Document:

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                                                                   EXHIBIT 10.12

                         CAPITAL CONTRIBUTION AGREEMENT

     This CAPITAL CONTRIBUTION AGREEMENT (the "Agreement"), dated as of
                                               ---------
December 19, 2000, is by and between SOUTHERN ENERGY, INC., a Delaware
corporation ("SEI"), and SOUTHERN ENERGY MID-ATLANTIC, LLC, a Delaware limited
              ---
liability company ("SEMA").
                    ----

                             W I T N E S S E T H :
                             -------------------

     WHEREAS, SEI owns one hundred percent (100%) of the limited liability
company interests of each of Southern Energy Potomac River ("SE Potomac River")
                                                             ----------------
and Southern Energy Peaker ("SE Peaker"); and
                             ---------

     WHEREAS, SEMA is a wholly owned indirect subsidiary of SEI; and

     WHEREAS, SEI and Potomac Electric Power Company ("Pepco") are parties to a
                                                       -----
certain Asset Purchase and Sale Agreement dated as of June 7, 2000, as amended;
and

     WHEREAS, SEI has agreed to assign its rights, but not its obligations, to
certain assets under the Asset Purchase and Sale Agreement to SEMA, SE Potomac
River, and SE Peaker pursuant to which SE Potomac River will acquire the Potomac
River Station and SE Peaker will acquire the Chalk Point Station combustion
turbines and rights to the SMECO combustion turbine; and

     WHEREAS, SEMA is a party to those certain eleven (11) Participation
Agreements of even date herewith (each, a "Participation Agreement") between
                                           -----------------------
SEMA, each of the eleven (11) Owner Lessors and other parties pursuant to which
SEMA will lease one hundred percent (100%) of the undivided interest in the
Dickerson base-load units 1, 2, and 3 from four (4) of the Owner Lessors, and
will lease one hundred percent (100%) of the undivided interest in the
Morgantown base-load units 1 and 2 from seven (7) of the Owner Lessors, and will
derive substantial benefit from the lease transactions; and

     WHEREAS, it is a condition precedent to the effectiveness of each of the
Participation Agreements that SEI have executed and delivered this Agreement.

     NOW, THEREFORE, in consideration of the premises and of the mutual
agreements herein, the parties hereto hereby agree as follows:

                                   ARTICLE I

                                  DEFINITIONS

          SECTION 1.01.  Certain Defined Terms.  The following terms shall have
                         ---------------------
the respective meanings set forth above or in this Section 1.01.  Capitalized
terms used herein and not otherwise defined herein shall have the meanings
assigned to such terms in Appendix A to each of the Participation Agreements.
The rules of usage set forth in the General Provisions of Appendix A to each of
the Participation Agreements apply to this Agreement except as otherwise
provided herein.
<PAGE>

          "Chalk Point Station" means that certain coal, oil and gas-fueled
           -------------------
     generating facility located on the Patuxent River in Aquasco, Maryland.

          "Dickerson Station" means that certain coal, oil and gas-fueled fired
           -----------------
     generating facility located on the Potomac River near Dickerson, Maryland.

          "Material Adverse Effect" means any event or circumstance that has had
           -----------------------
     or could reasonably be expected to have a material adverse effect on the
     financial condition, results of operations, business or assets of SEMA and
     its Designated Subsidiaries, taken as a whole, or SEI, as the case may be,
     or the ability of SEMA or any such Designated Subsidiary to perform its
     obligations under any of the Operative Documents and, with respect to SEI
     only, that could have a material adverse effect on the ability of SEI to
     receive distributions from any Structured Company to pay amounts owed by it
     from time to time under this Agreement or the validity and enforceability
     of this Agreement or the material rights and remedies granted hereunder.

          "Morgantown Station" means that certain coal and oil-fueled generating
           ------------------
     facility located on the Potomac River near Newburg, Maryland.

          "Participation Agreement" has the meaning set forth in the Recitals to
           -----------------------
     this Agreement.

          "Potomac River Station" means that certain coal-fueled generating
           ---------------------
     facility located on the Potomac River in Alexandria, Virginia.

          "Representatives" means the members, employees, agents, auditors,
           ---------------
     attorneys, consultants or advisors of SEMA or SEI.

