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Published: 2008-03-26

Change in Control Agreement - The Southern Co., Southern Energy Inc., Southern Energy Resources Inc. and Richard J. Pershing



                              AMENDED AND RESTATED
                           CHANGE IN CONTROL AGREEMENT

         THIS AMENDED AND  RESTATED  CHANGE IN CONTROL  AGREEMENT  ("Agreement")
made and entered into by and between The Southern Company ("Southern"), Southern
Energy,  Inc. ("SEI"),  Southern Energy Resources,  Inc. (the "Company") and Mr.
Richard J. Pershing ("Mr.  Pershing")  (hereinafter  collectively referred to as
the "Parties") is effective as of the date of execution of this Agreement unless
otherwise provided herein.

                              W I T N E S S E T H:

         WHEREAS,  Mr.Pershing is the Executive  Vice  President of the 
Company which serves as the employer with respect to assets held by SEI;

         WHEREAS,  the  Parties  entered  into a  Change  in  Control  Agreement
effective  December  10,  1998 (the  "Original  Agreement")  to  provide  to Mr.
Pershing  certain  severance  benefits under certain  circumstances  following a
change in control (as defined herein) of Southern or the Company;

         WHEREAS,  the parties  subsequently  entered into a Change in Control
Agreement,  effective  December 10, 1998 and executed June 21, 1999,  
which  superseded  the Original  Agreement  (the "Second  Agreement")  to 
clarify benefits under this Agreement related to the Southern Energy Resources,
Inc. Deferred Incentive Compensation Plan;

         WHEREAS,  pursuant to Section 6(d) of the Second Agreement, the Parties
may amend the Second Agreement by written agreement;

         WHEREAS,  the  Parties  wish to enter into this  Amended  and  Restated
Change in Control Agreement  pursuant to the provisions of such Section 6(d), to
(i) change  certain  references  from normal market bonus to target bonus,  (ii)
incorporate by reference the definition of "change in control" as provided under
the Change in Control Benefit Plan Determination  Policy adopted by the board of
directors of SEI, (iii) reflect SEI's guarantee of benefits under the Agreement,
(iv) reference an Omnibus  Incentive  Compensation  Plan which may be adopted by
SEI  in  the  future,   and  (v)  certain  other  technical  and   miscellaneous
modifications;

         NOW, THEREFORE, in consideration of the premises, and the agreements of
the  parties  set  forth  in  this  Agreement,   and  other  good  and  valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereby agree as follows:

           1.  Definitions. For purposes of this Agreement, the following terms 
       shall have the following meanings:

                  (a)  "Annual  Compensation"  shall mean Mr.  Pershing's  
             highest  annual base salary rate for the twelve (12) month period 
             immediately preceding the date of the Change in Control plus 
             target bonus.

                  (b) "Board" shall mean the board of directors of the Company.

                  (c) "Change in  Control"  shall have the  meaning of such 
             term as set forth in the Change in Control Benefit Plan 
             Determination  Policy, as approved by the board of directors  
             of SEI, as such  Policy may be amended  from time to time in
             accordance with the provisions therein.  However,  any 
             amendment to the Policy  which causes the  definition  of 
             "Change in Control" to be more restrictive  than such 
             definition in effect on the Effective Date shall
             not be taken  into  account  for  purposes  of this  
             Agreement,  unless approved by the board of directors of SEI or a 
             compensation  committee thereof and agreed to in writing by Mr. 
             Pershing.

                  (d) "COBRA  Coverage"  shall mean any  continuation  coverage
             to which Mr. Pershing or his dependents may be entitled pursuant 
             to Code Section 4980B.
                  
                  (e) "Code" shall mean the Internal Revenue Code of 1986, as 
             amended.

                  (f) "Company" shall mean Southern Energy Resources, Inc., its
             successors and assigns.
 
                  (g) "DIC  Plan"  shall  mean  the  Southern  Energy  
             Resources,   Inc.  Deferred   Incentive Compensation Plan or 
             replacement thereto, as such plans may be amended from time 
             to time.

                  (h) "Effective  Date" shall mean the date of execution 
             of this Agreement,  unless  otherwise
             provided herein.

                  (i)  "Employee  Outplacement  Program"  shall mean the 
             program established  by the  Company  from  time to time  for  
             the  purpose  of assisting  participants  covered  by the  plan  
             in  finding  employment outside of the Company which provides 
             for the following services:
                           
                       (i)  self-assessment,   career   decision  and  goal
                  setting; 
 
                      (ii) job market  research  and job sources;

                     (iii)  networking  and  interviewing   skills; 
  
                      (iv)  planning  and  implementation  strategy;  
                  
                       (v)  resume writing,  job hunting methods and salary 
                  negotiation; and 

                      (vi)  office support and job search resources.

                  (j) "Exchange Act" shall mean the Securities Exchange Act of 
             1934, as amended.

