<PAGE>   1
                                                                   Exhibit 10.13


                         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 Richard J. Pershing ("Mr. Pershing").

                                   WITNESSETH

         WHEREAS, Mr. Pershing is an Officer of the Company;

         WHEREAS, the Company and Southern wish to encourage Mr. Pershing to
increase the profitability of the Company and to provide Mr. Pershing an
interest in the Company's overall profitability, and to provide Mr. Pershing
with additional deferred compensation for service he 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 Mr. Pershing an account on the Company's books and records
         (the "Account") which, if Mr. Pershing continues to be an employee of
         the Company, or any affiliate or subsidiary of Southern (as set forth
         in Paragraph 5 hereof), shall entitle Mr. Pershing to receive on May 1,
         2003 (the period from the effective date of the Agreement through May
         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 Three
         Hundred Thousand Dollars ($300,000.00) of Market


<PAGE>   2

         Value of 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 Mr. Pershing's Account that number of deemed shares
                  (including fractional shares) of Southern's common stock
                  ("Common Stock") as shall equal $300,000.00 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 Mr. Pershing'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


                                       2
<PAGE>   3

                           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 Mr.
         Pershing's Account shall vest on May 1, 2003 (the "Vesting Date"),
         provided Mr. Pershing is then an employee of the Company, Southern, or
         an affiliate or subsidiary of Southern.

                  d.       Valuation of Account. The value of Mr. Pershing'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 Mr. Pershing by the Chief Executive
         Officers of Southern and the Company have been equaled or exceeded
         during the Performance


                                       3
<PAGE>   4

         Period as set forth on 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 Mr. Pershing'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 Officers of Southern and the Company may, in their 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 Mr.
         Pershing 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 Mr. Pershing the value of his 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, Mr. Pershing may defer all or a
         portion of the amount to be received under this Agreement by having
         such amount contributed on his 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 Mr. Pershing's termination of
         employment with the Company prior to the payout of the


                                       4
<PAGE>   5


         value of the Account for reasons of death, permanent disability,
         termination by the Company without Cause, or termination of employment
         by Mr. Pershing for Good Reason following a Change in Control, or, if
         prior to the payout of the value of the Account Mr. Pershing 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 Mr. Pershing, or his 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 21, 1999, as amended from time to time,
         between Southern, the Company and Mr. Pershing (the "Change in Control
         Agreement"), the defined terms of which are incorporated in this
         Paragraph 1.g. by reference thereto.

                  h.       Assignability. Neither Mr. Pershing, his estate, his
         beneficiaries, nor his 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.       Supplemental Pension Payment.

                  a.       Nature of Payment. If Mr. Pershing remains employed
         with the Company until November 1, 2002 (the "Service Requirement") and
         upon his termination of employment enters into a release in the form
         attached hereto as Exhibit C, the Company


                                       5
<PAGE>   6

         shall pay him an amount per month equal to the difference between the
         monthly amount payable to him under The Southern Company Pension Plan
         (the "Plan") as it shall then be in effect at the time and the monthly
         amount which would have been payable to him under the Plan if his
         period of Accredited Service under the Plan included an additional
         three (3) years; provided, however, that the Plan's 43-year maximum on
         Accredited Service shall not apply to the additional service granted
         under this Agreement, and provided further, that the Service
         Requirement shall not apply if Mr. Pershing is terminated under
         circumstances that result in eligibility for severance benefits under
         the Change in Control Agreement ("Change in Control Termination").
         Similarly, such additional service shall also be credited to Mr.
         Pershing for purposes of calculating a benefit under The Southern
         Company Supplemental Executive Retirement Plan and/or The Southern
         Energy Resources, Inc. Supplemental Executive Retirement Plan
         (collectively, "SERP"). For the purpose of computing a monthly amount
         payable to Mr. Pershing under the Plan, no limitation on benefits
         imposed by the Internal Revenue Code as it now exists or is hereafter
         amended or any other limiting legislation shall be taken into account.
         Said amount shall be recalculated from time to time to reflect any
         future increases, if any, in Retirement Income of retirees following
         Mr. Pershing's retirement. Mr. Pershing covenants and agrees that the
         consideration set forth in this Paragraph 2.a. shall constitute good
         and complete consideration for the release attached hereto as Exhibit
         C, those nondisclosure and ownership obligations under Paragraph 4
         hereof, and all other obligations and covenants of Mr. Pershing
         contained herein.

