Document:

Exhibit 4.2

                              ALABAMA POWER COMPANY

                                       TO

                              THE BANK OF NEW YORK
                                     TRUSTEE

                      THIRTY-SEVENTH SUPPLEMENTAL INDENTURE

                          DATED AS OF FEBRUARY 6, 2007

                            SERIES 2007A SENIOR NOTES

                              DUE FEBRUARY 1, 2017

<PAGE>

                              TABLE OF CONTENTS(1)
                                                                       PAGE

ARTICLE 1  Series 2007A Senior Notes.....................................2
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SECTION 101.  Establishment..............................................2
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SECTION 102.  Definitions................................................2
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SECTION 103.  Payment of Principal and Interest..........................3
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SECTION 104.  Denominations..............................................4
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SECTION 105.  Global Securities..........................................4
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SECTION 106.  Transfer...................................................5
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SECTION 107.  Redemption at the Company's Option.........................5
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ARTICLE 2  Miscellaneous Provisions......................................6
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SECTION 201.  Recitals by Company........................................6
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SECTION 202.  Ratification and Incorporation of Original Indenture.......6
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SECTION 203.  Executed in Counterparts...................................6
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EXHIBIT A  FORM OF SERIES 2007A NOTE ....................................A-1

EXHIBIT B  CERTIFICATE OF AUTHENTICATION ................................B-1

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1 This Table of Contents does not constitute part of the Indenture or have any
bearing upon the interpretation of any of its terms and provisions.

<PAGE>

         THIS THIRTY-SEVENTH SUPPLEMENTAL INDENTURE is made as of the 6th day of
February, 2007, by and between ALABAMA POWER COMPANY, an Alabama corporation,
600 North 18th Street, Birmingham, Alabama 35291 (the "Company"), and THE BANK
OF NEW YORK, a New York banking corporation, 101 Barclay Street, New York, New
York 10286 (the "Trustee").

                              W I T N E S S E T H:

                  WHEREAS, the Company has heretofore entered into a Senior Note
Indenture, dated as of December 1, 1997 (the "Original Indenture"), with The
Bank of New York (as successor to JPMorgan Chase Bank, N.A. (formerly known as
The Chase Manhattan Bank)), Trustee, as heretofore supplemented;

                  WHEREAS, the Original Indenture is incorporated herein by this
reference and the Original Indenture, as heretofore supplemented and as further
supplemented by this Thirty-Seventh Supplemental Indenture, is herein called the
"Indenture";

                  WHEREAS, under the Original Indenture, a new series of Senior
Notes may at any time be established pursuant to a supplemental indenture
executed by the Company and the Trustee;

                  WHEREAS, the Company proposes to create under the Indenture a
new series of Senior Notes;

                  WHEREAS, additional Senior Notes of other series hereafter
established, except as may be limited in the Original Indenture as at the time
supplemented and modified, may be issued from time to time pursuant to the
Indenture as at the time supplemented and modified; and

                  WHEREAS, all conditions necessary to authorize the execution
and delivery of this Thirty-Seventh Supplemental Indenture and to make it a
valid and binding obligation of the Company have been done or performed.

                  NOW, THEREFORE, in consideration of the agreements and
obligations set forth herein and for other good and valuable consideration, the
sufficiency of which is hereby acknowledged, the parties hereto hereby agree as
follows:

<PAGE>

                                    ARTICLE 1

                            Series 2007A Senior Notes

         SECTION 101. Establishment. There is hereby established a new series of
Senior Notes to be issued under the Indenture, to be designated as the Company's
Series 2007A 5.55% Senior Notes due February 1, 2017 (the "Series 2007A Notes").

         There are to be authenticated and delivered $200,000,000 aggregate
principal amount of Series 2007A Notes, and such principal amount of the Series
2007A Notes may be increased from time to time pursuant to Section 301 of the
Original Indenture. All Series 2007A Notes need not be issued at the same time
and such series may be reopened at any time, without the consent of any Holder,
for issuances of additional Series 2007A Notes. Any such additional Series 2007A
Notes will have the same interest rate, maturity and other terms as those
initially issued. No Series 2007A Notes shall be authenticated and delivered in
excess of the principal amount as so increased except as provided by Sections
203, 303, 304, 907 or 1107 of the Original Indenture. The Series 2007A Notes
shall be issued in definitive fully registered form.

         The Series 2007A Notes shall be issued in the form of one or more
Global Securities in substantially the form set out in Exhibit A hereto. The
Depositary with respect to the Series 2007A Notes shall be The Depository Trust
Company.

         The form of the Trustee's Certificate of Authentication for the Series
2007A Notes shall be in substantially the form set forth in Exhibit B hereto.

         Each Series 2007A Note shall be dated the date of authentication
thereof and shall bear interest from the date of original issuance thereof or
from the most recent Interest Payment Date to which interest has been paid or
duly provided for.

         The Series 2007A Notes will not have a sinking fund.