                  (k) "Good  Reason"  shall mean,  without  Mr.  Pershing's  
             express  written  consent,  after written  notice to the Board,  
             and after a thirty (30) day  opportunity for  the  Board  to  
             cure,  the  continuing  occurrence  of  any of the following 
             events:
                      (i) Inconsistent Duties. A meaningful and detrimental  
                  alteration in Mr. Pershing's position  or in the nature or 
                  status of his  responsibilities  from  those in effect  
                  immediately prior to the Change in Control;
                           
                     (ii) Reduced Salary. A reduction of five percent (5%)
                  or more by the  Company  in either of the  following: 
 
                         (i) Mr. Pershing's  annual base  salary rate as in 
                      effect  immediately prior to the  Change in  Control  
                      (except  for a less than ten percent  (10%),   
                      across-the-board  annual  base  salary  rate
                      reduction  similarly  affecting at least  ninety-five  
                      percent (95%) of the Executive Employees of the Company);
                      or 
                        (ii) the sum of Mr.  Pershing's  annual  base  salary  
                      rate plus target bonus under the  Company's  Short Term 
                      Plan (except for a less than ten percent (10%),  
                      across-the-board  reduction of annual base salary  
                      rate plus target  bonus under the Short Term Plan 
                      similarly  affecting at least ninety-five percent 
                      (95%) of the Executive Employees of the Company);
                           
                     (iii) Pension and Compensation Plans. The failure by
                  the Company to continue in effect any pension or  compensation
                  plan or agreement in which Mr.  Pershing  participates or is a
                  party  as of  the  date  of  the  Change  in  Control  or  the
                  elimination of Mr. Pershing's  participation therein,  (except
                  for  across-the-board  plan changes or terminations  similarly
                  affecting at least ninety-five  percent (95%) of the Executive
                  Employees  of the  Company);  For  purposes of this  Paragraph
                  1.(k),  a "pension plan or  agreement"  shall mean any written
                  arrangement  executed by an authorized  officer of the Company
                  which   provides  for   payments   upon   retirement;   and  a
                  "compensation  plan or  arrangement"  shall  mean any  written
                  arrangement  executed by an authorized  officer of the Company
                  which  provides for periodic,  non-discretionary  compensatory
                  payments in the nature of bonuses.
 
                     (iv)  Relocation.  A change  in Mr.  Pershing's  work
                  location  to a  location  more than  fifty (50) miles from the
                  office where Mr. Pershing is located at the time of the Change
                  in Control, unless such new work location is within fifty (50)
                  miles from Mr. Pershing's  principal place of residence at the
                  time of the Change in Control. The acceptance,  if any, by Mr.
                  Pershing of employment by the Company at a work location which
                  is outside the fifty mile  radius set forth in this  Paragraph
                  1.(k)(iv)  shall  not be a waiver of Mr.  Pershing's  right to
                  refuse subsequent  transfer by the Company to a location which
                  is more than fifty (50)  miles from Mr.  Pershing's  principal
                  place of residence  at the time of the Change in Control,  and
                  such  subsequent  unconsented  transfer shall be "Good Reason"
                  under this Agreement; or

                      (v)  Benefits  and  Perquisites.  The  taking  of any
                  action by the  Company  which  would  directly  or  indirectly
                  materially  reduce the benefits  enjoyed by Mr. Pershing under
                  the Company's retirement, life insurance,  medical, health and
                  accident,  disability,  deferred compensation or savings plans
                  in which Mr. Pershing was  participating  immediately prior to
                  the  Change in  Control;  or the  failure  by the  Company  to
                  provide Mr.  Pershing with the number of paid vacation days to
                  which  Mr.  Pershing  is  entitled  on the  basis  of years of
                  service  with the  Company in  accordance  with the  Company's
                  normal  vacation  policy  in effect  immediately  prior to the
                  Change  in  Control  (except  for  across-the-board   plan  or
                  vacation  policy  changes  or  plan   terminations   similarly
                  affecting at least ninety-five  percent (95%) of the Executive
                  Employees of the Company).

                      (vi) For purposes of this Paragraph 1.(k), the term 
                  "Executive  Employee" shall mean employees of the Company 
                  whose annual base salary is $130,000 or more.
                  
                 (l) "Group  Health Plan" shall mean the group health plan  
             covering  Mr.  Pershing,  as such plan may be amended from time to 
             time.
                 
                 (m) "Group Life  Insurance  Plan" shall mean the group life 
             insurance  program  covering Mr.Pershing, as such plan may be 
             amended from time to time.

                 (n) "Month of Service"  shall mean any calendar  month during 
             which Mr.  Pershing has worked at least one (1) hour or was on 
             approved  leave of absence while in the employ of the Company or 
             any affiliate or subsidiary of Southern.

                 (o) "Pension  Plan" shall mean The Southern  Company  Pension
             Plan, as such plan may be amended from time to time.

                 (p) "Performance  Dividend  Plan"  shall  mean  the  Southern
         Company Performance  Dividend Plan or any replacement  thereto, as such
         plans may be amended from time to time.

                 (q) "Performance  Stock Plan" shall mean the Southern Company
         Performance Stock Plan or any replacement thereto, as such plans may be
         amended from time to time.

                 (r) "Southern" shall mean The Southern Company, its successors
         and assigns.

                 (s) "Southern Board" shall mean the board of directors of 
         Southern.

                 (t) "SEI" shall mean Southern Energy, Inc., its successors and
         assigns.

                 (u) "Southern  Subsidiary"  shall  mean  any  corporation  or
         other  entity  Controlled  by Southern.

