
successors and assigns of the Consenting Party, the Borrower, the Collateral
Agent, the Secured Parties and their respective successors, transferees and
assigns (including, without limitation, any entity that refinances all or any
portion of the obligations under the Financing Documents and that, if required
by Section 1(l) hereof, countersigns this Consent). The Consenting Party agrees
to confirm such continuing obligation in writing upon the reasonable request of
the Borrower, the Collateral Agent, the Secured Parties or any of their
respective successors, transferees or assigns. No termination, amendment,
variation or waiver of any provisions of this Consent shall be effective unless
in writing and signed by the Consenting Party, the Collateral Agent and, in the
case of a termination, amendment, variation, or waiver sought prior to a Trigger
Event, the Borrower. This Consent shall be governed by the laws of the State of
New York, without reference to principles of conflict of laws (other than
Section 5-1401 of the New York General Obligations Law).
5. If any term or provision hereof is declared by a court of
competent jurisdiction to be illegal, invalid or unenforceable for any reason
whatsoever, such illegality, invalidity or unenforceability shall not affect the
other terms and provisions hereof, which shall remain binding and enforceable,
and to the extent possible, all of such other provisions shall remain in full
force and effect.
6. This Consent may be executed in one or more duplicate
counterparts, and when executed and delivered by all the parties listed below,
shall constitute a single binding agreement.
7. Subject to the following Section 8, this Consent shall be
deemed to be terminated and of no further force and effect when the Consenting
Party receives written notice from the Borrower and the Collateral Agent stating
that no Original Debt is outstanding and all amounts owing to the Secured
Parties in respect of the Original Debt (including, without limitation,
principal, interest, fees and reimbursement obligations, whether upon maturity,
acceleration or otherwise) have been paid in full; provided, however, that the
obligations of the Borrower to provide the Consenting Party with copies of the
Borrower's financial
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<PAGE>
statements as required under Section 1(n) shall survive the termination of this
Consent.
8. If at any time any payment in respect of Original Debt is
rescinded or must otherwise be restored or returned by the holder of such
Original Debt in connection with any bankruptcy, insolvency or other similar or
related proceeding, or upon or as a result of the appointment of a receiver,
intervenor or conservator of, or trustee or similar officer for, the Borrower or
any substantial part of the Borrower's property, the rights and obligations of
the holder of such Original Debt under this Consent shall continue to be
effective, or be reinstated as of the time such payment in respect of Original
Debt is so rescinded or must otherwise be restored, as the case may be, all as
though such payment had not been made.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto by their officers
thereunto duly authorized, have duly executed this Consent as of the date set
forth below.
Dated as of: August 1, 1995
S.D. WARREN COMPANY, a Pennsylvania
corporation, in its capacity as
Paper Mill Owner
By: /s/
Name: Trevor L. Larkan
Title: Vice President and
Chief Financial Officer
BANKERS TRUST (DELAWARE), a Delaware
banking corporation, as Collateral
Agent
By: /s/
Name: James H. Stallkamp
Title: President
MOBILE ENERGY SERVICES COMPANY,
L.L.C., an Alabama limited liability
company, as Borrower
By: /s/
Name: Christopher J. Kysar
Title: Vice President
ACKNOWLEDGED:
MOBILE ENERGY SERVICES HOLDINGS, INC.,
an Alabama corporation
By: /s/
Name: Christopher J. Kysar
Title: Vice President
<PAGE>
SCHEDULE I
Total Debt Service
(in thousands)
1995 40,500
1996 40,500
1997 40,000
1998 40,000
1999 39,500
2000 39,000
2001 38,500
2002 38,000
2003 37,500
2004 37,000
2005 36,500
2006 36,000
2007 35,500
2008 35,000
2009 34,500
2010 34,000
2011 33,500
2012 33,000
2013 32,500
2014 32,000
2015 31,500
2016 31,500
2017 35,000
2018 35,000
2019 through
January 3, 2020 35,000
thereafter 0
Exhibit 10.45
CONSENT AND AGREEMENT
THIS CONSENT AND AGREEMENT (this "Consent"), dated as of
August 1, 1995, is executed by SCOTT PAPER COMPANY, a Pennsylvania corporation
(the "Consenting Party"), in its capacity as Pulp Mill Owner, MOBILE ENERGY
SERVICES COMPANY, L.L.C., an Alabama limited liability company (the
"Borrower")(which is an indirect wholly-owned subsidiary of The Southern
Company, a Delaware corporation ("Southern")), and BANKERS TRUST (DELAWARE), a
Delaware banking corporation, as Collateral Agent for the Secured Parties (as
hereinafter defined) (the "Collateral Agent").
A. The Borrower, Mobile Energy Services Holdings, Inc.
(formerly known as Mobile Energy Services Company, Inc.), an Alabama corporation
("Mobile Energy"), and First Union National Bank of Georgia, as trustee (in such
capacity, the "Taxable Trustee"), have entered into a Trust Indenture dated as
of August 1, 1995 (the "Taxable Indenture"), pursuant to which the Borrower (i)
is issuing its First Mortgage Bonds (the "Taxable Bonds"), the proceeds of which
will be used to (among other things) repay to Southern a portion of the amounts
advanced to pay certain costs associated with the acquisition of the Energy
Complex (as defined in the Master Operating Agreement (as hereinafter defined))
and (ii) may, from time to time, issue additional Senior Debt (as defined in the
Taxable Indenture).
B. The Borrower, Mobile Energy and The Industrial Development
Board of the City of Mobile, Alabama (the "Board") have entered into an Amended
and Restated Lease and Agreement dated as of August 1, 1995 with respect to part
of the Energy Complex, relating to The Industrial Development Board of the City
of Mobile, Alabama Solid Waste Revenue Refunding Bonds (Mobile Energy Services
Company, L.L.C. Project), Series 1995A (the "Tax-Exempt Bonds" and, together
with the Taxable Bonds, the "Bonds") to be issued for the benefit of the
Borrower pursuant to an Amended and Restated Indenture dated as of August 1,
1995 (the "Tax-Exempt Indenture" and, together with the Taxable Indenture, the
"Indentures") between the Board and First Union National Bank of Georgia, as
trustee (in such capacity, the "Tax-Exempt Trustee"). The proceeds of the Tax-
Exempt Bonds will be used to refinance the 1984 Tax-Exempt Bonds and to pay for
certain other costs.
C. The Borrower and Banque Paribas (together with any lender
that is or becomes a provider of the Working Capital Facility (as hereinafter
defined), the "Working Capital Facility Provider" and, together with the Taxable
Trustee and the Tax-Exempt Trustee, the "Secured Parties") have entered into a
Revolving Credit Facility dated as of August 1, 1995 and together with any
replacement working capital facility, the "Working Capital
<PAGE>
Facility"), borrowings under which will be used to finance certain working
capital requirements of the Borrower.
D. The Consenting Party and Mobile Energy have entered into
(i) that certain Amended and Restated Master Operating Agreement dated as of
July 13, 1995 and effective as of December 12, 1994 (the "Master Operating
Agreement"); (ii) that certain Pulp Mill Energy Services Agreement dated as of
December 12, 1994 (as amended by the First Amendment thereto dated as of July
13, 1995); (iii) that certain Pulp Mill Environmental Indemnity Agreement (as
amended by the First Amendment thereto dated as of July 13, 1995); (iv) that
certain Water Procurement and Effluent Service Agreement dated as of December
12, 1994 (as amended by the First Amendment thereto dated as of July 13, 1995);
(v) that certain Boiler Ash Disposal Agreement dated as of December 12, 1995 (as
amended by the First Amendment thereto dated as of July 13, 1995); and (vi)
those certain Easement Deeds to which the Consenting Party is a party dated as
of December 12, 1994 (collectively, as the same may be amended, waived or
otherwise modified, the "Contracts").
E. Pursuant to an Omnibus Deed, Bill of Sale, General
Assignment and Conveyance Agreement between Mobile Energy and the Borrower dated
as of July 14, 1995, Mobile Energy has assigned to the Borrower, and the
Borrower has assumed, all of Mobile Energy's rights and obligations under the
Contracts.
F. The Collateral Agent has been granted a security interest
in the Contracts and the Energy Complex for the benefit of the Secured Parties
pursuant to an Intercreditor and Collateral Agency Agreement dated as of August
1, 1995 by and among the Secured Parties, the Board, the Collateral Agent, the
Borrower and Mobile Energy (as the same may be amended, supplemented, waived or
otherwise modified, the "Intercreditor Agreement") and the other Financing
Documents (as defined in the Master Operating Agreement).
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. The Consenting Party acknowledges the assignments referred
to in Recitals E and F above and hereby irrevocably consents to such
assignments, and each of the parties hereto agrees as follows:
(a) Definitions; Rules of Interpretation. Unless
otherwise defined herein, all terms used in this Consent shall have the meanings
given in Exhibit A to the Master Operating Agreement. Except as otherwise
expressly provided herein, the rules of interpretation set forth in said Exhibit
A shall apply to this Consent. The parties hereto acknowledge that the
Collateral Agent, acting on behalf of the Secured Parties, is a "Lender" within
the meaning of the Master Operating Agreement, and that, without the consent of
the parties hereto, no other Person (other than a secured Lender who executes a
counterpart of, or acknowledges to be bound by, this Consent) shall be deemed a
Lender under the
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<PAGE>
Contracts. Any such Lenders shall coordinate so as not to give any
conflicting instructions or demands to the Consenting Party.
(b) Step-In Rights. The Mill Owners shall have the
right to exercise the Mill Owner Step-In Rights in accordance with Section
11.4(a)(ii) of the Master Operating Agreement. The Collateral Agent acknowledges
that (A) the Mill Owner Step-In Rights give the Mill Owners the right, under the
circumstances set forth in Section 11.4(a)(ii) of the Master Operating
Agreement, to, among other things, take possession of or obtain entry to the
Energy Complex and to assume and exercise operational control of the Energy
Complex and (B) in so assuming or exercising operational control of the Energy
Complex, the Mill Owners may exclude the Collateral Agent from assuming or
exercising operational control of the Energy Complex until such time as the
Collateral Agent shall have foreclosed upon the Energy Complex, subject to
Section 1(d) hereof.
The parties hereto agree that if the Mill Owners continue to exercise the Mill
Owner Step-In Rights at the end of the initial term of the Contracts, the
Borrower may not exercise the renewal term for the Contracts, provided that, if
the Mill Owners desire to continue their Mill Owner Step-in Rights, and if there
is any Original Debt (as hereinafter defined) outstanding under the Financing
Documents at the end of such initial term, a Master Operating Agreement Renewal
Term shall be deemed to be exercised, which such renewal term shall terminate on
the earlier of the expiration of such Master Operating Agreement Renewal Term
and the date no Original Debt remains outstanding without prejudice to the Mill
Owners' rights to terminate the Mill Owner Step-In Rights at any time pursuant
to the terms of the Contracts and to terminate or allow the Contracts to expire
in accordance with their terms (subject to the provisions of Section 1(e)
hereof). If at any time on or after December 16, 2019 the Mill Owners are
exercising the Mill Owner Step-In Rights at the time all Original Debt
outstanding has been repaid, the Mill Owners may, at the option of the Mill
Owners exercised in their sole and absolute discretion, elect to acquire all of
the Borrower's right, title and interest in and to the Energy Complex by written
notice delivered to the Borrower and the Lender, provided that in the event any
of the Mill Owners exercises the foregoing option, the Borrower and the
Collateral Agent shall execute and deliver all agreements, instruments and other
documents, and shall take or cause to be taken such other actions as required
under applicable law, as shall be necessary to assign and transfer all of the
Borrower's right, title and interest in and to the Energy Complex to the
Consenting Party; and provided, further, that such option shall expire, if not
theretofore exercised, immediately upon the cessation of such Mill Owner Step-
In Rights. "Original Debt" shall mean all Indebtedness (as defined in Section
1(l) hereof) the aggregate scheduled annual debt service for which in any year
does not exceed that set forth on Schedule I hereto. Without limiting the
foregoing, "Original Debt" shall include Indebtedness outstanding from time to
time under the Working Capital Facility complying with clause (b) of Section
1(l)
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<PAGE>
hereof, provided that the limitations contained in the preceding sentence
regarding scheduled annual debt service on Original Debt not exceeding the
amount set forth on Schedule I hereto shall be determined without regard to
principal payments under the Working Capital Facility. For purposes hereof,
"debt service" means payments of principal, interest and other payments, costs,
fees and expenses under any Indebtedness.
Nothing in this Section 1(b) shall be deemed to limit or restrict any of the
other rights and remedies available to the Collateral Agent under the Financing
Documents (subject to the other terms and provisions hereof) and no provision of
any of the Financing Documents shall be deemed to limit or restrict any of the
other rights and remedies of the Consenting Party hereunder (subject to the
other terms and provisions hereof).
Notwithstanding any provision to the contrary set forth herein, the failure to
exercise any Mill Owner Step-In Rights shall not act as a waiver or release of
such Mill Owner Step-In Rights and the termination of the exercise of any Mill
Owner Step-In Rights shall not act as a waiver or release of any other Mill
Owner Step-In Rights that may arise after such termination; provided that no
provision in this Consent shall be deemed to permit the Mill Owners, upon
termination of Mill Owner Step-In Rights with respect to any Energy Complex
Triggering Event, to elect to exercise Mill Owner Step-In Rights with respect to
any Energy Complex Triggering Event that was in existence and of which the Mill
Owners were aware at the time of such termination, or otherwise to increase the
availability or scope of Mill Owner Step-In Rights beyond that specified in the
Master Operating Agreement and the other Contracts.
(c) Cure Rights and Payments. Subject to Section
1(b) hereof, the Collateral Agent shall be entitled to exercise all rights and
to cure any defaults of the Borrower under and strictly in accordance with the
terms of the Contracts (or as otherwise expressly provided in this Consent), and
the Consenting Party agrees to permit and accept such exercise and cure by the
Collateral Agent in accordance with their terms except as expressly provided
herein. The Consenting Party agrees to render all payments due by it to the
Borrower under the Contracts directly to the Collateral Agent, c/o Bankers Trust
Company, for deposit into the Borrower's Account No. 15351 maintained with
Bankers Trust Company, or to such other person and/or at such other address as
the Collateral Agent may from time to time specify in writing to the Consenting
Party. Upon receipt by the Consenting Party of notice from the Collateral Agent
that a Trigger Event (as defined in the Intercreditor Agreement as in effect on
the date hereof) has occurred, the Consenting Party agrees, subject to Section
1(b) hereof, to render all performance due by it under the Contracts and this
Consent to the Collateral Agent for the benefit of the Secured Parties. The
Borrower hereby acknowledges and agrees that payments made by the Consenting
Party to the Collateral Agent in accordance with the Collateral Agent's
directions pursuant to this Section
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<PAGE>
1(c) and performance to the Collateral Agent shall satisfy the Consenting
Party's obligations to make payments or to perform such obligations (as the case
may be) to the Borrower in accordance with the Contracts, and shall relieve the
Consenting Party of all liability with respect to such payments or performance.
During the term of this Consent, the Borrower hereby waives any right it may
have to require that payments be made or performance be rendered in any manner
other than the manner designated by the Collateral Agent pursuant to this
Section 1(c).
(d) Foreclosure. (i) The Collateral Agent shall
not commence foreclosure proceedings upon the Energy Complex or the Contracts
without first providing the Consenting Party with fifteen (15) days advance
written notice thereof. Contemporaneously with or immediately following such
foreclosure upon the Contracts, the Collateral Agent shall notify the Consenting
Party that the Collateral Agent or a purchaser (either such person, in such
circumstance, constituting a "New Owner") has succeeded to the Borrower's
interest under the Contracts pursuant to documentation satisfactory to the
Consenting Party and the New Owner. At the time of foreclosure, the Collateral
Agent shall not make an assignment of the Contracts to a third party unless (i)
such third party assumes liability for all of the Borrower's and the Collateral
Agent's (as the case may be) obligations under the Contracts (including the
obligation to continue operation of the Energy Complex in accordance with the
terms of the Contracts) (provided that the New Owner need not assume obligations
under any Contract with respect to any Mill Owner as to which a Mill Owner Event
of Default has occurred and is continuing) pursuant to documentation
satisfactory to the Consenting Party in form and substance and (ii) such third
party is a Qualified Purchaser and has substantial expertise (or is controlled
or managed by, or has retained as an operator of the Energy Complex, a person
with substantial expertise) in operating and managing facilities similar to the
Energy Complex and there is a reasonable basis to conclude that the operations
at the Energy Complex will be conducted in accordance with Prudent Plant
Operating Standards following such assignment.
(ii) If the Collateral Agent determines that it wishes to foreclose
upon (or accept title in lieu of foreclosure to) the Energy Complex, the Lease,
the Supplementary Lease and the Easement Deeds but not to foreclose upon (or
accept title in lieu of foreclosure to) all of the other Contracts (other than
Contracts as to which a Mill Owner Event of Default has occurred and is
continuing), the Collateral Agent shall provide written notice to the Mill
Owners of such determination. The Mill Owners may elect by written notice to the
Collateral Agent within thirty (30) days of receipt of the foregoing notice (or
on the date that the Collateral Agent obtains title to the Energy Complex, if
later) to take possession of and operate the Energy Complex:
(A) for a period of up to eighteen months,
commencing on the date of receipt by the Collateral Agent of
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<PAGE>
the Mill Owners' written notice of election (the "Limited Standstill
Period"), provided that, and for so long as, (1) during the Limited
Standstill Period, the Master Operating Agreement and the other
Contracts shall remain in effect and the Mill Owners shall operate the
Energy Complex in compliance with the standards set forth in the
Contracts applicable to the Mill Owner Step-In Rights (or, if the
Energy Complex is not operable, the Mill Owners shall use their good
faith efforts to restore the Energy Complex to operability) and no
Liquidated Damages shall be payable and (2) the Mill Owners and the
Collateral Agent shall attempt in good faith to negotiate in the
interests of all such parties; or
(B) for an unlimited period, commencing on the date
of receipt by the Collateral Agent of the Mill Owners' written notice
of election (the "Unlimited Standstill Period"), provided that, and for
so long as, (1) any of (a) the second Demand Anniversary Date has not
occurred, (b) the annualized Demand Charge for the then current Demand
Period is set at a level equal to or greater than 77% of the Demand
Charge during the First Contract Year (the "Minimum Demand Charge") or
(c) if the provisions of clause (b) are not satisfied, the Mill Owners
commit to pay the Collateral Agent during the then current Demand
Period all amounts payable under the Contracts and agree that the
Demand Charge for the then current Demand Period shall be deemed to
equal the Minimum Demand Charge, (2) during the Unlimited Standstill
Period, the Master Operating Agreement and the other Contracts shall
remain in effect, and the Mill Owners shall operate the Energy Complex
in compliance with the standards set forth in the Contracts applicable
to the Mill Owner Step-In Rights and shall comply with all obligations
of the Mill Owners under the Contracts (including, without limitation,
the obligation to pay Demand Charges, subject to Demand Charge
Reductions), except that (i) all liabilities incurred in connection
with the operation of the Energy Complex during the Unlimited
Standstill Period (excluding debt service on the Original Debt
outstanding, but including, without limitation, rent, real estate taxes
and similar impositions that are otherwise payable by the lessee under
the Lease and the Supplementary Lease, operation and maintenance
expenses and capital expenditures, and all amounts payable to the Mill
Owners in reimbursement thereof) shall be expressly subordinated and
junior in right of payment to the payment of scheduled debt service on
Original Debt outstanding; (ii) except as provided in clause (iv) of
Section 1(d)(ii)(B)(2) hereof, no rights of set-off, counterclaim,
deduction or defense of any kind shall be exercised or asserted against
the Demand Charges and other amounts payable to the Collateral Agent
under the Contracts or payment thereof; (iii) no Liquidated Damages
shall be payable; and (iv) all amounts payable by the Mill Owners under
the Contracts in excess of the sum of (w) scheduled debt service on the
Original Debt outstanding, (x) operation and maintenance expenses, (y)
capital expenditures and (z) amounts
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<PAGE>
otherwise payable to the Mill Owners pursuant to rights of set-off,
counterclaim, deduction or defense, shall be applied to redemption of
the Original Debt outstanding, which shall be redeemed in accordance
with the terms thereof to the extent of such available funds, and (3)
the Mill Owners and the Collateral Agent shall attempt in good faith to
negotiate in the interests of all such parties.
(iii) If at any time none of the conditions specified in Section
1(d)(ii)(B)(1) hereof is satisfied, the Collateral Agent shall have the right to
convert the Unlimited Standstill Period into a Limited Standstill Period, in
which case the Mill Owners' rights to enter into an Unlimited Standstill Period
shall terminate. If at any time any of the other conditions specified in Section
1(d)(ii)(A) or 1(d)(ii)(B) hereof is not satisfied, the Collateral Agent may
elect to terminate the Limited Standstill Period or the Unlimited Standstill
Period (as the case may be).
(iv) Upon termination (or, in the case of the Limited Standstill
Period, expiration) of the Limited Standstill Period or the Unlimited Standstill
Period (as the case may be), the New Owner may elect either to assume all of the
Contracts (other than obligations under any Contracts with respect to any Mill
Owner as to which a Mill Owner Event of Default has occurred and is continuing,
which the New Owner may either assume or not assume, at its option) or to
terminate all of the Contracts (other than, if the New Owner so elects, the
Lease, the Supplemental Lease and the Easement Deeds) and to dispose of the
Energy Complex in any manner that it chooses.
If the New Owner elects to assume the Contracts, the term of each Contract shall
be deemed to be extended by the term of the Limited Standstill Period if, at the
end of such Contract's term, any Original Debt is outstanding.
(v) The Borrower and the Collateral Agent acknowledge and agree that
(A) during the Limited Standstill Period or Unlimited Standstill Period, the
Mill Owners shall have the right and option to purchase the Energy Complex for a
purchase price equal to all outstanding principal and interest due and owing to
the Secured Parties in respect of the Original Debt outstanding and (B) at the
end of the initial term of the Lease, the Mill Owners shall have the right and
option to purchase the Energy Complex in accordance with Article 15 of the Lease
and, in each case, the Mill Owners shall acquire the Energy Complex free and
clear of all liens and encumbrances that at any time secured the repayment of
the Original Debt outstanding; provided that all Original Debt outstanding and
all other amounts payable to the Senior Secured Parties or the New Owner (as the
case may be) under the Contracts shall have been paid in full.