         SECTION 102. Definitions. The following defined terms used herein
shall, unless the context otherwise requires, have the meanings specified below.
Capitalized terms used herein for which no definition is provided herein shall
have the meanings set forth in the Original Indenture.

         "Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker as having a maturity comparable to
the remaining term of the Series 2007A Notes to be redeemed that would be
utilized, at the time of selection and in accordance with customary financial
practice, in pricing new issues of corporate debt securities of comparable
maturity to the remaining term of the Series 2007A Notes.

                                       2
<PAGE>

         "Comparable Treasury Price" means, with respect to any Redemption Date,
(i) the average of the Reference Treasury Dealer Quotations for such Redemption
Date, after excluding the highest and lowest such Reference Treasury Dealer
Quotations, or (ii) if the Company obtains fewer than four such Reference
Treasury Dealer Quotations, the average of all such quotations.

         "Independent Investment Banker" means an independent investment banking
institution of national standing appointed by the Company and reasonably
acceptable to the Trustee.

         "Interest Payment Dates" means February 1 and August 1 of each year,
commencing August 1, 2007.

         "Original Issue Date" means February 6, 2007.

         "Redemption Price" has the meaning given to it in Section 107 hereof.

         "Reference Treasury Dealer" means a primary U.S. Government securities
dealer in New York City appointed by the Company and reasonably acceptable to
the Trustee.

         "Reference Treasury Dealer Quotation" means, with respect to each
Reference Treasury Dealer and any Redemption Date, the average, as determined by
the Company, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount and quoted in
writing to the Company by such Reference Treasury Dealer at 5:00 p.m. on the
third Business Day in New York City preceding such Redemption Date).

         "Regular Record Date" means, with respect to each Interest Payment
Date, the close of business on the 15th calendar day preceding such Interest
Payment Date (whether or not a Business Day).

         "Stated Maturity" means February 1, 2017.

         "Treasury Yield" means, with respect to any Redemption Date, the rate
per annum equal to the semi-annual equivalent yield to maturity of the
Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue
(expressed as a percentage of its principal amount) equal to the Comparable
Treasury Price for such Redemption Date.

         SECTION 103. Payment of Principal and Interest. The principal of the
Series 2007A Notes shall be due at Stated Maturity (unless earlier redeemed).
The unpaid principal amount of the Series 2007A Notes shall bear interest at the
rate of 5.55% per annum until paid or duly provided for. Interest shall be paid
semiannually in arrears on each Interest Payment Date to the Person in whose
name the Series 2007A Notes are registered on the Regular Record Date for such
Interest Payment Date, provided that interest payable at the Stated Maturity of
principal or on a Redemption Date as provided herein will be paid to the Person
to whom principal is payable. Any such interest that is not so punctually paid

                                       3
<PAGE>

or duly provided for will forthwith cease to be payable to the Holders on such
Regular Record Date and may either be paid to the Person or Persons in whose
name the Series 2007A Notes are registered at the close of business on a Special
Record Date for the payment of such defaulted interest to be fixed by the
Trustee, notice whereof shall be given to Holders of the Series 2007A Notes not
less than ten (10) days prior to such Special Record Date, or be paid at any
time in any other lawful manner not inconsistent with the requirements of any
securities exchange, if any, on which the Series 2007A Notes shall be listed,
and upon such notice as may be required by any such exchange, all as more fully
provided in the Original Indenture.

         Payments of interest on the Series 2007A Notes will include interest
accrued to but excluding the respective Interest Payment Dates. Interest
payments for the Series 2007A Notes shall be computed and paid on the basis of a
360-day year of twelve 30-day months. In the event that any date on which
interest is payable on the Series 2007A Notes is not a Business Day, then
payment of the interest payable on such date will be made on the next succeeding
day that is a Business Day (and without any interest or other payment in respect
of any such delay), with the same force and effect as if made on the date the
payment was originally payable.

         Payment of the principal and interest due at the Stated Maturity or
earlier redemption of the Series 2007A Notes shall be made upon surrender of the
Series 2007A Notes at the Corporate Trust Office of the Trustee. The principal
of and interest on the Series 2007A Notes shall be paid in such coin or currency
of the United States of America as at the time of payment is legal tender for
payment of public and private debts. Payments of interest (including interest on
any Interest Payment Date) will be made, subject to such surrender where
applicable, at the option of the Company, (i) by check mailed to the address of
the Person entitled thereto as such address shall appear in the Security
Register or (ii) by wire transfer or other electronic transfer at such place and
to such account at a banking institution in the United States as may be
designated in writing to the Trustee at least sixteen (16) days prior to the
date for payment by the Person entitled thereto.

         SECTION 104. Denominations. The Series 2007A Notes may be issued in
denominations of $1,000, or any integral multiple thereof.