                 (v) "Termination  for  Cause"  or  "Cause"  shall  mean the  
         termination  of Mr.  Pershing's employment by the Company upon the 
         occurrence of any of the following:

                     (i) The willful and continued failure by Mr. Pershing
                  substantially  to perform his duties  with the Company  (other
                  than any such  failure  resulting  from Mr.  Pershing's  Total
                  Disability  or from  Mr.  Pershing's  retirement  or any  such
                  actual or anticipated  failure  resulting from  termination by
                  Mr.  Pershing  for Good  Reason)  after a written  demand  for
                  substantial  performance  is  delivered to him by the Southern
                  Board,  which  demand  specifically  identifies  the manner in
                  which   the   Southern   Board   believes   that  he  has  not
                  substantially performed his duties; or

                    (ii) The willful  engaging by Mr. Pershing in conduct
                  that is demonstrably and materially  injurious to the Company,
                  monetarily or otherwise,  including, but not limited to any of
                  the following:
                                    
                         (A) any  willful act  involving  fraud or  dishonesty 
                     in the course of Mr. Pershing's employment by the Company;
                                    
                         (B) the willful carrying out of any activity
                     or the making of any statement which would materially
                     prejudice or impair the good name and standing of the
                     Company,  SEI, Southern or any Southern Subsidiary or
                     would bring the Company,  SEI,  Southern or any other
                     Southern Subsidiary into contempt,  ridicule or would
                     reasonably shock or offend any community in which the
                     Company, SEI, Southern or such Southern Subsidiary is
                     located;

                         (C)  attendance  at  work  in  a  state  of
                     intoxication  or otherwise  being found in possession
                     at his workplace of any prohibited drug or substance,
                     possession  of  which  would  amount  to  a  criminal
                     offense;

                         (D) violation of the  Company's  policies on
                     drug and alcohol usage, fitness for duty requirements
                     or similar policies as may exist from time to time as
                     adopted by the Company's safety officer;

                         (E) assault or other act of violence  against any 
                     person  during the course of employment; or

                         (F) indictment of any felony or any misdemeanor 
                     involving moral turpitude.

                  No act or failure to act by Mr.  Pershing  shall be deemed  
         "willful"  unless done, or omitted to be done,  by Mr.  Pershing  not 
         in good  faith and  without  reasonable belief  that his action or  
         omission  was in the best  interest  of the Company.

                  Notwithstanding  the  foregoing,  Mr.  Pershing  shall  not be
         deemed to have been  terminated  for Cause unless and until there shall
         have been  delivered to him a copy of a resolution  duly adopted by the
         affirmative  vote  of not  less  than  three  quarters  of  the  entire
         membership  of the Southern  Board at a meeting of the  Southern  Board
         called  and held for  such  purpose  (after  reasonable  notice  to Mr.
         Pershing and an opportunity for him, together with counsel, to be heard
         before the Southern Board),  finding that, in the good faith opinion of
         the Southern Board,  Mr. Pershing was guilty of conduct set forth above
         in  clause  (i) or (ii) of this  Paragraph  1.(v)  and  specifying  the
         particulars thereof in detail.

             (w)  "Termination  Date"  shall  mean the  date on  which  Mr.
         Pershing's  employment  with  the  Company  is  terminated;   provided,
         however,  that  solely for  purposes of  Paragraph  2.(c)  hereof,  the
         Termination Date shall be the effective date of his retirement pursuant
         to the terms of the Pension Plan.

             (x) "Total  Disability"  shall mean Mr.  Pershing's total  
         disability  within the meaning of the Pension Plan.

             (y) "Value  Creation  Plan" shall mean the Southern  Energy  
         Resources,  Inc. Value Creation Plan, or any replacement thereto, 
         as such plans may be amended from time to time.

             (z) "Waiver and Release" shall mean the Waiver and Release 
         attached hereto as Exhibit A.

            (aa) "Year of Service"  shall mean Mr.  Pershing's  Months of 
         Service  divided by twelve (12) rounded to the nearest whole year,  
         rounding up if the remaining number of months is seven (7) or greater 
         and  rounding  down if the  remaining number of months is less than 
         seven (7). If Mr. Pershing has a break in his  service  with the  
         Company,  he will  receive  credit  under  this
         Agreement  for service  prior to the break in service only if the break
         in service is less than five years.
        
         2. Severance Benefits.
                  
            (a)  Eligibility.   Except  as  otherwise   provided  in  this
         Paragraph  2.(a),  if  Mr.   Pershing's   employment  is  involuntarily
         terminated  by the  Company  at any time  during  the two  year  period
         following a Change in Control for reasons  other than Cause,  or if Mr.
         Pershing  voluntarily  terminates his  employment  with the Company for
         Good Reason at any time  during the two year period  following a Change
         in Control,  Mr.  Pershing  shall be  entitled to receive the  benefits
         described in this Agreement upon the Company's  receipt of an effective
         Waiver and Release.  Notwithstanding  anything to the contrary  herein,
         Mr.  Pershing  shall not be  eligible  to receive  benefits  under this
         Agreement if Mr. Pershing:

                 (i)   voluntarily  terminates  his  employment  with the  
            Company for other than Good Reason;

                (ii)  has his employment terminated by the Company for Cause;

               (iii)  accepts  the  transfer  of his  employment  to
            Southern, any  Southern  Subsidiary  or  any  employer  that
            succeeds  to all or  substantially  all of the  assets of SEI,
            Southern or any Southern Subsidiary;

                (iv)  refuses an offer of continued  employment  with
            the Company,  any Southern  Subsidiary,  or any employer  that
            succeeds  to all or  substantially  all of the  assets of SEI,
            Southern, or any Southern Subsidiary under circumstances where
            such  refusal  would not amount to Good  Reason for  voluntary
            termination of employment; or

                 (v)  elects  to  receive  the  benefits  of any other
            voluntary or involuntary severance or separation program, plan
            or  agreement  maintained  by the  Company in lieu of benefits
            under this Agreement;  provided  however,  that the receipt of
            benefits  under the terms of any  retention  plan or agreement
            shall  not  be  deemed  to be  the  receipt  of  severance  or
            separation benefits for purposes of this Agreement.