          "SMECO" means the Southern Maryland Electric Cooperative.
           -----

          "Structured Company" means SE Potomac River or SE Peaker.
           ------------------

                                  ARTICLE II

                        REPRESENTATIONS AND WARRANTIES

          SECTION 2.01.  Representations and Warranties.  SEI hereby represents
                         ------------------------------
and warrants as follows:

          (a) Organization.  SEI is a corporation duly organized, validly
              ------------
     existing and in good standing under the laws of the State of Delaware.

          (b) Power and Authority.  SEI has the corporate power to execute,
              -------------------
     deliver and perform its obligations under this Agreement and to take all
     action necessary to consummate the transactions contemplated by this
     Agreement.

                                       2
<PAGE>

          (c) Due Authorization.  The execution, delivery and performance by SEI
              -----------------
     of this Agreement have been duly authorized by all necessary corporate
     action and do not (i) contravene its certificate of incorporation or
     bylaws, (ii) conflict with or contravene any Requirement of Law or
     Governmental Approval to which it is subject, or (iii) result in the
     imposition of Liens upon any of its assets except, in the case of (ii) and
     (iii) to the extent such conflict or contravention or Lien has not had or
     could not reasonably be expected to have a Material Adverse Effect as to
     SEI.

          (d) Governmental Approval.  No authorization or approval or other
              ---------------------
     action by, and no notice to or filing with, any Governmental Authority is
     required for the due execution, delivery and performance by SEI of this
     Agreement, except for those which have been duly obtained or made and are
     in full force and effect.

          (e) Binding and Enforceable.  This Agreement constitutes the legal,
              -----------------------
     valid and binding obligation of SEI enforceable against SEI in accordance
     with its terms, subject to laws affecting the enforcement of creditors'
     rights generally and to general principles of equity.

          (f) No Violation.  The execution, delivery and performance by SEI of
              ------------
     this Agreement do not violate, in a manner which has had or would
     reasonably be expected to have a Material Adverse Effect as to SEI, or
     require any consent under, any agreement binding on it.

          (g) Proceedings.  There are no legal or arbitral proceedings, or any
              -----------
     proceedings by or before any Governmental Authority, now pending or
     threatened against SEI or its property or rights which could reasonably be
     expected to have a Material Adverse Effect.

                                  ARTICLE III

                               COVENANTS OF SEI

          SECTION 3.01.  Affirmative Covenants of SEI.  So long as either
                         ----------------------------
Structured Company shall not be a wholly owned Subsidiary of SEMA or shall not
have consolidated with or merged into SEMA or a wholly owned Subsidiary of SEMA,
SEI will cause such Structured Company to:

          (a) Section V of the Participation Agreements.  Take any action
              -----------------------------------------
     required to comply with Section V of each of the Participation Agreements.

          (b) Inspection Rights, Etc.  Permit SEMA or any Representatives
              ----------------------
     thereof to examine and make copies of and abstracts from records and books
     of, and visit the properties of such Structured Company to discuss the
     affairs, finances and accounts of, such Structured Company with any of its
     officers or directors and with its independent certified public accountants
     from time to time during normal business hours upon reasonable notice.
     Such Structured Company shall coordinate and consolidate visits by SEMA and
     its Representatives (including the examination of records and books and the
     making of copies and abstracts of records and books) at mutually convenient
     times and in such a manner so as to minimize the

                                       3
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     disruption to the operations of such Structured Company and to the costs
     associated with such visits.

          SECTION 3.02.  Negative Covenants of SEI.  So long as either
                         -------------------------
Structured Company shall not be a wholly owned Subsidiary of SEMA or shall not
have consolidated with or merged into SEMA or a wholly owned Subsidiary of SEMA,
SEI will cause such Structured Company not to:

          (a) Section VI of the Participation Agreements.  Take any action which
              ------------------------------------------
     is prohibited under Section VI of each of the Participation Agreements.

          (b) Amendment to Intercompany Notes.  Permit either Structured Company
              -------------------------------
     to amend either the Peaker Note or the Potomac River Note, as the case may
     be.

          (c) Limited Liability Company Agreements.  Amend Section 14 of either
              ------------------------------------
     Structured Company's respective limited liability company agreement.

          (d) Limitations on Restricted Payments.  Permit either Structured
              ----------------------------------
     Company to make a Restricted Payment except for cash distributions made to
     SEI or cash payments made to SEMA.

