Deferred Compensation Agreement - The Southern Co., Southern Energy Resources Inc. and S. Marce Fuller


                        DEFERRED COMPENSATION AGREEMENT

         THIS DEFERRED COMPENSATION AGREEMENT ("Agreement") made and entered
into by and between The Southern Company ("Southern"), Southern Energy
Resources, Inc. (the "Company") and S. Marce Fuller ("Ms. Fuller").

                                   WITNESSETH:

         WHEREAS, Ms. Fuller is an Officer of the Company;

         WHEREAS, the Company and Southern wish to encourage Ms. Fuller to
increase the profitability of the Company and to provide Ms. Fuller an interest
in the Company's overall profitability, and to provide Ms. Fuller with
additional deferred compensation for service she has or will provide the
Company;

         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.       Retention Bonus.

                  a.       General Nature of Award. Subject to the terms and
         conditions of this Agreement, the Company shall establish and maintain
         on behalf of Ms. Fuller an account on the Company's books and records
         (the "Account") which, if Ms. Fuller continues to be an employee of the
         Company, or any affiliate or subsidiary of Southern (as set forth in
         Paragraph 4 hereof), shall entitle Ms. Fuller to receive on July 1,
         2003 (the period from the effective date of the Agreement through July
         1, 2003 to be referred to as the "Performance Period") an amount equal
         to the then Market Value (as defined below) of the equivalent of Four
         Hundred Thousand Dollars ($400,000.00) of Market Value of


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         Southern's common stock deemed to have been purchased as of the
         effective date of this Agreement, including reinvested dividends
         thereon, increased, if certain profitability goals are met, by
         estimated income tax expenses.

                  b.       Investment.

                           (1)      As of the date hereof, the Company shall
                  credit to Ms. Fuller's Account that number of deemed shares
                  (including fractional shares) of Southern's common stock
                  ("Common Stock") as shall equal $400,000.00 in Market Value
                  (as defined herein) determined as of the effective date of
                  this Agreement (such hypothetical shares to be referred to
                  herein as the "Phantom Stock"). For purposes of this
                  Agreement, "Market Value" shall mean the average closing
                  price of the Common Stock as reported by the New York Stock
                  Exchange for the ten trading days immediately preceding the
                  respective valuation date.

                           (2)      As of the day of each calendar quarter in
                  which occurs the payment of dividends on Common Stock, there
                  shall be credited to Ms. Fuller's Account such additional
                  shares of Phantom Stock (including fractional shares) as
                  could have been purchased at the Market Value on such day as
                  follows:

                                    (a)      In the case of cash dividends, such
                           additional shares of Phantom Stock as could have been
                           purchased with the dividends payable on the number of
                           shares of Phantom Stock credited to the Account
                           immediately prior to the dividend;

                                    (b)      In the case of dividends payable in
                           property other than cash or Common Stock, such
                           additional shares of Phantom Stock as could have been
                           purchased with the fair market value of the property
                           which would have


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                           been payable as dividends on the number of shares of
                           Phantom Stock credited to the Account immediately
                           prior to the dividend; or

                                    (c)      In the case of dividends payable in
                           Common Stock, such additional shares of Phantom Stock
                           as would have been payable on the number of shares of
                           Phantom Stock credited to the Account immediately
                           prior to the dividend.

                           (3)      In the event that the number of outstanding
                  shares of Common Stock is changed through merger,
                  consolidation, reorganization, recapitalization,
                  reincorporation, stock split, stock dividend (in excess of 2%)
                  or other change in the capital structure of Southern without
                  consideration, or upon the occurrence of any other
                  extraordinary corporate event involving the Common Stock
                  causing a reduction in the value of the Common Stock, such as
                  a corporate spin off or split up, the number of shares of
                  Phantom Stock credited to the Account shall be proportionately
                  adjusted by the Company so as to preserve the value of the
                  Account immediately prior to such event.

                  c.       Vesting of Account. The Market Value of Ms. Fuller's
         Account shall vest on July 1, 2003 (the "Vesting Date"), provided Ms.
         Fuller is then an employee of the Company, Southern, or an affiliate or
         subsidiary of Southern.

