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.



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         1.       Each of the Mobile Energy Parties jointly and severally
represents and warrants to, and agrees with, each of the
Underwriters that:

                  (a) A registration statement on Form S-1 (File No. 33- 92776)
         in respect of the Securities has been filed with the Securities and
         Exchange Commission (the "Commission"); such registration statement and
         any post-effective amendment thereto, each in the form heretofore
         delivered to the Underwriters, have been declared effective by the
         Commission in such form; no other document with respect to such
         registration statement has heretofore been filed with the Commission
         (other than the Application for Confidential Treatment of specified
         provisions of certain Project Contracts filed as exhibits to such
         registration statement); and no stop order suspending the effectiveness
         of such registration statement has been issued and no proceeding for
         that purpose has been initiated or, to the knowledge of either of the
         Mobile Energy Parties after due inquiry, threatened by the Commission;
         any preliminary prospectus included in such registration statement or
         filed with the Commission pursuant to Rule 424(a) of the rules and
         regulations of the Commission under the Securities Act of 1933, as
         amended (the "Act"), is hereinafter called a "Preliminary Prospectus";
         the various parts of such registration statement, including all
         exhibits (other than Form T-1) thereto and including the information
         contained in the form of final prospectus filed with the Commission
         pursuant to Rule 424(b) under the Act in accordance with Section 5(a)
         hereof and deemed by virtue of Rule 430A under the Act to be part of
         such registration statement at the time it was declared effective, each
         as amended at the time such part of such registration statement became
         effective, are hereinafter collectively called the "Registration
         Statement"; and such form of final prospectus, in the form first filed
         pursuant to Rule 424(b) under the Act and including all appendices
         thereto, is hereinafter called the "Prospectus."

                  (b) No order preventing or suspending the use of any
         Preliminary Prospectus has been issued by the Commission; each
         Preliminary Prospectus, at the time of filing thereof, conformed in all
         material respects to the requirements of the Act and the Trust
         Indenture Act of 1939, as amended (the "Trust Indenture Act"), and the
         rules and regulations of the Commission thereunder; and the
         Registration Statement conforms, and the Prospectus and any further
         amendments or supplements to the Registration Statement or the
         Prospectus will conform, in all material respects to the requirements
         of the Act and the Trust Indenture Act and the rules and regulations of
         the Commission thereunder.

                  (c) The Registration Statement does not and will not, as of
         the applicable effective date of the Registration Statement and any
         amendment thereto, contain an untrue statement of a material fact or
         omit to state a material fact required to be

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         stated therein or necessary to make the statements therein not
         misleading; the Preliminary Prospectus, Subject to Completion, dated
         July 20, 1995 (the "Circulated Preliminary Prospectus") did not contain
         an untrue statement of a material fact or omit to state a material fact
         required to be stated therein or necessary to make the statements
         therein, in the light of the circumstances under which they were made,
         not misleading; and the Prospectus does not and will not, as of the
         applicable filing date of the Prospectus and any amendment or
         supplement thereto, contain an untrue statement of a material fact or
         omit to state a material fact required to be stated therein or
         necessary to make the statements therein, in the light of the
         circumstances under which they were made, not misleading; provided,
         however, that this representation and warranty shall not apply to any
         statements or omissions (i) made in reliance upon and in conformity
         with information furnished in writing to the Mobile Energy Parties by
         the Underwriters expressly for use therein or (ii) in Appendices B and
         C to the Circulated Preliminary Prospectus or to the Prospectus.

                  (d) Neither of the Mobile Energy Parties has sustained, since
         the date of the latest audited financial statements included in the
         Prospectus, any material loss or interference with its business from
         fire, explosion, flood, hurricane or other calamity, whether or not
         covered by insurance, or from any labor dispute or court or
         governmental action, order or decree, otherwise than as set forth or
         contemplated in the Prospectus; and, since the respective dates as of
         which information is given in the Registration Statement and the
         Prospectus, there has not been any change in the capital stock or
         long-term debt of either of the Mobile Energy Parties or any material
         adverse change, or any development involving a prospective material
         adverse change, in or affecting the general affairs, management,
         properties, financial position, business prospects, shareholders' or
         other equity, results of operations or otherwise of either of the
         Mobile Energy Parties otherwise than as set forth or contemplated in
         the Prospectus.

                  (e) Each of the Mobile Energy Parties has good and marketable
         title in fee simple to all real property and good and marketable title
         to all personal property described in the Prospectus as being owned by
         them, in each case free and clear of all liens, encumbrances and
         defects except such as are described in the Prospectus or such as do
         not materially affect the value of such property and do not interfere
         with the use made and proposed to be made of such property by the
         Mobile Energy Parties; any real property and buildings described in the
         Prospectus as being held under lease by the Company are held by the
         Company under valid and subsisting leases, enforceable against the
         Company, with such exceptions as are not material and do not interfere
         with the use made and proposed to be made of such property and
         buildings by the Company; the easements, licenses and other rights
         granted or to be granted to either of the Mobile Energy Parties
         pursuant

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         to the terms of the Project Contracts provide or will provide the
         Company with all rights and property interests required to enable the
         Company to obtain all material services, materials or rights (including
         rights of access) required for the operation and maintenance of the
         Energy Complex, as contemplated by the Prospectus, other than those
         services, materials or rights that reasonably can be expected to be
         obtainable in the ordinary course of business; and Mobile Energy's only
         material assets consist of its ownership interest in the Company and
         its rights in respect of the Southern Master Tax Sharing Agreement.

                  (f) The Company has been duly formed and is validly existing
         as a limited liability company in good standing under the laws of the
         State of Alabama, with requisite limited liability company power and
         authority to own its properties and conduct its business as described
         in the Prospectus and to execute, deliver and perform its obligations
         under this Agreement and each other Project Document to which it is, or
         as of the Time of Delivery (as defined in Section 4(a) hereof) will be,
         a party and to consummate the transactions contemplated hereby and
         thereby, including the issuance and sale of the Securities as provided
         herein, and has been duly qualified as a foreign limited liability
         company for the transaction of business and is in good standing under
         the laws of each other jurisdiction in which it owns or leases property
         or conducts any business so as to require such qualification, or is
         subject to no material liability or disability by reason of the failure
         to be so qualified in any such jurisdiction.

                  (g) Mobile Energy has been duly incorporated and is validly
         existing as a corporation in good standing under the laws of the State
         of Alabama, with requisite corporate power and authority to own its
         properties and conduct its business as described in the Prospectus, and
         to execute, deliver and perform its obligations under this Agreement
         and each other Project Document to which it is, or as of the Time of
         Delivery will be, a party and to consummate the transactions
         contemplated hereby and thereby, including the issuance of the Guaranty
         as provided in the Indenture, and has been duly qualified as a foreign
         corporation for the transaction of business and is in good standing
         under the laws of each other jurisdiction in which it owns or leases
         properties or conducts any business so as to require such
         qualification, or is subject to no material liability or disability by
         reason of the failure to be so qualified in any such jurisdiction.

                  (h) The Company is, and as of the Time of Delivery will be,
         wholly-owned by Mobile Energy and Southern Electric International,
         Inc., a Delaware corporation ("Southern Electric"); each of Mobile
         Energy and Southern Electric is, and as of the Time of Delivery will
         be, wholly-owned by The Southern Company, a Delaware corporation
         ("Southern"); each of the Mobile Energy Parties has an authorized
         capitalization as

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         set forth in the Prospectus, and all of the outstanding equity
         interests of each of the Mobile Energy Parties have been duly and
         validly authorized and issued, are fully paid, nonassessable and not
         subject to any preemptive or similar rights and have been issued in
         accordance with applicable federal and state securities laws; as of the
         Time of Delivery, the equity interests of each of the Mobile Energy
         Parties will be free and clear of any security interest, mortgage,
         pledge, lien, encumbrance, claim or adverse interest of any nature; and
         neither of the Mobile Energy Parties has outstanding any securities
         convertible into or exchangeable for any of its equity interests or any
         rights to subscribe for or to purchase, or any warrants or options for
         the purchase of, or any agreements providing for the issuance
         (contingent or otherwise) of, or any calls, commitments or claims of
         any character relating to, any such equity interests.