          SECTION 3.03.  Additional Covenants of SEI.  So long as either
                         ---------------------------
Structured Company shall not be a wholly owned Subsidiary of SEMA or shall not
have consolidated with or merged into SEMA or a wholly owned Subsidiary of SEMA,
SEI will:

          (a) Contributions to SEMA.  Contribute or cause to be contributed to
              ---------------------
     SEMA's capital (a "SEMA Contribution") an amount equal to any amount
                        -----------------
     distributed by such Structured Company to SEI on account of SEI's limited
     liability company interest in such Structured Company.  SEMA Contributions
     shall be made substantially concurrently with the receipt by SEI of the
     related distribution from a Structured Company.

          (b) Distributions by Such Structured Company.  Unless prohibited by
              ----------------------------------------
     law, cause such Structured Company to make distributions to SEI not less
     frequently than once per quarter of all cash available after taking into
     account projected cash requirements, including mandatory debt service,
     prepayments permitted under the Peaker Note and Potomac River Note and
     maintenance reserves as reasonably determined by SEI.

          (c) Transfers of Such Structured Company.  Not transfer directly or
              ------------------------------------
     indirectly any of its limited liability company interest in such Structured
     Company to any Person other than (i) a company of which SEMA is a
     Subsidiary which concurrently transfers such interest to SEMA or a wholly
     owned Subsidiary of SEMA or (ii) SEMA or a wholly owned Subsidiary of SEMA,
     either directly or by causing such Structured Company to be consolidated
     with or merged into SEMA or a wholly owned Subsidiary of SEMA.  Any
     transfers of interests in the Structured Companies to SEMA shall be made as
     a contribution to SEMA's capital by SEI, directly or indirectly, through
     SEI's direct and indirect subsidiaries.

          (d) Financial Statements.  Deliver to SEMA audited annual financial
              --------------------
     statements of SEI on a consolidated basis within 120 days following the end
     of each fiscal year of SEI

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<PAGE>

     and unaudited quarterly financial statements of SEI on a consolidated basis
     within 60 days following the end of each of the first three quarters of
     SEI.

          SECTION 3.04.  Obligations Absolute, Etc.  SEI further covenants and
                         -------------------------
agrees:

          (a) The obligation of SEI hereunder to make capital contributions to
     SEMA in accordance with the terms of this Agreement (i) constitutes a
     direct obligation of SEI to SEMA for the benefit of the Owner Lessors, and
     (ii) shall be enforceable by SEMA, any of the Owner Lessors or any of the
     Indenture Trustees.

          (b) The obligation of SEI hereunder to make or to cause to be made
     capital contributions in accordance with the terms of this Agreement is and
     shall be absolute and unconditional and is not, and shall not be, subject
     to any defense or right of setoff, counterclaim, deduction, diminution,
     abatement, recoupment, suspension, deferment or reduction or any other
     legal or equitable defense which SEI has or hereafter may have, against any
     other Person (including SEMA or the Owner Lessors) for any reason
     whatsoever (including, without limitation, any circumstance which
     constitutes, or might be construed to constitute, an equitable or legal
     discharge of any or all of SEMA's obligations under the Operative
     Documents, in bankruptcy or otherwise).

          (c) The obligations of SEI hereunder shall be absolute and
     unconditional irrespective of:

              (i)    any lack of validity, enforceability or value of any
     Operative Document or any other agreement or instrument relating thereto;

              (ii)   any change in the time, manner or place of payment of, or
     in any other term of, any Operative Document, or any amendment or waiver
     thereof, or any consent to departure from any of the foregoing agreements;

              (iii)  any release or amendment or waiver of or consent to
     departure from the terms of any Operative Document;

              (iv)   any failure to pay any taxes which may be payable with
     respect to the performance of its obligations hereunder by SEI or failure
     to obtain any authorization or approval from or other action by, or to
     notify or file with, any Governmental Authority or regulatory body required
     in connection with the performance of such obligations by SEI; or

              (v)    any impossibility or impracticability of performance, force
     majeure, any act of any government, or other circumstance which might
     constitute a defense available to, or a discharge of, SEI, or a surety, or
     any other circumstance, event or happening whatsoever, whether foreseen or
     unforeseen and whether similar or dissimilar to anything referred to above
     in this Section.

          (d) Except as permitted in Section 4.11 hereof, SEI has no right, and
     shall have no right, to terminate this Agreement or to be released,
     relieved or discharged from any obligation or liability hereunder for any
     reason whatsoever.