(vi) Notwithstanding any provision in the Contracts or the arrangements
establishing the Mill Owner Maintenance Reserve Account to the contrary, the
Borrower agrees that in the event the
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<PAGE>
Mill Owners are operating the Energy Complex during the Limited Standstill
Period or the Unlimited Standstill Period, the Mill Owner Maintenance Reserve
Account shall be available to the Mill Owners (but not to the Collateral Agent)
for the payment of operation, maintenance or capital expenses.
(e) Termination/Transfer. (i) The Consenting Party
will not, without the prior written consent of the Collateral Agent, (A) cancel
or terminate any of the Contracts except as provided in the Contracts and in
accordance with Section 1(e)(ii) hereof, or consent to or accept any
cancellation or termination thereof by the Borrower, (B) sell, assign or
otherwise dispose of (by operation of law or otherwise) any part of its interest
in the Contracts, except as set forth in Article 15 of the Master Operating
Agreement, or (C) amend or modify the Contracts in any respect that may
reasonably be expected to have a material effect on the Borrower's rights or
obligations. The Consenting Party agrees to deliver duplicates or copies of all
(i) notices of default delivered under or pursuant to any of the Contracts to
the Collateral Agent promptly upon delivery thereof to the Borrower (and the
Consenting Party agrees that no such notice of default shall be effective until
received by Collateral Agent), and (ii) amendments to any of the Contracts that
in any respect may reasonably be expected to have a material effect on the
Borrower's rights or obligations (and the Consenting Party agrees that no such
amendment shall be effective until received by the Collateral Agent), provided,
that any failure by the Consenting Party to deliver to the Collateral Agent any
such duplicates or copies shall not subject the Consenting Party to any
liability whatsoever.
(ii) The Consenting Party will not terminate the Contracts or any of
its obligations thereunder on account of any default or breach of the Borrower
thereunder without (A) in the case of a default by the Borrower that is the
failure by the Borrower to pay amounts to the Consenting Party which are due and
payable under the Contracts, first providing to the Collateral Agent written
notice of such default and ninety (90) days from the date such notice is
delivered to the Collateral Agent to pay such amounts and (B) in the case of a
default that cannot be cured by the payment of money to the Consenting Party,
first providing to the Collateral Agent written notice of such default and a
reasonable opportunity (in any event at least ninety (90) days but no more than
one hundred eighty (180) days) to cure such breach or default so long as the
Collateral Agent or its designee shall have commenced to cure the breach or
default within such ninety-day period and thereafter diligently pursues such
cure to completion and continues to perform any monetary obligations of the
Borrower to the Consenting Party under the Contracts and all other obligations
of the Borrower under the Contracts are performed by the Borrower (or the
Collateral Agent on behalf of the Borrower) or with respect to any defaults that
are not susceptible of being cured by the Collateral Agent, to rectify to the
Consenting Party's reasonable satisfaction the effect on the Consenting Party of
such default within such period. If possession of the Energy Complex (by way of
foreclosure
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<PAGE>
proceedings or otherwise) is necessary to cure such breach or default, the
Collateral Agent or its successor, transferee or assignee will be allowed a
reasonable period to complete such proceedings or otherwise accomplish such
possession, provided, that in no event shall such additional period exceed
thirty (30) days. The Collateral Agent acknowledges and agrees that during the
foregoing time periods the Consenting Party shall be entitled to exercise any
set-off right which the Consenting Party may have against the Borrower under the
Contracts.
If the Collateral Agent or its successor, transferee or assignee is prohibited
by any court order or bankruptcy or insolvency proceedings from curing the
default or from commencing or prosecuting foreclosure proceedings, the foregoing
time periods shall be extended by the period of such prohibition. Subject to
Section 1(d) hereof, the Consenting Party consents to the transfer of the
Borrower's interest under the Contracts to the Collateral Agent for the benefit
of the Secured Parties or a purchaser or grantee at a foreclosure sale by
judicial or nonjudicial foreclosure and sale or by a conveyance by the Borrower
in lieu of foreclosure and agrees that upon such foreclosure, sale or
conveyance, the Consenting Party shall recognize the Collateral Agent or other
purchaser or grantee as the applicable party under the transferred Contracts
(provided that the Collateral Agent or such purchaser or grantee assumes the
obligations of the Borrower under the transferred Contracts as provided in
Section 1(d) hereof).
(f) Bankruptcy. In the event that any of the
Contracts is rejected by a trustee or debtor-in-possession in any bankruptcy or
insolvency proceeding, or if any of the Contracts is terminated for any reason
other than a default that could have been but was not cured by the Collateral
Agent as provided in Section 1(e)(ii) hereof, and if, within sixty (60) days
after such rejection or termination, the Collateral Agent or its successor,
transferee or assignee shall so request, the Consenting Party will execute and
deliver to the Collateral Agent or its successor, transferee or assignee for the
benefit of the Secured Parties a new Contract, which Contract shall be on
substantially the same terms and conditions as the original Contract for the
remaining term of the Contract before giving effect to such rejection or
termination (but in no event on less favorable terms and conditions as the
original Contract).
(g) Liability. (i) None of the Collateral Agent,
the Secured Parties or the holders of Bonds shall be liable for any of the
obligations or duties of the Borrower (including, without limitation, the
obligation to deliver title to the Energy Complex free of any lien upon the
exercise of a Repurchase Option (as defined in the Master Operating Agreement)
by the Consenting Party), unless and until the Collateral Agent or its successor
expressly assumes the Contracts or any or all of such obligations or duties.
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(ii) In the event the Collateral Agent or its successor elects to
perform the Borrower's obligations under the Contracts or to enter into any new
Contract as provided in Section 1(d), 1(e)(ii) or 1(f) hereof, the Collateral
Agent, the Secured Parties and the holders of Bonds, and their successors, shall
have no liability to the Consenting Party for the performance of such
obligations, and the sole recourse of the Consenting Party in seeking the
enforcement of such obligations shall be to such parties' interest in the Energy
Complex.
(iii) It is expressly understood and agreed by the parties hereto that
this Consent has been executed by Bankers Trust (Delaware), not in its
individual capacity, but solely as Collateral Agent hereunder in the exercise of
the power and authority conferred and vested in it.
(h) Cure Duties; Assignment. In the event the
Collateral Agent or its successor, transferee or assignee succeeds to the
Borrower's interest under the Contracts, the Collateral Agent or its successor,
transferee or assignee shall cure any defaults of the Borrower existing under
the Contracts that are reasonably capable of being cured and, with respect to
any defaults that are not susceptible of being cured by the Collateral Agent,
shall rectify to the Consenting Party's reasonable satisfaction the effect on
the Consenting Party of such default within such period. The Collateral Agent
shall have the right to assign its interest in this Consent to any person or
entity to whom the Original Debt is transferred, provided such transferee
assumes the obligations of the Borrower (or the Collateral Agent, as the case
may be) under this Consent. Upon such assignment, the Collateral Agent and the
Secured Parties (including their agents and employees) shall be released from
any further liability under this Consent and the Contracts to the extent of the
interest assigned.
(i) Insurance Proceeds. The parties hereto
acknowledge and agree that the disposition of insurance proceeds with respect to
the Energy Complex is subject to the terms and conditions of Section 10.7 of the
Master Operating Agreement and this Section 1(i), and the Collateral Agent
acknowledges that the independent engineer under the Financing Documents shall
be required, if appropriate, to deliver to the Collateral Agent the certificate
contemplated by Section 3.10(c) of the Intercreditor Agreement (a copy of which
is attached as Exhibit A thereto), such certificate not to be unreasonably
withheld. Notwithstanding anything herein or in the Master Operating Agreement
to the contrary, the parties hereto acknowledge that until all Original Debt has
been paid in full, Casualty Proceeds and Eminent Domain Proceeds (each as
defined in the Intercreditor Agreement) will be disposed of pursuant to the
terms of Sections 3.10 and 6.2 of the Intercreditor Agreement, which provisions
shall not be amended, supplemented or otherwise modified, directly or
indirectly, without the prior written consent of the Consenting Party.
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<PAGE>
(j) Borrower Not to Cause Breach. The Borrower
hereby irrevocably waives any rights that it may have, including those arising
under any of the Contracts, to seek or compel the Consenting Party to act in a
manner that is inconsistent with this Consent while this Consent is in effect.
(k) Acknowledgment of Lien. The Consenting Party
hereby acknowledges that the Energy Complex is subject to the lien of the
Financing Documents. The Collateral Agent, the Secured Parties and the holders
of the Bonds have no obligation to release such lien until all obligations
secured thereby have been paid in full.
(l) Approval Rights; Additional Debt. The Borrower
and the Collateral Agent agree that they will not amend, modify, supplement or
provide waivers under the Financing Documents that would result in (A) the
scheduled annual debt service (as "debt service" is defined in Section 1(b)
hereof), except for principal payments under the Working Capital Facility, in
any year being greater than the scheduled annual debt service for such year as
set forth on Schedule I hereto, (B) the Working Capital Facility having terms
and conditions (including the maximum aggregate principal amount that can be
outstanding thereunder) inconsistent with those described in clause (a)(ii) of
the definition of "Permitted Indebtedness" contained in the Indenture (as such
definition is in effect as of the date hereof, provided that amendments to such
definition shall be permitted to reduce any payments of principal, interest or
other amounts that may be scheduled to become due in any month) or (C) any
modifications, direct or indirect, to the provisions of Sections 3.10 and 3.11
of the Intercreditor Agreement. This provision is not intended to apply to
consensual restructurings of Original Debt due to non-payment of Original Debt
that results in an accrual of past due scheduled annual debt service, and is not
intended to require the Collateral Agent or the Secured Parties to exercise
remedies. The Borrower agrees not to (and the Collateral Agent acknowledges that
the Borrower is not permitted to) (i) make, issue or cause to be suffered
secured Indebtedness that would result in the scheduled annual debt service in
any year, except for principal payments under the Working Capital Facility,
being greater than the scheduled annual debt service for such years as set forth
on Schedule I hereto, and (ii) issue unsecured Indebtedness that, when taken
together with all other Indebtedness, would exceed Original Debt in an amount
greater than $5,000,000 (in the aggregate) escalated at the rate of change in
the PPI. As a condition to the Borrower's issuance of any additional secured
Indebtedness, the Borrower shall cause the holder of any additional secured
Indebtedness to execute a counterpart of, or acknowledge to be bound by, this
Consent. "Indebtedness" shall mean at any date, without duplication, (a)(i) all
obligations of the Borrower for borrowed money, (ii) all obligations of the
Borrower evidenced by bonds, debentures, notes or other similar instruments,
(iii) all obligations of the Borrower to pay the deferred purchase price of
property or services, except trade accounts payable arising in the ordinary
course of business
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<PAGE>
and that mature not more than 180 days after the date originally incurred, (iv)
the aggregate of all guarantee or purchase obligations of the Borrower with
respect to capital stock of any person, including any capital stock of a
consolidated subsidiary that is required to be shown as a liability on a balance
sheet of the Borrower, (v) the aggregate of all redeemable shares of common or
preferred stock of the Borrower, (vi) all obligations of the Borrower, whether
direct or contingent, matured or unmatured, to reimburse banks in respect of
drawings made under letters of credit that are issued to secure or provide for
the payment of Indebtedness of the Borrower, (vii) foreign currency exchanges,
(viii) currency and interest rate swaps and similar derivatives, and (ix)
commodities hedges and (b) in each case to the extent, and only to the extent,
such obligations (or the Borrower's liability with respect thereto) are required
to be shown as a liability on a consolidated balance sheet of the Borrower
prepared as of such date, (i) all obligations of the Borrower as lessee under
capital leases, (ii) all Indebtedness of others secured by a lien on any asset
of the Borrower, whether or not such Indebtedness is assumed by the Borrower,
and (iii) all Indebtedness of others guaranteed by the Borrower. "Indebtedness"
shall not include (i) purchase money notes secured by equipment (but otherwise
non-recourse to the Borrower's other properties) that is not material to the
operations of the Energy Complex, (ii) financial instruments that could not
reasonably be expected to have a material adverse effect on the Borrower and
(iii) the Borrower's obligations (if any) in respect of the 1994 Bonds, the 1984
Taxable Lease Agreement, the 1973 Tax- Exempt Lease Agreement and the 1976
Tax-Exempt Lease Agreement, except for any refinancing by the Borrower of any
such obligation.
(m) The Collateral Agent hereby acknowledges that
it has no lien on the Mill Owner Maintenance Reserve Account established
pursuant to the Mill Owner Maintenance Reserve Account Agreement dated as of
August 1, 1995 among the Borrower, Southern, the Consenting Party (in its
capacity as the owner and operator of the Tissue Mill and the Pulp Mill) and
S.D. Warren (in its capacity as the owner and operator of the Paper Mill) or any
amounts on deposit therein.
(n) Mill Owner Payment Default Cure Right. The
Mill Owners shall be entitled to cure any payment defaults of the Borrower under
and strictly in accordance with the terms of the Borrower's cure rights under
the Financing Documents. The Collateral Agent agrees to deliver to the Mill
Owners duplicates or copies of all notices of payment default delivered under or
pursuant to any of the Financing Documents to the Borrower, and the Collateral
Agent agrees that no notice of payment default shall be effective until received
by the Mill Owners; provided, that any failure by the Collateral Agent to
deliver to the Mill Owners any such duplicates or copies shall not subject the
Collateral Agent to any liability whatsoever; and provided, further, that the
Mill Owners shall be entitled to reimbursement for any amounts paid thereby to
cure any payment default to the extent that such reimbursement is made from
funds that otherwise are permitted to be
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<PAGE>
distributed to the equity holders of the Borrower under the Financing Documents.
The Borrower agrees to provide each of the Mill Owners with one copy of the
Financing Documents (including any amendments or modifications thereto), as well
as copies of all notices of default from the Secured Parties, all material
notices to bondholders (including notices from the Secured Parties to the
bondholders) and copies of all financial statements provided to the Secured
Parties.
(o) The Borrower hereby acknowledges and agrees to
the terms and conditions set forth in this Consent, and agrees that to the
extent any of the terms and conditions set forth herein are inconsistent with
the terms and conditions of the Project Documents, the terms and conditions of
this Consent shall control.
2. The Consenting Party hereby represents and warrants
that:
(a) The Consenting Party is a corporation duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Pennsylvania. The execution, delivery and performance by the
Consenting Party of the Contracts and this Consent have been duly authorized by
all necessary corporate action, and do not and will not require any further
consents or approvals which have not been obtained, or violate any provision of
the corporate charter or by-laws of the Consenting Party or any law, regulation,
order, judgment, injunction or similar matters or breach any agreement presently
in effect with respect to or binding on the Consenting Party or its properties
or result in, or require, the creation or imposition of any mortgage, deed of
trust, pledge, lien, security interest, charge or encumbrance of any nature that
could adversely affect the Consenting Party's ability to perform its obligations
under the Contracts or this Consent;
(b) This Consent and the Contracts have been duly
executed and delivered and are legal, valid and binding obligations of the
Consenting Party enforceable against the Consenting Party in accordance with
their respective terms, except as such enforceability may be limited by (i)
bankruptcy, insolvency, reorganization, moratorium or similar laws of general
applicability affecting the enforcement of creditors' rights, and (ii) the
application of general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law);
(c) As of the date hereof, the Contracts are in
full force and effect and, except as described in Recital D above, have not been
amended, supplemented or otherwise modified, other than such amendments,
supplements and modifications as may have been agreed to by the Site Operating
Committee that do not materially affect the material obligations of the
Consenting Party under the Contracts; and
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(d) None of senior management of the Consenting
Party, the Pulp Mill SOC Representative and the Tissue Mill SOC Representative
has actual knowledge of any facts that would allow the Consenting Party to
terminate this Consent or the Contracts, and the Consenting Party has no present
intention to deliver a notice of default or a notice of termination thereunder;
the consummation of any transaction contemplated by this Consent to take place
on the date hereof would not allow the Consenting Party to terminate this
Consent or the Contracts.
(e) The Consenting Party has no actual notice of
any assignment of any Contract (other than the assignment referred to in Recital
E above and the assignment contemplated by this Consent).
(f) The Consenting Party has not assigned,
transferred or hypothecated the Contracts or any interest therein.
3. All notices required or permitted hereunder shall be in
writing and shall be effective (a) upon receipt if hand delivered, (b) upon
telephonic verification of receipt if sent by telefacsimile and (c) if otherwise
delivered, upon the earlier of receipt or two (2) business days after being sent
by registered or certified mail, return receipt requested, with proper postage
affixed thereto, or by private courier or delivery service with charges prepaid,
and addressed as specified below:
If to the Consenting Party:
Attention:
Thomas C. Deas, Jr.
Scott Paper Company
Scott Plaza
Philadelphia, Pennsylvania 19113-1585
Telecopy No.: (610) 522-5665
Telephone No.: (610) 522-5560
If to the Collateral Agent:
Attention:
Bankers Trust (Delaware)
c/o Bankers Trust Company
Four Albany Street, 4th Floor
New York, New York 10006
Telecopy No.: 212-250-6961
Telephone No.: 212-250-6826
If to the Borrower:
Attention:
Mobile Energy Services Company, L.L.C.
900 Ashwood Parkway, Suite 300
Atlanta, Georgia 30338
Telecopy No.: 770-673-7781
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<PAGE>
Telephone No.: 770-392-7644
with a copy to:
Mobile Energy Services Company, L.L.C.
P.O. Box 2747
200 Bay Bridge Road
Mobile, Alabama 36652
Telecopy No.: 334-452-6337
Telephone No.: 334-330-3600
4. This Consent shall be binding upon and benefit the
successors and assigns of the Consenting Party, the Borrower, the Collateral
Agent, the Secured Parties and their respective successors, transferees and
assigns (including, without limitation, any entity that refinances all or any
portion of the obligations under the Financing Documents and that, if required
by Section 1(l) hereof, countersigns this Consent). The Consenting Party agrees
to confirm such continuing obligation in writing upon the reasonable request of
the Borrower, the Collateral Agent, the Secured Parties or any of their
respective successors, transferees or assigns. No termination, amendment,
variation or waiver of any provisions of this Consent shall be effective unless
in writing and signed by the Consenting Party, the Collateral Agent and, in the
case of a termination, amendment, variation, or waiver sought prior to a Trigger
Event, the Borrower. This Consent shall be governed by the laws of the State of
New York, without reference to principles of conflict of laws (other than
Section 5-1401 of the New York General Obligations Law).
5. If any term or provision hereof is declared by a court of
competent jurisdiction to be illegal, invalid or unenforceable for any reason
whatsoever, such illegality, invalidity or unenforceability shall not affect the
other terms and provisions hereof, which shall remain binding and enforceable,
and to the extent possible, all of such other provisions shall remain in full
force and effect.
6. This Consent may be executed in one or more duplicate
counterparts, and when executed and delivered by all the parties listed below,
shall constitute a single binding agreement.
7. Subject to the following Section 8, this Consent shall be
deemed to be terminated and of no further force and effect when the Consenting
Party receives written notice from the Borrower and the Collateral Agent stating
that no Original Debt is outstanding and all amounts owing to the Secured
Parties in respect of the Original Debt (including, without limitation,
principal, interest, fees and reimbursement obligations, whether upon maturity,
acceleration or otherwise) have been paid in full; provided, however, that the
obligations of the Borrower to provide the Consenting Party with copies of the
Borrower's financial statements as required under Section 1(n) shall survive the
termination of this Consent.
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<PAGE>
8. If at any time any payment in respect of Original Debt is
rescinded or must otherwise be restored or returned by the holder of such
Original Debt in connection with any bankruptcy, insolvency or other similar or
related proceeding, or upon or as a result of the appointment of a receiver,
intervenor or conservator of, or trustee or similar officer for, the Borrower or
any substantial part of the Borrower's property, the rights and obligations of
the holder of such Original Debt under this Consent shall continue to be
effective, or be reinstated as of the time such payment in respect of Original
Debt is so rescinded or must otherwise be restored, as the case may be, all as
though such payment had not been made.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto by their officers
thereunto duly authorized, have duly executed this Consent as of the date set
forth below.
Dated as of: August 1, 1995
SCOTT PAPER COMPANY, a Pennsylvania
corporation, in its capacity as Pulp
Mill Owner
By: /s/
Name: Thomas C. Deas, Jr.
Title: Assistant Treasurer
BANKERS TRUST (DELAWARE), a Delaware
banking corporation, as Collateral
Agent
By: /s/
Name: James H. Stallkamp
Title:President
MOBILE ENERGY SERVICES COMPANY,
L.L.C., an Alabama limited liability
company, as Borrower
By: /s/
Name: Christopher J. Kysar
Title: Vice President
ACKNOWLEDGED:
MOBILE ENERGY SERVICES HOLDINGS, INC.,
an Alabama corporation
By: /s/
Name: Christopher J. Kysar
Title: Vice President
<PAGE>
SCHEDULE I
Total Debt Service
(in thousands)
1995 40,500
1996 40,500
1997 40,000
1998 40,000
1999 39,500
2000 39,000
2001 38,500
2002 38,000
2003 37,500
2004 37,000
2005 36,500
2006 36,000
2007 35,500
2008 35,000
2009 34,500
2010 34,000
2011 33,500
2012 33,000
2013 32,500
2014 32,000
2015 31,500
2016 31,500
2017 35,000
2018 35,000
2019 through
January 3, 2020 35,000
thereafter 0
Exhibit 10.46
CONSENT AND AGREEMENT
THIS CONSENT AND AGREEMENT (this "Consent"), dated as of
August 1, 1995, is executed by SCOTT PAPER COMPANY, a Pennsylvania corporation
(the "Consenting Party"), in its capacity as Tissue Mill Owner, MOBILE ENERGY
SERVICES COMPANY, L.L.C., an Alabama limited liability company (the
"Borrower")(which is an indirect wholly-owned subsidiary of The Southern
Company, a Delaware corporation ("Southern")), and BANKERS TRUST (DELAWARE), a
Delaware banking corporation, as Collateral Agent for the Secured Parties (as
hereinafter defined) (the "Collateral Agent").
A. The Borrower, Mobile Energy Services Holdings, Inc.
(formerly known as Mobile Energy Services Company, Inc.), an Alabama corporation
("Mobile Energy"), and First Union National Bank of Georgia, as trustee (in such
capacity, the "Taxable Trustee"), have entered into a Trust Indenture dated as
of August 1, 1995 (the "Taxable Indenture"), pursuant to which the Borrower (i)
is issuing its First Mortgage Bonds (the "Taxable Bonds"), the proceeds of which
will be used to (among other things) repay to Southern a portion of the amounts
advanced to pay certain costs associated with the acquisition of the Energy
Complex (as defined in the Master Operating Agreement (as hereinafter defined))
and (ii) may, from time to time, issue additional Senior Debt (as defined in the
Taxable Indenture).
