Employment Retention Agreement - Southern Energy Resources LLC


                              AMENDED AND RESTATED
                     EMPLOYMENT RETENTION AGREEMENT FOR SERI

         THIS AMENDED AND RESTATED EMPLOYMENT RETENTION AGREEMENT  ("Agreement")
made and entered into by and between Southern Energy Resources,  L.L.C. ("SERI")
and                          (the "Employee") on                   , 2000, to be
   --------------------------                    ------------------
effective as of                , 2000 (the "Effective Date").
                ---------------

                              W I T N E S S E T H:
                               - - - - - - - - - -
         WHEREAS, the Employee is the            (insert title)     of SERI; and
                                      -----------------------------
         WHEREAS, SERI and the Employee  entered  into an  Employment  Retention
Agreement  on                          , 1999 (the  "Original  Effective  Date")
              ------------------------
(the "Original Agreement"); and
         WHEREAS, SERI and the Employee subsequently entered into an Amended and
Restated  Employment  Retention  Agreement on                        (the "First
                                              -----------------------
Amended Agreement"); and
         WHEREAS, SERI and the Employee wish to supersede the Original Agreement
and the First Amended Agreement with this Agreement; and
         WHEREAS,  this  Agreement  incorporates  the definition of a "Change in
Control" from the Southern Energy Resources, Inc. Change in Control Benefit Plan
Determination   Policy,  and  replaces   references  to  Southern  Company  with
references to Southern Energy,  Inc.  ("Southern Energy") due to the spin-off of
Southern Energy from Southern Company; and
         WHEREAS,  SERI wishes to continue to  encourage  the Employee to remain
with SERI and to  provide  the  Employee  with an  interest  in  SERI's  overall
profitability.


         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.  General  Award.  Subject  to  the  terms  and  conditions  of  this
Agreement, SERI shall pay to the Employee an amount equal to ______________ (the
"Base  Award") plus an  additional  amount  calculated  as provided in Section 3
below (the "Value Award") (collectively referred to as the "Award Amount").
         2. Vesting of Award  Amount.  Payment of the Award Amount is subject to
Employee satisfying the following vesting  requirements.  The Award Amount shall
vest on the earlier of: (1) January 1, 2003 (the "Vesting Period"), provided the
Employee is then an employee of SERI,  or an affiliate or subsidiary of Southern
Energy;  or (2) upon a Change in  Control  as  defined  in the  Southern  Energy
Resources,  Inc. Change in Control Benefit Plan Determination Policy, as amended
from time to time in accordance with the provisions  therein  (collectively  the
"Vesting Date").
         3. Value Award.  The Value Award shall be calculated by multiplying the
Base Award times a  percentage  that is equal to the  increase  (expressed  as a
percentage)  in the Share Value of  Southern  Energy as  determined  on the most
recent  Valuation Date preceding the Original  Effective  Date, this Share Value
converted in a manner  consistent with the conversion  under the former Southern
Energy  Resources,  Inc. Value Creation Plan, as in effect  immediately prior to
the termination  thereof (the "VCP"), and the increase in this "converted" Share
Value  attributable  to the  increase,  if any, in the common  stock of Southern
Energy  as  determined  on the  Vesting  Date.  In the event of  termination  of
employment  under Section 6, the Employee,  or his estate in the event of death,



shall be entitled to a partial  payment of the Value Award (the  "Partial  Value
Award").  Notwithstanding  the above,  the payment of any Value Award or Partial
Value Award under this Section 3 is expressly conditioned upon the determination
that the Share  Value of Southern  Energy as of the Vesting  Date or the date of
termination  of employment,  whichever is applicable,  is greater than the Share
Value of Southern  Energy on the Original  Effective  Date. The "Share Value" on
the Original Effective Date shall be determined under the VCP; the "Share Value"
on the Vesting Date or the date of termination  of employment  shall be the fair
market value of the common stock of Southern  Energy on the Valuation Date on or
immediately preceding the Vesting Date or the date of termination of employment,
as applicable.  The "Valuation Date" with respect to the Original Effective Date
shall be  determined  under the VCP;  the  "Valuation  Date" with respect to the
Vesting Date or the date of termination of employment  shall be each day the New
York Stock Exchange conducts business.
         4.  Payment of Account Balance. Provided that  the Employee is  then an
employee of SERI, or an affiliate or subsidiary of Southern Energy,  SERI  shall
pay to the Employee the value of his Award Amount, in cash, within ten (10) days
of the Vesting Date.
         5.  Election to Defer.  If eligible  and  permitted  under the Southern
Energy, Inc. Deferred  Compensation Plan for Directors and Select Employees,  by
written election timely filed with the Deferred Compensation Plan Committee, the
Employee  may defer all or a portion  of the  amount to be  received  under this
Agreement,  by having such amount  contributed on his account in accordance with
the terms and conditions of such Plan.
         6. Death,  Permanent  Disability or Termination  Without Cause.  In the
event of the Employee's termination of employment with SERI, prior to the payout
of the Award Amount, for reasons of death,  permanent  disability or termination
by SERI  without  Cause (as  defined in  Section  7),  SERI shall pay,  within a