                                       5
<PAGE>

          (e) To the extent permitted by applicable law, the obligations of SEI
     hereunder will be performed regardless of any law, regulation or order now
     or hereafter in effect in any jurisdiction affecting any of the terms of
     any Operative Document or any other document related thereto or the rights
     of any Person with respect thereto.

                                   ARTICLE IV

                                 MISCELLANEOUS

          SECTION 4.01.  Amendments, Etc.  No amendment or waiver of any
                         ---------------
provision of this Agreement, nor consent to any departure by SEI therefrom,
shall in any event be effective unless the same shall be in writing and signed
by or on behalf of SEI and SEMA, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.  No amendment that would adversely affect the holders of the Lessor Notes
shall be effective without the consent of the Indenture Trustees and no
amendment that would adversely affect the Owner Lessors shall be effective
without the consent of the Owner Lessors.

          SECTION 4.02.  Notices, Etc.  All notices and other communications
                         ------------
provided for hereunder shall be in writing (including telecopier communication)
and mailed, telecopied, or delivered, if to SEI, at 1155 Perimeter Center West,
Atlanta, Georgia 30338-4780, Attention: President, cc: General Counsel, and if
to SEMA, at 1155 Perimeter Center West, Atlanta, Georgia 30338-4780, Attention:
President, or, as to SEI or SEMA, at such other address as shall be designated
by such party in a written notice to the other party.  All such notices and
communications shall, when mailed, telecopied or emailed, be effective when
deposited in the mails or telecopied, respectively.

          SECTION 4.03.  Waiver.  No failure on the part of SEMA to exercise,
                         ------
and no delay in exercising, any right hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any such right preclude any
other or further exercise thereof or the exercise of any other right.

          SECTION 4.04.  Certain Waivers.  To the fullest extent permitted by
                         ---------------
applicable law, SEI hereby expressly waives diligence, presentment, demand for
payment, protest, benefit of any statute of limitations affecting the liability
of SEMA under the Operative Documents, all notices relating to a capital
contribution, including, without limitation, notice of acceptance of this
Agreement and the incurring of the obligation to make or to cause to be made a
capital contribution, and any requirement that SEMA exhaust any right, power, or
remedy or proceed against SEI hereunder.

          SECTION 4.05.  Governing Law.  This Agreement shall be governed by,
                         -------------
and construed in accordance with, the laws of the State of New York.

          SECTION 4.06.  Consent to Jurisdiction.  With respect to any legal
                         -----------------------
action or proceeding against SEI arising out of or in connection with this
Agreement or any other Operative Document, SEI hereby irrevocably (i) consents
to the jurisdiction of any state or federal court located in the State of New
York, (ii) consents to the service of process outside the territorial
jurisdiction of

                                       6
<PAGE>

said courts in any such action or proceeding by mailing copies thereof by
registered United States mail, postage prepaid, to the address specified
pursuant to Section 4.02 hereof, and (iii) waives any objection to the venue of
the aforesaid courts and any objection that the aforesaid courts are an
inconvenient forum.

          SECTION 4.07.  WAIVER OF JURY TRIAL.  EACH OF THE PARTIES HERETO
                         --------------------
HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR ANY OTHER OPERATIVE
DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

          SECTION 4.08.  Expenses.  SEI will, upon demand, pay to the Owner
                         --------
Lessors and the Indenture Trustees any and all reasonable expenses, including
attorneys' fees and expenses, incurred by it in connection with the exercise or
enforcement of any of its rights or interests hereunder.

          SECTION 4.09.  Execution in Counterparts.  This Agreement may be
                         -------------------------
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement.  Delivery of an executed counterpart of a signature page to this
Agreement by telecopier shall be effective as delivery of a manually executed
counterpart of this Agreement.

          SECTION 4.10.   Severability.  If any provision of this Agreement
                          ------------
shall be held or deemed to be or shall, in fact, be illegal, inoperative or
unenforceable, the same shall not affect any other provision or provisions
herein contained or render the same invalid, inoperative or unenforceable to any
extent whatsoever.

          SECTION 4.11.  Termination.  This Agreement shall terminate with
                         -----------
respect to a Structured Company at the time such Structured Company becomes a
wholly owned Subsidiary of SEMA or consolidates with or merges into SEMA or a
wholly owned Subsidiary of SEMA.