         SECTION 105. Global Securities. The Series 2007A Notes will be issued
in the form of one or more Global Securities registered in the name of the
Depositary (which shall be The Depository Trust Company) or its nominee. Except
under the limited circumstances described below, Series 2007A Notes represented
by one or more Global Securities will not be exchangeable for, and will not
otherwise be issuable as, Series 2007A Notes in definitive form. The Global
Securities described above may not be transferred except by the Depositary to a
nominee of the Depositary or by a nominee of the Depositary to the Depositary or
another nominee of the Depositary or to a successor Depositary or its nominee.

         Owners of beneficial interests in such a Global Security will not be
considered the Holders thereof for any purpose under the Indenture, and no
Global Security representing a Series 2007A Note shall be exchangeable, except
for another Global Security of like denomination and tenor to be registered in
the name of the Depositary or its nominee or a successor Depositary or its

                                       4
<PAGE>

nominee. The rights of Holders of such Global Security shall be exercised only
through the Depositary.

         Neither the Company, the Trustee nor any agent of the Company or the
Trustee shall have any responsibility or liability for any aspect of the records
relating to or payments made on account of beneficial ownership interests in a
Global Security or for maintaining, supervising or reviewing any records
relating to such beneficial ownership interests.

         Subject to the procedures of the Depositary, a Global Security shall be
exchangeable for Series 2007A Notes registered in the names of persons other
than the Depositary or its nominee only if (i) the Depositary notifies the
Company that it is unwilling or unable to continue as a Depositary for such
Global Security and no successor Depositary shall have been appointed by the
Company, or if at any time the Depositary ceases to be a clearing agency
registered under the Securities Exchange Act of 1934, as amended, at a time when
the Depositary is required to be so registered to act as such Depositary and no
successor Depositary shall have been appointed by the Company, in each case
within 90 days after the Company receives such notice or becomes aware of such
cessation, (ii) the Company in its sole discretion determines that such Global
Security shall be so exchangeable, or (iii) there shall have occurred an Event
of Default with respect to the Series 2007A Notes. Any Global Security that is
exchangeable pursuant to the preceding sentence shall be exchangeable for Series
2007A Notes registered in such names as the Depositary shall direct.

         SECTION 106. Transfer. No service charge will be made for any transfer
or exchange of Series 2007A Notes, but payment will be required of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection therewith.

         The Company shall not be required (a) to issue, register the transfer
of or exchange any Series 2007A Notes during a period beginning at the opening
of business fifteen (15) days before the date of the mailing of a notice
pursuant to Section 1104 of the Original Indenture identifying the serial
numbers of the Series 2007A Notes to be called for redemption, and ending at the
close of business on the day of the mailing, or (b) to register the transfer of
or exchange any Series 2007A Notes theretofore selected for redemption in whole
or in part, except the unredeemed portion of any Series 2007A Notes redeemed in
part.

         SECTION 107. Redemption at the Company's Option. The Series 2007A Notes
will be subject to redemption at the option of the Company in whole or in part
at any time and from time to time upon not less than 30 nor more than 60 days'
notice. The Company shall have the right to redeem the Series 2007A Notes in
whole or in part at a redemption price (the "Redemption Price") equal to the
greater of (i) 100% of the principal amount of the Series 2007A Notes to be
redeemed, or (ii) the sum of the present values of the remaining scheduled
payments of principal and interest on the Series 2007A Notes being redeemed,
discounted (for purposes of determining present value) to the Redemption Date on
a semiannual basis (assuming a 360-day year consisting of twelve 30-day months)

                                       5
<PAGE>

at a discount rate equal to the Treasury Yield plus 15 basis points, plus, in
each case, accrued interest thereon to the Redemption Date.

         In the event of redemption of the Series 2007A Notes in part only, a
new Series 2007A Note or Notes for the unredeemed portion will be issued in the
name or names of the Holders thereof upon the surrender thereof.

         Notice of redemption shall be given as provided in Section 1104 of the
Original Indenture except that any notice of redemption shall not specify the
Redemption Price but only the manner of calculation thereof. The Trustee shall
not be responsible for the calculation of the Redemption Price. The Company
shall calculate the Redemption Price and promptly notify the Trustee thereof.

         Any redemption of less than all of the Series 2007A Notes shall, with
respect to the principal thereof, be divisible by $1,000.

                                    ARTICLE 2

                            Miscellaneous Provisions

         SECTION 201. Recitals by Company. The recitals in this Thirty-Seventh
Supplemental Indenture are made by the Company only and not by the Trustee, and
all of the provisions contained in the Original Indenture in respect of the
rights, privileges, immunities, powers and duties of the Trustee shall be
applicable in respect of Series 2007A Notes and of this Thirty-Seventh
Supplemental Indenture as fully and with like effect as if set forth herein in
full.

         SECTION 202. Ratification and Incorporation of Original Indenture. As
heretofore supplemented and as supplemented hereby, the Original Indenture is in
all respects ratified and confirmed, and the Original Indenture as heretofore
supplemented and as supplemented by this Thirty-Seventh Supplemental Indenture
shall be read, taken and construed as one and the same instrument.