B. The Borrower, Mobile Energy and The Industrial Development
Board of the City of Mobile, Alabama (the "Board") have entered into an Amended
and Restated Lease and Agreement dated as of August 1, 1995 with respect to part
of the Energy Complex, relating to The Industrial Development Board of the City
of Mobile, Alabama Solid Waste Revenue Refunding Bonds (Mobile Energy Services
Company, L.L.C. Project), Series 1995A (the "Tax-Exempt Bonds" and, together
with the Taxable Bonds, the "Bonds") to be issued for the benefit of the
Borrower pursuant to an Amended and Restated Indenture dated as of August 1,
1995 (the "Tax-Exempt Indenture" and, together with the Taxable Indenture, the
"Indentures") between the Board and First Union National Bank of Georgia, as
trustee (in such capacity, the "Tax-Exempt Trustee"). The proceeds of the Tax-
Exempt Bonds will be used to refinance the 1984 Tax-Exempt Bonds and to pay for
certain other costs.
C. The Borrower and Banque Paribas (together with any lender
that is or becomes a provider of the Working Capital Facility (as hereinafter
defined), the "Working Capital Facility Provider" and, together with the Taxable
Trustee and the Tax-Exempt Trustee, the "Secured Parties") have entered into a
Revolving Credit Facility dated as of August 1, 1995 and together with any
replacement working capital facility, the "Working Capital
<PAGE>
Facility"), borrowings under which will be used to finance certain working
capital requirements of the Borrower.
D. The Consenting Party and Mobile Energy have entered into
(i) that certain Amended and Restated Master Operating Agreement dated as of
July 13, 1995 and effective as of December 12, 1994 (the "Master Operating
Agreement"); (ii) that certain Tissue Mill Energy Services Agreement dated as of
December 12, 1994 (as amended by the First Amendment thereto dated as of July
13, 1995); (iii) that certain Tissue Mill Environmental Indemnity Agreement (as
amended by the First Amendment thereto dated as of July 13, 1995); (iv) that
certain Water Procurement and Effluent Service Agreement dated as of December
12, 1994 (as amended by the First Amendment thereto dated as of July 13, 1995);
and (v) those certain Easement Deeds to which the Consenting Party is a party
dated as of December 12, 1994 (collectively, as the same may be amended, waived
or otherwise modified, the "Contracts").
E. Pursuant to an Omnibus Deed, Bill of Sale, General
Assignment and Conveyance Agreement between Mobile Energy and the Borrower dated
as of July 14, 1995, Mobile Energy has assigned to the Borrower, and the
Borrower has assumed, all of Mobile Energy's rights and obligations under the
Contracts.
F. The Collateral Agent has been granted a security interest
in the Contracts and the Energy Complex for the benefit of the Secured Parties
pursuant to an Intercreditor and Collateral Agency Agreement dated as of August
1, 1995 by and among the Secured Parties, the Board, the Collateral Agent, the
Borrower and Mobile Energy (as the same may be amended, supplemented, waived or
otherwise modified, the "Intercreditor Agreement") and the other Financing
Documents (as defined in the Master Operating Agreement).
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. The Consenting Party acknowledges the assignments referred
to in Recitals E and F above and hereby irrevocably consents to such
assignments, and each of the parties hereto agrees as follows:
(a) Definitions; Rules of Interpretation. Unless
otherwise defined herein, all terms used in this Consent shall have the meanings
given in Exhibit A to the Master Operating Agreement. Except as otherwise
expressly provided herein, the rules of interpretation set forth in said Exhibit
A shall apply to this Consent. The parties hereto acknowledge that the
Collateral Agent, acting on behalf of the Secured Parties, is a "Lender" within
the meaning of the Master Operating Agreement, and that, without the consent of
the parties hereto, no other Person (other than a secured Lender who executes a
counterpart of, or acknowledges to be bound by, this Consent) shall be deemed a
Lender under the Contracts. Any such Lenders shall coordinate so as not to give
any conflicting instructions or demands to the Consenting Party.
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(b) Step-In Rights. The Mill Owners shall have the
right to exercise the Mill Owner Step-In Rights in accordance with Section
11.4(a)(ii) of the Master Operating Agreement. The Collateral Agent acknowledges
that (A) the Mill Owner Step-In Rights give the Mill Owners the right, under the
circumstances set forth in Section 11.4(a)(ii) of the Master Operating
Agreement, to, among other things, take possession of or obtain entry to the
Energy Complex and to assume and exercise operational control of the Energy
Complex and (B) in so assuming or exercising operational control of the Energy
Complex, the Mill Owners may exclude the Collateral Agent from assuming or
exercising operational control of the Energy Complex until such time as the
Collateral Agent shall have foreclosed upon the Energy Complex, subject to
Section 1(d) hereof.
The parties hereto agree that if the Mill Owners continue to exercise the Mill
Owner Step-In Rights at the end of the initial term of the Contracts, the
Borrower may not exercise the renewal term for the Contracts; provided that, if
the Mill Owners desire to continue their Mill Owner Step-in Rights, and if there
is any Original Debt (as hereinafter defined) outstanding under the Financing
Documents at the end of such initial term, a Master Operating Agreement Renewal
Term shall be deemed to be exercised, which such renewal term shall terminate on
the earlier of the expiration of such Master Operating Agreement Renewal Term
and the date no Original Debt remains outstanding without prejudice to the Mill
Owners' rights to terminate the Mill Owner Step-In Rights at any time pursuant
to the terms of the Contracts and to terminate or allow the Contracts to expire
in accordance with their terms (subject to the provisions of Section 1(e)
hereof). If at any time on or after December 16, 2019 the Mill Owners are
exercising the Mill Owner Step-In Rights at the time all Original Debt
outstanding has been repaid, the Mill Owners may, at the option of the Mill
Owners exercised in their sole and absolute discretion, elect to acquire all of
the Borrower's right, title and interest in and to the Energy Complex by written
notice delivered to the Borrower and the Lender, provided that in the event any
of the Mill Owners exercises the foregoing option, the Borrower and the
Collateral Agent shall execute and deliver all agreements, instruments and other
documents, and shall take or cause to be taken such other actions as required
under applicable law, as shall be necessary to assign and transfer all of the
Borrower's right, title and interest in and to the Energy Complex to the Mill
Owners that elect to exercise said option; and provided, further, that such
option shall expire, if not theretofore exercised, immediately upon the
cessation of such Mill Owner Step-In Rights. "Original Debt" shall mean all
Indebtedness (as defined in Section 1(l) hereof) the aggregate scheduled annual
debt service for which in any year does not exceed that set forth on Schedule I
hereto. Without limiting the foregoing, "Original Debt" shall include
Indebtedness outstanding from time to time under the Working Capital Facility
complying with clause (b) of Section 1(l) hereof, provided that the limitations
contained in the preceding sentence regarding scheduled annual debt service on
Original Debt not exceeding the amount set
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<PAGE>
forth on Schedule I hereto shall be determined without regard to principal
payments under the Working Capital Facility. For purposes hereof, "debt service"
means payments of principal, interest and other payments, costs, fees and
expenses under any Indebtedness.
Nothing in this Section 1(b) shall be deemed to limit or restrict any of the
other rights and remedies available to the Collateral Agent under the Financing
Documents (subject to the other terms and provisions hereof) and no provision of
any of the Financing Documents shall be deemed to limit or restrict any of the
other rights and remedies of the Consenting Party hereunder (subject to the
other terms and provisions hereof).
Notwithstanding any provision to the contrary set forth herein, the failure to
exercise any Mill Owner Step-In Rights shall not act as a waiver or release of
such Mill Owner Step-In Rights and the termination of the exercise of any Mill
Owner Step-In Rights shall not act as a waiver or release of any other Mill
Owner Step-In Rights that may arise after such termination; provided that no
provision in this Consent shall be deemed to permit the Mill Owners, upon
termination of Mill Owner Step-In Rights with respect to any Energy Complex
Triggering Event, to elect to exercise Mill Owner Step-In Rights with respect to
any Energy Complex Triggering Event that was in existence and of which the Mill
Owners were aware at the time of such termination, or otherwise to increase the
availability or scope of Mill Owner Step-In Rights beyond that specified in the
Master Operating Agreement and the other Contracts.
(c) Cure Rights and Payments. Subject to Section
1(b) hereof, the Collateral Agent shall be entitled to exercise all rights and
to cure any defaults of the Borrower under and strictly in accordance with the
terms of the Contracts (or as otherwise expressly provided in this Consent), and
the Consenting Party agrees to permit and accept such exercise and cure by the
Collateral Agent in accordance with their terms except as expressly provided
herein. The Consenting Party agrees to render all payments due by it to the
Borrower under the Contracts directly to the Collateral Agent, c/o Bankers Trust
Company, for deposit into the Borrower's Account No. 15351 maintained with
Bankers Trust Company, or to such other person and/or at such other address as
the Collateral Agent may from time to time specify in writing to the Consenting
Party. Upon receipt by the Consenting Party of notice from the Collateral Agent
that a Trigger Event (as defined in the Intercreditor Agreement as in effect on
the date hereof) has occurred, the Consenting Party agrees, subject to Section
1(b) hereof, to render all performance due by it under the Contracts and this
Consent to the Collateral Agent for the benefit of the Secured Parties. The
Borrower hereby acknowledges and agrees that payments made by the Consenting
Party to the Collateral Agent in accordance with the Collateral Agent's
directions pursuant to this Section 1(c) and performance to the Collateral Agent
shall satisfy the Consenting Party's obligations to make payments or to perform
such
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<PAGE>
obligations (as the case may be) to the Borrower in accordance with the
Contracts, and shall relieve the Consenting Party of all liability with respect
to such payments or performance. During the term of this Consent, the Borrower
hereby waives any right it may have to require that payments be made or
performance be rendered in any manner other than the manner designated by the
Collateral Agent pursuant to this Section 1(c).
(d) Foreclosure. (i) The Collateral Agent shall
not commence foreclosure proceedings upon the Energy Complex or the Contracts
without first providing the Consenting Party with fifteen (15) days advance
written notice thereof. Contemporaneously with or immediately following such
foreclosure upon the Contracts, the Collateral Agent shall notify the Consenting
Party that the Collateral Agent or a purchaser (either such person, in such
circumstance, constituting a "New Owner") has succeeded to the Borrower's
interest under the Contracts pursuant to documentation satisfactory to the
Consenting Party and the New Owner. At the time of foreclosure, the Collateral
Agent shall not make an assignment of the Contracts to a third party unless (i)
such third party assumes liability for all of the Borrower's and the Collateral
Agent's (as the case may be) obligations under the Contracts (including the
obligation to continue operation of the Energy Complex in accordance with the
terms of the Contracts) (provided that the New Owner need not assume obligations
under any Contract with respect to any Mill Owner as to which a Mill Owner Event
of Default has occurred and is continuing) pursuant to documentation
satisfactory to the Consenting Party in form and substance and (ii) such third
party is a Qualified Purchaser and has substantial expertise (or is controlled
or managed by, or has retained as an operator of the Energy Complex, a person
with substantial expertise) in operating and managing facilities similar to the
Energy Complex and there is a reasonable basis to conclude that the operations
at the Energy Complex will be conducted in accordance with Prudent Plant
Operating Standards following such assignment.
(ii) If the Collateral Agent determines that it wishes to foreclose
upon (or accept title in lieu of foreclosure to) the Energy Complex, the Lease,
the Supplementary Lease and the Easement Deeds but not to foreclose upon (or
accept title in lieu of foreclosure to) all of the other Contracts (other than
Contracts as to which a Mill Owner Event of Default has occurred and is
continuing), the Collateral Agent shall provide written notice to the Mill
Owners of such determination. The Mill Owners may elect by written notice to the
Collateral Agent within thirty (30) days of receipt of the foregoing notice (or
on the date that the Collateral Agent obtains title to the Energy Complex, if
later) to take possession of and operate the Energy Complex:
(A) for a period of up to eighteen months, commencing
on the date of receipt by the Collateral Agent of the Mill Owners'
written notice of election (the "Limited Standstill Period"), provided
that, and for so long as, (1)
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during the Limited Standstill Period, the Master Operating Agreement
and the other Contracts shall remain in effect and the Mill Owners
shall operate the Energy Complex in compliance with the standards set
forth in the Contracts applicable to the Mill Owner Step-In Rights (or,
if the Energy Complex is not operable, the Mill Owners shall use their
good faith efforts to restore the Energy Complex to operability) and no
Liquidated Damages shall be payable and (2) the Mill Owners and the
Collateral Agent shall attempt in good faith to negotiate in the
interests of all such parties; or
(B) for an unlimited period, commencing on the date
of receipt by the Collateral Agent of the Mill Owners' written notice
of election (the "Unlimited Standstill Period"), provided that, and for
so long as, (1) any of (a) the second Demand Anniversary Date has not
occurred, (b) the annualized Demand Charge for the then current Demand
Period is set at a level equal to or greater than 77% of the Demand
Charge during the First Contract Year (the "Minimum Demand Charge") or
(c) if the provisions of clause (b) are not satisfied, the Mill Owners
commit to pay the Collateral Agent during the then current Demand
Period all amounts payable under the Contracts and agree that the
Demand Charge for the then current Demand Period shall be deemed to
equal the Minimum Demand Charge, (2) during the Unlimited Standstill
Period, the Master Operating Agreement and the other Contracts shall
remain in effect, and the Mill Owners shall operate the Energy Complex
in compliance with the standards set forth in the Contracts applicable
to the Mill Owner Step-In Rights and shall comply with all obligations
of the Mill Owners under the Contracts (including, without limitation,
the obligation to pay Demand Charges, subject to Demand Charge
Reductions), except that (i) all liabilities incurred in connection
with the operation of the Energy Complex during the Unlimited
Standstill Period (excluding debt service on the Original Debt
outstanding, but including, without limitation, rent, real estate taxes
and similar impositions that are otherwise payable by the lessee under
the Lease and the Supplementary Lease, operation and maintenance
expenses and capital expenditures, and all amounts payable to the Mill
Owners in reimbursement thereof) shall be expressly subordinated and
junior in right of payment to the payment of scheduled debt service on
Original Debt outstanding; (ii) except as provided in clause (iv) of
Section 1(d)(ii)(B)(2) hereof, no rights of set-off, counterclaim,
deduction or defense of any kind shall be exercised or asserted against
the Demand Charges and other amounts payable to the Collateral Agent
under the Contracts or payment thereof; (iii) no Liquidated Damages
shall be payable; and (iv) all amounts payable by the Mill Owners under
the Contracts in excess of the sum of (w) scheduled debt service on the
Original Debt outstanding, (x) operation and maintenance expenses, (y)
capital expenditures and (z) amounts otherwise payable to the Mill
Owners pursuant to rights of set-off, counterclaim, deduction or
defense, shall be applied
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to redemption of the Original Debt outstanding, which shall be redeemed
in accordance with the terms thereof to the extent of such available
funds, and (3) the Mill Owners and the Collateral Agent shall attempt
in good faith to negotiate in the interests of all such parties.
(iii) If at any time none of the conditions specified in Section
1(d)(ii)(B)(1) hereof is satisfied, the Collateral Agent shall have the right to
convert the Unlimited Standstill Period into a Limited Standstill Period, in
which case the Mill Owners' rights to enter into an Unlimited Standstill Period
shall terminate. If at any time any of the other conditions specified in Section
1(d)(ii)(A) or 1(d)(ii)(B) hereof is not satisfied, the Collateral Agent may
elect to terminate the Limited Standstill Period or the Unlimited Standstill
Period (as the case may be).
(iv) Upon termination (or, in the case of the Limited Standstill
Period, expiration) of the Limited Standstill Period or the Unlimited Standstill
Period (as the case may be), the New Owner may elect either to assume all of the
Contracts (other than obligations under any Contracts with respect to any Mill
Owner as to which a Mill Owner Event of Default has occurred and is continuing,
which the New Owner may either assume or not assume, at its option) or to
terminate all of the Contracts (other than, if the New Owner so elects, the
Lease, the Supplemental Lease and the Easement Deeds) and to dispose of the
Energy Complex in any manner that it chooses.
If the New Owner elects to assume the Contracts, the term of each Contract shall
be deemed to be extended by the term of the Limited Standstill Period if, at the
end of such Contract's term, any Original Debt is outstanding.
(v) The Borrower and the Collateral Agent acknowledge and agree that
(A) during the Limited Standstill Period or Unlimited Standstill Period, the
Mill Owners shall have the right and option to purchase the Energy Complex for a
purchase price equal to all outstanding principal and interest due and owing to
the Secured Parties in respect of the Original Debt outstanding and (B) at the
end of the initial term of the Lease, the Mill Owners shall have the right and
option to purchase the Energy Complex in accordance with Article 15 of the Lease
and, in each case, the Mill Owners shall acquire the Energy Complex free and
clear of all liens and encumbrances that at any time secured the repayment of
the Original Debt outstanding; provided that all Original Debt outstanding and
all other amounts payable to the Senior Secured Parties or the New Owner (as the
case may be) under the Contracts shall have been paid in full.
(vi) Notwithstanding any provision in the Contracts or the arrangements
establishing the Mill Owner Maintenance Reserve Account to the contrary, the
Borrower agrees that in the event the Mill Owners are operating the Energy
Complex during the Limited Standstill Period or the Unlimited Standstill Period,
the Mill
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Owner Maintenance Reserve Account shall be available to the Mill Owners (but not
to the Collateral Agent) for the payment of operation, maintenance or capital
expenses.
(e) Termination/Transfer. (i) The Consenting
Party will not, without the prior written consent of the Collateral Agent, (A)
cancel or terminate any of the Contracts except as provided in the Contracts and
in accordance with Section 1(e)(ii) hereof, or consent to or accept any
cancellation or termination thereof by the Borrower, (B) sell, assign or
otherwise dispose of (by operation of law or otherwise) any part of its interest
in the Contracts, except as set forth in Article 15 of the Master Operating
Agreement, or (C) amend or modify the Contracts in any respect that may
reasonably be expected to have a material effect on the Borrower's rights or
obligations. The Consenting Party agrees to deliver duplicates or copies of all
(i) notices of default delivered under or pursuant to any of the Contracts to
the Collateral Agent promptly upon delivery thereof to the Borrower (and the
Consenting Party agrees that no such notice of default shall be effective until
received by Collateral Agent), and (ii) amendments to any of the Contracts that
in any respect may reasonably be expected to have a material effect on the
Borrower's rights or obligations (and the Consenting Party agrees that no such
amendment shall be effective until received by the Collateral Agent); provided,
that any failure by the Consenting Party to deliver to the Collateral Agent any
such duplicates or copies shall not subject the Consenting Party to any
liability whatsoever.
(ii) The Consenting Party will not terminate the Contracts or any of
its obligations thereunder on account of any default or breach of the Borrower
thereunder without (A) in the case of a default by the Borrower that is the
failure by the Borrower to pay amounts to the Consenting Party which are due and
payable under the Contracts, first providing to the Collateral Agent written
notice of such default and ninety (90) days from the date such notice is
delivered to the Collateral Agent to pay such amounts and (B) in the case of a
default that cannot be cured by the payment of money to the Consenting Party,
first providing to the Collateral Agent written notice of such default and a
reasonable opportunity (in any event at least ninety (90) days but no more than
one hundred eighty (180) days) to cure such breach or default so long as the
Collateral Agent or its designee shall have commenced to cure the breach or
default within such ninety-day period and thereafter diligently pursues such
cure to completion and continues to perform any monetary obligations of the
Borrower to the Consenting Party under the Contracts and all other obligations
of the Borrower under the Contracts are performed by the Borrower (or the
Collateral Agent on behalf of the Borrower) or with respect to any defaults that
are not susceptible of being cured by the Collateral Agent, to rectify to the
Consenting Party's reasonable satisfaction the effect on the Consenting Party of
such default within such period. If possession of the Energy Complex (by way of
foreclosure proceedings or otherwise) is necessary to cure such breach or
default, the Collateral Agent or its successor, transferee or
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assignee will be allowed a reasonable period to complete such proceedings or
otherwise accomplish such possession; provided, that in no event shall such
additional period exceed thirty (30) days. The Collateral Agent acknowledges and
agrees that during the foregoing time periods the Consenting Party shall be
entitled to exercise any set-off right which the Consenting Party may have
against the Borrower under the Contracts.
If the Collateral Agent or its successor, transferee or assignee is prohibited
by any court order or bankruptcy or insolvency proceedings from curing the
default or from commencing or prosecuting foreclosure proceedings, the foregoing
time periods shall be extended by the period of such prohibition. Subject to
Section 1(d) hereof, the Consenting Party consents to the transfer of the
Borrower's interest under the Contracts to the Collateral Agent for the benefit
of the Secured Parties or a purchaser or grantee at a foreclosure sale by
judicial or nonjudicial foreclosure and sale or by a conveyance by the Borrower
in lieu of foreclosure and agrees that upon such foreclosure, sale or
conveyance, the Consenting Party shall recognize the Collateral Agent or other
purchaser or grantee as the applicable party under the transferred Contracts
(provided that the Collateral Agent or such purchaser or grantee assumes the
obligations of the Borrower under the transferred Contracts as provided in
Section 1(d) hereof).
(f) Bankruptcy. In the event that any of the
Contracts is rejected by a trustee or debtor-in-possession in any bankruptcy or
insolvency proceeding, or if any of the Contracts is terminated for any reason
other than a default that could have been but was not cured by the Collateral
Agent as provided in Section 1(e)(ii) hereof, and if, within sixty (60) days
after such rejection or termination, the Collateral Agent or its successor,
transferee or assignee shall so request, the Consenting Party will execute and
deliver to the Collateral Agent or its successor, transferee or assignee for the
benefit of the Secured Parties a new Contract, which Contract shall be on
substantially the same terms and conditions as the original Contract for the
remaining term of the Contract before giving effect to such rejection or
termination (but in no event on less favorable terms and conditions as the
original Contract).
(g) Liability. (i) None of the Collateral Agent,
the Secured Parties or the holders of Bonds shall be liable for any of the
obligations or duties of the Borrower (including, without limitation, the
obligation to deliver title to the Energy Complex free of any lien upon the
exercise of a Repurchase Option (as defined in the Master Operating Agreement)
by the Consenting Party), unless and until the Collateral Agent or its successor
expressly assumes the Contracts or any or all of such obligations or duties.