          SECTION 4.12.  Third Party Beneficiary.  SEI hereby acknowledges that
                         -----------------------
the Owner Lessors, the Indenture Trustees and the holders of the Lessor Notes
are intended to benefit from the transactions contemplated by this Agreement and
the representations, warranties and covenants made by SEI hereunder, and agrees
that the Owner Lessors, Indenture Trustees and holders of the Lessor Notes shall
be third party beneficiaries of this Agreement and shall be entitled to enforce
its performance in reliance thereon.

                                       7
<PAGE>

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.

                                    SOUTHERN ENERGY, INC.

                                    By /s/ J. William Holden III
                                       ------------------------------------
                                     Name: J. William Holden III
                                     Title: Vice President and Treasurer

                                    SOUTHERN ENERGY
                                    MID-ATLANTIC, LLC

                                    By /s/ Gary J. Kubik
                                       ------------------------------------
                                     Name: Gary J. Kubik
                                     Title: Vice President, Chief Financial
                                            Officer and Treasurer

                                       8<PAGE>

                                                                   EXHIBIT 10.13

                                PROMISSORY NOTE

$71,110,000                                                    December 19, 2000

                                                                Atlanta, Georgia

          FOR VALUE RECEIVED, SOUTHERN ENERGY PEAKER, LLC, a Delaware limited
liability company (the "Maker"), hereby unconditionally promises to pay SOUTHERN
ENERGY MID-ATLANTIC, LLC (the "Holder"), at the offices of the Holder located at
1155 Perimeter Center West, Atlanta, Georgia 30338, or at such other place
within the United States as shall be designated from time to time by the Holder,
on December 30, 2028, the principal amount of SEVENTY ONE MILLION, ONE HUNDRED
TEN THOUSAND AND NO/100 DOLLARS ($71,110,000.00) (the "Loan"), or such lesser
principal amount as may then constitute the aggregate unpaid balance of the Loan
made by the Holder to the Maker pursuant to this Note, in lawful money of the
United States of America in federal or other immediately available funds.

          The Maker also unconditionally promises to pay interest on the unpaid
principal amount of the Loan for each day from the date of disbursement until
such principal amount is paid in full, at a rate of 10% per annum (the "Interest
Rate").  Interest calculated hereunder shall be due and payable semiannually, in
arrears, on December 30 and June 30 of each calendar year beginning June 30,
2001.  Any amount payable hereunder not paid when due (whether at maturity, by
acceleration or otherwise) shall bear interest thereafter, payable on demand, at
a rate per annum equal to the 12% (the "Default Rate").  All computations of
interest shall be made on the basis of a year of 360 days, and paid, in each
case, for the actual number of days elapsed (including the first day but
excluding the last day).  Nothing contained in this Note shall be deemed to
establish or require the payment of a rate of interest in excess of the maximum
rate permitted by any applicable law.  In the event that any rate of interest
required to be paid hereunder exceeds the maximum rate permitted by applicable
law, such interest rate shall be reduced to the extent necessary to comply with
applicable law, and any interest amounts paid by Maker to Holder in excess of
such applicable rate shall be held in trust by the Holder for the benefit of the
Maker, to be remitted to Maker.

          The Maker shall make each payment of principal of, and interest on,
the Loan hereunder not later than 12:00 Noon (New York time) on the day when
due.  Payments received after 12:00 Noon (New York time) shall be deemed to have
been received on the following Business Day (and such additional day shall be
included in any related computation of interest).  For the purposes of this
Note, "Business Day" shall mean any day other than a Saturday, a Sunday, or a
day on which commercial banking institutions are authorized or required by law,
regulation or executive order to be closed in New York, New York.

          If any amount payable hereunder is due on a day which is not a
Business Day, payment thereof shall be made on the next succeeding Business Day
with the same effect as if made on the date on which such payment was due,
unless such Business Day falls in another calendar month, in which case the date
for payment thereof shall be the immediately preceding
<PAGE>

Business Day. If the date, for any payment of principal is extended by operation
of law, interest thereon shall be payable for such extended time.

          Presentment for payment, demand, protest and notice of demand, notice
of dishonor, notice of non-payment and all other notices or demands in
connection with the delivery, acceptance, performance, default or endorsement of
this Note are hereby waived by the Maker.  No delay or omission on the part of
Holder in exercising any right hereunder shall operate as a waiver of such right
or any other right under this Note.  A waiver of any right or remedy on any one
occasion shall not be construed as a bar to or waiver of any right or remedy on
any future occasion.