                  d.       Valuation of Account. The value of Ms. Fuller's
         Account on any date shall be based on the Market Value on such date
         multiplied by the number of shares of Phantom Stock then credited to
         the Account, provided, however, that if the profitability goals
         established for the Company and for Ms. Fuller by the Chief Executive
         Officer of Southern have been equaled or exceeded during the
         Performance Period as set forth on


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         Exhibit A, and as annually documented on Exhibit B of this Agreement
         (the "Profitability Goals"), the value of the Account shall be
         increased upon payout to cover Ms. Fuller's federal and state income
         tax expense as reasonably estimated by the Company for the year of
         payout (the "Tax Gross-up"). Failure to meet the Profitability Goals
         for the Performance Period shall result in the forfeiture of the Tax
         Gross-up, provided, however, that the Chief Executive Officer of
         Southern may, in his sole discretion, determine after the close of the
         Performance Period, that as a result of overall Company profitability
         and individual performance during the entire Performance Period, all or
         a portion of the value of the Tax Gross-up shall nevertheless be paid.

                  e.       Payment of Account Balance. Provided that Ms. Fuller
         is then an employee of the Company, Southern, or an affiliate or
         subsidiary of Southern, and, with respect to the Tax Gross-up amount,
         has also achieved the Profitability Goals, the Company shall pay to Ms.
         Fuller the value of her Account, and, if applicable, the Tax Gross-up
         amount, in cash within ten (10) days of the Vesting Date.

                  f.       Election to Defer. By written election filed with
         Southern's Vice President, Human Resources no less than thirteen (13)
         months prior to the Vesting Date, Ms. Fuller may defer all or a portion
         of the amount to be received under this Agreement by having such amount
         contributed on her account to The Southern Company Deferred
         Compensation Plan, in accordance with the terms and conditions of such
         Plan.

                  g.       Death, Permanent Disability, Termination Without
         Cause, Termination for Good Reason, or Continued Employment Following a
         Change in Control. In the event of Ms. Fuller's termination of
         employment with the Company prior to the payout of the value of the
         Account for reasons of death, permanent disability, termination by the
         Company


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         without Cause, or termination of employment by Ms. Fuller for Good
         Reason following a Change in Control, or, if prior to the payout of the
         value of the Account Ms. Fuller continues employment with the Company,
         any Southern Subsidiary, or any employer that succeeds to all or
         substantially all of the assets of the Company, Southern, or any
         Southern Subsidiary following a Change in Control, the Company shall
         pay to Ms. Fuller, or her estate in the event of death, the value of
         the Account determined as of the date of such termination or Change in
         Control, plus, if the Profitability Goals have been met as of such
         date, the Tax Gross-up amount. For purposes of this Paragraph 1.g., the
         terms Cause, Change in Control, Good Reason, and Southern Subsidiary
         shall have the meaning set forth in that certain Change in Control
         Agreement, dated June 17, 1999, as amended from time to time, between
         Southern, the Company and Ms. Fuller (the "Change in Control
         Agreement"), the defined terms of which are incorporated in this
         Paragraph 1.g. by reference thereto.

                  h.       Assignability. Neither Ms. Fuller, her estate, her
          beneficiaries, nor her legal representative shall have any rights to
          commute, sell, assign, transfer or otherwise convey the right to
          receive the payment under this Paragraph 1, which payment and the
          rights thereto are expressly declared to be nonassignable and
          nontransferable. Any attempt to assign or transfer the right to such
          payment shall be void and have no effect.

         2.       Publicity; No Disparaging Statement. Except as otherwise
provided in Paragraph 5 hereof, Ms. Fuller, Southern and the Company covenant
and agree that they shall not engage in any communications which shall disparage
one another or interfere with their existing or prospective business
relationships.


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         3.       Non-Disclosure.

                  a.       Definitions. For purposes of this Paragraph 3, the
         following terms shall have the following meanings:

                           (1)      "Entity" shall mean any business,
                  individual, partnership, joint venture, agency, governmental
                  subdivision, association, firm, corporation or other entity.