                  (i) Neither of the Mobile Energy Parties has engaged in any
         business or activity other than in connection with the acquisition,
         development, ownership, operation and financing of the Energy Complex
         as contemplated by the Project Documents to which either of the Mobile
         Energy Parties is, or as of the Time of Delivery will be, a party.

                  (j) The Securities have been duly authorized and, when
         authenticated by the Trustee in accordance with the Indenture and
         purchased by the Underwriters pursuant to this Agreement, will have
         been duly executed, issued and delivered and will constitute valid and
         legally binding obligations of each of the Mobile Energy Parties
         entitled to the benefits provided by the Indenture, which will be
         substantially in the form filed as an exhibit to the Registration
         Statement; the Indenture has been duly authorized by each of the Mobile
         Energy Parties and duly qualified under the Trust Indenture Act and,
         when executed and delivered, will constitute a valid and legally
         binding instrument, enforceable against each of the Mobile Energy
         Parties in accordance with its terms, subject, as to enforceability, to
         bankruptcy, insolvency, reorganization, fraudulent conveyance,
         moratorium and other similar laws of general applicability relating to
         or affecting creditors' rights and remedies generally, to general
         equity principles, whether enforcement is considered in a proceeding in
         equity or law, to the discretion of the court before which any
         proceeding therefor may be brought and to public policy that may limit
         rights to indemnification; and the Securities and the Indenture will
         conform in all material respects to the descriptions thereof in the
         Prospectus.

                  (k) This Agreement has been duly authorized, executed and
         delivered by each of the Mobile Energy Parties and constitutes a valid
         and legally binding obligation of each of the Mobile Energy Parties,
         enforceable against each of the Mobile Energy Parties in accordance
         with its terms, subject, as to enforceability, to bankruptcy,
         insolvency,

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         reorganization, fraudulent conveyance, moratorium and other similar
         laws of general applicability relating to or affecting creditors'
         rights and remedies generally, to general equity principles, whether
         enforcement is considered in a proceeding in equity or law, to the
         discretion of the court before which any proceeding therefor may be
         brought and to public policy or federal or state securities law that
         may limit rights to indemnification.

                  (l) Each of the Financing Documents (other than the
         Securities, the Indenture and this Agreement), which, if the form
         thereof was filed as an exhibit to the Registration Statement, will be
         substantially in such form, to which either of the Mobile Energy
         Parties is, or as of the Time of Delivery will be, a party has been
         duly authorized by such Mobile Energy Party and, when executed and
         delivered by the parties thereto, will constitute a valid and legally
         binding obligation of such Mobile Energy Party, enforceable against
         such Mobile Energy Party in accordance with its terms, subject, as to
         enforceability, to bankruptcy, insolvency, reorganization, fraudulent
         conveyance, moratorium and other similar laws of general applicability
         relating to or affecting creditors' rights and remedies generally, to
         general equity principles, whether enforcement is considered in a
         proceeding in equity or law, to the discretion of the court before
         which any proceeding therefor may be brought and to public policy that
         may limit rights to indemnification; and the Financing Documents will
         conform in all material respects to the descriptions thereof in the
         Prospectus.

                  (m) Each of the Project Contracts to which either of the
         Mobile Energy Parties is a party has been duly authorized, executed and
         delivered by such Mobile Energy Party, and constitutes a valid and
         legally binding obligation of such Mobile Energy Party, enforceable
         against such Mobile Energy Party in accordance with its terms (other
         than with respect to (i) liquidated damages, (ii) Step-In Rights (as
         defined in the Master Operating Agreement), (iii) arbitration and (iv)
         agreements to agree at future dates, as to which no representation or
         warranty is made), subject, as to enforceability, to bankruptcy,
         insolvency, reorganization, fraudulent conveyance, moratorium and other
         similar laws of general applicability relating to or affecting
         creditors' rights and remedies generally, to general equity principles,
         whether considered in a proceeding in equity or law, to the discretion
         of the court before which any proceeding therefor may be brought and to
         public policy that may limit rights to indemnification; the Project
         Contracts conform in all material respects to the descriptions thereof
         in the Prospectus; neither of the Mobile Energy Parties nor, to the
         knowledge of either of the Mobile Energy Parties, any other party to
         any Project Contract is in default (and, to the knowledge after due
         inquiry of either of the Mobile Energy Parties, no event has occurred
         that with lapse of time or notice or action by a

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         third party would result in a default) in any material respect in the
         performance of or compliance with any term or provision in any Project
         Contract; and no material force majeure event has occurred and is
         continuing under any Project Contract.

                  (n) The issue and sale of the Securities by Company, the issue
         of the Guaranty by Mobile Energy, the execution, delivery and
         performance by each of the Mobile Energy Parties of the Securities, the
         Indenture, this Agreement and the other Financing Documents to which
         either of the Mobile Energy Parties is, or as of the Time of Delivery
         will be, a party and the consummation of the transactions contemplated
         hereby and thereby will not conflict with or result in a breach or
         violation of any of the terms or provisions of, or constitute a default
         under, any indenture, mortgage, deed of trust, sale/leaseback
         agreement, loan agreement or other similar financing agreement or
         instrument or other agreement or instrument to which either of the
         Mobile Energy Parties is a party or by which either of the Mobile
         Energy Parties is bound or to which any of the property or assets of
         either of the Mobile Energy Parties is subject, nor will such action
         result in any violation of the provisions of the Articles of
         Organization of the Company or the Operating Agreement or the
         Certificate of Incorporation or By-laws of Mobile Energy or any law or
         statute or any order, rule or regulation, judgment or decree of any
         Governmental Authority having jurisdiction over either of the Mobile
         Energy Parties or any of their properties; and no Governmental Approval
         of any Governmental Authority having jurisdiction over either of the
         Mobile Energy Parties or any of their properties is required for the
         issue and sale of the Securities by the Company, the issue of the
         Guaranty by Mobile Energy, the execution, delivery and performance by
         each of the Mobile Energy Parties of the Securities, the Indenture,
         this Agreement and the other Financing Documents to which either of the
         Mobile Energy Parties is, or as of the Time of Delivery will be, a
         party, or the consummation by each of the Mobile Energy Parties of the
         transactions contemplated hereby and thereby, except for the
         registration of the Securities and the Guaranty under the Act, the
         qualification of the Indenture under the Trust Indenture Act and the
         approval of the Commission under the Public Utility Holding Company Act
         of 1935, as amended (the "PUHCA"), and such consents, approvals,
         authorizations, registrations or qualifications as may be required
         under state securities or blue sky laws in connection with the purchase
         and distribution of the Securities by the Underwriters.

                  (o) The execution, delivery and performance by each of the
         Mobile Energy Parties of the Project Contracts to which either of the
         Mobile Energy Parties is, or as of the Time of Delivery will be, a
         party and the consummation of the transactions contemplated thereby
         will not conflict with or result in a breach or violation of any of the
         material terms or provisions of, or constitute a default under, any
         material

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         indenture, mortgage, deed of trust, sale/leaseback agreement, loan
         agreement or other similar financing agreement or instrument or other
         agreement or instrument to which either of the Mobile Energy Parties is
         a party or by which either of the Mobile Energy Parties is bound or to
         which any of the property or assets of either of the Mobile Energy
         Parties is subject, nor will such action result in any violation of the
         provisions of the Articles of Organization of the Company or the
         Operating Agreement or the Certificate of Incorporation or By-laws of
         Mobile Energy or any material law or statute or any material order,
         rule or regulation, judgment or decree of any Governmental Authority
         having jurisdiction over either of the Mobile Energy Parties or any of
         their properties; and no Governmental Approval (including any
         Environmental Requirement) of any Governmental Authority having
         jurisdiction over either of the Mobile Energy Parties or any of their
         properties is required for the execution, delivery and performance by
         each of the Mobile Energy Parties of the Project Contracts to which
         either of the Mobile Energy Parties is, or as of the Time of Delivery
         will be, a party, or the consummation by each of the Mobile Energy
         Parties of the transactions contemplated thereby, except for such
         Governmental Approvals as have been, or (in the ordinary course of
         business without substantial delay in, or material impairment to, the
         consummation by the Mobile Energy Parties of such transactions) will
         be, obtained.