                  b.       Commencement and Form of Payment. The benefit
         provided in accordance with Paragraph 2.a. above shall be paid in
         monthly installments on the first


                                       6
<PAGE>   7

         day of each month in the same manner and commence at the same time as
         Mr. Pershing's election to receive Retirement Income under the Plan.
         Mr. Pershing's benefit under Paragraph 2.a. shall be subject to such
         early commencement reduction factors as would apply to a participant in
         the Plan based on his benefit commencement date under Paragraph 2.a. In
         the event Mr. Pershing is married, predeceases his spouse, and his
         spouse is entitled to payments as a Provisional Payee, monthly payments
         shall be made in the same manner as provided by the Provisional Payee
         option elected by him under the Plan taking into account the additional
         Accredited Service set forth in Paragraph 2.a. In the event Mr.
         Pershing shall not be married or shall not be survived by his spouse on
         the date payments commence under this Paragraph 2, the benefit
         described in the preceding sentence shall be forfeited. Mr. Pershing or
         his surviving spouse shall not, under any circumstances, have any
         option or right to require payments hereunder otherwise than in
         accordance with the terms hereof.

                  c.       Company's Option to Enhance Payment. On the second
         anniversary of the effective date of this Agreement, the Company shall
         have the option in its sole discretion to enhance the benefit under
         this Paragraph 2 as follows: beginning November 1, 2002, for each year
         of service completed by Mr. Pershing with the Company after such date,
         the Company shall pay him an amount per month equal to the difference
         between the monthly amount payable to him under the Plan as it shall
         then be in effect at the time and the monthly amount which would have
         been payable to him under the Plan if his period of Accredited Service
         under the Plan included an additional year, to a maximum of three (3)
         additional years. Such additional service shall also be credited to Mr.
         Pershing for purposes of calculating a benefit under the SERP. If the
         Company exercises such option,


                                       7
<PAGE>   8

         it shall so notify Mr. Pershing in writing and all the terms and
         conditions set forth in Paragraphs 2.a. and 2.b. with respect to the
         original grant of supplemental pension credit shall apply.

         3.       Publicity; No Disparaging Statement. Except as otherwise
provided in Paragraph 6 hereof, Mr. Pershing, 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.

         4.       Non-Disclosure and Non-Solicitation.

                  a.       Definitions. For purposes of this Paragraph 4, 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


                                       8
<PAGE>   9

                  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 Mr. Pershing as a result of his affiliation with the
                  Company or its Affiliates, and other 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


                                       9
<PAGE>   10

                  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 Mr.
                  Pershing for the Company or its Affiliates or by using the
                  Company's or its Affiliates' time, personnel, facilities, or
                  material.

                  b.       Nondisclosure: Ownership of Proprietary Property.

                           1)       Nondisclosure. In recognition of the
                  Company's need to protect its legitimate business interests,
                  Mr. Pershing hereby acknowledges that he has been given access
                  to valuable Trade Secrets and Confidential Information; and he
                  hereby covenants and agrees that he will use the Trade Secrets
                  and Confidential Information for the Company's business
                  purposes only, and that he 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 two (2) years from his termination.

                           2)       Notification of Unauthorized Disclosure. Mr.
                  Pershing shall exercise his best efforts to ensure the
                  continued confidentiality of all Trade Secrets and
                  Confidential Information known by, disclosed or made available
                  to him. He shall immediately notify the Company of any
                  unauthorized disclosure or use of any Trade Secrets or
                  Confidential Information of which he becomes aware.


                                       10
<PAGE>   11

                  Mr. Pershing 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.

                           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 Mr. Pershing hereby unconditionally
                  and irrevocably transfers and assigns to the Company or its
                  Affiliates all rights, title and interest he 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 Mr. Pershing and the
                  Company, its Affiliates or otherwise. Mr. Pershing 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.