                           (2)      "Affiliate" shall mean the following
                  Entities: (a) any Entity which owns an Interest (as defined
                  below) in the Company either directly or indirectly through
                  any other Entity, (b) any Entity an Interest in which is owned
                  directly or indirectly by any Entity which owns directly or
                  indirectly an Interest in the Company or (c) any Entity in
                  which the Company owns an Interest either directly or
                  indirectly through any other Entity. For purposes of this
                  Agreement, the term "Interest" shall include any equity
                  interest in an Entity in an amount equal to or greater than
                  30% of the Entity's total outstanding equity interests.

                           (3)      "Confidential Information" shall mean
                  proprietary and confidential data or information other than
                  Trade Secrets (as defined below), which is valuable to, and
                  related to the business of, the Company, its Affiliates or
                  non-affiliated Entities with whom the Company or its
                  Affiliates has or have business relationships (collectively,
                  "Third Parties"), and the details of which are generally
                  unknown to the public or to the Company's competitors,
                  including, without limitation, information regarding the
                  Company's employees, business strategies, models and systems,
                  customers, suppliers, partners and affiliates, gained by Ms.
                  Fuller as a result of her affiliation with the Company or its
                  Affiliates, and other


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                  items that the Company or its Affiliates may from time to time
                  mark or otherwise identify as confidential.

                           (4)      "Trade Secrets" shall mean information of or
                  related to the Company, its Affiliates or Third Parties which
                  (a) derives economic value, actual or potential, from not
                  being generally known to, and not being readily ascertainable
                  by proper means by, other persons who can obtain economic
                  value from its disclosure or use; and (b) is the subject of
                  efforts that are reasonable under the circumstances to
                  maintain its secrecy; it being agreed that such information
                  includes, without limitation, technical and non-technical
                  data, a formula, a pattern, a compilation, a program, a
                  device, a method, a technique, a drawing, a process, financial
                  data, financial plans, product plans or a list of actual or
                  potential customers or suppliers.

                           (5)      "Intellectual Property" shall mean all work
                  product, property, data, documentation, "know-how", concepts
                  or plans, inventions, discovery, compositions, innovations,
                  computer programs, improvements, techniques, processes,
                  designs, article of manufacture or information of any kind, or
                  any new or useful improvements of any of the foregoing and any
                  Trade Secrets, patents, copyrights, Confidential Information,
                  mask work, trademark or service mark, relating in any way to
                  the Company or its Affiliates and its or their business
                  prepared, conceived, revised, discovered, developed, or
                  created by Ms. Fuller for the Company or its Affiliates or by
                  using the Company's or its Affiliates' time, personnel,
                  facilities, equipment, knowledge, information, resources, or
                  material.


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                  b.       Nondisclosure; Ownership of Proprietary Property.

                           (1)      Nondisclosure. In recognition of the
                  Company's need to protect its legitimate business interests,
                  Ms. Fuller hereby acknowledges that she has been given access
                  to valuable Trade Secrets and Confidential Information; and
                  she hereby covenants and agrees that she will use the Trade
                  Secrets and Confidential Information for the Company's
                  business purposes only, and that she will not for any reason,
                  in any fashion, form or manner, other than as instructed by a
                  duly authorized representative of the Company, copy, disclose,
                  disseminate, communicate, transfer or otherwise convey to any
                  Entity any item: (a) which is a Trade Secret, for so long as
                  such item remains a trade secret under applicable law; or (b)
                  which is Confidential Information, other than Trade Secrets,
                  for a period of three (3) years from her termination.

                           (2)      Notification of Unauthorized Disclosure. Ms.
                  Fuller shall exercise her best efforts to ensure the continued
                  confidentiality of all Trade Secrets and Confidential
                  Information known by, disclosed or made available to her. She
                  shall immediately notify the Company of any unauthorized
                  disclosure or use of any Trade Secrets or Confidential
                  Information of which she becomes aware. Ms. Fuller shall
                  assist the Company, to the extent necessary, in the
                  procurement or protection of the Company's or its Affiliates'
                  rights to or in any Intellectual Property, Trade Secrets or
                  Confidential Information and, upon the Company's request,
                  shall assist, to the extent necessary, in the procurement or
                  protection of any Third Party's rights to or in any
                  Intellectual Property, Trade Secrets or Confidential
                  Information.