                  (p) The issue and sale of the Securities by the Company, the
         issue of the Guaranty by Mobile Energy, the execution, delivery and
         performance by each of the Mobile Energy Parties of the Securities, the
         Indenture, this Agreement and the other Project Documents to which
         either of the Mobile Energy Parties is, or as of the Time of Delivery
         will be, a party, and the consummation of any of the other transactions
         contemplated hereby or thereby, do not and will not result in the
         creation or imposition of any Liens (other than Permitted Liens) on any
         of the Indenture Securities Collateral.

                  (q) When the Securities are authenticated by the Trustee in
         accordance with the Indenture and purchased by the Underwriters
         pursuant to this Agreement, (i) the Securities will rank pari passu
         without any preference among themselves, (ii) the Liens granted under
         the Security Documents will constitute valid Liens on the Indenture
         Securities Collateral, (iii) the Liens on such of the Indenture
         Securities Collateral (A) in which a Lien may be perfected by the
         filing of a financing statement under the Uniform Commercial Code, upon
         the filing of the necessary financing statements in all appropriate
         jurisdictions, (B) possession of which is required to perfect the Lien
         thereon, upon the possession by, in the case of the Shared Collateral,
         the Collateral Agent and, in the case of the other Indenture Securities
         Collateral, the Trustee and (C) in which a Lien may otherwise be
         perfected under the Uniform Commercial Code, will be, in the case of

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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

                                                        12

<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

                                                        13

<PAGE>



Securities for sale upon the terms and conditions set forth in the Prospectus.

         4. (a) The Securities to be purchased by each Underwriter hereunder
will be represented by one or more definitive global Securities in book-entry
form that will be deposited by or on behalf of the Company with The Depository
Trust Company ("DTC") or its designated custodian. The Company will deliver the
Securities to Goldman, Sachs & Co., for the account of each Underwriter, against
payment by or on behalf of such Underwriters of the purchase price therefor by,
at the option of the Company, certified official bank check or checks, payable
to the order of the Company in federal (same day) funds, or wire transfer of
federal (same day) funds to an account designated by the Company, by causing DTC
to credit the Securities to the account of Goldman, Sachs & Co. at DTC. The
Company will cause the certificates representing the Securities to be made
available to Goldman, Sachs & Co. for checking at least twenty-four hours prior
to the Time of Delivery at the office of DTC or its designated custodian (the
"Designated Office"). The time and date of such delivery and payment shall be
10:00 a.m., New York City time, on August 24, 1995 or such other time and date
as the Underwriters and the Mobile Energy Parties may agree upon in writing.
Such time and date are herein called the "Time of Delivery."

                  (b) The documents to be delivered at the Time of Delivery by
or on behalf of the parties hereto pursuant to Section 7 hereof, including the
cross-receipt for the Securities and any additional documents requested by the
Underwriters pursuant to Section 7(aa) hereof, will be delivered at the offices
of Winthrop, Stimson, Putnam & Roberts, One Battery Park Plaza, New York, New
York (the "Closing Location"), and the Securities will be delivered at the
Designated Office, all at the Time of Delivery. A meeting will be held at the
Closing Location at 9:30 a.m., New York City time, on the New York Business Day
next preceding the Time of Delivery, at which meeting the final drafts of the
documents to be delivered pursuant to the preceding sentence will be available
for review by the parties hereto. For the purposes of this Section 4, "New York
Business Day" shall mean each Monday, Tuesday, Wednesday, Thursday and Friday
that is not a day on which banking institutions in New York City are generally
authorized or obligated by law or executive order to close.

         5.       Each of the Mobile Energy Parties agrees with each of the
Underwriters:

                  (a) To prepare the Prospectus in a form approved by the
         Underwriters and to file such Prospectus pursuant to Rule 424(b) under
         the Act not later than the Commission's close of business on the second
         business day following the execution and delivery of this Agreement or,
         if applicable, such earlier time as may be required by Rule 430A(a)(3)
         under the Act; to make no further amendment or any supplement to the
         Registration Statement or the Prospectus that shall be

                                                        14

<PAGE>



         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."

                                                        16

<PAGE>




                  (i) To file with the Commission such reports on Form SR as may
         be required by Rule 463 under the Act.

         6. Whether or not the transactions contemplated by this Agreement are
consummated or this Agreement is terminated, each of the Mobile Energy Parties
covenant and agree with the several Underwriters that, as between the
Underwriters and the Mobile Energy Parties, the Mobile Energy Parties will pay
or cause to be paid, and will hold the Underwriters harmless against, the
following: (a) the fees, disbursements and expenses of counsel and accountants
for each of the Mobile Energy Parties in connection with the registration of the
Securities under the Act and all other expenses in connection with the
preparation, printing and filing of the Registration Statement, any Preliminary
Prospectus and the Prospectus and amendments and supplements thereto and the
mailing and delivering of copies thereof to the Underwriters and dealers; (b)
the cost of printing or producing this Agreement, the other Financing Documents,
the blue sky survey and any legal investment memoranda relating to the
qualification of the Securities for offering and sale under state securities
laws as provided in Section 5(b) hereof, closing documents (including any
compilations thereof) and any other documents in connection with the offering,
purchase, sale and delivery of the Securities; (c) all expenses in connection
with the qualification of the Securities for offering and sale under state
securities laws as provided in Section 5(b) hereof, including the fees and
disbursements of counsel for the Underwriters in connection with such
qualification and in connection with the blue sky survey and any legal
investment memoranda relating thereto; (d) any fees charged by securities rating
services for rating the Securities; (e) the filing fees incident to, and the
fees and disbursements of counsel for the Underwriters in connection with, any
required review by the National Association of Securities Dealers, Inc. of the
terms of the sale of the Securities; (f) the cost of preparing the Securities;
(g) the fees, disbursements and expenses of each of the Trustee, the Tax-Exempt
Indenture Trustee and the Collateral Agent and any agents thereof (or any agent
of either of the Mobile Energy Parties appointed under the Financing Documents)
and the fees and disbursements of their respective counsel; (h) the fees,
disbursements and expenses of counsel for the Underwriters and all other
expenses incurred by the Underwriters in connection with the offering of the
Securities, including, without limitation, advertising, marketing and other
out-of-pocket expenses; (i) the fees, disbursements and expenses of the
Independent Engineer, the Paper Consultant, the Environmental Consultant (as
defined in Section 7(s) hereof), the Independent Insurance Consultant (as
defined in Section 7(t) hereof) and the Engineering Consultant (as defined in
Section 7(u) hereof); (j) the fees and expenses relating to the issuance of the
Title Policy (as defined in Section 7(n) hereof), the preparation of any surveys
relating to the Site or the site of the Mobile Facility and the filing and/or
recordation of certain of the Financing Documents; and (k) all other costs and
expenses incident to the performance of the obligations of either

                                                        17

<PAGE>



of the Mobile Energy Parties hereunder that are not otherwise specifically
provided for in this Section 6.

         7. The obligations of the Underwriters hereunder shall be subject to
the condition that all representations and warranties and other statements of
each of the Mobile Energy Parties herein are, at and as of the Time of Delivery,
true and correct, to the condition that each of the Mobile Energy Parties shall
have performed all of their respective obligations hereunder theretofore to be
performed and to the following additional conditions:

                  (a) The Prospectus shall have been filed with the Commission
         pursuant to Rule 424(b) within the applicable time period prescribed
         for such filing by the rules and regulations under the Act and in
         accordance with Section 5(a) hereof; no stop order suspending the
         effectiveness of the Registration Statement or any part thereof shall
         have been issued and no proceeding for that purpose shall have been
         initiated or threatened by the Commission; and all requests for
         additional information on the part of the Commission shall have been
         complied with to the reasonable satisfaction of the Underwriters.

                  (b) Winthrop, Stimson, Putnam & Roberts, counsel for the
         Underwriters, shall have furnished to the Underwriters their written
         opinion, dated the Time of Delivery, with respect to such matters as
         the Underwriters may reasonably request, and such counsel shall have
         received such papers and information as they may reasonably request to
         enable them to pass upon such matters.