          The Maker shall be entitled, without the consent of the Holder and
without paying any penalty or premium therefor, to prepay up $2,539,643 per year
on a cumulative basis.  Such prepayment shall only be made out of the operating
cash flow of the Maker.

          The Maker's obligation to repay this Note shall be unconditional and
absolute, without setoff, regardless of any rights, claims or defenses that the
Maker might have against the Holder or any other party.

          Any and all payments by the Maker under this Note shall be made free
and clear of and without deduction for any and all Covered Taxes, except to the
extent such deduction or withholding is required by law.  If the Maker shall be
required by law to withhold or deduct any Taxes from or in respect of any sum
payable under this Note, (i) if such Taxes are Covered Taxes, the sum payable
shall be increased as may be necessary so that after making all required
deductions for Covered Taxes (including deductions applicable to additional sums
payable hereunder) the Holder receives an amount equal to the sum it would have
received had no such deductions been made, (ii) the Maker shall make such
deductions and (iii) the Maker shall pay the full amount deducted to the
relevant taxation authority or other authority in accordance with applicable
law.

          In addition, the Maker agrees to pay any present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies that arise under applicable law from any payment made under this Note or
from the execution or delivery or otherwise with respect to this Note
(hereinafter referred to as "Other Taxes").

          The Maker shall indemnify the Holder and the Owner Lessor as third
party beneficiary for the full amount of Covered Taxes and Other Taxes
(including, without limitation, any Covered Taxes or Other Taxes imposed by any
jurisdiction on amounts payable hereunder) paid by the Holder or any liability
(including penalties, interest and expenses) arising therefrom or with respect
thereto such that, after making all such payments, the Holder receives such
amounts as it would have received had no such Covered Taxes, Other Taxes or
liabilities been imposed on the Holder.  The Holder shall give written notice to
the Maker no later than 90 days after it learns of the imposition of any Covered
Taxes or Other Taxes.  Payments by the Maker pursuant to this paragraph shall be
made within 30 days from the date the Holder makes written demand therefor
(submitted through the Holder), which demand shall be accompanied by a
certificate describing in reasonable detail the basis thereof.  The Holder
agrees that if it receives a

                                       2
<PAGE>

final tax credit or tax deduction with respect to any amount paid by the Maker
pursuant to this paragraph, the Holder shall reimburse the Maker to the extent
it has actually benefited from such tax credit or tax deduction (as determined
by the Holder in its good faith judgment) in an amount equal to the lesser of
(i) the benefit of such credit or deduction of net expenses incurred by the
Holder in obtaining such benefit and (ii) the related amount paid by the Maker
to the Holder. The obligations of the Holder under the preceding sentence shall
survive the termination of this Note.

          Within 30 days after the date of any payment of Covered Taxes or Other
Taxes by the Maker, the Maker shall furnish to the Holder, at the Holder's
address referred to above, the original or a certified copy of a receipt
evidencing payment thereof.  The Maker shall compensate the Holder for all
reasonable losses and expenses sustained by it as a result of any failure by the
Maker to so furnish such copy of such receipt.

          For the purposes of this Note, "Taxes" shall mean all fees (including
receipts, franchise, rental, turn over, excise, sales taxes, use taxes, stamp
taxes, value-added taxes, ad valorem taxes and property taxes (personal and
real, tangible and intangible), but excluding all income taxes), licenses,
levies, exports, duties, recording charges or fees, assessments, withholdings
and other charges and impositions of any nature, plus all related interest,
penalties, fines and additions to tax, now or hereafter imposed by any federal,
state, local or foreign government or other taxing authority.

          For the purposes of this Note, "Covered Taxes"  shall mean all Taxes
imposed by any Governmental Authority or any political subdivision or taxing
authority thereof or therein that would not have been incurred but for making by
Holder of the loan evidenced hereunder or any payment contemplated hereunder.
"Governmental Authority" shall mean any nation or government, any state,
provincial or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.