         SECTION 203. Executed in Counterparts. This Thirty-Seventh Supplemental
Indenture may be simultaneously executed in several counterparts, each of which
shall be deemed to be an original, and such counterparts shall together
constitute but one and the same instrument.

                                       6
<PAGE>

         IN WITNESS WHEREOF, each party hereto has caused this instrument to be
signed in its name and behalf by its duly authorized officers, all as of the day
and year first above written.

ATTEST:                                     ALABAMA POWER COMPANY

By:      /s/Ceila H. Shorts                 By:  /s/Art P.Beattie
   -----------------------------------         -------------------------------
         Assistant Secretary                     Art P. Beattie
                                                 Executive Vice President,
                                                 Chief Financial Officer and
                                                 Treasurer

ATTEST:                                     THE BANK OF NEW YORK,
                                            as Trustee

By:      /s/L. O'Brien                      By:      /s/Carol Ng
   -----------------------------------         -------------------------------

<PAGE>

                                    EXHIBIT A

                            FORM OF SERIES 2007A NOTE

NO. __                                                      CUSIP NO. 010392EW4

                              ALABAMA POWER COMPANY

                         SERIES 2007A 5.55% SENIOR NOTE

                              DUE FEBRUARY 1, 2017

       Principal Amount:                      $__________________

       Regular Record Date:                   15th  calendar day prior to
                                              Interest  Payment Date  (whether
                                              or not a Business Day)

       Original Issue Date:                   February 6, 2007

       Stated Maturity:                       February 1, 2017

       Interest Payment Dates:                February 1 and August 1

       Interest Rate:                         5.55%

       Authorized Denomination:               $1,000 or any integral multiple
                                              thereof

         Alabama Power Company, an Alabama corporation (the "Company", which
term includes any successor corporation under the Indenture referred to on the
reverse hereof), for value received, hereby promises to pay to
___________________________________________, or registered assigns, the
principal sum of ____________________________________________ DOLLARS
($______________) on the Stated Maturity shown above (or upon earlier
redemption), and to pay interest thereon from the Original Issue Date shown
above, or from the most recent Interest Payment Date to which interest has been
paid or duly provided for, semiannually in arrears on each Interest Payment Date
as specified above, commencing on August 1, 2007, and on the Stated Maturity (or
upon earlier redemption) at the rate per annum shown above until the principal
hereof is paid or made available for payment and at such rate on any overdue
principal and on any overdue installment of interest. The interest so payable,
and punctually paid or duly provided for, on any Interest Payment Date (other
than an Interest Payment Date that is the Stated Maturity or on a Redemption
Date) will, as provided in such Indenture, be paid to the Person in whose name
this Note (the "Note") is registered at the close of business on the Regular
Record Date as specified above next preceding such Interest Payment Date,
provided that any interest payable at the Stated Maturity or on any Redemption
Date will be paid to the Person to whom principal is payable. Except as
otherwise provided in the Indenture, any such interest not so punctually paid or

<PAGE>

duly provided for will forthwith cease to be payable to the Holder on such
Regular Record Date and may either be paid to the Person in whose name this Note
is registered at the close of business on a Special Record Date for the payment
of such defaulted interest to be fixed by the Trustee, notice whereof shall be
given to Holders of Notes of this series not less than 10 days prior to such
Special Record Date, or be paid at any time in any other lawful manner not
inconsistent with the requirements of any securities exchange, if any, on which
the Notes of this series shall be listed, and upon such notice as may be
required by any such exchange, all as more fully provided in the Indenture.

         Payments of interest on this Note will include interest accrued to but
excluding the respective Interest Payment Dates. Interest payments for this Note
shall be computed and paid on the basis of a 360-day year of twelve 30-day
months. In the event that any Interest Payment Date would otherwise be a day
that is not a Business Day, then payment of the interest payable on such date
will be made on the next succeeding day that is a Business Day (and without any
interest or other payment in respect of any such delay), with the same force and
effect as if made on the date the payment was originally payable. A "Business
Day" shall mean any day other than a Saturday or a Sunday or a day on which
banking institutions in New York City are authorized or required by law or
executive order to remain closed or a day on which the Corporate Trust Office of
the Trustee is closed for business.

         Payment of the principal of and interest due at the Stated Maturity or
earlier redemption of the Series 2007A Notes shall be made upon surrender of the
Series 2007A Notes at the Corporate Trust Office of the Trustee. The principal
of and interest on the Series 2007A Notes shall be paid in such coin or currency
of the United States of America as at the time of payment is legal tender for
payment of public and private debts. Payment of interest (including interest on
an Interest Payment Date) will be made, subject to such surrender where
applicable, at the option of the Company, (i) by check mailed to the address of
the Person entitled thereto as such address shall appear in the Security
Register or (ii) by wire transfer or other electronic transfer at such place and
to such account at a banking institution in the United States as may be
designated in writing to the Trustee at least 16 days prior to the date for
payment by the Person entitled thereto.

         REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS NOTE SET
FORTH ON THE REVERSE HEREOF, WHICH FURTHER PROVISIONS SHALL FOR ALL PURPOSES
HAVE THE SAME EFFECT AS IF SET FORTH AT THIS PLACE.

         Unless the certificate of authentication hereon has been executed by
the Trustee by manual signature, this Note shall not be entitled to any benefit
under the Indenture or be valid or obligatory for any purpose.

<PAGE>

         IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.

Dated:

                                                     ALABAMA POWER COMPANY

                                                     By:
                                                        ------------------------
                                                            Vice President

Attest:

----------------------------------------
         Assistant Secretary

                  {Seal of ALABAMA POWER COMPANY appears here}

<PAGE>

                          CERTIFICATE OF AUTHENTICATION

         This is one of the Senior Notes referred to in the within-mentioned
Indenture.

                                                     THE BANK OF NEW YORK
                                                     as Trustee

                                                     By:
                                                        ------------------------
                                                          Authorized Signatory

<PAGE>

                             (Reverse Side of Note)

         This Note is one of a duly authorized issue of Senior Notes of the
Company (the "Notes"), issued and issuable in one or more series under a Senior
Note Indenture, dated as of December 1, 1997, as supplemented (the "Indenture"),
between the Company and The Bank of New York (as successor to JPMorgan Chase
Bank, N.A. (formerly known as The Chase Manhattan Bank)), Trustee (the
"Trustee," which term includes any successor trustee under the Indenture), to
which Indenture and all indentures incidental thereto reference is hereby made
for a statement of the respective rights, limitation of rights, duties and
immunities thereunder of the Company, the Trustee and the Holders of the Notes
issued thereunder and of the terms upon which said Notes are, and are to be,
authenticated and delivered. This Note is one of the series designated on the
face hereof as Series 2007A 5.55% Senior Notes due February 1, 2017 (the "Series
2007A Notes") which is unlimited in aggregate principal amount. Capitalized
terms used herein for which no definition is provided herein shall have the
meanings set forth in the Indenture.

         The Series 2007A Notes will be subject to redemption at the option of
the Company in whole or in part at any time and from time to time upon not less
than 30 nor more than 60 days' notice. The Company shall have the right to
redeem the Series 2007A Notes in whole or in part at a redemption price (the
"Redemption Price") equal to the greater of (i) 100% of the principal amount of
the Series 2007A Notes to be redeemed, or (ii) the sum of the present values of
the remaining scheduled payments of principal and interest on the Series 2007A
Notes being redeemed, discounted (for purposes of determining present value) to
the Redemption Date on a semiannual basis (assuming a 360-day year consisting of
twelve 30-day months) at a discount rate equal to the Treasury Yield (as defined
below) plus 15 basis points, plus, in each case, accrued interest thereon to the
Redemption Date.

         "Treasury Yield" means, with respect to any Redemption Date, the rate
per annum equal to the semiannual equivalent yield to maturity of the Comparable
Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as
a percentage of its principal amount) equal to the Comparable Treasury Price for
such Redemption Date.

         "Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker as having a maturity comparable to
the remaining term of the Series 2007A Notes to be redeemed that would be
utilized, at the time of selection and in accordance with customary financial
practice, in pricing new issues of corporate debt securities of comparable
maturity to the remaining term of the Series 2007A Notes.

         "Comparable Treasury Price" means, with respect to any Redemption Date,
(i) the average of the Reference Treasury Dealer Quotations for such Redemption
Date, after excluding the highest and lowest such Reference Treasury Dealer

<PAGE>

Quotations, or (ii) if the Company obtains fewer than four such Reference
Treasury Dealer Quotations, the average of all such quotations.

         "Independent Investment Banker" means an independent investment banking
institution of national standing appointed by the Company and reasonably
acceptable to the Trustee.

         "Reference Treasury Dealer" means a primary U.S. Government securities
dealer in New York City appointed by the Company and reasonably acceptable to
the Trustee.

         "Reference Treasury Dealer Quotation" means, with respect to each
Reference Treasury Dealer and any Redemption Date, the average, as determined by
the Company, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount and quoted in
writing to the Company by such Reference Treasury Dealer at 5:00 p.m. on the
third Business Day in New York City preceding such Redemption Date).

         The Trustee shall not be responsible for the calculation of the
Redemption Price. The Company shall calculate the Redemption Price and promptly
notify the Trustee thereof.

         In the event of redemption of this Note in part only, a new Note or
Notes of this Series for the unredeemed portion hereof will be issued in the
name of the Holder hereof upon the surrender hereof. The Series 2007A Notes will
not have a sinking fund.

         If an Event of Default with respect to the Notes of this series shall
occur and be continuing, the principal of the Notes of this series may be
declared due and payable in the manner, with the effect and subject to the
conditions provided in the Indenture.