                  (c) Each of Balch & Bingham, Latham & Watkins and Troutman
         Sanders LLP (as the case may be), counsel for the Mobile Energy
         Parties, shall have furnished to the Underwriters their written opinion
         or opinions, dated the Time of Delivery, substantially to the effect,
         together with such changes as to legal matters as may be acceptable to
         counsel for the Underwriters, that:

                           (i) the Company has been duly formed and is validly
                  existing as a limited liability company in good standing under
                  the laws of the State of Alabama, with requisite limited
                  liability company power and authority to own its properties
                  and conduct its business as described in the Prospectus, to
                  execute, deliver and perform its obligations under this
                  Agreement and each other Project Document to which it is a
                  party and to consummate the transactions contemplated hereby
                  and thereby, including the issuance and sale of the Securities
                  as provided herein;

                          (ii) Mobile Energy has been duly incorporated and is
                  validly existing as a corporation in good standing under the
                  laws of the State of Alabama, with requisite

                                                        18

<PAGE>



                  corporate power and authority to own its properties and
                  conduct its business as described in the Prospectus, to
                  execute, deliver and perform its obligations under this
                  Agreement and each other Project Document to which it is a
                  party and to consummate the transactions contemplated hereby
                  and thereby, including the issuance of the Guaranty as
                  provided in the Indenture;

                         (iii) under the laws of each other jurisdiction in
                  which either of the Mobile Energy Parties, to the knowledge of
                  such counsel, owns or leases properties or conducts any
                  business so as to require qualification as a foreign
                  corporation for the transaction of business, each such Mobile
                  Energy Party has been, based solely upon certificates of
                  public officials, duly qualified as a foreign corporation and
                  is in good standing or is subject to no material liability or
                  disability by reason of the failure to be so qualified in any
                  such jurisdiction;

                          (iv) the Company is wholly-owned by Mobile Energy and
                  Southern Electric, and Mobile Energy is wholly-owned by
                  Southern; each of the Mobile Energy Parties has an authorized
                  capitalization as set forth in the Prospectus; all of the
                  outstanding equity interests of each of the Mobile Energy
                  Parties have been duly authorized and validly issued, are
                  fully paid and non-assessable and are not subject to any
                  preemptive or similar rights; to the knowledge of such
                  counsel, the outstanding equity interests of each of the
                  Mobile Energy Parties are free and clear of any security
                  interest, mortgage, pledge, lien, encumbrance, claim or
                  adverse interest of any nature; and, to the knowledge of such
                  counsel, neither of the Mobile Energy Parties has outstanding
                  any securities convertible into or exchangeable for any of its
                  equity interests or any rights to subscribe for or to
                  purchase, or any warrants or options for the purchase of, or
                  any agreement providing for the issuance (contingent or
                  otherwise) of, or any calls, commitments or claims of any
                  character relating to, any such equity interests;

                           (v) to the knowledge of such counsel based solely
                  upon a review of the public docket records of the state and
                  federal courts located in New York County, New York and Mobile
                  County, Alabama, the state courts located in DeKalb County,
                  Georgia and the federal courts located in Fulton County,
                  Georgia, and other than as set forth in the Prospectus, there
                  are no legal or governmental proceedings pending or threatened
                  to which either of the Mobile Energy Parties is a party, or of
                  which any property of either of the Mobile Energy Parties is
                  the subject, that (A) could reasonably be expected to have a
                  material adverse effect on either of the Mobile Energy

                                                        19

<PAGE>



                  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

<PAGE>



                  is a party and the performance of the obligations of the
                  Mobile Energy Parties thereunder (including the grant by the
                  Company of the Liens upon the Collateral pursuant to the
                  Security Documents), do not and will not (A) violate any
                  federal, New York, Alabama or Georgia statute, rule or
                  regulation applicable to either of the Mobile Energy Parties
                  or any of their respective properties (including, without
                  limitation, Regulation U or X of the Board of Governors of the
                  Federal Reserve System), (B) violate the provisions of the
                  Articles of Organization of the Company or the Operating
                  Agreement or the Certificate of Incorporation or By-laws of
                  Mobile Energy, (C) result in the breach or violation of or a
                  default under any of the Project Documents filed as an exhibit
                  to the Registration Statement, (D) to the knowledge of such
                  counsel, require any Governmental Approval of any Governmental
                  Authority having jurisdiction over either of the Mobile Energy
                  Parties or any of their respective properties, except for (1)
                  such Governmental Approvals as may be required under state
                  securities or blue sky laws in connection with the purchase
                  and distribution of the Securities by the Underwriters (as to
                  which such counsel need express no opinion) and (2) the
                  registration of the Securities and the Guaranty under the Act,
                  the qualification of the Indenture under the Trust Indenture
                  Act, the approval of the Commission under the PUHCA and such
                  other Governmental Approvals that shall have been obtained on
                  or prior to the Time of Delivery or, in the case of the
                  Project Contracts, are expected to be obtained on or prior to
                  the date any such other Governmental Approval is required in
                  the ordinary course of business without undue burden or delay
                  or (E) result in the imposition of any Liens (other than
                  Permitted Liens) on any of the Indenture Securities
                  Collateral;

                         (xii) neither First Union, in its capacity as the
                  Trustee and the Tax-Exempt Indenture Trustee, or Bankers
                  Trust, in its capacity as the Collateral Agent, nor any Holder
                  of the Securities will be as of the Time of Delivery (under
                  applicable law as in effect as of the Time of Delivery and
                  solely as a result of the ownership, maintenance and operation
                  of the Energy Complex by the Mobile Energy Parties as
                  described in the Prospectus, the purchase and ownership of the
                  Securities or any other transaction contemplated by the
                  Financing Documents (other than the exercise of remedies
                  thereunder)) subject to regulation under the FPA or by the
                  State of Alabama Public Service Commission; neither of the
                  Mobile Energy Parties is subject to rate regulation under
                  federal law or the laws of the State of Alabama; and none of
                  the execution, delivery and performance by each of the Mobile
                  Energy Parties of all the provisions of the Project Documents
                  to which such

                                                        21

<PAGE>



                  Mobile Energy Party is a party will violate the Alabama
                  Territorial Law;

                        (xiii) an Alabama state court or federal court sitting
                  in the State of Alabama will recognize and give effect to the
                  governing law provisions of any Financing Document that
                  provides for the application of the law of a jurisdiction
                  other than the State of Alabama if such provision is
                  reasonable, if the parties and transaction bear a reasonable
                  relationship to the state whose law is being applied and if
                  there are no Alabama public policy reasons not to enforce such
                  provision.

                         (xiv) the provisions of the Security Agreement are
                  effective to create valid security interests in favor of the
                  Collateral Agent, for the ratable benefit of the Senior
                  Secured Parties (subject to the priority of payment of
                  proceeds of Receivables and Fuel Inventory to the Working
                  Capital Facility Provider as provided in the Intercreditor
                  Agreement), in the Shared Collateral; the provisions of the
                  Indenture are effective to create valid security interests in
                  favor of the Trustee, for the ratable benefit of the Holders
                  of the Securities, in the Indenture Securities Collateral
                  other than the Shared Collateral; and the Liens of the
                  Security Agreement and the Indenture on such of the Indenture
                  Securities Collateral in which a Lien may be perfected by the
                  filing of a financing statement under the Uniform Commercial
                  Code, upon the filing of the necessary financing statements in
                  all appropriate jurisdictions, will be perfected.