           (b) Severance Benefits.  If Mr. Pershing meets the eligibility
         requirements of Paragraph 2.(a) hereof,  he shall be entitled to a cash
         severance  benefit  in an  amount  equal  to  three  times  his  Annual
         Compensation (the "Severance Amount").  If any portion of the Severance
         Amount  constitutes  an  "excess  parachute  payment"  (as such term is
         defined  under Code Section 280G  ("Excess  Parachute  Payment")),  the
         Company shall pay to Mr.  Pershing an additional  amount  calculated by
         determining the amount of tax under Code Section 4999 that he otherwise
         would have paid on any Excess  Parachute  Payment  with  respect to the
         Change in Control and dividing  such amount by a decimal  determined by
         adding  the tax rate  under  Code  Section  4999  ("Excise  Tax"),  the
         hospital  insurance  tax under  Code  Section  3101(b)  ("HI  Tax") and
         federal and state  income tax  measured at the highest  marginal  rates
         ("Income Tax") and subtracting such result from the number one (1) (the
         "280G  Gross-up");  provided,  however,  that no 280G Gross-up shall be
         paid unless the Severance Amount plus all other "parachute payments" to
         Mr.  Pershing  under  Code  Section  280G  exceeds  three (3) times Mr.
         Pershing's  "base  amount" (as such term is defined  under Code Section
         280G ("Base Amount")) by ten percent (10%) or more;  provided  further,
         that if no 280G Gross-up is paid, the Severance  Amount shall be capped
         at  three  (3)  times  Mr.  Pershing's  Base  Amount,  less  all  other
         "parachute  payments" (as such term is defined under Code Section 280G)
         received by Mr. Pershing, less one dollar (the "Capped Amount"), if the
         Capped Amount, reduced by HI Tax and Income Tax, exceeds what otherwise
         would have been the Severance Amount, reduced by HI Tax, Income Tax and
         Excise Tax.

                 For purposes of this Paragraph 2.(b), whether any amount would
         constitute an Excess  Parachute  Payment and any other  calculations of
         tax,  e.g.,  Excise Tax, HI Tax,  Income Tax,  etc., or other  amounts,
         e.g., Base Amount,  Capped Amount, etc., shall be determined by the tax
         department of the independent  public  accounting firm then responsible
         for preparing  Southern's  consolidated  federal income tax return, and
         such calculations or  determinations  shall be binding upon the parties
         hereto.

            (c)  Welfare  Benefits.  If Mr.  Pershing  meets the  eligibility  
         requirements  of Paragraph  2.(a)  hereof and is not  otherwise  
         eligible  to receive  retiree  medical  and life  insurance  benefits
         provided to certain  retirees  pursuant to the terms of the Pension  
         Plan,  the Group  Health Plan and the Group Life Insurance Plan, 
         he shall be entitled to the benefits set forth in this Paragraph 2.(c).
              
               (i)  Mr. Pershing shall be eligible to participate for
             a period not to exceed five (5) years in the  Company's  Group
             Health  Plan,  upon  payment  of both  the  Company's  and his
             monthly  premium  under  such  plan,  for a period  of six (6)
             months for each of Mr.  Pershing's  Years of  Service.  If Mr.
             Pershing elects to receive this extended medical coverage,  he
             shall  also be  entitled  to elect  coverage  under  the Group
             Health Plan for his dependents who were  participating  in the
             Group Health Plan on Mr. Pershing's  Termination Date (and for
             such other dependents as may be entitled to coverage under the
             provisions   of   the   Health   Insurance   Portability   and
             Accountability Act of 1996) for the duration of Mr. Pershing's
             extended medical coverage under this Paragraph 2.(c)(i) to the
             extent such dependents remain eligible for dependent  coverage
             under the terms of the Group Health Plan.
                                    
                    (A) The extended medical  coverage  afforded
                  to Mr. Pershing  pursuant to Paragraph  2.(c)(i),  as
                  well as the  premiums  to be paid by Mr.  Pershing in
                  connection  with such coverage shall be determined in
                  accordance  with the terms of the Group  Health  Plan
                  and shall be subject to any  changes in the terms and
                  conditions  of the Group  Health  Plan as well as any
                  future  increases in premiums  under the Group Health
                  Plan.  The  premiums  to be paid by Mr.  Pershing  in
                  connection  with this extended  coverage shall be due
                  on the first day of each  month;  provided,  however,
                  that if he fails  to pay his  premium  within  thirty
                  (30) days of its due  date,  such  extended  coverage
                  shall be terminated.

                    (B) Any Group Health Plan coverage  provided
                  under  Paragraph  2.(c)(i) shall be a part of and not
                  in addition to any COBRA Coverage which Mr.  Pershing
                  or his  dependent  may  elect.  In the event that Mr.
                  Pershing  or his  dependent  becomes  eligible  to be
                  covered, by virtue of re-employment or otherwise,  by
                  any  employer-sponsored   group  health  plan  or  is
                  eligible for coverage under any  government-sponsored
                  health plan during the above period,  coverage  under
                  the  Company's  Group  Health Plan  available  to Mr.
                  Pershing or his dependent by virtue of the provisions
                  of Paragraph 2.(c)

                      (i) shall terminate,  except as may
                  otherwise  be  required  by  law,  and  shall  not be
                  renewed.  