(ii) In the event the Collateral Agent or its successor
elects to perform the Borrower's obligations under the Contracts or
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to enter into any new Contract as provided in Section 1(d), 1(e)(ii) or 1(f)
hereof, the Collateral Agent, the Secured Parties and the holders of Bonds, and
their successors, shall have no liability to the Consenting Party for the
performance of such obligations, and the sole recourse of the Consenting Party
in seeking the enforcement of such obligations shall be to such parties'
interest in the Energy Complex.
(iii) It is expressly understood and agreed by the parties hereto that
this Consent has been executed by Bankers Trust (Delaware), not in its
individual capacity, but solely as Collateral Agent hereunder in the exercise of
the power and authority conferred and vested in it.
(h) Cure Duties; Assignment. In the event the
Collateral Agent or its successor, transferee or assignee succeeds to the
Borrower's interest under the Contracts, the Collateral Agent or its successor,
transferee or assignee shall cure any defaults of the Borrower existing under
the Contracts that are reasonably capable of being cured and, with respect to
any defaults that are not susceptible of being cured by the Collateral Agent,
shall rectify to the Consenting Party's reasonable satisfaction the effect on
the Consenting Party of such default within such period. The Collateral Agent
shall have the right to assign its interest in this Consent to any person or
entity to whom the Original Debt is transferred, provided such transferee
assumes the obligations of the Borrower (or the Collateral Agent, as the case
may be) under this Consent. Upon such assignment, the Collateral Agent and the
Secured Parties (including their agents and employees) shall be released from
any further liability under this Consent and the Contracts to the extent of the
interest assigned.
(i) Insurance Proceeds. The parties hereto
acknowledge and agree that the disposition of insurance proceeds with respect to
the Energy Complex is subject to the terms and conditions of Section 10.7 of the
Master Operating Agreement and this Section 1(i), and the Collateral Agent
acknowledges that the independent engineer under the Financing Documents shall
be required, if appropriate, to deliver to the Collateral Agent the certificate
contemplated by Section 3.10(c) of the Intercreditor Agreement (a copy of which
is attached as Exhibit A thereto), such certificate not to be unreasonably
withheld. Notwithstanding anything herein or in the Master Operating Agreement
to the contrary, the parties hereto acknowledge that until all Original Debt has
been paid in full, Casualty Proceeds and Eminent Domain Proceeds (each as
defined in the Intercreditor Agreement) will be disposed of pursuant to the
terms of Sections 3.10 and 6.2 of the Intercreditor Agreement, which provisions
shall not be amended, supplemented or otherwise modified, directly or
indirectly, without the prior written consent of the Consenting Party.
(j) Borrower Not to Cause Breach. The Borrower
hereby irrevocably waives any rights that it may have, including
those arising under any of the Contracts, to seek or compel the
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Consenting Party to act in a manner that is inconsistent with this Consent while
this Consent is in effect.
(k) Acknowledgment of Lien. The Consenting Party
hereby acknowledges that the Energy Complex is subject to the lien of the
Financing Documents. The Collateral Agent, the Secured Parties and the holders
of the Bonds have no obligation to release such lien until all obligations
secured thereby have been paid in full.
(l) Approval Rights; Additional Debt. The Borrower
and the Collateral Agent agree that they will not amend, modify, supplement or
provide waivers under the Financing Documents that would result in (A) the
scheduled annual debt service (as "debt service" is defined in Section 1(b)
hereof), except for principal payments under the Working Capital Facility, in
any year being greater than the scheduled annual debt service for such year as
set forth on Schedule I hereto, (B) the Working Capital Facility having terms
and conditions (including the maximum aggregate principal amount that can be
outstanding thereunder) inconsistent with those described in clause (a)(ii) of
the definition of "Permitted Indebtedness" contained in the Indenture (as such
definition is in effect as of the date hereof, provided that amendments to such
definition shall be permitted to reduce any payments of principal, interest or
other amounts that may be scheduled to become due in any month) or (C) any
modifications, direct or indirect, to the provisions of Sections 3.10 and 3.11
of the Intercreditor Agreement. This provision is not intended to apply to
consensual restructurings of Original Debt due to non-payment of Original Debt
that results in an accrual of past due scheduled annual debt service, and is not
intended to require the Collateral Agent or the Secured Parties to exercise
remedies. The Borrower agrees not to (and the Collateral Agent acknowledges that
the Borrower is not permitted to) (i) make, issue or cause to be suffered
secured Indebtedness that would result in the scheduled annual debt service in
any year, except for principal payments under the Working Capital Facility,
being greater than the scheduled annual debt service for such years as set forth
on Schedule I hereto, and (ii) issue unsecured Indebtedness that, when taken
together with all other Indebtedness, would exceed Original Debt in an amount
greater than $5,000,000 (in the aggregate) escalated at the rate of change in
the PPI. As a condition to the Borrower's issuance of any additional secured
Indebtedness, the Borrower shall cause the holder of any additional secured
Indebtedness to execute a counterpart of, or acknowledge to be bound by, this
Consent. "Indebtedness" shall mean at any date, without duplication, (a)(i) all
obligations of the Borrower for borrowed money, (ii) all obligations of the
Borrower evidenced by bonds, debentures, notes or other similar instruments,
(iii) all obligations of the Borrower to pay the deferred purchase price of
property or services, except trade accounts payable arising in the ordinary
course of business and that mature not more than 180 days after the date
originally incurred, (iv) the aggregate of all guarantee or purchase obligations
of the Borrower with respect to capital stock of any
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person, including any capital stock of a consolidated subsidiary that is
required to be shown as a liability on a balance sheet of the Borrower, (v) the
aggregate of all redeemable shares of common or preferred stock of the Borrower,
(vi) all obligations of the Borrower, whether direct or contingent, matured or
unmatured, to reimburse banks in respect of drawings made under letters of
credit that are issued to secure or provide for the payment of Indebtedness of
the Borrower, (vii) foreign currency exchanges, (viii) currency and interest
rate swaps and similar derivatives, and (ix) commodities hedges and (b) in each
case to the extent, and only to the extent, such obligations (or the Borrower's
liability with respect thereto) are required to be shown as a liability on a
consolidated balance sheet of the Borrower prepared as of such date, (i) all
obligations of the Borrower as lessee under capital leases, (ii) all
Indebtedness of others secured by a lien on any asset of the Borrower, whether
or not such Indebtedness is assumed by the Borrower, and (iii) all Indebtedness
of others guaranteed by the Borrower. "Indebtedness" shall not include (i)
purchase money notes secured by equipment (but otherwise non-recourse to the
Borrower's other properties) that is not material to the operations of the
Energy Complex, (ii) financial instruments that could not reasonably be expected
to have a material adverse effect on the Borrower and (iii) the Borrower's
obligations (if any) in respect of the 1994 Bonds, the 1984 Taxable Lease
Agreement, the 1973 Tax- Exempt Lease Agreement and the 1976 Tax-Exempt Lease
Agreement, except for any refinancing by the Borrower of any such obligation.
(m) The Collateral Agent hereby acknowledges that
it has no lien on the Mill Owner Maintenance Reserve Account established
pursuant to the Mill Owner Maintenance Reserve Account Agreement dated as of
August 1, 1995 among the Borrower, Southern, the Consenting Party (in its
capacity as the owner and operator of the Tissue Mill and the Pulp Mill) and
S.D. Warren (in its capacity as the owner and operator of the Paper Mill) or any
amounts on deposit therein.
(n) Mill Owner Payment Default Cure Right. The
Mill Owners shall be entitled to cure any payment defaults of the Borrower under
and strictly in accordance with the terms of the Borrower's cure rights under
the Financing Documents. The Collateral Agent agrees to deliver to the Mill
Owners duplicates or copies of all notices of payment default delivered under or
pursuant to any of the Financing Documents to the Borrower, and the Collateral
Agent agrees that no notice of payment default shall be effective until received
by the Mill Owners; provided, that any failure by the Collateral Agent to
deliver to the Mill Owners any such duplicates or copies shall not subject the
Collateral Agent to any liability whatsoever; and provided, further, that the
Mill Owners shall be entitled to reimbursement for any amounts paid thereby to
cure any payment default to the extent that such reimbursement is made from
funds that otherwise are permitted to be distributed to the equity holders of
the Borrower under the Financing Documents. The Borrower agrees to provide each
of the Mill Owners with one copy of the Financing Documents (including any
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amendments or modifications thereto), as well as copies of all notices of
default from the Secured Parties, all material notices to bondholders (including
notices from the Secured Parties to the bondholders) and copies of all financial
statements provided to the Secured Parties.
(o) The Borrower hereby acknowledges and agrees to
the terms and conditions set forth in this Consent, and agrees that to the
extent any of the terms and conditions set forth herein are inconsistent with
the terms and conditions of the Project Documents, the terms and conditions of
this Consent shall control.
2. The Consenting Party hereby represents and warrants
that:
(a) The Consenting Party is a corporation duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Pennsylvania. The execution, delivery and performance by the
Consenting Party of the Contracts and this Consent have been duly authorized by
all necessary corporate action, and do not and will not require any further
consents or approvals which have not been obtained, or violate any provision of
the corporate charter or by-laws of the Consenting Party or any law, regulation,
order, judgment, injunction or similar matters or breach any agreement presently
in effect with respect to or binding on the Consenting Party or its properties
or result in, or require, the creation or imposition of any mortgage, deed of
trust, pledge, lien, security interest, charge or encumbrance of any nature that
could adversely affect the Consenting Party's ability to perform its obligations
under the Contracts or this Consent;
(b) This Consent and the Contracts have been duly
executed and delivered and are legal, valid and binding obligations of the
Consenting Party enforceable against the Consenting Party in accordance with
their respective terms, except as such enforceability may be limited by (i)
bankruptcy, insolvency, reorganization, moratorium or similar laws of general
applicability affecting the enforcement of creditors' rights, and (ii) the
application of general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law);
(c) As of the date hereof, the Contracts are in
full force and effect and, except as described in Recital D above, have not been
amended, supplemented or otherwise modified, other than such amendments,
supplements and modifications as may have been agreed to by the Site Operating
Committee that do not materially affect the material obligations of the
Consenting Party under the Contracts; and
(d) None of senior management of the Consenting
Party, the Pulp Mill SOC Representative and the Tissue Mill SOC Representative
has actual knowledge of any facts that would allow the Consenting Party to
terminate this Consent or the Contracts,
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and the Consenting Party has no present intention to deliver a notice of default
or a notice of termination thereunder; the consummation of any transaction
contemplated by this Consent to take place on the date hereof would not allow
the Consenting Party to terminate this Consent or the Contracts.
(e) The Consenting Party has no actual notice of
any assignment of any Contract (other than the assignment referred to in Recital
E above and the assignment contemplated by this Consent).
(f) The Consenting Party has not assigned,
transferred or hypothecated the Contracts or any interest therein.
3. All notices required or permitted hereunder shall be in
writing and shall be effective (a) upon receipt if hand delivered, (b) upon
telephonic verification of receipt if sent by telefacsimile and (c) if otherwise
delivered, upon the earlier of receipt or two (2) business days after being sent
by registered or certified mail, return receipt requested, with proper postage
affixed thereto, or by private courier or delivery service with charges prepaid,
and addressed as specified below:
If to the Consenting Party:
Attention:
Thomas C. Deas, Jr.
Scott Paper Company
Scott Plaza
Philadelphia, Pennsylvania 19113-1585
Telecopy No.: (610) 522-5665
Telephone No.: (610) 522-5560
If to the Collateral Agent:
Attention:
Bankers Trust (Delaware)
c/o Bankers Trust Company
Four Albany Street, 4th Floor
New York, New York 10006
Telecopy No.: 212-250-6961
Telephone No.: 212-250-6826
If to the Borrower:
Attention:
Mobile Energy Services Company, L.L.C.
900 Ashwood Parkway, Suite 300
Atlanta, Georgia 30338
Telecopy No.: 770-673-7781
Telephone No.: 770-392-7644
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with a copy to:
Mobile Energy Services Company, L.L.C.
P.O. Box 2747
200 Bay Bridge Road
Mobile, Alabama 36652
Telecopy No.: 334-452-6337
Telephone No.: 334-330-3600
4. This Consent shall be binding upon and benefit the
successors and assigns of the Consenting Party, the Borrower, the Collateral
Agent, the Secured Parties and their respective successors, transferees and
assigns (including, without limitation, any entity that refinances all or any
portion of the obligations under the Financing Documents and that, if required
by Section 1(l) hereof, countersigns this Consent). The Consenting Party agrees
to confirm such continuing obligation in writing upon the reasonable request of
the Borrower, the Collateral Agent, the Secured Parties or any of their
respective successors, transferees or assigns. No termination, amendment,
variation or waiver of any provisions of this Consent shall be effective unless
in writing and signed by the Consenting Party, the Collateral Agent and, in the
case of a termination, amendment, variation, or waiver sought prior to a Trigger
Event, the Borrower. This Consent shall be governed by the laws of the State of
New York, without reference to principles of conflict of laws (other than
Section 5-1401 of the New York General Obligations Law).
5. If any term or provision hereof is declared by a court of
competent jurisdiction to be illegal, invalid or unenforceable for any reason
whatsoever, such illegality, invalidity or unenforceability shall not affect the
other terms and provisions hereof, which shall remain binding and enforceable,
and to the extent possible, all of such other provisions shall remain in full
force and effect.
6. This Consent may be executed in one or more duplicate
counterparts, and when executed and delivered by all the parties listed below,
shall constitute a single binding agreement.
7. Subject to the following Section 8, this Consent shall be
deemed to be terminated and of no further force and effect when the Consenting
Party receives written notice from the Borrower and the Collateral Agent stating
that no Original Debt is outstanding and all amounts owing to the Secured
Parties in respect of the Original Debt (including, without limitation,
principal, interest, fees and reimbursement obligations, whether upon maturity,
acceleration or otherwise) have been paid in full; provided, however, that the
obligations of the Borrower to provide the Consenting Party with copies of the
Borrower's financial statements as required under Section 1(n) shall survive the
termination of this Consent.
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8. If at any time any payment in respect of Original Debt is
rescinded or must otherwise be restored or returned by the holder of such
Original Debt in connection with any bankruptcy, insolvency or other similar or
related proceeding, or upon or as a result of the appointment of a receiver,
intervenor or conservator of, or trustee or similar officer for, the Borrower or
any substantial part of the Borrower's property, the rights and obligations of
the holder of such Original Debt under this Consent shall continue to be
effective, or be reinstated as of the time such payment in respect of Original
Debt is so rescinded or must otherwise be restored, as the case may be, all as
though such payment had not been made.
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IN WITNESS WHEREOF, the parties hereto by their officers
thereunto duly authorized, have duly executed this Consent as of the date set
forth below.
Dated as of: August 1, 1995
SCOTT PAPER COMPANY, a Pennsylvania
corporation, in its capacity as
Tissue Mill Owner
By: /s/
Name: Thomas C. Deas, Jr.
Title: Assistant Treasurer
BANKERS TRUST (DELAWARE), a Delaware
banking corporation, as Collateral
Agent
By: /s/
Name: James H. Stallkamp
Title:President
MOBILE ENERGY SERVICES COMPANY,
L.L.C., an Alabama limited liability
company, as Borrower
By: /s/
Name: Christopher J. Kysar
Title: Vice President
ACKNOWLEDGED:
MOBILE ENERGY SERVICES HOLDINGS, INC.,
an Alabama corporation
By: /s/
Name: Christopher J. Kysar
Title: Vice President
<PAGE>
SCHEDULE I
Total Debt Service
(in thousands)
1995 40,500
1996 40,500
1997 40,000
1998 40,000
1999 39,500
2000 39,000
2001 38,500
2002 38,000
2003 37,500
2004 37,000
2005 36,500
2006 36,000
2007 35,500
2008 35,000
2009 34,500
2010 34,000
2011 33,500
2012 33,000
2013 32,500
2014 32,000
2015 31,500
2016 31,500
2017 35,000
2018 35,000
2019 through
January 3, 2020 35,000
thereafter 0
Exhibit 10.47
CONSENT AND AGREEMENT
THIS CONSENT AND AGREEMENT (this "Consent"), dated as of
August 1, 1995, is executed by E.J. HODDER & ASSOCIATES, INC., a Tennessee
corporation (the "Consenting Party"), MOBILE ENERGY SERVICES COMPANY, L.L.C., an
Alabama limited liability company (the "Borrower")(which is an indirect
wholly-owned subsidiary of The Southern Company, a Delaware corporation
("Southern")), and BANKERS TRUST (DELAWARE), a Delaware banking corporation, as
Collateral Agent for the Secured Parties (as hereinafter defined) (the
"Collateral Agent").
A. The Borrower, Mobile Energy Services Holdings, Inc.
(formerly known as Mobile Energy Services Company, Inc.), an Alabama corporation
("Mobile Energy"), and First Union National Bank of Georgia, as trustee (in such
capacity, the "Taxable Trustee"), have entered into a Trust Indenture dated as
of August 1, 1995 (the "Taxable Indenture"), pursuant to which the Borrower (i)
is issuing its First Mortgage Bonds (the "Taxable Bonds"), the proceeds of which
will be used to (among other things) repay to Southern a portion of the amounts
advanced to pay certain costs associated with the acquisition of the Energy
Complex (as defined in the Master Operating Agreement (as hereinafter defined))
and (ii) may, from time to time, issue additional Senior Debt (as defined in the
Taxable Indenture).
B. The Borrower, Mobile Energy and The Industrial Development
Board of the City of Mobile, Alabama (the "Board") have entered into an Amended
and Restated Lease and Agreement dated as of August 1, 1995 with respect to part
of the Energy Complex, relating to The Industrial Development Board of the City
of Mobile, Alabama Solid Waste Revenue Refunding Bonds (Mobile Energy Services
Company, L.L.C. Project), Series 1995 (the "Tax-Exempt Bonds" and, together with
the Taxable Bonds, the "Bonds") to be issued for the benefit of the Borrower
pursuant to an Amended and Restated Indenture dated as of August 1, 1995 (the
"Tax-Exempt Indenture" and, together with the Taxable Indenture, the
"Indentures") between the Board and First Union National Bank of Georgia, as
trustee (in such capacity, the "Tax-Exempt Trustee"). The proceeds of the Tax-
Exempt Bonds will be used to refinance the 1984 Tax-Exempt Bonds and to pay for
certain other costs.
C. The Borrower and Banque Paribas (together with any lender
that is or becomes a provider of the Working Capital Facility (as hereinafter
defined), the "Working Capital Facility Provider" and, together with the Taxable
Trustee and the Tax-Exempt Trustee, the "Secured Parties") have entered into a
Revolving Credit Facility dated as of August 1, 1995 and together with any
replacement working capital facility, the "Working Capital Facility"),
borrowings under which will be used to finance certain working capital
requirements of the Borrower.
D. The Consenting Party and the Borrower (as assignee
of Mobile Energy) have entered into that certain Coal Supply
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Contract, dated as of May 1, 1995 (as the same may be amended, waived or
otherwise modified, the "Contract").
E. Pursuant to an Omnibus Deed, Bill of Sale, General
Assignment and Conveyance Agreement between Mobile Energy and the Borrower dated
as of July 14, 1995, Mobile Energy has assigned to the Borrower, and the
Borrower has assumed, all of Mobile Energy's rights and obligations under the
Contracts.
F. The Collateral Agent has been granted a security interest
in the Contracts and the Energy Complex for the benefit of the Secured Parties
pursuant to an Intercreditor and Collateral Agency Agreement dated as of August
1, 1995 by and among the Secured Parties, the Board, the Collateral Agent, the
Borrower and Mobile Energy (as the same may be amended, supplemented, waived or
otherwise modified, the "Intercreditor Agreement") and the other Financing
Documents (as defined in the Amended and Restated Master Operating Agreement
dated as of July 13, 1995 and effective as of December 12, 1994 (the "Master
Operating Agreement").
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. The Consenting Party acknowledges the assignments referred
to in Recitals F, E and F above and hereby irrevocably consents to such
assignments, and each of the parties hereto agrees as follows:
(a) The Collateral Agent shall be entitled to
exercise all rights of the Borrower under the Contract and to cure any defaults
of the Borrower under the Contract within the time periods set forth in the
Contract or within thirty (30) days of receiving notice of such default,
whichever is later. Upon receipt of the foregoing notice from the Collateral
Agent, the Consenting Party agrees to accept such exercise and cure by the
Collateral Agent, in each case strictly in accordance with the Contract (except
as provided above) and to render all performance due by it under the Contract
and this Consent to the Collateral Agent. The Consenting Party agrees to make
all payments (if any) to be made by it under the Contract directly to the
Collateral Agent for the benefit of the Secured Parties upon receipt of the
Collateral Agent's written instructions and each of the Consenting Party and the
Collateral Agent agree that any payments made by the Consenting Party to the
Collateral Agent pursuant to such instructions shall satisfy the Consenting
Party's obligations to make such payments to the Borrower in accordance with the
Contract and shall relieve the Consenting Party of all liability with respect to
such payments. To the extent that the Collateral Agent assumes all of the
Borrower's indemnification rights under the Contract, the Borrower shall not be
entitled to indemnification thereunder with respect to identical claims.
(b) The Consenting Party agrees to deliver
duplicates or copies of all notices of default delivered under or pursuant to
the Contract to the Collateral Agent promptly upon receipt thereof; provided
that any failure by the Consenting Party
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to deliver to the Collateral Agent any such duplicates or copies shall not
subject the Consenting Party to any liability whatsoever.
2. The Consenting Party will not, without the prior written
consent of the Collateral Agent, terminate, amend or modify the Contract in any
respect that has a material adverse effect on the Borrower's rights or
obligations; provided that, subject to Section 1 above, nothing herein shall
prohibit termination by the Consenting Party following a default by the Borrower
and the expiration of the applicable cure period specified in the Contract.
3. This Consent shall be binding upon and benefit the
successors and assigns of the Consenting Party, the Borrower, the Collateral
Agent, the Secured Parties and their respective successors, transferees and
assigns (including, without limitation, any entity that refinances all or any
portion of the obligations under the Financing Documents (as defined in the
Intercreditor Agreement) and that countersigns this Consent). This Consent shall
be governed by the laws of the State of New York, without reference to
principles of conflict of laws (other than Section 5-1401 of the New York
General Obligations Law).
4. This Consent may be executed in one or more duplicate
counterparts, and when executed and delivered by all the parties listed below,
shall constitute a single binding agreement.
5. It is expressly understood and agreed by the parties hereto
that this Consent has been executed by Bankers Trust (Delaware), not in its
individual capacity, but solely as Collateral Agent hereunder in the exercise of
the power and authority conferred and vested in it, and nothing contained herein
shall be construed as creating any liability on Bankers Trust (Delaware),
individually or personally, to perform any covenant, either expressed or
implied, contained herein, all such liability, if any, being expressly waived by
the parties hereto.