                          (xv) the Security Documents to be recorded with the
                  appropriate filing offices in the State of Alabama and the
                  county of Mobile, Alabama and in the State of Georgia and the
                  county of DeKalb, Georgia are in appropriate form for filing
                  under the laws of the States of Alabama and Georgia, as
                  applicable; the Mortgage, upon such recording, will constitute
                  a valid mortgage Lien on all of the Mortgaged Property that
                  can be mortgaged under the laws of the State of Alabama; the
                  foreclosure of the Mortgage will not in any manner restrict,
                  affect or impair the liability of either of the Mobile Energy
                  Parties with respect to any of the Senior Debt or the rights
                  and remedies of the Senior Secured Parties with respect to the
                  foreclosure or enforcement of any other security interests or
                  liens securing such Senior Debt (to the extent any of such
                  Senior Debt remains unpaid after application of the proceeds
                  of such foreclosure of the Mortgage); and, other than fees
                  specified in such opinion, no taxes or recording or filing
                  fees will be incurred by either of the Mobile Energy Parties,
                  the Trustee or the Collateral Agent as a result of the
                  execution, recordation or

                                                        22

<PAGE>



                  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

<PAGE>



         and agreements to agree at future dates, (D) include such further
         exceptions, qualifications, limitations and assumptions with respect to
         the matters set forth therein as may be acceptable to counsel for the
         Underwriters, (E) rely upon the opinion of any other counsel as to
         matters involving the application of laws other than the laws of the
         States of Alabama, Georgia and New York, provided that such other
         counsel and its opinion must be satisfactory to the Underwriters and
         that such opinion must be addressed and delivered to the Underwriters
         at or prior to the Time of Delivery, (F) with respect to paragraph
         (xvi) of this Section 7(c), provide a reasoned analysis as the basis
         for the matters set forth therein and (G) with respect to paragraph
         (xx) of this Section 7(c), state that the statements set forth therein
         are based upon such counsel's participation in conferences with
         officers and other representatives of, and other counsel for, the
         Mobile Energy Parties, representatives of the independent public
         accountants for the Mobile Energy Parties and representatives of and
         counsel for the Underwriters and in the preparation of the Registration
         Statement and the Prospectus and any amendments or supplements thereto
         and their review and discussion of the contents thereof, but are
         without independent check or verification except as specified. Such
         opinion or opinions shall be rendered to the Underwriters at the
         request of each of the Mobile Energy Parties and shall so state
         therein. Any legal opinion delivered on or prior to the Time of
         Delivery to any party other than the Underwriters by counsel for the
         Mobile Energy Parties in connection with the satisfaction of conditions
         to any of the other Financing Documents shall be accompanied by a
         letter from such counsel stating that the Underwriters may rely upon
         such opinion as if it were also addressed to them.

                  (d) Troutman Sanders LLP, counsel for Southern, and, insofar
         as such opinion or opinions relate to matters governed by the laws of
         the State of New York, Latham & Watkins, special New York counsel for
         Southern, shall have furnished to the Underwriters their written
         opinion or opinions, dated the Time of Delivery, substantially to the
         effect, together with such changes as to legal matters as may be
         acceptable to counsel for the Underwriters, that:

                              (i) Southern has been duly incorporated and is
                  validly existing as a corporation in good standing under the
                  laws of the State of Delaware, with power and authority
                  (corporate and other) to own its properties and conduct its
                  business, to execute, deliver and perform its obligations
                  under each of the Southern Guaranties provided at the Time of
                  Delivery and the Mill Owner Maintenance Reserve Account
                  Agreement (the "Southern Credit Support Documents") and to
                  consummate the transactions contemplated thereby;


                                                        25

<PAGE>



                             (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

<PAGE>



                  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

<PAGE>



                  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

<PAGE>



                  the competent courts of France without a review of the merits,
                  provided that the applicable requirements of the French Code
                  of Civil Procedure are satisfied, including, in particular,
                  that service of complaints filed with courts of competent
                  jurisdiction in the United States was properly effected on the
                  Bank, that fundamental procedural rights of the parties are
                  observed and that such final and conclusive judgment of a
                  court of competent jurisdiction of the United States is not
                  contrary to public order or good morals in France (provided
                  that such counsel shall not have any reason to believe that
                  the transactions contemplated by such Financing Documents are
                  contrary to public order or good morals in France);

                            (vi) in the event that the Bank fails to honor its
                  obligations under any of the Financing Documents to which it
                  is a party, other than as a result of compliance with then
                  applicable laws, regulations, directives or orders of
                  appropriate Governmental Authorities of the United States,
                  upon proper demand to the New York Branch in compliance with
                  the requirements of such Financing Documents, the Bank would
                  have a direct and general obligation to make payments in
                  accordance with such Financing Documents;

                           (vii) the choice of law provisions of the Financing
                  Documents to which the Bank is a party are valid under the
                  laws of France and a court in France would uphold such choice
                  of law in a suit brought in a court of competent jurisdiction
                  in France;

                           (viii) the Bank is subject to commercial law in
                  France and is generally subject to suit and neither it nor any
                  of its property or revenues enjoys any right of immunity from
                  any judicial proceeding in France; and

                            (ix) there is no fee, tax or duty or similar impost
                  of the government of France or any Governmental Authority
                  thereof on account of which any amount is required to be
                  withheld or deducted from payments to be made by the Bank
                  under the Financing Documents to which it is a party.

                  In rendering such opinion or opinions, such counsel for the
         Bank may rely as to matters of fact, to the extent deemed proper, on
         certificates of responsible officers of the Bank and of public
         officials. Such opinion or opinions shall be rendered to the
         Underwriters at the request of each of the Mobile Energy Parties and
         shall so state therein.

                  (i) Simpson Thacher & Bartlett, counsel for the New York
         Branch of the Bank (the "New York Branch"), shall have furnished to the
         Underwriters their written opinion or opinions, dated the Time of
         Delivery, substantially to the

                                                        33

<PAGE>



         effect, together with such changes as to legal matters as may be
         acceptable to counsel for the Underwriters, that:

                           (i) the New York Branch is licensed by the
                  Superintendent of Banks of the State of New York and qualified
                  to do business as a New York branch of the Bank in accordance
                  with the provisions of Article V of the Banking Law of the
                  State of New York; the New York Branch has the power and
                  authority under such Article V to execute, deliver and perform
                  its obligations under the Financing Documents to which it is a
                  party;

                           (ii) the Letter of Credit has been duly authorized,
                  executed and delivered by the Bank and constitutes a valid and
                  binding obligation of the Bank, enforceable against the Bank
                  in accordance with its terms, subject, as to enforceability,
                  to bankruptcy, insolvency, reorganization, fraudulent
                  conveyance, moratorium and other similar laws of general
                  applicability relating to or affecting creditors' rights and
                  remedies generally as such laws would apply in the event of
                  the bankruptcy, insolvency or reorganization of, or other
                  similar occurrence with respect to, the Bank, to general
                  equity principles, whether considered in a proceeding in
                  equity or law, to the discretion of the court before which any
                  proceeding therefor may be brought and to possible judicial
                  application of foreign laws or foreign governmental or
                  judicial action affecting creditors' rights;

                           (iii) each of the Financing Documents (other than the
                  Letter of Credit) to which the New York Bank is a party has
                  been duly authorized, executed and delivered by the Bank and
                  constitutes a valid and binding obligation of the Bank,
                  enforceable against the Bank in accordance with its terms,
                  subject, as to enforceability, to bankruptcy, insolvency,
                  reorganization, fraudulent conveyance, moratorium and other
                  similar laws of general applicability relating to or affecting
                  creditors' rights and remedies generally, to general equity
                  principles, whether considered in a proceeding in equity or
                  law, to the discretion of the court before which any
                  proceeding therefor may be brought and to possible judicial
                  application of foreign laws or foreign governmental or
                  judicial action affecting creditors' rights; and

                           (iv) the execution, delivery and performance by the
                  Bank of the Financing Documents to which it is a party do not
                  require any consent, approval, authorization, order,
                  registration or qualification of any Governmental Authority of
                  the State of New York or of the United States and do not
                  violate any laws of the State of New York or of the United
                  States.


                                                        34

<PAGE>



                  In rendering such opinion or opinions, such counsel for the
         Bank may rely as to matters of fact, to the extent deemed proper, on
         certificates of responsible officers of the Bank and of public
         officials. Such opinion or opinions shall be rendered to the
         Underwriters at the request of each of the Mobile Energy Parties and
         shall so state therein.

                  (j) The Underwriters shall have received, on each of the date
         hereof and at the Time of Delivery, a letter dated the date hereof or
         the Time of Delivery, as the case may be, and in form and substance
         satisfactory to the Underwriters, from Arthur Andersen LLP, independent
         public accountants for the Mobile Energy Parties, substantially in the
         form attached hereto as Exhibit A.