                     (ii)  Mr.  Pershing  shall be  entitled  to
                  receive cash in an amount equal to the Company's  and Mr.  
                  Pershing's  cost of premiums for three (3) years of coverage 
                  under the Group  Health Plan and Group Life Insurance  
                  Plan in accordance  with the terms of such plans as
                  of the date of the Change in Control.

                  (d) Incentive Plans. If Mr. Pershing meets the eligibility 
               requirements of Paragraph 2.(a) hereof he shall be entitled to
               the following benefits under the Company's incentive plans:

                      (i) Stock Option Plan.
                          (A) Any of Mr. Pershing's  Options and Stock
                      Appreciation  Rights under the Performance Stock Plan
                      (the defined terms of which are  incorporated in this
                      Paragraph    2.(d)(i)   by   reference)   which   are
                      outstanding as of the Termination  Date and which are
                      not then  exercisable and vested,  shall become fully
                      exercisable  and  vested  to the full  extent  of the
                      original grant; provided, that in the case of a Stock
                      Appreciation  Right,  if Mr.  Pershing  is subject to
                      Section   16(b)  of  the  Exchange  Act,  such  Stock
                      Appreciation  Right shall not become fully vested and
                      exercisable  at such time if such action would result
                      in liability to Mr.  Pershing  under Section 16(b) of
                      the Exchange  Act,  provided  further,  that any such
                      actions not taken as a result of the rules of Section
                      16(b) of the  Exchange  Act shall be  effective as of
                      the first  date that  such  activity  would no longer
                      result  in  liability  under  Section  16(b)  of  the
                      Exchange Act.

                        (B) The restrictions and deferral
                      limitations  applicable  to  any  of  Mr.  Pershing's
                      Restricted  Stock as of the  Termination  Date  shall
                      lapse, and such Restricted Stock shall become free of
                      all  restrictions  and  limitations  and become fully
                      vested  and  transferable  to the full  extent of the
                      original grant.

                        (C) The restrictions and deferral
                      limitations  and other  conditions  applicable to any
                      other   Awards  held  by  Mr.   Pershing   under  the
                      Performance  Stock  Plan as of the  Termination  Date
                      shall lapse,  and such other Awards shall become free
                      of all  restrictions,  limitations  or conditions and
                      become  fully  vested  and  transferable  to the full
                      extent of the original grant.

                      (ii) Performance Dividend Plan. Provided Mr. Pershing
                  is not  entitled to benefits  under the  Performance  Dividend
                  Plan  (the  defined  terms of which are  incorporated  in this
                  Paragraph 2.(d)(ii) by reference), if the Performance Dividend
                  Plan is in place through Mr.  Pershing's  Termination Date and
                  to the extent Mr. Pershing is entitled to participate therein,
                  Mr.  Pershing shall be entitled to receive cash for each Award
                  held by Mr. Pershing on his Termination  Date, based on actual
                  performance under Section 4.1 of the Performance Dividend Plan
                  determined as of the most recently  completed calendar quarter
                  of the Performance  Period in which the Termination Date shall
                  have occurred,  and the Annual Dividend  declared prior to the
                  Termination Date.

                      (iii) Value  Creation  Plan.  Any of Mr.  Pershing's
                  Appreciation Rights or Indexed Rights under the Value Creation
                  Plan  (the  defined  terms of which are  incorporated  in this
                  Paragraph 2.(d)(iii) by reference) which are outstanding as of
                  the  Termination  Date and which are not then  exercisable and
                  vested, shall become fully exercisable and fully vested to the
                  full extent of the original grant. Notwithstanding anything in
                  the Value  Creation  Plan to the  contrary,  Share  Value with
                  respect to any  Appreciation  Rights or Indexed Rights held by
                  Mr. Pershing  following his Termination  Date shall be no less
                  than the Share  Value as of the date of the  Change in Control
                  of  Southern  or  SEI,  as  the  case  may  be.  In  addition,
                  notwithstanding   any  provision  in  this  Agreement  to  the
                  contrary,  Mr.  Pershing's rights and benefits under the terms
                  of the Value Creation Plan will not be prejudiced by execution
                  of this Agreement.

                     (iv) Other Short Term Incentive Plans. The provisions
                  of this Paragraph  2.(d)(iv)  shall apply if and to the extent
                  that Mr.  Pershing is a  participant  in any other "short term
                  compensation  plan" not  otherwise  previously  referred to in
                  this Paragraph  2.(d).  Provided Mr. Pershing is not otherwise
                  entitled  to  a  plan  payout  under  any  change  of  control
                  provisions  of such  plans,  if the "short  term  compensation
                  plan" is in place as of the Termination Date and to the extent
                  Mr. Pershing is entitled to participate  therein, Mr. Pershing
                  shall  receive  cash in an amount equal to his award under the
                  Company's   "short  term   incentive   plan"  for  the  annual
                  performance  period in which the  Termination  Date shall have
                  occurred,  at Mr.  Pershing's  target  performance  level  and
                  prorated by the number of months  which have passed  since the
                  beginning   of  the  annual   performance   period  until  his
                  Termination Date. For purposes of this Paragraph 2.(d)(iv) the
                  term "short term incentive  compensation  plan" shall mean any
                  incentive  compensation plan or arrangement adopted in writing
                  by  the  Company   which   provides   for  annual,   recurring
                  compensatory   bonuses  based  upon  articulated   performance
                  criteria.