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IN WITNESS WHEREOF, the parties hereto by their officers
thereunto duly authorized, have duly executed this Consent as of the date set
forth below.
Dated as of: August 1, 1995
E.J. HODDER & ASSOCIATES, INC., a
Tennessee corporation
By: /s/
Name: Edwin J. Hodder, Jr.
Title:President
BANKERS TRUST (DELAWARE), a
Delaware banking
corporation, as Collateral
Agent, on behalf of itself
and the Secured Parties
By: /s/
Name: James H. Stallkamp
Title:President
MOBILE ENERGY SERVICES COMPANY,
L.L.C., an Alabama limited liability
company, as Borrower
By: /s/
Name: Christopher J. Kysar
Title: Vice President
ACKNOWLEDGED:
MOBILE ENERGY SERVICES HOLDINGS, INC.,
an Alabama corporation
By: /s/
Name: Christopher J. Kysar
Title: Vice President
Exhibit 10.48
CONSENT AND AGREEMENT
THIS CONSENT AND AGREEMENT (this "Consent"), dated as of
August 1, 1995, is executed by AHLSTROM RECOVERY, INC., a corporation (the
"Consenting Party"), MOBILE ENERGY SERVICES COMPANY, L.L.C., an Alabama limited
liability company (the "Borrower")(which is an indirect wholly-owned subsidiary
of The Southern Company, a Delaware corporation ("Southern")), and BANKERS TRUST
(DELAWARE), a Delaware banking corporation, as Collateral Agent for the Secured
Parties (as hereinafter defined) (the "Collateral Agent").
A. The Borrower, Mobile Energy Services Holdings, Inc.
(formerly known as Mobile Energy Services Company, Inc.), an Alabama corporation
("Mobile Energy"), and First Union National Bank of Georgia, as trustee (in such
capacity, the "Taxable Trustee"), have entered into a Trust Indenture dated as
of August 1, 1995 (the "Taxable Indenture"), pursuant to which the Borrower (i)
is issuing its First Mortgage Bonds (the "Taxable Bonds"), the proceeds of which
will be used to (among other things) repay to Southern a portion of the amounts
advanced to pay certain costs associated with the acquisition of the Energy
Complex (as defined in the Master Operating Agreement (as hereinafter defined))
and (ii) may, from time to time, issue additional Senior Debt (as defined in the
Taxable Indenture).
B. The Borrower, Mobile Energy and The Industrial Development
Board of the City of Mobile, Alabama (the "Board") have entered into an Amended
and Restated Lease and Agreement dated as of August 1, 1995 with respect to part
of the Energy Complex, relating to The Industrial Development Board of the City
of Mobile, Alabama Solid Waste Revenue Refunding Bonds (Mobile Energy Services
Company, L.L.C. Project), Series 1995 (the "Tax-Exempt Bonds" and, together with
the Taxable Bonds, the "Bonds") to be issued for the benefit of the Borrower
pursuant to an Amended and Restated Indenture dated as of August 1, 1995 (the
"Tax-Exempt Indenture" and, together with the Taxable Indenture, the
"Indentures") between the Board and First Union National Bank of Georgia, as
trustee (in such capacity, the "Tax-Exempt Trustee"). The proceeds of the Tax-
Exempt Bonds will be used to refinance the 1984 Tax-Exempt Bonds and to pay for
certain other costs.
C. The Borrower and Banque Paribas (together with any lender
that is or becomes a provider of the Working Capital Facility (as hereinafter
defined), the "Working Capital Facility Provider" and, together with the Taxable
Trustee and the Tax-Exempt Trustee, the "Secured Parties") have entered into a
Revolving Credit Facility dated as of August 1, 1995 and together with any
replacement working capital facility, the "Working Capital
<PAGE>
Facility"), borrowings under which will be used to finance certain working
capital requirements of the Borrower.
D. The Consenting Party and Scott Paper Company, a
Pennsylvania corporation ("Scott") have entered into that certain Purchase Order
Number MG-2601, dated December 18, 1991, as heretofore amended (as the same may
be amended, waived or otherwise
modified, the "Contract").
E. Pursuant to an Asset Purchase Agreement dated as of
December 12, 1994, Scott assigned to Mobile Energy, and Mobile
Energy assumed, all of Scott's rights and obligations under the
Contract.
F. Pursuant to an Omnibus Deed, Bill of Sale, General
Assignment and Conveyance Agreement between Mobile Energy and the Borrower dated
as of July 14, 1995, Mobile Energy has assigned to the Borrower, and the
Borrower has assumed, all of Mobile Energy's rights and obligations under the
Contracts.
G. The Collateral Agent has been granted a security interest
in the Contracts and the Energy Complex for the benefit of the Secured Parties
pursuant to an Intercreditor and Collateral Agency Agreement dated as of August
1, 1995 by and among the Secured Parties, the Board, the Collateral Agent, the
Borrower and Mobile Energy (as the same may be amended, supplemented, waived or
otherwise modified, the "Intercreditor Agreement") and the other Financing
Documents (as defined in the Amended and Restated Master Operating Agreement
dated as of July 13, 1995 and effective as of December 12, 1994 (the "Master
Operating Agreement").
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. The Consenting Party acknowledges the assignments referred
to in Recitals F, E and F above and hereby irrevocably consents to such
assignments, and each of the parties hereto agrees as follows:
(a) The Collateral Agent shall be entitled to
exercise all rights of the Borrower under the Contract and to cure any defaults
of the Borrower under the Contract within the time periods set forth in the
Contract or within thirty (30) days of receiving notice of such default,
whichever is later. Upon receipt of the foregoing notice from the Collateral
Agent, the Consenting Party agrees to accept such exercise and cure by the
Collateral Agent, in each case strictly in accordance with the Contract (except
as provided above) and to render all performance due by it under the Contract
and this Consent to the Collateral Agent. The Consenting Party agrees to make
all payments (if any) to be made by it under the Contract directly to the
Collateral Agent for the benefit of the Secured Parties upon receipt of the
Collateral Agent's written instructions and each of the Consenting Party and the
Collateral Agent agree that any payments made by the Consenting
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Party to the Collateral Agent pursuant to such instructions shall satisfy the
Consenting Party's obligations to make such payments to the Borrower in
accordance with the Contract and shall relieve the Consenting Party of all
liability with respect to such payments. To the extent that the Collateral Agent
assumes all of the Borrower's indemnification rights under the Contract, the
Borrower shall not be entitled to indemnification thereunder with respect to
identical claims.
(b) The Consenting Party agrees to deliver
duplicates or copies of all notices of default delivered under or pursuant to
the Contract to the Collateral Agent promptly upon receipt thereof; provided
that any failure by the Consenting Party to deliver to the Collateral Agent any
such duplicates or copies shall not subject the Consenting Party to any
liability whatsoever.
2. The Consenting Party will not, without the prior written
consent of the Collateral Agent, terminate, amend or modify the Contract in any
respect that has a material adverse effect on the Borrower's rights or
obligations.
3. This Consent shall be binding upon and benefit the
successors and assigns of the Consenting Party, the Borrower, the Collateral
Agent, the Secured Parties and their respective successors, transferees and
assigns (including, without limitation, any entity that refinances all or any
portion of the obligations under the Financing Documents (as defined in the
Intercreditor Agreement) and that countersigns this Consent). This Consent shall
be governed by the laws of the State of New York, without reference to
principles of conflict of laws (other than Section 5-1401 of the New York
General Obligations Law).
4. This Consent may be executed in one or more duplicate
counterparts, and when executed and delivered by all the parties listed below,
shall constitute a single binding agreement.
5. It is expressly understood and agreed by the parties hereto
that this Consent has been executed by Bankers Trust (Delaware), not in its
individual capacity, but solely as Collateral Agent hereunder in the exercise of
the power and authority conferred and vested in it, and nothing contained herein
shall be construed as creating any liability on Bankers Trust (Delaware),
individually or personally, to perform any covenant, either expressed or
implied, contained herein, all such liability, if any, being expressly waived by
the parties hereto.
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IN WITNESS WHEREOF, the parties hereto by their officers
thereunto duly authorized, have duly executed this Consent as of the date set
forth below.
Dated as of: August 1, 1995
AHLSTROM RECOVERY, INC., a
corporation
By: /s/
Name: Rodger H. Barton
Title: Vice President and
Treasurer
BANKERS TRUST (DELAWARE), a
Delaware banking
corporation, as Collateral
Agent, on behalf of itself
and the Secured Parties
By: /s/
Name: James H. Stallkamp
Title:President
MOBILE ENERGY SERVICES COMPANY,
L.L.C., an Alabama limited liability
company, as Borrower
By: /s/
Name: Christopher J. Kysar
Title: Vice President
ACKNOWLEDGED:
MOBILE ENERGY SERVICES HOLDINGS, INC.,
an Alabama corporation
By: /s/
Name: Christopher J. Kysar
Title: Vice President
Exhibit 10.49
CONSENT TO ASSIGNMENT
THIS CONSENT TO ASSIGNMENT (this "Consent"), dated as of
August 1, 1995, is executed by SOUTHERN ELECTRIC INTERNATIONAL, INC., a Delaware
corporation (the "Consenting Party"), MOBILE ENERGY SERVICES COMPANY, L.L.C., an
Alabama limited liability company (the "Company"), and BANKERS TRUST (OF
DELAWARE), a Delaware banking corporation, as Collateral Agent for the Senior
Secured Parties (as hereinafter defined) (the "Collateral Agent").
W I T N E S S E T H:
WHEREAS, the Company, Mobile Energy Services Holdings, Inc.
(formerly known as Mobile Energy Services Company, Inc.), an Alabama
corporation ("Mobile Energy"), and First Union National Bank of
Georgia, as trustee (in such capacity, the "Indenture Trustee"), have
entered into a Trust Indenture dated as of August 1, 1995 (as the same
may be amended, supplemented, waived or otherwise modified, the
"Indenture"), pursuant to which the Company (i)is issuing its First
Mortgage Bonds, the proceeds of which will be used to (among other
things) repay to The Southern Company a portion of the amounts advanced
to pay certain costs associated with the acquisition of the energy and
black liquor recovery complex located at an integrated pulp, paper and
tissue manufacturing facility in Mobile, Alabama (together with the
related real property rights and other related assets of the Company,
the "Energy Complex") and (ii) may, from time to time, issue additional
Senior Debt (as defined in the Indenture);
WHEREAS, the Company, Mobile Energy and The Industrial
Development Board of the City of Mobile, Alabama (the "IDB") have
entered into an Amended and Restated Lease and Agreement dated as of
August 1, 1995 with respect to a portion of the Energy Complex relating
to the IDB's Solid Waste Revenue Refunding Bonds (Mobile Energy
Services Company, L.L.C. Project), Series 1995, to be issued for the
benefit of the Company pursuant to an Amended and Restated Trust
Indenture dated as of August 1, 1995 (as the same may be amended,
supplemented, waived or otherwise modified, the "Tax-Exempt Indenture")
between the IDB and First Union National Bank of Georgia, as trustee
(in such capacity, the "Tax-Exempt Trustee"). The proceeds of the
Tax-Exempt Bonds will be used to refinance certain outstanding
tax-exempt bonds and to pay for certain other costs. The Company may
cause the IDB to issue, from time to time, additional Senior Debt under
the Tax-Exempt Indenture;
<PAGE>
WHEREAS, the Company and Banque Paribas (together with any
lender that is or becomes a provider of the Working Capital Facility
(as hereinafter defined), the "Working Capital Facility Provider" and,
together with the Indenture Trustee and the Tax-Exempt Trustee, the
"Senior Secured Parties") have entered into a Revolving Credit Facility
dated as of August 1, 1995 (as the same may be amended, supplemented,
waived or otherwise modified and, together with any replacement working
capital facility, the "Working Capital Facility"), borrowings under
which will be used from time to time to finance certain working capital
requirements of the Company;
WHEREAS, the Consenting Party and Mobile Energy have entered
into a Facility Operations and Maintenance Agreement dated as of
December 12, 1994 (as the same may be amended, supplemented, waived or
otherwise modified, the "Contract");
WHEREAS, pursuant to an Omnibus Deed, Bill of Sale, General
Assignment and Conveyance Agreement dated as of July 14, 1995 between
Mobile Energy and the Company, Mobile Energy has assigned to the
Company, and the Company has assumed, all of Mobile Energy's rights and
obligations under the Contract (the "Omnibus Transfer");
WHEREAS, the Collateral Agent has been granted a security
interest in the Contract and the Energy Complex for the benefit of the
Senior Secured Parties pursuant to an Assignment and Security Agreement
dated as of August 1, 1995 between the Collateral Agent and the Company
and a Leasehold Mortgage, Assignment of Leases, Rents, Issues and
Profits dated as of August 1, 1995 between the Collateral Agent and the
Company; and
WHEREAS, the Collateral Agent, the Senior Secured Parties, the
IDB, the Company and Mobile Energy have entered into a Intercreditor
and Collateral Agency Agreement dated as of August 1, 1995 (as the same
may be amended, supplemented, waived or otherwise modified, the
"Intercreditor Agreement").
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which hereby are acknowledged, the parties hereto
hereby agree as follows (except as otherwise expressly provided in this Consent
to Assignment or unless the context otherwise required, all terms used herein
having the meanings set forth in Appendix A to the Intercreditor Agreement).
1. Consent to Assignment. The Consenting Party hereby
irrevocably consents to the assignment of the Contract by Mobile Energy to the
Company and the Company's assignment of the Contract to the Collateral Agent as
security; and the Consenting Party shall, at the Collateral Agent's request in
the exercise of its rights as Collateral Agent, continue performance under the
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Contract in accordance with its terms and the terms of this Consent to
Assignment.
2. No Defaults. The Consenting Party represents and warrants
to, and agrees with, the Collateral Agent that (a) the Consenting Party shall
perform and comply with all material terms and provisions of the Contract
applicable to it, (b) the Contract is in full force and effect and there are no
amendments, modifications or supplements thereto, either oral or written, (c)
other than by entering into subcontracts in the ordinary course of business, the
Consenting Party has not assigned, transferred or hypothecated any of its right,
title and interest in and to the Contract or any interest therein, (d) the
Consenting Party has no knowledge of any default by the Company or Mobile Energy
in any respect in the performance of any provision of the Contract or of any
existing claims or rights of set-off by the Consenting Party or any of its
affiliates against the Company or Mobile Energy, (e) each of the Company and
Mobile Energy has fulfilled all of its material obligations under the Contract
required to be performed on or prior to the date hereof and there are no
material breaches or unsatisfied conditions presently existing (or that, with
the giving of notice or the passage of time or both, would exist) or that would
result from the consummation of any transaction contemplated by the Contract or
this Consent to Assignment to take place on the date hereof that would allow the
Consenting Party to terminate this Consent to Assignment or the Contract, (f) to
the best knowledge of the Consenting Party, none of the Company's or Mobile
Energy's rights under the Contract has been waived, (g) the assignment by Mobile
Energy of the Contract to the Company did not, and the security assignment of
the Contract by the Company to the Collateral Agent, and the acknowledgment of
and consent to such assignments by the Consenting Party, will not, cause or
constitute a default under the Contract or an event or condition that, with the
giving of notice or the passage of time or both, would constitute a default
under the Contract and (h) a foreclosure or other exercise of remedies under the
Financing Documents (as defined in the Indenture) or any sale thereunder by the
Collateral Agent or any of its designees or assignees, whether by judicial
proceedings or under any power of sale contained therein, or any conveyance from
the Company or the Collateral Agent or any such designee or assignee, in lieu
thereof, shall not cause or constitute a default under the Contract or an event
or condition that, with the giving of notice or the passage of time or both,
would constitute a default under the Contract.
3. Notice of Termination, Transfer, Etc.. (a) The
Consenting Party will not, without the prior written consent of
the Collateral Agent, (i) cancel, suspend or terminate the
Contract, except as provided in the Contract and in accordance
with Section 3(b) hereof, or consent to or accept any
cancellation, suspension or termination thereof by the Company
(other than upon the stated expiration of the term of the
Contract), (ii) sell, assign or otherwise dispose of (by
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operation of law or otherwise) any part of its interest in the Contract, other
than by entering into subcontracts in the ordinary course of business, (iii)
amend or modify the Contract in any respect that may reasonably be expected to
have a material adverse effect on the Company's rights or obligations or (iv)
claim prevention of or interference with performance of its obligations under
the Contract, except as otherwise set forth in Section 3(b). The Consenting
Party agrees to deliver duplicates or copies of all (i) notices of default
delivered by the Consenting Party under or pursuant to the Contract to the
Collateral Agent promptly upon delivery thereof to the Company (and the
Consenting Party agrees that no such notice of default shall be effective until
received by the Collateral Agent) and (ii) amendments to the Contract (and the
Consenting Party agrees that no such amendment shall be effective until received
by the Collateral Agent).
(b) The Consenting Party will not exercise any right it may
have under the Contract, at law or in equity, to cancel, suspend or terminate
the Contract (other than upon the stated expiration of the term of the Contract
or at the option of the Consenting Party on six (6) months notice pursuant to
Section 8.2 of the Contract) or any of its obligations thereunder on account of
any default, breach or other act or omission of the Company thereunder without
(i) in the case of a default by the Company that is the failure by the Company
to pay amounts to the Consenting Party that are due and payable under the
Contract, first providing to the Collateral Agent written notice of such
default, breach or other act or omission and the greater of (A) the cure period
specified in such Contract and (B) ninety (90) days from the date such notice is
received by the Collateral Agent to pay such amounts (provided that,
notwithstanding the foregoing, the Consenting Party may suspend performance
under the Contract within thirty (30) days) and (ii) in the case of a default,
breach or other act or omission that cannot be cured by the payment of money to
the Consenting Party, first providing to the Collateral Agent written notice of
such default, breach or other act or omission and the greater of (A) the cure
period specified in such Contract and (B) one hundred eighty (180) days from the
date such notice is received by the Collateral Agent to cure such breach or
default so long as the Collateral Agent or its designee shall have commenced to
cure such breach, default or other act or omission within ninety (90) days and
thereafter diligently pursues such cure to completion or, with respect to any
default, breach or other act or omission that is not susceptible of being cured
by the Collateral Agent, to rectify, to the Consenting Party's reasonable
satisfaction, the effect on the Consenting Party thereof within one hundred
eighty (180) days from the date such notice is received by the Collateral Agent.
If possession of the Energy Complex (by way of foreclosure proceedings or
otherwise) is necessary to cure such breach, default or other act or omission,
the Collateral Agent or its successor, transferee or assignee will be allowed a
reasonable additional period to complete such proceedings or otherwise
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accomplish such possession, provided that in no event shall such additional
period exceed ninety (90) days and provided that the Collateral Agent or its
successor, transferee or assignee proceeds diligently throughout such additional
period to accomplish such possession.
If the Collateral Agent or its successor, transferee or
assignee is prohibited by any court order or bankruptcy or insolvency
proceedings from curing the default, breach or other act or omission or from
commencing or prosecuting foreclosure proceedings, the foregoing time periods
shall be extended by the period of such prohibition. The Consenting Party
consents to the transfer of the Company's interest under the Contract to the
Collateral Agent for the benefit of the Senior Secured Parties or a purchaser or
grantee at a foreclosure sale by judicial or nonjudicial foreclosure and sale or
by a conveyance by the Company in lieu of foreclosure and agrees that, upon such
foreclosure, sale or conveyance, the Consenting Party shall recognize the
Collateral Agent or such other purchaser or grantee as the applicable party
under the Contract so transferred, provided that the Collateral Agent or such
purchaser or grantee assumes the obligations of the Company under such Contract.
The notice specified in this Section 3(b) shall be in writing
and shall be addressed to the Collateral Agent as set forth below or to such
other address as the Collateral Agent may have specified by written notice
delivered in accordance herewith. Such notice shall be effective (a) if by
telecopier, when transmitted to the telecopier number specified herein and
received at such number, (b) if by registered or certified mail, postage
prepaid, return receipt requested, on the third business day after delivered to
a United States post office and a receipt therefor is issued thereby or (c) if
by any other means, when delivered to the specified address:
Bankers Trust (Delaware)
c/o Bankers Trust Company
Four Albany Street, 4th Floor
New York, New York 10006
Attention: Corporate Trust and Agency Group
Telecopier No.: 212-250-6961
Failure of the Consenting Party to provide such notice to the Collateral Agent
shall not constitute a breach of this Consent to Assignment, and the Collateral
Agent agrees that the Consenting Party shall have no liability to the Collateral
Agent for such failure whatsoever; provided, however, that no cancellation,
suspension or termination (other than upon the stated expiration of the term of
the Contract) of the Contract by the Consenting Party, or of any of the
Consenting Party's obligations thereunder by the Consenting Party, shall be
binding upon the Collateral Agent without such notice and the expiration of the
applicable cure period set forth in this Section 3(b).
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4. No Previous Assignment. Except for the Omnibus Transfer
above and for the assignment contemplated by this Consent to Assignment, the
Consenting Party represents and warrants to the Collateral Agent that it has no
actual notice of any assignment of the Contract and that it has not previously
consented to any assignment, transfer or hypothecation of the Contract or any
interest therein by the Company, other than subcontracts entered into in the
ordinary course of business.
5. Payments to Revenue Account. The Consenting Party hereby
agrees that, until the Collateral Agent has given the Consenting Party written
notice that the obligations secured by the Contract have been paid, observed and
satisfied in full, all payments to be made by the Consenting Party pursuant to
the terms of the Contract shall be made directly to the Collateral Agent, c/o
Bankers Trust Company, for deposit into the Revenue Account established and
created under the Intercreditor Agreement (Account No. 15351), at Bankers Trust
Company, Four Albany Street, New York, New York 10006, or to such other person
or at such other address as the Collateral Agent may from time to time specify
in writing to the Consenting Party. By executing this Consent to Assignment, the
Company hereby directs the Consenting Party to make all payments due to the
Company under the Contract directly to the Collateral Agent, c/o Bankers Trust
Company, or such other person as provided for above until the Consenting Party
has received the notice referred to in the first sentence of this Section 5.