                  (k) (i) Neither of the Mobile Energy Parties nor Southern,
         Southern Electric, Scott, S.D. Warren or any other Project Participant
         shall have sustained, since the date of the latest audited financial
         statements included in the Prospectus, any loss or interference with
         its business from fire, explosion, flood, hurricane or other calamity,
         whether or not covered by insurance, or from any labor dispute or court
         or governmental action, order or decree, otherwise than as set forth or
         contemplated in the Prospectus and (ii) since the respective dates as
         of which information is given in the Prospectus, there shall not have
         been any change in the capital stock or long-term debt of either of the
         Mobile Energy Parties or any change, or any development involving a
         prospective change, in or affecting the general affairs, management,
         financial position, shareholders' or other equity or results of
         operations of either of the Mobile Energy Parties, Southern, Southern
         Electric, Scott, S.D. Warren or any other Project Participant,
         otherwise than as set forth or contemplated in the Prospectus, the
         effect of which, in any such case described in clause (i) or (ii)
         above, is in the judgment of the Underwriters so material and adverse
         as to make it impracticable or inadvisable to proceed with the public
         offering or the delivery of the Securities on the terms and in the
         manner contemplated in the Prospectus.

                  (l) On or after the date hereof there shall not have occurred
         any of the following: (i) a suspension or material limitation in
         trading in securities generally on the New York Stock Exchange or other
         national securities exchange; or (ii) a general moratorium on
         commercial banking activities declared by federal authorities or
         authorities of the State of Alabama, Georgia or New York; or (iii) the
         outbreak or escalation of hostilities involving the United States or
         the declaration by the United States of a national emergency or war, if
         the effect of any such event specified in this clause (iii) in the
         judgment of the Underwriters makes it impracticable or inadvisable to
         proceed with the public offering or the delivery of the Securities on
         the terms and in the manner contemplated in the Prospectus.

                                                        35

<PAGE>




                  (m) Each of the Mobile Energy Parties shall have furnished, or
         caused to be furnished, to the Underwriters a certificate of such
         Mobile Energy Party, dated the Time of Delivery and in form and
         substance satisfactory to the Underwriters, as to the accuracy of the
         representations and warranties of such Mobile Energy Party herein at
         and as of the Time of Delivery, as to the performance by such Mobile
         Energy Party of all of its obligations hereunder to be performed at or
         prior to the Time of Delivery and as to such other matters as the
         Underwriters may reasonably request; and Southern shall have furnished,
         or caused to be furnished, to the Underwriters a certificate of an
         officer of Southern, dated the Time of Delivery and in form and
         substance satisfactory to the Underwriters, as to the due incorporation
         and valid existence of Southern at the Time of Delivery and the due
         authorization, execution and delivery by Southern of, and the valid,
         binding and enforceable nature at the Time of Delivery of, each of the
         Southern Guaranties and the capital infusion arrangements with respect
         to the Mill Owner Maintenance Reserve Account.

                  (n) On or prior to the Time of Delivery, the Underwriters
         shall have received executed copies, in the form previously approved by
         the Underwriters, of the Project Documents.

                  (o) On or prior to the Time of Delivery, the Mobile Energy
         Parties shall have delivered to the Underwriters evidence reasonably
         satisfactory to the Underwriters and their counsel that a title policy
         or title policies in favor of the Collateral Agent, in an aggregate
         amount equal to or greater than the maximum aggregate principal amount
         of Senior Debt to be outstanding immediately after the Time of
         Delivery, insuring the validity of the Mortgage and the priority of the
         Lien of the Mortgage have been obtained (the "Title Policy"); and the
         Title Policy shall be satisfactory in form and substance to the
         Underwriters and their counsel.

                  (p) On or prior to the Time of Delivery, (i) the monies to be
         deposited into the Intercreditor Agreement Accounts and the Indenture
         Accounts shall been delivered to the Trustee and the Collateral Agent
         in accordance with the Intercreditor Agreement and the Indenture and
         all other Indenture Securities Collateral existing as of the Time of
         Delivery possession of which is required to perfect a Lien thereon
         shall have been delivered to, in the case of the Shared Collateral, the
         Collateral Agent and, in the case of all other Indenture Securities
         Collateral, the Trustee, (ii) the Mortgage shall have been delivered to
         a title company for due recordation as a mortgage of real estate, and
         any required filings with respect to personal property and fixtures
         subject to the Lien of the Mortgage or any other Security Document
         shall have been delivered to a title company for filing, in each place
         in which such recording or filing is required to protect, preserve and
         perfect the Lien of the Mortgage as a valid,

                                                        36

<PAGE>



         direct first Lien on the real estate and as a valid, first Lien on the
         personal property and fixtures covered or purported to be covered by
         the Mortgage, in each case subject only to Permitted Liens, and except
         for such recordation or filing no further action shall be required to
         create, preserve or protect such Liens and security interests, (iii)
         all financing statements shall have been delivered for filing,
         recordation and/or registration in each office and in each jurisdiction
         where required to create and perfect a valid, direct first Lien on the
         Indenture Securities Collateral and (iv) all taxes and recording and
         filing fees required to be paid with respect to the execution,
         recording or filing of the Mortgage and such financing statements shall
         have been paid or provided for.

                  (q) The Underwriters shall have received (i) a certified copy
         of, or binder for, each of the insurance policies required by Section
         5.2 of the Indenture, together with evidence satisfactory to the
         Underwriters that such insurance complies with the provisions thereof
         and the provisions of each of the other Project Documents and that all
         premiums then due with respect to such insurance have been paid, (ii) a
         written report of Sedgwick James (the "Independent Insurance
         Consultant") describing the insurance obtained by the Mobile Energy
         Parties as of the Time of Delivery with respect to the Energy Complex
         and stating that the insurance required to be obtained as of the Time
         of Delivery pursuant to the Project Documents is in full force and
         effect and provides reasonable and adequate coverage for the Energy
         Complex (the "Independent Insurance Consultant's Report") and (iii) a
         certificate of the Independent Insurance Consultant, signed by an
         authorized officer thereof, dated the Time of Delivery and in form and
         substance satisfactory to the Underwriters, confirming that (A) the
         Independent Insurance Consultant's Report was prepared in accordance
         with generally accepted insurance and consulting services practices,
         (B) the conclusions and opinions of the Independent Insurance
         Consultant contained in the Independent Insurance Consultant's Report
         are true and correct in all material respects as of the date of the
         Prospectus and as of the Time of Delivery and (C) attached to such
         certificate is a complete and executed copy of the Independent
         Insurance Consultant's Report.

                  (r) The Underwriters shall have received a certificate of the
         Independent Engineer, signed by an authorized officer thereof, dated
         the Time of Delivery and in form and substance satisfactory to the
         Underwriters, confirming that (i) the Independent Engineer's Report was
         prepared in accordance with generally accepted engineering and
         consulting services practices; (ii) the conclusions and opinions of the
         Independent Engineer contained in the Independent Engineer's Report are
         fair and reasonable and made in good faith based upon information
         provided by the Mobile Energy Parties that the Independent Engineer
         believes is true and correct in all

                                                        37

<PAGE>



         material respects as of the date of the Prospectus and as of the Time
         of Delivery; (iii) the Independent Engineer consents to the references
         in the Prospectus to its authority as an expert in the design,
         development and operation of power projects and other industrial
         facilities and the use of the Independent Engineer's Report prepared by
         the Independent Engineer in and included as Appendix B to the
         Prospectus; (iv) the description of the Independent Engineer's Report
         contained under "Summary--The Independent Engineer's Report" in the
         Prospectus conforms to, and constitutes a fair and accurate summary of,
         the material provisions thereof; (v) nothing has come to the attention
         of the Independent Engineer in relation to the preparation of the
         Independent Engineer's Report, including its review of the
         Environmental Consultant's Reports, that causes it to believe that the
         Independent Engineer's Report or the Environmental Consultant's
         Reports, as of the date of the Prospectus or as of the Time of
         Delivery, or any of the statements in the Prospectus specifically
         attributed to the Independent Engineer or the Environmental Consultant,
         as of the date of the Prospectus or as of the Time of Delivery,
         contained or contains any untrue statement of a material fact or
         omitted or omits a material fact necessary in order to make the
         statements made therein with respect to any of such matters, in the
         light of the circumstances under which they were made, not misleading;
         and (vi) attached to such certificate is a complete and executed copy
         of the Independent Engineer's Report.