                    (v) DIC Plan.  Provided Mr. Pershing is not entitled
                  to benefits under Article V of the DIC Plan (the defined terms
                  of which are  incorporated  into  this  Paragraph  2(d)(v)  by
                  reference), if the DIC Plan is in place through Mr. Pershing's
                  Termination  Date  and to the  extent  that  Mr.  Pershing  is
                  entitled to participate  therein, any of Mr. Pershing's Awards
                  as of the  Termination  Date which are not then  vested  shall
                  become  fully  vested and Mr.  Pershing  shall be  entitled to
                  receive cash in the amount equal to Mr. Pershing's  Account as
                  of his Termination Date.  Notwithstanding  anything in the DIC
                  Plan to the  contrary,  the  investment  return on the  Awards
                  determined in accordance  with Section 3.1 of the DIC Plan for
                  any Plan Year  following a Change in Control  shall be no less
                  than the  investment  return  determined  in  accordance  with
                  Section  3.1 of the DIC Plan as of the date of such  Change in
                  Control with respect to those Accounts  which are  outstanding
                  as of the date of such Change in Control.

                    (vi) Omnibus  Incentive  Compensation  Plan.  In  the  
                  event  of an  initial  public offering of SEI and the 
                  adoption of the Southern  Energy,  Inc.  Omnibus  Incentive  
                  Compensation Plan (the "Omnibus Plan"),  Mr.  Pershing's  
                  right to receive  incentive  compensation  under the
                  Omnibus  Plan in the event of a "change in  control,"  
                  as defined  therein,  shall be governed by the terms of such 
                  Omnibus Plan and the award(s) granted thereunder.

             (e) Payment of  Benefits.  Any  amounts  due under this  
         Agreement  shall be paid in one (1) lump sum payment as soon as 
         administratively  practicable following the later  of:  (i) Mr.  
         Pershing's  Termination  Date,  or (ii)  upon  Mr. Pershing's  tender 
         of an effective Waiver and Release to the Company in
         the  form of  Exhibit  A  attached  hereto  and the  expiration  of any
         applicable revocation period for such waiver. In the event of a dispute
         with respect to liability  or amount of any benefit due  hereunder,  an
         effective  Waiver and  Release  shall be  tendered at the time of final
         resolution of any such dispute when payment is tendered by the Company.
         Effective  May 10,  2000,  if the  Company  fails  or  refuses  to make
         payments under the Agreement, Mr. Pershing may have the right to obtain
         payment  by SEI  pursuant  to the  terms  of the  "Guarantee  Agreement
         Concerning  Southern Energy  Resources,  Inc.  Compensation and Benefit
         Arrangements" entered into by the Company and SEI. Mr. Pershing's right
         to payment is not increased as a result of this SEI  Guarantee.  He has
         the same right to payment  from SEI as he would have from the  Company.
         Any demand to enforce this SEI Guarantee  should be made in writing and
         should  reasonably  and  briefly  specify the manner and the amount the
         Company has failed to pay. Such writing  given by personal  delivery or
         mail shall be  effective  upon actual  receipt.  Any  writing  given by
         telegram  or  telecopier  shall be  effective  upon  actual  receipt if
         received during SEI's normal business hours, or at the beginning of the
         next business day after  receipt,  if not received  during SEI's normal
         business  hours.  All  arrivals  by  telegram  or  telecopier  shall be
         confirmed  promptly after  transmission in writing by certified mail or
         personal delivery.

             (f)  Benefits  in the  Event  of  Death.  In the  event of Mr.
         Pershing's  death  prior to the  payment of all  amounts due under this
         Agreement,  Mr.  Pershing's  estate shall be entitled to receive as due
         any  amounts not yet paid under this  Agreement  upon the tender by the
         executor  or  administrator  of the estate of an  effective  Waiver and
         Release.

             (g) Legal Fees. In the event of a dispute between Mr. Pershing
         and the  Company  with  regard to any  amounts  due  hereunder,  if any
         material  issue in such dispute is finally  resolved in Mr.  Pershing's
         favor,  the Company shall reimburse Mr.  Pershing's legal fees incurred
         with  respect to all issues in such  dispute in an amount not to exceed
         fifty thousand dollars ($50,000).

             (h) Employee  Outplacement  Services.  Mr.  Pershing shall be 
         eligible to participate in the Employee  Outplacement  Program,  
         which  program shall not be less than six (6) months  duration  
         measured from Mr. Pershing's Termination Date.

             (i) Non-qualified  Retirement and Deferred Compensation Plans.
         The Parties agree that subsequent to a Change in Control, any claims by
         Mr.  Pershing for  benefits  under any of the  Company's  non-qualified
         retirement  or deferred  compensation  plans shall be resolved  through
         binding  arbitration  in accordance  with the provisions and procedures
         set  forth in  Paragraph  5 hereof  and if any  material  issue in such
         dispute is finally resolved in Mr.  Pershing's favor, the Company shall
         reimburse Mr. Pershing's legal fees in the manner provided in Paragraph
         2.(g) hereof.
        
         3. Transfer of Employment.  In the event that Mr. Pershing's employment
by the Company is  terminated  during the two year period  following a Change in
Control and Mr. Pershing accepts employment by Southern,  a Southern Subsidiary,
or any employer that succeeds to all or substantially  all of the assets of SEI,
Southern or any Southern Subsidiary,  the Company shall assign this Agreement to
Southern, such Southern Subsidiary, or successor employer, Southern shall accept
such  assignment  or cause such  Southern  Subsidiary  or successor  employer to
accept such  assignment,  and such  assignee  shall become the "Company" for all
purposes hereunder.