         The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Notes of each series to be affected
under the Indenture at any time by the Company and the Trustee with the consent
of the Holders of not less than a majority in principal amount of the Notes at
the time Outstanding of each series to be affected. The Indenture also contains
provisions permitting the Holders of specified percentages in principal amount
of the Notes of each series at the time Outstanding, on behalf of the Holders of
all Notes of such series, to waive compliance by the Company with certain
provisions of the Indenture and certain past defaults under the Indenture and
their consequences. Any such consent or waiver by the Holder of this Note shall

<PAGE>

be conclusive and binding upon such Holder and upon all future Holders of this
Note and of any Note issued upon the registration of transfer hereof or in
exchange hereof or in lieu hereof, whether or not notation of such consent or
waiver is made upon this Note.

         No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place and rate, and in the coin or currency, herein prescribed.

         As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Note is registerable in the Security Register,
upon surrender of this Note for registration of transfer at the office or agency
of the Company for such purpose, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Company and the Security
Registrar and duly executed by, the Holder hereof or his attorney duly
authorized in writing, and thereupon one or more new Notes of this series, of
authorized denominations and of like tenor and for the same aggregate principal
amount, will be issued to the designated transferee or transferees. No service
charge shall be made for any such registration of transfer or exchange, but the
Company may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith.

         Prior to due presentment of this Note for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name this Note is registered as the owner hereof for all
purposes, whether or not this Note be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.

         The Notes of this series are issuable only in registered form without
coupons in denominations of $1,000 and any integral multiple thereof. As
provided in the Indenture and subject to certain limitations therein set forth,
Notes of this series are exchangeable for a like aggregate principal amount of
Notes of this series of a different authorized denomination, as requested by the
Holder surrendering the same upon surrender of the Note or Notes to be exchanged
at the office or agency of the Company.

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

<PAGE>

                                  ABBREVIATIONS

The following abbreviations, when used in the inscription on the face of this
instrument, shall be construed as though they were written out in full according
to applicable laws or regulations:

TEN COM-    as tenants in            UNIF GIFT MIN ACT-  ______ Custodian_____
            common                                       (Cust)         (Minor)

TEN ENT-    as tenants by the
            entireties
                                                         under Uniform Gifts to
JT TEN-     as joint tenants                             Minors Act
            with right of
            survivorship and                             ____________________
            not as tenants                                     (State)
            in common

                    Additional abbreviations may also be used
                          though not on the above list.

         FOR VALUE RECEIVED, the undersigned hereby sell(s) and transfer(s) unto

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(please insert Social Security or other identifying number of assignee)

PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING POSTAL ZIP CODE OF
ASSIGNEE

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the within Note and all rights thereunder, hereby irrevocably constituting and
appointing

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agent to transfer said Note on the books of the Company, with full power of
substitution in the premises.

Dated:
       --------------------       ---------------------------------------------

NOTICE: The signature to this assignment must correspond with the name as
written upon the face of the within instrument in every particular without
alteration or enlargement, or any change whatever.

<PAGE>

                                    EXHIBIT B

                          CERTIFICATE OF AUTHENTICATION

         This is one of the Senior Notes referred to in the within-mentioned
Indenture.

                                       THE BANK OF NEW YORK
                                       as Trustee

                                       By:
                                          --------------------------------------
                                                Authorized SignatoryExhibit 4.1

    

      EXHIBIT
        4.1

      

      Microchip
        Technology Incorporated

      2355
        West
        Chandler Boulevard

      Chandler,
        Arizona 85224-6199

      

      January
        29, 2007

      

      Wells
        Fargo Bank, N.A., successor to

      Norwest
        Bank Minnesota, N.A. 

      161
        North
        Concord Exchange 

      P.
        O. Box
        738

      South
        St.
        Paul, MN 55075-0738

      Attention:
        Shareowner Services 

       

      Re:
        First
        Amendment to Rights Agreement

       

       

      Ladies
        and Gentlemen: 

       

      Pursuant
        to Section 27 of the Amended and Restated Preferred Shares Rights
        Agreement, dated as of October 11, 1999 (the "Rights Agreement"), between
        Microchip Technology Incorporated, a Delaware corporation (the "Company"),
        and
        Wells Fargo Bank, N.A., successor to Norwest Bank Minnesota, N.A., as rights
        agent (the "Rights Agent"), the Company, by resolution adopted by its Board
        of
        Directors on January 29, 2007, hereby amends the Rights Agreement as follows
        (this "Amendment"): 

       

      1.
        Section 1(a) of the Rights Agreement is hereby amended and restated in its
        entirety to read in full as follows: 

       