          The agreements and obligations of the Maker relating to Covered Taxes
and Other Taxes shall survive the payment in full of principal and interest
under this Note.  In the event that (i) the Maker fails to pay principal
hereunder when the same becomes payable, whether by scheduled maturity or
required prepayment or acceleration or otherwise, (ii) the Maker fails to pay
interest or any other amount hereunder when the same becomes due and payable and
such failure shall continue for five (5) Business Days, (iii) the Maker fails to
perform or observe any term, covenant or condition on its part to be performed
or observed hereunder when required to be performed or observed, (iv) the Maker
(a) commences a voluntary case or other proceeding seeking relief under Title 11
of the United States Bankruptcy Code of 1978, as amended from time to time, 11
U.S.C. (S) 101 et seq. (the "Bankruptcy Code") or liquidation, reorganization or
other relief with respect to itself or its debts under any bankruptcy,
insolvency or other similar law now or hereafter in effect, or applies for or
consents to the appointment of a trustee, receiver, liquidator, custodian or
other similar official of it or any substantial part of its property, or (b)
consents to, or fails to controvert in a timely manner, any such relief or the
appointment of or taking possession by any such official in any voluntary case
or other proceeding commenced against it, or (c) files an answer admitting the
material allegations of a petition filed against it in

                                       3
<PAGE>

any such proceeding, or (d) makes a general assignment for the benefit of
creditors, or (v) an involuntary case or other proceeding shall be commenced
against the Maker seeking (a) liquidation, reorganization or other relief with
respect to it or its debts under Title 11 of the Bankruptcy Code or any
bankruptcy, insolvency or other similar law now or hereafter in effect, or (b)
the appointment of a trustee, receiver, liquidator, custodian or other similar
official with respect to it or any substantial part of its property, or (c) the
winding-up or liquidation of the Maker and such involuntary case or other
proceeding shall remain undismissed and unstayed for a period of 60 days, then
Holder shall, by notice to the Maker, take any of the following actions, without
prejudice to the rights of the Holder to enforce its claims against the Maker:
(A) declare the principal of and any accrued interest in respect of this Note
and all other amounts payable hereunder to be, whereupon the same shall become,
forthwith due and payable without presentment, demand, protest or other notice
of any kind, all of which are hereby waived by the Maker and (B) exercise any
other remedies available at law or in equity.

          The Maker hereby agrees to pay all costs and expenses incurred in
collecting the Loan and other obligations of the Maker hereunder or in enforcing
or attempting to enforce any of the Holder's rights hereunder, including, but
not limited to, reasonable attorneys' fees and expenses if collected by or
through an attorney, whether or not suit is filed.

          No failure to exercise and no delay in exercising on the part of the
Holder of any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or
privilege preclude any other or further exercise thereof, or the exercise of any
other right, power or privilege.  The rights and remedies herein provided are
cumulative and not exclusive of any rights or remedies provided by law.

          The Maker shall not assign or otherwise transfer all or any part of
its rights or obligations hereunder without the prior written consent of the
Holder.

          Any provision hereof that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability  without invalidating the remaining
provisions hereof and without affecting the validity or enforceability of any
provision in any other jurisdiction.

          THE MAKER HEREBY SEVERALLY, IRREVOCABLY AND UNCONDITIONALLY SUBMITS
FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS
NOTE, OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT HEREOF, TO
THE NON-EXCLUSIVE GENERAL JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK,
LOCATED IN NEW YORK, NEW YORK, AND THE COURTS OF THE UNITED STATES OF AMERICA
FOR THE SOUTHERN DISTRICT OF NEW YORK, AND CONSENTS THAT ANY SUCH ACTION OR
PROCEEDING MAY BE BROUGHT IN SUCH COURTS, AND WAIVES TO THE FULLEST EXTENT
PERMITTED BY LAW ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF
ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT OR THAT SUCH ACTION OR
PROCEEDING WAS BROUGHT IN AN INCONVENIENT COURT AND AGREES NOT TO PLEAD OR CLAIM
THE SAME.

                                       4
<PAGE>

          This Term Note shall be governed by, and construed in accordance with,
the laws of the State of  New York.

                             SOUTHERN ENERGY PEAKER, LLC
                             By: /s/ Gary J. Kubik
                                 -----------------------------------
                             Name:  Gary J. Kubik
                                    --------------------------------
                             Title: Vice President, Chief Financial
                                    --------------------------------
                                    Officer and Treasurer
                                    --------------------------------

Attest:

By: /s/ Michelle H. Ancosky
    ---------------------------
   Name: Michelle H. Ancosky
        -----------------------
   Title: Secretary
         ----------------------

                                       5

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