         4. No Mitigation.  If Mr.  Pershing is otherwise  eligible to receive  
benefits under Paragraph 2 of this Agreement,  he shall have no duty or 
obligation to seek other  employment  following his Termination Date and,
except as otherwise  provided in Paragraph  2.(a)(iii)  hereof, the amounts 
due Mr. Pershing hereunder shall not be reduced or suspended if Mr. Pershing 
accepts such subsequent employment.

         5. Arbitration.
            (a)  Any  dispute,  controversy  or  claim  arising  out of or
         relating to the Company's  obligations to pay severance  benefits under
         this Agreement,  or the breach  thereof,  shall be settled and resolved
         solely by  arbitration in accordance  with the  Commercial  Arbitration
         Rules  of  the  American  Arbitration  Association  ("AAA")  except  as
         otherwise  provided  herein.  The  arbitration  shall  be the  sole and
         exclusive forum for resolution of any such claim for severance benefits
         and the arbitrators'  award shall be final and binding.  The provisions
         of this  Paragraph 5 are not  intended to apply to any other  disputes,
         claims or  controversies  arising out of or relating to Mr.  Pershing's
         employment by the Company or the termination thereof.

            (b) Arbitration  shall be  initiated by serving a written  notice 
         of demand for  arbitration to Mr. Pershing, in the case of the Company,
         or to the Southern Board, in the case of Mr. Pershing.

            (c) The  arbitration  shall be held in Atlanta,  Georgia.  The
         arbitrators shall apply the law of the State of Georgia,  to the extent
         not preempted by federal law, excluding any law which would require the
         application of the law of another state.

            (d) The parties shall appoint  arbitrators within fifteen (15)
         business  days  following  service of the demand for  arbitration.  The
         number of arbitrators shall be three. One arbitrator shall be appointed
         by Mr. Pershing,  one arbitrator shall be appointed by the Company, and
         the two arbitrators  shall appoint a third.  If the arbitrators  cannot
         agree on a third arbitrator  within thirty (30) business days after the
         service  of  demand  for  arbitration,  the third  arbitrator  shall be
         selected by the AAA.

            (e) The arbitration  filing fee shall be paid by Mr. Pershing.
         All other costs of arbitration  shall be borne equally by Mr.  Pershing
         and the Company,  provided,  however,  that the Company shall reimburse
         such fees and costs in the event any material  issue in such dispute is
         finally resolved in Mr. Pershing's favor and Mr. Pershing is reimbursed
         legal fees under Paragraph 2.(g) hereof.

            (f) The parties  agree that they will  faithfully  observe the
         rules that govern any arbitration  between them, they will abide by and
         perform any award rendered by the arbitrators in any such  arbitration,
         including  any award of  injunctive  relief,  and a judgment of a court
         having jurisdiction may be entered upon an award.

            (g) The  parties  agree that  nothing in this  Paragraph  5 is
         intended to preclude  any court  having  jurisdiction  from issuing and
         enforcing  in any lawful  manner  such  temporary  restraining  orders,
         preliminary injunctions, and other interim measures of relief as may be
         necessary to prevent harm to a party's interests or as otherwise may be
         appropriate pending the conclusion of arbitration  proceedings pursuant
         to this Agreement regardless of whether an arbitration proceeding under
         this  Paragraph 5 has begun.  The parties  further  agree that  nothing
         herein  shall  prevent any court from  entering  and  enforcing  in any
         lawful manner such judgments for permanent  equitable  relief as may be
         necessary to prevent harm to a party's interests or as otherwise may be
         appropriate  following the issuance of arbitral awards pursuant to this
         Agreement.

        6.  Miscellaneous.
            (a) Funding of Benefits.  Unless the Board,  in its discretion
         shall determine  otherwise,  the benefits payable to Mr. Pershing under
         this  Agreement  shall not be funded in any manner and shall be paid by
         the Company out of its general assets,  which assets are subject to the
         claims of the Company's creditors.

            (b) Withholding.  There  shall be  deducted  from the  payment 
         of any benefit due under this Agreement  the amount of any tax  
         required by any  governmental  authority to be withheld and paid 
         over by the Company to such governmental authority for the account 
         of Mr. Pershing.

            (c) Assignment.  Mr. Pershing shall have no rights to sell, 
         assign,  transfer,  encumber, or otherwise  convey the right to 
         receive the payment of any benefit  due  hereunder,  which  payment 
         and the rights  thereto are  expressly  declared to be  nonassignable 
         and  nontransferable.  Any attempt to do so shall be null and void 
         and of no effect.

            (d) Amendment  and  Termination.  The  Agreement  may be  
         amended  or  terminated  only by a writing executed by the parties.

            (e)  Construction.   This  Agreement  shall  be  construed  in
         accordance  with and  governed by the laws of the State of Georgia,  to
         the extent not preempted by federal law,  disregarding any provision of
         law which would require the application of the law of another state.

            (f)  Pooling  Accounting.   Notwithstanding  anything  to  the
         contrary herein, if, but for any provision of this Agreement,  a Change
         in  Control   transaction   would  otherwise  be  accounted  for  as  a
         pooling-of-interests  under APB  No.16  ("Pooling  Accounting")  (after
         giving  effect to any and all other facts and  circumstances  affecting
         whether   such  Change  in  Control   transaction   would  use  Pooling
         Accounting,),  such  provision or  provisions of this  Agreement  which
         would  otherwise  cause  the  Change  in  Control   transaction  to  be
         ineligible for Pooling Accounting shall be void and ineffective in such
         a manner  and to the  extent  that by  eliminating  such  provision  or
         provisions of this Agreement,  Pooling Accounting would be required for
         such Change in Control transaction.