                  (s) The Underwriters shall have received a certificate of the
         Paper Consultant, signed by an authorized officer thereof, dated the
         Time of Delivery and in form and substance satisfactory to the
         Underwriters, confirming that (i) the Paper Consultant's Report was
         prepared in accordance with generally accepted economics research and
         consulting services practices; (ii) the conclusions and opinions of the
         Paper Consultant contained in the Paper Consultant's Report are true
         and correct in all material respects as of the date of the Prospectus
         and as of the Time of Delivery; (iii) the Paper Consultant consents to
         the references in the Prospectus to its authority as an expert in the
         review of the pulp, paper and tissue industries and its experience in
         the design, development and undertaking of studies similar to the Paper
         Consultant's Report and knowledge of the United States and
         international paper industry and the use of the Paper Consultant's
         Report prepared by the Paper Consultant in and included as Appendix C
         to the Prospectus; (iv) the assumptions attributed to the Paper
         Consultant's Report contained in the Independent Engineer's Report are
         reasonable; (v) the description of the Paper Consultant's Report
         contained under "Summary--The Paper Consultant's Report" in the
         Prospectus conforms to, and constitutes a fair and accurate summary of,
         the material provisions thereof; (vi) nothing has come to the attention
         of the Paper Consultant in relation to the preparation of the Paper
         Consultant's Report that causes it to

                                                        38

<PAGE>



         believe that the Paper Consultant's Report, as of the date of the
         Prospectus or as of the Time of Delivery, or any of the statements in
         the Prospectus specifically attributed to the Paper Consultant, as of
         the date of the Prospectus or as of the Time of Delivery, contained or
         contains any untrue statement of a material fact or omitted or omits a
         material fact necessary in order to make the statements made therein
         with respect to any of such matters, in the light of the circumstances
         under which they were made, not misleading; and (vii) attached to such
         certificate is a complete and executed copy of the Paper Consultant's
         Report.

                  (t) The Underwriters shall have received a certificate of
         Dames & Moore (the "Environmental Consultant"), signed by an authorized
         officer thereof, dated the Time of Delivery and in form and substance
         satisfactory to the Underwriters, confirming that (i) the report
         prepared by the Environmental Consultant with respect to the
         environmental site assessment of the Energy Complex (the "Environmental
         Consultant's Reports") was prepared in accordance with generally
         accepted engineering and consulting services practices; (ii) the
         conclusions and opinions of the Environmental Consultant contained in
         the Environmental Consultant's Reports were true and correct in all
         material respects as of the respective dates of the Environmental
         Consultant's Reports; (iii) the assumptions attributed to the
         Environmental Consultant's Reports contained in the Independent
         Engineer's Report are reasonable; (iv) the descriptions of the
         Environmental Consultant's Reports contained under "Summary--The
         Independent Engineer's Report" and "Business--Environmental
         Conditions--Environmental Reports" and in the Independent Engineer's
         Report under "The Project--Site" and "Permits" in the Prospectus
         conform to, and constitute a fair and accurate summary of, the material
         provisions thereof; and (v) attached to such certificate are complete
         and executed copies of the Environmental Consultant's Reports.

                  (u) The Underwriters shall have received a certificate of Rust
         Engineering Company (the "Engineering Consultant"), signed by an
         authorized officer thereof, dated the Time of Delivery and in form and
         substance satisfactory to the Underwriters, confirming that (i) the
         report prepared by the Engineering Consultant with respect to the
         assessment of the Energy Complex (the "Engineering Consultant's
         Report") was prepared in accordance with generally accepted engineering
         and consulting services practices; (ii) the conclusions and opinions of
         the Engineering Consultant contained in the Engineering Consultant's
         Report were true and correct in all material respects as of the date of
         the Engineering Consultant's Report; (iii) the description of the
         Engineering Consultant's Report contained under "Summary--The
         Independent Engineer's Report" in the Prospectus conforms to, and
         constitutes a fair and accurate summary of, the material provisions
         thereof; and (iv) attached to such certificate is

                                                        39

<PAGE>



         a complete and executed copy of the Engineering Consultant's
         Report.

                  (v) Each of the Mobile Energy Parties shall have entered into
         each of the Project Documents and the Consents to Assignment to which
         it is a party, in such forms as shall be reasonably satisfactory to the
         Underwriters and their counsel, each of which shall have been fully
         executed and shall be in full force and effect at the Time of Delivery.

                  (w) The Tax-Exempt Bonds shall have been issued; and the
         conditions precedent to the effectiveness of the Working Capital
         Facility, as specified in Article III thereof, shall have been
         satisfied or waived with the consent of the Underwriters; and the
         Underwriters shall have received a certificate of the Working Capital
         Facility Provider, dated the Time of Delivery, to such effect.

                  (x) The Underwriters shall have received evidence of the
         appointment of the Independent Engineer, and the acceptance by the
         Independent Engineer of such appointment, pursuant to the Intercreditor
         Agreement.

                  (y) The Underwriters shall have received evidence that there
         are in effect ratings on the Securities of "BBB-" by Standard & Poor's
         Ratings Group, "BBB-" by Fitch Investors Service, L.P. and "Baa3" by
         Moody's Investors Service, Inc., and no notice shall have been given of
         (i) any intended or potential downgrading of any of such ratings or
         (ii) any review or possible change that does not indicate the direction
         of a possible change in any of such ratings.

                  (z)      Goldman, Sachs & Co. shall have received its fee for
         financial advisory services rendered in respect of the
         offering of the Bonds and the First Mortgage Bonds in
         accordance with Section 6(b)(xii)(B) of the Bond Purchase
         Agreement dated August 17, 1995 between Goldman, Sachs & Co.
         and The Industrial Development Board of the City of Mobile,
         Alabama.

                  (aa) The Underwriters shall have received such additional
         legal opinions, certificates, instruments and other documents as the
         Underwriters may reasonably request.

         If any of the conditions specified in this Section 7 shall not have
been fulfilled when and as required by this Agreement, then this Agreement may
be terminated by the Underwriters by notice to the Company at or prior to the
Time of Delivery, without liability on the part of any Underwriter or either of
the Mobile Energy Parties, except for the expenses to be borne by the Mobile
Energy Parties as provided in Section 6 hereof and the indemnity agreements in
Section 8 hereof. If, at the Time of Delivery, such conditions shall not have
been fulfilled, and the Company shall not have issued and sold to the
Underwriters, and the Underwriters

                                                        40

<PAGE>



shall not have purchased from the Company, the Securities in accordance with
Section 2, then this Agreement shall, unless the Time of Delivery shall be
extended as contemplated by Section 4(a), terminate without liability on the
part of any Underwriter or either of the Mobile Energy Parties, except for the
expenses to be borne by the Mobile Energy Parties as provided in Section 6
hereof and the indemnity agreements in Section 8 hereof.

         8. (a) Each of the Mobile Energy Parties, jointly and severally, will
indemnify and hold harmless each Underwriter against any losses, claims, damages
or liabilities, joint or several, to which such Underwriter may become subject,
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus, the Registration Statement or the Prospectus, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and will
reimburse each Underwriter for any legal or other expenses reasonably incurred
by such Underwriter in connection with investigating or defending any such
action or claim as such expenses are incurred; provided, however, that (i)
neither of the Mobile Energy Parties shall be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission made in any Preliminary Prospectus, the Registration Statement or the
Prospectus or any such amendment or supplement in reliance upon and in
conformity with written information furnished to the Mobile Energy Parties by
any Underwriter through Goldman, Sachs & Co. expressly for use therein or (ii)
the right of any of the Underwriters to be indemnified and held harmless under
this Section 8 with respect to the Circulated Preliminary Prospectus shall not
inure to the benefit of any Underwriter from whom the person asserting any such
loss, claim, damage or liability purchased Securities (or any person who
controls such Underwriter within the meaning of the Act) if (A) the Prospectus
(as then amended or supplemented if either of the Mobile Energy Parties shall
have furnished any amendments or supplements thereto) was not sent or given by
or on behalf of such Underwriter to such person (if required by law so to have
been delivered) at or prior to the written confirmation of the sale of
Securities to such person and (B) the Prospectus (as so amended or supplemented)
would have cured the defect giving rise to such loss, claim, damage or
liability, provided that the application of this clause (ii) shall be
conditioned upon proof, sustained by the Mobile Energy Parties, that the
Prospectus (as so amended or supplemented) was not so sent or given by or on
behalf of such Underwriter. Notwithstanding anything to the contrary contained
in this Agreement, the satisfaction of any obligation of Mobile Energy under
this Section 8 shall be non-recourse to any monies or other assets of Mobile
Energy acquired through or on account of its interests in the Southern Master
Tax Sharing Agreement, so long as,

                                                        41

<PAGE>



and to the extent that, such assets are not commingled with any of Mobile
Energy's other monies or assets or with any monies or assets of the Company.