      (a)  "Acquiring
        Person"
        shall
        mean any Person who or which, together with all Affiliates and Associates
        of
        such Person, shall be the Beneficial Owner of 18% or more of the Common Shares
        then outstanding, but shall not include the Company, any Subsidiary of the
        Company or any employee benefit plan of the Company or of any Subsidiary
        of the
        Company, or any entity holding Common Shares for or pursuant to the terms
        of any
        such plan.
        Notwithstanding the foregoing, no Person shall be deemed to be an Acquiring
        Person as the result of an acquisition of Common Shares by the Company which,
        by
        reducing the number of shares outstanding, increases the proportionate number
        of
        shares beneficially owned by such Person to 18% or more of the Common Shares
        of
        the Company then outstanding; provided,
        however,
        that if
        a Person shall become the Beneficial Owner of 18% or more of the Common Shares
        of the Company then outstanding by reason of share purchases by the Company
        and
        shall, after such share purchases by the Company, become the Beneficial Owner
        of
        any additional Common Shares of the Company (other than pursuant to a dividend
        or distribution paid or made by the Company on the outstanding Common Shares
        in
        Common Shares or pursuant to a split or subdivision of the outstanding Common
        Shares), then such Person shall be deemed to be an Acquiring Person unless
        upon
        becoming the Beneficial Owner of
        such
        additional Common Shares of the Company such Person does not beneficially
        own
        18% or more of the Common Shares of the Company then outstanding. 

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      Notwithstanding
        the foregoing, (i) if the Company's Board of Directors determines in good
        faith
        that a Person who would otherwise be an "Acquiring Person," as defined pursuant
        to the foregoing provisions of this paragraph (a), has become such inadvertently
        (including, without limitation, because (A) such Person was unaware that
        it
        beneficially owned a percentage of the Common Shares that would otherwise
        cause
        such Person to be an "Acquiring Person," as defined pursuant to the foregoing
        provisions of this paragraph (a), or (B) such Person was aware of the extent
        of
        the Common Shares it beneficially owned but had no actual knowledge of the
        consequences of such beneficial ownership under this Agreement) and without
        any
        intention of changing or influencing control of the Company, and if such
        Person
        divested or divests as promptly as practicable a sufficient number of Common
        Shares so that such Person would no longer be an "Acquiring Person," as defined
        pursuant to the foregoing provisions of this paragraph (a), then such Person
        shall not be deemed to be or to have become an "Acquiring Person" for any
        purposes of this Agreement; and (ii) if, as of the date hereof, any Person
        is
        the Beneficial Owner of 18% or more of the Common Shares outstanding, such
        Person shall not be or become an "Acquiring Person," as defined pursuant
        to the
        foregoing provisions of this paragraph (a), unless and until such time as
        such
        Person shall become the Beneficial Owner of additional Common Shares (other
        than
        pursuant to a dividend or distribution paid or made by the Company on the
        outstanding Common Shares in Common Shares or pursuant to a split or subdivision
        of the outstanding Common Shares), unless, upon becoming the Beneficial Owner
        of
        such additional Common Shares, such Person is not then the Beneficial Owner
        of
        18% or more of the Common Shares then outstanding.”

      
         

      

      2.
        Exhibit
        C
        to the
        Rights Agreement is hereby amended and restated in its entirety to read in
        full
        as attached hereto.

       

      3.
        This
        Amendment shall be deemed to be a contract made under the laws of the State
        of
        Delaware and for all purposes shall be governed by and construed in accordance
        with the laws of such state applicable to contracts to be made and performed
        entirely within such state. 

       

      4.
        This
        Amendment may be executed in counterparts and each of such counterparts shall
        for all purposes be deemed to be an original, and all such counterparts shall
        together constitute but one and the same instrument. 

       

      5.
        If any
        term, provision, covenant or restriction of this Amendment is held by a court
        of
        competent jurisdiction or other authority to be invalid, void or unenforceable,
        the remainder of the terms, provisions, covenants and restrictions of this
        Amendment shall remain in full force and effect and shall in no way be affected,
        impaired or invalidated.

       

      6.
        This
        Amendment shall be effective as of the date first written above and all
        references to the Rights Agreement shall from and after such time be deemed
        to
        be references to the Rights Agreement as amended hereby. 

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

        
          	 	
                  Very
                    truly yours,

                
	 	 
	 	
                  Microchip
                    Technology Incorporated

                
	 	 
	 	
                  By: /s/
                    Gordon W. Parnell      
      

                
	 	 
	 	
                  Title: V.P.,
                    Chief Financial Officer      
                        

                

        

      

      

      Accepted
        and agreed to as of the effective time specified above:

       

      

        
          	
                  Wells
                    Fargo Bank, N.A., successor to 

                  Norwest
                    Bank Minnesota, N.A

                   

                	 
	
                  By: /s/
                    Susan J. Roeder            

                	 
	 	 
	
                  Title: Vice
                    President           
                       

                	 
	 	 
	 	 

        

      

       

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      EXHIBIT
        C

       

      STOCKHOLDER
        RIGHTS PLAN

       

      MICROCHIP
        TECHNOLOGY INCORPORATED

       

      Summary
        of Rights

      

      

      
        	
                Distribution
                  and Transfer of Rights 

                and
                  Mailing of Rights Certificate:

              	
                The
                  Board of Directors has declared a dividend of one Right for each
                  share of
                  Microchip Technology Incorporated Common Stock outstanding. Prior
                  to the
                  Distribution Date referred to below, the Rights will be evidenced
                  by and
                  trade with the certificates for the Common Stock. After the Distribution
                  Date, Microchip Technology Incorporated (the "Company")
                  will mail Rights certificates to the Company's stockholders and
                  the Rights
                  will become transferable apart from the Common Stock.