6. Protection of Collateral Agent. In the event that
(a) either (i) the Company's interest in the Energy Complex shall
be sold, assigned or otherwise transferred pursuant to the
exercise of any right, power or remedy by the Collateral Agent or
pursuant to judicial proceedings or (ii) the Company rejects the
Contract under the Federal Bankruptcy Code, or other similar
Federal or state statute, and such rejection is approved by the
appropriate bankruptcy court or is otherwise effective pursuant
to such statute and (b) in either case (i) all funds payable
under the Contract shall be paid to the Consenting Party, (ii)
the Collateral Agent shall have cured any material default or
breach by the Company under the Contract that is susceptible of
being corrected by the Collateral Agent or by a purchaser at any
judicial or non-judicial sale, (iii) the Contract shall have been
terminated pursuant to the terms thereof by reason of a default
or a rejection in bankruptcy under the Federal Bankruptcy Code,
or other similar Federal or state statute, and (iv) the effect
upon the Consenting Party of any default not susceptible of being
corrected shall have been rectified, to the Consenting Party's
reasonable satisfaction, then the Consenting Party shall, within
fifteen (15) days after receipt of written request therefor,
execute and deliver to the Collateral Agent or its nominee,
purchaser, assignee or transferee (as the case may be) an
agreement containing the same terms (including with respect to
termination by the Consenting Party) as the Contract so
terminated for the remainder of the term thereof. References in
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<PAGE>
this Consent to Assignment to "Contract" shall be deemed also to refer to such
new agreements.
7. Acknowledgment of the Collateral Agent's Obligations and
Rights. None of the Collateral Agent, the Senior Secured Parties or the IDB has
any obligation hereunder to extend credit to the Consenting Party or any
contractor of the Consenting Party at any time for any purpose. None of the
Collateral Agent, the Senior Secured Parties or the IDB shall have any
obligation to the Consenting Party under the Contract unless and until such time
as it succeeds to the interests of the Company under such Contract. It is
expressly understood and agreed by the parties hereto that this Consent has been
executed by Bankers Trust (Delaware), not in its individual capacity, but solely
as Collateral Agent hereunder in the exercise of the power and authority
conferred and vested in it, and nothing contained herein shall be construed as
creating any liability on Bankers Trust (Delaware), individually or personally,
to perform any covenant, either expressed or implied, contained herein, all such
liability, if any, being expressly waived by the parties hereto.
8. Exercise of Remedies by the Collateral Agent. Upon
delivery of written notice by the Collateral Agent to the
Consenting Party that the Collateral Agent or any of its
designees or assignees (as the case may be) expressly elects to
assume the obligations of the Company under the Contract, the
Collateral Agent or any of its designees or assignees shall have
the full right and power to enforce directly against the
Consenting Party all obligations of the Consenting Party under
such Contract and otherwise to exercise all remedies thereunder
and to make all demands and give all notices and make all
requests required or permitted to be made by the Company under
such Contract.
9. The Company Not to Cause Breach. The Company hereby
irrevocably waives any rights that it may have, including those arising under
the Contract, to seek to compel the Consenting Party to act in a manner
inconsistent with this Consent to Assignment while this Consent to Assignment is
in effect.
10. Subordination of Certain Claims; Indemnification. (a)
Notwithstanding anything herein or in the Contract to the contrary, the
Consenting Party hereby agrees that any claims of the Consenting Party for
indemnification, reimbursement or otherwise (whether or not based on the
Contract), insofar as such claims arise out of, are based upon or relate to (i)
the Notice of Charge of Discrimination (Charge No. 130952216) of the Equal
Employment Opportunity Commission heretofore delivered to the Consenting Party
or (ii) any other losses, claims, damages or liabilities (or actions in respect
thereof) of any Person, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of, are based upon or
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relate to conduct that is or is alleged to be part of a pattern of activity
similar to that alleged by or in the Notice of Charge of Discrimination referred
to above, in each case, whether heretofore or hereafter arising (each of such
losses, claims, damages and liabilities specified in clauses (i) and (ii), a
"Specified Claim"), shall constitute or shall be deemed to constitute
Subordinated Fees under the Financing Documents.
(b) Notwithstanding anything herein or in the Contract to the
contrary, the Consenting Party hereby agrees to indemnify and hold harmless the
Mobile Energy Parties, the Senior Secured Parties and the Collateral Agent
against any losses, claims, damages or liabilities, joint or several, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of, are based upon or relate to any Specified Claim.
11. Representations. The Consenting Party represents
and warrants to the Company and the Collateral Agent as follows:
(a) The Consenting Party is duly organized, validly existing
and in good standing under the laws of the State of Delaware and is
qualified to do business in the State of Alabama.
(b) The Consenting Party has the necessary corporate power and
corporate authority to execute, deliver and perform the Contract and
this Consent to Assignment; the execution and delivery by the
Consenting Party of the Contract and this Consent to Assignment and the
performance of its obligations thereunder and hereunder have been duly
authorized by all necessary corporate action and do not and will not
(i) require any consent or approval of the Consenting Party's board of
directors and shareholders, except for those consents and approvals
that have been duly obtained and are in full force and effect, (ii)
violate any provision of the certificate of incorporation and by-laws
of the Consenting Party or any provision of any law, rule or
regulation, or any order, writ, judgment, injunction, decree,
determination or award having applicability to the Consenting Party,
(iii) result in a breach of or constitute a default under any
indenture, loan agreement, credit agreement or any other agreement,
lease or instrument to which the Consenting Party is a party or by
which it or its properties may be bound or affected or (iv) result in,
or require, the creation or imposition of any mortgage, deed of trust,
pledge, lien, security interest, charge or encumbrance of any nature
now owned or hereafter acquired by the Consenting Party; and the
Consenting Party is not in violation, breach or default of any
provision of the certificate of incorporation and bylaws of the
Consenting Party or any provision of any law, rule, regulation, order,
writ, judgment, injunction, decree, determination or award having
applicability to the Consenting Party or any agreement referred to
above in clause (iii) of this Section
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<PAGE>
10(b), which violation could have a material adverse effect on the
ability of the Consenting Party to perform its obligations under this
Consent to Assignment or the Contract.
(c) Each of the Contract and this Consent to Assignment has
been duly executed and delivered and constitutes a valid and binding
obligation of the Consenting Party, enforceable against the Consenting
Party in accordance with its terms, except to the extent that
enforceability may be limited by applicable bankruptcy, insolvency,
moratorium, reorganization or other similar laws affecting the
enforcement of creditors' rights and general equitable principles
(regardless of whether such enforceability is considered in a
proceeding in equity or in law).
(d) No consent or approval of, or other action by, or any
notice or filing with, any court or administrative or governmental body
(except those previously obtained and in full force and effect) is
required in connection with the execution and delivery of the Contract
or this Consent to Assignment or the performance by the Consenting
Party of its obligations thereunder or hereunder; and the Consenting
Party has obtained all permits, licenses, approvals, consents,
authorizations and exemptions with respect to the performance of its
obligations under the Contract and this Consent to Assignment required
by applicable laws, statutes, rules and regulations in effect as of the
date hereof.
(e) The Consenting Party is not in default with respect to the
Contract and has no knowledge, as of the date hereof, of any claims or,
except as otherwise set forth in the Contract, rights of set-off by the
Consenting Party or by any of its affiliates against the Company. The
Consenting Party will not exercise any right of set-off it may have
against the Company or Mobile Energy under the Contract other than with
respect to matters arising under such Contract.
(f) There are no proceedings pending or, to the best of the
Consenting Party's knowledge after due inquiry, threatened against or
affecting the Consenting Party in any court or before any governmental
authority or arbitration board or tribunal (whether or not purportedly
on behalf of the Consenting Party) that may result in a material
adverse effect on the property, business, prospects or financial
condition of the Consenting Party or on the ability of the Consenting
Party to perform its obligations under, or that purports to affect the
legality, validity or enforceability of, the Contract or this Consent
to Assignment; and the Consenting Party is not in default with respect
to any order of any court, governmental authority or arbitration board
or tribunal that may result in a material adverse effect on the
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<PAGE>
Consenting Party's ability to perform its obligations under this
Consent to Assignment or the Contract.
12. Binding Upon Successors. All agreements,
covenants, conditions, representations and warranties in this
Consent to Assignment shall be binding upon and inure to the
benefit of and be enforceable by the successors and assigns of
each of the parties hereto.
13. Captions. The captions or headings at the
beginning of each Section hereof are for convenience only and
shall not affect the construction hereof.
14. Governing Law. THE RIGHTS AND DUTIES OF THE PARTIES UNDER
THIS CONSENT TO ASSIGNMENT SHALL, PURSUANT TO SECTION 5-1401 OF THE NEW YORK
GENERAL OBLIGATIONS LAW, BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK,
WITHOUT REFERENCE TO THE CHOICE OF LAW PROVISIONS THEREOF (OTHER THAN SUCH
SECTION 5-1401).
15. Amendment. This Consent to Assignment may be
modified, amended or rescinded only by a writing expressly
referring to this Consent to Assignment and signed by all of the
parties hereto.
16. Severability. Any provision of this Consent to Assignment
that may be determined by competent authority to be invalid or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such invalidity or unenforceability without invalidating or rendering
unenforceable any remaining terms and provisions hereof, and such invalidity or
unenforceability shall not invalidate or render unenforceable such provision in
any other jurisdiction.
17. Termination. This Consent to Assignment shall be
deemed to be terminated and of no further force and effect at the
earlier of (a) payment in full of all Secured Obligations (as
defined in the Intercreditor Agreement) and (b) termination of
the Contract in accordance with the provisions of Section 3(b).
18. Counterparts. This Consent to Assignment may be
executed in any number of counterparts, each of which when so
executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same
instrument.
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<PAGE>
IN WITNESS WHEREOF, each of the Consenting Party, the
Collateral Agent and the Company have duly executed this Consent to Assignment
as of the date first above written.
SOUTHERN ELECTRIC INTERNATIONAL, INC.
a Delaware corporation,
as the Consenting Party
By: /s/
Name: S. Marce Fuller
Title:Vice President
BANKERS TRUST (DELAWARE),
a Delaware banking corporation, as
the Collateral Agent
By: /s/
Name:James H. Stallkamp
Title:President
MOBILE ENERGY SERVICES COMPANY,
L.L.C., an Alabama limited
liability company, as the Company
By: /s/
Name: Christopher J. Kysar
Title: Vice President
Acknowledged and Agreed:
MOBILE ENERGY SERVICES
HOLDINGS, INC.,
an Alabama corporation
By: /s/
Name: Christopher J. Kysar
Title: Vice President
Exhibit 10.50
CONSENT TO ASSIGNMENT
THIS CONSENT TO ASSIGNMENT (this "Consent"), dated as of
August 1, 1995, is executed by SOUTHERN COMPANY SERVICES, INC., an Alabama
corporation (the "Consenting Party"), MOBILE ENERGY SERVICES COMPANY, L.L.C., an
Alabama limited liability company (the "Company"), and BANKERS TRUST (DELAWARE),
a Delaware banking corporation, as Collateral Agent for the Senior Secured
Parties (as hereinafter defined) (the "Collateral Agent").
W I T N E S S E T H:
WHEREAS, the Company, Mobile Energy Services Holdings, Inc.
(formerly known as Mobile Energy Services Company, Inc.), an Alabama
corporation ("Mobile Energy"), and First Union National Bank of
Georgia, as trustee (in such capacity, the "Indenture Trustee"), have
entered into a Trust Indenture dated as of August 1, 1995 (as the same
may be amended, supplemented, waived or otherwise modified, the
"Indenture"), pursuant to which the Company (i)is issuing its First
Mortgage Bonds, the proceeds of which will be used to (among other
things) repay to The Southern Company a portion of the amounts advanced
to pay certain costs associated with the acquisition of the energy and
black liquor recovery complex located at an integrated pulp, paper and
tissue manufacturing facility in Mobile, Alabama (together with the
related real property rights and other related assets of the Company,
the "Energy Complex") and (ii) may, from time to time, issue additional
Senior Debt (as defined in the Indenture);
WHEREAS, the Company, Mobile Energy and The Industrial
Development Board of the City of Mobile, Alabama (the "IDB") have
entered into an Amended and Restated Lease and Agreement dated as of
August 1, 1995 with respect to a portion of the Energy Complex relating
to the IDB's Solid Waste Revenue Refunding Bonds (Mobile Energy
Services Company, L.L.C. Project), Series 1995, to be issued for the
benefit of the Company pursuant to an Amended and Restated Trust
Indenture dated as of August 1, 1995 (as the same may be amended,
supplemented, waived or otherwise modified, the "Tax-Exempt Indenture")
between the IDB and First Union National Bank of Georgia, as trustee
(in such capacity, the "Tax-Exempt Trustee"). The proceeds of the
Tax-Exempt Bonds will be used to refinance certain outstanding
tax-exempt bonds and to pay for certain other costs. The Company may
cause the IDB to issue, from time to time, additional Senior Debt under
the Tax-Exempt Indenture;
<PAGE>
WHEREAS, the Company and Banque Paribas (together with any
lender that is or becomes a provider of the Working Capital Facility
(as hereinafter defined), the "Working Capital Facility Provider" and,
together with the Indenture Trustee and the Tax-Exempt Trustee, the
"Senior Secured Parties") have entered into a Revolving Credit Facility
dated as of August 1, 1995 (as the same may be amended, supplemented,
waived or otherwise modified and, together with any replacement working
capital facility, the "Working Capital Facility"), borrowings under
which will be used from time to time to finance certain working capital
requirements of the Company;
WHEREAS, the Consenting Party and the Company have entered
into a Services Agreement dated as of July 14, 1995 (as the same may be
amended, supplemented, waived or otherwise modified, the "Contract");
WHEREAS, the Collateral Agent has been granted a security
interest in the Contract and the Energy Complex for the benefit of the
Senior Secured Parties pursuant to an Assignment and Security Agreement
dated as of August 1, 1995 between the Collateral Agent and the Company
and a Leasehold Mortgage, Assignment of Leases, Rents, Issues and
Profits dated as of August 1, 1995 between the Collateral Agent and the
Company; and
WHEREAS, the Collateral Agent, the Senior Secured Parties, the
IDB, the Company and Mobile Energy have entered into an Intercreditor
and Collateral Agency Agreement dated as of August 1, 1995 (as the same
may be amended, supplemented, waived or otherwise modified, the
"Intercreditor Agreement").
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which hereby are acknowledged, the parties hereto
hereby agree as follows.
1. Consent to Assignment. The Consenting Party hereby
irrevocably consents to the Company's assignment of the Contract to the
Collateral Agent as security; and the Consenting Party shall, at the Collateral
Agent's request in the exercise of its rights as Collateral Agent, continue
performance under the Contract in accordance with its terms and the terms of
this Consent to Assignment; provided, however, that any such assignment shall be
subject to the receipt by the Consenting Party of any necessary regulatory
approvals, for which the Consenting Party shall diligently apply and use best
efforts to obtain; and provided, further, that the Contract shall be subject to
termination by the Consenting Party upon six (6) months notice at any time
following any such assignment.
2. No Defaults. The Consenting Party represents and
warrants to, and agrees with, the Collateral Agent that (a) the
Consenting Party shall perform and comply with all material terms
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<PAGE>
and provisions of the Contract applicable to it, (b) the Contract is in full
force and effect and there are no amendments, modifications or supplements
thereto, either oral or written, (c) the Consenting Party has not assigned,
transferred or hypothecated any of its right, title and interest in and to the
Contract or any interest therein, (d) the Consenting Party has no knowledge of
any default by the Company in any respect in the performance of any provision of
the Contract or of any existing claims or rights of set-off by the Consenting
Party or any of its affiliates against the Company, (e) the Company has
fulfilled all of its material obligations under the Contract required to be
performed on or prior to the date hereof and there are no material breaches or
unsatisfied conditions presently existing (or that, with the giving of notice or
the passage of time or both, would exist) or that would result from the
consummation of any transaction contemplated by the Contract or this Consent to
Assignment to take place on the date hereof that would allow the Consenting
Party to terminate this Consent to Assignment or the Contract, (f) to the best
knowledge of the Consenting Party, none of the Company's rights under the
Contract has been waived, (g) the security assignment of the Contract by the
Company to the Collateral Agent, and the acknowledgment of and consent to such
assignment by the Consenting Party, will not, cause or constitute a default
under the Contract or an event or condition that, with the giving of notice or
the passage of time or both, would constitute a default under the Contract and
(h) a foreclosure or other exercise of remedies under the Financing Documents
(as defined in the Indenture) or any sale thereunder by the Collateral Agent or
any of its designees or assignees, whether by judicial proceedings or under any
power of sale contained therein, or any conveyance from the Company or the
Collateral Agent or any such designee or assignee, in lieu thereof, shall not
cause or constitute a default under the Contract or an event or condition that,
with the giving of notice or the passage of time or both, would constitute a
default under the Contract.
3. Notice of Termination, Transfer, Etc.. (a) The Consenting
Party will not, without the prior written consent of the Collateral Agent, (i)
cancel, suspend or terminate the Contract, except as provided in the Contract
and in accordance with Section 3(b) hereof, or consent to or accept any
cancellation, suspension or termination thereof by the Company (other than upon
the stated expiration of the term of the Contract), (ii) sell, assign or
otherwise dispose of (by operation of law or otherwise) any part of its interest
in the Contract, (iii) amend or modify the Contract in any respect that may
reasonably be expected to have a material adverse effect on the Company's rights
or obligations or (iv) claim prevention of or interference with performance of
its obligations under the Contract, except as otherwise provided in Section 3(b)
hereof. The Consenting Party agrees to deliver duplicates or copies of all (i)
notices of default delivered by the Consenting Party under or pursuant to the
Contract to the Collateral Agent promptly upon delivery thereof to the Company
(and the Consenting Party agrees that no such notice of default shall be
effective until received by the Collateral Agent) and (ii) amendments to the
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<PAGE>
Contract (and the Consenting Party agrees that no such amendment shall be
effective until received by the Collateral Agent).
(b) The Consenting Party will not exercise any right it may
have under the Contract, at law or in equity, to cancel, suspend or terminate
the Contract (other than upon the stated expiration of the term of the Contract
or at the option of the Consenting Party on six (6) months notice as
contemplated by Section 1 hereof) or any of its obligations thereunder on
account of any default, breach or other act or omission of the Company
thereunder without (i) in the case of a default by the Company that is the
failure by the Company to pay amounts to the Consenting Party that are due and
payable under the Contract, first providing to the Collateral Agent written
notice of such default, breach or other act or omission and the greater of (A)
the cure period specified in such Contract and (B) ninety (90) days from the
date such notice is received by the Collateral Agent to pay such amounts
(provided that the Consenting Party may suspend performance under the Contract
within thirty (30) days), notwithstanding the foregoing, and (ii) in the case of
a default, breach or other act or omission that cannot be cured by the payment
of money to the Consenting Party, first providing to the Collateral Agent
written notice of such default, breach or other act or omission and the greater
of (A) the cure period specified in such Contract and (B) one hundred eighty
(180) days from the date such notice is received by the Collateral Agent to cure
such breach or default so long as the Collateral Agent or its designee shall
have commenced to cure such breach, default or other act or omission within
ninety (90) days and thereafter diligently pursues such cure to completion or,
with respect to any default, breach or other act or omission that is not
susceptible of being cured by the Collateral Agent, to rectify, to the
Consenting Party's reasonable satisfaction, the effect on the Consenting Party
thereof within one hundred eighty (180) days from the date such notice is
received by the Collateral Agent. If possession of the Energy Complex (by way of
foreclosure proceedings or otherwise) is necessary to cure such breach, default
or other act or omission, the Collateral Agent or its successor, transferee or
assignee will be allowed a reasonable additional period to complete such
proceedings or otherwise accomplish such possession, provided that in no event
shall such additional period exceed ninety (90) days and provided that the
Collateral Agent or its successor, transferee or assignee proceeds diligently
throughout such additional period to accomplish such possession.
If the Collateral Agent or its successor, transferee or
assignee is prohibited by any court order or bankruptcy or insolvency
proceedings from curing the default, breach or other act or omission or from
commencing or prosecuting foreclosure proceedings, the foregoing time periods
shall be extended by the period of such prohibition. The Consenting Party
consents to the transfer of the Company's interest under the Contract to the
Collateral Agent for the benefit of the Senior Secured Parties or a purchaser or
grantee at a foreclosure sale by judicial or nonjudicial foreclosure and sale or
by a conveyance by the Company
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<PAGE>
in lieu of foreclosure and agrees that, upon such foreclosure, sale or
conveyance, the Consenting Party shall recognize the Collateral Agent or such
other purchaser or grantee as the applicable party under the Contract so
transferred, provided that the Collateral Agent or such purchaser or grantee
assumes the obligations of the Company under such Contract.
The notice specified in this Section 3(b) shall be in writing
and shall be addressed to the Collateral Agent as set forth below or to such
other address as the Collateral Agent may have specified by written notice
delivered in accordance herewith. Such notice shall be effective (a) if by
telecopier, when transmitted to the telecopier number specified herein and
received at such number, (b) if by registered or certified mail, postage
prepaid, return receipt requested, on the third business day after delivered to
a United States post office and a receipt therefor is issued thereby or (c) if
by any other means, when delivered to the specified address:
Bankers Trust (Delaware)
c/o Bankers Trust Company
Four Albany Street, 4th Floor
New York, New York 10006
Attention: Corporate Trust and Agency Group
Telecopier No.: 212-250-6961
Failure of the Consenting Party to provide such notice to the Collateral Agent
shall not constitute a breach of this Consent to Assignment, and the Collateral
Agent agrees that the Consenting Party shall have no liability to the Collateral
Agent for such failure whatsoever; provided, however, that no cancellation,
suspension or termination (other than upon the stated expiration of the term of
the Contract) of the Contract by the Consenting Party, or of any of the
Consenting Party's obligations thereunder by the Consenting Party, shall be
binding upon the Collateral Agent without such notice and the expiration of the
applicable cure period set forth in this Section 3(b).
4. No Previous Assignment. Except for the assignment
contemplated by this Consent to Assignment, the Consenting Party represents and
warrants to the Collateral Agent that it has no actual notice of any assignment
of the Contract and that it has not previously consented to any assignment,
transfer or hypothecation of the Contract or any interest therein by the
Company, other than subcontracts entered into in the ordinary course of
business.
5. Payments to Revenue Account. The Consenting Party hereby
agrees that, until the Collateral Agent has given the Consenting Party written
notice that the obligations secured by the Contract have been paid, observed and
satisfied in full, all payments to be made by the Consenting Party pursuant to
the terms of the Contract shall be made directly to the Collateral Agent, c/o
Bankers Trust Company, for deposit into the Revenue Account
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<PAGE>
established and created under the Intercreditor Agreement (Account No. 15351),
at Bankers Trust Company, Four Albany Street, New York, New York 10006, or to
such other person or at such other address as the Collateral Agent may from time
to time specify in writing to the Consenting Party. By executing this Consent to
Assignment, the Company hereby directs the Consenting Party to make all payments
due to the Company under the Contract directly to the Collateral Agent, c/o
Bankers Trust Company, or such other person as provided for above until the
Consenting Party has received the notice referred to in the first sentence of
this Section 5.