         IN WITNESS WHEREOF,  the parties hereto have executed this 
Agreement this ____ day of  __________________, 2000.
                                                            
                                    THE SOUTHERN COMPANY


                           By:      ____________________________________


                                    SOUTHERN ENERGY RESOURCES, INC.


                           By:      ____________________________________


                                    SOUTHERN ENERGY, INC.


                           By:      ____________________________________


                                    MR. PERSHING


                                    -----------------------------
                                    Richard J. Pershing






RJP
26


                                    Exhibit A

                           CHANGE IN CONTROL AGREEMENT

                               Waiver and Release


         The  attached  Waiver  and  Release  is to be given to Mr.  Richard  J.
Pershing upon the occurrence of an event that triggers eligibility for severance
benefits under the Change in Control  Agreement,  as described in Paragraph 2(a)
of such agreement.





                          CHANGE IN CONTROL AGREEMENT

                               Waiver and Release

         I, Richard J.  Pershing,  understand  that I am entitled to receive the
severance  benefits  described  in Section 2 of the Change in Control  Agreement
(the "Agreement") if I execute this Waiver and Release ("Waiver").  I understand
that the benefits I will receive  under the  Agreement  are in excess of those I
would have received  from The Southern  Company and Southern  Energy  Resources,
Inc. (collectively, the "Company") if I had not elected to sign this Waiver.

         I recognize that I may have a claim against the Company under the Civil
Rights Act of 1964 and 1991,  the Age  Discrimination  in  Employment  Act,  the
Rehabilitation  Act of 1973, the Energy  Reorganization Act of 1974, as amended,
the Americans with Disabilities Act or other federal, state and local laws.

         In exchange for the benefits I elect to receive,  I hereby  irrevocably
waive and release all claims,  of any kind whatsoever,  whether known or unknown
in connection with any claim which I ever had, may have, or now have against The
Southern  Company,  Alabama Power  Company,  Georgia Power  Company,  Gulf Power
Company,  Mississippi  Power  Company,  Savannah  Electric  and  Power  Company,
Southern Communication Services, Inc., Southern Company Services, Inc., Southern
Energy  Resources,  Inc.,  Southern  Company Energy  Solutions,  Inc.,  Southern
Nuclear Operating Company, Inc. and other direct or indirect subsidiaries of The
Southern  Company  and their  past,  present  and  future  officers,  directors,
employees,  agents and  attorneys.  Nothing in this Waiver shall be construed to
release  claims or causes of action under the Age  Discrimination  in Employment
Act or the Energy  Reorganization  Act of 1974,  as amended,  which arise out of
events occurring after the execution date of this Waiver.

         In further  exchange for the benefits I elect to receive,  I understand
and agree that I will respect the  proprietary  and  confidential  nature of any
information  I have obtained in the course of my service with the Company or any
subsidiary or affiliate of The Southern Company. However, nothing in this Waiver
shall prohibit me from engaging in protected  activities under applicable law or
from communicating,  either voluntary or otherwise, with any governmental agency
concerning any potential violation of the law.

         In signing this Waiver, I am not releasing claims to benefits that I am
already entitled to under any workers' compensation laws or under any retirement
plan or welfare  benefit  plan  within the  meaning of the  Employee  Retirement
Income Security Act of 1974, as amended, which is sponsored by or adopted by the
Company and/or any of its direct or indirect subsidiaries; however, I understand
and  acknowledge  that  nothing  herein is intended to or shall be  construed to
require the Company to  institute or continue in effect any  particular  plan or
benefit  sponsored by the Company and the Company  hereby  reserves the right to
amend or terminate any of its benefit  programs at any time in  accordance  with
the procedures set forth in such plans.

         In signing  this  Waiver,  I realize  that I am waiving and  releasing,
among other things,  any claims to benefits under any and all bonus,  severance,
workforce reduction, early retirement,  outplacement,  or any other similar type
plan sponsored by the Company.

         I have been  encouraged  and  advised in writing  to seek  advice  from
anyone of my choosing  regarding  this Waiver,  including  my  attorney,  and my
accountant or tax advisor.  Prior to signing this Waiver,  I have been given the
opportunity and sufficient time to seek such advice,  and I fully understand the
meaning and contents of this Waiver.

         I understand  that I may take up to  twenty-one  (21)  calendar days to
consider  whether  or not I desire  to enter  this  Waiver.  I was not  coerced,
threatened  or otherwise  forced to sign this  Waiver.  I have made my choice to
sign this Waiver voluntarily and of my own free will.

         I understand that I may revoke this Waiver at any time during the seven
(7) calendar day period after I sign and deliver this Waiver to the Company.  If
I revoke  this  Waiver,  I must do so in writing  delivered  to the  Company.  I
understand  that this Waiver is not effective until the expiration of this seven
(7) calendar day  revocation  period.  I understand  that upon the expiration of
such seven (7) calendar day revocation period this entire Waiver will be binding
upon me and will be irrevocable.

         I  understand  that by signing  this Waiver I am giving up rights I may
have.

         IN WITNESS  WHEREOF,  the undersigned  hereby executes this Waiver 
this ____ day of  ____________________, in the year _____.


                                                  Richard J. Pershing

Sworn to and subscribed to me this
____ day of ____________, _____.


Notary Public

My Commission Expires:


(Notary Seal)

         Acknowledged and Accepted by the Company, as defined in the Waiver.

By:                                         
         -----------------------------------
Date:                                       
         -----------------------------------