reasonable time after such event, to the Employee, or his estate in the event of
death, the Base Amount and the applicable  Partial Value Amount determined under
Section 3 as of the date of such termination.
         7.  Termination  for Cause or Resignation by Employee.  In the event of
the  Employee's   termination  of  employment  for  Cause,   or  the  Employee's
resignation  (which  includes the Employee's  retirement),  prior to the Vesting
Date,  the Employee shall forfeit the entire Award Amount and SERI shall have no
further obligations with respect to any amount under this Agreement.  As used in
this  Agreement,  the term  "Cause"  shall  mean  gross  negligence  or  willful
misconduct in the performance of the duties and services  required in the course
of employment by SERI; the final conviction of a felony or misdemeanor involving
moral turpitude; the carrying out of any activity or the making of any statement
which would  prejudice  the good name and  standing of SERI,  or an affiliate or
subsidiary of Southern Energy  (collectively "SEI Group") or would bring the SEI
Group into contempt,  ridicule or would reasonably shock or offend any community
in  which  the  SEI  Group  is  located;  a  material  breach  of the  fiduciary
obligations  owed  by an  officer  and an  employee  to the  SEI  Group;  or the
Employee's unsatisfactory performance of the duties and services required by his
or her  employment  provided  that  SERI has given  the  Employee  notice of his
unsatisfactory  performance and the actions required on the part of the Employee
to make such  performance  satisfactory and the Employee has not improved his or
her performance to a satisfactory level within a ninety (90) day period.
         8.  Confidentiality  and Legal  Process.  The Employee  represents  and
agrees  that he  will  keep  the  terms,  amount  and  fact  of  this  Agreement
confidential and that he will not hereafter disclose any information  concerning
this  Agreement  to anyone other than his personal  agents,  including,  but not
limited  to,  any past,  present,  or  prospective  employee  or  applicant  for



employment with SERI,  Southern Energy, or its affiliates.  Notwithstanding  the
foregoing,  nothing in this  Agreement is intended to prohibit the Employee from
performing  any  duty  or  obligation  that  shall  arise  as a  matter  of law.
Specifically,  the  Employee  shall  continue  to be under a duty to  truthfully
respond to matters of law. Specifically, the Employee 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 the Employee's
right  and  ability  to  provide  information  to any  federal,  state  or local
government in the lawful exercise of such government's governmental functions.
         9. Assignability.  Neither the Employee, his estate, his beneficiaries,
nor his legal  representative  shall have any rights to commute,  sell,  assign,
transfer or otherwise convey the right to receive any payments hereunder,  which
payments and the rights thereto are expressly  declared to be nonassignable  and
nontransferable. Any attempt to assign or transfer the right to payments of this
Agreement shall be void and have no effect.
         10.  Unsecured  General  Creditor.   SERI  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
SERI.  Notwithstanding  that the  Employee  may be entitled to receive the Award
Amount 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 SERI's
creditors.
         11.  Guarantee  of  Southern  Energy.  If SERI fails or refuses to make
payments under this Agreement, the Employee may have the right to obtain payment
by Southern Energy pursuant to the terms of the "Guarantee  Agreement Concerning
Southern Energy Resources,  Inc.  Compensation and Benefit Arrangements" entered
into by SERI  and  Southern  Energy.  The  Employee's  right to  payment  is not
increased  as a result of this  Guarantee.  The  Employee  has the same right to



payment from Southern  Energy as from SERI. Any demand to enforce this Guarantee
should be made in writing and should  reasonably and briefly  specify the manner
and the amount SERI 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  Southern
Energy's  normal  business  hours,  or at the beginning of the next business day
after receipt,  if not received during Southern  Energy's normal business hours.
All  arrivals  by telegram  or  telecopier  shall be  confirmed  promptly  after
transmission in writing by certified mail or personal delivery.
         12. Amendment; Modification; Termination. Except as  otherwise provided
herein, this Agreement may be amended, modified, or terminated only by a writing
executed by the parties hereto.
         13. 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 the Employee may be entitled or
for  which he may be  eligible,  whether  funded or  unfunded,  by reason of his
employment with the SERI.
         14. 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 SERI to such governmental authority for the account
of the Employee.
         15.  Compensation.  Any  compensation  contributed  on  behalf  of  the
Employee under this  Agreement  shall not be considered  "compensation,"  as the
term is defined in the Southern Energy  Resources  Employee Savings Plan, or the
Southern  Energy  Resources  Pension  Plan.  Distributions  from the  Employee's
Account shall not be considered wages,  salaries or compensation under any other
employee benefit plan.



         16.  No Guarantee of Employment. No provision of  this Agreement  shall
be construed to  affect in  any  manner the  existing rights of SERI to suspend,
terminate, alter, modify, whether  or not for Cause, the employment relationship
of the Employee and SERI.
         17.  Transfer  of  Employment  to a Southern  Energy  Subsidiary  or an
Affiliate.  In the event that the  Employee's  employment  by SERI is terminated
during the Vesting Period and the Employee shall become immediately  re-employed
by another subsidiary or an affiliate of Southern Energy, SERI shall assign this
Agreement to such  subsidiary or affiliate;  such  subsidiary or affiliate shall
accept such  assignment  or cause such  affiliate or  subsidiary  to accept such
assignment;  such assignee shall become "SERI" for all purposes  hereunder;  and
this Agreement shall be amended to appropriately reflect the performance of such
assignee.  In the event of such assignment,  the expense of this Agreement shall
be the sole responsibility of SERI.
         18.   Governing Law. This Agreement, and all its rights under it, shall
be  governed  by  and  construed in  accordance  with  the  laws of the State of
Georgia.
         IN WITNESS  WHEREOF,  this  Agreement  has been executed by the parties
first  listed above on the date first  listed  above,  to be effective as of the
Effective Date.
                                             SOUTHERN ENERGY RESOURCES, INC.


                                             By: ______________________________

                                             EMPLOYEE


                                             ------------------------------
                                             [Name of Employee]
Attest:

By:                                         
         -----------------------------------