6. Protection of Collateral Agent. In the event that (a)
either (i) the Company's interest in the Energy Complex shall be sold, assigned
or otherwise transferred pursuant to the exercise of any right, power or remedy
by the Collateral Agent or pursuant to judicial proceedings or (ii) the Company
rejects the Contract under the Federal Bankruptcy Code, or other similar Federal
or state statute, and such rejection is approved by the appropriate bankruptcy
court or is otherwise effective pursuant to such statute and (b) in either case
(i) all funds payable under the Contract shall be paid, (ii) the Collateral
Agent shall have cured any material default or breach by the Company under the
Contract that is susceptible of being corrected by the Collateral Agent or by a
purchaser at any judicial or non-judicial sale, (iii) the Contract shall have
been terminated pursuant to the terms thereof by reason of a default or a
rejection in bankruptcy under the Federal Bankruptcy Code, or other similar
Federal or state statute, and (iv) the effect upon the Consenting Party of any
default not susceptible of being corrected shall have been rectified, to the
Consenting Party's reasonable satisfaction, then the Consenting Party shall,
within fifteen (15) days after receipt of written request therefor, execute and
deliver to the Collateral Agent or its nominee, purchaser, assignee or
transferee (as the case may be) an agreement containing the same terms as the
Contract so terminated for the remainder of the term thereof. References in this
Consent to Assignment to "Contract" shall be deemed also to refer to such new
agreements.
7. Acknowledgment of the Collateral Agent's Obligations and
Rights. None of the Collateral Agent, the Senior Secured Parties or the IDB has
any obligation hereunder to extend credit to the Consenting Party or any
contractor of the Consenting Party at any time for any purpose. None of the
Collateral Agent, the Senior Secured Parties or the IDB shall have any
obligation to the Consenting Party under the Contract unless and until such time
as it succeeds to the interests of the Company under such Contract. It is
expressly understood and agreed by the parties hereto that this Consent has been
executed by Bankers Trust (Delaware), not in its individual capacity, but solely
as Collateral Agent hereunder in the exercise of the power and authority
conferred and vested in it, and nothing contained herein shall be construed as
creating any liability on Bankers Trust (Delaware), individually or personally,
to perform any covenant, either expressed or implied, contained
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<PAGE>
herein, all such liability, if any, being expressly waived by the
parties hereto.
8. Exercise of Remedies by the Collateral Agent. Upon
delivery of written notice by the Collateral Agent to the
Consenting Party that the Collateral Agent or any of its designees
or assignees (as the case may be) expressly elects to assume the
obligations of the Company under the Contract, the Collateral Agent
or any of its designees or assignees shall have the full right and
power to enforce directly against the Consenting Party all
obligations of the Consenting Party under such Contract and
otherwise to exercise all remedies thereunder and to make all
demands and give all notices and make all requests required or
permitted to be made by the Company under such Contract.
9. The Company Not to Cause Breach. The Company hereby irrevocably
waives any rights that it may have, including those arising under the Contract,
to seek to compel the Consenting Party to act in a manner inconsistent with this
Consent to Assignment while this Consent to Assignment is in effect.
10. Representations. The Consenting Party represents
and warrants to the Company and the Collateral Agent as follows:
(a) The Consenting Party is duly organized, validly existing
and in good standing under the laws of the State of Alabama.
(b) The Consenting Party has the necessary corporate power and
corporate authority to execute, deliver and perform the Contract and
this Consent to Assignment; the execution and delivery by the
Consenting Party of the Contract and this Consent to Assignment and the
performance of its obligations thereunder and hereunder have been duly
authorized by all necessary corporate action and do not and will not
(i) require any consent or approval of the Consenting Party's board of
directors and shareholders, except for those consents and approvals
that have been duly obtained and are in full force and effect, (ii)
violate any provision of the articles of incorporation and by-laws of
the Consenting Party or any provision of any law, rule or regulation,
or any order, writ, judgment, injunction, decree, determination or
award having applicability to the Consenting Party, (iii) result in a
breach of or constitute a default under any indenture, loan agreement,
credit agreement or any other agreement, lease or instrument to which
the Consenting Party is a party or by which it or its properties may be
bound or affected or (iv) result in, or require, the creation or
imposition of any mortgage, deed of trust, pledge, lien, security
interest, charge or encumbrance of any nature now owned or hereafter
acquired by the Consenting Party; and the Consenting Party is not in
violation, breach or default of any provision of the articles of
incorporation and bylaws of the Consenting Party or any provision of
any law, rule, regulation, order, writ,
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<PAGE>
judgment, injunction, decree, determination or award having
applicability to the Consenting Party or any agreement referred to
above in clause (iii) of this Section 10(b), which violation could have
a material adverse effect on the ability of the Consenting Party to
perform its obligations under this Consent to Assignment or the
Contract.
(c) Each of the Contract and this Consent to Assignment has
been duly executed and delivered and constitutes a valid and binding
obligation of the Consenting Party, enforceable against the Consenting
Party in accordance with its terms, except to the extent that
enforceability may be limited by applicable bankruptcy, insolvency,
moratorium, reorganization or other similar laws affecting the
enforcement of creditors' rights and general equitable principles
(regardless of whether such enforceability is considered in a
proceeding in equity or in law).
(d) Except as set forth in Section 1 hereof no consent or
approval of, or other action by, or any notice or filing with, any
court or administrative or governmental body (except those previously
obtained and in full force and effect) is required in connection with
the execution and delivery of the Contract or this Consent to
Assignment or the performance by the Consenting Party of its
obligations thereunder or hereunder, and the Consenting Party has
obtained all permits, licenses, approvals, consents, authorizations and
exemptions with respect to the performance of its obligations under the
Contract and this Consent to Assignment required by applicable laws,
statutes, rules and regulations in effect as of the date hereof.
(e) The Consenting Party is not in default with respect to the
Contract and has no knowledge, as of the date hereof, of any claims or,
except as otherwise set forth in the Contract, rights of set-off by the
Consenting Party or by any of its affiliates against the Company. The
Consenting Party will not exercise any right of set-off it may have
against the Company under the Contract other than with respect to
matters arising under such Contract.
(f) There are no proceedings pending or, to the best of the
Consenting Party's knowledge after due inquiry, threatened against or
affecting the Consenting Party in any court or before any governmental
authority or arbitration board or tribunal (whether or not purportedly
on behalf of the Consenting Party) that may result in a material
adverse effect on the property, business, prospects or financial
condition of the Consenting Party or on the ability of the Consenting
Party to perform its obligations under, or that purports to affect the
legality, validity or enforceability of, the Contract or this Consent
to Assignment; and the Consenting Party is not in default with respect
to any order of any court, governmental authority or arbitration board
or tribunal that may result in
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<PAGE>
a material adverse effect on the Consenting Party's ability to perform
its obligations under this Consent to Assignment or the Contract.
11. Binding Upon Successors. All agreements, covenants,
conditions, representations and warranties in this Consent to
Assignment shall be binding upon and inure to the benefit of and be
enforceable by the successors and assigns of each of the parties
hereto.
12. Captions. The captions or headings at the beginning
of each Section hereof are for convenience only and shall not
affect the construction hereof.
13. Governing Law. THE CONSENTING PARTY AND THE COMPANY
ACKNOWLEDGE AND AGREE THAT THE CONTRACT SHALL BE GOVERNED BY THE LAW OF THE
STATE OF GEORGIA. THE RIGHTS AND DUTIES OF THE PARTIES UNDER THIS CONSENT TO
ASSIGNMENT SHALL, PURSUANT TO SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS
LAW, BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO THE
CHOICE OF LAW PROVISIONS THEREOF (OTHER THAN SUCH SECTION 5-1401).
14. Amendment. This Consent to Assignment may be
modified, amended or rescinded only by a writing expressly
referring to this Consent to Assignment and signed by all of the
parties hereto.
15. Severability. Any provision of this Consent to Assignment
that may be determined by competent authority to be invalid or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such invalidity or unenforceability without invalidating or rendering
unenforceable any remaining terms and provisions hereof, and such invalidity or
unenforceability shall not invalidate or render unenforceable such provision in
any other jurisdiction.
16. Termination. This Consent to Assignment shall be
deemed to be terminated and of no further force and effect at the
earlier of (a) payment in full of all Secured Obligations (as
defined in the Intercreditor Agreement) and (b) termination of the
Contract in accordance with the provisions of Section 3(b) hereof.
17. Counterparts. This Consent to Assignment may be
executed in any number of counterparts, each of which when so
executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same
instrument.
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<PAGE>
IN WITNESS WHEREOF, each of the Consenting Party, the Collateral Agent
and the Company have duly executed this Consent to Assignment as of the date
first above written.
SOUTHERN COMPANY SERVICES, INC.,
an Alabama corporation,
as the Consenting Party
By: /s/
Name: W.L. Westbrook
Title:Executive Vice President and
Treasurer
BANKERS TRUST (DELAWARE),
a Delaware banking corporation, as
the Collateral Agent
By: /s/
Name: James H. Stallkamp
Title:President
MOBILE ENERGY SERVICES COMPANY,
L.L.C., an Alabama limited
liability company, as the Company
By: /s/
Name: Christopher J. Kysar
Title:Vice President
Exhibit 10.51
ESTOPPEL, CONSENT AND RECOGNITION AGREEMENT
This ESTOPPEL, CONSENT AND RECOGNITION AGREEMENT (this
"Estoppel Agreement"), dated as of August 1, 1995, is executed by SCOTT PAPER
COMPANY, a Pennsylvania corporation ("Scott"), and MOBILE ENERGY SERVICES
COMPANY, L.L.C., an Alabama limited liability company ("MESC"), for the benefit
of BANKERS TRUST (DELAWARE), a Delaware banking corporation, as Collateral Agent
for the Secured Parties (as hereinafter defined) (the "Lender").
A. MESC, Mobile Energy Services Holdings, Inc. (formerly known
as Mobile Energy Services Company, Inc.), an Alabama corporation ("Mobile
Energy"), and First Union National Bank of Georgia, as trustee (in such
capacity, the "Taxable Trustee"), have entered into a Trust Indenture dated as
of August 1, 1995 (as the same may be amended, supplemented, waived or otherwise
modified, the "Taxable Indenture"), pursuant to which MESC (i) is issuing its
First Mortgage Bonds, the proceeds of which will be used to (among other things)
repay to The Southern Company a portion of the amounts advanced to pay certain
costs associated with the acquisition of the Energy Complex (as defined in the
Amended and Restated Master Operating Agreement dated as of July 13, 1995 among
Scott, Mobile Energy and the other parties thereto), and (ii) may, from time to
time, issue additional Senior Debt (as defined in the Taxable Indenture).
B. MESC, Mobile Energy and The Industrial Development Board of
the City of Mobile, Alabama (the "Board") have entered into an Amended and
Restated Lease and Agreement dated as of August 1, 1995 with respect to part of
the Energy Complex, relating to The Industrial Development Board of the City of
Mobile, Alabama Solid Waste Revenue Refunding Bonds (Mobile Energy Services
Company, L.L.C. Project), Series 1995, to be issued for the benefit of MESC
pursuant to an Amended and Restated Indenture dated as of August 1, 1995 (as the
same may be amended, supplemented, waived or otherwise modified, the Tax- Exempt
Indenture") between the Board and First Union National Bank of Georgia, as
trustee (in such capacity, the "Tax-Exempt Trustee"). The proceeds of the
Tax-Exempt Bonds will be used to refinance certain outstanding tax-exempt bonds
and to pay for certain other costs. MESC may cause the Board to issue, from time
to time, additional debt under such Amended and Restated Indenture.
C. MESC and Banque Paribas (together with any lender that is
or becomes a provider of the Working Capital Facility (as hereinafter defined),
the "Working Capital Facility Provider" and, together with the Taxable Trustee
and the Tax-Exempt Trustee, the "Secured Parties") have entered into a Revolving
<PAGE>
Credit Facility dated as of August 1, 1995 (as the same may be amended,
supplemented, waived or otherwise modified, and together with any replacement
working capital facility, the "Working Capital Facility"), borrowings under
which will be used to finance certain working capital requirements of MESC.
D. Scott and Mobile Energy have entered into that certain
Lease Agreement dated as of December 12, 1994 (as amended by the First Amendment
to Lease Agreement dated as of July 13, 1995, and as it may be further amended,
restated, renewed, modified or supplemented from time to time with the Lender's
written consent, the "Lease"), whereby, inter alia, Scott has leased to Mobile
Energy certain real property owned by Scott and described in Exhibit A attached
hereto and incorporated herein by this reference (the "Facility Site");
E. Pursuant to an Omnibus Deed, Bill of Sale, General
Assignment and Conveyance Agreement between Mobile Energy and MESC dated as of
July 14, 1995, Mobile Energy has assigned to MESC, and MESC has assumed, all of
Mobile Energy's rights and obligations under the Lease; and
F. The Lender has been granted a security interest in the
Lease and the Energy Complex for the benefit of the Secured Parties pursuant to
an Intercreditor and Collateral Agency Agreement dated as of August 1, 1995 by
and among the Secured Parties, the Board, the Lender, MESC and Mobile Energy (as
the same may be amended, supplemented, waived or otherwise modified, the
"Intercreditor Agreement"), the Leasehold Mortgage, Assignment of Leases, Rents,
Issues, Profits and Security Agreement and Fixture Filing dated as of August 1,
1995 (as the same may be amended, supplemented, waived or otherwise modified,
the "Mortgage"), the Assignment of Security Agreement dated as of August 1, 1995
between MESC and the Lender, and the other Financing Documents.
NOW, THEREFORE, with the understanding that the Lender and the
Secured Parties will be relying on each of the statements contained in this
Estoppel Agreement and that the Lender and the Secured Parties would not enter
into the Intercreditor Agreement and the other Financing Documents without this
Estoppel Agreement, Scott hereby states, certifies, represents and warrants (in
each case, as of the date hereof) and agrees as follows (capitalized terms not
otherwise defined herein having the meanings ascribed thereto in the
Intercreditor Agreement as in effect on the date hereof):
1. The Lease has not been supplemented or amended (orally or
in writing), except as described in Recital D above. Attached hereto as Exhibit
B is a true and correct copy of the Lease.
2. The Lease is valid and in full force and effect,
in accordance with its terms, and is the valid and binding
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<PAGE>
obligation of Scott as lessor. The Lease has not been surrendered, canceled,
terminated or abandoned, whether in writing or pursuant to a purported oral
surrender, cancellation, termination or abandonment.
3. The Lease constitutes the only written agreement
between Scott and MESC with respect to the interests described
therein.
4. Scott has not commenced any pending action or sent any
presently effective notice to MESC (or received any presently effective notice
from MESC) for the purpose of terminating the Lease. Scott is not presently
entitled to terminate the Lease.
5. Scott has not received any notice delivered for
the purpose of terminating the Lease.
6. To the best of Scott's knowledge, MESC is not in default in
the performance of the Lease and no event has occurred which with the passage of
time or the giving of notice, or both, would constitute a default by MESC under
the Lease.
7. Scott is not in default in the performance of the Lease and
no event has occurred which with the passage of time or the giving of notice, or
both, would constitute a default by Scott under the Lease.
8. Rent under the Lease is One Dollar ($1.00) per
year, payable in advance, and the first installment thereof was
due on December 16, 1994.
9. All rent has been paid under the Lease through and
including the rent payable for each rent payment period that includes the date
hereof. As of the date hereof, no rent or any other payments are presently due
under the Lease.
10. The "Effective Date" of the Lease, on which date
the term of the Lease commenced, is December 16, 1994.
11. Scott has not assigned, sublet, hypothecated, or otherwise
transferred its interests, or any portion thereof, under the Lease or in its
estate underlying the Lease. Except as described in Recital D above and as
contemplated by this Estoppel Agreement, Scott has not received notice of any
assignment of the Lease by MESC.
12. Scott acknowledges and agrees that MESC has the right to
and will encumber its interests under the Lease with the Mortgage and other
security documents. Scott consents to the assignment pursuant to the Mortgage
and other Financing Documents and agrees with the Lender for the benefit of the
Secured Parties that Scott has received notice that the Lender, for the benefit
of the Secured Parties, holds a leasehold mortgage on the leasehold estate of
MESC and is entitled to all rights,
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<PAGE>
privileges and protections that apply to the holder of such a leasehold mortgage
under the Lease, subject in each case to the terms and conditions of the
Consents to Assignment between the Lender and each of Scott and the Mill Owners
(the "Consents"), and that Scott has been provided with the Lender's address
herein.
13. Scott agrees that notwithstanding anything in the Lease to
the contrary, it will not create any lien, charge, interest, or encumbrance in
or on the Facility Site that is superior to the Lease and/or the lien of the
Mortgage.
14. Scott agrees that the Lender and the Secured Parties shall
have the right to enter, possess and use the Facility Site at such reasonable
times and manner as are necessary or desirable to effectuate the remedies and
enforce the rights of Lender and the Secured Parties under the Financing
Documents; provided, however, that such entry, possession or use shall be
strictly in accordance with the terms and conditions of the Consents.
15. None of senior management of Scott, the Pulp Mill SOC
Representative (as defined in the Master Operating Agreement) and the Tissue
Mill SOC Representative (as defined in the Master Operating Agreement) has
received notice of any other holder of a leasehold mortgage on or holder of any
other security interest in the leasehold estate of MESC under the Lease other
than the Mortgage.
16. Scott hereby represents and warrants that:
(a) The execution, delivery and performance by Scott
of the Lease and this Estoppel Agreement have been duly authorized by
all necessary corporate action, and do not require any further consents
or approvals which have not been obtained, or violate any provision of
any law, regulation, order, judgment, injunction or similar matters or
breach any agreement presently in effect with respect to or binding on
Scott;
(b) This Estoppel Agreement is the legal, valid and
binding obligation of Scott, and this Estoppel Agreement and the Lease
are enforceable against Scott in accordance with their terms, except as
such enforcement may be limited by (i) bankruptcy, insolvency,
reorganization, moratorium or similar laws of general applicability
affecting the enforcement of creditors' rights generally, and (ii) the
application of general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law); and
(c) All government approvals necessary for the
execution and delivery of and performance by Scott of its
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<PAGE>
obligations under the Lease have been obtained and are in
full force and effect.
17. All notices required or permitted hereunder shall be in
writing and shall be effective (a) upon receipt if hand delivered, (b) upon
telephonic verification of receipt if sent by telefacsimile and (c) if otherwise
delivered, upon the earlier of receipt or two (2) business days after being sent
registered or certified mail, return receipt requested, with proper postage
affixed thereto, or by private courier or delivery service with charges prepaid,
and addressed as specified below:
If to Scott:
Scott Paper Company
Scott Plaza
Philadelphia, Pennsylvania 19113-1585
Attn: Thomas C. Deas, Jr.
FAX: (215) 522-5665
with copy to:
Skadden, Arps, Slate, Meagher & Flom
1440 New York Avenue, N.W.
Washington, D.C. 20005
Attn: Martin Klepper, Esq.
FAX: (202) 393-5760
If to the Lender:
Bankers Trust (Delaware)
c/o Bankers Trust Company
Four Albany Street, 4th Floor
New York, New York 10006
Attn: Corporate Trust and Agency Group
FAX: 212-250-6961
with copy to:
Seward & Kissel
One Battery Park Plaza
New York, New York 10004
Attn: Kalyan Das
FAX:212-480-8421
Each party may change its address to another address within the United States by
notice in accordance with this paragraph.
18. This Estoppel Agreement shall be binding upon and benefit
the successors and assigns of Scott, MESC, the Lender, the Secured Parties, and
their respective successors, transferees and assigns (including, without
limitation, any entity that
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<PAGE>
refinances all or any portion of the obligations under the Financing Documents).
Scott agrees to confirm such continuing obligation in writing upon the
reasonable request of MESC, the Lender, the Secured Parties, or any of their
respective successors, transferees and assigns. No termination, amendment,
variation or waiver of any provisions of this Estoppel Agreement shall be
effective unless in writing and signed by Scott, the Lender and MESC. To the
extent this Estoppel Agreement conflicts in any way with the Lease, this
Estoppel Agreement is intended to modify and supersede the Lease. Any such
conflict shall be resolved in favor of this Estoppel Agreement. If all or any
portion of any provision of this Estoppel Agreement is held to be invalid,
illegal or unenforceable in any respect, then such invalidity, illegality, or
unenforceability shall not affect any other provision of this Estoppel
Agreement. This Estoppel Agreement shall be governed by the laws of the State of
New York, without reference to principles of conflicts of laws (other than
Section 5-1401 of the New York General Obligations Law).
19. Notwithstanding anything in the Lease to the contrary, the
parties hereto agree that the effectiveness of this Estoppel Agreement, and the
rights of the Lender as a leasehold mortgagee under the Lease and hereunder,
shall in no way be conditioned on the recording of this Estoppel Agreement.
20. This Estoppel Agreement may be executed in one or more
duplicate counterparts, and when executed and delivered by all the parties
listed below, shall constitute a single binding agreement.
21. It is expressly understood and agreed by the parties
hereto that this Estoppel Agreement has been executed by Bankers Trust
(Delaware), not in its individual capacity, but solely as Collateral Agent for
the Secured Parties in the exercise of the power and authority conferred and
vested in it.
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<PAGE>
IN WITNESS WHEREOF, Scott, by its officer thereunto duly
authorized, has duly executed this Estoppel Agreement as of the date first set
forth above.
SCOTT PAPER COMPANY,
a Pennsylvania corporation
By: /s/
Name: Thomas C. Deas, Jr.
Title: Assistant Treasurer
Accepted and agreed to:
BANKERS TRUST (DELAWARE),
as the Lender
By: /s/
Name: James H. Stallkamp
Title: President
MOBILE ENERGY SERVICES COMPANY, L.L.C.,
an Alabama limited liability company
By: /s/
Name: Christopher J. Kysar
Title: Vice President
<PAGE>
STATE OF PENNSYLVANIA )
) ss.:
COUNTY OF DELAWARE )
I, the undersigned Notary Public in and for said County in
said State, hereby certify that Thomas C. Deas, Jr. whose name as Assistant
Treasurer of Scott Paper Company, a Pennsylvania corporation, is signed to the
foregoing Estoppel, Consent and Recognition Agreement and who is known to me,
acknowledged before me on this day that, being informed of the contents of the
instrument, he, as such officer and with full authority, executed the same
voluntarily for and as the act of said corporation.