                  (b) Each Underwriter will indemnify and hold harmless each of
the Mobile Energy Parties against any losses, claims, damages or liabilities to
which such Mobile Energy Party may become subject, under the Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon an untrue statement or alleged untrue
statement of a material fact contained in any Preliminary Prospectus, the
Registration Statement or the Prospectus, or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, in each case to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or omission
or alleged omission was made in any Preliminary Prospectus, the Registration
Statement or the Prospectus or any such amendment or supplement in reliance upon
and in conformity with written information furnished to the Mobile Energy
Parties by such Underwriter through Goldman, Sachs & Co. expressly for use
therein, and will reimburse the Mobile Energy Parties for any legal or other
expenses reasonably incurred by the Mobile Energy Parties in connection with
investigating or defending any such action or claim as such expenses are
incurred.

                  (c) Promptly after receipt by an indemnified party under
Section 8(a) or 8(b) hereof of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under such Section 8(a) or 8(b), notify such indemnifying
party in writing of the commencement thereof, but the omission so to notify such
indemnifying party shall not relieve it from any liability that it may have to
any indemnified party otherwise than under such Section 8(a) or 8(b). In case
any such action shall be brought against any indemnified party and it shall
notify any indemnifying party of the commencement thereof, such indemnifying
party shall be entitled to participate therein and, to the extent that it shall
wish, jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel reasonably satisfactory to such indemnified
party. Upon the assumption by such indemnifying party of the defense of any such
action, such indemnified party shall have the right to participate in such
action and to retain its own counsel, but such indemnifying party shall not be
liable for any legal expenses of other counsel subsequently incurred by such
indemnified party in connection with the defense thereof unless (i) such
indemnifying party has agreed to pay such fees and expenses, (ii) such
indemnifying party shall have failed to employ counsel reasonably satisfactory
to such indemnified party in a timely manner or (iii) such indemnified party
shall have been advised by counsel that there are actual or potential
conflicting interests between such indemnified party and any other party
represented by counsel that is proposed by such indemnifying party to represent

                                                        42

<PAGE>



such indemnified party, including any such conflicting interests arising from
situations in which there are one or more legal defenses available to such
indemnified party that are different from or additional to those available to
such indemnifying party. No indemnifying party shall, without the written
consent of the indemnified party hereunder, effect the settlement or compromise
of, or consent to the entry of any judgment with respect to, any pending or
threatened action or claim in respect of which indemnification or contribution
may be sought hereunder (whether or not such indemnified party is an actual or
potential party to such action or claim) unless such settlement, compromise or
judgment (i) includes an unconditional release of such indemnified party from
all liability arising out of such action or claim and (ii) does not include a
statement as to or an admission of fault, culpability or a failure to act, by or
on behalf of such indemnified party. No indemnifying party shall be liable for
any settlement or compromise of any action effected without its written consent,
unless the indemnified party hereunder shall have requested such indemnifying
party to reimburse it for any legal expenses of counsel or any other expenses in
connection with the defense thereof in accordance with this Section 8(c), in
which case such indemnifying party agrees that it shall be liable for any such
settlement or compromise effected more than 30 days after its receipt of such
request if such indemnifying party shall not have reimbursed such indemnified
party in accordance with such request prior to the date of such settlement or
compromise.

                  (d) The obligations of each of the Mobile Energy Parties under
this Section 8 shall be in addition to any liability that either of the Mobile
Energy Parties may otherwise have and shall extend, upon the same terms and
conditions, to each person, if any, who controls any Underwriter within the
meaning of the Act; and the obligations of the Underwriters under this Section 8
shall be in addition to any liability that the respective Underwriters may
otherwise have and shall extend, upon the same terms and conditions, to each
officer and director of either of the Mobile Energy Parties (including any
person who, with his or her consent, is named in the Registration Statement as
about to become a director of either of the Mobile Energy Parties) and to each
person, if any, who controls either of the Mobile Energy Parties within the
meaning of the Act.

         9. (a) If any Underwriter shall default in its obligation to purchase
the Securities that it has agreed to purchase hereunder, the non-defaulting
Underwriters may in their discretion arrange for such non-defaulting
Underwriters or another party or other parties to purchase such Securities on
the terms contained herein. If within twenty-four hours after such default by
any Underwriter such non-defaulting Underwriters do not arrange for the purchase
of such Securities, then the Company shall be entitled to a further period of
twenty-four hours within which to, but shall not be required to, procure another
party or other parties satisfactory to such non-defaulting Underwriters to
purchase such Securities on such terms. In the event that, within the respective

                                                        43

<PAGE>



periods prescribed above, such non-defaulting Underwriters notify the Company
that they have so arranged for the purchase of such Securities, or the Company
notifies the Underwriters that it has so arranged for the purchase of such
Securities, then such non-defaulting Underwriters or the Company shall have the
right to postpone the Time of Delivery, for a period of not more than five days,
in order to effect whatever changes may thereby be made necessary in the
Registration Statement or the Prospectus, or in any other documents or
arrangements, and the Company agrees to file promptly any amendments to the
Registration Statement or the Prospectus that in the opinion of such
non-defaulting Underwriters may thereby be made necessary. The term
"Underwriters" as used in this Agreement shall include any party substituted
under this Section 9(a) with like effect as if such party had originally been a
party to this Agreement with respect to such Securities.

                  (b) If, after giving effect to any arrangements for the
purchase of the Securities of a defaulting Underwriter or Underwriters by the
non-defaulting Underwriter or Underwriters and the Company as provided in
Section 9(a) hereof, the aggregate principal amount of such Securities that
remains unpurchased does not exceed one-eleventh of the aggregate principal
amount of all the Securities to be purchased hereunder, then the Company shall
have the right to require each non-defaulting Underwriter to purchase the
principal amount of Securities that such Underwriter agreed to purchase
hereunder and, in addition, to require each non-defaulting Underwriter to
purchase its pro rata share (based on the principal amount of Securities that
such Underwriter agreed to purchase hereunder) of the Securities of such
defaulting Underwriter or Underwriters for which such arrangements have not been
made, but nothing herein shall relieve a defaulting Underwriter from liability
for its default.

                  (c) If, after giving effect to any arrangements for the
purchase of the Securities of a defaulting Underwriter or Underwriters by the
non-defaulting Underwriter or Underwriters and the Company as provided in
Section 9(a) hereof, the aggregate principal amount of Securities that remains
unpurchased exceeds one-eleventh of the aggregate principal amount of all the
Securities to be purchased hereunder, or if the Company shall not exercise the
right provided in Section 9(b) hereof to require such non-defaulting
Underwriters to purchase Securities of a defaulting Underwriter or Underwriters,
then this Agreement shall thereupon terminate, without liability on the part of
any such non-defaulting Underwriter or either of the Mobile Energy Parties,
except for the expenses to be borne by the Mobile Energy Parties as provided in
Section 6 hereof and the indemnity agreements in Section 8 hereof, but nothing
herein shall relieve a defaulting Underwriter from liability for its default.

         10.      The respective indemnities, agreements, representations,
warranties and other statements of each of the Mobile Energy
Parties and the several Underwriters, as set forth in this
Agreement or made by or on behalf of them, respectively, pursuant

                                                        44

<PAGE>



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

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<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