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                           (3)      Ownership. To the greatest extent possible,
                  any and all Intellectual Property shall be deemed to be "work
                  made for hire" (as defined in the Copyright Act, 17 U.S.C.A.
                  ss.ss. 101 et seq.), and Ms. Fuller hereby unconditionally and
                  irrevocably transfers and assigns to the Company or its
                  Affiliates all rights, title and interest she currently has or
                  in the future may have by operation of law or otherwise in or
                  to any Intellectual Property, including, without limitation,
                  all patents, copyrights, trademarks, service marks and other
                  Intellectual Property rights and agrees that the Company or
                  its Affiliates shall have the exclusive world-wide ownership
                  of such Intellectual Property, and that no Intellectual
                  Property shall be treated as or deemed to be a "joint work"
                  (as defined by the Copyright Act) of Ms. Fuller and the
                  Company, its Affiliates or otherwise. Ms. Fuller agrees to
                  execute and deliver to the Company or its Affiliates any
                  transfers, assignments, documents or other instruments which
                  the Company or its Affiliates may deem necessary or
                  appropriate to vest complete title and ownership of any
                  Intellectual Property, and all rights therein, exclusively in
                  the Company or its Affiliates, as the case may be.

                           (4)      Return of Materials. Upon Ms. Fuller's
                  termination, or at any point after that time upon the specific
                  request of the Company, she shall return to the Company all
                  written or descriptive materials of any kind belonging or
                  relating to the Company or its Affiliates, including, without
                  limitation, any Intellectual Property, Confidential
                  Information and Trade Secrets, in her possession.

         4.       Transfer of Employment to Southern or a Southern Subsidiary or
Affiliate. In the event that Ms. Fuller's employment by the Company is
terminated and she shall become


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immediately re-employed by Southern or a subsidiary or an affiliate of Southern,
the Company shall assign this Agreement to Southern or such subsidiary or
affiliate, Southern shall accept such assignment or cause such affiliate or
subsidiary to accept such assignment, such assignee shall become the "Company"
for all purposes hereunder, and the profitability goals set forth on Exhibit A
hereof shall be amended to appropriately reflect the performance of such
assignee. In the event of such assignment, the expense of this Agreement shall
be shared pro rata by the Company and any such assignee based upon the number of
months after the effective date of this Agreement that Ms. Fuller is employed by
the Company, and/or Southern and/or such affiliate or subsidiary of Southern, as
the case may be.

         5.       Confidentiality and Legal Process. Ms. Fuller represents and
agrees that she will keep the terms, amount and fact of this Agreement
confidential and that she will not hereafter disclose any information concerning
this Agreement to any one other than her personal agents, including, but not
limited to, any past, present, or prospective employee or applicant for
employment with Company. Notwithstanding the foregoing, nothing in this
Agreement is intended to prohibit Ms. Fuller from performing any duty or
obligation that shall arise as a matter of law. Specifically, Ms. Fuller shall
continue to be under a duty to truthfully respond to matter of law.
Specifically, Ms. Fuller shall continue to be under a duty to truthfully respond
to any legal and valid subpoena or other legal process. This Agreement is not
intended in any way to proscribe Ms. Fuller's right and ability to provide
information to any federal, state or local government in the lawful exercise of
such governments' governmental functions.


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         6.       Successors And Assigns; Applicable Law. Except as otherwise
provided in Paragraph l.h., this Agreement shall be binding upon and inure to
the benefit of Ms. Fuller and her heirs, administrators, representatives,
executors, successors and assigns, and shall be binding upon and inure to the
benefit of Southern, the Company and their officers, directors, employees,
agents, shareholders, parent corporation and affiliates, and their respective
predecessors, successors, assigns, heirs, executors and administrators and each
of them, and to their heirs, administrators, representatives, executors,
successors and assigns. This Agreement shall be construed and interpreted in
accordance with the laws of the State of Georgia, United States of America
(without giving effect to principles of conflicts of laws).