Given under my hand and seal this the 18th day of August,
1995.
/s/ (seal)
Notary Public
STATE OF DELAWARE )
) ss.:
COUNTY OF NEW CASTLE )
I, the undersigned Notary Public in and for said County in
said State, hereby certify that James H. Stallkamp whose name as President of
Bankers Trust (Delaware), a Delaware banking corporation, is signed to the
foregoing Estoppel, Consent and Recognition Agreement and who is known to me,
acknowledged before me on this day that, being informed of the contents of the
instrument, he, as such officer and with full authority, executed the same
voluntarily for and as the act of said Delaware banking Corporation.
Given under my hand and seal this the 21st day of August,
1995.
/s/ (seal)
Notary Public
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<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
I, the undersigned Notary Public in and for said County in
said State, hereby certify that Chris Kysar whose name as Vice President of
Mobile Energy Services Company, L.L.C., an Alabama limited liability companyon,
is signed to the foregoing Estoppel, Consent and Recognition Agreement and who
is known to me, acknowledged before me on this day that, being informed of the
contents of the instrument, he, as such officer and with full authority,
executed the same voluntarily for and as said corporation.
Given under my hand and seal this the 23rd day of August,
1995.
/s/ (seal)
Notary Public
<PAGE>
EXHIBIT "A"
Parcel A:
Lots 7 and 9 of Scott Paper Company Subdivision as shown on the plat thereof as
recorded in Map Book 64, Page 39, in the records appearing in the Office of the
Judge of Probate of Mobile County, Alabama.
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Exhibit 10.52
ESTOPPEL, CONSENT AND RECOGNITION AGREEMENT
This ESTOPPEL, CONSENT AND RECOGNITION AGREEMENT (this
"Estoppel Agreement"), dated as of August 1, 1995, is executed by SCOTT PAPER
COMPANY, a Pennsylvania corporation ("Scott"), and MOBILE ENERGY SERVICES
COMPANY, L.L.C., an Alabama limited liability company ("MESC"), for the benefit
of BANKERS TRUST (DELAWARE), a Delaware banking corporation, as Collateral Agent
for the Secured Parties (as hereinafter defined) (the "Lender").
A. MESC, Mobile Energy Services Holdings, Inc. (formerly known
as Mobile Energy Services Company, Inc.), an Alabama corporation ("Mobile
Energy"), and First Union National Bank of Georgia, as trustee (in such
capacity, the "Taxable Trustee"), have entered into a Trust Indenture dated as
of August 1, 1995 (as the same may be amended, supplemented, waived or otherwise
modified, the "Taxable Indenture"), pursuant to which MESC (i) is issuing its
First Mortgage Bonds, the proceeds of which will be used to (among other things)
repay to The Southern Company a portion of the amounts advanced to pay certain
costs associated with the acquisition of the Energy Complex (as defined in the
Amended and Restated Master Operating Agreement dated as of July 13, 1995 among
Scott, Mobile Energy and the other parties thereto), and (ii) may, from time to
time, issue additional Senior Debt (as defined in the Taxable Indenture).
B. MESC, Mobile Energy and The Industrial Development Board of
the City of Mobile, Alabama (the "Board") have entered into an Amended and
Restated Lease and Agreement dated as of August 1, 1995 with respect to part of
the Energy Complex, relating to The Industrial Development Board of the City of
Mobile, Alabama Solid Waste Revenue Refunding Bonds (Mobile Energy Services
Company, L.L.C. Project), Series 1995, to be issued for the benefit of MESC
pursuant to an Amended and Restated Indenture dated as of August 1, 1995 (as the
same may be amended, supplemented, waived or otherwise modified, the Tax- Exempt
Indenture") between the Board and First Union National Bank of Georgia, as
trustee (in such capacity, the "Tax-Exempt Trustee"). The proceeds of the
Tax-Exempt Bonds will be used to refinance certain outstanding tax-exempt bonds
and to pay for certain other costs. MESC may cause the Board to issue, from time
to time, additional debt under such Amended and Restated Indenture.
C. MESC and Banque Paribas (together with any lender that is
or becomes a provider of the Working Capital Facility (as hereinafter defined),
the "Working Capital Facility Provider" and, together with the Taxable Trustee
and the Tax-Exempt Trustee, the "Secured Parties") have entered into a Revolving
<PAGE>
Credit Facility dated as of August 1, 1995 (as the same may be amended,
supplemented, waived or otherwise modified, and together with any replacement
working capital facility, the "Working Capital Facility"), borrowings under
which will be used to finance certain working capital requirements of MESC.
D. Scott and Mobile Energy have entered into that certain
Supplementary Lease Agreement dated as of December 12, 1994 (as amended pursuant
to the First Amendment to Supplementary Lease Agreement dated as of July 13,
1995, and pursuant to the Second Amendment to Supplementary Lease Agreement
dated as of August 1, 1995 (to be recorded) and as it may be further amended,
restated, renewed, modified or supplemented from time to time with the Lender's
written consent, the "Lease"), whereby, inter alia, Scott has leased to Mobile
Energy certain real property owned by Scott and described in Exhibit A attached
hereto and incorporated herein by this reference (the "Facility Site");
E. Pursuant to an Omnibus Deed, Bill of Sale, General
Assignment and Conveyance Agreement between Mobile Energy and MESC dated as of
July 14, 1995, Mobile Energy has assigned to MESC, and MESC has assumed, all of
Mobile Energy's rights and obligations under the Lease; and
F. The Lender has been granted a security interest in the
Lease and the Energy Complex for the benefit of the Secured Parties pursuant to
an Intercreditor and Collateral Agency Agreement dated as of August 1, 1995 by
and among the Secured Parties, the Board, the Lender, MESC and Mobile Energy (as
the same may be amended, supplemented, waived or otherwise modified, the
"Intercreditor Agreement"), the Leasehold Mortgage, Assignment of Leases, Rents,
Issues, Profits and Security Agreement and Fixture Filing dated as of August 1,
1995 (as the same may be amended, supplemented, waived or otherwise modified,
the "Mortgage"), the Assignment of Security Agreement dated as of August 1, 1995
between MESC and the Lender, and the other Financing Documents.
NOW, THEREFORE, with the understanding that the Lender and the
Secured Parties will be relying on each of the statements contained in this
Estoppel Agreement and that the Lender and the Secured Parties would not enter
into the Intercreditor Agreement and the other Financing Documents without this
Estoppel Agreement, Scott hereby states, certifies, represents, and warrants (in
each case, as of the date hereof) and agrees as follows (capitalized terms not
otherwise defined herein having the meanings ascribed thereto in the
Intercreditor Agreement as in effect on the date hereof):
1. The Lease has not been supplemented or amended (orally or
in writing), except as described in Recital D above. Attached hereto as Exhibit
B is a true and correct copy of the Lease.
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<PAGE>
2. The Lease is valid and in full force and effect, in
accordance with its terms, and is the valid and binding obligation of Scott as
lessor. The Lease has not been surrendered, canceled, terminated or abandoned,
whether in writing or pursuant to a purported oral surrender, cancellation,
termination or abandonment.
3. The Lease constitutes the only written agreement
between Scott and MESC with respect to the interests described
therein.
4. Scott has not commenced any pending action or sent any
presently effective notice to MESC (or received any presently effective notice
from MESC) for the purpose of terminating the Lease. Scott is not presently
entitled to terminate the Lease.
5. Scott has not received any notice delivered for
the purpose of terminating the Lease.
6. To the best of Scott's knowledge, MESC is not in default in
the performance of the Lease and no event has occurred which with the passage of
time or the giving of notice, or both, would constitute a default by MESC under
the Lease.
7. Scott is not in default in the performance of the Lease and
no event has occurred which with the passage of time or the giving of notice, or
both, would constitute a default by Scott under the Lease.
8. Rent under the Lease is One Dollar ($1.00) per
year, payable in advance, and the first installment thereof was
due on December 16, 1994.
9. All rent has been paid under the Lease through and
including the rent payable for each rent payment period that includes the date
hereof. As of the date hereof, no rent or any other payments are presently due
under the Lease.
10. The "Effective Date" of the Lease, on which date
the term of the Lease commenced, is December 16, 1994.
11. Scott has not assigned, sublet, hypothecated, or otherwise
transferred its interests, or any portion thereof, under the Lease or in its
estate underlying the Lease. Except as described in Recital D above and as
contemplated by this Estoppel Agreement, Scott has not received notice of any
assignment of the Lease by MESC.
12. Scott acknowledges and agrees that MESC has the right to
and will encumber its interests under the Lease with the Mortgage and other
security documents. Scott consents to the assignment pursuant to the Mortgage
and other Financing Documents and agrees with the Lender for the benefit of the
Secured Parties that Scott has received notice that the Lender, for the benefit
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<PAGE>
of the Secured Parties, holds a leasehold mortgage on the leasehold estate of
MESC and is entitled to all rights, privileges and protections that apply to the
holder of such a leasehold mortgage under the Lease, subject in each case to the
terms and conditions of the Consents to Assignment between the Lender and each
of Scott and the Mill Owners (the "Consents"), and that Scott has been provided
with the Lender's address herein.
13. Scott agrees that notwithstanding anything in the Lease to
the contrary, it will not create any lien, charge, interest, or encumbrance in
or on the Facility Site that is superior to the Lease and/or the lien of the
Mortgage.
14. Scott agrees that the Lender and the Secured Parties shall
have the right to enter, possess and use the Facility Site at such reasonable
times and manner as are necessary or desirable to effectuate the remedies and
enforce the rights of Lender and the Secured Parties under the Financing
Documents; provided, however, that such entry, possession or use shall be
strictly in accordance with the terms and conditions of the Consents.
15. None of the senior management of Scott, the Pulp Mill SOC
Representative (as defined in the Master Operating Agreement) and the Tissue
Mill SOC Representative (as defined in the Master Operating Agreement) has
received notice of any other holder of a leasehold mortgage on or holder of any
other security interest in the leasehold estate of MESC under the Lease other
than the Mortgage.
16. Scott hereby represents and warrants that:
(a) The execution, delivery and performance by Scott
of the Lease and this Estoppel Agreement have been duly authorized by
all necessary corporate action, and do not require any further consents
or approvals which have not been obtained, or violate any provision of
any law, regulation, order, judgment, injunction or similar matters or
breach any agreement presently in effect with respect to or binding on
Scott;
(b) This Estoppel Agreement is the legal, valid and
binding obligation of Scott, and this Estoppel Agreement and the Lease
are enforceable against Scott in accordance with their terms, except as
such enforcement may be limited by (i) bankruptcy, insolvency,
reorganization, moratorium or similar laws of general applicability
affecting the enforcement of creditors' rights generally and (ii) the
application of general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law); and
-4-
<PAGE>
(c) All government approvals necessary for the
execution and delivery of and performance by Scott of its obligations
under the Lease have been obtained and are in full force and effect.
17. All notices required or permitted hereunder shall be in
writing and shall be effective (a) upon receipt if hand delivered, (b) upon
telephonic verification of receipt if sent by telefacsimile and (c) if otherwise
delivered, upon the earlier of receipt or two (2) business days after being sent
registered or certified mail, return receipt requested, with proper postage
affixed thereto, or by private courier or delivery service with charges prepaid,
and addressed as specified below:
If to Scott:
Scott Paper Company
Scott Plaza
Philadelphia, Pennsylvania 19113-1585
Attn: Thomas C. Deas, Jr.
FAX: (215) 522-5665
with copy to:
Skadden, Arps, Slate, Meagher & Flom
1440 New York Avenue, N.W.
Washington, D.C. 20005
Attn: Martin Klepper, Esq.
FAX: (202) 393-5760
If to the Lender:
Bankers Trust (Delaware)
c/o Bankers Trust Company
Four Albany Street, 4th Floor
New York, New York 10006
Attn: Corporate Trust and Agency Group
FAX: 212-250-6961
with copy to:
Seward & Kissel
One Battery Park Plaza
New York, New York 10004
Attn: Kalyan Das
FAX:212-480-8421
Each party may change its address to another address within the United States by
notice in accordance with this paragraph.
18. This Estoppel Agreement shall be binding upon and
benefit the successors and assigns of Scott, MESC, the Lender,
-5-
<PAGE>
the Secured Parties, and their respective successors, transferees and assigns
(including, without limitation, any entity that refinances all or any portion of
the obligations under the Financing Documents). Scott agrees to confirm such
continuing obligation in writing upon the reasonable request of MESC, the
Lender, the Secured Parties, or any of their respective successors, transferees
and assigns. No termination, amendment, variation or waiver of any provisions of
this Estoppel Agreement shall be effective unless in writing and signed by
Scott, the Lender and MESC. To the extent this Estoppel Agreement conflicts in
any way with the Lease, this Estoppel Agreement is intended to modify and
supersede the Lease. Any such conflict shall be resolved in favor of this
Estoppel Agreement. If all or any portion of any provision of this Estoppel
Agreement is held to be invalid, illegal or unenforceable in any respect, then
such invalidity, illegality, or unenforceability shall not affect any other
provision of this Estoppel Agreement. This Estoppel Agreement shall be governed
by the laws of the State of New York, without reference to principles of
conflicts of laws (other than Section 5-1401 of the New York General Obligations
Law).
19. Notwithstanding anything in the Lease to the contrary, the
parties hereto agree that the effectiveness of this Estoppel Agreement, and the
rights of the Lender as a leasehold mortgagee under the Lease and hereunder,
shall in no way be conditional on the recording of this Estoppel Agreement.
20. This Estoppel Agreement may be executed in one or more
duplicate counterparts, and when executed and delivered by all the parties
listed below, shall constitute a single binding agreement.
21. It is expressly understood and agreed by the parties
hereto that this Estoppel Agreement has been executed by Bankers Trust
(Delaware), not in its individual capacity, but solely as Collateral Agent for
the Secured Parties in the exercise of the power and authority conferred and
vested in it.
-6-
<PAGE>
IN WITNESS WHEREOF, Scott, by its officer thereunto duly
authorized, has duly executed this Estoppel Agreement as of the date first set
forth above.
SCOTT PAPER COMPANY,
a Pennsylvania corporation
By: /s/
Name: Thomas C. Deas, Jr.
Title: Assistant Treasurer
Accepted and agreed to:
BANKERS TRUST (DELAWARE),
as the Lender
By: /s/
Name: James H. Stallkamp
Title: President
MOBILE ENERGY SERVICES COMPANY, L.L.C.,
an Alabama limited liability company
By: /s/
Name: Christopher J. Kysar
Title: Vice President
<PAGE>
STATE OF PENNSYLVANIA )
) ss.:
COUNTY OF DELAWARE )
I, the undersigned Notary Public in and for said County in
said State, hereby certify that Thomas C. Deas, Jr. whose name as Assistant
Treasurer of Scott Paper Company, a Pennsylvania corporation, is signed to the
foregoing Estoppel, Consent and Recognition Agreement and who is known to me,
acknowledged before me on this day that, being informed of the contents of the
instrument, he, as such officer and with full authority, executed the same
voluntarily for and as the act of said corporation.
Given under my hand and seal this the 18th day of August,
1995.
/s/ (seal)
Notary Public
STATE OF DELAWARE )
) ss.:
COUNTY OF NEW CASTLE )
I, the undersigned Notary Public in and for said County in
said State, hereby certify that James H. Stallkamp whose name as President of
Bankers Trust (Delaware), a Delaware banking corporation, is signed to the
foregoing Estoppel, Consent and Recognition Agreement and who is known to me,
acknowledged before me on this day that, being informed of the contents of the
instrument, he, as such officer and with full authority, executed the same
voluntarily for and as the act of said Delaware banking Corporation.
Given under my hand and seal this the 21st day of August,
1995.
/s/ (seal)
Notary Public
-8-
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
I, the undersigned Notary Public in and for said County in
said State, hereby certify that Chris Kysar whose name as Vice President of
Mobile Energy Services Company, L.L.C., an Alabama limited liability companyon,
is signed to the foregoing Estoppel, Consent and Recognition Agreement and who
is known to me, acknowledged before me on this day that, being informed of the
contents of the instrument, he, as such officer and with full authority,
executed the same voluntarily for and as said corporation.
Given under my hand and seal this the 23rd day of August,
1995.
/s/ (seal)
Notary Public
<PAGE>
EXHIBIT "A"
Property Description of Leased Premises
ALL that certain plot, piece or parcel of land, situate, lying and being in the
City of Mobile, County of Mobile, and State of Alabama, bounded and described as
follows:
Parcel I
Beginning at a point in Lot 11 of the Scott Paper Company Subdivision
as recorded in Map Book 64, Page 39, in the Office of the Judge of
Probate of Mobile County, Alabama, said point being 3570.10 feet North
and 431.54 feet East of the Site of the Great Magnolia, and at Alabama
State Plane Coordinate, (West Zone, NAD 1927), North 270056.327 and
East 326422.733; Thence N-10-53'-56"-W for 356.22 ft.; Thence
S-89-01'-08"-E for 105.36 ft.; Thence S-68-5 2'-49"-E for 194.97 ft.;
Thence S-15-17'-38"-E for 241.11 ft.; Thence S-80-56'-54"-W for 287.04
ft. to the Point of Beginning. Said Parcel (the "East Fuel Tank
Parcel") lying and being in Lot 11 of the Scott Paper Company
Subdivision and containing 1.968 acres, more or less.
LESS AND EXCEPT:
Beginning at a point 38.85 feet South and 7.65 feet West of the North
East corner of the Parcel described above, said point being at Alabama
State Plane Coordinate, (West Zone, NAD 1927), North 270295.212 and
East 326634.957; Thence S-42-00'-44"-W for 42.00 ft.; Thence
N-47-59'-16"-W for 50.00 ft.; Thence N-42-00'-44"-E for 42.00 ft.;
Thence S-47-59'-16"-E for 50 ft. to the Point of Beginning. Said Parcel
(the "Excluded Parcel") lying entirely within the East Fuel Tank Parcel
described above and containing 2100.00 square feet, more or less.
Parcel II
Beginning at a point in Lot 11 of the Scott Paper Company Subdivision
as recorded in Map Book 64, Page 39, in the office of the judge of
Probate of Mobile County, Alabama: Said point being 2027.703 feet North
and 2186.144 feet East of the Site of the Great Magnolia, and at
Alabama State Plane Coordinate, West Zone, NAD 1927, North 268513.927,
East 328177.335: Thence N-41(degree)-44'-09"-E for 195.20 feet; Thence
S-26(degree)-32'-42"-E for 119.38 feet; Thence S-34(degree)-20'-56"-E
for 102.00 feet; Thence S-41(degree)-44'-09"-W for 144.25 feet; Thence
Northwesterly, around a curve to the left having a radius of 438.67
feet and a Delta angle of 27(degree)-48'-23", the Chord of which bears
N-43(degree)-25'-40"-W for 210.66 feet, for an arc distance of 212.74
feet to the Point of Beginning. Said Parcel lying and being entirely
within
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<PAGE>
the boundaries of Lot 11 of the aforesaid Scott Paper Company
Subdivision, and containing 0.759 acres, more or less.
-11-
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.
<PAGE>
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
2
<PAGE>
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
3
<PAGE>
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
4
<PAGE>
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,
5
<PAGE>
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
6
<PAGE>
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
7
<PAGE>
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
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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
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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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<PAGE>
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
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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
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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
<PAGE>
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."
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(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
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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
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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
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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
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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
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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
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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
<PAGE>
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
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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;
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(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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
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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
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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
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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
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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.
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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.
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(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,
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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
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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
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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
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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
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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,
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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
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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
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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
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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
<PAGE>
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.)
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted from the Form
10-K for December 31, 1995, and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<CIK> 0000945979
<NAME> MOBILE ENERGY SERVICES HOLDINGS, INC
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 357,091
<OTHER-PROPERTY-AND-INVEST> 0
<TOTAL-CURRENT-ASSETS> 59,067
<TOTAL-DEFERRED-CHARGES> 14,862
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 431,020
<COMMON> 1
<CAPITAL-SURPLUS-PAID-IN> 41,367
<RETAINED-EARNINGS> (602)
<TOTAL-COMMON-STOCKHOLDERS-EQ> 40,766
0
0
<LONG-TERM-DEBT-NET> 308,361
<SHORT-TERM-NOTES> 14,075
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> (5,895)
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 87,788
<TOT-CAPITALIZATION-AND-LIAB> 431,020
<GROSS-OPERATING-REVENUE> 82,497
<INCOME-TAX-EXPENSE> 8,058
<OTHER-OPERATING-EXPENSES> 44,215
<TOTAL-OPERATING-EXPENSES> 52,273
<OPERATING-INCOME-LOSS> 30,224
<OTHER-INCOME-NET> 1,076
<INCOME-BEFORE-INTEREST-EXPEN> 31,300
<TOTAL-INTEREST-EXPENSE> 18,501
<NET-INCOME> 12,799
0
<EARNINGS-AVAILABLE-FOR-COMM> 12,799
<COMMON-STOCK-DIVIDENDS> 14,694
<TOTAL-INTEREST-ON-BONDS> 13,007
<CASH-FLOW-OPERATIONS> 41,949
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted from the Form
10-K for December 31, 1995, and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<CIK> 0000948362
<NAME> MOBILE ENERGY SERVICES CO LLC
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 357,091
<OTHER-PROPERTY-AND-INVEST> 0
<TOTAL-CURRENT-ASSETS> 58,938
<TOTAL-DEFERRED-CHARGES> 14,862
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 430,891
<COMMON> 0
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 66,772
<TOTAL-COMMON-STOCKHOLDERS-EQ> 66,772
0
0
<LONG-TERM-DEBT-NET> 308,361
<SHORT-TERM-NOTES> 14,075
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> (5,895)
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 61,653
<TOT-CAPITALIZATION-AND-LIAB> 430,891
<GROSS-OPERATING-REVENUE> 82,497
<INCOME-TAX-EXPENSE> 0
<OTHER-OPERATING-EXPENSES> 44,005
<TOTAL-OPERATING-EXPENSES> 44,005
<OPERATING-INCOME-LOSS> 33,492
<OTHER-INCOME-NET> 1,012
<INCOME-BEFORE-INTEREST-EXPEN> 39,504
<TOTAL-INTEREST-EXPENSE> 18,501
<NET-INCOME> 21,003
0
<EARNINGS-AVAILABLE-FOR-COMM> 21,003
<COMMON-STOCK-DIVIDENDS> 37,058
<TOTAL-INTEREST-ON-BONDS> 13,007
<CASH-FLOW-OPERATIONS> 28,227
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