                                       11
<PAGE>   12

                           4)       Return of Materials. Upon Mr. Pershing's
                  termination, or at any point after that time upon the specific
                  request of the Company, he 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 his possession.

         5.       Transfer of Employment to Southern or a Southern Subsidiary or
Affiliate. In the event that Mr. Pershing's employment by the Company is
terminated and he shall become 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, including but
not limited to the Release attached hereto and incorporated herein as Exhibit C
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 Mr. Pershing is employed by the Company,
and/or Southern and/or such affiliate or subsidiary of Southern, as the case may
be.

         6.       Confidentiality and Legal Process. Mr. Pershing 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 any one other than his 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 Mr. Pershing from performing any duty or
obligation that shall arise as a


                                       12
<PAGE>   13

matter of law. Specifically, Mr. Pershing shall continue to be under a duty to
truthfully respond to matter of law. Specifically, Mr. Pershing 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 Mr.
Pershing's right and ability to provide information to any federal, state or
local government in the lawful exercise of such governments' governmental
functions.

         7.       Successors And Assigns; Applicable Law. Except as otherwise
provided in Paragraph 1.h., this Agreement shall be binding upon and inure to
the benefit of Mr. Pershing and his 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).

         8.       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 Mr. Pershing
and an authorized representative of Southern and the Company.

         9.       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.


                                       13
<PAGE>   14

         10.      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 his 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 his 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 and that any party may in its or his 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.

         11.      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 Mr. Pershing may be entitled to receive the
value of his 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.

         12.      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 Mr. Pershing may be
entitled or for which he may be eligible, whether funded or unfunded, by reason
of his employment with the Company.

         13.      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 Mr. Pershing.


                                       14
<PAGE>   15

         14.      Compensation. Any compensation contributed on behalf of Mr.
Pershing 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.

         15.      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 Mr. Pershing 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/ VN Booker
                                    --------------------------------------------

                                    Mr. Pershing


                                    /s/ Richard J. Pershing
                                    --------------------------------------------


Attest:


By: /s/ S. Marce Fuller
    --------------------------


                                       15
<PAGE>   16

                                    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 Officers of Southern and the Company and documented in Exhibit B of
this Agreement.


                                       16
<PAGE>   17

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


                                       17
<PAGE>   18

                                    EXHIBIT C

                                RELEASE AGREEMENT

         THIS RELEASE ("Release") is made and entered into by and between
RICHARD J. PERSHING ("Employee"), THE SOUTHERN COMPANY ("Southern") and SOUTHERN
ENERGY RESOURCES, INC. and its successor or assigns ("Company").

         WHEREAS, Employee, Southern and Company have agreed that Employee's
employment with ________________ shall terminate on _______________,_______;

         WHEREAS, Employee, Southern and the Company have previously entered
into that certain Deferred Compensation Agreement, dated ______, 1999
("Agreement"), that this Release is incorporated therein by reference;

         WHEREAS, Employee, Southern and Company desire to delineate their
respective rights, duties and obligations attendant to such termination and
desire to reach an accord and satisfaction of all claims arising from Employee's
employment, and his termination of employment, with appropriate releases, in
accordance with the Agreement;

         WHEREAS, the Company desires to provide Employee with deferred
compensation in accordance with the Agreement for service he has or will provide
for the Company;

         NOW, THEREFORE, in consideration of the premises and the agreements of
the parties set forth in this Release, and other good and valuable consideration
the receipt and sufficiency of which are hereby acknowledged, the parties
hereto, intending to be legally bound, hereby covenant and agree as follows:


                                       18
<PAGE>   19

         1.       RELEASE. Employee does hereby remise, release and
forever discharge Southern and the Company and their officers, directors,
employees, agents, shareholders, parent corporation and affiliates, and their
respective predecessors, successors, assigns, heirs, executors and
administrators (collectively, "Releasees"), of and from all manner of actions
and causes of action, suits, debts, claims and demands whatsoever at law or in
equity, known or unknown, actual or contingent, including, but not limited to,
any claims which have been asserted, or could be asserted now or in the future,
against any Releasees arising under any and all federal, state or local laws and
any common law claims, and including, but not limited to, any claims Employee
may have pursuant to the Age Discrimination in Employment Act and any claims to
benefits under any and all offer letters, employment or separation agreements,
or bonus, severance, workforce reduction, early retirement, out-placement, or
other similar plans sponsored by the Company, now or hereafter recognized
(collectively, "Claims"), which he ever had or now has or may in the future
have, by reason of any matter, cause or thing arising out of his employment
relationship and privileges, his serving as an employee of the Company or the
separation from his employment relationship or affiliation as an employee of the
Company as of the date of this Release against each of the Releasees.
Notwithstanding the foregoing, Employee does not release any Claims under the
Age Discrimination in Employment Act that may arise after his execution of this
Release.

         2.       NO ASSIGNMENT OF CLAIM. Employee represents that he has not
assigned or transferred, or purported to assign or transfer, any Claims or any
portion thereof or interest therein to any party prior to the date of this
Release.

         3.       DEFERRED COMPENSATION. In accordance with the Deferred
Compensation Agreement, the Company agrees to pay the Employee or his spouse, as
the case may be, the amounts provided in Paragraphs 1 and 2 of the Agreement.


                                       19
<PAGE>   20

         4.       NO ADMISSION OF LIABILITY. This Release shall not in any way
be construed as an admission by Southern, the Company or Employee of any
improper actions or liability whatsoever as to one another, and each
specifically disclaims any liability to or improper actions against the other or
any other person, on the part of itself or himself, its or his employees or
agents.

         5.       VOLUNTARY EXECUTION. Employee warrants, represents and agrees
that he has been encouraged in writing to seek advice from anyone of his
choosing regarding this Release, including his attorney and accountant or tax
advisor prior to his signing it; that this Release represents written notice to
do so; that he has been given the opportunity and sufficient time to seek such
advice; and that he fully understands the meaning and contents of this Release.
He further represents and warrants that he was not coerced, threatened or
otherwise forced to sign this Release, and that his signature appearing
hereinafter is voluntary and genuine. EMPLOYEE UNDERSTANDS THAT HE MAY TAKE UP
TO TWENTY-ONE (21) DAYS TO CONSIDER WHETHER OR NOT HE DESIRES TO ENTER INTO THIS
RELEASE.

         6.       ABILITY TO REVOKE AGREEMENT. EMPLOYEE UNDERSTANDS THAT HE MAY
REVOKE THIS RELEASE BY NOTIFYING THE COMPANY IN WRITING OF SUCH REVOCATION
WITHIN SEVEN (7) DAYS OF HIS EXECUTION OF THIS RELEASE AND THAT THIS RELEASE IS
NOT EFFECTIVE UNTIL THE EXPIRATION OF SUCH SEVEN (7) DAY PERIOD. HE UNDERSTANDS
THAT UPON THE EXPIRATION OF SUCH SEVEN (7) DAY PERIOD THIS RELEASE WILL BE
BINDING UPON HIM AND HIS HEIRS, ADMINISTRATORS, REPRESENTATIVES, EXECUTORS,
SUCCESSORS AND ASSIGNS AND WILL BE IRREVOCABLE.


                                       20
<PAGE>   21

Acknowledged and Agreed To:

                                    "SOUTHERN"

                                    THE SOUTHERN COMPANY


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

                                    Its:
                                         ---------------------------------------


                                    "COMPANY"

                                    SOUTHERN ENERGY RESOURCES, INC.


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


                                    Its: ---------------------------------------


I UNDERSTAND THAT BY SIGNING THIS RELEASE, I AM GIVING UP RIGHTS I MAY HAVE. I
UNDERSTAND THAT I DO NOT HAVE TO SIGN THIS RELEASE.

                                    "EMPLOYEE"

                                    RICHARD J. PERSHING



--------------------------          --------------------------------------------
DATE


WITNESSED BY:


--------------------------


--------------------------
DATE

                                       21