         7.       Complete Agreement. This Agreement shall constitute the full
and complete Agreement between the parties concerning its subject matter and
fully supersedes any and all other prior Agreements or understandings between
the parties concerning the subject matter hereof. This Agreement shall not be
modified or amended except by a written instrument signed by both Ms. Fuller and
an authorized representative of Southern and the Company.

         8.       Severability. The unenforceability or invalidity of any
particular provision of this Agreement shall not affect its other provisions,
and to the extent necessary to give such other provisions effect, they shall be
deemed severable.

         9.       Waiver Of Breach; Specific Performance. The waiver of a
breach of any provision of this Agreement shall not operate or be construed as a
waiver of any other breach. Each of the parties to this Agreement will be
entitled to enforce its or her rights under this Agreement, specifically, to
recover damages by reason of any breach of any provision of this Agreement and
to exercise all other rights existing in its or her favor. The parties hereto
agree and acknowledge that money damages may not be an adequate remedy for any
breach of the provisions of this Agreement


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and that any party may in its or her sole discretion apply to any court of law
or equity of competent jurisdiction for specific performance or injunctive
relief in order to enforce or prevent any violations of the provisions of this
Agreement.

         10.      Unsecured General Creditor. The Company shall neither reserve
nor specifically set aside funds for the payment of its obligations under this
Agreement, and such obligations shall be paid solely from the general assets of
the Company. Notwithstanding that Ms. Fuller may be entitled to receive the
value of her benefit under the terms and conditions of this Agreement, the
assets from which such amount may be paid shall at all times be subject to the
claims of the Company's creditors.

         11.      No Effect On Other Arrangements. It is expressly understood
and agreed that the payments made in accordance with this Agreement are in
addition to any other benefits or compensation to which Ms. Fuller may be
entitled or for which she may be eligible, whether funded or unfunded, by reason
of her employment with the Company.

         12.      Tax Withholding. There shall be deducted from each payment
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 Ms. Fuller.

         13.      Compensation. Any compensation contributed on behalf of Ms.
Fuller under this Agreement shall not be considered "compensation," as the term
is defined in The Southern Company Employee Savings Plan, The Southern Company
Employee Stock Ownership Plan, The Southern Company Performance Sharing Plan or
The Southern Company Pension Plan. Payments under this Agreement shall not be
considered wages, salaries or compensation under any other employee benefit
plan.


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         14.      No Guarantee of Employment. No provision of this Agreement
shall be construed to affect in any manner the existing rights of the Company to
suspend, terminate, alter, modify, whether or not for cause, the employment
relationship of Ms. Fuller and the Company.

         IN WITNESS WHEREOF, this Agreement has been executed by the parties
first listed above, effective this 5th day of October, 1999.

                                        THE SOUTHERN COMPANY


                                    By: /s/ A.W. Dahlberg
                                        ------------------------------------

                                        SOUTHERN ENERGY RESOURCES, INC.


                                    By: /s/ V.N. Booker               
                                        ------------------------------------

                                        Ms. Fuller


                                        /s/ S. Marce Fuller 
                                        ------------------------------------


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                                    EXHIBIT A
                         DEFERRED COMPENSATION AGREEMENT
                         SCHEDULE OF PROFITABILITY GOALS
                             FOR PERFORMANCE PERIOD

         The Company shall achieve a Corporate Performance Factor under the
Southern Energy Resources, Inc. Short Term Incentive Plan of at least 1.0 for
each of the calendar years 2000, 2001 and 2002 and an average of 1.5 for such
three-year period.

           Achievement of the goals shall be assessed annually by the Chief
Executive Officer of Southern and documented in Exhibit B of this Agreement.


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                                    EXHIBIT B
                         DEFERRED COMPENSATION AGREEMENT
                   ANNUAL DOCUMENTATION OF PROFITABILITY GOALS
                             FOR PERFORMANCE PERIOD


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