                 

              
	
                Distribution
                  Date:

              	
                Rights
                  will separate from the Common Stock and become exercisable following
                  (a)
                  the tenth day after a person or group acquires beneficial ownership
                  of 18%
                  or more of the Company's Common Stock or (b) the tenth business day
                  (or such later date as may be determined by the Company's Board
                  of
                  Directors) after a person or group announces a tender or exchange
                  offer,
                  the consummation of which would result in ownership by a person
                  or group
                  of 18% or more of the Company's Common Stock.

                 

              
	
                Preferred
                  Stock Purchasable Upon Exercise 

                of
                  Rights

              	
                After
                  the Distribution Date, each Right will entitle the holder to purchase
                  for
                  $250.00 (the "Exercise
                  Price"),
                  a fraction of a share of the Company's Preferred Stock with economic
                  terms
                  similar to that of one share of the Company's Common Stock.

                 

              
	
                Flip-In:

              	
                If
                  an acquiror (an "Acquiring
                  Person")
                  obtains 18% or more of the Company's Common Stock then
                  each Right (other than Rights owned by an Acquiring Person or its
                  affiliates) will entitle the holder thereof to purchase, for the
                  Exercise
                  Price, a number of shares of the Company's Common Stock having
                  a then
                  current market value of twice the Exercise Price.

                 

              

      

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      
        	
                Flip-Over:

              	
                If,
                  after an Acquiring Person obtains 18% or more of the Company's
                  Common
                  Stock, (a) the Company merges into another entity, (b) an
                  acquiring entity merges into the Company or (c) the Company sells
                  more than 50% of the Company's assets or earning power, then
                  each Right (other than Rights owned by an Acquiring Person or its
                  affiliates) will entitle the holder thereof to purchase, for the
                  Exercise
                  Price, a number of shares of Common Stock of the person engaging
                  in the
                  transaction having a then current market value of twice the Exercise
                  Price.

                 

              
	
                Exchange
                  Provision:

              	
                At
                  any time after the date an Acquiring Person obtains 18% or more
                  of the
                  Company's Common Stock and prior to the acquisition by the Acquiring
                  Person of 50% of the outstanding Common Stock, the Company's Board
                  of
                  Directors may exchange the Rights (other than Rights owned by the
                  Acquiring Person or its affiliates), in whole or in part, for shares
                  of
                  Common Stock of the Company at an exchange ratio of one share of
                  Common
                  Stock per Right (subject to adjustment).

                 

              
	
                Redemption
                  of the Rights:

              	
                Rights
                  will be redeemable at the Company's option for $0.01 per Right
                  at any time
                  on or prior to public announcement that a Person has acquired beneficial
                  ownership of 18% or more of the Company's Common Stock (the "Shares
                  Acquisition Date").

                 

              
	
                Expiration
                  of the Rights:

              	
                The
                  Rights expire on the earliest of (a) October 11, 2009 or (b) exchange
                  or redemption of the Rights as described above.

                 

              
	
                Amendment
                  of Terms of Rights:

              	
                The
                  terms of the Rights and the Rights Agreement may be amended in
                  any respect
                  without the consent of the Rights holders on or prior to the Distribution
                  Date; thereafter, the terms of the Rights and the Rights Agreement
                  may be
                  amended without the consent of the Rights holders in order to cure
                  any
                  ambiguities or to make changes which do not adversely affect the
                  interests
                  of Rights holders (other than the Acquiring Person).

                 

              
	
                Voting
                  Rights:

              	
                Rights
                  will not have any voting rights.

                 

              
	
                Anti-Dilution
                  Provisions:

              	
                Rights
                  will have the benefit of certain customary anti-dilution
                  provisions.

                 

              
	
                Taxes:

              	
                The
                  Rights distribution should not be taxable for federal income tax
                  purposes.
                  However, following an event which renders the Rights exercisable
                  or upon
                  redemption of the Rights, stockholders may recognize taxable
                  income.

                 

              

      

      

      The
        foregoing is a summary of certain principal terms of the Stockholder Rights
        Plan
        only and is qualified in its entirety by reference to the detailed terms
        of the
        Amended and Restated Rights Agreement dated as of October 11, 1999, between
        the
        Company and the Rights Agent.

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      THE
        RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES
        SPECIFIED IN SECTION 7(e) OF THE AMENDED AND RESTATED RIGHTS AGREEMENT
        BETWEEN MICROCHIP TECHNOLOGY INCORPORATED AND NORWEST BANK MINNESOTA, N.A.
        DATED
        AS OF OCTOBER 11, 1999.

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